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Brown & Brown Inc. late Monday reported 2019 first-quarter revenue of $619.3 million, up 23.5% from the first quarter of 2018 as acquisitions gave commissions and fees a boost.
Commissions and fees increased 23.4% in the first quarter to $617.5 million, and quarterly organic revenue grew 2.0%, which was a “strong start” to the year, J. Powell Brown, president and CEO, said Monday in a statement.
The Daytona Beach, Florida-based brokerage acquired eight businesses with approximately $36 million of annualized revenue in the first quarter of 2019, Mr. Brown said Tuesday on a conference call with analysts.
Hays Group Inc. contributed $74.1 million in first-quarter revenue. Brown & Brown acquired Minneapolis-based Hays Group for $700 million in the fourth quarter of 2018.
Net income for the first quarter increased 25.4% to $113.9 million as the brokerage benefited from a lower effective tax rate, R. Andrew Watts, Brown & Brown’s executive vice president, chief financial officer and treasurer, said on the call.
“The economy continued to expand in Q1 2019, with many of our customers investing in their business, hiring more people and growing organically,” Mr. Brown said.
Across its four business segments, Brown & Brown’s retail business reported 3.6% organic growth in the first quarter, wholesale reported 3.3% growth, and services saw 0.5% growth, Mr. Brown said. However, quarterly organic growth for national programs declined 2.3% due mainly to lower flood claims revenue.
While overall premium rates remain competitive, Mr. Brown said, “during the first quarter we saw some upward pressure in certain lines, including coastal property, both wind and earthquake. Also in auto, employee benefits and general liability.”
The main line of business where rates are consistently down across most regions is workers compensation, Mr. Brown said.
“Most other lines of coverage are flat to up slightly, zero to 5%, with commercial auto up 7% to 10%,” he said.
“While there’s a lot of talk and desire for higher rates, there’s still a lot of capital in the market,” he said.
“Therefore, we see some insurance companies tightening underwriting guidelines, but loss-free accounts remain quite competitive.”
On acquisitions, Mr. Brown said the acquisition pipeline is “good.”
“There are acquisitions we could do but choose not to,” he said, either because of price or where they are not a good cultural fit.
“Culture is an intangible thing that makes some companies great and others average,” Mr. Brown said, adding: “As we cross the 10,000-teammate threshold, we think about how we cultivate and drive our culture as we move toward the next intermediate goal of $4 billion in revenue.”
Brown & Brown would need to “hire or acquire around 10,000 more teammates” to get there, he said.
Brown & Brown Inc. on Monday said it has entered an agreement to acquire Hays Group Inc.