BROWN & BROWN INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
Or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______________ to ______________

COMMISSION FILE NUMBER 0-7201.

BROWN & BROWN, INC.
(Exact name of Registrant as specified in its charter)

FLORIDA 59-0864469
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)

220 SOUTH RIDGEWOOD AVENUE, DAYTONA BEACH, FL 32114
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (386) 252-9601

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which Registered
------------------- -----------------------------------------

COMMON STOCK, $0.10 PAR VALUE NEW YORK STOCK EXCHANGE
RIGHTS TO PURCHASE COMMON STOCK NEW YORK STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant (i.e., other than directors, officers, or holders of more than 5%
of the Registrant's common stock) computed by reference to the last reported
price at which the stock was sold on February 13, 2002, was $1,764,196.

THE NUMBER OF SHARES OF THE REGISTRANT'S COMMON STOCK, $.10 PAR VALUE,
OUTSTANDING AS OF FEBRUARY 11, 2002 WAS 63,333,912.

BROWN & BROWN, INC.

FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2001

PART I

ITEM 1. BUSINESS

GENERAL

We are the largest insurance agency and brokerage headquartered in the
southeastern United States and the eighth largest in the country, based on 2000
total revenues. The name of the company following the 1993 combination of Brown
& Brown, Inc., which commenced doing business in 1939, and Poe & Associates,
Inc., which commenced doing business in 1959, was Poe & Brown, Inc. The name was
changed to Brown & Brown, Inc. in 1999.

We market and sell to our clients insurance products and services, primarily in
the property and casualty area. As an agent and broker, we do not assume
underwriting risks. Instead, we provide our clients with quality insurance
contracts, as well as other targeted, customized risk management products.

We are compensated for our services primarily by commissions paid by insurance
companies and fees paid by clients for certain services. The commission is
usually a percentage of the premium paid by the insured. Commission rates
generally depend upon the type of insurance, the particular insurance company
and the nature of the services provided by us. In some cases, a commission is
shared with other agents or brokers who have acted jointly with us in a
transaction. We may also receive from an insurance company a contingent
commission that is generally based on the profitability and volume of business
placed with it by us over a given period of time. Fees are principally generated
by our Services Division, which offers third-party administration, benefit
consulting and managed healthcare services primarily in the workers'
compensation and employee benefit markets. The amount of our income from
commissions and fees is a function of, among other factors, continued new
business production, retention of existing clients, acquisitions and
fluctuations in insurance premium rates and insurable exposure units.

Premium pricing within the property and casualty insurance underwriting industry
has historically been cyclical, displaying a high degree of volatility based on
prevailing economic and competitive conditions. From the mid-1980s through 1999,
the property and casualty insurance industry experienced a "soft market" during
which the underwriting capacity of insurance companies expanded, stimulating an
increase in competition and a decrease in premium rates and related commissions.
The effect of this softness in rates on our revenues was somewhat offset by our
acquisitions and new business production. As a result of increasing "loss
ratios" (the comparison of incurred losses plus adjustment expense against
earned premiums) of insurance companies through 1999, there was a general
increase in premium rates beginning in the first quarter of 2000 and continuing
through the fourth quarter of 2001. Although premium increases vary by line of
business, geographical region, insurance company and specific underwriting
factors, we believe this was the first time since 1987 that we operated in an
environment of increased premiums for eight consecutive quarters. Additionally,
in light of the events of September 11, 2001, insurance companies, as well as
reinsurers, may extend this trend of increasing premium rates. While we cannot
predict the timing or extent of premium pricing changes as a result of market
fluctuations or their effect on our operations in the future, we believe that
premium rates will continue to increase through at least 2002.

Beginning in 1993 through 2001, we acquired 86 insurance agency operations
(excluding acquired books of business) that had aggregate estimated annual
revenues of $240.0 million for the 12 calendar months immediately following the
date of acquisition. Of these, 26 operations were acquired during 2001, with
aggregate estimated annual revenues of $148.0 million for the 12 calendar months
immediately following the date of acquisition, including our asset acquisition
of the insurance agency business-related assets of Riedman Corporation,
effective January 1, 2001,

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with estimated annual revenues of $54.0 million for the 12 calendar months
immediately following the date of acquisition. The large number of acquisitions
in 2001 was largely due to the then-anticipated elimination of
pooling-of-interests accounting for stock acquisitions, which encouraged the
shareholders of certain agencies, especially "C" corporations, to accelerate the
sale of their stock to us. As of December 31, 2000, our activities were
conducted in 39 locations in 12 states; however, with the acquisitions
consummated during 2001, we had 140 locations in 28 states:

Florida......................... 45 Connecticut..................... 2
New York........................ 20 Michigan........................ 2
Virginia........................ 8 New Jersey...................... 2
Louisiana....................... 7 Pennsylvania.................... 2
Minnesota....................... 6 Wisconsin....................... 2
Colorado........................ 5 Indiana......................... 1
North Dakota.................... 5 Iowa............................ 1
South Carolina.................. 5 Missouri........................ 1
Georgia......................... 4 Nevada.......................... 1
Texas........................... 4 North Carolina.................. 1
Arizona......................... 3 Ohio............................ 1
California...................... 3 Oklahoma........................ 1
New Mexico...................... 3 Tennessee....................... 1
Washington...................... 3 Wyoming......................... 1

Our business is divided into four segments: (1) the Retail Division; (2) the
National Programs Division; (3) the Services Division; and (4) the Brokerage
Division. The Retail Division provides a broad range of insurance products and
services to commercial, governmental, professional and individual clients. The
National Programs Division is comprised of two units: Professional Programs,
which provides professional liability and related package products for certain
professionals; and Special Programs, which markets targeted products and
services designated for specific industries, trade groups and market niches.
These programs and products are marketed and sold primarily through independent
agencies and agents across the United States. For these programs, we receive an
"override commission," which is a commission based upon the commissions
generated by these independent agencies. The Services Division provides
insurance-related services, including third-party administration, consulting for
the workers' compensation and employee benefit self-insurance markets and
managed healthcare services. The Brokerage Division markets and sells excess and
surplus commercial insurance and reinsurance, primarily through independent
agents and brokers. In 2001, we generated commission and fee revenues of $359.7
million.

The following table sets forth a summary of (1) the commission and fee revenues
generated by each of our operating segments for 2001, 2000 and 1999, and (2) the
percentage of our total commission and fee revenues represented by each segment
for each such period:

(1) Numbers and percentages have been restated to give effect to acquisitions
accounted for under the pooling-of-interests method of accounting. In addition,
we made acquisitions accounted for under the purchase method of accounting
during those periods, which affect the comparability of results. See
"Management's discussion and analysis of financial condition and results of
operations: General" and notes 2 and 3 of the notes to our consolidated
financial statements for a description of our acquisitions.

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DIVISIONS

RETAIL DIVISION

As of December 31, 2001, our Retail Division operated in 26 states and employed
approximately 2,320 persons. Our retail insurance agency business provides a
broad range of income products and sources to commercial, governmental,
professional and individual clients. The categories of insurance principally
sold by us are: Property insurance against physical damage to property and
resultant interruption of business or extra expense caused by fire, windstorm or
other perils; and Casualty insurance relating to legal liabilities, workers'
compensation, commercial and private passenger automobile coverages, and
fidelity and surety insurance. We also sell and service group and individual
life, accident, disability, health, hospitalization, medical and dental
insurance.

No material part of our retail business is attributable to a single client or a
few clients. During 2001, commissions and fees from our largest single Retail
Division client represented less than one percent of the Retail Division's total
commission and fee revenues.

In connection with the selling and marketing of insurance coverages, we provide
a broad range of related services to our clients, such as risk management
surveys and analysis, consultation in connection with placing insurance
coverages and claims processing. We believe these services are important factors
in securing and retaining clients.

NATIONAL PROGRAMS DIVISION

As of December 31, 2001, our National Programs Division employed approximately
200 persons. Our National Programs Division consists of two units: Professional
Programs and Special Programs.

Professional Programs. Professional Programs provides professional liability
and related package products for certain professionals delivered through
nationwide networks of independent agents. Professional Programs tailors
insurance products to the needs of a particular professional group, negotiates
policy forms, coverages and commission rates with an insurance company and, in
certain cases, secures the formal or informal endorsement of the product by a
professional association. The professional groups serviced by the National
Programs Division include dentists, lawyers, physicians, optometrists and
opticians. These programs are marketed and sold primarily through a national
network of independent agencies. We also market a variety of these products
through certain of our retail offices. Under agency agreements with the
insurance companies that underwrite these programs, we often have authority to
bind coverages, subject to established guidelines, to bill and collect premiums
and, in some cases, to process claims.

Below are brief descriptions of the programs offered to these major professional
groups:

- - Dentists: The Professional Protector Plan(R) is a package insurance policy
that provides comprehensive coverage for dentists, dental schools and dental
students, including practice protection and professional liability. This
program, initiated in 1969, is endorsed by a number of state and local dental
societies and is offered in 49 states, the District of Columbia, the U.S. Virgin
Islands and Puerto Rico. We believe that this program presently insures
approximately 20% of the eligible practicing dentists within our marketing
territories.

- - Lawyers: We began marketing lawyers' professional liability insurance in
1973, and the national Lawyer's Protector Plan(R) was introduced in 1983. This
program is presently offered in 47 states, the District of Columbia and Puerto
Rico.

- - Physicians: We market professional liability insurance for physicians,
surgeons and other health care providers through a program known as the
Physicians Protector Plan(R). This program, initiated in 1980, is currently
offered in five states.

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- - Optometrists and Opticians: The Optometric Protector Plan(R) ("OPP(R)") and
the Optical Services Protector Plan(R) ("OSPP(R)") were created in 1973 and
1987, respectively, to provide optometrists and opticians with a package of
practice and professional liability coverage. These programs insure optometrists
and opticians in all 50 states and Puerto Rico.

Special Programs. This unit markets targeted products and services designated
for specific industries, trade groups and market niches. Special Programs
consists of the following:

- - Florida Intracoastal Underwriters, Limited Company ("FIU") is a managing
general agency that specializes in providing insurance coverage for coastal and
inland high-value condominiums and apartments. FIU has developed a specialty
reinsurance facility to support the underwriting activities associated with
these risks. One of our subsidiaries has a 75% ownership interest in FIU.

- - Parcel Insurance Plan(R) ("PIP(R)") is a specialty insurance agency providing
insurance coverage to commercial and private shippers for small packages and
parcels with insured values of less than $25,000 each.

- - Program Management Services is a managing general agent that offers unique
property and casualty insurance products targeted at governmental entities on a
national basis.

- - Apollo Financial Corporation offers targeted insurance products to social
services organizations.

- - Commercial Programs serves the insurance needs of certain specialty
trade/industry groups. Programs offered include:

- Manufacturers Protector Plan(R). Introduced in 1997, this program
provides specialized coverages for manufacturers, with an emphasis on
selected niche markets.

- Wholesalers & Distributors Preferred Program(R). Introduced in 1997, this
program provides property and casualty protection for businesses principally
engaged in the wholesale-distribution industry.

- Railroad Protector Plan(R). Also introduced in 1997, this program is
designed for contractors, manufacturers and other entities that service the
needs of the railroad industry.

- Environmental Protector Plan(R). This program was introduced in 1998 and
is currently offered in 36 states. It provides a variety of specialized
environmental coverages, with an emphasis on municipal Mosquito Control and
Water Control Districts.

- Food Processors Preferred Program(SM). This program, introduced in 1998,
provides property and casualty insurance protection for businesses involved
in the handling and processing of various foods.

During 2001, we discontinued the following Commercial Programs due to loss of
underwriting insurance companies: Towing Operators Protector Plan(R); Automobile
Dealers Protector Plan(R); Automobile Transporters Protector Plan(R); Automotive
Aftermarket Protector Plan(R); High-Tech Target Program(SM) and Assisted Living
Facilities Protector Plan(R). We are currently evaluating the continued
viability of these and certain other programs.

SERVICES DIVISION

At December 31, 2001, the Services Division employed approximately 325 persons
and consisted of subsidiaries that provide the following services: (1)
insurance-related services as a third-party administrator and consultant for
employee health and welfare benefit plans; (2) insurance-related services
providing comprehensive risk management and third-party administration to
insurance

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entities and self-funded or fully-insured workers' compensation and liability
plans; and (3) certified managed care and utilization management services for
both insurance programs and self-funded plans.

In connection with its employee benefit plan administrative services, the
Services Division provides third-party administration and consulting related to
benefit plan design and costing, arrangement for the placement of stop-loss
insurance and other employee benefit coverages, and settlement of claims.
Services Division units also provide utilization management services such as
pre-admission review, concurrent/retrospective review, pre-treatment review of
certain non-hospital treatment plans and medical and psychiatric case
management. In addition to the administration of self-funded health care plans,
this unit offers administration of flexible benefit plans, including plan
design, employee communication, enrollment and reporting.

The Services Division's workers' compensation and liability third-party
administration include claim administration, access to major reinsurance
markets, cost containment consulting, services for secondary disability and
subrogation recoveries and risk management services such as loss control. In
2001, our largest workers' compensation contract represented approximately 38%
of our workers' compensation third-party administration revenues, or
approximately 1.6% of our total commission and fee revenues. In addition, the
Services Division provides managed care services certified by the American
Accreditation Health Care Commission, which include medical networks, case
management and utilization review services.

BROKERAGE DIVISION

The Brokerage Division markets excess and surplus commercial insurance and
reinsurance to retail agencies primarily in the southeastern United States, as
well as throughout the United States, including through our Retail Division. The
Brokerage Division represents various U.S. and U.K. surplus lines companies and
is also a Lloyd's of London correspondent. In addition to surplus lines
insurance companies, the Brokerage Division represents admitted insurance
companies for smaller agencies that do not have access to large insurance
company representation. Excess and surplus products include commercial
automobile, garage, restaurant, builder's risk and inland marine lines.
Difficult-to-insure general liability and products liability coverages are a
specialty, as is excess workers' compensation coverage. Retail agency business
is solicited through mailings and direct contact with retail agency
representatives. At December 31, 2001, the Brokerage Division employed
approximately 80 persons.

In January 2002, the operations of Champion Underwriters, Inc., a subsidiary
based in Ft. Lauderdale, Florida that specializes in the marketing and selling
of excess and surplus commercial insurance, were combined with Peachtree Special
Risk Brokers, LLC, an affiliate headquartered in Atlanta Georgia that
specializes in the marketing and selling of excess and surplus lines of property
insurance.

In September 2001, we established Brown & Brown Re, Inc., a subsidiary based in
Stamford, Connecticut that specializes in treaty and facultative reinsurance
brokerage services.

EMPLOYEES

At December 31, 2001, we had approximately 3,000 employees. We have contracts
with our sales employees and certain other employees that include provisions
restricting their right to solicit our clients and employees after termination
of employment with us. The enforceability of such contracts varies from state to
state depending upon state statutes, judicial decisions and factual
circumstances. The majority of these contracts are terminable by either party;
however, the

6

agreements not to solicit our clients and employees generally continue for a
period of two or three years after employment termination.

None of our employees is represented by a labor union, and we consider our
relations with our employees to be satisfactory.

