Good morning and welcome to the Brown & Brown Incorporated Earnings Conference Call. Today's call is being recorded. Please note that certain information discussed during this call, including the answers given in response to your questions, may relate to future results and events or otherwise be forward looking in nature and reflect our current views with respect to future events, including financial performance, and that such statements are intended to fall within the Safe Harbor provisions of the securities laws. Actual results or events in the future are subject to a number of risks and uncertainties that may differ materially from those currently anticipated or desired or referenced or any forward-looking statements made as a result of a number of factors, including those risks and uncertainties that have been or will be identified from time to time in the company's reports filed with the Securities and Exchange Commission. Additional discussion of these and other factors affecting the company's business and prospects are contained in the company's filings with the Securities and Exchange Commission. Listeners are cautioned that any such forward-looking statements are not guarantees of future performance, and those actual results and events may differ from those intended… indicated in this call. Such differences may be material. With that said, Mr. Hyatt Brown, I’d like to turn the conference over to you. J. Hyatt Brown – Chairman & Chief Executive Officer: Thank you, Bill, and we have Cory Walker and myself, Powell Brown and Jim Henderson here with us in the room and we are going to start off with Cory who will talk about the financials. Cory? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Great. Thanks, Hyatt. We had a good quarter considering the continuation of a very soft market environment. Our net income for…

Thank you, Mr. Brown. [Operator Instructions]. And we’ll take our first question from Keith Walsh, Citigroup. Keith Walsh – Citigroup: Good morning, gentlemen. First question for Hyatt on specifically Retail... Florida Retail. I know you talked about this extensively, but it just seems that we are really starting the deceleration, I guess, and the decline prices we are seeing. Are we heading towards the bottom here do you think? And then I have a follow-up. J. Hyatt Brown – Chairman & Chief Executive Officer: And the answer is no, we are not at a bottom. I think that you're looking at next year although in some areas you see one of the things that’s making this a little hazy is that not only you have a price or a rate decrease, but you have an exposure decrease. So, that's a little hard to kind of put together, but we don't see at the moment, if we have an account and we are about to lose the account, we can almost name the price, and so as long as that is the circumstance, I don't think we are at the bottom. Keith Walsh – Citigroup: Okay. That's very helpful. But then, just following up and thinking about cash and your stock right now, you guys are at the lowest multiple you’ve been at in over a decade, why wouldn't you be buying back stock right now? J. Hyatt Brown – Chairman & Chief Executive Officer: Well, most people like to buy back stock, because they don't have anything else to do with it. We feel that the M&A opportunities just based on what we're seeing are greater than they've ever been and we don't... we feel that our best investment is our M&As, because that's the future of the company. So, as long as that is a great opportunity for us, the buying of stock is in second position. Keith Walsh – Citigroup: Okay. Thank you.

And our next question comes from Keith Alexander, JP Morgan. Keith Alexander – JP Morgan Securities: Hi, good morning. I was just wondering, given the magnitude of rate decreases, are some companies buying more coverage? J. Hyatt Brown – Chairman & Chief Executive Officer: Yes. And of course that's... Keith, that's... what we're trying to do... we are trying Keith Alexander – JP Morgan Securities: [inaudible]. J. Hyatt Brown – Chairman & Chief Executive Officer: Yes. We are trying to sell everything we can do to offset some of these rate declines. So, if you have someone who hasn’t taken… it’s a $5 million umbrella and we think they all have a $10 million. We are trying to sell $10 million and if they haven’t had employee practices liability, we are trying to sell that or etcetera, etcetera. So, yes, there is more coverage being given for the same price, but there is also additional coverages or expanded coverages being written for additional dollars. Keith Alexander – JP Morgan Securities: Okay. And is the... is the current economic environment impacting your customer base, like is it changing buying behavior? J. Hyatt Brown – Chairman & Chief Executive Officer: Not changing buying behavior, if you mean towards… Keith, do you mean some alternative risk bearer or something like that? Keith Alexander – JP Morgan Securities: Yes. J. Hyatt Brown – Chairman & Chief Executive Officer: No, no we are not seeing that, but what we are seeing is, businesses that are no longer in business, that's fairly bad and then we are seeing people who are cutting back because of the economic times. Keith Alexander – JP Morgan Securities: Okay. Great, thank you.

