BROWN & BROWN, INC.

(BRO)
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Delayed Nyse  -  04:00 2022-07-01 pm EDT
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07/01Brown & Brown, Inc., completes the acquisition of Patrick Quinlan Insurance by O'Leary Insurance Ltd.
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07/01Brown & Brown, Inc., completes the acquisition of Patrick Quinlan Insurance by O'Leary Insurance Ltd.
GL
07/01Brown & Brown, Inc. acquired General Insurance Operations of Patrick Quinlan Insurance Limited.
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BROWN & BROWN, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/09/2022 | 05:05pm EDT
The following discussion updates the Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2021, and the two
discussions should be read together.

GENERAL

Company Overview - First Quarter of 2022


The following discussion should be read in conjunction with our Condensed
Consolidated Financial Statements and the related Notes to those Financial
Statements included elsewhere in this Quarterly Report on Form 10-Q. In
addition, please see "Information Regarding Non-GAAP Financial Measures" below
regarding important information on non-GAAP financial measures contained in our
discussion and analysis.

We are a diversified insurance agency, wholesale brokerage, insurance programs
and services organization headquartered in Daytona Beach, Florida. As an
insurance intermediary, our principal sources of revenue are commissions paid by
insurance companies and, to a lesser extent, fees paid directly by customers.
Commission revenues generally represent a percentage of the premium paid by an
insured and are affected by fluctuations in both premium rate levels charged by
insurance companies and the insureds' underlying "insurable exposure units,"
which are units that insurance companies use to measure or express insurance
exposed to risk (such as property values, sales or payroll levels) to determine
what premium to charge the insured. Insurance companies establish these premium
rates based upon many factors, including loss experience, risk profile and
reinsurance rates paid by such insurance companies, none of which we control. We
also operate a capitalized captive insurance facility (the "Captive") for the
purpose of having additional capacity to sell property insurance for earthquake
and wind exposed properties. The Captive buys reinsurance, limiting, but not
eliminating, the Company's exposure to underwriting losses, and revenues are
recognized as net retained earned premiums over the associated policy periods.

The volume of business from new and existing customers, fluctuations in
insurable exposure units, changes in premium rate levels, changes in general
economic and competitive conditions, a health pandemic, and the occurrence of
catastrophic weather events all affect our revenues. For example, higher levels
of inflation, which would increase the value of insurable exposure units, or a
general decline in economic activity, which could decrease the value of
insurable exposure units. Conversely, increasing costs of litigation settlements
and awards could cause some customers to seek higher levels of insurance
coverage. Historically, we have grown our revenues as a result of our focus on
net new business and acquisitions. We foster a strong, decentralized sales and
service culture, which enables responsiveness to changing business conditions
and drives accountability for results.

The term "core commissions and fees" excludes profit-sharing contingent
commissions, and therefore represents the revenues earned directly from specific
insurance policies sold, and specific fee-based services rendered. The net
change in core commissions and fees reflects the aggregate changes attributable
to: (i) net new and lost accounts; (ii) net changes in our customers' exposure
units; (iii) net changes in insurance premium rates or the commission rate paid
to us by our carrier partners; (iv) the net change in fees paid to us by our
customers; and (v) any businesses acquired or disposed of.

We also earn "profit-sharing contingent commissions," which are commissions
based primarily on underwriting results, but in select situations may reflect
additional considerations for volume, growth and/or retention. These
commissions, which are included in our commissions and fees in the Condensed
Consolidated Statements of Income, are accrued throughout the year based on
actual premiums written and are primarily received in the first and second
quarters of each subsequent year, based upon the aforementioned considerations
for the prior year(s). Over the last three years, profit-sharing contingent
commissions have averaged approximately 3.0% of commissions and fees revenue.

Fee revenues primarily relate to services other than securing coverage for our
customers, and to a lesser extent as fees negotiated in lieu of commissions. Fee
revenues are generated by: (i) our Services segment, which is primarily a
fee-based business that provides insurance-related services, including
third-party claims administration and comprehensive medical utilization
management services in both the workers' compensation and all-lines liability
arenas, as well as Medicare Set-aside services, Social Security disability and
Medicare benefits advocacy services, and claims adjusting services; (ii) our
National Programs and Wholesale Brokerage segments, which earn fees primarily
for the issuance of insurance policies on behalf of insurance companies; and
(iii) our Retail segment in our large-account customer base, where we primarily
earn fees for securing insurance for our customers, and in our automobile dealer
services ("F&I") businesses where we earn fees for assisting our customers with
creating and selling warranty and service risk management programs. Fee revenues
as a percentage of our total commissions and fees, represented 27.4% in 2021 and
26.1% in 2020.

For the three months ended March 31, 2022, our total commissions and fees growth rate was 11.1%, and our consolidated Organic Revenue growth rate was 7.8%.


Historically, investment income has consisted primarily of interest earnings on
operating cash and where permitted, on premiums and advance premiums collected
and held in a fiduciary capacity before being remitted to insurance companies.
Our policy as it relates to the Company's capital 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.
Other income primarily reflects legal settlements and other revenues.

Income before income taxes for the three months ended March 31, 2022 increased
from the first quarter of 2021 by $25.8 million, primarily as a result of net
new business, acquisitions completed in the past 12 months, and consistent
leveraging and management of our expense base.

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Information Regarding Non-GAAP Measures


In the discussion and analysis of our results of operations, in addition to
reporting financial results in accordance with generally accepted accounting
principles ("GAAP"), we provide references to the following non-GAAP financial
measures as defined in Regulation G of SEC rules: Total Revenues - Adjusted,
Organic Revenue, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted and EBITDAC Margin
- Adjusted. We present these measures because we believe such information is of
interest to the investment community and because we believe it provides
additional meaningful methods to evaluate the Company's operating performance
from period to period on a basis that may not be otherwise apparent on a GAAP
basis due to the impact of certain items that have a high degree of variability
and that we believe are not indicative of ongoing performance. This non-GAAP
financial information should be considered in addition to, not in lieu of, the
Company's consolidated income statements and balance sheets as of the relevant
date. Consistent with Regulation G, a description of such information is
provided below and tabular reconciliations of this supplemental non-GAAP
financial information to our most comparable GAAP information are contained in
this Quarterly Report on Form 10-Q under "Results of Operations - Segment
Information."

We view Organic Revenue and Organic Revenue growth as important indicators when
assessing and evaluating our performance on a consolidated basis and for each of
our four segments, because it allows us to determine a comparable, but non-GAAP,
measurement of revenue growth that is associated with the revenue sources that
were a part of our business in both the current and prior year and that are
expected to continue in the future. We also view EBITDAC and EBITDAC Margin as
important indicators when assessing and evaluating our performance, as they
present more comparable measurements of our operating margins in a meaningful
and consistent manner. As disclosed in our most recent proxy statement, we use
Organic Revenue and EBITDAC Margin as key performance metrics for our short-term
and long-term incentive compensation plans for executive officers and other key
employees.

