SEC Form 424B5 filed by Brown & Brown Inc.

 

SUMMARY

This summary does not contain all of the information you should consider before investing in the notes. To understand this offering fully, you should carefully read this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement and accompanying prospectus.

The Company

We are a diversified insurance agency, wholesale brokerage and insurance programs and service organization with origins dating from 1939 and are headquartered in Daytona Beach, Florida. We market and sell insurance products and services, primarily in the property, casualty and employee benefits areas. We provide our customers with quality, non-investment insurance contracts, as well as other targeted, customized risk management products and services. We primarily operate as an agent or broker and therefore, with limited exceptions, do not assume underwriting risks. Within The Wright Insurance Group, LLC, we operate 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, the program administered by the Federal Emergency Management Agency (“FEMA”). We also sell excess flood policies which are fully reinsured, thereby substantially eliminating WNFIC’s exposure to underwriting risk, as these policies are backed by either FEMA or a reinsurance carrier with an AM Best Company rating of “A” or better. 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 capitalized captive insurance facilities (the “Captives”) for the purpose of providing additional capacity to place coverage, deliver revenues and participate in underwriting results. We have traditionally participated in underwriting profits through profit-sharing contingent commissions. The Captives give us another way to continue to participate in underwriting results, while limiting exposure to underwriting claim costs. The Captives focus on property insurance for earthquake and wind exposed properties underwritten by certain of our managing general underwriters.

We may also receive from an insurance company a profit-sharing contingent commission, which is a supplemental commission based primarily on underwriting results. Fee revenues are generated by: (i) our Programs and Wholesale Brokerage segments, which earn 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. The amount of our revenues from commissions and fees is a function of several factors, including continued new business production, retention of existing customers, acquisitions and fluctuations in insurance premium rates and insurable exposure units, which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, 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.

As of December 31, 2024, our activities were conducted in 315 domestic locations in 44 states, and 201 international locations in Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Hong Kong Special Administrative Region of the People’s Republic of China, Republic of Ireland, Italy, Malaysia, the Netherlands, Singapore, United Arab Emirates and the United Kingdom.

Recent Developments

Proposed Transaction

On June 10, 2025, we entered into the Merger Agreement, by and among RSC, the Company, Encore Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”) and Kelso RSC (Investor), L.P., a Delaware limited partnership, solely in its capacity as the equityholder representative, pursuant to which the Company, through the consummation of the Merger described below, will acquire RSC for an aggregate purchase price of $9.825 billion, payable at the closing of the Merger (the “Closing”), subject to certain customary post-closing adjustments as set forth in the Merger Agreement (the “Transaction”). After adjustments pursuant to the Merger Agreement, the net merger consideration payable at Closing is expected to be approximately $9.4 billion, comprised of approximately $8.1 billion in cash and approximately $1.3 billion in shares of our common stock, par value $0.10 per share (our “common stock”). The number of shares of our common stock to be received as merger consideration will be determined using the $110.57 per share closing price of our common stock on June 6, 2025. A portion of the merger consideration will be held in escrow pursuant to certain indemnification arrangements as described below.

RSC is the holding company for Accession, a North American insurance distribution platform with a family of specialty insurance and risk management companies, including the Risk Strategies and One80 Intermediaries brands. RSC’s revenues were $430.6 million and $1.6 billion for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively. RSC’s pro forma adjusted EBITDA and pro forma adjusted EBITDA margin were $600 million and 35%, respectively, for the year ended December 31, 2024. As shown in the section titled “Selected Financial Data” in the reconciliation of RSC’s 2024 pro forma adjusted EBITDA and pro forma adjusted EBITDA margin to its 2024 total revenues, the Company’s management applied certain adjustments to RSC’s financial information to calculate RSC’s pro forma adjusted EBITDA and pro forma adjusted EBITDA margin, including with respect to compensation expense and profit-sharing contingent commission items. See also “Risk Factors—The financial information related to RSC presented in this prospectus includes certain pro forma non-GAAP measures. Investors are cautioned not to place undue reliance on such information.” In connection with the closing of the Transaction, we will combine our Programs and Wholesale Brokerage segments into a new Specialty Distribution segment.

Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, at the Closing, Merger Sub will merge with and into RSC, following which the separate existence of Merger Sub will cease (the “Merger”). RSC will continue its existence as the surviving corporation of the Merger as a wholly owned subsidiary of the Company.

