UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
xQuarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31,September 30, 2023
or
oTransition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission File Number: 001-39095

BRP GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware
  brplogo.jpg
61-1937225
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
4211 W. Boy Scout Blvd., Suite 800, Tampa, Florida 33607
(Address of principal executive offices) (Zip Code)
(866) 279-0698
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareBRPNasdaq 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 filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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 May 3,November 1, 2023, there were 63,736,99064,318,059 shares of Class A common stock outstanding and 53,064,50452,430,994 shares of Class B common stock outstanding.



BRP GROUP, INC.
INDEX
Page




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 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 AgreementThird Amended and Restated Limited Liability Company Agreement of BRP, as amended
APIApplication programming interface
book of businessInsurance policies bound by us on behalf of our Clients
bpsBasis points
BRPBaldwin Risk Partners, LLC, a wholly-owned subsidiary of BRP Group
BRP GroupBRP Group, Inc.
ClientsOur insureds
ColleaguesOur employees
Exchange ActSecurities Exchange Act of 1934, as amended
GAAPAccounting principles generally accepted in the United States of America
Insurance Company PartnersInsurance companies with which we have a contractual relationship
JPM Credit AgreementCredit 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
LIBORLondon Interbank Offered Rate
LLC UnitsMembership interests of BRP
MGAManaging General Agent
MIU conversion LLC UnitsNon-voting units issued to certain senior management prior to October 2019, 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 GroupsOur reportable segments
PartnersCompanies that we have acquired, or in the case of asset acquisitions, the producers
PartnershipsStrategic acquisitions made by the Company
QBEQBE Holdings, Inc., the prior owner of Westwood
Revolving FacilityOur revolving credit facility under the JPM Credit Agreement with commitments in an aggregate principal amount of $600.0 million, maturing April 1, 2027
Risk AdvisorsOur producers
SECU.S. Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
SOFRSecured Overnight Financing Rate
Tax Receivable AgreementTax 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 BOur term loan facility under the JPM Credit Agreement with a principal amount of $850.0 million,$1.02 billion, maturing October 14, 2027
WestwoodWestwood Insurance Agency, a 2022 Partner



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRP GROUP, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)(in thousands, except share and per share data)March 31, 2023December 31, 2022(in thousands, except share and per share data)September 30, 2023December 31, 2022
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$81,299 $118,090 Cash and cash equivalents$78,965 $118,090 
Restricted cashRestricted cash105,520 112,381 Restricted cash115,429 112,381 
Premiums, commissions and fees receivable, netPremiums, commissions and fees receivable, net580,343 531,992 Premiums, commissions and fees receivable, net595,359 531,992 
Prepaid expenses and other current assetsPrepaid expenses and other current assets13,199 9,823 Prepaid expenses and other current assets12,370 9,936 
Due from related parties114 113 
Total current assetsTotal current assets780,475 772,399 Total current assets802,123 772,399 
Property and equipment, netProperty and equipment, net25,470 25,405 Property and equipment, net24,378 25,405 
Right-of-use assetsRight-of-use assets95,316 96,465 Right-of-use assets88,586 96,465 
Other assetsOther assets43,878 45,935 Other assets41,738 45,935 
Intangible assets, netIntangible assets, net1,081,074 1,099,918 Intangible assets, net1,044,824 1,099,918 
GoodwillGoodwill1,422,060 1,422,060 Goodwill1,421,849 1,422,060 
Total assetsTotal assets$3,448,273 $3,462,182 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 companiesPremiums payable to insurance companies$481,131 $471,294 Premiums payable to insurance companies$502,081 $471,294 
Producer commissions payableProducer commissions payable62,954 53,927 Producer commissions payable65,855 53,927 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities108,641 125,743 Accrued expenses and other current liabilities131,418 125,743 
Related party notes payableRelated party notes payable1,525 1,525 Related party notes payable1,525 1,525 
Current portion of contingent earnout liabilitiesCurrent portion of contingent earnout liabilities118,569 46,717 Current portion of contingent earnout liabilities97,620 46,717 
Total current liabilitiesTotal current liabilities772,820 699,206 Total current liabilities798,499 699,206 
Revolving line of creditRevolving line of credit485,000 505,000 Revolving line of credit324,000 505,000 
Long-term debt, less current portionLong-term debt, less current portion808,765 809,862 Long-term debt, less current portion969,711 809,862 
Contingent earnout liabilities, less current portionContingent earnout liabilities, less current portion167,588 220,219 Contingent earnout liabilities, less current portion175,657 220,219 
Operating lease liabilities, less current portionOperating lease liabilities, less current portion86,739 87,692 Operating lease liabilities, less current portion81,510 87,692 
Other liabilitiesOther liabilities250 164 Other liabilities241 164 
Total liabilitiesTotal liabilities2,321,162 2,322,143 Total liabilities2,349,618 2,322,143 
Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)Commitments and contingencies (Note 12)
Mezzanine equity:Mezzanine equity:Mezzanine equity:
Redeemable noncontrolling interestRedeemable noncontrolling interest538 487 Redeemable noncontrolling interest333 487 
Stockholders’ equity:Stockholders’ equity:Stockholders’ equity:
Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 62,558,290 and 61,447,368 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively626 614 
Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 53,670,277 and 54,504,918 shares issued and outstanding at March 31, 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, respectivelyClass 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, respectively642 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, respectivelyClass 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
Additional paid-in capitalAdditional paid-in capital716,645 704,291 Additional paid-in capital742,553 704,291 
Accumulated deficitAccumulated deficit(110,896)(96,764)Accumulated deficit(152,422)(96,764)
Stockholder notes receivableStockholder notes receivable(21)(42)Stockholder notes receivable— (42)
Total stockholders’ equity attributable to BRP GroupTotal stockholders’ equity attributable to BRP Group606,359 608,104 Total stockholders’ equity attributable to BRP Group590,778 608,104 
Noncontrolling interestNoncontrolling interest520,214 531,448 Noncontrolling interest482,769 531,448 
Total stockholders’ equityTotal stockholders’ equity1,126,573 1,139,552 Total stockholders’ equity1,073,547 1,139,552 
Total liabilities, mezzanine equity and stockholders’ equityTotal liabilities, mezzanine equity and stockholders’ equity$3,448,273 $3,462,182 Total liabilities, mezzanine equity and stockholders’ equity$3,423,498 $3,462,182 
See accompanying Notes to Condensed Consolidated Financial Statements.
5


BRP GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands, except share and per share data)(in thousands, except share and per share data)20232022(in thousands, except share and per share data)2023202220232022
Revenues:Revenues:Revenues:
Commissions and feesCommissions and fees$330,446 $242,848 Commissions and fees$306,270 $259,368 $933,907 $734,676 
Operating expenses:Operating expenses:Operating expenses:
Commissions, employee compensation and benefitsCommissions, employee compensation and benefits230,954 153,750 Commissions, employee compensation and benefits220,469 195,920 676,659 522,518 
Other operating expensesOther operating expenses46,604 36,442 Other operating expenses47,165 47,212 141,254 124,424 
Amortization expenseAmortization expense23,163 17,562 Amortization expense23,183 23,180 69,505 59,912 
Change in fair value of contingent considerationChange in fair value of contingent consideration24,758 (5,632)Change in fair value of contingent consideration13,914 21,695 55,065 (10,809)
Depreciation expenseDepreciation expense1,348 988 Depreciation expense1,453 1,216 4,250 3,309 
Total operating expensesTotal operating expenses326,827 203,110 Total operating expenses306,184 289,223 946,733 699,354 
Operating income3,619 39,738 
Operating income (loss)Operating income (loss)86 (29,855)(12,826)35,322 
Other income (expense):Other income (expense):Other income (expense):
Interest expense, netInterest expense, net(27,884)(10,350)Interest expense, net(30,580)(20,766)(87,600)(45,748)
Other income (expense), netOther income (expense), net(1,511)15,451 Other income (expense), net(1,351)3,914 (193)25,151 
Total other income (expense)(29,395)5,101 
Total other expenseTotal other expense(31,931)(16,852)(87,793)(20,597)
Income (loss) before income taxesIncome (loss) before income taxes(25,776)44,839 Income (loss) before income taxes(31,845)(46,707)(100,619)14,725 
Income tax expenseIncome tax expense78 — Income tax expense161 — 904 — 
Net income (loss)Net income (loss)(25,854)44,839 Net income (loss)(32,006)(46,707)(101,523)14,725 
Less: net income (loss) attributable to noncontrolling interestsLess: net income (loss) attributable to noncontrolling interests(11,722)21,970 Less: net income (loss) attributable to noncontrolling interests(14,377)(21,914)(45,865)8,007 
Net income (loss) attributable to BRP GroupNet income (loss) attributable to BRP Group$(14,132)$22,869 Net income (loss) attributable to BRP Group$(17,629)$(24,793)$(55,658)$6,718 
Comprehensive income (loss)Comprehensive income (loss)$(25,854)$44,839 Comprehensive income (loss)$(32,006)$(46,707)$(101,523)$14,725 
Comprehensive income (loss) attributable to noncontrolling interestsComprehensive income (loss) attributable to noncontrolling interests(11,722)21,970 Comprehensive income (loss) attributable to noncontrolling interests(14,377)(21,914)(45,865)8,007 
Comprehensive income (loss) attributable to BRP GroupComprehensive income (loss) attributable to BRP Group(14,132)22,869 Comprehensive income (loss) attributable to BRP Group(17,629)(24,793)(55,658)6,718 
Basic earnings (loss) per shareBasic earnings (loss) per share$(0.24)$0.41 Basic earnings (loss) per share$(0.29)$(0.43)$(0.93)$0.12 
Diluted earnings (loss) per shareDiluted earnings (loss) per share$(0.24)$0.39 Diluted earnings (loss) per share$(0.29)$(0.43)$(0.93)$0.11 
Weighted-average shares of Class A common stock outstanding - basicWeighted-average shares of Class A common stock outstanding - basic58,711,79855,719,803Weighted-average shares of Class A common stock outstanding - basic60,549,08057,282,13259,791,43556,430,095
Weighted-average shares of Class A common stock outstanding - dilutedWeighted-average shares of Class A common stock outstanding - diluted58,711,79858,715,825Weighted-average shares of Class A common stock outstanding - diluted60,549,08057,282,13259,791,43559,895,371








