Brown & Brown to borrow $250m liquidity as it braces for COVID-19 hit
Broker Brown & Brown will borrow nearly $250 million on its existing revolving line of credit to pay for a previously announced acquisition, as well as for additional liquidity to strengthen its financial position and balance sheet impacted by the COVID-19 pandemic.
After assessing the projected impact of COVID-19, the broker has lowered its estimates for the revenues it expects to earn from existing employee benefits and workers’ compensation policies, resulting in a reduction to revenue of $10.5 million and a corresponding $5.8 million reduction to income before income taxes in the first quarter of 2020.
As per the unaudited financial results for Q1, Brown & Brown reported a 12.8 percent increase in its revenue to $698.5 million, compared with $619.3 million in the prior year. The commissions and fees increased by 12.8 percent.
The company's organic revenue increased by 5.6 percent, and the net income rose to $152.4 million, 33.8 percent up from the first quarter of the prior year.
The company stated that the COVID-19 effect on the economy is expected to "negatively impact" the future performance of several businesses it acquired in the last three years.
J. Powell Brown, president and chief executive officer of Brown & Brown, said: "Our financial performance for first quarter was outstanding and I would like to thank all of our teammates for making that possible. Our focus is on the safety and health of our teammates and their families and serving our customers during these unprecedented times. We believe our long-term focus will be to the of benefit our teammates, customers, shareholders, and carrier partners.”