The Merger Agreement contains representations, warranties, covenants and indemnities related to the Transaction that are customary for a transaction of this nature. The completion of the Transaction is subject to and dependent upon customary closing conditions, including the receipt of applicable regulatory approvals. The parties previously submitted filings in respect of the Transaction under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the waiting period for such filings has already expired. The Merger Agreement includes customary termination provisions for the parties, including if, subject to certain exceptions: (a) the Closing has not occurred on or prior to the Expiration Date (as defined in the Merger Agreement) and (b) the other party has breached its representations, warranties or covenants in the Merger

Agreement and such breach would cause certain conditions in the Merger Agreement not to be satisfied, subject to certain negotiated cure periods. The Company’s obligations under the Merger Agreement are not conditioned on the completion of this offering, the Common Stock Offering or the receipt of any specific financing for the Transaction.

This offering is not conditioned on the closing of the Transaction or the Common Stock Offering, and there can be no assurance that either the Common Stock Offering or the Transaction will be completed. See “Risk Factors—The Transaction may not be completed within the expected timeframe, or at all, and the pendency of the Transaction could adversely affect our business, financial condition, results of operations and cash flows.”

If we do not consummate the Transaction on or prior to the Outside Date, or, if on or prior to such date, we notify the trustee in writing that the Merger Agreement is terminated, then in either case, we must redeem all of the SMR Notes at a redemption price equal to 101% of the principal amount of such notes, plus accrued and unpaid interest to, but not including, the special mandatory redemption date. The 20  notes are not subject to the special mandatory redemption. See “Description of Notes—Special Mandatory Redemption.”

This offering is intended to be part of the financing for the Transaction, together with any cash raised in the Common Stock Offering and cash on hand. However, the closing of this offering is not contingent upon the consummation of the Transaction, which, if completed, will occur after the closing of this offering. The Transaction is expected to close in the third quarter of 2025, subject to receipt of required regulatory approvals. There can be no assurance that we will be able to consummate the Transaction on a timely basis or at all. See “Risk Factors.”

Indemnification Arrangement

One of RSC’s subsidiaries, Oxford Risk Management Group LLC (“Oxford”), has historically operated a captive management insurance program that provides, through the use of segregated cells, commercial and traditional captive risk management strategies to clients. Under this captive program, Oxford had facilitated the issuance of financial guarantee and final judgment preservation policies for segregated captive cells (the “FG Policies”). Oxford no longer facilitates the issuance of such policies.

In 2024, Oxford restructured the domicile of certain of the FG Policies by moving policies from existing combined Tennessee and North Carolina captive cells to a newly-formed, Bermuda special purpose insurer (the “Restructuring”). Following the Restructuring, certain of the owners of the FG Policies filed derivative suits against Oxford, alleging that Oxford had engaged in deceptive practices, misrepresentation, and bad faith in executing the Restructuring by moving the FG Policies to the Bermuda special purpose insurer, which had $200 million of coverage capacity, which was less than the total capacity of the combined Oxford captive cell structure, alleged by the plaintiffs to exceed more than $1 billion. The plaintiffs further alleged that Oxford did not secure the required approvals from either North Carolina or Tennessee regulators prior to the Restructuring. In connection with Oxford’s submission of change of captive plan operations materials to the North Carolina regulators with respect to the Restructuring, the North Carolina Department of Insurance notified Oxford in April 2025 that it is requiring Oxford to unwind the Restructuring, though no such unwinding has yet occurred.

Pursuant to the Merger Agreement, an aggregate of $750 million of merger consideration—consisting of cash and shares of our common stock—will be placed in escrow (the “Indemnity Escrow Fund”) to secure the indemnification obligations of the equityholders with respect to specified liabilities (the “Special Indemnified Matters”) related to the FG Policies and the unwinding of the Restructuring. Specifically, these Special Indemnified Matters include liabilities arising out of or relating to the Restructuring, litigation relating to the foregoing, costs and liabilities associated with the run-off and administration of the FG Policies, and related financing, tax and mitigation costs. With respect to indemnification claims arising from the FG Policies or related

litigation, payments will first be made from a separate capital pool maintained by the Oxford pool related specifically to the FG Policies (to the extent available), followed by payment from the Indemnity Escrow Fund. The Indemnity Escrow Fund will remain in place until the later of: (i) a determination by the FG Committee (as defined in the Merger Agreement) that no further obligations remain under the FG Policies and (ii) a determination by the FG Committee that no reserves are required for pending or reasonably anticipated Special Indemnified Matters. Once all claims related to the FG Policies and the Restructuring are resolved, any amounts remaining in the Indemnity Escrow Fund will be disbursed to the equityholders of RSC in proportion to the initial contribution to the Indemnity Escrow Fund.

