ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Florida | ![]() | 59-0864469 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||
220 South Ridgewood Avenue, Daytona Beach, FL | 32114 | |||
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
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• | Future prospects; |
• | Material adverse changes in economic conditions in the markets we serve and in the general economy; |
• | Downward commercial property and casualty premium pressures; |
• | Future regulatory actions and conditions in the states in which we conduct our business; |
• | The occurrence of adverse economic conditions, an adverse regulatory climate, or a disaster in California, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Michigan, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas, Virginia and Washington, because a significant portion of business written by us is for customers located in these states; |
• | Our ability to attract, retain and enhance qualified personnel; |
• | Competition from others in or entering into the insurance agency, wholesale brokerage, insurance programs and service business; |
• | The integration of our operations with those of businesses or assets we have acquired or may acquire in the future and the failure to realize the expected benefits of such integration; |
• | Risks that could negatively affect our acquisition strategy, including continuing consolidation among insurance intermediaries and the increasing presence of private equity investors driving up valuations; |
• | Exposure units, and premium rates set by insurance companies which have traditionally varied and are difficult to predict; |
• | Our ability to forecast liquidity needs through at least the end of 2016; |
• | Our ability to renew or replace expiring leases; |
• | Outcomes of existing or future legal proceedings and governmental investigations; |
• | Policy cancellations and renewal terms, which can be unpredictable; |
• | Potential changes to the tax rate that would affect the value of deferred tax assets and liabilities and the impact on income available for investment or distributable to shareholders; |
• | The inherent uncertainty in making estimates, judgments, and assumptions in the preparation of financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”); |
• | Our ability to effectively apply technology in providing improved value for our customers as well as applying effective internal controls and efficiencies in operations; and |
• | Other risks and uncertainties as may be detailed from time to time in our public announcements and Securities and Exchange Commission filings. |
(in thousands, except per share data) | For the three months ended March 31, | ||||||
2016 | 2015 | ||||||
REVENUES | |||||||
Commissions and fees | $ | 422,335 | $ | 403,781 | |||
Investment income | 418 | 220 | |||||
Other income, net | 1,420 | 297 | |||||
Total revenues | 424,173 | 404,298 | |||||
EXPENSES | |||||||
Employee compensation and benefits | 224,059 | 211,662 | |||||
Other operating expenses | 63,605 | 61,093 | |||||
Gain on disposal | (2,044 | ) | (257 | ) | |||
Amortization | 21,610 | 21,625 | |||||
Depreciation | 5,318 | 5,183 | |||||
Interest | 9,897 | 9,851 | |||||
Change in estimated acquisition earn-out payables | (821 | ) | 1,363 | ||||
Total expenses | 321,624 | 310,520 | |||||
Income before income taxes | 102,549 | 93,778 | |||||
Income taxes | 40,479 | 36,827 | |||||
Net income | $ | 62,070 | $ | 56,951 | |||
Net income per share: | |||||||
Basic | $ | 0.45 | $ | 0.40 | |||
Diluted | $ | 0.44 | $ | 0.39 | |||
Dividends declared per share | $ | 0.12 | $ | 0.11 |
(in thousands, except per share data) | March 31, 2016 | December 31, 2015 | |||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 401,846 | $ | 443,420 | |||
Restricted cash and investments | 231,075 | 229,753 | |||||
Short-term investments | 13,880 | 13,734 | |||||
Premiums, commissions and fees receivable | 430,002 | 433,885 | |||||
Reinsurance recoverable | 58,129 | 31,968 | |||||
Prepaid reinsurance premiums | 279,784 | 309,643 | |||||
Deferred income taxes | 14,127 | 24,635 | |||||
Other current assets | 67,778 | 50,351 | |||||
Total current assets | 1,496,621 | 1,537,389 | |||||
Fixed assets, net | 80,899 | 81,753 | |||||
Goodwill | 2,615,635 | 2,586,683 | |||||
Amortizable intangible assets, net | 739,555 | 744,680 | |||||
Investments | 20,515 | 18,092 | |||||
Other assets | 39,735 | 35,882 | |||||
Total assets | $ | 4,992,960 | $ | 5,004,479 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Premiums payable to insurance companies | $ | 554,527 | $ | 574,736 | |||
Losses and loss adjustment reserve | 58,129 | 31,968 | |||||
Unearned premiums | 279,784 | 309,643 | |||||
Premium deposits and credits due customers | 89,336 | 83,098 | |||||
Accounts payable | 77,912 | 63,910 | |||||
Accrued expenses and other liabilities | 143,176 | 192,067 | |||||
Current portion of long-term debt | 80,492 | 73,125 | |||||
Total current liabilities | 1,283,356 | 1,328,547 | |||||
Long-term debt less unamortized discount and debt issuance costs | 1,058,327 | 1,071,618 | |||||
Deferred income taxes, net | 363,583 | 360,949 | |||||
Other liabilities | 89,161 | 93,589 | |||||
Shareholders’ Equity: | |||||||
Common stock, par value $0.10 per share; authorized 280,000 shares; issued 147,967 shares and outstanding 140,173 shares at 2016, issued 146,415 shares and outstanding 138,985 shares at 2015 | 14,797 | 14,642 | |||||
Additional paid-in capital | 441,243 | 426,498 | |||||
Treasury stock, at cost 7,794 and 7,430 shares at 2016 and 2015, respectively | (250,025 | ) | (238,775 | ) | |||
Retained earnings | 1,992,518 | 1,947,411 | |||||
Total shareholders’ equity | 2,198,533 | 2,149,776 | |||||
Total liabilities and shareholders’ equity | $ | 4,992,960 | $ | 5,004,479 |
For the three months ended March 31, | |||||||
(in thousands) | 2016 | 2015 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 62,070 | $ | 56,951 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Amortization | 21,610 | 21,625 | |||||
Depreciation | 5,318 | 5,183 | |||||
Employee compensation and benefits | 2,772 | 6,357 | |||||
Change in estimated acquisition earn-out payables | (821 | ) | 1,363 | ||||
Deferred income taxes | 9,933 | 6,625 | |||||
Amortization of debt discount | 39 | 39 | |||||
Amortization and disposal of deferred financing costs | 420 | 390 | |||||
Accretion (amortization) of discounts and premiums, investments | 18 | — | |||||
Income tax benefit from exercise of shares from the stock benefit plans | (1,249 | ) | (1,783 | ) | |||
Net gain on sales of investments, fixed assets and customer accounts | (1,911 | ) | (190 | ) | |||
Payments on acquisition earn-outs in excess of original estimated payables | (3,550 | ) | — | ||||
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures: | |||||||
Restricted cash and investments (increase) | (1,322 | ) | (25,040 | ) | |||
Premiums, commissions and fees receivable decrease (increase) | 5,229 | (5,126 | ) | ||||
Reinsurance recoverables (increase) | (26,161 | ) | (64 | ) | |||
Prepaid reinsurance premiums decrease | 29,859 | 29,549 | |||||
Other assets (increase) | (21,247 | ) | (7,040 | ) | |||
Premiums payable to insurance companies (decrease) increase | (21,139 | ) | 18,538 | ||||
Premium deposits and credits due customers increase (decrease) | 6,238 | (2,894 | ) | ||||
Losses and loss adjustment reserve increase | 26,161 | 64 | |||||
Unearned premiums (decrease) | (29,859 | ) | (29,549 | ) | |||
Accounts payable increase | 22,962 | 32,019 | |||||
Accrued expenses and other liabilities (decrease) | (50,034 | ) | (54,100 | ) | |||
Other liabilities (decrease) | (3,436 | ) | (2,215 | ) | |||
Net cash provided by operating activities | 31,900 | 50,702 | |||||
Cash flows from investing activities: | |||||||
Additions to fixed assets | (4,252 | ) | (3,727 | ) | |||
Payments for businesses acquired, net of cash acquired | (40,603 | ) | (36,195 | ) | |||
Proceeds from sales of fixed assets and customer accounts | 2,467 | 3,712 | |||||
Purchases of investments | (10,106 | ) | (7,719 | ) | |||
Proceeds from sales of investments | 7,604 | 9,126 | |||||
Net cash used in investing activities | (44,890 | ) | (34,803 | ) | |||
Cash flows from financing activities: | |||||||
Payments on acquisition earn-outs | (5,527 | ) | (4,590 | ) | |||
Payments on long-term debt | (6,875 | ) | (25,000 | ) | |||
Income tax benefit from exercise of shares from the stock benefit plans | 1,249 | 1,783 | |||||
Issuances of common stock for employee stock benefit plans | 916 | 500 | |||||
Repurchase stock benefit plan shares for employees to fund tax withholdings | (1,385 | ) | (2,124 | ) | |||
Purchase of treasury stock | (11,250 | ) | (85,000 | ) | |||
Prepayment of accelerated share repurchase program | 11,250 | (15,000 | ) | ||||
Cash dividends paid | (16,962 | ) | (15,785 | ) | |||
Net cash (used in) financing activities | (28,584 | ) | (145,216 | ) | |||
Net (decrease) in cash and cash equivalents | (41,574 | ) | (129,317 | ) | |||
