10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-13619

BROWN & BROWN, INC.

(Exact name of Registrant as specified in its charter)

Florida		59-0864469
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
220 South Ridgewood Avenue, Daytona Beach, FL		32114
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (386) 252-9601

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The number of shares of the Registrant’s common stock, $0.10 par value, outstanding as of October 30, 2017 was 139,403,675.

BROWN & BROWN, INC.

INDEX

		PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016	4
	Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 6.	Exhibits	41
SIGNATURE		42

2

Disclosure Regarding Forward-Looking Statements

Brown & Brown, Inc., together with its subsidiaries (collectively, “we,” “Brown & Brown” or the “Company”), makes “forward-looking statements” within the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995, as amended, throughout this report and in the documents we incorporate by reference into this report. You can identify these statements by forward-looking words such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “intend,” “estimate,” “plan” and “continue” or similar words. We have based these statements on our current expectations about potential future events. Although we believe the expectations expressed in the forward-looking statements included in this Quarterly Report on Form 10-Q and the reports, statements, information and announcements incorporated by reference into this report are based upon reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. Many of these factors have previously been identified in filings or statements made by us or on our behalf. Important factors which could cause our actual results to differ materially from the forward-looking statements in this report include but are not limited to the following items, in addition to those matters described in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”:

• Future prospects;

• Material adverse changes in economic conditions in the markets we serve and in the general economy;

• Premium rates set by insurance companies and insurable exposure units, which have traditionally varied and are difficult to predict;

• Future regulatory actions and conditions in the states in which we conduct our business;

• The occurrence of adverse economic conditions, an adverse regulatory climate, or a disaster in California, Florida, Georgia, Illinois, Massachusetts, Michigan, New Jersey, New York, Oregon, Pennsylvania, Texas, Virginia and Washington, because a significant portion of business written by us is for customers located in these states;

• Our ability to attract, retain and enhance qualified personnel;

• Competition from others in or entering into the insurance agency, wholesale brokerage, insurance programs and related service business;

• The integration of our operations with those of businesses or assets we have acquired or may acquire in the future and the failure to realize the expected benefits of such integration;

• Risks that could negatively affect our acquisition strategy, including continuing consolidation among insurance intermediaries and the increasing presence of private equity investors driving up valuations;

• Our ability to forecast liquidity needs through at least the end of 2018;

• Our ability to renew or replace expiring leases;

• Outcomes of existing or future legal proceedings and governmental investigations;

• Policy cancellations and renewal terms, which can be unpredictable;

• Potential changes to tax rates that would affect the value of deferred tax assets and liabilities and the impact on income available for investment or distributable to shareholders;

• The inherent uncertainty in making estimates, judgments, and assumptions in the preparation of financial statements in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”);

• Our ability to effectively utilize technology to provide improved value for our customers or carrier partners as well as applying effective internal controls and efficiencies in operations; and

• Other risks and uncertainties as may be detailed from time to time in our public announcements and Securities and Exchange Commission (“SEC”) filings.

Assumptions as to any of the foregoing and all statements are not based upon historical fact, but rather reflect our current expectations concerning future results and events. Forward-looking statements that we make or that are made by others on our behalf are based upon a knowledge of our business and the environment in which we operate, but because of the factors listed above, among others, actual results may differ from those in the forward-looking statements. Consequently, these cautionary statements qualify all of the forward-looking statements we make herein. We cannot assure you that the results or developments anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business or our operations in the way we expect. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of their dates. We assume no obligation to update any of the forward-looking statements.

3

PART I — FINANCIAL INFORMATION

ITEM 1 — Financial Statements (Unaudited)

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except per share data)	For the three months   ended September 30,						For the nine months   ended September 30,
	2017			2016			2017			2016
REVENUES
Commissions and fees	$	474,609		$	461,652		$	1,383,899		$	1,329,649
Investment income	491			230			1,085			1,150
Other income, net	546			392			22,047			2,166
Total revenues	475,646			462,274			1,407,031			1,332,965
EXPENSES
Employee compensation and benefits	246,062			237,653			736,445			692,814
Other operating expenses	72,058			67,433			210,289			197,329
Loss/(gain) on disposal	(1,902		)	(277		)	(1,993		)	(3,131		)
Amortization	21,435			21,805			64,402			65,025
Depreciation	5,489			5,195			17,242			15,867
Interest	9,393			9,883			28,949			29,617
Change in estimated acquisition earn-out payables	(1,308		)	3,610			8,309			6,846
Total expenses	351,227			345,302			1,063,643			1,004,367
Income before income taxes	124,419			116,972			343,388			328,598
Income taxes	48,506			45,427			131,263			128,733
Net income	$	75,913		$	71,545		$	212,125		$	199,865
Net income per share:
Basic	$	0.54		$	0.51		$	1.52		$	1.43
Diluted	$	0.53		$	0.50		$	1.49		$	1.41
Dividends declared per share	$	0.14		$	0.12		$	0.41		$	0.37

See accompanying Notes to Condensed Consolidated Financial Statements.

4

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except per share data)	September 30, 2017			December 31, 2016
ASSETS
Current Assets:
Cash and cash equivalents	$	546,520		$	515,646
Restricted cash and investments	276,687			265,637
Short-term investments	29,156			15,048
Premiums, commissions and fees receivable	525,943			502,482
Reinsurance recoverable	2,160,286			78,083
Prepaid reinsurance premiums	332,246			308,661
Other current assets	45,545			50,571
Total current assets	3,916,383			1,736,128
Fixed assets, net	71,296			75,807
Goodwill	2,701,488			2,675,402
Amortizable intangible assets, net	656,054			707,454
Investments	14,085			23,048
Other assets	54,971			44,895
Total assets	$	7,414,277		$	5,262,734
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Premiums payable to insurance companies	$	653,289		$	647,564
Losses and loss adjustment reserve	2,160,286			78,083
Unearned premiums	332,246			308,661
Premium deposits and credits due customers	97,917			83,765
Accounts payable	63,623			69,595
Accrued expenses and other liabilities	204,153			201,989
Current portion of long-term debt	120,000			55,500
Total current liabilities	3,631,514			1,445,157
Long-term debt less unamortized discount and debt issuance costs	860,741			1,018,372
Deferred income taxes, net	382,228			357,686
Other liabilities	56,147			81,308
Shareholders’ Equity:
Common stock, par value $0.10 per share; authorized 280,000 shares; issued 148,838 shares and outstanding 139,518 shares at 2017, issued 148,107 shares and outstanding 140,104 shares at 2016	14,884			14,811
Additional paid-in capital	493,821			468,443
Treasury stock, at cost at 9,320 shares at 2017 and 8,003 shares at 2016, respectively	(315,072		)	(257,683		)
Retained earnings	2,290,014			2,134,640
Total shareholders’ equity	2,483,647			2,360,211
Total liabilities and shareholders’ equity	$	7,414,277		$	5,262,734

See accompanying Notes to Condensed Consolidated Financial Statements.

5

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

	For the nine months   ended September 30,
(in thousands)	2017			2016
Cash flows from operating activities:
Net income	$	212,125		$	199,865
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization	64,402			65,025
Depreciation	17,242			15,867
Non-cash stock-based compensation	22,362			11,593
Change in estimated acquisition earn-out payables	8,309			6,846
Deferred income taxes	23,941			20,081
Amortization of debt discount	119			118
Amortization and disposal of deferred financing costs	1,309			1,207
Accretion of discounts and premiums, investment	20			36
Income tax benefit from exercise of shares from the stock benefit plans	—			(7,213		)
Net loss/(gain) on sales of investments, fixed assets and customer accounts	(1,739		)	(2,860		)
Payments on acquisition earn-outs in excess of original estimated payables	(13,800		)	(3,683		)
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures:
Premiums, commissions and fees receivable (increase)	(23,350		)	(31,324		)
Reinsurance recoverables (increase)	(2,082,203		)	(300,036		)
Prepaid reinsurance premiums (increase)	(23,585		)	(24,324		)
Other assets (increase) decrease	(5,314		)	1,231
Premiums payable to insurance companies increase	5,585			39,787
Premium deposits and credits due customers increase	14,030			27,914
Losses and loss adjustment reserve increase	2,082,203			300,036
Unearned premiums increase	23,585			24,324
Accounts payable increase	22,113			13,858
Accrued expenses and other liabilities increase (decrease)	1,018			(22,119		)
Other liabilities (decrease)	(34,802		)	(17,094		)
Net cash provided by operating activities	313,570			319,135
Cash flows from investing activities:
Additions to fixed assets	(12,897		)	(13,135		)
Payments for businesses acquired, net of cash acquired	(26,478		)	(113,219		)
Proceeds from sales of fixed assets and customer accounts	4,085			3,411
Purchases of investments	(10,393		)	(24,332		)
Proceeds from sales of investments	5,178			16,716
Net cash used in investing activities	(40,505		)	(130,559		)
Cash flows from financing activities:
Payments on acquisition earn-outs	(25,488		)	(23,872		)
Payments on long-term debt	(91,750		)	(34,375		)
Deferred debt issuance costs	(2,809		)	—
Income tax benefit from exercise of shares from the stock benefit plans	—			7,213
Issuances of common stock for employee stock benefit plans	17,387			15,959
Repurchase shares to fund tax withholdings for non-cash stock-based compensation	(6,791		)	(8,395		)
Purchase of treasury stock	(57,389		)	(11,250		)
Settlement (prepayment) of accelerated share repurchase program	(7,500		)	11,250
Cash dividends paid	(56,801		)	(51,317		)
Net cash used in financing activities	(231,141		)	(94,787		)
Net increase in cash and cash equivalents inclusive of restricted cash	41,924			93,789
Cash and cash equivalents inclusive of restricted cash at beginning of period	781,283			673,173
Cash and cash equivalents inclusive of restricted cash at end of period	$	823,207		$	766,962

See accompanying Notes to Condensed Consolidated Financial Statements. Refer to Note 8 for reconciliation of cash and cash equivalents inclusive of restricted cash.

6

BROWN & BROWN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1· Nature of Operations

Brown & Brown, Inc., a Florida corporation, and its subsidiaries (collectively, “Brown & Brown” or the “Company”) is a diversified insurance agency, wholesale brokerage, insurance programs and services organization that markets and sells to its customers, insurance products and services, primarily in the property, casualty and employee benefits areas. Brown & Brown’s business is divided into four reportable segments: the Retail Segment provides a broad range of insurance products and services to commercial, public and quasi-public entities, professional and individual customers; the National Programs Segment, acting as a managing general agent (“MGA”), provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, including Brown & Brown retail agents; the Wholesale Brokerage Segment markets and sells excess and surplus commercial insurance, primarily through independent agents and brokers, as well as Brown & Brown Retail offices; and the Services Segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services, and claims adjusting services.

NOTE 2· Basis of Financial Reporting

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Recently Issued Accounting Pronouncements

In November 2016, the Financial Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, “Statement of Cash Flows (Topic 230)”: Restricted Cash (“ASU 2016-18”), which requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as restricted cash. ASU 2016-18 is effective for periods beginning after December 15, 2017. However, the Company elected to early adopt for the reporting period ended March 31, 2017 under the full retrospective approach for all periods presented. With the adoption of ASU 2016-18, the change in restricted cash is no longer reflected as a change in operating assets and liabilities, and the Statement of Cash Flows details the changes in the balance of cash and cash equivalents inclusive of restricted cash. Net cash provided by operating activities for the nine months ended September 30, 2016 were previously reported as $270.6 million. With the retrospective adoption, the net cash provided by operating activities for the nine months ended September 30, 2016 is now reported as $319.1 million. The Company reflects cash collected from customers that is payable to insurance companies as restricted cash if segregation of this cash is required by the state of domicile for the office conducting this transaction or if required by contract with the relevant insurance company providing coverage. Cash collected from customers that is payable to insurance companies is reported in cash and cash equivalents if no such restriction is required.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230)”: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (“ASU 2016-15”), which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified and applies to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. ASU 2016-15 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 and early adoption is permitted. The Company has evaluated the impact of ASU 2016-15 and has determined there is no impact on the Company's Statement of Cash Flows. The Company already presents cash paid on contingent consideration in business combination as prescribed by ASU 2016-15 and does not, at this time, engage in the other activities being addressed.

7

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share Based Payment Accounting” (“ASU 2016-09”), which amends guidance issued in Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company adopted the guidance on January 1, 2017, as required. Prior periods have not been adjusted, as the guidance was adopted prospectively. The principal impact is that the tax benefit or expense from stock compensation is now presented in the income tax line of the Statement of Income, whereas the prior treatment was to present this amount as a component of equity on the Balance Sheet. Also the tax benefit or expense is now presented as activity in Cash Flow from Operating Activity, rather than the prior presentation as Cash Flow from Financing Activity in the Statement of Cash Flows. The Company also continues to estimate forfeitures of stock grants as allowed by ASU 2016-09.

In March 2016, the FASB issued ASU 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)” (“ASU 2016-08”) to clarify certain aspects of the principal-versus-agent guidance included in the new revenue standard ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”). The FASB issued the ASU in response to concerns identified by stakeholders, including those related to (1) determining the appropriate unit of account under the revenue standard’s principal-versus-agent guidance and (2) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard’s control principle. ASU 2016-08 is effective contemporaneous with ASU 2014-09 beginning January 1, 2018. The impact of ASU 2016-08 is currently being evaluated along with ASU 2014-09. At this point in our evaluation the potential impact would primarily be limited to the claims administering activities within our Services Segment and therefore not material to the Company.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. Under ASU 2016-02, the Company will be required to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company continues to evaluate the impact of this pronouncement with the principal impact being that the present value of the remaining lease payments be presented as a liability on the Balance Sheet as well as an asset of similar value representing the “Right of Use” for those leased properties. As detailed in Note 13 of the 2016 10-K, the undiscounted contractual cash payments remaining on leased properties was $213.2 million as of December 31, 2016 and is $200.3 million as of September 30, 2017 as detailed in the Liquidity and Capital Resources section of this Quarterly Report on Form 10-Q.

In November 2015, FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as a single non-current item on the balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted as of the beginning of any interim or annual reporting period. The Company adopted the guidance on January 1, 2017, as required. As a result, the Company retrospectively applied the guidance to the 2016 balance sheet by reclassifying $24.6 million from deferred income taxes (asset) to deferred income taxes, net (liability) on the Condensed Consolidated Balance Sheet.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”), which provides guidance for revenue recognition. Topic 606 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets.  It supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. The standard’s core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. Specifically, in situations where multiple performance obligations exist within a contract, the use of estimates is required to allocate the transaction price to each separate performance obligation.

Historically, approximately 70% of the Company’s commissions and fees revenue is in the form of commissions paid by insurance carriers. These commissions are earned upon the effective date of bound coverage as no significant performance obligation remains after coverage is bound.

Approximately 20% of the Company's commissions and fees revenue is in the form of fees, which are predominantly in our National Programs and Services Segments, and to a lesser extent in the large accounts business within our Retail Segment. At the conclusion of our evaluation, it may be determined that fee revenue from certain agreements will be recognized in earlier or later periods under the new guidance as compared to our current accounting. Based upon the work completed to date, the Company does not expect the overall impact of these potential changes to be significant on a full-year basis, but they may impact the timing of recognizing revenue among quarters. 

The Company is continuing to evaluate approximately 10% of the Company's commissions and fees revenues and anticipates completion of this evaluation by December 31, 2017. 

8

Additionally, the Company is continuing to evaluate the requirement under ASC Topic 340 - Other Assets and Deferred Cost ("ASC 340") to capitalize costs to obtain, and costs to fulfill, customer contracts, and recognize these costs over the associated life of the contract as the performance obligations are fulfilled.  This evaluation includes assessing the costs that would qualify for capitalization as well as the timing to recognize these costs in future periods in accordance with ASC 340.  Presently all costs to obtain, and costs to fulfill, customer contracts are expensed by the Company as incurred.

The primary areas the Company has identified thus far that will be impacted by the adoption of the new revenue recognition standards are summarized below.

Contingent commissions - Under current accounting standards, revenue that is not fixed and determinable because a contingency exists is not recognized until the contingency is resolved.  Under Topic 606 the Company must use judgment to estimate the amount of consideration that will be received such that a significant reversal of revenue is not probable.  Contingent commissions represent a form of variable consideration associated with the same performance obligation, which is in the form of placement of coverage, for which we earn core commissions.  In connection with the new standard, contingent commissions will be estimated with an appropriate constraint applied and accrued relative to the core commissions as they are recognized.  The resulting effect on the timing of recognition of contingent commissions will more closely follow a similar pattern as our core commissions with true-ups recognized when payments are received or as additional information that affects the estimate becomes available.  As disclosed in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, contingent commissions have averaged approximately 3.6% of the previous year’s total commissions and fees revenue over the last three years and have primarily been received in the first and second quarters of the year.

Cost deferrals - ASC 340 requires an entity to defer the incremental costs to obtain a customer contract and recognize these costs over the anticipated life of the customer relationship, inclusive of anticipated renewals.  This requirement will primarily affect the Company as it relates to certain commission-based compensation plans in the Retail Segment whereby the Company pays an incremental amount of compensation on new business in the first year.  As has been disclosed in Note 4 to the Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, the weighted average life of purchased customer accounts is 15 years.

ASC 340 also requires a company to defer costs to fulfill a contract and recognize these costs as the associated performance obligations are fulfilled. In order for contract fulfillment costs to be deferred under ASC 340, the costs must (1) relate directly to a specific contract or anticipated contract, (2) generate or enhance resources that the Company will use in satisfying its obligations under the contract, and (3) be expected to be recovered through sufficient net cashflows from the contract.  We are evaluating and believe the impact of ASC 340 related to contract fulfillment costs will primarily affect businesses that recognize revenue based upon on fees. Based upon the work completed to date, the Company does not expect the overall impact of the potential change to be significant on a full-year basis, but may impact the timing of recognizing expense among quarters.

Installment billing - As disclosed in Note 1 to the Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, commission revenues related to installment billings are recognized on the latter of the policy effective date (as indicated in the policy) or the date that the premium was billed to the client (as indicated in the premium invoice), with the exception of our Arrowhead businesses, which follows a policy of recognizing these revenues on the latter of the policy effective date or processed date into our systems, regardless of the billing arrangement.  We are still determining the impact of recognizing installment revenue upon delivery of the contract fulfillment obligation.

Topic 606 is effective for the Company beginning January 1, 2018.  Entities are permitted to adopt the guidance under one of the following methods: the "full retrospective" method, which applies the guidance to each period presented (prior years restated), or the "modified retrospective" method, in which the guidance is only applied to the year of adoption, with the cumulative effect of initially applying the guidance recognized as an adjustment to retained earnings. The Company is evaluating the adoption method it will use, but currently expects to use the modified retrospective method.

In connection with the implementation of the above standards, we will augment our current procedures and controls, as necessary to support the new standards.

9

NOTE 3· Net Income Per Share

Basic EPS is computed based on the weighted average number of common shares (including restricted shares) issued and outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the exercise of stock options. The dilutive effect of stock options is computed by application of the treasury-stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding:

	For the three months   ended September 30,						For the nine months   ended September 30,
(in thousands, except per share data)	2017			2016			2017			2016
Net income	$	75,913		$	71,545		$	212,125		$	199,865
Net income attributable to unvested awarded performance stock	(1,852		)	(1,873		)	(5,181		)	(5,210		)
Net income attributable to common shares	$	74,061		$	69,672		$	206,944		$	194,655
Weighted average number of common shares outstanding – basic	139,756			140,129			140,012			139,642
Less unvested awarded performance stock included in weighted average number of common shares outstanding – basic	(3,410		)	(3,668		)	(3,420		)	(3,640		)
Weighted average number of common shares outstanding for basic earnings per common share	136,346			136,461			136,592			136,002
Dilutive effect of stock options	2,547			1,721			2,419			1,582
Weighted average number of shares outstanding – diluted	138,893			138,182			139,011			137,584
Net income per share:
Basic	$	0.54		$	0.51		$	1.52		$	1.43
Diluted	$	0.53		$	0.50		$	1.49		$	1.41

NOTE 4· Business Combinations

During the nine months ended September 30, 2017, Brown & Brown acquired the assets and assumed certain liabilities of six insurance intermediaries. Additionally, miscellaneous adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). Such adjustments are presented in the “Other” category within the following two tables. The recorded purchase price for all acquisitions included an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations will be recorded in the Condensed Consolidated Statement of Income when incurred.

The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. In determining fair value, the acquired business’s future performance is estimated using financial projections developed by management for the acquired business and reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These payments are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Condensed Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the nine months ended September 30, 2017, several adjustments were made within the permitted measurement period that resulted in an increase in the aggregate purchase price of the affected acquisitions of $1.5 million relating to the assumption of certain liabilities. These measurement period adjustments have been reflected as current period adjustments in the nine months ended September 30, 2017 in accordance with the guidance in ASU 2015-16 “Business Combinations”. The measurement period adjustments primarily impacted goodwill, with no effect on earnings or cash in the current period.

Cash paid for acquisitions was $26.5 million and $115.3 million in the nine-month periods ended September 30, 2017 and 2016, respectively. We completed six acquisitions (excluding book of business purchases) in the nine-month period ended September 30, 2017. We completed six acquisitions (excluding book of business purchases) in the nine-month period ended September 30, 2016.

10

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
Other	Various	Various	26,478		11,395		1,332		39,205		11,605
Total			$	26,478	$	11,395	$	1,332	$	39,205	$	11,605

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)	Other			Total
Other current assets	98			98
Fixed assets	47			47
Goodwill	27,580			27,580
Purchased customer accounts	12,858			12,858
Non-compete agreements	595			595
Total assets acquired	41,178			41,178
Other current liabilities	(1,284		)	(1,284		)
Deferred income tax, net	(689		)	(689		)
Total liabilities assumed	(1,973		)	(1,973		)
Net assets acquired	$	39,205		$	39,205

The weighted average useful lives for the acquired amortizable intangible assets are as follows: purchased customer accounts, 15 years; and non-compete agreements, 5 years.

Goodwill of $27.6 million, which is net of any opening balance sheet adjustments within the allowable measurement period, was allocated to the Retail, National Programs, Wholesale Brokerage and Service Segments in the amounts of $18.8 million, $7.3 million, $0.8 million and $0.7 million, respectively. Of the total goodwill of $27.6 million, the amount currently deductible for income tax purposes is $26.3 million and the remaining $1.3 million relates to the recorded earn-out payables and will not be deductible until it is earned and paid.

11

For the acquisitions completed during 2017, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues from the acquisitions completed through September 30, 2017, included in the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2017, were $3.2 million and $3.6 million, respectively. The income before income taxes, including the intercompany cost of capital charge, from the acquisitions completed through September 30, 2017, included in the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2017, were $0.9 million and $1.0 million, respectively. If the acquisitions had occurred as of the beginning of the respective periods, the Company’s results of operations would be as shown in the following table. 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)	For the three months   ended September 30,				For the nine months   ended September 30,
(in thousands, except per share data)	2017		2016		2017		2016
Total revenues	$	476,124	$	465,014	$	1,413,278	$	1,341,511
Income before income taxes	$	124,582	$	117,929	$	345,608	$	331,574
Net income	$	76,012	$	72,130	$	213,496	$	201,675
Net income per share:
Basic	$	0.54	$	0.51	$	1.52	$	1.44
Diluted	$	0.53	$	0.51	$	1.50	$	1.43
Weighted average number of shares outstanding:
Basic	136,346		136,461		136,592		136,002
Diluted	138,893		138,182		139,011		137,584

As of September 30, 2017 and 2016, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the three and nine months ended September 30, 2017 and 2016, were as follows:

	For the three months   ended September 30,						For the nine months   ended September 30,
(in thousands)	2017			2016			2017			2016
Balance as of the beginning of the period	$	57,943		$	73,447		$	63,821		$	78,387
Additions to estimated acquisition earn-out payables	1,050			1,437			1,332			3,828
Payments for estimated acquisition earn-out payables	(23,511		)	(16,988		)	(39,288		)	(27,555		)
Subtotal	35,482			57,896			25,865			54,660
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables	(1,784		)	2,883			6,402			4,704
Interest expense accretion	476			727			1,907			2,142
Net change in earnings from estimated acquisition earn-out payables	(1,308		)	3,610			8,309			6,846
Balance as of September 30,	$	34,174		$	61,506		$	34,174		$	61,506

Of the $34.2 million estimated acquisition earn-out payables as of September 30, 2017, $28.7 million was recorded as accounts payable and $5.5 million was recorded as other non-current liabilities. As of September 30, 2017, the maximum future acquisition contingency payments related to all acquisitions was $81.5 million, inclusive of the $34.2 million estimated acquisition earn-out payables as of September 30, 2017. Included within the additions to estimated acquisition earn-out payables are any adjustments to opening balance sheet items within the allowable measurement period, which may therefore differ from previously reported amounts.

