Brown & Brown (NYSE: BRO) lifts Q2 2026 revenue to $1.68B and boosts profit
Rhea-AI Filing Summary
Brown & Brown, Inc. reported total revenues of $1,676 million for the quarter ended June 30, 2026, compared with $1,285 million a year earlier. Net income attributable to the company was $288 million, up from $231 million, with basic EPS of $0.86 and diluted EPS of $0.84.
For the first half of 2026, revenues were $3,577 million versus $2,689 million and net income attributable to the company was $714 million versus $563 million. Retail contributed $947 million and Specialty Distribution $721 million of second-quarter revenues. Operating cash flow for the six months was $608 million, compared with $538 million in the prior-year period. Total assets were $29,887 million, and long-term debt (including current portion, net of discounts and issuance costs) was $7,759 million, reflecting financing for the Accession acquisition. A non‑cash mark‑to‑market gain on the Accession escrow liability reduced expenses by $69 million year-to-date.
Positive
- Strong revenue growth: Q2 2026 revenues were $1,676 million versus $1,285 million in Q2 2025, with first-half revenues rising to $3,577 million from $2,689 million.
- Higher profitability: Net income attributable to the company increased to $288 million in Q2 2026 from $231 million, and to $714 million for the first half from $563 million, alongside higher EPS and operating cash flow.
Negative
- Interest burden higher: Q2 2026 interest expense was $100 million versus $51 million in Q2 2025, and $199 million for the first half versus $96 million, reflecting increased debt used to finance the Accession acquisition.
Filing Explained
As of June 30, refinancing raised revolver capacity to $1.25 billion, while $310 million of earn-outs remained recorded and some agreements were uncapped.
The Form 10-Q is the company’s filed, unaudited interim report for the quarter ended
On
Acquisition earn-out payables totaled
Key Figures
Key Terms
profit-sharing contingent commissions financial
acquisition earn-out payables financial
write-your-own flood insurance carrier financial
fiduciary cash financial
EBITDAC financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Brown & Brown (BRO) perform financially in Q2 2026?
What were Brown & Brown (BRO)'s results for the first half of 2026?
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What is Brown & Brown (BRO)'s debt position as of June 30, 2026?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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 twelve months (or for such shorter period that the registrant was required to submit such files).
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.
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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 July 24, 2026 was
BROWN & BROWN, INC.
INDEX
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PAGE NO. |
PART I. FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements (Unaudited): |
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Condensed Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025 |
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Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2026 and 2025 |
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Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 |
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Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2026 and 2025 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 |
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Notes to Condensed Consolidated Financial Statements |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
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Controls and Procedures |
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PART II. OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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Item 1A. |
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Risk Factors |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Other Information |
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Item 6. |
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Exhibits |
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SIGNATURES |
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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”:
3
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)
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Three months ended June 30, |
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Six months ended June 30, |
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(in millions, except per share data) |
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2026 |
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2026 |
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2025 |
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REVENUES |
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Commissions and fees |
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Total revenues |
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EXPENSES |
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Employee compensation and benefits |
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Other operating expenses |
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Loss on disposal |
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Amortization |
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Depreciation |
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Interest |
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Change in estimated acquisition earn-out payables |
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Mark-to-market of escrow liability |
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Total expenses |
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Income before income taxes |
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Income taxes |
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Net income before non-controlling interests |
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Less: Net income attributable to non-controlling interests |
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Net income attributable to the Company |
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Net income per share: |
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Basic |
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Diluted |
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See accompanying Notes to Condensed Consolidated Financial Statements.
5
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
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Three months ended June 30, |
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Six months ended June 30, |
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(in millions) |
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2026 |
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2025 |
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2026 |
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2025 |
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Net income attributable to the Company |
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$ |
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$ |
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$ |
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Foreign currency translation (loss)/gain |
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Comprehensive income attributable to the Company |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
6
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except per share data) |
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June 30, 2026 |
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December 31, 2025 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Fiduciary cash |
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Commission, fees and other receivables |
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Fiduciary receivables |
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Reinsurance recoverable |
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Prepaid reinsurance premiums |
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Other current assets |
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Total current assets |
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Fixed assets, net |
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Operating lease assets |
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Goodwill |
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Amortizable intangible assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current Liabilities: |
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Fiduciary liabilities |
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$ |
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$ |
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Losses and loss adjustment reserve |
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Unearned premiums |
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Accounts payable |
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Accrued expenses and other liabilities |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt less unamortized discount and debt issuance costs |
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Operating lease liabilities |
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Deferred income taxes, net |
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Other liabilities |
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Equity: |
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Common stock, par value $ |
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Additional paid-in capital |
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Treasury stock, at cost |
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Accumulated other comprehensive income |
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Non-controlling interests |
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Retained earnings |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
7
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
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Common Stock |
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(in millions, except per share data) |
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Shares Outstanding |
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Par Value |
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Additional |
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Treasury |
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Accumulated Other Comprehensive Income (Loss) |
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Retained |
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Non-Controlling Interest |
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Total |
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Balance at December 31, 2025 |
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$ |
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$ |
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$ |
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Net income |
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Foreign currency translation |
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Shares issued - employee stock compensation plans: |
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Employee stock purchase plan |
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Stock incentive plans |
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Acquisitions |
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Net non-controlling interest acquired (disposed) |
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Repurchase shares to fund tax withholdings for non-cash stock-based compensation |
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Purchase of treasury stock |
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Cash dividends paid ($ |
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Balance at March 31, 2026 |
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$ |
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Net income |
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Foreign currency translation |
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Shares issued - employee stock compensation plans: |
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Employee stock purchase plan |
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Stock incentive plans |
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Directors |
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Repurchase shares to fund tax withholdings for non-cash stock-based compensation |
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Purchase of treasury stock |
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Cash dividends paid ($ |
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Balance at June 30, 2026 |
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$ |
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$ |
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Balance at December 31, 2024 |
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$ |
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Net income |
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Foreign currency translation |
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Shares issued - employee stock compensation plans: |
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Employee stock purchase plan |
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Stock incentive plans |
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|
|
|
|
|
|
|
|
|
|
|
||||||||
Repurchase shares to fund tax withholdings for non-cash stock-based compensation |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Cash dividends paid ($ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Balance at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shares issued - employee stock compensation plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Employee stock purchase plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock incentive plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Shares issued - public offering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Repurchase shares to fund tax withholdings for non-cash stock-based compensation |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Cash dividends paid ($ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||||
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
8
BROWN & BROWN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Six months ended June 30, |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income before non-controlling interests |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income before non-controlling interests to net cash provided by operating activities: |
|
|
|
|
|
|
||
Amortization |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Non-cash stock-based compensation |
|
|
|
|
|
|
||
Change in estimated acquisition earn-out payables |
|
|
( |
) |
|
|
|
|
Mark-to-market of escrow liability |
|
|
( |
) |
|
|
|
|
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Net loss on sales/disposals of investments, businesses, fixed assets and customer accounts |
|
|
|
|
|
|
||
Payments on acquisition earn-outs in excess of original estimated payables |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures: |
|
|
|
|
|
|
||
Commissions, fees and other receivables (increase) decrease |
|
|
( |
) |
|
|
( |
) |
Reinsurance recoverable (increase) decrease |
|
|
|
|
|
|
||
Prepaid reinsurance premiums (increase) decrease |
|
|
|
|
|
( |
) |
|
Other assets (increase) decrease |
|
|
( |
) |
|
|
( |
) |
Losses and loss adjustment reserve increase (decrease) |
|
|
( |
) |
|
|
( |
) |
Unearned premiums increase (decrease) |
|
|
( |
) |
|
|
|
|
Accounts payable increase (decrease) |
|
|
( |
) |
|
|
|
|
Accrued expenses and other liabilities increase (decrease) |
|
|
( |
) |
|
|
( |
) |
Other liabilities increase (decrease) |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Additions to fixed assets |
|
|
( |
) |
|
|
( |
) |
Payments for businesses acquired, net of cash acquired |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of businesses, fixed assets and customer accounts |
|
|
|
|
|
|
||
Other investing activities |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Fiduciary receivables and liabilities, net |
|
|
|
|
|
|
||
Payments on acquisition earn-outs |
|
|
( |
) |
|
|
( |
) |
Proceeds from long-term debt |
|
|
|
|
|
|
||
Payments on long-term debt |
|
|
( |
) |
|
|
( |
) |
Deferred debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Borrowings on revolving credit facility |
|
|
|
|
|
|
||
Payments on revolving credit facility |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuance of common stock, net of expenses |
|
|
|
|
|
|
||
Repurchase shares to fund tax withholdings for non-cash stock-based compensation |
|
|
( |
) |
|
|
( |
) |
Purchase of treasury stock |
|
|
( |
) |
|
|
|
|
Cash dividends paid |
|
|
( |
) |
|
|
( |
) |
Other financing activities |
|
|
( |
) |
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash inclusive of fiduciary cash |
|
|
( |
) |
|
|
|
|
Net (decrease) increase in cash, cash equivalents and restricted cash inclusive of fiduciary cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash inclusive of fiduciary cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash inclusive of fiduciary cash at end of period |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Condensed Consolidated Financial Statements. Refer to Note 10 for the reconciliations of cash, cash equivalents and restricted cash 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
The Company primarily operates as an agent or broker not assuming underwriting risks. However, we also operate and/or participate in various ancillary insurance operations, including: (1) reinsurance companies and stand-alone captives that assume underwriting risk; (2) series captive insurance companies (“SCICs”); (3) protected cell companies; (4) segregated account companies; (5) a quota share captive; and (6) an excess of loss layer captive (collectively, the "Captives"). These ancillary insurance operations facilitate additional underwriting capacity, generate incremental revenues and/or enable the Company to participate in certain underwriting results. The Company also operates 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”) to which premiums and underwriting exposure are ceded, and excess flood policies which are fully reinsured in the private market.
In conjunction with the acquisition of RSC, the holding company for Accession Risk Management Group, Inc., in the third quarter of 2025, the Company realigned its business from
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 (“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, 2025.
Fair Value of Financial Instruments
The Company has categorized its assets and liabilities that are recognized at fair value on a recurring basis into a three-level fair value hierarchy. Fair value accounting establishes a framework for measuring fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The framework includes a fair value hierarchy that prioritizes the inputs to the valuation technique used to measure fair value.
10
The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety. The three levels of the hierarchy in order of priority of inputs to the valuation technique are defined as follows:
The carrying amounts of the Company’s financial assets and liabilities, including cash and cash equivalents; fiduciary cash; fiduciary receivables, commissions, fees and other receivables; fiduciary liabilities; accounts payable and accrued expenses and other liabilities, at June 30, 2026, and December 31, 2025, approximate fair value, because of the short-term maturity of these instruments. Acquisition earnout payables and newly acquired intangible assets are measured at fair value using level 3 inputs.
Recently Issued Accounting Pronouncements
In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." This ASU clarifies the guidance in Accounting Standards Codification (“ASC”) Topic 270 - Interim Reporting, adding a comprehensive list of required interim disclosures and a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating these new disclosure requirements.
In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." This ASU was issued to modernize the accounting for software
costs that are accounted for under Subtopic 350-40, including removing references to "project stages" and adding the "probable-to-complete recognition threshold." This ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating these new accounting requirements.
In November 2024, the FASB issued ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)" which requires disclosure of specific information about certain costs and expenses in the notes to the financial statements. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements.
NOTE 3 Revenues
The following tables present the revenues disaggregated by revenue source:
|
|
Three months ended June 30, 2026 |
|
|||||||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other (8) |
|
|
Total |
|
||||
Base commissions (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fees (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other supplemental commissions (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Profit-sharing contingent commissions (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earned premium (5) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income (6) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net (7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
11
|
|
Three months ended June 30, 2025 |
|
|||||||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other (8) |
|
|
Total |
|
||||
Base commissions (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fees (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other supplemental commissions (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Profit-sharing contingent commissions (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earned premium (5) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income (6) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net (7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Six months ended June 30, 2026 |
|
|||||||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other (8) |
|
|
Total |
|
||||
Base commissions (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fees (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other supplemental commissions (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Profit-sharing contingent commissions (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earned premium (5) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income (6) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net (7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Six months ended June 30, 2025 |
|
|||||||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other (8) |
|
|
Total |
|
||||
Base commissions (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fees (2) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other supplemental commissions (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Profit-sharing contingent commissions (4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earned premium (5) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment income (6) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income, net (7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12
The following table presents the revenues disaggregated by geographic area where our services are being performed:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.K. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contract Assets and Liabilities
The balances of contract assets and contract liabilities arising from contracts with customers as of June 30, 2026 and December 31, 2025 were as follows:
(in millions) |
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Contract assets |
|
$ |
|
|
$ |
|
||
Contract liabilities |
|
$ |
|
|
$ |
|
||
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 Sheets. The increase in contract assets over the balance as of December 31, 2025, is due to the timing of policy renewals and contingent accruals in the six months ended June 30, 2026.