Cash and cash equivalents at beginning of period | 443,420 | 470,048 | |||||
Cash and cash equivalents at end of period | $ | 401,846 | $ | 340,731 |
For the three months ended March 31, | |||||||
(in thousands, except per share data) | 2016 | 2015 | |||||
Net income | $ | 62,070 | $ | 56,951 | |||
Net income attributable to unvested awarded performance stock | (1,451 | ) | (1,363 | ) | |||
Net income attributable to common shares | $ | 60,619 | $ | 55,588 | |||
Weighted average number of common shares outstanding – basic | 138,793 | 142,777 | |||||
Less unvested awarded performance stock included in weighted average number of common shares outstanding – basic | (3,245 | ) | (3,417 | ) | |||
Weighted average number of common shares outstanding for basic earnings per common share | 135,548 | 139,360 | |||||
Dilutive effect of stock options | 1,392 | 2,127 | |||||
Weighted average number of shares outstanding – diluted | 136,940 | 141,487 | |||||
Net income per share: | |||||||
Basic | $ | 0.45 | $ | 0.40 | |||
Diluted | $ | 0.44 | $ | 0.39 |
(in thousands) | |||||||||||||||||||||||||||
Name | Business Segment | Effective Date of Acquisition | Cash Paid | Note Payable | Other Payable | Recorded Earn-Out Payable | Net Assets Acquired | Maximum Potential Earn- Out Payable | |||||||||||||||||||
Social Security Advocates for the Disabled (SSAD) | Services | February 1, 2016 | $ | 32,499 | $ | 492 | $ | — | $ | 971 | $ | 33,962 | $ | 3,000 | |||||||||||||
Other | Various | Various | 10,198 | — | 300 | (365 | ) | 10,133 | 2,474 | ||||||||||||||||||
Total | $ | 42,697 | $ | 492 | $ | 300 | $ | 606 | $ | 44,095 | $ | 5,474 |
(in thousands) | SSAD | Other | Total | ||||||||
Cash | $ | 2,094 | $ | — | $ | 2,094 | |||||
Other current assets | 1,042 | 337 | 1,379 | ||||||||
Fixed assets | 307 | 42 | 349 | ||||||||
Goodwill | 22,294 | 6,658 | 28,952 | ||||||||
Purchased customer accounts | 13,069 | 3,710 | 16,779 | ||||||||
Non-compete agreements | 72 | 62 | 134 | ||||||||
Total assets acquired | 38,878 | 10,809 | 49,687 | ||||||||
Other current liabilities | (1,686 | ) | (676 | ) | (2,362 | ) | |||||
Deferred income tax, net | (3,230 | ) | — | (3,230 | ) | ||||||
Total liabilities assumed | (4,916 | ) | (676 | ) | (5,592 | ) | |||||
Net assets acquired | $ | 33,962 | $ | 10,133 | $ | 44,095 |
(UNAUDITED) | For the three months ended March 31, | ||||||
(in thousands, except per share data) | 2016 | 2015 | |||||
Total revenues | $ | 425,179 | $ | 407,579 | |||
Income before income taxes | $ | 102,873 | $ | 94,780 | |||
Net income | $ | 62,266 | $ | 57,560 | |||
Net income per share: | |||||||
Basic | $ | 0.45 | $ | 0.40 | |||
Diluted | $ | 0.44 | $ | 0.40 | |||
Weighted average number of shares outstanding: | |||||||
Basic | 135,548 | 139,360 | |||||
Diluted | 136,940 | 141,487 |
For the three months ended March 31, | |||||||
(in thousands) | 2016 | 2015 | |||||
Balance as of the beginning of the period | $ | 78,387 | $ | 75,283 | |||
Additions to estimated acquisition earn-out payables | 606 | 5,653 | |||||
Payments for estimated acquisition earn-out payables | (9,077 | ) | (4,590 | ) | |||
Subtotal | 69,916 | 76,346 | |||||
Net change in earnings from estimated acquisition earn-out payables: | |||||||
Change in fair value on estimated acquisition earn-out payables | (1,563 | ) | 677 | ||||
Interest expense accretion | 742 | 686 | |||||
Net change in earnings from estimated acquisition earn-out payables | (821 | ) | 1,363 | ||||
Balance as of March 31, | $ | 69,095 | $ | 77,709 |
(in thousands) | Retail | National Programs | Wholesale Brokerage | Services | Total | ||||||||||||||
Balance as of January 1, 2016 | $ | 1,345,636 | $ | 901,866 | $ | 226,961 | $ | 112,220 | $ | 2,586,683 | |||||||||
Goodwill of acquired businesses | 6,704 | (70 | ) | 24 | 22,294 | 28,952 | |||||||||||||
Goodwill of transferred businesses | 571 | (571 | ) | — | — | — | |||||||||||||
Balance as of March 31, 2016 | $ | 1,352,911 | $ | 901,225 | $ | 226,985 | $ | 134,514 | $ | 2,615,635 |
March 31, 2016 | December 31, 2015 | ||||||||||||||||||||||||||
(in thousands) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Weighted Average Life (Years)(1) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Weighted Average Life (Years)(1) | |||||||||||||||||||
Purchased customer accounts | $ | 1,415,155 | $ | (677,933 | ) | $ | 737,222 | 15.0 | $ | 1,398,986 | $ | (656,799 | ) | $ | 742,187 | 15.0 | |||||||||||
Non-compete agreements | 29,574 | (27,241 | ) | 2,333 | 6.8 | 29,440 | (26,947 | ) | 2,493 | 6.8 | |||||||||||||||||
Total | $ | 1,444,729 | $ | (705,174 | ) | $ | 739,555 | $ | 1,428,426 | $ | (683,746 | ) | $ | 744,680 |
(1) | Weighted average life calculated as of the date of acquisition. |
(in thousands) | March 31, 2016 | December 31, 2015 | |||||
Current portion of long-term debt: | |||||||
Current portion of 5-year term loan facility expires 2019 | $ | 55,000 | $ | 48,125 | |||
5.660% senior notes, Series C, semi-annual interest payments, balloon due 2016 | 25,000 | 25,000 | |||||
Short term promissory note | 492 | — | |||||
Total current portion of long-term debt | 80,492 | 73,125 | |||||
Long-term debt: | |||||||
Note agreements: | |||||||
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018 | 100,000 | 100,000 | |||||
4.200% senior notes, semi-annual interest payments, balloon due 2024 | 498,667 | 498,628 | |||||
Total notes | 598,667 | 598,628 | |||||
Credit agreements: | |||||||
5-year term-loan facility, periodic interest and principal payments, LIBOR plus up to 1.75%, expires May 20, 2019 | 467,500 | 481,250 | |||||
5-year revolving-loan facility, periodic interest payments, currently LIBOR plus 1.50%, plus commitment fees up to 0.25%, expires May 20, 2019 | — | — | |||||
Revolving credit loan, quarterly interest payments, LIBOR plus up to 1.40% and availability fee up to 0.25%, terminated March 14, 2016 | — | — | |||||
Total credit agreements | 467,500 | 481,250 | |||||
Debt issuance costs (contra) | $ | (7,840 | ) | $ | (8,260 | ) | |
Total long-term debt less unamortized discount and debt issuance costs | $ | 1,058,327 | $ | 1,071,618 | |||
Current portion of long-term debt | $ | 80,492 | $ | 73,125 | |||
Total debt | $ | 1,138,819 | $ | 1,144,743 |
For the three months ended March 31, | |||||||
(in thousands) | 2016 | 2015 | |||||
Cash paid during the period for: | |||||||
Interest | $ | 14,323 | $ | 14,899 | |||
Income taxes | $ | 6,922 | $ | 8,004 |
For the three months ended March 31, | |||||||
(in thousands) | 2016 | 2015 | |||||
Other payable issued for purchased customer accounts | $ | 300 | $ | 5 | |||
Estimated acquisition earn-out payables and related charges | $ | 606 | $ | 5,653 | |||
Notes payable issued or assumed for purchased customer accounts | $ | 492 | $ | — | |||
Notes received on the sale of fixed assets and customer accounts | $ | — | $ | 362 |
For the three months ended March 31, 2016 | |||||||||||||||||||||||
(in thousands) | Retail | National Programs | Wholesale Brokerage | Services | Other | Total | |||||||||||||||||
Total revenues | $ | 232,188 | $ | 101,070 | $ | 53,414 | $ | 36,568 | $ | 933 | $ | 424,173 | |||||||||||
Investment income | $ | 21 | $ | 248 | $ | 3 | $ | 64 | $ | 82 | $ | 418 | |||||||||||
Amortization | $ | 10,989 | $ | 7,108 | $ | 2,442 | $ | 1,065 | $ | 6 | $ | 21,610 | |||||||||||
Depreciation | $ | 1,637 | $ | 1,929 | $ | 496 | $ | 487 | $ | 769 | $ | 5,318 | |||||||||||
Interest expense | $ | 10,403 | $ | 12,590 | $ | 247 | $ | 1,236 | $ | (14,579 | ) | $ | 9,897 | ||||||||||
Income before income taxes | $ | 50,452 | $ | 13,803 | $ | 14,562 | $ | 5,052 | $ | 18,680 | $ | 102,549 | |||||||||||
Total assets | $ | 3,531,100 | $ | 2,499,870 | $ | 888,745 | $ | 324,269 | $ | (2,251,024 | ) | $ | 4,992,960 | ||||||||||
Capital expenditures | $ | 1,049 | $ | 1,932 | $ | 592 | $ | 205 | $ | 474 | $ | 4,252 |
For the three months ended March 31, 2015 | |||||||||||||||||||||||
(in thousands) | Retail | National Programs | Wholesale Brokerage | Services | Other | Total | |||||||||||||||||
Total revenues | $ | 218,344 | $ | 99,555 | $ | 51,828 | $ | 34,788 | $ | (217 | ) | $ | 404,298 | ||||||||||
Investment income | $ | 22 | $ | 45 | $ | 72 | $ | — | $ | 81 | $ | 220 | |||||||||||
Amortization | $ | 10,934 | $ | 7,235 | $ | 2,423 | $ | 1,023 | $ | 10 | $ | 21,625 | |||||||||||
Depreciation | $ | 1,642 | $ | 1,766 | $ | 563 | $ | 530 | $ | 682 | $ | 5,183 | |||||||||||
Interest expense | $ | 10,158 | $ | 14,955 | $ | 229 | $ | 1,599 | $ | (17,090 | ) | $ | 9,851 | ||||||||||
Income before income taxes | $ | 47,009 | $ | 9,476 | $ | 14,484 | $ | 4,502 | $ | 18,307 | $ | 93,778 | |||||||||||
Total assets | $ | 3,305,917 | $ | 2,407,695 | $ | 858,149 | $ | 300,155 | $ | (2,032,974 | ) | $ | 4,838,942 | ||||||||||
Capital expenditures | $ | 1,424 | $ | 1,489 | $ | 451 | $ | 240 | $ | 123 | $ | 3,727 |
(in thousands) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals | $ | 19,149 | $ | 121 | $ | — | $ | 19,270 | |||||||
Foreign government | 50 | — | — | 50 | |||||||||||
Corporate debt | 3,725 | 26 | (3 | ) | 3,748 | ||||||||||