12

NOTE 5· Goodwill

Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. The Company completed its most recent annual assessment as of November 30, 2016, and identified no impairment as a result of the evaluation.

The changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2017 are as follows:

(in thousands)	Retail			National Programs		Wholesale Brokerage		Services		Total
Balance as of January 1, 2017	$	1,354,667		$	901,294	$	284,869	$	134,572	$	2,675,402
Goodwill of acquired businesses	18,807			7,314		770		689		27,580
Goodwill disposed of relating to sales of businesses	(1,494		)	—		—		—		(1,494		)
Balance as of September 30, 2017	$	1,371,980		$	908,608	$	285,639	$	135,261	$	2,701,488

NOTE 6· Amortizable Intangible Assets

Amortizable intangible assets at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30, 2017								December 31, 2016
(in thousands)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Life (Years)(1)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Life (Years)(1)
Purchased customer accounts	$	1,458,405	$	(803,764	)	$	654,641	15.0	$	1,447,680	$	(741,770	)	$	705,910	15.0
Non-compete agreements	30,161		(28,748		)	1,413		6.8	29,668		(28,124		)	1,544		6.8
Total	$	1,488,566	$	(832,512	)	$	656,054		$	1,477,348	$	(769,894	)	$	707,454

(1) Weighted average life calculated as of the date of acquisition.

Amortization expense for amortizable intangible assets for the years ending December 31, 2017, 2018, 2019, 2020 and 2021 is estimated to be $85.3 million, $80.6 million, $76.1 million, $68.7 million, and $65.4 million, respectively.

13

NOTE 7· Long-Term Debt

Long-term debt at September 30, 2017 and December 31, 2016 consisted of the following:

(in thousands)	September 30, 2017			December 31, 2016
Current portion of long-term debt:
Current portion of 5-year term loan facility expires June 28, 2022	$	20,000		$	55,000
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	100,000			—
Short-term promissory note	—			500
Total current portion of long-term debt	120,000			55,500
Long-term debt:
Note agreements:
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	—			100,000
4.200% senior notes, semi-annual interest payments, net of the unamortized discount, balloon due 2024	498,904			498,785
Total notes	498,904			598,785
Credit agreements:
5-year term-loan facility, periodic interest and principal payments, LIBOR plus up to 1.750%, expires June 28, 2022	370,000			426,250
5-year revolving-loan facility, periodic interest payments, LIBOR plus up to 1.500%, plus commitment fees up to 0.250%, expires June 28, 2022	—			—
Total credit agreements	370,000			426,250
Debt issuance costs (contra)	(8,163		)	(6,663		)
Total long-term debt less unamortized discount and debt issuance costs	860,741			1,018,372
Current portion of long-term debt	120,000			55,500
Total debt	$	980,741		$	1,073,872

On December 22, 2006, the Company entered into a Master Shelf and Note Purchase Agreement (the “Master Agreement”) with a national insurance company (the “Purchaser”). The initial issuance of notes under the Master Agreement occurred on December 22, 2006, through the issuance of $25.0 million in Series C Senior Notes due December 22, 2016, with a fixed interest rate of 5.660% per year. On February 1, 2008, $25.0 million in Series D Senior Notes due January 15, 2015, with a fixed interest rate of 5.370% per year, were issued. On September 15, 2011, and pursuant to a Confirmation of Acceptance (the “Confirmation”), dated January 21, 2011, in connection with the Master Agreement, $100.0 million in Series E Senior Notes were issued and are due September 15, 2018, with a fixed interest rate of 4.500% per year. The Series E Senior Notes were issued for the sole purpose of retiring existing senior notes. On January 15, 2015 the Series D Senior Notes were redeemed at maturity using cash proceeds to pay off the principal of $25.0 million plus any remaining accrued interest. On December 22, 2016, the Series C Senior Notes were redeemed at maturity using cash proceeds to pay off the principal of $25.0 million plus any remaining accrued interest. As of September 30, 2017, there was an outstanding debt balance issued under the provisions of the Master Agreement of $100.0 million.

On April 17, 2014, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents (the “Credit Agreement”). The Credit Agreement in the amount of $1,350.0 million provides for an unsecured revolving credit facility (the “Credit Facility”) in the initial amount of $800.0 million and unsecured term loans in the initial amount of $550.0 million, either or both of which may, subject to lenders’ discretion, potentially be increased by up to $500.0 million. The Credit Facility was funded on May 20, 2014 in conjunction with the closing of The Wright Insurance Group, LLC (“Wright”) acquisition, with the $550.0 million term loan being funded as well as a drawdown of $375.0 million on the revolving loan facility. Use of these proceeds was to retire existing term loan debt and to facilitate the closing of the Wright acquisition as well as other acquisitions. The Credit Facility terminates on May 20, 2019, but either or both of the revolving Credit Facility and the term loans may be extended for two additional one-year periods at the Company’s request and at the discretion of the respective lenders. Interest and facility fees in respect to the Credit Facility are based on the better of the Company’s net debt leverage ratio or a non-credit enhanced senior unsecured long-term debt rating. Based on the Company’s net debt leverage ratio, the rates of interest charged on the term loan are 1.000% to 1.750%, and the revolving loan is 0.850% to 1.500% above the adjusted LIBOR rate for outstanding amounts drawn. There are fees included in the facility which include a facility fee based on the revolving credit commitments of the lenders (whether used or unused) at a rate of 0.150% to 0.250% and letter of credit fees based on the amounts of outstanding secured or unsecured letters of credit. The Credit Facility includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers.

14

On June 28, 2017, the Company entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”) with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents. The Amended and Restated Credit Agreement amended and restated the credit agreement dated April 17, 2014, among such parties (the “Original Credit Agreement”). The Amended and Restated Credit Agreement extends the applicable maturity date of the existing revolving credit facility (the “Facility”) of $800.0 million to June 28, 2022 and re-evidences unsecured term loans at $400.0 million while also extending the applicable maturity date to June 28, 2022. The term loan principal amortization schedule was reset with payments due quarterly. At the time of the execution of the Amended and Restated Credit Agreement, $67.5 million of principal from the original unsecured term loans was repaid using operating cash balances, and the Company added an additional $2.8 million in debt issuance costs related to the facility to the Consolidated Balance Sheet. The Company also expensed to the Consolidated Statements of Income $0.2 million of debt issuance costs related to the Original Credit Agreement due to certain lenders exiting prior to the modified agreement, while also carrying forward $1.6 million on the Consolidated Balance Sheet the unamortized portion of the Original Credit Agreement debt issuance costs which will amortize over the term of the Amended and Restated Credit Agreement. On September 30, 2017, a scheduled principal payment of $5.0 million was satisfied per the terms of the Amended and Restated Credit Agreement. As of September 30, 2017, there was an outstanding debt balance issued under the terms of the Amended and Restated Credit Agreement of $390.0 million with no borrowings outstanding against the revolving loan. Per the terms of the Amended and Restated Credit Agreement, a scheduled principal payment of $5.0 million is due December 31, 2017.

On September 18, 2014, the Company issued $500.0 million of 4.200% unsecured senior notes due in 2024. The senior notes were given investment grade ratings of BBB-/Baa3 with a stable outlook. The notes are subject to certain covenant restrictions and regulations which are customary for credit rated obligations. At the time of funding, the proceeds were offered at a discount of the original note amount which also excluded an underwriting fee discount. The net proceeds received from the issuance were used to repay the outstanding balance of $475.0 million on the revolving Credit Facility and for other general corporate purposes. As of September 30, 2017 and December 31, 2016, there was an outstanding debt balance of $500.0 million exclusive of the associated discount balance.

In conjunction with the acquisition of Social Security Advocates for the Disabled (SSAD) effective February 1, 2016, the company added a $0.5 million promissory note incurred as a payment to the sellers and payable after the one-year anniversary of the acquisition. The note had a nominal rate of interest 0.810%. On March 10, 2017, the promissory note was settled, plus any outstanding accrued interest, using cash.

The Master Agreement and the Amended and Restated Credit Agreement require the Company to maintain certain financial ratios and comply with certain other covenants. The Company was in compliance with all such covenants as of September 30, 2017 and December 31, 2016.

The 30-day Adjusted LIBOR Rate as of September 30, 2017 was 1.250%.

NOTE 8· Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

	For the nine months   ended September 30,
(in thousands)	2017		2016
Cash paid during the period for:
Interest	$	32,504	$	33,122
Income taxes	$	110,853	$	104,739

Brown & Brown’s significant non-cash investing and financing activities are summarized as follows:

	For the nine months   ended September 30,
(in thousands)	2017		2016
Other payable issued for purchased customer accounts	$	11,395	$	10,505
Estimated acquisition earn-out payables and related charges	$	1,332	$	3,828
Notes payable issued or assumed for purchased customer accounts	$	—	$	492

15

The following is a reconciliation of cash and cash equivalents inclusive of restricted cash as of September 30, 2017 and 2016.

	Balance as of September 30,
(in thousands)	2017		2016
Table to reconcile cash and cash equivalents inclusive of restricted cash
Cash and cash equivalents	$	546,520	$	488,683
Restricted cash	276,687		278,279
Total cash and cash equivalents inclusive of restricted cash at the end of the period	$	823,207	$	766,962

The following is a reconciliation of cash and cash equivalents inclusive of restricted cash as of December 31, 2016 and 2015.

	Balance as of December 31,
(in thousands)	2016		2015
Table to reconcile cash and cash equivalents inclusive of restricted cash
Cash and cash equivalents	$	515,646	$	443,420
Restricted cash	265,637		229,753
Total cash and cash equivalents inclusive of restricted cash at the end of the period	$	781,283	$	673,173

NOTE 9· Legal and Regulatory Proceedings

The Company is involved in numerous pending or threatened proceedings by or against Brown & Brown, Inc. or one or more of its subsidiaries that arise in the ordinary course of business. The damages that may be claimed against the Company in these various proceedings are in some cases substantial, including in certain instances claims for punitive or extraordinary damages. Some of these claims and lawsuits have been resolved, others are in the process of being resolved and others are still in the investigation or discovery phase. The Company will continue to respond appropriately to these claims and lawsuits and to vigorously protect its interests.

During the first quarter of 2017, the Company was successful in settling a lawsuit it had brought against certain former employees of Brown & Brown, their employer, AssuredPartners, Inc. and certain key executives of AssuredPartners.  The settlement included a payment of $20,000,000 by AssuredPartners to Brown & Brown in exchange for releasing certain individuals from restrictive covenants in the employment contracts they had signed with the Company and provides protection for current Brown & Brown teammates from continued solicitation for employment by AssuredPartners.

The proceeds of the settlement were received in March 2017 and were recorded in the Other income line in the Statement of Income.

We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could adversely impact the Company’s operating results, cash flows and overall liquidity. The Company maintains third-party insurance policies to provide coverage for certain legal claims, in an effort to mitigate its overall exposure to unanticipated claims or adverse decisions. However, as (i) one or more of the Company’s insurance carriers could take the position that portions of these claims are not covered by the Company’s insurance, (ii) to the extent that payments are made to resolve claims and lawsuits, applicable insurance policy limits are eroded and (iii) the claims and lawsuits relating to these matters are continuing to develop, it is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by unfavorable resolutions of these matters. Based on the AM Best Company ratings of these third-party insurers, management does not believe there is a substantial risk of an insurer’s material non-performance related to any current insured claims.

On the basis of current information, the availability of insurance and legal advice, in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows.

NOTE 10· Segment Information

Brown & Brown’s business is divided into four reportable segments:(1) the Retail Segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers; (2) the National Programs Segment, which acts as a MGA, provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; (3) the Wholesale Brokerage Segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents; and (4) the Services Segment, which provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services and claims adjusting services.

16

Brown & Brown conducts all of its operations within the United States of America, except for a wholesale brokerage operation based in London, England, and retail operations in Bermuda and the Cayman Islands. These operations earned $3.9 million and $3.8 million of total revenues for the three months ended September 30, 2017 and 2016, respectively. These operations earned $11.1 million and $10.3 million of total revenues for the nine months ended September 30, 2017 and 2016, respectively. Long-lived assets held outside of the United States as of September 30, 2017 and 2016 were not material.

The accounting policies of the reportable segments are the same as those described in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Inter-segment revenues are eliminated.

Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes any income and expenses not allocated to reportable segments, corporate-related items, including the inter-company interest expense charge to the reporting segment, and the elimination of inter-segment activities.

	For the three months ended September 30, 2017
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	234,483	$	127,718	$	71,574	$	41,491	$	380		$	475,646
Investment income	$	3	$	124	$	—	$	72	$	292		$	491
Amortization	$	10,540	$	6,913	$	2,845	$	1,137	$	—		$	21,435
Depreciation	$	1,262	$	1,412	$	471	$	402	$	1,942		$	5,489
Interest expense	$	7,216	$	8,304	$	1,515	$	876	$	(8,518	)	$	9,393
Income before income taxes	$	54,950	$	32,203	$	21,219	$	7,910	$	8,137		$	124,419
Total assets	$	4,246,422	$	5,026,918	$	1,258,783	$	432,331	$	(3,550,177	)	$	7,414,277
Capital expenditures	$	844	$	1,357	$	214	$	364	$	1,270		$	4,049

	For the three months ended September 30, 2016
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	228,645	$	123,632	$	70,192	$	39,586	$	219		$	462,274
Investment income	$	5	$	96	$	—	$	57	$	72		$	230
Amortization	$	10,861	$	6,921	$	2,882	$	1,140	$	1		$	21,805
Depreciation	$	1,508	$	1,945	$	503	$	473	$	766		$	5,195
Interest expense	$	9,026	$	10,844	$	1,540	$	1,257	$	(12,784	)	$	9,883
Income before income taxes	$	44,894	$	32,319	$	20,862	$	5,971	$	12,926		$	116,972
Total assets	$	3,652,977	$	2,933,568	$	1,053,516	$	342,360	$	(2,460,394	)	$	5,522,027
Capital expenditures	$	1,443	$	2,153	$	11	$	80	$	504		$	4,191

	For the nine months ended September 30, 2017
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	712,739	$	342,576	$	208,812	$	122,397	$	20,507		$	1,407,031
Investment income	$	6	$	279	$	—	$	224	$	576		$	1,085
Amortization	$	31,704	$	20,664	$	8,621	$	3,412	$	1		$	64,402
Depreciation	$	3,975	$	4,975	$	1,438	$	1,191	$	5,663		$	17,242
Interest expense	$	23,918	$	27,257	$	4,803	$	2,783	$	(29,812	)	$	28,949
Income before income taxes	$	151,783	$	68,127	$	56,569	$	22,480	$	44,429		$	343,388
Total assets	$	4,246,422	$	5,026,918	$	1,258,783	$	432,331	$	(3,550,177	)	$	7,414,277
Capital expenditures	$	3,384	$	3,885	$	1,606	$	856	$	3,166		$	12,897

17

	For the nine months ended September 30, 2016
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	695,393	$	333,522	$	184,893	$	117,906	$	1,251		$	1,332,965
Investment income	$	33	$	583	$	4	$	204	$	326		$	1,150
Amortization	$	32,743	$	21,011	$	7,915	$	3,345	$	11		$	65,025
Depreciation	$	4,761	$	5,881	$	1,487	$	1,432	$	2,306		$	15,867
Interest expense	$	29,415	$	34,895	$	2,472	$	3,820	$	(40,985	)	$	29,617
Income before income taxes	$	144,496	$	68,367	$	51,711	$	17,929	$	46,095		$	328,598
Total assets	$	3,652,977	$	2,933,568	$	1,053,516	$	342,360	$	(2,460,394	)	$	5,522,027
Capital expenditures	$	4,664	$	5,399	$	925	$	561	$	1,586		$	13,135

NOTE 11· Investments

At September 30, 2017, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	32,724	$	1	$	(94	)	$	32,631
Corporate debt	1,407		16		—			1,423
Total	$	34,131	$	17	$	(94	)	$	34,054

At September 30, 2017, the Company held $32.6 million in fixed income securities composed of U.S. Treasury securities, securities issued by U.S. Government agencies and municipalities, and $1.4 million issued by corporations with investment grade ratings. Of that total, $20.0 million is classified as short-term investments on the Consolidated Balance Sheet as maturities are less than one-year. Additionally, the Company holds $9.2 million in short-term investments which are related to time deposits held with various financial institutions.

For securities in a loss position, the following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2017:

	Less than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	24,444	$	(60	)	$	7,364	$	(34	)	$	31,808	$	(94	)
Corporate debt	200		—			—		—			200		—
Total	$	24,644	$	(60	)	$	7,364	$	(34	)	$	32,008	$	(94	)

The unrealized losses were caused by interest rate increases. At September 30, 2017, the Company had 27 securities in an unrealized loss position. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at September 30, 2017.

At December 31, 2016, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	26,280	$	11	$	(59	)	$	26,232
Corporate debt	2,358		13		(1		)	2,370
Total	$	28,638	$	24	$	(60	)	$	28,602

18

At December 31, 2016, the Company held $26.2 million in fixed income securities composed of U.S. Treasury securities, securities issued by U.S. Government agencies and municipalities, and $2.4 million issued by corporations with investment grade ratings. Of that total, $5.6 million is classified as short-term investments on the Consolidated Balance Sheet as maturities are less than one-year. Additionally, the Company holds $9.5 million in short-term investments which are related to time deposits held with various financial institutions.

For securities in a loss position, the following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2016:

	Less than 12 Months					12 Months or More				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	14,663	$	(59	)	$	—	$	—	$	14,663	$	(59	)
Corporate debt	1,001		(1		)	—		—		1,001		(1		)
Total	$	15,664	$	(60	)	$	—	$	—	$	15,664	$	(60	)

The unrealized losses from corporate issuers were caused by interest rate increases. At December 31, 2016, the Company had 20 securities in an unrealized loss position. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at December 31, 2016.

The amortized cost and estimated fair value of the fixed maturity securities at September 30, 2017 by contractual maturity are set forth below:

(in thousands)	Amortized Cost		Fair Value
Years to maturity:
Due in one year or less	$	20,005	$	19,969
Due after one year through five years	13,893		13,843
Due after five years	233		242
Total	$	34,131	$	34,054

The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2016 by contractual maturity are set forth below:

(in thousands)	Amortized Cost		Fair Value
Years to maturity:
Due in one year or less	$	5,551	$	5,554
Due after one year through five years	22,757		22,708
Due after five years	330		340
Total	$	28,638	$	28,602

The expected maturities in the foregoing table may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalty.

Proceeds from the sales and maturity of the Company’s investment in fixed maturity securities were $2.7 million. This along with maturing time deposits yielded total cash proceeds from the sale of investments of $5.2 million in the period of January 1, 2017 to September 30, 2017. These proceeds were used to purchase additional fixed maturity securities and time deposits. The gains and losses realized on those sales for the period from January 1, 2017 to September 30, 2017 were insignificant.

Realized gains and losses are reported on the Condensed Consolidated Statements of Income, with the cost of securities sold determined on a specific identification basis.

At September 30, 2017, investments with a fair value of approximately $4.0 million were on deposit with state insurance departments to satisfy regulatory requirements.

19

NOTE 12· Reinsurance

Although the reinsurers are liable to the Company for amounts reinsured, our subsidiary, Wright National Flood Insurance Company (“Wright Flood”) remains primarily liable to its policyholders for the full amount of the policies written whether or not the reinsurers meet their obligations to the Company when they become due. The effects of reinsurance on premiums written and earned are as follows:

	Period from January 1, 2017 to September 30, 2017
(in thousands)	Written			Earned
Direct premiums	$	462,718		$	439,134
Ceded premiums	(462,710		)	(439,126		)
Net premiums	$	8		$	8

All premiums written by Wright Flood under the National Flood Insurance Program are 100% ceded to the Federal Emergency Management Agency, or FEMA, for which Wright Flood received a 30.9% expense allowance from January 1, 2017 through September 30, 2017. For the period from January 1, 2017 through September 30, 2017, the Company ceded $461.5 million of written premiums.

Effective April 1, 2014, Wright Flood is also a party to a quota share agreement whereby it cedes 100% of its gross excess flood premiums, excluding fees, to Arch Reinsurance Company and receives a 30.5% commission. Wright Flood ceded $1.2 million for the period from January 1, 2017 through September 30, 2017. No loss data exists on this agreement.

Wright Flood also ceded 100% of the Homeowners, Private Passenger Auto Liability, and Other Liability Occurrence to Stillwater Insurance Company, formerly known as Fidelity National Insurance Company. This business is in runoff. Therefore, only loss data exists on this business. As of September 30, 2017, no ceded unpaid losses and loss adjustment expenses or incurred but not reported expenses for Homeowners, Private Passenger Auto Liability and Other Liability Occurrence existed.

As of September 30, 2017 the Condensed Consolidated Balance Sheet contained reinsurance recoverable of $2,160.3 million and prepaid reinsurance premiums of $332.2 million. There was no net activity in the reserve for losses and loss adjustment expense during the period January 1, 2017 through September 30, 2017, as Wright Flood's direct premiums written were 100% ceded to two reinsurers. The balance of the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, as of September 30, 2017 was $2,160.3 million.

NOTE 13· Statutory Financial Data

Wright Flood maintains capital in excess of the minimum statutory amount of $7.5 million as required by regulatory authorities. The unaudited statutory capital and surplus of Wright Flood was $26.7 million at September 30, 2017 and $23.5 million as of December 31, 2016. For the period from January 1, 2017 through September 30, 2017, Wright Flood generated statutory net income of $2.9 million. For the period from January 1, 2016 through December 31, 2016, Wright Flood generated statutory net income of $8.2 million.

NOTE 14· Subsidiary Dividend Restrictions

Under the insurance regulations of Texas, where Wright Flood is incorporated, the maximum amount of ordinary dividends that Wright Flood can pay to shareholders in a rolling twelve-month period is limited to the greater of 10% of statutory adjusted capital and surplus as shown on Wright Flood’s last annual statement on file with the superintendent of the Texas Department of Insurance or 100% of adjusted net income. There was no dividend payout in 2016 and the maximum dividend payout that may be made in 2017 without prior approval is $8.2 million.

NOTE 15· Shareholders’ Equity

Between May 18, 2017 and June 30, 2017, the Company made share repurchases in the open market in total of 216,615 shares at a total cost of $11.2 million. Between July 1, 2017 and July 14, 2017, the Company made share repurchases in the open market in total of 131,845 shares at a total cost of $3.7 million.

On August 14, 2017, the Company entered into an accelerated share repurchase agreement ("ASR") with an investment bank to purchase an aggregate $50.0 million of the Company's common stock. As part of the ASR, the company received an initial delivery of 967,888 shares of the Company's common stock with a fair market value of approximately $42.5 million. On October 16, 2017, the Company was notified by its investment bank that the accelerated share repurchase was completed. To complete the transaction, the investment bank delivered an additional 108,288 shares of the Company's common stock for a total of 1,076,176 shares repurchased under the ASR.

