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Business Combinations (Tables) | 6 Months Ended
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Jun. 30, 2014
2014 Acquisitions [Member] |
Acquisitions Accounted for Business Combinations | The following table summarizes the aggregate purchase price allocations made as of the date of the acquisitions for the current-year acquisitions and adjustments made during the measurement period for prior-year acquisitions:
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Name |  | Business Segment |  | Effective Date of Acquisition |  | Cash Paid |  |  | Other Payable |  |  | Recorded Earn-Out Payable |  |  | Net Assets Acquired |  |  | Maximum Potential Earn- Out Payable |
The Wright Insurance Group, LLC. |  | National Programs |  | May 1, 2014 |  |  | 610,158 |  |  |  | — |  |  |  | — |  |  |  | 610,158 |  |  |  | — |
Pacific Resources Benefits Advisors, LLC |  | Retail |  | May 1, 2014 |  | $ | 90,000 |  |  | $ | — |  |  | $ | 8,819 |  |  | $ | 98,819 |  |  | $ | 35,000 |
Axia Strategies, Inc. |  | Wholesale Brokerage |  | May 1, 2014 |  |  | 9,870 |  |  |  | — |  |  |  | 1,824 |  |  |  | 11,694 |  |  |  | 5,200 |
Other |  | Various |  | Various |  |  | 10,074 |  |  |  | 125 |  |  |  | 2,515 |  |  |  | 12,714 |  |  |  | 6,028 |
Total |  |  |  |  |  | $ | 720,102 |  |  | $ | 125 |  |  | $ | 13,158 |  |  | $ | 733,385 |  |  | $ | 46,228 |
Estimated Fair Values of Aggregate Assets and Liabilities Acquired | The following table summarizes the adjustments made to the estimated fair values along with the aggregate assets and liabilities acquired as of the date of each acquisition:
(in thousands) |  | PacRes |  |  | Axia |  |  | Wright |  |  | Other |  |  | Total |
Cash |  | $ | — |  |  | $ | — |  |  | $ | 25,365 |  |  | $ | — |  |  | $ | 25,365 |
Other current assets |  |  | 2,383 |  |  |  | — |  |  |  | 16,768 |  |  |  | 436 |  |  |  | 19,587 |
Fixed assets |  |  | 53 |  |  |  | 24 |  |  |  | 7,445 |  |  |  | 1,719 |  |  |  | 9,241 |
Reinsurance recoverable |  |  | — |  |  |  | — |  |  |  | 25,238 |  |  |  | — |  |  |  | 25,238 |
Prepaid reinsurance premiums |  |  | — |  |  |  | — |  |  |  | 289,013 |  |  |  | — |  |  |  | 289,013 |
Goodwill |  |  | 70,255 |  |  |  | 7,377 |  |  |  | 417,539 |  |  |  | 7,936 |  |  |  | 503,107 |
Purchased customer accounts |  |  | 26,460 |  |  |  | 4,252 |  |  |  | 213,958 |  |  |  | 2,842 |  |  |  | 247,512 |
Non-compete agreements |  |  | 21 |  |  |  | 41 |  |  |  | 1,119 |  |  |  | 119 |  |  |  | 1,300 |
Other assets |  |  | — |  |  |  | — |  |  |  | 20,045 |  |  |  | — |  |  |  | 20,045 |
Total assets acquired |  |  | 99,172 |  |  |  | 11,694 |  |  |  | 1,016,490 |  |  |  | 13,052 |  |  |  | 1,140,408 |
Other current liabilities |  |  | (353 | ) |  |  | — |  |  |  | (14,911 | ) |  |  | (338 | ) |  |  | (15,602 | )
Losses and loss adjustment expense |  |  | — |  |  |  | — |  |  |  | (25,238 | ) |  |  | — |  |  |  | (25,238 | )
Unearned premiums |  |  | — |  |  |  | — |  |  |  | (289,013 | ) |  |  | — |  |  |  | (289,013 | )
Deferred income tax, net |  |  | — |  |  |  | — |  |  |  | (44,476 | ) |  |  | — |  |  |  | (44,476 | )
Other liabilities |  |  | — |  |  |  | — |  |  |  | (32,694 | ) |  |  | — |  |  |  | (32,694 | )
Total liabilities assumed |  |  | (353 | ) |  |  | — |  |  |  | (406,332 | ) |  |  | (338 | ) |  |  | (407,023 | )
Net assets acquired |  | $ | 98,819 |  |  |  | 11,694 |  |  |  | 610,158 |  |  | $ | 12,714 |  |  | $ | 733,385 |
Results of Operations | These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.
