01—Abstract
Summary
Summary of the 10-K filed February 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Brown & Brown, Inc. (BRO) presented a strong financial performance for the fiscal year ending December 31, 2018, demonstrating consistent revenue growth and profitability.
The company operates as a diversified insurance intermediary, offering a wide array of insurance products and services across its four key segments: Retail, National Programs, Wholesale Brokerage, and Services. With a history of increasing revenues year-over-year, Brown & Brown's business model is characterized by a decentralized sales and service culture, focused on organic growth and strategic acquisitions. The company's financial health is robust, supported by substantial revenue from commissions and fees, which reached $2,009.9 milliona in 2018.
This growth was driven by a combination of new and retained business, as well as contributions from acquisitions, with the Retail segment remaining the largest revenue generator. Brown & Brown also effectively manages its expenses, including employee compensation and benefits, while investing in technology and expanding its operational footprint across 42 states and internationally. The company's strong balance sheet and commitment to shareholder returns, evidenced by share repurchases and dividends, position it well for continued success in the competitive insurance market.
02—Key points
Key Highlights
- Total revenues reached $2,014.2 million in 2018, an increase of 7.1% from 2017, driven by strong performance across its segments.
- The Retail Segment, the largest contributor to revenue, saw a 10.5% increase in total revenues to $1,042.8 million in 2018.
- The company completed 23 acquisitions in 2018, integrating them into its operations and contributing approximately $82.4 million in revenues.
- Employee compensation and benefits, while significant at $1,068.9 million, remained a manageable percentage of total revenues (53.1%).
- Brown & Brown maintained a strong liquidity position with $439.0 million in cash and cash equivalents at year-end 2018.
- The company actively returned capital to shareholders through share repurchases totaling $100.0 million and dividends paid of $84.7 million in 2018.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 26, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $2.01B$1.88B | +7.1% |
| Operating Expenses | $1.55B$1.43B | +8.4% |
| Interest Expense | $40.58M$38.32M | +5.9% |
| Net Income | $344.25M$399.63M | −13.9% |
| EPS (Basic) | $1.24$1.43 | −13.3% |
| EPS (Diluted) | $1.22$1.40 | −12.9% |
| Shares Outstanding (Basic) | 270.97M272.58M | −0.6% |
| Shares Outstanding (Diluted) | 275.52M277.59M | −0.7% |
05—Questions
Frequently Asked Questions
What is Brown & Brown's primary business and revenue model?
Brown & Brown, Inc. is a diversified insurance intermediary. Its primary revenue sources are commissions paid by insurance companies for selling insurance products and, to a lesser extent, fees paid directly by customers for services such as claims administration and risk management. The company operates across four segments: Retail, National Programs, Wholesale Brokerage, and Services.
How did Brown & Brown perform financially in 2018?
In 2018, Brown & Brown reported total revenues of $2,014.2 million, an increase of 7.1% from 2017. Net income was $344.3 million, though this was a decrease from 2017's $399.6 million, primarily due to a significant legal settlement in 2017 that boosted the prior year's income. The company also grew its total assets to $6,688.7 million.
What is the company's growth strategy?
Brown & Brown's growth strategy is driven by both organic growth, focusing on net new business and customer retention across its decentralized operations, and strategic acquisitions. The company actively pursues acquisitions of other insurance intermediaries to expand its market reach and service offerings.
How does the company manage its debt?
Brown & Brown maintains a conservative balance sheet. As of December 31, 2018, total debt was $1,507.0 million. The company utilizes credit facilities and has access to capital markets for financing. It aims to manage its debt levels in line with its earnings and cash flow generation, with covenants in its agreements monitored closely.
06—Continue