Under the authorization from the Company’s Board of Directors, shares may be purchased from time to time, at the Company’s discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company’s financial performance and other potential factors. These purchases may be carried out through open market purchases, block trades, accelerated share repurchase plans of up to $100.0 million each (unless otherwise approved by the Board of Directors), negotiated private transactions or

20

pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. After completion of this ASR transaction, the Company has approval to repurchase up to $302.4 million, in the aggregate, of the Company's outstanding common stock.

ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion updates the MD&A contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2016, and the two discussions should be read together.

GENERAL

Company Overview — Third Quarter of 2017

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes to those Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. In addition, please see “Information Regarding Non-GAAP Financial Measures” below, regarding important information on non-GAAP financial measures contained in our discussion and analysis.

We are a diversified insurance agency, wholesale brokerage, insurance programs and services organization headquartered in Daytona Beach, Florida. As an insurance intermediary, our principal sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers. Commission revenues 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.

The volume of business from new and existing customers, fluctuations in insurable exposure units, changes in premium rate levels, and changes in general economic and competitive conditions and the occurrence of catastrophic weather events all affect our revenues. For example, level rates of inflation or a general decline in economic activity could limit increases in the values of insurable exposure units. Conversely, increasing costs of litigation settlements and awards could cause some customers to seek higher levels of insurance coverage. Historically, our revenues have typically grown as a result of our focus on net new business growth and acquisitions. We foster a strong, decentralized sales and service culture with the goal of consistent, sustained growth over the long-term.

“Commissions and fees” is included in our Condensed Consolidated Statements of Income. The term “Organic Revenue”, a non-GAAP financial measure, is our “core commissions and fees” (which are our commissions and fees less profit-sharing contingent commissions and less guaranteed supplemental commissions, and therefore represents the revenues earned directly from specific insurance policies sold, and specific fee-based services rendered) less (i) the core commissions and fees earned for the first twelve months by newly-acquired operations and (ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period). “Organic Revenue” is reported in this manner in order to express the current year’s core commissions and fees on a comparable basis with the prior year’s core commissions and fees. The resulting net change reflects the aggregate changes attributable to (i) net new and lost accounts, (ii) net changes in our customers’ exposure units, (iii) net changes in insurance premium rates or the commission rate paid to us by our carrier partners; and (iv) the net change in fees paid to us by our customers. We believe that Organic Revenue provides a meaningful representation of the Company’s operating performance. The Company has historically viewed Organic Revenue growth as an important indicator when assessing and evaluating the performance of its four segments. Organic revenue is reported in the Results of Operations and in the Results of Operations - Segment sections of this Quarterly Report on Form 10-Q.

We also earn “profit-sharing contingent commissions,” which are profit-sharing commissions based primarily on underwriting results, but which may also reflect considerations for volume, growth and/or retention. These commissions are primarily received in the first and second quarters of each year, based upon the aforementioned considerations for the prior year(s). Over the last three years, profit-sharing contingent commissions have averaged approximately 3.6% of the previous year’s commissions and fees revenue. Profit-sharing contingent commissions are included in our commissions and fees in the Consolidated Statement of Income in the year received. For the three-month period ended September 30, 2017, profit-sharing contingent commissions were down $4.7 million as compared to the same period of the prior year, primarily realized in our Wholesale Brokerage Segment.

Certain insurance companies offer guaranteed fixed-base agreements, referred to as “Guaranteed Supplemental Commissions” (“GSCs”) in lieu of profit-sharing contingent commissions. Since GSCs are not subject to the uncertainty of loss ratios, they are accrued throughout the year based on actual premiums written. For the twelve-month period ending December 31, 2016, we had earned $11.5 million of GSCs, of which $9.2 million remained accrued at December 31, 2016, the balance of which is typically collected over the first and second quarter. For the three-month periods ended September 30, 2017 and 2016, we earned and accrued $2.5 million and $2.9 million, respectively, from GSCs.

21

Combined, our profit-sharing contingent commissions and GSCs for the three months ended September 30, 2017decreased by $5.2 million compared to the third quarter of 2016 reflecting the actual loss experience from our carrier partners.

Fee revenues primarily relate to services other than securing coverage for our customers and are recognized as services are rendered, as well as fees negotiated in lieu of commissions. Fee revenues have historically been generated primarily by: (1) our Services Segment, which provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services, and claims adjusting services; (2) our National Programs and Wholesale Brokerage Segments, which earn fees primarily for the issuance of insurance policies on behalf of insurance companies; and to a lesser extent (3) our Retail Segment in our large-account customer base. Fee revenues, on a consolidated basis, as a percentage of our total commissions and fees, represented 31.3% in 2016, 30.6% in 2015 and 30.6% in 2014.

For the three-month period ended September 30, 2017, our total commissions and fees growth rate was 2.8% and our consolidated organic revenue growth rate was 3.4%. In the event that the gradual increases in insurable exposure units that occurred in the past few years continues through 2017 and premium rate changes are similar with 2016, we believe we will continue to see positive quarterly organic revenue growth for the remainder of 2017.

Historically, investment income has consisted primarily of interest earnings on operating cash and where permitted, on premiums and advance premiums collected and held in a fiduciary capacity before being remitted to insurance companies. Our policy is to invest available funds in high-quality, short-term fixed income investment securities. Investment income also includes gains and losses realized from the sale of investments. Other income primarily reflects legal settlements and other miscellaneous income.

Income before income taxes for the three-month period ended September 30, 2017increased from the third quarter of 2016 by $7.4 million, primarily as a result of a change in estimated acquisition earn-out payables, acquisitions completed in the past twelve months and profits from existing customers and net new business.

Information Regarding Non-GAAP Measures

In the discussion and analysis of our results of operations, in addition to reporting financial results in accordance with generally accepted accounting principles ("GAAP"), we provide references to the following non-GAAP financial measures as defined in Regulation G of SEC rules: organic revenue and organic revenue growth. We view these non-GAAP financial measures as important indicators when assessing and evaluating our performance on a consolidated basis and for each of our segments because they allow us to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that were a part of our business in both the current and prior year. We believe that organic revenue provides a meaningful representation of our operating performance and view organic revenue growth as an important indicator when assessing and evaluating the performance of our four segments. We also use organic revenue growth for incentive compensation determinations for executive officers and other key employees.

These measures are not in accordance with, or an alternative to the GAAP information provided in this Quarterly Report on Form 10-Q. We present such non-GAAP supplemental financial information because we believe such information is of interest to the investment community and because we believe they provide additional meaningful methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis. We believe these non-GAAP financial measures improve the comparability of results between periods by eliminating the impact of certain items that have a high degree of variability. Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments. This supplemental financial information should be considered in addition to, not in lieu of, our Condensed Consolidated Financial Statements.

Tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operation - Segment Information.”

Acquisitions

Part of our continuing business strategy is to attract high-quality insurance intermediaries to join our operations. From 1993 through the third quarter of 2017, we acquired 485 insurance intermediary operations, excluding acquired books of business (customer accounts).

Critical Accounting Policies

We have had no changes to our Critical Accounting Policies. We believe that of our significant accounting and reporting policies, the more critical policies include our accounting for revenue recognition, business combinations and purchase price allocations, intangible asset impairments, non-cash stock-based compensation and reserves for litigation. In particular, the accounting for these areas requires significant use of judgment to be made by management. Different assumptions in the application of these policies could result in material changes in our consolidated financial position or consolidated results of operations. Refer to Note 1 in the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2016 on file with the Securities and Exchange Commission for details regarding our critical and significant accounting policies.

22

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,2017 AND 2016

The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.

Financial information relating to our Condensed Consolidated Financial results for the three and nine months ended September 30, 2017 and 2016 is as follows:

	For the three months   ended September 30,								For the nine months   ended September 30,
(in thousands, except percentages)	2017			2016			% Change		2017			2016			% Change
REVENUES
Core commissions and fees	$	468,574		$	450,464		4.0	%	$	1,330,341		$	1,274,170		4.4	%
Profit-sharing contingent commissions	3,542			8,247			(57.1	)%	45,409			46,586			(2.5	)%
Guaranteed supplemental commissions	2,493			2,941			(15.2	)%	8,149			8,893			(8.4	)%
Investment income	491			230			113.5	%	1,085			1,150			(5.7	)%
Other income, net	546			392			39.3	%	22,047			2,166			NMF
Total revenues	475,646			462,274			2.9	%	1,407,031			1,332,965			5.6	%
EXPENSES
Employee compensation and benefits	246,062			237,653			3.5	%	736,445			692,814			6.3	%
Other operating expenses	72,058			67,433			6.9	%	210,289			197,329			6.6	%
Loss/(gain) on disposal	(1,902		)	(277		)	NMF		(1,993		)	(3,131		)	(36.3	)%
Amortization	21,435			21,805			(1.7	)%	64,402			65,025			(1.0	)%
Depreciation	5,489			5,195			5.7	%	17,242			15,867			8.7	%
Interest	9,393			9,883			(5.0	)%	28,949			29,617			(2.3	)%
Change in estimated acquisition earn-out payables	(1,308		)	3,610			(136.2	)%	8,309			6,846			21.4	%
Total expenses	351,227			345,302			1.7	%	1,063,643			1,004,367			5.9	%
Income before income taxes	124,419			116,972			6.4	%	343,388			328,598			4.5	%
Income taxes	48,506			45,427			6.8	%	131,263			128,733			2.0	%
NET INCOME	$	75,913		$	71,545		6.3	%	$	212,125		$	199,865		6.2	%
Organic revenue growth rate (1)	3.4		%	4.3		%			2.8		%	2.8		%
Employee compensation and benefits relative to total revenues	51.7		%	51.4		%			52.3		%	52.0		%
Other operating expenses relative to total revenues	15.1		%	14.6		%			14.9		%	14.8		%
Capital expenditures	$	4,049		$	4,191				$	12,897		$	13,135
Total assets at September 30									$	7,414,277		$	5,522,027

(1) A non-GAAP financial measure

NMF = Not a meaningful figure

Commissions and Fees

Commissions and fees, including profit-sharing contingent commissions and GSCs, for the three months ended September 30, 2017increased$13.0 million to $474.6 million, or 2.8% over the same period in 2016. Core commissions and fees revenue for the third quarter of 2017increased$18.1 million, of which approximately $4.3 million represented core commissions and fees from agencies acquired since 2016 that had no comparable revenues in the same period of 2016. After accounting for divested business of $1.3 million, the remaining net increase of $15.1 million represented net new and renewal business, which reflects an organic revenue growth rate of 3.4%. Profit-sharing contingent commissions and GSCs for the third quarter of 2017decreased by $5.2 million, or 46.1%, compared to the same period in 2016. The net decrease of $5.2 million in the third quarter was mainly driven by a decrease in profit-sharing contingent commissions in the Wholesale Brokerage Segment as a result of loss experience for insurance carriers.

23

For the nine months ended September 30, 2017 commissions and fees, including profit-sharing contingent commissions and GSCs, increased$54.3 million to $1,383.9 million, or 4.1% over the same period in 2016. Core commissions and fees revenue for the nine months ended September 30, 2017increased$56.2 million, of which approximately $22.9 million represented core commissions and fees from acquisitions that had no comparable revenues in the same period of 2016. After accounting for divested business of $2.2 million, the remaining net increase of $35.5 million represented net new and renewal business, which reflects an organic revenue growth rate of 2.8%. Profit-sharing contingent commissions and GSCs for the nine months ended September 30, 2017decreased by $1.9 million, or 3.5%, compared to the same period in 2016. The net decrease of $1.9 million in the first nine months of 2017 was mainly driven by a decrease in profit-sharing contingent commissions in the Retail and Wholesale Brokerage Segments as a result of loss experience for insurance carriers partially offset by an increase in the National Programs Segment.

Investment Income

Investment income for the three months ended September 30, 2017increased$0.3 million, or 113.5% over the same period in 2016. The increase was primarily driven by cash management activities to earn a higher yield on excess cash balances.

Investment income for the nine months ended September 30, 2017decreased$0.1 million, or 5.7%, over the same period in 2016. This decrease was related to a one-time receipt of interest on premium tax refunds received in 2016.

Other Income, net

Other income for the three months ended September 30, 2017 was $0.5 million, compared with $0.4 million in the same period in 2016. Other income consists primarily of legal settlements and other miscellaneous income.

Other income for the nine months ended September 30, 2017 was $22.0 million, compared with $2.2 million in the same period in 2016. The $19.8 millionincrease for the nine months ended September 30, 2017 from the comparable period in 2016 was a result of a legal settlement recognized in the first quarter of 2017.

Employee Compensation and Benefits

Employee compensation and benefits expense as a percentage of total revenues increased to 51.7% for the three months ended September 30, 2017, from 51.4% for the three months ended September 30,2016. Employee compensation and benefits for the third quarter of 2017increased approximately 3.5%, or $8.4 million, over the same period in 2016. This net increase included (i) $0.4 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2016; (ii) an increase in staff salaries attributable to salary inflation and higher volumes in portions of our business; (iii) increased producer commissions due to higher revenue; and (iv) the additional cost associated with the Retail Segment's performance incentive plan introduced in 2017.

Employee compensation and benefits expense as a percentage of total revenues increased to 52.3% for the nine months ended September 30, 2017, from 52.0% for the nine months ended September 30, 2016. Employee compensation and benefits for the first nine months of 2017increased, by approximately 6.3%, or $43.6 million, over the same period in 2016. This increase included (i) $10.1 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2016; (ii) an increase in staff salaries attributable to salary inflation and higher volumes in portions of our business; (iii) increased producer commissions due to higher revenue; (iv) increased non-cash stock based compensation due to larger forfeiture credits recorded in 2016; and (v) the additional cost associated with the Retail Segment's performance incentive plan introduced in 2017.

Other Operating Expenses

As a percentage of total revenues, other operating expenses represented 15.1% in the third quarter of 2017, versus 14.6% reported in the third quarter of 2016. Other operating expenses for the third quarter of 2017increased$4.6 million, or 6.9%, over the same period of 2016, of which $0.1 million was related to acquisitions that had no comparable costs in the same period of 2016. The remaining other operating expenses for both three-month periods ended September 30, 2017 and 2016, respectively, increased by $4.5 million, which was primarily attributable to (i) increased expenses associated with our investment in information technology and consulting; partially offset by (ii) a foreign exchange gains and (iii) the benefits from our strategic purchasing program.

Other operating expenses represented 14.9% of total revenues for the nine months ended September 30, 2017, versus 14.8% for the nine months ended September 30, 2016. Other operating expenses for the first nine months of 2017increased$13.0 million, or 6.6%, over the same period of 2016, of which $3.1 million was related to acquisitions that had no comparable costs in the same period of 2016. The remaining other operating expenses for both of the nine months ended September 30, 2017 and 2016, respectively, increased by $9.8 million, which was primarily attributable to (i) increased expenses associated with our investment in information technology; (ii) a credit of approximately $5.3 million associated with premium tax refunds recognized in the first nine months of 2016; and (iii) partially offset by foreign exchange gains and (iv) the benefits from our strategic purchasing program.

24

Gain on Disposal

Gain on disposal for the third quarter of 2017increased$1.6 million from the third quarter of 2016. Gain on disposal for the nine months ended September 30, 2017decreased$1.1 million from the nine months ended September 30, 2016. The change in the gain on disposal for the three and nine months ended September 30, 2017 was due to activity associated with book of business sales. Although we are not in the business of selling customer accounts or businesses, we periodically sell an office or a book of business (one or more customer accounts) because we believe doing so is in the Company’s best interest.

Amortization

Amortization expense for the third quarter of 2017decreased$0.4 million, or 1.7%, over the third quarter of 2016. Amortization expense for the nine months ended September 30, 2017decreased$0.6 million, or 1.0%, over the nine months ended September 30, 2016. These decreases reflect certain intangibles becoming fully amortized, partially offset with amortization of new intangibles from recently acquired businesses.

Depreciation

Depreciation expense for the third quarter of 2017increased$0.3 million, or 5.7%, compared to the third quarter of 2016. Depreciation expense for the nine months ended September 30, 2017increased$1.4 million, or 8.7%, over the nine months ended September 30, 2016. These changes were due primarily to the addition of fixed assets resulting from acquisitions completed since the first nine months of 2016, net of assets which became fully depreciated.

Interest Expense

Interest expense for the third quarter of 2017decreased$0.5 million, or 5.0%, compared to the third quarter of 2016. Interest expense for the nine months ended September 30, 2017decreased$0.7 million, or 2.3%, over the nine months ended September 30, 2016. This decrease was due to a lower effective interest rate for our Credit Facility term loan and the scheduled amortized principal payments on the Credit Facility term loan, which has reduced the Company's average debt balance.

Change in Estimated Acquisition Earn-Out Payables

Accounting Standards Codification (“ASC”) Topic 805-Business Combinations is the authoritative guidance requiring an acquiring entity to recognize 100% of the fair value of acquired assets, including goodwill, and assumed liabilities (with only limited exceptions) upon initially obtaining control of an acquired entity. Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase price arrangements) at the acquisition date must be included in the purchase price consideration. As a result, the recorded purchase prices for all acquisitions consummated after January 1, 2009 include an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are required to be recorded in the Consolidated Statement of Income when incurred or reasonably estimated. Estimations of potential earn-out obligations are typically based upon future earnings of the acquired operations or entities, usually for periods ranging from one to three years.

The net charge or credit to the Condensed Consolidated Statement of Income for the period is the combination of the net change in the estimated acquisition earn-out payables balance, and the interest expense imputed on the outstanding balance of the estimated acquisition earn-out payables.

As of September 30, 2017 and 2016, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the three and nine month periods ended September 30, 2017 and 2016 were as follows:

	For the three months   ended September 30,					For the nine months   ended September 30,
(in thousands)	2017			2016		2017		2016
Change in fair value of estimated acquisition earn-out payables	$	(1,784	)	$	2,883	$	6,402	$	4,704
Interest expense accretion	476			727		1,907		2,142
Net change in earnings from estimated acquisition earn-out payables	$	(1,308	)	$	3,610	$	8,309	$	6,846

25

For the three months ended September 30, 2017 and 2016, the fair value of estimated earn-out payables was re-evaluated and decreased by $1.8 million and increased by $2.9 million, respectively, which resulted in credits and charges to the Condensed Consolidated Statement of Income, respectively. For the nine months ended September 30, 2017 and 2016, the fair value of estimated earn-out payables was re-evaluated and increased by $6.4 million and $4.7 million, respectively, which resulted in charges to the Condensed Consolidated Statement of Income.

As of September 30, 2017, the estimated acquisition earn-out payables equaled $34.2 million, of which $28.7 million was recorded as accounts payable and $5.5 million was recorded as other non-current liabilities.

Income Taxes

The effective tax rate on income from operations for the three months ended September 30, 2017 and 2016 was 39.0% and 38.8%, respectively. The effective tax rate on income from operations for the nine months ended September 30, 2017 and 2016 was 38.2% and 39.2% respectively. The decrease for the nine months ended September 30, 2017 is related to the adoption in the first quarter of 2017, of FASB Accounting Standards Update 2016-09, “Improvements to Employee Share Based Payment Accounting” (“ASU 2016-09”), which amends guidance issued in Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation, that requires upon vesting of stock based compensation, any tax implications be treated as a discrete credit to the income tax expense in the quarter of vesting.

RESULTS OF OPERATIONS — SEGMENT INFORMATION

As discussed in Note 10 to the Condensed Consolidated Financial Statements, we operate four reportable segments: Retail, National Programs, Wholesale Brokerage, and Services. On a segmented basis, changes in amortization, depreciation and interest expenses generally result from activity associated with acquisitions. Likewise, other income in each segment reflects net gains primarily from legal settlements and miscellaneous income. As such, in evaluating the operational efficiency of a segment, management focuses upon the organic revenue growth rate of core commissions and fees revenue, the ratio of total employee compensation and benefits to total revenues, and the ratio of other operating expenses to total revenues.

The reconciliation of commissions and fees, included in the Condensed Consolidated Statement of Income, to organic revenue for the three months ended September 30, 2017, and 2016, is as follows:

	For the three months   ended September 30,
(in thousands)	2017		2016
Commissions and fees	$	474,609	$	461,652
Less profit-sharing contingent commissions	3,542		8,247
Less guaranteed supplemental commissions	2,493		2,941
Core commissions and fees	468,574		450,464
Less acquisition revenues	4,337		—
Less divested business	—		1,359
Organic Revenue	$	464,237	$	449,105

26

The growth rates for organic revenue, a non-GAAP financial measure, for the three months ended September 30, 2017, by segment, are as follows:

2017	Retail(1)					National Programs					Wholesale Brokerage					Services					Total
(in thousands, except percentages)	2017			2016		2017			2016		2017			2016		2017			2016		2017			2016
Commissions and Fees	$	234,414		$	228,468	$	127,271		$	123,523	$	71,505		$	70,132	$	41,419		$	39,529	$	474,609		$	461,652
Total Change	$	5,946				$	3,748				$	1,373				$	1,890				$	12,957
Total Growth %	2.6		%			3.0		%			2.0		%			4.8		%			2.8		%
Contingent Commissions	1,444			2,229		1,748			2,498		350			3,520		—			—		3,542			8,247
GSCs	2,164			2,516		5			14		324			411		—			—		2,493			2,941
Core Commissions and Fees	$	230,806		$	223,723	$	125,518		$	121,011	$	70,831		$	66,201	$	41,419		$	39,529	$	468,574		$	450,464
Acquisition Revenues	2,726			—		1,043			—		568			—		—			—		4,337			—
Divested Business	—			1,306		—			53		—			—		—			—		—			1,359
Organic Revenue(2)	$	228,080		$	222,417	$	124,475		$	120,958	$	70,263		$	66,201	$	41,419		$	39,529	$	464,237		$	449,105
Organic Revenue Growth(2)	$	5,663				$	3,517				$	4,062				$	1,890				$	15,132
Organic Revenue Growth %(2)	2.5		%			2.9		%			6.1		%			4.8		%			3.4		%

(1) The Retail Segment includes commissions and fees reported in the “Other” column of the Segment Information in Note 10 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees, included in the Condensed Consolidated Statement of Income, to organic revenue for the three months ended September 30, 2016, and 2015, is as follows:

	For the three months   ended September 30,
(in thousands)	2016		2015
Commissions and fees	$	461,652	$	431,863
Less profit-sharing contingent commissions	8,247		12,068
Less guaranteed supplemental commissions	2,941		2,520
Core commissions and fees	450,464		417,275
Less acquisition revenues	17,307		—
Less divested business	—		2,060
Organic Revenue	$	433,157	$	415,215

27

The growth rates for organic revenue, a non-GAAP financial measure, for the three months ended September 30, 2016, by segment, are as follows:

2016	Retail(1)					National Programs					Wholesale Brokerage					Services					Total
(in thousands, except percentages)	2016			2015		2016			2015		2016			2015		2016			2015		2016			2015
Commissions and Fees	$	228,468		$	215,630	$	123,523		$	116,919	$	70,132		$	61,332	$	39,529		$	37,982	$	461,652		$	431,863
Total Change	$	12,838				$	6,604				$	8,800				$	1,547				$	29,789
Total Growth %	6.0		%			5.6		%			14.3		%			4.1		%			6.9		%
Contingent Commissions	2,229			1,810		2,498			3,188		3,520			7,070		—			—		8,247			12,068
GSCs	2,516			2,061		14			10		411			449		—			—		2,941			2,520
Core Commissions and Fees	$	223,723		$	211,759	$	121,011		$	113,721	$	66,201		$	53,813	$	39,529		$	37,982	$	450,464		$	417,275
Acquisition Revenues	6,248			—		—			—		8,764			—		2,295			—		17,307			—
Divested Business	—			158		—			585		—			—		—			1,317		—			2,060
Organic Revenue(2)	$	217,475		$	211,601	$	121,011		$	113,136	$	57,437		$	53,813	$	37,234		$	36,665	$	433,157		$	415,215
Organic Revenue Growth(2)	$	5,874				$	7,875				$	3,624				$	569				$	17,942
Organic Revenue Growth %(2)	2.8		%			7.0		%			6.7		%			1.6		%			4.3		%

