Brown & Brown reports higher revenue for fourth quarterPosted On: Jan. 29, 2019 10:28 AM CST
Brown & Brown Inc. late Monday reported fourth-quarter 2018 revenue of $508.7 million, up 7.3% from the same period in 2017.
Commissions and fees increased 7.2% in the fourth quarter to $507.7 million, but quarterly organic revenue growth slowed, declining by 2.1% as the Daytona Beach, Florida-based brokerage saw significantly lower claims processing revenue from weather-related events.
The acquisitive broker acquired five businesses with approximately $227 million of annualized revenue in the fourth quarter of 2018, said J. Powell Brown, president and CEO on a conference call with analysts Tuesday.
The largest transaction during the fourth quarter of 2018 was Brown & Brown Inc.’s acquisition of Minneapolis-based Hays Group for $700 million which closed in November.
Brown & Brown expects Hays Group to deliver up to $220 million of annual revenues for 2019, the company said during the call.
Net income for the fourth quarter was $73.5 million, down 60.8% from the prior year fourth quarter which was bolstered by $120.9 million due to the “one-time impact of the Tax Cuts and Jobs Act of 2017,” Brown & Brown said in the statement.
For the full year, Brown & Brown reported of $2.01 billion, up 7.1% compared with 2017, and profit of $344.3 million, down 13.8%.
“We remain optimistic about the economy but there is a reasonable possibility the economy may slow down in second half of 2019 or early 2020,” said Mr. Brown.
The economy during the fourth quarter continued to expand with “exposure units” increasing across most industries and geographies, as employers invested in their business, he said during the call.
Across its four business segments, Brown & Brown’s retail business reported 3.5% organic growth in the fourth quarter and wholesale reported 3.4% growth.
However, quarterly organic growth for national programs declined 14% driven by a $20 million decrease in claims processing revenues from weather events compared with the fourth quarter of 2017.
Brown & Brown’s services segment also reported a 3.3% decline in organic growth due to lower revenues associated with weather-related events, Mr. Brown said.
Premium rates for most lines remain generally flat, with the exception of commercial auto where rates are up 3%-7% and on employee benefit accounts, he said.
“Coastal property rates for the quarter remain generally flat, with some downward pressure on the best accounts and upward pressure on accounts with poor loss experience,” said Mr. Brown.