4211 W. Boy Scout Blvd., Suite 800, Tampa, Florida 33607

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.01 per share

BRP

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 1, ~~2022,~~2023, there were ~~61,428,515~~64,318,059 shares of Class A common stock outstanding and ~~54,600,460~~52,430,994 shares of Class B common stock outstanding.

Note Regarding Forward-Looking Statements

We have made statements in this report, including matters discussed under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1. Legal Proceedings, Part II, Item 1A. Risk Factors and in other sections of this report, that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking ~~statements, including those factors discussed under Part II, Item 1A. Risk Factors.~~statements. You should specifically consider the numerous risks outlined under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on ~~March 1, 2022.~~February 28, 2023.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations, except as required by law.

Commonly Used Defined Terms

The following terms have the following meanings throughout this Quarterly Report on Form 10-Q unless the context indicates or requires otherwise:


Amended LLC Agreement						Third Amended and Restated Limited Liability Company Agreement of ~~Baldwin Risk Partners, LLC,~~BRP, as amended
~~Book~~API						Application programming interface
book of ~~Business~~business						Insurance policies bound by us on behalf of our Clients
bps						Basis points
BRP						Baldwin Risk Partners, LLC, a wholly-owned subsidiary of BRP Group
BRP Group						BRP Group, Inc.
Clients						Our insureds
Colleagues						Our employees
Exchange Act						Securities Exchange Act of 1934, as amended
GAAP						Accounting principles generally accepted in the United States of America
Insurance Company Partners						Insurance companies with which we have a contractual relationship
JPM Credit Agreement						Credit Agreement, dated as of October 14, 2020, between Baldwin Risk Partners, LLC, as borrower, JPMorgan Chase Bank, N.A., as the Administrative Agent, the Guarantors party thereto, the Lenders party thereto and the Issuing Lenders party thereto, as amended by the Amendment No. 1 to Credit Agreement dated as of May 7, 2021, Amendment No. 2 to Credit Agreement dated as of June 2, 2021, Amendment No. 3 to Credit Agreement dated as of August 6, 2021, Amendment No. 4 to Credit Agreement dated as of December 16, 2021, ~~and~~ Amendment No. 5 to Credit Agreement dated as of March 28, 2022, Amendment No. 6 to Credit Agreement dated as of June 27, 2023 and Amendment No. 7 to Credit Agreement dated as of September 15, 2023
LIBOR						London Interbank Offered Rate
LLC Units						Membership interests of BRP
MGA						Managing General Agent
~~MSI~~MIU conversion LLC Units						~~Millennial Specialty Insurance, a~~Non-voting units issued to certain senior management prior to October 2019, ~~Partner~~which were converted to restricted LLC Units (and corresponding shares of Class B common stock) with identical vesting conditions as the original issuances in connection with our initial public offering
Operating Groups						Our reportable segments
Partners						Companies that we have acquired, or in the case of asset acquisitions, the producers
Partnerships						Strategic acquisitions made by the Company
QBE						QBE Holdings, Inc., the prior owner of Westwood
Revolving Facility						Our revolving credit facility under the JPM Credit Agreement with commitments in an aggregate principal amount of $600.0 million, maturing April 1, 2027
Risk Advisors						Our producers
SEC						U.S. Securities and Exchange Commission
Securities Act						Securities Act of 1933, as amended
SOFR						Secured Overnight Financing Rate
Tax Receivable Agreement						Tax Receivable Agreement between BRP Group, Inc. and the holders of LLC Units in Baldwin Risk Partners, LLC entered into on October 28, 2019
Term Loan B						Our term loan facility under the JPM Credit Agreement with a principal amount of $1.02 billion, maturing October 14, 2027
Westwood						Westwood Insurance Agency, a 2022 Partner

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets

Liabilities, Mezzanine Equity and Stockholders’ Equity

See accompanying Notes to Condensed Consolidated Financial Statements.

BRP GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands, except share and per share data)	2023		2022		2023		2022
Revenues:
Commissions and fees	$	306,270	$	259,368	$	933,907	$	734,676

Operating expenses:
Commissions, employee compensation and benefits	220,469		195,920		676,659		522,518
Other operating expenses	47,165		47,212		141,254		124,424
Amortization expense	23,183		23,180		69,505		59,912
Change in fair value of contingent consideration	13,914		21,695		55,065		(10,809)
Depreciation expense	1,453		1,216		4,250		3,309
Total operating expenses	306,184		289,223		946,733		699,354

Operating income (loss)	86		(29,855)		(12,826)		35,322

Other income (expense):
Interest expense, net	(30,580)		(20,766)		(87,600)		(45,748)
Other income (expense), net	(1,351)		3,914		(193)		25,151
Total other expense	(31,931)		(16,852)		(87,793)		(20,597)

Income (loss) before income taxes	(31,845)		(46,707)		(100,619)		14,725
Income tax expense	161		—		904		—
Net income (loss)	(32,006)		(46,707)		(101,523)		14,725
Less: net income (loss) attributable to noncontrolling interests	(14,377)		(21,914)		(45,865)		8,007
Net income (loss) attributable to BRP Group	$	(17,629)	$	(24,793)	$	(55,658)	$	6,718

Comprehensive income (loss)	$	(32,006)	$	(46,707)	$	(101,523)	$	14,725
Comprehensive income (loss) attributable to noncontrolling interests	(14,377)		(21,914)		(45,865)		8,007
Comprehensive income (loss) attributable to BRP Group	(17,629)		(24,793)		(55,658)		6,718

Basic earnings (loss) per share	$	(0.29)	$	(0.43)	$	(0.93)	$	0.12
Diluted earnings (loss) per share	$	(0.29)	$	(0.43)	$	(0.93)	$	0.11
Weighted-average shares of Class A common stock outstanding - basic	60,549,080		57,282,132		59,791,435		56,430,095
Weighted-average shares of Class A common stock outstanding - diluted	60,549,080		57,282,132		59,791,435		59,895,371

See accompanying Notes to Condensed Consolidated Financial Statements.

BRP GROUP, INC.

Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity

(Unaudited)


For the Three Months Ended September 30, 2023
	Stockholders’ Equity														Mezzanine Equity
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Non-controlling Interest		Total		Redeemable Non-controlling Interest
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance at June 30, 2023	63,696,680	$	637	53,024,504	$	5	$	732,673	$	(134,793)	$	498,245	$	1,096,767	$	495
Net income (loss)	—	—		—	—		—		(17,629)		(14,459)		(32,088)		82
Share-based compensation, net of forfeitures	(5,777)	—		—	—		4,898		—		4,017		8,915		—
Redemption of Class B common stock	538,410	5		(538,410)	—		4,982		—		(4,987)		—		—
Tax distributions to BRP LLC members	—	—		—	—		—		—		(47)		(47)		—
Distributions to VIEs	—	—		—	—		—		—		—		—		(244)
Balance at September 30, 2023	64,229,313	$	642	52,486,094	$	5	$	742,553	$	(152,422)	$	482,769	$	1,073,547	$	333


For the Nine Months Ended September 30, 2023
	Stockholders’ Equity																Mezzanine Equity
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Stockholder Notes Receivable		Non-controlling Interest		Total		Redeemable Non-controlling Interest
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance at December 31, 2022	61,447,368	$	614	54,504,918	$	5	$	704,291	$	(96,764)	$	(42)	$	531,448	$	1,139,552	$	487
Net income (loss)	—	—		—	—		—		(55,658)		—		(46,096)		(101,754)		231
Share-based compensation, net of forfeitures	763,121	8		—	—		19,517		—		—		16,590		36,115		—
Redemption of Class B common stock	2,018,824	20		(2,018,824)	—		18,745		—		—		(18,765)		—		—
Tax distributions to BRP LLC members	—	—		—	—		—		—		—		(408)		(408)		—
Repayment of stockholder notes receivable	—	—		—	—		—		—		42		—		42		—
Distributions to VIEs	—	—		—	—		—		—		—		—		—		(385)
Balance at September 30, 2023	64,229,313	$	642	52,486,094	$	5	$	742,553	$	(152,422)	$	—	$	482,769	$	1,073,547	$	333

See accompanying Notes to Condensed Consolidated Financial Statements.

BRP GROUP, INC.

Condensed Consolidated ~~Balance Sheets~~Statements of Stockholders’ Equity and Mezzanine Equity (Continued)

(Unaudited)

~~The following table presents the assets and liabilities~~


For the Three Months Ended September 30, 2022
	Stockholders’ Equity																Mezzanine Equity
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Stockholder Notes Receivable		Non-controlling Interest		Total		Redeemable Non-controlling Interest
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance at June 30, 2022	60,122,842	$	601	55,442,435	$	6	$	683,331	$	(23,481)	$	(131)	$	599,209	$	1,259,535	$	350
Net income (loss)	—	—		—	—		—		(24,793)		—		(21,988)		(46,781)		74
Equity issued in business combinations	129,182	1		—	—		(66)		—		—		3,014		2,949		—
Share-based compensation, net of forfeitures	114,925	1		29,430	—		7,871		—		—		(3)		7,869		—
Redemption of Class B common stock	860,381	9		(860,381)	(1)		8,279		—		—		(8,287)		—		—
Repayment of stockholder notes receivable	—	—		—	—		—		—		68		—		68		—
Balance at September 30, 2022	61,227,330	$	612	54,611,484	$	5	$	699,415	$	(48,274)	$	(63)	$	571,945	$	1,223,640	$	424


For the Nine Months Ended September 30, 2022
	Stockholders’ Equity																Mezzanine Equity
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Stockholder Notes Receivable		Non-controlling Interest		Total		Redeemable Non-controlling Interest
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance at December 31, 2021	58,602,859	$	586	56,338,051	$	6	$	663,002	$	(54,992)	$	(219)	$	578,904	$	1,187,287	$	269
Net income	—	—		—	—		—		6,718		—		7,852		14,570		155
Equity issued in business combinations	226,338	2		—	—		(4,331)		—		—		9,148		4,819		—
Share-based compensation, net of forfeitures	663,565	6		29,430	—		22,488		—		—		(1,365)		21,129		—
Redemption and cancellation of Class B common stock	1,734,568	18		(1,755,997)	(1)		18,256		—		—		(18,273)		—		—
Tax distributions to BRP LLC members	—	—		—	—		—		—		—		(4,321)		(4,321)		—
Repayment of stockholder notes receivable	—	—		—	—		—		—		156		—		156		—
Balance at September 30, 2022	61,227,330	$	612	54,611,484	$	5	$	699,415	$	(48,274)	$	(63)	$	571,945	$	1,223,640	$	424

See accompanying Notes to Condensed Consolidated Financial Statements.

BRP GROUP, INC.

Condensed Consolidated Statements of ~~the Company’s consolidated variable interest entities, which are included on the condensed consolidated balance sheets above. The assets in the table below include those assets that can only be used~~Cash Flows

(Unaudited)


	For the Nine Months Ended September 30,
(in thousands)	2023		2022
Cash flows from operating activities:
Net income (loss)	$	(101,523)	$	14,725
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	73,755		63,221
Change in fair value of contingent consideration	55,065		(10,809)
Share-based compensation expense	46,637		26,065
(Gain) loss on interest rate caps	489		(25,420)
Payment of contingent earnout consideration in excess of purchase price accrual	(22,639)		(48,943)
Amortization of deferred financing costs	3,577		3,894
Other loss	797		369
Changes in operating assets and liabilities:
Premiums, commissions and fees receivable, net	(63,367)		(97,126)
Prepaid expenses and other current assets	(6,294)		(11,087)
Right-of-use assets	7,671		(15,076)
Accounts payable, accrued expenses and other current liabilities	32,793		70,282
Operating lease liabilities	(4,162)		16,992
Other liabilities	—		(3,740)
Net cash provided by (used in) operating activities	22,799		(16,653)
Cash flows from investing activities:
Capital expenditures	(14,157)		(15,400)
Cash consideration paid for asset acquisitions	(2,118)		(3,356)
Investment in business ventures	(673)		(791)
Cash consideration paid for business combinations, net of cash received	—		(387,919)
Net cash used in investing activities	(16,948)		(407,466)
Cash flows from financing activities:
Payment of contingent earnout consideration up to amount of purchase price accrual	(26,808)		(47,218)
Proceeds from revolving line of credit	88,000		512,000
Payments on revolving line of credit	(269,000)		(20,000)
Proceeds from issuance of long-term debt	170,000		—
Payments on long-term debt	(6,815)		(6,382)
Payments of debt issuance costs	(4,447)		(1,751)
Proceeds from the sale and settlement of interest rate caps	7,893		19,587
Tax distributions to BRP LLC members	(408)		(9,393)
Proceeds from repayment of stockholder notes receivable	42		156
Distributions to VIEs	(385)		—
Net cash provided by (used in) financing activities	(41,928)		446,999
Net increase (decrease) in cash and cash equivalents and restricted cash	(36,077)		22,880
Cash and cash equivalents and restricted cash at beginning of period	230,471		227,737
Cash and cash equivalents and restricted cash at end of period	$	194,394	$	250,617

See accompanying Notes to ~~settle obligations~~Condensed Consolidated Financial Statements.

BRP GROUP, INC.

Condensed Consolidated Statements of ~~the consolidated variable interest entities.~~Cash Flows (Continued)

(in thousands) September 30, 2022 December 31, 2021
Assets of Consolidated Variable Interest Entities That Can Only be Used to Settle the Obligations of Consolidated Variable Interest Entities:
Cash and cash equivalents $ 239 $ 303
Premiums, commissions and fees receivable, net 356 272
Total current assets 595 575
Property and equipment, net 11 15
Other assets 5 5
Total assets $ 611 $ 595
Liabilities of Consolidated Variable Interest Entities for Which Creditors Do Not Have Recourse to the Company:
Premiums payable to insurance companies $ 38 $ —
Producer commissions payable 45 41
Accrued expenses and other current liabilities 1 4
Total liabilities $ 84 $ 45
(Unaudited)


	For the Nine Months Ended September 30,
(in thousands)	2023		2022
Supplemental schedule of cash flow information:
Cash paid during the period for interest	$	77,455	$	41,225
Cash paid during the period for income taxes	1,208		1,056
Disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	4,391	$	23,444
Contingent earnout liabilities recognized in business combinations and asset acquisitions	723		16,495
Capital expenditures incurred but not yet paid	699		1,198
Right-of-use assets increased through lease modifications and reassessments	697		4,732
Noncash debt issuance costs incurred	245		—
Increase (decrease) in goodwill resulting from measurement period adjustments for prior year business combinations	(211)		3,455
Equity issued in business combinations	—		4,819
Equity issued in satisfaction of a liability	—		711

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~ 6

~~BRP GROUP, INC.~~

~~Condensed Consolidated Statements of Comprehensive Income (Loss)~~

~~(Unaudited)~~

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(in thousands, except share and per share data) 2022 2021 2022 2021
Revenues:
Commissions and fees $ 259,368 $ 135,556 $ 734,676 $ 408,090
Operating expenses:
Commissions, employee compensation and benefits 195,920 100,081 522,518 278,521
Other operating expenses 47,212 27,968 124,424 64,380
Amortization expense 23,180 12,596 59,912 33,875
Change in fair value of contingent consideration 21,695 11,341 (10,809) 23,163
Depreciation expense 1,216 753 3,309 1,920
Total operating expenses 289,223 152,739 699,354 401,859
Operating income (loss) (29,855) (17,183) 35,322 6,231
Other income (expense):
Interest expense, net (20,766) (6,940) (45,748) (18,431)
Other income (expense), net 3,914 (478) 25,151 (1,535)
Total other expense (16,852) (7,418) (20,597) (19,966)
Net income (loss) (46,707) (24,601) 14,725 (13,735)
Less: net income (loss) attributable to noncontrolling interests (21,914) (11,389) 8,007 (5,736)
Net income (loss) attributable to BRP Group, Inc. $ (24,793) $ (13,212) $ 6,718 $ (7,999)
Comprehensive income (loss) $ (46,707) $ (24,601) $ 14,725 $ (13,735)
Comprehensive income (loss) attributable to noncontrolling interests (21,914) (11,389) 8,007 (5,736)
Comprehensive income (loss) attributable to BRP Group, Inc. (24,793) (13,212) 6,718 (7,999)
Basic earnings (loss) per share $ (0.43) $ (0.28) $ 0.12 $ (0.18)
Diluted earnings (loss) per share $ (0.43) $ (0.28) $ 0.11 $ (0.18)
Weighted-average shares of Class A common stock outstanding - basic 57,282,132 46,446,254 56,430,095 45,132,217
Weighted-average shares of Class A common stock outstanding - diluted 57,282,132 46,446,254 59,895,371 45,132,217