(1) The Retail Segment includes commissions and fees reported in the “Other” column of the Segment Information in Note 10 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees, included in the Condensed Consolidated Statement of Income, to organic revenue for the nine months ended September 30, 2017, and 2016, is as follows:

	For the nine months   ended September 30,
(in thousands)	2017		2016
Commissions and fees	$	1,383,899	$	1,329,649
Less profit-sharing contingent commissions	45,409		46,586
Less guaranteed supplemental commissions	8,149		8,893
Core commissions and fees	1,330,341		1,274,170
Less acquisition revenues	22,936		—
Less divested business	—		2,246
Organic Revenue	$	1,307,405	$	1,271,924

28

The growth rates for organic revenue, a non-GAAP financial measure, for the nine months ended September 30, 2017, by segment, are as follows:

2017	Retail(1)					National Programs					Wholesale Brokerage					Services						Total
(in thousands, except percentages)	2017			2016		2017			2016		2017			2016		2017			2016			2017			2016
Commissions and Fees	$	711,532		$	694,402	$	341,910		$	332,872	$	208,284		$	184,673	$	122,173		$	117,702		$	1,383,899		$	1,329,649
Total Change	$	17,130				$	9,038				$	23,611				$	4,471					$	54,250
Total Growth %	2.5		%			2.7		%			12.8		%			3.8		%				4.1		%
Contingent Commissions	22,380			24,365		16,038			12,152		6,991			10,069		—			—			45,409			46,586
GSCs	7,109			7,488		8			24		1,032			1,381		—			—			8,149			8,893
Core Commissions and Fees	$	682,043		$	662,549	$	325,864		$	320,696	$	200,261		$	173,223	$	122,173		$	117,702		$	1,330,341		$	1,274,170
Acquisition Revenues	5,100			—		1,201			—		15,785			—		850			—			22,936			—
Divested Business	—			2,147		—			302		—			—		—			(203		)	—			2,246
Organic Revenue(2)	$	676,943		$	660,402	$	324,663		$	320,394	$	184,476		$	173,223	$	121,323		$	117,905		$	1,307,405		$	1,271,924
Organic Revenue Growth(2)	$	16,541				$	4,269				$	11,253				$	3,418					$	35,481
Organic Revenue Growth %(2)	2.5		%			1.3		%			6.5		%			2.9		%				2.8		%

(1) The Retail Segment includes commissions and fees reported in the “Other” column of the Segment Information in Note 10 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees, included in the Condensed Consolidated Statement of Income, to organic revenue for the nine months ended September 30, 2016, and 2015, is as follows:

	For the nine months   ended September 30,
(in thousands)	2016		2015
Commissions and fees	$	1,329,649	$	1,252,888
Less profit-sharing contingent commissions	46,586		45,596
Less guaranteed supplemental commissions	8,893		8,112
Core commissions and fees	1,274,170		1,199,180
Less acquisition revenues	47,475		—
Less divested business	—		5,854
Organic Revenue	$	1,226,695	$	1,193,326

29

The growth rates for organic revenue, a non-GAAP financial measure, for the nine months ended September 30, 2016, by segment, are as follows:

2016	Retail(1)					National Programs					Wholesale Brokerage					Services					Total
(in thousands, except percentages)	2016			2015		2016			2015		2016			2015		2016			2015		2016			2015
Commissions and Fees	$	694,402		$	653,992	$	332,872		$	319,377	$	184,673		$	168,374	$	117,702		$	111,145	$	1,329,649		$	1,252,888
Total Change	$	40,410				$	13,495				$	16,299				$	6,557				$	76,761
Total Growth %	6.2		%			4.2		%			9.7		%			5.9		%			6.1		%
Contingent Commissions	24,365			21,653		12,152			10,734		10,069			13,209		—			—		46,586			45,596
GSCs	7,488			6,699		24			15		1,381			1,398		—			—		8,893			8,112
Core Commissions and Fees	$	662,549		$	625,640	$	320,696		$	308,628	$	173,223		$	153,767	$	117,702		$	111,145	$	1,274,170		$	1,199,180
Acquisition Revenues	27,080			—		1,680			—		12,147			—		6,568			—		47,475			—
Divested Business	—			1,283		—			1,255		—			—		—			3,316		—			5,854
Organic Revenue(2)	$	635,469		$	624,357	$	319,016		$	307,373	$	161,076		$	153,767	$	111,134		$	107,829	$	1,226,695		$	1,193,326
Organic Revenue Growth(2)	$	11,112				$	11,643				$	7,309				$	3,305				$	33,369
Organic Revenue Growth %(2)	1.8		%			3.8		%			4.8		%			3.1		%			2.8		%

(1) The Retail Segment includes commissions and fees reported in the “Other” column of the Segment Information in Note 10 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

30

Retail Segment

The Retail Segment provides a broad range of insurance products and services to commercial, public and quasi-public, professional and individual insured customers. Approximately 88% of the Retail Segment’s commissions and fees revenue is commission based. Because most of our other operating expenses are not correlated to changes in commissions on insurance premiums, a significant portion of any fluctuation in the commissions we receive, net of related producer compensation, will result in a similar fluctuation in our income before income taxes, unless we make incremental investments or modifications to the costs in the organization.

Financial information relating to our Retail Segment for the three and nine months ended September 30, 2017 and 2016 is as follows:

	For the three months   ended September 30,								For the nine months   ended September 30,
(in thousands, except percentages)	2017			2016			% Change		2017			2016			% Change
REVENUES
Core commissions and fees	$	230,777		$	223,641		3.2	%	$	682,310		$	662,963		2.9	%
Profit-sharing contingent commissions	1,444			2,229			(35.2	)%	22,380			24,365			(8.1	)%
Guaranteed supplemental commissions	2,164			2,516			(14.0	)%	7,109			7,488			(5.1	)%
Investment income	3			5			(40.0	)%	6			33			(81.8	)%
Other income, net	95			254			(62.6	)%	934			544			71.7	%
Total revenues	234,483			228,645			2.6	%	712,739			695,393			2.5	%
EXPENSES
Employee compensation and benefits	128,228			123,175			4.1	%	385,291			369,109			4.4	%
Other operating expenses	35,593			35,953			(1.0	)%	110,645			111,377			(0.7	)%
Loss/(gain) on disposal	(1,898		)	(277		)	NMF		(2,144		)	(3,131		)	(31.5	)%
Amortization	10,540			10,861			(3.0	)%	31,704			32,743			(3.2	)%
Depreciation	1,262			1,508			(16.3	)%	3,975			4,761			(16.5	)%
Interest	7,216			9,026			(20.1	)%	23,918			29,415			(18.7	)%
Change in estimated acquisition earn-out payables	(1,408		)	3,505			(140.2	)%	7,567			6,623			14.3	%
Total expenses	179,533			183,751			(2.3	)%	560,956			550,897			1.8	%
Income before income taxes	$	54,950		$	44,894		22.4	%	$	151,783		$	144,496		5.0	%
Organic revenue growth rate (1)	2.5		%	2.8		%			2.5		%	1.8		%
Employee compensation and benefits relative to total revenues	54.7		%	53.9		%			54.1		%	53.1		%
Other operating expenses relative to total revenues	15.2		%	15.7		%			15.5		%	16.0		%
Capital expenditures	$	844		$	1,443				$	3,384		$	4,664
Total assets at September 30									$	4,246,422		$	3,652,977

(1) A non-GAAP financial measure.

NMF = Not a meaningful figure

The Retail Segment’s total revenue during the three months ended September 30, 2017increased2.6%, or $5.8 million, over the same period in 2016, to $234.5 million. The $7.1 millionincrease in core commissions and fees revenue was driven by: (i) $5.7 million related to net new and renewal business; (ii) approximately $2.7 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016; and (iii) an offsetting decrease of $1.3 million related to commissions and fees revenue from business divested in 2016 and 2017. Profit-sharing contingent commissions and GSCs for the third quarter of 2017decreased24.0%, or $1.1 million, from the same period in 2016, to $3.6 million. The Retail Segment’s growth rate for total commissions and fees was 2.6% and the organic revenue growth rate was 2.5% for the third quarter of 2017. The organic revenue growth rate was driven by increased new business and higher retention during the preceding twelve months.

31

Income before income taxes for the three months ended September 30, 2017increased22.4%, or $10.1 million, over the same period in 2016, to $55.0 million. The primary factors affecting this increase were: (i) the net increase in revenue as described above; (ii) a change in estimated acquisition earn-out payables; (iii) an increase in the benefit of gains on disposals associated with book sales within certain businesses and (iv) a decrease in intercompany interest charges of $1.8 million; partially offset by (v) total compensation which increased by $5.1 million or 4.1%, due primarily to salary inflation, additional teammates to support revenue growth and the incremental investment in the Retail Segment's performance incentive plan introduced in 2017 and (vi) an incremental investment in technology.

The Retail Segment’s total revenue during the nine months ended September 30, 2017increased2.5%, or $17.3 million, over the same period in 2016, to $712.7 million. The $19.3 millionincrease in core commissions and fees revenue was driven by: (i) $16.3 million related to net new and renewal business; (ii) approximately $5.1 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016; and (iii) an offsetting decrease of $2.1 million related to commissions and fees revenue from business divested in 2016 and 2017. Profit-sharing contingent commissions and GSCs for the first nine months of 2017decreased7.4%, or $2.4 million, from the same period in 2016, to $29.5 million. The Retail Segment’s growth rate for total commissions and fees was 2.5% and the organic revenue growth rate 2.5% for the first nine months of 2017. The organic revenue growth rate was driven by revenue from net new and renewal business written during the preceding twelve months, some exposure unit growth, and modest increases in commercial auto rates, which was partially offset by continued reductions in property insurance premium rates, particularly in catastrophe-prone areas.

Income before income taxes for the nine months ended September 30, 2017increased5.0%, or $7.3 million, over the same period in 2016, to $151.8 million. The primary factors affecting this increase were (i) the net increase in revenue as described above; (ii) a $1.0 million increase in the benefit of gains on disposals associated with book sales within certain businesses and (iii) a decrease in intercompany interest charges of $5.5 million; partially offset by (iv) total compensation, which increased by $16.2 million or 4.4%, due primarily to salary inflation and the incremental investment in the Retail Segment's performance incentive plan introduced in 2017; (v) an incremental investment in technology and (vi) a change in estimated acquisition earn-out payables that increased $1.0 million to $7.6 million.

32

National Programs Segment

The National Programs Segment manages over 50 programs supported by approximately 40 well-capitalized carrier partners. In most cases, the insurance carriers that support the programs have delegated underwriting and, in many instances, claims-handling authority to our programs operations. These programs are generally distributed through a nationwide network of independent agents and Brown & Brown retail agents, and offer targeted products and services designed for specific industries, trade groups, professions, public entities and market niches. The National Programs Segment operations can be grouped into five broad categories: Professional Programs, Arrowhead Insurance Programs, Commercial Programs, Public Entity-Related Programs and the National Flood Program. The National Programs Segment’s revenue is primarily commission based.

Financial information relating to our National Programs Segment for the three and nine months ended September 30, 2017 and 2016 is as follows:

	For the three months   ended September 30,								For the nine months   ended September 30,
(in thousands, except percentages)	2017			2016			% Change		2017			2016			% Change
REVENUES
Core commissions and fees	$	125,518		$	121,011		3.7	%	$	325,864		$	320,696		1.6	%
Profit-sharing contingent commissions	1,748			2,498			(30.0	)%	16,038			12,152			32.0	%
Guaranteed supplemental commissions	5			14			(64.3	)%	8			24			(66.7	)%
Investment income	124			96			29.2	%	279			583			(52.1	)%
Other income, net	323			13			NMF		387			67			NMF
Total revenues	127,718			123,632			3.3	%	342,576			333,522			2.7	%
EXPENSES
Employee compensation and benefits	50,764			47,796			6.2	%	148,592			141,204			5.2	%
Other operating expenses	28,058			23,756			18.1	%	72,147			62,009			16.3	%
Loss/(gain) on disposal	(4		)	—			—	%	96			—			—	%
Amortization	6,913			6,921			(0.1	)%	20,664			21,011			(1.7	)%
Depreciation	1,412			1,945			(27.4	)%	4,975			5,881			(15.4	)%
Interest	8,304			10,844			(23.4	)%	27,257			34,895			(21.9	)%
Change in estimated acquisition earn-out payables	68			51			33.3	%	718			155			NMF
Total expenses	95,515			91,313			4.6	%	274,449			265,155			3.5	%
Income before income taxes	$	32,203		$	32,319		(0.4	)%	$	68,127		$	68,367		(0.4	)%
Organic revenue growth rate (1)	2.9		%	7.0		%			1.3		%	3.8		%
Employee compensation and benefits relative to total revenues	39.7		%	38.7		%			43.4		%	42.3		%
Other operating expenses relative to total revenues	22.0		%	19.2		%			21.1		%	18.6		%
Capital expenditures	$	1,357		$	2,153				$	3,885		$	5,399
Total assets at September 30									$	5,026,918		$	2,933,568

(1) A non-GAAP financial measure.

NMF = Not a meaningful figure

The National Programs Segment’s revenue for the three months ended September 30, 2017increased3.3%, or $4.1 million, from the same period in 2016, to $127.7 million. The $4.5 million net increase in core commissions and fees revenue was driven by: (i) $3.5 million related to net new and renewal business; (ii) approximately $1.0 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016. Profit-sharing contingent commissions and GSCs were $1.8 million for the third quarter of 2017, which was a decrease of $0.8 million from the third quarter of 2016 reflecting the actual loss experience from our carrier partners.

33

The National Programs Segment’s growth rate for total commissions and fees was 3.0% and the organic revenue growth rate was 2.9% for the three months ended September 30, 2017. The organic revenue growth rate was mainly due to strong growth in our lender placed coverage, core commercial and residential earthquake programs, as well as our all-risk program that continues to build momentum. The growth from these and other programs was materially offset by continued downward rate pressure for our coastal property programs and the impact related to a change in carrier risk appetite.

Income before income taxes for the three months ended September 30, 2017decreased0.4%, or $0.1 million, from the same period in 2016, to $32.2 million. The decrease was driven by the investment in our new core commercial program that began operating in July 2017 offset by a $2.5 million decrease in the intercompany interest expense charge for acquisitions.

The National Programs Segment's revenue for the nine months ended September 30, 2017increased2.7%, or $9.1 million, from the same period in 2016, to $342.6 million. The $5.2 millionincrease in core commissions and fees revenue was driven by: (i) $4.3 million related to net new and renewal business, (ii) approximately $1.2 million related to core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016, and (iii) a decrease of $0.3 million related to commissions and fees revenue from business divested in 2016 and 2017. Profit-sharing contingent commissions and GSCs were $16.0 million for the first nine months of 2017, which was an increase of $3.9 million from the same period in 2016 primarily driven by receipt of a new contingent commission we did not receive in the prior year.

The National Programs Segment’s growth rate for total commissions and fees was 2.7% and the organic revenue growth rate was 1.3% for the nine months ended September 30, 2017. This organic revenue growth rate was mainly due to strong growth in our lender placed coverage, core commercial and residential earthquake programs, as well as our all-risk program that continue to build momentum. The growth from these and other programs was substantially offset by continued downward rate pressure for our coastal property programs and the impact related to carrier risk appetite at certain programs.

Income before income taxes for the nine months ended September 30, 2017decreased0.4%, or $0.2 million, from the same period in 2016, to $68.1 million. The decrease was driven by the investment in our core commercial program, $5.8 million in prior year credits related to premium taxes and a $7.4 million increase in employee compensation and benefits. This decrease was partially offset by a $7.6 million decrease in the intercompany interest expense charge for acquisitions along with additional profit associated with the overall growth in revenue.

34

Wholesale Brokerage Segment

The Wholesale Brokerage Segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, including Brown & Brown retail agents. Like the Retail and National Programs Segments, the Wholesale Brokerage Segment’s revenues are primarily commission based.

Financial information relating to our Wholesale Brokerage Segment for the three and nine months ended September 30, 2017 and 2016 is as follows:

	For the three months   ended September 30,								For the nine months   ended September 30,
(in thousands, except percentages)	2017			2016			% Change		2017			2016			% Change
REVENUES
Core commissions and fees	$	70,831		$	66,201		7.0	%	$	200,261		$	173,223		15.6	%
Profit-sharing contingent commissions	350			3,520			(90.1	)%	6,991			10,069			(30.6	)%
Guaranteed supplemental commissions	324			411			(21.2	)%	1,032			1,381			(25.3	)%
Investment income	—			—			—	%	—			4			(100.0	)%
Other income, net	69			60			15.0	%	528			216			144.4	%
Total revenues	71,574			70,192			2.0	%	208,812			184,893			12.9	%
EXPENSES
Employee compensation and benefits	34,678			33,187			4.5	%	104,098			90,099			15.5	%
Other operating expenses	10,814			11,175			(3.2	)%	33,259			31,141			6.8	%
Loss/(gain) on disposal	—			—			—	%	—			—			—	%
Amortization	2,845			2,882			(1.3	)%	8,621			7,915			8.9	%
Depreciation	471			503			(6.4	)%	1,438			1,487			(3.3	)%
Interest	1,515			1,540			(1.6	)%	4,803			2,472			94.3	%
Change in estimated acquisition earn-out payables	32			43			(25.6	)%	24			68			(64.7	)%
Total expenses	50,355			49,330			2.1	%	152,243			133,182			14.3	%
Income before income taxes	$	21,219		$	20,862		1.7	%	$	56,569		$	51,711		9.4	%
Organic revenue growth rate (1)	6.1		%	6.7		%			6.5		%	4.8		%
Employee compensation and benefits relative to total revenues	48.5		%	47.3		%			49.9		%	48.7		%
Other operating expenses relative to total revenues	15.1		%	15.9		%			15.9		%	16.8		%
Capital expenditures	$	214		$	11				$	1,606		$	925
Total assets at September 30									$	1,258,783		$	1,053,516

(1) A non-GAAP financial measure.

NMF = Not a meaningful figure

The Wholesale Brokerage Segment’s total revenues for the three months ended September 30, 2017increased2.0%, or $1.4 million, from the same period in 2016, to $71.6 million. The $4.6 million net increase in core commissions and fees revenue was driven primarily by: (i) $0.5 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016; and (ii) $4.1 million related to net new and renewal business. Profit-sharing contingent commissions and GSCs for the third quarter of 2017decreased$3.3 million compared to the third quarter of 2016, to $0.7 million as a result of decreased carrier profitability. The Wholesale Brokerage Segment’s growth rate for total commissions and fees was 2.0% and the organic revenue growth rate was 6.1% for the third quarter of 2017. The organic revenue growth rate was driven by net new and renewal business and modest increases in exposure units.

Income before income taxes for the three months ended September 30, 2017increased1.7%, or $0.4 million, over the same period in 2016, to $21.2 million, primarily due to: (i) the net increase in revenue as described above, offset partially by (ii) an increase in employee compensation and benefits of $1.5 million, of which $0.4 million was related to acquisitions that had no comparable compensation and benefits in the same period of 2016, with the remainder related to additional teammates to support increased transaction volumes.

35

The Wholesale Brokerage Segment’s total revenues for the nine months ended September 30, 2017increased12.9%, or $23.9 million, from the same period in 2016, to $208.8 million. The $27.0 million net increase in core commissions and fees revenue was driven primarily by: (i) $15.8 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016; and (ii) $11.2 million related to net new and renewal business. Profit-sharing contingent commissions and GSCs for the first nine months of 2017decreased$3.4 million compared to the same period of 2016, to $8.0 million. This decrease in contingent commissions was driven by an increase in loss ratios with certain carriers, and offset partially by contingent commissions received from acquisitions that had no comparable contingent revenue during the same period of 2016. The Wholesale Brokerage Segment’s growth rate for total commissions and fees was 12.8% and the organic revenue growth rate was 6.5% for the first nine months of 2017, and was driven by net new and renewal business and modest increases in exposure units, partially offset by a continued significant contraction in insurance premium rates for catastrophe-prone properties.

Income before income taxes for the nine months ended September 30, 2017increased9.4%, or $4.9 million, over the same period in 2016, to $56.6 million, primarily due to: (i) the net increase in revenue as described above, offset by; (ii) an increase in employee compensation and benefits of $14.0 million, of which $9.5 million was related to acquisitions that had no comparable compensation and benefits in the same period of 2016 with the remainder related to additional teammates to support increased transaction volumes; (iii) a $2.1 million increase in other operating expenses, of which $2.8 million was related to acquisitions that had no comparable expenses in the same period of 2016, while existing other operating expenses decreased $0.7 million; and (iv) an increase of $2.3 million in intercompany interest expense related to acquisitions completed in the previous twelve months.

36

Services Segment

The Services Segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas. The Services Segment also provides Medicare Set-aside account services, Social Security disability and Medicare benefits advocacy services, and claims adjusting services.

Unlike the other segments, nearly all of the Services Segment’s revenue is generated from fees, which are not significantly affected by fluctuations in general insurance premiums.

Financial information relating to our Services Segment for the three and nine months ended September 30, 2017 and 2016 is as follows:

	For the three months   ended September 30,								For the nine months   ended September 30,
(in thousands, except percentages)	2017			2016			% Change		2017			2016			% Change
REVENUES
Core commissions and fees	$	41,419		$	39,529		4.8	%	$	122,173		$	117,702		3.8	%
Profit-sharing contingent commissions	—			—			—	%	—			—			—	%
Guaranteed supplemental commissions	—			—			—	%	—			—			—	%
Investment income	72			57			26.3	%	224			204			9.8	%
Other income, net	—			—			—	%	—			—			—	%
Total revenues	41,491			39,586			4.8	%	122,397			117,906			3.8	%
EXPENSES
Employee compensation and benefits	19,993			20,151			(0.8	)%	59,606			58,658			1.6	%
Other operating expenses	11,173			10,583			5.6	%	32,870			32,722			0.5	%
Loss/(gain) on disposal	—			—			—	%	55			—			—	%
Amortization	1,137			1,140			(0.3	)%	3,412			3,345			2.0	%
Depreciation	402			473			(15.0	)%	1,191			1,432			(16.8	)%
Interest	876			1,257			(30.3	)%	2,783			3,820			(27.1	)%
Change in estimated acquisition earn-out payables	—			11			(100.0	)%	—			—			—	%
Total expenses	33,581			33,615			(0.1	)%	99,917			99,977			(0.1	)%
Income before income taxes	$	7,910		$	5,971		32.5	%	$	22,480		$	17,929		25.4	%
Organic revenue growth rate (1)	4.8		%	1.6		%			2.9		%	3.1		%
Employee compensation and benefits relative to total revenues	48.2		%	50.9		%			48.7		%	49.7		%
Other operating expenses relative to total revenues	26.9		%	26.7		%			26.9		%	27.8		%
Capital expenditures	$	364		$	80				$	856		$	561
Total assets at September 30									$	432,331		$	342,360

(1) A non-GAAP financial measure.

The Services Segment’s total revenues for the three months ended September 30, 2017increased4.8%, or $1.9 million, over the same period in 2016, to $41.5 million. The $1.9 millionincrease in core commissions and fees revenue was related to net new business. The Services Segment’s growth rate for total commissions and fees was 4.8% and the organic revenue growth rate was 4.8% for the third quarter of 2017. The organic revenue growth rate was primarily due to new business and increased premiums for workers’ compensation and managed-care claims.

Income before income taxes for the three months ended September 30, 2017increased32.5%, or $1.9 million, over the same period in 2016, to $7.9 million due to a combination of organic revenue growth from higher margin businesses and continued expense management.