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 Sheets.
As of June 30, 2026, deferred revenue totaled $
During the six months ended June 30, 2026 and 2025, the net amount of revenue recognized related to performance obligations satisfied in a previous period was $
Other Assets and Deferred Cost
Incremental cost to obtain - 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
Cost to fulfill - 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 Sheets was $
13
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.
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
(in millions, except per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to the Company |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Net income attributable to unvested awarded performance stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income attributable to common shares – basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Gain on mark-to-market of escrow liability (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income attributable to common shares – diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Unvested awarded performance stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Weighted average number of common shares outstanding – basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock compensation plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of contingently issuable shares (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares outstanding – diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 5 Business Combinations
During the six months ended June 30, 2026, the Company acquired all of the stock of
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. 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.
On August 1, 2025, the Company completed the acquisition of Accession pursuant to the Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provided for escrowed consideration in the form of cash and 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, total approximately
14
The value of the shares and cash held 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 Condensed 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. 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 June 30, 2026, the total balance of the escrow liability was $
The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired through the six months ended June 30, 2026 as of the date of each acquisition and adjustments made during the measurement period of the prior year acquisitions.
(in millions) |
Other (1) |
|
|
Measurement Period Adjustments |
|
|
Total |
|
|||
Business Segment |
Retail & Specialty Distribution |
|
|
Retail & Specialty Distribution |
|
|
|
|
|||
Effective date of acquisition |
Various |
|
|
Various |
|
|
|
|
|||
Cash paid |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other payable |
|
|
|
|
( |
) |
|
|
( |
) |
|
Recorded earn-out payable |
|
|
|
|
|
|
|
|
|||
Total consideration |
|
|
|
|
( |
) |
|
|
|
||
Maximum potential earn-out payable |
|
|
|
|
|
|
|
|
|||
Allocation of purchase price: |
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents, inclusive of fiduciary cash |
|
|
|
|
|
|
|
|
|||
Commission, fees, and other receivables |
|
|
|
|
( |
) |
|
|
( |
) |
|
Fiduciary receivables |
|
|
|
|
|
|
|
|
|||
Other current assets |
|
|
|
|
( |
) |
|
|
( |
) |
|
Goodwill |
|
|
|
|
|
|
|
|
|||
Purchased customer accounts and other intangibles (2) |
|
|
|
|
( |
) |
|
|
( |
) |
|
Other assets |
|
( |
) |
|
|
|
|
|
|
||
Total assets acquired |
|
|
|
|
|
|
|
|
|||
Fiduciary liabilities |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other current liabilities |
|
|
|
|
( |
) |
|
|
( |
) |
|
Deferred income tax, net |
|
( |
) |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
( |
) |
|
|
( |
) |
|
Total liabilities assumed |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net assets acquired |
$ |
|
|
$ |
( |
) |
|
$ |
|
||
For the six months ended June 30, 2026, adjustments were made within the permitted measurement period that resulted in a net increase to goodwill of $
15
Acquisition Earn-Out Payables
As of June 30, 2026 and 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.
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Balance as of the beginning of the period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Additions from new acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assumed estimated acquisition earn-out payables |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Disposals |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in earnings from estimated acquisition earn-out payables: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in fair value |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Interest expense accretion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in earnings from estimated acquisition earn-out payables |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Balance as of June 30, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Of the $
Certain acquisition agreements include provisions with
NOTE 6 Goodwill
The changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2026 are as follows:
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Total |
|
|
|||
Balance as of December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
|||
Acquisitions |
|
|
|
|
|
|
|
|
|
|
|||
Adjustments during measurement period (1) |
|
|
|
|
|
|
|
|
|
|
|||
Disposals |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
Foreign currency translation adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance as of June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
|||
NOTE 7 Amortizable Intangible Assets
Amortizable intangible assets consisted of the following:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
(in millions) |
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
||||||
Purchased customer accounts and other |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Foreign currency translation adjustments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
16
Estimated amortization expense for intangible assets for each of the next five years is as follows:
(in millions) |
|
|
|
|
2026 (Remainder) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
17
NOTE 8 Long-Term Debt
Long-term debt consisted of the following:
(in millions) |
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Current portion of long-term debt: |
|
|
|
|
|
|
||
Current portion of |
|
$ |
|
|
$ |
— |
|
|
Current portion of |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|||
Current portion of |
|
|
— |
|
|
|
|
|
Current portion of |
|
|
— |
|
|
|
|
|
Total current portion of long-term debt |
|
|
|
|
|
|
||
Long-term debt: |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Total notes |
|
|
|
|
|
|
||
Credit agreements: |
|
|
|
|
|
|
||
|
|
|
|
|
— |
|
||
|
|
|
|
|
— |
|
||
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
— |
|
|
Total credit agreements |
|
|
|
|
|
|
||
Unamortized portion of debt discounts related to note agreements (contra) |
|
|
( |
) |
|
|
( |
) |
Debt issuance costs (contra) |
|
|
( |
) |
|
|
( |
) |
Total long-term debt, less unamortized discount and debt issuance costs |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
|
|
|
|
|
||
Total debt |
|
$ |
|
|
$ |
|
||
Note agreements: On June 11, 2025, the Company entered into an Underwriting Agreement (the “Notes Underwriting Agreement”) with BofA Securities, Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (collectively, the “Notes Underwriters”), with respect to the offer and sale by the Company of $
The Company maintains notes from other issuances aggregating to a total outstanding debt balance of $
Credit agreements: On June 5, 2026, the Company entered into a Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent, Bank of America, N.A.,
18
Truist Bank and BMO Bank N.A. as co-syndication agents, and U.S. Bank National Association, Fifth Third Bank, National Association, Wells Fargo Bank, National Association, PNC Bank, National Association, HSBC Bank USA, National Association, Citizens Bank, N.A., The Huntington National Bank, and Barclays Bank PLC as co-documentation agents. The Third Amended and Restated Credit Agreement amended and restated the credit agreement dated October 27, 2021, which amended and restated the prior credit agreement, terminated the Company's existing term loan facility, and refinanced the outstanding borrowings thereunder into new term loan facilities. The agreement increased revolving credit commitments from $
The Company is required to maintain certain financial ratios and comply with certain other covenants. The Company was in compliance with all such covenants as of June 30, 2026 and December 31, 2025.
At June 30, 2026, the for the term loan due June 2029 and the term loan due June 2031 was
Fair value information about financial instruments not measured at fair value
The following table presents liabilities that are not measured at fair value on a recurring basis:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
(in millions) |
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current portion of long-term debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Long-term debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The carrying value of the Company's borrowings under various credit agreements approximates its fair value due to the variable interest rate based upon adjusted SOFR. The fair values above, which exclude accrued interest, are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instruments. The fair values of our respective senior notes are considered Level 2 financial instruments, as their values are measured by using observable inputs, other than quoted prices in active markets.
NOTE 9 Leases
Substantially all of the Company's operating lease right-of-use assets and operating lease liabilities represent real estate leases for office space used to conduct the Company's business that expire on various dates through
The balances and classification of operating lease right-of-use assets and operating lease liabilities within the Condensed Consolidated Balance Sheets is as follows:
(in millions) |
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Assets: |
|
|
|
|
|
|
|
||
Operating lease right-of-use assets |
Operating lease assets |
|
$ |
|
|
$ |
|
||
Total assets |
|
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
|
||
Accrued expenses and other liabilities |
|
|
|
|
|
|
|||
Non-current operating lease liabilities |
Operating lease liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
$ |
|
|
$ |
|
||
19
The components of lease cost for operating leases were as follows:
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
(in millions) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Operating leases: |
|
|
|
|
|
|
|
|
|
|
|
||||
Lease cost |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease cost |
|
|
|
|
|
|
|
|
|
|
|
||||
Sublease income |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total lease cost net |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The weighted average remaining lease term and the weighted average discount rate for operating leases as of June 30, 2026 were:
Weighted average remaining lease term in years |
|
|
|
|
Weighted average discount rate |
|
|
% |
Maturities of the operating lease liabilities by fiscal year at June 30, 2026 for the Company's operating leases are as follows:
(in millions) |
|
Operating leases |
|
|
2026 (Remainder) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total undiscounted lease payments |
|
|
|
|
Less: imputed interest |
|
|
|
|
Present value of lease payments |
|
$ |
|
|
Supplemental cash flow information for operating leases is as follows:
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||
(in millions) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cash paid for amounts included in measurement of liabilities |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating cash flows from operating leases |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Right-of-use assets obtained in exchange for new operating liabilities |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 10 Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities
Cash paid during the period for interest and income taxes are summarized as follows:
|
|
Six months ended June 30, |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income taxes, net of refunds |
|
$ |
|
|
$ |
|
||
The increase in interest payments during the six months ended June 30, 2026, was primarily attributable to higher outstanding debt balances incurred to finance the Accession acquisition completed during the third quarter of 2025.
During six months ended June 30, 2025, the Company paid $
Significant non-cash investing and financing activities are summarized as follows:
|
|
Six months ended June 30, |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Other payables issued for acquisitions and purchased customer accounts |
|
$ |
( |
) |
|
$ |
|
|
Estimated acquisition earn-out payables issued for acquisitions |
|
$ |
|
|
$ |
|
||
Assumed acquisition earn-out payables |
|
$ |
|
|
$ |
|
||
Note receivable recorded in connection with the sale of a business |
|
$ |
|
|
$ |
|
||
20
The reconciliation of cash, cash equivalents and restricted cash inclusive of fiduciary cash is as follows:
|
|
Balance as of June 30, |
|
|||||
(in millions) |
|
2026 |
|
|
2025 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Fiduciary cash |
|
|
|
|
|
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash inclusive of fiduciary cash at the end of the period |
|
$ |
|
|
$ |
|
||
The Company's restricted cash balances relate to amounts held in escrow in accordance with the Merger Agreement. Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, the remaining cash in the escrow account will be released to the equityholders. Restricted cash is presented within other assets in the Company's Condensed Consolidated Balance Sheets.
NOTE 11 Legal and Regulatory Proceedings
The Company is involved in numerous pending or threatened proceedings by or against Brown & Brown, Inc. or one or more of its subsidiaries that arise in the ordinary course of business. The damages that may be claimed against the Company in these various proceedings are in some cases substantial, including in certain instances claims for punitive or extraordinary damages. Some of these claims and lawsuits have been resolved; others are in the process of being resolved and others are still in the investigation or discovery phase. The Company will continue to respond appropriately to these claims and lawsuits and vigorously protect its interests.
The Company continues to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could adversely impact the Company’s operating results, cash flows and overall liquidity. The Company maintains third-party insurance policies to provide coverage for certain legal claims, in an effort to mitigate its overall exposure to unanticipated claims or adverse decisions. However, as (i) one or more of the Company’s insurance carriers could take the position that portions of these claims are not covered by the Company’s insurance, (ii) to the extent that payments are made to resolve claims and lawsuits, applicable insurance policy limits are eroded and (iii) the claims and lawsuits relating to these matters are continuing to develop, it is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by unfavorable resolutions of these matters. Based upon the AM Best Company ratings of these third-party insurers and other factors, management does not believe there is a substantial risk of an insurer’s material non-performance related to any current insured claims.
On the basis of current information, the availability of insurance and legal advice, in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows.
NOTE 12 Segment Information
In conjunction with the acquisition of Accession in the third quarter of 2025, the Company aligned its business from
The balances presented for the three months and six months ended June 30, 2025 have been recast to align with the two-segment structure.
Brown & Brown conducts most of its operations within the U.S. International retail operations include businesses based in Bermuda, Canada, Cayman Islands, India, the Netherlands, Republic of Ireland and the United Kingdom; specialty distribution operations are in Belgium, Canada, France, Germany, Hong Kong, Italy, Malaysia, the Netherlands, Singapore, United Arab Emirates and the United Kingdom. These international operations earned $
21
The Company's chief operating decision maker (""), the president and chief executive officer, regularly receives segment information on total revenue, organic revenue growth, the growth in Contingents, income before income taxes and earnings before interest, income taxes, depreciation, amortization and change in estimated acquisition earn-out payables ("EBITDAC"). The metrics are used to review operating trends, to perform analytical comparisons between periods and to monitor budget to actual variances. The Company's CODM does not use segment assets to make resource allocation decisions; therefore, they have not been presented.