Beginning January 1, 2022, we no longer exclude guaranteed supplemental
commissions ("GSCs") from core commissions and fees and, therefore, GSCs are a
component of Organic Revenue. All current and prior periods contained within
this Quarterly Report on Form 10-Q have been adjusted for this treatment. GSCs
are a stable source of revenue that are highly correlated to core commissions,
so isolating them separately provides no meaningful incremental value in
evaluating our revenue.

Beginning January 1, 2022, the following, in addition to the change in estimated
acquisition earn-out payables, are excluded from certain non-GAAP measures, as
we believe these amounts are not indicative of the ongoing operating performance
of the business and are not easily comparable from period-to-period:

"(Gain)/loss on disposal," a caption on our consolidated statements of income
which reflects net proceeds received as compared to net book value related to
sales of books of business and other divestiture transactions, such as the
disposal of a business through sale or closure.

"Acquisition/Integration Costs," which represent the acquisition and integration
costs (e.g., costs associated with regulatory filings, legal/accounting
services, due diligence and the costs of integrating our information technology
systems) arising out of our acquisition of Orchid Underwriters Agency and
CrossCover Insurance Services ("Orchid") and pending acquisitions of GRP
(Jersey) Holdco Limited and its business ("GRP") and BdB Limited companies
("BdB"). Such costs are not expected to occur on an ongoing basis in the future.

The period-over-period impact of foreign currency translation ("Foreign Currency
Translation"), which is calculated by applying current-year foreign exchange
rates to the various functional currencies in our business to our reporting
currency of US dollars for the same period in the prior year.

We are presenting EBITDAC - Adjusted and EBITDAC Margin - Adjusted for the current and prior year periods contained within this Quarterly Report on Form 10-Q so these non-GAAP financial measures compare both periods on the same basis.


Non-GAAP Revenue Measures

Total Revenues - Adjusted is our total revenues, excluding the period-over-period impact of Foreign Currency Translation.

Organic Revenue is our core commissions and fees less: (i) the core commissions
and fees earned for the first 12 months by newly acquired operations; (ii)
divested business (core commissions and fees generated from offices, books of
business or niches sold or terminated during the comparable period); and (iii)
the period-over-period impact of Foreign Currency Translation. The term "core
commissions and fees" excludes profit-sharing contingent commissions and
therefore represents the revenues earned directly from specific insurance
policies sold and specific fee-based services rendered. Organic Revenue can be
expressed as a dollar amount or a percentage rate when describing Organic
Revenue growth.

Non-GAAP Earnings Measures

•

EBITDAC is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables.

EBITDAC Margin is defined as EBITDAC divided by total revenues.

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EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal,
(ii) Acquisition/Integration Costs and (iii) the period-over-period impact of
Foreign Currency Translation.

EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by Total Revenues - Adjusted.


Our industry peers may provide similar supplemental non-GAAP information with
respect to one or more of these measures, although they may not use the same or
comparable terminology and may not make identical adjustments and, therefore,
comparability may be limited. This supplemental non-GAAP financial information
should be considered in addition to, and not in lieu of, the Company's condensed
consolidated financial statements.

Acquisitions


Part of our continuing business strategy is to attract high-quality insurance
intermediaries to join our operations. From 1993 through the first quarter of
2022, we acquired 582 insurance intermediary operations.

Critical Accounting Policies


We have had no changes to our Critical Accounting Policies as described in our
most recent Form 10-K for the year ended December 31, 2021. We believe that of
our significant accounting and reporting policies, the more critical policies
include our accounting for revenue recognition, business combinations and
purchase price allocations including potential earn-out obligations, intangible
asset impairments, non-cash stock-based compensation and reserves for
litigation. In particular, the accounting for these areas requires significant
use of judgment to be made by management. Different assumptions in the
application of these policies could result in material changes in our
consolidated financial position or consolidated results of operations. Refer to
Note 1 in the "Notes to Consolidated Financial Statements" in our Annual Report
on Form 10-K for the year ended December 31, 2021 for details regarding our
critical and significant accounting policies.

While we did not have any changes to our Critical Accounting Policies we have
implemented a revised basis of presentation to segregate fiduciary assets and
liabilities from the operating assets and liabilities of the Company. The
associated fiduciary cash flow is reflected within the financing activity
section of the Statement of Cash Flows. All prior periods included in these
financial statements have been updated to this basis of presentation.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.

Financial information relating to our condensed consolidated financial results for the three months ended March 31, 2022 and 2021 is as follows:


                                              Three months ended March 31,
(in millions, except percentages)          2022           2021         % 

Change

REVENUES

Core commissions and fees               $     875.7     $   788.1           11.1 %
Profit-sharing contingent commissions          28.6          25.9           10.4 %
Investment income                               0.2           0.3          (33.3 )%
Other income, net                               0.2           1.0          (80.0 )%
Total revenues                                904.7         815.3           11.0 %
EXPENSES
Employee compensation and benefits            459.0         429.5            6.9 %
Other operating expenses                      126.8          94.4           34.3 %
(Gain)/loss on disposal                        (0.2 )        (0.2 )           (- )%
Amortization                                   31.1          29.5            5.4 %
Depreciation                                    8.1           7.5            8.0 %
Interest                                       18.3          16.3           12.3 %
Change in estimated acquisition
  earn-out payables                            (3.4 )        (0.9 )          NMF
Total expenses                                639.7         576.1           11.0 %
Income before income taxes                    265.0         239.2           10.8 %
Income taxes                                   44.7          39.5           13.2 %
NET INCOME                              $     220.3     $   199.7           10.3 %
Income Before Income Taxes
  Margin (1)                                   29.3 %        29.3 %
EBITDAC - Adjusted (2)                  $     323.3     $   291.1           11.1 %
EBITDAC Margin - Adjusted (2)                  35.7 %        35.7 %
Organic Revenue growth rate (2)                 7.8 %         9.9 %

Employee compensation and benefits

  relative to total revenues                   50.7 %        52.7 %

Other operating expenses relative

  to total revenues                            14.0 %        11.6 %
Capital expenditures                    $      10.0     $    11.4          (12.3 )%
Total assets at March 31,               $  11,272.9     $ 8,910.8




(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure

Commissions and Fees


Commissions and fees, including profit-sharing contingent commissions, for the
three months ended March 31, 2022 increased $90.3 million to $904.3 million, or
11.1%, over the same period in 2021. Core commissions and fees revenue for the
first quarter of 2022 increased $87.6 million, composed of (i) approximately
$61.4 million of net new and renewal business, which reflects an Organic Revenue
growth rate of 7.8%; (ii) $29.3 million from acquisitions that had no comparable
revenues in the same period of 2021; (iii) an offsetting decrease from the
impact of foreign currency translation of $0.7 million; and (iv) an offsetting
decrease of $2.4 million related to commissions and fees revenue from business
divested in the preceding twelve months. Profit-sharing contingent commissions
for the first quarter of 2022 increased by $2.7 million, or 10.4%, compared to
the same period in 2021.

