ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
Company Overview
The following discussion should be read in conjunction with our Consolidated Financial Statements and the related Notes to those Financial Statements included elsewhere in this Annual Report on Form 10-K, which are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In addition, 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. We 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.
We have increased revenues every year from 1993 to 2025, with the exception of 2009, when our revenues declined 1.0%. Our revenues grew from $95.6 million in 1993 to $5.9 billion in 2025, reflecting a compound annual growth rate of 14.2%. In the same 32-year period, we increased net income from $8.1 million to over $1.0 billion in 2025, a 16.9% compound annual growth rate.
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. Conversely, 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 profit-sharing contingent commissions, 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 profit-sharing contingent commissions, 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 year, based upon the aforementioned considerations for the prior year(s), 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, profit-sharing contingent commissions have averaged approximately 4.4% of commissions and fees.
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. Fee revenues as a percentage of our total commissions and fees, represented 22.2% in 2025 and 21.1% in 2024.
For the year ended December 31, 2025, our commissions and fees growth rate was 22.5% and our consolidated Organic Revenue growth rate was 2.8%.
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.
Income before income taxes for the year ended December 31, 2025, increased by $68 million, or 5.2% over 2024, driven by Organic Revenue growth, increased profit-sharing contingent commissions, leveraging our expense base, increased investment income, acquisitions completed in the past twelve months and the change in mark-to-market of escrow liability. This growth was partially offset by Acquisition/Integration Costs and the change in estimated acquisition earn-out payables.
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, 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 Annual Report on Form 10-K under “Results of Operations - Segment Information.”
We view Organic Revenue and Organic Revenue 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
Organic Revenue is our core commissions and fees less: (i) the core commissions and fees earned for the first twelve months by newly acquired operations; (ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period) and (iii) Foreign Currency Translation (as defined below). The term “core commissions and fees” excludes profit-sharing contingent commissions; and therefore, represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered. Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth.
Non-GAAP Earnings Measures
EBITDAC is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables.
EBITDAC Margin is defined as EBITDAC divided by total revenues.
EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal (as defined below), (ii) Acquisition/Integration Costs (as defined below) and (iii) mark-to-market of escrow liability (as defined below).
EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by total revenues.
Definitions Related to Certain Components of Non-GAAP Measures
“Acquisition/Integration Costs” means the acquisition and integration costs (e.g., costs associated with regulatory filings; costs for third-party professional services, including legal, accounting, consulting, financial advisory and due diligence; costs and fees associated with entry into the bridge financing commitment; costs of integrating or streamlining processes and information technology systems, including data migration and system integration; costs associated with optimizing vendor agreements and leased office space, including exit costs related to location combinations; and employment-related costs, including severance payments, costs associated with the transition of certain legacy compensation programs, retention-related compensation expenses, and incentive payments) arising out of our acquisition of Accession and acquisitions previously completed by Accession, which are not considered to be normal, recurring or part of ongoing operations.
“Foreign Currency Translation” means the period-over-period impact of foreign currency translation, which is calculated by applying current-year foreign exchange rates to the various functional currencies in our business to our reporting currency of U.S. dollars for the same period in the prior year.
“(Gain)/loss on disposal” is a caption on our consolidated statements of income which reflects net proceeds received as compared to the net book value related to sales of books of business and other divestiture transactions.
“Mark-to-market of escrow liability” is a caption on our consolidated statements of income which reflects the non-cash change in the fair value associated with certain shares of the Company’s common stock held in escrow. The change is driven by fluctuations in our stock price between the beginning of the period and the end of the period. These escrowed shares represent a portion of the merger consideration payable in connection with our acquisition of Accession. The escrowed shares secure certain indemnification obligations of the Accession equity holders related to businesses that are in run-off or discontinued.
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 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 fourth quarter of 2025, we acquired 717 insurance intermediary operations.
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We continually evaluate our estimates, which are based upon a combination of historical experience and assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for our judgments about the recognition of revenues, expenses, carrying values of our assets and liabilities, of which values are not readily apparent from other sources. Actual results may differ from these estimates.
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.
Revenue Recognition
The majority of our revenue is commissions derived from our performance as agents and brokers, acting on behalf of insurance carriers to sell products to customers that are seeking to transfer risk; and conversely, acting on behalf of those customers in negotiating with insurance carriers seeking to acquire risk in exchange for premiums. In the majority of these arrangements, our performance obligation is complete upon the effective date of the bound policy; as such, that is when the associated revenue is recognized. In some arrangements, where we are compensated through commissions, we also perform other services for our customer beyond binding of coverage. In those arrangements we apportion the commission between binding of coverage and other services based on their relative fair value and recognize the associated revenue as those performance obligations are satisfied. Where the Company’s performance obligations have been completed, but the final amount of compensation is unknown due to variable factors, we estimate the amount of such compensation. We refine those estimates upon our receipt of additional information or final settlement, whichever occurs first.
To a lesser extent, the Company earns revenues in the form of fees. Like commissions, fees paid to us in lieu of commission, are recognized upon the effective date of the bound policy. When we are paid a fee for service; however, the associated revenue is recognized over a period of time that coincides with when the customer simultaneously receives and consumes the benefit of our work, which characterizes most of our claims processing arrangements and various services performed in our property and casualty, and employee benefits practices. Other fees are typically recognized upon the completion of the delivery of the agreed-upon services to the customer.
To a much lesser extent, the Company earns revenues in the form of net retained earned premiums in connection with the Captives. These premiums are reported net of the ceded premiums for reinsurance and recognized ratably over the associated policy periods.
Management determines a cancellation reserve based upon historical cancellation experience adjusted in accordance with known circumstances.
See Note 2 to our Consolidated Financial Statements for additional information regarding the nature and timing of our revenues.
Business Combinations and Purchase Price Allocations
In connection with acquisitions, we record the estimated fair value of net tangible assets purchased, the estimated fair value of identifiable intangible assets purchased, which primarily consist of purchased customer accounts, and the excess of purchase prices over the fair value of identifiable net assets acquired (goodwill). The recorded purchase prices include an estimation of the fair value of liabilities associated with any potential contingent consideration provisions (such as earn-out obligations). The allocation of purchase price to intangible assets, the determination of the related estimated useful lives and the estimated fair value of earn-out payables require significant estimates and assumptions and affects the amount of future expense recognized. For certain large or complex acquisitions, we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities.
Purchased customer accounts include the right to represent insureds or claimants supported by the physical records and files obtained from acquired businesses that contain information about insurance policies, customers and other matters essential to policy renewals and delivery of services. Their value primarily represents the present value of the underlying net cash flows expected to be received over the estimated future duration of the acquired customer relationships. Purchased customer accounts are amortized on a straight-line basis over the related estimated lives which generally average approximately 15 years.
Typically, an income approach is used to estimate the present value of the expected future cash flows associated with the purchased customer accounts. Critical estimates used in the model include forecasting future performance such as projected revenue growth and profit margins, selection of attrition rates and selection of discount rates. To evaluate these assumptions, management considers historical data, operating strategies, expected synergies and available relevant market data. Useful life is estimated as the period over which substantially all of the future cash flows from the purchased customer accounts will be received.
Many of the acquisitions we complete contain provisions for potential earn-out obligations. The amounts recorded as earn-out payables are based upon the terms of the purchase agreements and the present value of expected future payments to be made to the sellers resulting from estimated future operating results of the acquired entities over a period subsequent to the acquisition date, typically one to three years. The earn-out payables are measured at estimated fair value as of the acquisition date and are included in purchase price consideration. Subsequent changes in the fair value of earn-out obligations are recorded in the Consolidated Statement of Income as a result of updated expectations for the performance of the associated businesses.
The expected future payments are estimated based on the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These estimates are then discounted to a present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made. For certain acquisitions, we also utilize a Monte Carlo simulation to estimate the fair value of earnout obligations. Critical estimates used in the valuation of earn-out liabilities include forecasting future performance such as projected revenue growth and profit margins and selection of risk premiums, volatility and discount rates. To evaluate these assumptions, management considers historical data, operating strategies, expected synergies and relevant market data from comparable public companies.
These estimates and assumptions require significant judgment. While management believes the estimates and assumptions are reasonable, they are inherently uncertain. Changes in these estimates and assumptions could affect the carrying value of purchased customer accounts, earnout obligations, and the related future expenses.
Intangible Assets Impairment
Management assesses the recoverability of our goodwill and our amortizable intangible assets annually and whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Any of the following factors are examples, that if present, may trigger an impairment review: (i) a significant underperformance relative to historical or projected future operating results, (ii) a significant negative industry or economic trend, and (iii) a significant decline in our market capitalization. If the recoverability of these assets is unlikely because of the existence of one or more of the above-referenced factors, an impairment analysis is performed.
Goodwill is subject to at least an annual assessment for impairment. To determine if there is potential impairment of goodwill, we compare the fair value of each reporting unit with its carrying value. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the Company does not perform a qualitative assessment, or if, as a result of the qualitative assessment, it determines that a quantitative analysis is required, the Company will estimate the fair value of the reporting unit for comparison against the carrying value. If the estimated fair value of the reporting unit is less than its carrying value, an impairment loss would be recorded for the amount of carrying value in excess of fair value.
We typically use a combination of market and income approach methodologies to estimate the fair value of our reporting units. The income approach is generally based on a discounted cash flow analysis, which estimates the present value of the projected cash flows to be generated by the reporting unit. Critical estimates and assumptions used in the analysis include forecasting future performance such as projected revenue growth, profit margins and capital expenditures as well as tax rates, cost of capital and risk premiums used in the selection of discount rates. To evaluate these assumptions, management considers historical data, operating strategies and available relevant market data from comparable public companies. The market approach estimates the value of our reporting units by comparing to comparable public companies. Various valuation multiples of companies that are economically and operationally similar are used as data points for selecting multiples for the reporting units. We will from time to time retain the services of certified valuation specialists to assist with the valuation of certain reporting units.
Amortizable intangible assets are amortized over their useful lives and are subject to an impairment review, whenever events or changes in circumstances indicate the carrying value may not be recoverable. The review compares the carrying value of the assets, or asset groups, to an estimate of the undiscounted future cash flows resulting from the use of the assets. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset. An impairment loss would be recognized for the excess of the carrying value over the fair value of the asset.
These estimates and assumptions require significant judgment. While management believes the estimates and assumptions are reasonable, they are inherently uncertain. If our actual results are not consistent with our expectations, we may be required to revise the assessment and, if appropriate, record an impairment charge. That impairment charge could have a material impact on our financial results.
We completed our most recent evaluation of impairment for goodwill as of November 30, 2025, and determined that the fair value of goodwill exceeded the carrying value for each reporting unit. Additionally, there have been no impairments recorded for amortizable intangible assets for the years ended December 31, 2025, 2024 or 2023.
Non-Cash Stock-Based Compensation
We grant non-vested stock awards to our employees, with the related compensation expense recognized in the financial statements over the associated service period based upon the grant-date fair value of those awards, subject to any performance modification. During the performance measurement period, we review the probable outcome of the performance conditions associated with our performance awards and adjust the expense recognition accruals with the expected performance outcome.
With respect to time-based-only restricted stock awards, the grantees are eligible to receive payments of dividends and exercise voting privileges from the date of grant, and the awarded shares are included as issued and outstanding common stock shares and included in the calculation of basic and diluted net income per share. With respect to time-based-only restricted stock units, the grantees are eligible to receive payments of dividend equivalents from the date of grant, and the awarded restricted stock units are included in the calculation of basic and diluted net income per share but are not included as issued and outstanding common stock shares until the awarded restricted stock units vest.
With respect to performance-based restricted stock awards that become awarded, the grantees are eligible to receive payments of dividends and exercise voting privileges from the awarded date, and the awarded shares are included as issued and outstanding common stock shares and included in the calculation of basic and diluted net income per share. With respect to performance-based restricted stock units that become awarded, the grantees are eligible to receive payments of dividend equivalents from the awarded date, and the awarded restricted stock units are included in the calculation of basic and diluted net income per share but are not included as issued and outstanding common stock shares until the awarded restricted stock units vest.
Litigation and Claims
We are subject to various litigation and claims that arise in the ordinary course of business. If it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss is estimable, an accrual for the costs to resolve these claims is recorded in accrued expenses in the accompanying financial statements. Professional fees related to these claims are included in other operating expenses in the accompanying Consolidated Statement of Income as incurred. Management, with the assistance of in-house and outside counsel, determines whether it is probable that a liability has been incurred and estimates the amount of loss based upon analysis of individual issues. New developments or changes in settlement strategy in dealing with these matters may significantly affect the required reserves and affect our net income.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Consolidated Financial Statements and related Notes. For a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2024 and 2023, see Part II, Item 7 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2025.
Financial information relating to our Consolidated Financial Results is as follows:
(in millions, except percentages)
% Change
REVENUES
Core commissions and fees
Profit-sharing contingent commissions
Investment income and other income
Total revenues
EXPENSES
Employee compensation and benefits
Other operating expenses
(Gain)/loss on disposal
Amortization
Depreciation
Interest
Change in estimated acquisition earn-out payables
NMF
Mark-to-market of escrow liability
NMF
Total expenses
Income before income taxes
Income taxes
Net income before non-controlling interests
Less: Net income attributable to non-controlling interests
Net income attributable to the Company
Income Before Income Taxes Margin (1)
EBITDAC - Adjusted (2)
EBITDAC Margin - Adjusted (2)
Organic Revenue growth rate (2)
Employee compensation and benefits relative
to total revenues
Other operating expenses relative to total revenues
“Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues
A non-GAAP financial measure
NMF = Not a meaningful figure
Commissions and Fees
Commissions and fees, including profit-sharing contingent commissions and earned premiums for 2025, increased $1,058 million to $5,763 million, or 22.5% over 2024. Core commissions and fees in 2025 increased $969 million, composed of: (i) approximately $126 million of net new and renewal business, which reflects an Organic Revenue growth rate of 2.8%; (ii) $836 million from acquisitions that had no comparable revenues in the same period of 2024; (iii) an increase from the impact of Foreign Currency Translation of $18 million and (iv) an offsetting decrease of $11 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months. Profit-sharing contingent commissions for 2025 increased by $89 million, or 53.6%, compared to the same period in 2024. This increase was driven primarily by (i) improved underwriting results, increased premium volume and qualifying for certain profit-sharing contingent commissions that we did not qualify for in the prior year and (ii) recent acquisitions.
