Business Combinations (Tables)

9 Months Ended

Sep. 30, 2019

Purchase Price Allocation for Current Year Acquisitions and Adjustments Made for Prior Year Acquisitions

The following table summarizes the purchase price allocations made as of the date of each acquisition for current year acquisitions and adjustments made during the measurement period for prior year acquisitions. 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. These adjustments are 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.

(in thousands)
Name	Business segment	Effective date of acquisition	Cash paid		Common Stock Issued		Other payable		Recorded earn-out payable		Net assets acquired		Maximum potential earn- out payable
Smith Insurance Associates, Inc. (Smith)	Retail	February 1, 2019	$	20,129	$	—	$	—	$	2,704	$	22,833	$	4,550
Donald P. Pipino Company, LTD (Pipino)	Retail	February 1, 2019		16,420		—		135		9,821		26,376		12,996
Cossio Insurance Agency (Cossio)	Retail	March 1, 2019		13,990		—		10		1,710		15,710		2,000
Medval LLC (Medval)	Services	March 1, 2019		29,106		—		100		1,684		30,890		2,500
United Development Systems, Inc. (United)	Retail	May 1, 2019		18,987		—		388		3,268		22,643		8,625
Twinbrook Insurance Brokerage, Inc. (Twinbrook)	Retail	June 1, 2019		26,251		—		400		1,565		28,216		5,073
Innovative Risk Solutions, Inc. (IRS)	Retail	July 1, 2019		26,435		—		2,465		5,482		34,382		9,000
WBR Insurance Agency, LLC et al (WBR)	Retail	August 1, 2019		10,667		—		203		2,197		13,067		4,575
West Ridge Insurance Agency, Inc. d/b/a Yozell Associates (Yozell)	Retail	August 1, 2019		13,030		—		470		768		14,268		6,730
CKP Insurance, LLC (CKP)	Retail	August 1, 2019		89,190		20,000		4,000		38,093		151,283		76,500
Other	Various	Various		27,405		—		1,291		4,172		32,868		9,404
Total			$	291,610	$	20,000	$	9,462	$	71,464	$	392,536	$	141,953

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 and adjustments made during the measurement period of the prior year acquisitions.

(in thousands)	Smith			Pipino			Cossio		Medval			United			Twinbrook			IRS			WBR			Yozell		CKP			Other			Total
Cash	$	—		$	—		$	—	$	3,217		$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	3,217
Other current assets		473			819			17		1,708			477			—			1,200			169			1,473		8,900			(6,173	)		9,063
Fixed assets		39			112			29		50			20			85			11			10			12		193			(166	)		395
Goodwill		16,249			16,765			11,319		19,108			15,111			19,839			24,040			9,376			9,212		110,765			23,523			275,307
Purchased customer accounts		6,500			11,360			4,324		7,300			7,065			8,557			9,246			4,022			3,550		32,274			10,732			104,930
Non-compete agreements		41			11			21		1			11			12			11			34			21		21			128			312
Other assets		—			772			—		15			—			—			—			—			—		—			(732	)		55
Total assets acquired		23,302			29,839			15,710		31,399			22,684			28,493			34,508			13,611			14,268		152,153			27,312			393,279
Other current liabilities		(469	)		(3,463	)		—		(480	)		(41	)		(277	)		(126	)		(166	)		—		(870	)		5,556			(336	)
Other liabilities		—			—			—		(29	)		—			—			—			(378	)		—		—			—			(407	)
Total liabilities assumed		(469	)		(3,463	)		—		(509	)		(41	)		(277	)		(126	)		(544	)		—		(870	)		5,556			(743	)
Net assets acquired	$	22,833		$	26,376		$	15,710	$	30,890		$	22,643		$	28,216		$	34,382		$	13,067		$	14,268	$	151,283		$	32,868		$	392,536

Unaudited Proforma 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.

(UNAUDITED)	Three months ended September 30,				Nine months ended September 30,
(in thousands, except per share data)	2019		2018		2019		2018
Total revenues	$	619,359	$	547,196	$	1,853,193	$	1,578,627
Income before income taxes	$	152,038	$	147,351	$	438,289	$	385,327
Net income	$	115,658	$	109,663	$	332,940	$	288,373
Net income per share:
Basic	$	0.41	$	0.39	$	1.18	$	1.04
Diluted	$	0.41	$	0.39	$	1.17	$	1.02
Weighted average number of shares outstanding:
Basic		272,962		271,008		272,425		270,423
Diluted		275,075		275,282		274,529		275,614

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 nine months ended September 30, 2019 and 2018, were as follows:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2019			2018			2019			2018
Balance as of the beginning of the period	$	104,976		$	52,540		$	89,924		$	36,175
Additions to estimated acquisition earn-out payables		47,498			29,646			71,464			51,717
Payments for estimated acquisition earn-out payables		(601	)		(16,521	)		(7,865	)		(25,112	)
Subtotal		151,873			65,665			153,523			62,780
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		(6,573	)		(928	)		(10,873	)		945
Interest expense accretion		1,303			571			3,953			1,583
Net change in earnings from estimated acquisition earn-out payables		(5,270	)		(357	)		(6,920	)		2,528
Balance as of September 30,	$	146,603		$	65,308		$	146,603		$	65,308