10-KPeriod: FY2003

BROWN & BROWN, INC. Annual Report, Year Ended Dec 31, 2003

Filed March 15, 2004For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) operates as a general insurance agency, marketing and selling primarily property, casualty, and employee benefits insurance products and services. The company acts as an agent and broker, not assuming underwriting risks, and earns revenue through commissions from insurance companies and fees from customers. BRO's business is diversified across four reportable segments: Retail, National Programs, Services, and Brokerage. For the fiscal year ending December 31, 2003, BRO demonstrated a strong growth trajectory, driven significantly by its consistent acquisition strategy, which has expanded its operational footprint across 29 states. The company reported total commission and fee revenues of $545.3 million, an increase from the previous year. The Retail Division remains the largest contributor, accounting for 72.6% of total revenues, indicating its continued importance to the company's performance. Despite a moderating trend in insurance premium rate increases, BRO's business model appears resilient, leveraging acquisitions and diverse revenue streams to maintain growth.

Key Highlights

  • 1BRO's business model is centered on acting as an insurance agent and broker, earning commissions and fees rather than assuming underwriting risks.
  • 2The company has a robust acquisition strategy, having acquired 141 insurance agency operations between 1993 and 2003, expanding its presence to 29 states by the end of 2003.
  • 3Total commission and fee revenues reached $545.3 million in 2003, showing significant growth compared to previous years.
  • 4The Retail Division is the largest segment, contributing 72.6% of total revenues in 2003, highlighting its core importance to the company.
  • 5The insurance premium pricing environment saw moderating rate increases in 2003, a trend expected to continue into 2004.
  • 6BRO manages interest rate risk through an interest rate swap agreement to hedge its term loan.
  • 7The company successfully transitioned its independent accounting firm from Arthur Andersen LLP to Deloitte & Touche LLP in June 2002.

Frequently Asked Questions

Brown & Brown, Inc. generates revenue primarily through commissions paid by insurance companies based on the premiums of the policies they sell and fees paid by customers for specific services, such as third-party administration and consulting.

Brown & Brown's primary growth strategy involves the continuous acquisition of insurance agency operations and related assets. This strategy has allowed them to expand their geographic reach and service offerings significantly over the years.

Brown & Brown operates through four main reportable segments: the Retail Division, the National Programs Division, the Services Division, and the Brokerage Division.

The company has exposure to market risk primarily through its investments and debt. They manage interest rate risk on their term loan using an interest rate swap agreement and have a notable investment in Rock-Tenn Company, exposing them to equity price risk.