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 March 31, 2024

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 April 23, 2024 was 285,249,262.

BROWN & BROWN, INC.

INDEX

		PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Statements of Income for the three months ended March 31, 2024 and 2023	5
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023	6
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	7
	Condensed Consolidated Statements of Equity for the three months ended March 31, 2024 and 2023	8
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
SIGNATURE		39

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 hire, retain and develop qualified employees, as well as the loss of any of our executive officers or other key employees;

•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;

•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;

•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 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 or claims expenses within 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;

•Fluctuations in our commission revenue as a result of factors outside of our control;

•The effects of sustained inflation or higher interest rates;

•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;

•Changes in, or the termination of, certain programs administered by the U.S. federal government from which we derive revenues;

•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 laws and expectations from regulators, investors and customers with respect to our environmental, social and governance practices and disclosure;

•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;

•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 March 31,
(in millions, except per share data)	2024			2023
REVENUES
Commissions and fees	$	1,237		$	1,108
Investment income		18			7
Other income, net		3			1
Total revenues		1,258			1,116
EXPENSES
Employee compensation and benefits		631			571
Other operating expenses		161			161
Loss/(gain) on disposal		2			(6	)
Amortization		43			41
Depreciation		11			10
Interest		48			47
Change in estimated acquisition earn-out payables		(2	)		(2	)
Total expenses		894			822
Income before income taxes		364			294
Income taxes		71			58
Net income before non-controlling interests		293			236
Less: Net income attributable to non-controlling interests		—			—
Net income attributable to the Company	$	293		$	236
Net income per share:
Basic	$	1.03		$	0.83
Diluted	$	1.02		$	0.83

See accompanying Notes to Condensed Consolidated Financial Statements.

5

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three months ended March 31,
(in millions)	2024			2023
Net income attributable to the Company	$	293		$	236
Foreign currency translation (loss)/gain		(32	)		47
Comprehensive income attributable to the Company	$	261		$	283

See accompanying Notes to Condensed Consolidated Financial Statements.

6

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except per share data)	March 31, 2024			December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	581		$	700
Fiduciary cash		1,569			1,603
Short-term investments		10			11
Commission, fees and other receivables		932			790
Fiduciary receivables		1,133			1,125
Reinsurance recoverable		65			125
Prepaid reinsurance premiums		428			462
Other current assets		287			314
Total current assets		5,005			5,130
Fixed assets, net		272			270
Operating lease assets		197			199
Goodwill		7,386			7,341
Amortizable intangible assets, net		1,592			1,621
Investments		21			21
Other assets		333			301
Total assets	$	14,806		$	14,883
LIABILITIES AND EQUITY
Current Liabilities:
Fiduciary liabilities	$	2,702		$	2,727
Losses and loss adjustment reserve		72			131
Unearned premiums		488			462
Accounts payable		322			459
Accrued expenses and other liabilities		421			608
Current portion of long-term debt		875			569
Total current liabilities		4,880			4,956
Long-term debt less unamortized discount and debt issuance costs		3,009			3,227
Operating lease liabilities		178			179
Deferred income taxes, net		614			616
Other liabilities		338			326
Equity:
Common stock, par value $0.10 per share; authorized 560 shares; issued 305 shares and outstanding 285 shares at 2024, issued 304 shares and outstanding 285 shares at 2023, respectively		30			30
Additional paid-in capital		1,003			1,027
Treasury stock, at cost 20 shares at 2024, 20 shares at 2023, respectively		(748	)		(748	)
Accumulated other comprehensive loss		(51	)		(19	)
Non-controlling interests		9			—
Retained earnings		5,544			5,289
Total equity		5,787			5,579
Total liabilities and equity	$	14,806		$	14,883

See accompanying Notes to Condensed Consolidated Financial Statements.

7

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

	Common Stock
(in millions, except per share data)	Shares Outstanding			Par Value		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Non-Controlling Interest		Total
Balance at December 31, 2023		285		$	30	$	1,027		$	(748	)	$	(19	)	$	5,289		$	—	$	5,579
Net income																293					293
Foreign currency translation													(32	)							(32	)
Shares issued - employee stock compensation plans:
Employee stock purchase plan							4														4
Stock incentive plans		1					25														25
Net non-controlling interest acquired (disposed)							1												9		10
Repurchase shares to fund tax withholdings for non-cash stock-based compensation		(1	)				(54	)													(54	)
Cash dividends paid ($0.1300 per share)																(38	)				(38	)
Balance at March 31, 2024		285		$	30	$	1,003		$	(748	)	$	(51	)	$	5,544		$	9	$	5,787
Balance at December 31, 2022		283		$	30	$	920		$	(748	)	$	(148	)	$	4,553		$	—	$	4,607
Net income																236					236
Foreign currency translation													47								47
Shares issued - employee stock compensation plans:
Employee stock purchase plan							3														3
Stock incentive plans		1					21														21
Repurchase shares to fund tax withholdings for non-cash stock-based compensation							(36	)													(36	)
Cash dividends paid ($0.1150 per share)																(33	)				(33	)
Balance at March 31, 2023		284		$	30	$	908		$	(748	)	$	(101	)	$	4,756		$	—	$	4,845

See accompanying Notes to Condensed Consolidated Financial Statements.