Short duration fixed income fund | 924 | 17 | — | 941 | |||||||||||
Total | $ | 23,848 | $ | 164 | $ | (3 | ) | $ | 24,009 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals | $ | 243 | $ | — | $ | — | $ | — | $ | 243 | $ | — | |||||||||||
Corporate debt | 1,018 | 2 | 411 | 1 | 1,429 | 3 | |||||||||||||||||
Total | $ | 1,261 | $ | 2 | $ | 411 | $ | 1 | $ | 1,672 | $ | 3 |
(in thousands) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals | $ | 11,876 | $ | 6 | $ | (26 | ) | $ | 11,856 | ||||||
Foreign government | 50 | — | — | 50 | |||||||||||
Corporate debt | 4,505 | 7 | (16 | ) | 4,496 | ||||||||||
Short duration fixed income fund | 1,663 | 27 | 1,690 | ||||||||||||
Total | $ | 18,094 | $ | 40 | $ | (42 | ) | $ | 18,092 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals | $ | 8,998 | $ | 26 | $ | — | $ | — | $ | 8,998 | $ | 26 | |||||||||||
Foreign Government | 50 | — | 50 | — | |||||||||||||||||||
Corporate debt | 2,731 | 14 | 284 | 2 | 3,015 | 16 | |||||||||||||||||
Total | $ | 11,779 | $ | 40 | $ | 284 | $ | 2 | $ | 12,063 | $ | 42 |
(in thousands) | Amortized Cost | Fair Value | |||||
Years to maturity: | |||||||
Due in one year or less | $ | 3,494 | $ | 3,494 | |||
Due after one year through five years | 20,024 | 20,172 | |||||
Due after five years through ten years | 330 | 343 | |||||
Total | $ | 23,848 | $ | 24,009 |
(in thousands) | Amortized Cost | Fair Value | |||||
Years to maturity: | |||||||
Due in one year or less | $ | 5,726 | $ | 5,722 | |||
Due after one year through five years | 12,038 | 12,041 | |||||
Due after five years through ten years | 330 | 329 | |||||
Total | $ | 18,094 | $ | 18,092 |
Period from January 1, 2016 to March 31, 2016 | |||||||
(in thousands) | Written | Earned | |||||
Direct premiums | $ | 118,786 | $ | 148,644 | |||
Ceded premiums | 118,781 | 148,639 | |||||
Net premiums | $ | 5 | $ | 5 |
For the three months ended March 31, | ||||||||||
(in thousands, except percentages) | 2016 | 2015 | % Change | |||||||
REVENUES | ||||||||||
Core commissions and fees | $ | 388,244 | $ | 370,470 | 4.8 | % | ||||
Profit-sharing contingent commissions | 30,981 | 29,955 | 3.4 | % | ||||||
Guaranteed supplemental commissions | 3,110 | 3,356 | (7.3 | )% | ||||||
Investment income | 418 | 220 | 90.0 | % | ||||||
Other income, net | 1,420 | 297 | NMF | |||||||
Total revenues | 424,173 | 404,298 | 4.9 | % | ||||||
EXPENSES | ||||||||||
Employee compensation and benefits | 224,059 | 211,662 | 5.9 | % | ||||||
Other operating expenses | 63,605 | 61,093 | 4.1 | % | ||||||
Loss/(Gain) on disposal | (2,044 | ) | (257 | ) | NMF | |||||
Amortization | 21,610 | 21,625 | (0.1 | )% | ||||||
Depreciation | 5,318 | 5,183 | 2.6 | % | ||||||
Interest | 9,897 | 9,851 | 0.5 | % | ||||||
Change in estimated acquisition earn-out payables | (821 | ) | 1,363 | (160.2 | )% | |||||
Total expenses | 321,624 | 310,520 | 3.6 | % | ||||||
Income before income taxes | 102,549 | 93,778 | 9.4 | % | ||||||
Income taxes | 40,479 | 36,827 | 9.9 | % | ||||||
NET INCOME | $ | 62,070 | $ | 56,951 | 9.0 | % | ||||
Net internal growth rate – core organic commissions and fees | 1.3 | % | 3.8 | % | ||||||
Employee compensation and benefits ratio | 52.8 | % | 52.4 | % | ||||||
Other operating expenses ratio | 15.0 | % | 15.1 | % | ||||||
Capital expenditures | $ | 4,252 | $ | 3,727 | ||||||
Total assets at March 31 | $ | 4,992,960 | $ | 4,838,942 |
For the three months ended March 31, | |||||||
(in thousands) | 2016 | 2015 | |||||
Change in fair value of estimated acquisition earn-out payables | $ | (1,563 | ) | $ | 677 | ||
Interest expense accretion | 742 | 686 | |||||
Net change in earnings from estimated acquisition earn-out payables | $ | (821 | ) | $ | 1,363 |
2016 | For the three months ended March 31, | Total Net Change | Total Net Growth % | Less Acquisition Revenues | Internal Net Growth $ | Internal Net Growth % | |||||||||||||||||||
(in thousands, except percentages) | 2016 | 2015 | |||||||||||||||||||||||
Retail(1) | $ | 208,298 | $ | 195,848 | $ | 12,450 | 6.4 | % | $ | 11,089 | $ | 1,361 | 0.7 | % | |||||||||||
National Programs | 95,557 | 92,762 | 2,795 | 3.0 | % | 1,266 | 1,529 | 1.6 | % | ||||||||||||||||
Wholesale Brokerage | 47,886 | 46,060 | 1,826 | 4.0 | % | 254 | 1,572 | 3.4 | % | ||||||||||||||||
Services | 36,503 | 34,449 | 2,054 | 6.0 | % | 1,649 | 405 | 1.2 | % | ||||||||||||||||
Total core commissions and fees | $ | 388,244 | $ | 369,119 | $ | 19,125 | 5.2 | % | $ | 14,258 | $ | 4,867 | 1.3 | % |
For the three months ended March 31, | |||||||
(in thousands) | 2016 | 2015 | |||||
Total core commissions and fees | $ | 388,244 | $ | 369,119 | |||
Profit-sharing contingent commissions | 30,981 | 29,955 | |||||
Guaranteed supplemental commissions | 3,110 | 3,356 | |||||
Divested business | — | 1,351 | |||||
Total commissions and fees | $ | 422,335 | $ | 403,781 |
2015 | For the three months ended March 31, | Total Net Change | Total Net Growth % | Less Acquisition Revenues | Internal Net Growth $ | Internal Net Growth % | |||||||||||||||||||
(in thousands, except percentages) | 2015 | 2014 | |||||||||||||||||||||||
Retail(1) | $ | 196,352 | $ | 183,279 | $ | 13,073 | 7.1 | % | $ | 10,163 | $ | 2,910 | 1.6 | % | |||||||||||
National Programs | 93,254 | 65,020 | 28,234 | 43.4 | % | 25,398 | 2,836 | 4.4 | % | ||||||||||||||||
Wholesale Brokerage | 46,060 | 42,489 | 3,571 | 8.4 | % | 485 | 3,086 | 7.3 | % | ||||||||||||||||
Services | 34,804 | 31,510 | 3,294 | 10.5 | % | — | 3,294 | 10.5 | % | ||||||||||||||||
Total core commissions and fees | $ | 370,470 | $ | 322,298 | $ | 48,172 | 14.9 | % | $ | 36,046 | $ | 12,126 | 3.8 | % |
For the three months ended March 31, | |||||||
(in thousands) | 2015 | 2014 | |||||
Total core commissions and fees | $ | 370,470 | $ | 322,298 | |||
Profit-sharing contingent commissions | 29,955 | 31,748 | |||||
Guaranteed supplemental commissions | 3,356 | 2,932 | |||||
Divested business | — | 5,029 | |||||
Total commissions and fees | $ | 403,781 | $ | 362,007 |
(1) | The Retail Segment includes commissions and fees reported in the “Other” column of the Segment Information in Note 10 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items. |
For the three months ended March 31, | ||||||||||
(in thousands, except percentages) | 2016 | 2015 | % Change | |||||||
REVENUES | ||||||||||
Core commissions and fees | $ | 208,539 | $ | 196,642 | 6.1 | % | ||||
Profit-sharing contingent commissions | 20,762 | 18,828 | 10.3 | % | ||||||
Guaranteed supplemental commissions | 2,627 | 2,799 | (6.1 | )% | ||||||
Investment income | 21 | 22 | (4.5 | )% | ||||||
Other income, net | 239 | 53 | NMF | |||||||
Total revenues | 232,188 | 218,344 | 6.3 | % | ||||||
EXPENSES | ||||||||||
Employee compensation and benefits | 124,037 | 113,219 | 9.6 | % | ||||||
Other operating expenses | 37,574 | 35,029 | 7.3 | % | ||||||
(Gain) loss on disposal | (2,044 | ) | (339 | ) | NMF | |||||
Amortization | 10,989 | 10,934 | 0.5 | % | ||||||
Depreciation | 1,637 | 1,642 | (0.3 | )% | ||||||
Interest | 10,403 | 10,158 | 2.4 | % | ||||||
Change in estimated acquisition earn-out payables | (860 | ) | 692 | NMF | ||||||
Total expenses | 181,736 | 171,335 | 6.1 | % | ||||||
Income before income taxes | $ | 50,452 | $ | 47,009 | 7.3 | % | ||||
Net internal growth rate – core organic commissions and fees | 0.7 | % | 1.6 | % | ||||||
Employee compensation and benefits ratio | 53.4 | % | 51.9 | % | ||||||
Other operating expenses ratio | 16.2 | % | 16.0 | % | ||||||
Capital expenditures | $ | 1,049 | $ | 1,424 | ||||||
Total assets at March 31 | $ | 3,531,100 | $ | 3,305,917 |
For the three months ended March 31, | ||||||||||
(in thousands, except percentages) | 2016 | 2015 | % Change | |||||||
REVENUES | ||||||||||
Core commissions and fees | $ | 95,557 | $ | 93,254 | 2.5 | % | ||||
Profit-sharing contingent commissions | 5,244 | 6,017 | (12.8 | )% | ||||||
Guaranteed supplemental commissions | 6 | 3 | 100.0 | % | ||||||
Investment income | 248 | 45 | NMF | |||||||
Other income, net | 15 | 236 | (93.6 | )% | ||||||
Total revenues | 101,070 | 99,555 | 1.5 | % | ||||||
EXPENSES | ||||||||||
Employee compensation and benefits | 46,694 | 43,986 | 6.2 | % | ||||||
Other operating expenses | 18,894 | 21,655 | (12.7 | )% | ||||||
(Gain) loss on disposal | — | 467 | — | % | ||||||
Amortization | 7,108 | 7,235 | (1.8 | )% | ||||||
Depreciation | 1,929 | 1,766 | 9.2 | % | ||||||
Interest | 12,590 | 14,955 | (15.8 | )% | ||||||
Change in estimated acquisition earn-out payables | 52 | 15 | NMF | |||||||
Total expenses | 87,267 | 90,079 | (3.1 | )% | ||||||
Income before income taxes | $ | 13,803 | $ | 9,476 | 45.7 | % | ||||
Net internal growth rate – core organic commissions and fees | 1.6 | % | 4.4 | % | ||||||
Employee compensation and benefits ratio | 46.2 | % | 44.2 | % | ||||||
Other operating expenses ratio | 18.7 | % | 21.8 | % | ||||||
Capital expenditures | $ | 1,932 | $ | 1,489 | ||||||
Total assets at March 31 | $ | 2,499,870 | $ | 2,407,695 |
For the three months ended March 31, | ||||||||||
(in thousands, except percentages) | 2016 | 2015 | % Change | |||||||