Investment and Other Income
Investment and other income for 2025 was $139 million, compared with $100 million in 2024. The increase was driven by approximately $42 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, which was held in preparation for the closing of the Transaction. The increase year over year was partially offset by lower average interest rates as compared to the prior year.
Employee Compensation and Benefits
Employee compensation and benefits expense as a percentage of total revenues was 49.7% for the year ended December 31, 2025 as compared to 50.1% for the year ended December 31, 2024, and increased 22.0%, or $529 million. This increase included $448 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $81 million. This underlying employee compensation and benefits expense increase was primarily related to: (i) an increase in staff costs attributable to new hires; (ii) the increased cost of health insurance; (iii) an increase in producer compensation associated with revenue growth and (iv) the year-over-year increase of approximately $12 million in the value of deferred compensation liabilities driven by changes in the market prices of our deferred compensation plan, with such amount substantially offset within other operating expenses as we hold assets to fund these liabilities.
Other Operating Expenses
Other operating expenses represented 16.2% of total revenues for 2025 as compared to 14.8% for the year ended December 31, 2024. Other operating expenses for 2025 increased $249 million, or 35.1%, from the same period of 2024. This change includes: (i) $161 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2024; (ii) $113 million of Acquisition/Integration Costs that had no comparable costs in the same period of 2024; and (iii) increased information technology-related costs, partially offset by (iv) lower claims costs within our captives and (v) the year-over-year decrease of approximately $12 million in the value of assets held to fund the associated liabilities within our deferred compensation plan, which was substantially offset within employee compensation and benefits, as noted above.
Gain or Loss on Disposal
The Company recognized a net loss on disposal of $2 million in 2025 and a net gain on disposal $31 million in 2024. The amount for 2024 was primarily attributable to the prior year finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023. 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 2025 increased $134 million to $312 million, or 75.3% over 2024. 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 2025 increased $11 million to $55 million, or 25.0% over 2024. 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)/loss on disposal.
Interest Expense
Interest expense for 2025 increased $104 million to $297 million, or 53.9%, from 2024. The increase is due to higher debt balances resulting from 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
Accounting Standards Codification (“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 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 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 December 31, 2025, the fair values of the estimated acquisition earn-out payables were reevaluated 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, for the years ended December 31, 2025 and 2024 were as follows:
(in millions)
Change in fair value
Interest expense accretion
Net change in earnings from estimated acquisition
earn-out payables
For the years ended December 31, 2025 and 2024, the fair value of estimated earn-out payables was reevaluated and increased by $16 million for 2025 and decreased by $6 million for 2024, which are charges and credits, exclusive of interest expense accretion, to the Consolidated Statements of Income for 2025 and 2024.
As of December 31, 2025, the estimated acquisition earn-out payables were $541 million, of which $281 million was recorded as accounts payable and $260 million was recorded as other non-current liabilities. As of December 31, 2024, the estimated acquisition earn-out payables were $167 million, of which $75 million was recorded as accounts payable and $92 million was recorded as other non-current liabilities.
Income Taxes
The effective tax rate on income from operations was 22.2% in 2025 and 23.1% in 2024.
RESULTS OF OPERATIONS — SEGMENT INFORMATION
As discussed in Note 15 “Segment Information” of the Notes to 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 can fluctuate between comparable periods. As such, management primarily focuses on the Organic Revenue growth rate and EBITDAC Margin when evaluating the operational efficiency of a segment.
The reconciliation of total commissions and fees included in the Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, including by segment, and the growth rates for Organic Revenue for the year ended December 31, 2025 are as follows:
Retail (1)
Specialty Distribution
Total
(in millions)
Commissions and fees
Total change
Total growth %
Profit-sharing contingent
commissions
Core commissions and
fees
Acquisitions
Dispositions
Foreign currency translation
Organic Revenue (2)
Organic Revenue
growth (2)
Organic Revenue growth rate (2)
The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 15 of the Notes to the Consolidated Financial Statements, which includes corporate and consolidation items.
A non-GAAP financial measure.
The reconciliation of total commissions and fees included in the Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, including by segment, and the growth rates for Organic Revenue for the year ended December 31, 2024, by segment, are as follows:
Retail (1)
Specialty Distribution
Total
(in millions)
Commissions and fees
Total change
Total growth %
Profit-sharing contingent
commissions
Core commissions and fees
Acquisitions
Dispositions
Foreign currency translation
Organic Revenue (2)
Organic Revenue growth (2)
Organic Revenue growth rate (2)
The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 15 of the Notes to the Consolidated Financial Statements, which includes corporate and consolidation items.
A non-GAAP financial measure.
The reconciliation of income before income taxes, included in the 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 year ended December 31, 2025, including by segment, is as follows:
(in millions)
Retail
Specialty Distribution
Other
Total
Total Revenues
Income before income taxes
Income Before Income Taxes Margin (1)
NMF
Amortization
Depreciation
Interest
Change in estimated acquisition
earn-out payables
EBITDAC (2)
EBITDAC Margin (2)
NMF
(Gain)/loss on disposal
Acquisition/Integration Costs
Mark-to-market of escrow liability
EBITDAC - Adjusted (2)
EBITDAC Margin - Adjusted (2)
NMF
“Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues
A non-GAAP financial measure.
NMF = Not a meaningful figure
The reconciliation of income before income taxes, included in the 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 year ended December 31, 2024, including by segment, is as follows:
(in millions)
Retail
Specialty Distribution
Other
Total
Total Revenues
Income before income taxes
Income Before Income Taxes Margin (1)
NMF
Amortization
Depreciation
Interest
Change in estimated acquisition
earn-out payables
EBITDAC (2)
'EBITDAC Margin (2)
NMF
(Gain)/loss on disposal
Acquisition/Integration Costs
Mark-to-market of escrow liability
EBITDAC - Adjusted (2)
EBITDAC Margin - Adjusted (2)
NMF
“Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues
A non-GAAP financial measure
NMF = Not a meaningful figure
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 for the 12 months ended December 31, 2025 and 2024 is as follows:
(in millions, except percentages)
% Change
REVENUES
Core commissions and fees
Profit-sharing contingent commissions
Investment and other income
Total revenues
EXPENSES
Employee compensation and benefits
Other operating expenses
(Gain)/loss on disposal
Amortization
Depreciation
Interest
Change in estimated acquisition earn-out payables
Total expenses
Income before income taxes
Income Before Income Taxes Margin (1)
EBITDAC - Adjusted (2)
EBITDAC Margin - Adjusted (2)
Organic Revenue growth rate (2)
Employee compensation and benefits relative to total revenues
Other operating expenses relative to total revenues
“Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues
A non-GAAP financial measure
NMF = Not a meaningful figure
The Retail segment’s total revenues in 2025 increased 24.8%, or $677 million, over 2024, to $3,406 million. The $638 million increase in core commissions and fees was driven by the following: (i) approximately $559 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; (ii) an increase of $74 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $14 million; and (iv) an offsetting decrease of $11 million related to commissions and fees recorded in 2024 from businesses since divested. Profit-sharing contingent commissions in 2025 increased 63.6%, or $28 million, over 2024, to $72 million. This increase was due primarily to acquisitions completed within the last twelve months. The Retail segment’s total commissions and fees increased 24.5% and the Organic Revenue growth rate was 2.8% for 2025. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers. Renewal business was impacted by timing of certain nonrecurring revenue items, slowing rate increases, rate decreases for certain lines of coverage, certain adjustments to incentive commissions and a regulatory change for one of our UK businesses.
Income before income taxes for 2025 increased 17.4%, or $105 million, over the same period in 2024, to $707 million. The primary factors driving this increase were: (i) the profit associated with the net increase in revenue as described above and (ii) a decrease in intercompany interest expense, partially offset by (iii) increased amortization and depreciation expense; and (iv) Acquisition/Integration Costs.
EBITDAC - Adjusted for 2025 increased 24.9%, or $204 million, from the same period in 2024, to $1,022 million. EBITDAC Margin - Adjusted for 2025 remained flat at 30.0% as compared to the same period in 2024. EBITDAC Margin - Adjusted was primarily driven by (i) the net increase in revenue as described above and (ii) leveraging our expense base, offset by (iii) the timing of revenues associated with recent acquisitions.
Specialty Distribution Segment
The Specialty Distribution Segment is composed of three divisions; our programs business, known as Arrowhead Programs; our wholesale brokerage business, known as Bridge Specialty Group; and our specialty program business, known 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 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 is composed of our newly acquired specialty businesses from One80 Intermediaries, a segment of Accession, which offer 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 profit-sharing contingent commissions. 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.
Financial information relating to our Specialty Distribution segment for the 12 months ended December 31, 2025 and 2024 is as follows:
(in millions, except percentages)
% Change
REVENUES
Core commissions and fees
Profit-sharing contingent commissions
Investment and other income
Total revenues
EXPENSES
Employee compensation and benefits
Other operating expenses
(Gain)/loss on disposal
Amortization
Depreciation
Interest
Change in estimated acquisition earn-out payables
NMF
Total expenses
Income before income taxes
Income Before Income Taxes Margin (1)
EBITDAC - Adjusted (2)
EBITDAC Margin - Adjusted (2)
Organic Revenue growth rate (2)
Employee compensation and benefits relative to total revenues
Other operating expenses relative to total revenues
“Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues
A non-GAAP financial measure
NMF = Not a meaningful figure
The Specialty Distribution segment’s total revenue for 2025 increased 19.5%, or $393 million, as compared to the same period in 2024, to $2,409 million. The $333 million increase in core commissions and fees revenue was driven by: (i) approximately $277 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; (ii) approximately $52 million of net new business, renewal business and fee revenues; and (iii) an increase from the impact of Foreign Currency Translation of $4 million. Profit-sharing contingent commissions in 2025 increased 50.0%, or $61 million, from 2024, to $183 million which was primarily driven by favorable loss ratios, increased premiums, and acquisitions completed in the past twelve months.
Total commissions and fees increased 19.8% and the Organic Revenue growth rate was 2.8% for 2025. The Organic Revenue growth was driven by net new and retained business and exposure unit expansion; and was partially offset by non-recurring flood claims processing revenue in the prior year and declining rates on catastrophic ("CAT") property.
Income before income taxes for 2025 increased 11.2%, or $87 million, from 2024, to $865 million. Income before income taxes increased due to: (i) the drivers of EBITDAC - Adjusted described below; partially offset by: (ii) increased amortization expense; (iii) a gain on disposal recorded in the prior year; (iv) an increase in estimated acquisition earn-out payables; and (v) Acquisition/Integration Costs.
EBITDAC - Adjusted for 2025 increased 20.4%, or $176 million, from the same period in 2024, to $1,038 million. EBITDAC Margin - Adjusted for 2025 increased to 43.1% from 42.8%. EBITDAC Margin - Adjusted increased due to: (i) the increase in profit-sharing contingent commissions; (ii) Organic Revenue growth; and (iii) leveraging our expense base; while being partially offset by (iv) businesses acquired within the last twelve months that have lower margins than our average segment margins.
Other
As discussed in Note 15 of the Notes to Consolidated Financial Statements, in the Segment Information tables “Other” includes any income 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, which as of December 31, 2025 provided capacity for up to $700 million in additional 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 and the Loan Agreement (the “Loan Agreement"), will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for the next 12 months and in the long term.
The Revolving Credit Facility contains an expansion option for up to an additional $500 million of borrowing capacity, subject to the approval of participating lenders. Additionally, the Company may, subject to satisfaction of certain conditions, including receipt of additional term loan commitments by new or existing lenders, increase either Term Loan Commitment under the existing Loan Agreement or the term loans issued thereunder or issue new tranches of term loans in an aggregate additional amount of up to $400 million. Including the expansion options under all existing credit agreements, the Company has access to up to $1,600 million of incremental borrowing capacity as of December 31, 2025.
On February 10, 2026, the Company drew down on the Revolving Credit Facility by $225 million, and the proceeds will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of our capital stock, acquisitions and repayment of our existing debt.
Cash and cash equivalents totaled $1,079 million at December 31, 2025 reflecting an increase of $404 million from the $675 million balance at December 31, 2024. This increase is due to the cash generated during the year and cash assumed in connection with the Transaction.
At December 31, 2025, the Company had approximately $228 million of cash and cash equivalents outside of the U.S. From time to time, the Company will evaluate the repatriation of available funds from our non-U.S. operating subsidiaries or permanently reinvest a portion of those funds in those various territories.
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 of 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 (the “current ratio”) was 1.04 and 1.10 for December 31, 2025 and December 31, 2024, respectively.
Cash flows generated from operating activities totaled $1,450 million and $1,174 million for the years ended December 31, 2025 and 2024, respectively, representing an increase of $276 million. Operating cash flows generated in 2025 included $1,067 million from net income before non-controlling interests with $430 million of non-cash adjustments, offset by $47 million from changes in working capital. The growth in cash from operations is primarily due to increased operating margins from organic revenue growth, acquisitions and improved working capital changes.
Investing Cash Flows
Cash flows used for investing activities were $7,914 million and $898 million for the years ended December 31, 2025 and 2024, respectively, an increase of $7,016 million.