The Services Segment’s total revenues for the nine months ended September 30, 2017increased3.8%, or $4.5 million, over the same period in 2016, to $122.4 million. The $4.5 millionincrease in core commissions and fees revenue was driven by: (i) $3.4 million related to net new and renewal business; (ii) approximately $0.9 million related to core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2016; and (iii) $0.2 million related to commissions and fees revenue from net transferred/divested business in 2016 and 2017. The Services Segment’s growth rate for total commissions and fees was 3.8% and the organic revenue growth rate was 2.9% for the first nine months of 2017. This organic revenue growth rate was driven primarily from growth in our Social Security disability advocacy businesses, as well as new business and increased premiums for workers’ compensation and managed-care claims.

37

Income before income taxes for the nine months ended September 30, 2017increased25.4%, or $4.6 million, over the same period in 2016, to $22.5 million due to a combination of organic revenue growth from higher margin businesses and continued expense management.

Other

As discussed in Note 10 of the Notes to Condensed Consolidated Financial Statements, the “Other” column in the Segment Information table includes any income and expenses not allocated to reportable segments, and corporate-related items, including the inter-company interest expense charges to reporting segments.

LIQUIDITY AND CAPITAL RESOURCES

Our capital requirements to operate as an insurance intermediary are low and we have been able to grow and invest in our business principally through cash that has been generated from operations. If necessary, we also have available our revolving credit facility, which provides up to $800.0 million in available cash, and we believe that we have access to additional funds, if needed, through the capital markets to obtain further debt financing under the current market conditions. The Company believes that its existing cash, cash equivalents, short-term investment portfolio and funds generated from operations, together with the funds available under the Amended and Restated Credit Agreement (as defined below), will be sufficient to satisfy our normal liquidity needs, including principal payments on our long-term debt, for at least the next twelve months.

Contractual Cash Obligations

As of September 30, 2017, our contractual cash obligations were as follows:

	Payments Due by Period
(in thousands)	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-term debt	$	990,000	$	120,000	$	65,000	$	305,000	$	500,000
Other liabilities(1)	47,137		2,828		6,732		2,030		35,547
Operating leases	200,261		42,352		71,297		47,872		38,740
Interest obligations	191,673		35,255		60,255		55,038		41,125
Unrecognized tax benefits	1,293		—		1,293		—		—
Maximum future acquisition contingency payments(2)	81,505		49,879		31,626		—		—
Total contractual cash obligations	$	1,511,869	$	250,314	$	236,203	$	409,940	$	615,412

(1) Includes the current portion of other long-term liabilities.

(2) Includes $34.2 million of current and non-current estimated earn-out payables.

Debt

Total debt at September 30, 2017 was $980.7 million net of unamortized discount and debt issuance costs, which was a decrease of $93.1 million compared to December 31, 2016. The decrease includes the repayment of $91.7 million in principal including the repayment of the $0.5 million in a short-term note payable related to the 2016 acquisition of Social Security Advocates for the Disabled, LLC, net of the amortization of discounted debt related to our 4.200% Notes due 2024 and debt issuance cost amortization of $1.4 million. The Company also added $2.8 million in debt issuance costs related to the Amended and Restated Credit Agreement (as defined below) that was executed in June 2017.

On June 28, 2017, the Company entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”) with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents. The Amended and Restated Credit Agreement amended and restated the credit agreement dated April 17, 2014, among such parties (the “Original Credit Agreement”). The Amended and Restated Credit Agreement extends the applicable maturity date of the existing revolving credit facility (the “Facility”) of $800.0 million to June 28, 2022 and re-evidences unsecured term loans at $400.0 million while also extending the applicable maturity date to June 28, 2022. The term loan principal amortization schedule was reset with payments due quarterly. At the time of the execution of the Amended and Restated Credit Agreement, $67.5 million of principal from the original unsecured term loans was repaid using operating cash balances, and the Company added an additional $2.8 million in debt issuance costs related to the facility to the Consolidated Balance Sheet. The Company also expensed to the Consolidated Statements of Income $0.2 million of debt issuance costs related to the Original Credit Agreement due to certain lenders exiting prior to the modified agreement, while also carrying forward $1.6 million on the Consolidated Balance Sheet the unamortized portion of the Original Credit Agreement debt issuance costs which will amortize over the term of the Amended and Restated Credit Agreement. On September 30, 2017, a scheduled principal payment of $5.0 million was satisfied per the terms of the Amended and Restated Credit Agreement. As of September 30, 2017, there was an outstanding debt balance issued under the terms of the Amended and Restated Credit Agreement of $390.0 million with no borrowings outstanding against the

38

revolving loan. Per the terms of the Amended and Restated Credit Agreement, a scheduled principal payment of $5.0 million is due December 31, 2017.

Off-Balance Sheet Arrangements

Neither we nor our subsidiaries have ever incurred off-balance sheet obligations through the use of, or investment in, off-balance sheet derivative financial instruments or structured finance or special purpose entities organized as corporations, partnerships or limited liability companies or trusts.

For further discussion of our cash management and risk management policies, see “Quantitative and Qualitative Disclosures About Market Risk.”

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates, foreign exchange rates and equity prices. We are exposed to market risk through our investments, revolving credit line, term loan agreements and international operations.

Our invested assets are held primarily as cash and cash equivalents, restricted cash, available-for-sale marketable debt securities, non-marketable debt securities, certificates of deposit, U.S. treasury securities, and professionally managed short duration fixed income funds. These investments are subject to interest rate risk. The fair values of our invested assets at September 30, 2017 and December 31, 2016, approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.

We do not actively invest or trade in equity securities. In addition, we generally dispose of any significant equity securities received in conjunction with an acquisition shortly after the acquisition date.

As of September 30, 2017, we had $390.0 million of borrowings outstanding under our term loan which bears interest on a floating basis tied to the London Interbank Offered Rate (LIBOR) and therefore subject to changes in the associated interest expense. The effect of an immediate hypothetical 10% change in interest rates would not have a material effect on our Consolidated Financial Statements.

We are subject to exchange rate risk primarily in our U.K-based wholesale brokerage business that has a cost base principally denominated in British pounds and a revenue base in several other currencies, but principally in U.S. dollars. Based upon our foreign currency rate exposure as of September 30, 2017, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Consolidated Financial Statements.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation (the “Evaluation”) required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15 and 15d-15 under the Exchange Act (“Disclosure Controls”) as of September 30, 2017. Based upon the Evaluation, our CEO and CFO concluded that the design and operation of our Disclosure Controls were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) accumulated and communicated to our senior management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

Changes in Internal Controls

There has not been any change in our internal control over financial reporting identified in connection with the Evaluation that occurred during the quarter ended September 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Control Over Financial Reporting

Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

39

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

CEO and CFO Certifications

Exhibits 31.1 and 31.2 are the Certifications of the CEO and the CFO, respectively. The Certifications are supplied in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This Item 4 of Part I of this Quarterly Report on Form 10-Q contains the information concerning the evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

PART II

ITEM 1. Legal Proceedings

In Item 3 of Part I of the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2016, certain information concerning litigation claims arising in the ordinary course of business was disclosed. Such information was current as of the date of filing. During the Company’s fiscal quarter ended September 30, 2017, no new legal proceedings, or material developments with respect to existing legal proceedings, occurred which require disclosure in this Quarterly Report on Form 10-Q.

ITEM 1A. Risk Factors

There were no material changes in the risk factors previously disclosed in Item 1A, “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about our repurchase of shares of our common stock during the three months ended September 30, 2017:

	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Value that May Yet be Purchased Under the Plans or Programs(2)
July 1, 2017 to July 31, 2017	93,810	$	42.96	86,845	$	352,453,029
August 1, 2017 to August 31, 2017	983,002	43.92		967,888	302,453,029
September 1, 2017 to September 30, 2017	44,210	46.27		—	302,453,029
Total	1,121,022	$	43.93	1,054,733	$	302,453,029

(1) We purchased 1,121,022 shares during the quarter ended September 30, 2017 of which 1,054,733 shares were purchased as part of publicly announced plans as authorized by our Board of Director and 66,289 shares were acquired from our teammates in the net exercise of stock options under our equity compensation plans or to cover required tax withholdings on the vesting of shares in our equity compensation plans.

(2) On July 21, 2014, our Board of Directors approved the repurchase of up to $200.0 million of the Company’s outstanding common stock. On July 20, 2015, the Company’s Board of Directors authorized the repurchase of up to an additional $400.0 million of the Company's outstanding common stock. Between May 17, 2017 and July 19, 2017, the Company made share repurchases in the open market in total of 348,460 shares at a total cost of $14.9 million. On August 14, 2017, the Company entered into an accelerated share repurchase agreement with an investment bank to purchase an aggregate $50 million of the Company’s common stock. The Company received an initial delivery of 967,888 shares of the Company’s common stock with a fair market value of approximately $42.5 million. On October 16, 2017, this agreement was completed by the investment bank with the delivery of 108,288 shares of the Company's common stock. After completing these share repurchases, the Company’s outstanding Board-approved share repurchase authorization is $302.4 million. As of September 30, 2017, a total of 9,319,545 shares have been repurchased since the first quarter of 2014.

40

ITEM 6. Exhibits

The following exhibits are filed as a part of this Report:

3.1	Articles of Amendment to Articles of Incorporation (adopted April 24, 2003) (incorporated by reference to Exhibit 3a to Form 10-Q for the quarter ended March 31, 2003 (Commission file number 001-13619)), and Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3a to Form 10-Q for the quarter ended March 31, 1999 (Commission file number 001-13619)).
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on October 12, 2016).
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer of the Registrant.
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer of the Registrant.
32.1	Section 1350 Certification by the Chief Executive Officer of the Registrant.
32.2	Section 1350 Certification by the Chief Financial Officer of the Registrant.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

41

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BROWN & BROWN, INC.
	/s/ R. Andrew Watts
Date: November 3, 2017	R. Andrew Watts
	Executive Vice President, Chief Financial Officer and Treasurer
	(duly authorized officer, principal financial officer and principal accounting officer)

42

EX-31.1

Exhibit 31.1

Certification by the Chief Executive Officer

Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

I, J. Powell Brown, certify that:

1. I have reviewed this Quarterly Report of Brown & Brown, Inc. (the “Registrant”) on Form 10-Q for the quarter ended September 30, 2017;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 3, 2017

/s/ J. Powell Brown

J. Powell Brown

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification by the Chief Financial Officer

Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

I, R. Andrew Watts, certify that:

1. I have reviewed this Quarterly Report of Brown & Brown, Inc. (the “Registrant”) on Form 10-Q for the quarter ended September 30, 2017;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 3, 2017

/s/ R. Andrew Watts

R. Andrew Watts

Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 1350 of Title 18 of the United States Code, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Brown & Brown, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, J. Powell Brown, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or § 78o(d)); and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 3, 2017

/s/ J. Powell Brown

J. Powell Brown

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 1350 of Title 18 of the United States Code, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Brown & Brown, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, R. Andrew Watts, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or § 78o(d)); and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 3, 2017

/s/ R. Andrew Watts

R. Andrew Watts

Executive Vice President, Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	BRO
Entity Registrant Name	BROWN & BROWN INC
Entity Central Index Key	0000079282
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		139,403,675

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
REVENUES
Commissions and fees	$ 474,609	$ 461,652	$ 1,383,899	$ 1,329,649
Investment income	491	230	1,085	1,150
Other income, net	546	392	22,047	2,166
Total revenues	475,646	462,274	1,407,031	1,332,965
EXPENSES
Employee compensation and benefits	246,062	237,653	736,445	692,814
Other operating expenses	72,058	67,433	210,289	197,329
Loss/(gain) on disposal	(1,902)	(277)	(1,993)	(3,131)
Amortization	21,435	21,805	64,402	65,025
Depreciation	5,489	5,195	17,242	15,867
Interest	9,393	9,883	28,949	29,617
Change in estimated acquisition earn-out payables	(1,308)	3,610	8,309	6,846
Total expenses	351,227	345,302	1,063,643	1,004,367
Income before income taxes	124,419	116,972	343,388	328,598
Income taxes	48,506	45,427	131,263	128,733
Net income	$ 75,913	$ 71,545	$ 212,125	$ 199,865
Net income per share:
Basic (in dollars per share)	$ 0.54	$ 0.51	$ 1.52	$ 1.43
Diluted (in dollars per share)	0.53	0.50	1.49	1.41
Dividends declared per share (in dollars per share)	$ 0.1350	$ 0.1225	$ 0.405	$ 0.3675

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 546,520	$ 515,646
Restricted cash and investments	276,687	265,637
Short-term investments	29,156	15,048
Premiums, commissions and fees receivable	525,943	502,482
Reinsurance recoverable	2,160,286	78,083
Prepaid reinsurance premiums	332,246	308,661
Other current assets	45,545	50,571
Total current assets	3,916,383	1,736,128
Fixed assets, net	71,296	75,807
Goodwill	2,701,488	2,675,402
Amortizable intangible assets, net	656,054	707,454
Investments	14,085	23,048
Other assets	54,971	44,895
Total assets	7,414,277	5,262,734
Current Liabilities:
Premiums payable to insurance companies	653,289	647,564
Losses and loss adjustment reserve	2,160,286	78,083
Unearned premiums	332,246	308,661
Premium deposits and credits due customers	97,917	83,765
Accounts payable	63,623	69,595
Accrued expenses and other liabilities	204,153	201,989
Current portion of long-term debt	120,000	55,500
Total current liabilities	3,631,514	1,445,157
Long-term debt less unamortized discount and debt issuance costs	860,741	1,018,372
Deferred income taxes, net	382,228	357,686
Other liabilities	56,147	81,308
Shareholders’ Equity:
Common stock, par value $0.10 per share; authorized 280,000 shares; issued 148,838 shares and outstanding 139,518 shares at 2017, issued 148,107 shares and outstanding 140,104 shares at 2016	14,884	14,811
Additional paid-in capital	493,821	468,443
Treasury stock, at cost at 9,319 shares at 2017 and 8,003 shares at 2016, respectively	(315,072)	(257,683)
Retained earnings	2,290,014	2,134,640
Total shareholders’ equity	2,483,647	2,360,211
Total liabilities and shareholders’ equity	$ 7,414,277	$ 5,262,734

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	280,000,000	280,000,000
Common stock, shares issued (in shares)	148,837,537	148,107,038
Common stock, shares outstanding (in shares)	139,517,992	140,103,841
Treasury stock shares (in shares)	9,319,545	8,003,197

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Cash and Cash Equivalents [Line Items]
Document Period End Date			Sep. 30, 2017
Cash, Cash Equivalents and Restricted Cash			$ 823,207	$ 766,962	$ 781,283	$ 673,173
Cash flows from operating activities:
Net income	$ 75,913	$ 71,545	212,125	199,865
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization	21,435	21,805	64,402	65,025
Depreciation	5,489	5,195	17,242	15,867
Non-cash stock-based compensation			22,362	11,593
Change in estimated acquisition earn-out payables	(1,308)	3,610	8,309	6,846
Deferred income taxes			23,941	20,081
Amortization of debt discount			119	118
Deferred Finance Costs, Own-share Lending Arrangement, Issuance Costs, Amortization Expense			1,309	1,207
Accretion (Amortization) of Discounts and Premiums, Investments			20	36
Income tax benefit from exercise of shares from the stock benefit plans			0	(7,213)
Payments On Acquisition Earn Outs In Excess Of Original Estimated Payables			(13,800)	(3,683)
Net loss/(gain) on sales of investments, fixed assets and customer accounts			(1,739)	(2,860)
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures:
Premiums, commissions and fees receivable decrease (increase)			(23,350)	(31,324)
Reinsurance recoverables decrease (increase)			(2,082,203)	(300,036)
Prepaid reinsurance premiums decrease			(23,585)	(24,324)
Other assets (increase)			(5,314)	1,231
Premiums payable to insurance companies decrease			5,585	39,787
Premium deposits and credits due customers increase			14,030	27,914
Losses and loss adjustment reserve (decrease) increase			2,082,203	300,036
Unearned premiums (decrease)			23,585	24,324
Accounts payable increase			22,113	13,858
Accrued expenses and other liabilities (decrease)			1,018	(22,119)
Other liabilities (decrease)			(34,802)	(17,094)
Net cash provided by operating activities			313,570	319,135
Cash flows from investing activities:
Additions to fixed assets	(4,049)	(4,191)	(12,897)	(13,135)
Payments for businesses acquired, net of cash acquired			(26,478)	(113,219)
Proceeds from sales of fixed assets and customer accounts			4,085	3,411
Purchases of investments			(10,393)	(24,332)
Proceeds from Sale, Maturity and Collection of Investments			5,178	16,716
Net cash used in investing activities			(40,505)	(130,559)
Cash flows from financing activities:
Payments on acquisition earn-outs			(25,488)	(23,872)
Payments on long-term debt			(91,750)	(34,375)
Income tax benefit from exercise of shares from the stock benefit plans			0	7,213
Issuances of common stock for employee stock benefit plans			17,387	15,959
Repurchase Of Stock Benefit Plan Shares For Employees To Fund Tax Withholdings			(6,791)	(8,395)
Purchase of treasury stock			(57,389)	(11,250)
Settlement of accelerated share repurchase program			(7,500)	11,250
Cash dividends paid			(56,801)	(51,317)
Net cash used in financing activities			(231,141)	(94,787)
Payments of Debt Issuance Costs			(2,809)
Net increase in cash and cash equivalents inclusive of restricted cash			41,924	93,789
Cash and cash equivalents inclusive of restricted cash at end of period	$ 546,520	$ 488,683	$ 546,520	$ 488,683	$ 515,646	$ 443,420

XML

Nature of Operations

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

Brown & Brown, Inc., a Florida corporation, and its subsidiaries (collectively, “Brown & Brown” or the “Company”) is a diversified insurance agency, wholesale brokerage, insurance programs and services organization that markets and sells to its customers, insurance products and services, primarily in the property, casualty and employee benefits areas. Brown & Brown’s business is divided into four reportable segments: the Retail Segment provides a broad range of insurance products and services to commercial, public and quasi-public entities, professional and individual customers; the National Programs Segment, acting as a managing general agent (“MGA”), provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, including Brown & Brown retail agents; the Wholesale Brokerage Segment markets and sells excess and surplus commercial insurance, primarily through independent agents and brokers, as well as Brown & Brown Retail offices; and the Services Segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services, and claims adjusting services.

XML

Basis of Financial Reporting

9 Months Ended

Sep. 30, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Basis of Financial Reporting

Basis of Financial Reporting

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Recently Issued Accounting Pronouncements

In November 2016, the Financial Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-18, “Statement of Cash Flows (Topic 230)”: Restricted Cash (“ASU 2016-18”), which requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as restricted cash. ASU 2016-18 is effective for periods beginning after December 15, 2017. However, the Company elected to early adopt for the reporting period ended March 31, 2017 under the full retrospective approach for all periods presented. With the adoption of ASU 2016-18, the change in restricted cash is no longer reflected as a change in operating assets and liabilities, and the Statement of Cash Flows details the changes in the balance of cash and cash equivalents inclusive of restricted cash. Net cash provided by operating activities for the nine months ended September 30, 2016 were previously reported as $270.6 million. With the retrospective adoption, the net cash provided by operating activities for the nine months ended September 30, 2016 is now reported as $319.1 million. The Company reflects cash collected from customers that is payable to insurance companies as restricted cash if segregation of this cash is required by the state of domicile for the office conducting this transaction or if required by contract with the relevant insurance company providing coverage. Cash collected from customers that is payable to insurance companies is reported in cash and cash equivalents if no such restriction is required.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230)”: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (“ASU 2016-15”), which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified and applies to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. ASU 2016-15 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 and early adoption is permitted. The Company has evaluated the impact of ASU 2016-15 and has determined there is no impact on the Company's Statement of Cash Flows. The Company already presents cash paid on contingent consideration in business combination as prescribed by ASU 2016-15 and does not, at this time, engage in the other activities being addressed.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share Based Payment Accounting” (“ASU 2016-09”), which amends guidance issued in Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company adopted the guidance on January 1, 2017, as required. Prior periods have not been adjusted, as the guidance was adopted prospectively. The principal impact is that the tax benefit or expense from stock compensation is now presented in the income tax line of the Statement of Income, whereas the prior treatment was to present this amount as a component of equity on the Balance Sheet. Also the tax benefit or expense is now presented as activity in Cash Flow from Operating Activity, rather than the prior presentation as Cash Flow from Financing Activity in the Statement of Cash Flows. The Company also continues to estimate forfeitures of stock grants as allowed by ASU 2016-09.

In March 2016, the FASB issued ASU 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net)” (“ASU 2016-08”) to clarify certain aspects of the principal-versus-agent guidance included in the new revenue standard ASU 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”). The FASB issued the ASU in response to concerns identified by stakeholders, including those related to (1) determining the appropriate unit of account under the revenue standard’s principal-versus-agent guidance and (2) applying the indicators of whether an entity is a principal or an agent in accordance with the revenue standard’s control principle. ASU 2016-08 is effective contemporaneous with ASU 2014-09 beginning January 1, 2018. The impact of ASU 2016-08 is currently being evaluated along with ASU 2014-09. At this point in our evaluation the potential impact would primarily be limited to the claims administering activities within our Services Segment and therefore not material to the Company.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. Under ASU 2016-02, the Company will be required to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company continues to evaluate the impact of this pronouncement with the principal impact being that the present value of the remaining lease payments be presented as a liability on the Balance Sheet as well as an asset of similar value representing the “Right of Use” for those leased properties. As detailed in Note 13 of the 2016 10-K, the undiscounted contractual cash payments remaining on leased properties was $213.2 million as of December 31, 2016 and is $200.3 million as of September 30, 2017 as detailed in the Liquidity and Capital Resources section of this Quarterly Report on Form 10-Q.

In November 2015, FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as a single non-current item on the balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted as of the beginning of any interim or annual reporting period. The Company adopted the guidance on January 1, 2017, as required. As a result, the Company retrospectively applied the guidance to the 2016 balance sheet by reclassifying $24.6 million from deferred income taxes (asset) to deferred income taxes, net (liability) on the Condensed Consolidated Balance Sheet.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”), which provides guidance for revenue recognition. Topic 606 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets.  It supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. The standard’s core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. Specifically, in situations where multiple performance obligations exist within a contract, the use of estimates is required to allocate the transaction price to each separate performance obligation.

Historically, approximately 70% of the Company’s commissions and fees revenue is in the form of commissions paid by insurance carriers. These commissions are earned upon the effective date of bound coverage as no significant performance obligation remains after coverage is bound.

Approximately 20% of the Company's commissions and fees revenue is in the form of fees, which are predominantly in our National Programs and Services Segments, and to a lesser extent in the large accounts business within our Retail Segment. At the conclusion of our evaluation, it may be determined that fee revenue from certain agreements will be recognized in earlier or later periods under the new guidance as compared to our current accounting. Based upon the work completed to date, the Company does not expect the overall impact of these potential changes to be significant on a full-year basis, but they may impact the timing of recognizing revenue among quarters. 

The Company is continuing to evaluate approximately 10% of the Company's commissions and fees revenues and anticipates completion of this evaluation by December 31, 2017. 

Additionally, the Company is continuing to evaluate the requirement under ASC Topic 340 - Other Assets and Deferred Cost ("ASC 340") to capitalize costs to obtain, and costs to fulfill, customer contracts, and recognize these costs over the associated life of the contract as the performance obligations are fulfilled.  This evaluation includes assessing the costs that would qualify for capitalization as well as the timing to recognize these costs in future periods in accordance with ASC 340.  Presently all costs to obtain, and costs to fulfill, customer contracts are expensed by the Company as incurred.

The primary areas the Company has identified thus far that will be impacted by the adoption of the new revenue recognition standards are summarized below.

Contingent commissions - Under current accounting standards, revenue that is not fixed and determinable because a contingency exists is not recognized until the contingency is resolved.  Under Topic 606 the Company must use judgment to estimate the amount of consideration that will be received such that a significant reversal of revenue is not probable.  Contingent commissions represent a form of variable consideration associated with the same performance obligation, which is in the form of placement of coverage, for which we earn core commissions.  In connection with the new standard, contingent commissions will be estimated with an appropriate constraint applied and accrued relative to the core commissions as they are recognized.  The resulting effect on the timing of recognition of contingent commissions will more closely follow a similar pattern as our core commissions with true-ups recognized when payments are received or as additional information that affects the estimate becomes available.  As disclosed in Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, contingent commissions have averaged approximately 3.6% of the previous year’s total commissions and fees revenue over the last three years and have primarily been received in the first and second quarters of the year.

