10-QPeriod: Q3 FY2009

BROWN & BROWN, INC. Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 6, 2009For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported financial results for the third quarter and the first nine months ended September 30, 2009. Total revenues saw a slight increase of 1.1% for the nine-month period, reaching $753.7 million, while net income for the same period saw a decrease of 2.3% to $129.6 million. The company continued to experience negative internal growth in its core commissions and fees revenue, a trend attributed to the ongoing "soft market" in insurance, increased competition from Citizens Property Insurance Corporation, and the general economic downturn. Despite these headwinds, the company executed several acquisitions, contributing to overall revenue growth and demonstrating a strategic focus on expansion. The balance sheet as of September 30, 2009, shows total assets of $2.24 billion, an increase from $2.12 billion at the end of 2008. This growth is largely driven by an increase in goodwill due to acquisitions. The company maintained a strong liquidity position, with cash and cash equivalents significantly increasing to $186.2 million from $78.6 million at the end of the prior year, supported by robust operating cash flows. Management expressed confidence in the company's ability to meet its liquidity needs and pursue future growth opportunities, including potential acquisitions.

Key Highlights

  • 1Total revenues for the first nine months of 2009 increased by 1.1% to $753.7 million, compared to the same period in 2008.
  • 2Net income for the nine months ended September 30, 2009, decreased by 2.3% to $129.6 million, with diluted EPS at $0.91.
  • 3The company experienced negative internal revenue growth for core commissions and fees, reflecting challenging market conditions.
  • 4Significant acquisition activity continued, with eight insurance intermediaries and several books of business acquired in the first nine months of 2009 for approximately $47.0 million.
  • 5Cash and cash equivalents increased substantially to $186.2 million as of September 30, 2009, from $78.6 million at December 31, 2008, driven by strong operating cash flows.
  • 6Goodwill increased to $1.06 billion from $1.02 billion, primarily due to acquisitions during the period.
  • 7The company's current ratio improved to 1.24 from 1.00, indicating a stronger short-term financial position.

Frequently Asked Questions

For the nine months ended September 30, 2009, total revenues increased by 1.1% to $753.7 million. However, core commissions and fees, excluding profit-sharing, showed negative internal growth of (4.1)%, reflecting challenging market conditions.

Net income for the first nine months of 2009 decreased by 2.3% to $129.6 million. This decline is partly due to the negative internal revenue growth and a significant decrease in investment income.

Brown & Brown continues an active acquisition strategy. In the first nine months of 2009, they acquired eight insurance intermediaries and several books of business for approximately $47.0 million. These acquisitions are primarily aimed at expanding core businesses.

The company's liquidity position is strong. Cash and cash equivalents significantly increased to $186.2 million as of September 30, 2009, up from $78.6 million at the end of 2008, primarily due to strong cash flow from operations. The current ratio also improved to 1.24.