10-KPeriod: FY2009

BROWN & BROWN, INC. Annual Report, Year Ended Dec 31, 2009

Filed March 1, 2010For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) experienced a challenging year in 2009, marked by a 0.1% decline in total revenues to $967.9 million, the first revenue decrease since 1993. This downturn was attributed to a prolonged "soft market" in insurance premium rates and, more significantly, a decline in "insurable exposure units" due to the weakening U.S. economy. Net income also saw a decrease, falling to $153.3 million from $166.1 million in 2008. Despite the revenue headwinds, the company demonstrated resilience through strategic acquisitions, adding 11 new entities. Management highlighted the company's long-term growth trajectory, with a 15.6% compound annual growth rate in revenue from 1993 to 2009 and a 20.3% compound annual growth rate in net income over the same period. The company maintained a strong focus on managing expenses, with employee compensation and benefits as a percentage of revenue rising slightly, but controlled through headcount reductions. The report also indicates no goodwill impairment for the year. Investors should note the company's heavy concentration in nine key states (California, Florida, Indiana, Michigan, New Jersey, New York, Pennsylvania, Texas, and Washington), which accounted for 74.3% of revenues in 2009, making it susceptible to regional economic downturns and regulatory changes. Additionally, the company is navigating a competitive landscape and ongoing governmental investigations into industry compensation practices, which could pose future risks.

Financial Highlights

25 data points
Beta

Revenue

$967.88M

Net Income

$153.29M

15.8% Net Margin

EPS (Diluted)

$0.54

Free Cash Flow

$210.28M

Financial Statements
Beta
Revenue$967.88M
Operating Expenses$713.12M
Interest Expense$14.60M
Net Income$153.29M
EPS (Basic)$0.54
EPS (Diluted)$0.54
Shares Outstanding (Basic)274.35M
Shares Outstanding (Diluted)275.01M

Key Highlights

  • 1Total revenues declined by 0.1% to $967.9 million in 2009, marking the first year-over-year revenue decrease since 1993.
  • 2Net income decreased to $153.3 million in 2009 from $166.1 million in 2008.
  • 3The company continued its acquisition strategy, adding 11 new insurance intermediaries and books of business in 2009.
  • 4Despite a challenging economic environment, employee compensation and benefits were managed, with headcount reductions contributing to cost control.
  • 5Goodwill was not impaired in 2009, indicating that the acquired assets retained their value.
  • 6A significant concentration of business remains in nine key states, representing 74.3% of total revenues in 2009, posing regional risk.
  • 7The company noted ongoing governmental investigations into industry compensation practices, which represent a potential risk.

Frequently Asked Questions

Brown & Brown's total revenues decreased by 0.1% to $967.9 million in 2009. This was the first year-over-year revenue decline since 1993, primarily attributed to a soft insurance market and reduced insurable exposure units due to the economic downturn.

Net income declined to $153.3 million in 2009, down from $166.1 million in 2008. This decrease was influenced by the revenue decline and increased operating expenses, partly offset by cost management efforts.

Yes, Brown & Brown continued its acquisition strategy, acquiring 11 insurance intermediaries and several books of business during 2009. These acquisitions are part of the company's ongoing growth strategy.

Key risks include the dependence on premium rates and insurable exposure units, the impact of current economic conditions, potential losses from financial institutions holding cash balances, disruption in credit markets, reliance on a limited number of insurance companies, concentration of business in specific states, and the uncertainty surrounding governmental investigations into compensation practices.