See accompanying Notes to Condensed Consolidated Financial Statements.7

~~BRP GROUP, INC.~~

~~Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity~~

~~(Unaudited)~~

For the Three Months Ended September 30, 2022
Stockholders’ Equity
Mezzanine Equity
Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Stockholder Notes Receivable Non-controlling Interest Total Redeemable Non-controlling Interest
(in thousands, except share data) Shares Amount Shares Amount
Balance at June 30, 2022 60,122,842 $ 601 55,442,435 $ 6 $ 683,331 $ (23,481) $ (131) $ 599,209 $ 1,259,535 $ 350
Net income (loss) — — — — — (24,793) — (21,988) (46,781) 74
Equity issued in business combinations 129,182 1 — — (66) — — 3,014 2,949 —
Share-based compensation, net of forfeitures 114,925 1 29,430 — 7,871 — — (3) 7,869 —
Redemption of Class B common stock 860,381 9 (860,381) (1) 8,279 — — (8,287) — —
Repayment of stockholder notes receivable — — — — — — 68 — 68 —
Balance at September 30, 2022 61,227,330 $ 612 54,611,484 $ 5 $ 699,415 $ (48,274) $ (63) $ 571,945 $ 1,223,640 $ 424

For the Nine Months Ended September 30, 2022
Stockholders’ Equity
Mezzanine Equity
Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Stockholder Notes Receivable Non-controlling Interest Total Redeemable Non-controlling Interest
(in thousands, except share data) Shares Amount Shares Amount
Balance at December 31, 2021 58,602,859 $ 586 56,338,051 $ 6 $ 663,002 $ (54,992) $ (219) $ 578,904 $ 1,187,287 $ 269
Net income — — — — — 6,718 — 7,852 14,570 155
Equity issued in business combinations 226,338 2 — — (4,331) — — 9,148 4,819 —
Share-based compensation, net of forfeitures 663,565 6 29,430 — 22,488 — — (1,365) 21,129 —
Redemption and cancellation of Class B common stock 1,734,568 18 (1,755,997) (1) 18,256 — — (18,273) — —
Tax distributions to BRP LLC members — — — — — — — (4,321) (4,321) —
Repayment of stockholder notes receivable — — — — — — 156 — 156 —
Balance at September 30, 2022 61,227,330 $ 612 54,611,484 $ 5 $ 699,415 $ (48,274) $ (63) $ 571,945 $ 1,223,640 $ 424

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~ 8

~~BRP GROUP, INC.~~

~~Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity (Continued)~~

~~(Unaudited)~~

For the Three Months Ended September 30, 2021
Stockholders’ Equity
Mezzanine Equity
Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Stockholder Notes Receivable Non-controlling Interest Total Redeemable Non-controlling Interest
(in thousands, except share data) Shares Amount Shares Amount
Balance at June 30, 2021 46,583,582 $ 466 49,575,871 $ 5 $ 404,025 $ (19,133) $ (306) $ 407,473 $ 792,530 $ 173
Net income (loss) — — — — — (13,212) — (11,439) (24,651) 50
Issuance of Class A common stock in offering, net of underwriting discounts and offering costs 9,200,000 92 — — 159,101 — — 109,128 268,321 —
Equity issued in business combinations 520,781 5 2,967,730 — 41,757 — — 30,157 71,919 —
Share-based compensation, net of forfeitures 23,277 — — — 2,963 — — 344 3,307 —
Redemption of Class B common stock 59,286 1 (59,286) — 445 — — (446) — —
Repayment of stockholder notes receivable — — — — — — 43 — 43 $ —
Balance at September 30, 2021 56,386,926 $ 564 52,484,315 $ 5 $ 608,291 $ (32,345) $ (263) $ 535,217 $ 1,111,469 $ 223

For the Nine Months Ended September 30, 2021
Stockholders’ Equity
Mezzanine Equity
Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Stockholder Notes Receivable Non-controlling Interest Total Redeemable Non-controlling Interest
(in thousands, except share data) Shares Amount Shares Amount
Balance at December 31, 2020 44,953,166 $ 450 49,828,383 $ 5 $ 392,139 $ (24,346) $ (465) $ 402,087 $ 769,870 $ 98
Net income (loss) — — — — — (7,999) — (5,861) (13,860) 125
Issuance of Class A common stock in offering, net of underwriting discounts and offering costs 9,200,000 92 — — 159,101 — — 109,128 268,321 —
Equity issued in business combinations 737,065 7 2,967,730 — 43,616 — — 32,010 75,633 —
Share-based compensation, net of forfeitures 1,184,897 12 — — 10,942 — — 349 11,303 —
Redemption of Class B common stock 311,798 3 (311,798) — 2,493 — — (2,496) — —
Repayment of stockholder notes receivable — — — — — — 202 — 202 —
Balance at September 30, 2021 56,386,926 $ 564 52,484,315 $ 5 $ 608,291 $ (32,345) $ (263) $ 535,217 $ 1,111,469 $ 223

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~ 9

~~BRP GROUP, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

For the Nine Months
Ended September 30,
(in thousands) 2022 2021
Cash flows from operating activities:
Net income (loss) $ 14,725 $ (13,735)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 63,221 35,795
Change in fair value of contingent consideration (10,809) 23,163
Share-based compensation expense 26,065 11,921
(Gain) loss on interest rate caps (25,420) 1,159
Payment of contingent earnout consideration in excess of purchase price accrual (48,943) (602)
Amortization of deferred financing costs 3,894 2,301
Other fair value adjustments 369 217
Changes in operating assets and liabilities, net of effect of acquisitions:
Premiums, commissions and fees receivable, net (97,126) (58,150)
Prepaid expenses and other current assets (10,911) (5,604)
Due to/from related parties (176) 19
Right-of-use assets (15,076) (66,373)
Accounts payable, accrued expenses and other current liabilities 70,282 28,818
Operating lease liabilities 16,992 68,112
Other liabilities (3,740) —
Net cash provided by (used in) operating activities (16,653) 27,041
Cash flows from investing activities:
Cash consideration paid for business combinations, net of cash received (387,919) (218,818)
Cash consideration paid for asset acquisitions, net of cash received (3,356) (1,575)
Capital expenditures (15,400) (3,188)
Investment in business venture (791) —
Net cash used in investing activities (407,466) (223,581)
Cash flows from financing activities:
Proceeds from issuance of Class A common stock, net of underwriting discounts — 269,376
Payment of common stock offering costs — (1,055)
Payment of contingent earnout consideration up to amount of purchase price accrual (47,218) (1,078)
Proceeds from revolving line of credit 512,000 120,000
Payments on revolving line of credit (20,000) —
Proceeds from long-term debt — 97,914
Payments on long-term debt (6,382) (2,250)
Payments of debt issuance costs (1,751) (693)
Proceeds from the sales and settlements of interest rate caps 19,587 —
Tax distributions to BRP LLC members (9,393) —
Purchase of interest rate caps — (6,461)
Proceeds from repayment of stockholder notes receivable 156 202
Net cash provided by financing activities 446,999 475,955
Net increase in cash and cash equivalents and restricted cash 22,880 279,415
Cash and cash equivalents and restricted cash at beginning of period 227,737 142,022
Cash and cash equivalents and restricted cash at end of period $ 250,617 $ 421,437

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~ 10

~~BRP GROUP, INC.~~

~~Condensed Consolidated Statements of Cash Flows (Continued)~~

~~(Unaudited)~~

For the Nine Months
Ended September 30,
(in thousands) 2022 2021
Supplemental schedule of cash flow information:
Cash paid during the period for interest $ 41,225 $ 15,177
Cash paid during the period for taxes 1,056 —
Disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities $ 23,444 $ 12,495
Contingent earnout liabilities recognized in business combinations 16,495 60,865
Equity issued in business combinations 4,819 75,634
Right-of-use assets increased through lease modifications and reassessments 4,732 5,676
Increase in goodwill resulting from measurement period adjustments for prior year business combinations 3,455 —
Capital expenditures incurred but not yet paid 1,198 493
Equity issued in satisfaction of a liability 711 —
Conversion of contingent earnout liability to related party notes payable — 61,500
Noncash debt issuance costs incurred — 3,823

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~ 11

BRP GROUP, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Business and Basis of Presentation

BRP Group, Inc. (“BRP Group” or the “Company”) was incorporated in the state of Delaware on July 1, 2019. BRP Group is a diversified insurance agency and services organization that markets and sells insurance products and services to its customers throughout the U.S. A significant portion of the Company’s business is concentrated in the Southeastern U.S., with several other regional concentrations. BRP Group and its subsidiaries operate through ~~four~~ three reportable segments (“Operating ~~Groups,~~Groups”), including ~~Middle Market, Specialty, MainStreet~~Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions and ~~Medicare,~~Mainstreet Insurance Solutions, which are discussed in more detail in Note ~~15.~~13.

Principles of Consolidation

The consolidated financial statements include the accounts of BRP Group and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

As the sole manager of Baldwin Risk Partners, LLC (“BRP”), BRP Group operates and controls all the business and affairs of BRP, and has the sole voting interest in, and controls the management of, BRP. Accordingly, BRP Group consolidates BRP in its consolidated financial statements, resulting in a noncontrolling interest related to the membership interests of BRP (the “LLC Units”) held by BRP’s ~~LLC~~ members in its consolidated financial statements.

The Company has prepared these condensed consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“Topic 810”). Topic 810 requires that if an enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity should be included in the consolidated financial statements of the enterprise. The Company has recognized certain entities as variable interest entities of which the Company is the primary beneficiary and has included the accounts of these entities in the consolidated financial statements. Refer to Note 32 for additional information regarding the Company’s variable interest entities.

Topic 810 also requires that the equity of a noncontrolling interest shall be reported on the condensed consolidated balance sheets within total equity of the Company. Certain redeemable noncontrolling interests are reported on the condensed consolidated balance sheets as mezzanine equity. Topic 810 also requires revenues, expenses, gains, losses, net income or loss, and other comprehensive income or loss to be reported in the consolidated financial statements at consolidated amounts, which include amounts attributable to the owners of the parent and the noncontrolling interests.

Unaudited Interim Financial Reporting

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information and related notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting of recurring accruals, considered necessary for fair statement have been included. The accompanying balance sheet for the year ended December 31, ~~2021~~2022 was derived from audited financial statements, but does not include all disclosures required by GAAP. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, ~~2021~~2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on ~~March 1, 2022.~~February 28, 2023 and the Company’s Current Report on Form 8-K (relating to the Company’s reclassification of historical segment information) filed with the SEC on May 9, 2023.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Significant accounting policies and estimates underlying the accompanying condensed consolidated financial statements include the application of guidance for revenue ~~recognition, including determination of allowances for estimated policy cancellations;~~recognition; the ~~determination of fair value in relation to business combinations, purchase price allocation and~~ valuation of ~~intangible assets~~acquired relationships and contingent consideration; impairment of long-lived assets ~~including~~and goodwill; share-based compensation related to performance-based restricted stock unit awards; and the valuation ~~of the Tax Receivable Agreement liability and income taxes; and share-based compensation.~~allowance for deferred tax assets.

1211

Changes in Presentation

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, beginning in January 2023, the Company’s MainStreet and Medicare businesses were combined under one Operating Group, Mainstreet Insurance Solutions. In addition, the Middle Market and Specialty Operating Groups were rebranded as Insurance Advisory Solutions and Underwriting, Capacity & Technology Solutions, respectively. Prior year segment reporting information in Note 13 has been recast to conform to the current organizational structure.

Certain prior ~~year~~period amounts have been reclassified to conform to current ~~year~~period presentation. The Company ~~reclassified its wealth business~~made changes to the classification of revenue ~~from other income to~~in the disaggregated revenue table, including (i) the combination of direct bill revenue and agency bill revenue lines into one commission revenue line and (ii) the reclassification of certain revenue streams between profit-sharing revenue, consulting and service fee revenue, policy fee and installment fee revenue, and other income. Prior period amounts in the disaggregated revenue table in Note 4.3 have been reclassified to conform to current period presentation. In addition, amounts due from related parties and the change therein has been combined with prepaid expenses and other current assets within the condensed consolidated balance sheets and the condensed consolidated statements of cash flows.

Recently ~~Issued~~Adopted Accounting ~~Pronouncements~~Standards

In October 2021, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) to improve the accounting for acquired revenue contracts with customers in a business ~~combinations~~combination by addressing diversity in practice and inconsistency related to (i) the recognition of an acquired contract liability and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 requires that, at the acquisition date, an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) as if it had originated the contracts, while also taking into account how the acquiree applied Topic 606. ~~This guidance is~~The Company adopted ASU 2021-08 effective ~~for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted.~~January 1, 2023. The adoption ~~of this standard will~~did not have any impact on ~~the Company’s results of operations or~~our consolidated financial ~~condition.~~statements.

~~Adoption~~In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“Topic 848”)—Facilitation of the ~~Lease Accounting Standard Under~~Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which established optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform to provide temporary relief during the transition period of Topic ~~842~~

~~On December 31, 2021,~~848 and ease the ~~Company adopted ASU No. 2016-02, Leases (“Topic 842”) in connection with the loss~~potential burden of its emerging growth company status. Topic 842 was adopted effective January 1, 2021 (the “adoption date”) on a modified retrospective basis, under which the Company applied the new guidance to leases existing at,accounting for, or entered into after, the adoption date. The Company revised its previously reported consolidated financial statements effective January 1, 2021 in its Form 10-K for the year ended December 31, 2021 without filing amendments to its previously filed quarterly reports on Form 10-Q for the same year. Accordingly, our prior period condensed consolidated financial statements and information, as presented herein, have been revised to conform to the standard.

~~The following table summarizes~~recognizing the effects of, ~~adopting~~reference rate reform on financial reporting. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic ~~842~~848 to defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024 as a result of the extension of the intended cessation of USD LIBOR to June 30, 2023. The Company has adopted the optional expedient within ASU 2020-04 to account for modifications of contracts within the scope of ASC Topic 470, Debt, including Amendment No. 6 to the JPM Credit Agreement dated June 27, 2023 discussed in Note 7. The adoption did not have any impact on our ~~condensed~~ consolidated ~~statements of comprehensive income (loss) for the three and nine months ended September 30, 2021:~~

For the Three Months Ended
September 30, 2021 For the Nine Months Ended
September 30, 2021
(in thousands, except per share data) As Previously Reported Effect of Adoption of Topic 842 As Adjusted As Previously Reported Effect of Adoption of Topic 842 As Adjusted
Operating expenses:
Other operating expenses $ 27,589 $ 379 $ 27,968 $ 64,357 $ 23 $ 64,380
Total operating expenses 152,360 379 152,739 401,836 23 401,859
Operating income (loss) (16,804) (379) (17,183) 6,254 (23) 6,231
Net loss (24,222) (379) (24,601) (13,712) (23) (13,735)
Net loss attributable to BRP Group, Inc. (12,833) (379) (13,212) (7,976) (23) (7,999)
Basic loss per share $ (0.28) $ — $ (0.28) $ (0.18) $ — $ (0.18)
Diluted loss per share $ (0.28) $ — $ (0.28) $ (0.18) $ — $ (0.18)

financial statements.

