Brown & Brown (BRO) 8-K Results of Operations and Financial Condition

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News Release

February 3, 2014

Cory T. Walker

Chief Financial Officer

(386) 239-7250

BROWN & BROWN, INC. ANNOUNCES

COMPANY RECORD FOURTH-QUARTER EARNINGS OF $47.2 MILLION AND 2013 NET INCOME GROWTH OF 18.0%

(Daytona Beach and Tampa, Florida) . . . Brown & Brown, Inc. (NYSE:BRO) today announced its preliminary, unaudited financial results for the fourth quarter of 2013.

Net income for the fourth quarter of 2013 was $47,225,000, or $0.32 per share, compared with $42,637,000, or $0.29 per share for the same quarter of 2012, an increase of 10.8%. Total revenue for the fourth quarter was $343,165,000, compared with 2012 fourth-quarter revenue of $302,830,000, an increase of 13.3%.

Total revenue for the twelve months ended December 31, 2013 was $1,363,279,000, compared with total revenue for the same period of 2012 of $1,200,032,000, an increase of 13.6%. Net income for the twelve-month period ended December 31, 2013 was $217,112,000, or $1.48 per share, compared with $184,045,000, or $1.26 per share for the same period of 2012, an increase of 18.0%.

J. Powell Brown, President and Chief Executive Officer of the Company, noted, “We are very pleased that we grew our net income 18.0% in 2013. Our Colonial Claims subsidiary, which adjusts flood claims, had core commissions and fees of $1.3 million in the fourth quarter of 2013, but had $7.4 million of core commissions and fees in the fourth quarter of 2012 as a result of the significant flood claims attributable to SuperStorm Sandy. Excluding the impact of Colonial Claims, our core organic commissions and fees in the fourth quarter of 2013 grew by 4.5%. In addition, we continued to improve certain operating profit margins in the fourth quarter.”

Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance and reinsurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third-party administration, and other services. Serving business, public entity, individual, trade and professional association clients nationwide, the Company is ranked byBusiness Insurance magazine as the United States’ seventh largest independent insurance intermediary. The Company’s Web address is www.bbinsurance.com.

This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to the Company's anticipated financial results forthe fourth quarter and full year of 2013. These statements are not historical facts, but instead represent only the Company’s current belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results, financial condition and achievements may differ, possibly materially, from the anticipated results, financial condition and achievements contemplated by these forward-looking statements.These risks and uncertainties include, but are not limited to, the Company's determination as it finalizes its financial results forthe fourth quarter and full year of 2013that its financial results differ from the current preliminary unaudited numbers set forth herein, other factors that the Company may not have currently identified or quantified, and other risks, relevant factors and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, andthe Company’sother filings with the Securities and Exchange Commission. All forward-looking statements made herein are made only as of the date of this release, and the Company does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which the Company hereafter becomes aware.

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Brown & Brown, Inc.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

	For the Three Months Ended December 31,				For the Twelve Months Ended December 31,
	2013		2012		2013		2012
REVENUES
Commissions and fees	$	339,364	$	300,296	$	1,355,503	$	1,189,081
Investment income		128		236		638		797
Other income, net		3,673		2,298		7,138		10,154
Total revenues		343,165		302,830		1,363,279		1,200,032
EXPENSES
Employee compensation and benefits		179,460		158,467		683,000		608,506
Non-cash stock-based compensation		7,699		4,472		22,603		15,865
Other operating expenses		51,839		44,995		195,677		174,389
Amortization		17,792		16,123		67,932		63,573
Depreciation		4,589		3,990		17,485		15,373
Interest		4,324		4,004		16,440		16,097
Change in estimated acquisition earn-out     payables		1,020		1,552		2,533		1,418
Total expenses		266,723		233,603		1,005,670		895,221
Income before income taxes		76,442		69,227		357,609		304,811
Income taxes		29,217		26,590		140,497		120,766
Net income	$	47,225	$	42,637	$	217,112	$	184,045
Net income per share:
Basic	$	0.32	$	0.30	$	1.50	$	1.28
Diluted	$	0.32	$	0.29	$	1.48	$	1.26
Weighted average number of shares outstanding:
Basic		141,355		139,681		141,033		139,364
Diluted		143,036		142,314		142,624		142,010
Dividends declared per share	$	0.100	$	0.090	$	0.3700	$	0.3450

Brown & Brown, Inc.