Summarized financial information concerning the Company’s reportable segments is shown in the following tables.
|
|
Three months ended June 30, 2026 |
|
|||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Total |
|
|||
Total segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of revenues |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
|
|||
Total consolidated revenues |
|
|
|
|
|
|
|
$ |
|
|||
Less: (2) |
|
|
|
|
|
|
|
|
|
|||
Employee compensation and benefits |
|
|
|
|
|
|
|
|
|
|||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|||
(Gain)/loss on disposal |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Change in estimated acquisition earn-out payables |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Segment Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
|
|
Three months ended June 30, 2025 |
|
|||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Total |
|
|||
Total segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of revenues |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
|
|||
Total consolidated revenues |
|
|
|
|
|
|
|
$ |
|
|||
Less: (2) |
|
|
|
|
|
|
|
|
|
|||
Employee compensation and benefits |
|
|
|
|
|
|
|
|
|
|||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|||
(Gain)/loss on disposal |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Change in estimated acquisition earn-out payables |
|
|
|
|
|
|
|
|
|
|||
Segment Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
22
|
|
Six months ended June 30, 2026 |
|
|||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Total |
|
|||
Total segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of revenues |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
|
|||
Total consolidated revenues |
|
|
|
|
|
|
|
$ |
|
|||
Less: (2) |
|
|
|
|
|
|
|
|
|
|||
Employee compensation and benefits |
|
|
|
|
|
|
|
|
|
|||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|||
(Gain)/loss on disposal |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Change in estimated acquisition earn-out payables |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Segment Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
|
|
Six months ended June 30, 2025 |
|
|||||||||
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Total |
|
|||
Total segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of revenues |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
|
|||
Total consolidated revenues |
|
|
|
|
|
|
|
$ |
|
|||
Less: (2) |
|
|
|
|
|
|
|
|
|
|||
Employee compensation and benefits |
|
|
|
|
|
|
|
|
|
|||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|||
(Gain)/loss on disposal |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Change in estimated acquisition earn-out payables |
|
|
|
|
|
|
|
|
|
|||
Segment Income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Reconciliation of income before income taxes |
|
|
|
|
|
|
|
|
|
|||
Other (1) |
|
|
|
|
|
|
|
|
( |
) |
||
Consolidated Income before income taxes |
|
|
|
|
|
|
|
$ |
|
|||
23
NOTE 13 Insurance Company Subsidiary Operations
The Company operates a write-your-own flood insurance carrier, Wright National Flood Insurance Company. WNFIC’s underwriting business consists of policies written pursuant to the NFIP, the program administered by FEMA to which premiums and underwriting exposure are ceded, and excess flood policies, which are fully reinsured in the private market. Congressional authorization for the NFIP is periodically evaluated and may be subject to potential government shutdowns. The Company sells excess flood policies, which are
The Company operates and/or participates in various ancillary insurance operations, including (1) reinsurance companies and stand-alone captives that assume underwriting risk; (2) series captive insurance companies (SCICs); (3) protected cell companies; (4) segregated account companies; (5) a quota share captive and (6) an excess of loss layer captive. These ancillary insurance operations facilitate additional underwriting capacity, generate incremental revenues and/or enable the Company to participate in certain underwriting results. The Company acquired certain of the insurance operations through the acquisition of Accession. Several of the newly acquired entities were consolidated after determining that they qualify as Variable Interest Entities ("VIEs"), and the Company is the primary beneficiary. These entities are required to follow the regulatory requirements of their respective domiciliary governments. Total assets and liabilities of the Company's consolidated VIE insurance operations included on the consolidated balance sheets were $
The Company purchases reinsurance from other insurance companies to limit total exposure. In addition, the Company cedes insurance risk to other insurance companies and the U.S. government as permitted by the NFIP. The Company’s SCICs are created for clients to insure their risks and manage the costs of their insurance programs. In these arrangements, the Company acts as a fronting insurer and enters into reinsurance treaties, under which the Company has ceded all of the liabilities to client-owned captive cells through cross collateralization between the cells. The premiums and underwriting exposure related to the Company’s SCIC insurance operations are fully ceded to the client-owned captive cells such that the Company’s SCIC operations have no underwriting risk on a net written basis.
The quota share captive participates in risk sharing on policies placed by certain of our MGU businesses that currently underwrite property insurance for earthquake and wind exposed properties. A large portion of written premiums are ceded to reinsurance companies, limiting, but not fully eliminating the Company's exposure to underwriting losses.
The excess of loss layer captive participates in risk sharing on policies placed by one of our MGU businesses that underwrites risks associated with personal property, excluding flood, primarily in the southeastern United States with one layer of per risk excess reinsurance and three layers of catastrophe per occurrence reinsurance. All four layers have limited reinstatements; and therefore, the layers have capped, maximum aggregate limits.
The effects of reinsurance on premiums written and earned are as follows:
|
|
Six months ended June 30, 2026 |
|
|||||
(in millions) |
|
Written |
|
|
Earned |
|
||
WNFIC: |
|
|
|
|
|
|
||
Direct |
|
$ |
|
|
$ |
|
||
Ceded |
|
|
( |
) |
|
|
( |
) |
Net premiums - WNFIC |
|
|
— |
|
|
|
— |
|
Captives: |
|
|
|
|
|
|
||
Direct |
|
|
|
|
|
|
||
Assumed |
|
|
|
|
|
|
||
Ceded |
|
|
( |
) |
|
|
( |
) |
Net premiums - Captives |
|
|
|
|
|
|
||
Net premiums - Total |
|
$ |
|
|
$ |
|
||
WNFIC
All premiums written by the Company under NFIP are
As of June 30, 2026, the Condensed Consolidated Balance Sheets contained reinsurance recoverable of $
24
Captives
As of June 30, 2026, the Condensed Consolidated Balance Sheet contained the following balances related to the Captives: deferred acquisition costs of $
NOTE 14 Equity
Under the authorization from the Company’s board of directors, shares may be purchased from time to time, at the Company’s discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company’s financial performance and other potential factors. These purchases may be carried out through open market purchases, block trades, accelerated share repurchase plans of up to $
On October 22, 2025, the board of directors approved an additional $
On February 12, 2026, the Company entered into accelerated share repurchase agreement ("ASR") with an investment bank to purchase an aggregate $
During the three months ended June 30, 2026, the Company repurchased an additional
At June 30, 2026, the remaining amount authorized by our board of directors for share repurchases was approximately $
During the first quarter, the Company paid a dividend of $
During the second quarter, the Company paid a dividend of $
25
ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion updates the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and the two discussions should be read together.
GENERAL
Company Overview — Second Quarter of 2026
The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes to those Financial Statements included elsewhere in this Quarterly Report on Form 10-Q, which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition, please see “Information Regarding Non-GAAP Financial Measures” below regarding important information on non-GAAP financial measures contained in our discussion and analysis.
We are a diversified insurance agency, wholesale brokerage, insurance programs, specialty insurance business and service organization headquartered in Daytona Beach, Florida. As an insurance intermediary, our principal sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers. Commission revenues 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, sales or 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. We also participate in captive insurance facilities for the purpose of having additional capacity to place coverage, driving additional revenues and to participate in underwriting results, and to limit the Company's exposure to claims expenses through reinsurance or by only participating in certain tranches of the underwriting. We also operate registered insurance companies to support our national flood insurance program and to support our cross-collateralized segregated captive cell businesses. We do not participate in earnings of the collateralized segregated captive cells.
The volume of business from new and existing customers, fluctuations in insurable exposure units, changes in premium rate levels, changes in general economic and competitive conditions, a reduction of purchased limits, or the occurrence of catastrophic weather events all affect our revenues. For example, higher levels of inflation, an increase in the value of insurable exposure units or a general decline in economic activity, could increase or decrease the value of insurable exposure units. Furthermore, increasing costs of litigation settlements and awards could cause some customers to seek higher levels of insurance coverage. Historically, we have grown our revenues as a result of our focus on new business, customer retention and acquisitions. We foster a strong, decentralized sales and service culture, which enables responsiveness to changing business conditions and drives accountability for results.
The term “core commissions and fees” excludes Contingents; and therefore, it represents the revenues earned directly from specific insurance policies sold, and specific fee-based services rendered. The net change in core commissions and fees reflects the aggregate changes attributable to: (i) net new and lost accounts; (ii) net changes in our customers’ exposure units, deductibles or insured limits; (iii) net changes in insurance premium rates or the commission rate paid to us by our carrier partners; (iv) the net change in fees paid to us by our customers and (v) any businesses acquired or disposed of.
We also earn Contingents, which are commissions based primarily on underwriting results, but in select situations may reflect additional considerations for volume, growth and/or retention. These commissions, which are included in our commissions and fees in the Consolidated Statements of Income, are estimated and accrued throughout the year based on actual premiums written and knowledge, to the extent it is available, of losses incurred. Payments are primarily received in the first and second quarters of each subsequent underwriting year, based upon prior year(s) underwriting results, but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until they are received. Over the last three years, Contingents have averaged approximately 4.4% of total commissions and fee revenues.
Fee revenues primarily relate to services other than securing coverage for our customers, and for fees negotiated in lieu of commissions. Fee revenues are generated by: (i) our Specialty Distribution segment, which earns fees primarily for the issuance of insurance policies on behalf of insurance carriers and (ii) our Retail segment in our large-account customer base, where we primarily earn fees for securing insurance for our customers, in our F&I businesses where we earn fees for assisting our customers with creating and selling warranty and service risk management programs and fees for Medicare Set-aside services, Social Security disability services and Medicare benefits advocacy services. Annual fee revenues as a percentage of our total commissions and fees, represented 22.2% in 2025 and 21.1% in 2024.
For the three months ended June 30, 2026, our total commissions and fees growth rate was 32.4%. Our consolidated Organic Revenue decreased by 0.7% and our Organic Revenue with Contingents growth rate was 0.7%.
Historically, investment and other income has consisted primarily of interest earnings on operating cash and where permitted, on premiums collected and held in a fiduciary capacity before being remitted to insurance companies. Our policy as it relates to the Company’s capital is to invest available funds in high-quality, short-term money-market funds and fixed income investment securities. Investment income also includes gains and losses realized from the sale of investments. Other income primarily reflects other miscellaneous revenues.
26
Income before income taxes for the three months ended June 30, 2026 increased from the second quarter of 2025 by $72 million or 23.2%, driven by increased Contingents, leveraging our expense base, synergies realized from the acquisition of Accession, acquisitions completed in the past twelve months and the change in estimated acquisition earn-out payables. This growth was partially offset by Acquisition/Integration Costs.
Information Regarding Non-GAAP Financial Measures
In the discussion and analysis of our results of operations, in addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), we provide references to the following non-GAAP financial measures as defined in Regulation G of the SEC rules: Organic Revenue, Organic Revenue with Contingents, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted and EBITDAC Margin - Adjusted. We present these measures because we believe such information is of interest to the investment community. We believe they provide additional meaningful methods to evaluate the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis due to the impact of certain items that have a high degree of variability, that we believe are not indicative of ongoing performance and that are not easily comparable from period to period. This non-GAAP financial information should be considered in addition to, not in lieu of, the Company’s consolidated income statements and balance sheets as of the relevant date. Consistent with Regulation G, a description of such information is provided below and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations - Segment Information.”
We view Organic Revenue and Organic Revenue growth (including Organic Revenue with Contingents and its growth) as important indicators when assessing and evaluating our performance on a consolidated basis and for each of our two segments, because they allow us to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that were a part of our business in both the current and prior year and that are expected to continue in the future. We also view EBITDAC, EBITDAC - Adjusted, EBITDAC Margin and EBITDAC Margin - Adjusted as important indicators when assessing and evaluating our performance, as they present more comparable measurements of our operating margins in a meaningful and consistent manner. As disclosed in our most recent proxy statement, we use Organic Revenue growth, and EBITDAC Margin - Adjusted as key performance metrics for our short-term and long-term incentive compensation plans for executive officers and other key employees.
Non-GAAP Revenue Measures
Non-GAAP Earnings Measures
Definitions Related to Certain Components of Non-GAAP Measures
27
Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments and; therefore, comparability may be limited. This supplemental non-GAAP financial information should be considered in addition to, and not in lieu of, the Company's Condensed Consolidated Financial Statements.
Acquisitions
Part of our business strategy is to attract high-quality insurance intermediaries and service organizations to join our operations. From 1993 through the second quarter of 2026, we acquired 732 insurance intermediary operations.
Critical Accounting Policies
We have had no changes to our Critical Accounting Policies as described in our most recent Form 10-K for the year ended December 31, 2025. We believe that of our significant accounting and reporting policies, the more critical policies include our accounting for revenue recognition, business combinations and purchase price allocations, intangible asset impairments, non-cash stock-based compensation and reserves for litigation. In particular, the accounting for these areas is subject to uncertainty, because it requires significant use of judgment to be made by management. Different assumptions in the application of these policies could result in material changes in our consolidated financial position or consolidated results of operations. Refer to Note 1 in the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2025 for details regarding our critical and significant accounting policies.