COMPETITION

The insurance agency and brokerage business is highly competitive, and numerous
firms actively compete with us for clients and insurance companies. Although we
are the largest insurance agency and brokerage headquartered in the southeastern
United States and were ranked in 2001, based on 2000 revenues, as the nation's
eighth largest by Business Insurance magazine, a number of firms with
substantially greater resources and market presence compete with us in the
southeastern United States and elsewhere. This situation is particularly
pronounced outside of Florida. Competition in the insurance business is largely
based on innovation, quality of service and price.

A number of insurance companies are engaged in the direct sale of insurance,
primarily to individuals, and do not pay commissions to third-party agents and
brokers. In addition, the Internet continues to be a source for direct placement
of personal lines business. To date, such direct writing has had relatively
little effect on our operations, primarily because our Retail Division is
commercially oriented.

In addition, to the extent that the Gramm-Leach-Bliley Financial Services
Modernization Act of 1999 and regulations recently enacted thereunder permit
banks, securities firms and insurance companies to affiliate, the financial
services industry may experience further consolidation, which in turn could
result in increased competition from diversified financial institutions,
including competition for acquisition candidates.

REGULATION, LICENSING AND AGENCY CONTRACTS

We or our designated employees must be licensed to act as agents by state
regulatory authorities in the states in which we conduct business. Regulations
and licensing laws vary in individual states and are often complex.

The applicable licensing laws and regulations in all states are subject to
amendment or reinterpretation by state regulatory authorities, and such
authorities are vested in most cases with relatively broad discretion as to the
granting, revocation, suspension and renewal of licenses. The possibility exists
that we or our employees could be excluded or temporarily suspended from
carrying on some or all of our activities in, or otherwise subjected to
penalties by, a particular state.

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ITEM 2. PROPERTIES

We lease our executive offices, which are located at 220 South Ridgewood Avenue,
Daytona Beach, Florida 32114, and 401 East Jackson Street, Suite 1700, Tampa,
Florida 33602. We lease offices at every location with the exception of our
Ocala, Florida; Opelousas and Ruston, Louisiana; Washington, New Jersey;
Dansville, Hornell and Jamestown New York; and Grand Forks, North Dakota
offices, where we own the buildings. In addition, we own buildings in
Loreauville and Scott, Louisiana, and Penn Yan, New York, where we no longer
have offices, as well as a parcel of undeveloped property outside of Lafayette,
Louisiana. There is a mortgage on the Ocala, Florida building with an
outstanding balance as of December 31, 2001 of $0.6 million. There is also a
mortgage on the Grand Forks, North Dakota building with an outstanding balance
as of December 31, 2001 of $0.1 million. There are no outstanding mortgages on
our other owned properties. Set forth below is information relating to our
office locations as of December 31, 2001, summarized by business segment:

Retail Division Office Locations:

- - Arizona: Phoenix, Prescott, Tucson

- - California: Novato, Oakland, Thousand Oaks

- - Colorado: Colorado Springs, Denver, Ft. Collins, Longmont, Steamboat Springs

- - Connecticut: Newington

- - Florida: Brooksville, Clearwater, Daytona Beach, Ft. Lauderdale, Ft. Myers,
Ft. Pierce, Jacksonville, Leesburg, Melbourne, Miami Lakes, Monticello, Naples,
Ocala, Orlando, Panama City, Pensacola, Perry, Port Charlotte, Sarasota, St.
Petersburg, Tallahassee, Tampa, Titusville, West Palm Beach, Winter Haven

- - Georgia: Atlanta, Canton, Rome

- - Indiana: Indianapolis

- - Iowa: Des Moines

- - Louisiana: Abbeville, Baton Rouge, Breaux Bridge, Lafayette, New Iberia,
Opelousas, Ruston

- - Michigan: Flint, Jackson

- - Minnesota: Duluth, East Grand Forks, Fairmont, Mankato, New Ulm, St. Cloud

- - Nevada: Las Vegas

- - New Jersey: Clark, Washington

- - New Mexico: Albuquerque, Roswell, Taos

- - New York: Avon, Clifton Park, Dansville, East Greenbush, Endicott, Geneva,
Hornell, Ithaca, Jamestown, Naples, Rochester, Rome, Sodus, Spencerport,
Syracuse, Wellsville, Williamsville, Wolcott

- - North Dakota: Bismarck, Fargo, Grand Forks, Jamestown, Minot

- - Ohio: Toledo

- - Oklahoma: Pryor

- - Pennsylvania: Bethlehem

- - South Carolina: Charleston, Georgetown, Greenville, Spartanburg, Union

- - Tennessee: Kingsport

- - Texas: El Paso, Houston

- - Virginia: Bristol, Manassas, Norfolk, Norton, Richlands, Richmond, Salem,
Virginia Beach

- - Washington: Seattle, Tacoma, Wenatachee

- - Wisconsin: Hartland, LaCrosse

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- - Wyoming: Cheyenne

National Programs Division Office Locations:

- - Professional Programs: Tampa, Florida

- - Special Programs:

- Florida: Altamonte Springs, Miami Lakes, Plantation, Tampa

- Missouri: St. Louis

- New York: Mechanicville

- Pennsylvania: Bethlehem

- Texas: San Antonio

Services Division Office Locations:

- - Florida: Altamonte Springs, Daytona Beach, Orlando, Oviedo, St. Petersburg

- - Louisiana: Lafayette

Brokerage Division Office Locations:

- - Connecticut: Stamford

- - Florida: Daytona Beach, Ft. Lauderdale, Lake Mary, Orlando, St. Petersburg

- - Georgia: Atlanta

- - New York: Massapequa, Rochester

- - North Carolina: Charlotte

Our operating leases expire on various dates. These leases generally contain
renewal options and escalation clauses based on increases in the lessors'
operating expenses and other charges. We expect that most leases will be renewed
or replaced upon expiration. From time to time, we may have unused space and
seek to sublet such space to third parties, depending on the demand for office
space in the locations involved. See note 13 of the notes to our consolidated
financial statements for additional information on our lease commitments.

9

ITEM 3. LEGAL PROCEEDINGS

On January 19, 2000, a complaint was filed in the Superior Court of Henry
County, Georgia, captioned Gresham & Associates, Inc. vs. Anthony T. Strianese,
et al. The complaint names us, certain of our subsidiaries and affiliates, and
two of their employees as defendants. The complaint alleges, among other things,
that we tortiously interfered with the contractual relationship between the
plaintiff and certain of its employees. The plaintiff alleges that we hired such
persons and actively encouraged them to violate the restrictive covenants
contained in their employment agreements with plaintiff. The complaint seeks
compensatory damages from us with respect to each of the two employees in
amounts "not less than $750,000" and seeks punitive damages for alleged
intentional wrongdoing in an amount "not less than $10,000,000." The complaint
also sought a declaratory judgment regarding the enforceability of the
restrictive covenants in the employment agreements and an injunction prohibiting
the violation of those agreements. The plaintiff subsequently dismissed the
claims for a declaratory judgment and an injunction, as well as its claims of
breach of contract against the two individual employees named as defendants.
Those individuals, and Peachtree Special Risk Brokers, LLC, one of our
affiliates named as a defendant in this action, have filed counterclaims against
the plaintiff, seeking damages, and seeking a declaratory judgment holding that
the restrictive covenants in the employment agreements are not enforceable. We
believe that we have meritorious defenses to each of the claims remaining in
this action, and intend to contest this action vigorously.

We are involved in various other pending or threatened proceedings by or against
us or one or more of our subsidiaries that involve routine litigation relating
to insurance risks placed by us and other contractual matters. Our management
does not believe that any of such pending or threatened proceedings will have a
materially adverse effect on our consolidated financial position or future
operations.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during our
fourth quarter ended December 31, 2001.

11

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is listed on the New York Stock Exchange (NYSE) under the
symbol "BRO". The table below sets forth, for the periods indicated, the
intra-day high and low sales prices for our common stock as reported on the
NYSE Composite Tape and dividends declared on our common stock. The stock
prices and dividends reflect the two-for-one common stock split on August 23,
2000 and the two-for-one common stock split on November 21, 2001. Each such
stock split was effected as a stock dividend.

The last reported sale price of our common stock on the New York Stock Exchange
on February 13, 2002 was $35.10 per share. At February 11, 2002, there were
63,333,912 shares of our common stock outstanding, held by approximately 973
shareholders of record.

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ITEM 6. SELECTED FINANCIAL DATA

(1) All share and per share information has been restated to give effect to the
two-for-one common stock split that became effective November 21, 2001, the
two-for-one common stock split that became effective August 23, 2000 and the
three-for-two common stock split that became effective February 27, 1998. Each
stock split was effected as a stock dividend. Prior years' results have been
restated to give effect to acquisitions accounted for under the
pooling-of-interests method of accounting. In addition, we made acquisitions
accounted for under the purchase method of accounting during those periods,
which affect the comparability of results. See "Management's discussion and
analysis of financial condition and results of operations: General" and notes 2
and 3 of the notes to our consolidated financial statements for a description
of our acquisitions in 2001, 2000 and 1999.

(2) Shareholders' equity as of December 31, 2001, 2000, 1999, 1998 and 1997
included net increases (in thousands) of $4,393, $2,495, $4,922, $5,540 and
$6,744, respectively, as a result of our application of Statement of Financial
Accounting Standards (SFAS) No. 115, ""Accounting for Certain Investments in
Debt and Equity Securities."

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL

The following discussion should be read in conjunction with our consolidated
financial statements and notes to those consolidated financial statements,
included elsewhere in this report.

We are a general insurance agency and brokerage headquartered in Daytona Beach
and Tampa, Florida. Since the early 1980s, our stated corporate objective has
been to increase our net income per share by at least 15% every year. We have
increased revenues from $95.6 million in 1993 (as originally stated, without
giving effect to any subsequent acquisitions accounted for under the
pooling-of-interests method of accounting) to $365.0 million in 2001, a compound
annual growth rate of 18.2%. In the same period, we increased net income from
$8.0 million (as originally stated, without giving effect to any subsequent
acquisitions accounted for under the pooling-of-interests method of accounting)
to $53.9 million in 2001, a compound annual growth rate of 26.9%. We have also
increased net income per share 15.0% or more for nine consecutive years,
excluding the effect of a one-time investment gain of $1.3 million in 1994 and
favorable adjustments to our income tax reserves of $0.7 million in 1994 and
$0.5 million in 1995. Since 1993, excluding the historical impact of poolings,
our pre-tax margins improved in all but one year, and in that year, the pre-tax
margin was essentially flat. These improvements have resulted primarily from net
new business growth (new business production offset by lost business) and
continued operating efficiencies. Our growth in 2001 was primarily the result of
a higher than historical number of acquisitions, driven in large part by the
then-anticipated elimination of pooling-of-interests accounting treatment for
acquisitions, coupled with a general increase in premium rates and stronger net
new business growth.

Our revenues are comprised principally of commissions paid by insurance
companies, fees paid directly by clients and investment income. Commission
revenues generally represent a percentage of the premium paid by the insured and
are materially affected by fluctuations in both premium rate levels charged by
insurance underwriters and the insureds' underlying "insurable exposure units,"
which are units that insurers use to measure or express insurance exposed to
risk (such as property values, sales and payroll levels) so as to determine what
premium to charge the policyholder. These premium rates are established by
insurance companies based upon many factors, including reinsurance rates, none
of which we control. Beginning in 1987 and continuing through 1999, revenues
were adversely influenced by a consistent decline in premium rates resulting
from intense competition among property and casualty insurers for market share.
Among other factors, this condition of a prevailing decline in premium rates,
commonly referred to as a "soft market," generally resulted in flat to reduced
commissions on renewal business. The effect of this softness in rates on our
revenues was somewhat offset by our acquisitions and new business production.
As a result of increasing "loss ratios" (the comparison of incurred losses plus
adjustment expense against earned premiums) of insurance companies through
1999, there was a general increase in premium rates beginning in the first
quarter of 2000 and continuing through the fourth quarter of 2001. Although
premium rates vary by line of business, geographical region, insurance company
and specific underwriting factors, we believe this was the first time since
1987 that we operated in an environment of increased premiums for eight
consecutive quarters. Additionally, in light of the events of September 11,
2001, insurance companies, as well as reinsurers, may extend this trend of
increasing premium rates. While we cannot predict the timing or extent of
premium pricing changes as a result of market fluctuations or their effect on
our operations in the future, we believe that premium rates will continue to
increase through at least 2002.

The volume of business from new and existing clients, fluctuations in insurable
exposure units and changes in general economic and competitive conditions
further impact our revenues. For example, stagnant rates of inflation and the
general decline of economic activity in recent years have generally limited the
increases in the values of insurable exposure units. Conversely, the increasing
costs of litigation settlements and awards have caused some clients to seek
higher levels of insurance coverage. Still, our revenues continue to grow
through acquisitions and an intense focus

14

on net new business growth. We anticipate that results of operations for 2002
will continue to be influenced by these competitive and economic conditions.

We also earn "contingent commissions," which are revenue-sharing commissions
from insurance companies based upon the volume and the growth and/or
profitability of the business placed with such companies during the prior year.
These commissions are primarily received in the first and second quarters of
each year, and over the last three years, have averaged approximately 4.6% of
total commissions and fees. Contingent commissions are included in our total
commissions and fees in the consolidated statements of income in the year
received. The term "core commissions and fees" excludes contingent commissions
and represents the revenues earned directly from each specific insurance policy
sold or from fee-based services rendered.

Fee revenues are generated primarily by our Services Division, which provides
insurance-related services, including third-party administration, consulting for
the workers' compensation and employee benefit self-insurance markets and
managed healthcare services. In each of the past three years, fee revenues
generated by the Services Division have averaged approximately 6.8% of total
commissions and fees.

Investment income consists primarily of interest earnings on premiums and
advance premiums collected and held in a fiduciary capacity before being
remitted to insurance companies. Our policy is to invest available funds in
high-quality, short-term fixed income investment securities. Investment income
also includes gains and losses realized from the sale of investments.

ACQUISITIONS AND THE IMPACT OF THE POOLING-OF-INTERESTS METHOD OF ACCOUNTING

During 2001, we acquired the following 12 agency groups in stock-for-stock
transactions accounted for under the pooling-of-interests method of accounting:

- - The Huval Companies

- - Spencer & Associates, Inc. and SAN of East Central Florida, Inc.

- - The Young Agency, Inc.

- - Layne & Associates, Ltd.

- - Agency of Insurance Professionals, Inc., CompVantage Insurance Agency, LLC and
Agency of Indian Programs Insurance, LLC

- - Finwall & Associates Insurance, Inc.

- - The Connelly Insurance Group, Inc.

- - The Benefit Group, Inc.

- - Logan Insurance Agency, Inc. and Automobile Insurance Agency of Virginia, Inc.

- - Froelich-Paulson-Moore, Inc. and M&J Buildings, LLC

- - McKinnon & Mooney, Inc.

- - Raleigh, Schwarz & Powell, Inc.

We also acquired the assets of 12 general insurance agencies, several books of
business (client accounts) and the outstanding stock of two general insurance
agencies in transactions accounted for under the purchase method of accounting.

