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Brown & Brown CEO Returns Back to Work

Posted on 26 Apr 2012

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J. Powell Brown, the Brown & Brown president and CEO who left the company more than 2 1/2 months ago because of health reasons, will return to work today, the company announced Tuesday.

Brown, 44, abruptly left the company on Jan. 29 because of an undisclosed health issue.

His father, J. Hyatt Brown, 74, the company's former longtime CEO and current chairman, replaced Powell temporarily.

Hyatt Brown said he expects the company's board of directors to reinstate his son during the annual shareholders meeting April 25 at The Shores Resort & Spa in Daytona Beach Shores.

Powell Brown became president of the company in January 2007 and assumed the additional responsibilities of CEO from his father in July 2009.

The elder Brown announced his son's return during a conference call with analysts discussing the Daytona Beach-based national insurance agency's first-quarter earnings. He said he has spoken with his son daily throughout his medical leave.

Brown & Brown executives on Tuesday continued to decline to elaborate on what health issue sidelined Powell Brown from his duties as CEO of the publicly traded company.

Cory Walker, the company's chief financial officer, said Brown & Brown's positive performance in the most recent quarter highlights the company's decentralization at the top.

"I know it's a curiosity, but he just took a temporary leave of absence, and it's over," Walker said. "It doesn't affect the business. You've got to have strong leadership, and the company performed as expected."

Brown & Brown has a mandate to grow and control expenses, and if employees don't comply they'll hear from management, said Meyer Shields, a stock analyst with Baltimore-based Stifel Nicolaus. But as long as employees get the job done, there won't be any problems from above, Shields said.

"Brown & Brown is unusually decentralized," Shields said. "Other companies have more bureaucracy."
While the company's common stock shares have been traded on the New York Stock Exchange since 1993, it doesn't have to disclose the reason for

Powell Brown's absence if company officials don't believe the business will be impacted in the future by whatever ailed Brown, Shields said.

The younger Brown won't be facing a gloomy financial situation for the company upon his return. Brown & Brown's earnings and revenues both increased this past quarter, compared with the same quarter a year ago.

Brown & Brown's 2012 first-quarter net profit increased 6.3 percent to $49.4 million, or 34 cents per share, up from $46.3 million, or 32 cents per share, during the same quarter a year ago.

Those numbers exceeded analysts' forecasts. The 16 analysts polled by Thomson Reuters expected, on average, for Brown & Brown to generate a first-quarter net profit of 33 cents per share, according to business wire service RTTNews.

First-quarter revenues for the company increased 15.4 percent, to nearly $302.5 million, up from $262.2 million for the same period a year ago.

Excluding acquisitions, Brown & Brown's revenues grew 0.9 percent. That's the first time the company has had positive organic growth in five years.

Hyatt Brown said he is unsure what the number would be this quarter.

"But it turned out to be positive, so that's good," said Brown, 74. "It looks like the economy is getting better; pricing is better, so it sort of is all good."

Shields said the executives sounded significantly more optimistic than they have been in the past about their organic growth, and its increase is a good sign. But he is concerned about the added expenses the company has used to help drive that organic growth.

A stabilizing economy and rising insurance premium costs helped contribute to Brown & Brown's positive quarter, the executives said.

Powell Brown has talked with Walker during the past few weeks to get a grasp of how things are going.

He'll join senior leaders during a retreat early next week at The Shores Resort & Spa, which is hosting Brown & Brown's annual shareholders meeting at 9 a.m. April 25.

Hyatt Brown expects his son to easily be reinstated as president and CEO.

That should be a formality, Hyatt said, and when that happens he will go back to his role as a non-executive chairman, where no employees report to him.

"So I work on all the fun things -- recruitment, solicitation of new accounts, mergers and acquistions," he said. "That sort of thing, as opposed to the nitty gritty on operations."

Walker said he's glad to have Powell back and that the company is hitting on nearly all cylinders, largely because of the things Powell Brown put in place before he left.