See accompanying Notes to Condensed Consolidated Financial Statements.
6


BRP GROUP, INC.
Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity
(Unaudited)
For the Three Months Ended March 31, 2023
For the Three Months Ended September 30, 2023For the Three Months Ended September 30, 2023
Stockholders Equity
Mezzanine EquityStockholders’ EquityMezzanine Equity
Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitStockholder Notes ReceivableNon-controlling InterestTotalRedeemable Non-controlling InterestClass A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitNon-controlling InterestTotalRedeemable Non-controlling Interest
(in thousands, except share data)(in thousands, except share data)SharesAmountSharesAmount(in thousands, except share data)SharesAmountSharesAmount
Balance at December 31, 202261,447,368$614 54,504,918$$704,291 $(96,764)$(42)$531,448 $1,139,552 $487 
Balance at June 30, 2023Balance at June 30, 202363,696,680$637 53,024,504$$732,673 $(134,793)$498,245 $1,096,767 $495 
Net income (loss)Net income (loss)— — — — — (14,132)— (11,773)(25,905)51 Net income (loss)— — — — — (17,629)(14,459)(32,088)82 
Share-based compensation, net of forfeituresShare-based compensation, net of forfeitures276,281— — 6,870 — — 6,043 12,916 — Share-based compensation, net of forfeitures(5,777)— — — 4,898 — 4,017 8,915 — 
Redemption of Class B common stockRedemption of Class B common stock834,641 (834,641)— 5,484 — — (5,493)— — Redemption of Class B common stock538,410 (538,410)— 4,982 — (4,987)— — 
Tax distributions to BRP LLC membersTax distributions to BRP LLC members— — — — — — — (11)(11)— Tax distributions to BRP LLC members— — — — — — (47)(47)— 
Repayment of stockholder notes receivable— — — — — — 21 — 21 — 
Balance at March 31, 202362,558,290$626 53,670,277$$716,645 $(110,896)$(21)$520,214 $1,126,573 $538 
Distributions to VIEsDistributions to VIEs— — — — — — (244)
Balance at September 30, 2023Balance at September 30, 202364,229,313$642 52,486,094$$742,553 $(152,422)$482,769 $1,073,547 $333 

For the Three Months Ended March 31, 2022
For the Nine Months Ended September 30, 2023For the Nine Months Ended September 30, 2023
Stockholders Equity
Mezzanine Equity
Stockholders Equity
Mezzanine Equity
Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitStockholder Notes ReceivableNon-controlling InterestTotalRedeemable Non-controlling InterestClass A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitStockholder Notes ReceivableNon-controlling InterestTotalRedeemable Non-controlling Interest
(in thousands, except share data)(in thousands, except share data)SharesAmountSharesAmount(in thousands, except share data)SharesAmountSharesAmount
Balance at December 31, 202158,602,859$586 56,338,051$$663,002 $(54,992)$(219)$578,904 $1,187,287 $269 
Net income— — — — — 22,869 — 21,951 44,820 19 
Balance at December 31, 2022Balance at December 31, 202261,447,368$614 54,504,918$$704,291 $(96,764)$(42)$531,448 $1,139,552 $487 
Net income (loss)Net income (loss)— — — — — (55,658)— (46,096)(101,754)231 
Share-based compensation, net of forfeituresShare-based compensation, net of forfeitures117,899 — — 7,508 — — (913)6,596 — Share-based compensation, net of forfeitures763,121— — 19,517 — — 16,590 36,115 — 
Redemption of Class B common stockRedemption of Class B common stock70,000 (70,000)— 633 — — (634)— — Redemption of Class B common stock2,018,824 20 (2,018,824)— 18,745 — — (18,765)— — 
Tax distributions to BRP LLC membersTax distributions to BRP LLC members— — — — — — — (408)(408)— 
Repayment of stockholder notes receivableRepayment of stockholder notes receivable— — — — — — 44 — 44 — Repayment of stockholder notes receivable— — — — — — 42 — 42 — 
Balance at March 31, 202258,790,758$588 56,268,051$$671,143 $(32,123)$(175)$599,308 $1,238,747 $288 
Distributions to VIEsDistributions to VIEs— — — — — — — — — (385)
Balance at September 30, 2023Balance at September 30, 202364,229,313$642 52,486,094$$742,553 $(152,422)$— $482,769 $1,073,547 $333 















See accompanying Notes to Condensed Consolidated Financial Statements.
7


BRP GROUP, INC.
Condensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity (Continued)
(Unaudited)
For the Three Months Ended September 30, 2022
Stockholders Equity
Mezzanine Equity
Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitStockholder Notes ReceivableNon-controlling InterestTotalRedeemable Non-controlling Interest
(in thousands, except share data)SharesAmountSharesAmount
Balance at June 30, 202260,122,842$601 55,442,435$$683,331 $(23,481)$(131)$599,209 $1,259,535 $350 
Net income (loss)— — — — — (24,793)— (21,988)(46,781)74 
Equity issued in business combinations129,182 — — (66)— — 3,014 2,949 — 
Share-based compensation, net of forfeitures114,925 29,430 — 7,871 — — (3)7,869 — 
Redemption of Class B common stock860,381 (860,381)(1)8,279 — — (8,287)— — 
Repayment of stockholder notes receivable— — — — — — 68 — 68 — 
Balance at September 30, 202261,227,330$612 54,611,484$$699,415 $(48,274)$(63)$571,945 $1,223,640 $424 
7
For the Nine Months Ended September 30, 2022
Stockholders Equity
Mezzanine Equity
Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitStockholder Notes ReceivableNon-controlling InterestTotalRedeemable Non-controlling Interest
(in thousands, except share data)SharesAmountSharesAmount
Balance at December 31, 202158,602,859$586 56,338,051$$663,002 $(54,992)$(219)$578,904 $1,187,287 $269 
Net income— — — — — 6,718 — 7,852 14,570 155 
Equity issued in business combinations226,338 — — (4,331)— — 9,148 4,819 — 
Share-based compensation, net of forfeitures663,565 29,430 — 22,488 — — (1,365)21,129 — 
Redemption and cancellation of Class B common stock1,734,568 18 (1,755,997)(1)18,256 — — (18,273)— — 
Tax distributions to BRP LLC members— — — — — — — (4,321)(4,321)— 
Repayment of stockholder notes receivable— — — — — — 156 — 156 — 
Balance at September 30, 202261,227,330$612 54,611,484$$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 Cash Flows
(Unaudited)
For the Three Months
 Ended March 31,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022(in thousands)20232022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net income (loss)Net income (loss)$(25,854)$44,839 Net income (loss)$(101,523)$14,725 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortizationDepreciation and amortization24,511 18,550 Depreciation and amortization73,755 63,221 
Change in fair value of contingent considerationChange in fair value of contingent consideration24,758 (5,632)Change in fair value of contingent consideration55,065 (10,809)
Share-based compensation expenseShare-based compensation expense13,281 7,564 Share-based compensation expense46,637 26,065 
(Gain) loss on interest rate caps(Gain) loss on interest rate caps1,407 (15,810)(Gain) loss on interest rate caps489 (25,420)
Payment of contingent earnout consideration in excess of purchase price accrualPayment of contingent earnout consideration in excess of purchase price accrual(857)(11,117)Payment of contingent earnout consideration in excess of purchase price accrual(22,639)(48,943)
Amortization of deferred financing costsAmortization of deferred financing costs1,239 1,286 Amortization of deferred financing costs3,577 3,894 
Other lossOther loss100 — Other loss797 369 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Premiums, commissions and fees receivable, netPremiums, commissions and fees receivable, net(48,351)(35,359)Premiums, commissions and fees receivable, net(63,367)(97,126)
Prepaid expenses and other current assetsPrepaid expenses and other current assets(4,859)(8,908)Prepaid expenses and other current assets(6,294)(11,087)
Due to/from related parties(1)(89)
Right-of-use assetsRight-of-use assets1,149 (1,368)Right-of-use assets7,671 (15,076)
Accounts payable, accrued expenses and other current liabilitiesAccounts payable, accrued expenses and other current liabilities(163)627 Accounts payable, accrued expenses and other current liabilities32,793 70,282 
Operating lease liabilitiesOperating lease liabilities(468)1,984 Operating lease liabilities(4,162)16,992 
Other liabilitiesOther liabilities77 — Other liabilities— (3,740)
Net cash used in operating activities(14,031)(3,433)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities22,799 (16,653)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Capital expendituresCapital expenditures(3,499)(1,793)Capital expenditures(14,157)(15,400)
Cash consideration paid for asset acquisitionsCash consideration paid for asset acquisitions(1,500)(700)Cash consideration paid for asset acquisitions(2,118)(3,356)
Investment in business venturesInvestment in business ventures(100)(639)Investment in business ventures(673)(791)
Cash consideration paid for business combinations, net of cash receivedCash consideration paid for business combinations, net of cash received— (387,919)
Net cash used in investing activitiesNet cash used in investing activities(5,099)(3,132)Net cash used in investing activities(16,948)(407,466)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Payment of contingent earnout consideration up to amount of purchase price accrualPayment of contingent earnout consideration up to amount of purchase price accrual(4,680)(13,993)Payment of contingent earnout consideration up to amount of purchase price accrual(26,808)(47,218)
Proceeds from revolving line of creditProceeds from revolving line of credit50,000 40,000 Proceeds from revolving line of credit88,000 512,000 
Payments on revolving line of creditPayments on revolving line of credit(70,000)— Payments on revolving line of credit(269,000)(20,000)
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt170,000 — 
Payments on long-term debtPayments on long-term debt(2,127)(2,127)Payments on long-term debt(6,815)(6,382)
Payments of debt issuance costsPayments of debt issuance costs— (1,188)Payments of debt issuance costs(4,447)(1,751)
Proceeds from settlements of interest rate caps2,275 — 
Proceeds from the sale and settlement of interest rate capsProceeds from the sale and settlement of interest rate caps7,893 19,587 
Tax distributions to BRP LLC membersTax distributions to BRP LLC members(11)— Tax distributions to BRP LLC members(408)(9,393)
Proceeds from repayment of stockholder notes receivableProceeds from repayment of stockholder notes receivable21 44 Proceeds from repayment of stockholder notes receivable42 156 
Distributions to VIEsDistributions to VIEs(385)— 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(24,522)22,736 Net cash provided by (used in) financing activities(41,928)446,999 
Net increase (decrease) in cash and cash equivalents and restricted cashNet increase (decrease) in cash and cash equivalents and restricted cash(43,652)16,171 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 periodCash and cash equivalents and restricted cash at beginning of period230,471 227,737 Cash and cash equivalents and restricted cash at beginning of period230,471 227,737 
Cash and cash equivalents and restricted cash at end of periodCash and cash equivalents and restricted cash at end of period$186,819 $243,908 Cash and cash equivalents and restricted cash at end of period$194,394 $250,617 