Cost deferrals - ASC 340 requires an entity to defer the incremental costs to obtain a customer contract and recognize these costs over the anticipated life of the customer relationship, inclusive of anticipated renewals.  This requirement will primarily affect the Company as it relates to certain commission-based compensation plans in the Retail Segment whereby the Company pays an incremental amount of compensation on new business in the first year.  As has been disclosed in Note 4 to the Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, the weighted average life of purchased customer accounts is 15 years.

ASC 340 also requires a company to defer costs to fulfill a contract and recognize these costs as the associated performance obligations are fulfilled. In order for contract fulfillment costs to be deferred under ASC 340, the costs must (1) relate directly to a specific contract or anticipated contract, (2) generate or enhance resources that the Company will use in satisfying its obligations under the contract, and (3) be expected to be recovered through sufficient net cashflows from the contract.  We are evaluating and believe the impact of ASC 340 related to contract fulfillment costs will primarily affect businesses that recognize revenue based upon on fees. Based upon the work completed to date, the Company does not expect the overall impact of the potential change to be significant on a full-year basis, but may impact the timing of recognizing expense among quarters.

Installment billing - As disclosed in Note 1 to the Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, commission revenues related to installment billings are recognized on the latter of the policy effective date (as indicated in the policy) or the date that the premium was billed to the client (as indicated in the premium invoice), with the exception of our Arrowhead businesses, which follows a policy of recognizing these revenues on the latter of the policy effective date or processed date into our systems, regardless of the billing arrangement.  We are still determining the impact of recognizing installment revenue upon delivery of the contract fulfillment obligation.

Topic 606 is effective for the Company beginning January 1, 2018.  Entities are permitted to adopt the guidance under one of the following methods: the "full retrospective" method, which applies the guidance to each period presented (prior years restated), or the "modified retrospective" method, in which the guidance is only applied to the year of adoption, with the cumulative effect of initially applying the guidance recognized as an adjustment to retained earnings. The Company is evaluating the adoption method it will use, but currently expects to use the modified retrospective method.

In connection with the implementation of the above standards, we will augment our current procedures and controls, as necessary to support the new standards.

XML

Net Income Per Share

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

Basic EPS is computed based on the weighted average number of common shares (including restricted shares) issued and outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the exercise of stock options. The dilutive effect of stock options is computed by application of the treasury-stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding:

	For the three months   ended September 30,						For the nine months   ended September 30,
(in thousands, except per share data)	2017			2016			2017			2016
Net income	$	75,913		$	71,545		$	212,125		$	199,865
Net income attributable to unvested awarded performance stock	(1,852		)	(1,873		)	(5,181		)	(5,210		)
Net income attributable to common shares	$	74,061		$	69,672		$	206,944		$	194,655
Weighted average number of common shares outstanding – basic	139,756			140,129			140,012			139,642
Less unvested awarded performance stock included in weighted average number of common shares outstanding – basic	(3,410		)	(3,668		)	(3,420		)	(3,640		)
Weighted average number of common shares outstanding for basic earnings per common share	136,346			136,461			136,592			136,002
Dilutive effect of stock options	2,547			1,721			2,419			1,582
Weighted average number of shares outstanding – diluted	138,893			138,182			139,011			137,584
Net income per share:
Basic	$	0.54		$	0.51		$	1.52		$	1.43
Diluted	$	0.53		$	0.50		$	1.49		$	1.41

XML

Business Combinations

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

During the nine months ended September 30, 2017, Brown & Brown acquired the assets and assumed certain liabilities of six insurance intermediaries. Additionally, miscellaneous adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). Such adjustments are presented in the “Other” category within the following two tables. The recorded purchase price for all acquisitions included an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations will be recorded in the Condensed Consolidated Statement of Income when incurred.

The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. In determining fair value, the acquired business’s future performance is estimated using financial projections developed by management for the acquired business and reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These payments are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Condensed Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the nine months ended September 30, 2017, several adjustments were made within the permitted measurement period that resulted in an increase in the aggregate purchase price of the affected acquisitions of $1.5 million relating to the assumption of certain liabilities. These measurement period adjustments have been reflected as current period adjustments in the nine months ended September 30, 2017 in accordance with the guidance in ASU 2015-16 “Business Combinations”. The measurement period adjustments primarily impacted goodwill, with no effect on earnings or cash in the current period.

Cash paid for acquisitions was $26.5 million and $115.3 million in the nine-month periods ended September 30, 2017 and 2016, respectively. We completed six acquisitions (excluding book of business purchases) in the nine-month period ended September 30, 2017. We completed six acquisitions (excluding book of business purchases) in the nine-month period ended September 30, 2016.

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
Other	Various	Various	26,478		11,395		1,332		39,205		11,605
Total			$	26,478	$	11,395	$	1,332	$	39,205	$	11,605

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)	Other			Total
Other current assets	98			98
Fixed assets	47			47
Goodwill	27,580			27,580
Purchased customer accounts	12,858			12,858
Non-compete agreements	595			595
Total assets acquired	41,178			41,178
Other current liabilities	(1,284		)	(1,284		)
Deferred income tax, net	(689		)	(689		)
Total liabilities assumed	(1,973		)	(1,973		)
Net assets acquired	$	39,205		$	39,205

The weighted average useful lives for the acquired amortizable intangible assets are as follows: purchased customer accounts, 15 years; and non-compete agreements, 5 years.

Goodwill of $27.6 million, which is net of any opening balance sheet adjustments within the allowable measurement period, was allocated to the Retail, National Programs, Wholesale Brokerage and Service Segments in the amounts of $18.8 million, $7.3 million, $0.8 million and $0.7 million, respectively. Of the total goodwill of $27.6 million, the amount currently deductible for income tax purposes is $26.3 million and the remaining $1.3 million relates to the recorded earn-out payables and will not be deductible until it is earned and paid.

For the acquisitions completed during 2017, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues from the acquisitions completed through September 30, 2017, included in the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2017, were $3.2 million and $3.6 million, respectively. The income before income taxes, including the intercompany cost of capital charge, from the acquisitions completed through September 30, 2017, included in the Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2017, were $0.9 million and $1.0 million, respectively. If the acquisitions had occurred as of the beginning of the respective periods, the Company’s results of operations would be as shown in the following table. 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)	For the three months   ended September 30,				For the nine months   ended September 30,
(in thousands, except per share data)	2017		2016		2017		2016
Total revenues	$	476,124	$	465,014	$	1,413,278	$	1,341,511
Income before income taxes	$	124,582	$	117,929	$	345,608	$	331,574
Net income	$	76,012	$	72,130	$	213,496	$	201,675
Net income per share:
Basic	$	0.54	$	0.51	$	1.52	$	1.44
Diluted	$	0.53	$	0.51	$	1.50	$	1.43
Weighted average number of shares outstanding:
Basic	136,346		136,461		136,592		136,002
Diluted	138,893		138,182		139,011		137,584

As of September 30, 2017 and 2016, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the three and nine months ended September 30, 2017 and 2016, were as follows:

	For the three months   ended September 30,						For the nine months   ended September 30,
(in thousands)	2017			2016			2017			2016
Balance as of the beginning of the period	$	57,943		$	73,447		$	63,821		$	78,387
Additions to estimated acquisition earn-out payables	1,050			1,437			1,332			3,828
Payments for estimated acquisition earn-out payables	(23,511		)	(16,988		)	(39,288		)	(27,555		)
Subtotal	35,482			57,896			25,865			54,660
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables	(1,784		)	2,883			6,402			4,704
Interest expense accretion	476			727			1,907			2,142
Net change in earnings from estimated acquisition earn-out payables	(1,308		)	3,610			8,309			6,846
Balance as of September 30,	$	34,174		$	61,506		$	34,174		$	61,506

Of the $34.2 million estimated acquisition earn-out payables as of September 30, 2017, $28.7 million was recorded as accounts payable and $5.5 million was recorded as other non-current liabilities. As of September 30, 2017, the maximum future acquisition contingency payments related to all acquisitions was $81.5 million, inclusive of the $34.2 million estimated acquisition earn-out payables as of September 30, 2017. Included within the additions to estimated acquisition earn-out payables are any adjustments to opening balance sheet items within the allowable measurement period, which may therefore differ from previously reported amounts.

XML

Goodwill

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

Goodwill is subject to at least an annual assessment for impairment by applying a fair value-based test. The Company completed its most recent annual assessment as of November 30, 2016, and identified no impairment as a result of the evaluation.

The changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2017 are as follows:

(in thousands)	Retail			National Programs		Wholesale Brokerage		Services		Total
Balance as of January 1, 2017	$	1,354,667		$	901,294	$	284,869	$	134,572	$	2,675,402
Goodwill of acquired businesses	18,807			7,314		770		689		27,580
Goodwill disposed of relating to sales of businesses	(1,494		)	—		—		—		(1,494		)
Balance as of September 30, 2017	$	1,371,980		$	908,608	$	285,639	$	135,261	$	2,701,488

XML

Amortizable Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Amortizable Intangible Assets

Amortizable Intangible Assets

Amortizable intangible assets at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30, 2017								December 31, 2016
(in thousands)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Life (Years)(1)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Life (Years)(1)
Purchased customer accounts	$	1,458,405	$	(803,764	)	$	654,641	15.0	$	1,447,680	$	(741,770	)	$	705,910	15.0
Non-compete agreements	30,161		(28,748		)	1,413		6.8	29,668		(28,124		)	1,544		6.8
Total	$	1,488,566	$	(832,512	)	$	656,054		$	1,477,348	$	(769,894	)	$	707,454

(1) Weighted average life calculated as of the date of acquisition.

Amortization expense for amortizable intangible assets for the years ending December 31, 2017, 2018, 2019, 2020 and 2021 is estimated to be $85.3 million, $80.6 million, $76.1 million, $68.7 million, and $65.4 million, respectively.

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt at September 30, 2017 and December 31, 2016 consisted of the following:

(in thousands)	September 30, 2017			December 31, 2016
Current portion of long-term debt:
Current portion of 5-year term loan facility expires June 28, 2022	$	20,000		$	55,000
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	100,000			—
Short-term promissory note	—			500
Total current portion of long-term debt	120,000			55,500
Long-term debt:
Note agreements:
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	—			100,000
4.200% senior notes, semi-annual interest payments, net of the unamortized discount, balloon due 2024	498,904			498,785
Total notes	498,904			598,785
Credit agreements:
5-year term-loan facility, periodic interest and principal payments, LIBOR plus up to 1.750%, expires June 28, 2022	370,000			426,250
5-year revolving-loan facility, periodic interest payments, LIBOR plus up to 1.500%, plus commitment fees up to 0.250%, expires June 28, 2022	—			—
Total credit agreements	370,000			426,250
Debt issuance costs (contra)	(8,163		)	(6,663		)
Total long-term debt less unamortized discount and debt issuance costs	860,741			1,018,372
Current portion of long-term debt	120,000			55,500
Total debt	$	980,741		$	1,073,872

On December 22, 2006, the Company entered into a Master Shelf and Note Purchase Agreement (the “Master Agreement”) with a national insurance company (the “Purchaser”). The initial issuance of notes under the Master Agreement occurred on December 22, 2006, through the issuance of $25.0 million in Series C Senior Notes due December 22, 2016, with a fixed interest rate of 5.660% per year. On February 1, 2008, $25.0 million in Series D Senior Notes due January 15, 2015, with a fixed interest rate of 5.370% per year, were issued. On September 15, 2011, and pursuant to a Confirmation of Acceptance (the “Confirmation”), dated January 21, 2011, in connection with the Master Agreement, $100.0 million in Series E Senior Notes were issued and are due September 15, 2018, with a fixed interest rate of 4.500% per year. The Series E Senior Notes were issued for the sole purpose of retiring existing senior notes. On January 15, 2015 the Series D Senior Notes were redeemed at maturity using cash proceeds to pay off the principal of $25.0 million plus any remaining accrued interest. On December 22, 2016, the Series C Senior Notes were redeemed at maturity using cash proceeds to pay off the principal of $25.0 million plus any remaining accrued interest. As of September 30, 2017, there was an outstanding debt balance issued under the provisions of the Master Agreement of $100.0 million.

On April 17, 2014, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents (the “Credit Agreement”). The Credit Agreement in the amount of $1,350.0 million provides for an unsecured revolving credit facility (the “Credit Facility”) in the initial amount of $800.0 million and unsecured term loans in the initial amount of $550.0 million, either or both of which may, subject to lenders’ discretion, potentially be increased by up to $500.0 million. The Credit Facility was funded on May 20, 2014 in conjunction with the closing of The Wright Insurance Group, LLC (“Wright”) acquisition, with the $550.0 million term loan being funded as well as a drawdown of $375.0 million on the revolving loan facility. Use of these proceeds was to retire existing term loan debt and to facilitate the closing of the Wright acquisition as well as other acquisitions. The Credit Facility terminates on May 20, 2019, but either or both of the revolving Credit Facility and the term loans may be extended for two additional one-year periods at the Company’s request and at the discretion of the respective lenders. Interest and facility fees in respect to the Credit Facility are based on the better of the Company’s net debt leverage ratio or a non-credit enhanced senior unsecured long-term debt rating. Based on the Company’s net debt leverage ratio, the rates of interest charged on the term loan are 1.000% to 1.750%, and the revolving loan is 0.850% to 1.500% above the adjusted LIBOR rate for outstanding amounts drawn. There are fees included in the facility which include a facility fee based on the revolving credit commitments of the lenders (whether used or unused) at a rate of 0.150% to 0.250% and letter of credit fees based on the amounts of outstanding secured or unsecured letters of credit. The Credit Facility includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers.

On June 28, 2017, the Company entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”) with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents. The Amended and Restated Credit Agreement amended and restated the credit agreement dated April 17, 2014, among such parties (the “Original Credit Agreement”). The Amended and Restated Credit Agreement extends the applicable maturity date of the existing revolving credit facility (the “Facility”) of $800.0 million to June 28, 2022 and re-evidences unsecured term loans at $400.0 million while also extending the applicable maturity date to June 28, 2022. The term loan principal amortization schedule was reset with payments due quarterly. At the time of the execution of the Amended and Restated Credit Agreement, $67.5 million of principal from the original unsecured term loans was repaid using operating cash balances, and the Company added an additional $2.8 million in debt issuance costs related to the facility to the Consolidated Balance Sheet. The Company also expensed to the Consolidated Statements of Income $0.2 million of debt issuance costs related to the Original Credit Agreement due to certain lenders exiting prior to the modified agreement, while also carrying forward $1.6 million on the Consolidated Balance Sheet the unamortized portion of the Original Credit Agreement debt issuance costs which will amortize over the term of the Amended and Restated Credit Agreement. On September 30, 2017, a scheduled principal payment of $5.0 million was satisfied per the terms of the Amended and Restated Credit Agreement. As of September 30, 2017, there was an outstanding debt balance issued under the terms of the Amended and Restated Credit Agreement of $390.0 million with no borrowings outstanding against the revolving loan. Per the terms of the Amended and Restated Credit Agreement, a scheduled principal payment of $5.0 million is due December 31, 2017.

On September 18, 2014, the Company issued $500.0 million of 4.200% unsecured senior notes due in 2024. The senior notes were given investment grade ratings of BBB-/Baa3 with a stable outlook. The notes are subject to certain covenant restrictions and regulations which are customary for credit rated obligations. At the time of funding, the proceeds were offered at a discount of the original note amount which also excluded an underwriting fee discount. The net proceeds received from the issuance were used to repay the outstanding balance of $475.0 million on the revolving Credit Facility and for other general corporate purposes. As of September 30, 2017 and December 31, 2016, there was an outstanding debt balance of $500.0 million exclusive of the associated discount balance.

In conjunction with the acquisition of Social Security Advocates for the Disabled (SSAD) effective February 1, 2016, the company added a $0.5 million promissory note incurred as a payment to the sellers and payable after the one-year anniversary of the acquisition. The note had a nominal rate of interest 0.810%. On March 10, 2017, the promissory note was settled, plus any outstanding accrued interest, using cash.

The Master Agreement and the Amended and Restated Credit Agreement require the Company to maintain certain financial ratios and comply with certain other covenants. The Company was in compliance with all such covenants as of September 30, 2017 and December 31, 2016.

The 30-day Adjusted LIBOR Rate as of September 30, 2017 was 1.250%.

XML

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

9 Months Ended

Sep. 30, 2017

Supplemental Cash Flow Elements [Abstract]

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

	For the nine months   ended September 30,
(in thousands)	2017		2016
Cash paid during the period for:
Interest	$	32,504	$	33,122
Income taxes	$	110,853	$	104,739

Brown & Brown’s significant non-cash investing and financing activities are summarized as follows:

	For the nine months   ended September 30,
(in thousands)	2017		2016
Other payable issued for purchased customer accounts	$	11,395	$	10,505
Estimated acquisition earn-out payables and related charges	$	1,332	$	3,828
Notes payable issued or assumed for purchased customer accounts	$	—	$	492

The following is a reconciliation of cash and cash equivalents inclusive of restricted cash as of September 30, 2017 and 2016.

	Balance as of September 30,
(in thousands)	2017		2016
Table to reconcile cash and cash equivalents inclusive of restricted cash
Cash and cash equivalents	$	546,520	$	488,683
Restricted cash	276,687		278,279
Total cash and cash equivalents inclusive of restricted cash at the end of the period	$	823,207	$	766,962

The following is a reconciliation of cash and cash equivalents inclusive of restricted cash as of December 31, 2016 and 2015.

	Balance as of December 31,
(in thousands)	2016		2015
Table to reconcile cash and cash equivalents inclusive of restricted cash
Cash and cash equivalents	$	515,646	$	443,420
Restricted cash	265,637		229,753
Total cash and cash equivalents inclusive of restricted cash at the end of the period	$	781,283	$	673,173

XML

Legal and Regulatory Proceedings

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Legal and Regulatory Proceedings

Legal and Regulatory Proceedings

The Company is involved in numerous pending or threatened proceedings by or against Brown & Brown, Inc. or one or more of its subsidiaries that arise in the ordinary course of business. The damages that may be claimed against the Company in these various proceedings are in some cases substantial, including in certain instances claims for punitive or extraordinary damages. Some of these claims and lawsuits have been resolved, others are in the process of being resolved and others are still in the investigation or discovery phase. The Company will continue to respond appropriately to these claims and lawsuits and to vigorously protect its interests.

During the first quarter of 2017, the Company was successful in settling a lawsuit it had brought against certain former employees of Brown & Brown, their employer, AssuredPartners, Inc. and certain key executives of AssuredPartners.  The settlement included a payment of $20,000,000 by AssuredPartners to Brown & Brown in exchange for releasing certain individuals from restrictive covenants in the employment contracts they had signed with the Company and provides protection for current Brown & Brown teammates from continued solicitation for employment by AssuredPartners.

The proceeds of the settlement were received in March 2017 and were recorded in the Other income line in the Statement of Income.

We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could adversely impact the Company’s operating results, cash flows and overall liquidity. The Company maintains third-party insurance policies to provide coverage for certain legal claims, in an effort to mitigate its overall exposure to unanticipated claims or adverse decisions. However, as (i) one or more of the Company’s insurance carriers could take the position that portions of these claims are not covered by the Company’s insurance, (ii) to the extent that payments are made to resolve claims and lawsuits, applicable insurance policy limits are eroded and (iii) the claims and lawsuits relating to these matters are continuing to develop, it is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by unfavorable resolutions of these matters. Based on the AM Best Company ratings of these third-party insurers, management does not believe there is a substantial risk of an insurer’s material non-performance related to any current insured claims.

On the basis of current information, the availability of insurance and legal advice, in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows.

XML

Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

Brown & Brown’s business is divided into four reportable segments:(1) the Retail Segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers; (2) the National Programs Segment, which acts as a MGA, provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; (3) the Wholesale Brokerage Segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents; and (4) the Services Segment, which provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services and claims adjusting services.

Brown & Brown conducts all of its operations within the United States of America, except for a wholesale brokerage operation based in London, England, and retail operations in Bermuda and the Cayman Islands. These operations earned $3.9 million and $3.8 million of total revenues for the three months ended September 30, 2017 and 2016, respectively. These operations earned $11.1 million and $10.3 million of total revenues for the nine months ended September 30, 2017 and 2016, respectively. Long-lived assets held outside of the United States as of September 30, 2017 and 2016 were not material.

The accounting policies of the reportable segments are the same as those described in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Inter-segment revenues are eliminated.

Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes any income and expenses not allocated to reportable segments, corporate-related items, including the inter-company interest expense charge to the reporting segment, and the elimination of inter-segment activities.

	For the three months ended September 30, 2017
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	234,483	$	127,718	$	71,574	$	41,491	$	380		$	475,646
Investment income	$	3	$	124	$	—	$	72	$	292		$	491
Amortization	$	10,540	$	6,913	$	2,845	$	1,137	$	—		$	21,435
Depreciation	$	1,262	$	1,412	$	471	$	402	$	1,942		$	5,489
Interest expense	$	7,216	$	8,304	$	1,515	$	876	$	(8,518	)	$	9,393
Income before income taxes	$	54,950	$	32,203	$	21,219	$	7,910	$	8,137		$	124,419
Total assets	$	4,246,422	$	5,026,918	$	1,258,783	$	432,331	$	(3,550,177	)	$	7,414,277
Capital expenditures	$	844	$	1,357	$	214	$	364	$	1,270		$	4,049

	For the three months ended September 30, 2016
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	228,645	$	123,632	$	70,192	$	39,586	$	219		$	462,274
Investment income	$	5	$	96	$	—	$	57	$	72		$	230
Amortization	$	10,861	$	6,921	$	2,882	$	1,140	$	1		$	21,805
Depreciation	$	1,508	$	1,945	$	503	$	473	$	766		$	5,195
Interest expense	$	9,026	$	10,844	$	1,540	$	1,257	$	(12,784	)	$	9,883
Income before income taxes	$	44,894	$	32,319	$	20,862	$	5,971	$	12,926		$	116,972
Total assets	$	3,652,977	$	2,933,568	$	1,053,516	$	342,360	$	(2,460,394	)	$	5,522,027
Capital expenditures	$	1,443	$	2,153	$	11	$	80	$	504		$	4,191

	For the nine months ended September 30, 2017
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	712,739	$	342,576	$	208,812	$	122,397	$	20,507		$	1,407,031
Investment income	$	6	$	279	$	—	$	224	$	576		$	1,085
Amortization	$	31,704	$	20,664	$	8,621	$	3,412	$	1		$	64,402
Depreciation	$	3,975	$	4,975	$	1,438	$	1,191	$	5,663		$	17,242
Interest expense	$	23,918	$	27,257	$	4,803	$	2,783	$	(29,812	)	$	28,949
Income before income taxes	$	151,783	$	68,127	$	56,569	$	22,480	$	44,429		$	343,388
Total assets	$	4,246,422	$	5,026,918	$	1,258,783	$	432,331	$	(3,550,177	)	$	7,414,277
Capital expenditures	$	3,384	$	3,885	$	1,606	$	856	$	3,166		$	12,897

	For the nine months ended September 30, 2016
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	695,393	$	333,522	$	184,893	$	117,906	$	1,251		$	1,332,965
Investment income	$	33	$	583	$	4	$	204	$	326		$	1,150
Amortization	$	32,743	$	21,011	$	7,915	$	3,345	$	11		$	65,025
Depreciation	$	4,761	$	5,881	$	1,487	$	1,432	$	2,306		$	15,867
Interest expense	$	29,415	$	34,895	$	2,472	$	3,820	$	(40,985	)	$	29,617
Income before income taxes	$	144,496	$	68,367	$	51,711	$	17,929	$	46,095		$	328,598
Total assets	$	3,652,977	$	2,933,568	$	1,053,516	$	342,360	$	(2,460,394	)	$	5,522,027
Capital expenditures	$	4,664	$	5,399	$	925	$	561	$	1,586		$	13,135

XML

Investments

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

At September 30, 2017, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	32,724	$	1	$	(94	)	$	32,631
Corporate debt	1,407		16		—			1,423
Total	$	34,131	$	17	$	(94	)	$	34,054

At September 30, 2017, the Company held $32.6 million in fixed income securities composed of U.S. Treasury securities, securities issued by U.S. Government agencies and municipalities, and $1.4 million issued by corporations with investment grade ratings. Of that total, $20.0 million is classified as short-term investments on the Consolidated Balance Sheet as maturities are less than one-year. Additionally, the Company holds $9.2 million in short-term investments which are related to time deposits held with various financial institutions.