28
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.
Financial information relating to our condensed consolidated financial results is as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||||||||||
(in millions, except percentages) |
|
2026 |
|
|
2025 |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Core commissions and fees |
|
$ |
1,569 |
|
|
$ |
1,204 |
|
|
|
30.3 |
% |
|
$ |
3,352 |
|
|
$ |
2,546 |
|
|
|
31.7 |
% |
Profit-sharing contingent commissions |
|
|
85 |
|
|
|
45 |
|
|
|
88.9 |
% |
|
|
182 |
|
|
|
88 |
|
|
|
106.8 |
% |
Investment and other income |
|
|
22 |
|
|
|
36 |
|
|
|
-38.9 |
% |
|
|
43 |
|
|
|
55 |
|
|
|
-21.8 |
% |
Total revenues |
|
|
1,676 |
|
|
|
1,285 |
|
|
|
30.4 |
% |
|
|
3,577 |
|
|
|
2,689 |
|
|
|
33.0 |
% |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Employee compensation and benefits |
|
|
838 |
|
|
|
640 |
|
|
|
30.9 |
% |
|
|
1,745 |
|
|
|
1,323 |
|
|
|
31.9 |
% |
Other operating expenses |
|
|
271 |
|
|
|
211 |
|
|
|
28.4 |
% |
|
|
560 |
|
|
|
398 |
|
|
|
40.7 |
% |
(Gain)/loss on disposal |
|
|
1 |
|
|
|
— |
|
|
NMF |
|
|
|
— |
|
|
|
1 |
|
|
NMF |
|
||
Amortization |
|
|
110 |
|
|
|
50 |
|
|
|
120.0 |
% |
|
|
226 |
|
|
|
103 |
|
|
|
119.4 |
% |
Depreciation |
|
|
18 |
|
|
|
11 |
|
|
|
63.6 |
% |
|
|
35 |
|
|
|
23 |
|
|
|
52.2 |
% |
Interest |
|
|
100 |
|
|
|
51 |
|
|
|
96.1 |
% |
|
|
199 |
|
|
|
96 |
|
|
|
107.3 |
% |
Change in estimated acquisition |
|
|
(40 |
) |
|
|
11 |
|
|
NMF |
|
|
|
(34 |
) |
|
|
7 |
|
|
NMF |
|
||
Mark-to-market of escrow liability |
|
|
(5 |
) |
|
|
— |
|
|
NMF |
|
|
|
(69 |
) |
|
|
— |
|
|
NMF |
|
||
Total expenses |
|
|
1,293 |
|
|
|
974 |
|
|
|
32.8 |
% |
|
|
2,662 |
|
|
|
1,951 |
|
|
|
36.4 |
% |
Income before income taxes |
|
|
383 |
|
|
|
311 |
|
|
|
23.2 |
% |
|
|
915 |
|
|
|
738 |
|
|
|
24.0 |
% |
Income taxes |
|
|
94 |
|
|
|
77 |
|
|
|
22.1 |
% |
|
|
199 |
|
|
|
169 |
|
|
|
17.8 |
% |
Net income before non-controlling interests |
|
|
289 |
|
|
|
234 |
|
|
|
23.5 |
% |
|
|
716 |
|
|
|
569 |
|
|
|
25.8 |
% |
Less: Net income attributable to non-controlling interests |
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
2 |
|
|
|
6 |
|
|
|
|
||
Net income attributable to the Company |
|
$ |
288 |
|
|
$ |
231 |
|
|
|
24.7 |
% |
|
$ |
714 |
|
|
$ |
563 |
|
|
|
26.8 |
% |
Income Before Income Taxes |
|
|
22.9 |
% |
|
|
24.2 |
% |
|
|
|
|
|
25.6 |
% |
|
|
27.4 |
% |
|
|
|
||
EBITDAC - Adjusted (2) |
|
$ |
598 |
|
|
$ |
471 |
|
|
|
27.0 |
% |
|
$ |
1,329 |
|
|
$ |
1,005 |
|
|
|
32.2 |
% |
EBITDAC Margin - Adjusted (2) |
|
|
35.7 |
% |
|
|
36.7 |
% |
|
|
|
|
|
37.2 |
% |
|
|
37.4 |
% |
|
|
|
||
Organic Revenue growth rate (2) |
|
|
(0.7 |
)% |
|
|
3.6 |
% |
|
|
|
|
|
(0.3 |
)% |
|
|
5.1 |
% |
|
|
|
||
Organic Revenue with Contingents growth rate (2) |
|
|
0.7 |
% |
|
|
4.2 |
% |
|
|
|
|
|
1.6 |
% |
|
|
5.1 |
% |
|
|
|
||
Employee compensation and benefits |
|
|
50.0 |
% |
|
|
49.8 |
% |
|
|
|
|
|
48.8 |
% |
|
|
49.2 |
% |
|
|
|
||
Other operating expenses relative |
|
|
16.2 |
% |
|
|
16.4 |
% |
|
|
|
|
|
15.7 |
% |
|
|
14.8 |
% |
|
|
|
||
(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
29
Commissions and Fees
Commissions and fees, including Contingents and earned premiums, for the three months ended June 30, 2026 increased $405 million to $1,654 million, or 32.4%, over the same period in 2025. Core commissions and fees revenue for the second quarter of 2026 increased $365 million or 30.3%, composed of: (i) $393 million from acquisitions that had no comparable revenues in the same period of 2025; (ii) an increase from the impact of Foreign Currency Translation of $2 million and an offsetting decrease from (iii) $4 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months; (iv) $18 million related to the Litigation-Related Impact and (v) $8 million of net new and renewal business, which combined reflected an overall Organic Revenue decrease of 0.7%. Contingents for the second quarter of 2026 increased by $40 million, or 88.9%, compared to the same period in 2025. This increase was driven primarily by (i) improved underwriting results for our carrier partners, growth in premium volume and qualifying for certain Contingents that we did not qualify for in the prior year, (ii) recent acquisitions and (iii) our enhanced carrier engagement model. The Organic Revenue with Contingents growth rate was 0.7%.
Commissions and fees, including Contingents and earned premiums, for the six months ended June 30, 2026, increased $900 million to $3,534 million, or 34.2%, over the same period in 2025. Core commissions and fees revenue for the six months ended June 30, 2026 increased $806 million or 31.7%, composed of: (i) $829 million from acquisitions that had no comparable revenues in the same period of 2025; (ii) an increase from the impact of Foreign Currency Translation of $20 million and an offsetting decrease from (iii) $8 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months; (iv) $28 million related to the Litigation-Related Impact and (v) $7 million of net new and renewal business, which combined reflected an overall Organic Revenue growth decrease of 0.3%. Contingents for the six months ended June 30, 2026 increased by $94 million, or 106.8%, compared to the same period in 2025. This increase was driven primarily by (i) improved underwriting results for our carrier partners, (ii) growth in premium volume and qualifying for certain Contingents that we did not qualify for in the prior year, (iii) recent acquisitions and (iv) our enhanced carrier engagement model. The Organic Revenue with Contingents growth rate was 1.6%.
Investment and Other Income
Investment and other income for the three months ended June 30, 2026 decreased $14 million from the same period in 2025. Investment and other income for the six months ended June 30, 2026 decreased $12 million, from the same period in 2025. These decreases were driven substantially by $13 million of interest income generated by the proceeds of the Company's follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company's acquisition of Accession, and to a lesser extent lower average interest rates, each partially offset by acquisitions that had no comparable investment and other income in the same period of 2025.
Employee Compensation and Benefits
Employee compensation and benefits expense as a percentage of total revenues was 50.0% for the three months ended June 30, 2026 as compared to 49.8% for the three months ended June 30, 2025, an increase of 30.9%, or $198 million. This increase included $203 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2025. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2026 and 2025 decreased by $5 million. This underlying employee compensation and benefits expense decrease was primarily related to: (i) lower non-cash stock-based compensation expense driven by the company's performance; (ii) a decrease in claims costs within our self-insured health plan; (iii) a decrease in commissions, base compensation and bonuses resulting from the Litigation-Related Impact; partially offset by (iv) an increase in staff costs attributable to new hires and annual compensation increases.
Employee compensation and benefits expense as a percentage of total revenues was 48.8% for the six months ended June 30, 2026 as compared to 49.2% for the six months ended June 30, 2025, an increase of 31.9%, or $422 million. This increase included $444 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2025. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2026 and 2025 decreased by $22 million. This underlying employee compensation and benefits expense decrease was primarily related to: (i) lower non-cash stock-based compensation expense driven by the Company's performance; (ii) a decrease in claims costs within our self-insured health plan; (iii) a decrease in commissions, base compensation and bonuses resulting from the Litigation-Related Impact; partially offset by (iv) an increase in staff costs attributable to new hires and annual compensation increases.
Other Operating Expenses
Other operating expenses represented 16.2% of total revenues for the second quarter of 2026, as compared to 16.4% for the second quarter of 2025. Other operating expenses for the second quarter of 2026 increased $60 million, or 28.4%, from the same period of 2025. This change includes: (i) $72 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2025; and (ii) increased information technology-related costs.
Other operating expenses represented 15.7% of total revenues for the six months ended June 30, 2026, as compared to 14.8% for the six months ended June 30, 2025. Other operating expenses for the first six months of 2026 increased $162 million, or 40.7%, from the same period of 2025. This change includes: (i) $150 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2025; and (ii) increased information technology-related costs.
30
(Gain)/Loss on Disposal
Gain on disposal for the second quarter of 2026 decreased $1 million from the second quarter of 2025. Gain on disposal for the six months ended June 30, 2026 increased $1 million from the six months ended June 30, 2025. Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.
Amortization
Amortization expense for the second quarter of 2026 increased $60 million, or 120.0%, compared to the second quarter of 2025. Amortization expense for the six months ended June 30, 2026 increased $123 million, or 119.4%, compared to the six months ended June 30, 2025. This change reflects the amortization of new intangibles from businesses acquired within the past twelve months, net of certain intangible assets becoming fully amortized or written off in the (Gain)/Loss on disposal.
Depreciation
Depreciation expense for the second quarter of 2026 increased $7 million, or 63.6%, compared to the second quarter of 2025. Depreciation expense for the six months ended June 30, 2026 increased $12 million, or 52.2%, compared to the six months ended June 30, 2025. Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, partially offset by the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.
Interest Expense
Interest expense for the second quarter of 2026 increased $49 million, or 96.1%, compared to the second quarter of 2025. Interest expense for the six months ended June 30, 2026 increased $103 million, or 107.3%, compared to the first six months of 2025. The increase is due to higher debt resulting from a debt issuance in the second quarter of 2025 to fund the Transaction, which was partially offset by decreases in the floating rate benchmark used on our adjustable-rate debt.
Change in Estimated Acquisition Earn-Out Payables
ASC 805 - Business Combinations 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 price arrangements) at the acquisition date must be included in the purchase price consideration. The recorded purchase price for acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are required to be recorded in the Condensed Consolidated Statements of Income when incurred or reasonably estimated. Estimations of potential earn-out obligations are typically based upon future earnings of the acquired operations or entities, usually for periods ranging from one to three years.
The net charge or credit to the Condensed Consolidated Statements of Income for the period is the combination of the net change in the estimated acquisition earn-out payables liability, and the accretion of the present value discount on those liabilities.
As of June 30, 2026 and 2025, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820 - Fair Value Measurement. The resulting 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) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Change in fair value |
|
$ |
(44 |
) |
|
$ |
9 |
|
|
$ |
(45 |
) |
|
$ |
4 |
|
Interest expense accretion |
|
|
4 |
|
|
|
2 |
|
|
|
11 |
|
|
|
3 |
|
Net change in earnings from estimated acquisition earn-out payables |
|
$ |
(40 |
) |
|
$ |
11 |
|
|
$ |
(34 |
) |
|
$ |
7 |
|
For the three months and six months ended June 30, 2026, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $44 million and $45 million, respectively, which resulted in credits to the Condensed Consolidated Statements of Income. These adjustments were primarily related to revised estimates for companies acquired in the Transaction.
As of June 30, 2026, estimated acquisition earn-out payables totaled $310 million, of which $136 million was recorded as accounts payable and $174 million was recorded as other non-current liabilities.
Income Taxes
The effective tax rate on income from operations for the three months ended June 30, 2026 and 2025 was 24.5% and 24.8%, respectively. The effective tax rate on income from operations for the six months ended June 30, 2026 and 2025 was 21.7% and 22.9%, respectively. The decrease for the six months ended June 30, 2026 was driven by the non-taxable treatment of the mark-to-market of escrow liability.