8

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three months ended March 31,
(in millions)	2024			2023
Cash flows from operating activities:
Net income before non-controlling interests	$	293		$	236
Adjustments to reconcile net income before non-controlling interest to net cash provided by operating activities:
Amortization		43			41
Depreciation		11			10
Non-cash stock-based compensation		29			24
Change in estimated acquisition earn-out payables		(2	)		(2	)
Deferred income taxes		(1	)		1
Net loss/(gain) on sales/disposals of investments, fixed assets and customer accounts		2			(5	)
Payments on acquisition earn-outs in excess of original estimated payables		(13	)		—
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures:
Commissions, fees and other receivables (increase) decrease		(142	)		(131	)
Reinsurance recoverable (increase) decrease		60			688
Prepaid reinsurance premiums (increase) decrease		33			14
Other assets (increase) decrease		—			(6	)
Losses and loss adjustment reserve increase (decrease)		(59	)		(687	)
Unearned premiums increase (decrease)		25			(13	)
Accounts payable increase (decrease)		(86	)		71
Accrued expenses and other liabilities increase (decrease)		(186	)		(169	)
Other liabilities increase (decrease)		6			(12	)
Net cash provided by operating activities		13			60
Cash flows from investing activities:
Additions to fixed assets		(13	)		(12	)
Payments for businesses acquired, net of cash acquired		(76	)		(38	)
Proceeds from sales of fixed assets and customer accounts		—			6
Purchases of investments		—			(3	)
Proceeds from sales of investments		1			4
Net cash used in investing activities		(88	)		(43	)
Cash flows from financing activities:
Fiduciary receivables and liabilities, net		(26	)		(19	)
Payments on acquisition earn-outs		(39	)		(16	)
Payments on long-term debt		(13	)		(17	)
Borrowings on revolving credit facility		150			—
Payments on revolving credit facilities		(50	)		—
Repurchase shares to fund tax withholdings for non-cash stock-based compensation		(54	)		(36	)
Cash dividends paid		(38	)		(33	)
Non-controlling interest acquired (disposed), net		3			—
Net cash used in financing activities		(67	)		(121	)
Effect of foreign exchange rate changes on cash and cash equivalents inclusive of fiduciary cash		(11	)		14
Net decrease in cash and cash equivalents inclusive of fiduciary cash		(153	)		(90	)
Cash and cash equivalents inclusive of fiduciary cash at beginning of period		2,303			2,033
Cash and cash equivalents inclusive of fiduciary cash at end of period	$	2,150		$	1,943

See accompanying Notes to Condensed Consolidated Financial Statements. Refer to Note 10 for the reconciliations of cash and cash equivalents inclusive of fiduciary cash.

9

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 service organization that markets and sells insurance products and services, primarily in the property, casualty and employee benefits areas. Brown & Brown’s business is divided into three reportable segments. The Retail segment provides a broad range of insurance products and services to commercial, public and quasi-public entities, professional and individual insured customers, and non-insurance risk-mitigating products through our automobile and recreational vehicle dealer services (“F&I”) businesses. The Programs segment, which acts as a managing general underwriter (“MGU”), 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 a nationwide network of independent agents, including Brown & Brown retail agents. The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents.

The Company primarily operates as an agent or broker not assuming underwriting risks. However, we operate a write-your-own flood insurance carrier, Wright National Flood Insurance Company (“WNFIC”). WNFIC’s underwriting business consists of policies written pursuant to the National Flood Insurance Program (“NFIP”), the program administered by the Federal Emergency Management Agency (“FEMA”). In addition, WNFIC writes excess flood policies that are fully reinsured by a private carrier. The Company also operates two capitalized captive insurance facilities (the "Captives") for the purpose of facilitating additional underwriting capacity, generating incremental revenues and participating in underwriting results.

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 recurring accruals) 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, 2023.

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 Condensed Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Business Realignment

In conjunction with the divestiture of certain businesses within the Company’s Services segment in the fourth quarter of 2023, the Company aligned its business from four to three segments beginning in fiscal year 2024. As a result of the segment reorganization, the Services segment was eliminated as a business segment. The Company reports its financial results in the following three reportable segments: Retail, Programs and Wholesale Brokerage. The historical results, discussion and presentation of our business segments as set forth in the accompanying Condensed Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of income, balance sheets, statements of cash flows, statements of comprehensive income or statements of shareholders’ equity resulting from these changes. See Note 12 of these Notes to Condensed Consolidated Financial Statements for further information.

