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Revenues
 12 Months Ended
Dec. 31, 2022
Revenues [Abstract]  
Revenues

NOTE 2 Revenues

The following tables present the revenues disaggregated by revenue source:

 

 

 

For the year
ended December 31, 2022

 

(in millions)

 

Retail

 

 

National
Programs

 

 

Wholesale
Brokerage

 

 

Services

 

 

Other(8)

 

 

Total

 

Base commissions(1)

 

$

1,420.9

 

 

$

590.2

 

 

$

366.6

 

 

$

—

 

 

$

—

 

 

$

2,377.7

 

Fees(2)

 

 

473.5

 

 

 

198.5

 

 

 

68.5

 

 

 

171.9

 

 

 

(1.2

)

 

 

911.2

 

Other supplemental commissions(3)

 

 

138.4

 

 

 

15.4

 

 

 

5.4

 

 

 

—

 

 

 

—

 

 

 

159.2

 

Profit-sharing contingent commissions(4)

 

 

48.8

 

 

 

27.6

 

 

 

12.3

 

 

 

—

 

 

 

—

 

 

 

88.7

 

Earned premium(5)

 

 

—

 

 

 

26.4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

26.4

 

Investment income(6)

 

 

0.1

 

 

 

1.3

 

 

 

0.3

 

 

 

—

 

 

 

4.8

 

 

 

6.5

 

Other income, net(7)

 

 

2.6

 

 

 

0.1

 

 

 

0.3

 

 

 

—

 

 

 

0.7

 

 

 

3.7

 

Total Revenues

 

$

2,084.3

 

 

$

859.5

 

 

$

453.4

 

 

$

171.9

 

 

$

4.3

 

 

$

3,573.4

 

 

 

 

For the year
ended December 31, 2021

 

(in millions)

 

Retail

 

 

National
Programs

 

 

Wholesale
Brokerage

 

 

Services

 

 

Other(8)

 

 

Total

 

Base commissions(1)

 

$

1,198.1

 

 

$

488.7

 

 

$

323.1

 

 

$

—

 

 

$

0.1

 

 

$

2,010.0

 

Fees(2)

 

 

414.9

 

 

 

173.8

 

 

 

67.2

 

 

 

178.9

 

 

 

(1.8

)

 

 

833.0

 

Other supplemental commissions(3)

 

 

114.7

 

 

 

3.3

 

 

 

4.3

 

 

 

—

 

 

 

—

 

 

 

122.3

 

Profit-sharing contingent commissions(4)

 

 

38.9

 

 

 

35.3

 

 

 

8.0

 

 

 

—

 

 

 

—

 

 

 

82.2

 

Earned premium(5)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Investment income(6)

 

 

0.3

 

 

 

0.6

 

 

 

0.2

 

 

 

—

 

 

 

—

 

 

 

1.1

 

Other income, net(7)

 

 

1.0

 

 

 

0.2

 

 

 

0.6

 

 

 

—

 

 

 

1.0

 

 

 

2.8

 

Total Revenues

 

$

1,767.9

 

 

$

701.9

 

 

$

403.4

 

 

$

178.9

 

 

$

(0.7

)

 

$

3,051.4

 

 

 

 

 

 

 

For the year
ended December 31, 2020

 

(in millions)

 

Retail

 

 

National
Programs

 

 

Wholesale
Brokerage

 

 

Services

 

 

Other(8)

 

 

Total

 

Base commissions(1)

 

$

1,054.6

 

 

$

422.9

 

 

$

273.9

 

 

$

—

 

 

$

—

 

 

$

1,751.4

 

Fees(2)

 

 

275.9

 

 

 

159.2

 

 

 

66.0

 

 

 

174.0

 

 

 

(1.1

)

 

 

674.0

 

Other supplemental commissions(3)

 

 

105.0

 

 

 

0.3

 

 

 

4.4

 

 

 

—

 

 

 

—

 

 

 

109.7

 

Profit-sharing contingent commissions(4)

 

 

35.8

 

 

 

27.3

 

 

 

7.9

 

 

 

—

 

 

 

—

 

 

 

71.0

 

Earned premium(5)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Investment income(6)

 

 

0.2

 

 

 

0.8

 

 

 

0.2

 

 

 

—

 

 

 

1.6

 

 

 

2.8

 

Other income, net(7)

 

 

1.3

 

 

 

0.1

 

 

 

0.4

 

 

 

—

 

 

 

2.7

 

 

 

4.5

 

Total Revenues

 

$

1,472.8

 

 

$

610.6

 

 

$

352.8

 

 

$

174.0

 

 

$

3.2

 

 

$

2,613.4

 

 

 

 

(1)
Base commissions generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, or sales and payroll levels) to determine what
premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control.
(2)
Fee revenues relate to fees for services other than securing coverage for our customers, fees negotiated in lieu of commissions, and F&I products and services.
(3)
Other supplemental commissions include additional commissions over base commissions received from insurance carriers based on predetermined growth or production measures. This includes incentive commissions and guaranteed supplemental commissions.
(4)
Profit-sharing contingent commissions are based primarily on underwriting results, but may also reflect considerations for volume, growth and/or retention.
(5)
Earned premium relates to the premiums earned in the Captives.
(6)
Investment income consists primarily of interest on cash and investments.
(7)
Other income consists primarily of legal settlements and other miscellaneous income.
(8)
Fees within Other reflects the elimination of intercompany revenues.