Bridge Loan Facility

In connection with the Transaction, we also entered into a commitment letter (the “Bridge Commitment Letter”) with Bank of America, N.A., BofA Securities, Inc. and JPMorgan Chase Bank, N.A. (the “Bridge Lenders”). The Bridge Commitment Letter provides for a commitment by certain Bridge Lenders to provide up to $9.4 billion of loans under a 364-day senior unsecured bridge term loan facility (the “Bridge Loan Facility”) to fund a portion of the consideration for the Transaction and to pay related fees and expenses. Commitments under the Bridge Commitment Letter will be permanently reduced by, among other things, net cash proceeds of certain equity issuances, debt incurrences, asset sales and the committed amounts of any term loan facility or new or amended revolving credit facility. The commitments of the underwriters or their respective affiliates with respect to the Bridge Loan Facility will be reduced on a dollar-for-dollar basis by the gross proceeds from the notes. See “Underwriting.”

Common Stock Offering

Concurrently with this offering, we have also made a public offering (the “Common Stock Offering”) of $4,000 million in shares of our common stock. We have granted the underwriters of the Common Stock Offering a 30-day option to purchase up to an additional $400 million in shares of our common stock. The closing of this offering is not conditioned upon the closing of the Common Stock Offering, and the closing of the Common Stock Offering is not conditioned upon the closing of this offering. It is possible that this offering occurs and the Common Stock Offering does not occur, and vice versa. The closing of the Transaction is also not conditioned upon the closing of the Common Stock Offering. We cannot assure you that the Common Stock Offering will be completed on the terms described herein, or at all. Nothing contained herein shall constitute an offer to sell or a solicitation of an offer to buy our common stock. Certain of the underwriters of this offering are also underwriters in the Common Stock Offering.

Corporate Information

Our principal executive offices are located at 300 North Beach Street, Daytona Beach, Florida 32114. Our telephone number is (386) 252-9601. Our website is https:// www.bbrown.com/us/. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this prospectus supplement, the accompanying prospectus or the documents incorporated by reference herein or therein.

The Offering

The following summary contains basic information about this offering. This summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus supplement and the accompanying prospectus. For a more complete description of the notes, see “Description of Notes” in this prospectus supplement.

 

Issuer

Brown & Brown, Inc.

 

Notes Offered

$     aggregate principal amount of notes, consisting of:

 

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$    aggregate principal amount of 20 notes;

 

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$    aggregate principal amount of 20 notes;

 

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$    aggregate principal amount of 20 notes;

 

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$     aggregate principal amount of 20 notes;

 

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$    aggregate principal amount of 20 notes; and

 

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$    aggregate principal amount of 20 notes.

 

Maturity

Unless earlier redeemed or repurchased by us:

 

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the 20 notes will mature on     , 20 ;

 

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the 20 notes will mature on     , 20 ;

 

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the 20 notes will mature on     , 20 ;

 

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the 20 notes will mature on     , 20 ;

 

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the 20 notes will mature on     , 20 ; and

 

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the 20 notes will mature on     , 20 .

Interest Rate and Interest Payment Dates

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% per year on the principal amount of the 20 notes;

 

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% per year on the principal amount of the 20 notes;

 

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% per year on the principal amount of the 20 notes;

 

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% per year on the principal amount of the 20 notes;

 

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% per year on the principal amount of the 20 notes; and

 

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% per year on the principal amount of the 20 notes.

 

Interest on the notes is payable semi-annually in arrears on           and           of each year, commencing on           , 20  .

 

Interest on the notes will accrue from     , 2025.

 

Ranking

The notes will be senior unsecured obligations of Brown & Brown, Inc. and will rank equally with all of our other senior unsecured indebtedness from time to time outstanding.

 

As of March 31, 2025, we had $3,806 million of outstanding senior unsecured indebtedness for borrowed money, and our subsidiaries had no indebtedness for borrowed money outstanding.

Special Mandatory Redemption

If we do not consummate the Transaction on or prior to the Outside Date, or, if on or prior to such date, we notify the trustee in writing that the Merger Agreement is terminated, then, in either case, we must redeem all of the SMR Notes at a redemption price equal to 101% of the principal amount of such notes, plus accrued and unpaid interest to, but not including, the special mandatory redemption date. The 20  notes will not be subject to the special mandatory redemption. See “Description of Notes—Special Mandatory Redemption.”

 

Optional Redemption

We may, at our option, redeem the notes of any series, in whole or in part at any time and from time to time, before their maturity at the redemption prices described under “Description of Notes—Optional Redemption.”

 

Change of Control Repurchase Event

Upon a Change of Control Triggering Event (as defined under “Description of Notes—Certain Covenants—Purchase of Notes Upon a Change of Control Triggering Event”), we will be required to make an offer to each holder of notes to repurchase all or any part of that holder’s notes at a repurchase price in cash equal to 101% of the aggregate principal amount of such notes repurchased, plus any accrued and unpaid interest to the date of repurchase.

