With operating net income of 40 cents per share for the first quarter of 2014, Brown & Brown Inc. (BRO - Free Report) missed the Zacks Consensus Estimate for the third time in a row. Earnings fell short of the estimate by a couple of cents.
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However, results improved 11% from 36 cents per share earned in the year-ago quarter.
The year-over-year improvement was primarily driven by solid performance across all business divisions.
Including adjustment for acquisition earn-outs of 2 cents, and margin impact of Beecher Carlson large accounts, Brown & Brown reported net income of 36 cents per share, decreasing 12.2% year over year.
Behind the Headlines
Total revenue amounted to $363.6 million in the quarter, missing the Zacks Consensus Estimate of $373 million. The results also improved 8.5% year over year driven by higher commissions and fees and other income. Organic revenue growth was 3.9% in the reported quarter.
Among the four business divisions of the company, Wholesale Brokerage and Services exhibited higher organic revenue growth rates of 11.8% and 4.9% respectively, whereas organic growth rate at Retail Divisions increased 0.2%. National Programs climbed 1.6%.
Investment income continued to witness a decline, plunging 50% year over year.
Total expense increased 17.5% year over year to $276.8 million. Operating total expense (excluding effects of acquisitions) increased 4.5% to $243.1 million
Pretax income decreased 12.8% from the prior-year quarter to $86.8 million.
Brown & Brown exited the first quarter of 2014 with cash and cash equivalents of approximately $502.9 million, improving 11% from 2013 end.
Long-term debt of the company stood at $480 million at the end of 2013, up 26% from the 2013-end level.
Share Repurchase Update
In Feb 2014, the board of directors of Brown & Brown authorized the company to repurchase upto $25 million worth of shares.
Brown & Brown paid a quarterly cash dividend of 10 cents per share on Feb 19, 2014 to the shareholders of record as of Feb 5.
Brown & Brown presently carries a Zacks Rank #4 (Sell).
Performance of Other Insurance Brokers
Arthur J Gallagher & Co. (AJG - Free Report) reported first-quarter 2014 operating net earnings of 39 cents a share that outperformed the Zacks Consensus Estimate by 52%. However, results steered ahead of the prior-year quarter number by 22%.
Better-ranked insurance brokers Marsh & McLennan Companies, Inc. (MMC - Free Report) and Erie Indemnity Company (ERIE - Free Report) are scheduled to release their quarterly results on May 2. Both these stocks sport a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Marsh & McLennan is currently pegged at 81 cents, while the same for Erie Indemnity is 78 cents.