15

During 2000, we acquired the following four agency groups in stock-for-stock
transactions accounted for under the pooling-of-interests method of accounting:

- - Bowers, Schumann & Welch

- - The Flagship Group, Ltd.

- - WMH, Inc. and Huffman & Associates, Inc.

- - Mangus Insurance & Bonding, Inc.

We also acquired the assets of five general insurance agencies, several books of
business and the outstanding stock of two general insurance agencies in
transactions accounted for under the purchase method of accounting.

During 1999, we acquired the following two agency groups in stock-for-stock
transactions accounted for under the pooling-of-interests method of accounting:

- - Ampher Insurance, Inc. and Ross Insurance of Florida, Inc.

- - Signature Insurance Group, Inc. and C,S&D, a Florida general partnership.

We also acquired the assets of seven general insurance agencies, several books
of business and the outstanding stock of three general insurance agencies in
transactions accounted for under the purchase method of accounting.

The revenues and expenses of entities that were acquired and accounted for under
the purchase method of accounting are recognized only from the date of
acquisition, and therefore did not impact our previously reported historical
results. However, the applicable accounting rules require that our consolidated
financial statements be restated for all periods to include the results of
operations, financial positions and cash flows of entities acquired in
transactions accounted for under the pooling-of-interests method. Because most
of the pooled entities were operated as privately-held companies that paid
significant year-end bonuses and compensation to their principals and owners
during the periods prior to our acquisition of such entities, the combination of
their lower net income results with our results diluted our historically
reported profit margins, defined as income before income taxes and minority
interest as a percentage of total revenues. As restated, our profit margins were
24.8%, 20.4% and 20.0% in 2001, 2000 and 1999, respectively. Without giving
effect to any acquisitions accounted for under the pooling-of-interests method
in the year of acquisition or in any prior year, our profit margins were 27.9%,
27.4% and 26.2% in 2001, 2000 and 1999, respectively. We believe that, as we
continue to integrate these acquired entities, our profit margins will continue
to improve.

The pooling-of-interests method of accounting has been eliminated for all
business combinations initiated after June 30, 2001. This change in accounting
rules was the impetus for many of our acquisitions in 2001. The pace of our
ongoing acquisition activities may be significantly slower than it was in 2001,
although we will continue to seek qualified acquisition candidates. Future
acquisitions will be accounted for under the purchase method of accounting. See
note 1 of the notes to our consolidated financial statements.

See notes 2 and 3 of the notes to our consolidated financial statements for a
description of our acquisitions.

The following discussion and analysis regarding results of operations and
liquidity and capital resources should be considered in conjunction with the
accompanying consolidated financial statements and related notes.

16

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

COMMISSIONS AND FEES

Commissions and fees increased 39% in 2001, 12% in 2000 and 9% in 1999. Core
commissions and fees increased 11.3% in 2001, 11.1% in 2000 and 0.4% in 1999,
excluding commissions and fees generated from operations acquired that were
accounted for under the purchase method of accounting and excluding divested
operations. The 2001 and 2000 results reflect stronger premium rate increases
that began in the first quarter of 2000 and continued through 2001.
Additionally, the 2001 increase was impacted by the higher than historical
number of acquisitions consummated during that year. During 1999, property and
casualty insurance premium prices declined from the previous year, and this
decline was primarily responsible for the lower growth rate.

INVESTMENT INCOME

Investment income decreased to $3.7 million in 2001, compared with $4.9 million
in 2000 and $3.5 million in 1999. The decrease in 2001 is primarily a result of
lower available investment cash balances due to increased acquisition activity,
although lower investment yields also contributed to reduced income. The
increase in 2000 was primarily a result of higher levels of invested cash.
Investment income also included gains of approximately $0.3 million in 2001,
$0.2 million in 2000 and $0.1 million in 1999 realized from the sale of
investments in various equity securities and partnership interests.

OTHER INCOME

Other income consists primarily of gains and losses from the sale and
disposition of assets. In 2001, gains of $0.8 million were recognized from the
sale of client accounts that were primarily related to the Auto Dealer
Protector Plan(R), based in central Florida. Gains from the sale of client
accounts were $0.1 million in 2000, compared with gains of $0.4 million in 1999.
This decrease from 1999 to 2000 was primarily due to the gain on sales of
certain accounts in 1999 within the Lawyer's Protector Plan(R) of our National
Programs Division.

EMPLOYEE COMPENSATION & BENEFITS

Employee compensation and benefits increased approximately 25% in 2001, 14% in
2000 and 10% in 1999, primarily as a result of acquisitions and an increase in
commissions paid to new and existing employees. Employee compensation and
benefits as a percentage of total revenues was 51% in 2001, 56% in 2000 and 55%
in 1999. The percentages are higher in 2000 and 1999 due to higher compensation
and year-end bonuses paid to the principals and owners of pooled entities prior
to the dates of acquisition. We had approximately 3,000 full-time employees at
December 31, 2001, compared with approximately 2,140 at December 31, 2000 and
approximately 2,000 at December 31, 1999.

OTHER OPERATING EXPENSES

Other operating expenses increased 28% in 2001, 6% in 2000, and 2% in 1999.
Other operating expenses as a percentage of total revenues decreased to 16% in
2001 from 17% in 2000 and 18% in 1999. The continuing decline in other operating
expenses, expressed as a percentage of total revenues, is attributable to the
effective cost containment measures brought about by an initiative designed to
identify areas of excess expense, and to the fact that, in an increasing premium
rate environment, certain significant other operating expenses such as office
rent, office supplies and

17

telephone costs, increase at a slower rate than commission and fee revenues
increase during the same period.

DEPRECIATION

Depreciation increased 6% in 2001, 5% in 2000 and 13% in 1999. These increases
were primarily due to the purchase of new computer equipment and the
depreciation associated with acquired assets.

AMORTIZATION

Amortization expense increased $6.6 million, or 72%, in 2001, $0.9 million, or
11%, in 2000, and $2.0 million, or 32%, in 1999. The increase each year is due
to the additional amortization of intangibles as a result of new acquisitions.
See notes 1, 3 and 6 of the notes to our consolidated financial statements.

INTEREST EXPENSE

Interest expense increased $4.4 million, or 350%, in 2001, and decreased $0.9
million, or 7%, in 2000. On January 3, 2001, we obtained a $90 million term
loan, primarily to acquire the insurance agency business-related assets of
Riedman Corporation, which accounts for the increase in 2001. The average London
Interbank Offered Rate (LIBOR) for the interest paid on that loan in 2001 was
4.4%. Effective January 2, 2002, we entered into an interest rate swap agreement
to lock in an effective fixed interest rate of 4.53% for the remaining six years
of the term loan, excluding our "credit risk spread" (additional interest paid
to offset risk of default) between 0.5% and 1.0%. The decrease in 2000 was the
result of reduced outstanding debt.

NON-CASH STOCK GRANT COMPENSATION

Non-cash stock grant compensation expense represents the expense required to be
recorded under Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," relating to our stock performance plan, which is more
fully described in note 11 of the notes to our consolidated financial
statements.

The annual cost of this stock performance plan increases only when our average
stock price over a 20 trading day period increases by increments of 20% or more
from the price at the time of the original grant, or when more shares are
granted and the stock price increases.

During 2001, after the first vesting condition for most of the previously
granted performance stock was satisfied as a result of increases in our average
stock price over a 20 trading day period, we granted additional shares of
performance stock. With the awards granted in 2001 and the increase in our stock
price during that year, the expense for the stock performance plan increased to
$2.0 million in 2001 from $0.5 million in 2000. If our stock price continues to
increase in 2002, this expense could increase to as much as $3.0 million,
excluding the cost of any new shares granted.

INCOME TAXES

The effective tax rate on income from operations was 38.5% in 2001, 37.3% in
2000 and 38.6% in 1999.

18

RESULTS OF OPERATIONS--SEGMENT INFORMATION

As discussed in note 15 of the notes to our consolidated financial statements,
we operate in four business segments: the Retail, National Programs, Services
and Brokerage Divisions.

The Retail Division is our insurance agency business that provides a broad range
of insurance products and services to commercial, governmental, professional and
individual clients. Over 95% of the Retail Division's revenues are
commission-based. As a majority of our operating expenses do not change as
premiums fluctuate, we believe that a majority of any fluctuation in commissions
received by us will be reflected in our pre-tax income. The Retail Division's
revenues accounted for 77% to 80% of our total consolidated commissions and fees
over the last three years. The Retail Division's total revenues in 2001
increased $88.0 million to $287.6 million, a 44.1% increase over 2000. Of this
increase, approximately $69.8 million related to commissions and fees from
acquisitions accounted for under the purchase method of accounting that had no
comparable revenues in 2000. The remaining increase is primarily due to net new
business growth, which benefited from rising premium rates during 2001. Income
before income taxes and minority interest in 2001 increased $21.9 million to
$52.0 million, a 72.7% increase over 2000. This increase is due to acquired
revenues, increases in premium rates and the lack of comparable year-end bonuses
paid in 2000 related to the pooled entities. Total revenues in 2000 increased
$17.0 million to $199.5 million, a 9.3% increase over 1999. This increase is
primarily due to net new business growth and rising premium rates during 2000.
Income before income taxes and minority interest in 2000 increased $2.0 million
to $30.1 million, a 6.8% increase over 1999. This increase is due to net new
business growth, acquired revenues and rising premium rates.

The National Programs Division is comprised of two units: Professional Programs,
which provides professional liability and related package products for certain
professionals delivered through nationwide networks of independent agents; and
Special Programs, which markets targeted products and services designated for
specific industries, trade groups and market niches. Similar to the Retail
Division, essentially all of the National Programs Division's revenues are
commission-based. Total revenues in 2001 increased $7.0 million to $43.8
million, an 18.9% increase over 2000, of which $2.4 million was related to net
new business growth. All of this net new business growth was related to our
Special Programs Division, but was partially offset by the loss of approximately
$3.4 million of auto industry-related business that was terminated. Revenues
related to our Professional Programs Division were essentially flat for 2001;
however, prior to 2001, we experienced at least three years of 10% to 20% of
annual revenue declines in this business. Income before income taxes and
minority interest in 2001 increased $2.9 million to $17.9 million, a 19.6%
increase over 2000, due primarily to net increases in revenues. Total revenues
in 2000 increased $4.2 million to $36.8 million, a 12.8% increase over 1999, due
to net new business growth in the Special Programs Division, which was partially
offset by an 11.7% decline in the Professional Programs Division. Income before
income taxes and minority interest in 2000 increased $2.6 million to $14.9
million, a 20.7% increase over 1999, primarily due to revenue increases in
Special Programs.

The Services Division provides insurance-related services, including third-party
administration, consulting for the workers' compensation and employee benefit
self-insurance markets and managed healthcare services. Unlike our other
segments, over 90% of the Services Division's revenues are fees, which are not
significantly affected by fluctuations in general insurance premiums. The
Services Division's total revenues in 2001 increased $3.3 million to $25.0
million, a 15.4% increase over 2000. Of this increase, $2.3 million was the
result of net new business growth and the remaining portion was acquired. Income
before income taxes and minority interest in 2001 increased $0.9 million to $4.0
million, a 29.3% increase over 2000, primarily due to strong net new business
growth. Total revenues in 2000 increased $4.5 million to $21.6 million, a 26.6%
increase

19

over 1999. Of this increase, $2.7 million was the result of net new business
growth and the remaining portion was acquired. Income before income taxes and
minority interest in 2000 increased $0.5 million to $3.1 million, a 18.8%
increase over 1999, again due primarily to strong net new business growth.

The Brokerage Division markets and sells excess and surplus commercial insurance
and reinsurance, primarily through independent agents and brokers. Similar to
our Retail and National Programs Divisions, essentially all of the Brokerage
Division's revenues are commission-based. Total Brokerage revenues in 2001
increased $4.2 million to $12.2 million, a 53.1% increase over 2000, due
entirely to net new business growth. As a result of the Brokerage Division's
strong net new business growth, income before income taxes and minority interest
in 2001 increased $1.4 million to $4.1 million, a 51.5% increase over 2000.
Brokerage revenue in 2000 increased $1.6 million to $8.0 million, a 24.6%
increase over 1999, solely due to net new business growth. Income before income
taxes and minority interest for 2000 increased $0.6 million to $2.7 million, a
27.3% increase over 1999, again due to net new business growth.

QUARTERLY OPERATING RESULTS

The following table sets forth our quarterly operating results for 2001 and
2000:

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents of $16.0 million at December 31, 2001 reflects a
decrease of $21.0 million from our December 31, 2000 balance of $37.0 million.
During 2001, $70.0 million of cash was provided from operating activities and
$90.1 million was received from long-term debt financing. From this borrowing
and existing cash balances, $131.0 million was used for acquisitions, $33.3
million was used to repay long-term debt, $9.7 million was used to pay dividends
and $11.0 million was used for additions to fixed assets.

Our cash and cash equivalents of $37.0 million at December 31, 2000 reflects an
increase of $2.3 million from the December 31, 1999 balance of $34.7 million.
During 2000, $42.3 million of cash

20

was provided from operating activities and $0.5 million was received from
long-term debt financing. From this financing and existing cash balances, $17.7
million was used for acquisitions, $5.5 million was used for purchases of our
stock, $4.5 million was used to repay long-term debt, $7.5 million was used to
pay dividends and $5.6 million was used for additions to fixed assets.

Our cash and cash equivalents of $34.7 million at December 31, 1999 reflects a
decrease of $5.6 million from the December 31, 1998 balance of $40.4 million.
During 1999, $44.2 million of cash was provided from operating activities and
$0.7 million was received from long-term debt financing. From this financing and
existing cash balances, $16.2 million was used for acquisitions, $1.2 million
was used for purchases of our stock, $17.9 million was used to repay long-term
debt, $6.2 million was used to pay dividends and $6.2 million was used for
additions to fixed assets.

Our ratio of current assets to current liabilities (the "current ratio") was
0.78 and 0.94 at December 31, 2001 and 2000, respectively. The decrease in the
current ratio in 2001 is primarily attributable to the use of cash and increased
debt to fund the higher level of acquisition activity.

In January 2001, we entered into a $90 million seven-year term loan agreement
with SunTrust Banks, Inc. Borrowings under this facility bear interest based
upon the 30-, 60- or 90-day LIBOR plus a margin ranging from 0.50% to 1.00%,
depending upon our quarterly ratio of funded debt to earnings before interest,
taxes, depreciation and amortization. Ninety-day LIBOR was 1.88% as of December
31, 2001. The loan was fully funded on January 3, 2001 and a balance of $77.1
million remained outstanding as of December 31, 2001. This loan is to be repaid
in equal quarterly principal installments of $3.2 million through December 2007.
Effective January 2, 2002, we entered into an interest rate swap agreement with
SunTrust Banks, Inc. to lock in an effective fixed interest rate of 4.53% for
the remaining six years of the term loan, excluding our credit risk spread
between 0.50% and 1.00%.