Acquisitions
During 2025, the Company completed 43 acquisitions (including book purchases) and paid $7,854 million, net of cash, and cash and cash equivalents held in a fiduciary capacity acquired, most notably for the purchases of Accession and Poulton Associates, LLC for $7,463 million and $168 million, respectively. Net cash paid for acquisitions increased $6,964 million in 2025, up from $890 million in 2024.
Dispositions
The Company received cash proceeds from the sale of businesses, fixed assets and customer accounts totaling $9 million and $70 million in 2025 and 2024, respectively. The decrease is attributed to the proceeds received during the second quarter of 2024 of $57 million from the settlement of two of the contingent payments related to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.
Capital Expenditures
Capital expenditures amounted to $68 million and $82 million in 2025 and 2024, 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
Cash flows sourced from financing activities totaled $7,713 million and a use of $64 million in 2025 and 2024, respectively, an increase of $7,777 million.
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 $53 million and $191 million in 2025 and 2024, respectively, related to fiduciary receivables and liabilities.
Acquisition Earn-outs
Payments on acquisition earn-outs related to the original acquisition date estimates totaled $143 million and $117 million in 2025 and 2024, respectively.
Dividends
During 2025 and 2024, the Company paid cash dividends of $193 million and $154 million, respectively, an increase of $39 million, 25.3%. On January 21, 2026, the board of directors approved a quarterly cash dividend of $0.165 per share to be paid on February 11, 2026.
Debt
Net proceeds from long-term debt totaled $3,781 million in 2025, compared to net proceeds of $25 million in 2024.
Total debt at December 31, 2025 was $7,613 million net of unamortized discount and debt issuance costs, which was an increase of $3,789 million compared to December 31, 2024. The increase includes the issuance of $4,192 million of senior notes net of the unamortized debt discounts and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $8 million, offset by the addition of deferred debt issuance costs of $36 million, $225 million of payments on outstanding term loan balances and net payments on the Revolving Credit Facility of $150 million.
During the twelve months ended December 31, 2025, the Company repaid $25 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments. The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $169 million as of December 31, 2025. The Company's next scheduled principal payment is due in March 2026 and is equal to $6 million.
During the second quarter, the Company repaid the outstanding balance on the Revolving Credit Facility of $400 million with cash on hand. During the third quarter, the Company drew $300 million on the Revolving Credit Facility in connection with the closing of the acquisition of Accession and repaying $100 million during the same quarter, and $100 million during the fourth quarter. There is an outstanding balance of $100 million on the Revolving Credit Facility as of December 31, 2025.
The outstanding amounts under the Revolving Credit Facility and associated term loan in total are $269 million in total, and are classified as current liabilities as of December 31, 2025, as the facilities mature within twelve months of the balance sheet date. Although the Company intends to refinance or extend these facilities, no such agreements were in place as of period end.
During the twelve months ended December 31, 2025, the Company repaid $50 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments. The Term A-2 Loans had an outstanding balance of $363 million as of December 31, 2025. The Company’s next scheduled principal payment is $13 million due in March 2026.
During the twelve months ended December 31, 2025, the Company repaid the outstanding balance on the Term A-1 Loan Commitment (the “Term A-1 Loan Commitment”) of $150 million related to the Loan Agreement, in accordance with the terms of the Loan Agreement using proceeds from the Revolving Credit Facility in connection with the Second Amended and Restated Credit Agreement.
On June 11, 2025, the Company entered into an Underwriting Agreement with BofA Securities, Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein, with respect to the offer and sale by the Company of $400 million principal amount of its 4.600% Senior Notes due 2026 (the “2026 Notes”), $500 million principal amount of its 4.700% Senior Notes due 2028 (the “2028 Notes”), $800 million principal amount of its 4.900% Senior Notes due 2030 (the “2030 Notes”), $500 million principal amount of its 5.250% Senior Notes due 2032 (the “2032 Notes”), $1,000 million principal amount of its 5.550% Senior Notes due 2035 (the “2035 Notes”) and $1,000 million principal amount of its 6.250% Senior Notes due 2055 (the “2055 Notes” and, together with the 2026 Notes, the 2028 Notes, the 2030 Notes, the 2032 Notes, and the 2035 Notes, the “Notes”). The Company used the net proceeds of the offering of the Notes, together with the proceeds from the offering of shares of common stock and cash on hand, to fund the cash consideration payable under the Merger Agreement, and to pay fees and expenses associated with the foregoing. As of December 31, 2025, the aggregate outstanding balance of these notes was $4,200 million exclusive of the associated discount balance.
The $400 million principal amount of the Company’s 4.600% Senior Notes due in 2026 is classified as current as of December 31, 2025, reflecting the scheduled maturity within twelve months. The Company expects to repay the notes at maturity.
Total debt at December 31, 2024 was $3,824 million net of unamortized discount and debt issuance costs, which was an increase of $28 million compared to December 31, 2023. The increase includes: the issuance of $600 million senior notes, $150 million of net additions to the Revolving Credit Facility and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $4 million; offset by the repayment of $719 million in senior notes and floating-rate debt balances net of Revolving Credit Facility activity and the addition of deferred financing costs and discount on debt of $7 million.
On October 27, 2021, the Company entered into an amended and restated credit agreement (the “Second 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 Harris 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, Morgan Stanley Senior Funding, Inc. and Citizens Bank, N.A. as co-documentation agents. The Second Amended and Restated Credit Agreement amended and restated the credit agreement dated April 17, 2014, among certain of such parties, as amended by that certain amended and restated credit agreement dated June 28, 2017 (the “Original Credit Agreement”). The Second Amended and Restated Credit Agreement, among other certain terms, extended the maturity of the Revolving Credit Facility of $800 million and unsecured term loans associated with the agreement of $250 million to October 27, 2026.
During the twelve months ended December 31, 2024, the Company repaid $25 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments. The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $194 million as of December 31, 2024.
During the twelve months ended December 31, 2024, the Company repaid $44 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments. The Term A-2 Loans had an outstanding balance of $412 million as of December 31, 2024.
During the twelve months ended December 31, 2024, the Company repaid $150 million of principal related to the Term Loans issued under the Term A-1 Loan Commitment (“Term A-1 Loans”). The Term A-1 Loans had an outstanding balance of $150 million as of December 31, 2024.
On February 13, 2024, the Company drew down on the Revolving Credit Facility by $150 million, and the proceeds were used for general corporate purposes. During the nine months ended September 30, 2024, the Company repaid $250 million of the outstanding balance on the Revolving Credit Facility. On October 23, 2024, the Company drew down on the Revolving Credit Facility by $350 million in connection with the acquisition of Quintes Holding B.V. The Company repaid $100 million thereafter, leaving an outstanding balance of $250 million on the Revolving Credit Facility as of December 31, 2024.
On June 11, 2024, the Company completed the issuance of $600 million aggregate principal amount of 5.650% senior notes due 2034 (the “2034 Senior Notes”). The net proceeds to the Company from the issuance of the 2034 Senior Notes, after deducting underwriting discounts and estimated offering expenses, were approximately $593 million. The 2034 Senior Notes were given investment grade ratings of BBB- stable outlook and Baa3 positive outlook. The 2034 Senior Notes will mature in June 2034. Interest on the 2034 Senior Notes is payable semi-annually in arrears. The 2034 Senior Notes are senior unsecured obligations of the Company and rank equal in right of payment to all of the Company’s existing and future senior unsecured indebtedness. The Company may redeem the 2034 Senior Notes in whole or in part at any time and from time to time, at the “make whole” redemption prices specified in the prospectus supplement for the 2034 Senior Notes being redeemed, plus accrued and unpaid interest thereon. In September 2024, the Company used a portion of the proceeds from the 2034 Senior Notes to repay $500 million of the 4.200% senior notes due September 2024. In June 2024, the Company also used $100 million of the proceeds to repay a portion of an outstanding term loan balance. As of December 31, 2024 there was a total outstanding debt balance of $600 million exclusive of the associated discount balance on the 2034 Senior Notes.
Common Stock
On June 10, 2025, the Company entered into an Underwriting Agreement with J.P. Morgan Securities LLC and BofA Securities, Inc., as representatives of the several underwriters named therein, with respect to the offer and sale by the Company of 43,137,254 shares of the Company’s common stock, par value $0.10 per share (the “Common Stock”) at a per share offering price of $102.00 for an aggregate purchase price for net proceeds of $4,315 million after underwriting discounts and fees and expenses. The Company closed the offering of the shares of Common Stock on June 12, 2025. The Company used the net proceeds of the offerings of the shares of Common Stock and the Notes, together with cash on hand, to fund the cash consideration payable under the Merger Agreement and to pay fees and expenses associated with the foregoing.
As part of the consideration for the Transaction, the Company issued approximately $1,045 million of its common stock, par value $0.10 per share, to the selling shareholders, a portion of which is held in escrow, based on the market value of the shares at closing. The number of shares issued was calculated using the Company’s closing stock price of $110.57 per share on June 6, 2025.
Excluding the shares issued to the selling shareholders as consideration for the Accession acquisition, during 2025, the Company issued 271,532 shares valued at $21 million associated with business combinations. During 2024, the Company did not issue shares associated with business combinations.
On October 22, 2025, the board of directors approved an additional $1,251 million increase to our existing share repurchase authorization, bringing our total remaining repurchase capacity at that time to approximately $1,500 million of the Company's outstanding common stock.
During 2025, the Company repurchased 1,255,970 shares at an average price of $79.62 for a total of $100 million. During 2024, the Company did not repurchase any shares.
Contractual Cash Obligations
As of December 31, 2025, our contractual cash obligations were as follows:
Payments Due by Period
(in millions)
Total
Less Than
1 Year
1-3 Years
4-5 Years
After 5
Years
Long-term debt
Other liabilities (1)
Operating leases (2)
Interest obligations
Maximum future acquisition contingency payments (3)
Total contractual cash obligations (4)
Includes the escrow liability which is included within “Other Long-Term Liabilities” issued in connection with the Transaction. The liability reflects the fair value of shares and cash held in escrow to secure certain indemnification obligations of the Accession equityholders related to businesses that are in run-off or discontinued. Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, the remaining amount in the escrow account will be released to the equityholders. The fair value of the escrow liability is remeasured at each reporting date, with changes recognized in earnings. The timing and amount of any future settlement remains subject to the achievement of contractual milestones and may vary from the amounts disclosed. The value as of December 31, 2025 was $616 million .
Includes $37 million of future lease commitments expected to commence in 2026.
Includes $541 million of current and non-current estimated earn-out payables. Earn-out payables for acquisitions not denominated in U.S. dollars are measured at the current foreign exchange rate. Certain acquisition agreements include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of December 31, 2025 is $385 million.
Does not include approximately $56 million of current liability for a dividend of $0.165 per share approved by the board of directors on January 21, 2026 and paid on February 11, 2026.
ITEM 7A. Quantitative and Qualitat ive 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, fiduciary 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 December 31, 2025 and December 31, 2024, 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 equity securities received in conjunction with an acquisition shortly after the acquisition date.
As of December 31, 2025, we had $632 million outstanding under the Second Amended and Restated Credit Agreement and the Loan 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 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 because we have businesses operating outside of the U.S. in the following functional currencies: British pounds, Canadian dollar and euros and, to a lesser extent, other currencies. Based upon our foreign currency rate exposure as of December 31, 2025, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Consolidated Financial Statements.
ITEM 8. Financial Statemen ts and Supplementary Data.
Index to Consolidated Financial Statements
Page No.
Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Equity for the years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023
Notes to Consolidated Financial Statements for the years ended December 31, 2025, 2024 and 2023
Note 1: Summary of Significant Accounting Policies
Note 2: Revenues
Note 3: Business Combinations
Note 4: Goodwill
Note 5: Amortizable Intangible Assets
Note 6: Fixed Assets
Note 7: Accrued Expenses and Other Liabilities
Note 8: Long-Term Debt
Note 9: Income Taxes
Note 10: Employee Savings Plan
Note 11: Stock-Based Compensation
Note 12: Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities
Note 13: Commitments and Contingencies
Note 14: Leases
Note 15: Segment Information
Note 16: Insurance Company Subsidiary Operations
Note 17: Equity
Reports of Independent Registered Public Accounting Firm
BROWN & BROWN, INC.
CONSOLIDATED STAT EMENTS OF INCOME
For the Year Ended December 31,
(in millions, except per share data)
REVENUES
Commissions and fees
Investment and other income
Total revenues
EXPENSES
Employee compensation and benefits
Other operating expenses
Loss/(gain) on disposal
Amortization
Depreciation
Interest
Change in estimated acquisition earn-out payables
Mark-to-market of escrow liability
Total expenses
Income before income taxes
Income taxes
Net income before non-controlling interests
Less: Net income attributable to non-controlling interests
Net income attributable to the Company
Net income per share:
Basic
Diluted
See accompanying notes to Consolidated Financial Statements.
BROWN & BROWN, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31,
(in millions)
Net income attributable to the Company
Foreign currency translation gain/(loss)
Unrealized gain on available-for-sale debt securities, net of tax
Comprehensive income attributable to the Company
See accompanying notes to Consolidated Financial Statements.
BROWN & BROWN, INC.
CONSOLIDATED B ALANCE SHEETS
(in millions, except per share data)
December 31,
December 31,
ASSETS
Current Assets:
Cash and cash equivalents
Fiduciary cash
Commission, fees and other receivables
Fiduciary receivables
Reinsurance recoverable
Prepaid reinsurance premiums
Other current assets
Total current assets
Fixed assets, net
Operating lease assets
Goodwill
Amortizable intangible assets, net
Other assets
Total assets
LIABILITIES AND EQUITY
Current Liabilities:
Fiduciary liabilities
Losses and loss adjustment reserve
Unearned premiums
Accounts payable
Accrued expenses and other liabilities
Current portion of long-term debt
Total current liabilities
Long-term debt less unamortized discount and debt issuance costs
Operating lease liabilities
Deferred income taxes, net
Other liabilities
Equity:
Common stock, par value $ 0.10 per share; authorized 560 shares; issued 357 shares and outstanding 336 shares at 2025, issued 306
shares and outstanding 286 shares at 2024, respectively
Additional paid-in capital
Treasury stock, at cost 21 shares at 2025 and 20 shares at 2024, respectively
Accumulated other comprehensive income/(loss)
Non-controlling interests
Retained earnings
Total equity
Total liabilities and equity
See accompanying notes to Consolidated Financial Statements .
