Brown & Brown (BRO) is an insurance brokerage. The company sells insurance policies to commercial, professional, and individual customers. Brown & Brown was founded in 1939 and has grown to reach a market cap of $4.6 billion.
Company name is a member of the Dividend Achievers Index. Brown & Brown has increased its dividend payments each year since 1993. The Dividend Achievers Index is comprised of businesses with 10 or more consecutive years of dividend payments. You can see the current list of all 238 members of the Dividend Achievers Index here. The image below shows the company’s dividend growth since 1993.
This article will look at Brown & Brown’s current events, competitive advantage, and future growth prospects. The company will be examined using The 8 Rules of Dividend Investing. The 8 Rules of Dividend Investing take a systematic approach to building a high quality dividend growth portfolio.
Business Overview
Brown & Brown operates in 4 segments: retail, national programs, wholesale brokerage, and services. The percentage of total revenue generated for Brown & Brown by each segment in the company’s latest quarter is listed below:
- Retail percent of total revenue: 53%
- National programs percent of total revenue: 25%
- Wholesale brokerage percent of total revenue: 12%
- Services percent of total revenue: 9%
The retail segment is the company’s largest, responsible for over half of the company’s revenue. The retail segment includes 3,700 retail professionals operating out of 100 locations in 34 states, Bermuda, and the Caiman Islands. The retail segment sells policies to small and mid-sized businesses and individuals.
The national programs segment is the company’s second largest. The segment partners with insurance carriers and handles underwriting, policy issuance, billing, and in some cases claim handling. The segment offers insurance policies targeted toward specific niche industries, trade groups, and professions.
The wholesale brokerage segment services customers that fall outside of the ‘normal’ types of insurance. Brown & Brown has 330 wholesale brokers and is one of the 10 largest wholesalers in the world.
Brown & Brown’s service segment offers specific services individuals, businesses, and insurance carriers. Services offered include: claims handling and management, social security advocacy, Medicare enrollment support, and Medicare compliance. The services segment is Brown & Brown’s smallest, responsible for just 9% of total revenue in the company’s first quarter of fiscal 2015.
Competitive Advantage
Brown & Brown operates in the insurance industry. The insurance industry has unique benefits. Insurance is one of the slowest changing industries imaginable. Potential customers will always have risks that need to be covered. Insurers will be there to profitably cover these risks. Advances in technology do little to change the core aspects of insurance.