We also have a revolving credit facility with SunTrust Banks, Inc. that provides
for available borrowings of up to $50 million, with a maturity date of October
2002. Borrowings under this facility bear interest based upon the 30-, 60- or
90-day LIBOR plus a margin ranging from 0.45% to 1.00%, depending upon our
quarterly ratio of funded debt to earnings before interest, taxes, depreciation
and amortization. A commitment fee of 0.15% to 0.25% per year is assessed on the
unused balance. As noted above, 90-day LIBOR was 1.88% as of December 31, 2001.
There were no borrowings under this facility at December 31, 2001 or December
31, 2000.

We continue to maintain our credit agreement with Continental Casualty Company
(CNA) under which $2.0 million (the maximum amount available for borrowing) was
outstanding at December 31, 2001. The available amount will decrease by $1.0
million each August through 2003.

All three of our credit agreements require us to maintain certain financial
ratios and comply with certain other covenants. We were in compliance with all
such covenants as of December 31, 2001.

We believe that our existing cash, cash equivalents, short-term investment
portfolio, funds generated from operations and the availability of the bank line
of credit will be sufficient to satisfy our normal liquidity needs through at
least the end of 2002. Additionally, we believe that funds generated from future
operations will be sufficient to satisfy our normal liquidity needs, including
the required annual principal payments on our long-term debt.

In December 2001, a universal "shelf" registration statement that we filed with
the Securities and Exchange Commission covering the public offering and sale,
from time to time, of up to an aggregate of $250 million of debt and/or equity
securities, was declared effective. The primary use of this capital would be to
fund acquisitions.

21

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

We make "forward-looking statements" within the "safe harbor" provision
of the Private Securities Litigation Reform Act of 1995 throughout this report
and in the documents we incorporate by reference into this report. You can
identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," "plan" and "continue" or similar
words. We have based these statements on our current expectations about future
events. Although we believe that our expectations reflected in or suggested by
our forward-looking statements are reasonable, our actual results may differ
materially from what we currently expect. Important factors which could cause
our actual results to differ materially from the forward-looking statements in
this report include:

- material adverse changes in economic conditions in the markets
we serve;

- future regulatory actions and conditions in the states in which
we conduct our business;

- competition from others in the insurance agency and brokerage
business;

- the integration of our operations with those of businesses or
assets we have acquired or may acquire in the future and the
failure to realize the expected benefits of such integration;
and

- other risks and uncertainties as may be detailed from time to
time in our public announcements and Securities and Exchange
Commission filings.

You should carefully read this report completely and with the
understanding that our actual future results may be materially different from
what we expect. All forward-looking statements attributable to us are expressly
qualified by these cautionary statements.

We do not undertake my obligation to publicly update or revise any
forward-looking statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from adverse changes in
market rates and prices, such as interest rates and equity prices. We are
exposed to market risk through our investments, revolving credit line and term
loan agreements.

Our invested assets are held as cash and cash equivalents, restricted
cash, available-for-sale marketable equity securities, non-marketable equity
securities and certificates of deposit. These investments are subject to
interest rate risk and equity price risk. The fair values of our cash and cash
equivalents, restricted cash, and certificates of deposit at December 31, 2001
and 2000 approximated their respective carrying values due to their short-term
duration and therefore such market risk is not considered to be material.

We do not actively invest or trade in equity securities. In addition,
we generally dispose of any significant equity securities received in
conjunction with an acquisition shortly after the acquisition date. However, we
have no current intentions to add or dispose of any of the 559,970 common stock
shares of Rock-Tenn Company, a publicly-held NYSE company, which we have owned
for over ten years. The investment in Rock-Tenn Company accounted for 85% and
48% of the total value of available-for-sale

22

marketable equity securities, non-marketable equity securities and certificates
of deposit as of December 31, 2001 and 2000, respectively. Rock-Tenn Company's
closing stock price at December 31, 2001 and 2000 was $14.40 and $7.44
respectively. Our exposure to equity price risk is primarily related to the
Rock-Tenn Company investment. As of December 31, 2001, the value of the
Rock-Tenn Company investment was $8,064,000.

To hedge the risk of increasing interest rates from January 2, 2002
through the remaining six years of our seven-year $90 million term loan, on
December 5, 2001 we entered into an interest rate swap agreement that
effectively converted the floating rate LIBOR-based interest payments to fixed
interest rate payments at 4.53%. As of December 31, 2001, the fair value of the
derivative liability was $88,000. We do not otherwise enter into derivatives,
swaps or other similar financial instruments for trading or speculative
purposes.

23

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Brown & Brown, Inc.

We have audited the accompanying consolidated balance sheets of Brown & Brown,
Inc. and subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brown & Brown, Inc. and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

/s/ ARTHUR ANDERSEN LLP
Orlando, Florida
January 18, 2002

24

BROWN & BROWN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to our consolidated financial statements.

25

BROWN & BROWN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

See accompanying notes to our consolidated financial statements.

26

BROWN & BROWN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

See accompanying notes to our consolidated financial statements.

27

BROWN & BROWN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to our consolidated financial statements.

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Brown & Brown, Inc., a Florida corporation, and its subsidiaries ("Brown &
Brown") is a diversified insurance agency and brokerage that markets and sells
to its clients insurance products and services, primarily in the property and
casualty area. Brown & Brown's business is divided into four segments: the
Retail Division, which provides a broad range of insurance products and services
to commercial, governmental, professional and individual clients; the National
Programs Division, which is comprised of two units--Professional Programs, which
provides professional liability and related package products for certain
professionals delivered through nationwide networks of independent agents, and
Special Programs, which markets targeted products and services designated for
specific industries, trade groups and market niches; the Services Division,
which provides insurance-related services, including third-party administration,
consulting for the workers' compensation and employee benefit self-insurance
markets, and managed healthcare services; and the Brokerage Division, which
markets and sells excess and surplus commercial insurance and reinsurance,
primarily through independent agents and brokers.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of Brown
& Brown, Inc. and its subsidiaries. All significant intercompany account
balances and transactions have been eliminated in consolidation. Outside or
third party interest in Brown & Brown's net income and net assets is reflected
as minority interest in the accompanying consolidated financial statements.

As more fully described in Note 2--Pooling-of-interests acquisitions, the
accompanying consolidated financial statements for all periods presented have
been restated to show the effect of the acquisitions accounted for under the
pooling-of-interests method of accounting.

REVENUE RECOGNITION

Commission income is recognized as of the effective date of the insurance policy
or the date the client is billed, whichever is later. At that date, the
earnings process has been completed and Brown & Brown can reliably estimate the
impact of policy cancellations for refunds and establish reserves accordingly.
The reserve for policy cancellations is periodically evaluated and adjusted as
necessary. Subsequent commission adjustments are recognized upon notification
from the insurance companies. Commission revenues are reported net of sub-broker
commissions. Contingent commissions from insurance companies are recognized when
determinable, which is when such commissions are received. Fee income is
recognized as services are rendered.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents principally consist of demand deposits with financial
institutions and highly liquid investments having maturities of three months or
less when purchased.

RESTRICTED CASH, AND PREMIUMS, COMMISSIONS AND FEES RECEIVABLE

In its capacity as an insurance agent or broker, Brown & Brown typically
collects premiums from insureds and, after deducting its authorized commissions,
remits the premiums to the appropriate insurance companies. Accordingly, as
reported in the consolidated balance sheets, "premiums" are receivable from
insureds. Unremitted insurance premiums are held in a fiduciary capacity until
disbursed by Brown & Brown. In certain states where Brown & Brown operates, the
use and investment alternatives for these funds are regulated by various state
agencies. Brown & Brown invests these unremitted funds only in cash, money
market accounts and commercial paper, and reports such amounts as restricted
cash on the consolidated balance sheets. The interest income earned on these
unremitted funds is reported as investment income in the consolidated statements
of income.

In other circumstances, the insurance companies collect the premiums directly
from the insureds and remit the applicable commissions to Brown & Brown.
Accordingly, as reported in the consolidated balance sheets, "commissions" are
receivable from insurance companies. "Fees" are primarily receivable from
clients of Brown & Brown's Services Division.

INVESTMENTS

Brown & Brown's marketable equity securities have been classified as
"available-for-sale" and are reported at estimated fair value, with the
accumulated other comprehensive income (unrealized gains and losses), net of
tax, reported as a separate component of shareholders' equity. Realized gains
and losses and declines in value below cost that are judged to be
other-than-temporary on available-for-sale securities are included in investment
income. The cost of securities sold is based on the specific identification
method. Interest and dividends on securities classified as available-for-sale
are included in investment income in the consolidated statements of income.

As of December 31, 2001 and 2000, Brown & Brown's marketable equity securities
principally represented a long-term investment of 559,970 shares of common stock
in Rock-Tenn Company. Brown & Brown's President and Chief Executive Officer
serves on the board of directors of Rock-Tenn Company. Brown & Brown has no
current intentions to add to or to sell these shares.

Non-marketable equity securities and certificates of deposit having maturities
of more than three months when purchased are reported at cost and are adjusted
for other-than-temporary market value declines.

Accumulated other comprehensive income reported in shareholders' equity was
$4,393,000 at December 31, 2001 and $2,495,000 at December 31, 2000, net of
deferred income taxes of $2,750,000 and $1,595,000, respectively.

FIXED ASSETS

Fixed assets are stated at cost. Expenditures for improvements are capitalized,
and expenditures for maintenance and repairs are charged to operations as
incurred. Upon sale or retirement, the cost and related accumulated depreciation
and amortization are removed from the accounts and the

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

resulting gain or loss, if any, is reflected in income. Depreciation has been
determined using the straight-line method over the estimated useful lives of the
related assets, which range from three to ten years. Leasehold improvements are
amortized on the straight-line method over the term of the related lease.

INTANGIBLES

Intangible assets are stated at cost less accumulated amortization and consist
of purchased client accounts, noncompete agreements, acquisition costs, and
the excess of costs over the fair value of identifiable net assets acquired
(goodwill). Purchased client accounts, noncompete agreements and acquisition
costs are being amortized on a straight-line basis over the related estimated
lives and contract periods, which range from five to 20 years. The weighted
average life of purchased client accounts, noncompete agreements and
acquisitions costs is 17.5 years, 7.9 years and 8.0 years as of December 31,
2001, and 15.4 years, 8.1 years, 8.4 years as of December 21, 2000,
respectively. Goodwill is amortized on a straight-line basis over 15 to 40 years
and has a weighted average life of 25.6 years and 32.9 years as of December 31,
2001 and 2000, respectively. Purchased client accounts are records and files
obtained from acquired businesses that contain information on insurance policies
and the related insured parties that is essential to policy renewals.

The carrying value of intangibles attributable to each agency division
comprising Brown & Brown is periodically reviewed by management to determine if
the facts and circumstances suggest that they may be impaired. In the insurance
agency and brokerage industry, it is common for agencies or client accounts to
be acquired at a price determined as a multiple of their corresponding revenues.
Accordingly, Brown & Brown assesses the carrying value of its intangibles by
comparison of a reasonable multiple applied to corresponding revenues, as well
as considering the undiscounted cash flows generated by the corresponding agency
division. Any impairment identified through this assessment may require that the
carrying value of related intangibles be adjusted; however, no impairments have
been recorded for the years ended December 31, 2001, 2000 and 1999.

DERIVATIVES

Brown & Brown utilizes a derivative financial instrument to reduce interest rate
risks. Brown & Brown does not hold or issue derivative financial instruments for
trading purposes. In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which was
subsequently amended by SFAS Nos. 137 and 138. SFAS No. 133, as amended,
establishes accounting and reporting standards for derivative instruments and
hedging activities. These standards require that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
condition and measure those instruments at fair value. Changes in the fair value
of those instruments will be reported in earnings or other comprehensive income,
depending on the use of the derivative and whether it qualifies for hedge
accounting. The accounting for gains and losses associated with changes in the
fair value of the derivative and the resulting effect on the consolidated
financial statements will depend on the derivative's hedge designation and
whether the hedge is highly effective in achieving offsetting changes in the
fair value of cash flows as compared to changes in the fair value of the
liability being hedged.

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

Brown & Brown files a consolidated federal income tax return. Deferred income
taxes are provided for in the consolidated financial statements and relate
principally to expenses charged to income for financial reporting purposes in
one period and deducted for income tax purposes in other periods, unrealized
appreciation of available-for-sale securities, and basis differences of
intangible assets.

NET INCOME PER SHARE

Basic net income per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Basic net income per share excludes dilution. Diluted net income per
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted to common stock.

The following table sets forth the computation of basic net income per common
share and diluted net income per common and common equivalent share:

All share and per share amounts in the consolidated financial statements have
been restated to give effect to the two-for-one common stock split effected by
Brown & Brown on November 21, 2001 and the two-for-one common stock split
effected by Brown & Brown on August 23, 2000. Each stock split was effected as a
stock dividend.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of Brown & Brown's financial assets and liabilities,
including cash and cash equivalents, investments, premiums, commissions and fees
receivable, premiums payable to insurance companies, premium deposits and
credits due clients and accounts payable, at December 31, 2001 and 2000,
approximate fair value because of the short maturity of these instruments. The
carrying amount of Brown & Brown's long-term debt approximates fair value at
December 31, 2001 and 2000 since the debt is at floating rates.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 141, "Business Combinations," which
requires all business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. Brown & Brown has historically used the
pooling-of-interests method to record those acquisitions that met

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the now-superseded APB No. 16, and the purchase method of accounting for other
acquisitions. Acquisitions that met the now-superseded APB No. 16's
pooling-of-interests criteria and that were initiated prior to June 30, 2001
with executed letters of intent outlining the major terms of the acquisition
plan, including the ratio of exchange of stock, were accounted for as
pooling-of-interests transactions. All of Brown & Brown's future acquisitions
will be consummated using the purchase method.

Also in June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which addresses how intangible assets that are acquired individually or
as a group of other assets should be accounted for in financial statements upon
their acquisition. This statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements. Goodwill, which historically has been
amortized over a 20-to 40-year time period, will no longer be subject to
amortization. Instead, goodwill will be tested at least annually for impairment
by applying a fair-value-based test. Goodwill and intangible assets acquired
after June 30, 2001 were immediately subject to the provisions of SFAS No. 142;
otherwise, the provisions of this statement became effective January 1, 2002.
Exclusive of non-amortization of goodwill, Brown & Brown does not expect the
adoption of SFAS No. 142 during the first quarter of 2002 to have a material
impact on Brown & Brown's consolidated financial statements.