Recently Issued Accounting Pronouncements

On November 27, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, "Improvements to Reportable Segment Disclosures." This ASU requires additional reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the ASU enhances interim disclosure requirements effectively making the current annual requirements a requirement for interim reporting. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements.

On December 14, 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures." This ASU improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements.

10

Recently Adopted Accounting Standards

None.

Income Tax Expense

The effective tax rate on income from operations for the three months ended March 31, 2024, was 19.5%. The first quarter tax rate is generally lower than the full year rate due to the timing of vestings on equity-based compensation.

NOTE 3 Revenues

The following tables present the revenues disaggregated by revenue source:

	Three months ended March 31, 2024
(in millions)	Retail		Programs		Wholesale Brokerage		Other (8)		Total
Base commissions (1)	$	547	$	206	$	111	$	—	$	864
Fees (2)		156		49		21		1		227
Other supplemental commissions (3)		86		1		3		—		90
Profit-sharing contingent commissions (4)		14		26		6		—		46
Earned premium (5)		—		10		—		—		10
Investment income (6)		1		5		1		11		18
Other income, net (7)		2		1		—		—		3
Total Revenues	$	806	$	298	$	142	$	12	$	1,258

	Three months ended March 31, 2023
(in millions)	Retail		Programs		Wholesale Brokerage		Other (8)			Total
Base commissions (1)	$	490	$	158	$	99	$	—		$	747
Fees (2)		145		76		18		(1	)		238
Other supplemental commissions (3)		82		2		2		—			86
Profit-sharing contingent commissions (4)		15		8		4		—			27
Earned premium (5)		—		10		—		—			10
Investment income (6)		—		1		—		6			7
Other income, net (7)		1		—		—		—			1
Total Revenues	$	733	$	255	$	123	$	5		$	1,116

(1)Base commissions 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.

(2)Fee revenues relate to fees for services other than securing coverage for our customers, fees negotiated in lieu of commissions, and F&I products and services.

(3)Other supplemental commissions include additional commissions over base commissions received from insurance carriers based on predetermined growth or production measures. This includes incentive commissions and guaranteed supplemental commissions.

(4)Profit-sharing contingent commissions are based primarily on underwriting results, but may also reflect considerations for volume, growth and/or retention.

(5)Earned premium relates to the premiums earned in the Captives.

(6)Investment income consists primarily of interest on cash and investments.

(7)Other income consists primarily of other miscellaneous income.

(8)Fees within Other primarily reflects the elimination of intercompany revenues.

11

The following table presents the revenues disaggregated by geographic area where our services are being performed:

	Three months ended March 31,
(in millions, except per share data)	2024		2023
U.S.	$	1,099	$	999
U.K.		131		98
Ireland		12		11
Canada		9		5
Other		7		3
Total Revenues	$	1,258	$	1,116

Contract Assets and Liabilities

The balances of contract assets and contract liabilities arising from contracts with customers as of March 31, 2024 and December 31, 2023 were as follows:

(in millions)	March 31, 2024		December 31, 2023
Contract assets	$	630	$	473
Contract liabilities	$	107	$	113

Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which have not yet been billed in the Company's systems and are reflected in commissions, fees and other receivables in the Company's Condensed Consolidated Balance Sheet. The increase in contract assets over the balance as of December 31, 2023 is due to normal seasonality and growth in our business.

Deferred revenue (contract liabilities) relates to payments received in advance of performance under the contract before the transfer of a good or service to the customer. Deferred revenue is reflected within accrued expenses and other liabilities for those to be recognized in less than twelve months and in other liabilities for those to be recognized more than twelve months from the date presented in the Company's Condensed Consolidated Balance Sheet.

As of March 31, 2024, deferred revenue consisted of $69 million as the current portion to be recognized within one year and $38 million in long-term to be recognized beyond one year. As of December 31, 2023, deferred revenue consisted of $78 million as the current portion to be recognized within one year and $35 million in long-term deferred revenue to be recognized beyond one year.

During the three months ended March 31, 2024 and 2023, the net amount of revenue recognized related to performance obligations satisfied in a previous period was $16 million and $12 million, consisting of additional variable consideration received on our incentive and profit-sharing contingent commissions.

Other Assets and Deferred Cost

Incremental cost to obtain customer contracts - The Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans in the Retail segment, in which the Company pays an incremental amount of compensation on new business. These incremental costs are deferred and amortized over a 15-year period, consistent with the period for acquired customer intangibles. The cost to obtain customer contracts balance within the other assets caption in the Company's Condensed Consolidated Balance Sheet was $102 million and $96 million as of March 31, 2024 and December 31, 2023, respectively. For the three months ended March 31, 2024, the Company deferred $8 million of incremental cost to obtain customer contracts. The Company recorded an expense of $2 million associated with the incremental cost to obtain customer contracts for the three months ended March 31, 2024.