~~The following table summarizes the effects of adopting Topic 842 on our condensed consolidated statement of cash flows for the nine months ended September 30, 2021:~~

For the Nine Months Ended September 30, 2021
(in thousands) As Previously Reported Effect of Adoption of Topic 842 As Adjusted
Cash flows from operating activities:
Net loss $ (13,712) $ (23) $ (13,735)
Changes in operating assets and liabilities, net of effect of acquisitions:
Prepaid expenses and other current assets (5,773) 169 (5,604)
Right-of-use assets — (66,373) (66,373)
Accounts payable, accrued expenses and other current liabilities 30,703 (1,885) 28,818
Operating lease liabilities — 68,112 68,112

2. ~~Business Combinations~~

~~The Company completed three business combinations for an aggregate purchase price of $415.4 million during the nine months ended September 30, 2022. In accordance with ASC Topic 805,~~ ~~Business Combinations~~ (“Topic 805”), total consideration was first allocated to the fair value of assets acquired, including liabilities assumed, with the excess being recorded as goodwill. For financial statement purposes, goodwill is not amortized but rather is evaluated for impairment at least annually or more frequently if an event or change in circumstances occurs that indicates goodwill may be impaired. For tax purposes, goodwill is deductible and will be amortized over a period of 15 years.

~~The Company completed the following business combinations during the nine months ended September 30, 2022:~~

•The Company acquired all the equity interests of Westwood Insurance Agency (“Westwood”), a MainStreet Partner effective April 29, 2022, to enhance the Company’s expertise and capabilities in embedded, tech-enabled homeowners’ insurance solutions.

•The Company acquired substantially all the assets and assumed certain liabilities of Venture Captive Management, LLC (“VCM”), a Specialty Partner effective June 3, 2022, to expand its capabilities into captive management and alternative risk funding solutions for Clients.

•The Company acquired substantially all the assets and assumed certain liabilities of National Health Plans & Benefits Agency, LLC (“NHPBA”), a Medicare Partner effective August 1, 2022, to enhance the Company’s expertise and expand its offerings within the individual health insurance market.

The recorded purchase price for business combinations includes an estimation of the fair value of contingent earnout obligations associated with contractual earnout provisions and other similar provisions providing for post-closing contingent consideration payments, which are based on recurring revenue, the insured value of sourced homeowners’ insurance of Westwood or other similar post-closing metrics. The contingent earnout consideration amounts identified in the table below are measured at fair value within Level 3 of the fair value hierarchy as discussed further in Note 13. Any subsequent changes in the fair value of contingent earnout liabilities will be recorded in the condensed consolidated statements of comprehensive income (loss) when incurred.

The recorded purchase price for certain business combinations also includes an estimation of the fair value of equity interests, which is calculated based on the value of the Company’s Class A common stock on the closing date taking into account a discount for lack of marketability.

The operating results of these business combinations have been included in the condensed consolidated statements of comprehensive income (loss) since their respective acquisition dates. The Company recognized total revenues and net income from these business combinations of $31.5 million and $10.0 million, respectively, for the three months ended September 30, 2022 and $49.7 million and $17.1 million, respectively, for the nine months ended September 30, 2022.

Acquisition-related costs incurred in connection with these business combinations are recorded in other operating expenses in the condensed consolidated statements of comprehensive income (loss). The Company incurred acquisition-related costs from these business combinations of $2.3 million for the nine months ended September 30, 2022.

Due to the complexity of valuing the consideration paid and the purchase price allocation and the timing of these activities, certain amounts included in the consolidated financial statements may be provisional and subject to additional adjustments within the measurement period as permitted by Topic 805. Specifically, the Company's valuations of premiums, commissions and fees receivable in accordance with Topic 606 are estimates subject to change based on relevant factors over the policy period. The valuations of intangible assets are also estimates based on assumptions of factors such as discount rates and growth rates. Accordingly, these assets are subject to measurement period adjustments as determined after the passage of time. Any measurement period adjustments related to prior period business combinations are reflected as current period adjustments in accordance with Topic 805.

The table below provides a summary of the total consideration and the estimated purchase price allocations made for each of the business acquisitions that became effective during the nine months ended September 30, 2022.

(in thousands) Westwood
All Others(1)
Totals
Cash consideration paid $ 372,939 $ 17,415 $ 390,354
Fair value of contingent earnout consideration 12,724 3,771 16,495
Fair value of equity interest — 4,819 4,819
Deferred payment — 3,716 3,716
Total consideration $ 385,663 $ 29,721 $ 415,384
Cash $ 658 $ 1,727 $ 2,385
Restricted cash 50 — 50
Premiums, commissions and fees receivable 4,225 157 4,382
Other assets 392 1,281 1,673
Intangible assets 209,200 15,124 224,324
Goodwill 174,727 14,006 188,733
Total assets acquired 389,252 32,295 421,547
Premiums payable to insurance companies (218) — (218)
Producer commissions payable (2,488) — (2,488)
Other liabilities (883) (2,574) (3,457)
Total liabilities acquired (3,589) (2,574) (6,163)
Net assets acquired $ 385,663 $ 29,721 $ 415,384
Maximum potential contingent earnout consideration $ 15,000 $ 12,294 $ 27,294

~~__________~~

~~(1)~~ ~~The "All Others" column includes amounts for the VCM and NHPBA business combinations.~~

The factors contributing to the recognition of goodwill are based on expanding business presence into new service markets, strategic benefits expected to be realized from acquiring the Partners’ assembled workforce and technology, in addition to other synergies gained from integrating the Partners’ operations into our consolidated structure.

~~The intangible assets acquired in connection with business combinations during the nine months ended September 30, 2022 have the following values and estimated weighted-average lives:~~


~~(in thousands, except weighted-average lives)~~	~~Amount~~		~~Weighted-Average Life~~
~~Purchased customer accounts~~	$	~~30,600~~	~~20.0 years~~
~~Distributor relationships~~	~~159,800~~		~~20.0 years~~
~~Software~~	~~29,500~~		~~5.0 years~~
~~Trade names~~	~~4,424~~		~~4.9 years~~

Future annual estimated amortization expense over the next five years for intangible assets acquired in connection with business combinations during the nine months ended September 30, 2022 is as follows:

(in thousands) Amount
For the remainder of 2022 $ 4,453
2023 20,140
2024 22,349
2025 23,940
2026 24,231
2027 18,565

The following pro forma consolidated results of operations are provided for illustrative purposes only and have been presented as if the acquisitions of Westwood, VCM and NHPBA occurred on January 1, 2021. This pro forma information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had occurred on that date, nor of the results that may be obtained in the future.

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(in thousands, except per share data) 2022 2021 2022 2021
Pro forma results:
Revenues $ 260,051 $ 160,131 $ 768,444 $ 477,928
Net income (loss) (46,133) (26,883) 11,969 (23,056)
Net income (loss) attributable to BRP Group, Inc. (24,491) (14,327) 5,290 (12,511)
Basic earnings (loss) per share $ (0.43) $ (0.31) $ 0.09 $ (0.28)
Diluted earnings (loss) per share $ (0.43) $ (0.31) $ 0.09 $ (0.28)
Weighted-average shares of Class A common stock outstanding - basic 57,327 46,673 56,586 45,358
Weighted-average shares of Class A common stock outstanding - diluted 57,327 46,673 60,190 45,358

3. Variable Interest Entities

Topic 810 requires a reporting entity to consolidate a variable interest entity (“VIE”) when the reporting entity has a variable interest or combination of variable interests that provide the entity with a controlling financial interest in the VIE. The Company continually assesses whether it has a controlling financial interest in each of its VIEs to determine if it is the primary beneficiary of the VIE and should, therefore, consolidate each of the VIEs. A reporting entity is considered to have a controlling financial interest in a VIE if it has (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb the losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

The Company determined that it is the primary beneficiary of its VIEs, which ~~at September 30, 2022 and December 31, 2021,~~ include Laureate Insurance Partners, LLC, BKS Smith, LLC, BKS MS, LLC and BKS Partners Galati Marine Solutions, LLC. The Company has consolidated its VIEs into the accompanying condensed consolidated financial statements.

Total revenues and expenses of the Company’s consolidated VIEs included in the condensed consolidated statements of comprehensive income (loss) were $0.4 million and $0.3 million, respectively, for the three months ended September 30, 2023 and $0.5 million and $0.2 million, respectively, for the three months ended September 30, ~~2022 and $0.3 million and $0.1 million, respectively, for the three months ended September 30, 2021.~~2022. Total revenues and expenses of the Company’s consolidated VIEs included in the condensed consolidated statements of comprehensive income (loss) were $1.4 million and $0.8 million, respectively, for the nine months ended September 30, 2023 and $1.3 million and $0.8 million, respectively, for the nine months ended September 30, ~~2022~~2022.

Total assets and ~~$0.7~~liabilities of the Company's consolidated VIEs included on the condensed consolidated balance sheets were $0.8 million and ~~$0.5~~$0.2 million, respectively, ~~for the nine months ended~~at September 30, ~~2021.~~

2023 and $0.4 million and $0.1 million, respectively, at December 31, 2022. The assets of the consolidated VIEs can only be used to settle the obligations of the consolidated VIEs and the creditors of the liabilities of the consolidated VIEs do not have recourse to the Company.

4.3. Revenue

The following table provides disaggregated commissions and fees revenue by major source:

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(in thousands) 2022 2021 2022 2021
Direct bill revenue(1)
$ 111,369 $ 58,582 $ 336,563 $ 203,302
Agency bill revenue(2)
92,895 53,495 255,087 136,271
Profit-sharing revenue(3)
15,044 8,105 49,422 26,572
Consulting and service fee revenue(4)
17,572 7,893 44,097 22,470
Policy fee and installment fee revenue(5)
18,036 5,146 37,163 14,414
Other income(6)
4,452 2,335 12,344 5,061
Total commissions and fees $ 259,368 $ 135,556 $ 734,676 $ 408,090


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Commission revenue(1)	$	237,103	$	204,264	$	737,815	$	591,650
Profit-sharing revenue(2)	25,959		15,044		75,877		49,422
Consulting and service fee revenue(3)	21,735		19,084		57,947		47,417
Policy fee and installment fee revenue(4)	17,071		18,367		49,907		37,834
Other income(5)	4,402		2,609		12,361		8,353
Total commissions and fees	$	306,270	$	259,368	$	933,907	$	734,676

__________

(1) ~~Direct bill~~Commission revenue ~~represents commission revenue~~is earned ~~by facilitating the arrangement between individuals or businesses and Insurance Company Partners~~ by providing insurance placement services to Clients ~~primarily~~under direct bill and agency bill arrangements with Insurance Company Partners for private risk management, commercial risk management, wealth management, employee benefits and Medicare insurance types.

(2)Agency bill revenue primarily represents commission revenue earned by facilitating the arrangement between individuals or businesses and Insurance Company Partners by providing insurance placement services to Clients wherein the Company acts as an agent on behalf of the Client.

~~(3)~~ Profit-sharing revenue represents bonus-type revenue that is earned by the Company as a sales incentive provided by certain Insurance Company Partners.

~~(4)~~(3) Service fee revenue is earned ~~by receiving~~for providing insurance placement services to Clients for a negotiated ~~fees in lieu of a commission~~fee and consulting revenue is earned by providing specialty insurance consulting.

~~(5)~~(4) Policy fee revenue represents revenue earned for acting in the capacity of an MGA on behalf of the Insurance Company ~~Partners~~Partner and fulfilling certain services including delivery of policy documents, processing payments and other administrative functions. Installment fee revenue represents revenue earned by the Company for providing payment processing services on behalf of the Insurance Company Partner related to policy premiums paid on an installment basis.

~~(6)~~(5) Other income ~~consists of Medicare~~includes other ancillary income, premium financing income and investment income, as well as marketing income that is based on agreed-upon cost reimbursement for fulfilling specific targeted Medicare marketing ~~campaigns in addition to other ancillary income and premium financing income generated across all Operating Groups.~~campaigns.

The application of Topic 606 requires the use of management judgment. The following are the areas of most significant judgment as it relates to Topic 606:

•The Company considers the policyholders as representative of its customers in the majority of contractual relationships, with the exception of Medicare contracts in its ~~Medicare operating segment,~~Mainstreet Insurance Solutions Operating Group, where the Insurance Company Partner is considered its customer.

•~~Contracts~~Medicare contracts in the ~~Medicare operating segment~~Mainstreet Insurance Solutions Operating Group are multi-year arrangements in which the Company is entitled to renewal commissions. However, the Company has applied a constraint to renewal ~~commission~~commissions that limits revenue recognized on new policies to the policy year in effect, and revenue recognized on renewed policies to the receipt of periodic cash, when a risk of significant reversals exists based on: (i) insufficient history; and (ii) the influence of external factors outside of the Company’s control, including policyholder discretion over plans and Insurance Company Partner relationship, political influence, and a contractual provision, which limits the Company’s right to receive renewal commissions to ongoing compliance and regulatory approval of the relevant Insurance Company Partner and compliance with the Centers for Medicare and Medicaid Services.

•The Company recognizes separately contracted ~~commissions~~commission revenue at the effective date of insurance placement and considers any ongoing interaction with the customer to be ~~immaterial~~insignificant in the context of the obligations of the contract.

•Variable consideration includes estimates of direct bill commissions, ~~a reserve~~reserves for policy cancellations and ~~estimates of~~accruals for profit-sharing ~~revenue.~~income.

•Costs to obtain a contract are deferred and recognized over five years, which represents management’s estimate of the average period over which a Client maintains its initial coverage relationship with the original Insurance Company Partner.

•Due to the relatively short time period between the information gathering phase and binding insurance coverage, the Company has determined that costs to fulfill contracts are not significant. Therefore, costs to fulfill a contract are expensed as incurred.

5.4. Contract Assets and Liabilities

Contract assets arise when the Company recognizes (i) revenue for amounts which have not yet been billed and ~~contract~~(ii) receivables for premiums to be collected on behalf of Insurance Company Partners. Contract liabilities relate to payments received in advance of performance under the contract before the transfer of a good or service to the customer. Contract assets are included in premiums, commissions and fees receivable, net and contract liabilities are included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. The balances of contract assets and liabilities arising from contracts with customers ~~are~~were as follows:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	September 30, 2023		December 31, 2022
Contract assets	Contract assets	$	192,176	$	168,550	Contract assets	$	327,999	$	278,023
Contract liabilities	Contract liabilities	25,060		18,178		Contract liabilities	27,094		30,981

~~Contract assets related to 2022 business combinations comprised $3.6 million at September 30, 2022.~~ During the nine months ended September 30, ~~2022,~~2023, the Company recognized revenue of ~~$17.9~~$30.6 million related to the contract liabilities balance at December 31, ~~2021.~~2022.