See accompanying Notes to Condensed Consolidated Financial Statements.8
9



BRP GROUP, INC.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Three Months
 Ended March 31,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022(in thousands)20232022
Supplemental schedule of cash flow information:Supplemental schedule of cash flow information:Supplemental schedule of cash flow information:
Cash paid during the period for interestCash paid during the period for interest$24,898 $9,049 Cash paid during the period for interest$77,455 $41,225 
Cash paid during the period for income taxesCash paid during the period for income taxes1,208 1,056 
Disclosure of non-cash investing and financing activities:Disclosure of non-cash investing and financing activities:Disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilitiesRight-of-use assets obtained in exchange for operating lease liabilities$3,071 $5,336 Right-of-use assets obtained in exchange for operating lease liabilities$4,391 $23,444 
Contingent earnout liabilities recognized in business combinations and asset acquisitionsContingent earnout liabilities recognized in business combinations and asset acquisitions723 16,495 
Capital expenditures incurred but not yet paidCapital expenditures incurred but not yet paid1,084 — Capital expenditures incurred but not yet paid699 1,198 
Right-of-use assets increased through lease modifications and reassessmentsRight-of-use assets increased through lease modifications and reassessments61 — Right-of-use assets increased through lease modifications and reassessments697 4,732 
Increase in goodwill resulting from measurement period adjustments for prior year business combinations— 3,658 
Noncash debt issuance costs incurredNoncash debt issuance costs incurred— 92 Noncash debt issuance costs incurred245 — 
Increase (decrease) in goodwill resulting from measurement period adjustments for prior year business combinationsIncrease (decrease) in goodwill resulting from measurement period adjustments for prior year business combinations(211)3,455 
Equity issued in business combinationsEquity issued in business combinations— 4,819 
Equity issued in satisfaction of a liabilityEquity issued in satisfaction of a liability— 711 







































See accompanying Notes to Condensed Consolidated Financial Statements.9
10


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 three reportable segments (“Operating Groups”), including Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions and Mainstreet Insurance Solutions, which are discussed in more detail in Note 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 members (“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 2 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, 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, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on 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; the valuation of acquired relationships and contingent consideration; impairment of long-lived assets and goodwill; share-based compensation related to performance-based restricted stock unit awards; and the valuation allowance for deferred tax assets.
1011


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 period amounts have been reclassified to conform to current period presentation. The Company made certain changes to the classification of revenue 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 previously classified as other income tobetween profit-sharing revenue, consulting and service fee revenue, or policy fee and installment fee revenue.revenue, and other income. Prior yearperiod amounts in the disaggregated revenue table in Note 3 have been reclassified to conform to current yearperiod 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 Adopted Accounting Standards
In October 2021, the FASBFinancial 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 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. The Company adopted ASU 2021-08 effective January 1, 2023. The adoption did not have any impact on our consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“Topic 848”)—Facilitation of the 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 848 and ease the potential burden of accounting for, or recognizing the effects of, 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 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 consolidated financial statements.
2. 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 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 March 31,September 30, 2023 and $0.3$0.5 million and $0.3$0.2 million, respectively, for the three months ended March 31,September 30, 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.
12


Total assets and liabilities of the Company's consolidated VIEs included on the condensed consolidated balance sheets were $1.3$0.8 million and $0.7$0.2 million, respectively, at March 31,September 30, 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.
11


3. Revenue
The following table provides disaggregated commissions and fees revenue by major source:
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022(in thousands)2023202220232022
Commission revenue(1)
Commission revenue(1)
$270,861 $204,837 
Commission revenue(1)
$237,103 $204,264 $737,815 $591,650 
Profit-sharing revenue(2)
Profit-sharing revenue(2)
23,025 15,012 
Profit-sharing revenue(2)
25,959 15,044 75,877 49,422 
Consulting and service fee revenue(3)
Consulting and service fee revenue(3)
17,636 15,202 
Consulting and service fee revenue(3)
21,735 19,084 57,947 47,417 
Policy fee and installment fee revenue(4)
Policy fee and installment fee revenue(4)
15,832 5,850 
Policy fee and installment fee revenue(4)
17,071 18,367 49,907 37,834 
Other income(5)
Other income(5)
3,092 1,947 
Other income(5)
4,402 2,609 12,361 8,353 
Total commissions and feesTotal commissions and fees$330,446 $242,848 Total commissions and fees$306,270 $259,368 $933,907 $734,676 
__________
(1)    Commission revenue is earned by providing insurance placement services to Clients 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)    Profit-sharing revenue represents bonus-type revenue that is earned by the Company as a sales incentive provided by certain Insurance Company Partners.
(3)    Service fee revenue is earned by receivingfor providing insurance placement services to Clients for a negotiated fees in lieu of a commissionfee and consulting revenue is earned by providing specialty insurance consulting.
(4)    Policy fee revenue represents revenue earned for acting in the capacity of an MGA on behalf of the Insurance Company 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.
(5)    Other income 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.
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 Mainstreet Insurance Solutions Operating Group, where the Insurance Company Partner is considered its customer.
Medicare contracts in the 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 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 commission revenue at the effective date of insurance placement and considers any ongoing interaction with the customer to be insignificant in the context of the obligations of the contract.
Variable consideration includes estimates of direct bill commissions, reserves for policy cancellations and accruals for profit-sharing 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.
13


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.
12


4. Contract Assets and Liabilities
Contract assets arise when the Company recognizes (i) revenue for amounts which have not yet been billed and (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 were as follows:
(in thousands)(in thousands)March 31, 2023December 31, 2022(in thousands)September 30, 2023December 31, 2022
Contract assetsContract assets$346,824 $278,023 Contract assets$327,999 $278,023 
Contract liabilitiesContract liabilities26,033 30,981 Contract liabilities27,094 30,981 
During the threenine months ended March 31,September 30, 2023, the Company recognized revenue of $26.2$30.6 million related to the contract liabilities balance at December 31, 2022.
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 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 Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022(in thousands)2023202220232022
Balance at beginning of periodBalance at beginning of period$21,669 $11,336 Balance at beginning of period$24,840 $16,198 $21,669 $11,336 
Costs capitalizedCosts capitalized3,372 3,630 Costs capitalized2,666 3,641 9,170 10,509 
AmortizationAmortization(1,597)(927)Amortization(1,847)(1,206)(5,180)(3,212)
Balance at end of periodBalance at end of period$23,444 $14,039 Balance at end of period$25,659 $18,633 $25,659 $18,633 
6. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
(in thousands)(in thousands)March 31, 2023December 31, 2022(in thousands)September 30, 2023December 31, 2022
Accrued compensation and benefitsAccrued compensation and benefits$34,437 $44,903 Accrued compensation and benefits$48,782 $44,903 
Contract liabilitiesContract liabilities26,033 30,981 Contract liabilities27,094 30,981 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities14,527 14,043 Current portion of operating lease liabilities16,064 14,043 
Accrued expensesAccrued expenses11,029 13,101 Accrued expenses13,070 13,101 
Current portion of long-term debtCurrent portion of long-term debt8,509 8,509 Current portion of long-term debt10,243 8,509 
Deferred consideration paymentsDeferred consideration payments5,412 6,840 Deferred consideration payments3,471 6,840 
OtherOther8,694 7,366 Other12,694 7,366 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities$108,641 $125,743 Accrued expenses and other current liabilities$131,418 $125,743 
14


7. Long-Term Debt
TheAs of December 31, 2022, the JPM Credit Agreement, providesas amended, provided for senior secured credit facilities in an aggregate principal amount of $1.45 billion, which consistsconsisted 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 $600.0 million maturing in April 2027 (the “Revolving Facility”).
13


The Term Loan B bearsbore interest at LIBOR plus 350 bps, subject to a LIBOR floor of 50 bps. At MarchDecember 31, 2022, the outstanding borrowings on the Term Loan B of $838.1 million, 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 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, 2023, the outstanding borrowings on the Term Loan B of $836.0 million$1.0 billion had an applicable interest rate of 8.21%8.94%. The outstanding borrowings on the Term Loan B are offset bypresented net of unamortized debt discount and issuance costs of $18.7$21.3 million on the condensed consolidated balance sheet at March 31,September 30, 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 
202410,243 
202510,243 
202610,243 
2027968,008 
Total long-term debt1,001,298 
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 $485.0$324.0 million at September 30, 2023 had an applicable interest rate of 7.90%8.42%. Comparatively, the outstanding borrowings on the Revolving Facility of $505.0 million at MarchDecember 31, 2023.2022 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 March 31,September 30, 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 March 31,September 30, 2023.
15