31
RESULTS OF OPERATIONS — SEGMENT INFORMATION
As discussed in Note 12 to the Condensed Consolidated Financial Statements, we operate two reportable segments: Retail and Specialty Distribution. On a segmented basis, changes in amortization, depreciation and interest expenses generally result from activity associated with acquisitions. Likewise, other income consists primarily of miscellaneous income; and therefore, it can fluctuate between comparable periods. As such, management primarily focuses on Organic Revenue growth, the growth in Contingents and EBITDAC Margin when evaluating the operational efficiency of a segment.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measures, for the three months ended June 30, 2026 and 2025, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the three months ended June 30, 2026 and 2025, including by segment, are as follows:
2026 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
|||||||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||
Commissions and fees |
|
$ |
940 |
|
|
$ |
694 |
|
|
$ |
714 |
|
|
$ |
555 |
|
|
$ |
1,654 |
|
|
$ |
1,249 |
|
Total change |
|
$ |
246 |
|
|
|
|
|
$ |
159 |
|
|
|
|
|
$ |
405 |
|
|
|
|
|||
Total growth % |
|
|
35.4 |
% |
|
|
|
|
|
28.6 |
% |
|
|
|
|
|
32.4 |
% |
|
|
|
|||
Contingents |
|
$ |
(26 |
) |
|
$ |
(7 |
) |
|
$ |
(59 |
) |
|
$ |
(38 |
) |
|
$ |
(85 |
) |
|
$ |
(45 |
) |
Core commissions and fees |
|
$ |
914 |
|
|
$ |
687 |
|
|
$ |
655 |
|
|
$ |
517 |
|
|
$ |
1,569 |
|
|
$ |
1,204 |
|
Acquisitions |
|
|
(236 |
) |
|
|
|
|
|
(157 |
) |
|
|
|
|
|
(393 |
) |
|
|
|
|||
Dispositions |
|
|
|
|
|
(2 |
) |
|
|
|
|
|
(2 |
) |
|
|
|
|
|
(4 |
) |
|||
Foreign Currency Translation |
|
|
|
|
|
1 |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
2 |
|
|||
Litigation-Related Impact |
|
|
|
|
|
(18 |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
(18 |
) |
|||
Organic Revenue (2) |
|
$ |
678 |
|
|
$ |
668 |
|
|
$ |
498 |
|
|
$ |
516 |
|
|
$ |
1,176 |
|
|
$ |
1,184 |
|
Organic Revenue growth (2) |
|
$ |
10 |
|
|
|
|
|
$ |
(18 |
) |
|
|
|
|
|
(8 |
) |
|
|
|
|||
Organic Revenue growth rate (2) |
|
|
1.5 |
% |
|
|
|
|
|
(3.5 |
)% |
|
|
|
|
|
(0.7 |
)% |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Organic Contingents |
|
$ |
14 |
|
|
$ |
7 |
|
|
$ |
47 |
|
|
$ |
38 |
|
|
$ |
61 |
|
|
$ |
45 |
|
Organic Revenue with Contingents (2) |
|
$ |
692 |
|
|
$ |
675 |
|
|
$ |
545 |
|
|
$ |
554 |
|
|
$ |
1,237 |
|
|
$ |
1,229 |
|
Organic Revenue with Contingents growth (2) |
|
$ |
17 |
|
|
|
|
|
$ |
(9 |
) |
|
|
|
|
$ |
8 |
|
|
|
|
|||
Organic Revenue with Contingents growth rate (2) |
|
|
2.5 |
% |
|
|
|
|
|
(1.6 |
)% |
|
|
|
|
|
0.7 |
% |
|
|
|
|||
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measures, for the three months ended June 30, 2025 and 2024, including by segment, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the three months ended June 30, 2025 and 2024, including by segment, are as follows:
32
2025 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
|||||||||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||||
Commissions and fees |
|
$ |
694 |
|
|
$ |
643 |
|
|
$ |
555 |
|
|
$ |
511 |
|
|
$ |
1,249 |
|
|
$ |
1,154 |
|
Total change |
|
$ |
51 |
|
|
|
|
|
$ |
44 |
|
|
|
|
|
$ |
95 |
|
|
|
|
|||
Total growth % |
|
|
7.9 |
% |
|
|
|
|
|
8.6 |
% |
|
|
|
|
|
8.2 |
% |
|
|
|
|||
Contingents |
|
$ |
(7 |
) |
|
$ |
(7 |
) |
|
$ |
(38 |
) |
|
$ |
(29 |
) |
|
$ |
(45 |
) |
|
$ |
(36 |
) |
Core commissions and fees |
|
$ |
687 |
|
|
$ |
636 |
|
|
$ |
517 |
|
|
$ |
482 |
|
|
$ |
1,204 |
|
|
$ |
1,118 |
|
Acquisitions |
|
|
(29 |
) |
|
|
|
|
|
(13 |
) |
|
|
|
|
|
(42 |
) |
|
|
|
|||
Dispositions |
|
|
|
|
|
(3 |
) |
|
|
|
|
|
(1 |
) |
|
|
|
|
|
(4 |
) |
|||
Foreign Currency Translation |
|
|
|
|
|
6 |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
8 |
|
|||
Litigation-Related Impact |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Organic Revenue (2) |
|
$ |
658 |
|
|
$ |
639 |
|
|
$ |
504 |
|
|
$ |
483 |
|
|
$ |
1,162 |
|
|
$ |
1,122 |
|
Organic Revenue growth (2) |
|
$ |
19 |
|
|
|
|
|
$ |
21 |
|
|
|
|
|
$ |
40 |
|
|
|
|
|||
Organic Revenue growth rate (2) |
|
|
3.0 |
% |
|
|
|
|
|
4.3 |
% |
|
|
|
|
|
3.6 |
% |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Organic Contingents |
|
$ |
7 |
|
|
$ |
7 |
|
|
$ |
38 |
|
|
$ |
29 |
|
|
$ |
45 |
|
|
$ |
36 |
|
Organic Revenue with Contingents (2) |
|
$ |
665 |
|
|
$ |
646 |
|
|
$ |
542 |
|
|
$ |
512 |
|
|
$ |
1,207 |
|
|
$ |
1,158 |
|
Organic Revenue with Contingents growth (2) |
|
$ |
19 |
|
|
|
|
|
$ |
30 |
|
|
|
|
|
$ |
49 |
|
|
|
|
|||
Organic Revenue with Contingents growth rate (2) |
|
|
2.9 |
% |
|
|
|
|
|
5.9 |
% |
|
|
|
|
|
4.2 |
% |
|
|
|
|||
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measures, for the six months ended June 30, 2026 and 2025, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the six months ended June 30, 2026 and 2025, including by segment, are as follows:
2026 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
|||||||||||||||
(in millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||
Commissions and fees |
|
$ |
2,143 |
|
|
$ |
1,598 |
|
|
$ |
1,391 |
|
|
$ |
1,036 |
|
|
$ |
3,534 |
|
|
$ |
2,634 |
|
Total change |
|
$ |
545 |
|
|
|
|
|
$ |
355 |
|
|
|
|
|
$ |
900 |
|
|
|
|
|||
Total growth % |
|
|
34.1 |
% |
|
|
|
|
|
34.3 |
% |
|
|
|
|
|
34.2 |
% |
|
|
|
|||
Contingents |
|
|
(56 |
) |
|
|
(22 |
) |
|
|
(126 |
) |
|
|
(66 |
) |
|
|
(182 |
) |
|
|
(88 |
) |
Core commissions and fees |
|
$ |
2,087 |
|
|
$ |
1,576 |
|
|
$ |
1,265 |
|
|
$ |
970 |
|
|
$ |
3,352 |
|
|
$ |
2,546 |
|
Acquisitions |
|
|
(507 |
) |
|
|
|
|
|
(322 |
) |
|
|
|
|
|
(829 |
) |
|
|
|
|||
Dispositions |
|
|
|
|
|
(3 |
) |
|
|
|
|
|
(5 |
) |
|
|
|
|
|
(8 |
) |
|||
Foreign Currency Translation |
|
|
|
|
|
16 |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
20 |
|
|||
Litigation-Related Impact |
|
|
|
|
|
(28 |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
(28 |
) |
|||
Organic Revenue (2) |
|
$ |
1,580 |
|
|
$ |
1,561 |
|
|
$ |
943 |
|
|
$ |
969 |
|
|
$ |
2,523 |
|
|
$ |
2,530 |
|
Organic Revenue growth (2) |
|
$ |
19 |
|
|
|
|
|
$ |
(26 |
) |
|
|
|
|
$ |
(7 |
) |
|
|
|
|||
Organic Revenue growth rate (2) |
|
|
1.2 |
% |
|
|
|
|
|
(2.7 |
)% |
|
|
|
|
|
(0.3 |
)% |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Organic Contingents |
|
$ |
32 |
|
|
$ |
21 |
|
|
$ |
103 |
|
|
$ |
65 |
|
|
$ |
135 |
|
|
$ |
86 |
|
Organic Revenue with Contingents (2) |
|
$ |
1,612 |
|
|
$ |
1,582 |
|
|
$ |
1,046 |
|
|
$ |
1,034 |
|
|
$ |
2,658 |
|
|
$ |
2,616 |
|
Organic Revenue with Contingents growth (2) |
|
$ |
30 |
|
|
|
|
|
$ |
12 |
|
|
|
|
|
$ |
42 |
|
|
|
|
|||
Organic Revenue with Contingents growth rate (2) |
|
|
1.9 |
% |
|
|
|
|
|
1.2 |
% |
|
|
|
|
|
1.6 |
% |
|
|
|
|||
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measure, for the six months ended June 30, 2025 and 2024, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the six months ended June 30, 2025 and 2024, including by segment, are as follows:
33
2025 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
|||||||||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||||
Commissions and fees |
|
$ |
1,598 |
|
|
$ |
1,446 |
|
|
$ |
1,036 |
|
|
$ |
944 |
|
|
$ |
2,634 |
|
|
$ |
2,390 |
|
Total change |
|
$ |
152 |
|
|
|
|
|
$ |
92 |
|
|
|
|
|
$ |
244 |
|
|
|
|
|||
Total growth % |
|
|
10.5 |
% |
|
|
|
|
|
9.7 |
% |
|
|
|
|
|
10.2 |
% |
|
|
|
|||
Contingents |
|
|
(22 |
) |
|
|
(21 |
) |
|
|
(66 |
) |
|
|
(61 |
) |
|
|
(88 |
) |
|
|
(82 |
) |
Core commissions and fees |
|
$ |
1,576 |
|
|
$ |
1,425 |
|
|
$ |
970 |
|
|
$ |
883 |
|
|
$ |
2,546 |
|
|
$ |
2,308 |
|
Acquisitions |
|
|
(102 |
) |
|
|
|
|
|
(19 |
) |
|
|
|
|
|
(121 |
) |
|
|
|
|||
Dispositions |
|
|
|
|
|
(7 |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
(7 |
) |
|||
Foreign Currency Translation |
|
|
|
|
|
5 |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
6 |
|
|||
Litigation-Related Impact |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Organic Revenue (2) |
|
$ |
1,474 |
|
|
$ |
1,423 |
|
|
$ |
951 |
|
|
$ |
884 |
|
|
$ |
2,425 |
|
|
$ |
2,307 |
|
Organic Revenue growth (2) |
|
$ |
51 |
|
|
|
|
|
$ |
67 |
|
|
|
|
|
$ |
118 |
|
|
|
|
|||
Organic Revenue growth rate (2) |
|
|
3.6 |
% |
|
|
|
|
|
7.6 |
% |
|
|
|
|
|
5.1 |
% |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Organic Contingents |
|
$ |
20 |
|
|
$ |
21 |
|
|
$ |
66 |
|
|
$ |
61 |
|
|
$ |
86 |
|
|
$ |
82 |
|
Organic Revenue with Contingents (2) |
|
$ |
1,494 |
|
|
$ |
1,444 |
|
|
$ |
1,017 |
|
|
$ |
945 |
|
|
$ |
2,511 |
|
|
$ |
2,389 |
|
Organic Revenue with Contingents growth (2) |
|
$ |
50 |
|
|
|
|
|
$ |
72 |
|
|
|
|
|
$ |
122 |
|
|
|
|
|||
Organic Revenue with Contingents growth rate (2) |
|
|
3.5 |
% |
|
|
|
|
|
7.6 |
% |
|
|
|
|
|
5.1 |
% |
|
|
|
|||
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
34
The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2026, including by segment, is as follows:
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total |
|
|
||||
Total Revenues |
|
$ |
947 |
|
|
$ |
721 |
|
|
$ |
8 |
|
|
$ |
1,676 |
|
|
Income before income taxes |
|
|
206 |
|
|
|
253 |
|
|
|
(76 |
) |
|
|
383 |
|
|
Income Before Income Taxes Margin(1) |
|
|
21.8 |
% |
|
|
35.1 |
% |
|
NMF |
|
|
|
22.9 |
% |
|
|
Amortization |
|
|
66 |
|
|
|
44 |
|
|
|
— |
|
|
|
110 |
|
|
Depreciation |
|
|
11 |
|
|
|
6 |
|
|
|
1 |
|
|
|
18 |
|
|
Interest |
|
|
5 |
|
|
|
9 |
|
|
|
86 |
|
|
|
100 |
|
|
Change in estimated acquisition |
|
|
(30 |
) |
|
|
(10 |
) |
|
|
— |
|
|
|
(40 |
) |
|
EBITDAC(2) |
|
|
258 |
|
|
|
302 |
|
|
|
11 |
|
|
|
571 |
|
|
EBITDAC Margin(2) |
|
|
27.2 |
% |
|
|
41.9 |
% |
|
NMF |
|
|
|
34.1 |
% |
|
|
(Gain)/loss on disposal |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
Acquisition/Integration Costs |
|
|
23 |
|
|
|
6 |
|
|
|
2 |
|
|
|
31 |
|
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
|
|
(5 |
) |
|
EBITDAC - Adjusted(2) |
|
$ |
282 |
|
|
$ |
308 |
|
|
$ |
8 |
|
|
$ |
598 |
|
|
EBITDAC Margin - Adjusted(2) |
|
|
29.8 |
% |
|
|
42.7 |
% |
|
NMF |
|
|
|
35.7 |
% |
|
|
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2025, including by segment, is as follows:
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total(1) |
|
||||
Total Revenues |
|
$ |
697 |
|
|
$ |
563 |
|
|
$ |
25 |
|
|
$ |
1,285 |
|
Income before income taxes |
|
|
127 |
|
|
|
233 |
|
|
|
(49 |
) |
|
|
311 |
|
Income Before Income Taxes Margin(2) |
|
|
18.2 |
% |
|
|
41.4 |
% |
|
NMF |
|
|
|
24.2 |
% |
|
Amortization |
|
|
35 |
|
|
|
15 |
|
|
|
— |
|
|
|
50 |
|
Depreciation |
|
|
6 |
|
|
|
4 |
|
|
|
1 |
|
|
|
11 |
|
Interest |
|
|
15 |
|
|
|
9 |
|
|
|
27 |
|
|
|
51 |
|
Change in estimated acquisition |
|
|
9 |
|
|
|
2 |
|
|
|
— |
|
|
|
11 |
|
EBITDAC(3) |
|
|
192 |
|
|
|
263 |
|
|
|
(21 |
) |
|
|
434 |
|
EBITDAC Margin(3) |
|
|
27.5 |
% |
|
|
46.7 |
% |
|
NMF |
|
|
|
33.8 |
% |
|
(Gain)/loss on disposal |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Acquisition/Integration Costs |
|
|
— |
|
|
|
— |
|
|
|
37 |
|
|
|
37 |
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
EBITDAC - Adjusted(3) |
|
$ |
192 |
|
|
$ |
263 |
|
|
$ |
16 |
|
|
$ |
471 |
|
EBITDAC Margin - Adjusted(3) |
|
|
27.5 |
% |
|
|
46.7 |
% |
|
NMF |
|
|
|
36.7 |
% |
|
(1) Amount reflects the positive impact of approximately $13 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company’s acquisition of Accession.