6.5. Deferred Commission Expense

The Company pays an incremental amount of compensation in the form of producer commissions on new business. In accordance with ASC Topic 340, Other Assets and Deferred Costs, these incremental costs are deferred and amortized over five years, which represents management’s estimate of the average benefit period for new business. Deferred commission expense represents ~~advisor~~producer commissions that are capitalized and not yet expensed and are included in other assets on the condensed consolidated balance sheets. The table below provides a rollforward of deferred commission ~~expense for the periods presented:~~expense:


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022		2023		2022
Balance at beginning of period	Balance at beginning of period	$	16,198	$	6,036	$	11,336	$	4,751	Balance at beginning of period	$	24,840	$	16,198	$	21,669	$	11,336
Costs capitalized	Costs capitalized	3,641		3,966		10,509		6,152		Costs capitalized	2,666		3,641		9,170		10,509
Amortization	Amortization	(1,206)		(587)		(3,212)		(1,488)		Amortization	(1,847)		(1,206)		(5,180)		(3,212)
Balance at end of period	Balance at end of period	$	18,633	$	9,415	$	18,633	$	9,415	Balance at end of period	$	25,659	$	18,633	$	25,659	$	18,633

~~7. Intangible Assets, Net and Goodwill~~

~~The Company recognizes certain separately identifiable intangible assets acquired in connection with business combinations and asset acquisitions. Intangible assets consist of the following:~~

September 30, 2022 December 31, 2021
(in thousands) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value
Purchased customer accounts $ 885,401 $ (94,268) $ 791,133 $ 851,445 $ (54,481) $ 796,964
Distributor relationships 260,421 (11,418) 249,003 100,621 (3,814) 96,807
Software 77,138 (27,178) 49,960 41,743 (18,265) 23,478
Trade names 28,613 (6,909) 21,704 24,189 (3,583) 20,606
Carrier relationships 7,859 (1,530) 6,329 7,859 (1,247) 6,612
Totals $ 1,259,432 $ (141,303) $ 1,118,129 $ 1,025,857 $ (81,390) $ 944,467

Amortization expense recorded for intangible assets was $23.2 million and $12.6 million for the three months ended September 30, 2022 and 2021, respectively, and $59.9 million and $33.9 million for the nine months ended September 30, 2022 and 2021, respectively.

Refer to Note 2 for a summary of goodwill recorded in connection with business combinations during the nine months ended September 30, 2022. The changes in carrying value of goodwill by Operating Group for the periods are as follows:
(in thousands) Middle Market Specialty MainStreet Medicare Total
Balance at December 31, 2021 $ 901,127 $ 264,018 $ 38,892 $ 24,704 $ 1,228,741
Goodwill of acquired businesses — 6,865 174,727 7,141 188,733
Measurement period adjustments(1)
2,939 516 — — 3,455
Balance at September 30, 2022 $ 904,066 $ 271,399 $ 213,619 $ 31,845 $ 1,420,929

~~(1)~~ Measurement period adjustments recorded during 2022 relating to businesses acquired in the fourth quarter of 2021 increased premiums, commissions and fees receivable by $3.7 million, increased current liabilities by $7.0 million and increased consideration by $0.2 million.

8.6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	September 30, 2023		December 31, 2022
Accrued compensation and benefits	Accrued compensation and benefits	$	39,225	$	22,460	Accrued compensation and benefits	$	48,782	$	44,903
Contract liabilities	Contract liabilities	25,060		18,178		Contract liabilities	27,094		30,981
Current portion of operating lease liabilities	Current portion of operating lease liabilities	13,447		12,520		Current portion of operating lease liabilities	16,064		14,043
Accrued expenses	Accrued expenses	11,862		9,731		Accrued expenses	13,070		13,101
Current portion of long-term debt						Current portion of long-term debt	10,243		8,509
Deferred consideration payments	Deferred consideration payments	10,543		12,355		Deferred consideration payments	3,471		6,840
Current portion of long-term debt		8,509		8,521
Tax distribution payable		—		5,072
Other	Other	5,552		3,386		Other	12,694		7,366
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	$	114,198	$	92,223	Accrued expenses and other current liabilities	$	131,418	$	125,743

BRP previously had advisor incentive agreements with several of its Risk Advisors to incentivize them to stay with the Company and grow their Book of Business. The incentive rights had a deposit buy-in requirement payable in the form of payroll withholding or other cash payments for which the Company recorded an advisor incentive liability. The incentive rights could be converted to LLC Units after the achievement of certain milestones, subject to approval at the discretion of management. The Company’s obligation related to advisor incentive liabilities of all but one Risk Advisor was settled in connection with its reorganization during 2019. One Risk Advisor chose not to convert his incentive rights into common stock of BRP Group. As a result, the remaining advisor incentive liability has been reported at expected value of the expected buyout amount each reporting period as a component of other liabilities in the accompanying balance sheets.

During the second quarter of 2022, the Company entered into an agreement with this Risk Advisor to settle the advisor incentive liability for $4.8 million, at which time the liability was reclassified from other liabilities to accrued expenses and other current liabilities. The obligation was subsequently satisfied in the third quarter of 2022.

7. Long-Term Debt

As of December 31, ~~2021,~~2022, the JPM Credit Agreement, as amended, provided for senior secured credit facilities in an aggregate principal amount of ~~$1.325~~$1.45 billion, which consisted of (i) a term loan facility in the principal amount of $850.0 million maturing in October 2027 (the “Term Loan B”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of ~~$475.0~~$600.0 million maturing in ~~2025~~April 2027 (the “Revolving Facility”).

On March 28, 2022, the Company entered into Amendment No. 5 to the JPM Credit Agreement, under which (i) the aggregate principal amount of the Revolving Facility was increased from $475.0 million to $600.0 million, (ii) the interest rate on the Revolving Facility changed to the SOFR, plus a credit spread adjustment of 10 bps plus an amount between 200 bps and 300 bps based on the total net leverage ratio, (iii) the total net leverage ratio covenant increased to 7.0x consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) and (iv) the maturity of the Revolving Facility was extended to April 1, 2027. The other terms of the Revolving Facility and the terms of the Term Loan B remained unchanged. The JPM Credit Agreement also provides for a benchmark replacement to SOFR for the Term Loan B such that there are no material contract modifications resulting from a transition from LIBOR.

The Term Loan B ~~bears~~bore interest at LIBOR plus 350 bps, subject to a LIBOR floor of 50 bps. At ~~September 30,~~December 31, 2022, the outstanding borrowings on the Term Loan B ~~were $840.2~~of $838.1 million, ~~and~~which are presented net of unamortized debt issuance costs of $19.7 million on the condensed consolidated balance sheet, had an applicable interest rate of ~~6.26% at~~7.79%.

On June 27, 2023, the Company entered into Amendment No. 6 to the JPM Credit Agreement, under which, effective July 1, 2023, the interest rate on the Term Loan B changed to term SOFR plus a credit spread adjustment between 11 bps and 43 bps based on the term SOFR rate plus an applicable margin of 350 bps, subject to a term SOFR floor of 50 bps.

On September 15, 2023, the Company entered into Amendment No. 7 to the JPM Credit Agreement to provide for a new senior secured first lien incremental term loan facility in an aggregate principal amount of $170.0 million (the “Incremental Term Loan B”), which represents an increase in the aggregate principal amount of the Term Loan B from $850.0 million to $1.02 billion. The Company used a portion of the proceeds from the Incremental Term Loan B to partially repay outstanding amounts under the Revolving Facility. The Company incurred $4.7 million in debt issuance costs in connection with this amendment.

At September 30, ~~2022.~~2023, the outstanding borrowings on the Term Loan B of $1.0 billion had an applicable interest rate of 8.94%. The outstanding borrowings on the Term Loan B are ~~offset by~~presented net of unamortized debt ~~discount and~~ issuance costs of ~~$20.8~~$21.3 million on the condensed consolidated balance sheet at September 30, ~~2022.~~2023.

Future annual maturities of the Term Loan B are as follows as of September 30, 2023:


(in thousands)	Amount
Payments for the years ending December 31,
2023	$	2,561
2024	10,243
2025	10,243
2026	10,243
2027	968,008
Total long-term debt	1,001,298
Less: unamortized debt issuance costs	(21,344)
Net long-term debt	$	979,954

Borrowings under the Revolving Facility accrue interest at SOFR plus 210 bps to SOFR plus 310 bps based on total net leverage ratio. The outstanding borrowings on the Revolving Facility of ~~$527.0~~$324.0 million at September 30, 2023 had an applicable interest rate of ~~6.07%~~8.42%. Comparatively, the outstanding borrowings on the Revolving Facility of $505.0 million at ~~September 30, 2022.~~December 31, 2022 had an applicable interest rate of 7.41%. The Revolving Facility is also subject to a commitment fee of 0.40% on the unused capacity at September 30, ~~2022.~~2023.

The JPM Credit Agreement requires the Company to meet certain financial covenants and comply with customary affirmative and negative covenants as listed in the underlying agreement. The Company was in compliance with these covenants at September 30, ~~2022.~~2023.

Interest Rate Caps

The Company ~~enters into~~uses interest rate caps to mitigate its exposure to interest rate risk on its debt by limiting the impact of interest rate changes on cash flows. On May 5, 2022, the Company sold its $300.0 million notional, 2.50% interest rate cap expiring March 8, 2026 and two $100.0 million notional, 3.00% interest rate caps expiring August 13, 2028 for aggregate proceeds of $19.0 million. The Company retained its $300.0 million notional, 1.50% interest rate cap expiring on March 10, 2024.

The interest rate caps ~~are recorded at an aggregate fair value~~limit the variability of ~~$12.2 million and $6.3 million at September 30, 2022 and December 31, 2021, respectively.~~the applicable base rate to the amount of the cap. The interest rate caps, which are included as a component of other assets on the condensed consolidated balance ~~sheets.~~sheets, are recorded at an aggregate fair value of $6.8 million and $15.2 million at September 30, 2023 and December 31, 2022, respectively. The Company recognized a ~~fair value gain~~loss on interest rate caps ~~net~~ of ~~cash received for settlement of $3.6~~$0.8 million and ~~$24.9~~$0.5 million for the three and nine months ended September 30, 2023, respectively, and a gain of $4.2 million and $25.4 million for the three and nine months ended September 30, 2022, respectively, and a fair value loss on interest rate caps of $0.3 million and $1.2 million, respectively, for the three and nine months ended September 30, 2021. In addition, the Company recognized a gain on interest rate caps related to settlements received of $0.5 million for each of the three and nine months ended September 30, 2022.respectively. The ~~fair value~~ gain or loss on interest rate caps ~~and the gain on interest rate caps related to settlements received are~~is included as ~~components~~a component of other income, ~~(expense),~~ net in the condensed consolidated statements of comprehensive income (loss).

~~10.~~8. Related Party Transactions

~~Notes Payable~~Due to/from Related Parties

InRelated party notes payable of $1.5 million at September ~~2021,~~30, 2023 and December 31, 2022 relate to the ~~Company accelerated recognition~~settlement of ~~MSI’s maximum~~ contingent earnout ~~and entered into notes payable agreements with each~~consideration for certain of ~~MSI’s shareholders for a combined principal amount of $61.5 million. The related party notes were subsequently paid in full in April 2022.~~the Company’s Partners.

Commission Revenue

The Company serves as a broker for Holding Company of the Villages, Inc. (“The Villages”), a significant shareholder, and certain affiliated entities. Commission revenue recorded ~~as a result of~~from transactions with The Villages and affiliated entities was ~~$0.3~~$0.4 millionand ~~$1.0~~$0.3 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and $2.0 million~~and $2.3 million~~ for each of the nine months ended September 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

The Company serves as a broker for certain entities in which a member of our board of directors has a material interest. Commission revenue recorded ~~as a result of~~from transactions with these ~~transactions~~entities was less than $0.1 million and $0.1 million for ~~each of~~ the three months ended September 30, 2023 and 2022, respectively, and ~~2021~~$0.2 million and $0.3 ~~million and $0.1~~ million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Commissions and Consulting Expense

Two brothers of Lowry Baldwin, our Board Chair, ~~earned~~received Risk Advisor commissions from the Company ofcomprising approximately $0.2 million ~~and $0.1 million for~~during each of the three months ended September 30, ~~2022~~2023 and ~~2021, respectively,~~2022 and $0.5 million ~~and $0.4 million for~~during each of the nine months ended September 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

The Company has a consulting agreement with Accenture, with which an independent member of our board of directors holds an executive leadership position. Consulting expense recorded as a result of ~~these transactions~~this transaction was $0.4 million for the nine months ended September 30, 2023 and $0.7 million for each of the three and nine months ended September 30, 2022.

Rent Expense

The Company has various agreements to lease office space from wholly-owned subsidiaries of The Villages. Total rent expense incurred with respect to The Villages and its wholly-owned subsidiaries was approximately $0.1 million for each of the three months ended September 30, ~~2022~~2023 and ~~2021~~2022, and $0.3 million ~~and $0.4 million~~ for each of the nine months ended September 30, ~~2022~~2023 and ~~2021, respectively.~~2022. Total right-of-use assets and operating lease liabilities included on the Company's condensed consolidated balance sheets relating to these lease agreements were $1.4 million and $1.5 million, respectively, at September 30, 2023 and $1.7 million each at December 31, 2022.

The Company has various agreements to lease office space from other related ~~party entities.~~parties. Total rent expense incurred with respect to other related parties was ~~$0.9~~$1.0 million and ~~$0.6~~$0.9 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$2.8~~$2.9 million and ~~$1.7~~$2.8 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Total right-of-use assets and operating lease liabilities included on the Company’s condensed consolidated balance ~~sheet related~~sheets relating to these lease agreements were ~~$15.8~~$13.8 million and ~~$16.2~~$14.3 million, respectively, at September 30, ~~2022~~2023 and ~~$17.9~~$15.0 million and ~~$18.2~~$15.4 million, respectively, at December 31, ~~2021.~~2022.

~~11.~~

9. Share-Based Compensation

The Company has an Omnibus Incentive Plan (the “Omnibus Plan”) and a Partnership Inducement Award Plan (the “Inducement Plan” and collectively with the Omnibus Plan, the “Plans”) to motivate and reward Colleagues and certain other individuals ~~including those who join the Company through Partnerships,~~ to perform at the highest level and contribute significantly to the Company’s success, thereby furthering the best interests of ~~its~~BRP Group’s shareholders. The total number of shares of Class A common stock authorized for issuance under the Omnibus Plan and the Inducement Plan ~~provide for the Company to make awards of 6,142,862~~was 8,461,907 and 3,000,000, ~~shares of Class A common stock,~~ respectively, at September 30, ~~2022.~~2023.

During the nine months ended September 30, ~~2022,~~2023, the Company made awards of restricted stock ~~unrestricted stock and~~awards (“RSAs”), performance-based restricted stock ~~units~~unit awards (“PSUs”), and fully vested shares under the Plans to its non-employee directors, officers, Colleagues and ~~executive officers. Shares of unrestricted stock~~consultants. Fully-vested shares issued to directors, officers and Colleagues during the nine months ended September 30, ~~2022~~2023 were vested upon issuance and PSUs issued to officers vest in the quarter following the end of a performance period of 3 years, while ~~restricted stock~~RSAs issued to Colleagues, ~~Risk Advisors~~consultants and ~~executive~~ officers generally either cliff vest after 3 to 4 years or vest ratably over 3 to 5 years.

The following table summarizes the activity for non-vested awards granted by the Company under the Plans:


		Shares	Weighted-Average Grant-Date Fair Value Per Share			Shares	Weighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2021		3,215,731	$	28.83
Outstanding at December 31, 2022					Outstanding at December 31, 2022	3,595,303	$	28.26
Granted	Granted	1,048,937	26.62		Granted	1,585,820	29.95
Vested and settled	Vested and settled	(545,204)	25.53		Vested and settled	(1,145,017)	25.82
Forfeited	Forfeited	(92,533)	26.52		Forfeited	(156,054)	25.34
Outstanding at September 30, 2022		3,626,931	28.77
Outstanding at September 30, 2023					Outstanding at September 30, 2023	3,880,052	29.79

The total fair value of shares that vested and settled under the Plans was ~~$13.9~~$29.6 million and ~~$5.7~~$13.9 million for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Share-based compensation is recognized ratably over the vesting period of the respective awards and includes expense ~~recognized for management incentive units and advisor incentives, in addition~~related to issuances under the ~~Plans.~~Plans, MIU conversion LLC units and, prior to 2023, advisor incentive awards. Share-based compensation also includes the portion of annual bonuses that are payable in fully vested shares of Class A common stock. The Company recognizes share-based compensation expense for the Plans net of actual forfeitures. The Company recorded ~~total~~ share-based compensation expense of ~~$8.4~~$14.6 million and ~~$3.8~~$8.4 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$26.1~~$46.6 million and ~~$11.9~~$26.1 million for the nine months ended September 30, 2023 and 2022, ~~and 2021, respectively, which~~respectively. Share-based compensation expense is included in commissions, employee compensation and benefits expense in the condensed consolidated statements of comprehensive income (loss).