Interest Rate Caps
The Company 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. The interest rate caps limit the variability of the applicable base rate to the amount of the cap. The interest rate caps, are recorded at an aggregate fair value of $11.5 million and $15.2 million at March 31, 2023 and December 31, 2022, respectively. The interest rate capswhich 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 loss on interest rate caps of $1.4$0.8 million and $0.5 million for the three and nine months ended March 31,September 30, 2023, respectively, and a gain on interest rate caps of $15.8$4.2 million and $25.4 million for the three and nine months ended March 31, 2022.September 30, 2022, respectively. The gain or loss on interest rate caps is included as a component of other income, (expense), net in the condensed consolidated statements of comprehensive income (loss).
8. Related Party Transactions
Due to/from Related Parties
Due from related parties totaling $0.1 million at each March 31, 2023 and December 31, 2022 consists of receivables due from Partners for post-closing cash requirements in accordance with Partnership agreements.
Related party notes payable of $1.5 million at March 31,September 30, 2023 and December 31, 2022 relate to the settlement of contingent earnout consideration for certain of 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 offrom transactions with The Villages and affiliated entities was $1.5$0.4 millionand $1.1$0.3 million for the three months ended March 31,September 30, 2023 and 2022, respectively.respectively, and $2.0 million for each of the nine months ended September 30, 2023 and 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 offrom transactions with these transactionsentities was less than $0.1 million and $0.1 million for the three months ended March 31, 2023.September 30, 2023 and 2022, respectively, and $0.2 million and $0.3 million for the nine months ended September 30, 2023 and 2022, respectively.
Commissions and Consulting Expense
A brotherTwo brothers of Lowry Baldwin, our Board Chair, received approximately $0.1 millionRisk Advisor commissions from the Company in Risk Advisor commissionscomprising approximately $0.2 million during each of the three months ended March 31,September 30, 2023 and 2022 and $0.5 million during each of the nine months ended September 30, 2023 and 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 this transaction was $0.4 million for the threenine months ended March 31, 2023.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 March 31,September 30, 2023 and 2022, and $0.3 million for each of the nine months ended September 30, 2023 and 2022. Total right-of-use assets and operating lease liabilities included on the Company's condensed consolidated balance sheets relatedrelating to The Villagesthese lease agreements were $1.6$1.4 million eachand $1.5 million, respectively, at March 31,September 30, 2023 and $1.7 million each at December 31, 2022.
14


The Company has various agreements to lease office space from other related parties. Total rent expense incurred with respect to other related parties was $1.0 million and $0.9 million for the three months ended March 31,September 30, 2023 and 2022, respectively, and $2.9 million and $2.8 million for the nine months ended September 30, 2023 and 2022, respectively. Total right-of-use assets and operating lease liabilities included on the Company’s condensed consolidated balance sheets relatedrelating to these lease agreements were $14.3$13.8 million and $14.7$14.3 million, respectively, at March 31,September 30, 2023 and $15.0 million and $15.4 million, respectively, at December 31, 2022.
16


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 to perform at the highest level and contribute significantly to the Company’s success, thereby furthering the best interests of 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 was 8,461,907 and 3,000,000, respectively, at March 31,September 30, 2023.
During the threenine months ended March 31,September 30, 2023, the Company made awards of restricted stock awards (“RSAs”), performance-based restricted stock unit awards (“PSUs”), and fully vested shares under the Plans to its non-employee directors, officers, Colleagues and consultants. Fully-vested shares issued to directors, officers and Colleagues during the threenine months ended March 31,September 30, 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 RSAs issued to Colleagues, consultants and consultantsofficers 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:
SharesWeighted-Average Grant-Date Fair Value Per ShareSharesWeighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2022Outstanding at December 31, 20223,595,303 $28.26 Outstanding at December 31, 20223,595,303 $28.26 
GrantedGranted491,466 27.10 Granted1,585,820 29.95 
Vested and settledVested and settled(488,011)28.12 Vested and settled(1,145,017)25.82 
ForfeitedForfeited(44,855)25.97 Forfeited(156,054)25.34 
Outstanding at March 31, 20233,553,903 28.14 
Outstanding at September 30, 2023Outstanding at September 30, 20233,880,052 29.79 
The total fair value of shares that vested and settled under the Plans was $13.7$29.6 million and $5.6$13.9 million for the threenine months ended March 31,September 30, 2023 and 2022, respectively.
Share-based compensation is recognized ratably over the vesting period of the respective awards and includes expense related to issuances under the 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 share-based compensation expense of $13.3$14.6 million and $7.6$8.4 million in connection with the Plans for the three months ended March 31,September 30, 2023 and 2022, respectively, whichand $46.6 million and $26.1 million for the nine months ended September 30, 2023 and 2022, respectively. Share-based compensation expense is included in commissions, employee compensation and benefits expense in the condensed consolidated statements of comprehensive income (loss).
10. Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to BRP Group 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.
1517


DuringThe following table sets forth the periods presented, potentiallycomputation 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)2023202220232022
Basic earnings (loss) per share:
Net income (loss) attributable to BRP Group$(17,629)$(24,793)$(55,658)$6,718 
Shares used for basic earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic60,54957,28259,79156,430
Basic earnings (loss) per share$(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)$6,718 
Shares used for diluted earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic60,549 57,282 59,791 56,430 
Dilutive effect of unvested stock awards— — — 3,465 
Weighted-average shares of Class A common stock outstanding - diluted60,549 57,282 59,791 59,895 
Diluted earnings (loss) per share$(0.29)$(0.43)$(0.93)$0.11 
Potentially dilutive securities includeconsist of unvested restricted stock awards, including RSAs and PSUs, in addition to shares of Class B common stock, which can be exchanged (together with a corresponding number of LLC Units) for shares of Class A common stock on a one-for-one basis. The following potentially dilutive securities were excluded from the Company's diluted weighted-average number of shares outstanding calculation for the periods presented as their inclusion would have been anti-dilutive.
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
202320222023202220232022
Unvested restricted shares of Class A common stock3,265,880 — 
Unvested RSAs and PSUsUnvested RSAs and PSUs3,880,052 3,626,931 3,880,052 — 
Shares of Class B common stockShares of Class B common stock53,670,277 56,268,051 Shares of Class B common stock52,486,094 54,611,484 52,486,094 54,611,484 
The shares of Class B common stock do not share in the earnings or losses attributable to BRP Group, and therefore, are not participating securities. Accordingly, a separate presentation of basic and diluted earnings (loss) per share of Class B common stock under the two-class method has not been included.
The following is a calculation of the basic and diluted weighted-average number of shares of Class A common stock outstanding and basic and diluted earnings (loss) per share for the three months ended March 31, 2023 and 2022:
For the Three Months
 Ended March 31,
(in thousands, except per share data)20232022
Basic earnings (loss) per share:
Net income (loss) attributable to BRP Group$(14,132)$22,869 
Shares used for basic earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic58,71255,720
Basic earnings (loss) per share$(0.24)$0.41 
Diluted earnings (loss) per share:
Net income (loss) attributable to BRP Group$(14,132)$22,869 
Shares used for diluted earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding58,712 55,720 
Dilutive effect of unvested restricted shares of Class A common stock— 2,996 
Weighted-average shares of Class A common stock outstanding - diluted58,712 58,716 
Diluted earnings (loss) per share$(0.24)$0.39 
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.
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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:
(in thousands)(in thousands)March 31, 2023December 31, 2022(in thousands)September 30, 2023December 31, 2022
Level 2Level 2Level 2
Interest rate capsInterest rate caps$11,468 $15,150 Interest rate caps$6,768 $15,150 
Level 2 AssetsLevel 2 Assets$11,468 $15,150 Level 2 Assets$6,768 $15,150 
Level 3Level 3Level 3
Contingent earnout liabilitiesContingent earnout liabilities$286,157 $266,936 Contingent earnout liabilities$273,277 $266,936 
Level 3 LiabilitiesLevel 3 Liabilities$286,157 $266,936 Level 3 Liabilities$273,277 $266,936 
The fair value of interest rate caps was $11.5 million at March 31, 2023. 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 capcaps 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 March 31,September 30, 2023 and December 31, 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 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 $24.8$13.9 million and $55.1 million for the three and nine months ended March 31, 2023.September 30, 2023, respectively. The Company has assessed the maximum estimated exposure to the contingent earnout liabilities to be $944.2$847.1 million at March 31,September 30, 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 ofchange 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, the number of rental units tracked or the insured value of sourced homeowners insurance. Revenue growth rates generally ranged from 10%9% to 35% at March 31,September 30, 2023 and from 8% to 35% at December 31, 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 7.25%8.25% to 18.00%14.50% at March 31,September 30, 2023 and from 6.50% to 18.00% at December 31, 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.
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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:
For the Three Months
 Ended March 31,
For the Three Months
Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022(in thousands)2023202220232022
Balance at beginning of periodBalance at beginning of period$266,936 $258,589 Balance at beginning of period$294,312 $209,996 $266,936 $258,589 
Change in fair value of contingent considerationChange in fair value of contingent consideration24,758 (5,632)Change in fair value of contingent consideration13,914 21,695 55,065 (10,809)
Settlement of contingent consideration(5,537)(25,110)
Fair value of contingent consideration issuancesFair value of contingent consideration issuances723 3,097 723 16,495 
Settlement of contingent consideration(1)
Settlement of contingent consideration(1)
(35,672)(5,174)(49,447)(34,661)
Balance at end of periodBalance at end of period$286,157 $227,847 Balance at end of period$273,277 $229,614 $273,277 $229,614 
__________