REVENUES | ||||||||||
Core commissions and fees | $ | 47,886 | $ | 46,060 | 4.0 | % | ||||
Profit-sharing contingent commissions | 4,975 | 5,110 | (2.6 | )% | ||||||
Guaranteed supplemental commissions | 477 | 554 | (13.9 | )% | ||||||
Investment income | 3 | 72 | (95.8 | )% | ||||||
Other income, net | 73 | 32 | 128.1 | % | ||||||
Total revenues | 53,414 | 51,828 | 3.1 | % | ||||||
EXPENSES | ||||||||||
Employee compensation and benefits | 26,390 | 25,317 | 4.2 | % | ||||||
Other operating expenses | 9,267 | 8,549 | 8.4 | % | ||||||
(Gain) loss on disposal | — | (385 | ) | — | % | |||||
Amortization | 2,442 | 2,423 | 0.8 | % | ||||||
Depreciation | 496 | 563 | (11.9 | )% | ||||||
Interest | 247 | 229 | 7.9 | % | ||||||
Change in estimated acquisition earn-out payables | 10 | 648 | (98.5 | )% | ||||||
Total expenses | 38,852 | 37,344 | 4.0 | % | ||||||
Income before income taxes | $ | 14,562 | $ | 14,484 | 0.5 | % | ||||
Net internal growth rate – core organic commissions and fees | 3.4 | % | 7.3 | % | ||||||
Employee compensation and benefits ratio | 49.4 | % | 48.8 | % | ||||||
Other operating expenses ratio | 17.3 | % | 16.5 | % | ||||||
Capital expenditures | $ | 592 | $ | 451 | ||||||
Total assets at March 31 | $ | 888,745 | $ | 858,149 |
For the three months ended March 31, | ||||||||||
(in thousands, except percentages) | 2016 | 2015 | % Change | |||||||
REVENUES | ||||||||||
Core commissions and fees | $ | 36,503 | $ | 34,804 | 4.9 | % | ||||
Profit-sharing contingent commissions | — | — | — | % | ||||||
Guaranteed supplemental commissions | — | — | — | % | ||||||
Investment income | 64 | — | — | % | ||||||
Other income, net | 1 | (16 | ) | (106.3 | )% | |||||
Total revenues | 36,568 | 34,788 | 5.1 | % | ||||||
EXPENSES | ||||||||||
Employee compensation and benefits | 18,876 | 19,270 | (2.0 | )% | ||||||
Other operating expenses | 9,875 | 7,856 | 25.7 | % | ||||||
(Gain) loss on disposal | — | — | — | % | ||||||
Amortization | 1,065 | 1,023 | 4.1 | % | ||||||
Depreciation | 487 | 530 | (8.1 | )% | ||||||
Interest | 1,236 | 1,599 | (22.7 | )% | ||||||
Change in estimated acquisition earn-out payables | (23 | ) | 8 | NMF | ||||||
Total expenses | 31,516 | 30,286 | 4.1 | % | ||||||
Income before income taxes | $ | 5,052 | $ | 4,502 | 12.2 | % | ||||
Net internal growth rate – core organic commissions and fees | 1.2 | % | 10.5 | % | ||||||
Employee compensation and benefits ratio | 51.6 | % | 55.4 | % | ||||||
Other operating expenses ratio | 27.0 | % | 22.6 | % | ||||||
Capital expenditures | $ | 205 | $ | 240 | ||||||
Total assets at March 31 | $ | 324,269 | $ | 300,155 |
Payments Due by Period | |||||||||||||||||||
(in thousands) | Total | Less Than 1 Year | 1-3 Years | 4-5 Years | After 5 Years | ||||||||||||||
Long-term debt | $ | 1,148,000 | $ | 80,500 | $ | 210,000 | $ | 357,500 | $ | 500,000 | |||||||||
Other liabilities(1) | 64,651 | 20,929 | 14,565 | 1,300 | 27,857 | ||||||||||||||
Operating leases | 205,010 | 41,589 | 71,404 | 49,736 | 42,281 | ||||||||||||||
Interest obligations | 217,933 | 36,538 | 65,754 | 43,016 | 72,625 | ||||||||||||||
Unrecognized tax benefits | 679 | — | 679 | — | — | ||||||||||||||
Maximum future acquisition contingency payments(2) | 128,528 | 25,742 | 101,547 | 1,239 | — | ||||||||||||||
Total contractual cash obligations | $ | 1,764,801 | $ | 205,298 | $ | 463,949 | $ | 452,791 | $ | 642,763 |
(1) | Includes the current portion of other long-term liabilities. |
(2) | Includes $69.1 million of current and non-current estimated earn-out payables resulting from acquisitions consummated after January 1, 2009. |
Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Value that May Yet be Purchased Under the Plans or Programs(2) | ||||||||
January 1, 2016 to January 31, 2016 | 380,042 | $ | 31.93 | 363,209 | $ 375.0 million | ||||||
February 1, 2016 to February 29, 2016 | 1,431 | 32.30 | — | 375.0 million | |||||||
March 1, 2016 to March 31, 2016 | 38,191 | 34.79 | — | 375.0 million | |||||||
Total | 419,664 | $ | 32.69 | 363,209 | $ 375.0 million |
(1) | We purchased 363,209 shares during the quarter ended March 31, 2016. The $11.3 million remaining balance of the $75.0 million accelerated share repurchase ("ASR") program entered into on November 11, 2015 was settled on January 6, 2016. This ASR was part of the $200.0 million repurchase program approved by our Board of Directors and announced on July 21, 2014 and part of the $400.0 million repurchase program approved by our Board of Directors and announced on July 20, 2015. In addition, we purchased 56,455 shares during the quarter ended March 31, 2016 outside of our publicly announced share repurchase program, all of which represent shares surrendered by our teammates in the exercise of stock options under our equity compensation plans or to cover required tax withholdings on the vesting of shares in our equity compensation plans. |
(2) | As announced on July 21, 2014, our Board of Directors approved the purchasing of up to $200.0 million of the Company’s outstanding common stock of which $150.0 million have been purchased with the last settlement on August 11, 2015. On July 20, 2015, the Company’s Board of Directors authorized the purchasing of up to an additional $400.0 million of the Company's outstanding common stock. On November 11, 2015, the Company entered into ASR with an investment bank to purchase an aggregate $75.0 million of the Company’s common stock, all of which has been settled with this latest settlement on January 6, 2016 as noted above. After this completion, the Company will now have outstanding approval to purchase up to $375.0 million, in the aggregate, of the Company's outstanding common stock. As of March 31, 2016, a total of 7,793,579 shares have been repurchased since the first quarter of 2015. |
3.1 | Articles of Amendment to Articles of Incorporation (adopted April 24, 2003) (incorporated by reference to Exhibit 3a to Form 10-Q for the quarter ended March 31, 2003), and Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3a to Form 10-Q for the quarter ended March 31, 1999). | |
3.2 | Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on March 2, 2012). | |
10.1 | 2010 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 5, 2016). | |
10.2 | Form of Performance Stock Award Agreement under the 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed March 23, 2016). | |
10.3 | Form of Restricted Stock Award Agreement under the 2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to Form 8-K filed March 23, 2016). | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer of the Registrant. | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer of the Registrant. | |
32.1 | Section 1350 Certification by the Chief Executive Officer of the Registrant. | |
32.2 | Section 1350 Certification by the Chief Financial Officer of the Registrant. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
BROWN & BROWN, INC. | ||||
/s/ R. Andrew Watts | ||||
Date: May 6, 2016 | R. Andrew Watts | |||
Executive Vice President, Chief Financial Officer and Treasurer | ||||
(duly authorized officer, principal financial officer and principal accounting officer) |
/s/ J. Powell Brown |
J. Powell Brown |
President and Chief Executive Officer |
/s/ R. Andrew Watts |
R. Andrew Watts |
Executive Vice President, Chief Financial Officer and Treasurer |
/s/ J. Powell Brown |
J. Powell Brown |
President and Chief Executive Officer |
/s/ R. Andrew Watts |
R. Andrew Watts |
Executive Vice President, Chief Financial Officer and Treasurer |
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Document and Entity Information - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 03, 2016 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | BRO | |
Entity Registrant Name | BROWN & BROWN INC | |
Entity Central Index Key | 0000079282 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 140,022,014 | |
Entity Public Float | $ 111,111,111 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
REVENUES | ||
Commissions and fees | $ 422,335 | $ 403,781 |
Investment income | 418 | 220 |
Other income, net | 1,420 | 297 |
Total revenues | 424,173 | 404,298 |
EXPENSES | ||
Employee compensation and benefits | 224,059 | 211,662 |
Other operating expenses | 63,605 | 61,093 |
Gain on disposal | (2,044) | (257) |
Amortization | 21,610 | 21,625 |
Depreciation | 5,318 | 5,183 |
Interest | 9,897 | 9,851 |
Change in estimated acquisition earn-out payables | (821) | 1,363 |
Total expenses | 321,624 | 310,520 |
Income before income taxes | 102,549 | 93,778 |
Income taxes | 40,479 | 36,827 |
Net income | $ 62,070 | $ 56,951 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.45 | $ 0.40 |
Diluted (in dollars per share) | 0.44 | 0.39 |
Dividends declared per share (in dollars per share) | $ 0.1225 | $ 0.11 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 | |
Common stock, shares authorized (in shares) | 280,000,000 | 280,000,000 | |
Common stock, shares issued (in shares) | 147,967 | 146,415 | |
Common stock, shares outstanding (in shares) | 140,173 | 138,985 | |