BROWN & BROWN, INC.
CONSOLIDATED STATEMENTS OF EQUITY
Common Stock
(in millions, except per share data)
Shares Outstanding
Par
Value
Additional
Paid-In
Capital
Treasury
Stock
Accumulated Other Comprehensive Income (Loss)
Retained
Earnings
Non-Controlling Interest
Total
Balance at January 1, 2023
Net Income
Net unrealized holding gain on available-for-sale securities
Foreign currency translation
Shares issued - employee stock compensation plans
Employee stock purchase plan
Stock incentive plans
Acquisitions
Directors
Repurchase shares to fund tax withholdings for non-cash stock-based compensation
Cash dividends paid ($ 0.48 per share)
Balance at December 31, 2023
Net Income
Net unrealized holding gain on available-for-sale securities
Foreign currency translation
Shares issued - employee stock compensation plans
Employee stock purchase plan
Stock incentive plans
Directors
Net non-controlling interest acquired (disposed)
Repurchase shares to fund tax withholdings for non-cash stock-based compensation
Cash dividends paid ($ 0.54 per share)
Balance at December 31, 2024
Net Income
Foreign currency translation
Shares issued - employee stock compensation plans
Employee stock purchase plan
Stock incentive plans
Acquisitions
Shares issued, public offering
Directors
Non-controlling interest distribution
Repurchase shares to fund tax withholdings for non-cash stock-based compensation
Purchase of treasury stock
Cash dividends paid ($ 0.62 per share)
Balance at December 31, 2025
See accompanying notes to Consolidated Financial Statements .
BROWN & BROWN, INC.
CONSOLIDATED STATEM ENTS OF CASH FLOWS
Year Ended December 31,
(in millions)
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/(gain) 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
Issuances of common stock for employee stock benefit plans
Repurchase shares to fund tax withholdings for non-cash stock-based compensation
Purchase of treasury stock
Cash dividends paid
Other financing activities
Net cash provided by (used in) financing activities
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash inclusive of fiduciary cash
Net 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 Consolidated Financial Statements. Refer to Note 12 for reconciliations of cash, cash equivalents and restricted cash inclusive of fiduciary cash.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Summary of Signif icant Accounting Policies
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 two reportable segments. The Retail segment provides a broad range of risk management products and services to commercial, public and quasi-public entities, and to professional and individual customers. These products and services include property and casualty insurance and reinsurance, employee benefits, private client services, captive solutions, consulting services and financial and wealth solutions, as well as non-insurance warranty services and products through the Retail segment’s automobile and recreational vehicle dealer services (“F&I”) businesses. The Specialty Distribution segment consists of our programs, wholesale brokerage and specialty businesses. The programs businesses, which act as managing general underwriters (“MGUs”), provide targeted products and services designated for specific industries, trade groups, governmental entities and market niches, which are delivered to the insured directly, to affinity groups, through wholesale brokers or through a global network of independent agents, including Brown & Brown retail agents. These products and services include specialty property and casualty insurance, financial lines, life and health benefits, reinsurance, travel/accident and health insurance, captive administrative services, warranty services and specialty packages of coverages. The wholesale brokerage businesses underwrite and place excess and surplus commercial and personal lines insurance, typically for specialized or hard-to-place types of risks, primarily through a global network of independent agents and brokers, including Brown & Brown retail agents. The specialty business offers solutions across affinity and administrative services, captives, reinsurance, travel/, warranty, and life & health.
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. 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.
Business Realignment
In conjunction with the acquisition of RSC Topco, Inc., (“RSC” or “Accession”) the holding company for Accession Risk Management Group, Inc., in the third quarter of 2025, the Company realigned its business from three to two segments. As a result of the segment reorganization, the Company consolidated its Programs and Wholesale Brokerage segments into a new Specialty Distribution segment. The Company now reports its financial res ults in the following two reportable segments: Retail and Specialty Distribution. The historical results, discussion and presentation of our business segments as set forth in the accompanying Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of income, balance sheets, statements of cash flows, statements of comprehensive income or statements of equity resulting from these changes. See Note 15 of these Notes to Consolidated Financial Statements for further information.
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 ASC 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 reference 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.
Recently Adopted Accounting Standards
In December 2023, the FASB issued ASU 2023-09 , "Improvements to Income Tax Disclosures." This ASU enhances income tax disclosure requirements, including expanded disclosure of the effective tax rate reconciliation in both percentages and reporting currency amounts, defined categories within the reconciliation, additional disclosure for individually significant reconciling items, and disaggregation of state and local income taxes by jurisdiction. The Company adopted ASU 2023‑09 prospectively for the year ended December 31, 2025 .
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of Brown & Brown, Inc. and its subsidiaries. All significant intercompany account balances and transactions have been eliminated in the Consolidated Financial Statements.
Revenue Recognition
The Company earns commissions paid by insurance carriers for the binding of insurance coverage. Commissions are earned at a point in time upon the effective date of bound insurance coverage, as no performance obligation exists after coverage is bound. If there are other services within the contract, the Company estimates the stand-alone selling price for each separate performance obligation, and the corresponding apportioned revenue is recognized over a period of time as the performance obligations are fulfilled. The Company earns fee revenue by receiving negotiated fees in lieu of a commission and from services other than securing insurance coverage. Fee revenues from certain agreements are recognized depending on when the services within the contract are satisfied and when control of the related services has transferred to the customer. In situations where multiple performance obligations exist within a fee contract, the use of estimates is required to allocate the transaction price on a relative stand-alone selling price basis to each separate performance obligation. Other supplemental commissions represent a form of variable consideration, which includes additional commissions over base commissions received from insurance carriers based on predetermined production levels mutually agreed upon by both parties. Profit-sharing contingent commissions represent a form of variable consideration associated with the placement of coverage, for which we earn commissions. Profit-sharing contingent commissions and other supplemental commissions are estimated and accrued relative to the recognition of the corresponding core commissions and are based on the amount of estimated consideration that will be received in the coming year. Since there are variables unknown to the Company, there can be adjustments to profit-sharing contingent commissions and other supplemental commissions in the year of receiving the commissions versus what was accrued in the prior year. Guaranteed supplemental commissions, a form of variable consideration within other supplemental commissions, represent guaranteed fixed-based agreements in lieu of profit-sharing contingent commissions.
Management estimates the policy cancellation reserve based upon historical cancellation experience adjusted for any known circumstances.
Use of Estimates
The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents principally consist of demand deposits with financial institutions and highly liquid investments with quoted market prices having maturities of three months or less when purchased.
Fiduciary Cash, Fiduciary Receivables, and Fiduciary Liabilities
The Company presents certain assets and liabilities that arise from activities in which the Company engages as an intermediary, where we collect premiums from insureds to remit to insurance companies, hold funds from insurance companies to distribute to insureds for claims on covered losses, and hold refunds due to customers as fiduciary assets and fiduciary liabilities.
Uncollected premiums are presented as fiduciary receivables. Likewise, payables to insurance companies and premium deposits due customers are presented as fiduciary 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.
Unremitted net insurance premiums are held in a fiduciary capacity until the Company disburses them, and the use of such funds is restricted by laws in certain jurisdictions in which we operate, or are restricted due to our contracts with certain insurance companies in which we hold premiums in a fiduciary capacity. Where permitted by law, the Company invests these unremitted funds only in cash, money-market accounts, tax-free variable-rate demand bonds and commercial paper held for a short-term. In certain jurisdictions in which the Company operates, the use and investment alternatives for these funds are regulated and restricted by various state laws and governmental agencies. The interest income earned on these unremitted funds, where allowed by state law, is reported as investment income in the Consolidated Statement of Income.
Investments
Certificates of deposit, and other securities, having maturities of more than three months when purchased are reported at cost and are adjusted for other-than-temporary market value declines. The Company’s investment holdings include U.S. Government securities, municipal bonds, domestic corporate and international corporate bonds as well as short-duration fixed income funds. Investments within the portfolio or funds are held as available-for-sale and are carried at their fair value. Any gain/loss applicable from the fair value change is recorded, net of tax, as other comprehensive income within the equity section of the Consolidated Balance Sheets. Realized gains and losses are reported as investment income on the Consolidated Statements of Income, with the cost of securities sold determined on a specific identification basis.
Fixed Assets
Fixed assets, including leasehold improvements, are carried at cost, less accumulated depreciation and amortization. Expenditures for improvements are capitalized, and expenditures for maintenance and repairs are expensed to operations as incurred. Upon sale or retirement, the cost and related accumulated depreciation and amortization are removed from the accounts. Depreciation has been determined using the straight-line method over the estimated useful lives of the related assets, which range from 3 to 40 years . Leasehold improvements are amortized on the straight-line method over the shorter of the useful life of the improvement or the term of the related lease.
Goodwill and Amortizable Intangible Assets
Business combinations are accounted for using the acquisition method. The estimated fair value of net tangible assets and identifiable intangible assets purchased, primarily customer accounts, are recognized with the excess of purchase price over the fair value of identifiable net assets acquired recorded to goodwill. For certain large or complex acquisitions, the Company retains the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities.
The fair value of purchased customer accounts is estimated using an income approach that estimates the acquired business’ future performance using financial projections developed by management for the acquired business which includes market participant assumptions regarding revenue growth and/or profitability. The fair value of the tangible assets acquired and liabilities assumed in each acquisition approximated their respective carrying amounts as of the acquisition date.
Amortizable intangible assets are stated at cost, less accumulated amortization, and consist primarily of purchased customer accounts. Purchased customer accounts are amortized on a straight-line basis over the related estimated lives which generally average approximately 15 years. Purchased customer accounts represent the value of customer relationships which include the right to represent insureds or claimants supported by the physical records and files that contain information about insurance policies, customers and other matters essential to policy renewals and delivery of services. The carrying value of amortizable intangible assets attributable to each business or asset group comprising the Company is periodically reviewed by management to determine if there are events or changes in circumstances that would indicate that its carrying amount may not be recoverable. Accordingly, if there are any such changes in circumstances during the year, the Company assesses the carrying value of its amortizable intangible assets by considering the estimated future undiscounted cash flows generated by the corresponding business or asset group. Any impairment identified through this assessment may require that the carrying value of related amortizable intangible assets be adjusted after determining the fair value of the amortizable intangible assets. There were no impairments recorded for the years ended December 31, 2025, 2024 and 2023.
The excess of the purchase price of an acquisition over the fair value of the identifiable tangible and amortizable intangible assets is assigned to goodwill. While goodwill is not amortizable under GAAP, it is subject to assessment at least annually, and more frequently in the presence of certain circumstances, for impairment by application of a fair value-based test. The Company compares the fair value of each reporting unit with its carrying value to determine if there is potential impairment of goodwill. The Company may elect to first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the Company does not perform a qualitative assessment, or if, as a result of the qualitative assessment, it is determined that a qualitative analysis is required, the Company will estimate the fair value of the reporting unit for comparison against the carrying value. If the estimated fair value of the reporting unit is less than its carrying value, an impairment loss is recorded for the amount of carrying value in excess of fair value. Fair value is estimated based upon multiples of earnings, or on a discounted cash flow basis. The Company completed its most recent annual assessment as of November 30, 2025, and determined that the fair value of goodwill exceeded the carrying value for each reporting unit. As of December 31, 2025 , there are no accumulated .
Many of the Company's acquisitions contain provisions for potential earn-out obligations. The amounts recorded as earn-out payables are based upon the terms of the purchase agreements and the present value of expected future payments to be made to the sellers resulting from estimated future operating results of the acquired entities over a period subsequent to the acquisition date, typically one to three years. In determining fair value, the acquired business’ future performance is estimated using financial projections developed by management for the acquired business which reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These estimates are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecast earn-out payments will be made.
The earn-out payables are measured at estimated fair value as of the acquisition date and are included in purchase price consideration. Subsequent changes in the fair value of earn-out obligations are recorded in the Consolidated Statement of Income as a result of updated expectations for the performance of the associated businesses.
Gain or Loss on Disposal
From time to time the Company will sell individual books of business or entire businesses when it aligns with our strategic priorities. When a business is sold, goodwill along with identified tangible and intangible assets and liabilities are netted against the agreed transaction price net of transaction costs to determine the associated gain or loss on disposal. Goodwill is apportioned to the disposed business using the relative fair value of the disposed business to the associated reporting unit to which it was a member.
In the fourth quarter of 2023, the Company completed the sale of certain third-party claims administration and adjusting services businesses from its Services segment and recognized a pre-tax gain on the sale of businesses totaling $ 135 million. The Company is entitled to future consideration payments upon achievement of certain conditions in accordance with the terms of the sale agreement. During 2024, the Company recorded an additional gain of $ 29 million from the settlement of two of the contingent payments. Any future consideration payments will be recognized as the condition for achievement is satisfied.
For the years ending December 31, 2025, 2024 and 2023, total gain or loss recognized on sales of businesses and books of business totaled $ 2 million loss, $ 31 million gain, and $ 143 million gain, respectively.
Income Taxes
The Company records income tax expense using the asset-and-liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and the income tax bases of the Company’s assets and liabilities.
The Company files a consolidated federal income tax return and has elected to file consolidated returns in certain states. Deferred income taxes are provided for in the Consolidated Financial Statements and relate principally to expenses charged to income for financial reporting purposes in one period and deducted for income tax purposes in other periods.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.