(1)
    During 2021, the Company settled $61.5 million of its contingent earnout liabilities through the issuance of related party notes payable, which was subsequently paid in April 2022 and included as payments of contingent earnout consideration in the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022. This amount has been excluded from the settlement of contingent consideration in the table above for 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 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:
Fair Value HierarchyMarch 31, 2023December 31, 2022Fair Value HierarchySeptember 30, 2023December 31, 2022
Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
(in thousands)(in thousands)Fair Value HierarchyCarrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Long-term debt(1)
Long-term debt(1)
Level 2$835,987 $816,174 $838,114 $816,155 
Long-term debt(1)
$1,001,298 $991,286 $838,114 $816,155 
Revolving line of creditRevolving line of creditLevel 2485,000 462,111 505,000 476,304 Revolving line of creditLevel 2324,000 314,966 505,000 476,304 
__________
(1)    The carrying amount of the long-term debt does not reflectreflects outstanding borrowings on the Term Loan B, which are presented net of unamortized debt discount and issuance costs of $18.7$21.3 million and $19.7 million at March 31,September 30, 2023 and December 31, 2022, respectively, which are netted against long-term debt on the condensed consolidated balance sheets.
12. Commitments and Contingencies
As of March 31,September 30, 2023, BRP has a remaining commitment to the University of South Florida (“USF”) to donate an aggregate $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.
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.
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 three Operating Groups: Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions, and Mainstreet Insurance Solutions.
20


The 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.
18


The Underwriting, Capacity & Technology Solutions (“UCTS”) Operating Group consists of two distinct businesses. Our specialty wholesale broker businesses deliverbusiness delivers specialty insurers, professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement. UCTS also houses our MGA of the Future platform, in which we manufacture proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our Risk Advisors 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 renters insurance product sold at point of lease via integrations with property management software providers.
The Mainstreet Insurance Solutions Operating Group offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities. The Mainstreet Insurance Solutions Operating Group also offers 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 all of ourits Operating Groups, the Company generates commissions and fees from insurance placement under both agency bill and direct bill arrangements, and profit sharingprofit-sharing income based on either the underlying book of business or performance, such as loss ratios. All Operating Groups also generate other ancillary income and premium financing income.
In the Insurance Advisory Solutions and 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 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 and services and other administrative functions on behalf of Insurance Company Partners.
In the Mainstreet Insurance Solutions Operating Group, the Company generates commissions and fees from 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 generates investment income.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 concerningregarding 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 March 31, 2023
(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet Insurance Solutions Corporate
and Other
 Total
Commissions and fees(1)
$195,713 $90,069 $58,140 $(13,476)$330,446 
Net income (loss)23,814 2,087 7,834 (59,589)(25,854)

For the Three Months Ended March 31, 2022For the Three Months Ended September 30, 2023
(in thousands)(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet Insurance Solutions Corporate
and Other
 Total(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet Insurance Solutions Corporate
and Other
 Total
Commissions and fees(2)(1)
Commissions and fees(2)(1)
$171,403 $49,523 $22,958 $(1,036)$242,848 
Commissions and fees(2)(1)
$144,409 $118,413 $62,297 $(18,849)$306,270 
Net income (loss)Net income (loss)54,887 5,318 2,442 (17,808)44,839 Net income (loss)3,756 11,205 10,763 (57,730)(32,006)
1921


For the Three Months Ended September 30, 2022
(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet 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 SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet 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)

For the Nine Months Ended September 30, 2022
(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet Insurance Solutions Corporate
and Other
 Total
Commissions and fees(2)
$433,151 $221,753 $106,767 $(26,995)$734,676 
Net income (loss)63,296 31,060 14,868 (94,499)14,725 
__________
(1)    During the three and nine months ended March 31,September 30, 2023, the Insurance Advisory Solutions Operating Group recorded intercompany commissions and fees from activity with the UCTS Operating Group of $0.4 million; the UCTS Operating Group recorded intercompany commissions and fees from activity with the Mainstreet Insurance Solutions Operating Group and itself of $12.6 million;$18.6 million and $47.7 million, respectively, and the Mainstreet Insurance Solutions Operating Group recorded intercompany commissions and fees from activity with all Operating Groups of $0.9 million.$0.3 million and $1.4 million, respectively. These intercompany commissions and fees are eliminated through Corporate and Other.
(2)    During the three and nine months ended March 31,September 30, 2022, the Insurance Advisory Solutions Operating Group recorded intercompany commissions and fees from activity with the UCTS Operating Group of $0.3 million;$0.4 million and $1.1 million, respectively; the UCTS Operating Group recorded intercompany commissions and fees from activity with the Mainstreet Insurance Solutions Operating Group and itself of $0.1 million;$15.8 million and $24.5 million, respectively; and the Mainstreet Insurance Solutions Operating Group recorded intercompany commissions and fees from activity with all Operating Groups of $0.6 million.$0.4 million and $1.4 million, respectively. These intercompany commissions and fees are eliminated through Corporate and Other.
(in thousands)(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet Insurance Solutions Corporate
and Other
 Total(in thousands)Insurance Advisory SolutionsUnderwriting, Capacity & Technology SolutionsMainstreet Insurance Solutions Corporate
and Other
 Total
Total assets at March 31, 2023$2,237,415 $615,879 $519,446 $75,533 $3,448,273 
Total assets at September 30, 2023Total assets at September 30, 2023$2,234,244 $628,549 $517,088 $43,617 $3,423,498 
Total assets at December 31, 2022Total assets at December 31, 20222,240,483 616,117 530,504 75,078 3,462,182 Total assets at December 31, 20222,240,483 616,117 530,504 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.
2022


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, 2022 filed with the SEC on 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 withfor the SEC on February 28, 2023.year ended December 31, 2022.
THE COMPANY
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 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 1.3two million Clients across the United States and internationally. Our more than 3,8003,900 Colleagues include overapproximately 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 three Operating Groups.
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.
Underwriting, Capacity & Technology Solutions (“UCTS”) consists of two distinct businesses—our specialty wholesale broker businessesbusiness and our MGA of the Future platform. Our specialty wholesale broker businesses deliverbusiness delivers specialty insurers, professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement. Through our MGA of the Future platform (representing approximately 90% of UCTS' revenue during the first quarternine months of 2023), we manufacture proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or application programming interface (“API”)API integrations) internally via our Risk Advisors 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 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.
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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—fueled by relationships, powered by people and exemplified by 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, 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.
Seasonality
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 a higher degree of first quarter policy commencements and renewals in certain Insurance Advisory Solutions and Mainstreet Insurance Solutions lines of business such as employee benefits, commercial and 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.
PARTNERSHIPS
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.
We completed three Partnerships for an aggregate purchase price of $415.4 million during the nine months ended September 30, 2022. We did not complete any Partnerships during the threenine months ended March 31, 2023 or 2022.September 30, 2023.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31,SEPTEMBER 30, 2023 AND 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 March 31,September 30, 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 withfor the SEC on February 28, 2023.year ended December 31, 2022.
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The following is a discussion of our consolidated results of operations for the three and nine months ended March 31,September 30, 2023 and 2022.
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022Variance(in thousands)20232022Variance20232022Variance
Revenues:Revenues:Revenues:
Commissions and feesCommissions and fees$330,446 $242,848 $87,598 Commissions and fees$306,270 $259,368 $46,902 $933,907 $734,676 $199,231 
Operating expenses:Operating expenses:Operating expenses:
Commissions, employee compensation and benefitsCommissions, employee compensation and benefits230,954 153,750 77,204 Commissions, employee compensation and benefits220,469 195,920 24,549 676,659 522,518 154,141 
Other operating expensesOther operating expenses46,604 36,442 10,162 Other operating expenses47,165 47,212 (47)141,254 124,424 16,830 
Amortization expenseAmortization expense23,163 17,562 5,601 Amortization expense23,183 23,180 69,505 59,912 9,593 
Change in fair value of contingent considerationChange in fair value of contingent consideration24,758 (5,632)30,390 Change in fair value of contingent consideration13,914 21,695 (7,781)55,065 (10,809)65,874 
Depreciation expenseDepreciation expense1,348 988 360 Depreciation expense1,453 1,216 237 4,250 3,309 941 
Total operating expensesTotal operating expenses326,827 203,110 123,717 Total operating expenses306,184 289,223 16,961 946,733 699,354 247,379 
Operating income3,619 39,738 (36,119)
Operating income (loss)Operating income (loss)86 (29,855)29,941 (12,826)35,322 (48,148)
Other income (expense):Other income (expense):Other income (expense):
Interest expense, netInterest expense, net(27,884)(10,350)(17,534)Interest expense, net(30,580)(20,766)(9,814)(87,600)(45,748)(41,852)
Other income (expense), netOther income (expense), net(1,511)15,451 (16,962)Other income (expense), net(1,351)3,914 (5,265)(193)25,151 (25,344)
Total other income (expense)(29,395)5,101 (34,496)
Total other expenseTotal other expense(31,931)(16,852)(15,079)(87,793)(20,597)(67,196)
Income (loss) before income taxesIncome (loss) before income taxes(25,776)44,839 (70,615)Income (loss) before income taxes(31,845)(46,707)14,862 (100,619)14,725 (115,344)
Income tax expenseIncome tax expense78 — 78 Income tax expense161 — 161 904 — 904 
Net income (loss)Net income (loss)(25,854)44,839 (70,693)Net income (loss)(32,006)(46,707)14,701 (101,523)14,725 (116,248)
Less: net income (loss) attributable to noncontrolling interestsLess: net income (loss) attributable to noncontrolling interests(11,722)21,970 (33,692)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 GroupNet income (loss) attributable to BRP Group$(14,132)$22,869 $(37,001)Net income (loss) attributable to BRP Group$(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 profit-sharing commissions, or straight overrides, which represent forms of variable consideration from Insurance Company Partners associated with the placement of coverage based primarily on underwriting results, but may also contain considerations for volume, growth or retention.
Commissions and fees increased $87.6$46.9 million year over year. The increase for the third quarter of 2023 as compared to the same period relatesof 2022 primarily due to organic growth. Commissions and fees increased $199.2 million for the 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 2022 prior to their having reached the twelve-month owned mark (such amounts, the “Partnership Contribution”). Organic growth accounted for $55.8 million of the increase to revenues and the Partnership Contribution accounted for $30.9$44.7 million.
2325


