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Issue July 6, 2009 |
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| After nearly 50 years as chief executive officer of Brown & Brown, J. Hyatt Brown, 71, handed the reins over to his eldest son, J. Powell Brown, last week. |
Not many can say they were destined for success in the insurance business quite like J. Hyatt Brown.
As a boy growing up in Daytona Beach, Fla., Mr. Brown remembers going on sales calls with his father, Adrian Brown, who started Brown & Owen Insurance Agency in 1939 with his cousin, Charles “Cov” Owen.
“I remember thinking as a kid that a lot of time these were two-hour conversations; and of the two-hour conversation, the first hour and 45 minutes would be about hunting, fishing, politics, the family, the children, and the last 15 minutes would be about insurance and then we left. I thought to myself, "I could be a lot more efficient by cutting out most of that other stuff and just talk about insurance,'” he recalls.
Upon graduating from the University of Florida in 1959 with majors in real estate and insurance, Mr. Brown got his chance.
He joined his older brother, Worley, and father at the aptly renamed family agency Brown & Brown Inc. Two years later at age 23, Mr. Brown's father retired and sold him the agency for $75,000.
Although the intention was that Worley, who had been appointed chairman of the Florida Industrial Commission, would come back to help him run the agency, he never did.
The rest, as they say, is history.
Except for the time he spent serving as a state representative in the Florida House from 1972 to 1980—and House speaker from 1978 to 1980—Mr. Brown has led Brown & Brown on an impressive journey that has seen the intermediary grow from $61,000 in revenues and seven employees in 1961 into a publicly traded company with just less than $1 billion in revenues and 5,400 employees today.
After nearly 50 years as chief executive officer of Brown & Brown, Mr. Brown, 71, handed the reins over to his eldest son, J. Powell Brown, on July 1. Mr. Brown will remain nonexecutive chairman of Brown & Brown, focusing on acquisitions and mentoring young producers.
J. Powell Brown said he has no intentions of changing the formula that has made Brown & Brown so successful throughout the years (see story, page 20).
While some may see the more than 200 acquisitions that Brown & Brown has made throughout the years as the secret to its success, Hyatt Brown attributes success to the agency's common driving culture, the core of which revolves around recruiting only certain kinds of producers.
Brown & Brown, he said, seeks only those producers who are analytical, energetic, driven by a “money-making gene” and satisfied with being respected rather than loved. As a result, the agency has been able to recruit “true salespeople” rather than “account handlers,” he said.
Performance is measured by growth and profitability and rewarded with short- and long-term incentive compensation plans, he said.
Prospective acquisitions must agree to the sales model, Mr. Brown said. “If they don't buy into the model, we don't acquire them. If they do, then we help them get to the level of efficiencies that other offices have.”
He said it takes about one to two years for a newly acquired agency to become competitive with existing Brown & Brown-owned offices, which are ranked quarterly on their growth and operating margin.
The model is not for every agency and every producer, Mr. Brown acknowledged. But for those producers who want to work hard, it's very rewarding, he said.
The model also has been rewarding for Brown & Brown's shareholders. The agency's operating margins, which hover in the high 30% range, far outpace its public peers, whose margins average more in the high teens to low 20% range.
Mr. Brown notes that in addition to its sales model, Brown & Brown's commitment to commission-based middle market business also helps it achieve its profit goals.
Those who know Mr. Brown say his legacy will remain firmly implanted for years to come.
“Hyatt is the best CEO I've ever dealt with of any public company,” said Nik Fisken, an analyst with Stephens Inc. in Little Rock, Ark. “I think he is the best motivator,” which is key for a sales organization, he said.
“He also has a strong underlying financial focus to not only go out and sell hard every day, but at the same time make money for shareholders with profits,” he said.
“Hyatt Brown has been one of the most amazing leaders to grace the industry over the past 20 years,” said Kevin P. Donoghue, managing director of Mystic Capital Advisors Group L.L.C. in New York. “His ability to get all of Brown & Brown's officers to march to the beat of a common corporate theme, regardless of region, has been astonishing.”
“He's one of the pillars of our industry. He's iconic in some nature,” said Ken Crerar, president of the Council of Insurance Agents & Brokers.
“He built a model that has been attempted to be replicated by numerous people over the years, and he's done it in an incredibly profitable way,” Mr. Crerar said.
For reprints of this story, please contact Lauren Melesio at 212-210-0707 or email lmelesio@crain.com