The OBBBA includes several provisions that impact the timing and magnitude of certain tax deductions, including restoring 100% bonus depreciation for qualifying property, increasing the business interest limitation and the immediate expensing of domestic research and development costs. The Company has applied the provisions of OBBBA to its financial results and position following its effective date, and will continue to assess potential impacts to its financial position, results of operations and cash flows as additional guidance from the OBBBA is issued.
The Organization for Economic Co-operation and Development (“OECD”) has a framework to implement a global minimum corporate tax of 15% for companies with global revenue and profits above certain thresholds (referred to as "Pillar 2"). The U.S. has not enacted legislation to implement Pillar 2; however, certain countries in which the Company operates have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The OECD issued new administrative guidance on January 5, 2026 (the “Side-by-Side” or “SbS” package) modifying key aspects of the operation of the Pillar 2 rules. The package introduces simplifications and new safe harbors for U.S. multinational companies to coexist with Pillar 2 while fully exempting U.S. parented groups from the application of two of the three Pillar 2 charging provisions, the income-inclusion rule (“IIR”) and the undertaxed profits rule (“UTPR”). The SbS package also extends the current Transitional Country-by-Country Reporting (“CbCR”) Safe Harbor by one year, through the end of fiscal year 2027. The Company continues to refine the effective tax rate and cash tax impacts of Pillar 2 in light of existing and new legislation in multiple countries. Pillar 2 is not material to the Company in 2025 and is not expected to be in the future.
Net Income Per Share
Basic net income per share is computed based on the weighted average number of common shares (including participating securities) issued and outstanding during the period. Diluted net income per share is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the issuance of all potentially issuable common shares. The dilutive effect of potentially issuable common shares is computed by application of the treasury stock method.
The following is a reconciliation between basic and diluted weighted average shares outstanding for the years ended December 31:
(in millions, except per share data)
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
The calculation of diluted net income per share for the year ended December 31, 2025, excludes the gain on the mark-to-market of escrow liability in the numerator and includes the shares held in escrow in the denominator, in accordance with ASC 260 - Earnings Per Share , which requires this treatment in periods where the combined effect of these adjustments is accretive to earnings.
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.
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:
Level 1 - observable inputs such as quoted prices for identical assets in active markets;
Level 2 - inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and
Level 3 - unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.
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 December 31, 2025 and 2024, 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. See Note 3 to the Consolidated Financial Statements for the fair values related to acquired intangible assets and the establishment and adjustment of earn-out payables.
The estimated fair value of our variable floating-rate debt agreements is $ 632 million , which approximates the carrying value due to the variable interest rate based upon adjusted Secured Overnight Financing Rate (“SOFR”). The fair value of our senior notes are measured using market quotes of notes with similar terms, which are level 2 inputs. As of December 31, 2025 the carrying value and calculated fair value of the Company's fixed-rate borrowings was $ 7,032 million and $ 7,002 m illion, respectively. As of December 31, 2024 the carrying value and calculated fair value of our fixed-rate borrowings wa s $ 2,839 million and $ 2,602 m illion, respectively. See Note 8 to the Consolidated Financial Statements for information on the fair value of long-term debt.
Non-Cash Stock-Based Compensation
The Company has stock-based compensation plans that provide for grants of restricted stock, restricted stock units, stock options and other stock-based awards to employees and non-employee directors of the Company. In addition, the Company has an Teammate Stock Purchase Plan which allows employees to purchase shares in the Company. The Company expenses stock-based compensation, which is included in Employee compensation and benefits in the Consolidated Statements of Income over the requisite service period. The significant assumptions underlying our expense calculations include the fair value of the award on the date of grant, the estimated achievement of any performance targets and estimated forfeiture rates.
The Company uses the Black-Scholes valuation model for valuing all stock options and shares purchased under the Teammate Stock Purchase Plan (the “TSPP”). Compensation for non-vested stock awards is measured at fair value on the grant date based upon the number of shares expected to vest. Compensation cost for all awards is recognized in earnings, net of estimated forfeitures, on a straight-line basis over the requisite service period. See Note 11 to our Consolidated Financial Statements for information on stock-based compensation.
Insurance Company Operations
The Company acts in a risk-bearing capacity for flood insurance associated with WNFIC and through operating and/or participating 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").
The Company protects itself from claims-related losses by reinsuring claims risk exposure and through ceding liabilities to client-owned captive cells through cross-collateralization between the cells. All exposure from basic admitted policies conforming to the National Flood Insurance Program, is reinsured with FEMA. For other polices, exposure is reinsured with a reinsurance carrier with an AM Best Company rating of “A” or better. Reinsurance does not legally discharge the Company or any ceding insurer from the primary liability for the full amount due under the reinsured policies. Reinsurance premiums, commissions, expense reimbursement and reserves related to ceded business are accounted for on a basis consistent with the accounting for the original policies issued and the terms of reinsurance contracts. Premiums earned and losses and loss adjustment expenses incurred are reported net of reinsurance amounts. Other underwriting expenses are shown net of earned ceding commission income. The liabilities for unpaid losses and loss adjustment expenses and unearned premiums are reported gross of ceded reinsurance.
Balances due from reinsurers on unpaid losses and loss adjustment expenses, including an estimate of such that is recoverable related to reserves for incurred but not reported (“IBNR”) losses, are reported as assets and are included in reinsurance recoverable even though amounts due on unpaid loss and loss adjustment expense are not due from the reinsurer until such losses are paid. The Company does not believe it is exposed to any material credit risk through its reinsurance. Historically, no amounts due from reinsurance carriers have been written off as uncollectible.
Refer to Note 16 for additional information on the Company’s insurance operation s.
Unpaid Losses and Loss Adjustment Reserve
Unpaid losses and loss adjustment reserve includes amounts determined on individual claims and other estimates based upon the past experience and the policyholders for IBNR claims, less anticipated salvage and subrogation recoverable. The methods of making such estimates and for establishing the resulting reserves include a combination of an analysis of large discrete events, typically named-storm activity, and also routine losses in the ordinary course from non-named-storm activity. These methodologies are continually reviewed and updated, and any resulting adjustments are reflected in current operations.
The Company engages the services of outside actuarial consulting firms (the “Actuaries”) to assist with rendering an opinion on the sufficiency of the Company’s estimates for unpaid losses and related loss adjustment reserve. The Actuaries utilize both industry experience and the Company’s own experience to develop estimates of those amounts as of year-end. These estimated liabilities are subject to the impact of future changes in claim severity, frequency and other factors. In spite of the variability inherent in such estimates, management believes that the liabilities for unpaid losses and related loss adjustment reserve are adequate.
Premiums are recognized as income over the coverage period of the related policies. Unearned premiums represent the portion of premiums written that relate to the unexpired terms of the policies in force and are determined on a daily pro rata basis. The income is recorded to the commissions and fees line of the Consolidated Statements of Income.
NOTE 2 Revenues
The following tables present the revenues disaggregated by revenue source:
For the year
ended December 31, 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
For the year
ended December 31, 2024
(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
For the year
ended December 31, 2023
(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
Base commissions generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, or sales and payroll levels) to determine what premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control.
Fee revenues relate to fees for services other than securing coverage for our customers, fees negotiated in lieu of commissions, and F&I products and services.
Other supplemental commissions include additional commissions over base commissions received from insurance carriers based on predetermined growth or production measures. This includes incentive commissions and guaranteed supplemental commissions.
Profit-sharing contingent commissions are based primarily on underwriting results, but may also reflect considerations for volume, growth and/or retention.
Earned premium relates to the premiums earned in the Captives.
Investment income consists primarily of interest on cash and investments.
Other income consists primarily of other miscellaneous income.
Fees within Other reflects the elimination of intercompany revenues .
Revenues Disaggregated by Geography
The following table presents the revenues disaggregated by geographic area where our services are being performed:
For the year ended December 31,
(in millions)
Other
Total Revenues
Contract Assets and Liabilities
The balances of contract assets and contract liabilities arising from contracts with customers as of December 31, 2025 and 2024 were as follows:
(in millions)
December 31, 2025
December 31, 2024
Contract assets
Contract liabilities
Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which have not yet been billed in our systems and are reflected in commissions, fees and other receivables in the Company's Consolidated Balance Sheets. The increase in contract assets over the balance as of December 31, 2024 is due to growth in our business and from businesses acquired in the current year.
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 12 months and in other liabilities for those to be recognized more than 12 months from the date presented in the Company's Consolidated Balance Sheets.
As of December 31, 2025, deferred revenue consisted of $ 127 million as the current portion to be recognized within one year and $ 41 million to be recognized beyond one year. As of December 31, 2024, deferred revenue consisted of $ 80 million as the current portion to be recognized within one year and $ 39 million in long-term deferred revenue to be recognized beyond one year.
During the 12 months ended December 31, 2025, 2024, and 2023, the amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates, was approximately $ 59 million , $ 39 million , and $ 28 million, respectively. This consists of additional variable consideration received on our incentive and profit-sharing contingent commissions that required refinements in our estimates and variable consideration true-ups.
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, whereby the Company pays an incremental amount of compensation on new business. These incremental costs are deferred and amortized over a 15-year period. The cost to obtain balance within the other assets caption in the Company’s Consolidated Balance Sheets was $ 143 million and $ 119 million as of December 31, 2025 and 2024, respectively. For the 12 months ended December 31, 2025 and December 31, 2024, the Company deferred $ 35 million and $ 33 million of incremental cost to obtain customer contracts, respectively and recorded an expense of $ 11 million and $ 10 million, respectively.
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 Consolidated Balance Sheets was $ 208 million and $ 145 million as of December 31, 2025 and 2024, respectively. For the 12 months ended December 31, 2025 and December 31, 2024, the Company had net deferrals of $ 8 million and $ 13 million related to current year deferrals for costs incurred that relate to performance obligations yet to be fulfilled, net of the expense of previously deferred contract fulfillment costs associated with performance obligations that were satisfied in the period, respectively.
NOTE 3 Busines s Combinations
During the year ended December 31, 2025, the Company acquired the assets and assumed certain liabilities of 18 insurance intermediaries, all of the stock of 15 insurance intermediaries, and purchased 10 books of businesses (customer accounts) for a total of 43 acquisitions. Additionally, adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last 12 months as permitted by Accounting Standards Codification (“ASC”) 805 - Business Combinations (“ASC 805”).
Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Consolidated Financial Statements may be provisional; and therefore, those amounts are subject to further adjustments within the permitted measurement period, as defined in ASC 805. Management often uses independent third-party valuation specialists to assist in finalizing the fair value of assets acquired and liabilities assumed. Fair value adjustments, if any, are most common to the values established for amortizable intangible assets and earnout liabilities, with the offset to goodwill, net of any income tax effect. Provisional estimates were used to initially record the acquisitions of NBS Insurance Agency, Tim Parkman, Inc., Accession Risk Management Group and Poulton Associates, LLC, including for intangible assets, goodwill, customer contract related balances, tax related balances and other asset and liability accounts.
For the year ended December 31, 2025, adjustments to prior year acquisitions were made within the permitted measurement period that resulted in a net decrease to goodwill of $ 3 million. These measurement period adjustments have been reflected as current period adjustments in the year ended December 31, 2025.
Gross cash paid for acquisitions was $ 8,708 million and $ 934 million in the years ended December 31, 2025 and 2024, respectively. We completed 43 acquisitions (including book of business purchases) during the year ended December 31, 2025 and 32 acquisitions (including book of business purchases) during the year ended December 31, 2024.
On August 1, 2025, the Company completed the acquisition of RSC, the holding company for Accession Risk Management Group, Inc., a North American insurance distribution platform composed of specialty insurance and risk management companies, including Risk Strategies, a retail brokerage firm, and One80 Intermediaries, an insurance wholesaler and program manager. The acquisition was completed pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), by and among RSC, the Company, Encore Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company and Kelso RSC (Investor), L.P., a Delaware limited partnership, solely in its capacity as the equityholder representative. The aggregate purchase price totaled $ 9,608 million and included cash of $ 8,293 million and $ 613 million in shares of the Company’s common stock, par value $ 0.10 per share. The acquisition was funded using cash raised from our June 2025 follow-on common stock offering and senior notes issuance.
The Merger Agreement provided for escrowed consideration of $ 750 million in the form of $ 250 million of cash and $ 500 million in shares of the Company’s common stock. Both the cash and shares are held in an escrow account. Escrowed shares, which were issued at the closing of the acquisition, totaled approximately 4.5 million shares. The number of shares was determined using an agreed upon share price of $ 110.57 and $ 500 million of consideration, as detailed in the Merger Agreement. The total number of escrowed shares will not increase in the future.
Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, any amounts remaining in the escrow account will be released to the equityholders. The amount of the cash balance will change over time based upon payment of any indemnification obligations of the equityholders associated with the discontinued businesses, as well as dividends paid on the shares and interest income earned on the cash. The Company believes this escrow, plus other available funds, is sufficient to cover any potential costs associated with those specified matters subject to indemnification under the Merger Agreement.
The value of the shares and cash in the escrow account is presented within long-term liabilities (other liabilities), and the restricted cash is presented within other assets in the Company's Consolidated Balance Sheets. The value of the shares placed in escrow changes as the share price of the Company increases or decreases as compared to the value at the start of the applicable reporting period. On August 1, 2025, the closing date of the Accession acquisition, each share was valued at $ 92.00 using our opening share price, for a total amount of $ 406 million. In accordance with ASC 480 - Distinguishing Liabilities from Equity and ASC 815 - Derivatives and Hedging , periodic share value changes will be recorded as a mark-to -market of the escrow liability in the Company's Consolidated Statements of Income. This mark-to-market adjustment is non-cash.
As of December 31, 2025, the total balance of the escrow liability was $ 616 million, with $ 351 million in escrowed shares and $ 265 million in cash. The fair value of the shares held in escrow are re-evaluated and measured at fair value on a recurring basis as defined in ASC 820 - Fair Value Measurement . The change in fair value of the shares for the year ended December 31, 2025, resulted in a $ 54 million decrease to expense.
