BROWN & BROWN, INC. – 10-K – 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. In addition, please see
"Information Regarding Non-GAAP Financial Measures" below regarding important
information on non-GAAP financial measures contained in our discussion and
analysis.

We are a diversified insurance agency, wholesale brokerage, insurance programs
and services 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 capitalized captive insurance facilities (the "Captives")
for the purpose of having additional capacity to place coverage, drive
additional revenues and to participate in underwriting. The Company has
traditionally participated in underwriting profits through profit-sharing
contingent commissions. These Captives give us another way to deliver
incremental revenue growth and continue to participate in underwriting results
while limiting exposure to claims expenses. The Captives focus on property
insurance for earthquake and wind exposed properties underwritten by certain
managing general agents. The Captives limit the Company's exposure to claims
expenses either through reinsurance or by only participating in certain tranches
of the underwriting.

We have increased revenues every year from 1993 to 2022, with the exception of
2009, when our revenues declined 1.0%. Our revenues grew from $95.6 million in
1993 to $3.6 billion in 2022, reflecting a compound annual growth rate of 13.3%.
In the same 29-year period, we increased net income from $8.1 million to $671.8
million in 2022, a 16.5% 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 health pandemic or a reduction of
purchased limits the occurrence of catastrophic weather events all affect our
revenues. For example, higher levels of inflation, an increase the value of
insurable exposure units, or a general decline in economic activity, could
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 net new business 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 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; (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 accrued throughout the year based on actual premiums
written and are primarily received in the first and second quarters of each
subsequent year, based upon the aforementioned considerations for the prior
year(s). Over the last three years, profit-sharing contingent commissions have
averaged approximately 3.0% of commissions and fees revenue.

Fee revenues primarily relate to services other than securing coverage for our
customers, and to a lesser extent as fees negotiated in lieu of commissions. Fee
revenues are generated by: (i) our Services segment, which is primarily a
fee-based business that provides insurance-related services, including
third-party claims administration and comprehensive medical utilization
management services in both the workers' compensation and all-lines liability
arenas, as well as Medicare Set-aside services, Social Security disability and
Medicare benefits advocacy services, and claims adjusting services; (ii) our
National Programs and Wholesale Brokerage segments, which earn fees primarily
for the issuance of insurance policies on behalf of insurance companies; and
(iii) our Retail segment in our large-account customer base, where we primarily
earn fees for securing insurance for our customers, and in our automobile dealer
services ("F&I") businesses where we earn fees for

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assisting our customers with creating and selling warranty and service risk
management programs. Fee revenues as a percentage of our total commissions and
fees, represented 25.8% in 2022 and 27.4% in 2021.

For the year ended December 31, 2022, our commissions and fees growth rate was
16.9% and our consolidated Organic Revenue growth rate was 8.1%.

Historically, investment income has consisted primarily of interest earnings on
operating cash and where permitted, on premiums and advance 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 legal settlements and other
revenues.

Income before income taxes for the year ended December 31, 2022 increased by
$113.3 million, or 14.9% over 2021, driven by new business and growth from
existing customers, acquisitions we completed in the last twelve months and the
year-over-year change in estimated acquisition earn-out payables, which were
partially offset by incremental operating costs, increased amortization expense
as a result of our recent acquisitions along with increased interest expense
associated with higher average debt balances from debt issued and bank financing
in the first quarter of 2022 to fund the acquisitions of GRP (Jersey) Holdco
Limited and its businesses ("GRP"), Orchid Underwriters Agency and CrossCover
Insurance Services ("Orchid") and BdB Limited companies ("BdB") as well as
increases in the floating-rate benchmark used on our adjustable rate debt and
the net change in any gain or loss associated with the sales of businesses or
books of business.

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: Total Revenues - Adjusted,
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 and because we believe it provides
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
and that we believe are not indicative of ongoing performance. This non-GAAP
financial information should be considered in addition to, not in lieu of, the
Company's consolidated income statements 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 four 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. We
also view Total Revenues - Adjusted, 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 and EBITDAC Margin as key
performance metrics for our short-term and long-term incentive compensation
plans for executive officers and other key employees.

Beginning January 1, 2022, we include guaranteed supplemental commissions
("GSCs") as part of core commissions and fees and, therefore, GSCs are a
component of Organic Revenue. All current and prior periods contained within
this Annual Report on Form 10-K have been adjusted for this treatment. GSCs are
a stable source of revenue that are highly correlated to core commissions, so
isolating them separately provided no meaningful incremental value in evaluating
our revenue.

Beginning January 1, 2022, the following, in addition to the change in estimated
acquisition earn-out payables, are excluded from certain non-GAAP measures, as
we believe these amounts are not indicative of the ongoing operating performance
of the business and are not easily comparable from period-to-period:

•

"(Gain)/loss on disposal," a caption on our consolidated statements of income
which reflects net proceeds received as compared to net book value related to
sales of books of business and other divestiture transactions, such as the
disposal of a business through sale or closure.

•

"Acquisition/Integration Costs," which represent the acquisition and integration
costs (e.g., costs associated with regulatory filings, legal/accounting
services, due diligence and the costs of integrating our information technology
systems) arising out of our acquisitions of GRP, Orchid and BdB, which are not
expected to occur on an ongoing basis in the future.

•

The period-over-period impact of foreign currency translation ("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.

We are presenting EBITDAC - Adjusted and EBITDAC Margin - Adjusted for the
current and prior year periods contained within this Annual Report on Form 10-K
so these non-GAAP financial measures compare both periods on the same basis.

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Non-GAAP Revenue Measures

•

Total Revenues - Adjusted is our total revenues, excluding the
period-over-period impact of Foreign Currency Translation.

•

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)
the period-over-period impact of Foreign Currency Translation. 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,
(ii) Acquisition/Integration Costs and (iii) the period-over-period impact of
Foreign Currency Translation.

•

EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by Total
Revenues - Adjusted.

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 2022, we acquired 610 insurance intermediary
operations.

Critical Accounting Policies

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

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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 earned revenues starting in 2022 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
evenly over the associated policy periods.

Management determines a policy cancellation reserve based upon historical
cancellation experience adjusted in accordance with known circumstances.

Please see Note 2 "Revenues" in the "Notes to Consolidated Financial Statements"
for additional information regarding the nature and timing of our revenues.

Business Combinations and Purchase Price Allocations

We have acquired significant intangible assets through acquisitions of
businesses. These assets generally consist of purchased customer accounts,
non-compete agreements, and the excess of purchase prices over the fair value of
identifiable net assets acquired (goodwill). The determination of estimated
useful lives and the allocation of purchase price to intangible assets requires
significant judgment and affects the amount of future amortization and possible
impairment charges.

In connection with acquisitions, we record the estimated value of the net
tangible assets purchased and the value of the identifiable intangible assets
purchased, which typically consist of purchased customer accounts and
non-compete agreements. 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 of delivery
of services. Their value primarily represents the present value of the
underlying cash flows expected to be received over the estimated future duration
of the acquired customer relationships. The valuation of purchased customer
accounts involves significant estimates and assumptions concerning matters such
as cancellation frequency, expenses and discount rates. Any change in these
assumptions could affect the carrying value of purchased customer accounts.
Non-compete agreements are valued based upon their duration and any unique
features of the particular agreements. Purchased customer accounts and
non-compete agreements are amortized on a straight-line basis over the related
estimated lives and contract periods, which typically range from 3 to 15 years.
The excess of the purchase price of an acquisition over the fair value of the
identifiable tangible and intangible assets is assigned to goodwill and is not
amortized.

The recorded purchase prices for all acquisitions include an estimation of the
fair value of liabilities associated with any potential earn-out provisions,
where an earn-out is part of the negotiated transaction. 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 business.

The fair value of earn-out obligations is based upon the present value of the
expected future payments to be made to the sellers of the acquired businesses in
accordance with the provisions contained in the respective purchase agreements.
In determining fair value, the acquired business's future performance is
estimated using financial projections developed by management for the acquired
business, and this estimate reflects market participant assumptions regarding
revenue growth and/or profitability. 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 forecast earn-out payments will be made.

Intangible Assets Impairment

Goodwill is subject to at least an annual assessment for impairment, measured by
a fair-value-based test. Amortizable intangible assets are amortized over their
useful lives and are subject to an impairment review based upon an estimate of
the undiscounted future cash flows resulting from the use of the assets. 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 as a result of the qualitative assessment, it is not
determined that the fair value of the reporting unit more likely than not
exceeds the carrying amount, the Company will calculate the fair value of the
reporting unit for comparison against the carrying value. If the fair value of
the reporting unit is less than its carrying value, an impairment loss would be
recorded to the extent that the fair value of the goodwill within the reporting
unit is less than its carrying value. Fair value is estimated based upon
multiples of EBITDAC, or on a discounted cash flow basis.

Management assesses the recoverability of our goodwill and our amortizable
intangibles and other long-lived 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, 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.
Management must make assumptions regarding estimated future cash flows and other
factors to determine the fair value of these assets. If these estimates or
related assumptions change in the future, we may be required to revise the
assessment and, if appropriate, record an impairment charge. We completed our
most recent evaluation of impairment for goodwill as of November 30, 2022 and
determined that the fair value of goodwill exceeded the carrying value of such
assets. Additionally, there have been no impairments recorded for amortizable
intangible assets for the years ended December 31, 2022 and 2021.

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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.

During the first quarter of 2021, the performance conditions for approximately
1.2 million shares of the Company's common stock granted under the Company's
2010 SIP and approximately 22,000 shares of the Company's common stock granted
under the Company's 2019 SIP were determined by the Compensation Committee to
have been satisfied relative to the performance-based grants issued in 2018 and
2020. These grants had a performance measurement period that concluded on
December 31, 2020. The vesting condition for these grants requires continuous
employment for a period of up to five years from the 2018 grant date and four
years from the 2020 grant date in order for the awarded shares to become fully
vested and nonforfeitable. As a result of the awarding of these shares, the
grantees will be eligible to receive payments of dividends and exercise voting
privileges. The awarded shares will be included as issued and outstanding common
stock shares and included in the calculation of basic and diluted net income per
share.

During the first quarter of 2022, the performance conditions for approximately
1.3 million shares of the Company's common stock granted under the Company's
2010 SIP and approximately 22,000 shares of the Company's common stock granted
under the Company's 2019 SIP were determined by the Compensation Committee to
have been satisfied relative to the performance-based grants issued in 2019 and
2021. These grants had a performance measurement period that concluded on
December 31, 2021. The vesting condition for these grants requires continuous
employment for a period of up to five years from the 2019 grant date and four
years from the 2021 grant date in order for the awarded shares to become fully
vested and nonforfeitable. As a result of the awarding of these shares, the
grantees will be eligible to receive payments of dividends and exercise voting
privileges. The awarded shares will be included as issued and outstanding common
stock shares and included in the calculation of basic and diluted net income per
share.

During the first quarter of 2023, the performance conditions for approximately
970,000 shares of the Company's common stock granted under the under the
Company's 2019 SIP were determined by the Compensation Committee to have been
satisfied relative to the performance-based grants issued in 2020 and 2022.
These grants had a performance measurement period that concluded on December 31,
2022. The vesting condition for these grants requires continuous employment for
a period of up to five years from the 2020 grant date and four years from the
2022 grant date in order for the awarded shares to become fully vested and
nonforfeitable. As a result of the awarding of these shares, the grantees will
be eligible to receive payments of dividends and exercise voting privileges. The
awarded shares will be included as issued and outstanding common stock shares
and included in the calculation of basic and diluted net income per share.

Litigation and Claims

We are subject to numerous litigation 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 Consolidated 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.

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RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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, 2021 and 2020, please see Part II, Item 7 of our
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
February 22, 2022.

Financial information relating to our Consolidated Financial Results is as
follows:

(in millions, except percentages)                  2022          % Change   

2021

REVENUES

Core commissions and fees                       $  3,474.5             17.2 %    $  2,965.3
Profit-sharing contingent commissions                 88.7              7.9 %          82.2
Investment income                                      6.5              NMF             1.1
Other income, net                                      3.7             32.1 %           2.8
Total revenues                                     3,573.4             17.1 %       3,051.4
EXPENSES
Employee compensation and benefits                 1,816.9             11.0 %       1,636.9
Other operating expenses                             596.8             48.1 %         403.0
(Gain)/loss on disposal                               (4.5 )          (53.1 )%         (9.6 )
Amortization                                         146.6             22.6 %         119.6
Depreciation                                          39.2             17.7 %          33.3
Interest                                             141.2            117.2 %          65.0
Change in estimated acquisition earn-out
payables                                             (38.9 )         (196.3 )%         40.4
Total expenses                                     2,697.3             17.9 %       2,288.6
Income before income taxes                           876.1             14.9 %         762.8
Income taxes                                         204.3             16.3 %         175.7
NET INCOME                                      $    671.8             14.4 %    $    587.1
Income Before Income Taxes Margin (1)                 24.5 %                           25.0 %
EBITDAC - Adjusted (2)                          $  1,170.9             15.9 %    $  1,010.1
EBITDAC Margin - Adjusted (2)                         32.8 %                           33.2 %
Organic Revenue growth rate (2)                        8.1 %                           10.4 %

Employee compensation and benefits relative

  to total revenues                                   50.8 %                           53.6 %
Other operating expenses relative to total
revenues                                              16.7 %                           13.2 %
Capital expenditures                            $     52.6             16.9 %    $     45.0
Total assets at December 31                     $ 13,973.5             42.7 %    $  9,795.4



(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure
NMF = Not a meaningful figure

Commissions and Fees

Commissions and fees, including profit-sharing contingent commissions for 2022,
increased $515.7 million to $3,563.2 million, or 16.9% over 2021. Core
commissions and fees in 2022 increased $509.2 million, composed of (i) $239.9
million of net new and renewal business, which reflects an Organic Revenue
growth rate of 8.1%; (ii) $288.6 million from acquisitions that had no
comparable revenues in the same period of 2021; (iii) an offsetting decrease
from the impact of foreign currency translation of $4.5 million; and (iv) an
offsetting decrease of $14.8 million related to commissions and fees revenue
from business divested in the preceding twelve months. Profit-sharing contingent
commissions for 2022 increased by $6.5 million, or 7.9%, compared to the same
period in 2021. This increase was the result of recent acquisitions and
qualifying for certain profit-sharing contingent commissions in 2022 that we did
not qualify for in the prior year, partially offset by reduced profit-sharing
contingent commissions relating to the impacts from the estimated insured
property losses associated with Hurricane Ian.

Investment Income

Investment income for 2022 was $6.5 million, compared with $1.1 million in 2021.
The increase was primarily driven by higher average interest rates compared to
2021.

Other Income, Net

Other income for 2022 was $3.7 million, compared with $2.8 million in 2021.

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Employee Compensation and Benefits

Employee compensation and benefits expense as a percentage of total revenues was
50.8% for the year ended December 31, 2022 as compared to 53.6% for the year
ended December 31, 2021, and increased 11.0%, or $180.0 million. This increase
included $128.6 million of compensation costs related to stand-alone
acquisitions that had no comparable costs in the same period of 2021. Therefore,
employee compensation and benefits expense attributable to those offices that
existed in the same time periods of 2022 and 2021 increased by $51.4 million or
3.2%. This underlying employee compensation and benefits expense increase was
primarily related to: (i) increased claims associated with our self-insured
employee health plan; (ii) an increase in salaries attributable to inflation;
(iii) an increase in producer compensation associated with revenue growth;
partially offset by (iv) the year-over-year decrease of approximately $36.6
million in the value of deferred compensation liabilities driven by changes in
the market prices of our employees' investment elections associated with our
deferred compensation plan, which was substantially offset within other
operating expenses as we hold assets to fund these liabilities that closely
match the investment elections of our employees.

Other Operating Expenses

Other operating expenses represented 16.7% of total revenues for 2022 as
compared to 13.2% for the year ended December 31, 2021. Other operating expenses
for 2022 increased $193.8 million, or 48.1%, from the same period of 2021. The
net increase included: (i) $73.7 million of other operating expenses related to
stand-alone acquisitions that had no comparable costs in the same period of
2021; (ii) increased variable costs with travel and entertainment being the
largest driver; (iii) acquisition and integration costs associated with the
acquisitions of Orchid, GRP, and BdB, and; (iv) the year-over-year increase of
approximately $36.6 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 net gains on disposals of $4.5 million in 2022 and $9.6
million in 2021. The gains on disposal were due to activity associated with
sales of businesses or book of business. 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 growth, or because doing so is
in the Company's best interest.

Amortization

Amortization expense for 2022 increased $27.0 million to $146.6 million, or
22.6% over 2021. This increase reflects the amortization of new intangibles from
businesses acquired within the past twelve months, partially offset by certain
intangible assets becoming fully amortized.

Depreciation

Depreciation expense for 2022 increased $5.9 million to $39.2 million, or 17.7%
over 2021. Changes in depreciation expense reflect the addition of fixed assets
resulting from business initiatives, net additions of fixed assets resulting
from businesses acquired in the past twelve months, partially offset by fixed
assets which became fully depreciated.

Interest Expense

Interest expense for 2022 increased $76.2 million to $141.2 million, or 117.2%,
from 2021. The increase is due to higher average debt balances resulting from
debt issuance and bank financing in the first quarter of 2022 to fund the
acquisitions of Orchid, GRP, and BdB, as well as increases in the floating rate
benchmark used on our adjustable-rate debt.

Change in Estimated Acquisition Earn-Out Payables

Accounting Standards Codification ("ASC") Topic 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 Statement 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.

                                       32
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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 balance, and the interest expense imputed on the outstanding balance of
the estimated acquisition earn-out payables.

As of December 31, 2022, 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, 2022
and 2021 were as follows:

(in millions)                                                      2022        2021

Change in fair value of estimated acquisition earn-out payables $ (45.9 )

   $ 34.2
Interest expense accretion                                            7.0   

6.2

Net change in earnings from estimated acquisition

  earn-out payables                                               $ (38.9 )   $ 40.4



For the years ended December 31, 2022 and 2021, the fair value of estimated
earn-out payables was reevaluated and decreased by $45.9 million for 2022 and
increased by $34.2 million for 2021, which are credits and charges respectively,
exclusive of interest expense accretion, to the Consolidated Statements of
Income for 2022 and 2021.

As of December 31, 2022, the estimated acquisition earn-out payables equaled
$251.6 million, of which $119.3 million was recorded as accounts payable and
$132.3 million was recorded as other non-current liabilities. As of December 31,
2021, the estimated acquisition earn-out payables equaled $291.0 million, of
which $78.4 million was recorded as accounts payable and $212.6 million was
recorded as other non-current liabilities.

Income Taxes

The effective tax rate on income from operations was 23.3% in 2022 and 23.0% in
2021.

RESULTS OF OPERATIONS - SEGMENT INFORMATION

As discussed in Note 16 "Segment Information" of the Notes to Consolidated
Financial Statements, we operate four reportable segments: Retail, National
Programs, Wholesale Brokerage and Services. On a segmented basis, changes in
amortization, depreciation and interest expenses generally result from activity
associated with acquisitions. Likewise, other revenues in each segment reflects
net gains primarily from legal settlements and miscellaneous income. As such, in
evaluating the operational efficiency of a segment, management focuses on the
Organic Revenue growth rate and EBITDAC margin.

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, 2022 are as follows:

2022                         Retail(1)              National Programs          Wholesale Brokerage              Services                    Total
(in millions,
except
  percentages)          2022          2021           2022         2021          2022           2021        2022         2021         2022          2021
Commissions and
fees                  $ 2,080.4     $ 1,764.9     $    858.1     $ 701.1     $    452.8       $ 402.6     $ 171.9      $ 178.9     $ 3,563.2     $ 3,047.5
Total change          $   315.5                   $    157.0                 $     50.2                   $  (7.0 )                $   515.7
Total growth %             17.9 %                       22.4 %                     12.5 %                    (3.9 )%                    16.9 %
Profit-sharing
contingent
  commissions             (48.8 )       (38.9 )        (27.6 )     (35.3 )        (12.3 )        (8.0 )         -            -         (88.7 )       (82.2 )
Core commissions
and
  fees                $ 2,031.6     $ 1,726.0     $    830.5     $ 665.8     $    440.5       $ 394.6     $ 171.9      $ 178.9     $ 3,474.5     $ 2,965.3
Acquisitions             (205.1 )           -          (64.9 )         -          (18.6 )           -           -            -        (288.6 )           -
Dispositions                  -          (7.2 )            -        (3.3 )            -          (2.4 )         -         (1.9 )           -         (14.8 )
Foreign currency
translation                   -          (3.9 )            -        (0.6 )            -             -           -            -             -          (4.5 )
Organic Revenue(2)    $ 1,826.5     $ 1,714.9     $    765.6     $ 661.9     $    421.9       $ 392.2     $ 171.9      $ 177.0     $ 3,185.9     $ 2,946.0
Organic Revenue
  growth(2)           $   111.6                   $    103.7                 $     29.7                   $  (5.1 )                $   239.9
Organic Revenue
growth rate(2)              6.5 %                       15.7 %                      7.6 %                    (2.9 )%                     8.1 %






(1)
The Retail segment includes commissions and fees reported in the "Other" column
of the Segment Information table in Note 16 of the Notes to the Consolidated
Financial Statements, which includes corporate and consolidation items.
(2)
A non-GAAP financial measure.


                                       33

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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, 2021, by segment, are as follows:

2021                         Retail(1)              National Programs          Wholesale Brokerage             Services                    Total
(in millions,
except percentages)     2021          2020           2021         2020          2021           2020        2021        2020         2021          2020
Commissions and
fees                  $ 1,764.9     $ 1,470.1     $    701.1     $ 609.8     $    402.6       $ 352.2     $ 178.9     $ 174.0     $ 3,047.5     $ 2,606.1
Total change          $   294.8                   $     91.3                 $     50.4                   $   4.9                 $   441.4
Total growth %             20.1 %                       15.0 %                     14.3 %                     2.8 %                    16.9 %
Profit-sharing
contingent
  commissions             (38.9 )       (35.8 )        (35.3 )     (27.3 )         (8.0 )        (7.9 )         -           -         (82.2 )       (71.0 )
Core commissions
and fees              $ 1,726.0     $ 1,434.3     $    665.8     $ 582.5     $    394.6       $ 344.3     $ 178.9     $ 174.0     $ 2,965.3     $ 2,535.1
Acquisitions             (139.0 )           -           (8.2 )         -          (23.0 )           -           -           -        (170.2 )           -
Dispositions                  -          (4.4 )            -        (0.5 )            -             -           -        (0.4 )           -          (5.3 )
Foreign currency
translation                   -             -              -         1.2              -             -           -           -             -           1.2

Organic Revenue(2) $ 1,587.0 $ 1,429.9 $ 657.6 $ 583.2

 $    371.6       $ 344.3     $ 178.9     $ 173.6     $ 2,795.1     $ 2,531.0
Organic Revenue
growth(2)             $   157.1                   $     74.4                 $     27.3                   $   5.3                 $   264.1
Organic Revenue
growth rate(2)             11.0 %                       12.8 %                      7.9 %                     3.1 %                    10.4 %





(1)
The Retail segment includes commissions and fees reported in the "Other" column
of the Segment Information table in Note 16 of the Notes to the Consolidated
Financial Statements, which includes corporate and consolidation items.
(2)
A non-GAAP financial measure.

The reconciliation of Total Revenues to Total Revenues - Adjusted, a non-GAAP
measure, income before incomes taxes, included in the Consolidated Statement 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, including by
segment, for the year ended December 31, 2022, is as follows:

                                         National       Wholesale
(in millions)              Retail        Programs       Brokerage       Services        Other         Total
Total Revenues            $ 2,084.3     $    859.5     $     453.4     $    171.9     $     4.3     $ 3,573.4
Total Revenues -
Adjusted(2)                 2,084.3          859.5           453.4          171.9           4.3       3,573.4
Income before income
taxes                         466.7          271.1           117.7           24.1          (3.5 )       876.1
Income Before Income
Taxes Margin(1)                22.4 %         31.5 %          26.0 %         14.0 %         NMF          24.5 %
Amortization                   96.7           35.4             9.4            5.1             -         146.6
Depreciation                   12.8           15.3             2.7            1.6           6.8          39.2
Interest                       94.3           33.0            12.9            2.1          (1.1 )       141.2
Change in estimated
acquisition
  earn-out payables           (26.3 )        (10.9 )          (1.7 )            -             -         (38.9 )
EBITDAC(2)                $   644.2     $    343.9     $     141.0     $     32.9     $     2.2     $ 1,164.2
EBITDAC Margin(2)              30.9 %         40.0 %          31.1 %         19.1 %         NMF          32.6 %
(Gain)/loss on disposal        (8.4 )          0.8             3.1              -             -          (4.5 )
Acquisition/Integration
Costs                           7.6            0.5             1.5              -           1.6          11.2
EBITDAC - Adjusted(2)     $   643.4     $    345.2     $     145.6     $   

 32.9     $     3.8     $ 1,170.9
EBITDAC Margin -
Adjusted(2)                    30.9 %         40.2 %          32.1 %         19.1 %         NMF          32.8 %



(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure. Current year not adjusted for foreign currency
translation as the prior year is converted at current year rates.
NMF = Not a meaningful figure

                                       34
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The reconciliation of Total Revenues to Total Revenues - Adjusted, a non-GAAP
measure, income before incomes taxes, included in the Consolidated Statement 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, including by
segment, for the year ended December 31, 2021, is as follows:

                                         National       Wholesale
(in millions)              Retail        Programs       Brokerage       Services        Other         Total
Total Revenues            $ 1,767.9     $    701.9     $     403.4     $    178.9     $    (0.7 )   $ 3,051.4
Foreign Currency
Translation                    (4.1 )         (0.7 )             -              -             -          (4.8 )
Total Revenues -
Adjusted(2)                 1,763.8          701.2           403.4          178.9          (0.7 )     3,046.6
Income before income
taxes                         334.4          242.3            94.8           28.3          63.0         762.8
Income Before Income
Taxes Margin(1)                18.9 %         34.5 %          23.5 %         15.8 %         NMF          25.0 %
Amortization                   77.8           27.4             9.1            5.3             -         119.6
Depreciation                   11.2            9.8             2.6            1.5           8.2          33.3
Interest                       91.4           11.4            16.0            2.9         (56.7 )        65.0
Change in estimated
acquisition
  earn-out payables            40.8           (7.7 )           7.3              -             -          40.4
EBITDAC(2)                $   555.6     $    283.2     $     129.8     $     38.0     $    14.5     $ 1,021.1
'EBITDAC Margin(2)             31.4 %         40.3 %          32.2 %         21.2 %         NMF          33.5 %
(Gain)/loss on disposal        (5.1 )         (4.5 )             -              -             -          (9.6 )
Acquisition/Integration
Costs                             -              -               -              -             -             -
Foreign Currency
Translation                    (1.0 )         (0.4 )             -              -             -          (1.4 )
EBITDAC - Adjusted(2)     $   549.5     $    278.3     $     129.8     $   

 38.0     $    14.5     $ 1,010.1
EBITDAC Margin -
Adjusted(2)                    31.2 %         39.7 %          32.2 %         21.2 %         NMF          33.2 %



(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure

NMF = Not a meaningful figure

                                       35

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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 automobile
dealer services ("F&I") businesses. Approximately 77.3% of the Retail segment's
commissions and fees revenue is commission based.

Financial information relating to our Retail segment for the twelve months ended
December 31, 2022 and 2021 is as follows:

(in millions, except percentages)                  2022         % Change    

2021

REVENUES

Core commissions and fees                       $  2,032.8            17.7 %    $  1,727.7
Profit-sharing contingent commissions                 48.8            25.4 %          38.9
Investment income                                      0.1           (66.7 )%          0.3
Other income, net                                      2.6           160.0 %           1.0
Total revenues                                     2,084.3            17.9 %       1,767.9
EXPENSES
Employee compensation and benefits                 1,093.0            15.1 %         949.3
Other operating expenses                             355.5            32.6 %         268.1
(Gain)/loss on disposal                               (8.4 )          64.7 %          (5.1 )
Amortization                                          96.7            24.3 %          77.8
Depreciation                                          12.8            14.3 %          11.2
Interest                                              94.3             3.2 %          91.4
Change in estimated acquisition earn-out
payables                                             (26.3 )        (164.5 )%         40.8
Total expenses                                     1,617.6            12.8 %       1,433.5
Income before income taxes                      $    466.7            39.6 %    $    334.4
Income Before Income Taxes Margin (1)                 22.4 %                          18.9 %
EBITDAC - Adjusted (2)                          $    643.4            17.1 %    $    549.5
EBITDAC Margin - Adjusted (2)                         30.9 %                          31.2 %
Organic Revenue growth rate (2)                        6.5 %                          11.0 %
Employee compensation and benefits relative
to total revenues                                     52.4 %                          53.7 %
Other operating expenses relative to total
revenues                                              17.1 %                          15.2 %
Capital expenditures                            $     18.6           129.6 %    $      8.1
Total assets at December 31                     $  7,458.6            48.0 %    $  5,040.7




(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure
NMF = Not a meaningful figure

The Retail segment's total revenues in 2022 increased 17.9%, or $316.4 million,
over 2021, to $2,084.3 million. The $305.1 million increase in core commissions
and fees was driven by the following: (i) $111.6 million related to net new and
renewal business; (ii) approximately $205.1 million related to the core
commissions and fees from acquisitions that had no comparable revenues in the
same period of 2021; (iii) an offsetting decrease from the impact of foreign
currency translation of $3.9 million; and (iv) an offsetting decrease of $7.2
million related to commissions and fees recorded in 2021 from businesses since
divested. Profit-sharing contingent commissions in 2022 increased 25.4%, or $9.9
million, over 2021, to $48.8. The Retail segment's growth rate for total
commissions and fees was 17.8% and the Organic Revenue growth rate was 6.5% for
2022. 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 rate increases in most lines of business with
continued increases in employee benefits, commercial and condominium property,
partially offset by continued premium rate reductions in workers' compensation.

Income before income taxes for 2022 increased 39.6%, or $132.3 million, over the
same period in 2021, to $466.7 million. The primary factors driving this
increase were: (i) the profit associated with the net increase in revenue as
described above; (ii) the drivers of EBITDAC described below; (iii) amortization
and depreciation growing faster than total revenues; and (iv) a decrease in the
change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for 2022 increased 17.1%, or $93.9 million, from the same
period in 2022, to $643.4 million. EBITDAC Margin - Adjusted for 2022 decreased
to 30.9% from 31.2% in the same period in 2021. EBITDAC Margin was impacted by
increased variable operating expenses, which are largely travel and meeting
related.

National Programs Segment

The National Programs segment manages over 40 programs supported by
approximately 100 well-capitalized carrier partners. In most cases, the
insurance carriers that support these programs have delegated underwriting and,
in many instances, claims-handling authority to our programs operations. These
programs are generally distributed through a nationwide network of independent
agents and Brown & Brown retail

                                       36
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agents, and offer targeted products and services designed for specific
industries, trade groups, professions, public entities and market niches. This
segment also operates our write-your-own flood insurance carrier, WNFIC and
participates in two Captives. WNFIC's underwriting business consists of policies
written under and fully ceded to the NFIP and excess flood and private flood
policies which are fully reinsured in the private market. The Captives provide
additional underwriting capacity and allow us to participate in underwriting
results. The Company has traditionally participated in underwriting profits
through profit-sharing contingent commissions. These Captives give us another
way to continue to participate in underwriting results while limiting exposure
to claims expenses. The Captives focus on property insurance for earthquake and
wind exposed properties underwritten by certain managing general agents. The
Captives limit the Company's exposure to claims expenses either through
reinsurance or by participating in limited tranches of the underwriting risk.

The National Programs segment operations can be grouped into five broad
categories: Professional Programs, Personal Lines Programs, Commercial Programs,
Public Entity-Related Programs and Specialty Programs. Approximately 76.1% of
the National Programs segment's commissions and fees revenue is commission
based.

Financial information relating to our National Programs segment for the twelve
months ended December 31, 2022 and 2021 is as follows:

(in millions, except percentages)                  2022         % Change    

2021

REVENUES

Core commissions and fees                       $    830.5            24.7 %    $    665.8
Profit-sharing contingent commissions                 27.6           (21.8 )%         35.3
Investment income                                      1.3           116.7 %           0.6
Other income, net                                      0.1           (50.0 )%          0.2
Total revenues                                       859.5            22.5 %         701.9
EXPENSES
Employee compensation and benefits                   318.7             8.1 %         294.7
Other operating expenses                             196.1            52.6 %         128.5
(Gain)/loss on disposal                                0.8          (117.8 )%         (4.5 )
Amortization                                          35.4            29.2 %          27.4
Depreciation                                          15.3            56.1 %           9.8
Interest                                              33.0           189.5 %          11.4
Change in estimated acquisition earn-out
payables                                             (10.9 )          41.6 %          (7.7 )
Total expenses                                       588.4            28.0 %         459.6
Income before income taxes                      $    271.1            11.9 %    $    242.3
Income Before Income Taxes Margin (1)                 31.5 %                          34.5 %
EBITDAC - Adjusted (2)                          $    345.2            24.0 %    $    278.3
EBITDAC Margin - Adjusted (2)                         40.2 %                          39.7 %
Organic Revenue growth rate (2)                       15.7 %                          12.8 %
Employee compensation and benefits relative
to total revenues                                     37.1 %                          42.0 %
Other operating expenses relative to total
revenues                                              22.8 %                          18.3 %
Capital expenditures                            $     20.2            49.6 %    $     13.5
Total assets at December 31                     $  4,467.8            51.8 %    $  2,943.0




(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure
NMF = Not a meaningful figure

The National Programs segment's total revenue for 2022 increased 22.5%, or
$157.6 million, as compared to the same period in 2021, to $859.5 million. The
$164.7 million increase in core commissions and fees revenue was driven by: (i)
approximately $103.7 million of net new and renewal business; (ii) $64.9 million
from acquisitions that had no comparable revenues in the same period of 2021;
(iii) an offsetting decrease from the impact of foreign currency translation of
$0.6 million; and (iv) an offsetting decrease of $3.3 million related to
commissions and fees revenue from business divested in the preceding twelve
months. Profit-sharing contingent commissions in 2022 decreased 21.8%, or $7.7
million, from 2021, to $27.6 primarily relating to the impacts from the
estimated insured property losses associated with Hurricane Ian. The National
Programs segment's growth rate for total commissions and fees was 22.4% and the
Organic Revenue growth rate was 15.7% for 2022. The Organic Revenue growth was
driven primarily by an increase in lender placed coverage, good new business and
retention, exposure unit expansion and rate increases for many programs.

Income before income taxes for 2022 increased 11.9%, or $28.8 million, from the
same period in 2021, to $271.1 million. Income before income taxes increased due
to the drivers of EBITDAC described below. This was partially offset by an
increase in intercompany interest expense and increased amortization expense
associated with recent acquisitions.

EBITDAC - Adjusted for 2022 increased 24.0%, or $66.9 million, from the same
period in 2021, to $345.2 million. EBITDAC Margin - Adjusted for 2022 increased
to 40.2% from 39.7% in the prior year due to strong total revenue growth along
with leverage our expense base.


                                       37
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Wholesale Brokerage Segment

The Wholesale Brokerage segment markets and sells excess and surplus commercial
and personal lines insurance, primarily through independent agents and brokers,
including Brown & Brown retail agents. Approximately 84.9% of the Wholesale
Brokerage segment's commissions and fees revenue is commission based.

Financial information relating to our Wholesale Brokerage segment for the twelve
months ended December 31, 2022 and 2021 is as follows:

(in millions, except percentages)                  2022         % Change    

2021

REVENUES

Core commissions and fees                       $    440.5            11.6 %    $    394.6
Profit-sharing contingent commissions                 12.3            53.8 %           8.0
Investment income                                      0.3            50.0 %           0.2
Other income, net                                      0.3           (50.0 )%          0.6
Total revenues                                       453.4            12.4 %         403.4
EXPENSES
Employee compensation and benefits                   239.3            12.5 %         212.8
Other operating expenses                              70.0            15.1 %          60.8
(Gain)/loss on disposal                                3.1               -               -
Amortization                                           9.4             3.3 %           9.1
Depreciation                                           2.7             3.8 %           2.6
Interest                                              12.9           (19.4 )%         16.0
Change in estimated acquisition earn-out
payables                                              (1.7 )        (123.3 )%          7.3
Total expenses                                       335.7             8.8 %         308.6
Income before income taxes                      $    117.7            24.2 %    $     94.8
Income Before Income Taxes Margin (1)                 26.0 %                          23.5 %
EBITDAC - Adjusted (2)                          $    145.6            12.2 %    $    129.8
EBITDAC Margin - Adjusted (2)                         32.1 %                          32.2 %
Organic Revenue growth rate (2)                        7.6 %                           7.9 %
Employee compensation and benefits relative
to total revenues                                     52.8 %                          52.7 %
Other operating expenses relative to total
revenues                                              15.4 %                          15.0 %
Capital expenditures                            $      2.8            75.0 %    $      1.6
Total assets at December 31                     $  1,401.6            21.4 %    $  1,154.4





(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure
NMF = Not a meaningful figure

The Wholesale Brokerage segment's total revenues for 2022 increased 12.4%, or
$50.0 million, over 2021, to $453.4 million. The $45.9 million increase in core
commissions and fees was driven by the following: (i) approximately $29.7
million of net new and renewal business; (ii) $18.6 million from acquisitions
that had no comparable revenues in the same period of 2021; and (iii) an
offsetting decrease of $2.4 million related to commissions and fees revenue from
business divested in the preceding twelve months. Profit-sharing contingent
commissions for 2022 increased $4.3 million compared to 2021, to $12.3 million.
The Wholesale Brokerage segment's growth rate for total commissions and fees was
12.5%, and the Organic Revenue growth rate was 7.6% for 2022. The Organic
Revenue growth rate was driven by new business, good retention as well as rate
increases for most lines of coverage, which was partially offset by shrinking
capacity in the catastrophe exposed personal lines market.

Income before income taxes for 2022 increased 24.2%, or $22.9 million, over
2021, to $117.7 million, primarily due to the following: (i) the drivers of
EBITDAC - Adjusted described below; (ii) decrease in the change in estimated
acquisition earn-out payables; and (iii) lower intercompany interest expense;
partially offset by (iv) acquisition/integration costs.

EBITDAC - Adjusted for 2022 increased 12.2%, or $15.8 million, from the same
period in 2021, to $145.6 million. EBITDAC Margin for 2022 decreased to 32.1%
from 32.2% in the same period in 2021. EBITDAC Margin - Adjusted decreased due
to: (i) higher broker compensation; (ii) increased variable operating expenses,
which are primarily travel and meeting related; partially offset by (iii) higher
profit-sharing contingent commissions; and (iv) leveraging our expense base in
connection with revenue growth.

Services Segment

The Services segment provides insurance-related services, including third-party
claims administration and comprehensive medical utilization management services
in both the workers' compensation and all-lines liability arenas. The Services
segment also provides Medicare Set-aside account services, Social Security
disability and Medicare benefits advocacy services, and claims adjusting
services.

                                       38
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Unlike the other segments, nearly all of the Services segment's revenue is
generated from fees which are not significantly affected by fluctuations in
general insurance premiums.

Financial information relating to our Services segment for the twelve months
ended December 31, 2022 and 2021 is as follows:

(in millions, except percentages)                    2022          % Change 

2021

REVENUES

Core commissions and fees                         $    171.9             (3.9 )%   $    178.9
Profit-sharing contingent commissions                      -                -               -
Investment income                                          -                -               -
Other income, net                                          -                -               -
Total revenues                                         171.9             (3.9 )%        178.9
EXPENSES
Employee compensation and benefits                      90.6              1.0 %          89.7
Other operating expenses                                48.4             (5.5 )%         51.2
(Gain)/loss on disposal                                    -                -               -
Amortization                                             5.1             (3.8 )%          5.3
Depreciation                                             1.6              6.7 %           1.5
Interest                                                 2.1            (27.6 )%          2.9
Change in estimated acquisition earn-out
payables                                                   -                -               -
Total expenses                                         147.8             (1.9 )%        150.6
Income before income taxes                        $     24.1            (14.8 )%   $     28.3
Income Before Income Taxes Margin (1)                   14.0 %                           15.8 %
EBITDAC - Adjusted (2)                            $     32.9            (13.4 )%   $     38.0
EBITDAC Margin - Adjusted (2)                           19.1 %                           21.2 %
Organic Revenue growth rate (2)                         (2.9 )%                           3.1 %
Employee compensation and benefits relative to
total revenues                                          52.7 %                           50.2 %
Other operating expenses relative to total
revenues                                                28.2 %                           28.6 %
Capital expenditures                              $      1.0            (37.5 )%   $      1.6
Total assets at December 31                       $    295.0             (1.4 )%   $    299.2




(1)
"Income Before Income Taxes Margin" is defined as income before income taxes
divided by total revenues
(2)
A non-GAAP financial measure
NMF = Not a meaningful figure

The Services segment's total revenues for 2022 decreased 3.9%, or $7.0 million,
from 2021, to $171.9 million. The $7.0 million decrease in core commissions and
fees, was driven by: (i) higher COVID-19 travel restricted claims in 2021; and
(ii) a lack of weather-related claims coupled with reduced severity in 2022 and
(iii) partially offset by new business resulting in Organic Revenue decreasing
by 2.9% in 2022.

Income before income taxes for 2022 decreased 14.8%, or $4.2 million, from 2021,
to $24.1 million due to the drivers of EBITDAC described below.

EBITDAC - Adjusted for 2022 decreased 13.4%, or $5.1 million, from the same
period in 2021, to $32.9 million. EBITDAC Margin - Adjusted for 2022 decreased
to 19.1% from 21.2% in the same period in 2021. The decrease in EBITDAC and
EBITDAC Margin was driven primarily by lower revenues.

Other

As discussed in Note 16 of the Notes to Consolidated Financial Statements, the
"Other" column in the Segment Information table 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 principally through
cash that has been generated from operations. We have the ability to utilize our
Revolving Credit Facility, which as of December 31, 2022 provided up to $800.0
million in available cash. We believe that we have access to additional funds,
if needed, through the capital markets or private placements to obtain further
debt financing under the current market conditions. The Company believes that
its existing cash, cash equivalents, short-term investment portfolio and funds
generated from operations, together with the funds available under the Revolving
Credit Facility 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 twelve months.

                                       39
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The Revolving Credit Facility contains an expansion option for up to an
additional $500.0 million of borrowing capacity, subject to the approval of
participating lenders. In addition, under the Term Loan Credit Agreement, the
unsecured term loan in the initial amount of $300.0 million may be increased by
up to $150.0 million, subject to the approval of participating lenders.

On March 31, 2022, the Company entered into a Loan Agreement which provided term
loan capacity of $800.0 million. 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 $400.0
million. Including the expansion options under all existing credit agreements,
the Company has access to up to $1.9 billion of incremental borrowing capacity
as of December 31, 2022.

Our cash and cash equivalents of $650.0 million at December 31, 2022 reflected a
decrease of $43.3 million from the $693.2 million balance at December 31, 2021.
During 2022, $881.4 million of cash was generated from operating activities,
representing an increase of 9.0%. During this period, $1,927.7 million of cash
was used for acquisitions, $106.3 million was used for acquisition earn-out
payments, $52.6 million was used to purchase additional fixed assets, $119.5
million was used for payment of dividends, $74.1 million was used for share
repurchases and $61.3 million was used to pay outstanding principal balances
owed on long-term debt.

We hold approximately $225.4 million in cash outside of the U.S., which we
currently have no plans to repatriate in the near future.

Our cash and cash equivalents of $693.2 million at December 31, 2021 reflected
an increase of $37.0 million from the $656.2 million balance at December 31,
2020. During 2021, $808.8 million of cash was generated from operating
activities, representing an increase of 13.4%. During this period, $366.8
million of cash was used for acquisitions, $83.6 million was used for
acquisition earn-out payments, $45.0 million was used to purchase additional
fixed assets, $107.2 million was used for payment of dividends, $82.6 million
was used for share repurchases and $73.1 million was used to pay outstanding
principal balances owed on long-term debt.

Our ratio of current assets to current liabilities (the "current ratio") was
1.09 and 1.25 for December 31, 2022 and December 31, 2021, respectively.

Contractual Cash Obligations

As of December 31, 2022, our contractual cash obligations were as follows:

                                                               Payments Due by Period
                                                      Less Than                                      After 5
(in millions)                            Total         1 Year        1-3 Years       4-5 Years        Years
Long-term debt                         $ 3,975.6     $     250.6     $    943.7     $     531.3     $ 2,250.0
Other liabilities                          149.5             8.4           15.4            11.2         114.5
Operating leases(1)                        278.3            53.0           97.0            62.1          66.2
Interest obligations                     1,572.4           179.7          286.5           208.8         897.4
Maximum future acquisition
contingency payments(2)                    542.8           181.1          355.5             6.2             -
Total contractual cash
obligations(3)                         $ 6,518.6     $     672.8     $  1,698.1     $     819.6     $ 3,328.1





(1)
Includes $12.4 million of future lease commitments expected to commence in 2023.
(2)
Includes $251.6 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. Four of the estimated acquisition earn-out
payables assumed in connection with the acquisition of GRP included provisions
with no maximum potential earn-out amount. The amount recorded for these
acquisitions as of December 31, 2022, is $3.0 million. The Company deems a
significant increase to this amount to be unlikely.
(3)
Does not include approximately $32.6 million of current liability for a dividend
of $0.1150 per share approved by the board of directors on
January 18, 2023 and paid on February 15, 2023.

Debt

Total debt at December 31, 2022 was $3,942.1 million net of unamortized discount
and debt issuance costs, which was an increase of $1,919.2 million compared to
December 31, 2021. The increase includes: (i) the issuance of $1,200.0 million
in aggregate principal amount of Senior Notes on March 17, 2022, exclusive of
debt issuance costs and discounts applied to the principal; (ii) the drawdown of
$350.0 million of the Revolving Credit Facility in conjunction with the
acquisition payment for Orchid on March 31, 2022; (iii) the aggregate drawdown
of $800.0 million under the Loan Agreement in connection with the funding of the
acquisitions of GRP and BdB which occurred on various dates on or before the
final draw on April 28, 2022; and (iv) net of the amortization of discounted
debt related to our various unsecured Senior Notes, and debt issuance cost
amortization of $3.8 million; offset by decreases due to: (i) the scheduled
principal amortization balances related to our various existing floating-rate
debt term notes in total of $61.3 million; (ii) added discounted debt balances
related to the issuance of $600.0 million in aggregate principal amount of the
Company's 4.200% Senior Notes due 2032 (the "2032 Notes") and $600.0 million in
aggregate principal amount of the Company's 4.950% Senior Notes due 2052 (the
"2052 Notes," and together with the 2032 Notes, the "Notes") of $10.4 million;
(iii) debt issuance costs related to the Notes and the Loan Agreement of $13.0
million; and (iv) through December 31, 2022 the

                                       40
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Company repaying $350.0 million of debt related to the outstanding amount drawn
under the Revolving Credit Facility under the Second Amended and Restated Credit
Agreement.

During the twelve months ended December 31, 2022, the Company repaid $12.5
million of principal related to the Second Amended and Restated Credit Agreement
term loan through the quarterly scheduled amortized principal payments. The
Second Amended and Restated Credit Agreement term loan had an outstanding
balance of $234.4 million as of December 31, 2022. The Company's next scheduled
amortized principal payment is due March 31, 2023 and is equal to $3.1 million.

During the twelve months ended December 31, 2022, the Company repaid $30.0
million of principal related to the Term Loan Credit Agreement through quarterly
scheduled amortized principal payments. The Term Loan Credit Agreement had an
outstanding balance of $210.0 million as of December 31, 2022. As of December
31, 2022, the total term loan balance of $210.0 million is presented under
current portion of long-term debt as the agreement and underlying debt
instruments are within one-year of maturity. The Company is evaluating options
with regard to the loan's remaining balance, including retiring the balance at
maturity or refinancing the balance or a portion thereof. The Company's next
scheduled amortized principal payment is due March 31, 2023 and is equal to $7.5
million.

During the twelve months ended December 31, 2022, the Company repaid $18.8
million of principal related to the Term Loans issued under the Term A-2 Loan
Commitment ("Term A-2 Loans") through quarterly scheduled amortized principal
payments. The Term A-2 Loans had an outstanding balance of $481.3 million as of
December 31, 2022. The Company's next scheduled amortized principal payment is
due March 31, 2023 and is equal to $6.3 million.

On March 17, 2022, the Company completed the issuance of $600.0 million
aggregate principal amount of the Company's 4.200% Senior Notes due 2032 and
$600.0 million aggregate principal amount of the Company's 4.950% Senior Notes
due 2052 (and together with the 2032 Notes, the "Notes"). The net proceeds to
the Company from the issuance of the Notes, after deducting underwriting
discounts and estimated offering expenses, were approximately $1,178.2 million.
The Senior Notes were given investment grade ratings of BBB- stable outlook and
Baa3 stable outlook. The 2032 Notes bear interest at the rate of 4.200% per year
and will mature on March 17, 2032. The 2052 Notes bear interest at the rate of
4.950% per year and will mature on March 17, 2052. Interest on the Notes is
payable semi-annually in arrears. The 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 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 Notes being
redeemed, plus accrued and unpaid interest thereon to, but excluding the
redemption date. The Company used the net proceeds from the offering of the
Notes, together with borrowings under its Revolving Credit Facility, cash on
hand and other borrowings, to fund the cash consideration and other amounts
payable under the GRP Acquisition Agreement and to pay fees and expenses
associated with the foregoing. As of December 31, 2022, there was a total
outstanding debt balance of $1,200.0 million exclusive of the associated
discount balance on both Notes.

On March 31, 2022, the Company entered into the Loan Agreement with the lenders
named therein, BMO Harris Bank N.A., as administrative agent, Fifth Third Bank,
National Association, PNC Bank, National Association, U.S. Bank National
Association and Wells Fargo Bank, National Association, as co-syndication agents
and BMO Capital Markets Corp., BofA Securities, Inc., JPMorgan Chase Bank, N.A.
and Truist Securities, Inc., as joint bookrunners and joint lead arrangers. The
Loan Agreement evidences commitments for (i) unsecured delayed draw term loans
in an aggregate amount of up to $300.0 million (the "Term A-1 Loan Commitment")
and (ii) unsecured delayed draw term loans in an amount of up to $500.0 million
(the "Term A-2 Commitment" and, together with the Term A-1 Loan Commitments, the
"Term Loan Commitments"). 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 or the term loans issued
thereunder or issue new tranches of term loans in an aggregate additional amount
of up to $400.0 million. The Company may borrow term loans (the "Term Loans")
under either of the Term Loan Commitments during the period from the Effective
Date (the "Effective Date") until the date which is the first anniversary
thereof. Once borrowed, Term Loans issued under the Term A-1 Loan Commitment
("Term A-1 Loans") are due and payable on the date that is the third anniversary
of the Effective Date unless such maturity date is extended as provided under
the Loan Agreement. Once borrowed, Term Loans issued under the Term A-2 Loan
Commitment ("Term A-2 Loans") are repayable in installments until the fifth
anniversary the Effective Date with any remaining outstanding amounts due and
payable on such fifth anniversary of the Effective Date unless such maturity
date is extended as provided under the Loan Agreement. While outstanding, the
undrawn Term Loan Commitments accrue a commitment fee of 0.15% beginning on the
earlier of the initial funding of Term Loans under the Loan Agreement and the
date that is 120 days from the Effective Date. Once drawn, Term A-1 Loans will
bear interest at the annual rate of Adjusted Term SOFR plus 1.125% or Base Rate
plus 0.125% (subject to a pricing grid for changes in the Company's credit
rating and/or leverage) and Term A-2 Loans will bear interest at the annual rate
of Adjusted Term SOFR plus 1.25% or Base Rate plus 0.25% (subject to a pricing
grid for changes in the Company's credit rating and/or leverage). The Loan
Agreement includes various covenants (including financial covenants),
limitations and events of default customary for similar facilities for similarly
rated borrowers. As of December 31, 2022 the outstanding balance on the Loan
Agreement was $781.3 million.

On March 31, 2022 the Company borrowed $350.0 million of available proceeds on
the Revolving Credit Facility under the Second Amended and Restated Credit
Agreement. The proceeds were used in conjunction with the funding of the Orchid
acquisition along with funds from cash on hand. As of December 31, 2022 the
outstanding loan balance was repaid.

Total debt at December 31, 2021 was $2,022.9 million net of unamortized discount
and debt issuance costs, which was a decrease of $73.0 million compared to
December 31, 2020. The decrease includes: (i) the repayment of the principal
balance of $73.1 million for scheduled

                                       41

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principal amortization balances related to our various existing floating rate
debt term notes; (ii) an additional $2.7 million including debt issuance costs
related to the Company's refinanced credit facility, the Second Amended and
Restated Credit Agreement (as defined below), on October 27, 2021; offset by
(iii) net of the amortization of discounted debt related to our various
unsecured Senior Notes, and debt issuance cost amortization of $2.8 million.

During the twelve months ended December 31, 2021, the Company repaid $30.0
million of principal related to the amended and restated credit agreement term
loan through quarterly scheduled amortized principal payments each equaling
$10.0 million on March 31, 2021, June 30, 2021, September 30, 2021 and on
October 27, 2021 in conjunction with the closing of the Second Amended and
Restated Credit Agreement, the Company repaid an additional $10.0 million of
outstanding principal related to the term loan under the amended and restated
credit agreement. On December 31, 2021, the Company repaid $3.1 million under
the Second Amended and Restated Credit Agreement as part of a scheduled
amortized principal payment/ The Second Amended and Restated Credit Agreement
term loan had an outstanding balance of $246.9 million as of December 31, 2021.

During the twelve months ended December 31, 2021, the Company repaid $30.0
million of principal related to the term loan credit agreement through quarterly
scheduled amortized principal payments each equaling $7.5 million on March 31,
2021, June 30, 2021, September 30, 2021 and December 31, 2021. The term loan
credit agreement had an outstanding balance of $240.0 million as of December 31,
2021.

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 $800.0 million and unsecured term loans associated with the
agreement of $250.0 million to October 27, 2026. At the time of the renewal, the
Company added an additional $2.7 million in debt issuance costs related to the
transaction. The Company carried forward $0.6 million of existing debt issuance
costs related to the previous credit facility agreements while expensing $0.1
million in debt issuance costs due to certain lenders exiting the renewed
facility agreement.