UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2023

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)
300 North Beach Street, Daytona Beach, FL		32114
(Address of principal executive offices)		(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 Par Value	BRO	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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	☒	Accelerated filer	☐
Non-accelerated filer	☐	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 ☒

The number of shares of the Registrant’s common stock, $0.10 par value, outstanding as of October 23, 2023 was 284,597,831.

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, 2023 and 2022	5
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022	6
	Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	7
	Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2023 and 2022	8
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	11
	Notes to Condensed Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
SIGNATURE		52

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, possibly 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”:

•The inability to retain or hire qualified employees, as well as the loss of any of our executive officers or other key employees;

•Acquisition-related risks that could negatively affect the success of our growth strategy, including the possibility that we may not be able to successfully identify suitable acquisition candidates, complete acquisitions, successfully integrate acquired businesses into our operations and expand into new markets;

•A cybersecurity attack or any other interruption in information technology and/or data security that may impact our operations or the operations of third parties that support us;

•Risks related to our international operations, which may result in additional risks or require more management time and expense than our domestic operations to achieve or maintain profitability;

•The effects of inflation;

•The requirement for additional resources and time to adequately respond to dynamics resulting from rapid technological change;

•The loss of or significant change to any of our insurance company relationships, which could result in loss of capacity to write business, additional expense, loss of market share or material decrease in our commissions;

•The effect of natural disasters on our profit-sharing contingent commissions, insurer capacity and claims expenses from our capitalized captive insurance facilities;

•Adverse economic conditions, political conditions, outbreaks of war, disasters, or regulatory changes in states or countries where we have a concentration of our business;

•The inability to maintain our culture or a significant change in management, management philosophy or our business strategy;

•Claims expense resulting from the limited underwriting risk associated with our participation in capitalized captive insurance facilities;

•Risks associated with our automobile and recreational vehicle dealer services (“F&I”) businesses;

•Risks facing us in our Services segment, including our third-party claims administration operations, that are distinct from those we face in our insurance intermediary operations;

•The limitations of our system of disclosure and internal controls and procedures in preventing errors or fraud, or in informing management of all material information in a timely manner;

•The significant control certain shareholders have over the Company;

•Changes in data privacy and protection laws and regulations or any failure to comply with such laws and regulations;

•Improper disclosure of confidential information;

•Our ability to comply with non-U.S. laws, regulations and policies;

•The potential adverse effect of certain actual or potential claims, regulatory actions or proceedings on our businesses, results of operations, financial condition or liquidity;

•Uncertainty in our business practices and compensation arrangements with insurance carriers due to potential changes in regulations;

3

•Regulatory changes that could reduce our profitability or growth by increasing compliance costs, technology compliance, restricting the products or services we may sell, the markets we may enter, the methods by which we may sell our products and services, or the prices we may charge for our services and the form of compensation we may accept from our customers, carriers and third parties;

•Increasing scrutiny and changing expectations from investors and customers with respect to our environmental, social and governance practices;

•A decrease in demand for liability insurance as a result of tort reform legislation;

•Our failure to comply with any covenants contained in our debt agreements;

•The possibility that covenants in our debt agreements could prevent us from engaging in certain potentially beneficial activities;

•Changes in the U.S.-based credit markets that might adversely affect our business, results of operations and financial condition;

•Risks associated with the current interest rate environment, and to the extent we use debt to finance our investments, changes in interest rates will affect our cost of capital and net investment income;

•Changes in current U.S. or global economic conditions, including an extended slowdown in the markets in which we operate;

•Disintermediation within the insurance industry, including increased competition from insurance companies, technology companies and the financial services industry, as well as the shift away from traditional insurance markets;

•Conditions that result in reduced insurer capacity;

•Quarterly and annual variations in our commissions that result from the timing of policy renewals and the net effect of new and lost business production;

•Intangible asset risk, including the possibility that our goodwill may become impaired in the future;

•Future pandemics, epidemics or outbreaks of infectious diseases, and the resulting governmental and societal responses;

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

•Other factors that the Company may not have currently identified or quantified.

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. All forward-looking statements made herein are made only as of the date of this filing, and the Company does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which the Company hereafter becomes aware.

4

PART I — FINANCIAL INFORMATION

ITEM 1 — Financial Statements (Unaudited)

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three months ended September 30,						Nine months ended September 30,
(in millions, except per share data)	2023			2022			2023			2022
REVENUES
Commissions and fees	$	1,049.3		$	925.2		$	3,193.2		$	2,668.2
Investment income		16.6			1.2			33.8			1.8
Other income, net		1.8			1.2			3.9			2.0
Total revenues		1,067.7			927.6			3,230.9			2,672.0
EXPENSES
Employee compensation and benefits		531.6			470.3			1,632.9			1,341.3
Other operating expenses		167.7			169.6			490.2			450.6
(Gain)/loss on disposal		(2.8	)		—			(8.9	)		(0.9	)
Amortization		41.1			43.5			123.7			108.2
Depreciation		10.4			11.3			30.5			28.3
Interest		47.5			41.5			142.1			95.8
Change in estimated acquisition earn-out payables		29.9			(26.6	)		29.4			(33.1	)
Total expenses		825.4			709.6			2,439.9			1,990.2
Income before income taxes		242.3			218.0			791.0			681.8
Income taxes		66.4			56.9			189.2			155.2
Net income	$	175.9		$	161.1		$	601.8		$	526.6
Net income per share:
Basic	$	0.62		$	0.57		$	2.12		$	1.86
Diluted	$	0.62		$	0.57		$	2.11		$	1.85
Dividends declared per share	$	0.115		$	0.103		$	0.345		$	0.309

See accompanying Notes to Condensed Consolidated Financial Statements.

