Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Significant Components of Provision for Income Taxes

Significant components of the provision for income taxes for the years ended December 31 are as follows:

(in thousands)	2012		2011		2010
Current:
Federal	$	75,522	$	65,461	$	70,715
State		11,852		10,084		10,236
Foreign		669		638		860
Total current provision		88,043		76,183		81,811
Deferred:
Federal		27,348		27,212		19,890
State		5,375		3,131		2,645
Total deferred provision		32,723		30,343		22,535
Total tax provision	$	120,766	$	106,526	$	104,346

Reconciliation of Differences Between Effective Tax Rate and Federal Statutory Tax Rate

A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the years ended December 31 is as follows:

	2012			2011			2010
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		4.3			3.5			3.5
Non-deductible employee stock purchase plan expense		0.3			0.3			0.3
Non-deductible meals and entertainment		0.3			0.3			0.3
Other, net		(0.3	)		0.3			0.1
Effective tax rate		39.6	%		39.4	%		39.2	%

Significant Components of Current Deferred Tax Assets

Significant components of Brown & Brown’s current deferred tax assets as of December 31 are as follows:

(in thousands)	2012		2011
Current deferred tax assets:
Deferred profit-sharing contingent commissions	$	9,490	$	11,124
Net operating loss carryforwards		5,786		—
Accruals and reserves		9,132		8,739
Total current deferred tax assets	$	24,408	$	19,863

Significant Components of Non-Current Deferred Tax Liabilities and Assets

Significant components of Brown & Brown’s non-current deferred tax liabilities and assets as of December 31 are as follows:

(in thousands)	2012			2011
Non-current deferred tax liabilities:
Fixed assets	$	12,427		$	11,400
Net unrealized holding gain of available-for-sale securities		—			4
Prepaid insurance and pension		—			3,123
Intangible assets		245,020			176,459
Total non-current deferred tax liabilities		257,447			190,986
Non-current deferred tax assets:
Deferred compensation		13,576			11,341
Net operating loss carryforwards		6,658			2,071
Valuation allowance for deferred tax assets		(417	)		(478	)
Total non-current deferred tax assets		19,817			12,934
Net non-current deferred tax liability	$	237,630		$	178,052

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2012			2011			2010
Unrecognized tax benefits balance at January 1	$	806		$	656		$	635
Gross increases for tax positions of prior years		222			257			229
Gross decreases for tax positions of prior years		(409	)		—			—
Settlements		(325	)		(107	)		(208	)
Unrecognized tax benefits balance at December 31	$	294		$	806		$	656