The following table summarizes the purchase price allocations and estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition for current year acquisitions and adjustments made during the measurement period for prior year acquisitions. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. These adjustments are made in the period in which the amounts are determined and the current period income effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date.
(in millions)
NBS Insurance Agency
Tim Parkman, Inc.
Accession Risk Management Group
Poulton Associates, LLC
Other (1)
Total
Segment
Specialty Distribution
Specialty Distribution
Retail & Specialty Distribution
Specialty Distribution
Retail & Specialty Distribution
Effective date of acquisition
March 1, 2025
May 1, 2025
August 1, 2025
November 1, 2025
Various
Cash paid
Common stock issued
Other payable
Recorded earn-out payable
Total consideration
Maximum potential earn-out payable
Allocation of purchase price:
Cash and cash equivalents
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
Accounts payable and accrued expenses
Other current liabilities
Deferred income tax, net
Other long-term liabilities
Total liabilities assumed
Net assets acquired
(1) The other column represents current year acquisitions with total net assets acquired of less than $ 50 million and adjustments from prior year acquisitions that were made within the permitted measurement period.
(2) The weighted average useful life of purchased customer accounts is 14 years.
Goodwill of $ 6,885 million, net of opening balance sheet adjustments within the allowable measurement period, was allocated to the Retail and Specialty Distribution segments in the amounts of $ 3,554 million and $ 3,331 million , respectively. Of the total goodwill, the amount expected to be deductible for income tax purposes is $ 1,933 million .
For acquisitions completed during 2025, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues from 2025 acquisitions included in the Consolidated Statement of Income for the year ended December 31, 2025 were $ 747 million . The income before income taxes included in the Consolidated Statement of Income for the year ended December 31, 2025 was $ 77 million , which includes $ 112 million of amortization expense for acqui red intangible assets.
The following unaudited pro forma information presents the estimated results of combined operations as if the Company's 2025 acquisitions had occurred as of the beginning of 2024 . The pro forma information includes adjustments for (i) amortization of acquired intangible assets, (ii) interest expense on borrowings to fund the acquisitions and (iii) shares issued as consideration and funding for the acquisitions. Included in the pro forma information presented below is a non-recurring pro forma adjustment directly attributable to the acquisitions for transaction and integration costs totaling $ 113 million. The pro forma information does not reflect any operating efficiencies or potential cost savings that may result from the acquisitions. Accordingly, it is for illustrative purposes only and is not intended to present or be indicative of the actual results of operations of the combined company that may have been achieved had the acquisitions actually occurred at the beginning of 2024, nor is it intended to represent or be indicative of future results of the combined business.
(UNAUDITED)
Year Ended December 31,
(in millions, except per share data)
Total revenues
Net income attributable to the Company
Net income per share:
Basic
Diluted
Acquisition Earn-Out Payables
ASC 805 is the authoritative guidance requiring an acquirer to recognize 100% of the fair value of acquired assets, including goodwill, and assumed liabilities (with only limited exceptions) upon initially obtaining control of an acquired entity. Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase arrangements) at the acquisition date must be included in the purchase price consideration. The recorded purchase prices for acquisitions include an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are recorded in the Consolidated Statements of Income when incurred or reasonably estimated.
As of December 31, 2025, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820 - Fair Value Measurement . The resulting additions, payments and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the years ended December 31, 2025, 2024 and 2023 were as follows:
Year Ended December 31,
(in millions)
Balance as of the beginning of the period
Additions from new acquisitions
Assumed estimated acquisition earn-out payables
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 during the year
Balance as of December 31,
Of the $ 541 million of estimated acquisition earn-out payables as of December 31, 2025, $ 281 million was recorded as accounts payable and $ 260 million was recorded as other non-current liabilities. Included within the additions to estimated acquisition earn-out payables are any adjustments to opening balance sheet items within the allowable measurement period, which may therefore differ from previously reported amounts. Of the $ 167 million of estimated acquisition earn-out payables as of December 31, 2024, $ 75 million was recorded as accounts payable and $ 92 million was recorded as other non-current liabilities.
Certain acquisition agreements include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of December 31, 2025, was $ 385 million. As of December 31, 2025, the maximum future contingency payments related to all acquisition agreements that include a cap on the potential earnout amount totaled $ 457 million .
NOTE 4 Goodwill
The changes in the carrying value of goodwill by reportable segment for the years ended December 31, are as follows:
(in millions)
Retail
Specialty Distribution
Total
Balance as of January 1, 2024
Acquisitions
Adjustments during measurement period (1)
Disposals
Foreign currency translation adjustments
Balance as of December 31, 2024
Acquisitions
Adjustments during measurement period (1)
Disposals
Foreign currency translation adjustments
Balance as of December 31, 2025
Provisional estimates of fair value are established at the time of each acquisition and are subsequently reviewed and finalized within the first year of operations subsequent to the acquisition dates. As of December 31, 2025 , adjustments were made to the amounts initially recorded. See also Note 3.
NOTE 5 Amortizable Intangible Assets
Amortizable intangible assets at December 31, 2025 and 2024 consisted of the following:
December 31, 2025
December 31, 2024
(in millions)
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Gross
carrying
value
Accumulated
amortization
Net
carrying
value
Purchased customer accounts and other
Foreign currency translation adjustments during the year
Total
Amortization expense for amortizable intangible assets for the years ending December 31, 2026, 2027, 2028, 2029 and 2030 is estimated to be $ 450 million , $ 431 million , $ 424 million , $ 406 million and $ 395 million , respectively.
NOTE 6 Fi xed Assets
Fixed assets at December 31 consisted of the following:
(in millions)
Furniture, fixtures, equipment and software
Leasehold improvements
Land, buildings and improvements
Total cost
Less accumulated depreciation and amortization
Total
Depreciation expense for fixed assets amounted to $ 55 million in 2025, $ 44 million in 2024 and $ 40 million in 2023 .
NOTE 7 Accrued Expenses an d Other Liabilities
Accrued expenses and other current liabilities at December 31 consisted of the following:
(in millions)
Accrued incentive compensation
Accrued compensation and benefits
Lease liability (1)
Deferred revenue
Reserve for policy cancellations
Accrued interest
Accrued rent and vendor expenses
Other
Total
The Lease liability is the current portion of the Operating lease liabilities as reflected in the Consolidated Balance Sheets as of December 31, 2025 and 2024 .
NOTE 8 Lon g-Term Debt
Long-term debt at December 31, 2025 and 2024 consisted of the following, with certain prior-period amounts having been reclassified to conform to the current-period presentation.
(in millions)
December 31,
December 31,
Current portion of long-term debt:
Current portion of 5-year term loan facility expires 2026
Current portion of 3 -year term loan facility expired 2025
4.600 % senior notes, semi-annual interest payments, balloon due 2026
Current portion of 5 -year revolving loan facility, periodic interest payments,
SOFR plus up to 1.525 %, plus commitment fees up to 0.225 %, expires October 27, 2026
Current portion of 5-year term loan facility expires 2027
Total current portion of long-term debt
Long-term debt:
Note agreements:
4.700 % senior notes, semi-annual interest payments, balloon due 2028
4.500 % senior notes, semi-annual interest payments, balloon due 2029
4.900 % senior notes, semi-annual interest payments, balloon due 2030
2.375 % senior notes, semi-annual interest payments, balloon due 2031
4.200 % senior notes, semi-annual interest payments, balloon due 2032
5.250 % senior notes, semi-annual interest payments, balloon due 2032
5.650 % senior notes, semi-annual interest payments, balloon due 2034
5.550 % senior notes, semi-annual interest payments, balloon due 2035
4.950 % senior notes, semi-annual interest payments, balloon due 2052
6.250 % senior notes, semi-annual interest payments, balloon due 2055
Total notes
Credit agreements:
5-year term loan facility, periodic interest and principal payments, SOFR plus up to
1.750 %, expires October 27, 2026
5-year revolving loan facility, periodic interest payments, SOFR plus up to 1.525 %,
plus commitment fees up to 0.225 %, expires October 27, 2026
5-year term loan facility, periodic interest and principal payments, SOFR plus up to 1.750 %,
expires March 31, 2027
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 with BofA Securities, Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein, with respect to the offer and sale by the Company of $ 400 million principal amount of its 4.600 % Senior Notes due 2026 (the “2026 Notes”), $ 500 million principal amount of its 4.700 % Senior Notes due 2028 (the “2028 Notes”), $ 800 million principal amount of its 4.900 % Senior Notes due 2030 (the “2030 Notes”), $ 500 million principal amount of its 5.250 % Senior Notes due 2032 (the “2032 Notes”), $ 1,000 million principal amount of its 5.550 % Senior Notes due 2035 (the “2035 Notes”) and $ 1,000 million principal amount of its 6.250 % Senior Notes due 2055 (the “2055 Notes” and, together with the 2026 Notes, the 2028 Notes, the 2030 Notes, the 2032 Notes, and the 2035 Notes, the “Notes”). The Company used the net proceeds of the offering of the Notes, together with the proceeds from the offering of shares of common stock and cash on hand, to fund the cash consideration payable under the Merger Agreement, and to pay fees and expenses associated with the foregoing. As of December 31, 2025 , the aggregate outstanding balance of the Notes was $ 4,200 million, exclusive of the associated discount balance.
The Company maintains notes from other issuances aggregating to a total outstanding debt balance of $ 2,850 million, exclusive of the associated discount balance, as of December 31, 2025 and December 31, 2024.
Credit agreements: On March 31, 2025, the Company repaid the outstanding balance on the 3-year term loan facility of $ 150 million.
The Company has credit agreements that include term loans and a Revolving Credit Facility of $ 800 million, all having similar terms and covenants. The outstanding balance on the term loans was $ 532 million and $ 756 million as of December 31, 2025 and December 31, 2024, respectively. There was an outstanding balance of $ 100 million on the Revolving Credit Facility as of December 31, 2025, and $ 250 million outstanding as of December 31, 2024.
The Company is required to maintain certain financial ratios and comply with certain other covenants related to outstanding credit agreements. The Company was in compliance with all such covenants as of December 31, 2025 and December 31, 2024.
At December 31, 2025 , the one month term SOFR Rate for the term loan due October 2026 and the term loan due March 2027 was 3.716 % . The one month term SOFR Rate on the Revolving Credit Facility due October 2026 was 3.843 % as of December 31, 2025 . These SOFR rates are inclusive of a 0.100 % credit-spread adjustment per the terms of the relevant agreements.
Interest paid in 2025, 2024 and 2023 was $ 284 million , $ 195 million , and $ 186 million , respectively.
At December 31, 2025, maturities of long-term debt are $ 719 million in 2026, $ 313 million in 2027, $ 500 million in 2028, $ 350 million in 2029, $ 800 million in 2030 and $ 5,000 million thereafter.
On February 10, 2026, the Company drew down on the Revolving Credit Facility by $ 225 million, and the proceeds will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of our capital stock, acquisitions and repayment of our existing debt.
Fair value information about financial instruments not measured at fair value
The following tables presents liabilities that are not measured at fair value on a recurring basis:
December 31, 2025
December 31, 2024
(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 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 I ncome Taxes
Significant components of the provision for income taxes for the years ended December 31 are as follows:
(in millions)
Current:
Federal
State
Foreign
Total current provision
Deferred:
Federal
State
Foreign
Total deferred provision
Total tax provision
The table below provides additional information as a result of our adoption of ASU 2023-09. A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the year ended December 31, 2025 is as follows:
(in millions)
Provision for income taxes at U.S. federal statutory rate
Effect of cross-border tax laws
Nontaxable or nondeductible items
Other
State and local income taxes, net of federal income tax effect
Foreign tax effects
Bermuda
Effect of rates different than statutory
Other
Other foreign jurisdictions
Worldwide changes in unrecognized tax benefits
Total tax provision and effective tax rate
The individual state and local jurisdictions comprising the majority of state income taxes, net of federal income tax benefit, include: Florida, California, Minnesota, South Carolina, New York City and New Jersey.
As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, a reconciliation of the differences between the effective tax rate and the federal statutory tax rate is as follows:
Federal statutory tax rate
State income taxes, net of federal income tax benefit
Non-deductible employee stock purchase plan expense
Non-deductible meals and entertainment
Non-deductible officers’ compensation
Tax benefit from stock-based compensation
Effect of rates different than statutory
Other, net
Effective tax rate
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax reporting purposes.
Significant components of the Company’s net deferred tax liabilities as of December 31 are as follows:
(in millions)
Non-current deferred tax liabilities:
Intangible assets
Fixed assets
Right-of-use assets
Impact of adoption of ASC 606 revenue recognition
Total non-current deferred tax liabilities
Non-current deferred tax assets:
Deferred compensation
Accruals and reserves
Lease liabilities
Net operating loss carryforwards and other carryforwards
Valuation allowance for deferred tax assets
Total non-current deferred tax assets
Net non-current deferred tax liability
ASU 2023-09 also requires that the Company disclose the amount of income taxes paid, disaggregated by jurisdiction if the income taxes paid to that jurisdiction are greater than or equal to 5% of the total income taxes paid . Income taxes paid in 2025, 2024 and 2023 were $ 371 million , $ 304 million and $ 219 million , respectively. For 2025, the only jurisdiction with income taxes paid (net of refunds) in excess of the 5% reporting threshold was domestic federal income taxes of $ 284 million.
At December 31, 2025, for income tax reporting purposes, the Company had net operating loss carryforwards of $ 214 million for federal, $ 24 million net operating loss carryforwards for international jurisdictions and $ 4.8 billion net operating loss carryforwards for state, portions of which expire in the years 2026 and thereafter. The state carryforward amount is derived from the operating results of certain subsidiaries.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions)
Unrecognized tax benefits balance at January 1
Gross increases for tax positions of prior years
Gross decreases for tax positions of prior years
Settlements
Unrecognized tax benefits balance at December 31
The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized was $ 18 million as of December 31, 2025, $ 4 million as of December 31, 2024 and $ 5 million as of December 31, 2023. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, 2024 and 2023, accrued interest and penalties related to uncertain tax positions were minimal.
