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Brown & Brown Posts In-Line Q3 Earnings, Raises Dividend

Brown & Brown Inc . BRO reported third-quarter 2015 earnings per share of 47 cents, in line with the Zacks Consensus Estimate and unchanged from the year-ago quarter.

Brown & Brown Inc. - Earnings Surprise | FindTheBest

Shares of the insurance broker gained 0.9% in the last four trading sessions likely because of the dividend hike approved by the board of directors

Behind the Headlines

The quarter's total revenue amounted to $432 million, which missed the Zacks Consensus Estimate of $437 million by 5%. However, the top line buoyed up 2.6% year over year on higher commissions and fees. Organic revenue growth was 2.4%.

Commissions and fees increased nearly 4.8% year over year to $417.3 million on the back of higher commissions across the four divisions - National Program, Services, Wholesale Brokerage and Retail.

Services commission grew 7.8% followed by a 6.9% increase in Wholesale Brokerage commission, 5.3% improvement in Retail commission and 1.9% higher National Program commission.

Investment income was flat year over year at $0.2 million in the quarter.

Total expense increased 3.4% year over year to $319.3 million due to the rise in employee compensation and benefits, other operating expenses, and interest expenses.

Revenue improvement was mostly offset by higher expenses, resulting in a 0.3% increase in pretax income.

Net income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables (EBITDAC) margin contracted 20 basis points year over year to 32.9%.

Financial Update

Brown & Brown exited the third quarter with cash and cash equivalents worth $448.9 million, down about 4.5% from year-end 2014.

Long-term debt was $1.12 billion as of Sep 30, 2015, reflecting a 3% improvement from $1.15 billion at the end of 2014.

Share Repurchase and Dividend Update

The $100 million accelerated share repurchase program that commenced in the first quarter got over in August.

Additionally, the board of directors declared a quarterly cash dividend of 12.55 cents per share, which translates into an 11.4% increase. This also marks the 22nd annual dividend hike. The new dividend will be paid on Nov 12 to shareholders on record as of Nov 4.

Zacks Rank and Performance of Some Other Insurers

Brown & Brown presently carries a Zacks Rank #3 (Hold). The bottom line at Progressive Corp. PGR , RLI Corp. RLI and The Travelers Companies Inc. TRV each has outperformed the respective Zacks Consensus Estimate in the reported quarter.

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RLI CORP (RLI): Free Stock Analysis Report

TRAVELERS COS (TRV): Free Stock Analysis Report

PROGRESSIVE COR (PGR): Free Stock Analysis Report

BROWN & BROWN (BRO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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