5

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

	Three months ended September 30,						Nine months ended September 30,
(in millions)	2023			2022			2023		2022
Net income	$	175.9		$	161.1		$	601.8	$	526.6
Foreign currency translation		(77.2	)		(172.3	)		20.6		(304.5	)
Unrealized gain/(loss) on available-for-sale debt securities, net of tax		0.1			(0.4	)		0.2		(1.6	)
Comprehensive (loss) income	$	98.8		$	(11.6	)	$	622.6	$	220.5

See accompanying Notes to Condensed Consolidated Financial Statements.

6

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except per share data)	September 30, 2023			December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	755.7		$	650.0
Fiduciary cash		1,515.2			1,383.2
Short-term investments		13.2			12.0
Commission, fees and other receivables		732.6			642.9
Fiduciary receivables		862.5			881.4
Reinsurance recoverable		220.1			831.0
Prepaid reinsurance premiums		502.7			393.2
Other current assets		243.2			202.3
Total current assets		4,845.2			4,996.0
Fixed assets, net		250.2			239.9
Operating lease assets		198.0			214.9
Goodwill		6,845.6			6,674.2
Amortizable intangible assets, net		1,531.7			1,595.2
Investments		24.3			22.4
Other assets		288.0			230.9
Total assets	$	13,983.0		$	13,973.5
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Fiduciary liabilities	$	2,377.7		$	2,264.6
Losses and loss adjustment reserve		231.7			841.1
Unearned premiums		530.9			412.3
Accounts payable		380.2			286.5
Accrued expenses and other liabilities		507.5			541.5
Current portion of long-term debt		562.5			250.6
Total current liabilities		4,590.5			4,596.6
Long-term debt less unamortized discount and debt issuance costs		3,144.6			3,691.5
Operating lease liabilities		178.9			195.9
Deferred income taxes, net		568.4			584.0
Other liabilities		301.9			298.9
Shareholders’ Equity:
Common stock, par value $0.10 per share; authorized 560.0 shares; issued 304.0 shares and outstanding 284.3 shares at 2023, issued 302.9 shares and outstanding 283.2 shares at 2022, respectively		30.4			30.3
Additional paid-in capital		987.1			919.7
Treasury stock, at cost 19.7 shares at 2023, 19.7 shares at 2022, respectively.		(748.1	)		(748.0	)
Accumulated other comprehensive loss		(127.6	)		(148.4	)
Retained earnings		5,056.9			4,553.0
Total shareholders’ equity		5,198.7			4,606.6
Total liabilities and shareholders’ equity	$	13,983.0		$	13,973.5

See accompanying Notes to Condensed Consolidated Financial Statements.

7

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

8

	Common Stock
(in millions, except per share data)	Shares Outstanding			Par Value			Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
Balance at December 31, 2022		283.2		$	30.3		$	919.7		$	(748.0	)	$	(148.4	)	$	4,553.0		$	4,606.6
Net income																	235.5			235.5
Net unrealized holding (loss) gain on available-for-sale securities														0.3						0.3
Foreign currency translation														47.1						47.1
Shares issued - employee stock compensation plans:
Employee stock purchase plan								3.4												3.4
Stock incentive plans		1.0			0.1			20.9												21.0
Repurchase shares to fund tax withholdings for non-cash stock-based compensation		(0.6	)		(0.1	)		(36.1	)											(36.2	)
Purchase of treasury stock		—			—						(0.1	)								(0.1	)
Cash dividends paid ($0.1150 per share)																	(32.6	)		(32.6	)
Balance at March 31, 2023		283.6		$	30.3		$	907.9		$	(748.1	)	$	(101.0	)	$	4,755.9		$	4,845.0
Net income																	190.4			190.4
Net unrealized holding (loss) gain on available-for-    sale securities														(0.2	)					(0.2	)
Foreign currency translation								(0.2	)					50.7						50.5
Shares issued - employee stock compensation plans:
Employee stock purchase plan								2.4												2.4
Stock incentive plans		—			—			18.7												18.7
Directors		—			—			1.1												1.1
Repurchase shares to fund tax withholdings for non-cash stock-based compensation		—			—			(2.8	)											(2.8	)
Cash dividends paid ($0.1150 per share)																	(32.6	)		(32.6	)
Balance at June 30, 2023		283.6		$	30.3		$	927.1		$	(748.1	)	$	(50.5	)	$	4,913.7		$	5,072.5
Net income																	175.9			175.9
Net unrealized holding (loss) gain on available-for-sale securities														0.1						0.1
Foreign currency translation								—						(77.2	)					(77.2	)
Shares issued - employee stock compensation plans:
Employee stock purchase plan		0.7			0.1			42.9												43.0
Stock incentive plans		—			—			17.9												17.9
Repurchase shares to fund tax withholdings for non-cash stock-based compensation		—			—			(0.8	)											(0.8	)
Cash dividends paid ($0.1150 per share)																	(32.7	)		(32.7	)
Balance at September 30, 2023		284.3		$	30.4		$	987.1		$	(748.1	)	$	(127.6	)	$	5,056.9		$	5,198.7
Balance at December 31, 2021		282.5		$	30.1		$	849.4		$	(673.9	)	$	(9.4	)	$	4,000.7		$	4,196.9
Net income																	220.3			220.3
Net unrealized holding (loss) gain on available-for-sale securities														(0.9	)