Additionally, in June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses the financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated retirement costs. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. Brown & Brown does not expect the adoption of
SFAS No. 143 to have a material impact on Brown & Brown's consolidated financial
statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Disposal or
Impairment of Long-Lived Assets," which now requires that a single accounting
impairment model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired, and broadens the
presentation of discontinued operations to include more disposal transactions.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
Brown & Brown does not expect the adoption of SFAS No. 144 to have a material
impact on Brown & Brown's consolidated financial statements.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. POOLING-OF-INTERESTS ACQUISITIONS

In 2001, Brown & Brown acquired all of the outstanding stock of the following
insurance agency or brokerage firms. These transactions have been accounted for
under the pooling-of-interests method of accounting and, accordingly, Brown &
Brown's consolidated financial statements and related notes have been restated
for all periods prior to the dates of acquisition to include the results of
operations, financial positions and cash flows of these companies. The following
table reflects the effects of its 2001 acquisitions on the 2001, 2000 and 1999
individual and combined operating results of Brown & Brown:

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 2000, Brown & Brown acquired all of the outstanding stock of the following
insurance agency or brokerage firms. These transactions have been accounted for
under the pooling-of-interests method of accounting and, accordingly, Brown &
Brown's consolidated financial statements and related notes have been restated
for all periods prior to the dates of acquisition to include the results of
operations, financial positions and cash flows of these companies. The following
table reflects the effects of its 2000 acquisitions on the 2000, 1999 and 1998
individual and combined operating results of Brown & Brown:

In 1999, Brown & Brown acquired all of the outstanding stock of the following
insurance agency or brokerage firms. These transactions have been accounted for
under the pooling-of-interests method of accounting and, accordingly, Brown &
Brown's consolidated financial statements and related notes have been restated
for all periods prior to the dates of acquisition to include the results of
operations, financial positions and cash flows of these companies. The following
table reflects the effects of its 1999 acquisitions on the 1999 and 1998
individual and combined operating results of Brown & Brown:

3. PURCHASE ACQUISITIONS

On January 1, 2001, Brown & Brown acquired the insurance-related assets of The
Riedman Corporation ("Riedman"). Riedman was a provider of a broad range of
insurance products and services in 13 states. As a result of the acquisition,
Brown & Brown acquired operations that generated $54,193,000 in commissions and
fees in 2000, and established locations in 12 new states. The aggregate purchase
price was $92,310,000, including $62,398,000 of cash, issuance of $10,546,000 in
notes payable and the assumption of $19,366,000 of liabilities, which was
primarily debt related to prior acquisitions by Riedman. The results of
Riedman's operations have been included in the consolidated financial statements
since January 1, 2001.

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On May 1, 2001, Brown & Brown acquired the insurance-related assets of Parcel
Insurance Plan, Inc. ("PIP"). PIP was a specialty insurance agency providing
insurance coverage to commercial and private shippers for small packages and
parcels with insured values of less than $25,000 each. As a result of the
acquisition, Brown & Brown expanded into a new insurance brokerage niche. The
aggregate purchase price was $23,012,000, including $22,869,000 of cash and the
assumption of $143,000 of liabilities. The results of PIP's operations have been
included in the consolidated financial statements since May 1, 2001.

On October 1, 2001, Brown & Brown acquired the insurance-related assets of Henry
S. Lehr, Inc. and Apollo Financial Corporation ("Lehr"). Lehr was a provider of
a broad range of insurance products and services including targeted insurance
products and services for social-services organizations. As a result of the
acquisition, Brown & Brown expanded its retail insurance presence in the
northeastern United States. The aggregate purchase price was $11,600,000,
consisting entirely of cash. The results of Lehr's operations have been included
in the consolidated financial statements since October 1, 2001.

In addition, Brown & Brown acquired the assets of nine general insurance
agencies, several books of business (client accounts) and the outstanding
stock of two general insurance agencies. The aggregate purchase price was
$47,174,000, including $36,056,000 of net cash payments, the issuance of notes
payable in the amount of $4,662,000 and the issuance of 244,028 shares of Brown
& Brown's common stock with an approximate fair market value as of the
respective acquisition dates of $6,456,000 based on the average stock price for
the 20 trading days ending three days prior to the respective closing dates. The
results of these operations have been included in the consolidated financial
statements since the dates of each acquisition.

The following table summarizes the estimated fair values of the assets acquired
at the date of each acquisition and are based on preliminary purchase price
allocations:

The weighted-average useful lives for the acquired intangible assets are as
follows: purchased client accounts--20 years; noncompete agreements--5 years;
and acquisition costs--5 years.

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Goodwill of $81,517,000 was assigned to the Retail and National Programs
Divisions in the amounts of $71,440,000 and $10,077,000, respectively. Of that
total amount, $75,741,000 is expected to be deductible for tax purposes.

The results of operations for the acquisitions completed during 2001 have been
combined with those of Brown & Brown since their respective acquisition dates.
If the acquisitions had occurred at the beginning of the year 2000, Brown &
Brown's results of operations would be as shown in the following table. These
unaudited pro forma results are not necessarily indicative of the actual results
of operations that would have occurred had the acquisitions actually been made
at the beginning of the respective periods.

The results of operations for the Riedman acquisition were combined with Brown &
Brown effective January 1, 2001. Riedman's unaudited revenues, income before
income taxes and minority interest and net income included in the 2000 pro forma
data summarized above approximate $54,193,000, $1,075,000 and $661,000,
respectively. The impact of Riedman on the 2000 pro forma data on diluted net
income per share approximates $0.01 per share.

Additional consideration paid to sellers or consideration returned to Brown &
Brown by sellers as a result of purchase price adjustment provisions are
recorded as adjustments to intangibles when the contingencies are settled. The
net payments by Brown & Brown as a result of these adjustments totaled
$2,342,000, $1,220,000 and $1,611,000 in 2001, 2000 and 1999, respectively. As
of December 31, 2001, the maximum future contingency payments related to
acquisitions totaled $10,852,000.

In 2000, Brown & Brown acquired the assets of five general insurance agencies,
several books of business (client accounts) and the outstanding stock of two
general insurance agencies. The aggregate purchase price was $19,669,000,
including $19,058,000 of net cash payments and the issuance of notes payable in
the amount of $611,000. Of that total amount, $12,000 was assigned to goodwill
in the National Programs Division. Each of these acquisitions was accounted for
as a purchase, and substantially the entire cost was assigned to purchased
client accounts, noncompete agreements and goodwill. The results of these
operations have been included in the consolidated financial statements since the
dates of each acquisition.

In 1999, Brown & Brown acquired the assets of seven general insurance agencies,
several books of business (client accounts) and the outstanding stock of three
general insurance agencies. The

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

aggregate purchase price was $21,011,000, including $18,533,000 of net cash
payments and the issuance of notes payable in the amount of $2,478,000. Of that
total amount, $4,949,000 was assigned to goodwill in the Retail Division. Each
of these acquisitions was accounted for as a purchase, and substantially the
entire cost was assigned to purchased client accounts, noncompete agreements
and goodwill. The results of these operations have been included in the
consolidated financial statements since the dates of each acquisition.

4. INVESTMENTS

Investments at December 31 consisted of the following:

The following table summarizes available-for-sale securities at December 31:

The following table summarizes the proceeds and realized gains/(losses) on
investments for the year ended December 31:

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. FIXED ASSETS

Fixed assets at December 31 consisted of the following:

Depreciation expense amounted to $6,536,000 in 2001, $6,158,000 in 2000 and
$5,892,000 in 1999.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INTANGIBLES

Intangibles at December 31 consisted of the following:

Amortization expense amounted to $15,860,000 in 2001, $9,226,000 in 2000, and
$8,343,000 in 1999.

Amortization of $4,203,000 was expensed in 2001 relating to goodwill. The
consolidated income statements in 2002 will have no goodwill amortization
expense in accordance with SFAS No. 142.

The FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," in June
2001. SFAS No. 142 disallows amortization of goodwill for any acquisition
completed subsequent to June 30, 2001. Brown & Brown completed ten acquisitions
under the purchase method of accounting after June 30, 2001 and as the result of
the application of SFAS No. 142, $274,000 of goodwill that would have been
amortized in 2001 under the pre-SFAS No. 142 rule was not amortized.

7. ACCRUED EXPENSES

Accrued expenses at December 31 consisted of the following:

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. LONG-TERM DEBT

Long-term debt at December 31 consisted of the following:

In January 2001, Brown & Brown entered into a $90 million unsecured seven-year
term loan agreement with a national banking institution, bearing an interest
rate based upon the 30-, 60- or 90-day London Interbank Offered Rate (LIBOR)
plus 0.50% to 1.00%, depending upon Brown & Brown's quarterly ratio of funded
debt to earnings before interest, taxes, depreciation and amortization. The
90-day LIBOR was 1.88% as of December 31, 2001. The loan was fully funded on
January 3, 2001 and as of December 31, 2001 had an outstanding balance of $77.1
million. This loan is to be repaid in equal quarterly installments of $3.2
million through December 2007.

In 1991, Brown & Brown entered into a long-term unsecured credit agreement with
a major insurance company that provided for borrowings at an interest rate equal
to the prime rate (4.75% and 9.50% at December 31, 2001 and 2000, respectively)
plus 1.00%. At December 31, 2001, the maximum amount of $2.0 million currently
available for borrowings was outstanding. In accordance with an August 1, 1998
amendment to the credit agreement, the outstanding balance will be repaid in
annual installments of $1.0 million each August through 2003.

Brown & Brown also has a revolving credit facility with a national banking
institution that provides for available borrowings of up to $50 million, with a
maturity date of October 2002, bearing an interest rate based upon the 30-, 60-
or 90-day LIBOR plus 0.45% to 1.00%, depending upon Brown & Brown's quarterly
ratio of funded debt to earnings before interest, taxes, depreciation and
amortization. A commitment fee of 0.15% to 0.25% per annum is assessed on the
unused balance. The 90-day LIBOR was 1.88% as of December 31, 2001. There were
no borrowings against this facility at December 31, 2001 or December 31, 2000.

All three of our credit agreements require Brown & Brown to maintain certain
financial ratios and comply with certain other covenants. Brown & Brown was in
compliance with all such covenants as of December 31, 2001.

Acquisition notes payable represent debt incurred to former owners of certain
agencies acquired by Brown & Brown. These notes, including future contingent
payments, are payable in monthly and annual installments through February 2014,
including interest in the range from 5.0% to 9.0%.

Interest paid in 2001, 2000 and 1999 was $5,324,000, $1,364,000 and $1,301,000,
respectively.

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 2001, maturities of long-term debt were $20,855,000 in 2002,
$18,198,000 in 2003, $13,518,000 in 2004, $12,060,000 in 2005, $11,464,000 in
2006 and $22,955,000 in 2007 and beyond.

To hedge the risk of increasing interest rates from January 2, 2002 through the
remaining six years of its seven-year $90 million term loan, Brown & Brown
entered into an interest rate swap agreement that effectively converted the
floating rate LIBOR-based interest payments to fixed interest rate payments at
4.53%. This agreement did not impact or change the required 0.5% to 1.00% credit
risk spread portion of the term loan. In accordance with SFAS No. 133, as
amended, Brown & Brown recorded a liability as of December 31, 2001 for the fair
value of the interest rate swap at December 31, 2001 for approximately $53,000,
net of taxes of approximately $33,000. Brown & Brown has designated and assessed
the derivative as a highly effective cash flow hedge, and accordingly, the
effect is reflected in other comprehensive income in the accompanying
Consolidated statements of shareholders' equity.

9. INCOME TAXES

At December 31, 2001, Brown & Brown had a net operating loss carryforward of
$1,900,000 for income tax reporting purposes, portions of which expire in the
years 2011 through 2021. This carryforward was derived from agencies acquired by
Brown & Brown in 2001 and 1998. For financial reporting purposes, a valuation
allowance of $38,000 has been recognized to offset the deferred tax asset
related to this carryforward.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for income tax reporting purposes.
Significant components of Brown & Brown's deferred tax liabilities and assets as
of December 31 are as follows:

42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the provision (benefit) for income taxes for the year
ended December 31 are as follows:

A reconciliation of the differences between the effective tax rate and the
federal statutory tax rate for the year ended December 31 is as follows:

Income taxes paid in 2001, 2000 and 1999 were $33,840,000, $18,740,000, and
$16,132,000, respectively.

10. EMPLOYEE SAVINGS PLAN

Brown & Brown has an Employee Savings Plan (401(k)) under which substantially
all employees with more than 30 days of service are eligible to participate.
Under this plan, Brown & Brown makes matching contributions, subject to a
maximum of 2.5% of each participant's salary. Further, Brown & Brown provides
for a discretionary profit sharing contribution for all eligible employees.
Brown & Brown's contributions to the plan totaled $4,357,000 in 2001, $3,663,000
in 2000 and $3,126,000 in 1999.

11. STOCK-BASED COMPENSATION AND INCENTIVE PLANS

STOCK PERFORMANCE PLAN

Brown & Brown has adopted a stock performance plan, under which up to 3,600,000
shares of Brown & Brown's stock ("Performance Stock") may be granted to key
employees contingent on the employees' future years of service with Brown &
Brown and other criteria established by the Compensation Committee of Brown &
Brown's Board of Directors. Shares must be vested before participants take full
title to Performance Stock. Of the grants currently outstanding, specified

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

portions will satisfy the first condition for vesting based on increases in the
market value of Brown & Brown's common stock from the initial price specified by
Brown & Brown. Dividends are paid on unvested shares of Performance Stock that
have satisfied the first vesting condition, and participants may exercise voting
privileges on such shares which are considered to be "awarded shares." Awarded
shares are included as issued and outstanding common stock shares and are
included in the calculation of basic and diluted earnings per share. Awarded
shares satisfy the second condition for vesting on the earlier of (i) 15 years
of continuous employment with Brown & Brown from the date shares are granted to
the participants; (ii) attainment of age 64; or (iii) death or disability of the
participant. At December 31, 2001, 2,893,488 shares had been granted under the
plan at initial stock prices ranging from $3.79 to $24.00. As of December 31,
2001, 2,545,702 shares had met the first condition for vesting and had been
awarded; and 59,988 shares had satisfied both conditions for vesting and had
been distributed to participants.

The compensation element for Performance Stock is equal to the fair market value
of the shares at the date the first vesting condition is satisfied and is
expensed over the remainder of the vesting period. Compensation expense related
to this Plan totaled $1,984,000 in 2001, $483,000 in 2000 and $1,263,000 in
1999.

EMPLOYEE STOCK PURCHASE PLAN

Brown & Brown has adopted an employee stock purchase plan ("the Stock Purchase
Plan"), which allows for substantially all employees to subscribe to purchase
shares of Brown & Brown's stock at 85% of the lesser of the market value of such
shares at the beginning or end of each annual subscription period. Of the
3,000,000 shares authorized for issuance under the Stock Purchase Plan as of
December 31, 2001, 847,566 shares remained available and reserved for future
issuance.

INCENTIVE STOCK OPTION PLAN

On April 21, 2000, Brown & Brown adopted a qualified incentive stock option plan
(the "Incentive Stock Option Plan") that provides for the granting of stock
options to certain key employees. The objective of this plan is to provide
additional performance incentives to grow Brown & Brown's pre-tax earnings in
excess of 15% annually. Brown & Brown is authorized to grant options for up to
2,400,000 common shares, of which 1,152,000 were granted on April 21, 2000 at
the most recent trading day's closing market price of $9.67 per share. All of
the outstanding options vest over a one-to-ten-year period, with a potential
acceleration of the vesting period to three to six years based on achievement of
certain performance goals. All of the options expire ten years after the grant
date. As of December 31, 2001, 72,380 option shares were exercisable. During
2001, no additional option shares were granted or exercised, and 20,000 shares
were canceled.

The weighted average fair value of the incentive stock options granted during
2000 estimated on the date of grant using the Black-Scholes option-pricing
model, was $4.73 per share. The fair value of these options granted is estimated
on the date of grant using the following assumptions: dividend yield of 0.86%;
expected volatility of 29.6%; risk-free interest rate of 6.3%; and an expected
life of ten years.