~~12.~~10. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to BRP Group ~~Inc.~~ by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings (loss) per share is computed giving effect to all potentially dilutive shares of common stock.

~~During~~The following table sets forth the ~~periods presented, potentially~~computation of basic and diluted earnings (loss) per share:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Basic earnings (loss) per share:
Net income (loss) attributable to BRP Group	$	(17,629)	$	(24,793)	$	(55,658)	$	6,718
Shares used for basic earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic	60,549		57,282		59,791		56,430
Basic earnings (loss) per share	$	(0.29)	$	(0.43)	$	(0.93)	$	0.12

Diluted earnings (loss) per share:
Net income (loss) attributable to BRP Group	$	(17,629)	$	(24,793)	$	(55,658)	$	6,718
Shares used for diluted earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic	60,549		57,282		59,791		56,430
Dilutive effect of unvested stock awards	—		—		—		3,465
Weighted-average shares of Class A common stock outstanding - diluted	60,549		57,282		59,791		59,895
Diluted earnings (loss) per share	$	(0.29)	$	(0.43)	$	(0.93)	$	0.11

Potentially dilutive securities ~~include restricted~~consist of unvested stock awards, including RSAs and PSUs, in addition to shares of Class B common stock, which can be exchanged (together with a corresponding number of LLC Units) for shares of Class A common stock on a one-for-one basis. The following potentially dilutive securities were excluded from the Company's diluted weighted-average number of shares outstanding calculation for the periods presented as their inclusion would have been anti-dilutive.

The shares of Class B common stock do not share in the earnings or losses attributable to BRP Group, and therefore, are not participating securities. Accordingly, a separate presentation of basic and diluted earnings (loss) per share of Class B common stock under the two-class method has not been included.

The following is a calculation of the basic and diluted weighted-average number of shares of Class A common stock outstanding and earnings (loss) per share for the three and nine months ended September 30, 2022 and 2021:

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(in thousands, except per share data) 2022 2021 2022 2021
Basic earnings (loss) per share:
Net income (loss) attributable to BRP Group, Inc. $ (24,793) $ (13,212) $ 6,718 $ (7,999)
Shares used for basic earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic 57,282 46,446 56,430 45,132
Basic earnings (loss) per share $ (0.43) $ (0.28) $ 0.12 $ (0.18)
Diluted earnings (loss) per share:
Net income (loss) attributable to BRP Group, Inc. $ (24,793) $ (13,212) $ 6,718 $ (7,999)
Shares used for diluted earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding 57,282 46,446 56,430 45,132
Dilutive effect of unvested restricted shares of Class A common stock — — 3,465 —
Weighted-average shares of Class A common stock outstanding - diluted 57,282 46,446 59,895 45,132
Diluted earnings (loss) per share $ (0.43) $ (0.28) $ 0.11 $ (0.18)

~~13.~~11. Fair Value Measurements

ASC Topic 820, Fair Value Measurement (“Topic 820”) established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy under Topic 820 are described below:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2: Inputs to the valuation methodology are quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The fair value measurement level for assets and liabilities within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis within each level of the fair value hierarchy:

The fair value of interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

Methodologies used for liabilities measured at fair value on a recurring basis within Level 3 of the fair value hierarchy at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 are based on limited unobservable inputs. These methods may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The fair value of interest rate caps was $12.2 million at September 30, 2022. The fair value of interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

~~The fair value of~~ contingent earnout liabilities is based on sales projections for the acquired entities, which are reassessed each reporting period. Based on the Company’s ongoing assessment of the fair value of its contingent earnout liabilities, the Company recorded a net increase in the estimated fair value of such liabilities of ~~$21.7~~$13.9 million and $55.1 million for the three ~~months ended September 30, 2022~~ and ~~a net decrease of $10.8 million for the~~ nine months ended September 30, ~~2022.~~2023, respectively. The Company has assessed the maximum estimated exposure to the contingent earnout liabilities to be ~~approximately $980.5~~$847.1 million at September 30, ~~2022.~~2023.

The Company measures contingent earnout liabilities at fair value at each reporting period using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The Company uses a probability weighted value analysis as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are sales projections over the earnout period, and the probability outcome percentages assigned to each scenario. Significant increases or decreases to either of these inputs would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earnout liabilities. Ultimately, the liability will be equivalent to the amount settled, and the difference between the fair value estimate and amount settled will be recorded in earnings for business combinations, or as a ~~reduction of~~change in the cost of the assets acquired for asset acquisitions.

The fair value of the contingent earnout liabilities is based on Monte Carlo simulations that measure the present value of the expected future payments to be made to Partners in accordance with the provisions outlined in the respective purchase agreements, which is a Level 3 fair value measurement. In determining fair value, the Company estimates the Partner’s future performance using financial projections developed by management for the Partner and market participant assumptions that were derived for revenue growth, ~~profitability based on EBITDA,~~ the number of rental units tracked or the insured value of sourced ~~homeowners’~~homeowners insurance. Revenue ~~and EBITDA~~ growth rates generally ranged from 7%9% to 35% at September 30, ~~2022~~2023 and from 5%8% to ~~22%~~35% at December 31, ~~2021.~~2022. The Company estimates future payments using the earnout formula and performance targets specified in each purchase agreement and these financial projections. These payments are discounted to present value using a risk-adjusted rate that takes into consideration market-based rates of return that reflect the ability of the Partner to achieve the targets. These discount rates generally ranged from 8.25% to ~~18.00%~~14.50% at September 30, ~~2022~~2023 and from ~~5.00%~~6.50% to ~~15.50%~~18.00% at December 31, ~~2021.~~2022. Changes in financial projections, market participant assumptions for revenue growth, ~~and profitability,~~ or the risk-adjusted discount rate, would result in a change in the fair value of contingent consideration.

The following table sets forth a summary of the changes in the fair value of the Company’s contingent earnout liabilities, which are measured at fair value on a recurring basis utilizing Level 3 assumptions in their valuation:

Fair value of contingent consideration issuances(1)

Settlement of contingent consideration~~(2)~~(1)

(1)During the nine months ended September 30, 2021, the Company recorded measurement period adjustments relating to businesses acquired in the fourth quarter of 2020. These adjustments decreased contingent earnout liabilities by $4.7 million, which offsets issuances of $60.9 million from business combinations for the period.

~~(2)~~ During ~~the three and nine months ended September 30,~~ 2021, the Company settled $61.5 million of its contingent earnout liabilities through the issuance of related party notes payable, of which ~~$35.9 million is~~was subsequently paid in April 2022 and included ~~in payment~~as payments of contingent earnout consideration ~~in excess of purchase price accrual~~ in the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022. ~~Refer to Note 10~~This amount has been excluded from the settlement of contingent consideration in the table above for ~~additional information.~~the nine months ended September 30, 2022.

Fair Value of Other Financial Instruments

The fair value of long-term debt and the revolving line of credit is based on an estimate using a discounted cash flow analysis ~~based on~~and current borrowing rates for similar types of borrowing arrangements. The carrying amount and estimated fair value of long-term debt and the revolving line of credit were as follows:

(1) The carrying amount of ~~the~~ long-term debt ~~does not reflect~~reflects outstanding borrowings on the Term Loan B, which are presented net of unamortized debt ~~discount and~~ issuance costs of ~~$20.8~~$21.3 million and ~~$23.5~~$19.7 million at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, ~~which are netted against long-term debt for~~on the condensed consolidated balance ~~sheet presentation.~~sheets.

~~14.~~12. Commitments and Contingencies

~~In April 2022,~~As of September 30, 2023, BRP ~~made~~has a remaining commitment to the University of South Florida (“USF”) to donate ~~a total of $5.3~~$4.7 million through October 2028. The gift will provide support for the School of Risk Management and Insurance in the USF Muma College of Business. It is currently anticipated that Lowry Baldwin, our Board Chair, will fund half of the amounts to be donated by BRP. ~~No payments have been made toward this commitment as of September 30, 2022.~~

The Company is involved in various claims and legal actions arising in the ordinary course of business. A liability is recorded when a loss is considered probable and is reasonably estimable in accordance with GAAP. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

The Company is in negotiations to settle one or more disputes relating to alleged restrictive covenant violations on the part of certain of its Risk Advisors. The Company has determined that a loss with an estimated range between $1.5 million and $1.8 million is probable. The Company accrued $1.5 million relating to this contingency during the three and nine months ended September 30, 2022 as a component of other operating expenses in the condensed consolidated statements of comprehensive income (loss).

~~15.~~13. Segment Information

The Company completed a strategic review of its organizational structure in January 2023 and determined that the chief operating decision maker, the chief executive officer, would change the way he manages and operates the Company’s MainStreet and Medicare businesses. Effective in the first quarter of 2023, the chief executive officer reviews the Medicare and Mainstreet businesses on a combined basis as one operating segment, also determined to be an Operating Group, Mainstreet Insurance Solutions, which is used by the chief executive officer to make decisions about the resources to be allocated to the Operating Group and to assess its performance. In addition, the Middle Market and Specialty Operating Groups were rebranded as Insurance Advisory Solutions and Underwriting, Capacity & Technology Solutions, respectively, effective in the first quarter of 2023.

Effective in the first quarter of 2023, BRP Group’s business is divided into ~~four~~three Operating Groups: ~~Middle Market, Specialty, MainStreet,~~Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions, and ~~Medicare.~~Mainstreet Insurance Solutions.

•The ~~Middle Market~~Insurance Advisory Solutions Operating Group provides expertly-designed commercial risk management, employee benefits solutions and private risk management for mid-to-large size businesses and high net worth individuals, as well as their families.

•The ~~Specialty~~Underwriting, Capacity & Technology Solutions (“UCTS”) Operating Group consists of two distinct businesses. Our specialty wholesale broker ~~businesses deliver~~business delivers specialty insurers, professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement. ~~Specialty~~UCTS also houses our MGA of the Future platform, in which we manufacture proprietary, ~~technology enabled~~technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our Risk Advisors ~~in Middle Market and MainStreet~~across our other Operating Groups and externally via select distribution partners, with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is our national embedded ~~renter’s~~renters insurance product sold at point of lease via integrations with property management software providers.

•The ~~MainStreet~~Mainstreet Insurance Solutions Operating Group offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities.

•The ~~Medicare~~Mainstreet Insurance Solutions Operating Group also offers ~~consultation~~consultations for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals, through a network of primarily independent contractor agents. In the Medicare Operating Group, BRP generates commissions and fees in the form of direct bill insurance placement and marketing income. Marketing income is earned through co-branded marketing campaigns with our Insurance Company Partners.

In ~~the Middle Market, MainStreet, and Specialty~~all its Operating Groups, the Company generates commissions ~~and fees~~ from insurance placement under both agency bill and direct bill ~~arrangements. In addition, the Company generates profit sharing~~arrangements, and profit-sharing income ~~in each of those segments~~ based on either the underlying ~~Book~~book of ~~Business~~business or performance, such as loss ratios. All Operating Groups also generate other ancillary income and premium financing income.

In the ~~Middle Market~~Insurance Advisory Solutions and ~~Specialty~~UCTS Operating Groups, the Company generates fees from service fee and consulting arrangements. Service fee arrangements are in place with certain ~~customers in lieu of commission arrangements.~~Clients for providing insurance placement services.

In the ~~Medicare~~UCTS Operating Group, the Company generates fees from policy fee and installment fee arrangements. Policy fee revenue is earned for acting in the capacity of an MGA and providing payment processing services and other administrative functions on behalf of Insurance Company Partners.

In the Mainstreet Insurance Solutions Operating Group, the Company generates commissions and fees ~~in the form of direct bill insurance placement and~~from marketing ~~income. Marketing~~ income, which is earned through co-branded Medicare marketing campaigns with the Company’s Insurance Company Partners.

In addition, the Company generates investment income in the Insurance Advisory Solutions and UCTS Operating Groups and the Corporate and Other non-reportable segment.

The Company’s chief operating decision maker, the chief executive officer, uses net income (loss) and net income (loss) before interest, taxes, depreciation, amortization, and one-time transactional-related expenses or non-recurring items to manage resources and make decisions about the business.

Summarized financial information ~~concerning~~regarding the Company’s Operating Groups is shown in the following tables. The Corporate and Other non-reportable segment includes any expenses not allocated to the Operating Groups and corporate-related items, including ~~related party and third-party~~ interest expense. Intersegment revenue and expenses are eliminated through the Corporate and Other column. Service center expenses and other overhead are allocated to the Company’s Operating Groups based on either revenue or headcount as applicable to each expense.

For the Three Months Ended September 30, 2022
(in thousands) Middle Market Specialty MainStreet Medicare Corporate and Other Total
Commissions and fees(1)
$ 130,216 $ 97,929 $ 39,894 $ 7,890 $ (16,561) $ 259,368
Net income (loss) (25,050) 14,734 7,008 (227) (43,172) (46,707)

For the Three Months Ended September 30, 2021
(in thousands) Middle Market Specialty MainStreet Medicare Corporate and Other Total
Commissions and fees(2)
$ 80,087 $ 41,986 $ 8,760 $ 5,665 $ (942) $ 135,556
Net income (loss) (7,395) 930 1,180 40 (19,356) (24,601)

Commissions and fees(1)


	For the Three Months Ended September 30, 2022
(in thousands)	Insurance Advisory Solutions		Underwriting, Capacity & Technology Solutions		Mainstreet Insurance Solutions		Corporate and Other		Total
Commissions and fees(2)	$	130,216	$	97,929	$	47,784	$	(16,561)	$	259,368
Net income (loss)	(25,050)		14,734		6,781		(43,172)		(46,707)


	For the Nine Months Ended September 30, 2023
(in thousands)	Insurance Advisory Solutions		Underwriting, Capacity & Technology Solutions		Mainstreet Insurance Solutions		Corporate and Other		Total
Commissions and fees(1)	$	493,367	$	314,791	$	174,114	$	(48,365)	$	933,907
Net income (loss)	31,807		22,830		22,775		(178,935)		(101,523)

Commissions and fees(2)

(1) During the three and nine months ended September 30, ~~2022,~~2023, the ~~Middle Market~~UCTS Operating Group recorded intercompany commissions and fees from activity with the ~~Specialty~~Mainstreet Insurance Solutions Operating Group and itself of ~~$0.4~~$18.6 million and ~~$1.1~~$47.7 million, ~~respectively;~~respectively, and the ~~Specialty~~Mainstreet Insurance Solutions Operating Group recorded intercompany commissions and fees from activity with the MainStreet Operating Group and itself of $15.8 million and $24.5 million, respectively; the MainStreet Operating Group recorded intercompany commissions and fees from activity with the Middle Market and Specialtyall Operating Groups of ~~$0.2~~$0.3 million and ~~$0.4 million, respectively; and the Medicare Operating Group recorded intercompany commissions and fees from activity with itself of $0.2 million and $1.0~~$1.4 million, respectively. These intercompany commissions and fees are eliminated through Corporate and Other.