(UNAUDITED) |  | For the three months ended June 30, |  |  | For the six months ended June 30, |
(in thousands, except per share data) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Total revenues |  | $ | 410,801 |  |  | $ | 365,964 |  |  | $ | 812,972 |  |  | $ | 737,673 |
Income before income taxes |  | $ | 106,186 |  |  |  | 99,431 |  |  | $ | 206,102 |  |  |  | 211,003 |
Net income |  | $ | 64,427 |  |  |  | 59,975 |  |  | $ | 124,753 |  |  |  | 127,408 |
Net income per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.44 |  |  | $ | 0.42 |  |  | $ | 0.86 |  |  | $ | 0.88 |
Diluted |  | $ | 0.44 |  |  | $ | 0.41 |  |  | $ | 0.85 |  |  | $ | 0.87 |
Weighted average number of shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 141,250 |  |  |  | 140,836 |  |  |  | 141,428 |  |  |  | 140,816 |
Diluted |  |  | 143,032 |  |  |  | 143,021 |  |  |  | 143,169 |  |  |  | 142,938 |
2013 Acquisitions [Member] |
Acquisitions Accounted for Business Combinations | The following table summarizes the aggregate purchase price allocations made as of the date of each acquisition for current year acquisitions and adjustments made during the measurement period for prior year acquisitions:
(in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Name |  | Business Segment |  | Effective Date of Acquisition |  | Cash Paid |  |  | Other Payable |  |  | Recorded Earn-Out Payable |  |  | Net Assets Acquired |  |  | Maximum Potential Earn- Out Payable |
Arrowhead General Insurance Agency Superholding Corporation |  | National Programs; Services |  | January 9, 2012 |  | $ | — |  |  | $ | (454 | ) |  | $ | — |  |  | $ | (454 | ) |  | $ | — |
Insurcorp & GGM Investments LLC |  | Retail |  | May 1, 2012 |  |  | — |  |  |  | — |  |  |  | (834 | ) |  |  | (834 | ) |  |  | — |
Richard W. Endlar Insurance Agency, Inc. |  | Retail |  | May 1, 2012 |  |  | — |  |  |  | — |  |  |  | 220 |  |  |  | 220 |  |  |  | — |
Texas Security General Insurance Agency, Inc. |  | Wholesale Brokerage |  | September 1, 2012 |  |  | — |  |  |  | — |  |  |  | (107 | ) |  |  | (107 | ) |  |  | — |
The Rollins Agency, Inc. |  | Retail |  | June 1, 2013 |  |  | 13,792 |  |  |  | 50 |  |  |  | 2,256 |  |  |  | 16,098 |  |  |  | 4,300 |
Other |  | Various |  | Various |  |  | 592 |  |  |  | 35 |  |  |  | 298 |  |  |  | 925 |  |  |  | 448 |
Total |  |  |  |  |  | $ | 14,384 |  |  | $ | (369 | ) |  | $ | 1,833 |  |  | $ | 15,848 |  |  | $ | 4,748 |
Estimated Fair Values of Aggregate Assets and Liabilities Acquired | The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition and adjustments made during the measurement period for prior year acquisitions:
(in thousands) |  | Rollins |  |  | Arrowhead |  |  | Insurcorp |  |  | Endlar |  |  | Texas Security |  |  | Other |  |  | Total |
Other current assets |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 25 |  |  | $ | 1,455 |  |  | $ | 1,480 |
Fixed assets |  |  | 30 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 31 |
Goodwill |  |  | 13,019 |  |  |  | (454 | ) |  |  | (566 | ) |  |  | 216 |  |  |  | (843 | ) |  |  | (685 | ) |  |  | 10,687 |