 

Covenants

The notes and the indenture (as defined in this prospectus supplement) governing the notes contain certain covenants applicable to us. See “Description of Notes—Certain Covenants.”

 

Additional Notes

We may, without the consent of the noteholders, issue additional notes of any series having the same ranking and the same interest rate, maturity and other terms (other than the issue date and public offering price) as the notes of the applicable series offered by this prospectus supplement; provided, however, such additional notes must be fungible with the notes of the applicable series offered by this prospectus supplement for U.S. federal income tax purposes. Any such additional notes will be a part of the series of the previously issued notes having the same terms.

 

Sinking Fund

None.

 

Use of Proceeds

We estimate that the net proceeds from this offering will be approximately $    million, after deducting underwriting discounts and our estimated offering expenses. We intend to use the net proceeds from this offering, together with any net proceeds from the Common Stock Offering and cash on hand, to fund the cash consideration payable under the Merger Agreement, and to pay fees and expenses associated with the foregoing. The closing of this offering is not contingent on the consummation of the Transaction. If we do not consummate the Transaction on or prior to the Outside Date or, if prior to such date, we notify the trustee in writing that the Merger Agreement is terminated, then, in either case, we will be required to redeem the SMR Notes at a special mandatory redemption price (as defined in this prospectus supplement) equal to 101% of the

principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date. See “Description of Notes—Special Mandatory Redemption.”

 

If we do not consummate the Transaction on or prior to the Outside Date or, if on or prior to such date, we notify the trustee in writing that the Merger Agreement is terminated, then, in either case, we expect to use the net proceeds from the sale of the 20   notes for general corporate purposes.

 

Listing

We do not intend to list the notes on any securities exchange. The notes will be new securities for which there are currently no public markets.

 

Governing Law

The notes and the indenture governing the notes will be governed by the laws of the State of New York.

 

Trustee

U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association).

 

Risk Factors

Investing in the notes involves risk. See “Risk Factors” beginning on page S-23 of this prospectus supplement and page 5 of the accompanying prospectus for a discussion of factors you should consider carefully before deciding to invest in the notes.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On June 10, 2025, the Company entered into the Merger Agreement, pursuant to which the Company, through the consummation of certain transactions, including the Merger, will acquire RSC for an aggregate purchase price of approximately: (i) $8,525 million in cash and (ii) shares of our common stock, with a value of approximately $1,300 million (based on the trading price of our common stock at the close of business on June 6, 2025), issuable to certain stockholders of RSC (the “Equity Consideration”). A portion of the merger consideration will be held in escrow as described in Note 4 to this unaudited pro forma condensed combined financial information. RSC is the holding company for Accession, a North American insurance distribution platform with a family of specialty insurance and risk management companies, including the Risk Strategies and One80 Intermediaries brands.

Pursuant to the Merger Agreement, and subject to the terms and conditions set forth therein, at the Closing, Merger Sub will merge with and into RSC, following which the separate existence of Merger Sub will cease. RSC will continue its existence as the surviving corporation of the Merger as a wholly owned subsidiary of the Company.

The Company plans to fund the purchase price with a combination of: (i) net proceeds from this offering; (ii) net proceeds from the Common Stock Offering, and (iii) the Equity Consideration (together, the “Acquisition Financing”), described further in Note 3 to this unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information set forth below has been prepared in accordance with Article 11 of Regulation S-X, as amended, and should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. For purposes of this section, “RSC” refers to RSC and its consolidated subsidiaries.

The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with:

 

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Audited consolidated financial statements and accompanying notes of the Company as of and for the year ended December 31, 2024 (as contained in its Annual Report on Form 10-K filed with the SEC on February 13, 2025);

 

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Unaudited condensed consolidated financial statements and accompanying notes of the Company as of and for the three months ended March 31, 2025 (as contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 filed with the SEC on April 28, 2025); and

 

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Audited consolidated financial statements and accompanying notes of RSC Topco, Inc. and Subsidiaries as of and for the year ended December 31, 2024 and unaudited condensed consolidated financial statements and accompanying notes of RSC Topco, Inc. and Subsidiaries as of and for the three months ended March 31, 2025 (as contained in Exhibits 99.3 and 99.4 to the Company’s Current Report on Form 8-K filed with the SEC on June 10, 2025).

The unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of the Company and the historical consolidated financial statements of RSC, as adjusted to give effect to the Transaction and the Acquisition Financing (collectively, the “Transactions”). The unaudited pro forma condensed combined balance sheet as of March 31, 2025 gives effect to the Transactions as if they occurred or had become effective on March 31, 2025. The unaudited pro forma condensed combined statements of income for the three months ended March 31, 2025, and for the year ended December 31, 2024, give effect to the Transactions as if they occurred or had become effective on January 1, 2024. Further information about this basis of presentation is provided in Note 1 to this unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information has been prepared by using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has been treated as the acquirer in the Transaction for accounting purposes in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The unaudited pro forma condensed combined financial information is provided for illustrative and informational purposes only and does not purport to represent or be indicative of the consolidated results of operations or financial condition of the Company had the Transactions been completed as of the dates presented and should not be construed as representative of the future consolidated results of operations or financial condition of the combined company.

Provisional estimates of fair value of RSC’s assets acquired and liabilities assumed will be subsequently reviewed and finalized within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments. Fair value adjustments, if any, are most common to the values established for amortizable intangible assets, with the offset to goodwill, net of any income tax effect. Independent third-party valuation specialists were used to assist in determining the fair value of assets acquired and liabilities assumed for the Transaction. As of this filing, the specialists have not completed their analysis; and thus, these fair value estimates are provisional. These provisional fair value estimates will be subsequently reviewed and adjusted based on the results of this valuation.

As a result of the foregoing, the pro forma adjustments are preliminary and have been made solely for the purpose of providing the unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final acquisition accounting may arise, and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information and the combined company’s future results of operations and financial position. See “Risk Factors—The unaudited pro forma condensed combined financial information reflecting the Transaction included in this prospectus supplement is based on assumptions and is subject to change based on various factors” for further information.

The unaudited pro forma condensed combined financial information does not reflect any expected cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the Transactions or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of March 31, 2025

 

(in millions)		Brown & Brown Historical				RSC Adjusted Historical (Note 2)				Acquisition Financing Adjustments				Note 3				Other Transaction Accounting Adjustments				Note 4				Pro Forma Combined
ASSETS
Current Assets:
Cash and cash equivalents		$	669			$	171			$	7,890				(a)(b)			$	(7,857	)			(a)			$	873
Fiduciary cash			1,771				561				—								—								2,332
Commission, fees and other receivables			1,083				460				—								—								1,543
Fiduciary receivables			1,136				292				—								—								1,428
Reinsurance recoverable			447				262				—								—								709
Prepaid reinsurance premiums			480				361				—								—								841
Other current assets			331				142				—								—								473
Total current assets			5,917				2,249				7,890								(7,857	)							8,199
Fixed assets, net			327				47				—								—								374
Operating lease assets			197				76				—								—								273
Goodwill			8,111				3,523				—								3,144				(f	)			14,778
Amortizable intangible assets, net			1,821				1,277				—								1,768				(b	)			4,866
Other assets			387				53				—								—								440
Total assets		$	16,760			$	7,225			$	7,890							$	(2,945	)						$	28,930
LIABILITIES AND EQUITY
Current Liabilities:
Fiduciary liabilities		$	2,907			$	887			$	—							$	—							$	3,794
Losses and loss adjustment reserve			462				275				—								—								737
Unearned premiums			542				383				—								—								925
Accounts payable			481				365				—								50				(k	)			896
Accrued expenses and other liabilities			463				311				—								65				(c	)			839
Current portion of long-term debt			75				67				—								(67	)			(e	)			75
Total current liabilities			4,930				2,288				—								48								7,266
Long-term debt less unamortized discount and debt issuance costs			3,731				4,574				3,965				(b	)			(4,574	)			(e	)			7,696
Operating lease liabilities			186				60				—								—								246
Deferred income taxes, net			701				34				—								117				(d	)			852
Other liabilities			371				233				—								750				(a	)			1,354
Equity:
Redeemable Preferred Stock			—				363				—								(363	)			(e	)			—
Common stock			31				16				4				(a	)			(15	)			(a	)(e)			36
Additional paid-in capital			1,107				953				3,921				(a	)			(154	)			(a	)(e)			5,827
Treasury stock			(748	)			—				—								—								(748	)
Accumulated other comprehensive income			15				(10	)			—								10				(e	)			15
Non-controlling interests			20				—				—								—								20
Retained earnings			6,416				(1,286	)			—								1,236				(e	)(k)			6,366
Total equity and mezzanine equity			6,841				36				3,925								714								11,516
Total liabilities and equity		$	16,760			$	7,225			$	7,890							$	(2,945	)						$	28,930

See accompanying notes to unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the Three Months Ended March 31, 2025

 