Cost to fulfill customer contracts - The Company defers certain costs to fulfill contracts and recognizes these costs as the associated performance obligations are fulfilled. The cost to fulfill balance within the other current assets caption in the Company's Condensed Consolidated Balance Sheet as of March 31, 2024 was $107 million. The cost to fulfill customer contracts balance as of December 31, 2023 was $123 million. For the three months ended March 31, 2024, the Company had net expense of $17 million related to the release of previously deferred contract fulfillment costs associated with performance obligations that were satisfied in the period, net of current year deferrals for costs incurred that related to performance obligations yet to be fulfilled.

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NOTE 4 Net Income Per Share

Basic net income per share is computed based on the weighted average number of common shares (including participating securities) issued and outstanding during the period. Diluted net income per share is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the issuance of all potentially issuable common shares. The dilutive effect of potentially issuable common shares is computed by application of the treasury stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding:

	Three months ended March 31,
(in millions, except per share data)	2024			2023
Net income attributable to the Company	$	293		$	236
Net income attributable to unvested awarded performance stock		(4	)		(4	)
Net income attributable to common shares	$	289		$	232
Weighted average number of common shares outstanding – basic		285			283
Less unvested awarded performance stock included in weighted    average number of common shares outstanding – basic		(4	)		(5	)
Weighted average number of common shares outstanding for basic    net income per common share		281			278
Dilutive effect of potentially issuable common shares		2			1
Weighted average number of shares outstanding – diluted		283			279
Net income per share:
Basic	$	1.03		$	0.83
Diluted	$	1.02		$	0.83

NOTE 5 Business Combinations

During the three months ended March 31, 2024, Brown & Brown acquired all of the stock of two insurance intermediaries, purchased assets and assumed certain liabilities of three insurance intermediaries, and purchased one book of business (customer accounts) for a total of six acquisitions. Additionally, 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”).

The recorded purchase price for all acquisitions includes 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 Statements 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.

Total consideration for acquisition activity during the three months ended March 31, 2024, was $87 million and included gross cash paid of $76 million, initial fair value of earnout-out liabilities of $9 million and other payables of $2 million. The Company recorded $66 million of goodwill and $21 million of other identifiable intangible assets in connection with the acquisitions and measurement period adjustments during the three months ended March 31, 2024. The weighted average useful lives for the acquired amortizable intangible assets are 15 years.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Consolidated Financial Statements are provisional and thus subject to further adjustments within the permitted measurement periods, as defined in ASC 805, including balances related to the acquisition of Kentro Capital Limited as of the October 1, 2023 acquisition date, primarily for intangible assets, goodwill, customer contract related balances and tax related balances.

Certain disclosures have not been presented as the effect of the acquisitions were not material to the Company's financial results.

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Acquisition Earn-Out Payables

As of March 31, 2024 and 2023, 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 months ended March 31, 2024 and 2023, were as follows:

	Three months ended March 31,
(in millions)	2024			2023
Balance as of the beginning of the period	$	249		$	252
Additions to estimated acquisition earn-out payables		9			20
Payments for estimated acquisition earn-out payables		(52	)		(16	)
Subtotal		206			256
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		(4	)		(4	)
Interest expense accretion		2			2
Net change in earnings from estimated acquisition    earn-out payables		(2	)		(2	)
Foreign currency translation adjustments during the year		(1	)		1
Balance as of March 31,	$	203		$	255

Of the $203 million of estimated acquisition earn-out payables as of March 31, 2024, $118 million was recorded as current liabilities within the accounts payable caption in the Company's Consolidated Balance sheets and $85 million was recorded as non-current liabilities within the other liabilities caption in the Company's Consolidated Balance Sheets. Included within 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.

As of March 31, 2024, the maximum future acquisition contingency payments related to all acquisitions was $566 million. Six of the estimated acquisition earn-out payables included provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of March 31, 2024 is $5 million. The Company deems a significant increase to this amount to be unlikely.

NOTE 6 Goodwill

The changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2024 are as follows:

(in millions)	Retail (2)			Programs			Wholesale Brokerage		Total
Balance as of December 31, 2023	$	4,870		$	1,853		$	618	$	7,341
Goodwill of acquired businesses		58			—			—		58
Goodwill adjustment during measurement period (1)		4			(1	)		5		8
Foreign currency translation adjustments during the year		(18	)		(3	)		—		(21	)
Balance as of March 31, 2024	$	4,914		$	1,849		$	623	$	7,386

(1)Provisional estimates of fair value are established at the time of each acquisition and are subsequently reviewed and finalized within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments.