Business Combinations (Tables)

6 Months Ended

Jun. 30, 2020

Purchase Price Allocation for Current Year Acquisitions and Adjustments Made for Prior Year Acquisitions

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		Common Stock Issued		Other payable		Recorded earn-out payable		Net assets acquired		Maximum potential earn- out payable
Special Risk Insurance Managers Ltd. (Special Risk)	National Programs	January 1, 2020	$	70,156	$	—	$	—	$	8,173	$	78,329	$	14,650
Texas All Risk General Agency, Inc. et al (Texas Risk)	Wholesale Brokerage	January 1, 2020		10,511		—		159		310		10,980		1,150
The Colonial Group, Inc. et al (Colonial)	Wholesale Brokerage	March 1, 2020		29,037		—		527		5,639		35,203		10,150
RLA Insurance Intermediaries, LLC (RLA)	Wholesale Brokerage	March 1, 2020		42,496		—		786		9,970		53,252		22,500
Dealer Financial Services of N.C., LLC d/b/a The Sterling Group (Sterling)	Retail	April 1, 2020		19,341		—		300		2,840		22,481		5,400
LP Insurance Services, LLC (LP)	National Programs	May 1, 2020		115,948		10,000		318		42,993		169,259		75,850
Other	Various	Various		3,935		—		75		4,829		8,839		3,940
Total			$	291,424	$	10,000	$	2,165	$	74,754	$	378,343	$	133,640

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)	Special Risk		Texas Risk			Colonial			RLA			Sterling			LP			Other			Total
Cash	$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Other current assets		1,764		446			1,344			—			118			3,528			833			8,033
Fixed assets		346		27			59			54			16			1,877			—			2,379
Goodwill		60,049		8,940			25,719			51,285			15,163			115,200			848			277,204
Purchased customer accounts		15,483		3,222			9,393			12,875			7,196			48,633			4,158			100,960
Non-compete agreements		136		25			43			481			21			31			31			768
Other assets		—		—			—			—			—			—			3,088			3,088
Total assets acquired		77,778		12,660			36,558			64,695			22,514			169,269			8,958			392,432
Other current liabilities		551		(1,680	)		(1,355	)		(11,443	)		(33	)		(10	)		(119	)		(14,089	)
Other liabilities		—		—			—			—			—			—			—			—
Total liabilities assumed		551		(1,680	)		(1,355	)		(11,443	)		(33	)		(10	)		(119	)		(14,089	)
Net assets acquired	$	78,329	$	10,980		$	35,203		$	53,252		$	22,481		$	169,259		$	8,839		$	378,343

Unaudited Proforma 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)	Three months ended June 30,				Six months ended June 30,
(in thousands, except per share data)	2020		2019		2020		2019
Total revenues	$	602,143	$	597,784	$	1,316,330	$	1,235,519
Income before income taxes	$	130,378	$	129,909	$	340,312	$	283,667
Net income	$	97,514	$	97,381	$	253,396	$	215,312
Net income per share:
Basic	$	0.34	$	0.35	$	0.90	$	0.77
Diluted	$	0.34	$	0.34	$	0.89	$	0.76
Weighted average number of shares outstanding:
Basic		273,100		272,563		272,938		272,621
Diluted		274,362		274,402		274,519		274,704

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 six months ended June 30, 2020 and 2019, were as follows:

	Three months ended June 30,						Six months ended June 30,
(in thousands)	2020			2019			2020			2019
Balance as of the beginning of the period	$	157,720		$	108,710		$	161,513		$	89,924
Additions to estimated acquisition earn-out payables		60,776			5,811			74,754			23,966
Payments for estimated acquisition earn-out payables		(664	)		(6,685	)		(7,478	)		(7,264	)
Subtotal		217,832			107,836			228,789			106,626
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		(1,308	)		(4,350	)		(13,949	)		(4,301	)
Interest expense accretion		1,943			1,490			3,627			2,651
Net change in earnings from estimated acquisition earn-out payables		635			(2,860	)		(10,322	)		(1,650	)
Balance as of June 30,	$	218,467		$	104,976		$	218,467		$	104,976