DAYTONA BEACH -- Brown & Brown Inc. has lost half of its Florida condominium insurance business since Jan. 1, largely because of aggressive price cutting by the state-run Citizens Property Insurance Corp., company executives said Tuesday.
J. Hyatt Brown, chairman of Brown & Brown, briefed investment analysts on why his company posted its weakest quarterly performance in more than a decade Monday.
"It's a wild and crazy place here in Florida," Brown said in a conference call with the brokerage researchers. ". . . It's the most unusual set of circumstances I've seen since I've been in the insurance business."
Although the company recorded an overall $9.7 million profit boost for the January-March period, and revenues grew by $28 million, all the extra money came from newly purchased agencies and a one-time investment gain. The company's core business -- the 100-plus offices that have been part of Brown & Brown for more than a year -- suffered a 1.8 percent decline in revenue.
Brown & Brown makes most of its money from business insurance, workers compensation and fringe benefit management. Homeowners insurance is just a small part of its volume.
The company's biggest setback during the quarter was a $4.4 million drop in revenue from Florida Insurance Underwriters, its condominium subsidiary.
Some of the revenue loss resulted from the company tightening its standards -- no longer renewing whole-building policies for older condo complexes that lack storm shutters or hurricane-resistant windows, Brown said.
But in cases where it's renewing coverage, the subsidiary is cutting condo premiums by about 20 percent to match price reductions being offered by Citizens.
In previous years, Citizens was forbidden to compete with private insurance companies, but the Legislature recently eased that restriction.
Source : http://www.news-journalonline.com/NewsJournalOnline/Business/Headlines/bizBIZ02042507.htm
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