Business Combinations (Tables)

12 Months Ended

Dec. 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		Common Stock Issued		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	$	70,156	$	—	$	—	$	9,859	$	80,015	$	14,650
Texas All Risk General Agency, Inc. et al (Texas Risk)	Wholesale Brokerage	January 1, 2020		10,511		—		159		310		10,980		1,150
The Colonial Group, Inc. et al (Colonial)	Wholesale Brokerage	March 1, 2020		29,037		—		527		7,577		37,141		10,150
RLA Insurance Intermediaries, LLC (RLA)	Wholesale Brokerage	March 1, 2020		42,496		—		786		11,687		54,969		22,500
Dealer Financial Services of N.C., LLC d/b/a The Sterling Group (Sterling)	Retail	April 1, 2020		19,341		—		300		4,129		23,770		5,400
LP Insurance Services, LLC (LP)	National Programs	May 1, 2020		115,948		10,000		318		23,394		149,660		75,850
First Resource, Inc. (First)	Retail	July 1, 2020		10,700		—		450		3,776		14,926		5,800
Buiten & Associates, LLC (Buiten)	Retail	August 1, 2020		38,225		—		1,175		7,448		46,848		14,175
Amity Insurance, Inc. (Amity)	Retail	August 1, 2020		14,820		2,000		200		1,860		18,880		4,060
Frank E. Neal & Co., Inc. (Neal)	Retail	September 1, 2020		32,589		3,120		345		5,732		41,786		10,325
BrookStone Insurance Group, LLC (BrookStone)	Retail	September 1, 2020		12,030		—		—		1,058		13,088		1,878
VAS GenPar, LLC (VAS)	Retail	October 1, 2020		114,249		15,000		—		23,274		152,523		48,000
Bright & Associates, Inc. (Bright)	Retail	October 1, 2020		12,528		—		1,257		3,854		17,639		5,775
J.E. Brown & Associates Insurance Services, Inc. (J.E. Brown)	Wholesale Brokerage	October 1, 2020		33,331		—		1,030		5,947		40,308		10,425
CoverHound, Inc. and CyberPolicy, Inc. (CoverHound)	Retail	November 1, 2020		27,595		—		600		—		28,195		—
MAJ Companies, Ltd. (MAJ)	Retail	December 1, 2020		19,072		—		300		2,006		21,378		6,475
South & Western General Agency, Inc. (South & Western)	Wholesale Brokerage	December 1, 2020		69,673		—		1,193		7,294		78,160		18,000
Berry Insurance Group, Inc. (Berry)	Retail	December 31, 2020		35,326		—		—		3,694		39,020		6,500
Other	Various	Various		14,888		—		490		8,498		23,876		12,337
Total			$	722,515	$	30,120	$	9,130	$	131,397	$	893,162	$	273,450

The following table summarizes the purchase price allocation made as of the date of each acquisition for current year acquisitions and significant adjustments made during the measurement period for prior year acquisitions:

(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
AGA Enterprises, LLC d/b/a Cossio Insurance Agency (Cossio)	Retail	March 1, 2019		13,990		—		10		696		14,696		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		6,109		35,009		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
Poole Professional Ltd. Insurance Agents and Brokers et al (Poole)	Retail	October 1, 2019		32,358		—		75		4,556		36,989		6,850
VerHagen Glendenning & Walker LLP (VGW)	Retail	October 1, 2019		23,032		—		1,498		2,385		26,915		8,170
Other	Various	Various		36,665		—		2,391		9,026		48,082		14,454
Total			$	356,260	$	20,000	$	12,135	$	82,872	$	471,267	$	162,023

(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
Opus Advisory Group, LLC (Opus)	Retail	February 1, 2018	$	20,400	$	—	$	200	$	2,384	$	22,984	$	3,600
Kerxton Insurance Agency, Inc. (Kerxton)	Retail	March 1, 2018		13,176		—		1,490		2,080		16,746		2,920
Automotive Development Group, LLC (ADG)	Retail	May 1, 2018		29,471		—		559		17,545		47,575		20,000
Servco Pacific, Inc. (Servco)	Retail	June 1, 2018		76,245		—		—		934		77,179		7,000
Tower Hill Prime Insurance Company (Tower Hill)	National Programs	July 1, 2018		20,300		—		—		1,188		21,488		7,700
Health Special Risk, Inc. (HSR)	National Programs	July 1, 2018		20,132		—		—		1,991		22,123		9,000
Professional Disability Associates, LLC (PDA)	Services	July 1, 2018		15,025		—		—		9,818		24,843		17,975
Finance & Insurance Resources, Inc. (F&I)	Retail	September 1, 2018		44,940		—		410		9,121		54,471		19,500
Rodman Insurance Agency, Inc. (Rodman)	Retail	November 1, 2018		31,121		—		261		3,720		35,102		9,850
The Hays Group, Inc. et al (Hays)	Retail	November 16, 2018		605,000		100,000		—		19,600		724,600		25,000
Dealer Associates, Inc. (Dealer)	Retail	December 1, 2018		28,825		—		1,175		3,100		33,100		12,125
Other	Various	Various		30,293		—		1,367		5,896		37,556		12,998
Total			$	934,928	$	100,000	$	5,462	$	77,377	$	1,117,767	$	147,668