Investment Income

Investment income for the three months ended March 31, 2022 decreased $0.1 million, or 33.3%, from the same period in 2021. The decrease was primarily driven by lower interest rates as compared to the prior year.

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Other Income

Other income for the three months ended March 31, 2022 was $0.2 million, compared with $1.0 million in the same period in 2021. Other income consists primarily of legal settlements and other miscellaneous income.

Employee Compensation and Benefits


Employee compensation and benefits expense as a percentage of total revenues was
50.7% for the three months ended March 31, 2022 as compared to 52.7% for the
three months ended March 31, 2021, and increased 6.9%, or $29.5 million. This
increase included $10.9 million of compensation costs related to stand-alone
acquisitions that had no comparable costs in the same period of 2021. Therefore,
employee compensation and benefits expense attributable to those offices that
existed in the same time periods of 2022 and 2021 increased by $18.6 million or
4.4%. This underlying employee compensation and benefits expense increase was
primarily related to: (i) increased claims associated with our self-insured
employee health plan; (ii) an increase in staff salaries attributable to salary
inflation; (iii) an increase in accrued performance bonuses; (iv) an increase in
producer compensation associated with revenue growth; partially offset by (v)
the year-over-year decrease of approximately $10.6 million in the value of
deferred compensation liabilities driven by changes in the market prices of our
employees' investment elections, which was substantially offset by other
operating expenses as we hold assets to fund these liabilities that closely
match the investment elections of our employees.

Other Operating Expenses


Other operating expenses represented 14.0% of total revenues for the first
quarter of 2022 as compared to 11.6% for the first quarter of 2021. Other
operating expenses for the first quarter of 2022 increased $32.4 million, or
34.3%, from the same period of 2021. The net increase included: (i) $4.2 million
of other operating expenses related to stand-alone acquisitions that had no
comparable costs in the same period of 2021; (ii) increased variable expenses
with higher travel and entertainment being the largest driver; (iii) acquisition
and integration costs associated with the purchase of Orchid and our pending
acquisitions of GRP and BdB and (iv) the year-over-year increase of
approximately $10.6 million in the value of assets held to fund the associated
liabilities within our deferred compensation plan, which was substantially
offset by increases in the value of those liabilities recognized as expense in
employee compensation and benefits.

(Gain)/Loss on Disposal


Gain on disposal for the first quarter of 2022 and the first quarter of 2021 was
$0.2 million. The gains on disposal were due to activity associated with book of
business sales. Although we do not routinely sell businesses or customer
accounts, we periodically sell an office or a book of business (one or more
customer accounts) that we believe does not produce reasonable margins or
demonstrate a potential for growth, or because doing so is in the Company's best
interest.

Amortization

Amortization expense for the first quarter of 2022 increased $1.6 million, or 5.4%, compared to the first quarter of 2021. This increase reflects the amortization of new intangibles from businesses acquired within the past 12 months, partially offset by certain intangible assets becoming fully amortized.

Depreciation


Depreciation expense for the first quarter of 2022 increased $0.6 million, or
8.0%, compared to the first quarter of 2021. Changes in depreciation expense
reflect the addition of fixed assets resulting from business initiatives, and
net additions of fixed assets resulting from businesses acquired in the past 12
months, which were partially offset by fixed assets that became fully
depreciated.

Interest Expense


Interest expense for the first quarter of 2022 increased $2.0 million, or 12.3%,
compared to the first quarter of 2021. The increase was due to higher average
debt balances resulting from a recent debt issuance in the first quarter of 2022
in preparation of the funding of the Orchid, GRP and BdB acquisitions, as well
as increases in the floating rate benchmark used on our floating rate debt.

Change in Estimated Acquisition Earn-Out Payables


Accounting Standards Codification ("ASC") Topic 805-Business Combinations is the
authoritative guidance requiring an acquirer to recognize 100% of the fair value
of acquired assets, including goodwill and assumed liabilities (with only
limited exceptions) upon initially obtaining control of an acquired entity.
Additionally, the fair value of contingent consideration arrangements (such as
earn-out purchase price arrangements) at the acquisition date must be included
in the purchase price consideration. The recorded purchase price for
acquisitions includes an estimation of the fair value of liabilities associated
with any potential earn-out provisions. Subsequent changes in these earn-out
obligations are required to be recorded in the Condensed Consolidated Statements
of Income when incurred or reasonably estimated. Estimations of potential
earn-out obligations are typically based upon future earnings of the acquired
operations or entities, usually for periods ranging from one to three years.

The net charge or credit to the Condensed Consolidated Statements of Income for
the period is the combination of the net change in the estimated acquisition
earn-out payables balance, and the interest expense imputed on the outstanding
balance of the estimated acquisition earn-out payables.

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As of March 31, 2022 and 2021, the fair values of the estimated acquisition
earn-out payables were re-evaluated based upon projected operating results and
measured at fair value on a recurring basis using unobservable inputs (Level 3)
as defined in ASC 820-Fair Value Measurement. The resulting net changes, as well
as the interest expense accretion on the estimated acquisition earn-out
payables, for the three months ended March 31, 2022 and 2021 were as follows:
                                                            Three months ended March 31,
(in millions)                                                2022                   2021
Change in fair value of estimated acquisition
earn-out payables                                       $         (4.8 )       $         (2.7 )
Interest expense accretion                                         1.4                    1.8
Net change in earnings from estimated acquisition
earn-out payables                                       $         (3.4 )    

$ (0.9 )



For the three months ended March 31, 2022 and 2021, the fair value of estimated
acquisition earn-out payables was re-evaluated and decreased by $4.8 million and
$2.7 million, respectively, which resulted in credits to the Condensed
Consolidated Statements of Income.

As of March 31, 2022, estimated acquisition earn-out payables totaled $250.9 million, of which $49.3 million was recorded as accounts payable and $201.6 million was recorded as other non-current liabilities.

Income Taxes

The effective tax rate on income from operations for the three months ended March 31, 2022 and 2021 was 16.9% and 16.5% respectively.

