Brown's 1Q Weak but Stabilizing

Insurance broker Brown & Brown BRO reported that internal revenue continued to decline on a year-over-year basis in the first quarter, consistent with marked continuing weakness in the Southeast economy, particularly in Florida, where Brown generates nearly one third of its total revenue. In addition, property and other insurance rates in Florida continued to decline significantly, and the firm cited still-weak economic conditions for its small to middle-market customer base generally around the country. We recently reduced our 2010 revenue growth assumptions for Brown in light of other evidence of continuing weakness in the Southeast as well as for smaller businesses, and we will retain our revenue projections and fair value estimate for now.