By David Bull
April 29 - (The Insurer) - Brown & Brown reported in-line quarterly earnings and an organic revenue growth miss on Monday, triggering an adverse reaction from investors with the intermediary’s shares trading down 7% at around 10.00 a.m. in New York on Tuesday.
The Daytona Beach, Florida-based company generated operating earnings per share for the first quarter of $1.29, which matched analysts’ consensus for the period.
However, organic revenue growth of 6.5% fell short of consensus forecasts of 7.2%, according to a note from KBW analyst Meyer Shields, who said Brown & Brown shares were expected to trade down on the miss.
The broker's adjusted Ebitdac margin was up 110 basis points to 38.1%, while diluted net income per share was 12.7% higher at $1.15. Brown & Brown also reported annual revenue of $36 million from 13 acquisitions in the quarter.
President and CEO J Powell Brown said: “We continue to execute our plan and are pleased with our performance for the quarter."
Overall revenue for the period climbed 11.6% to $1.4 billion.
Organic revenue growth was driven by a 13.6% expansion within Brown & Brown’s programs business, with wholesale brokerage growing 6.7% on an underlying basis but retail more sluggish at 4.1%.
The company said that organic revenue growth in retail was driven by net new business, rate and exposure increases with a partial offset because of the timing of renewals and non-recurring business.
It said rate increases for commercial lines moderated to 2% to 7% with rate decreases of 10% to 20% in property catastrophe.
The Ebitdac margin in retail increased by 120 basis points to 37.3% on an adjusted basis.
In programs, organic growth was driven by hurricane claim revenue, said Brown & Brown, as well as good retention and exposure unit expansion, partially offset by declining property cat rates.
In this division, adjusted Ebitdac margin increased by 220 basis points to 44.5%.
In wholesale, organic revenue growth was led by net new business and exposure unit increases with some offset from lower property cat rates, said the intermediary.
It added that property cat rates decreased in the range of 10% to 25%, with professional lines flat to down 10% and casualty rates up 5% to 10%.
Adjusted Ebitdac margin in wholesale contracted, however, by 30 basis points to 32.1%.
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