J. Powell Brown, Chief Executive Officer and President of Brown
& Brown, Inc. (NYSE: BRO), today announced that Brown &
Brown, Inc. has entered into an agreement to acquire the parent
company of Arrowhead General Insurance Agency, Inc. ("Arrowhead"),
a national insurance program manager and one of the largest
managing general agents (MGAs) in the property and casualty
insurance industry, from Spectrum Equity Investors, JMI Equity and
a management equityholder group. The transaction is expected to
close in January 2012 and is subject to customary closing
conditions, including regulatory approval. The transaction will be
a cash transaction and is not subject to financing conditions.
On Friday, December 16, 2011, J. Powell Brown, J. Scott Penny,
Regional President and Chief Acquisitions Officer, and Cory T.
Walker, Senior Vice President and Chief Financial Officer of Brown
& Brown, Inc., along with Arrowhead senior executive officers
Chris L. Walker, D. McDonald "Mac" Armstrong, and Stephen "Steve"
Bouker, will host an investor update conference call concerning
this transaction. You are invited to listen to the call, which will
be broadcast live on Brown & Brown's Internet site at 9:00 a.m.
ET. Simply log on to www.bbinsurance.com and click on "Investor
Relations" and then "Calendar of Events." A presentation containing
additional material regarding the transaction will also be
available at this link.
If you are unable to listen during the live webcast, audio from
the conference call will be available commencing two hours after
the end of the live broadcast until midnight (ET) on Sunday,
January 15, 2012. To access this replay, dial 1-888-203-1112 or
1-719-457-0820 and, when prompted, enter replay access code
4612161. Audio will also be archived on Brown & Brown's
website, www.bbinsurance.com, for 60 days after the live broadcast.
To access the website replay, go to "Investor Relations" and click
on "Calendar of Events." Windows Media Player software and at least
a 28.8 kbps connection to the Internet are required to access and
listen to this broadcast.
Arrowhead, together with its subsidiary, American Claims
Management, Inc. ("ACM"), a third-party claims administrator, and
its other subsidiaries, is expected to have total annual 2011 net
revenues of approximately $105 million.
As part of this transaction:
- Chris Walker, Chief Executive Officer of Arrowhead, will be
named a Regional Executive Vice President of Brown & Brown,
Inc. and will also continue to serve as CEO of Arrowhead.
- Mac Armstrong, Arrowhead's current Chief Financial Officer and
Chief Operating Officer, will be promoted to President of
Arrowhead.
- Steve Bouker has elected to focus his energy on leadership of
the Residential Earthquake Program, which he created for Arrowhead,
and will continue as President of that division.
- Lewis DeFuria will continue to serve as President of Special
Risk for Arrowhead.
- Stephen Boyd will continue to serve as President of Arrowhead's
Commercial Lines.
- Scott Marshall will continue to serve as President of ACM.
- Messrs. Walker, Armstrong, Bouker, DeFuria, Boyd, and Marshall
will also join Brown & Brown, Inc.'s Leadership Council.
Arrowhead and ACM will continue to operate in their current
locations in the greater San Diego, California area. Alexander
Anthony Insurance, LLC, an Arrowhead subsidiary, will continue to
operate in its Salt Lake City, Utah location.
Powell Brown stated, "This transaction brings many exciting
opportunities to Brown & Brown. We believe Arrowhead has built
a strong management team and an organization that enjoys an
excellent reputation within the industry. The addition of Arrowhead
to our Programs Division should significantly expand the breadth
and depth of our insurance carrier relationships and the products
and services we can offer our distribution partners." He also
noted, "It is expected that this transaction will increase our
total annual revenues and number of team members by approximately
ten percent."
Chris Walker said, "The Arrowhead team is thrilled to be joining
Brown & Brown. We believe the entrepreneurial, results-driven
culture of Brown & Brown is a perfect fit for Arrowhead. We
look forward to continuing our successful, profitable growth with
our producers and carrier partners with the enhanced resources and
talent of Brown & Brown at our side."
The purchase price is $395.0 million, subject to adjustments for
certain items such as Arrowhead's working capital, debt and net tax
operating losses. An additional payment of up to $5.0 million may
be made three years after closing, depending on Arrowhead's EBITDA
during the last year of that period.
Brown & Brown, Inc., through its subsidiaries, offers a
broad range of insurance and reinsurance products and related
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, Brown & Brown
is ranked by Business Insurance magazine as the United States'
seventh largest independent insurance intermediary. Brown &
Brown'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 associated with this acquisition, the expected total annual
2011 net revenues of Arrowhead, together with ACM and its other
subsidiaries, the appointments of those individuals previously
employed by Arrowhead to the above-described positions with Brown
& Brown after the transaction, the opportunities for Brown
& Brown expected to result from the transaction, the expansion,
expected to result from the transaction, of Brown & Brown's
breadth and depth of its insurance carrier relationships and the
products and services it can offer its distribution partners, and
the increase, expected to result from the transaction, of Brown
& Brown's total revenues and number of team members. These
statements are not historical facts, but instead represent only
Brown & Brown's current belief regarding future events, many of
which, by their nature, are inherently uncertain and outside of
Brown & Brown's control. It is possible that Brown &
Brown's actual results and financial condition may differ, possibly
materially, from the anticipated results and financial condition
indicated in these forward-looking statements. These risks and
uncertainties include, but are not limited to: Brown & Brown's
consummation and integration of the announced acquisition,
including adequately addressing any matters analyzed in the due
diligence process; Brown & Brown's ability to obtain the
financing that it is pursuing for the transaction as the Merger
Agreement does not include a financing condition to Brown &
Brown's obligation to close; Brown & Brown's ability to retain
the seller's customers following the transaction; the
post-transaction performance of the operations acquired from the
seller combined with Brown & Brown's operations; material
adverse changes in the business and financial condition of the
seller, the buyer, or both, and their respective customers;
material adverse changes in economic conditions in the markets
Brown & Brown serves and in the general economy; management's
decisions after the transaction regarding employment positions with
Brown & Brown; the inability of certain individuals to fill
certain positions with Brown & Brown after the transaction;
changes to management's strategy, including the future strategic
decisions regarding its insurance carrier relationships and/or the
products and services it offers its distribution partners; future
regulatory actions and conditions in the states in which Brown
& Brown conducts its business; competition from others in the
insurance agency, wholesale brokerage, insurance programs and
service business; the occurrence of adverse economic conditions; an
adverse regulatory climate; and a disaster in California, Florida,
Georgia, Indiana, Louisiana, Massachusetts, Michigan, New Jersey,
New York, Pennsylvania, Texas, Virginia and Washington because a
significant portion of business written by Brown & Brown is for
customers located in these states; and the inherent uncertainty in
making estimates, judgments, and assumptions in the preparation of
financial statements in accordance with generally accepted
accounting principles in the United States of America. Further
information concerning Brown & Brown and its business,
including factors that potentially could materially affect Brown
& Brown's financial results and condition, as well as its other
achievements, is contained in Brown & Brown's filings with the
Securities and Exchange Commission. All forward-looking statements
made herein are made only as of the date of this release, and Brown
& Brown 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 Brown & Brown
hereafter becomes aware.
Cory T. Walker Chief Financial Officer (386) 239-7250
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