Treasury stock shares (in shares) | 7,794,000 | 7,430,000 | |
Tax effect of accumulated other comprehensive income | $ 0 | $ 0 |
Nature of Operations |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Brown & Brown, Inc., a Florida corporation, and its subsidiaries (collectively, “Brown & Brown” or the “Company”) is a diversified insurance agency, wholesale brokerage, insurance programs and services organization that markets and sells to its customers, insurance products and services, primarily in the property and casualty area. Brown & Brown’s business is divided into four reportable segments: the Retail Segment provides a broad range of insurance products and services to commercial, public entity, professional and individual customers; the National Programs Segment, acting as a managing general agent (“MGA”), provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; the Wholesale Brokerage Segment markets and sells excess and surplus commercial insurance, primarily through independent agents and brokers, as well as Brown & Brown Retail offices; and 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, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services, and claims adjusting services. In addition, as the result of our acquisition of The Wright Insurance Group, LLC (“Wright”) in May 2014, we own a flood insurance carrier, Wright National Flood Insurance Company (“Wright Flood”), that is a Wright subsidiary. Wright Flood’s business consists of policies written pursuant to the National Flood Insurance Program, the program administered by the Federal Emergency Management Agency (“FEMA”), and several excess flood insurance policies, all of which are fully reinsured. |
Basis of Financial Reporting |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Basis of Financial Reporting | Basis of Financial Reporting The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2015-03, "Simplifying the Presentation of Debt Issuance Costs". The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts, and not recorded as a separate asset. The reason for the change is to align the treatment of debt issuance costs and debt discounts so that both reduce the carrying value of the liability. In August 2015, the FASB clarified that its guidance does not apply to line-of credit arrangements. This guidance requires retrospective application and is effective for fiscal years beginning after December 15, 2015 and for interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2016, as required. As a result, the Company retrospectively applied the guidance to the 2015 Consolidated Balance Sheet by reclassifying $8.3 million from other assets to long term debt. The Company has condensed the presentation of non-cash stock based compensation into the employee compensation and benefits line. The non-cash stock based compensation shown in the 2015 Consolidated Statement of Income was $15.5 million for the full year. Recently Issued Accounting Pronouncements In March 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-08, "Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)" ("ASU 2016-08") to clarify certain aspects of the principal-versus-agent guidance included in the new revenue standard ASU 2014-09 "Revenue from Contracts with Customers" ("ASU 2014-09"). The FASB issued the ASU in response to concerns identified by stakeholders, including those related to (1) determining the appropriate unit of account under the revenue standard’s principal-versus-agent guidance and (2) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard’s control principle. ASU 2016-08 is effective for the Company beginning January 1, 2018. The impact of ASU 2016-08 is currently being evaluated along with ASU 2014-09. In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share Based Payment Accounting" ("ASU 2016-09"), which amends guidance issued in Accounting Standards Codification ("ASC") Topic 718, Compensation – Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of the ASU on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. Under ASU 2016-02, the Company will be required to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating its leases against the requirements of this pronouncement. In November 2015, FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as a single non-current item on the balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted as of the beginning of any interim or annual reporting period. The Company plans to adopt ASU 2015-17 in the first quarter of 2017. This is not expected to have a material impact on our Consolidated Financial Statements other than reclassifying current deferred tax assets and liabilities to non-current in the balance sheet. In August 2014, FASB issued ASU No. 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which addresses management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for fiscal years beginning after December 15, 2016 and for interim periods within those fiscal years, with early adoption permitted. The Company does not expect to early adopt this guidance, and it believes the adoption of this guidance will not have an impact on our Consolidated Financial Statements. In May 2014, FASB issued ASU 2014-09, which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company beginning January 1, 2018, after FASB voted to delay the effective date by one year. At that time, the Company may adopt the new standard under the full retrospective approach or the modified retrospective approach. The Company is currently evaluating its revenue streams against the requirements of this pronouncement. |
Net Income Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share | Net Income Per Share Basic EPS is computed based on the weighted average number of common shares (including participating securities) issued and outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the exercise of stock options. The dilutive effect of stock options is computed by application of the treasury-stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding:
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Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations During the three months ended March 31, 2016, Brown & Brown acquired the assets and assumed certain liabilities of two insurance intermediaries and all of the stock of one insurance intermediary. Additionally, miscellaneous adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). Such adjustments are presented in the "Other" category within the following two tables. All of these businesses were acquired primarily to expand Brown & Brown’s core business and to attract and hire high-quality individuals. The recorded purchase price for all acquisitions consummated after January 1, 2009 included an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations will be recorded in the Condensed Consolidated Statement of Income when incurred. The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. In determining fair value, the acquired business’s future performance is estimated using financial projections developed by management for the acquired business and reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These payments are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made. Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Condensed Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the three months ended March 31, 2016, several adjustments were made within the permitted measurement period that resulted in a decrease in the aggregate purchase price of the affected acquisitions of $1,074,754 relating to the assumption of certain liabilities. These measurement period adjustments have been reflected as current period adjustments in the three months ended March 31, 2016 in accordance with the guidance in ASU 2015-16 "Business Combinations". The measurement period adjustments impacted goodwill, with no effect on earnings or cash in the current period. Cash paid for acquisitions was $42.7 million and $36.2 million in the three-month periods ended March 31, 2016 and 2015, respectively. We completed three acquisitions (excluding book of business purchases) in the three-month period ended March 31, 2016. We also completed three acquisitions (excluding book of business purchases) in the three-month period ended March 31, 2015. The following table summarizes the purchase price allocation made as of the date of each acquisition for current year acquisitions and adjustments made during the measurement period for prior year acquisitions. The purchase price allocation for Social Security Advocates for the Disabled ("SSAD") is provisional as it is based upon an initial valuation. The primary areas of the preliminary purchase price allocation for SSAD that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and residual goodwill. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. With the Company's adoption of ASU No. 2015-16 in the first fiscal quarter of 2016, these adjustments will be made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date.