(2) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(3) A non-GAAP financial measure.
NMF = Not a meaningful figure
35
The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2026, including by segment, is as follows:
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total |
|
|
||||
Total Revenues |
|
$ |
2,156 |
|
|
$ |
1,403 |
|
|
$ |
18 |
|
|
$ |
3,577 |
|
|
Income before income taxes |
|
|
522 |
|
|
|
474 |
|
|
|
(81 |
) |
|
|
915 |
|
|
Income Before Income Taxes Margin(1) |
|
|
24.2 |
% |
|
|
33.8 |
% |
|
NMF |
|
|
|
25.6 |
% |
|
|
Amortization |
|
|
139 |
|
|
|
88 |
|
|
|
(1 |
) |
|
|
226 |
|
|
Depreciation |
|
|
20 |
|
|
|
12 |
|
|
|
3 |
|
|
|
35 |
|
|
Interest |
|
|
12 |
|
|
|
17 |
|
|
|
170 |
|
|
|
199 |
|
|
Change in estimated acquisition |
|
|
(19 |
) |
|
|
(15 |
) |
|
|
— |
|
|
|
(34 |
) |
|
EBITDAC(2) |
|
|
674 |
|
|
|
576 |
|
|
|
91 |
|
|
|
1,341 |
|
|
EBITDAC Margin(2) |
|
|
31.3 |
% |
|
|
41.1 |
% |
|
NMF |
|
|
|
37.5 |
% |
|
|
(Gain)/loss on disposal |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Acquisition/Integration Costs |
|
|
41 |
|
|
|
12 |
|
|
|
4 |
|
|
|
57 |
|
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
(69 |
) |
|
|
(69 |
) |
|
EBITDAC - Adjusted(2) |
|
$ |
715 |
|
|
$ |
588 |
|
|
$ |
26 |
|
|
$ |
1,329 |
|
|
EBITDAC Margin - Adjusted(2) |
|
|
33.2 |
% |
|
|
41.9 |
% |
|
NMF |
|
|
|
37.2 |
% |
|
|
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2025, including by segment, is as follows:
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total(1) |
|
||||
Total Revenues |
|
$ |
1,604 |
|
|
$ |
1,050 |
|
|
$ |
35 |
|
|
$ |
2,689 |
|
Income before income taxes |
|
|
411 |
|
|
|
399 |
|
|
|
(72 |
) |
|
|
738 |
|
Income Before Income Taxes Margin(2) |
|
|
25.6 |
% |
|
|
38.0 |
% |
|
NMF |
|
|
|
27.4 |
% |
|
Amortization |
|
|
73 |
|
|
|
31 |
|
|
|
(1 |
) |
|
|
103 |
|
Depreciation |
|
|
12 |
|
|
|
8 |
|
|
|
3 |
|
|
|
23 |
|
Interest |
|
|
30 |
|
|
|
18 |
|
|
|
48 |
|
|
|
96 |
|
Change in estimated acquisition |
|
|
3 |
|
|
|
4 |
|
|
|
— |
|
|
|
7 |
|
EBITDAC(3) |
|
|
529 |
|
|
|
460 |
|
|
|
(22 |
) |
|
|
967 |
|
EBITDAC Margin(3) |
|
|
33.0 |
% |
|
|
43.8 |
% |
|
NMF |
|
|
|
36.0 |
% |
|
(Gain)/loss on disposal |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Acquisition/Integration Costs |
|
|
— |
|
|
|
— |
|
|
|
37 |
|
|
|
37 |
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
EBITDAC - Adjusted(3) |
|
$ |
530 |
|
|
$ |
460 |
|
|
$ |
15 |
|
|
$ |
1,005 |
|
EBITDAC Margin - Adjusted(3) |
|
|
33.0 |
% |
|
|
43.8 |
% |
|
NMF |
|
|
|
37.4 |
% |
|
(1) Amount reflects the positive impact of approximately $13 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company’s acquisition of Accession.
(2) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(3) A non-GAAP financial measure.
NMF = Not a meaningful figure
36
Retail Segment
The Retail segment provides a broad range of insurance products and services to commercial, public and quasi-public, professional and individual insured customers, and non-insurance risk-mitigating products through our F&I businesses. Approximately 77% of the Retail segment’s commissions and fees revenue is commission based.
Financial information relating to our Retail segment is as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||||||||||
(in millions, except percentages) |
|
2026 |
|
|
2025 |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Core commissions and fees |
|
$ |
914 |
|
|
$ |
687 |
|
|
|
33.0 |
% |
|
$ |
2,087 |
|
|
$ |
1,577 |
|
|
|
32.3 |
% |
Profit-sharing contingent commissions |
|
|
26 |
|
|
|
7 |
|
|
|
271.4 |
% |
|
|
56 |
|
|
|
22 |
|
|
|
154.5 |
% |
Investment and other income |
|
|
7 |
|
|
|
3 |
|
|
|
133.3 |
% |
|
|
13 |
|
|
|
5 |
|
|
|
160.0 |
% |
Total revenues |
|
|
947 |
|
|
|
697 |
|
|
|
35.9 |
% |
|
|
2,156 |
|
|
|
1,604 |
|
|
|
34.4 |
% |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Employee compensation and benefits |
|
|
514 |
|
|
|
385 |
|
|
|
33.5 |
% |
|
|
1,128 |
|
|
|
833 |
|
|
|
35.4 |
% |
Other operating expenses |
|
|
174 |
|
|
|
120 |
|
|
|
45.0 |
% |
|
|
354 |
|
|
|
241 |
|
|
|
46.9 |
% |
(Gain)/loss on disposal |
|
|
1 |
|
|
|
— |
|
|
NMF |
|
|
|
— |
|
|
|
1 |
|
|
|
100.0 |
% |
|
Amortization |
|
|
66 |
|
|
|
35 |
|
|
|
88.6 |
% |
|
|
139 |
|
|
|
73 |
|
|
|
90.4 |
% |
Depreciation |
|
|
11 |
|
|
|
6 |
|
|
|
83.3 |
% |
|
|
20 |
|
|
|
12 |
|
|
|
66.7 |
% |
Interest |
|
|
5 |
|
|
|
15 |
|
|
|
(66.7 |
%) |
|
|
12 |
|
|
|
30 |
|
|
|
(60.0 |
%) |
Change in estimated acquisition |
|
|
(30 |
) |
|
|
9 |
|
|
NMF |
|
|
|
(19 |
) |
|
|
3 |
|
|
NMF |
|
||
Total expenses |
|
|
741 |
|
|
|
570 |
|
|
|
30.0 |
% |
|
|
1,634 |
|
|
|
1,193 |
|
|
|
37.0 |
% |
Income before income taxes |
|
$ |
206 |
|
|
$ |
127 |
|
|
|
62.2 |
% |
|
$ |
522 |
|
|
$ |
411 |
|
|
|
27.0 |
% |
Income Before Income Taxes |
|
|
21.8 |
% |
|
|
18.2 |
% |
|
|
|
|
|
24.2 |
% |
|
|
25.6 |
% |
|
|
|
||
EBITDAC - Adjusted (2) |
|
$ |
282 |
|
|
$ |
192 |
|
|
|
46.9 |
% |
|
$ |
715 |
|
|
$ |
530 |
|
|
|
34.9 |
% |
EBITDAC Margin - Adjusted (2) |
|
|
29.8 |
% |
|
|
27.5 |
% |
|
|
|
|
|
33.2 |
% |
|
|
33.0 |
% |
|
|
|
||
Organic Revenue growth rate (2) |
|
|
1.5 |
% |
|
|
3.0 |
% |
|
|
|
|
|
1.2 |
% |
|
|
3.6 |
% |
|
|
|
||
Organic Revenue with Contingents growth rate (2) |
|
|
2.5 |
% |
|
|
2.9 |
% |
|
|
|
|
|
1.9 |
% |
|
|
3.5 |
% |
|
|
|
||
Employee compensation and benefits |
|
|
54.3 |
% |
|
|
55.2 |
% |
|
|
|
|
|
52.3 |
% |
|
|
51.9 |
% |
|
|
|
||
Other operating expenses relative |
|
|
18.4 |
% |
|
|
17.2 |
% |
|
|
|
|
|
16.4 |
% |
|
|
15.0 |
% |
|
|
|
||
(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The Retail segment’s total revenues for the three months ended June 30, 2026 increased 35.9%, or $250 million, as compared to the same period in 2025, to $947 million. The $227 million increase in core commissions and fees revenue was driven by: (i) approximately $236 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025; (ii) an increase of $10 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $1 million; (iv) an offsetting decrease of $2 million related to commissions and fees recorded in 2025 from businesses since divested; and (v) an offsetting decrease of $18 million related to the Litigation-Related Impact. Contingents for the second quarter of 2026 increased $19 million to $26 million, as compared to the same period in 2025. This increase was due to acquisitions completed within the last twelve months and more favorable terms for certain carrier contracts resulting from our enhanced carrier engagement model. The Retail segment’s total commissions and fees increased by 35.4%. The Organic Revenue growth rate was 1.5% and the Organic Revenue with Contingents growth rate was 2.5% for the second quarter of 2026. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers. Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines of coverage, and a change to the revenue model for our specialty pharmacy consulting business.
Income before income taxes for the three months ended June 30, 2026 increased 62.2%, or $79 million, as compared to the same period in 2025, to $206 million. The primary factors driving this increase were: (i) a decrease in intercompany interest expense; (ii) a decrease in estimated acquisition earn-out payables; and (iii) the profit associated with the net increase in revenue as described above, partially offset by (iv) an increase in amortization expense and (v) Acquisition/Integration Costs.
