Revenues

9 Months Ended

Sep. 30, 2023

Revenues [Abstract]

Revenues

NOTE 3 Revenues

The following tables present the revenues disaggregated by revenue source:

	Three months ended September 30, 2023
(in millions)	Retail		National Programs		Wholesale Brokerage		Services		Other (8)			Total
Base commissions (1)	$	411.2	$	188.2	$	121.5	$	—	$	0.1		$	721.0
Fees (2)		133.8		60.8		21.1		42.4		(0.3	)		257.8
Other supplemental commissions (3)		29.2		1.0		0.9		—		—			31.1
Profit-sharing contingent commissions (4)		9.7		12.1		5.5		—		—			27.3
Earned premium (5)		—		12.1		—		—		—			12.1
Investment income (6)		0.5		3.8		0.6		—		11.7			16.6
Other income, net (7)		1.6		0.2		—		—		—			1.8
Total Revenues	$	586.0	$	278.2	$	149.6	$	42.4	$	11.5		$	1,067.7

	Three months ended September 30, 2022
(in millions)	Retail		National Programs			Wholesale Brokerage		Services		Other (8)			Total
Base commissions (1)	$	360.6	$	165.8		$	103.7	$	—	$	—		$	630.1
Fees (2)		130.6		56.2			18.4		41.1		(0.2	)		246.1
Other supplemental commissions (3)		25.0		3.7			0.9		—		—			29.6
Profit-sharing contingent commissions (4)		10.9		(6.2	)		3.1		—		—			7.8
Earned premium (5)		—		11.6			—		—		—			11.6
Investment income (6)		—		0.3			0.1		—		0.8			1.2
Other income, net (7)		1.1		—			0.1		—		—			1.2
Total Revenues	$	528.2	$	231.4		$	126.3	$	41.1	$	0.6		$	927.6

	Nine months ended September 30, 2023
(in millions)	Retail		National Programs		Wholesale Brokerage		Services		Other (8)			Total
Base commissions (1)	$	1,297.3	$	543.6	$	335.7	$	—	$	0.1		$	2,176.7
Fees (2)		393.8		166.4		59.1		129.9		(1.4	)		747.8
Other supplemental commissions (3)		138.9		5.1		3.3		—		—			147.3
Profit-sharing contingent commissions (4)		40.1		35.0		12.6		—		—			87.7
Earned premium (5)		—		33.7		—		—		—			33.7
Investment income (6)		1.0		7.0		1.2		—		24.6			33.8
Other income, net (7)		3.1		0.4		0.1		—		0.3			3.9
Total Revenues	$	1,874.2	$	791.2	$	412.0	$	129.9	$	23.6		$	3,230.9

	Nine months ended September 30, 2022
(in millions)	Retail		National Programs		Wholesale Brokerage		Services		Other (8)			Total
Base commissions (1)	$	1,055.7	$	443.2	$	277.1	$	—	$	(0.1	)	$	1,775.9
Fees (2)		369.4		137.6		52.0		128.8		(1.0	)		686.8
Other supplemental commissions (3)		117.3		7.7		3.9		—		—			128.9
Profit-sharing contingent commissions (4)		38.3		12.0		8.2		—		—			58.5
Earned premium (5)		—		18.1		—		—		—			18.1
Investment income (6)		—		0.6		0.2		—		1.0			1.8
Other income, net (7)		1.6		0.1		0.2		—		0.1			2.0
Total Revenues	$	1,582.3	$	619.3	$	341.6	$	128.8	$	—		$	2,672.0

(1)Base commissions generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, or sales and payroll levels) to determine what premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control.

(2)Fee revenues relate to fees for services other than securing coverage for our customers, fees negotiated in lieu of commissions, and F&I products and services.

(3)Other supplemental commissions include additional commissions over base commissions received from insurance carriers based on predetermined growth or production measures. This includes incentive commissions and guaranteed supplemental commissions.

(4)Profit-sharing contingent commissions are based primarily on underwriting results, but may also reflect considerations for volume, growth and/or retention.

(5)Earned premium relates to the premiums earned in the Captives.

(6)Investment income consists primarily of interest on cash and investments.

(7)Other income consists primarily of other miscellaneous income.

(8)Fees within Other reflects the elimination of intercompany revenues.

The following table presents the revenues disaggregated by geographic area where our services are being performed:

	Three months ended September 30,				Nine months ended September 30,
(in millions, except per share data)	2023		2022		2023		2022
U.S.	$	941.7	$	835.5	$	2,857.4	$	2,539.2
U.K.		105.6		75.9		308.6		84.3
Ireland		8.7		7.6		31.0		24.2
Canada		9.7		5.7		25.4		17.8
Other		2.0		2.9		8.5		6.5
Total Revenues	$	1,067.7	$	927.6	$	3,230.9	$	2,672.0

Contract Assets and Liabilities

The balances of contract assets and contract liabilities arising from contracts with customers as of September 30, 2023 and December 31, 2022 were as follows:

(in millions)	September 30, 2023		December 31, 2022
Contract assets	$	468.0	$	431.2
Contract liabilities	$	107.9	$	113.3

Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which have not yet been billed in the Company's systems and are reflected in commissions, fees and other receivables in the Company's Condensed Consolidated Balance Sheet. The increase in contract assets over the balance as of December 31, 2022 is due to normal seasonality, growth in our business, and from businesses acquired in the current year.

Deferred revenue (contract liabilities) relates to payments received in advance of performance under the contract before the transfer of a good or service to the customer. Deferred revenue is reflected within accrued expenses and other liabilities for those to be recognized in less than 12 months and in other liabilities for those to be recognized more than 12 months from the date presented in the Company's Condensed Consolidated Balance Sheet.

As of September 30, 2023, deferred revenue consisted of $67.2 million as the current portion to be recognized within one year and $40.7 million in long-term to be recognized beyond one year. As of December 31, 2022, deferred revenue consisted of $79.9 million as the current portion to be recognized within one year and $33.4 million in long-term deferred revenue to be recognized beyond one year.

During the nine months ended September 30, 2023 and 2022, the net amount of revenue recognized related to performance obligations satisfied in a previous period was $26.0 million and $23.9 million, consisting of additional variable consideration received on our incentive and profit-sharing contingent commissions.

Other Assets and Deferred Cost

Incremental cost to obtain - The Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans in the Retail segment, in which the Company pays an incremental amount of compensation on new business. These incremental costs are deferred and amortized over a 15-year period. The cost to obtain balance within the other assets caption in the Company's Condensed Consolidated Balance Sheet was $91.4 million and $76.0 million as of September 30, 2023 and December 31, 2022, respectively. For the nine months ended September 30, 2023, the Company deferred $20.3 million of incremental cost to obtain customer contracts. The Company recorded an expense of $4.9 million associated with the incremental cost to obtain customer contracts for the nine months ended September 30, 2023.

Cost to fulfill - The Company defers certain costs to fulfill contracts and recognizes these costs as the associated performance obligations are fulfilled. The cost to fulfill balance within the other current assets caption in the Company's Condensed Consolidated Balance Sheet as of September 30, 2023 was $107.4 million. The cost to fulfill balance as of December 31, 2022 was $108.7 million. For the nine months ended September 30, 2023, the Company had net expense of $5.8 million related to the release of previously deferred contract fulfillment costs

associated with performance obligations that were satisfied in the period, net of current year deferrals for costs incurred that related to performance obligations yet to be fulfilled.