For securities in a loss position, the following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2017:

	Less than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	24,444	$	(60	)	$	7,364	$	(34	)	$	31,808	$	(94	)
Corporate debt	200		—			—		—			200		—
Total	$	24,644	$	(60	)	$	7,364	$	(34	)	$	32,008	$	(94	)

The unrealized losses were caused by interest rate increases. At September 30, 2017, the Company had 27 securities in an unrealized loss position. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at September 30, 2017.

At December 31, 2016, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	26,280	$	11	$	(59	)	$	26,232
Corporate debt	2,358		13		(1		)	2,370
Total	$	28,638	$	24	$	(60	)	$	28,602

At December 31, 2016, the Company held $26.2 million in fixed income securities composed of U.S. Treasury securities, securities issued by U.S. Government agencies and municipalities, and $2.4 million issued by corporations with investment grade ratings. Of that total, $5.6 million is classified as short-term investments on the Consolidated Balance Sheet as maturities are less than one-year. Additionally, the Company holds $9.5 million in short-term investments which are related to time deposits held with various financial institutions.

For securities in a loss position, the following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2016:

	Less than 12 Months					12 Months or More				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	14,663	$	(59	)	$	—	$	—	$	14,663	$	(59	)
Corporate debt	1,001		(1		)	—		—		1,001		(1		)
Total	$	15,664	$	(60	)	$	—	$	—	$	15,664	$	(60	)

The unrealized losses from corporate issuers were caused by interest rate increases. At December 31, 2016, the Company had 20 securities in an unrealized loss position. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at December 31, 2016.

The amortized cost and estimated fair value of the fixed maturity securities at September 30, 2017 by contractual maturity are set forth below:

(in thousands)	Amortized Cost		Fair Value
Years to maturity:
Due in one year or less	$	20,005	$	19,969
Due after one year through five years	13,893		13,843
Due after five years	233		242
Total	$	34,131	$	34,054

The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2016 by contractual maturity are set forth below:

(in thousands)	Amortized Cost		Fair Value
Years to maturity:
Due in one year or less	$	5,551	$	5,554
Due after one year through five years	22,757		22,708
Due after five years	330		340
Total	$	28,638	$	28,602

The expected maturities in the foregoing table may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalty.

Proceeds from the sales and maturity of the Company’s investment in fixed maturity securities were $2.7 million. This along with maturing time deposits yielded total cash proceeds from the sale of investments of $5.2 million in the period of January 1, 2017 to September 30, 2017. These proceeds were used to purchase additional fixed maturity securities and time deposits. The gains and losses realized on those sales for the period from January 1, 2017 to September 30, 2017 were insignificant.

Realized gains and losses are reported on the Condensed Consolidated Statements of Income, with the cost of securities sold determined on a specific identification basis.

At September 30, 2017, investments with a fair value of approximately $4.0 million were on deposit with state insurance departments to satisfy regulatory requirements.

XML

Losses and Loss Adjustment Reserve

9 Months Ended

Sep. 30, 2017

Reinsurance Disclosures [Abstract]

Losses and Loss Adjustment Reserve

Although the reinsurers are liable to the Company for amounts reinsured, our subsidiary, Wright National Flood Insurance Company (“Wright Flood”) remains primarily liable to its policyholders for the full amount of the policies written whether or not the reinsurers meet their obligations to the Company when they become due. The effects of reinsurance on premiums written and earned are as follows:

	Period from January 1, 2017 to September 30, 2017
(in thousands)	Written			Earned
Direct premiums	$	462,718		$	439,134
Ceded premiums	(462,710		)	(439,126		)
Net premiums	$	8		$	8

All premiums written by Wright Flood under the National Flood Insurance Program are 100% ceded to the Federal Emergency Management Agency, or FEMA, for which Wright Flood received a 30.9% expense allowance from January 1, 2017 through September 30, 2017. For the period from January 1, 2017 through September 30, 2017, the Company ceded $461.5 million of written premiums.

Effective April 1, 2014, Wright Flood is also a party to a quota share agreement whereby it cedes 100% of its gross excess flood premiums, excluding fees, to Arch Reinsurance Company and receives a 30.5% commission. Wright Flood ceded $1.2 million for the period from January 1, 2017 through September 30, 2017. No loss data exists on this agreement.

Wright Flood also ceded 100% of the Homeowners, Private Passenger Auto Liability, and Other Liability Occurrence to Stillwater Insurance Company, formerly known as Fidelity National Insurance Company. This business is in runoff. Therefore, only loss data exists on this business. As of September 30, 2017, no ceded unpaid losses and loss adjustment expenses or incurred but not reported expenses for Homeowners, Private Passenger Auto Liability and Other Liability Occurrence existed.

As of September 30, 2017 the Condensed Consolidated Balance Sheet contained reinsurance recoverable of $2,160.3 million and prepaid reinsurance premiums of $332.2 million. There was no net activity in the reserve for losses and loss adjustment expense during the period January 1, 2017 through September 30, 2017, as Wright Flood's direct premiums written were 100% ceded to two reinsurers. The balance of the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, as of September 30, 2017 was $2,160.3 million.

XML

Statutory Financial Information

9 Months Ended

Sep. 30, 2017

Statutory Accounting Practices [Abstract]

Statutory Financial Information

Statutory Financial Data

Wright Flood maintains capital in excess of the minimum statutory amount of $7.5 million as required by regulatory authorities. The unaudited statutory capital and surplus of Wright Flood was $26.7 million at September 30, 2017 and $23.5 million as of December 31, 2016. For the period from January 1, 2017 through September 30, 2017, Wright Flood generated statutory net income of $2.9 million. For the period from January 1, 2016 through December 31, 2016, Wright Flood generated statutory net income of $8.2 million.

XML

Subsidiary Dividend Restrictions

9 Months Ended

Sep. 30, 2017

Disclosure of Restrictions on Dividends, Loans and Advances Disclosure [Abstract]

Subsidiary Dividend Restrictions

Subsidiary Dividend Restrictions

Under the insurance regulations of Texas, where Wright Flood is incorporated, the maximum amount of ordinary dividends that Wright Flood can pay to shareholders in a rolling twelve-month period is limited to the greater of 10% of statutory adjusted capital and surplus as shown on Wright Flood’s last annual statement on file with the superintendent of the Texas Department of Insurance or 100% of adjusted net income. There was no dividend payout in 2016 and the maximum dividend payout that may be made in 2017 without prior approval is $8.2 million.

XML

Shareholders' Equity

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

Between May 18, 2017 and June 30, 2017, the Company made share repurchases in the open market in total of 216,615 shares at a total cost of $11.2 million. Between July 1, 2017 and July 14, 2017, the Company made share repurchases in the open market in total of 131,845 shares at a total cost of $3.7 million.

On August 14, 2017, the Company entered into an accelerated share repurchase agreement ("ASR") with an investment bank to purchase an aggregate $50.0 million of the Company's common stock. As part of the ASR, the company received an initial delivery of 967,888 shares of the Company's common stock with a fair market value of approximately $42.5 million. On October 16, 2017, the Company was notified by its investment bank that the accelerated share repurchase was completed. To complete the transaction, the investment bank delivered an additional 108,288 shares of the Company's common stock for a total of 1,076,176 shares repurchased under the ASR.

Under the authorization from the Company’s Board of Directors, shares may be purchased from time to time, at the Company’s discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company’s financial performance and other potential factors. These purchases may be carried out through open market purchases, block trades, accelerated share repurchase plans of up to $100.0 million each (unless otherwise approved by the Board of Directors), negotiated private transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. After completion of this ASR transaction, the Company has approval to repurchase up to $302.4 million, in the aggregate, of the Company's outstanding common stock.

XML

Nature of Operations (Policies)

9 Months Ended

Sep. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

four

Basis of Accounting

December 31, 2016.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

XML

Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Reconciliation between Basic and Diluted Weighted Average Shares Outstanding

	For the three months   ended September 30,						For the nine months   ended September 30,
(in thousands, except per share data)	2017			2016			2017			2016
Net income	$	75,913		$	71,545		$	212,125		$	199,865
Net income attributable to unvested awarded performance stock	(1,852		)	(1,873		)	(5,181		)	(5,210		)
Net income attributable to common shares	$	74,061		$	69,672		$	206,944		$	194,655
Weighted average number of common shares outstanding – basic	139,756			140,129			140,012			139,642
Less unvested awarded performance stock included in weighted average number of common shares outstanding – basic	(3,410		)	(3,668		)	(3,420		)	(3,640		)
Weighted average number of common shares outstanding for basic earnings per common share	136,346			136,461			136,592			136,002
Dilutive effect of stock options	2,547			1,721			2,419			1,582
Weighted average number of shares outstanding – diluted	138,893			138,182			139,011			137,584
Net income per share:
Basic	$	0.54		$	0.51		$	1.52		$	1.43
Diluted	$	0.53		$	0.50		$	1.49		$	1.41

XML

Business Combinations (Tables)

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Purchase price allocation for current year acquisitions and adjustments made for prior year acquisitions

(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
Other	Various	Various	26,478		11,395		1,332		39,205		11,605
Total			$	26,478	$	11,395	$	1,332	$	39,205	$	11,605

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)	Other			Total
Other current assets	98			98
Fixed assets	47			47
Goodwill	27,580			27,580
Purchased customer accounts	12,858			12,858
Non-compete agreements	595			595
Total assets acquired	41,178			41,178
Other current liabilities	(1,284		)	(1,284		)
Deferred income tax, net	(689		)	(689		)
Total liabilities assumed	(1,973		)	(1,973		)
Net assets acquired	$	39,205		$	39,205

Unaudited pro forma 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)	For the three months   ended September 30,				For the nine months   ended September 30,
(in thousands, except per share data)	2017		2016		2017		2016
Total revenues	$	476,124	$	465,014	$	1,413,278	$	1,341,511
Income before income taxes	$	124,582	$	117,929	$	345,608	$	331,574
Net income	$	76,012	$	72,130	$	213,496	$	201,675
Net income per share:
Basic	$	0.54	$	0.51	$	1.52	$	1.44
Diluted	$	0.53	$	0.51	$	1.50	$	1.43
Weighted average number of shares outstanding:
Basic	136,346		136,461		136,592		136,002
Diluted	138,893		138,182		139,011		137,584

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 and nine months ended September 30, 2017 and 2016, were as follows:

	For the three months   ended September 30,						For the nine months   ended September 30,
(in thousands)	2017			2016			2017			2016
Balance as of the beginning of the period	$	57,943		$	73,447		$	63,821		$	78,387
Additions to estimated acquisition earn-out payables	1,050			1,437			1,332			3,828
Payments for estimated acquisition earn-out payables	(23,511		)	(16,988		)	(39,288		)	(27,555		)
Subtotal	35,482			57,896			25,865			54,660
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables	(1,784		)	2,883			6,402			4,704
Interest expense accretion	476			727			1,907			2,142
Net change in earnings from estimated acquisition earn-out payables	(1,308		)	3,610			8,309			6,846
Balance as of September 30,	$	34,174		$	61,506		$	34,174		$	61,506

XML

Goodwill (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Carrying Value of Goodwill by Operating Segment

nine months ended September 30, 2017 are as follows:

(in thousands)	Retail			National Programs		Wholesale Brokerage		Services		Total
Balance as of January 1, 2017	$	1,354,667		$	901,294	$	284,869	$	134,572	$	2,675,402
Goodwill of acquired businesses	18,807			7,314		770		689		27,580
Goodwill disposed of relating to sales of businesses	(1,494		)	—		—		—		(1,494		)
Balance as of September 30, 2017	$	1,371,980		$	908,608	$	285,639	$	135,261	$	2,701,488

XML

Amortizable Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Amortizable Intangible Assets

Amortizable intangible assets at September 30, 2017 and December 31, 2016 consisted of the following:

	September 30, 2017								December 31, 2016
(in thousands)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Life (Years)(1)	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Life (Years)(1)
Purchased customer accounts	$	1,458,405	$	(803,764	)	$	654,641	15.0	$	1,447,680	$	(741,770	)	$	705,910	15.0
Non-compete agreements	30,161		(28,748		)	1,413		6.8	29,668		(28,124		)	1,544		6.8
Total	$	1,488,566	$	(832,512	)	$	656,054		$	1,477,348	$	(769,894	)	$	707,454

(1) Weighted average life calculated as of the date of acquisition.

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-Term Debt Instrument

Long-term debt at September 30, 2017 and December 31, 2016 consisted of the following:

(in thousands)	September 30, 2017			December 31, 2016
Current portion of long-term debt:
Current portion of 5-year term loan facility expires June 28, 2022	$	20,000		$	55,000
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	100,000			—
Short-term promissory note	—			500
Total current portion of long-term debt	120,000			55,500
Long-term debt:
Note agreements:
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	—			100,000
4.200% senior notes, semi-annual interest payments, net of the unamortized discount, balloon due 2024	498,904			498,785
Total notes	498,904			598,785
Credit agreements:
5-year term-loan facility, periodic interest and principal payments, LIBOR plus up to 1.750%, expires June 28, 2022	370,000			426,250
5-year revolving-loan facility, periodic interest payments, LIBOR plus up to 1.500%, plus commitment fees up to 0.250%, expires June 28, 2022	—			—
Total credit agreements	370,000			426,250
Debt issuance costs (contra)	(8,163		)	(6,663		)
Total long-term debt less unamortized discount and debt issuance costs	860,741			1,018,372
Current portion of long-term debt	120,000			55,500
Total debt	$	980,741		$	1,073,872

XML

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities (Tables)

9 Months Ended

Sep. 30, 2017

Supplemental Cash Flow Elements [Abstract]

Summary of Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

	For the nine months   ended September 30,
(in thousands)	2017		2016
Cash paid during the period for:
Interest	$	32,504	$	33,122
Income taxes	$	110,853	$	104,739

Brown & Brown’s significant non-cash investing and financing activities are summarized as follows:

	For the nine months   ended September 30,
(in thousands)	2017		2016
Other payable issued for purchased customer accounts	$	11,395	$	10,505
Estimated acquisition earn-out payables and related charges	$	1,332	$	3,828
Notes payable issued or assumed for purchased customer accounts	$	—	$	492

XML

Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting Information [Line Items]

Segment Information

Segment Information

Brown & Brown’s business is divided into four reportable segments:(1) the Retail Segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers; (2) the National Programs Segment, which acts as a MGA, provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; (3) the Wholesale Brokerage Segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents; and (4) the Services Segment, which provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services and claims adjusting services.

Brown & Brown conducts all of its operations within the United States of America, except for a wholesale brokerage operation based in London, England, and retail operations in Bermuda and the Cayman Islands. These operations earned $3.9 million and $3.8 million of total revenues for the three months ended September 30, 2017 and 2016, respectively. These operations earned $11.1 million and $10.3 million of total revenues for the nine months ended September 30, 2017 and 2016, respectively. Long-lived assets held outside of the United States as of September 30, 2017 and 2016 were not material.

The accounting policies of the reportable segments are the same as those described in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Inter-segment revenues are eliminated.

Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes any income and expenses not allocated to reportable segments, corporate-related items, including the inter-company interest expense charge to the reporting segment, and the elimination of inter-segment activities.

	For the three months ended September 30, 2017
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	234,483	$	127,718	$	71,574	$	41,491	$	380		$	475,646
Investment income	$	3	$	124	$	—	$	72	$	292		$	491
Amortization	$	10,540	$	6,913	$	2,845	$	1,137	$	—		$	21,435
Depreciation	$	1,262	$	1,412	$	471	$	402	$	1,942		$	5,489
Interest expense	$	7,216	$	8,304	$	1,515	$	876	$	(8,518	)	$	9,393
Income before income taxes	$	54,950	$	32,203	$	21,219	$	7,910	$	8,137		$	124,419
Total assets	$	4,246,422	$	5,026,918	$	1,258,783	$	432,331	$	(3,550,177	)	$	7,414,277
Capital expenditures	$	844	$	1,357	$	214	$	364	$	1,270		$	4,049

	For the three months ended September 30, 2016
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	228,645	$	123,632	$	70,192	$	39,586	$	219		$	462,274
Investment income	$	5	$	96	$	—	$	57	$	72		$	230
Amortization	$	10,861	$	6,921	$	2,882	$	1,140	$	1		$	21,805
Depreciation	$	1,508	$	1,945	$	503	$	473	$	766		$	5,195
Interest expense	$	9,026	$	10,844	$	1,540	$	1,257	$	(12,784	)	$	9,883
Income before income taxes	$	44,894	$	32,319	$	20,862	$	5,971	$	12,926		$	116,972
Total assets	$	3,652,977	$	2,933,568	$	1,053,516	$	342,360	$	(2,460,394	)	$	5,522,027
Capital expenditures	$	1,443	$	2,153	$	11	$	80	$	504		$	4,191

	For the nine months ended September 30, 2017
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	712,739	$	342,576	$	208,812	$	122,397	$	20,507		$	1,407,031
Investment income	$	6	$	279	$	—	$	224	$	576		$	1,085
Amortization	$	31,704	$	20,664	$	8,621	$	3,412	$	1		$	64,402
Depreciation	$	3,975	$	4,975	$	1,438	$	1,191	$	5,663		$	17,242
Interest expense	$	23,918	$	27,257	$	4,803	$	2,783	$	(29,812	)	$	28,949
Income before income taxes	$	151,783	$	68,127	$	56,569	$	22,480	$	44,429		$	343,388
Total assets	$	4,246,422	$	5,026,918	$	1,258,783	$	432,331	$	(3,550,177	)	$	7,414,277
Capital expenditures	$	3,384	$	3,885	$	1,606	$	856	$	3,166		$	12,897

	For the nine months ended September 30, 2016
(in thousands)	Retail		National Programs		Wholesale Brokerage		Services		Other			Total
Total revenues	$	695,393	$	333,522	$	184,893	$	117,906	$	1,251		$	1,332,965
Investment income	$	33	$	583	$	4	$	204	$	326		$	1,150
Amortization	$	32,743	$	21,011	$	7,915	$	3,345	$	11		$	65,025
Depreciation	$	4,761	$	5,881	$	1,487	$	1,432	$	2,306		$	15,867
Interest expense	$	29,415	$	34,895	$	2,472	$	3,820	$	(40,985	)	$	29,617
Income before income taxes	$	144,496	$	68,367	$	51,711	$	17,929	$	46,095		$	328,598
Total assets	$	3,652,977	$	2,933,568	$	1,053,516	$	342,360	$	(2,460,394	)	$	5,522,027
Capital expenditures	$	4,664	$	5,399	$	925	$	561	$	1,586		$	13,135

XML

Investments (Tables)

9 Months Ended

Sep. 30, 2017

Schedule of Held-to-maturity Securities [Line Items]

Schedule of Investments in Fixed Maturity Securities

At December 31, 2016, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	26,280	$	11	$	(59	)	$	26,232
Corporate debt	2,358		13		(1		)	2,370
Total	$	28,638	$	24	$	(60	)	$	28,602

At September 30, 2017, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	32,724	$	1	$	(94	)	$	32,631
Corporate debt	1,407		16		—			1,423
Total	$	34,131	$	17	$	(94	)	$	34,054

Summary of Unrealized Loss Position

December 31, 2016:

	Less than 12 Months					12 Months or More				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	14,663	$	(59	)	$	—	$	—	$	14,663	$	(59	)
Corporate debt	1,001		(1		)	—		—		1,001		(1		)
Total	$	15,664	$	(60	)	$	—	$	—	$	15,664	$	(60	)

he following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2017:

	Less than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities	$	24,444	$	(60	)	$	7,364	$	(34	)	$	31,808	$	(94	)
Corporate debt	200		—			—		—			200		—
Total	$	24,644	$	(60	)	$	7,364	$	(34	)	$	32,008	$	(94	)

Amortized Cost and Fair Value of Fixed Maturity Securities by Contractual Maturity

The amortized cost and estimated fair value of the fixed maturity securities at September 30, 2017 by contractual maturity are set forth below:

(in thousands)	Amortized Cost		Fair Value
Years to maturity:
Due in one year or less	$	20,005	$	19,969
Due after one year through five years	13,893		13,843
Due after five years	233		242
Total	$	34,131	$	34,054

The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2016 by contractual maturity are set forth below:

(in thousands)	Amortized Cost		Fair Value
Years to maturity:
Due in one year or less	$	5,551	$	5,554
Due after one year through five years	22,757		22,708
Due after five years	330		340
Total	$	28,638	$	28,602

XML

Losses and Loss Adjustment Reserve (Tables)

9 Months Ended

Sep. 30, 2017

Reinsurance Disclosures [Abstract]

Effects of Reinsurance on Premiums Written and Earned

The effects of reinsurance on premiums written and earned are as follows:

	Period from January 1, 2017 to September 30, 2017
(in thousands)	Written			Earned
Direct premiums	$	462,718		$	439,134
Ceded premiums	(462,710		)	(439,126		)
Net premiums	$	8		$	8

XML

Nature of Operations - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2017 Segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	4

XML

Basis of Financial Reporting Text Block (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Text Block [Abstract]
Operating Leases, Future Minimum Payments Due	$ 200,300		$ 213,200
Share-based Compensation	$ 22,362	$ 11,593

XML

Net Income Per Share - Reconciliation between Basic and Diluted Weighted Average Shares Outstanding (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Net income	$ 75,913	$ 71,545	$ 212,125	$ 199,865
Net income attributable to unvested awarded performance stock	(1,852)	(1,873)	(5,181)	(5,210)
Net income attributable to common shares	$ 74,061	$ 69,672	$ 206,944	$ 194,655
Weighted average number of common shares outstanding - basic (in shares)	139,756	140,129	140,012	139,642
Less unvested awarded performance stock included in weighted average number of common shares outstanding - basic (in shares)	(3,410)	(3,668)	(3,420)	(3,640)
Weighted average number of common shares outstanding for basic earnings per common share (in shares)	136,346	136,461	136,592	136,002
Dilutive effect of stock options (in shares)	2,547	1,721	2,419	1,582
Weighted average number of shares outstanding - diluted (in shares)	138,893	138,182	139,011	137,584
Basic (in dollars per share)	$ 0.54	$ 0.51	$ 1.52	$ 1.43
Diluted (in dollars per share)	$ 0.53	$ 0.50	$ 1.49	$ 1.41