44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA EFFECT OF PLANS

Brown & Brown accounts for the Stock Purchase Plan and the Incentive
Stock Option Plan using the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
under which no compensation cost is required. Had compensation expense for these
plans been determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," Brown & Brown's net income and net income per share for the year
ended December 31 would have been reduced to the pro forma amounts indicated
below:

12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Brown & Brown's significant non-cash investing and financing activities for the
year ended December 31 are as follows:

13. COMMITMENTS AND CONTINGENCIES

Brown & Brown leases facilities and certain items of office equipment under
noncancelable operating lease arrangements expiring on various dates through
2015. The facility leases generally contain renewal options and escalation
clauses based on increases in the lessors' operating expenses and other charges.
Brown & Brown anticipates that most of these leases will be renewed

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

or replaced upon expiration. At December 31, 2001, the aggregate future minimum
lease payments under all noncancelable lease agreements in excess of one year
were as follows:

Rental expense in 2001, 2000 and 1999 for operating leases totaled $14,608,000,
$11,109,000 and $8,965,000, respectively.

Brown & Brown is not a party to any legal proceedings other than various claims
and lawsuits arising in the normal course of business. Management of Brown &
Brown does not believe that any such claims or lawsuits will have a material
effect on Brown & Brown's financial condition or results of operations.

14. BUSINESS CONCENTRATIONS

Substantially all of Brown & Brown's premiums receivable from clients and
premiums payable to insurance companies arise from policies sold on behalf of
insurance companies. Brown & Brown, as agent and broker, typically collects
premiums, retains its commission and remits the balance to the insurance
companies. A significant portion of business written by Brown & Brown is for
clients located in Arizona, Florida and New York. Accordingly, the occurrence of
adverse economic conditions or an adverse regulatory climate in Arizona, Florida
and/or New York could have a material adverse effect on Brown & Brown's
business, although no such conditions have been encountered in the past.

For the years ended December 31, 2001, 2000 and 1999, approximately 5.2%, 6.5%
and 11.2%, respectively, of Brown & Brown's total revenues were derived from
insurance policies underwritten by one insurance company. Should this carrier
seek to terminate its arrangement with Brown & Brown, Brown & Brown believes
other insurance companies are available to underwrite the business, although
some additional expense and loss of market share could possibly result. No other
insurance company accounts for 5% or more of Brown & Brown's total revenues.

15. SEGMENT INFORMATION

Brown & Brown's business is divided into four segments: the Retail Division,
which provides a broad range of insurance products and services to commercial,
professional and individual clients; the National Programs Division, which is
comprised of two units--Professional Programs, which provides professional
liability and related package products for certain professionals delivered
through nationwide networks of independent agents, and Special Programs, which
markets targeted products and services designated for specific industries, trade
groups and market niches; the Services Division, which provides
insurance-related services, including third-party administration, consulting for
the workers' compensation and employee benefit self-insurance markets, and

46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

managed healthcare services; and the Brokerage Division, which markets and sells
excess and surplus commercial insurance and reinsurance, primarily through
independent agents and brokers. Brown & Brown conducts all of its operations
within the United States of America.

The accounting policies of the reportable segments are the same as those
described in Note 1 of Notes to Consolidated Financial Statements. Brown & Brown
evaluates the performance of its segments based upon revenues and income before
income taxes and minority interest. Intersegment revenues are not significant.

In 2001, Brown & Brown reclassified two profit centers into the National
Programs Division that were previously reported in the Brokerage Division. Total
revenues for these profit centers in 2000 and 1999 were $15,185,000 and
$8,822,000 respectively. Segment information for 2000 and 1999 has been
reclassified to conform to the current year presentation.

Summarized financial information concerning Brown & Brown's reportable segments
is shown in the following table. The "Other" column includes corporate-related
items and any income and expenses not allocated to reportable segments.

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not Applicable.

48

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is certain information concerning our executive
officers and directors. All directors and officers hold office for one-year
terms or until their successors are elected and qualified.

J. Hyatt Brown. Mr. Brown has been our President and Chief Executive
Officer since 1993, and the Chairman of the Board of Directors since 1994. Mr.
Brown was President and Chief Executive Officer of our predecessor corporation
from 1961 to 1993. He was a member of the Florida House of Representatives from
1972 to 1980, and Speaker of the House from 1978 to 1980. Mr. Brown serves on
the Board of Directors of SunTrust Banks, Inc., SunTrust Bank/East Central
Florida, International Speedway Corporation, The FPL Group, Inc., BellSouth
Corporation, Rock-Tenn Company, and SCPIE Holdings Inc., each a publicly held
company. He also serves on the Board of Trustees of Stetson University, of which
he is a past Chairman, and serves as a member of the YMCA Advisory Board, the
March of Dimes Board of Directors, and the Salvation Army Advisory Council. He
is also the treasurer of the Council of Insurance Agents and Brokers.

Jim W. Henderson. Mr. Henderson served as our Senior Vice President
from 1993 to 1995, and was elected Executive Vice President in 1995. He served
as Senior Vice President of our predecessor corporation from 1989 to 1993, and
as Chief Financial Officer from 1985 to 1989.

Samuel P. Bell, III. Mr. Bell has been a shareholder of the law firm of
Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. since January 1, 1998 and also
serves as Of Counsel to the law firm of Cobb Cole & Bell. Prior to that, he was
a shareholder and managing partner of Cobb Cole & Bell. He has served as counsel
to us and our predecessor corporation since 1964. Mr. Bell was a member of the
Florida House of Representatives from 1974 to 1988.

49

Bradley Currey, Jr. Mr. Currey served as Chief Executive Officer of
Rock-Tenn Company, a manufacturer of packaging and recycled paperboard products,
from 1989 to 1999 and as Chairman of the Board of Rock-Tenn Company from 1993 to
January 31, 2000, when he retired. He also previously served as President
(1978-1995) and Chief Operating Officer (1978-1989) of Rock-Tenn Company. Mr.
Currey is a member of the Board of Directors and the Executive Committee of
Rock-Tenn Company; the Board of Directors, the Executive Committee and the
Compensation Committee of Genuine Parts Company; and the Board of Directors of
Enzymatic Deinking Technologies, Inc. Mr. Currey is Trustee Emeritus and a past
Chairman of the Board of Trustees of Emory University. He is also a past
Chairman of the Federal Reserve Bank of Atlanta.

Theodore J. Hoepner. Mr. Hoepner has been Vice Chairman of SunTrust
Banks, Inc. since 2000. From 1995 to 2000, Mr. Hoepner served as Chairman of the
Board, President and Chief Executive Officer of SunTrust Banks, Inc. f/k/a
SunTrust Banks of Florida, Inc. From 1990 through 1995, he served as Chairman of
the Board, President and Chief Executive Officer of SunBank, N.A. From 1983
through 1990, he was the Chairman of the Board and Chief Executive Officer of
SunBank/Miami, N.A.

David H. Hughes. Mr. Hughes has been Chief Executive Officer of Hughes
Supply, Inc., a publicly held business-to-business distributor of construction
and industrial supplies, since 1974, and has been Chairman of the Board since
1986. Mr. Hughes is a member of the Board of Directors of SunTrust Banks, Inc.
and Darden Restaurants, Inc., a publicly held company.

Toni Jennings. Ms. Jennings has been President of Jack Jennings & Sons,
Inc., a commercial construction firm based in Orlando, Florida, since 1982. Ms.
Jennings also serves as Secretary and Treasurer of Jennings & Jennings, Inc., an
architectural millwork firm based in Orlando, Florida. Ms. Jennings was a member
of the Florida Senate from 1980 to 2000, and President of the Florida Senate
from 1996 to 2000. She previously served in the Florida House of Representatives
from 1976 to 1980. She currently serves on the Salvation Army Advisory Board;
the Rollins College Board of Trustees and the Board of Directors of SunTrust
Bank/Central Florida, Hughes Supply, Inc. and the Florida Chamber of Commerce.

John R. Riedman. Mr. Riedman was elected to our Board of Directors in
January 2001. He has served as Chairman of Riedman Corporation, based in
Rochester, New York, since 1992. In January 2001, we acquired the insurance
agency operations of Riedman Corporation, at which time Mr. Riedman joined us as
an Executive Vice President and was elected as Vice Chairman of Brown & Brown of
New York, Inc., one of our subsidiaries. Mr. Riedman is a Trustee and Finance
Committee member of ViaHealth, a Rochester-based healthcare services network; an
honorary Trustee of WXXI Public Broadcasting Corporation; and a member of the
Executive Committee of the Greater Rochester Chamber of Commerce. He serves as
President of 657 East Avenue Corp. (a subsidiary of Rochester Museum and Science
Center) and of the Monroe County Sheriff's Foundation, and as Chairman of the
Greater Rochester Sports Authority. He serves on the Board of Directors of High
Falls Brewing Company, Sage, Rutty & Company, Inc., a Rochester-based financial
services firm; the New York State Thruway Authority; and the New York State
Canal Corporation. Mr. Riedman also served as a director and Chairman of the
Audit Committee of Fleet Financial Group, a publicly-held company, from 1988 to
1999.

Jan E. Smith. Mr. Smith has served as President of Jan Smith & Company,
a commercial real estate and business investment firm, since 1978. Mr. Smith is
also the managing general partner of Ramblers Rest Resort, Ltd., a recreational
vehicle park in Venice, Florida, and President of Travel Associates, Inc. Mr.
Smith serves on the Board of Directors of SunTrust Bank/Gulf Coast, and is a
member of the University of South Florida Foundation Board of Trustees. He also
serves as a member of the Florida Education Governance Reorganization Transition
Task Force and as a

50

member of the Tampa Bay Business Hall of Fame. He is a past member of the
Advisory Council of the Federal Reserve Bank of Atlanta.

C. Roy Bridges. Mr. Bridges was elected as one of our Regional
Executive Vice Presidents in January 2002. Since 1998, Mr. Bridges has overseen
our profit center operations in northern and Western Florida, as well as in
Louisiana and Oklahoma. Prior to undertaking his current duties, Mr. Bridges
served as profit center manager of our Ft. Myers, Florida retail office from
1993 to 1998. Mr. Bridges also served as profit center manager of our Tampa,
Florida retail office from 1998 to 2001 and was previously a profit center
manager of our Brooksville, Florida retail office.

Linda S. Downs. Ms. Downs was elected as one of our Regional Executive
Vice Presidents in January 2002. Since 1998, Ms. Downs has overseen various
profit center operations for us, including operations in Tennessee, Virginia,
and Orlando, Florida, as well as our professional and commercial insurance
programs. Prior to undertaking her current duties, Ms. Downs served as profit
center manager of our Orlando, Florida retail office from 1980 to 1998.

Kenneth D. Kirk. Mr. Kirk was elected as one of our Regional Executive
Vice Presidents in January 2002. Since 1995, Mr. Kirk has overseen our profit
center operations in Arizona, California, Colorado, New Mexico, Nevada,
Washington and Wyoming, as well as in El Paso, Texas. Prior to undertaking his
current duties, Mr. Kirk served as profit center manager of our Phoenix, Arizona
retail office from 1995 to 2000.

J. Scott Penny. Mr. Penny was elected as one of our Regional Executive
Vice Presidents in January 2002. Mr. Penny oversees our profit center operations
in Indiana, Iowa, Ohio, Michigan, Minnesota, North Dakota and Wisconsin. Since
1999, Mr. Penny has served as profit center manager of our Indianapolis, Indiana
retail office. Prior to that, Mr. Penny served as profit center manager of our
Jacksonville, Florida retail office from 1997 to 1999.

Thomas E. Riley. Mr. Riley was elected as one of our Regional Executive
Vice Presidents in January 2002. Since 1999, Mr. Riley has overseen our profit
center operations in southeastern Florida, as well as in Connecticut, New
Jersey, New York, and Pennsylvania. Prior to undertaking his current duties, Mr.
Riley served as profit center manager of our Fort Lauderdale, Florida retail
office from 1992 to 2001 and served as Chief Financial Officer from 1990 to
1991.

Cory T. Walker. Mr. Walker has been our Vice President, Treasurer and
Chief Financial Officer since 2000. Mr. Walker previously served as our Vice
President and Chief Financial Officer from 1992 to 1994. Between 1995 and 2000,
Mr. Walker served as profit center manager for our Oakland, California retail
office. Before joining us, Mr. Walker was a Senior Audit Manager for Ernst &
Young LLP.

51

Laurel L. Grammig. Ms. Grammig has been our Vice President, Secretary
and General Counsel since 1994. Before joining us, Ms. Grammig was a partner of
the law firm of Holland & Knight LLP in Tampa, Florida.

Thomas M. Donegan, Jr. Mr. Donegan has been our Vice President,
Assistant Secretary and Assistant General Counsel since 2000. Before joining us,
Mr. Donegan was an associate with the law firm of Smith, Gambrell & Russell LLP
in Atlanta, Georgia.

M. Catherine Wellman. Ms. Wellman has been our Assistant General
Counsel since 2000 and was elected as our Vice President and Assistant Secretary
in January 2001. Before joining us, Ms. Wellman was an associate with the law
firm of Meier, Lengauer, Bonner, Muszynski & Doyle, P.A. in Orlando, Florida.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who own more than 10% of our
outstanding shares of common stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
10% shareholders are required by SEC regulations to furnish us with copies of
all Section 16(a) reports they file.

Based solely on our review of the copies of such reports furnished to us and
written representations from certain reporting persons that no SEC Form 5s were
required to be filed by those persons, we believe that during 2001, our
officers, directors and 10% beneficial owners timely complied with all
applicable filing requirements, except for David H. Hughes, a director, who was
late in filing one Form 4 with respect to one transaction (the subject
transaction has since been reported), and C. Roy Bridges, Linda S. Downs,
Kenneth D. Kirk, Thomas E. Riley, and Dan W. Williamson, who did not timely
file a Form 3 after qualifying in October 2001 as our "executive officers"
under the SEC's rules (Form 5s including the information required on Form 3 have
since been filed for each of these individuals). (Mr. Williamson resigned as an
"executive officer" in January 2002 but continues to serve as profit center
manager of our Toledo, Ohio retail office.)

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation received by our Chief
Executive Officer, and the four other highest paid executive officers in 2001
(the "Named Executive Officers") for services rendered to us in such capacity
for each of the three years, as applicable, in the period ended December 31,
2001:

52

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------- -------------------------
OTHER
ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS (#) ($)(2)
- --------------------------- ----------- ------------- ----------- ------------- ------------- ------------

J. Hyatt Brown.................. 2001 $ 529,167 $ 502,205 -- -- $ 6,800
Chairman of the Board,......... 2000 493,835 342,568 -- -- 6,800
President & Chief Executive.... 1999 426,381 292,364 -- -- 6,400
Officer

Jim W. Henderson(3)............. 2001 $ 346,466 $ 526,799 $ 16,118 -- $ 6,800
Executive Vice President....... 2000 334,375 325,000 10,306 239,116 6,800
1999 325,350 254,000 6,900 -- 6,400

Thomas E. Riley(4).............. 2001 $ 246,270 $ 510,000 $ 16,118 -- $ 6,800
Regional Executive Vice President

Kenneth D. Kirk(5).............. 2001 $ 271,687 $ 404,942 $ 15,945 -- $ 6,800
Regional Executive Vice President

C. Roy Bridges(6)............... 2001 $ 267,105 $ 404,966 $ 13,254 -- $ 6,800
Regional Executive Vice
President

(1) Certain of the Named Executive Officers have been granted shares of
performance stock under our stock performance plan. For a
description of the terms of such grants, the number of shares granted
and the value of such shares, see "Executive Compensation - Long-Term
Incentive Plans - Awards in Last Fiscal Year," below. These dollar
amounts reflect cash dividends paid to officer-grantees on those
granted performance stock shares that have met the first condition
for vesting.

