Brown & Brown Chief Executive Officer takes leave
Jan 31, 2012
The following article was published in the Daytona Beach News-Journal on January 31, 2012:
Brown & Brown CEO takes leave
By Tom Knox
Powell Brown, the president and chief executive officer at Brown & Brown Inc., has taken a temporary leave of absence for health reasons, the company announced Monday morning.
Brown’s father, Hyatt Brown, the company’s chairman, has agreed to fill in as interim CEO and president.
Hyatt Brown, 74, was the company’s CEO from 1961 until his semi-retirement in 2009. He has been chairman since 1994.
The leave of absence for Powell Brown, 44, took effect Sunday, the company announced in a filing with the Securities and Exchange Commission.
Hyatt Brown, who spoke with The News-Journal on Monday, declined to offer details regarding his son’s sudden decision.
“We fully expect Powell to be back in a reasonable period of time,” he said.
Hyatt Brown declined to specify what would constitute a “reasonable period of time.”
Colleagues of the Browns and stock analysts who cover Brown & Brown said the company’s announcement was unexpected, but added that Hyatt Brown is the best person to fill in during his son’s absence.
Powell Brown became president of the company in January 2007 and assumed the additional responsibilities of CEO from his father in July 2009.
Hyatt Brown bought Brown & Brown from his father, the company’s co-founder, in 1961.
As CEO, Hyatt Brown guided Brown & Brown’s transformation from a private, independently owned local insurance agency with one office that employed just a handful of employees into a national company with offices in multiple states.
Brown & Brown in 1993 became a public company under Hyatt Brown’s watch — not via the traditional route of an initial public offering, but through its merger with Poe & Associates, a Tampa insurancy agency that had already gone public.
Under Powell Brown’s leadership, Brown & Brown has continued to grow via an aggressive acquisition strategy. In December, it made its biggest acquisition to date: its $395 million cash purchase of San Diego-based Arrowhead General Insurance Agency.
Today, Brown & Brown is the nation’s seventh-largest independent insurance agency, with 231 offices in 36 states, as well as one in England, and more than 6,000 employees.
Powell Brown’s age was one of the plusses the company referenced when it announced his promotion to CEO, said Meyer Shields, a stock analyst with Baltimore-based Stifel Nicolaus.
Brown & Brown envisioned the younger Brown as someone who could lead the company for decades to come, Shields said.
Shields said Monday’s announcement was “absolutely a little surprising.”
He said even when Powell Brown returns, the company might not detail the specificity of the health problem. “It’s a tricky thing to balance privacy concerns with shareholders wanting to know who’s going to run the company as soon as they can,” Shields said.
Keith Walsh, a New York-based stock analyst with Citi Investment Research, wrote in a note to clients Monday morning that the Daytona Beach company remains in good hands.
“The ability to have Mr. Hyatt Brown step in on an interim basis means the company should not miss a beat during the transition and we expect minimal disruptions in the day-to-day operations and the execution of the company’s long-term strategic objectives,” Walsh wrote.
Filling in as interim CEO won’t be too big of a stretch for Hyatt Brown, his colleagues say.
Bill McMunn, the recently retired CEO of Consolidated-Tomoka and a former member of the CEO Business Alliance, whose board members include Hyatt Brown, said Hyatt Brown has been involved in many of Brown & Brown’s acquisitions since beginning his so-called semi-retirement.
Hyatt Brown said he still works 40 hours a week, meeting with potential acquisition targets as well as other tasks. He still maintains an office at the company’s headquarters.
“Really, this is kind of energizing for me, and so we go forward,” he said. “I’m doing what I used to do, so it’s like getting back in the saddle for a little while but knowing I’m not going to be in the saddle for a long time.”
Brown & Brown officials are set to ring the opening bell — for the first time — at the New York Stock Exchange next Monday, the same day it will host its fourth-quarter 2011 earnings call with stock analysts.
It’s a potentially once-in-a-lifetime event for a company of Brown & Brown’s size. Twelve or 13 of Brown & Brown’s senior executives will be there, but Powell Brown will not be among them, Hyatt Brown confirmed.
Powell Brown did not return a message seeking comment.
Brown & Brown’s common stock shares (NYSE: BRO) ended Monday’s trading session at $22.83, down 23 cents on the day.