(in millions, except per share data)		Brown & Brown Historical				RSC Adjusted Historical (Note 2)				Acquisition Financing Adjustments				Note 3				Other Transaction Accounting Adjustments				Note 4				Pro Forma Combined
REVENUES
Commissions and fees		$	1,385			$	414			$	—							$	—								$1,799
Investment and other income			19				8				—								—								27
Total revenues			1,404				422				—								—								1,826
EXPENSES
Employee compensation and benefits			683				229				—								—								912
Other operating expenses			186				79				—								—								265
Loss on disposal			2				—				—								—								2
Amortization			53				37				—								16				(g	)(h)			106
Depreciation			11				3				—								—								14
Interest			46				111				58				(c	)			(111	)			(h	)			104
Change in estimated acquisition earn-out payables			(4	)			17				—								—								13
Total expenses			977				476				58								(95	)							1,416
Income (loss) before income taxes			427				(54	)			(58	)							95								410
Income taxes			93				43				(14	)			(d	)			(33	)			(i	)(j)			89
Net income (loss) before non-controlling interests			334				(97	)			(44	)							128								321
Less: Net income attributable to non-controlling interests			3				—				—								—								3
Net income (loss) attributable to the Company		$	331			$	(97	)		$	(44	)						$	128							$	318
Net income per share:
Basic		$	1.16																							$	0.98
Diluted		$	1.15																							$	0.96

See accompanying notes to unaudited pro forma condensed combined financial statements.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

For the Twelve Months Ended December 31, 2024

 

(in millions, except per share data)		Brown & Brown Historical				RSC Adjusted Historical (Note 2)				Acquisition Financing Adjustments				Note 3				Other Transaction Accounting Adjustments				Note 4				Pro Forma Combined
REVENUES
Commissions and fees		$	4,705			$	1,599			$	—							$	—							$	6,304
Investment and other income			100				37				—								—								137
Total revenues			4,805				1,636				—								—								6,441
EXPENSES
Employee compensation and benefits			2,406				849				—								—								3,255
Other operating expenses			710				311				—								50				(k	)			1,071
Gain on disposal			(31	)			—				—								—								(31	)
Amortization			178				143				—								67				(g	)(h)			388
Depreciation			44				21				—								—								65
Interest			193				474				233				(c	)			(474	)			(h	)			426
Change in estimated acquisition earn-out payables			2				188				—								—								190
Total expenses			3,502				1,986				233								(357	)							5,364
Income (loss) before income taxes			1,303				(350	)			(233	)							357								1,077
Income taxes			301				18				(56	)			(d	)			(11	)			(i	)(j)			252
Net income (loss) before non-controlling interests			1,002				(368	)			(177	)							368								825
Less: Net income attributable to non-controlling interests			9				—				—								—								9
Net income (loss) attributable to the Company		$	993			$	(368	)		$	(177	)						$	368							$	816
Net income per share:
Basic		$	3.48																							$	2.51
Diluted		$	3.46																							$	2.47

See accompanying notes to unaudited pro forma condensed combined financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1. Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared in connection with the Company’s acquisition of RSC.

The unaudited pro forma condensed combined financial information and related notes were prepared in accordance with Article 11 of Regulation S-X and are based on the historical consolidated financial statements of the Company and the historical consolidated financial statements of RSC, as adjusted to give effect to the pro forma adjustments described below.

The pro forma adjustments to the unaudited pro forma condensed combined statements of income have been prepared as if the Transaction occurred on January 1, 2024. The pro forma adjustments to the unaudited pro forma condensed combined balance sheet have been prepared as if the Transaction occurred on March 31, 2025. The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements in accordance with Article 11 of Regulation S-X as amended. The pro forma adjustments are based on currently available information and certain estimates and assumptions; and therefore, the actual effect of the Transactions may materially differ from the pro forma adjustments.

The historical consolidated financial statements of the Company and RSC were prepared in accordance with U.S. GAAP.

The audited consolidated financial statements and accompanying notes of RSC as of and for the year ended December 31, 2024, and the unaudited condensed consolidated financial statements and accompanying notes of RSC as of and for the three months ended March 31, 2025, are attached as Exhibits 99.3 and 99.4 to the Company’s Current Report on Form 8-K, filed with the SEC on June 10, 2025.

The accompanying unaudited pro forma condensed combined financial information and related notes were prepared using the acquisition method of accounting in accordance with ASC 805, with the Company considered the accounting acquirer of RSC. ASC 805 requires, among other things, that the assets acquired, and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. For purposes of the unaudited pro forma condensed combined balance sheet, the purchase price consideration has been allocated to the assets acquired (including intangible assets) and liabilities assumed based upon management’s preliminary estimate of their fair values as of March 31, 2025. The excess of the purchase price consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill. Accordingly, the purchase price allocation and related adjustments reflected in the unaudited pro forma condensed combined financial information are preliminary and subject to adjustment based on a final determination of fair value. The estimated fair values of the assets and liabilities will be updated and finalized as soon as practicable, but no later than one year from the Closing.

The pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. Management has included certain reclassification and policy alignment adjustments for consistency in presentation as indicated in the subsequent notes (see Note 2 for further details). The unaudited pro forma condensed combined financial information is provided for informational purposes only and does not purport to represent or be indicative of the consolidated results of operations or financial condition of the Company had the Transaction been completed as of the dates presented. This information should not be construed as representative of the future consolidated results of operations or financial condition of the combined company.

Note 2. Reclassification Adjustments

Certain balances were reclassified from RSC’s historical consolidated financial statements to conform the presentation with that of the Company. These reclassifications are based on management’s preliminary analysis and have no effect on separately reported net assets, equity or net income attributed to stockholders of RSC.

When the Company completes its detailed review of RSC’s chart of accounts and accounting policies, additional reclassification adjustments could be identified that, when conformed, could have a material impact on the combined company’s financial information. Refer to the table below for a summary of the reclassification adjustments made to RSC’s unaudited condensed consolidated balance sheet as of March 31, 2025, to conform its presentation to that of the Company.

 

(in millions)				As of March 31, 2025
Brown & Brown Presentation		RSC Presentation		RSC Unadjusted Historical				Reclassification Adjustments				Note				RSC Adjusted Historical
Cash and cash equivalents		Cash and cash equivalents		$	171											$	171
Fiduciary cash		Restricted Cash			561												561
Commission, fees and other receivables		Premiums, commissions and fees receivable, net			752				(292	)			(a	)			460
Fiduciary receivables					—				292				(a	)			292
Reinsurance recoverable		Reinsurance recoverables			262				—								262
Prepaid reinsurance premiums		Deferred reinsurance premiums ceded			361				—								361
Other current assets		Prepaid expenses and other current assets			142				—								142
Fixed assets, net		Property and equipment, net			47				—								47
Operating lease assets					—				76				(b	)			76
Goodwill		Goodwill			3,523				—								3,523
Amortizable intangible assets, net		Intangible assets, net			1,277				—								1,277
Other assets		Other long-term assets			129				(76	)			(b	)			53
Total assets		Total assets		$	7,225			$	—							$	7,225
Fiduciary liabilities		Premiums payable			887				—								887
Losses and loss adjustment reserve		Loss and loss adjustment expense reserves			275				—								275
Unearned premiums		Unearned premiums			383				—								383
Accounts payable		Accounts payable and accrued expenses			154				211				(c)				365
		Ceded premiums payable			145				(145	)			(c)				—
		Current portion of purchase agreement obligations			154				(154	)			(c)				—
Accrued expenses and other liabilities		Other liabilities			223				88				(c)				311
Current portion of long-term debt		Current portion of long-term debt			67				—								67
Long-term debt less unamortized discount and debt issuance costs		Long-term debt, net of debt discount and issuance costs			4,574				—								4,574
Operating lease liabilities					—				60				(d)				60
Deferred income taxes, net					—				34				(d)				34
Other liabilities		Other long-term liabilities			73				160				(d)				233
		Purchase agreement obligation			254				(254	)			(d)				—
Total liabilities					7,189				—								7,189

(in millions)				As of March 31, 2025
Brown & Brown Presentation		RSC Presentation		RSC Unadjusted Historical				Reclassification Adjustments				Note				RSC Adjusted Historical
		Redeemable Preferred Stock			363				—								363
Common stock		Common stock			16				—								16
Additional paid-in capital		Additional paid-in capital			953				—								953
Treasury stock					—				—								—
Accumulated other comprehensive income		Accumulated other comprehensive loss			(10	)			—								(10	)
Non-controlling interests					—				—								—
Retained earnings		Accumulated deficit			(1,286	)			—								(1,286	)
Total equity		Total shareholders’ equity			(327	)			—								(327	)
Total liabilities and equity		Total liabilities, mezzanine equity and shareholders’ equity		$	7,225			$	—							$	7,225

(a)	Represents the reclassification of a portion of RSC’s Premiums, commissions and fees receivable, net to Fiduciary receivables.

(b)	Represents reclassification of a portion of RSC’s Other long-term assets to Operating lease assets.

(c)	Represents reclassification of a portion of RSC’s Accounts payable and accrued expenses to Accrued expenses and other liabilities and reclassification of RSC’s Ceded premiums payable and Current portion of purchase agreement obligation to Accounts payable.

(d)	Represents reclassification of a portion of RSC’s Other long-term liabilities to Operating lease liabilities and Deferred income taxes, net and reclassification of RSC’s Purchase agreement obligation to Other liabilities.

Refer to the tables below for a summary of the reclassification adjustments made to RSC’s unaudited condensed consolidated statements of income for the three months ended March 31, 2025, and for the year ended December 31, 2024, to conform its presentation to that of the Company.

 

(in millions)				For the Three Months Ended March 31, 2025
Brown & Brown Presentation		RSC Presentation		RSC Unadjusted Historical				Reclassification Adjustments				Note				RSC Adjusted Historical
Commissions and fees		Commissions		$	338			$	76				(a)(b)			$	414
		Fees			63				(63	)			(a)				—
		Contingency and profit share			24				(24	)			(a)				—
		Insurance revenue			5				(5	)			(a)				—
Investment and other income
					—				8				(c)				8
Total revenues		Total revenues			430				(8	)							422
Employee compensation and benefits		Commissions, employee compensation, and benefits			245				(16	)			(b)				229
Other operating expenses		Professional services			34				45				(d)				79
		Other expenses			45				(45	)			(d)				—
Loss on disposal					—				—								—
Amortization		Depreciation and amortization			40				(3	)			(e)				37
Depreciation					—				3				(e)				3
Interest					—				111				(f)				111
Change in estimated acquisition earn-out payables		Change in fair value of deferred purchase consideration			17				—								17
Total expenses		Total expenses			38	1			95								476
		Interest income			5				(5)				(c	)			—
		Other income, net			3				(3)				(c	)			—
		Interest expense			111				(111)				(f	)			—
Income before income taxes		Loss before income taxes			(54	)			—								(54	)
Income taxes		Income tax expense			43				—								43
Net income before non-controlling interests		Net loss			(97	)			—								(97	)
Less: Net income attributable to non-controlling interests					—				—								—
Net income attributable to the Company		Net loss		$	(97	)		$	—							$	(97	)

(a)	Represents reclassification of RSC’s Commissions, Fees, Contingency and profit share and Insurance revenue to Commissions and fees.

(b)	Represents reclassification of $16 million of third-party broker commission expense to Commission and fees.

(c)	Represents reclassification of RSC’s Interest income and Other income, net to Investment and other income.

(d)	Represents reclassification of RSC’s Professional services and Other expenses to Other operating expenses.

(e)	Represents reclassification of RSC’s Depreciation and amortization to separately present Depreciation and Amortization.

(f)	Represents reclassification of RSC’s Interest expense to Interest.

 

(in millions)				For the Year Ended December 31, 2024
Brown & Brown Presentation		RSC Presentation		RSC Unadjusted Historical				Reclassification Adjustments				Note				RSC Adjusted Historical
Commissions and fees		Commissions		$	1,296			$	303				(a	)(b)		$	1,599
		Fees			245				(245	)			(a	)			—
		Contingency and profit-share			87				(87	)			(a	)			—
		Insurance revenue			13				(13	)			(a	)			—
Investment and other income					—				37				(c	)			37
Total revenues		Total revenues			1,641				(5	)							1,636
Employee compensation and benefits		Commissions, employee compensation, and benefits			891				(42	)			(b	)			849
Other operating expenses		Professional services			134				177				(d	)			311
		Other expenses			174				(174	)			(d	)			—
Loss on disposal					—				—								—
Amortization		Depreciation and amortization			164				(21	)			(e)				143
Depreciation					—				21				(e)				21
Interest					—				474				(f)				474
Change in estimated acquisition earn-out payables		Change in fair value of deferred purchase consideration			188				—								188
Total expenses		Total expenses			1,551				435								1,986
		Interest income			18				(18	)			(c)				—
		Other income, net			19				(19	)			(c)				—
		Loss on extinguishment of long-term debt			3				(3	)			(d)				—
		Interest expense			474				(474	)			(f)				—
Income before income taxes		Loss before income taxes			(350	)			—								(350	)
Income taxes		Income tax expense			18				—								18
Net income before non-controlling interests		Net loss			(368	)			—								(368	)
Less: Net income attributable to non-controlling interests					—				—								—
Net income attributable to the Company		Net loss		$	(368	)		$	—							$	(368	)

(a)	Represents reclassification of RSC’s Commissions, Fees, Contingency and profit share and Insurance revenue to Commissions and fees.

(b)	Represents reclassification of $42 million of third-party broker commission expense to Commission and fees.

(c)	Represents reclassification of RSC’s Interest income and Other income, net to Investment and other income.

(d)	Represents reclassification of RSC’s Professional services, Other expenses and Loss on extinguishment of long-term debt to Other operating expenses.

(e)	Represents reclassification of RSC’s Depreciation and amortization to separately present Depreciation and Amortization.

(f)	Represents reclassification of RSC’s Interest expense to Interest.