Major Sources of Commissions and Fees
The following table sets forth our commissions and fees by major source for the three and nine months ended March 31,September 30, 2023 and 2022:
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022Variance(in thousands)20232022Variance20232022Variance
Commission revenueCommission revenue$270,861 $204,837 $66,024 Commission revenue$237,103 $204,264 $32,839 $737,815 $591,650 $146,165 
Profit-sharing revenueProfit-sharing revenue23,025 15,012 8,013 Profit-sharing revenue25,959 15,044 10,915 75,877 49,422 26,455 
Consulting and service fee revenueConsulting and service fee revenue17,636 15,202 2,434 Consulting and service fee revenue21,735 19,084 2,651 57,947 47,417 10,530 
Policy fee and installment fee revenuePolicy fee and installment fee revenue15,832 5,850 9,982 Policy fee and installment fee revenue17,071 18,367 (1,296)49,907 37,834 12,073 
Other incomeOther income3,092 1,947 1,145 Other income4,402 2,609 1,793 12,361 8,353 4,008 
Total commissions and feesTotal commissions and fees$330,446 $242,848 $87,598 Total commissions and fees$306,270 $259,368 $46,902 $933,907 $734,676 $199,231 
Commission revenue represents commission revenuecommissions earned by providing insurance placement services to Clients. Commission revenue increased by $66.0$32.8 million year over yearfor the third quarter of 2023 as a resultcompared to the same period of 2022 primarily due to organic growth. Commission revenue increased $146.2 million for the first nine months of 2023 as compared to the same period of 2022 due to organic growth of $36.5$105.4 million and the Partnership Contribution of $29.5$40.7 million.
Profit-sharing revenue represents bonus-type revenue that is earned by us as a sales incentive provided by certain Insurance Company Partners. Profit-sharing revenue increased by $8.0$10.9 million year over yearand $26.5 million for the three and nine months ended September 30, 2023 as compared to the same periods of 2022, respectively, primarily due to organic growth.
Consulting and service fee revenue represents negotiated fees received in lieu of a commissionearned for providing insurance placement services to Clients and specialty insurance consulting revenue. Consulting and service fee revenue increased $2.4 million year over year as a result of organic growth of $1.9$2.7 million and $10.5 million for the Partnership Contributionthree and nine months ended September 30, 2023 as compared to the same periods of $0.5 million.2022, respectively, primarily due to organic 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 decreased $1.3 million for the third quarter of 2023 as compared to the same period of 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 $10.0$12.1 million year over yearfor the first nine months of 2023 as compared to the same period of 2022 due to organic growth.
Other income consists of other feeancillary income, premium financing income and investment income, generated across all Operating Groups as well as marketing income that is based on agreed-upon cost reimbursement for fulfilling specific targeted Medicare marketing campaigns. Other income increased $1.1$1.8 million year over yearand $4.0 million for the three and nine months ended September 30, 2023 as compared to the same periods of 2022, respectively, primarily due to investment income, which is excluded from the organic growth calculation.
Commissions, Employee Compensation and Benefits
Commissions, employee compensation and benefits is our largest expense. It consists of (i) base compensation comprising salary, bonuses and benefits paid and payable to Colleagues, commissions paid to Colleagues and outside commissions paid to others; and (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 revenuecompensation arrangements with our Colleagues and headcount. WeRisk 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. In addition, our compensation arrangements with our Colleagues 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.
26


Commissions, employee compensation and benefits expenses increased $77.2$24.5 million year over year.and $154.1 million for the three and nine months ended September 30, 2023 as compared to the same periods of 2022, respectively, in part from the correlation of compensation to our revenue growth, as well as the inflationary environment. The Partnership Contribution accounted for $17.2$0.7 million and $25.1 million of the increase to commissions, employee compensation and benefits.benefits for the quarter and year-to-date periods, respectively. Share-based compensation expense increased $5.7$6.2 million and $20.6 million for the quarter and year-to-date periods, respectively, as a result of equity grants awarded to all newly hired Colleagues, and grants to reward Colleagues, including members of senior management. The remainingmanagement, 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 attributedexpenses have also increased as a result of investing in our future as we continue to higher commissions expense relating tolaunch new products in our organic growth, higher compensationMGA of the Future product suite and benefits related to hiring to supportexpand 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 increasesFuture products in the costthird quarter of human capital.
24


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 Colleagues and the overall size and scale of our business operations.
Other operating expenses increased $10.2 million year over year relatedwas relatively flat for the three months ended September 30, 2023 as compared to increases in dues and subscriptionsthe same period of $8.7 million from integration2022. During the third quarter of 2023, we had higher costs andfor 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 $3.6$1.6 million, relating to integration of our Partnerships, advertising and marketing of $2.6$1.3 million, repairs and maintenance of $1.1 million and professional fees of $0.8 million.
Other operating expenses increased $16.8 million for the nine months ended September 30, 2023 as compared to the same period of 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 $1.9 million and rent expense of $0.8 million relating to expansion of our operating locations.$1.5 million. These increases were partially offset by lower costs for professional fees of $4.2 million, Colleague education and welfare of $1.0 million and repairs and maintenance of $0.8$3.2 million, licenses and taxes of $2.2 million, professional fees of $2.1 million and recruiting expense of $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 $5.6$9.6 million year over yearfor the nine months ended September 30, 2023 as compared to the same period of 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 $24.8$13.9 million loss for the three months ended March 31,September 30, 2023 as compared to a $5.6$21.7 million loss for the same period of 2022. Change in fair value of contingent consideration was a $55.1 million loss for the nine months ended September 30, 2023 as compared to a $10.8 million gain for the same period of 2022. The fair value losslosses related to contingent consideration for 2023 waswere impacted by changes in growth trends of certain partners and lower discount rates,approaching the measurement date for many of the contingent earnout obligations, which resulted in an overall higher contingent earnout liability value.
Interest Expense, Net
Interest expense, net increased $17.5$9.8 million year over yearfor the three 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, 2023 as compared to the same period of 2022, resulting primarily from the highhigher interest rate environment and, to a lesser extent, higher average borrowings outstanding underon our Revolving Facility. We expect interest expense to continue to increase during the remainder of 2023 and into 2024 as a result of recent unprecedented interest rate hikes fromrates are expected to remain high in the Federal Reserve, which directly affect our variable rate debt.near-term.
Refer to Item 3. Quantitative and 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.
27


Other Income, (Expense), Net
Other income, (expense), net decreased $17.0$5.3 million year over year,for the three months ended September 30, 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 resultrelates 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 $15.8$4.2 million recognized during the firstthird quarter of 2022 in connection with rising interest rates and market estimates for future rate increases.
Other income, net decreased $25.3 million for the nine months ended September 30, 2023 as compared to the same period of 2022. We recognized a loss on our interest rate caps of $0.5 million 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 hadrecognized a lossgain on interest rate caps of $1.4$25.4 million during the first quarter of 2023 relatingyear to a decreasedate for 2022 in theconnection with rising interest rates and market estimates for future rate curve.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 (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, 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, 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.
25


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.
28


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 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, 2022 are excluded from Organic Revenue for 2022. However, after June 1, 2023, results from June 1, 2022 to December 31, 2022 for such Partners are compared to results from June 1, 2023 to December 31, 2023 for purposes of calculating Organic Revenue Growth in 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.
We define Adjusted Net Income as net income (loss) attributable to BRP Group 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, 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 dilutivediluted 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.
26


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:
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands, except percentages)(in thousands, except percentages)20232022(in thousands, except percentages)2023202220232022
Commissions and feesCommissions and fees$330,446 $242,848 Commissions and fees$306,270 $259,368 $933,907 $734,676 
Net income (loss)Net income (loss)$(25,854)$44,839 Net income (loss)$(32,006)$(46,707)$(101,523)$14,725 
Adjustments to net income (loss):Adjustments to net income (loss):Adjustments to net income (loss):
Interest expense, netInterest expense, net27,884 10,350 Interest expense, net30,580 20,766 87,600 45,748 
Amortization expenseAmortization expense23,183 23,180 69,505 59,912 
Change in fair value of contingent considerationChange in fair value of contingent consideration24,758 (5,632)Change in fair value of contingent consideration13,914 21,695 55,065 (10,809)
Amortization expense23,163 17,562 
Share-based compensationShare-based compensation13,281 7,564 Share-based compensation14,598 8,388 46,637 26,065 
Transaction-related Partnership and integration expensesTransaction-related Partnership and integration expenses5,432 8,216 Transaction-related Partnership and integration expenses3,774 12,128 18,007 29,552 
(Gain) loss on interest rate caps1,407 (15,810)
Depreciation expenseDepreciation expense1,348 988 Depreciation expense1,453 1,216 4,250 3,309 
SeveranceSeverance167 222 Severance875 260 3,373 1,135 
Income tax provisionIncome tax provision78 — Income tax provision161 — 904 — 
(Gain) loss on interest rate caps(Gain) loss on interest rate caps818 (4,151)489 (25,420)
Other(1)
Other(1)
7,342 4,633 
Other(1)
6,659 5,109 20,289 13,083 
Adjusted EBITDAAdjusted EBITDA$79,006 $72,932 Adjusted EBITDA$64,009 $41,884 $204,596 $157,300 
Adjusted EBITDA MarginAdjusted EBITDA Margin24 %30 %Adjusted EBITDA Margin21 %16 %22 %21 %
__________
(1)    Other addbacks to Adjusted EBITDA include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.
29