The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition.
The weighted average useful lives for the acquired amortizable intangible assets are as follows: purchased customer accounts, 15 years; and non-compete agreements, 5 years. Goodwill of $28,952,000, which is net of any opening balance sheet adjustments within the allowable measurement period, was allocated to the Retail, National Programs, Wholesale Brokerage and Service Segments in the amounts of $6,704,000, $(70,000), $24,000 and $22,294,000, respectively. Of the total goodwill of $28,952,000, $7,023,000 is currently deductible for income tax purposes and $21,323,000 is non-deductible. The remaining $606,000 relates to the recorded earn-out payables and will not be deductible until it is earned and paid. For the acquisitions completed during 2016, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues and income before income taxes, including the intercompany cost of capital charge, from the acquisitions completed through March 31, 2016, included in the Condensed Consolidated Statement of Income for the three months ended March 31, 2016, were $2,527,000 and $570,000, respectively. If the acquisitions had occurred as of the beginning of the respective periods, the Company’s results of operations would be as shown in the following table. These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.
As of March 31, 2016 and 2015, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the three months ended March 31, 2016 and 2015, were as follows:
Of the $69.1 million estimated acquisition earn-out payables as of March 31, 2016, $23.7 million was recorded as accounts payable and $45.4 million was recorded as other non-current liabilities. Included within the additions to estimated acquisition earn-out payables are any adjustments to opening balance sheet items within the allowable measurement period, which may therefore differ from previously reported amounts. |
Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. The Company completed its most recent annual assessment as of November 30, 2015, and identified no impairment as a result of the evaluation. The changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2016 are as follows:
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Amortizable Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortizable Intangible Assets | Amortizable Intangible Assets Amortizable intangible assets at March 31, 2016 and December 31, 2015 consisted of the following:
Amortization expense for amortizable intangible assets for the years ending December 31, 2016, 2017, 2018, 2019 and 2020 is estimated to be $85.5 million, $82.7 million, $77.5 million, $72.9 million, and $65.6 million, respectively. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt at March 31, 2016 and December 31, 2015 consisted of the following:
On December 22, 2006, the Company entered into a Master Shelf and Note Purchase Agreement (the “Master Agreement”) with a national insurance company (the “Purchaser”). The initial issuance of notes under the Master Agreement occurred on December 22, 2006, through the issuance of $25.0 million in Series C Senior Notes due December 22, 2016, with a fixed interest rate of 5.66% per year. On February 1, 2008, $25.0 million in Series D Senior Notes due January 15, 2015, with a fixed interest rate of 5.37% per year, were issued. On September 15, 2011, and pursuant to a Confirmation of Acceptance (the “Confirmation”), dated January 21, 2011, in connection with the Master Agreement, $100.0 million in Series E Senior Notes were issued and are due September 15, 2018, with a fixed interest rate of 4.50% per year. The Series E Senior Notes were issued for the sole purpose of retiring existing senior notes. On January 15, 2015 the Series D Notes were redeemed at maturity using cash proceeds to pay off the principal of $25.0 million plus any remaining accrued interest. As of March 31, 2016, there was an outstanding debt balance issued under the provisions of the Master Agreement of $125.0 million. On July 1, 2013, in conjunction with the acquisition of Beecher Carlson Holdings, Inc., the Company entered into a revolving loan agreement (the “Wells Fargo Agreement”) with Wells Fargo Bank, N.A. that provided for a $50.0 million revolving line of credit (the “Wells Fargo Revolver”). The maturity date for the Wells Fargo Revolver is December 31, 2016, at which time all outstanding principal and unpaid interest will be due. On April 16, 2014, in connection with the signing of the Credit Facility (as defined below) an amendment to the agreement was established to reduce the total revolving loan commitment from $50.0 million to $25.0 million. The Wells Fargo Revolver may be increased by up to $50.0 million (bringing the total amount available to $75.0 million). The calculation of interest and fees for the Wells Fargo Agreement is generally based on the Company’s funded debt-to-EBITDA ratio. Interest is charged at a rate equal to 1.00% to 1.40% above LIBOR or 1.00% below the Base Rate, each as more fully described in the Wells Fargo Agreement. Fees include an up-front fee, an availability fee of 0.175% to 0.25%, and a letter of credit margin fee of 1.00% to 1.40%. The obligations under the Wells Fargo Revolver are unsecured and the Wells Fargo Agreement includes various covenants, limitations and events of default that are customary for similar facilities for similar borrowers. On March 14, 2016, the Wells Fargo Revolver was terminated before its maturity date as mentioned above with no fees incurred. There were no borrowings against the Wells Fargo Revolver as of March 31, 2016 and December 31, 2015. On April 17, 2014, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents (the “Credit Agreement”). The Credit Agreement in the amount of $1,350.0 million provides for an unsecured revolving credit facility (the “Credit Facility”) in the initial amount of $800.0 million and unsecured term loans in the initial amount of $550.0 million, either or both of which may, subject to lenders’ discretion, potentially be increased by up to $500.0 million. The Credit Facility was funded on May 20, 2014 in conjunction with the closing of the Wright acquisition, with the $550.0 million term loan being funded as well as a drawdown of $375.0 million on the revolving loan facility. Use of these proceeds was to retire existing term loan debt and to facilitate the closing of the Wright acquisition as well as other acquisitions. The Credit Facility terminates on May 20, 2019, but either or both of the revolving credit facility and the term loans may be extended for two additional one-year periods at the Company’s request and at the discretion of the respective lenders. Interest and facility fees in respect to the Credit Facility are based on the better of the Company’s net debt leverage ratio or a non-credit enhanced senior unsecured long-term debt rating. Based on the Company’s net debt leverage ratio, the rates of interest charged on the term loan are 1.00% to 1.75%, and the revolving loan is 0.85% to 1.50% above the adjusted LIBOR rate for outstanding amounts drawn. There are fees included in the facility which include a facility fee based on the revolving credit commitments of the lenders (whether used or unused) at a rate of 0.15% to 0.25% and letter of credit fees based on the amounts of outstanding secured or unsecured letters of credit. The Credit Facility includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers. As of March 31, 2016 and December 31, 2015, there was an outstanding debt balance issued under the provisions of the Credit Facility in total of $522.5 million and $529.4 million respectively, with no borrowings outstanding relative to the revolving loan. Per the terms of the agreement, a scheduled principal payment of $13.8 million is due on June 30, 2016. On September 18, 2014, the Company issued $500.0 million of 4.200% unsecured senior notes due in 2024. The senior notes were given investment grade ratings of BBB-/Baa3 with a stable outlook. The notes are subject to certain covenant restrictions and regulations which are customary for credit rated obligations. At the time of funding, the proceeds were offered at a discount of the original note amount which also excluded an underwriting fee discount. The net proceeds received from the issuance were used to repay the outstanding balance of $475.0 million on the revolving Credit Facility and for other general corporate purposes. As of March 31, 2016 and December 31, 2015, there was an outstanding debt balance of $500.0 million exclusive of the associated discount balance. The Master Agreement and the Credit Agreement all require the Company to maintain certain financial ratios and comply with certain other covenants. The Company was in compliance with all such covenants as of March 31, 2016 and December 31, 2015. The 30-day Adjusted LIBOR Rate as of March 31, 2016 was 0.44%. |
Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities | Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities
Brown & Brown’s significant non-cash investing and financing activities are summarized as follows:
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Legal and Regulatory Proceedings |
3 Months Ended |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal and Regulatory Proceedings | Legal and Regulatory Proceedings The Company is involved in numerous pending or threatened proceedings by or against Brown & Brown, Inc. or one or more of its subsidiaries that arise in the ordinary course of business. The damages that may be claimed against the Company in these various proceedings are in some cases substantial, including in certain instances claims for punitive or extraordinary damages. Some of these claims and lawsuits have been resolved, others are in the process of being resolved and others are still in the investigation or discovery phase. The Company will continue to respond appropriately to these claims and lawsuits and to vigorously protect its interests. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could adversely impact the Company’s operating results, cash flows and overall liquidity. The Company maintains third-party insurance policies to provide coverage for certain legal claims, in an effort to mitigate its overall exposure to unanticipated claims or adverse decisions. However, as (i) one or more of the Company’s insurance carriers could take the position that portions of these claims are not covered by the Company’s insurance, (ii) to the extent that payments are made to resolve claims and lawsuits, applicable insurance policy limits are eroded and (iii) the claims and lawsuits relating to these matters are continuing to develop, it is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by unfavorable resolutions of these matters. Based on the AM Best Company ratings of these third-party insurers, management does not believe there is a substantial risk of an insurer’s material nonperformance related to any current insured claims. On the basis of current information, the availability of insurance and legal advice, in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Brown & Brown’s business is divided into four reportable segments: (1) the Retail Segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers; (2) the National Programs Segment, which acts as a MGA, provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; (3) the Wholesale Brokerage Segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents; and (4) the Services Segment, which 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. Brown & Brown conducts all of its operations within the United States of America, except for a wholesale brokerage operation based in London, England, and retail operations in Bermuda and the Cayman Islands. These operations earned $2.8 million and $2.7 million of total revenues for the three months ended March 31, 2016 and 2015, respectively. Long-lived assets held outside of the United States as of March 31, 2016 and 2015 were not material. The accounting policies of the reportable segments are the same as those described in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Inter-segment revenues are eliminated. Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes any income and expenses not allocated to reportable segments, corporate-related items, including the inter-company interest expense charge to the reporting segment, and the elimination of inter-segment activities.
