Business Combinations (Tables)

3 Months Ended

Mar. 31, 2020

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		Other payable		Recorded earn-out payable		Net assets acquired		Maximum potential earn- out payable
Special Risk Insurance Managers Ltd. (Special Risk)	National Programs	January 1, 2020	$	68,812	$	—	$	4,884	$	73,696	$	14,650
Texas All Risk General Agency, Inc. et al (Texas Risk)	Wholesale Brokerage	January 1, 2020		10,511		135		310		10,980		1,150
The Colonial Group, Inc. et al (Colonial)	Wholesale Brokerage	March 1, 2020		29,037		10		5,639		35,203		10,150
RLA Insurance Intermediaries, LLC (RLA)	Wholesale Brokerage	March 1, 2020		42,496		100		2,951		46,233		22,500
Other	Various	Various		2,435		1,291		194		2,704		1,140
Total			$	153,291	$	1,536	$	13,978	$	168,816	$	49,590

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)	Special Risk		Texas Risk			Colonial			RLA			Other			Total
Cash	$	—	$	—		$	—		$	—		$	—		$	—
Other current assets		2,159		446			808			—			747			4,160
Fixed assets		346		27			59			54			—			486
Goodwill		55,607		8,488			26,030			44,592			765			135,482
Purchased customer accounts		14,897		3,674			9,393			12,549			1,279			41,792
Non-compete agreements		136		25			43			481			21			706
Other assets		—		—			—			—			—			—
Total assets acquired		73,145		12,660			36,333			57,676			2,812			182,626
Other current liabilities		551		(1,680	)		(1,130	)		(11,443	)		(108	)		(13,810	)
Other liabilities		—		—			—			—			—			—
Total liabilities assumed		551		(1,680	)		(1,130	)		(11,443	)		(108	)		(13,810	)
Net assets acquired	$	73,696	$	10,980		$	35,203		$	46,233		$	2,704		$	168,816

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 March 31,
(in thousands, except per share data)	2020		2019
Total revenues	$	702,333	$	628,230
Income before income taxes	$	206,330	$	150,948
Net income	$	153,200	$	115,758
Net income per share:
Basic	$	0.54	$	0.41
Diluted	$	0.54	$	0.41
Weighted average number of shares outstanding:
Basic		272,776		272,679
Diluted		274,861		275,014

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, 2020 and 2019, were as follows:

	Three months ended March 31,
(in thousands)	2020			2019
Balance as of the beginning of the period	$	161,513		$	89,924
Additions to estimated acquisition earn-out payables		13,978			18,155
Payments for estimated acquisition earn-out payables		(6,814	)		(579	)
Subtotal		168,677			107,500
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		(12,641	)		50
Interest expense accretion		1,684			1,160
Net change in earnings from estimated acquisition earn-out payables		(10,957	)		1,210
Balance as of March 31,	$	157,720		$	108,710