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			Sterling			LP			First			Buiten			Amity			Neal
Cash	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other current assets		2,477			446			1,344		—				612			3,162			302			2,595			653			2,337
Fixed assets		345			27			59			55			16			1,877			1			43			58			46
Goodwill		63,087			8,940			27,845			53,567			17,339			99,983			9,523			33,641			15,454			28,929
Purchased customer accounts		14,286			3,222			9,205			12,309			5,962			44,801			5,095			11,323			5,614			13,225
Non-compete agreements		136			25			43			481			21			31			21			91			21			31
Other assets	—			—			—			—			—			—			—			—			—				274
Total assets acquired		80,331			12,660			38,496			66,412			23,950			149,854			14,942			47,693			21,800			44,842
Other current liabilities		(316	)		(1,680	)		(1,355	)		(11,443	)		(180	)		(10	)		(16	)		(845	)		(2,920	)		(3,056	)
Other liabilities	—			—			—			—			—				(184	)		—		—			—			—
Total liabilities assumed		(316	)		(1,680	)		(1,355	)		(11,443	)		(180	)		(194	)		(16	)		(845	)		(2,920	)		(3,056	)
Net assets acquired	$	80,015		$	10,980		$	37,141		$	54,969		$	23,770		$	149,660		$	14,926		$	46,848		$	18,880		$	41,786

(in thousands)	Brook Stone			VAS			Bright			J.E. Brown			Cover Hound			MAJ			South & Western			Berry			Other			Total
Cash	$	—		$	27,673		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	27,673
Other current assets		527			5,486			402			—			375			413			—			—			912			22,043
Fixed assets		22			138			23			32			6,441			—			149			30			25			9,387
Goodwill		8,585			100,826			12,218			31,476			19,524			13,003			63,128			29,702			11,325			648,095
Purchased customer accounts		3,689			48,188			5,055			9,479			3,678			8,034			18,513			9,701			8,582			239,961
Non-compete agreements		21			101			42			41			—			11			21			11			64			1,213
Other assets		290			—			—			—			—			—			—			—			3,088			3,652
Total assets acquired		13,134			182,412			17,740			41,028			30,018			21,461			81,811			39,444			23,996			952,024
Other current liabilities		(46	)		(3,760	)		(101	)		(720	)		(1,823	)		(83	)		(3,651	)		(424	)		(120	)		(32,549	)
Other liabilities	—				(26,129	)		—			—			—			—			—			—			—			(26,313	)
Total liabilities assumed		(46	)		(29,889	)		(101	)		(720	)		(1,823	)		(83	)		(3,651	)		(424	)		(120	)		(58,862	)
Net assets acquired	$	13,088		$	152,523		$	17,639		$	40,308		$	28,195		$	21,378		$	78,160		$	39,020		$	23,876		$	893,162

(in thousands)	Smith			Pipino			Cossio			Medval			United			Twinbrook			IRS			WBR			Yozell		CKP
Cash	$	—		$	—		$	—		$	3,217		$	—		$	—		$	—		$	—		$	—	$	—
Other current assets		680			819			236			1,708			477			919			1,375			449			1,781		9,170
Fixed assets		39			112			29			50			20			85			11			10			12		193
Goodwill		16,042			16,765			10,010			19,108			15,111			18,935			24,938			9,096			8,904		110,495
Purchased customer accounts		6,500			11,360			4,403			7,300			7,065			8,557			8,800			4,022			3,550		32,274
Non-compete agreements		41			11			21			1			11			12			11			34			21		21
Other assets		—			772			—			15			—			—			—			—			—		—
Total assets acquired		23,302			29,839			14,699			31,399			22,684			28,508			35,135			13,611			14,268		152,153
Other current liabilities		(469	)		(3,463	)		(3	)		(480	)		(41	)		(292	)		(126	)		(166	)		—		(870	)
Other liabilities		—			—			—			(29	)		—			—			—			(378	)		—		—
Total liabilities assumed		(469	)		(3,463	)		(3	)		(509	)		(41	)		(292	)		(126	)		(544	)		—		(870	)
Net assets acquired	$	22,833		$	26,376		$	14,696		$	30,890		$	22,643		$	28,216		$	35,009		$	13,067		$	14,268	$	151,283

(in thousands)	Poole			VGW			Other			Total
Cash	$	—		$	—		$	—		$	3,217
Other current assets		938			1,190			(6,786	)		12,956
Fixed assets		4			20			(130	)		455
Goodwill		28,233			16,595			34,314			328,546
Purchased customer accounts		10,359			9,092			15,020			128,302
Non-compete agreements		33			34			161			412
Other assets		—			—			(732	)		55
Total assets acquired		39,567			26,931			41,847			473,943
Other current liabilities		(2,578	)		(16	)		6,235			(2,269	)
Other liabilities		—			—			—			(407	)
Total liabilities assumed		(2,578	)		(16	)		6,235			(2,676	)
Net assets acquired	$	36,989		$	26,915		$	48,082		$	471,267

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition.