INTERNAL GROWTH SCHEDULE

Core Organic Commissions and Fees⁽¹⁾

Three Months Ended December 31, 2013

(in thousands)

(unaudited)

		Quarter Ended 12/31/13		Quarter Ended 12/31/12		Total Net Change		Total Net Growth %			Less Acquisition Revenues		Internal Net Growth $		Internal Net Growth %
Retail(2)	$	184,996	$	151,041	$	33,955		22.5	%	$	33,625	$	330		0.2	%
National Programs		73,528		64,090		9,438		14.7	%		3,094		6,344		9.9	%
Wholesale Brokerage		46,238		40,299		5,939		14.7	%		—		5,939		14.7	%
Services		28,273		34,398		(6,125	)	-17.8	%		—		(6,125	)	-17.8	%
Total Core Commissions and Fees(1)	$	333,035	$	289,828	$	43,207		14.9	%	$	36,719	$	6,488		2.2	%

Reconciliation of Internal Growth Schedule

to Total Commissions and Fees

Included in the Consolidated Statements of Income

For the Three Months Ended December 31, 2013 and 2012

(in thousands)

(unaudited)

		Quarter Ended 12/31/13		Quarter Ended 12/31/12
Total core commissions and fees(1)	$	333,035	$	289,828
Profit-sharing contingent   commissions		4,382		6,342
Guaranteed supplemental     commissions		1,947		1,937
Divested business		—		2,189
Total commissions & fees	$	339,364	$	300,296

(1) Total core commissions and fees are our total commissions and fees less (i) profit-sharing contingent

commissions (revenues derived from special revenue-sharing commissions from insurance companies based upon the volume and the growth and/or profitability of the business placed with such companies during the prior year), (ii) guaranteed supplemental commissions (GSC) (revenues derived from special revenue-sharing commissions from insurance companies based solely upon the volume of the business placed with such companies during the current year),and (iii) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).

(2) The Retail segment includes commissions and fees reported in the “Other” column of the Segment Information, which includes corporate and consolidation items.

Brown & Brown, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	December 31,		December 31,
ASSETS	2013		2012
Current assets:
Cash and cash equivalents	$	202,952	$	219,821
Restricted cash and investments		250,009		164,564
Short-term investments		10,624		8,183
Premiums, commissions and fees receivable		395,915		302,725
Deferred income taxes		29,276		24,408
Other current assets		39,260		39,811
Total current assets		928,036		759,512
Fixed assets, net		74,733		74,337
Goodwill		2,006,173		1,711,514
Amortizable intangible assets, net		618,888		566,538
Other assets		21,678		16,157
Total assets	$	3,649,508	$	3,128,058
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Premiums payable to insurance companies	$	534,360	$	406,704
Premium deposits and credits due customers		80,959		32,867
Accounts payable		34,158		48,524
Accrued expenses and other liabilities		157,400		79,593
Current portion of long-term debt		100,000		93
Total current liabilities		906,877		567,781
Long-term debt		380,000		450,000
Deferred income taxes, net		291,704		237,630
Other liabilities		63,786		65,314
Shareholders’ equity:
Common stock, par value $0.10 per share;    authorized 280,000 shares; issued and outstanding 145,419 at 2013 and 143,878 at 2012		14,542		14,388
Additional paid-in capital		371,960		335,872
Retained earnings		1,620,639		1,457,073
Total shareholders’ equity		2,007,141		1,807,333
Total liabilities and shareholders’ equity	$	3,649,508	$	3,128,058