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Member, Beacon International Group, Ltd.
DAYTONA BEACH, Fla.—Brown & Brown Inc. settled its lawsuit this week against several of its former high-ranking employees whom the company accused of using confidential trade secrets to start a competing brokerage.
In March, Brown & Brown's former chief operating officer, Jim Henderson, and its former chief acquisitions officer, Tom Reilly, announced the formation of an insurance brokerage in Lake Mary, Fla., Assured Agencies L.L.C., just a few months after leaving the company. Assured's business model—to grow an insurance brokerage through targeted acquisitions in the middle market—closely resembles Brown & Brown's core strategy.
Several other top-level Brown & Brown executives soon joined Assured Agencies, prompting the Daytona Beach, Fla.-based broker to file suit against the start-up and the defectors for misappropriating trade secrets, luring away key personnel, and wrongful use of institutional knowledge.
In a settlement filed in a Florida court on Thursday, Assured Agencies agreed not to solicit any Brown & Brown clients or employees for 18 months, and not to communicate with any insurance agency or brokerage listed on two rosters of potential Brown & Brown acquisition targets for six to 12 months. Assured also agreed to return all confidential material the former Brown & Brown employees might have kept after leaving the company, as well paying Brown & Brown in an undisclosed amount.
“We expect our team members to honor their contractual commitments,” said J. Powell Brown, president and CEO of Brown & Brown. “We're very pleased with the outcome of this matter, and happy to have it behind us.”
Analysts for the St. Louis-based Stifel, Nicolaus & Co. Inc. financial advisers characterized the settlement of the lawsuit as a “modest positive” for Brown & Brown in a note to investors, as it “it eliminates what we had seen as a credible threat of accelerating defections of personnel, clients and acquisitions to Assured Agencies.”
According to a document filed with the Securities and Exchange Commission this week, former Brown & Brown Inc. Chief Acquisitions Officer and Regional President Thomas E. Riley and his former employer have reached a separation agreement that will pay him $800,000 in severance pay.