The Company is subject to taxation in the United States and various state jurisdictions. The Company is also subject to taxation in various international jurisdictions throughout Europe and Asia. In the United States, federal returns for fiscal years 2022 through 2025 remain open and subject to examination by the Internal Revenue Service. The Company files and remits state income taxes in various states where the Company has determined it is required to file state income taxes. The Company’s filings with those states remain open for audit for the fiscal years 2022 through 2025 . The Company files and remits income taxes in various international jurisdictions where the Company has determined it is required to file income taxes. The Company's filings with those countries remain open for audit for the fiscal years 2021 through 2025 . The Company also operates in Bermuda and the Cayman Islands. The Company is not subject to any income taxes in these countries.
During the third quarter of 2023, the Company was notified by the State of California Franchise Tax Board regarding an audit for the 2020-2021 tax years for Saferide Motor Club, Inc. No additional correspondence has been received, and we are not aware of any amounts to reserve for at this time.
During 2025, the Company was notified by the State of New York regarding an audit for the 2021-2023 tax years for Brown & Brown, Inc. We are currently gathering requested information and are not aware of any amounts to reserve for this time.
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. The Company has determined it is not practical to determine the unrecognized deferred tax liabilities on the undistributed earnings from the Company’s international subsidiaries as such earnings are considered to be indefinitely reinvested.
NOTE 10 Employ ee Savings Plan
The Company has an Employee Savings Plan (401(k)) in which substantially all employees with more than 30 days of service are eligible to participate. Under this plan, the Company makes matching contributions of up to 4.0 % of each participant’s annual compensation. The Company’s contribution expense to the plan totaled $ 65 million in 2025 and $ 56 million in 2024 .
NOTE 11 Stock-Ba sed Compensation
Performance Stock Plan
In 1996, the Company adopted and the shareholders approved a performance stock plan, under which until the suspension of the plan in 2010, up to 28,800,000 Performance Stock Plan (“PSP”) shares could be granted to key employees contingent on the employees’ future years of service with the Company and other performance-based criteria established by the Compensation Committee of the Company’s board of directors. Before participants may take full title to Performance Stock, two vesting conditions must be met. Of the grants currently outstanding, specified portions satisfied the first condition for vesting based upon 20 % incremental increases in the 20-trading-day average stock price of Brown & Brown’s common stock from the price on the last business day before date of grant. Performance Stock that has satisfied the first vesting condition is considered “awarded shares.” Awarded shares are included as issued and outstanding common stock shares and are included in the calculation of basic and diluted net income per share. Dividends are paid on awarded shares and participants may exercise voting privileges on such shares. Awarded shares satisfy the second condition for vesting on the earlier of a participant’s: (i) 15 years of continuous employment with Brown & Brown from the date shares are granted to the participants (or, in the case of the July 2009 grant to Powell Brown, 20 years ), (ii) of age 64 (on a prorated basis corresponding to the number of years since the date of grant), or (iii) death or disability. On April 28, 2010, the PSP was and any remaining authorized, but unissued shares, as well as any shares in the future, were reserved for issuance under the 2010 Stock Incentive Plan (the “2010 SIP”).
At December 31, 2025, 10,154,854 shares had been granted, net of forfeitures, under the PSP. As of December 31, 2025, 32,000 shares had met the first condition of vesting and had been awarded, and 10,122,854 shares had satisfied both conditions of vesting and had been distributed to participants.
The Company uses a path-dependent lattice model to estimate the fair value of PSP grants on the grant date.
A summary of PSP activity for the years ended December 31, 2025, 2024 and 2023 is as follows:
Weighted-
average grant
date fair value
Granted
shares
Awarded
shares
Shares not
yet awarded
Outstanding at January 1, 2023
Granted
Awarded
Vested
Forfeited
Outstanding at December 31, 2023
Granted
Awarded
Vested
Forfeited
Outstanding at December 31, 2024
Granted
Awarded
Vested
Forfeited
Outstanding at December 31, 2025
The total fair value of PSP grants that vested during each of the years ended December 31, 2025, 2024 and 2023 was $ 7 million , $ 6 million and $ 31 million , respectively.
Stock Incentive Plans
On April 28, 2010, the shareholders of the Company approved the 2010 Stock Incentive Plan (“2010 SIP”), which was suspended May 1, 2019. On May 1, 2019, the shareholders of the Company approved the 2019 Stock Incentive Plan (“2019 SIP”) that provides for the granting of restricted stock, restricted stock units, stock options, stock appreciation rights and other stock-based awards to employees and directors contingent on performance-based and/or time-based criteria established by the Compensation Committee of the Company’s board of directors. In addition, the 2019 SIP provides for a limited delegation of authority of the Company’s chief executive officer to grant awards to individuals who are not subject to Section 16 of the Securities Exchange Act of 1934. The principal purpose of the 2019 SIP is to attract, incentivize and retain key employees by offering those persons an opportunity to acquire or increase a direct proprietary interest in the Company’s operations and future success. The number of shares of stock reserved for issuance under the 2019 SIP is 2,283,475 shares, plus any shares that are authorized for issuance under the 2010 SIP (described below), and not already subject to grants under the 2010 SIP, and that were outstanding as of May 1, 2019, the date of suspension of the 2010 SIP, together with PSP shares, 2010 SIP shares and 2019 SIP shares forfeited after that date. As of May 1, 2019, 6,957,897 shares were available for issuance under the 2010 SIP, which were then transferred to the 2019 SIP.
On March 24, 2025, the Compensation Committee of the Company’s Board of Directors approved, subject to shareholder approval, an amendment to the 2019 SIP to increase the number of shares of Common Stock that may be issued under the 2019 SIP by 6,930,000 shares and extend the term of the Plan to May 7, 2035. On May 7, 2025, the Company’s shareholders approved the plan amendment.
The Company has granted restricted share awards (including both restricted stock and restricted stock units) to our employees in the form of time-based grants and performance-based grants under the 2010 SIP and 2019 SIP. To date, a substantial majority of restricted share grants to employees under these plans vest in 5 years . The performance-based grants are subject to the achievement of certain performance criteria by grantees, which may include growth in a defined book of business, Organic Revenue growth of the Company and consolidated diluted net income per share growth at certain levels of the Company. The performance measurement period ranges from 3 to 5 years . Certain performance-based grants have a payout range between 0 % to 200 % depending on the achievement against the stated performance target.
Non-employee members of the board of directors received shares annually issued pursuant to the 2019 SIP as part of their annual compensation. A total of 13,948 shares were issued in May 2025, 16,884 shares were issued in May 2024 and 16,632 shares were issued in May 2023.
The Company uses the closing stock price on the day before the grant date to determine the fair value of grants under the 2010 SIP and 2019 SIP and then applies an estimated forfeiture factor to estimate the annual expense. Additionally, the Company uses the path-dependent lattice model to estimate the fair value of grants with PSP-type vesting conditions as of the grant date. SIP shares that satisfied the first vesting condition for PSP-type grants or the established performance criteria are considered awarded shares. Awarded shares under restricted stock awards are included as issued and outstanding common stock shares and are included in the calculation of basic and diluted net income per share.
A summary of 2010 SIP and 2019 SIP activity for the years ended December 31, 2025, 2024 and 2023 is as follows:
Weighted-
average grant
date fair value
Granted
shares
Awarded
shares
Shares not
yet awarded
Outstanding at January 1, 2023
Granted
Awarded
Vested
Forfeited
Outstanding at December 31, 2023
Granted
Awarded
Vested
Forfeited
Outstanding at December 31, 2024
Granted
Awarded
Vested
Forfeited
Outstanding at December 31, 2025
The following table sets forth information as of December 31, 2025, 2024 and 2023, with respect to the number of time-based restricted shares granted and awarded, the number of performance-based restricted shares granted, and the number of performance-based restricted shares awarded under our Performance Stock Plan and 2010 and 2019 Stock Incentive Plans:
Year
Time-based restricted
stock granted and
awarded
Performance-based
restricted
stock granted
Performance-based
restricted
stock awarded
O f the 761,851 performance-based shares granted in 2025 , the payout for 351,146 shares may be increased up to 200 % of the target or decreased to zero . The amount reflected in the table includes all time-based share grants at a target payout of 100 %.
O f the 1,154,634 performance-based shares granted in 2024 , the payout for 587,205 shares may be increased up to 200 % of the target or decreased to zero . The amount reflected in the table includes all time-based share grants at a target payout of 100 %.
Of t he 1,323,088 perf ormance-based shares granted in 2023 , the payout for 615,575 shares may be increased up to 200 % of the target or decreased to zero , 17,338 shares may be increased up to 120 % of the target or decreased to zero . The amount reflected in the table includes all time-based share grants at a target payout of 100 %.
At December 31, 2025, 8,891,392 shares were available for future grants under the 2019 SIP. This amount is calculated assuming the maximum payout for all grants.
Teammate Stock Purchase Plan
The Company has a shareholder-approved TSPP with a total of 34,000,000 authorized shares of which 1,730,975 were available for future subscriptions as of December 31, 2025 . Employees of the Company who regularly work 20 hours or more per week are generally eligible to participate in the TSPP. Participants, through payroll deductions, may allot up to 10 % of their compensation towards the purchase of a maximum of $ 25,000 worth of Company stock between August 1 st of each year and the following July 31 st (the “Subscription Period”) at a cost of 85 % of the lower of the stock price as of the beginning or end of the Subscription Period.
The Company estimates the fair value of an TSPP share option as of the beginning of the Subscription Period as the sum of: (i) 15 % of the quoted market price of the Company’s stock on the day prior to the beginning of the Subscription Period, and (ii) 85 % of the value of a one-year stock option on the Company stock using the Black-Scholes option-pricing model. The estimated fair value of an TSPP share option as of the Subscription Period beginning in August 2025 was $ 22.32 . The fair values of an TSPP share option as of the Subscription Periods beginning in August 2024 and 2023, were $ 23.10 and $ 18.13 , respectively.
For the TSPP plan years ended July 31, 2025, 2024 and 2023, the Company issued 542,381 , 718,457 and 743,856 shares of common stock, respectively. These shares were issued at an aggregate purchase price of $ 42 million , or $ 77.66 per share, in 2025, $ 43 million , or $ 59.50 per share, in 2024 and $ 40 million , or $ 53.70 per share, in 2023.
For the five months ended December 31, 2025, 2024 and 2023 (portions of the 2024-2025, 2023-2024 and 2022-2023 plan years), 416,313 , 255,015 and 330,599 shares of common stock (from authorized but unissued shares), respectively, were subscribed to by TSPP participants for proceeds of approximately $ 28 million , $ 22 million and $ 20 million , respectively.
Summary of Non-Cash Stock-Based Compensation Expense
The non-cash stock-based compensation expense for the years ended December 31 is as follows:
(in millions)
Stock incentive plan
Teammate stock purchase plan
Performance stock plan
Sharesave plan
Total
Summary of Unamortized Compensation Expense
As of December 31, 2025, the Company estimates there to be $ 223 million of unamortized compensation expense related to all non-vested stock-based compensation arrangements granted under the Company’s stock-based compensation plans, based upon current projections of grant measurement against performance criteria. That expense is expected to be recognized over a weighted average period of 3.19 years.
NOTE 12 Supplemental Disclosures of Cash Flow Inform ation and Non-Cash Financing and Investing Activities
During 2025, the Company had an impact of $ 64 million of foreign exchange rate changes on cash, cash equivalents and restricted cash inclusive of fiduciary cash reported on its Consolidated Statements of Cash Flows due to the change in currency exchange rates, primarily for British pounds.
During 2024, the C ompany accrued for and deferred approximately $ 90 million related to certain federal income tax payments due to Hurricane Debby and Milton tax relief, which were announced by the Internal Revenue Service in August and October 2024, respectively. These deferrals of income tax payments were paid by the deadline of May 1, 2025.
During 2023, the Company accrued for and deferred $ 121 million related to certain federal income tax payments due to Hurricane Idalia tax relief, which was announced by the Internal Revenue Service on August 30, 2023. Included in the 2023 deferred payments was $ 30 million associated with the gain on disposal associated with certain third-party claims administration and adjusting services businesses sold in the fourth quarter of 2023. These deferred income tax payments were paid by the deadline of February 15, 2024. On March 15, 2023, the Company paid $ 31 million of accrued federal income tax payments deferred from the fourth quarter of 2022 related to similar tax relief announced by the Internal Revenue Service on September 29, 2022 and associated with Hurricane Ian.
Pursuant to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023, the Company is entitled to future consideration payments upon achievement of certain conditions in accordance with the terms of the sale agreement. During the second quarter of 2024, the Company received cash of $ 57 million from the settlement of two of the contingent payments.
The Company’s cash paid during the period for interest and income taxes are summarized as follows:
Year Ended December 31,
(in millions)
Cash paid during the period for:
Interest
Income taxes, net of refunds
The Company’s significant non-cash investing and financing activities are summarized as follows:
Year Ended December 31,
(in millions)
Other payables issued for acquisitions and purchased customer accounts
Estimated acquisition earn-out payables and related charges
Assumed acquisition earn-out payables
Common stock issued for acquisitions
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 Consolidated Balance Sheets.
Balance as of December 31,
(in millions)
Table to reconcile cash, cash equivalents and restricted cash inclusive of fiduciary cash
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
NOTE 13 Commitment s and Contingencies
Legal Proceedings
The Company records losses for claims in excess of the limits of, or outside the coverage of, applicable insurance at the time and to the extent they are probable and estimable. In accordance with ASC 450 - Contingencies , the Company accrues anticipated costs of settlement, damages, losses for liability claims and, under certain conditions, costs of defense, based upon historical experience or to the extent specific losses are probable and estimable. Otherwise, the Company expenses these costs as incurred. If the best estimate of a probable loss is a range rather than a specific amount, the Company accrues the amount at the lower end of the range.