37
EBITDAC - Adjusted for the three months ended June 30, 2026 increased 46.9%, or $90 million, as compared to the same period in 2025, to $282 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2026 increased to 29.8% from 27.5% in the same period in 2025. The change in EBITDAC Margin - Adjusted was primarily driven by: (i) increased Contingents; (ii) leveraging our expense base; and (iii) lower compensation as a result of employee departures associated with the Litigation-Related Impact.
The Retail segment’s total revenues for the six months ended June 30, 2026 increased 34.4%, or $552 million, as compared to the same period in 2025, to $2,156 million. The $510 million increase in core commissions and fees revenue was driven by: (i) approximately $507 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025; (ii) an increase of $19 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $16 million; (iv) an offsetting decrease of $3 million related to commissions and fees recorded in 2025 from businesses since divested; and (v) an offsetting decrease of $28 million related to the Litigation-Related Impact. Contingents for the six months of 2026 increased 154.5%, or $34 million, as compared to the same period in 2025, to $56 million. This increase was due to acquisitions completed within the last twelve months and qualifying for Contingents this year that we did not qualify for in the prior year. The Retail segment’s total commissions and fees increased by 34.0%. The Organic Revenue growth rate was 1.2% and the Organic Revenue with Contingents growth rate was 1.9% for the first six months of 2026. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth from renewals of existing customers. Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines of coverage, and a change to the revenue model in our specialty pharmacy consulting business.
Income before income taxes for the six months ended June 30, 2026 increased 27.0%, or $111 million, as compared to the same period in 2025, to $522 million. The primary factors driving this increase were: (i) a decrease in intercompany interest expense; (ii) a decrease in estimated acquisition earn-out payables; and (iii) the profit associated with the net increase in revenue as described above, partially offset by (iv) an increase in amortization expense; and (v) Acquisition/Integration Costs.
EBITDAC - Adjusted for the six months ended June 30, 2026 increased 34.9%, or $185 million, as compared to the same period in 2025, to $715 million. EBITDAC Margin - Adjusted for the six months ended June 30, 2026 increased to 33.2% from 33.0% in the same period in 2025. The increase in EBITDAC Margin - Adjusted was primarily driven by: (i) increased Contingents; (ii) leveraging our expense base; and (iii) lower compensation as a result of employee departures associated with the Litigation-Related Impact.
Specialty Distribution Segment
The Specialty Distribution Segment is composed of three divisions; our programs business, operating as Arrowhead Programs; our wholesale brokerage business, operating as Bridge Specialty Group; and our specialty program business, operating as Arrowhead Specialty.
Arrowhead Programs manages a diverse portfolio of professional liability, personal lines, commercial lines, public entity and specialty programs supported by over 100 well-capitalized insurance carriers. In most cases, the insurance carriers that support these programs have delegated underwriting and, in many instances, claims-handling authority. These programs are generally distributed through a global network of independent agents and brokers, including Brown & Brown retail agents, and offer targeted products and services designed for businesses, individuals, specific industries, trade groups, professions, public entities, municipalities, and niche markets. This division also operates our write-your-own flood insurance carrier, WNFIC and participates in a quota share captive and an excess of loss layer captive. WNFIC’s underwriting business consists of policies written on behalf of and fully ceded to the NFIP, as well as excess flood policies, which are fully reinsured in the private market.
Bridge Specialty Group offers global wholesale brokerage and delegated binding/underwriting capabilities across multiple lines, to independent agents and brokers, including Brown & Brown retail agents. Our teams across the globe provide deep industry knowledge and expertise, for placements across multiple lines of coverage based on access to admitted, excess and surplus lines carriers, as well as the Lloyd’s markets in the United Kingdom.
Arrowhead Specialty offers solutions across affinity organizations, administrative services, captives, reinsurance, travel/accident, warranty, and life & health.
Arrowhead Programs' and Arrowhead Specialty's captives businesses provide additional underwriting capacity that enables growth in core commissions and fees and allow us to participate in underwriting results with limited exposure to claims expenses. The Company has traditionally participated in underwriting profits through Contingents. These captives purchase reinsurance or participate in limited tranches of the underwriting risk in order to limit the Company's exposure to claims expenses.
Approximately 81% of the Specialty Distribution segment’s commissions and fees revenue is commission based.
38
Financial information relating to our Specialty Distribution segment is as follows:
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
||||||||||||||||||
(in millions, except percentages) |
|
2026 |
|
|
2025 |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Core commissions and fees |
|
$ |
655 |
|
|
$ |
517 |
|
|
|
26.7 |
% |
|
$ |
1,265 |
|
|
$ |
970 |
|
|
|
30.4 |
% |
Profit-sharing contingent commissions |
|
|
59 |
|
|
|
38 |
|
|
|
55.3 |
% |
|
|
126 |
|
|
|
66 |
|
|
|
90.9 |
% |
Investment and other income |
|
|
7 |
|
|
|
8 |
|
|
|
(12.5 |
)% |
|
|
12 |
|
|
|
14 |
|
|
|
(14.3 |
)% |
Total revenues |
|
|
721 |
|
|
|
563 |
|
|
|
28.1 |
% |
|
|
1,403 |
|
|
|
1,050 |
|
|
|
33.6 |
% |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Employee compensation and benefits |
|
|
273 |
|
|
|
202 |
|
|
|
35.1 |
% |
|
|
546 |
|
|
|
401 |
|
|
|
36.2 |
% |
Other operating expenses |
|
|
146 |
|
|
|
98 |
|
|
|
49.0 |
% |
|
|
281 |
|
|
|
189 |
|
|
|
48.7 |
% |
(Gain)/loss on disposal |
|
|
— |
|
|
|
— |
|
|
|
— |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
% |
Amortization |
|
|
44 |
|
|
|
15 |
|
|
|
193.3 |
% |
|
|
88 |
|
|
|
31 |
|
|
|
183.9 |
% |
Depreciation |
|
|
6 |
|
|
|
4 |
|
|
|
50.0 |
% |
|
|
12 |
|
|
|
8 |
|
|
|
50.0 |
% |
Interest |
|
|
9 |
|
|
|
9 |
|
|
|
— |
% |
|
|
17 |
|
|
|
18 |
|
|
|
(5.6 |
)% |
Change in estimated acquisition |
|
|
(10 |
) |
|
|
2 |
|
|
NMF |
|
|
|
(15 |
) |
|
|
4 |
|
|
NMF |
|
||
Total expenses |
|
|
468 |
|
|
|
330 |
|
|
|
41.8 |
% |
|
|
929 |
|
|
|
651 |
|
|
|
42.7 |
% |
Income before income taxes |
|
$ |
253 |
|
|
$ |
233 |
|
|
|
8.6 |
% |
|
$ |
474 |
|
|
$ |
399 |
|
|
|
18.8 |
% |
Income Before Income Taxes |
|
|
35.1 |
% |
|
|
41.4 |
% |
|
|
|
|
|
33.8 |
% |
|
|
38.0 |
% |
|
|
|
||
EBITDAC - Adjusted (2) |
|
$ |
308 |
|
|
$ |
263 |
|
|
|
17.1 |
% |
|
$ |
588 |
|
|
$ |
460 |
|
|
|
27.8 |
% |
EBITDAC Margin - Adjusted (2) |
|
|
42.7 |
% |
|
|
46.7 |
% |
|
|
|
|
|
41.9 |
% |
|
|
43.8 |
% |
|
|
|
||
Organic Revenue growth rate (2) |
|
|
(3.5 |
%) |
|
|
4.3 |
% |
|
|
|
|
|
(2.7 |
%) |
|
|
7.6 |
% |
|
|
|
||
Organic Revenue with Contingents growth rate (2) |
|
|
(1.6 |
%) |
|
|
5.9 |
% |
|
|
|
|
|
1.2 |
% |
|
|
7.6 |
% |
|
|
|
||
Employee compensation and benefits |
|
|
37.9 |
% |
|
|
35.9 |
% |
|
|
|
|
|
38.9 |
% |
|
|
38.2 |
% |
|
|
|
||
Other operating expenses relative |
|
|
20.2 |
% |
|
|
17.4 |
% |
|
|
|
|
|
20.0 |
% |
|
|
18.0 |
% |
|
|
|
||
(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The Specialty Distribution segment’s total revenues for the three months ended June 30, 2026 increased 28.1%, or $158 million, as compared to the same period in 2025, to $721 million. The $138 million increase in core commissions and fees revenue was driven by: (i) approximately $157 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025; and (ii) an increase from the impact of Foreign Currency Translation of $1 million; partially offset by: (iii) a $18 million decrease in net new business, renewal business, and fee revenues; and (iv) a $2 million decline in core commission and fees revenue from dispositions that had no comparable revenues in the same period of 2026. Contingents for the second quarter of 2026 increased approximately $21 million as compared to the second quarter of 2025. This increase is a result of acquisitions completed in the past twelve months and favorable loss ratios.
The Specialty Distribution segment’s total commissions and fees increased by 28.6%, with Organic Revenue decreasing 3.5% and Organic Revenue with Contingents decreasing 1.6% for the three months ended June 30, 2026. The Organic Revenue with Contingents decline was driven by: (i) increased Contingents; (ii) net new and retained business; and (iii) exposure unit expansion; which were more than offset by (iv) declining rates on catastrophe ("CAT") property.
Income before income taxes for the three months ended June 30, 2026 increased 8.6%, or $20 million, as compared to the same period in 2025, to $253 million due to: (i) the growth of EBITDAC - Adjusted described below; (ii) a decrease in estimated acquisition earn-out payables; partially offset by: (iii) increased amortization expense; (iv) Acquisition/Integration Costs; and (v) increased depreciation expense.
EBITDAC - Adjusted for the three months ended June 30, 2026 increased 17.1%, or $45 million, from the same period in 2025, to $308 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2026 decreased to 42.7% from 46.7% in the same period in 2025. EBITDAC Margin - Adjusted decreased due to: (i) the decline in Organic Revenue; and (ii) investments to increase our capabilities in Europe; partially offset by: (iii) the increase in Contingents.
39
The Specialty Distribution segment’s total revenues for the six months ended June 30, 2026 increased 33.6%, or $353 million, as compared to the same period in 2025, to $1,403 million. The $295 million increase in core commissions and fees revenue was driven by: (i) approximately $322 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025; and (ii) an increase from the impact of Foreign Currency Translation of $4 million; partially offset by: (iii) a $26 million decrease in net new business, renewal business, and fee revenues; and (iv) a $5 million decline in core commission and fees revenue from dispositions that had no comparable revenues in the same period of 2026. Contingents for the six months ended June 30, 2026 increased approximately $60 million, or by 90.9%, as compared to the same period in 2025. This increase is a result of favorable loss ratios and to a lesser extent acquisitions completed in the past twelve months.
The Specialty Distribution segment’s total commissions and fees increased by 34.3% with Organic Revenue decreasing 2.7% and Organic Revenue with Contingents increasing 1.2%, for the six months ended June 30, 2026. The Organic Revenue with Contingents growth was driven by: (i) increased Contingents; (ii) net new and retained business; and (iii) exposure unit expansion; which were partially offset by (iv) declining rates on CAT property.
Income before income taxes for the six months ended June 30, 2026 increased 18.8%, or $75 million to $474 million, from the same period in 2025. Income before income taxes increased due to: (i) the growth of EBITDAC - Adjusted described below; and (ii) a decrease in estimated acquisition earn-out payables; partially offset by: (iii) increased amortization expense; and (iv) Acquisition/Integration Costs.
EBITDAC - Adjusted for the six months ended June 30, 2026 increased 27.8%, or $128 million to $588 million, as compared to the same period in 2025. EBITDAC Margin - Adjusted for the six months ended June 30, 2026 decreased to 41.9% from 43.8% in the same period in 2025. EBITDAC Margin - Adjusted decreased due to: (i) the decline in Organic Revenue; partially offset by: (ii) the increase in Contingents; and (iii) disciplined expense management.
Other
As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” line items in the Segment Information table includes any revenue and expenses not allocated to reportable segments, and corporate-related items, including the intercompany interest expense charges to reporting segments.
LIQUIDITY AND CAPITAL RESOURCES
The Company seeks to maintain a conservative balance sheet and strong liquidity profile. Our capital requirements to operate as an insurance intermediary are low, and we have been able to grow and invest in our business through a combination of cash that has been generated from operations, the disciplined use of debt and the issuance of equity as part of the purchase price consideration to acquire certain businesses. We have the ability to utilize our Revolving Credit Facility under the Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”), which as of June 30, 2026 provided additional capacity for up to $975 million in available cash. We believe that we have access to additional funds, if needed, through the capital markets or private placements to obtain further debt financing under the current market conditions. The Company believes that its existing cash, cash equivalents, short-term investment portfolio and funds generated from operations, together with the funds available under the Revolving Credit Facility will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for the next twelve months and in the long term.
