Brown Reports Weak 4Q

Brown & Brown's BRO fourth-quarter results came in a little weaker than we expected, but we don't anticipate changing our fair value estimate. Internal revenues declined 4.7% in the quarter. Although this number is in line with our expectations for Brown, we have recently become slightly more optimistic given stronger internal growth at other insurance brokers. In the fourth quarter operating margins declined to 24.9% compared with 26.2% during the same period a year ago. Full-year 2008 operating margins were 29.4%. While these results were slightly worse than our forecast, and the firm's internal growth bears watching closely, Brown's margins remain the highest of the insurance brokers we cover.