Brown & Brown

One of my favorite insurance stocks, Brown & Brown, was recently upgraded by Legg Mason. I like the stock anyway, but I think it’s especially good right now.

The company is extremely well run and has never had a lost in nearly 70 years of business. Operating margins are expanding, however legal expenses are weighing them down. Despite rising profits, the stock has been in a trading range for most of the past year.

The company had two offices in New Orleans. Obviously, they expect too many claims and Brown said that the first estimates will be probably be low. He also said that it probably won’t impact rates nationwide, but it will have a major impact in the south. In fact, Brown said that there will be big problems in Florida in November and December due to a lack of capacity. Firms will simply not underwrite policies. If this is true, it will certainly impact the real estate market. Officials now estimate that the damages of Katrina at $125 billion.

You can listen to J. Hyatt Brown at Keefe, Bruyette and Woods insurance conference. He’s a bit of a character. I could see him in talk radio. (Brown was actually speaker of Florida State House.) He said that his goal is to grow EPS by 15% ad infinitum. I was surprised to hear him say positive things about Sarbanes-Oxley.

Here’s a transcript of an interview from a few years ago.

Posted by on September 9th, 2005 at 12:50 pm


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