Business Combinations

12 Months Ended

Dec. 31, 2025

Business Combination [Abstract]

Business Combinations

NOTE 3 Business Combinations

During the year ended December 31, 2025, the Company acquired the assets and assumed certain liabilities of 18 insurance intermediaries, all of the stock of 15 insurance intermediaries, and purchased 10 books of businesses (customer accounts) for a total of 43 acquisitions. Additionally, adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last 12 months as permitted by Accounting Standards Codification (“ASC”) 805 - Business Combinations (“ASC 805”).

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Consolidated Financial Statements may be provisional; and therefore, those amounts are subject to further adjustments within the permitted measurement period, as defined in ASC 805. Management often uses independent third-party valuation specialists to assist in finalizing the fair value of assets acquired and liabilities assumed. Fair value adjustments, if any, are most common to the values established for amortizable intangible assets and earnout liabilities, with the offset to goodwill, net of any income tax effect. Provisional estimates were used to initially record the acquisitions of NBS Insurance Agency, Tim Parkman, Inc., Accession Risk Management Group and Poulton Associates, LLC, including for intangible assets, goodwill, customer contract related balances, tax related balances and other asset and liability accounts.

For the year ended December 31, 2025, adjustments to prior year acquisitions were made within the permitted measurement period that resulted in a net decrease to goodwill of $3 million. These measurement period adjustments have been reflected as current period adjustments in the year ended December 31, 2025.

Gross cash paid for acquisitions was $8,708 million and $934 million in the years ended December 31, 2025 and 2024, respectively. We completed 43 acquisitions (including book of business purchases) during the year ended December 31, 2025 and 32 acquisitions (including book of business purchases) during the year ended December 31, 2024.

On August 1, 2025, the Company completed the acquisition of RSC, the holding company for Accession Risk Management Group, Inc., a North American insurance distribution platform composed of specialty insurance and risk management companies, including Risk Strategies, a retail brokerage firm, and One80 Intermediaries, an insurance wholesaler and program manager. The acquisition was completed pursuant to 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 and Kelso RSC (Investor), L.P., a Delaware limited partnership, solely in its capacity as the equityholder representative. The aggregate purchase price totaled $9,608 million and included cash of $8,293 million and $613 million in shares of the Company’s common stock, par value $0.10 per share. The acquisition was funded using cash raised from our June 2025 follow-on common stock offering and senior notes issuance.

The Merger Agreement provided for escrowed consideration of $750 million in the form of $250 million of cash and $500 million in shares of the Company’s common stock. Both the cash and shares are held in an escrow account. Escrowed shares, which were issued at the closing of the acquisition, totaled approximately 4.5 million shares. The number of shares was determined using an agreed upon share price of $110.57 and $500 million of consideration, as detailed in the Merger Agreement. The total number of escrowed shares will not increase in the future.

Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, any amounts remaining in the escrow account will be released to the equityholders. The amount of the cash balance will change over time based upon payment of any indemnification obligations of the equityholders associated with the discontinued businesses, as well as dividends paid on the shares and interest income earned on the cash. The Company believes this escrow, plus other available funds, is sufficient to cover any potential costs associated with those specified matters subject to indemnification under the Merger Agreement.

The value of the shares and cash in the escrow account is presented within long-term liabilities (other liabilities), and the restricted cash is presented within other assets in the Company's Consolidated Balance Sheets. The value of the shares placed in escrow changes as the share price of the Company increases or decreases as compared to the value at the start of the applicable reporting period. On August 1, 2025, the closing date of the Accession acquisition, each share was valued at $92.00 using our opening share price, for a total amount of $406 million. In accordance with ASC 480 - Distinguishing Liabilities from Equity and ASC 815 - Derivatives and Hedging, periodic share value changes will be recorded as a mark-to -market of the escrow liability in the Company's Consolidated Statements of Income. This mark-to-market adjustment is non-cash.

As of December 31, 2025, the total balance of the escrow liability was $616 million, with $351 million in escrowed shares and $265 million in cash. The fair value of the shares held in escrow are re-evaluated and measured at fair value on a recurring basis as defined in ASC 820 - Fair Value Measurement. The change in fair value of the shares for the year ended December 31, 2025, resulted in a $54 million decrease to expense.