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:
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands, except percentages)(in thousands, except percentages)20232022(in thousands, except percentages)2023202220232022
Commissions and feesCommissions and fees$330,446 $242,848 Commissions and fees$306,270 $259,368 $933,907 $734,676 
Partnership commissions and fees(1)
Partnership commissions and fees(1)
(30,871)(64,777)
Partnership commissions and fees(1)
(985)(85,638)(44,696)(234,601)
Investment incomeInvestment income(923)— Investment income(2,038)— (4,601)— 
Organic RevenueOrganic Revenue$298,652 $178,071 Organic Revenue$303,247 $173,730 $884,610 $500,075 
Organic Revenue Growth(2)
Organic Revenue Growth(2)
$55,804 $25,181 
Organic Revenue Growth(2)
$47,523 $38,014 $150,471 $91,825 
Organic Revenue Growth %(2)
Organic Revenue Growth %(2)
23 %16 %
Organic Revenue Growth %(2)
19 %28 %20 %22 %
__________
(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 March 31,September 30, 2022 used to calculate Organic Revenue Growth for the three and nine months ended March 31,September 30, 2023 was $242.8$255.7 million and $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 March 31,September 30, 2023.
2730


Adjusted Net Income and Adjusted Diluted EPS
The following table reconciles Adjusted Net Income to net income (loss) attributable to BRP Group and reconciles Adjusted Diluted EPS to diluted earnings (loss) per share, which we consider to be the most directly comparable GAAP financial measures:
For the Three Months
 Ended March 31,
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
(in thousands, except per share data)(in thousands, except per share data)20232022(in thousands, except per share data)2023202220232022
Net income (loss) attributable to BRP GroupNet income (loss) attributable to BRP Group$(14,132)$22,869 Net income (loss) attributable to BRP Group$(17,629)$(24,793)$(55,658)$6,718 
Net income (loss) attributable to noncontrolling interestsNet income (loss) attributable to noncontrolling interests(11,722)21,970 Net income (loss) attributable to noncontrolling interests(14,377)(21,914)(45,865)8,007 
Amortization expenseAmortization expense23,183 23,180 69,505 59,912 
Change in fair value of contingent considerationChange in fair value of contingent consideration24,758 (5,632)Change in fair value of contingent consideration13,914 21,695 55,065 (10,809)
Amortization expense23,163 17,562 
Share-based compensationShare-based compensation13,281 7,564 Share-based compensation14,598 8,388 46,637 26,065 
Transaction-related Partnership and integration expensesTransaction-related Partnership and integration expenses5,432 8,216 Transaction-related Partnership and integration expenses3,774 12,128 18,007 29,552 
(Gain) loss on interest rate caps, net of cash settlements(Gain) loss on interest rate caps, net of cash settlements3,682 (15,810)(Gain) loss on interest rate caps, net of cash settlements3,771 (3,602)8,382 (24,871)
DepreciationDepreciation1,348 988 Depreciation1,453 1,216 4,250 3,309 
Amortization of deferred financing costsAmortization of deferred financing costs1,239 1,286 Amortization of deferred financing costs1,244 1,420 3,577 3,894 
SeveranceSeverance167 222 Severance875 260 3,373 1,135 
Other(1)
Other(1)
7,342 4,633 
Other(1)
6,659 5,109 20,289 13,083 
Adjusted pre-tax incomeAdjusted pre-tax income54,558 63,868 Adjusted pre-tax income37,465 23,087 127,562 115,995 
Adjusted income taxes(2)
Adjusted income taxes(2)
5,401 6,323 
Adjusted income taxes(2)
3,709 2,286 12,629 11,484 
Adjusted Net IncomeAdjusted Net Income$49,157 $57,545 Adjusted Net Income$33,756 $20,801 $114,933 $104,511 
Weighted-average shares of Class A common stock outstanding - dilutedWeighted-average shares of Class A common stock outstanding - diluted58,712 58,716 Weighted-average shares of Class A common stock outstanding - diluted60,549 57,282 59,791 59,895 
Dilutive effect of non-vested restricted shares of Class A common stock3,603 — 
Dilutive effect of unvested stock awardsDilutive effect of unvested stock awards3,941 3,675 3,931 — 
Exchange of Class B common stock(3)
Exchange of Class B common stock(3)
54,094 56,269 
Exchange of Class B common stock(3)
52,862 55,151 53,367 55,743 
Adjusted dilutive weighted-average shares outstanding116,409 114,985 
Adjusted diluted weighted-average shares outstandingAdjusted diluted weighted-average shares outstanding117,352 116,108 117,089 115,638 
Adjusted Diluted EPSAdjusted Diluted EPS$0.42 $0.50 Adjusted Diluted EPS$0.29 $0.18 $0.98 $0.90 
Diluted earnings (loss) per shareDiluted earnings (loss) per share$(0.24)$0.39 Diluted earnings (loss) per share$(0.29)$(0.43)$(0.93)$0.11 
Effect of exchange of Class B common stock and net income (loss) attributable to noncontrolling interests per shareEffect of exchange of Class B common stock and net income (loss) attributable to noncontrolling interests per share0.02 — Effect of exchange of Class B common stock and net income (loss) attributable to noncontrolling interests per share0.02 0.03 0.06 0.02 
Other adjustments to earnings (loss) per shareOther adjustments to earnings (loss) per share0.69 0.16 Other adjustments to earnings (loss) per share0.59 0.60 1.96 0.87 
Adjusted income taxes per shareAdjusted income taxes per share(0.05)(0.05)Adjusted income taxes per share(0.03)(0.02)(0.11)(0.10)
Adjusted Diluted EPSAdjusted Diluted EPS$0.42 $0.50 Adjusted Diluted EPS$0.29 $0.18 $0.98 $0.90 
___________
(1)    Other addbacks to Adjusted Net Income include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.
(2)    Represents corporate income taxes at an assumed effective tax rate of 9.9% applied to adjusted pre-tax income.
(3)    Assumes the full exchange of Class B common stock for Class A common stock pursuant to the Amended LLC Agreement.

2831


OPERATING GROUP RESULTS
Commissions and Fees
In all of our Operating Groups, we generate commissions and fees from insurance placement under both agency bill and direct bill arrangements, and profit-sharing income based on either the underlying book of business or performance, such as loss ratios. In theseAll Operating Groups we also generate other ancillary income and premium financing income.
In the Insurance Advisory Solutions and 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 the UCTS Operating Group, we generate 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 and services and other administrative functions on behalf of Insurance Company Partners.
In the Mainstreet Insurance Solutions Operating Group, we generate commissions and fees in the form of marketing income, which is earned through co-branded Medicare marketing campaigns with our Insurance Company Partners.
In addition, we generate investment income in the Insurance Advisory Solutions and UCTS Operating Groups and the Corporate and Other non-reportable segment, we generate investment income.segment.
The following table sets forth our commissions and fees by Operating Group and for Corporate and Other by amount and as a percentage of our commissions and fees:
Commissions and Fees by Operating Group (in thousands, except percentages)
For the Three Months Ended March 31,
20232022Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%
Insurance Advisory Solutions$195,713 59 %$171,403 71 %$24,310 14 %
Underwriting, Capacity & Technology Solutions90,069 27 %49,523 20 %40,546 82 %
Mainstreet Insurance Solutions58,140 18 %22,958 %35,182 153 %
Corporate and Other(13,476)(4)%(1,036)— %(12,440)n/m
$330,446 $242,848 $87,598 
__________
n/m    not meaningful
Commissions and Fees by Operating Group (in thousands, except percentages)
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
20232022Variance20232022Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%AmountPercent of BusinessAmountPercent of BusinessAmount%
Insurance Advisory Solutions$144,409 47 %$130,216 50 %$14,193 11 %$493,367 52 %$433,151 59 %$60,216 14 %
Underwriting, Capacity & Technology Solutions118,413 39 %97,929 38 %20,484 21 %314,791 34 %221,753 30 %93,038 42 %
Mainstreet Insurance Solutions62,297 20 %47,784 18 %14,513 30 %174,114 19 %106,767 15 %67,347 63 %
Corporate and Other(18,849)(6)%(16,561)(6)%(2,288)14 %(48,365)(5)%(26,995)(4)%(21,370)79 %
$306,270 $259,368 $46,902 $933,907 $734,676 $199,231 
Commissions and fees for our Insurance Advisory Solutions Operating Group increased $24.3$14.2 million year over yearand $60.2 million for the three and nine months ended September 30, 2023 as compared to the same periods of 2022, respectively, primarily as a result of organic growth related to base commissions and fees.
Commissions and fees for our UCTS Operating Group increased $20.5 million for the third quarter of 2023 as compared to the same period of 2022 primarily as a result of organic growth. Organic growth included $22.2$15.8 million relatedattributable to base commissionsour renter’s and feeshomeowner’s insurance products and $1.6$4.2 million related to contingent and other revenue.
Commissions and fees for our UCTS Operating Group increased $40.5$93.0 million year over yearfor the first nine months of 2023 as compared to the same period of 2022 primarily as a result of organic growth of $27.4$68.1 million and higher intercompany revenue of $12.5 million and the Partnership Contribution of $0.5$23.2 million. Organic growth included $24.1$55.2 million attributable to our renter’s and homeowner’s insurance products, of which $8.4$10.5 million is related to the QBE Program Administrator Agreement, and $3.3$12.8 million related to contingent and other revenue. The QBE Program Administrator Agreement was entered into in connection with the Westwood Partnership with an affiliate of QBE, Holdings, Inc. (“QBE”), the prior owner of Westwood. Under the QBE Program Administrator Agreement, our MGA of the Future business assumed operations of QBE’s builder-sourced homeowners book, including all MGA functions associated with the book of business.
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Commissions and fees for our Mainstreet Insurance Solutions Operating Group increased $35.2$14.5 million year over yearfor the third quarter of 2023 as compared to the same period of 2022 due to organic growth related primarily to core commissions and fees of $13.6 million and the Partnership Contribution of $1.0 million. Commissions and fees increased $67.3 million for the first nine months of 2023 as compared to the same period of 2022 as a result of the Partnership Contribution of $30.3$42.2 million and organic growth of $4.6 million. Organic growth included $3.8 million related primarily to core commissions and fees and $0.8 million related to contingent and other revenue.of $25.1 million.
The amount reported for Corporate and Other primarily relates to the elimination of intercompany revenue. During the first quarter ofthree and nine months ended September 30, 2023, the Insurance Advisory Solutions Operating Group recorded intercompany commissions and fees from activity with the UCTS Operating Group of $0.4 million; the UCTS Operating Group recorded intercompany commissions and fees from activity with the Mainstreet Insurance Solutions Operating Group and itself of $12.6 million;$18.6 million and $47.7 million, respectively, and the Mainstreet Insurance Solutions Operating Group recorded intercompany commissions and fees from activity with all Operating Groups of $0.9 million.$0.3 million and $1.4 million, respectively. These amounts were eliminated through Corporate and Other.
29