And our next question comes from Mark Hughes, SunTrust. Mark Hughes – SunTrust Robinson Humphrey: Thank you very much. Any movement in your average commission rates from 4Q to 1Q? And what's the outlook there, the last couple of quarters? J. Hyatt Brown – Chairman & Chief Executive Officer: Yes, there is and what's happening is we're seeing higher commissions being offered by companies. And we are also asking and so what's really happening is that as these prices are going down, we are getting some additional commissions in some cases and the companies are pushing this to try to maintain their market share, so that's a positive. Now, could I quantify that? No. I was in a meeting in the West on Thursday night and Friday where we had all of our profit centers, it seems to be that in the West there is a greater propensity for extra commissions than elsewhere, it might have something to do with the way the market is out there. Mark Hughes – SunTrust Robinson Humphrey: Got you. And then in terms of the cost structure, you did very well in other expenses, any one-time benefits there? Should we look for similar performance, excluding acquisitions? J. Hyatt Brown – Chairman & Chief Executive Officer: Cory, will you answer that? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: No, not in general. Probably the only thing that may not have a reoccurence is the fact that E&O reserves, as claims are settled that comes down and that was probably a little more than normal, but the rest of those calls really just kind of came all across all line items and there was nothing one specific and that's why we’ve seen it's really the function of our decentralized system that really naturally modifies their cost as the market gets tougher. J. Hyatt Brown – Chairman & Chief Executive Officer: I think also Mark, one of the things that a lot of people don’t recognize is that this virulence in the marketplace actually is really good for us because it hones our skills and it's a little bit like Lipitor for arteries and veins. It cleans out any plaque. And so what's happening is that we will come out of this even more efficient than we were in the past. So, we are not looking at this just being a negative. This is just sort of get it down and get it done time. Mark Hughes – SunTrust Robinson Humphrey: Got you. Thank you.

And we'll take our next question from Dan Johnson, Citadel Investment. Dan Johnson – Citadel Investment Group: Thank you very much. A couple of numbers, follow-ups, please. The $2 million E&O, the service line broke up during that. Was that a $2 million reduction in E&O accruals in the quarter? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Well, it's a combination of less E&O claims activity, as well as… as claims were settled, we may have had a reserve line and it just comes down. And basically attorneys kind of come up with a list of each of the account. But this is what we think we reserves and this is what's been settled up that. And so the comparison between the end of the last year of '07 and the first quarter, there’s a little bit of claims activity coming off the list. Dan Johnson – Citadel Investment Group: I guess what I wanted to be clear was that this was an income statement impact, not a balance sheet; they are not only a balance sheet impact item. Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Right. They are both linked together. Dan Johnson – Citadel Investment Group: Okay. So, there is that $2 million flow through the earnings. Got it. The Proctor, can you tell us a little bit more about… remind us roughly how big that is and what sort of growth you saw in the quarter? J. Hyatt Brown – Chairman & Chief Executive Officer: Powell, will you answer that? J. Powell Brown – President: Yes, the... I’ll just see something here. Dan Johnson – Citadel Investment Group: Proctor for the… J. Powell Brown – President: For the quarter, it's about six, seven for the quarter and once again…

And our next question comes from Dan Farrell, FPK. Dan Farrell – Fox-Pitt Kelton: Hi, good morning. Just in terms of your comments on the fourth quarter, you mentioned that maybe you get back to a more… we get back to a more normalized soft market of 10% to 15% price declines. And I think you are referring to just Florida. But within that context, is that the type of environment where you can generate flattish to modestly positive organic growth? Or is the fact that we also have a slowing economy, reduced exposure uses, is that an additional headwind that makes it difficult to get back to a flattish organic growth environment? J. Hyatt Brown – Chairman & Chief Executive Officer: There’s about three different factors. The economy is one of them. And so home building is up very substantially. The second thing and looking at Florida, Florida has had these ups and downs. And so when is the real estate market going to come back in Florida? Well, who knows, couple of years, three years, maybe. But there... but we still have a lot of economic activity down here and there are people that are making investments here and in Arizona and in Southern California, and in… maybe not so much in Las Vegas at the moment, that are going to be stimulative to the economy. There is one thing, if you look back at ‘98-‘99, which is when the depths of the last soft market, we had an internal growth rate of about 1% at the bottom, about 1.8%. Now, there is one name that’s different about us today that was not then. And that is that we have a greater amount of revenue in Wholesale Brokerage, both transactional and the actual binding authority kind of stuff.…