(2) During the three and nine months ended September 30, ~~2021,~~2022, the ~~Middle Market~~Insurance Advisory Solutions Operating Group recorded intercompany commissions and fees from activity with the ~~Specialty~~UCTS Operating Group of ~~$0.6~~$0.4 million and $1.1 million, respectively; the ~~Specialty Operating Group recorded intercompany commissions and fees from activity with itself of less than $0.1 million for each period; the MainStreet~~UCTS Operating Group recorded intercompany commissions and fees from activity with the ~~Middle Market~~Mainstreet Insurance Solutions Operating Group and itself of ~~$0.1~~$15.8 million and ~~$0.2~~$24.5 million, respectively; and the ~~Medicare~~Mainstreet Insurance Solutions Operating Group recorded intercompany commissions and fees from activity with ~~itself~~all Operating Groups of ~~$0.2~~$0.4 million and ~~$0.3~~$1.4 million, respectively. These intercompany commissions and fees are eliminated through Corporate and Other.

(in thousands) Middle Market Specialty MainStreet Medicare Corporate and Other Total
Total assets at September 30, 2022 $ 2,204,872 $ 597,662 $ 467,066 $ 72,693 $ 70,095 $ 3,412,388
Total assets at December 31, 2021 2,142,485 549,662 61,322 56,472 66,366 2,876,307


(in thousands)	Insurance Advisory Solutions		Underwriting, Capacity & Technology Solutions		Mainstreet Insurance Solutions		Corporate and Other		Total
Total assets at September 30, 2023	$	2,234,244	$	628,549	$	517,088	$	43,617	$	3,423,498
Total assets at December 31, 2022	2,240,483		616,117		530,504		75,078		3,462,182

14. Subsequent Events

On November 7, 2023, the Company announced its mutual agreement with Kris Wiebeck and John Valentine for each to retire from their respective positions as Chief Strategy Officer and Chief Partnership Officer effective at the end of the Company’s 2023 fiscal year. The Company expects to incur one-time costs of approximately $8.0 million during the fourth quarter of 2023, $5.1 million of which represents severance compensation and $2.9 million of which represents early payment of the 2023 bonus otherwise payable to the retiring executives under the Company’s 2023 annual incentive plan in respect of 2023 performance.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q, ~~and~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on ~~March 1, 2022.~~February 28, 2023 and in our Current Report on Form 8-K (relating to the Company’s reclassification of historical segment information) filed with the SEC on May 9, 2023. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part ~~II, Item 1A. Risk Factors and Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q and under Part~~ I, Item 1A. Risk Factors in our Annual Report on Form 10-K ~~filed with~~for the ~~SEC on March 1,~~year ended December 31, 2022.

BRP Group, Inc. (“BRP Group,” the “Company,” “we,” “us” or “our”) is an independent insurance distribution firm delivering tailored insurance and risk management insights and solutions that give our Clients the peace of mind to pursue their purpose, passion and dreams. We support our Clients, Colleagues, Insurance Company Partners and communities through the deployment of vanguard resources, technology and capital to drive both organic and inorganic growth. When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our fifth stakeholder, our shareholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits. Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our Partnership strategy, and ~~the continued buildout of~~continuing to build out our MGA of the Future platform, which delivers proprietary, technology-enabled insurance solutions to our internal Risk Advisors as well as to a growing channel of external distribution partners. We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation.

We represent over ~~1,200,000~~two million Clients across the United States and internationally. Our more than ~~3,800~~3,900 Colleagues include ~~over 640~~approximately 700 Risk Advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 125 offices in 2325 states, all of which are equipped to provide diversified products and services to empower our Clients at every stage through our ~~four~~three Operating Groups.

•~~Middle Market~~Insurance Advisory Solutions provides expertly-designed commercial risk management, employee benefits solutions and private risk management for mid-to-large-size businesses and high net worth individuals, as well as their families.

•~~MainStreet~~Underwriting, Capacity & Technology Solutions ~~offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities.~~

•~~Medicare~~ offers consultation for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals through a network of primarily independent contractor agents. In the Medicare Operating Group, we generate commissions and fees in the form of direct bill insurance placement and marketing income. Marketing income is earned through co-branded marketing campaigns with our Insurance Company Partners.

•~~Specialty~~ (“UCTS”) consists of two distinct ~~businesses with~~businesses—our specialty wholesale broker business and our MGA of the Future ~~representing approximately 86% of the revenue.~~platform. Our specialty wholesale broker ~~businesses deliver~~business delivers specialty insurers, professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement. ~~Specialty also houses~~Through our MGA of the Future platform ~~in which~~(representing approximately 90% of UCTS' revenue during the first nine months of 2023), we ~~deliver~~manufacture proprietary, ~~technology enabled~~technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our Risk Advisors ~~in Middle Market and MainStreet~~across our other Operating Groups and externally via select distribution partners, with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is our national embedded ~~renter’s~~renters insurance product sold at point of lease via integrations with property management software providers.

•Mainstreet Insurance Solutions offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities, with a focus on accessing clients via sheltered distribution channels, which include, but are not limited to, new home builders, realtors, mortgage originators/lenders, master planned communities, and various other community centers of influence. Mainstreet Insurance Solutions also offers consultation for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals through a network of primarily independent contractor agents.

In 2011, we adopted the “Azimuth” as our corporate and cultural constitution. Named after a historical navigation tool used to find “true north,” the Azimuth asserts our core values, business basics and stakeholder promises. The ideals encompassed by the Azimuth support our mission to deliver indispensable, tailored insurance and risk management insights and solutions to our Clients. We strive to be regarded as the preeminent insurance advisory ~~firm~~ firm—fueled by relationships, powered by people and exemplified by ~~Client~~client adoption and loyalty. This type of environment is upheld by the distinct vernacular we use to describe our services and culture. We are a ~~firm,~~Firm, instead of an agency; we have Colleagues, instead of employees; and we have Risk Advisors, instead of producers/agents. We serve Clients instead of customers and we refer to our strategic acquisitions as Partnerships. We refer to insurance brokerages that we have acquired, or in the case of asset acquisitions, the producers, as Partners.

The insurance brokerage market is seasonal and our results of operations are somewhat affected by seasonal trends. Our Adjusted EBITDA and Adjusted EBITDA Margins are typically highest in the first quarter and lowest in the fourth quarter. This variation is primarily due to fluctuations in our revenues, while overhead remains consistent throughout the year. Our revenues are generally highest in the first quarter due to ~~the impact of contingent payments received in the first quarter from Insurance Company Partners that we cannot readily estimate before receipt without the risk of significant reversal and~~ a higher degree of first quarter policy commencements and renewals in ~~Medicare~~certain Insurance Advisory Solutions and ~~certain Middle Market~~Mainstreet Insurance Solutions lines of business such as employee benefits, commercial and ~~commercial.~~Medicare. In addition, a higher proportion of our first quarter revenue is derived from our highest margin businesses.

Partnerships can significantly impact Adjusted EBITDA and Adjusted EBITDA Margins in a given year and may increase the amount of seasonality within the business, especially results attributable to Partnerships that have not been fully integrated into our business or owned by us for a full year.

We utilize ~~strategic acquisitions, which we refer to as~~ Partnerships to complement and expand our business. We source Partnerships through proprietary deal flow, competitive auctions and cultivated industry relationships. We are currently considering Partnership opportunities in all of our Operating Groups, including businesses to complement or expand our MGA of the Future.

The financial impact of Partnerships may affect the comparability of our results from period to period. Our acquisition strategy also entails certain risks, including the risks that we may not be able to successfully source, value, close, integrate and effectively manage businesses that we acquire. To mitigate that risk, we have a professional team focused on finding new Partners and integrating new Partnerships. Executing on Partnership opportunities is a key pillar in our long-term growth ~~strategy over the next seven years.~~strategy.

We completed three Partnerships for an aggregate purchase price of $415.4 million during the nine months ended September 30, ~~2022 and ten~~2022. We did not complete any Partnerships ~~for an aggregate purchase price of $387.5 million~~ during the nine months ended September 30, 2021. Partnerships completed during 2022 added a total of $4.4 million of premiums, commissions and fees receivable, $224.3 million of intangible assets and $188.7 million of goodwill to the condensed consolidated balance sheet on the Partnership date.2023.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2022~~2023 AND ~~2021~~2022

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements for the three and nine months ended September 30, ~~2022~~2023 and the related notes and other financial information included elsewhere in this report.

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K ~~filed with~~for the ~~SEC on March 1,~~year ended December 31, 2022.

The following is a discussion of our consolidated results of operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

For the Three Months
Ended September 30, For the Nine Months
Ended September 30,
(in thousands) 2022 2021 Variance 2022 2021 Variance
Revenues:
Commissions and fees $ 259,368 $ 135,556 $ 123,812 $ 734,676 $ 408,090 $ 326,586
Operating expenses:
Commissions, employee compensation and benefits 195,920 100,081 95,839 522,518 278,521 243,997
Other operating expenses 47,212 27,968 19,244 124,424 64,380 60,044
Amortization expense 23,180 12,596 10,584 59,912 33,875 26,037
Change in fair value of contingent consideration 21,695 11,341 10,354 (10,809) 23,163 (33,972)
Depreciation expense 1,216 753 463 3,309 1,920 1,389
Total operating expenses 289,223 152,739 136,484 699,354 401,859 297,495
Operating income (loss) (29,855) (17,183) (12,672) 35,322 6,231 29,091
Other income (expense):
Interest expense, net (20,766) (6,940) (13,826) (45,748) (18,431) (27,317)
Other income (expense), net 3,914 (478) 4,392 25,151 (1,535) 26,686
Total other expense (16,852) (7,418) (9,434) (20,597) (19,966) (631)
Net income (loss) (46,707) (24,601) (22,106) 14,725 (13,735) 28,460
Less: net income (loss) attributable to noncontrolling interests (21,914) (11,389) (10,525) 8,007 (5,736) 13,743
Net income (loss) attributable to BRP Group, Inc. $ (24,793) $ (13,212) $ (11,581) $ 6,718 $ (7,999) $ 14,717


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands)	2023		2022		Variance		2023		2022		Variance
Revenues:
Commissions and fees	$	306,270	$	259,368	$	46,902	$	933,907	$	734,676	$	199,231

Operating expenses:
Commissions, employee compensation and benefits	220,469		195,920		24,549		676,659		522,518		154,141
Other operating expenses	47,165		47,212		(47)		141,254		124,424		16,830
Amortization expense	23,183		23,180		3		69,505		59,912		9,593
Change in fair value of contingent consideration	13,914		21,695		(7,781)		55,065		(10,809)		65,874
Depreciation expense	1,453		1,216		237		4,250		3,309		941
Total operating expenses	306,184		289,223		16,961		946,733		699,354		247,379

Operating income (loss)	86		(29,855)		29,941		(12,826)		35,322		(48,148)

Other income (expense):
Interest expense, net	(30,580)		(20,766)		(9,814)		(87,600)		(45,748)		(41,852)
Other income (expense), net	(1,351)		3,914		(5,265)		(193)		25,151		(25,344)
Total other expense	(31,931)		(16,852)		(15,079)		(87,793)		(20,597)		(67,196)

Income (loss) before income taxes	(31,845)		(46,707)		14,862		(100,619)		14,725		(115,344)
Income tax expense	161		—		161		904		—		904
Net income (loss)	(32,006)		(46,707)		14,701		(101,523)		14,725		(116,248)
Less: net income (loss) attributable to noncontrolling interests	(14,377)		(21,914)		7,537		(45,865)		8,007		(53,872)
Net income (loss) attributable to BRP Group	$	(17,629)	$	(24,793)	$	7,164	$	(55,658)	$	6,718	$	(62,376)

Commissions and Fees

We earn commissions and fees by facilitating the arrangement between Insurance Company Partners and individuals or businesses for the carrier to provide insurance to the insured party. Our commissions ~~and fees~~ are usually a percentage of the premium paid by the insured and generally depends on the type of insurance, the particular Insurance Company Partner and the nature of the services provided. Under certain arrangements with Clients, we earn pre-negotiated service fees ~~in lieu of commissions.~~for insurance placement services. Additionally, we earn policy fees for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of Insurance Company Partners. We may also receive ~~from Insurance Company Partners a~~ profit-sharing ~~commission,~~commissions, or straight ~~override,~~overrides, which represent forms of variable consideration from Insurance Company Partners associated with the placement of coverage ~~and are~~ based primarily on underwriting results, but may also contain considerations for volume, growth or retention.

Commissions and fees increased ~~$123.8 million and $326.6~~$46.9 million for the ~~three and nine months ended September 30, 2022~~third quarter of 2023 as compared to the same ~~periods~~period of ~~2021, respectively. The increase~~2022 primarily due to organic growth. Commissions and fees increased $199.2 million for the ~~periods related~~first nine months of 2023 as compared to the same period of 2022 due to organic growth of $150.5 million, and amounts attributable to Partners acquired during ~~2021 and~~ 2022 prior to their having reached the twelve-month owned mark (such amounts, the “Partnership Contribution”) ~~and organic growth. The Partnership Contribution accounted for $85.8 million and $234.8 million~~ of the increase to commissions and fees for the quarter and year-to-date periods, respectively, and organic growth accounted for $38.0 million and $91.8 million of the increase for the quarter and year-to-date periods, respectively.$44.7 million.

Major Sources of Commissions and Fees

The following table sets forth our commissions and fees by major source for the ~~periods indicated:~~three and nine months ended September 30, 2023 and 2022:

~~Direct bill~~Commission revenue represents ~~commission revenue~~commissions earned by providing insurance placement services to ~~Clients, primarily for private risk management, commercial risk management, employee benefits and Medicare insurance types. Direct bill~~Clients. Commission revenue increased ~~by $52.8 million and $133.3~~$32.8 million for the ~~three and nine months ended September 30, 2022~~third quarter of 2023 as compared to the same ~~periods~~period of ~~2021, respectively. The Partnership Contribution accounted for $42.9 million and $105.2 million of the increase~~2022 primarily due to ~~direct bill~~organic growth. Commission revenue ~~for the quarter and year-to-date periods, respectively. Organic growth for direct bill revenue was $9.9 million and $28.1~~increased $146.2 million for the ~~quarter and year-to-date periods, respectively.~~

Agency bill revenue primarily represents commission revenue earned by providing insurance placement services to clients wherein we act as an agent on behalf of the Client. Agency bill revenue increased $39.4 million and $118.8 million for the three andfirst nine months ~~ended September 30, 2022~~of 2023 as compared to the same ~~periods~~period of ~~2021, respectively. The~~2022 due to organic growth of $105.4 million and the Partnership Contribution ~~accounted for $29.7 million and $91.7 million~~ of the increase to agency bill revenue for the quarter and year-to-date periods, respectively. Organic growth for agency bill revenue was $9.7 million and $27.1 million for the quarter and year-to-date periods, respectively.$40.7 million.

Profit-sharing revenue represents bonus-type ~~or contingent~~ revenue that is earned by us as a sales incentive provided by certain Insurance Company Partners. Profit-sharing revenue increased ~~$6.9~~$10.9 million and ~~$22.9~~$26.5 million for the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods of ~~2021,~~2022, respectively, ~~as a result of the Partnership Contribution of $3.8 million and $13.3 million, respectively, and~~primarily due to organic growth of $3.1 million and $9.6 million, respectively. Profit-sharing revenue can be affected by higher loss ratios in our Middle Market and MainStreet Operating Groups, which is particularly acute in the Florida homeowners marketplace.growth.

Consulting and service fee revenue represents negotiated fees ~~received in lieu of a commission~~earned for providing insurance placement services to Clients and specialty insurance consulting revenue. Consulting and service fee revenue increased ~~$9.7~~$2.7 million and ~~$21.6~~$10.5 million for the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods of ~~2021,~~2022, respectively, ~~as a result of the Partnership Contribution of $8.2 million and $17.8 million, respectively, and~~primarily due to organic ~~growth of $1.5 million and $3.8 million, respectively.~~growth.