The Company’s accruals for legal matters that were probable and estimable were not material at December 31, 2025 and 2024. We continue 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 and lawsuits, applicable insurance policy limits are and (iii) the 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 resolutions of these matters. Based upon the AM Company ratings of these third-party insurers, management does not believe there is a substantial risk of an insurer’s material non-performance related to any current insured .
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 14 Leases
Substantially all of the Company's leases are classified as operating leases and primarily represent real estate leases for office space used to conduct the Company's business that expire on various dates through 2041 . Leases generally contain renewal options and escalation clauses based upon increases in the lessors’ operating expenses and other charges. The Company anticipates that most of these leases will be renewed or replaced upon expiration.
The Company assesses at inception of a contract if it contains a lease. This assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset.
The right-of-use asset is initially measured at cost, which is primarily composed of the initial lease liability, plus any initial direct costs incurred, less any lease incentives received. The lease liability is initially measured at the present value of the minimum lease payments through the term of the lease. Minimum lease payments are discounted to present value using the incremental borrowing rate at the lease commencement date, which approximates the rate of interest the Company expects to pay on a secured borrowing in an amount equal to the lease payments for the underlying asset under similar terms and economic conditions. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a total term of 12 months or less. The effect of short-term leases on the Company’s right-of-use asset and lease liability would not be significant. The balances and classification of operating lease right-of-use assets and operating lease liabilities within the Consolidated Balance Sheets as of December 31, 2025 and 2024 is as follows:
(in millions)
December 31, 2025
December 31, 2024
Balance Sheet
Assets:
Operating lease right-of-use assets
Operating lease assets
Total assets
Liabilities:
Current operating lease liabilities
Accrued expenses and other liabilities
Non-current operating lease liabilities
Operating lease liabilities
Total liabilities
As of December 31, 2025, the Company has entered into future lease agreements expected to commence in 2026 consisting of undiscounted lease liabilities of $ 37 million.
Variable lease cost represents lease payments that are based on an index or similar rate. They are initially measured using the index or rate in effect at lease commencement and are based on the minimum payments stated in the lease. Additional payments based on the change in an index or rate, or payments based on a change in the Company's portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred.
Lease expense for operating leases consists of the lease payments, inclusive of lease incentives, plus any initial direct costs, and is recognized on a straight-line basis over the lease term. Included in lease expense are any variable lease payments incurred in the period that were not included in the initial lease liability.
The components of lease cost for operating leases for the 12 months ended December 31, 2025 and 2024 were:
(in millions)
For the year
ended December 31, 2025
For the year
ended December 31, 2024
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 December 31, 2025 were:
Weighted average remaining lease term
Weighted average discount rate
Maturities of the operating lease liabilities by fiscal year at December 31, 2025 for the Company's operating leases are as follows:
(in millions)
Operating Leases
Thereafter
Total undiscounted lease payments
Less: Imputed interest
Present value of future lease payments
Supplemental cash flow information for operating leases:
(in millions)
For the year
ended December 31, 2025
For the year
ended December 31, 2024
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 15 Segme nt Information
In conjunction with the acquisition of Accession in the third quarter of 2025, the Company realigned its business from three to two segments. As a result of the segment reorganization, the Company consolidated its Programs and Wholesale Brokerage segments into a new Specialty Distribution segment. Beginning in the third quarter of 2025, the Company reports its financial results in the following two reportable segments: (i) the Retail segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers, and non-insurance risk-mitigating products through our F&I businesses; and (ii) the Specialty Distribution segment, which consists of our programs, wholesale brokerage and specialty businesses. Our programs businesses which act as MGUs, provide targeted products and services designated for specific industries, trade groups, governmental entities and market niches, which are delivered to the insured directly, to affinity groups, through wholesale brokers or through a global network of independent agents, including Brown & Brown retail agents. Our wholesale brokerage businesses underwrite and place excess and surplus commercial and personal lines insurance, typically for specialized or hard-to-place types of risks, primarily through a global network of independent agents and brokers, including Brown & Brown retail agents. Our specialty business offers solutions across affinity and administrative services, captives, reinsurance, travel/accident, warranty, and life & health.
The balances presented for periods prior to December 31, 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 operations earned $ 843 million , $ 665 million and $ 527 million of total revenues for the years ended December 31, 2025, 2024 and 2023, respectively.
The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Intersegment revenues are eliminated.
The Company's chief operating decision maker (" CODM "), the president and chief executive officer, regularly receives total revenue, 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 table.
Year Ended December 31, 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
Year Ended December 31, 2024
(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
Year Ended December 31, 2023
(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
(1) "Other" includes any income and expenses not allocated to reportable segments and corporate-related items.
(2) Significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
NOTE 16 Insurance Company S ubsidiary Operations
The Company operates a write-your-own flood insurance carrier, Wright National Flood Insurance Company. WNFIC’s underwriting business consists of policies w ritten 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 100 % ceded to a highly rated reinsurance carrier.
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 $ 1,153 million and $ 1,151 million, respectively, as of December 31, 2025. The assets of the consolidated VIE insurance operations can only be used to settle the obligations of the consolidated VIE insurance operations and the creditors and beneficiaries of the liabilities of the consolidated VIE insurance operations do not have recourse to the Company.
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 customers 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 customer-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 customer-owned captive cells such that the Company’s SCIC operations have minimal 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 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:
(in millions)
Written
Earned
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 the NFIP are 100.0 % ceded to FEMA, for which WNFIC received a 29.1 % gross expense allowance from January 1, 2025 through September 30, 2025 and a 28.4 % gross expense allowance from October 1, 2025 through December 31, 2025. For the years ended, December 31, 2025 and 2024, the Company ceded $ 1,075 million and $ 1,001 million , respectively, of written premiums to FEMA for NFIP policies of $ 3 m illion and $ 4 million, respectively, to highly rated carriers, for excess flood policies.
As of December 31, 2025, the Consolidated Balance Sheets contained Reinsurance recoverable of $ 167 million and Prepaid reinsurance premiums of $ 553 million which are related to the WNFIC business. As of December 31, 2024, the Consolidated Balance Sheets contained reinsurance recoverable of $ 1,525 million and prepaid reinsurance premiums of $ 520 million . For flood policies, there was no change in the balance in the reserve for losses and loss adjustment expense net of reinsurance recoverable for the years ended December 31, 2025 and 2024, as the Company's direct premiums written were 100.0 % ceded to two reinsurers. The gross balance of the reserve for losses and loss adjustment expense for the WNFIC, excluding related reinsurance recoverable, was $ 167 million as of December 31, 2025 and $ 1,525 million as of December 31, 2024.
Captives
As of December 31, 2025, the Consolidated Balance Sheet contained the following balances related to the Captives: deferred acquisition costs of $ 12 million, prepaid reinsurance premiums of $ 426 million, reinsurance payable of $ 301 million, the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, of $ 501 million and unearned premiums of $ 499 million. As of December 31, 2024 , the Consolidated Balance Sheet contained the following balances related to the Captives: deferred acquisition costs of $ 12 million, reinsurance payable of $ 5 million, the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, of $ 14 million and unearned premiums of $ 57 million.
NOTE 17 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 $ 250 million each (unless otherwise approved by the board of directors), negotiated private transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.
On October 22, 2025, the board of directors approved an additional $ 1,251 million increase to our existing share repurchase authorization, bringing our total remaining repurchase capacity at that time to approximately $ 1,500 million of the Company's outstanding common stock.
During 2025, the Company repurchased 1,255,970 shares at an average price of $ 79.62 for a total of $ 100 million. During 2024, the Company did no t repurchase any shares. At December 31, 2025 , the remaining amount authorized by our board of directors for share repurchases was approximately $ 1,400 million. Under the authorized repurchase programs, the Company has repurchased approximately 21 million shares for an aggregate cost of approximately $ 848 million between 2014 and 2025.
During 2025, the Company paid a cumulative dividend of $ 0.62 per share for a total of $ 193 million . During 2024, the Company paid a cumulative dividend of $ 0.54 per share for a total of $ 154 million . On January 21, 2026 the board of directors approved a dividend of $ 0.165 per share payable on February 11, 2026 to shareholders of record on February 4, 2026 .
On June 10, 2025, the Company entered into an Underwriting Agreement with J.P. Morgan Securities LLC and BofA Securities, Inc., as representatives of the several underwriters named therein, with respect to the offer and sale by the Company of 43,137,254 shares of the Company’s common stock, par value $ 0.10 per share (the “Common Stock”) at a per share offering price of $ 102.00 for an aggregate purchase price for net proceeds of $ 4,315 million after underwriting discounts and fees and expenses. The Company closed the offering of the shares of Common Stock on June 12, 2025. The Company used the net proceeds of the offerings of the shares of Common Stock and the Notes, together with cash on hand, to fund the cash consideration payable under the Merger Agreement and to pay fees and expenses associated with the foregoing.
As part of the consideration for the Accession acquisition, the Company issued approximately $ 1,045 million of the Common Stock to the selling shareholders, a portion of which is held in escrow, based on the market value of the shares at closing. The number of shares issued was calculated using the Company’s closing stock price of $ 110.57 per share on June 6, 2025.
Excluding the shares issued to the selling shareholders as consideration for the Accession acquisition, during 2025, the Company issued 271,532 shares valued at $ 21 million associated with business combinations. During 2024, the Company did no t issue shares associated with business combinations.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Brown & Brown, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Brown & Brown, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 11, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Business Combinations — Accession Risk Management Group, Inc., Purchased Customer Accounts — Refer to Note 3 to the consolidated financial statements
Critical Audit Matter Description
The Company acquired RSC Topco, Inc., the holding Company for Accession Risk Management Group, Inc. on August 1, 2025 for an aggregate purchase price of $9,608 million. The Company accounted for this acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including purchased customer accounts and other intangibles of $3,221 million. Purchased customer accounts are recorded at fair value which is determined by calculating the present value of the underlying cash flows expected to be received over the estimated future duration of the acquired customer accounts. The fair value determination of the purchased customer accounts required management to make significant estimates and assumptions related to revenue projections and the selection of discount rates.
Given the high degree of auditor judgment required to evaluate certain assumptions used to estimate the acquisition-date fair value of purchased customer accounts, we identified the evaluation of the revenue projections and discount rates used in the valuation as a critical audit matter. The estimated fair value is sensitive to changes to these assumptions.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the revenue projections and selection of the discount rates for the purchased customer accounts included the following, among others:
We tested the effectiveness of controls over the valuation of the purchased customer accounts, including management’s controls over revenue projections and selection of the discount rate.
We assessed the reasonableness of management’s revenue projections by comparing the projections to historical results of the acquired business and historical performance of the Company as well as industry and macroeconomic conditions. We also evaluated whether the assumptions used to develop projected revenue estimates were consistent with evidence obtained in other areas of the audit.
We involved valuation specialists with specialized skills and knowledge, to assist in the evaluation of the reasonableness of the (1) valuation methodology and (2) discount rates by; (1) testing the source information underlying the determination of the discount rates and developing a range of independent estimates and comparing those to the discount rates selected by management and (2) comparing the weighted average cost of capital (WACC), internal rate of return (IRR), and weighted average return on assets (WARA) to each other to determine if the total consideration paid, cash flow projections, and discount rates, and other inputs/assumptions in the valuation models were consistent with each other and tested the mathematical accuracy of the calculations.
/s/ Deloitte & Touche LLP
Tampa, Florida
February 11, 2026
We have served as the Company's auditor since 2002.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Brown & Brown, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Brown & Brown, Inc. and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 11, 2026 expressed an unqualified opinion on those financial statements.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting of Accession Risk Management Group, Inc., Tim Parkman, Inc., NBS Insurance Agency, and 6 of the 39 entities acquired during 2025 with total consideration of less than $50 million each during 2025 as described in Note 3 to the consolidated financial statements, and whose financial statements constitute 11% of total assets (excluding goodwill and intangible assets), 13% of total revenues, and 3% of total net income of the consolidated financial statement amounts as of and for the year ended December 31, 2025. Accordingly, our audit did not include the internal control over financial reporting of these acquired entities.
B asis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Tampa, Florida
February 11, 2026
Management’s Report on Internal Control over Financial Reporting
The management of Brown & Brown, Inc. and its subsidiaries (“Brown & Brown”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including Brown & Brown’s principal executive officer and principal financial officer, Brown & Brown conducted an evaluation of the effectiveness of internal control over financial reporting based upon the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In conducting Brown & Brown’s evaluation of the effectiveness of its internal control over financial reporting, Brown & Brown has excluded the following acquisitions completed by Brown & Brown during 2025: Accession Risk Management Group, Tim Parkman, Inc., NBS Insurance Agency, and six of the 39 entities acquired with total consideration of less than $50 million each during 2025 (collectively the “2025 Excluded Acquisitions”), whose financial statements constitute less than approximately 11% of total assets, 13% of total revenues, and 3% of total net income of the consolidated financial statement amounts as of and for the year ended December 31, 2025. Refer to Note 3 to the Consolidated Financial Statements for further discussion of these acquisitions and their impact on Brown & Brown’s Consolidated Financial Statements.
Based upon Brown & Brown’s evaluation under the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission , management concluded that internal control over financial reporting was effective as of December 31, 2025. Management’s internal control over financial reporting as of December 31, 2025 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.
Brown & Brown, Inc.
Daytona Beach, Florida
February 11, 2026
/s/ J. Powell Brown
/s/ R. Andrew Watts
J. Powell Brown
Chief executive officer
R. Andrew Watts
Executive vice president, chief financial officer and treasurer
