Divestitures

Discontinued Operations

On December 31, 2013, the Company completed the previously announced sale of all of the issued and outstanding stock of its subsidiaries, Bliss and Glennon and eReinsure.com, to AmWINS Holdings, LLC, a North Carolina limited liability company ("AmWINS") (the "Disposition"), pursuant to the terms of the Stock Purchase Agreement ("Purchase Agreement"), dated December 2, 2013.

The Company received net cash proceeds of $81.8 million for the Disposition, representing gross proceeds of $83.5 million less $1.0 million in transaction fees paid at the time of closing and $0.7 million of cash held by the disposed entities. The proceeds are subject to certain purchase price adjustments as set forth in the Purchase Agreement to reflect fluctuations in working capital, including adjustments for any receivable balances as of the disposition date that are not collected within one year.

As a result of the Disposition, the Company no longer operates in the businesses of wholesale insurance brokerage and selling or licensing of a computerized system or platform for the negotiation and/or placement of facultative reinsurance. Further, the Company has agreed not to compete with the Bliss and Glennon and eReinsure businesses for five years, and has agreed not to solicit former employees of the divested businesses. As of and after December 31, 2013, the Company does not beneficially own the disposed businesses and will no longer consolidate Bliss and Glennon or eReinsure into its financial results. The historical financial results of the disposed businesses for periods prior to the Disposition will be reflected in the Company's Consolidated Statements of Income as income from discontinued operations - net of tax. As discussed more fully in the Note, "Notes Payable", the Company was required to repay its debt under the Wells Fargo Credit Agreement from the net proceeds of the Disposition. The Company would have been required to repay its debt under the SunTrust Facility if the Disposition had occurred during the time the SunTrust Facility was in effect. Accordingly, interest expense allocated to the discontinued operations was based on the anticipated net proceeds that would be applied to the repayment of these credit facilities outstanding at the respective time, multiplied by the respective interest rate of the credit facilities at the respective time. The following table provides the amounts related to discontinued operations in the Consolidated Statements of Income for the following periods:



	For the Years Ended December 31,
	2013		2012		2011
Income from discontinued operations:
Revenues:
Brokerage commissions and fees	$	36,823	$	35,306	$	34,396
Net investment income	22		1		—
Other income	40		—		—
Total revenues	36,885		35,307		34,396

Expenses:
Personnel costs	20,251		20,173		18,526
Other operating expenses	5,778		6,121		7,401
Depreciation and amortization	615		658		415
Amortization of intangibles	1,929		2,211		2,133
Interest expense	2,318		2,290		2,951
Total expenses	30,891		31,453		31,426
Income from discontinued operations before income taxes	5,994		3,854		2,970
Income taxes - discontinued operations	2,448		1,579		1,193
Income from discontinued operations - net of tax	3,546		2,275		1,777

Gain on sale of discontinued operations:
Gain on sale of discontinued operations before income taxes	14,739		—		—
Income taxes - gain on sale of discontinued operations	5,895		—		—
Gain on sale of discontinued operations - net of tax	8,844		—		—

Discontinued operations - net of tax	$	12,390	$	2,275	$	1,777

The gain on sale represents the gross proceeds of $83.5 million, plus an estimated $0.8 million adjustment for working capital, less the assets sold and liabilities disposed of $98.6 million and $32.5 million, respectively, and costs of $3.5 million. Costs included $1.0 million of fees paid at the time of closing noted above, retention and bonus compensation, insurance claims-made "tail" coverage, and accruals for the Company's guarantee of accounts receivable and other retained obligations related to the divested businesses.

The following table provides details of the assets and liabilities of the discontinued operations on the Consolidated Balance Sheet at:



	December 31, 2013
Assets:
Other receivables	$	791
Assets of discontinued operations	$	791

Liabilities:
Accrued expenses, accounts payable and other liabilities	$	2,708
Income taxes payable	5,895
Liabilities of discontinued operations	$	8,603

Other Sales of Subsidiaries

The Company completed the following divestitures that were not considered to be discontinued operations:

In June 2013, the Company sold its wholly owned subsidiary Magna for a gross sales price of $3.0 million, less cash held by Magna, transferred in the sale, of $0.8 million. For the year ended December 31, 2013, the Company recorded a $0.4 million pre-tax gain on the sale of Magna, which is included on the Consolidated Statements of Income line item, "Gain on sale of subsidiary."

In July 2011, the Company sold its wholly owned subsidiary, CIRG, for a sales price of $1.2 million, comprised of cash and a $1.1 million secured note receivable. For the year ended December 31, 2011, the Company recorded a $0.5 million loss on the sale of CIRG. This sale resulted in a non-consolidated VIE. For more information, see the Note, "Variable Interest Entity."