Business Combinations

6 Months Ended

Jun. 30, 2025

Business Combinations [Abstract]

Business Combinations

NOTE 5 Business Combinations

During the six months ended June 30, 2025, Brown & Brown acquired all of the stock of nine insurance intermediaries, purchased assets and assumed certain liabilities of 13 insurance intermediaries, and purchased seven books of business (customer accounts) for a total of 29 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 (“ASC”) Topic 805 — Business Combinations (“ASC 805”).

On June 10, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among RSC, the Company, Encore Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”) and Kelso RSC (Investor), L.P., a Delaware limited partnership, solely in its capacity as the equityholder representative, pursuant to which the Company will acquire RSC, the holding company for Accession Risk Management Group, Inc., a North American insurance distribution platform with a family of specialty insurance and risk management companies, including Risk Strategies, a dynamic specialty brokerage firm, and One80 Intermediaries, a leading insurance wholesaler and program manager. The transaction is expected to close in the third quarter of 2025, subject to customary closing conditions and regulatory approvals. The aggregate purchase price is $9,825 million, payable at closing, subject to certain customary post-closing adjustments. After adjustments, the net merger consideration payable at closing is expected to be approximately $9,400 million, composed of approximately $8,100 million in cash and approximately $1,300 million in shares of the Company’s common stock, par value $0.10 per share. A portion of the merger consideration will be held in escrow pursuant to certain indemnification arrangements. We expect to fund the acquisition using cash raised from our June 2025 follow-on common stock offering and senior notes issuance.

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 are 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.

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 six months ended June 30, 2025, adjustments were made within the permitted measurement period, which increased total net assets acquired by $5 million and decreased goodwill by $5 million. These measurement-period adjustments have been reflected as current period adjustments in the six months ended June 30, 2025 in accordance with the guidance in ASC 805. The measurement-period adjustments had no effect on earnings or cash in the current period.

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired through the six months ended June 30, 2025 as of the date of each acquisition and adjustments made during the measurement period of the prior year acquisitions.

(in millions)	NBS Insurance Agency			Tim Parkman, Inc.		Other (1)			Total
Business Segment	Wholesale			Wholesale		Various
Effective date of acquisition	March 1, 2025			May 1, 2025		Various
Cash paid	$	54		$	69	$	60		$	183
Other payable		—			6		4			10
Recorded earn-out payable		—			4		13			17
Total consideration		54			79		77			210
Maximum potential earn-out payable		—			23		25			48
Allocation of purchase price:
Cash and equivalents		—			—		5			5
Fiduciary cash		13			—		4			17
Fiduciary receivables		—			—		22			22
Other current assets		4			—		1			5
Goodwill		30			60		42			132
Purchased customer accounts and other intangibles (2)		17			19		25			61
Other assets		—			—		4			4
Total assets acquired		64			79		103			246
Fiduciary liabilities		(10	)		—		(22	)		(32	)
Other current liabilities		—			—		(3	)		(3	)
Other long-term liabilities		—			—		(1	)		(1	)
Total liabilities assumed		(10	)		—		(26	)		(36	)
Net assets acquired	$	54		$	79	$	77		$	210

(1)The other column represents a summarization of current year acquisitions with total consideration of less than $50 million per acquisition and adjustments from prior year acquisitions that were made within the permitted measurement period.

(2)The weighted average useful life of purchased customer accounts is 15 years.

For the acquisitions completed during 2025, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues and income before income taxes from acquisitions completed through June 30, 2025 included in the Condensed Consolidated Statement of Income for the six months ended June 30, 2025 were $18 million and $3 million, respectively.

If the Company's 2025 acquisitions had occurred as of the beginning of 2024, the estimated 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 six months ended June 30,
(in millions, except per share data)	2025		2024
Total revenues	$	2,701	$	2,471
Net income	$	565	$	555
Net income per share:
Basic	$	1.97	$	1.97
Diluted	$	1.95	$	1.96

Acquisition Earn-Out Payables

As of June 30, 2025 and 2024, 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 were as follows:

	Three months ended June 30,						Six months ended June 30,
(in millions)	2025			2024			2025			2024
Balance as of the beginning of the period	$	143		$	203		$	167		$	249
Additions to estimated acquisition earn-out payables		12			10			17			19
Payments for estimated acquisition earn-out payables		(20	)		(45	)		(46	)		(96	)
Subtotal		135			168			138			172
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		9			(2	)		4			(7	)
Interest expense accretion		2			3			3			5
Net change in earnings from estimated acquisition earn-out payables		11			1			7			(2	)
Foreign currency translation adjustments during the year		5			—			6			(1	)
Balance as of June 30,	$	151		$	169		$	151		$	169

Of the $151 million of estimated acquisition earn-out payables as of June 30, 2025, $63 million was recorded as accounts payable and $88 million was recorded as other non-current liabilities. As of June 30, 2025, the maximum future acquisition contingency payments was $429 million. Four of the estimated acquisition earn-out payables include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of June 30, 2025 is $1 million. The Company believes a significant increase to this amount to be unlikely.