Purchased customer accounts |  |  | 3,876 |  |  |  | — |  |  |  | (268 | ) |  |  | 4 |  |  |  | 708 |  |  |  | 170 |  |  |  | 4,490 |
Non-compete agreements |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 31 |  |  |  | 62 |
Total assets acquired |  |  | 16,956 |  |  |  | (454 | ) |  |  | (834 | ) |  |  | 220 |  |  |  | (110 | ) |  |  | 972 |  |  |  | 16,750 |
Other current liabilities |  |  | (858 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | (47 | ) |  |  | (902 | )
Net assets acquired |  | $ | 16,098 |  |  | $ | (454 | ) |  | $ | (834 | ) |  | $ | 220 |  |  | $ | (107 | ) |  | $ | 925 |  |  | $ | 15,848 |
Results of Operations | These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.
(UNAUDITED) |  | For the three months ended June 30, |  |  | For the six months ended June 30, |
(in thousands, except per share data) |  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
Total revenues |  | $ | 326,753 |  |  | $ | 292,242 |  |  | $ | 663,460 |  |  | $ | 596,931 |
Income before income taxes |  |  | 86,506 |  |  |  | 71,528 |  |  |  | 186,503 |  |  |  | 154,953 |
Net income |  |  | 52,179 |  |  |  | 42,700 |  |  |  | 112,616 |  |  |  | 92,511 |
Net income per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.36 |  |  | $ | 0.30 |  |  | $ | 0.78 |  |  | $ | 0.65 |
Diluted |  | $ | 0.36 |  |  | $ | 0.29 |  |  | $ | 0.77 |  |  | $ | 0.63 |
Weighted average number of shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 140,836 |  |  |  | 139,086 |  |  |  | 140,816 |  |  |  | 139,044 |
Diluted |  |  | 143,021 |  |  |  | 141,828 |  |  |  | 142,938 |  |  |  | 141,664 |
Additions, Payments, and Net Changes, as well as Interest Expense Accretion on Estimated Acquisition Earn-Out Payables | The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the three and six months ended June 30, 2014 and 2013, were as follows:
|  | For the three months ended June 30, |  |  | For the six months ended June 30, |
(in thousands) |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Balance as of the beginning of the period |  | $ | 48,806 |  |  | $ | 49,469 |  |  | $ | 43,058 |  |  | $ | 52,987 |
Additions to estimated acquisition earn-out payables |  |  | 14,527 |  |  |  | 2,554 |  |  |  | 14,807 |  |  |  | 1,833 |
Payments for estimated acquisition earn-out payables |  |  | (10,814 | ) |  |  | (3,761 | ) |  |  | (11,429 | ) |  |  | (8,080 | )
Subtotal |  |  | 52,519 |  |  |  | 48,262 |  |  |  | 46,436 |  |  |  | 46,740 |
Net change in earnings from estimated acquisition earn-out payables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in fair value on estimated acquisition earn-out payables |  |  | (375 | ) |  |  | 159 |  |  |  | 5,228 |  |  |  | 1,156 |
Interest expense accretion |  |  | 552 |  |  |  | 497 |  |  |  | 1,032 |  |  |  | 1,022 |
Net change in earnings from estimated acquisition earn-out payables |  |  | 177 |  |  |  | 656 |  |  |  | 6,260 |  |  |  | 2,178 |
Balance as of June 30 |  | $ | 52,696 |  |  | $ | 48,918 |  |  | $ | 52,696 |  |  | $ | 48,918 |

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