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Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments At March 31, 2016, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:
For securities in a loss position, the following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2016:
The unrealized losses from corporate issuers were caused by interest rate increases. At March 31, 2016, the Company had 12 securities in an unrealized loss position. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at March 31, 2016. At December 31, 2015, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:
The following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015:
The unrealized losses in the Company's investments in U.S Treasury Securities and obligations of U.S. Government agencies and bonds from corporate issuers were caused by interest rate increases. At December 31, 2015, the Company had 15 securities in an unrealized loss position. The contractual cash flows of the U.S. Treasury Securities and obligations of the U.S. Government agencies investments are either guaranteed by the U.S. Government or an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at December 31, 2015. The amortized cost and estimated fair value of the fixed maturity securities at March 31, 2016 by contractual maturity are set forth below:
The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2015 by contractual maturity are set forth below:
The expected maturities in the foregoing table may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalty. Proceeds from the sales and maturity of the Company’s investment in fixed maturity securities were $3.4 million. This along with maturing time deposits and the utilization of funds from a money-market investment account of $4.2 million yielded total cash proceeds form the sale of investments of $7.6 million in the period of January 1, 2016 to March 31, 2016. These proceeds were used to purchase additional fixed maturity securities. The gains and losses realized on those sales for the period from January 1, 2016 to March 31, 2016 were insignificant. Realized gains and losses are reported on the Condensed Consolidated Statements of Income, with the cost of securities sold determined on a specific identification basis. At March 31, 2016, investments with a fair value of approximately $4.0 million were on deposit with state insurance departments to satisfy regulatory requirements. |
Losses and Loss Adjustment Reserve |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Losses and Loss Adjustment Reserve | Losses and Loss Adjustment Reserve Although the reinsurers are liable to the Company for amounts reinsured, our subsidiary, Wright Flood remains primarily liable to its policyholders for the full amount of the policies written whether or not the reinsurers meet their obligations to the Company when they become due. The effects of reinsurance on premiums written and earned are as follows:
All premiums written by Wright Flood under the National Flood Insurance Program are 100% ceded to FEMA, for which Wright Flood received a 30.9% expense allowance from January 1, 2016 through March 31, 2016. For the period from January 1, 2016 through March 31, 2016, the Company ceded $118.4 million of written premiums. Effective April 1, 2014, Wright Flood is also a party to a quota share agreement whereby it cedes 100% of its gross excess flood premiums, which excludes fees, to Arch Reinsurance Company and receives a 30.5% commission. Wright Flood ceded $0.3 million for the period from January 1, 2016 through March 31, 2016. No loss data exists on this agreement. Wright Flood also ceded 100% of the Homeowners, Private Passenger Auto Liability, and Other Liability Occurrence to Stillwater Insurance Company, formerly known as Fidelity National Insurance Company. This business is in runoff. Therefore, only loss data still exists on this business. As of March 31, 2016, ceded unpaid losses and loss adjustment expenses for Homeowners, Private Passenger Auto Liability and Other Liability Occurrence was $8,698, $24,916 and $2,009, respectively. The incurred but not reported balance was $10,335 for Homeowners, $14,383 for Private Passenger Auto Liability and $8,456 for Other Liability Occurrence. The reinsurance recoverable balance as of March 31, 2016 was $337.9 million and was composed of recoverables on unpaid losses and loss expenses of $58.1 million and prepaid reinsurance premiums of $279.8 million. There was no net activity in the reserve for losses and loss adjustment expense during the period January 1, 2015 through March 31, 2016, as Wright Flood's direct premiums written were 100% ceded to three reinsurers. The balance of the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, as of March 31, 2016 was $58.1 million. |
Statutory Financial Information |
3 Months Ended |
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Mar. 31, 2016 | |
Statutory Accounting Practices [Abstract] | |
Statutory Financial Information | Statutory Financial Information Wright Flood maintains minimum amounts of statutory capital and surplus of $7.5 million as required by regulatory authorities. Wright Flood’s statutory capital and surplus exceeded their respective minimum statutory requirements. The unaudited statutory capital and surplus of Wright Flood was $17.7 million at March 31, 2016. For the period from January 1, 2016 through March 31, 2016, Wright Flood generated statutory net income of $2.5 million. |
Subsidiary Dividend Restrictions |
3 Months Ended |
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Mar. 31, 2016 | |
Disclosure of Restrictions on Dividends, Loans and Advances Disclosure [Abstract] | |
Subsidiary Dividend Restrictions | Subsidiary Dividend Restrictions Under the insurance regulations of Texas, the maximum amount of ordinary dividends that Wright Flood can pay to shareholders in a rolling twelve month period is limited to the greater of 10% of statutory adjusted capital and surplus as shown on Wright Flood’s last annual statement on file with the superintendent of the Texas Department of Insurance or 100% of adjusted net income. There was no dividend payout in 2015 and the maximum dividend payout that may be made in 2016 without prior approval is $4.1 million. |
Shareholders' Equity |
3 Months Ended |
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Mar. 31, 2016 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity On November 11, 2015, the Company entered into an accelerated share repurchase agreement (“ASR”) with an investment bank to purchase an aggregate $75 million of the Company’s common stock. The Company received an initial delivery of 1,985,981shares of the Company’s common stock with a fair market value of approximately $63.75 million. On January 6, 2016 this agreement was completed by the investment bank with the delivery of 363,209 shares of the Company’s common stock. On March 5, 2015, the Company entered into an ASR with an investment bank to purchase an aggregate $100.0 million of the Company’s common stock. As part of the ASR, the Company received an initial delivery of 2,667,992 shares of the Company’s common stock with a fair market value of approximately $85.0 million. On August 6, 2015, the Company was notified by its investment bank that the March 5, 2015 ASR agreement between the Company and the investment bank had been completed in accordance with the terms of the agreement. The investment bank delivered to the Company an additional 391,637 shares of the Company’s common stock for a total of 3,059,629 shares repurchased under the agreement. The delivery of the remaining 391,637 shares occurred on August 11, 2015. At the conclusion of this contract the Company had authorization for $50 million of share repurchases under the original Board authorization. On July 20, 2015, the Company’s Board of Directors authorized the repurchase of up to an additional $400 million of the Company’s outstanding common stock. After completion of the ASR on January 6, 2016, the Company has approval to repurchase up to $375 million, in the aggregate, of the Company’s outstanding common stock. Since beginning share repurchases in 2014, the Company has repurchased 7,793,579 shares of the Company's common stock at an aggregate cost of $250 million. Under the authorization from the Company’s Board of Directors, shares may be purchased from time to time, at the Company’s discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company’s financial performance and other potential factors. These purchases may be carried out through open market purchases, block trades, accelerated share repurchase plans of up to $100 million each (unless otherwise approved by the Board of Directors), negotiated private transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. |
Nature of Operations (Policies) |
3 Months Ended |
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Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | four |
Basis of Accounting | The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements |
Net Income Per Share (Tables) |
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Reconciliation between Basic and Diluted Weighted Average Shares Outstanding | The following is a reconciliation between basic and diluted weighted average shares outstanding:
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Business Combinations (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase price allocation for current year acquisitions and adjustments made for prior year acquisitions | The following table summarizes the purchase price allocation made as of the date of each acquisition for current year acquisitions and adjustments made during the measurement period for prior year acquisitions. The purchase price allocation for Social Security Advocates for the Disabled ("SSAD") is provisional as it is based upon an initial valuation. The primary areas of the preliminary purchase price allocation for SSAD that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and residual goodwill. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. With the Company's adoption of ASU No. 2015-16 in the first fiscal quarter of 2016, these adjustments will be made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date.
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Estimated fair values of aggregate assets and liabilities acquired | The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition.
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Unaudited pro forma results | These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.