Revenues Disaggregated by Geography

The following table presents the revenues disaggregated by geographic area where our services are being performed:

 

 

For the year ended December 31,

 

(in millions)

 

2022

 

 

2021

 

 

2020

 

U.S.

 

$

3,332.8

 

 

$

2,973.4

 

 

$

2,578.3

 

U.K.

 

 

170.0

 

 

 

15.5

 

 

 

12.7

 

Ireland

 

 

38.1

 

 

 

34.1

 

 

 

—

 

Canada

 

 

23.6

 

 

 

21.3

 

 

 

16.2

 

Other

 

 

8.9

 

 

 

7.1

 

 

 

6.2

 

Total Revenues

 

$

3,573.4

 

 

$

3,051.4

 

 

$

2,613.4

 

Contract Assets and Liabilities

The balances of contract assets and contract liabilities arising from contracts with customers as of December 31, 2022 and 2021 were as follows:

 

(in millions)

 

December 31, 2022

 

 

December 31, 2021

 

Contract assets

 

$

431.2

 

 

$

361.8

 

Contract liabilities

 

$

113.3

 

 

$

97.9

 

Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which have not yet been billed in our systems and are reflected in commissions, fees and other receivables in the Company's Consolidated Balance Sheets. The increase in contract assets over the balance as of December 31, 2021 is due to growth in our business and from businesses acquired in the current year.

Deferred revenue (contract liabilities) relates to payments received in advance of performance under the contract before the transfer of a good or service to the customer. Deferred revenue is reflected within accrued expenses and other liabilities for those to be recognized in less than 12 months and in other liabilities for those to be recognized more than 12 months from the date presented in the Company's Consolidated Balance Sheets.

As of December 31, 2022, deferred revenue consisted of $79.9 million as current portion to be recognized within one year and $33.4 million in long-term to be recognized beyond one year. As of December 31, 2021, deferred revenue consisted of $67.4 million as current portion to be recognized within one year and $30.5 million in long-term deferred revenue to be recognized beyond one year.

Contract assets and contract liabilities arising from acquisitions in 2022 were approximately $12.0 million and $4.4 million, respectively. Contract assets and contract liabilities arising from acquisitions in 2021 were approximately $5.5 million and $1.2 million, respectively.

During the twelve months ended December 31, 2022, 2021, and 2020, the amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates, was approximately $25.8 million, $23.3 million, and $8.9 million, respectively. The $25.8 million and $23.3 million for 2022 and 2021 consists of additional variable consideration received on our incentive and profit-sharing contingent commissions, respectively. The $8.9 million for 2020 consists of $18.1 million of additional variable consideration received on our incentive and profit-sharing contingent commissions, offset by $7.1 million of revised estimates related to variable consideration on policies where the exposure units were expected to be impacted by COVID-19 and $2.1 million of other adjustments.

Other Assets and Deferred Cost

Incremental cost to obtain – The Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans in the Retail segment, in which the Company pays an incremental amount of compensation on new business. These incremental costs are deferred and amortized over a 15-year period. The cost to obtain balance within the Other assets caption in the Company’s Consolidated Balance Sheets was $76.0 million and $58.2 million as of December 31, 2022 and December 31, 2021, respectively. For the twelve months ended December 31, 2022 and December 31, 2021, the Company deferred $23.0 million and $19.8 million of incremental cost to obtain customer contracts, respectively. The Company recorded an expense of $5.2 million and $3.8 million associated with the incremental cost to obtain customer contracts for the twelve months ended December 31, 2022 and December 31, 2021, respectively.

Cost to fulfill - The Company defers certain costs to fulfill contracts and recognizes these costs as the associated performance obligations are fulfilled. The cost to fulfill balance within the other current assets caption in the Company's Consolidated Balance Sheets was $108.7 million as of December 31, 2022, which is inclusive of deferrals from businesses acquired in the current year of $14.1 million. The cost to fulfill balance as of December 31, 2021 was $89.3 million, which is inclusive of deferrals from businesses acquired in the year of $9.9 million. For the twelve months ended December 31, 2022 and 2021, the Company had net deferrals of $6.7 million and $1.6 million related to current year deferrals for costs incurred that relate to performance obligations yet to be fulfilled, net of the expense of previously deferred contract fulfillment costs associated with performance obligations that were satisfied in the period, respectively.