And we’ll take our next question from Joseph DeMarino at Piper Jaffray. Joseph DeMarino – Piper Jaffray: Good morning. J. Hyatt Brown – Chairman & Chief Executive Officer: Hi, Joe. How are you? Joseph DeMarino – Piper Jaffray: Good. You might have answered this, but what… it looks like there is a little bit of an increase in the compensation expenses, what was the cause of that? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Well, of that… Joseph DeMarino – Piper Jaffray: Excluding the first quarter of last year capital gain? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Right. When you exclude that, it basically went up about 2.6 percentage points. And I think the total was about $10 million, but that's where I say if you take the acquisitions that we made since the end of last, first quarter last year, first quarter of April 1st, $12 million [ph] of compensation came from those new acquisitions. So, then if you just strip that out and you are really just looking at the same offices that were there in the first quarter last year versus the first quarter this year, we actually had a net decrease in compensation expense of $1.6 million. And so, part of that was producer commissions, which are based on... that are paid on a commission basis, that was probably down a little over $1 million. The total management salaries and staff salaries were essentially flat and then believe it or not, our salaried producers who are generally newer producers who have now become validated, that actually went up by about $1.4 million. So, the point I would make there that even though this is a tough market, we continue to develop our producer forces and are not…

And we’ll take our next question from Nick Fisken at Stephens. Nikolai Fisken – Stephens Inc. Hi, good morning, everybody. J. Hyatt Brown – Chairman & Chief Executive Officer: Hi, Nick. How are you? Nikolai Fisken – Stephens Inc. Good. Cory, on the other operating expenses, last year they were down, Q1 to Q2, $300,000 and just to be crystal on this one, it sounds like it should go up by at least $2 million on the E&O release, correct? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: I’m not so sure I’ve made that assumption. It’s just… I think it's more of a function of what happens here in this next quarter relative to E&O. Nikolai Fisken – Stephens Inc. So, worst case it goes up too, sequentially? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: I'm not sure, I didn't say that either. Basically, any claims that come up, our attorneys look at it and make evaluation as to what is a likely outcome? And then based on that you establish a reserve, if you believe that there is going to be an indemnity payment there. And so it's just a matter of what get settled and the drop this quarter just happened that, in the first quarter of this year there was a lot of clients who just got resolved or got drawn out of the court. One case we had that we were sued, we actually got a defendant payment out of it, like $200,000 with... so, it’s all… generally I think the number of claims have actually dropped too and some of the Spitzer related stuff is kind of winding out. And so, I don't... I don't think it’s something you can really predict. Nikolai Fisken – Stephens Inc.…

And we’ll go next to Meyer Shields of Stifel Nicolaus. Meyer Shields – Stifel Nicolaus & Company, Inc.: Hi, good morning everybody, J. Hyatt Brown – Chairman & Chief Executive Officer: Good morning, Meyer. Meyer Shields – Stifel Nicolaus & Company, Inc.: In your opinion, other than concerns about the weather, is the attitude of Florida's insurance regulators deterring any carriers from setting up their participation in the market? J. Hyatt Brown – Chairman & Chief Executive Officer: Well, that’s a really difficult answer, a question and answer. You have the legislature who is trying to respond to the cries of their constituency and so there is some chest-pounding going along. The regulators are trying to be evenhanded, but they have been pushed over some by the elected people. So, is it just awful, awful? It’s not awful, awful, but it is not considered to be a very positive climate by insurance companies at the moment, particularly if you're in the personal life business. That's where the real rub is and that’s where the big capacity problem is. So, we’ll work our way through this. This has happened before, Meyer. I remember in the 1970s when companies were going to walk out of Florida because they were being put to the test on personalized auto liability. Well, there was a lot of yanking and jerking in Yanks and now it all went away and file in use were actually working. So, if we just let a little time go along, the marketplace will solve the problem. Meyer Shields – Stifel Nicolaus & Company, Inc.: Jim, can you just talk a little bit about the... I guess M&A strategy and opportunity in London? Jim Henderson – Vice Chairman & Chief Operating Officer: Well, the opportunity there was, this project that Powell…