The following table summarizes the purchase price allocations and estimated fair values of the aggregate assets and liabilities acquired 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 millions)	NBS Insurance Agency			Tim Parkman, Inc.		Accession Risk Management Group			Poulton Associates, LLC		Other (1)			Total
Segment	Specialty Distribution			Specialty Distribution		Retail & Specialty Distribution			Specialty Distribution		Retail & Specialty Distribution
Effective date of acquisition	March 1, 2025			May 1, 2025		August 1, 2025			November 1, 2025		Various
Cash paid	$	54		$	69	$	8,293		$	168	$	124		$	8,708
Common stock issued		—			—		613			21		—			634
Other payable		—			6		702			1		3			712
Recorded earn-out payable		—			7		—			20		31			58
Total consideration		54			82		9,608			210		158			10,112
Maximum potential earn-out payable		—			23		—			104		59			186
Allocation of purchase price:
Cash and cash equivalents		—			—		314			—		2			316
Fiduciary cash		14			—		516			—		8			538
Commission, fees, and other receivables		4			—		430			—		1			435
Fiduciary receivables		—			—		437			—		23			460
Other current assets		—			—		851			—		—			851
Goodwill		34			62		6,547			141		101			6,885
Purchased customer accounts and other intangibles (2)		16			19		3,221			69		46			3,371
Other assets		—			1		111			—		15			127
Total assets acquired		68			82		12,427			210		196			12,983
Fiduciary liabilities		(13	)		—		(957	)		—		(22	)		(992	)
Accounts payable and accrued expenses		—			—		(722	)		—		(13	)		(735	)
Other current liabilities		(1	)		—		(775	)		—		—			(776	)
Deferred income tax, net		—			—		(80	)		—		—			(80	)
Other long-term liabilities		—			—		(285	)		—		(3	)		(288	)
Total liabilities assumed		(14	)		—		(2,819	)		—		(38	)		(2,871	)
Net assets acquired	$	54		$	82	$	9,608		$	210	$	158		$	10,112

(1) The other column represents current year acquisitions with total net assets acquired of less than $50 million 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 14 years.

Goodwill of $6,885 million, net of opening balance sheet adjustments within the allowable measurement period, was allocated to the Retail and Specialty Distribution segments in the amounts of $3,554 million and $3,331 million, respectively. Of the total goodwill, the amount expected to be deductible for income tax purposes is $1,933 million.

For acquisitions completed during 2025, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues from 2025 acquisitions included in the Consolidated Statement of Income for the year ended December 31, 2025 were $747 million. The income before income taxes included in the Consolidated Statement of Income for the year ended December 31, 2025 was $77 million, which includes $112 million of amortization expense for acquired intangible assets.

The following unaudited pro forma information presents the estimated results of combined operations as if the Company's 2025 acquisitions had occurred as of the beginning of 2024. The pro forma information includes adjustments for (i) amortization of acquired intangible assets, (ii) interest expense on borrowings to fund the acquisitions and (iii) shares issued as consideration and funding for the acquisitions. Included in the pro forma information presented below is a non-recurring pro forma adjustment directly attributable to the acquisitions for transaction and integration costs totaling $113 million. The pro forma information does not reflect any operating efficiencies or potential cost savings that may result from the acquisitions. Accordingly, it is for illustrative purposes only and is not intended to present or be indicative of the actual results of operations of the combined company that may have been achieved had the acquisitions actually occurred at the beginning of 2024, nor is it intended to represent or be indicative of future results of the combined business.

(UNAUDITED)	Year Ended December 31,
(in millions, except per share data)	2025		2024
Total revenues	$	6,947	$	6,637
Net income attributable to the Company	$	1,220	$	1,080
Net income per share:
Basic	$	3.63	$	3.22
Diluted	$	3.45	$	3.20

Acquisition Earn-Out Payables

ASC 805 is the authoritative guidance requiring an acquirer 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 arrangements) at the acquisition date must be included in the purchase price consideration. The recorded purchase prices for acquisitions include an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are recorded in the Consolidated Statements of Income when incurred or reasonably estimated.

As of December 31, 2025, 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 years ended December 31, 2025, 2024 and 2023 were as follows:

	Year Ended December 31,
(in millions)	2025			2024			2023
Balance as of the beginning of the period	$	167		$	249		$	252
Additions from new acquisitions		58			73			67
Assumed estimated acquisition earn-out payables		435			3			21
Payments		(146	)		(154	)		(119	)
Subtotal		514			171			221
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value		16			(6	)		14
Interest expense accretion		9			8			7
Net change in earnings from estimated acquisition earn out payables		25			2			21
Foreign currency translation adjustments during the year		2			(6	)		7
Balance as of December 31,	$	541		$	167		$	249

Of the $541 million of estimated acquisition earn-out payables as of December 31, 2025, $281 million was recorded as accounts payable and $260 million was recorded as other non-current liabilities. 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. Of the $167 million of estimated acquisition earn-out payables as of December 31, 2024, $75 million was recorded as accounts payable and $92 million was recorded as other non-current liabilities.

Certain acquisition agreements include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of December 31, 2025, was $385 million. As of December 31, 2025, the maximum future contingency payments related to all acquisition agreements that include a cap on the potential earnout amount totaled $457 million.