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RESULTS OF OPERATIONS - SEGMENT INFORMATION


As discussed in Note 12 of this 10-Q on the Condensed Consolidated Financial
Statements, we operate four reportable segments: Retail, National Programs,
Wholesale Brokerage, and Services. On a segmented basis, changes in
amortization, depreciation and interest expenses generally result from activity
associated with acquisitions. Likewise, other revenues in each segment reflects
net gains primarily from legal settlements and miscellaneous income. As such, in
evaluating the operational efficiency of a segment, management focuses on the
Organic Revenue growth rate and EBITDAC Margin - Adjusted.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended March 31, 2022 and 2021, including by segment, and the growth rates for Organic Revenue for the three months ended March 31, 2022, are as follows:



2022                    Retail (1)            National Programs          Wholesale Brokerage             Services                 Total
(in millions,
except
percentages)         2022        2021          2022         2021          2022            2021       2022        2021       2022        2021
Commissions and
fees                $ 595.9     $ 521.7     $    162.1     $ 154.6     $     102.7       $ 90.7     $ 43.6      $ 47.0     $ 904.3     $ 814.0
Total change        $  74.2                 $      7.5                 $      12.0                    (3.4 )               $  90.3
Total growth %         14.2 %                      4.9 %                      13.2 %                  (7.2 )%                 11.1 %
Profit-sharing
contingent
  commissions         (17.9 )     (15.7 )         (8.0 )      (8.3 )          (2.7 )       (1.9 )        -           -       (28.6 )     (25.9 )
Core commissions
and fees            $ 578.0     $ 506.0     $    154.1     $ 146.3     $     100.0       $ 88.8     $ 43.6      $ 47.0     $ 875.7     $ 788.1
Acquisitions          (28.3 )         -           (0.1 )         -            (0.9 )          -          -           -       (29.3 )         -
Dispositions              -        (0.7 )            -        (1.2 )             -            -          -        (0.5 )         -        (2.4 )
Foreign currency
translation               -        (0.7 )            -           -               -            -          -           -           -        (0.7 )
Organic Revenue
(2)                 $ 549.7     $ 504.6     $    154.0     $ 145.1     $      99.1       $ 88.8     $ 43.6      $ 46.5     $ 846.4     $ 785.0
Organic Revenue
growth (2)          $  45.1                 $      8.9                 $      10.3                  $ (2.9 )               $  61.4
Organic Revenue
growth rate (2)         8.9 %                      6.1 %                      11.6 %                  (6.2 )%                  7.8 %


(1) The Retail Segment includes commissions and fees reported in the "Other"
column of the Segment Information in Note 12 of this 10-Q of the Notes to the
Condensed Consolidated Financial Statements, which includes corporate and
consolidation items.
(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended March 31, 2021 and 2020, including by segment, and the growth rates for Organic Revenue for the three months ended March 31, 2021, including by segment, are as follows:


2021                    Retail (1)            National Programs          Wholesale Brokerage             Services                 Total
(in millions,
except
percentages)         2021        2020          2021         2020          2021           2020        2021       2020        2021        2020
Commissions and
fees                $ 521.7     $ 446.4     $    154.6     $ 128.1     $     90.7       $  77.5     $ 47.0     $  44.5     $ 814.0     $ 696.5
Total change        $  75.3                 $     26.5                 $     13.2                   $  2.5                 $ 117.5
Total growth %         16.9 %                     20.7 %                     17.0 %                    5.6 %                  16.9 %
Profit-sharing
contingent
  commissions         (15.7 )     (16.1 )         (8.3 )      (5.7 )         (1.9 )        (2.1 )        -           -       (25.9 )     (23.9 )
Core commissions
and fees              506.0       430.3          146.3       122.4           88.8          75.4       47.0        44.5       788.1       672.6
Acquisition
revenues            $ (34.1 )   $     -     $     (6.2 )   $     -     $   
 (8.5 )     $     -     $    -     $     -     $ (48.8 )   $     -
Divested business         -        (0.2 )            -           -              -             -          -           -           -        (0.2 )
Foreign currency
translation               -           -              -         0.2              -             -          -           -           -         0.2
Organic Revenue
(2)                 $ 471.9     $ 430.1     $    140.1     $ 122.6     $     80.3       $  75.4     $ 47.0     $  44.5     $ 739.3     $ 672.6
Organic Revenue
growth (2)          $  41.8                 $     17.5                 $      4.9                   $  2.5                 $  66.7
Organic Revenue
growth rate (2)         9.7 %                     14.3 %                      6.5 %                    5.6 %                   9.9 %


(1) The Retail Segment includes commissions and fees reported in the "Other"
column of the Segment Information in Note 12 of this 10-Q of the Notes to the
Condensed Consolidated Financial Statements, which includes corporate and
consolidation items.
(2) A non-GAAP financial measure.



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The reconciliation of Total Revenues to Total Revenues - Adjusted, a non-GAAP
measure, income before incomes taxes, included in the Condensed Consolidated
Statement of Income, to EBITDAC - Adjusted, a non-GAAP measure, and Income
Before Income Taxes Margin to EBITDAC Margin - Adjusted, a non-GAAP measure, for
the three months ended March 31, 2022, is as follows:

                                          National       Wholesale
(in millions)                Retail       Programs       Brokerage       Services       Other        Total
Total Revenues               $ 596.4     $    162.2     $     102.9     $     43.6     $   (0.4 )   $ 904.7
Foreign Currency
Translation                        -              -               -              -            -           -
Total Revenues -
Adjusted(2)                    596.4          162.2           102.9           43.6         (0.4 )     904.7
Income before income taxes     184.1           41.7            25.6            6.6          7.0       265.0
Income Before Income Taxes
Margin(1)                       30.9 %         25.7 %          24.9 %         15.1 %        NMF        29.3 %
Amortization                    21.1            6.7             2.0            1.3            -        31.1
Depreciation                     2.5            2.8             0.7            0.4          1.7         8.1
Interest                        23.6            2.2             3.5            0.6        (11.6 )      18.3
Change in estimated
acquisition
  earn-out payables             (3.7 )          0.1             0.2              -            -        (3.4 )
EBITDAC(2)                     227.6           53.5            32.0            8.9         (2.9 )     319.1
EBITDAC Margin(2)               38.2 %         33.0 %          31.1 %         20.4 %        NMF        35.3 %
(Gain)/loss on disposal         (0.2 )            -               -              -            -        (0.2 )

Acquisition/Integration

Costs                            2.3            0.3             0.4              -          1.4         4.4
Foreign Currency
Translation                        -              -               -              -            -           -
EBITDAC - Adjusted(2)        $ 229.7     $     53.8     $      32.4     $      8.9     $   (1.5 )   $ 323.3
EBITDAC Margin -
Adjusted(2)                     38.5 %         33.2 %          31.5 %         20.4 %        NMF        35.7 %


(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure

The reconciliation of Total Revenues to Total Revenues - Adjusted, a non-GAAP
measure, income before incomes taxes included in the Condensed Consolidated
Statement of Income to EBITDAC - Adjusted, a non-GAAP measure, and Income Before
Income Taxes Margin to EBITDAC Margin - Adjusted, a non-GAAP measure, for the
three months ended March 31, 2021, is as follows:


                                          National        Wholesale
(in millions)                Retail       Programs        Brokerage        Services       Other        Total
Total Revenues               $ 522.9     $    154.9     $        90.9     $     47.0     $   (0.4 )   $ 815.3
Foreign Currency
Translation                     (0.7 )            -                 -              -            -        (0.7 )
Total Revenues -
Adjusted(2)                    522.2          154.9              90.9           47.0         (0.4 )     814.6
Income before income taxes     151.2           41.1              18.8            9.3         18.8       239.2
Income Before Income Taxes
Margin(1)                       28.9 %         26.5 %            20.7 %         19.8 %        NMF        29.3 %
Amortization                    18.8            6.9               2.4            1.4            -        29.5
Depreciation                     2.8            2.1               0.6            0.4          1.6         7.5
Interest                        22.6            4.1               4.3            0.8        (15.5 )      16.3
Change in estimated
acquisition
  earn-out payables             (0.9 )         (0.2 )             0.2              -            -        (0.9 )
EBITDAC(2)                     194.5           54.0              26.3           11.9          4.9       291.6
EBITDAC Margin(2)               37.2 %         34.9 %            28.9 %         25.3 %        NMF        35.8 %
(Gain)/loss on disposal         (0.2 )            -                 -              -            -        (0.2 )
Acquisition/Integration
Costs                              -              -                 -              -            -           -
Foreign Currency
Translation                     (0.3 )            -                 -              -            -        (0.3 )
EBITDAC - Adjusted(2)        $ 194.0     $     54.0     $        26.3     $     11.9     $    4.9     $ 291.1
EBITDAC Margin -
Adjusted(2)                     37.2 %         34.9 %            28.9 %         25.3 %        NMF        35.7 %


(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure

                                       33
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Retail Segment

The Retail segment provides a broad range of insurance products and services to
commercial, public and quasi-public, professional and individual insured
customers, and non-insurance risk-mitigating products through our F&I
businesses. Approximately 81.3% of the Retail segment's commissions and fees
revenue is commission based.

Financial information relating to our Retail Segment for the three months ended March 31, 2022 and 2021 is as follows:



                                              Three months ended March 31,
(in millions, except percentages)          2022           2021         % 

Change

REVENUES

Core commissions and fees               $     578.4     $   506.5           14.2 %
Profit-sharing contingent commissions          17.9          15.7           14.0 %
Investment income                                 -             -              - %
Other income, net                               0.1           0.7          (85.7 )%
Total revenues                                596.4         522.9           14.1 %
EXPENSES
Employee compensation and benefits            288.1         262.9            9.6 %
Other operating expenses                       80.9          65.7           23.1 %
(Gain)/loss on disposal                        (0.2 )        (0.2 )            - %
Amortization                                   21.1          18.8           12.2 %
Depreciation                                    2.5           2.8          (10.7 %)
Interest                                       23.6          22.6            4.4 %
Change in estimated acquisition
  earn-out payables                            (3.7 )        (0.9 )          NMF
Total expenses                                412.3         371.7           10.9 %
Income before income taxes              $     184.1     $   151.2           21.8 %
Income Before Income Taxes
  Margin (1)                                   30.9 %        28.9 %
EBITDAC - Adjusted (2)                  $     229.7     $   194.0           18.4 %
EBITDAC Margin - Adjusted (2)                  38.5 %        37.2 %
Organic Revenue growth rate (2)                 8.9 %         9.7 %

Employee compensation and benefits

  relative to total revenues                   48.3 %        50.3 %

Other operating expenses relative

  to total revenues                            13.6 %        12.6 %
Capital expenditures                    $       1.6     $     2.3          (30.4 )%
Total assets at March 31,               $   4,903.9     $ 7,210.5




(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure


The Retail Segment's total revenues for the three months ended March 31, 2022
increased 14.1%, or $73.5 million, as compared to the same period in 2021, to
$596.4 million. The $71.9 million increase in core commissions and fees revenue
was driven by: (i) approximately $28.3 million related to the core commissions
and fees revenue from acquisitions that had no comparable revenues in the same
period of 2021; (ii) an increase of $45.0 million related to net new and renewal
business; offset by (iii) a decrease of $0.7 million related to commissions and
fees recorded in 2021 from businesses since divested and a negative impact from
foreign currency translation of $0.7 million. Profit-sharing contingent
commissions for the first quarter of 2022 increased 14.0%, or $2.2 million, as
compared to the same period in 2021, to $17.9 million. This increase was
primarily the result of recent acquisitions and qualifying for incremental
profit-sharing contingent commissions in 2022 beyond what was qualified for in
the prior year. The Retail Segment's total commissions and fees increased by
14.2%, and the Organic Revenue growth rate was 8.9% for the first quarter of
2022. The Organic Revenue growth rate was driven by net new business, which was
impacted by modest exposure unit improvement and rate increases in most lines of
business with the most pronounced being the continued increases in commercial
and condo property, and professional liability, partially offset by continued
premium rate reductions in workers' compensation. Organic Revenue growth was
realized across all lines of business.

                                       34
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Income before income taxes for the three months ended March 31, 2022 increased
21.8%, or $32.9 million, as compared to the same period in 2021, to $184.1
million. The primary factors affecting this increase were (i) the drivers of
EBITDAC - Adjusted described below; and (ii) the decrease in estimated
acquisition earn-out payables; partially offset by (iii) acquisition/integration
costs.

EBITDAC - Adjusted for the three months ended March 31, 2022 increased 18.4%, or
$35.7 million, as compared to the same period in 2021, to $229.7 million.
EBITDAC Margin - Adjusted for the three months ended March 31, 2022 increased to
38.5% from 37.2% in the same period in 2021. The increase in EBITDAC Margin -
Adjusted was driven by: (i) the total revenue growth; and (ii) leveraging our
expense base; partially offset by (iii) higher variable operating expenses that
include travel and meeting related costs.

                                       35
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National Programs Segment


The National Programs Segment manages over 40 programs supported by
approximately 100 well-capitalized carrier partners. In most cases, the
insurance carriers that support these programs have delegated underwriting and,
in many instances, claims-handling authority to our programs operations. These
programs are generally distributed through a nationwide network of independent
agents and Brown & Brown retail agents, and offer targeted products and services
designed for specific industries, trade groups, professions, public entities and
market niches. The National Programs Segment operations can be grouped into five
broad categories: Professional Programs, Personal Lines Programs, Commercial
Programs, Public Entity-Related Programs and Specialty Programs. Approximately
75.2% of the National Programs Segment's commissions and fees revenue is
commission based.