The Revolving Credit Facility contains an expansion option for up to an additional $1,000 million of borrowing capacity, subject to the approval of participating lenders. Including the expansion options under all existing credit agreements, the Company has access to up to $1,975 million of incremental borrowing capacity as of June 30, 2026.
Cash and cash equivalents totaled $918 million at June 30, 2026 reflecting a decrease of $161 million from the $1,079 million balance at December 31, 2025. This decrease was primarily driven by share repurchases and deferred contingent consideration payments, partially offset by cash generated from operations.
Operating Cash Flows
Our operating cash flows are primarily derived from the net income generated during the period adjusted for non-cash expenses, which include depreciation, amortization, changes in estimated earnout payables, mark-to-market escrow liability, non-cash stock-based compensation and deferred income taxes while excluding gains and losses on sales/disposals of investments, businesses, fixed assets and customer accounts, payments on acquisition earn-outs in excess of original estimated payables and changes in working capital which relate primarily to the timing of payments of accrued liabilities and receipts of receivables from commissions and fees related to our revenues. Our ratio of current assets to current liabilities was 1.13 and 1.04 for June 30, 2026 and December 31, 2025, respectively.
Cash flows generated from operating activities totaled $608 million and $538 million for the six months ended June 30, 2026 and 2025, respectively, representing an increase of $70 million. Operating cash flows generated in 2026 included $716 million from net income before non-controlling interests with $303 million of non-cash adjustments, offset by $411 million from changes in working capital. The growth in cash from operations is primarily due to recent acquisitions.
40
Investing Cash Flows
Cash flows used for investing activities were $71 million and $187 million for the six months ended June 30, 2026 and 2025, respectively, a decrease of $116 million.
Acquisitions
During the six months ended June 30, 2026, the Company completed 14 acquisitions (including book purchases) and paid $30 million net of cash acquired, and including cash and cash equivalents held in a fiduciary capacity. Net cash paid for acquisitions decreased $131 million in the six months ended June 30, 2026, from $161 million during the same period in 2025.
Dispositions
The Company received $3 million from the sale of businesses, fixed assets and customer accounts during the six months ended June 30, 2026, compared to $10 million proceeds received in the same period in 2025. The decrease is attributed to smaller sales of businesses in the current period.
Capital Expenditures
Capital expenditures amounted to $38 million and $32 million in the six months ended June 30, 2026 and 2025, respectively, and included purchases of furniture and fixtures, leasehold improvements related to office moves and hardware and software purchases related to information technology investments.
Financing Cash Flows
Net cash flows used by financing activities totaled $526 million and net cash flows sourced totaled $7,981 million in the six months ended June 30, 2026 and 2025, respectively. The decrease of $8,507 million in sourced financing activities was primarily driven by the proceeds of the Company's follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company's acquisition of Accession, offset by share repurchases and deferred contingent consideration payments in 2026.
Fiduciary Receivables and Liabilities
Fiduciary cash represents funds in the Company's possession collected from customers to be remitted to insurance companies and funds from insurance companies to be distributed to insureds for the settlement of claims or refunds. The net change in fiduciary cash is represented by the net change in fiduciary liabilities and fiduciary receivables and is presented as cash flows from financing activities in the statement of cash flows. Financing cash flows reflect an increase of $157 million and $119 million in the six months ended June 30, 2026 and 2025, respectively, related to fiduciary receivables and liabilities.
Acquisition Earn-outs
Deferred contingent consideration payments totaled $224 million and $46 million during the six months ended June 30, 2026 and 2025, respectively, including $184 million and $45 million, respectively, classified as financing activities related to acquisition earn-outs associated with original acquisition-date estimates.
Dividends
During the six months ended June 30, 2026 and 2025, the Company paid cash dividends of $112 million and $86 million, respectively, an increase of $26 million, or 30.2%. On July 22, 2026, the Board of Directors approved a quarterly cash dividend of $0.165 per share to be paid on August 19, 2026.
Debt
Net cash proceeds from long term debt totaled $141 million in the six months ended June 30, 2026, compared to net cash proceeds of $3,718 million in the same period of 2025.
Total debt at June 30, 2026 was $7,759 million net of unamortized discount and debt issuance costs, which was an increase of $146 million compared to December 31, 2025. The increase includes the drawdown of $225 million on the Revolving Credit Facility and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $5 million, offset by $81 million of payments on outstanding term loan and Revolving Credit Facility balances and an additional $3 million of deferred financing costs associated with the Third Amended and Restated Credit Agreement.
41
On June 5, 2026, the Company entered into the Third Amended and Restated Credit Agreement with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent, Bank of America, N.A., Truist Bank and BMO Bank N.A. as co-syndication agents, and U.S. Bank National Association, Fifth Third Bank, National Association, Wells Fargo Bank, National Association, PNC Bank, National Association, HSBC Bank USA, National Association, Citizens Bank, N.A., The Huntington National Bank, and Barclays Bank PLC as co-documentation agents. The Third Amended and Restated Credit Agreement amended and restated the credit agreement dated October 27, 2021, which amended and restated the prior credit agreement, terminated the Company's existing term loan facility, and refinanced the outstanding borrowings thereunder into new term loan facilities. The agreement increased revolving credit commitments from $800 million to $1.25 billion and extended the maturity date to June 5, 2031. The agreement also provides for a $250 million term loan due June 5, 2029 and a $250 million term loan due June 5, 2031. Total borrowings outstanding under the facilities were approximately $775 million as of June 30, 2026.
During the six months ended June 30, 2026, the Company made $6 million of scheduled principal payments on its Second Amended and Restated Credit Agreement term loan. On June 5, 2026, the remaining $163 million outstanding under the term loan was refinanced and consolidated into the Third Amended and Restated Credit Agreement.
During the six months ended June 30, 2026, the Company repaid $25 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”). Upon execution of the Third Amended and Restated Credit Agreement on June 5, 2026, the remaining $338 million outstanding was refinanced and consolidated into the new credit facility.
During the first quarter, the Company drew $225 million on the Revolving Credit Facility in connection with a share repurchase program. The Company has repaid $50 million of the balance as of June 30, 2026. There is an outstanding balance of $275 million on the Revolving Credit Facility as of June 30, 2026.
Common Stock
On February 12, 2026, the Company entered into accelerated share repurchase agreement ("ASR") with an investment bank to purchase an aggregate $250 million of the Company's common stock. The program ended on March 9, 2026 and during the period, the Company received a total of 3,574,890 shares of the Company's common stock.
During the three months ended June 30, 2026, the Company repurchased an additional 4,279,712 shares for $250 million.
At June 30, 2026, the remaining amount authorized by our board of directors for share repurchases was approximately $900 million.
Contractual Cash Obligations
As of June 30, 2026, our contractual cash obligations were as follows:
|
|
Payments Due by Period |
|
|||||||||||||||||
(in millions) |
|
Total |
|
|
Less than |
|
|
1-3 |
|
|
4-5 |
|
|
After |
|
|||||
Long-term debt |
|
$ |
7,825 |
|
|
$ |
413 |
|
|
$ |
1,137 |
|
|
$ |
1,975 |
|
|
$ |
4,300 |
|
Other liabilities (1) |
|
|
879 |
|
|
|
47 |
|
|
|
602 |
|
|
|
42 |
|
|
|
188 |
|
Operating leases |
|
|
368 |
|
|
|
71 |
|
|
|
127 |
|
|
|
87 |
|
|
|
83 |
|
Interest obligations |
|
|
4,134 |
|
|
|
376 |
|
|
|
703 |
|
|
|
580 |
|
|
|
2,475 |
|
Maximum future acquisition contingent payments (2) |
|
|
561 |
|
|
|
200 |
|
|
|
361 |
|
|
|
— |
|
|
|
— |
|
Total contractual cash obligations (3) |
|
$ |
13,767 |
|
|
$ |
1,107 |
|
|
$ |
2,930 |
|
|
$ |
2,684 |
|
|
$ |
7,046 |
|
42
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates, foreign exchange rates and equity prices. We are exposed to market risk through our investments, revolving credit line, term loan agreements and international operations.
Our invested assets are held primarily as cash and cash equivalents, restricted cash, available-for-sale marketable debt securities, non-marketable debt securities, certificates of deposit, U.S. Treasury securities, and professionally managed short duration fixed income funds. These investments are subject to interest rate risk. The fair value of our invested assets at June 30, 2026 and December 31, 2025 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.
We do not actively invest or trade in equity securities. In addition, we generally dispose of any significant equity securities received in conjunction with an acquisition shortly after the acquisition date.
As of June 30, 2026, we had $775 million outstanding under the Third Amended and Restated Credit Agreement tied to the Secured Overnight Financing Rate (“SOFR”). These agreements bear interest on a floating basis and are therefore subject to changes in the associated interest expense. The effect of an immediate hypothetical 10% change in interest rates would not have a material effect on our Condensed Consolidated Financial Statements.
The majority of our international operations do not have material transactions in currencies other than their functional currency which would expose the Company to transactional currency rate risk. We are subject to translation exchange rate risk having businesses operating outside of the U.S. in the following functional currencies, British pounds, Canadian dollar, euros and, to a lesser extent, other currencies. Based upon our foreign currency rate exposure as of June 30, 2026, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Condensed Consolidated Financial Statements.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation (the “Evaluation”) required by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15 and 15d-15 under the Exchange Act (“Disclosure Controls”) as of June 30, 2026. Based upon the Evaluation, our CEO and CFO concluded that the design and operation of our Disclosure Controls were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) accumulated and communicated to our senior management, including our CEO and CFO, to allow timely decisions regarding required disclosures.
Changes in Internal Controls
There has not been any change in our internal control over financial reporting identified in connection with the Evaluation that occurred during the quarter ended June 30, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of Internal Control Over Financial Reporting
Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 are the Certifications of the CEO and the CFO, respectively. The Certifications are supplied in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This Item 4 of Part I of this Quarterly Report on Form 10-Q contains the information concerning the evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
43
PART II
ITEM 1. Legal Proceedings
In Item 3 of Part I of the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2025, certain information concerning litigation claims arising in the ordinary course of business was disclosed. Such information was current as of the date of filing. During the Company’s fiscal quarter ended June 30, 2026, no new legal proceedings, or material developments with respect to existing legal proceedings, occurred which require disclosure in this Quarterly Report on Form 10-Q.
ITEM 1A. Risk Factors
There were no material changes in the risk factors previously disclosed in Item 1A, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table provides information about our repurchase of shares of our common stock during the three months ended June 30, 2026:
|
|
Total number |
|
|
Average price |
|
|
Total number of |
|
|
Maximum value of shares |
|
||||
April 1, 2026 to April 30, 2026 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
1,150 |
|
May 1, 2026 to May 31, 2026 |
|
|
1,765,460 |
|
|
|
57.11 |
|
|
|
1,751,616 |
|
|
|
1,050 |
|
June 1, 2026 to June 30, 2026 |
|
|
2,528,096 |
|
|
|
59.29 |
|
|
|
2,528,096 |
|
|
|
900 |
|
Total |
|
|
4,293,556 |
|
|
$ |
58.39 |
|
|
|
4,279,712 |
|
|
$ |
900 |
|
ITEM 5. Other Information
During the second quarter of 2026, none of the Company’s officers or directors
44
ITEM 6. Exhibits
The following exhibits are filed as a part of this Report:
3.1 |
|
Amended and Restated Articles of Incorporation of the Company (adopted January 18, 2023) (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 19, 2023). |
|
|
|
3.2 |
|
Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on January 19, 2023). |
|
|
|
10.1*† |
|
Third Amended and Restated Credit Agreement, dated June 5, 2026, among the Registrant, JPMorgan Chase Bank, N.A., Bank of America, N.A., Truist Bank, BMO Bank N.A. and the other parties thereto. |
|
|
|
10.2 |
|
Amended and Restated Brown & Brown, Inc. 2019 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 7, 2026). |
|
|
|
31.1 |
|
Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer of the Registrant. |
|
|
|
31.2 |
|
Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer of the Registrant. |
|
|
|
32.1 |
|
Section 1350 Certification by the Chief Executive Officer of the Registrant. |
|
|
|
32.2 |
|
Section 1350 Certification by the Chief Financial Officer of the Registrant. |
|
|
|
101 |
|
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in inline XBRL, include: (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to the Condensed Consolidated Financial Statements. |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted in inline XBRL and included in Exhibit 101). |
* Filed herewith
† Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, for any exhibits or schedules so furnished.
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
BROWN & BROWN, INC. |
|
|
|
|
|
/s/ R. Andrew Watts |
Date: July 27, 2026 |
|
R. Andrew Watts |
|
|
Executive Vice President and Chief Financial Officer |
|
|
(duly authorized officer, principal financial officer) |
46