01—Abstract
Summary
Summary of the 10-K filed February 24, 2017. Cited figures are marked; the original filing is the authoritative source.
Brown & Brown, Inc. (BRO) demonstrated consistent revenue growth in its fiscal year ending December 31, 2016, with total revenues reaching $1.77 billiona, an increase of 6.4% from the prior year.
This growth was primarily driven by its Retail and National Programs segments, which together accounted for approximately 77.4%b of total revenues. The company's strategic focus on acquisitions and organic growth continues to be a key driver of its financial performance. Operationally, Brown & Brown operates through four distinct segments: Retail, National Programs, Wholesale Brokerage, and Services.
The Retail segment remains the largest contributor to revenue, while the National Programs segment showed strong organic growth. The company also maintained a healthy financial position, with total assets of $5.29 billionc and significant shareholder equity. Management expressed confidence in continued organic revenue growth, anticipating positive results in the upcoming year based on current trends in insurable exposure units and premium rates.
02—Key points
Key Highlights
- Total revenues grew by 6.4% to $1.77 billion in 2016, indicating a consistent growth trajectory.
- The Retail segment, the largest revenue contributor, saw a 5.4% increase in total revenues, driven by acquisitions and net new business.
- The National Programs segment experienced a 4.6% increase in total revenues, with a notable organic revenue growth rate of 4.2% for core commissions and fees.
- Employee compensation and benefits represent a significant portion of expenses, accounting for approximately 52.4% of total revenues in 2016.
- The company actively pursues growth through acquisitions, adding seven insurance intermediaries and three books of business in 2016.
- Brown & Brown's financial health is supported by substantial shareholder equity of $2.36 billion and total assets of $5.29 billion as of year-end 2016.
- The company's performance is geographically diversified, with operations across 41 states, although concentrated in 17 key states.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 24, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $1.77B$1.66B | +6.4% |
| Operating Expenses | $1.34B$1.26B | +6.8% |
| Interest Expense | $39.48M$39.25M | +0.6% |
| Net Income | $257.49M$243.32M | +5.8% |
| EPS (Basic) | $0.92$0.86 | +7.0% |
| EPS (Diluted) | $0.91$0.85 | +7.1% |
| Shares Outstanding (Basic) | 272.28M275.62M | −1.2% |
| Shares Outstanding (Diluted) | 275.61M280.22M | −1.6% |
05—Questions
Frequently Asked Questions
What is Brown & Brown's primary business model and revenue generation strategy?
Brown & Brown operates as a diversified insurance agency, wholesale brokerage, insurance programs, and service organization. Its primary revenue sources are commissions paid by insurance companies and fees paid directly by customers for services like claims administration and risk management.
How did the company perform in terms of revenue growth in 2016?
In 2016, Brown & Brown reported total revenues of $1.77 billion, representing a 6.4% increase compared to $1.66 billion in 2015. This growth was fueled by both acquisitions and organic new business across its segments, particularly in the Retail and National Programs divisions.
What are the main segments of Brown & Brown's operations?
Brown & Brown's operations are divided into four reportable segments: Retail, National Programs, Wholesale Brokerage, and Services. The Retail segment is the largest, followed by National Programs, Wholesale Brokerage, and Services.
What is the company's approach to growth and expansion?
Brown & Brown's growth strategy is a combination of organic growth, driven by new business production and customer retention, and strategic acquisitions. In 2016, the company completed multiple acquisitions to expand its reach and service offerings.
How does the company manage its financial position and debt?
As of December 31, 2016, Brown & Brown had total assets of $5.29 billion and total shareholders' equity of $2.36 billion. The company manages its capital through operating cash flow, a revolving credit facility, and a conservative balance sheet approach, with total debt at $1.07 billion.
06—Continue