Financial information relating to our National Programs Segment for the three months ended March 31, 2022 and 2021 is as follows:



                                             Three months ended March 31,
(in millions, except percentages)          2022          2021        % Change
REVENUES
Core commissions and fees               $    154.1     $   146.3           5.3 %
Profit-sharing contingent commissions          8.0           8.3          (3.6 )%
Investment income                              0.1           0.2         (50.0 )%
Other income, net                                -           0.1        (100.0 )%
Total revenues                               162.2         154.9           4.7 %
EXPENSES
Employee compensation and benefits            73.4          71.1           3.2 %
Other operating expenses                      35.3          29.8          18.5 %
(Gain)/loss on disposal                          -             -             - %
Amortization                                   6.7           6.9          (2.9 )%
Depreciation                                   2.8           2.1          33.3 %
Interest                                       2.2           4.1         (46.3 )%
Change in estimated acquisition
  earn-out payables                            0.1          (0.2 )         NMF
Total expenses                               120.5         113.8           5.9 %
Income before income taxes              $     41.7     $    41.1           1.5 %
Income Before Income Taxes
  Margin (1)                                  25.7 %        26.5 %
EBITDAC - Adjusted (2)                  $     53.8     $    54.0          (0.4 )%
EBITDAC Margin - Adjusted (2)                 33.2 %        34.9 %
Organic Revenue growth rate (2)                6.1 %        14.3 %

Employee compensation and benefits

  relative to total revenues                  45.3 %        45.9 %

Other operating expenses relative

  to total revenues                           21.8 %        19.2 %
Capital expenditures                    $      5.6     $     3.0          86.7 %
Total assets at March 31,               $  3,338.8     $ 3,398.7




(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure

The National Programs Segment's total revenue for the three months ended March
31, 2022 increased 4.7%, or $7.3 million, as compared to the same period in
2021, to $162.2 million. The $7.8 million increase in core commissions and fees
revenue was driven by: (i) an increase of $8.9 million related to net new and
renewal business; (ii) approximately $0.1 million related to the core
commissions and fees revenue from acquisitions that had no comparable revenues
in the same period of 2021; offset by (iii) a decrease of $1.2 million related
to commissions and fees recorded in 2021 from businesses since divested.

The National Programs Segment's total commissions and fees increased by 4.9%,
and the Organic Revenue growth rate was 6.1% for the three months ended March
31, 2022. The Organic Revenue growth was driven primarily by good new business,
exposure unit expansion and rate increases.

Income before income taxes for the three months ended March 31, 2022 increased
1.5%, or $.6 million, as compared to the same period in 2021, to $41.7 million.
Income before income taxes increased due to: (i) the drivers of EBITDAC -
Adjusted described below; and (ii) lower intercompany interest expense.

                                       36
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EBITDAC - Adjusted for the three months ended March 31, 2022 decreased 0.4%, or
$0.2 million, from the same period in 2021, to $53.8 million. EBITDAC Margin -
Adjusted for the three months ended March 31, 2022 decreased to 33.2% from 34.9%
in the same period in 2021. The EBITDAC - Adjusted was substantially flat
year-over-year due to increased variable costs, increased non-cash stock-based
compensation and incremental costs associated with onboarding new customers.

Wholesale Brokerage Segment


The Wholesale Brokerage Segment markets and sells excess and surplus commercial
and personal lines insurance, primarily through independent agents and brokers,
including Brown & Brown retail agents. Approximately 83.3% of the Wholesale
Brokerage Segment's commissions and fees revenue is commission based.

Financial information relating to our Wholesale Brokerage Segment for the three months ended March 31, 2022 and 2021 is as follows:

                                              Three months ended March 31,
(in millions, except percentages)          2022           2021         % 

Change

REVENUES

Core commissions and fees               $     100.0     $    88.8           12.6 %
Profit-sharing contingent commissions           2.7           1.9           42.1 %
Investment income                               0.1           0.1              - %
Other income, net                               0.1           0.1              - %
Total revenues                                102.9          90.9           13.2 %
EXPENSES
Employee compensation and benefits             55.1          50.5            9.1 %
Other operating expenses                       15.8          14.1           12.1 %
(Gain)/loss on disposal                           -             -              - %
Amortization                                    2.0           2.4          (16.7 %)
Depreciation                                    0.7           0.6           16.7 %
Interest                                        3.5           4.3          (18.6 %)
Change in estimated acquisition
  earn-out payables                             0.2           0.2              - %
Total expenses                                 77.3          72.1            7.2 %
Income before income taxes              $      25.6     $    18.8           36.2 %
Income Before Income Taxes
  Margin (1)                                   24.9 %        20.7 %
EBITDAC - Adjusted (2)                  $      32.4     $    26.3           23.2 %
EBITDAC Margin - Adjusted (2)                  31.5 %        28.9 %
Organic Revenue growth rate (2)                11.6 %         6.5 %

Employee compensation and benefits

  relative to total revenues                   53.5 %        55.6 %

Other operating expenses relative to

  total revenues                               15.4 %        15.5 %
Capital expenditures                    $       0.4     $     0.5          (20.0 )%
Total assets at March 31,               $   1,124.8     $ 1,787.0




(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure

The Wholesale Brokerage Segment's total revenues for the three months ended
March 31, 2022 increased 13.2%, or $12.0 million, as compared to the same period
in 2021, to $102.9 million. The $11.2 million net increase in core commissions
and fees revenue was driven primarily by: (i) $10.3 million related to net new
and renewal business; and (ii) $0.9 million related to the core commissions and
fees revenue from acquisitions that had no comparable revenues in the same
period of 2021. Profit-sharing contingent commissions for the first quarter of
2022 increased $0.8 million compared to the first quarter of 2021. The Wholesale
Brokerage Segment's growth rate for total commissions and fees was 13.2%, and
the Organic Revenue growth rate was 11.6% for the first quarter of 2022. The
Organic Revenue growth rate was driven by new business, good retention as well
as rate increases for most lines of coverage.

Income before income taxes for the three months ended March 31, 2022 increased
36.2%, or $6.8 million, as compared to the same period in 2021, to $25.6
million. The increase was due to: (i) the drivers of EBITDAC - Adjusted
described below; and (ii) lower intercompany interest and amortization expenses;
partially offset by (iii) acquisition/integration costs.

                                       37
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EBITDAC - Adjusted for the three months ended March 31, 2022 increased 23.2%, or
$6.1 million, as compared to the same period in 2021, to $32.4 million. EBITDAC
Margin - Adjusted for the three months ended March 31, 2022 increased to 31.5%
from 28.9%, as compared to the same period in 2021. EBITDAC Margin - Adjusted
increased due to: (i) total revenue growth; (ii) leveraging our expense base;
and (iii) higher profit-sharing contingent commissions; partially offset by (iv)
higher variable operating expenses, which are primarily travel and meeting
related.

Services Segment


The Services Segment provides insurance-related services, including third-party
claims administration and comprehensive medical utilization management services
in both the workers' compensation and all-lines liability arenas. The Services
Segment also provides Medicare Set-aside account services, Social Security
disability and Medicare benefits advocacy services, and claims adjusting
services.