(in thousands)	Opus		Kerxton			ADG		Servco			Tower Hill		HSR			PDA			F&I		Rodman			Hays
Cash	$	—	$	—		$	—	$	8,188		$	—	$	3,114		$	(248	)	$	—	$	—		$	—
Other current assets		1,215		663			1,500		7,769			—		818			1,762			999		1,062			36,254
Fixed assets		11		10			67		179		$	—	$	124		$	310		$	34	$	45		$	4,936
Goodwill		16,414		12,423			35,769		54,429			—		18,737			16,547			36,423		26,572			456,217
Purchased customer accounts		5,008		4,712			9,751		16,442			21,468		5,516			7,700			16,611		10,129			218,600
Non-compete agreements		21		22			21		1			20		65			82			21		51			2,600
Other assets		315		419			467		1,478			—		21			6			383		542			13,977
Total assets acquired		22,984		18,249			47,575		88,486			21,488		28,395			26,159			54,471		38,401			732,584
Other current liabilities		—		(1,503	)		—		(11,307	)		—		(5,930	)		(1,093	)		—		(3,299	)		(7,984	)
Deferred income tax, net		—		—			—		—			—		(342	)		(223	)		—		—			—
Total liabilities assumed		—		(1,503	)		—		(11,307	)		—		(6,272	)		(1,316	)		—		(3,299	)		(7,984	)
Net assets acquired	$	22,984	$	16,746		$	47,575	$	77,179		$	21,488	$	22,123		$	24,843		$	54,471	$	35,102		$	724,600

(in thousands)	Dealer			Other			Total
Cash	$	—		$	—		$	11,054
Other current assets		552			323			52,917
Fixed assets		13			100			5,829
Goodwill		21,467			22,712			717,710
Purchased customer accounts		10,986			15,085			342,008
Non-compete agreements		21			297			3,222
Other assets		226			754			18,588
Total assets acquired		33,265			39,271			1,151,328
Other current liabilities		(165	)		(1,715	)		(32,996	)
Other liabilities		—			—			(565	)
Total liabilities assumed		(165	)		(1,715	)		(33,561	)
Net assets acquired	$	33,100		$	37,556		$	1,117,767

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)	Year Ended December 31,
(in thousands, except per share data)	2020		2019
Total revenues	$	2,714,314	$	2,579,075
Income before income taxes	$	650,618	$	576,355
Net income	$	500,900	$	436,722
Net income per share:
Basic	$	1.77	$	1.55
Diluted	$	1.76	$	1.54
Weighted average number of shares outstanding:
Basic		274,334		272,471
Diluted		275,867		274,616

(UNAUDITED)	Year Ended December 31,
(in thousands, except per share data)	2019		2018
Total revenues	$	2,447,401	$	2,120,867
Income before income taxes	$	545,182	$	496,076
Net income	$	412,974	$	369,277
Net income per share:
Basic	$	1.47	$	1.33
Diluted	$	1.46	$	1.31
Weighted average number of shares outstanding:
Basic		272,471		270,971
Diluted		274,616		275,521

(UNAUDITED)	Year Ended December 31,
(in thousands, except per share data)	2018		2017
Total revenues	$	2,259,812	$	2,193,169
Income before income taxes	$	504,664	$	503,927
Net income	$	375,670	$	447,796
Net income per share:
Basic	$	1.35	$	1.60
Diluted	$	1.33	$	1.57
Weighted average number of shares outstanding:
Basic		270,971		272,580
Diluted		275,521		277,586

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 years ended December 31, 2020, 2019 and 2018 were as follows:

	Year Ended December 31,
(in thousands)	2020			2019			2018
Balance as of the beginning of the period	$	161,513		$	89,924		$	36,175
Additions to estimated acquisition earn-out payables from new acquisitions		131,397			82,872			77,377
Payments for estimated acquisition earn-out payables		(29,509	)		(9,917	)		(26,597	)
Subtotal		263,401			162,879			86,955
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		(11,814	)		(7,298	)		603
Interest expense accretion		7,356			5,932			2,366
Net change in earnings from estimated acquisition earn- out payables		(4,458	)		(1,366	)		2,969
Balance as of December 31,	$	258,943		$	161,513		$	89,924