(2) Amounts shown represent our 401(k) plan profit sharing and matching
contributions.

(3) Mr. Henderson was originally granted 59,779 options under our
incentive stock option plan, effective April 21, 2000. On August 23,
2000 and November 21, 2001, respectively, we implemented a 2-for-1
stock split, each effected as a stock dividend. Under the incentive
stock option plan, the number of shares underlying granted options are
automatically adjusted to reflect any stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification
or similar event or change in our capital structure. The weighted
average exercise price per share for the granted options is $9.67,
which represents the closing market price of our common stock on
April 20, 2000 of $38.69, after adjustment by our Compensation
Committee for the two aforementioned 2-for-1 stock splits.

(4) By virtue of undertaking policy-making functions, Mr. Riley qualified
under applicable securities regulations as a Named Executive Officer
in October 2001 and was elected as a Regional Executive Vice President
in January 2002.

(5) By virtue of undertaking policy-making functions, Mr. Kirk qualified
under applicable securities regulations as a Named Executive Officer
in October 2001 and was elected as a Regional Executive Vice President
in January 2002.

53

(6) By virtue of undertaking policy-making functions, Mr. Bridges
qualified under applicable securities regulations as a Named Executive
Officer in October 2001 and was elected as a Regional Executive Vice
President in January 2002.

OPTION GRANTS IN 2001

Grants of stock options under our incentive stock option plan are intended to
provide an incentive for key employees to achieve our short- to medium-range
performance goals. This is done generally by tying the vesting of granted
options to the grantee's region or profit center achieving compound annual
growth in pre-tax earnings in excess of 15% over pre-tax earnings for 1999, the
plan's base year, for the three-year period ending December 31, 2002. The
granted options will vest as these performance standards are achieved or on the
day prior to the ten-year anniversary date of the grant, whichever is earlier.
Vested stock options may be exercised only pursuant to a schedule set forth in
each grantee's agreement with us. The grantee may not sell or transfer any
granted stock options.

No stock options were granted to the Named Executive Officers in 2001.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

No stock options granted under our incentive stock option plan
were exercised during fiscal year 2001. The closing market price of our stock
underlying the granted options was $27.30 per share as of December 31, 2001. The
resulting difference between the year-end market price and the adjusted exercise
price per-share of $9.67 is $17.63 per share. Therefore, the values at fiscal
year-end of unexercised in-the-money options granted to the Named Executed
Officers are as set forth in the table below:

NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED IN-THE-MONEY
DECEMBER 31, 2001($) OPTIONS AT DECEMBER 31, 2001($)
--------------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ------------- -------------

J. Hyatt Brown...................... -- -- -- --
Jim W. Henderson.................... 10,340 228,776 $182,294 $4,033,321
Thomas E. Riley..................... 10,340 116,404 182,294 2,052,203
Kenneth D. Kirk..................... 10,340 57,124 182,294 1,007,096
C. Roy Bridges...................... 10,340 185,324 182,294 3,267,262

LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

Grants of stock under our stock performance plan are intended to
provide an incentive for key employees to achieve our long-range performance
goals, generally by providing incentives to remain with us for a long period
after the grant date and by tying the vesting of the grant to appreciation of
our stock price. The table below sets forth the number of shares of performance
stock granted to the Named Executive Officers in 2001 and the criteria for
vesting.

PERFORMANCE OR OTHER PERIOD
NAME NUMBER OF SHARES(1)(2) UNTIL MATURATION OR PAYOUT(3)
- ---- ---------------- --------------------------

J. Hyatt Brown..................... -- --
Jim W. Henderson................... 20,000 15 years
Thomas E. Riley.................... 20,000 15 years
Kenneth D. Kirk.................... 20,000 15 years
C. Roy Bridges..................... 20,000 15 years

54

(1) None of the shares of performance stock granted to the Named Executive
Officers has fully vested as of the date hereof. In order for the
grants described above to fully vest, (i) the grantee would have to
remain with us for a period of 15 years from the date of grant
(subject to the exceptions set forth in footnote (3) below), and (ii)
our stock price would have to appreciate at a specified rate during
the five-year period beginning on the grant date. For each 20% increase
in an average stock price over a 20 trading day period within such
five-year period, dividends will be payable to the grantee on 20% of
the shares granted and the grantee will have the power to vote such
shares. The grantee will not have any of the other indicia of ownership
(e.g., the right to sell or transfer the shares) until such shares are
fully vested.

(2) The dollar value of the respective grants to Messrs. Henderson, Riley,
Kirk, and Bridges on April 1, 2001, the date of grant, was $350,000.
This value represents the number of shares granted multiplied by the
closing market price of our common stock on the New York Stock
Exchange on the date of grant, as adjusted for our 2-for-1 common stock
split effected November 21, 2001. The aggregate number of shares of
performance stock granted to the Named Executive Officers as of
December 31, 2001 was 115,300 for Mr. Henderson, 115,300 for Mr. Riley,
114,220 for Mr. Kirk, and 97,400 for Bridges. The corresponding dollar
values of all shares of performance stock granted to the Named
Executive Officers as of December 31, 2001 were $3,147,690 for Mr.
Henderson, $3,147,690 for Mr. Riley, $3,118,206 for Mr. Kirk, and
$2,659,020 for Mr. Bridges.

(3) If the grantee's employment with us were to terminate before the end
of the 15-year vesting period, such grantee's interest in his shares
would be forfeited unless (i) the grantee has attained age 64, (ii)
the grantee's employment with us terminates as a result of his death
or disability, or (iii) the Compensation Committee, in its sole and
absolute discretion, waives the conditions of the grant of performance
stock.

EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS

Effective July 29, 1999, J. Hyatt Brown entered into an Employment
Agreement that superseded Mr. Brown's prior agreement with us. The agreement
provides that Mr. Brown will serve as Chairman of the Board, President and
Chief Executive Officer. The agreement also provides that upon termination of
employment, Mr. Brown will not directly or indirectly solicit any of our
clients or employees for a period of three years.

The agreement requires us to make a payment to an escrow account upon
a Change of Control (as defined in the agreement). If, within three years after
the date of such Change of Control, Mr. Brown is terminated or he resigns as a
result of certain Adverse Consequences (as defined in the agreement), the
amount in the escrow account will be released to Mr. Brown. The amount of the
payment will be equal to two times the following amount: three times the sum of
Mr. Brown's annual base salary and most recent annual bonus, multiplied by a
factor of one plus the percentage representing the percentage increase, if any,
in the price of our common stock between the date of the agreement and the
close of business on the first business day following the date the public
announcement of the Change of Control is made. Mr. Brown will also be entitled
to receive all benefits he enjoyed prior to the Change of Control for a period
of three years after the date of termination of his employment.

As defined in the agreement, a "Change of Control" includes the
acquisition by certain parties of 30% or more of our outstanding voting
securities, certain changes in the composition of the Board of Directors that
are not approved by the incumbent Board, and the approval by our shareholders
of a plan of liquidation, certain mergers or reorganizations, or the sale of
substantially all of our assets. The "Adverse Consequences" described above
generally involve our breach of the agreement, a change in the terms of Mr.

55

Brown's employment, a reduction in our dividend policy, or a diminution in Mr.
Brown's role or responsibilities.

We entered into the agreement with Mr. Brown after determining that it
was in our best interests and our shareholders' best interests to retain his
services in the event of a threat or occurrence of a Change of Control and
thereafter, without alteration or diminution of his continuing leadership role
in determining and implementing our strategic objectives. We also recognized
that, unlike our other key personnel who participate in our stock performance
plan, Mr. Brown does not participate in that plan and would not enjoy the
benefit of the immediate vesting of stock interests granted pursuant to that
plan in the event of a Change of Control. Brown & Brown or Mr. Brown may
terminate his employment at any time with 30 days' notice.

Jim W. Henderson, C. Roy Bridges, Linda S. Downs, Kenneth D. Kirk, J.
Scott Penny, Thomas E. Riley, Cory T. Walker, Laurel L. Grammig, Thomas M.
Donegan, Jr., and M. Catherine Wellman have each entered into standard
employment agreements with us. These agreements may be terminated by either
party (in the case of Mr. Henderson, Ms. Downs, and Mr. Kirk, upon 30 days'
advance written notice). Compensation under these agreements is at amounts
agreed upon between us and the employee from time to time. Additionally, for a
period of two years following the termination of employment (three years in the
case of Mr. Henderson, Ms. Downs, Mr. Kirk, and Mr. Riley), these agreements
prohibit the employee from directly or indirectly soliciting or servicing our
clients or employees.

John R. Riedman entered into an Employment Agreement with the Company,
effective January 1, 2001. See Item 13, "Certain Relationships and Related
Transactions."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our Compensation Committee during 2001 were Samuel P.
Bell, III (Chairman), Bradley Currey, Jr., Theodore J. Hoepner, David H.
Hughes, Toni Jennings and Jan E. Smith.

Samuel P. Bell, III is a partner in the law firm of Pennington, Moore,
Wilkinson, Bell & Dunbar, P.A. and serves as Of Counsel to the law firm of Cobb
Cole & Bell. Cobb Cole & Bell performed services for us in 2001 and is expected
to continue to perform legal services for us during 2002.

Theodore J. Hoepner is the Vice Chairman of SunTrust Banks, Inc. We
have a $50 million line of credit and a $90 million term loan with SunTrust
Banks, Inc. We expect to continue to use SunTrust Banks, Inc. during 2002 for
some of our cash management requirements. Additionally, SunTrust Robinson
Humphrey Capital Markets, a division of SunTrust Capital Markets, Inc., the
investment banking subsidiary of SunTrust Banks, Inc., may provide investment
banking services to us from time to time. Mr. Brown and Mr. Hughes are each
directors of SunTrust Banks, Inc. Ms. Jennings is a director of SunTrust
Bank/Central Florida. Mr. Smith is a director of SunTrust Bank/Gulf Coast.
For other transactions involving management and us, see "Management -
Transactions with Management and Others."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 31, 2001, information as
to our common stock beneficially owned by (1) each of our directors, (2) each
executive officer named in the Summary Compensation Table, (3) all of our
directors and executive officers as a group, and (4) any person who we know to
be the beneficial owner of more than 5% of the outstanding shares of our common
stock:

56

AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2)(3) PERCENT OF TOTAL
- ------------------------ ----------------------------- ----------------

J. Hyatt Brown(4)............................................. 10,891,244 17.2%
220 South Ridgewood Avenue
Daytona Beach, Florida 32114
Samuel P. Bell, III(5)........................................ 6,800 *
C. Roy Bridges(6)............................................. 167,508 *
Bradley Currey, Jr............................................ 144,100 *
Jim W. Henderson(7)........................................... 564,431 *
Theodore J. Hoepner........................................... 6,000 *
David H. Hughes............................................... 10,000 *
Toni Jennings................................................. 1,324 *
Kenneth D. Kirk(8)............................................ 666,918 1.1%
John R. Riedman............................................... 20,000 *
Thomas E. Riley............................................... 185,640 *
Jan E. Smith(9)............................................... 3,400 *
T. Rowe Price Associates, Inc.(10)............................ 5,417,800 8.6%
100 E. Pratt Street
Baltimore, MD 21202
All current directors and executive officers as a group
(18 persons).................................................. 13,113,287 20.8%

- ---------
* Less than 1%

(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares
as to which a person has or shares voting power and/or investment
power. We have been informed that all shares shown are held of record
with sole voting and investment power, except as otherwise indicated.
All share amounts, percentages and share values have been adjusted to
reflect any applicable stock splits effected by us.

(2) The number and percentage of shares owned by the following persons
include the indicated number of shares owned through our 401(k) Plan
as of December 31, 2001: Mr. Bridges - 19,302; Mr. Henderson -
238,447; Mr. Kirk - 0; Mr. Riley - 30,148; all directors and officers
as a group - 327,618. The number and percentage of shares owned by the
following persons also include the indicated number of shares which
such persons have been granted under our stock performance plan as of
December 31, 2001 and which have satisfied the first condition for
vesting: Mr. Bridges - 89,400; Mr. Henderson - 107,300; Mr. Kirk -
106,220; Mr. Riley - 107,300; all directors and officers as a group -
705,728. These stock performance plan shares have voting and dividend
rights, but the holders thereof have no power to sell or dispose of
the shares, and the shares are subject to forfeiture. See "Executive
Compensation - Long-Term Incentive Plans - Awards in Last Fiscal
Year."

(3) Also includes any options exercisable within 60 days of December 31,
2001 granted to directors and officers under our incentive stock option
plan. On April 21, 2000, the indicated number of options were granted
to the following persons under the incentive stock option plan: Mr.
Henderson - 239,116; Mr. Bridges - 195,664; Mr. Kirk - 67,464; Mr.
Riley - 126,744; all directors and officers as a group - 915,716. Of
these granted amounts, 10,340 options became exercisable by each such
Named Executive Officer and by Ms. Downs on April 21, 2001.

57

and the underlying shares are therefore deemed to be beneficially
owned. An additional 10,340 options will become exercisable by each
such Named Executive Officer on April 21, 2002.

(4) All shares are beneficially owned jointly with Mr. Brown's spouse,
either directly or indirectly, and these shares have shared voting and
investment power.

(5) All shares are held in joint tenancy with Mr. Bell's spouse, and these
shares have shared voting and investment power.

(6) Mr. Bridges' ownership includes 6,080 shares held in joint tenancy
with Mr. Bridges' wife, which shares have shared voting and investment
power. Mr. Bridges' ownership also includes 1,250 shares owned by his
spouse, as to which he disclaims beneficial ownership.

(7) Mr. Henderson's ownership includes 179,224 shares held in joint
tenancy with Mr. Henderson's wife, which shares have shared voting and
investment power.

(8) Mr. Kirk's ownership includes 550,358 shares held in a revocable
family trust for which Mr. Kirk and his spouse serve as Trustees.

(9) Mr. Smith's ownership includes 1,400 shares owned by his spouse, as to
which he disclaims beneficial ownership.