Unlike the other segments, nearly all of the Services Segment's revenue is generated from fees, which are not significantly affected by fluctuations in general insurance premiums.

Financial information relating to our Services Segment for the three months ended March 31, 2022 and 2021 is as follows:



                                                       Three months ended March 31,
(in millions, except percentages)                  2022             2021         % Change
REVENUES
Core commissions and fees                       $     43.6        $    47.0           (7.2 %)
Profit-sharing contingent commissions                    -                -              - %
Investment income                                        -                -              - %
Other income, net                                        -                -              - %
Total revenues                                        43.6             47.0           (7.2 %)
EXPENSES
Employee compensation and benefits                    22.6             22.6              - %
Other operating expenses                              12.1             12.5           (3.2 )%
(Gain)/loss on disposal                                  -                -              - %
Amortization                                           1.3              1.4           (7.1 )%
Depreciation                                           0.4              0.4              - %
Interest                                               0.6              0.8          (25.0 )%
Change in estimated acquisition earn-out
payables                                                 -                -              - %
Total expenses                                        37.0             37.7           (1.9 )%
Income before income taxes                      $      6.6        $     9.3          (29.0 %)
Income Before Income Taxes Margin (1)                 15.1 %           19.8 %
EBITDAC - Adjusted (2)                          $      8.9        $    11.9          (25.2 %)
EBITDAC Margin - Adjusted (2)                         20.4 %           25.3 %
Organic Revenue growth rate (2)                       (6.2 %)           5.6 %
Employee compensation and benefits relative
to total
  revenues                                            51.8 %           48.1 %
Other operating expenses relative to total
revenues                                              27.8 %           26.6 %
Capital expenditures                            $      0.2        $     0.1          100.0 %
Total assets at March 31,                       $    290.5        $   483.9




(1) "Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure

The Services Segment's total revenues for the three months ended March 31, 2022
decreased 7.2%, or $3.4 million, as compared to the same period in 2021, to
$43.6 million. The Services Segment's total commissions and fees and Organic
Revenue declined 6.2% for the first quarter of 2022 driven by: (i) lack of
catastrophic weather driven claim activity; (ii) COVID-19 travel restricted
claim activity; and (iii) to a lesser extent continued external delays in
processing claims in our advocacy business.

Income before income taxes for the three months ended March 31, 2022 decreased
29.0%, or $2.7 million, as compared to the same period in 2021, to $6.6 million
due to the drivers of EBITDAC - Adjusted described below, with a partial offset
of lower intercompany interest and amortization.

EBITDAC - Adjusted for the three months ended March 31, 2022 decreased 25.2%, or
$3.0 million, from the same period in 2021, to $8.9 million. EBITDAC Margin -
Adjusted for the three months ended March 31, 2022 decreased to 20.4% from 25.3%
in the same period in 2021. The decrease in EBITDAC - Adjusted was driven
primarily by lower catastrophic weather claims activity.

                                       38
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Other

As discussed in Note 12 of the Notes to Condensed Consolidated Financial
Statements, the "Other" column in the Segment Information table includes any
revenue and expenses not allocated to reportable segments, and corporate-related
items, including the intercompany interest expense charges to reporting
segments.

LIQUIDITY AND CAPITAL RESOURCES


The Company seeks to maintain a conservative balance sheet and strong liquidity
profile. Our capital requirements to operate as an insurance intermediary are
low and we have been able to grow and invest in our business principally through
cash that has been generated from operations. We have the ability to utilize our
Revolving Credit Facility, which as of March 31, 2022 provided up to $450.0
million in available cash. We believe that we have access to additional funds,
if needed, through the capital markets or private placements to obtain further
debt financing under the current market conditions. The Company believes that
its existing cash, cash equivalents, short-term investment portfolio and funds
generated from operations, together with the funds available under the Revolving
Credit Facility, will be sufficient to satisfy our normal liquidity needs,
including principal payments on our long-term debt, for at least the next 12
months.

The Revolving Credit Facility contains an expansion option for up to an
additional $500.0 million of borrowing capacity, subject to the approval of
participating lenders. In addition, under the Term Loan Credit Agreement, the
unsecured term loan in the initial amount of $300.0 million may be increased by
up to $150.0 million, subject to the approval of participating lenders. On March
31, 2022, the Company entered into a Loan Agreement (the "Loan Agreement") which
provided term loan capacity of $800.0 million which was not drawn on at the time
of closing. Additionally, the Company may, subject to satisfaction of certain
conditions, including receipt of additional term loan commitments by new or
existing lenders, increase either Term Loan Commitment under the existing Loan
Agreement or the term loans issued thereunder or issue new tranches of term
loans in an aggregate additional amount of up to $400.0 million. Including the
expansion options under all existing credit agreements, the Company has access
to up to $2.3 billion of incremental borrowing capacity as of March 31, 2022.

Subsequent to March 31, 2022, the Company has exercised all available funding under the Loan Agreement of $800.0 million.

Contractual Cash Obligations

As of March 31, 2022, our contractual cash obligations were as follows:

                                                            Payments Due by Period
(in millions)                                        Less than         1-3          4-5          After
                                        Total         1 year          years        years        5 years
Long-term debt                        $ 3,576.3     $      42.5     $   746.3     $  537.5     $ 2,250.0
Other liabilities (1)                     175.9            28.2          20.4         12.0         115.3
Operating leases (2)                      266.7            50.7          90.2         59.9          65.9
Interest obligations                    1,474.6           115.9         215.6        180.2         962.9
Unrecognized tax benefits                   1.6               -           1.6            -             -
Maximum future acquisition
contingency payments (3)                  452.3            80.0         372.3            -             -
Total contractual cash obligations
(4)                                   $ 5,947.4     $     317.3     $ 1,446.4     $  789.6     $ 3,394.1


(1)

Includes the current portion of other long-term liabilities, and approximately $15.6 million of deferred employer-only payroll tax payments related to the CARES Act which is expected to be paid in December 2022.

(2)

Includes $20.0 million of future lease commitments expected to commence later in 2022.

(3)

Includes $250.9 million of current and non-current estimated acquisition earn-out payables. Earn-out payables for acquisitions not denominated in U.S. dollars are measured at the current foreign exchange rate.

(4)

Does not include approximately $29.0 million of current liability for a dividend of $0.1025 per share approved by the Board of Directors on April 25, 2022.

