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Hyatt BrownThank you very much, Nicole, and welcome everyone to our first quarter earnings call, and I’ll now turn it over to Corey for the financials. Cory Walker Thanks, Hyatt. Our net income for the first quarter of 2012 was $49.4 million, and that was up 6.8% over last year’s first quarter. Correspondingly, our net income per share for the quarter was $0.34 – that’s a 6.3% increase over the $0.32 that we earned in the first quarter of 2011. From the revenue standpoint, commissions and fees for the quarter increased 13.4% to $296.5 million. That’s up from the $261.5 million we earned in last year’s first quarter. Included in our press release is our normal table that summarizes our total growth rates and internal growth rates from our core commissions and fees, which excludes the profit sharing contingent commissions and now excludes the guaranteed supplemental commissions – GSCs – as we’ll discuss in a minute. We received $24.2 million of profit sharing contingent commissions, which represents a net decrease of approximately $4.7 million from the $28.9 million we received last year in the first quarter. Of this $4.7 million net decrease, roughly half of it was attributable to a lower profit sharing contingent commissions in the retail division, and the other half approximately from the program division that was really relating primarily to Proctor Financial and our public entity operation with lower profit sharing. Our best estimates of how much profit sharing contingent commissions we will receive for the remaining part of 2012 – and this is based on just what we received this quarter plus our discussion with the various carriers – is that we think we may receive between 14 and $17 million through the second through the fourth quarters. We think that for the second quarter, we’ll receive somewhere between 2 and $3 million, in the third quarter we should be around 10 to $11 million, and the fourth quarter we could get somewhere between 2 and $3 million.
Now additionally, we did accrue $2.6 million of guaranteed supplemental commissions – GSCs – in the first quarter of 2012, and that is $712,000 less than the $3.3 million that we accrued in the first quarter of 2011. Now this reduction is due to the fact that of the five carriers that pay us GSCs in lieu of profit sharing contingent commissions, two of them have reverted back to their profit sharing contingent commission contracts beginning this year in 2012. The cash from the GSC contracts that we accrue during the year is still received at approximately the same time period that we received the profit sharing contingent commission, which for these commissions would be in the first half of 2013. Therefore, there is no substantial change in the timing of the actual cash flows from the two programs. As you know, Brown & Brown would much rather have the standard profit sharing contingent commission arrangements as we believe that it more appropriately aligns the interests of the clients, the insurance carriers and us as the insurance agent in enhancing the safety and loss control systems. Since we believe the remaining carriers will eventually move back to the profit sharing contingent commission arrangements over the next few years, we will begin to treat the GSCs similar to the profit sharing contingent commissions with respect of excluding them from our internal growth rate calculation and just including them in the reconciliation below, so you’ll see with complete transparency the actual numbers of both the contingents and the GSCs each quarter.Now looking at the internal growth schedule, we had a positive internal growth rate of 0.9%. For the first quarter of 2012, our core commissions and fees increased 19.3%, and that is $43.6 million of net additional core commissions and fees; however, within that net number, we had $41.5 million of acquired revenues. That means that we had $2.1 million more commission and fee revenues on a same store sales basis. We had positive internal growth in three of our four divisions: the wholesale brokerage division, the national programs, and the services division. Our national program division had the best negative internal growth rate they’ve had in many, many quarters, and that was only a negative $1 million or negative 0.7%. Hy will talk about the activities in each of these segments in a minute. Read the rest of this transcript for free on seekingalpha.com