XML

Business Combinations - Additional Information (Detail)	3 Months Ended	9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2017 USD ($) acquisition	Sep. 30, 2016 USD ($) acquisition	Apr. 01, 2016 USD ($)	Jan. 01, 2016 USD ($)	Apr. 01, 2015 USD ($)	Jan. 01, 2015 USD ($)
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	$ 41,178,000	$ 41,178,000
Number of acquisitions | acquisition		6	6
Aggregate purchase price of acquisitions		$ 1,406,263
Payments to Acquire Businesses, Gross		26,478,000	$ 115,300,000
Goodwill assigned	27,580,000	27,580,000
Goodwill currently deductible for income tax purposes	26,248,000	26,248,000
Goodwill related to the recorded earn-out payables	1,333,000	1,333,000
Total revenues related to acquisitions	3,191,000	3,645,000
Income before income taxes related to acquisitions	864,000	979,000
Estimated acquisition earn-out payables	34,174,000	34,174,000	$ 61,506,000	$ 57,943,000	$ 63,821,000	$ 73,447,000	$ 78,387,000
Maximum Future Contingency payments Acquisitions	81,500,000	81,500,000
Accounts payable
Business Acquisition [Line Items]
Estimated acquisition earn-out payables	28,700,000	$ 28,700,000
Purchased customer accounts
Business Acquisition [Line Items]
Weighted average life (years)		15 years
Non-compete agreements
Business Acquisition [Line Items]
Weighted average life (years)		5 years
Services
Business Acquisition [Line Items]
Goodwill assigned	18,807,000	$ 18,807,000
National Programs
Business Acquisition [Line Items]
Goodwill assigned	7,314,000	7,314,000
Wholesale Brokerage
Business Acquisition [Line Items]
Goodwill assigned	771,000	771,000
Services [Member]
Business Acquisition [Line Items]
Goodwill assigned	689,000	689,000
Other non-current liability
Business Acquisition [Line Items]
Estimated acquisition earn-out payables	5,500,000	$ 5,500,000
Business Combinations - Asset Deals [Member]
Business Acquisition [Line Items]
Number of acquisitions | acquisition		6
Other Acquisitions [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	41,178,000	$ 41,178,000
Goodwill assigned	$ 27,580,000	$ 27,580,000

XML

Business Combinations - Acquisitions Accounted for Business Combinations (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Business Combination, Separately Recognized Transactions [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	$ 1,973
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	41,178
Cash Paid	26,478	$ 115,300
Other Payable	11,395
Recorded Earn-Out Payable	1,332
Net Assets Acquired	39,205
Maximum Potential Earn- Out Payable	11,605
Other current assets	98
Fixed assets	47
Goodwill	27,580
Purchased customer accounts	12,858
Non-compete agreements	595
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other	1,284
Deferred Tax Liabilities, Net	689
Services [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Goodwill	689
Services
Business Combination, Separately Recognized Transactions [Line Items]
Goodwill	18,807
National Programs
Business Combination, Separately Recognized Transactions [Line Items]
Goodwill	7,314
Wholesale Brokerage
Business Combination, Separately Recognized Transactions [Line Items]
Goodwill	771
Other Acquisitions [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	1,973
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	41,178
Net Assets Acquired	39,205
Other current assets	98
Fixed assets	47
Goodwill	27,580
Purchased customer accounts	12,858
Non-compete agreements	595
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other	1,284
Deferred Tax Liabilities, Net	689
Other Acquisitions [Member] | Various
Business Combination, Separately Recognized Transactions [Line Items]
Cash Paid	26,478
Other Payable	11,395
Recorded Earn-Out Payable	1,332
Net Assets Acquired	39,205
Maximum Potential Earn- Out Payable	$ 11,605

XML

Business Combinations - Estimated Fair Values of Aggregate Assets and Liabilities Acquired (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Fair Value Of Assets And Liabilities Statement [Line Items]
Payments to Acquire Businesses, Gross	$ 26,478	$ 115,300
Recorded Earn-Out Payable	1,332
Other current assets	98
Fixed assets	47
Goodwill	27,580
Purchased customer accounts	12,858
Non-compete agreements	595
Total assets acquired	41,178
Other current liabilities	(1,284)
Deferred Tax Liabilities, Net	(689)
Total liabilities assumed	(1,973)
Net assets acquired	39,205
Maximum Potential Earn- Out Payable	11,605
Other Acquisitions [Member]
Fair Value Of Assets And Liabilities Statement [Line Items]
Other current assets	98
Fixed assets	47
Goodwill	27,580
Purchased customer accounts	12,858
Non-compete agreements	595
Total assets acquired	41,178
Other current liabilities	(1,284)
Deferred Tax Liabilities, Net	(689)
Total liabilities assumed	(1,973)
Net assets acquired	39,205
Wholesale Brokerage
Fair Value Of Assets And Liabilities Statement [Line Items]
Goodwill	$ 771

XML

Business Combinations - Results of Operations (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual	$ 3,191		$ 3,645
Business Combination Pro Forma Information Income Loss Before Income Taxes Of Acquiree Since Acquisition Date Actual	864		979
Total revenues	476,124	$ 465,014	1,413,278	$ 1,341,511
Income before income taxes	124,582	117,929	345,608	331,574
Net income	$ 76,012	$ 72,130	$ 213,496	$ 201,675
Net income per share:
Basic (in dollars per share)	$ 0.54	$ 0.51	$ 1.52	$ 1.44
Diluted (in dollars per share)	$ 0.53	$ 0.51	$ 1.50	$ 1.43
Weighted Average Basic Shares Outstanding, Pro Forma	136,346	136,461	136,592	136,002
Weighted average number of shares outstanding:
Pro Forma Weighted Average Shares Outstanding, Diluted	138,893	138,182	139,011	137,584

XML

Business Combinations - Additions, Payments, and Net Changes, as well as Interest Expense Accretion on Estimated Acquisition Earn-Out Payables (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Combinations [Abstract]
Additions to estimated acquisition earn-out payables	$ 1,050	$ 1,437	$ 1,332	$ 3,828
Payments for estimated acquisition earn-out payables	(23,511)	(16,988)	(39,288)	(27,555)
Subtotal	35,482	57,896	25,865	54,660
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables	(1,784)	2,883	6,402	4,704
Interest expense accretion	476	727	1,907	2,142
Net change in earnings from estimated acquisition earn-out payables	(1,308)	3,610	8,309	6,846
Ending balance	$ 34,174	$ 61,506	$ 34,174	$ 61,506

XML

Goodwill - Changes in Carrying Value of Goodwill by Operating Segment (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Goodwill [Roll Forward]
Goodwill, Written off Related to Sale of Business Unit	$ 1,494
Beginning balance	2,675,402
Goodwill of acquired businesses	27,580
Ending balance	2,701,488
Services
Goodwill [Roll Forward]
Goodwill, Written off Related to Sale of Business Unit	1,494
Beginning balance	1,354,667
Goodwill of acquired businesses	18,807
Ending balance	1,371,980
National Programs
Goodwill [Roll Forward]
Goodwill, Written off Related to Sale of Business Unit	0
Beginning balance	901,294
Goodwill of acquired businesses	7,314
Ending balance	908,608
Wholesale Brokerage
Goodwill [Roll Forward]
Goodwill, Written off Related to Sale of Business Unit	0
Beginning balance	284,869
Goodwill of acquired businesses	770
Ending balance	285,639
Services
Goodwill [Roll Forward]
Goodwill, Written off Related to Sale of Business Unit	0
Beginning balance	134,572
Goodwill of acquired businesses	689
Ending balance	$ 135,261

XML

Amortizable Intangible Assets - Amortizable Intangible Assets (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 1,488,566		$ 1,477,348
Accumulated Amortization	(832,512)		(769,894)
Net Carrying Value	656,054		707,454
Purchased customer accounts
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	1,458,405		1,447,680
Accumulated Amortization	(803,764)		(741,770)
Net Carrying Value	$ 654,641		705,910
Weighted Average Life (Years)	15 years	15 years
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 30,161		29,668
Accumulated Amortization	(28,748)		(28,124)
Net Carrying Value	$ 1,413		$ 1,544
Weighted Average Life (Years)	6 years 9 months 18 days	6 years 9 months 18 days

XML

Amortizable Intangible Assets - Additional Information (Detail) $ in Millions	Sep. 30, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense estimated, year one (2015)	$ 85.3
Amortization expense estimated, year two (2016)	80.6
Amortization expense estimated, year three (2017)	76.1
Amortization expense estimated, year four (2018)	68.7
Amortization expense estimated, year five (2019)	$ 65.4

XML

Long-Term Debt - Long-Term Debt Instrument (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Jan. 15, 2015
Debt Instrument [Line Items]
Document Period End Date	Sep. 30, 2017
Total current portion of long-term debt	$ 120,000	$ 55,500
Total notes	498,904	598,785
Long-term credit agreements	370,000	426,250
Debt Issuance Costs, Gross	(8,163)	(6,663)
Total long-term debt	860,741	1,018,372
Current portion of long-term debt	120,000	55,500
Total debt	980,741	1,073,872
Notes Payable, Current	0	500
5.660% senior notes, Series C, semi-annual interest payments, balloon due 2016
Debt Instrument [Line Items]
Current portion of senior notes			$ 25,000
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018
Debt Instrument [Line Items]
Total notes	0	100,000
4.200% senior notes, semi-annual interest payments, net of the unamortized discount, balloon due 2024
Debt Instrument [Line Items]
Total notes	498,904	498,785
5-year term-loan facility, periodic interest and principal payments, LIBOR plus up to 1.750%, expires June 28, 2022
Debt Instrument [Line Items]
Current portion of loan facility	20,000	55,000
Long-term credit agreements	370,000	426,250
5-year revolving-loan facility, periodic interest payments, currently LIBOR plus up to 1.500%, plus commitment fees up to 0.250%, expires June 28, 2022
Debt Instrument [Line Items]
Long-term credit agreements	$ 0	$ 0

XML

Long-Term Debt - Long-Term Debt Instrument (Additional Information) (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Sep. 18, 2014	Sep. 15, 2011
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage		0.81%
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018
Debt Instrument [Line Items]
Debt instrument maturity year	2018	2018
Unsecured Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage			4.20%
4.200% senior notes, semi-annual interest payments, net of the unamortized discount, balloon due 2024
Debt Instrument [Line Items]
Debt instrument maturity year	2024	2024
5-year term-loan facility, periodic interest and principal payments, LIBOR plus up to 1.750%, expires June 28, 2022
Debt Instrument [Line Items]
Line of credit facility, expiration period	5 years	5 years
Line of credit facility, expiration date	Jun. 28, 2022	May 20, 2019
Five Year Term Loan Facility Expires In Two Thousand Ninteen Current [Member]
Debt Instrument [Line Items]
Debt instrument maturity year	2022	2019
5-year revolving-loan facility, periodic interest payments, currently LIBOR plus up to 1.500%, plus commitment fees up to 0.250%, expires June 28, 2022
Debt Instrument [Line Items]
Line of credit facility, expiration period	5 years	5 years
Line of credit facility, expiration date	Jun. 28, 2022	May 20, 2019
Maximum | Term Loan [Member] | LIBOR
Debt Instrument [Line Items]
Debt instrument, variable interest rate	1.75%	1.75%
Revolving Credit Facility [Member] | Maximum
Debt Instrument [Line Items]
Line of Credit Facility, Commitment Fee Percentage	0.25%	0.25%
Revolving Credit Facility [Member] | Maximum | LIBOR
Debt Instrument [Line Items]
Debt instrument, variable interest rate	1.50%	1.50%
Series E [Member] | Master Agreement [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage				4.50%

XML

Long-Term Debt - Narrative (Detail)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)	Jun. 28, 2017 USD ($)	Jan. 15, 2015 USD ($)	Sep. 18, 2014 USD ($)	May 20, 2014 USD ($) extension	Apr. 17, 2014 USD ($)	Sep. 15, 2011 USD ($)	Feb. 01, 2008 USD ($)	Dec. 22, 2006 USD ($)
Debt Instrument [Line Items]
Document Period End Date		Sep. 30, 2017
Debt instrument interest rate stated percentage			0.81%
Credit facility, outstanding amount	$ 370,000,000	$ 370,000,000	$ 426,250,000
Potential increased in line of credit facility									$ 500,000,000.0
Unsecured revolving credit facility					$ 400,000,000.0				800,000,000.0
Write off of Deferred Debt Issuance Cost	200,000
Debt Issuance Costs, Noncurrent, Net					1,600,000
Debt Instrument, Periodic Payment, Principal	5,000,000
Proceeds from Issuance of Debt	2,800,000
Unsecured term loans					$ 390,000,000.0				550,000,000.0
Outstanding debt balance	980,741,000	980,741,000	1,073,872,000
Notes Payable, Current	0	0	500,000
5.660% senior notes, Series C, semi-annual interest payments, balloon due 2016
Debt Instrument [Line Items]
Current portion of senior notes						$ 25,000,000
Credit Agreement
Debt Instrument [Line Items]
Number of extension periods | extension								2
Unsecured revolving credit facility									$ 1,350,000,000.0
Unsecured Senior Notes
Debt Instrument [Line Items]
Debt instrument interest rate stated percentage							4.20%
Debt instrument, face amount							$ 500,000,000.0
Outstanding debt balance	500,000,000	500,000,000	500,000,000
Term Loan
Debt Instrument [Line Items]
Credit facility, outstanding amount								$ 550,000,000.0
Debt Instrument, Periodic Payment, Principal	67,500,000.0
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Credit facility, outstanding amount							$ 475,000,000	$ 375,000,000
Uncommitted Facility | New Master Agreement
Debt Instrument [Line Items]
Credit facility, outstanding amount			$ 0
Master Agreement
Debt Instrument [Line Items]
Unsecured senior notes outstanding	$ 100,000,000	$ 100,000,000
Master Agreement | Series C
Debt Instrument [Line Items]
Unsecured senior notes outstanding											$ 25,000,000.0	$ 25,000,000.0
Debt instrument interest rate stated percentage												5.66%
Master Agreement | Series D
Debt Instrument [Line Items]
Debt instrument interest rate stated percentage											5.37%
Master Agreement | Series E
Debt Instrument [Line Items]
Unsecured senior notes outstanding										$ 100,000,000.0
Debt instrument interest rate stated percentage										4.50%
LIBOR
Debt Instrument [Line Items]
30-day Adjusted LIBOR Rate	1.25%	1.25%
Minimum | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Facility fee		0.15%
Minimum | LIBOR | Term Loan
Debt Instrument [Line Items]
Debt instrument, variable interest rate		1.00%
Minimum | LIBOR | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt instrument, variable interest rate		0.85%
Maximum | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Facility fee		0.25%	0.25%
Maximum | LIBOR | Term Loan
Debt Instrument [Line Items]
Debt instrument, variable interest rate		1.75%	1.75%
Maximum | LIBOR | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt instrument, variable interest rate		1.50%	1.50%
Scenario, Forecast [Member]
Debt Instrument [Line Items]
Unsecured senior notes outstanding				$ 5,000,000

XML

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities - Significant Non-Cash Investing and Financing Activities (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Restricted Cash and Cash Equivalents Items [Line Items]
Document Period End Date	Sep. 30, 2017
Cash and cash equivalents	$ 546,520,000	$ 488,683,000	$ 515,646,000	$ 443,420,000
Restricted Cash and Cash Equivalents	276,687,000	278,279,000	265,637,000	229,753,000
Cash paid during the period for:
Interest	32,504,000	33,122,000
Income taxes	110,853,000	104,739,000
Significant non-cash investing and financing activities
Other payable issued for purchased customer accounts	11,395,000	10,505,000
Estimated acquisition earn-out payables and related charges	1,332,000	3,828,000
Business Acquisition Cost of Entity Note Payable	0	492,000
Cash and Cash Equivalents inclusive of Restricted Cash [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalents	$ 823,207,000	$ 766,962,000	$ 781,283,000	$ 673,173,000

XML

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities Restricted Cash (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Cash and cash equivalents	$ 546,520,000	$ 488,683,000	$ 515,646,000	$ 443,420,000
Cash and Cash Equivalents, at Carrying Value	823,207,000	766,962,000	781,283,000	673,173,000
Restricted Cash and Cash Equivalents	276,687,000	278,279,000	265,637,000	229,753,000
Cash and Cash Equivalents inclusive of Restricted Cash [Member]
Cash and cash equivalents	$ 823,207,000	$ 766,962,000	$ 781,283,000	$ 673,173,000

XML

Segment Information - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) Segment	Sep. 30, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | Segment			4
Total revenues	$ 475,646	$ 462,274	$ 1,407,031	$ 1,332,965
London, Bermuda and Cayman Islands
Segment Reporting Information [Line Items]
Total revenues	$ 3,900	$ 3,800	$ 11,100	$ 10,300

XML

Segment Information - Summarized Financial Information Reportable Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Total revenues	$ 475,646	$ 462,274	$ 1,407,031	$ 1,332,965
Investment income	491	230	1,085	1,150
Amortization	21,435	21,805	64,402	65,025
Depreciation	5,489	5,195	17,242	15,867
Interest expense	9,393	9,883	28,949	29,617
Income before income taxes	124,419	116,972	343,388	328,598
Total assets	7,414,277	5,522,027	7,414,277	5,522,027	$ 5,262,734
Capital expenditures	4,049	4,191	12,897	13,135
Operating Segments | Services
Segment Reporting Information [Line Items]
Total revenues	234,483	228,645	712,739	695,393
Investment income	3	5	6	33
Amortization	10,540	10,861	31,704	32,743
Depreciation	1,262	1,508	3,975	4,761
Interest expense	7,216	9,026	23,918	29,415
Income before income taxes	54,950	44,894	151,783	144,496
Total assets	4,246,422	3,652,977	4,246,422	3,652,977
Capital expenditures	844	1,443	3,384	4,664
Operating Segments | National Programs
Segment Reporting Information [Line Items]
Total revenues	127,718	123,632	342,576	333,522
Investment income	124	96	279	583
Amortization	6,913	6,921	20,664	21,011
Depreciation	1,412	1,945	4,975	5,881
Interest expense	8,304	10,844	27,257	34,895
Income before income taxes	32,203	32,319	68,127	68,367
Total assets	5,026,918	2,933,568	5,026,918	2,933,568
Capital expenditures	1,357	2,153	3,885	5,399
Operating Segments | Wholesale Brokerage
Segment Reporting Information [Line Items]
Total revenues	71,574	70,192	208,812	184,893
Investment income	0	0	0	4
Amortization	2,845	2,882	8,621	7,915
Depreciation	471	503	1,438	1,487
Interest expense	1,515	1,540	4,803	2,472
Income before income taxes	21,219	20,862	56,569	51,711
Total assets	1,258,783	1,053,516	1,258,783	1,053,516
Capital expenditures	214	11	1,606	925
Operating Segments | Services
Segment Reporting Information [Line Items]
Total revenues	41,491	39,586	122,397	117,906
Investment income	72	57	224	204
Amortization	1,137	1,140	3,412	3,345
Depreciation	402	473	1,191	1,432
Interest expense	876	1,257	2,783	3,820
Income before income taxes	7,910	5,971	22,480	17,929
Total assets	432,331	342,360	432,331	342,360
Capital expenditures	364	80	856	561
Other
Segment Reporting Information [Line Items]
Total revenues	380	219	20,507	1,251
Investment income	292	72	576	326
Amortization	0	1	1	11
Depreciation	1,942	766	5,663	2,306
Interest expense	(8,518)	(12,784)	(29,812)	(40,985)
Income before income taxes	8,137	12,926	44,429	46,095
Total assets	(3,550,177)	(2,460,394)	(3,550,177)	(2,460,394)
Capital expenditures	$ 1,270	$ 504	$ 3,166	$ 1,586

XML

Investments - Schedule of Investments in Fixed Maturity Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Debt Maturities, Single Maturity Date	$ 9,200	$ 9,500
Cost	34,131	28,638
Gross Unrealized Gains	17	24
Gross Unrealized Losses	(94)	(60)
Fair Value	34,054	28,602
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities
Schedule of Available-for-sale Securities [Line Items]
Cost	32,724	26,280
Gross Unrealized Gains	1	11
Gross Unrealized Losses	(94)	(59)
Fair Value	32,631	26,232
Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Cost	1,407	2,358
Gross Unrealized Gains	16	13
Gross Unrealized Losses	0	(1)
Fair Value	$ 1,423	$ 2,370

XML

Investments - Summary of Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 24,644	$ 15,664
Unrealized Losses, Less than 12 Months	(60)	(60)
Fair Value, 12 Months or More	7,364	0
Unrealized Losses, 12 Months or More	34	0
Fair Value	32,008	15,664
Unrealized Losses	(94)	(60)
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	24,444	14,663
Unrealized Losses, Less than 12 Months	(60)	(59)
Fair Value, 12 Months or More	7,364	0
Unrealized Losses, 12 Months or More	34	0
Fair Value	31,808	14,663
Unrealized Losses	(94)	(59)
Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	200	1,001
Unrealized Losses, Less than 12 Months	0	(1)
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value	200	1,001
Unrealized Losses	$ 0	$ (1)

XML

Investments - Additional Information (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($) Securities	Dec. 31, 2016 USD ($) Securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	$ 34,054	$ 28,602
Number of securities in unrealized loss position | Securities	27	20
Proceeds from sale of investment in fixed maturity securities	$ 2,700
Proceeds from Sale of Other Investments	$ 5,200
Investment security maturity date, start	Jan. 01, 2017
Investment security maturity date, End	Sep. 30, 2017
Gross realized gains and losses of securities	insignificant
Investments on deposit with the state insurance department	$ 4,000
U.S. Treasury securities, obligations of U.S. Government agencies and Municipalities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities	$ 32,631	$ 26,232

XML

Investments - Amortized Cost and Fair Value of Fixed Maturity Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Amortized Cost
Due in one year or less	$ 20,005	$ 5,551
Due after one year through five years	13,893	22,757
Due after five years	233	330
Amortized Cost, Total	34,131	28,638
Fair Value
Due in one year or less	19,969	5,554
Due after one year through five years	13,843	22,708
Due after five years	242	340
Fair Value, Total	$ 34,054	$ 28,602

XML

Losses and Loss Adjustment Reserve - Effects of Reinsurance on Premiums Written and Earned (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Written
Direct premiums	$ 462,718
Ceded premiums	(462,710)
Net premiums	8
Earned
Direct premiums	439,134
Ceded premiums	(439,126)
Net premiums	$ 8

XML

Losses and Loss Adjustment Reserve - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2017 USD ($) Reinsurer	Dec. 31, 2016 USD ($)
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded rate of premiums under insurance program	100.00%
Premiums written net	$ 462,710,000
Ceded unpaid loss	2,160,300,000
Prepaid reinsurance premiums	332,246,000	$ 308,661,000
Increase (Decrease) in Loss and Loss Adjustment Expense Reserve	0
Reserve for losses and loss adjustment expense	$ 2,160,300,000
Number of reinsurers | Reinsurer	2
Wright Flood
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded rate of premiums under insurance program	100.00%
Expenses and allowance rate received in premiums	30.90%
Premiums written net	$ 461,500,000
Wright Flood | Quota Share Agreement
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Effective cedes rate under quota share agreement	100.00%
Commission rate, percent of ceded written premiums	30.50%
Ceded amount	$ 1,200,000

XML

Statutory Financial Information - Additional Information (Detail) - Wright Flood - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Statutory Accounting Practices [Line Items]
Statutory capital and surplus required	$ 7,500,000
Statutory capital and surplus	26,700,000	$ 23,500,000
Statutory net Income	$ 2,900,000	$ 8,200,000

XML

Subsidiary Dividend Restrictions - Additional Information (Detail) - Wright Flood $ in Millions	9 Months Ended
	Sep. 30, 2017 USD ($)
Dividend Restrictions [Line Items]
Dividend rate as a percentage of net income	100.00%
Ordinary dividends payment description	The maximum amount of ordinary dividends that Wright Flood can pay to shareholders in a rolling twelve month period is limited to the greater of 10% of statutory adjusted capital and surplus as shown on Wright Flood’s last annual statement on file with the superintendent or 100% of adjusted net income.
Maximum dividend payout that may be made without prior approval	$ 8.2
Maximum
Dividend Restrictions [Line Items]
Dividend rate as a percentage of net income	10.00%

XML

Shareholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accelerated Share Repurchases [Line Items]
Shares repurchased, number of shares received initially (in shares)	9,319,545	8,003,197
Fair value of common stock repurchased	$ 315,072	$ 257,683
Repurchase Agreements [Member]
Accelerated Share Repurchases [Line Items]
Shares repurchased, authorized amount	$ 100,000