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Additions, payments, and net changes, as well as interest expense accretion on estimated acquisition earn-out payables | The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the three months ended March 31, 2016 and 2015, were as follows:
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Goodwill (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Value of Goodwill by Operating Segment | The changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2016 are as follows:
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Amortizable Intangible Assets (Tables) |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortizable Intangible Assets | Amortizable intangible assets at March 31, 2016 and December 31, 2015 consisted of the following:
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Long-Term Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt Instrument | Long-term debt at March 31, 2016 and December 31, 2015 consisted of the following:
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Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities (Tables) |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities |
Brown & Brown’s significant non-cash investing and financing activities are summarized as follows:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Brown & Brown’s business is divided into four reportable segments: (1) the Retail Segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers; (2) the National Programs Segment, which acts as a MGA, provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; (3) the Wholesale Brokerage Segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents; and (4) the Services Segment, which 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. Brown & Brown conducts all of its operations within the United States of America, except for a wholesale brokerage operation based in London, England, and retail operations in Bermuda and the Cayman Islands. These operations earned $2.8 million and $2.7 million of total revenues for the three months ended March 31, 2016 and 2015, respectively. Long-lived assets held outside of the United States as of March 31, 2016 and 2015 were not material. The accounting policies of the reportable segments are the same as those described in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Inter-segment revenues are eliminated. Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes any income and expenses not allocated to reportable segments, corporate-related items, including the inter-company interest expense charge to the reporting segment, and the elimination of inter-segment activities.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments in Fixed Maturity Securities | At December 31, 2015, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:
At March 31, 2016, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:
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Summary of Unrealized Loss Position | The following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015:
he following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2016:
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Amortized Cost and Fair Value of Fixed Maturity Securities by Contractual Maturity | The amortized cost and estimated fair value of the fixed maturity securities at March 31, 2016 by contractual maturity are set forth below:
The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2015 by contractual maturity are set forth below:
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Losses and Loss Adjustment Reserve (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance on Premiums Written and Earned | The effects of reinsurance on premiums written and earned are as follows:
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Nature of Operations - Additional Information (Detail) |
3 Months Ended |
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Mar. 31, 2016
Segment
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 4 |
Basis of Financial Reporting Adopted Guidance (Details) $ in Millions |
Dec. 31, 2015
USD ($)
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Text Block [Abstract] | |
Debt Issuance Costs, Line of Credit Arrangements, Gross | $ 8.3 |
Basis of Financial Reporting Text Block (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
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Text Block [Abstract] | |||
Share-based Compensation | $ 2,772 | $ 6,357 | $ 15,500 |
Net Income Per Share - Reconciliation between Basic and Diluted Weighted Average Shares Outstanding (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Earnings Per Share [Abstract] | ||
Net income | $ 62,070 | $ 56,951 |
Net income attributable to unvested awarded performance stock | (1,451) | (1,363) |
Net income attributable to common shares | $ 60,619 | $ 55,588 |
Weighted average number of common shares outstanding - basic (in shares) | 138,793 | 142,777 |
Less unvested awarded performance stock included in weighted average number of common shares outstanding - basic (in shares) | (3,245) | (3,417) |
Weighted average number of common shares outstanding for basic earnings per common share (in shares) | 135,548 | 139,360 |
Dilutive effect of stock options (in shares) | 1,392 | 2,127 |
Weighted average number of shares outstanding - diluted (in shares) | 136,940 | 141,487 |
Basic (in dollars per share) | $ 0.45 | $ 0.40 |
Diluted (in dollars per share) | $ 0.44 | $ 0.39 |
Business Combinations - Results of Operations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | $ 2,527 | |
Business Combination Pro Forma Information Income Loss Before Income Taxes Of Acquiree Since Acquisition Date Actual | 570 | |
Total revenues | 425,179 | $ 407,579 |
Income before income taxes | 102,873 | 94,780 |
Net income | $ 62,266 | $ 57,560 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.45 | $ 0.40 |
Diluted (in dollars per share) | $ 0.44 | $ 0.40 |
Weighted Average Basic Shares Outstanding, Pro Forma | 135,548 | 139,360 |
Weighted average number of shares outstanding: | ||
Pro Forma Weighted Average Shares Outstanding, Diluted | 136,940 | 141,487 |
Business Combinations - Additions, Payments, and Net Changes, as well as Interest Expense Accretion on Estimated Acquisition Earn-Out Payables (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Business Combinations [Abstract] | ||
Additions to estimated acquisition earn-out payables | $ 606 | $ 5,653 |
Payments for estimated acquisition earn-out payables | (9,077) | (4,590) |
Subtotal | 69,916 | 76,346 |
Net change in earnings from estimated acquisition earn-out payables: | ||
Change in fair value on estimated acquisition earn-out payables | (1,563) | 677 |
Interest expense accretion | 742 | 686 |
Net change in earnings from estimated acquisition earn-out payables | (821) | 1,363 |
Ending balance | $ 69,095 | $ 77,709 |
Amortizable Intangible Assets - Amortizable Intangible Assets (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
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Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
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Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Value | $ 1,444,729 | $ 1,428,426 | |
Accumulated Amortization | (705,174) | (683,746) | |
Net Carrying Value | 739,555 | 744,680 | |
Purchased customer accounts | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Value | 1,415,155 | 1,398,986 | |
Accumulated Amortization | (677,933) | (656,799) | |
Net Carrying Value | $ 737,222 | 742,187 | |
Weighted Average Life (Years) | 15 years | 15 years | |
Non-compete agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Value | $ 29,574 | 29,440 | |
Accumulated Amortization | (27,241) | (26,947) | |
Net Carrying Value | $ 2,333 | $ 2,493 | |
Weighted Average Life (Years) | 6 years 9 months 18 days | 6 years 9 months 18 days |
Amortizable Intangible Assets - Additional Information (Detail) $ in Millions |
Mar. 31, 2016
USD ($)
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense estimated, year one (2015) | $ 85.5 |
Amortization expense estimated, year two (2016) | 82.7 |
Amortization expense estimated, year three (2017) | 77.5 |
Amortization expense estimated, year four (2018) | 72.9 |
Amortization expense estimated, year five (2019) | $ 65.6 |
Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities - Significant Non-Cash Investing and Financing Activities (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Cash paid during the period for: | ||
Interest | $ 14,323 | $ 14,899 |
Income taxes | 6,922 | 8,004 |
Significant non-cash investing and financing activities | ||
Other payable issued for purchased customer accounts | 300 | 5 |
Estimated acquisition earn-out payables and related charges | 606 | 5,653 |
Business Acquisition Cost of Entity Note Payable | 492 | 0 |
Notes received on the sale of fixed assets and customer accounts | $ 0 | $ 362 |
Segment Information - Additional Information (Detail) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
Segment
|
Mar. 31, 2015
USD ($)
|
|
Segment Reporting Information [Line Items] | ||
Number of reportable segments | Segment | 4 | |
Total revenues | $ 424,173 | $ 404,298 |
London, Bermuda and Cayman Islands | ||
Segment Reporting Information [Line Items] | ||
Total revenues | $ 2,800 | $ 2,700 |
Investments - Additional Information (Detail) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
Securities
|
Dec. 31, 2015
Securities
|
|
Investments, Debt and Equity Securities [Abstract] | ||
Number of securities in unrealized loss position | Securities | 12 | 15 |
Proceeds from sale of investment in fixed maturity securities | $ 3.4 | |
Investment security maturity date, start | Jan. 01, 2016 | |
Investment security maturity date, End | Mar. 31, 2016 | |
Gross realized gains and losses of securities | insignificant | |
Investments on deposit with the state insurance department | $ 4.0 |
Investments - Amortized Cost and Fair Value of Fixed Maturity Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 3,494 | $ 5,726 |
Due after one year through five years | 20,024 | 12,038 |
Due after five years through ten years | 330 | 330 |
Amortized Cost, Total | 23,848 | 18,094 |
Fair Value | ||
Due in one year or less | 3,494 | 5,722 |
Due after one year through five years | 20,172 | 12,041 |
Due after five years through ten years | 343 | 329 |
Fair Value, Total | $ 24,009 | $ 18,092 |
Losses and Loss Adjustment Reserve - Effects of Reinsurance on Premiums Written and Earned (Detail) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Written | |
Direct premiums | $ 118,786 |
Ceded premiums | 118,781 |
Net premiums | 5 |
Earned | |
Direct premiums | 148,644 |
Ceded premiums | 148,639 |
Net premiums | $ 5 |
Statutory Financial Information - Additional Information (Detail) - Wright Flood |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Statutory Accounting Practices [Line Items] | |
Statutory capital and surplus required | $ 7,500,000 |
Statutory capital and surplus | 17,700,000 |
Statutory net Income | $ 2,500,000 |
Subsidiary Dividend Restrictions - Additional Information (Detail) - Wright Flood $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Dividend Restrictions [Line Items] | |
Dividend rate as a percentage of net income | 100.00% |
Ordinary dividends payment description | The maximum amount of ordinary dividends that Wright Flood can pay to shareholders in a rolling twelve month period is limited to the greater of 10% of statutory adjusted capital and surplus as shown on Wright Flood’s last annual statement on file with the superintendent or 100% of adjusted net income. |
Maximum dividend payout that may be made without prior approval | $ 4.1 |
Maximum | |
Dividend Restrictions [Line Items] | |
Dividend rate as a percentage of net income | 10.00% |
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