(10) Based upon information contained in a report filed by T. Rowe Price
Associates, Inc. ("Price Associates") with the Securities and Exchange
Commission, these securities are owned by various individuals and
institutional investors, including T. Rowe Price Small-Cap Value Fund
(which owns 2,123,500 shares, representing 3.4% of the shares
outstanding), for which Price Associates serves as investment adviser
with power to direct investments and/or sole power to vote the
securities. Under Securities and Exchange Commission rules, Price
Associates is deemed to be a beneficial owner of such securities;
however, Price Associates disclaims beneficial ownership of such
securities.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective as of January 1, 2001, we acquired all of the insurance
agency business-related assets of Riedman Corporation ("Riedman"), based in
Rochester, New York. As of January 1, 2001, Riedman's capital stock was owned by
John R. Riedman, James R. Riedman and a trust, the equal beneficiaries of which
were John R. Riedman's four children, James R. Riedman, David J. Riedman,
Katherine R. Griswold, and Susan R. Holliday. Simultaneously with this
transaction, Brown & Brown of Wyoming, Inc. ("Brown & Brown-Wyoming"), one of
our wholly-owned subsidiaries, acquired all of the insurance agency
business-related assets of Riedman Insurance of Wyoming, Inc.
("Riedman-Wyoming"), a wholly-owned subsidiary of Riedman based in Cheyenne,
Wyoming. These acquisitions, recorded using the purchase method of accounting,
were made pursuant to an asset purchase agreement among us, Riedman, and
Riedman's shareholders, a purchase agreement between us and Andrew Meloni, a key
employee of Riedman, and a general assignment and bill of sale from
Riedman-Wyoming to Brown & Brown-Wyoming.

The aggregate consideration for these assets, which is payable in cash
in three installments by us and Brown & Brown-Wyoming, was equal to
approximately 1.55 times Riedman's revenues for the year 2000 less certain
Riedman debt related to its prior acquisitions, which we assumed. Cory T.
Walker, our Vice President, Treasurer and Chief Financial Officer, determined
the purchase price of the assets we acquired, based upon the above-described
formula. The cash consideration paid by us and Brown &

58

Brown-Wyoming at closing was approximately $61,566,572. Certain of the assets
acquired in these transactions were acquired by Riedman within two years prior
to the transactions, at an approximate aggregate cost of $12,135,000.

Riedman is the landlord under a lease agreement with us, as tenant,
with respect to office space in Rochester, New York that was entered into in
connection with the transactions referenced in the preceding paragraph. The
lease provides for our payment of annual rent of $300,000 for a term of five
years from January 2001. Additionally, we assumed and took assignment of a
covenant not to compete owed to Riedman from John R. Riedman's brother, Frank
Riedman. We received a discounted credit toward the asset purchase price for
amounts payable to Frank Riedman pursuant to this assumed obligation. We will
pay Frank Riedman ten equal quarterly installments of $82,500 which commenced
January 2001.

In January 2001, John R. Riedman, Chairman of Riedman, was elected as
one of our directors, and also became one of our Executive Vice Presidents and
Vice Chairman of Brown & Brown of New York, Inc., one of our subsidiaries. Mr.
John Riedman was paid an annual salary of $150,000 in 2001 pursuant to an
employment agreement with us that provides for a minimum term of one year, and
continues thereafter until terminated in accordance with its terms.

James R. Riedman, President of Riedman, is John R. Riedman's son and
was elected in January 2001 as an Executive Vice President of Brown & Brown of
New York, Inc. Mr. James Riedman was paid an annual salary of $150,000 pursuant
to an employment agreement with us that provided for a minimum term of four
months, and continued thereafter until terminated in accordance with its terms.
Mr. James Riedman resigned in June 2001.

As of January 2001, Mr. John Riedman directly owned 25.5% of Riedman's
capital stock, Mr. James Riedman and an unrelated third party each directly
owned 1.8% of such stock, and Mr. John Riedman's children beneficially owned
the remainder of such stock through the aforementioned trust. In addition, we
received a credit toward the asset purchase price for amounts payable by us for
covenants not to compete with terms of five years entered into with Mr. John
Riedman and each of his four children. At closing, we paid an aggregate of
$1,250,000 split equally among Mr. John Riedman and his four children for such
covenants. Additionally, Mr. John Riedman and Mr. James Riedman were each paid
$250,000 in 2001 and will each be paid $250,000 annually for the next two years
for their respective covenants.

J. Powell Brown, who is the son of J. Hyatt Brown, is employed by us
as the profit center manager for the Orlando, Florida retail office and
received compensation of $360,277 for services rendered to us in 2001. P.
Barrett Brown, who is also the son of J. Hyatt Brown, is employed by Brown &
Brown Insurance of Arizona, Inc., one of our subsidiaries as a producer in
that subsidiary's Phoenix, Arizona retail office, and received compensation of
$75,966 for services rendered to that subsidiary in 2001.

Eileen Craig, who is the sister-in-law of Kenneth D. Kirk, was
employed in 2001 by Brown & Brown Insurance of Arizona, Inc. as profit center
manager for the Tucson, Arizona retail office, and received compensation of
$80,350 for services rendered to that subsidiary in 2001. Ms. Craig resigned in
January 2002.

Joanne B. Penny, who is the mother of J. Scott Penny, is employed by us
as a producer in our Daytona Beach, Florida retail office and received
compensation of $168,552 for services rendered in 2001.

For other transactions involving management and us, see "Executive
Compensation - Compensation Committee Interlocks and Insider Participation."

59

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Consolidated Financial Statements of Brown & Brown,
Inc. consisting of:

(a) Consolidated Statements of Income for each
of the three years in the period ended
December 31, 2001.

(b) Consolidated Balance Sheets as of December
31, 2001 and 2000.

(c) Consolidated Statements of Shareholders'
Equity for each of the three years in the
period ended December 31, 2001.

(d) Consolidated Statements of Cash Flows for
each of the three years in the period ended
December 31, 2001.

(e) Notes to Consolidated Financial Statements.

(f) Report of Independent Certified Public
Accountants.

2. Consolidated Financial Statement Schedules. The
Consolidated Financial Statement Schedules are
omitted because they are not applicable.

3. EXHIBITS

2a Agreement and Plan of Reorganization, dated
as of July 25, 2001, by and among the
Registrant, Brown & Brown of Washington,
Inc., Raleigh, Schwarz & Powell, Inc. and
the Raleigh, Schwarz & Powell, Inc.
Employee Stock Ownership Plan (incorporated
by reference to Exhibit 2.1 to Form S-4/A
filed October 3, 2001).

2b Amendment No. 1 to Agreement and Plan of
Reorganization, dated as of August 10,
2001, by and among the Registrant, Brown &
Brown of Washington, Inc., Raleigh, Schwarz
& Powell, Inc. and the Raleigh, Schwarz &
Powell, Inc. Employee Stock Ownership Plan
(incorporated by reference to Exhibit 2.2
to Form S-4/A filed October 3, 2001).

3a Articles of Amendment to Articles of
Incorporation (incorporated by reference to
Exhibit 3a to Form 10-Q for the quarter
ended September 30, 2001), and Amended and
Restated Articles of Incorporation
(incorporated by reference to Exhibit 3a to
Form 10-Q for the quarter ended March 31,
1999).

3b Amended and Restated Bylaws of the
Registrant (incorporated by reference to
Exhibit 3b to Form 10K for the year ended
December 31, 1996).

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10a Amended and Restated Revolving and Term
Loan Agreement dated January 3, 2001 by and
between the Registrant and SunTrust Bank
(incorporated by reference to Exhibit 4a to
Form 10-K for the year ended December 31,
2001).

10a(1) Extension of the Term Loan Agreement
between the Registrant and SunTrust
(incorporated by reference to Exhibit 10b
to Form 10-Q for the quarter ended
September 30, 2000).

10a(2) Asset Purchase Agreement dated September
11, 2000, by and among the Registrant,
Riedman Corporation, and Riedman
Corporation's shareholders (incorporated by
reference to Exhibit 10a to Form 10-Q for
the quarter ended September 30, 2000).

10a(3) First Amendment to Asset Purchase
Agreement, dated January 3, 2001, by and
among the Registrant, Riedman Corporation,
and Riedman Corporation's shareholders
(incorporated by reference to Exhibit 10(b)
to Form 8-K filed on January 18, 2001).

10a(4) General Assignment and Bill of Sale, dated
January 1, 2001, from Riedman Insurance of
Wyoming, Inc. to Brown & Brown of Wyoming,
Inc. (incorporated by reference to Exhibit
10(c) to Form 8-K filed on January 18,
2001).

10b(1) Lease of the Registrant for office space at
220 South Ridgewood Avenue, Daytona Beach,
Florida dated August 15, 1987 (incorporated
by reference to Exhibit 10a(3) to Form 10-K
for the year ended December 31, 1993).

10b(2) Lease Agreement for office space at
SunTrust Financial Centre, Tampa, Florida,
dated February 1995, between Southeast
Financial Center Associates, as landlord,
and the Registrant, as tenant (incorporated
by reference to Exhibit 10a(4) to Form 10-K
for the year ended December 31, 1994).

10b(3) Lease Agreement for office space at Riedman
Tower, Rochester, New York, dated January 3,
2001, between Riedman Corporation, as
landlord, and the Registrant, as tenant
(incorporated by reference to Exhibit 10b(3)
to Form 10-K for the year ended December 31,
2001).

10c(1) Loan Agreement between Continental Casualty
Company and the Registrant dated August 23,
1991 (incorporated by reference to Exhibit
10d to Form 10-K for the year ended
December 31, 1991).

10c(2) Extension to Loan Agreement, dated August
1, 1998, between the Registrant and
Continental Casualty Company (incorporated
by reference to Exhibit 10c(2) to Form 10-Q
for the quarter ended September 30, 1998).

10d Indemnity Agreement dated January 1, 1979,
among the Registrant, Whiting National
Management, Inc., and Pennsylvania
Manufacturers' Association Insurance
Company (incorporated by reference to
Exhibit 10g to Registration Statement No.
33-58090 on Form S-4).

61

10e Agency Agreement dated January 1, 1979
among the Registrant, Whiting National
Management, Inc., and Pennsylvania
Manufacturers' Association Insurance
Company (incorporated by reference to
Exhibit 10h to Registration Statement No.
33-58090 on Form S-4).

10f(1) Deferred Compensation Agreement, dated May
6, 1998, between the Registrant and Kenneth
E. Hill (incorporated by reference to
Exhibit 10l to Form 10-Q for the quarter
ended September 30, 1998).

10f(2) Letter Agreement, dated May 6, 1998,
between the Registrant and Kenneth E. Hill
(incorporated by reference to Exhibit 10m
to Form 10-Q for the quarter ended
September 30, 1998).

10g Employment Agreement, dated as of July 29,
1999, between the Registrant and J. Hyatt
Brown (incorporated by reference to Exhibit
10f to Form 10-K for the year ended
December 31, 1999).

10h Portions of Employment Agreement, dated
April 28, 1993 between the Registrant and
Jim W. Henderson (incorporated by reference
to Exhibit 10m to Form 10-K for the year
ended December 31, 1993).

10i Employment Agreement, dated May 6, 1998
between the Registrant and Kenneth E. Hill
(incorporated by reference to Exhibit 10k
to Form 10-Q for the quarter ended
September 30, 1998).

10j Employment Agreement, dated January 3, 2001
between the Registrant and John R. Riedman
(incorporated by reference to Exhibit 10j
to Form 10-K for the year ended December
31, 2000).

10k Noncompetition, Nonsolicitation and
Confidentiality Agreement, effective as of
January 1, 2001 between the Registrant and
John R. Riedman (incorporated by reference
to Exhibit 10l to form 10-K for the year
ended December 31, 2000).

10l Asset Purchase Agreement, effective as of
May 1, 2001, by and among Brown & Brown of
Missouri, Inc., Parcel Insurance Plan,
Inc., Overseas Partners Capital Corp., and
Overseas Partners, Ltd.

10m Asset Purchase Agreement, effective October
1, 2001, by and among Brown & Brown of
Lehigh Valley, Inc., Henry S. Lehr, Inc.,
William H. Lehr, and Patsy A. Lehr.

10n(1) Registrant's 2000 Incentive Stock Option
Plan (incorporated by reference to Exhibit
4 to Registration Statement No. 333-43018
on Form S-8 filed on August 3, 2000).

10n(2) Registrant's Stock Performance Plan
(incorporated by reference to Exhibit 4 to
Registration Statement No. 333-14925 on
Form S-8 filed on October 28, 1996).

62

10o Rights Agreement, dated as of July 30,
1999, between the Registrant and First
Union National Bank, as Rights Agent
(incorporated by reference to Exhibit 4.1
to Form 8-K filed on August 2, 1999).

10p International Swap Dealers Association,
Inc. Master Agreement dated as of December
5, 2001 between SunTrust Bank and the
Registrant and letter agreement dated
December 6, 2001, regarding confirmation of
interest rate transaction.

10q Asset Purchase Agreement, effective October
3, 2001, by and among Brown & Brown of
Lehigh Valley, Inc., Apollo Financial
Corporation, William H. Lehr and Patsy A.
Lehr.

21 Subsidiaries of the Registrant.

23 Consent of Arthur Andersen LLP.

24 Powers of Attorney pursuant to which this
Form 10-K has been signed on behalf of
certain directors and officers of the
Registrant.

(b) REPORTS ON FORM 8-K.

We filed the following Current Reports on Form 8-K during the
last quarter of the fiscal year ended December 31, 2001:

1. Current Report on Form 8-K regarding the filing of a
"universal shelf" registration statement with the
Commission pursuant to Rule 415 under the Securities
Act of 1933, as amended, filed on December 19, 2001.

2. Current Report on Form 8-K regarding the financial
results of at least 30 days of post-merger combined
operations with Raleigh, Schwarz & Powell, Inc. and
Golden Gate Holdings, Inc. filed on December 12,
2001.

3. Current Report on Form 8-K regarding the completion
of the acquisition via merger of Raleigh, Schwarz &
Powell, Inc. and Golden Gate Holdings, Inc. filed on
November 6, 2001.

4. Current Report on Form 8-K regarding the declaration
by the Board of Directors of the two-for-one stock
split effected November 21, 2001 and an increase in
the quarterly cash dividend amount, filed on October
24, 2001.

5. Current Report on Form 8-K regarding our financial
results for the quarter ended September 30, 2001,
filed on October 2, 2001.

63

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

BROWN & BROWN, INC.
Registrant

By: *
-------------------------------
J. Hyatt Brown
Chief Executive Officer

Date: February 14, 2002

64

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

SIGNATURE TITLE DATE
- --------- ----- ----

* Chairman of the Board, President February 14, 2002
- ------------------------------
J. Hyatt Brown and Chief Executive Officer
(Principal Executive Officer)

* Director February 14, 2002
- ------------------------------
Samuel P. Bell, III

* Director February 14, 2002
- ------------------------------
Bradley Currey, Jr.

* Director February 14, 2002
- ------------------------------
Jim W. Henderson

* Director February 14, 2002
- ------------------------------
David H. Hughes

* Director February 14, 2002
- ------------------------------
Theodore J. Hoepner

* Director February 14, 2002
- ------------------------------
Toni Jennings

* Director February 14, 2002
- ------------------------------
John R. Riedman

* Director February 14, 2002
- ------------------------------
Jan E. Smith

* Vice President, Treasurer and February 14, 2002
- ------------------------------ Chief Financial Officer (Principal
Cory T. Walker Financial and Accounting Officer)

*By: /S/ LAUREL L. GRAMMIG
---------------------
Laurel L. Grammig
Attorney-in-Fact

65