And we will go next to Steven Labbe, Langen McAlenney. Steven Labbe – Langen McAlenney: Hi, good morning. Just a quick question, I was wondering if you could give us what organic growth would have been, excluding the supplemental or the GSCs that were included in this quarter, but not last year? J. Hyatt Brown – Chairman & Chief Executive Officer: Cory? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: [inaudible] about $2.4 million. Because remember last year, in the first quarter there were no GSCs accrued because we really didn't even know what Traveler's or Chubb's game plan was until the end of April. And so, in the second quarter of last year, of '07, we accrued $3.2 million, which was roughly $1.6 million to $1.650 million per quarter. So, it was two quarters that we plan into the June second quarter year-end. So, there wasn't anything in the first quarter. So, this year there is another two point... the Hartford is now part of the GSC in addition to Chubb and Traveler's. And so that amounts about $2.4 million this quarter. Steven Labbe – Langen McAlenney: So to be apples-to-apples, I would have to just use that 2.4 million? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: That's correct. Steven Labbe – Langen McAlenney: Okay. Thanks guys.

And we’ll go to Ken Billingsley, Signal Hill. Kenneth Billingsley – Signal Hill Group LLC: Good morning, just a couple of questions here. Seeing that the stock is trading at early 2004 levels, yet your income is at least in your 2000 level… 2006 levels and stabilizing. Based on your bonus structure, how is employee morale and retention of office leaders right now? J. Hyatt Brown – Chairman & Chief Executive Officer: Actually, it’ a good question. The individual offices… bonuses for the Head of Office and the department managers is based on the growth or lack thereof in their own offices. So, individual offices, some offices, bonuses went down last year and some went up, that's the same for this year. And so, the only people with bonuses who are probably going to be down is probably the senior leadership, which is the top 10 people in the company. And that's because those bonuses are tied to a minimum growth and the earnings for the whole company. So, we are not experiencing a loss of PCLs, we continue to make some changes, as they are deemed necessary. But from the standpoint of people leaving us who we want to keep, we just don't seem to have that problem. Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Ken, we also this first quarter, we reloaded our performance stock awards at this lower stock value and I think that is viewed as a very positive element meaning our ability to grow the stock and create equity wealth for them. And so that was well received and given the headwind there to grow the value. And Ken as you remember, there are performance stock plans, those are grants of stock and unlike options they are never underwater. You may…

We’ll take a follow-up question from Mark Hughes, SunTrust. Mark Hughes – SunTrust Robinson Humphrey: Thank you. What was the cash flow from operations? J. Hyatt Brown – Chairman & Chief Executive Officer: Cory? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: The cash flow from operations this year or this first quarter is going to be roughly $45 million. Mark Hughes – SunTrust Robinson Humphrey: Okay. And then the Proctor division in the fourth quarter was up 100% in Q1, how did they do in the fourth quarter? J. Hyatt Brown – Chairman & Chief Executive Officer: I don't have that with me, Cory. Do you have that? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Well, fourth quarter of last year they had… J. Hyatt Brown – Chairman & Chief Executive Officer: We're looking. Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: Proctor last year, I mean in the fourth quarter of last year, they basically were down, margin like 3%. Mark Hughes – SunTrust Robinson Humphrey: Down year-over-year to 3%? Cory Walker – Senior Vice President, Treasurer and Chief Financial Officer: No, that was just for the fourth quarter. Mark Hughes – SunTrust Robinson Humphrey: Right. Okay. Thank you.

And Mr. Brown, we have no other questions standing by at this time. I'll turn the conference back over to you for any additional or closing remarks. J. Hyatt Brown – Chairman & Chief Executive Officer: Okay. Thanks, Bill, and thank you all and we’ll look to see you in July. Bye. Operator: Thank you. That does conclude today's conference call. We do thank you for your participation. You may disconnect at this time.