                                       39
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Debt


Total debt at March 31, 2022 was $3,539.6 million net of unamortized discount
and debt issuance costs, which was an increase of $1,516.6 million compared to
December 31, 2021. The increase includes: (i) the issuance of $1,200.0 million
in aggregate principal amount of Senior Notes on March 17, 2022, exclusive of
debt issuance costs and discounts applied to the principal; (ii) the drawdown of
$350.0 million of the revolving credit facility in conjunction with the
acquisition payment for Orchid on March 31, 2022; and (iii) net of the
amortization of discounted debt related to our various unsecured Senior Notes,
and debt issuance cost amortization of $0.7 million; offset by decreases due to:
(i) the scheduled principal amortization balances related to our various
existing floating rate debt term notes in total of $10.7 million; and (ii) added
discounted debt balances related to the issuance of $600.0 million in aggregate
principal amount of the
Company's 4.200% Senior Notes due 2032 (the "2032 Notes") and $600.0 million in
aggregate principal amount of the Company's 4.950% Senior Notes due 2052 (the
"2052 Notes," and together with the 2032 Notes, the "Notes") of $10.4 million;
and (iii) debt issuance costs related to the Notes and the Loan Agreement of
$13.0 million.

During the three months ended March 31, 2022, the Company repaid $3.1 million of
principal related to the Second Amended and Restated Credit Agreement term loan
through the quarterly scheduled amortized principal payments. The Second Amended
and Restated Credit Agreement term loan had an outstanding balance of $243.8
million as of March 31, 2022. The Company's next scheduled amortized principal
payment is due June 30, 2022 and is equal to $3.1 million.

During the three months ended March 31, 2022, the Company repaid $7.5 million of
principal related to the Term Loan Credit Agreement through quarterly scheduled
amortized principal payments. The Term Loan Credit Agreement had an outstanding
balance of $232.5 million as of March 31, 2022. The Company's next scheduled
amortized principal payment is due June 30, 2022 and is equal to $7.5 million.

On March 17, 2022, the Company completed the issuance of $600.0 million
aggregate principal amount of the Company's 4.200% Senior Notes due 2032 and
$600.0 million aggregate principal amount of the Company's 4.950% Senior Notes
due 2052 (and together with the 2032 Notes, the "Notes"). The net proceeds to
the Company from the issuance of the Notes, after deducting underwriting
discounts and estimated offering expenses, were approximately $1,178.2 million.
The Senior Notes were given investment grade ratings of BBB- stable outlook and
Baa3 stable outlook. The 2032 Notes bear interest at the rate of 4.200% per year
and will mature on March 17, 2032. The 2052 Notes bear interest at the rate of
4.950% per year and will mature on March 17, 2052. Interest on the Notes will be
payable semi-annually in arrears. The Notes are senior unsecured obligations of
the Company and will rank equal in right of payment to all of the Company's
existing and future senior unsecured indebtedness. The Company may redeem the
Notes in whole or in part at any time and from time to time, at the "make whole"
redemption prices specified in the Prospectus Supplement for the Notes being
redeemed, plus accrued and unpaid interest thereon to but excluding the
redemption date. If we do not consummate the acquisition of GRP (the "GRP
Acquisition") on or prior to December 31, 2022 or, if prior to such date, we
notify the trustee in writing that the majority share purchase agreement
relating to the GRP Acquisition ("GRP Acquisition Agreement") is terminated,
then, in either case, we must redeem all of the 2032 Notes at a redemption price
equal to 101% of the principal amount of the notes, plus accrued and unpaid
interest to, but not including, the special mandatory redemption date. The 2052
Notes are not subject to the special mandatory redemption provision and will
remain outstanding even if the GRP Acquisition is not consummated on or prior to
December 31, 2022. The Company intends to use the net proceeds from the offering
of the Notes, together with borrowings under its revolving credit facility, cash
on hand and other borrowings, to fund the cash consideration and other amounts
payable under the GRP Acquisition Agreement and to pay fees and expenses
associated with the foregoing. If the GRP Acquisition is not consummated on or
prior to December 31, 2022, the Company expects to use the net proceeds from the
sale of the 2052 Notes for general corporate purposes. As of March 31, 2022,
there was a total outstanding debt balance of $1,200.0 million exclusive of the
associated discount balance on both Notes.

On March 31, 2022, the Company entered into the Loan Agreement with the lenders
named therein, BMO Harris Bank N.A., as administrative agent, Fifth Third Bank,
National Association, PNC Bank, National Association, U.S. Bank National
Association and Wells Fargo Bank, National Association, as co-syndication agents
and BMO Capital Markets Corp., BofA Securities, Inc., JPMorgan Chase Bank, N.A.
and Truist Securities, Inc., as joint bookrunners and joint lead arrangers. The
Loan Agreement evidences commitments for (i) unsecured delayed draw term loans
in an aggregate amount of up to $300.0 million (the "Term A-1 Loan Commitment")
and (ii) unsecured delayed draw term loans in an amount of up to $500.0 million
(the "Term A-2 Commitment" and, together with the Term A-1 Loan Commitments, the
"Term Loan Commitments"). The Company may, subject to satisfaction of certain
conditions, including receipt of additional term loan commitments by new or
existing lenders, increase either Term Loan Commitment or the term loans issued
thereunder or issue new tranches of term loans in an aggregate additional amount
of up to $400.0 million. The Company may borrow term loans (the "Term Loans")
under either of the Term Loan Commitments during the period from the Effective
Date (the "Effective Date") until the date which is the first anniversary
thereof. Once borrowed, Term Loans issued under the Term A-1 Loan Commitment
("Term A-1 Loans") are due and payable on the date that is the third anniversary
of the Effective Date unless such maturity date is extended as provided under
the Loan Agreement. Once borrowed, Term Loans issued under the Term A-2 Loan
Commitment ("Term A-2 Loans") are repayable in installments until the fifth
anniversary the Effective Date with any remaining outstanding amounts due and
payable on such fifth anniversary of the Effective Date unless such maturity
date is extended as provided under the Loan Agreement. While outstanding, the
undrawn Term Loan Commitments accrue a commitment fee of 0.15% beginning on the
earlier of the initial funding of Term Loans under the Loan Agreement and the
date that is 120 days from the Effective Date. Once drawn, Term A-1 Loans will
bear interest at the annual rate of Adjusted Term SOFR plus 1.125% or Base Rate
plus 0.125% (subject to a pricing grid for changes in the Company's credit
rating and/or leverage) and Term A-2 Loans will bear interest at the annual rate
of Adjusted Term SOFR plus 1.25% or Base Rate plus 0.25% (subject to a pricing
grid for changes in the Company's credit rating and/or leverage). The

                                       40
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Loan Agreement includes various covenants (including financial covenants),
limitations and events of default customary for similar facilities for similarly
rated borrowers. As of March 31, 2022, there were no borrowings under the terms
of the Loan Agreement.

On March 31, 2022 the Company accessed $350.0 million of available proceeds on
the revolving credit facility under the Second Amended and Restated Credit
Agreement. The proceeds were used in conjunction with the funding of the Orchid
acquisition along with funds from cash on hand.

As of April 28, 2022, the Company has fully drawn all available funds of $800.0
million under the Loan Agreement in connection with the preparation of closing
our pending acquisitions of GRP and BdB.



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