Policy fee and installment fee revenue represents revenue earned by our UCTS Operating Group for acting in the capacity of an MGA and providing payment processing ~~and~~ services and other administrative functions on behalf of Insurance Company Partners. Policy fee and installment fee revenue ~~increased $12.9~~decreased $1.3 million ~~and $22.7 million during~~for the ~~three and nine months ended September 30, 2022~~third quarter of 2023 as compared to the same ~~periods~~period of ~~2021, respectively, primarily~~2022 due to Clients from QBE’s builder-sourced homeowners book transitioning from the QBE Program Administrator Agreement and onto our agency management system.

Policy fee and installment fee revenue increased $12.1 million for the first nine months of 2023 as compared to the same period of 2022 due to organic growth. ~~These fees are generated by our Specialty Operating Group.~~

Other income consists of ~~Medicare~~other ancillary income, premium financing income and investment income, as well as marketing income that is based on agreed-upon cost reimbursement for fulfilling specific targeted Medicare marketing ~~campaigns in addition to other ancillary income and premium financing income generated across all Operating Groups.~~campaigns. Other income increased ~~$2.1~~$1.8 million and ~~$7.3~~$4.0 million for the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods of ~~2021, respectively. The increase in other~~2022, respectively, primarily due to investment income, ~~for~~which is excluded from the ~~year-to-date period is primarily attributable to the Partnership Contribution for our Specialty and Middle Market Operating Groups.~~

organic growth calculation.

Commissions, Employee Compensation and Benefits

Commissions, employee compensation and benefits is our largest expense. It consists of ~~(a)~~(i) base compensation comprising salary, bonuses and benefits paid and payable to Colleagues, commissions paid to Colleagues and outside commissions paid to others; and ~~(b)~~(ii) equity-based compensation associated with the grants of restricted and unrestricted stock awards to senior management, Colleagues, Risk Advisors and directors. We expect to continue to experience a general rise in commissions, employee compensation and benefits expense commensurate with expected revenue growth inas our ~~revenue~~compensation arrangements with our Colleagues and ~~headcount. We~~Risk Advisors contain significant bonus or commission components driven by the results of our operations. In addition, we operate in competitive markets for human capital and need to maintain competitive compensation levels as we expand geographically and create new products and services. ~~Our Colleague-related costs have risen as a result of the increasingly competitive market and the inflationary environment.~~

Our compensation arrangements with our employees contain significant bonus or commission components driven by the results of our operations. Therefore, as we grow commissions and fees, we expect compensation costs to rise.

Commissions, employee compensation and benefits expenses increased ~~$95.8~~$24.5 million and ~~$244.0~~$154.1 million for the three and nine months ended September 30, ~~2022~~2023 as compared to the same periods of ~~2021, respectively.~~2022, respectively, in part from the correlation of compensation to our revenue growth, as well as the inflationary environment. The Partnership Contribution accounted for ~~$44.4~~$0.7 million and ~~$126.7~~$25.1 million of the increase to commissions, employee compensation and benefits for the quarter and year-to-date periods, respectively. Share-based compensation expense increased ~~$4.6~~$6.2 million and ~~$14.1~~$20.6 million for the quarter and year-to-date periods, respectively, as a result of equity grants awarded to all newly hired Colleagues, ~~including those who joined us through Partnerships, and~~ grants to reward Colleagues, including members of senior ~~management. The remaining~~management, and an increase in ~~commissions,~~the portion of annual bonuses that are expected to be paid via fully vested shares of common stock. Commissions, employee compensation and benefits ~~expense can be attributed~~expenses have also increased as a result of investing in our future as we continue to ~~higher commissions expense relating to~~launch new products in our ~~organic growth, higher compensation~~MGA of the Future product suite and ~~benefits related to hiring to support~~expand the distribution footprint of our ~~growth,~~national mortgage and real estate channel. We successfully launched two new MGA of the ~~inflationary environment, which has resulted in significant increases~~Future products in the ~~cost~~third quarter of ~~human capital.~~2023, including a High Net Worth homeowners product targeted at homes with replacement values up to $10.0 million, and a habitational-focused Commercial Property product.

Other Operating Expenses

Other operating expenses include travel, accounting, legal and other professional fees, placement fees, rent, office expenses and other costs associated with our operations. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our ~~employees~~Colleagues and the overall size and scale of our business operations.

Other operating expenses ~~increased $19.2 million~~was relatively flat for the three months ended September 30, ~~2022~~2023 as compared to the same period of ~~2021, which was primarily attributable to increases in dues and subscriptions~~2022. During the third quarter of ~~$5.1 million from our~~2023, we had higher costs for investment in technology to support our growth of $3.3 million, lead generation fees relating to the expansion of our national mortgage and real estate channel of $1.2 million and payment processing fees for our MGA business of $0.4 million. These increases were offset by lower costs for travel and entertainment of ~~$4.7~~$1.6 million, ~~relating to integration of our 2021 Partnerships and our leadership and Risk Advisor conference,~~ advertising and marketing of ~~$2.8~~$1.3 million, ~~rent expense of $1.4 million relating to expansion of our operating locations, Colleague education and welfare of $1.2 million relating to investments in our Colleagues, and~~ repairs and maintenance of $1.1 million and professional fees of $0.8 million.

Other operating expenses increased ~~$60.0~~$16.8 million for the nine months ended September 30, ~~2022~~2023 as compared to the same period of ~~2021, which was primarily attributable to increases in dues and subscriptions of $12.0 million from our~~2022, driven by higher costs for investment in technology to support our growth of $16.7 million, lead generation fees relating to the expansion of our national mortgage and real estate channel of $5.0 million, travel and entertainment of ~~$9.2~~$1.9 million ~~relating to integration of our 2021 Partnerships~~ and ~~our leadership and Risk Advisor conference,~~ rent expense of ~~$7.2 million relating to expansion~~$1.5 million. These increases were partially offset by lower costs for repairs and maintenance of ~~our operating locations, Colleague education and welfare of $5.6 million relating to investments in our Colleagues, advertising and marketing of $5.4 million, professional fees of $3.8~~$3.2 million, licenses and taxes of ~~$3.5~~$2.2 million, ~~relating to revenue growth, repairs and maintenance~~professional fees of ~~$3.4~~$2.1 million and recruiting expense of ~~$2.4~~$1.8 million.

Amortization Expense

Amortization expense was relatively flat for the three months ended September 30, 2023 as compared to the same period of 2022. Amortization expense increased ~~$10.6 million and $26.0~~$9.6 million for the ~~three and~~ nine months ended September 30, ~~2022~~2023 as compared to the same ~~periods~~period of ~~2021, respectively, which was~~2022, driven by amortization of intangible assets recorded in connection with ~~Partnerships over the past twelve months.~~our 2022 Partnerships.

Change in Fair Value of Contingent Consideration

Change in fair value of contingent consideration was a ~~$21.7~~$13.9 million loss for the three months ended September 30, ~~2022~~2023 as compared to a ~~$11.3~~$21.7 million loss for the same period of ~~2021. The change~~2022. Change in fair value of contingent consideration was a $55.1 million loss for the ~~third quarter~~nine months ended September 30, 2023 as compared to a $10.8 million gain for the same period of ~~2022 was~~2022. The fair value losses related to contingent consideration for 2023 were impacted by changes in growth trends of certain partners ~~offset in part by high market volatility~~ and ~~rising interest rates,~~approaching the measurement date for many of the contingent earnout obligations, which resulted in an overall higher contingent earnout ~~consideration~~liability value.

Change in fair value of contingent consideration was a $10.8 million gain for the nine months ended September 30, 2022 as compared to a $23.2 million loss for the same period of 2021. The change in fair value of contingent consideration for the year-to-date period of 2022 was impacted by high market volatility and rising interest rates, offset in part by changes in growth trends of certain partners, which resulted in an overall lower contingent earnout consideration value.

~~Depreciation Expense~~

Depreciation expense increased $0.5 million and $1.4 million for the three and nine months ended September 30, 2022 as compared to the same periods of 2021, respectively, which was driven by our growth.

Interest Expense, Net

Interest expense, net increased ~~$13.8 million and $27.3~~$9.8 million for the three ~~and~~months ended September 30, 2023 as compared to the same period of 2022 due to the higher interest rate environment. Interest expense, net increased $41.9 million for the nine months ended September 30, ~~2022~~2023 as compared to the same ~~periods~~period of ~~2021, respectively,~~2022, resulting primarily from the higher interest rate environment and, to a lesser extent, higher average borrowings outstanding on our Revolving Facility. We expect interest expense to increase during the remainder of 2023 and ~~higher average~~into 2024 as interest rates ~~related~~are expected to ~~increases~~remain high in the ~~benchmark rates for our variable rate debt.~~near-term.

Refer to Item 3. ~~Qualitative~~Quantitative and ~~Quantitative~~Qualitative Disclosures About Market Risk for further discussion of the impact of rising interest rates on our results of operations, financial condition and cash flows.

Other Income, ~~(Expense),~~ Net

Other income, ~~(expense),~~ net ~~was $3.9 million and $25.2~~decreased $5.3 million for the three ~~and nine~~ months ended September 30, ~~2022,~~2023 as compared to the same period of 2022. We recognized a loss on our interest rate caps of $0.8 million during the third quarter of 2023, which included an unrealized fair value loss of $3.8 million, offset in part by a realized gain related to settlements received of $3.0 million. The unrealized fair value loss for the third quarter of 2023 primarily ~~as a result~~relates to one of our interest rate caps approaching maturity. The value of our $300.0 million notional, 1.50% interest rate cap will continue to decline through maturity in March 2024. Comparatively, we recognized a gain on interest rate caps of $4.2 million ~~and $25.4 million recorded~~ during the third quarter ~~and year-to-date periods, respectively,~~of 2022 in connection with rising interest rates and market estimates for future rate increases. ~~The gain~~

Other income, net decreased $25.3 million for the ~~year-to-date~~nine months ended September 30, 2023 as compared to the same period ~~includes $13.5~~of 2022. We recognized a loss on our interest rate caps of $0.5 million ~~that was~~year to date for 2023, which included an unrealized fair value loss of $8.4 million, offset in part by a realized gain related to settlements received of $7.9 million. The unrealized fair value loss year to date for 2023 relates to changes in the interest rate curve and one of our interest rate caps approaching maturity. Comparatively, we recognized a gain on interest rate caps of $25.4 million year to date for 2022 in connection with ~~our sale of three~~rising interest rates and market estimates for future rate ~~caps during the second quarter.~~increases.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA, Adjusted EBITDA Margin, Organic Revenue, Organic Revenue Growth, Adjusted Net Income and Adjusted Diluted Earnings Per Share (“EPS”), are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, including commissions and fees (for Organic Revenue and Organic Revenue Growth), net income (loss) (for Adjusted EBITDA and Adjusted EBITDA Margin), net income (loss) attributable to BRP Group ~~Inc.~~ (for Adjusted Net Income) or diluted earnings (loss) per share (for Adjusted Diluted EPS), which we consider to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for commissions and fees, net income (loss), net income (loss) attributable to BRP Group, ~~Inc.,~~ diluted earnings (loss) per share or other consolidated income statement data prepared in accordance with GAAP. Other companies in our industry may define or calculate these non-GAAP financial measures differently than we do, and accordingly, these measures may not be comparable to similarly titled measures used by other companies.

We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related Partnership and integration expenses, ~~related to Partnerships,~~ severance, and certain non-recurring items, including those related to raising capital. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance.

Adjusted EBITDA Margin is Adjusted EBITDA divided by commissions and fees. Adjusted EBITDA Margin is a key metric used by management and our board of directors to assess our financial performance. We believe that Adjusted EBITDA Margin is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance. We believe that Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.

Adjusted EBITDA and Adjusted EBITDA Margin have important limitations as analytical tools. For example, Adjusted EBITDA and Adjusted EBITDA Margin:

•do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•do not reflect changes in, or cash requirements for, our working capital needs;

•do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations;

•do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;

•do not reflect share-based compensation expense and other non-cash charges; and

•exclude certain tax payments that may represent a reduction in cash available to us.

We calculate Organic Revenue based on commissions and fees for the relevant period by excluding investment income and the first twelve months of commissions and fees generated from new Partners. Organic Revenue Growth is the change in Organic Revenue period-to-period, with prior period results adjusted to include commissions and fees that were excluded ~~from Organic Revenue~~ in the prior period because the relevant Partners had not yet reached the twelve-month owned mark, but which have reached the twelve-month owned mark in the current period. For example, revenues from a Partner acquired on June 1, ~~2021~~2022 are excluded from Organic Revenue for ~~2021.~~2022. However, after June 1, ~~2022,~~2023, results from June 1, ~~2021~~2022 to December 31, ~~2021~~2022 for such Partners are compared to results from June 1, ~~2022~~2023 to December 31, ~~2022~~2023 for purposes of calculating Organic Revenue Growth in ~~2022.~~2023. Organic Revenue Growth is a key metric used by management and our board of directors to assess our financial performance. We believe that Organic Revenue and Organic Revenue Growth are appropriate measures of operating performance as they allow investors to measure, analyze and compare growth in a meaningful and consistent manner.

~~Adjusted Net Income is presented for the purpose of calculating Adjusted Diluted EPS.~~ We define Adjusted Net Income as net income (loss) attributable to BRP Group ~~Inc.~~ adjusted for depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related Partnership and integration expenses, ~~related to Partnerships,~~ severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments. We believe that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance.

Adjusted Diluted EPS measures our per share earnings excluding certain expenses as discussed above and assuming all shares of Class B common stock were exchanged for Class A common ~~stock.~~stock on a one-for-one basis. Adjusted Diluted EPS is calculated as Adjusted Net Income divided by adjusted ~~dilutive~~diluted weighted-average shares outstanding. We believe Adjusted Diluted EPS is useful to investors because it enables them to better evaluate per share operating performance across reporting periods.

Adjusted EBITDA and Adjusted EBITDA Margin

The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net income (loss), which we consider to be the most directly comparable GAAP financial measure:

(1) Other addbacks to Adjusted EBITDA include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, ~~remediation efforts,~~ professional fees, ~~and~~ litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.

Organic Revenue and Organic Revenue Growth

The following table reconciles Organic Revenue and Organic Revenue Growth to commissions and fees, which we consider to be the most directly comparable GAAP financial measure:

Partnership commissions and fees(1)

Organic Revenue Growth(2)

Organic Revenue Growth %(2)

(1) Includes the first twelve months of such commissions and fees generated from newly acquired Partners.

(2) Organic Revenue for the three and nine months ended September 30, ~~2021~~2022 used to calculate Organic Revenue Growth for the three and nine months ended September 30, ~~2022~~2023 was ~~$135.7~~$255.7 million and ~~$408.3~~$734.1 million, respectively, which is adjusted to reflect revenues from Partnerships that reached the twelve-month owned mark during the three and nine months ended September 30, ~~2022.~~2023.

Adjusted Net Income and Adjusted Diluted EPS

The following table reconciles Adjusted Net Income to net income (loss) attributable to BRP Group ~~Inc.~~ and reconciles Adjusted Diluted EPS to diluted earnings (loss) per share, which we consider to be the most directly comparable GAAP financial measures:

Adjusted income taxes~~(3)~~(2)

Exchange of Class B shares(4)

Exchange of Class B common stock(3)

(1) ~~Calculation was adjusted in the fourth quarter of 2021 to include depreciation. Prior year amounts have been conformed to current year presentation.~~

~~(2)~~ Other addbacks to Adjusted Net Income include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, ~~remediation efforts,~~ professional fees, ~~and~~ litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.

~~(3)~~(2) Represents corporate income taxes at an assumed effective tax rate of 9.9% applied to adjusted pre-tax income.

~~(4)~~(3) Assumes the full exchange of Class B ~~shares~~common stock for Class A common stock pursuant to the Amended LLC Agreement.

OPERATING GROUP RESULTS

Commissions and Fees

In ~~the Middle Market, MainStreet and Specialty~~all our Operating Groups, we generate commissions ~~and fees~~ from insurance placement under both agency bill and direct bill ~~arrangements. In addition, we generate~~arrangements, and profit-sharing income ~~in each of those segments~~ based on either the underlying ~~Book~~book of ~~Business~~business or performance, such as loss ratios. All Operating Groups also generate other ancillary income and premium financing income.

In the ~~Middle Market~~Insurance Advisory Solutions and ~~Specialty~~UCTS Operating Groups, we generate fees from service fee and consulting arrangements. Service fee arrangements are in place with certain ~~customers in lieu of commission arrangements.~~Clients for providing insurance placement services.


(in thousands, except share and per share data)	(in thousands, except share and per share data)	September 30, 2022		December 31, 2021		(in thousands, except share and per share data)	September 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	158,600	$	138,292	Cash and cash equivalents	$	78,965	$	118,090
Restricted cash	Restricted cash	92,017		89,445		Restricted cash	115,429		112,381
Premiums, commissions and fees receivable, net	Premiums, commissions and fees receivable, net	446,112		340,837		Premiums, commissions and fees receivable, net	595,359		531,992
Prepaid expenses and other current assets	Prepaid expenses and other current assets	12,318		8,151		Prepaid expenses and other current assets	12,370		9,936
Due from related parties		1,844		1,668
Total current assets	Total current assets	710,891		578,393		Total current assets	802,123		772,399
Property and equipment, net	Property and equipment, net	24,500		17,474		Property and equipment, net	24,378		25,405
Right-of-use assets	Right-of-use assets	98,049		81,646		Right-of-use assets	88,586		96,465
Other assets	Other assets	39,890		25,586		Other assets	41,738		45,935
Intangible assets, net	Intangible assets, net	1,118,129		944,467		Intangible assets, net	1,044,824		1,099,918
Goodwill	Goodwill	1,420,929		1,228,741		Goodwill	1,421,849		1,422,060
Total assets	Total assets	$	3,412,388	$	2,876,307	Total assets	$	3,423,498	$	3,462,182
Liabilities, Mezzanine Equity and Stockholders’ Equity	Liabilities, Mezzanine Equity and Stockholders’ Equity					Liabilities, Mezzanine Equity and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Premiums payable to insurance companies	Premiums payable to insurance companies	$	356,671	$	310,045	Premiums payable to insurance companies	$	502,081	$	471,294
Producer commissions payable	Producer commissions payable	60,789		41,833		Producer commissions payable	65,855		53,927
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	114,198		92,223		Accrued expenses and other current liabilities	131,418		125,743
Related party notes payable	Related party notes payable	—		61,500		Related party notes payable	1,525		1,525
Current portion of contingent earnout liabilities	Current portion of contingent earnout liabilities	41,645		35,088		Current portion of contingent earnout liabilities	97,620		46,717
Total current liabilities	Total current liabilities	573,303		540,689		Total current liabilities	798,499		699,206
Revolving line of credit	Revolving line of credit	527,000		35,000		Revolving line of credit	324,000		505,000
Long-term debt, less current portion	Long-term debt, less current portion	810,973		814,614		Long-term debt, less current portion	969,711		809,862
Contingent earnout liabilities, less current portion	Contingent earnout liabilities, less current portion	187,969		223,501		Contingent earnout liabilities, less current portion	175,657		220,219
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	88,749		71,357		Operating lease liabilities, less current portion	81,510		87,692
Other liabilities	Other liabilities	330		3,590		Other liabilities	241		164
Total liabilities	Total liabilities	2,188,324		1,688,751		Total liabilities	2,349,618		2,322,143
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 12)						Commitments and contingencies (Note 12)
Mezzanine equity:	Mezzanine equity:					Mezzanine equity:
Redeemable noncontrolling interest	Redeemable noncontrolling interest	424		269		Redeemable noncontrolling interest	333		487
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 61,227,330 and 58,602,859 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		612		586
Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 54,611,484 and 56,338,051 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		5		6
Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 64,229,313 and 61,447,368 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 64,229,313 and 61,447,368 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	642		614
Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 52,486,094 and 54,504,918 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 52,486,094 and 54,504,918 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	5		5
Additional paid-in capital	Additional paid-in capital	699,415		663,002		Additional paid-in capital	742,553		704,291
Accumulated deficit	Accumulated deficit	(48,274)		(54,992)		Accumulated deficit	(152,422)		(96,764)
Stockholder notes receivable	Stockholder notes receivable	(63)		(219)		Stockholder notes receivable	—		(42)
Total stockholders’ equity attributable to BRP Group, Inc.		651,695		608,383
Total stockholders’ equity attributable to BRP Group						Total stockholders’ equity attributable to BRP Group	590,778		608,104
Noncontrolling interest	Noncontrolling interest	571,945		578,904		Noncontrolling interest	482,769		531,448
Total stockholders’ equity	Total stockholders’ equity	1,223,640		1,187,287		Total stockholders’ equity	1,073,547		1,139,552
Total liabilities, mezzanine equity and stockholders’ equity	Total liabilities, mezzanine equity and stockholders’ equity	$	3,412,388	$	2,876,307	Total liabilities, mezzanine equity and stockholders’ equity	$	3,423,498	$	3,462,182


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	September 30, 2023		December 31, 2022
Level 2	Level 2					Level 2
Interest rate caps	Interest rate caps	$	12,172	$	6,338	Interest rate caps	$	6,768	$	15,150
Level 2 Assets	Level 2 Assets	$	12,172	$	6,338	Level 2 Assets	$	6,768	$	15,150
Level 3	Level 3					Level 3
Contingent earnout liabilities	Contingent earnout liabilities	$	229,614	$	258,589	Contingent earnout liabilities	$	273,277	$	266,936
Level 3 Liabilities	Level 3 Liabilities	$	229,614	$	258,589	Level 3 Liabilities	$	273,277	$	266,936


		Fair Value Hierarchy		September 30, 2022						December 31, 2021						Fair Value Hierarchy			September 30, 2023						December 31, 2022
			Carrying Amount		Estimated Fair Value			Carrying Amount			Estimated Fair Value
(in thousands)														(in thousands)				Fair Value Hierarchy		Carrying Amount			Estimated Fair Value			Carrying Amount			Estimated Fair Value
Long-term debt(1)	Long-term debt(1)		Level 2		$	840,241		$	800,330		$	846,623		$	870,120		Long-term debt(1)			$	1,001,298		$	991,286		$	838,114		$	816,155
Revolving line of credit	Revolving line of credit	Level 2		527,000			501,967			35,000			33,968	Revolving line of credit		Level 2			324,000			314,966			505,000			476,304


☒x			Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934


☐o			Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934


	For the Three Months Ended September 30, 2021						For the Nine Months Ended September 30, 2021
(in thousands, except per share data)	As Previously Reported		Effect of Adoption of Topic 842		As Adjusted		As Previously Reported		Effect of Adoption of Topic 842		As Adjusted
Operating expenses:
Other operating expenses	$	27,589	$	379	$	27,968	$	64,357	$	23	$	64,380
Total operating expenses	152,360		379		152,739		401,836		23		401,859
Operating income (loss)	(16,804)		(379)		(17,183)		6,254		(23)		6,231
Net loss	(24,222)		(379)		(24,601)		(13,712)		(23)		(13,735)
Net loss attributable to BRP Group, Inc.	(12,833)		(379)		(13,212)		(7,976)		(23)		(7,999)
Basic loss per share	$	(0.28)	$	—	$	(0.28)	$	(0.18)	$	—	$	(0.18)
Diluted loss per share	$	(0.28)	$	—	$	(0.28)	$	(0.18)	$	—	$	(0.18)


(in thousands)	Westwood		All Others(1)		Totals
Cash consideration paid	$	372,939	$	17,415	$	390,354
Fair value of contingent earnout consideration	12,724		3,771		16,495
Fair value of equity interest	—		4,819		4,819
Deferred payment	—		3,716		3,716
Total consideration	$	385,663	$	29,721	$	415,384

Cash	$	658	$	1,727	$	2,385
Restricted cash	50		—		50
Premiums, commissions and fees receivable	4,225		157		4,382
Other assets	392		1,281		1,673
Intangible assets	209,200		15,124		224,324
Goodwill	174,727		14,006		188,733
Total assets acquired	389,252		32,295		421,547
Premiums payable to insurance companies	(218)		—		(218)
Producer commissions payable	(2,488)		—		(2,488)
Other liabilities	(883)		(2,574)		(3,457)
Total liabilities acquired	(3,589)		(2,574)		(6,163)
Net assets acquired	$	385,663	$	29,721	$	415,384

Maximum potential contingent earnout consideration	$	15,000	$	12,294	$	27,294


(in thousands)	Amount
For the remainder of 2022	$	4,453
2023	20,140
2024	22,349
2025	23,940
2026	24,231
2027	18,565


(in thousands)	Middle Market		Specialty		MainStreet		Medicare		Total
Balance at December 31, 2021	$	901,127	$	264,018	$	38,892	$	24,704	$	1,228,741
Goodwill of acquired businesses	—		6,865		174,727		7,141		188,733
Measurement period adjustments(1)	2,939		516		—		—		3,455
Balance at September 30, 2022	$	904,066	$	271,399	$	213,619	$	31,845	$	1,420,929


Commissions and Fees by Operating Group (in thousands, except percentages)
	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2022				2021				Variance				2022				2021				Variance
Operating Group	Amount		Percent of Business		Amount		Percent of Business		Amount		%		Amount		Percent of Business		Amount		Percent of Business		Amount		%
Middle Market	$	130,216	50	%	$	80,087	60	%	$	50,129	63	%	$	433,151	59	%	$	266,751	65	%	$	166,400	62	%
Specialty	97,929		38	%	41,986		31	%	55,943		133	%	221,753		30	%	97,173		24	%	124,580		128	%
MainStreet	39,894		15	%	8,760		6	%	31,134		355	%	78,601		11	%	25,558		6	%	53,043		208	%
Medicare	7,890		3	%	5,665		4	%	2,225		39	%	28,166		4	%	20,269		5	%	7,897		39	%
Corporate and Other	(16,561)		(6)	%	(942)		(1)	%	(15,619)		n/m		(26,995)		(4)	%	(1,661)		—	%	(25,334)		n/m
	$	259,368			$	135,556			$	123,812			$	734,676			$	408,090			$	326,586


Other Operating Expenses by Operating Group (in thousands, except percentages)
	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2022				2021				Variance				2022				2021				Variance
Operating Group	Amount		Percent of Business		Amount		Percent of Business		Amount		%		Amount		Percent of Business		Amount		Percent of Business		Amount		%
Middle Market	$	20,130	43	%	$	13,749	49	%	$	6,381	46	%	$	52,703	42	%	$	31,579	49	%	$	21,124	67	%
Specialty	8,031		17	%	4,343		16	%	3,688		85	%	21,184		17	%	8,386		13	%	12,798		153	%
MainStreet	4,422		9	%	1,169		4	%	3,253		278	%	11,969		10	%	3,464		5	%	8,505		246	%
Medicare	1,778		4	%	1,134		4	%	644		57	%	4,497		4	%	3,621		6	%	876		24	%
Corporate and Other	12,851		27	%	7,573		27	%	5,278		70	%	34,071		27	%	17,330		27	%	16,741		97	%
	$	47,212			$	27,968			$	19,244			$	124,424			$	64,380			$	60,044


Amortization Expense by Operating Group (in thousands, except percentages)
	For the Three Months Ended September 30,												For the Nine Months Ended September 30,
	2022				2021				Variance				2022				2021				Variance
Operating Group	Amount		Percent of Business		Amount		Percent of Business		Amount		%		Amount		Percent of Business		Amount		Percent of Business		Amount		%
Middle Market	$	12,576	55	%	$	8,811	70	%	$	3,765	43	%	$	37,660	63	%	$	23,722	69	%	$	13,938	59	%
Specialty	4,275		18	%	2,936		23	%	1,339		46	%	12,689		21	%	7,663		23	%	5,026		66	%
MainStreet	5,869		25	%	395		3	%	5,474		n/m		8,275		14	%	1,221		4	%	7,054		n/m
Medicare	459		2	%	452		4	%	7		2	%	1,284		2	%	1,266		4	%	18		1	%
Corporate and Other	1		—	%	2		—	%	(1)		—	%	4		—	%	3		—	%	1		—	%
	$	23,180			$	12,596			$	10,584			$	59,912			$	33,875			$	26,037


		Payments Due by Period													Payments Due by Period
(in thousands)	(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating leases(1)	Operating leases(1)	$	120,554	$	17,982	$	36,810	$	32,474	$	33,288	Operating leases(1)	$	113,401	$	20,662	$	39,344	$	33,010	$	20,385
Debt obligations payable(2)	Debt obligations payable(2)	1,769,375		92,821		184,043		692,956		799,555		Debt obligations payable(2)	1,774,749		126,556		250,364		1,397,829		—
Maximum future contingent payment obligation(3)		980,505		150,802		819,703		10,000		—
Undiscounted estimated contingent earnout obligation(3)												Undiscounted estimated contingent earnout obligation(3)	332,018		105,568		226,450		—		—
USF Grant	USF Grant	5,260		520		1,388		1,720		1,632		USF Grant	4,740		540		1,704		1,696		800
Total	Total	$	2,875,694	$	262,125	$	1,041,944	$	737,150	$	834,475	Total	$	2,224,908	$	253,326	$	517,862	$	1,432,535	$	21,185


	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Value that may yet be Purchased under the Plans or Programs
July 1, 2022 to July 31, 2022	21,911	$	25.15	—	$	—
August 1, 2022 to August 31, 2022	18,024	27.80		—	—
September 1, 2022 to September 30, 2022	2,162	31.68		—	—
Total	42,097	$	26.62	—	$	—


Exhibit No.						Description of Exhibit
3.1						Amended and Restated Certificate of Incorporation of BRP Group, Inc. (incorporated herein by reference to Exhibit 3.1 of the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2019).
3.2						Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 of the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 15, 2020).
3.3						Amended and Restated By-Laws of BRP Group, Inc. (incorporated herein by reference to Exhibit 3.2 of the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2019).
3.4						First Amendment to Amended and Restated By-Laws of BRP Group, Inc. (incorporated herein by reference to Exhibit 3.4 of the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2023).
10.1						Amendment No. 7 to Credit Agreement, dated as of September 15 , 2023, by and among Baldwin Risk Partners, LLC, a Delaware limited liability company, JPMorgan Chase Bank, N.A., as the Administrative Agent, the Guarantors party thereto, the Lenders party thereto and the Issuing Lenders party thereto (incor porated herein by reference to Exhibit 10.1 of the registrant ’s Current Report on Form 8-K filed with the Securities and Exchange Commissions on September 19 , 2023).
31.1*						Certification of the Registrant’s Chief Executive Officer pursuant to Rule ~~13a-14~~13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of the Registrant’s Chief Financial Officer pursuant to Rule ~~13a-14~~13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**						Certification of the Registrant’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*						XBRL Instance Document
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document
104*						Cover Page Interactive Data File (formatted in inline XBRL and included in Exhibit 101)


		BRP GROUP, INC.

Date: November 7, ~~2022~~2023	By:	/s/ Trevor L. Baldwin
		Trevor L. Baldwin
		Chief Executive Officer

Date: November 7, ~~2022~~2023	By:	/s/ Bradford L. Hale
		Bradford L. Hale
		Chief Financial Officer