The substantial increase in intercompany commissions and fees for the first quarternine months of 2023 is related to the QBE Program Administrator Agreement, which was effective May 1, 2022. A portion of the revenue recognized by the UCTS Operating Group related to this agreement is passed through to the Mainstreet Insurance Solutions Operating Group who servesfor serving as the retail agent. We expect that revenue relating to this agreement will continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through the Mainstreet Insurance Solutions Operating Group.
Commissions, Employee Compensation and Benefits
The following table sets forth our commissions, employee compensation and benefits by Operating Group and for Corporate and Other by amount and as a percentage of our commissions, employee compensation and benefits:
Commissions, Employee Compensation and Benefits by Operating Group (in thousands, except percentages)
For the Three Months Ended March 31,
20232022Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%
Insurance Advisory Solutions$119,802 52 %$94,790 62 %$25,012 26 %
Underwriting, Capacity & Technology Solutions67,595 29 %34,676 22 %32,919 95 %
Mainstreet Insurance Solutions35,227 15 %14,873 10 %20,354 137 %
Corporate and Other8,330 %9,411 %(1,081)(11)%
$230,954 $153,750 $77,204 

Commissions, Employee Compensation and Benefits by Operating Group (in thousands, except percentages)
For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
20232022Variance20232022Variance
Operating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%AmountPercent of ExpenseAmountPercent of ExpenseAmount%
Insurance Advisory Solutions$100,254 45 %$97,417 50 %$2,837 %$324,692 48 %$284,605 54 %$40,087 14 %
Underwriting, Capacity & Technology Solutions85,978 39 %73,293 37 %12,685 17 %231,596 34 %160,830 31 %70,766 44 %
Mainstreet Insurance Solutions37,536 17 %28,684 15 %8,852 31 %109,257 16 %65,538 13 %43,719 67 %
Corporate and Other(3,299)(1)%(3,474)(2)%175 (5)%11,114 %11,545 %(431)(4)%
$220,469 $195,920 $24,549 $676,659 $522,518 $154,141 
Commissions, employee compensation and benefits expenses increased across all Operating Groups year over year. Thefor each of the three and nine months ended September 30, 2023 as compared to the same periods of 2022 resulting, in part, from the correlation of compensation to our revenue growth, as well as the inflationary environment. Commissions, employee compensation and benefits expenses have also increased as a result of investing in our future as we continue to launch new products in our MGA of the Future product suite, for our UCTS Operating Group, and expand the distribution footprint of our national mortgage and real estate channel, for our Mainstreet Insurance Solutions Operating Group. We successfully launched two new MGA of the Future products in the third quarter of 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. In addition, the Partnership Contribution accounted for $16.9$24.5 million of the year-to-date increase to commissions, employee compensation and benefits expenses infor the Mainstreet Insurance Solutions Operating Group. The remaining increase in commissions, employee compensation and benefits expenses across all Operating Groups can be attributed to higher commissions expense relating to our organic growth, which are primarily allocated among the Operating Groups. In addition, there have been recent increases in the cost of human capital as a result of the increasingly competitive market and the inflationary environment, which has impacted employee compensation and benefits costs.
Commissions, employee compensation and benefits expenses for Corporate and Other decreased year over year primarilywere relatively flat for each of the three and nine months ended September 30, 2023 as a resultcompared to the same periods of 2022. During the third quarter of 2023, we had additional share-based compensation expense of $4.6 million, offset in part by an increase of $12.9 million in the elimination of intercompany expense offset in part by $7.2 million of additional expense due, in part, to$2.3 million. During the aforementioned increasesfirst nine months of 2023, we had an increase in the costelimination of human capital and $4.6intercompany expense of $22.2 million, ofpartially offset by additional share-based compensation expense.expense of $15.9 million.
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The substantial increase in intercompany commissions, employee compensation and benefits expense for the first quarternine months of 2023 is related to the QBE Program Administrator Agreement, which was effective May 1, 2022. We expect that commissions, employee compensation and benefits expense relating to this agreement will continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through the Mainstreet Insurance Solutions Operating Group.
Other Operating Expenses
The following table sets forth our other operating expenses by Operating Group and for Corporate and Other by amount and as a percentage of our other operating expenses:
Other Operating Expenses by Operating Group (in thousands, except percentages)Other Operating Expenses by Operating Group (in thousands, except percentages)Other Operating Expenses by Operating Group (in thousands, except percentages)
For the Three Months Ended March 31,For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
20232022Variance20232022Variance20232022Variance
Operating GroupOperating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%Operating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%AmountPercent of ExpenseAmountPercent of ExpenseAmount%
Insurance Advisory SolutionsInsurance Advisory Solutions$20,040 43 %$14,509 40 %$5,531 38 %Insurance Advisory Solutions$19,246 41 %$20,130 43 %$(884)(4)%$57,805 41 %$52,703 42 %$5,102 10 %
Underwriting, Capacity & Technology SolutionsUnderwriting, Capacity & Technology Solutions10,831 23 %5,380 15 %5,451 101 %Underwriting, Capacity & Technology Solutions10,929 23 %8,031 17 %2,898 36 %32,541 23 %21,184 17 %11,357 54 %
Mainstreet Insurance SolutionsMainstreet Insurance Solutions8,170 18 %4,148 11 %4,022 97 %Mainstreet Insurance Solutions7,769 16 %6,200 13 %1,569 25 %23,243 16 %16,466 14 %6,777 41 %
Corporate and OtherCorporate and Other7,563 16 %12,405 34 %(4,842)(39)%Corporate and Other9,221 20 %12,851 27 %(3,630)(28)%27,665 20 %34,071 27 %(6,406)(19)%
$46,604 $36,442 $10,162 $47,165 $47,212 $(47)$141,254 $124,424 $16,830 
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Other operating expenses for our Insurance Advisory Solutions Operating Group decreased $0.9 million for the third quarter of 2023 as compared to the same period of 2022, driven by lower costs for professional fees and software and internet expenses of $0.5 million each, consulting fees of $0.4 million, repairs and maintenance of $0.3 million and recruiting expense of $0.2 million. These decreases were partially offset by higher costs for investment in technology to support our growth of $1.2 million.
Other operating expenses for our Insurance Advisory Solutions Operating Group increased $5.5$5.1 million year over yearfor the first nine months of 2023 as compared to the same period of 2022, driven by higher costs for dues and subscriptions of $3.8 million from Partnership integration costs and our investment in technology to support our growth and integration activity of $5.9 million and travel and entertainment costs of $3.2 million. These increases were partially offset by lower costs for professional fees and software and internet expenses of $1.2 million each, repairs and maintenance of $0.9 million and consulting fees of $0.7 million.
Other operating expenses for our UCTS Operating Group increased $2.9 million for the third quarter of 2023 as compared to the same period of 2022, driven by higher costs for investment in technology to support our growth, primarily associated with the QBE Program Administrator Agreement, of $1.8 million, professional fees of $0.8 million, payment processing fees for our MGA business of $0.4 million and insurance expense of $0.3 million. These increases were partially offset by lower costs for travel and entertainment of $1.9$0.9 million.
Other operating expenses for our UCTS Operating Group increased $11.4 million for the first nine months of 2023 as compared to the same period of 2022, driven by higher costs for investment in technology to support our growth, primarily associated with the QBE Program Administrator Agreement, of $9.2 million, payment processing fees for our MGA business of $0.9 million and consulting fees and insurance expense of $0.4 million each.
Other operating expenses for our Mainstreet Insurance Solutions Operating Group increased $1.6 million for the third quarter of 2023 as compared to the same period of 2022, driven by higher lead generation fees relating to integrationthe expansion of our Partnerships, recruiting expensenational mortgage and real estate channel of $0.3$1.2 million, investment in technology to support our growth of $0.6 million and rent expense of $0.2 million relating to expansion of our operating locations.$0.3 million. These increases were partially offset by lower costs for advertising and marketing professional fees and repairs and maintenance of $0.4 million each.
Other operating expenses for our UCTS Operating Group increased $5.5 million year over year driven by higher costs for dues and subscriptions of $4.7 million from Partnership integration costs, primarily associated with the QBE Program Administrator Agreement, travel and entertainment of $0.6 million relating to integration of our Partnerships, bank charges of $0.3 million, and consulting fees and software and internet expenses of $0.2 million each. These increases were partially offset by lower costs for professional fees of $0.3 million and licenses and taxes of $0.2$0.7 million.
Other operating expenses for our Mainstreet Insurance Solutions Operating Group increased $4.0$6.8 million year over yearfor the first nine months of 2023 as compared to the same period of 2022, driven by higher advertisinglead generation fees relating to the expansion of our national mortgage and marketingreal estate channel of $3.0$5.0 million, dues and subscriptions of $0.9 million from Partnership integration costs and our investment in technology to support our growth rent expense of $0.7$2.1 million, relating to expansion of our operating locations, and travel and entertainment of $0.4$1.1 million relating to integrationand rent expense of our Partnerships.$0.9 million. These increases were partially offset by lower costs for professional fees of $1.2$1.8 million and recruiting expense of $0.7 million.
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Other operating expenses in Corporate and Other decreased $3.6 million for the third quarter of 2023 as compared to the same period of 2022 due to lower costs for travel and entertainment of $1.8 million, professional fees of $1.0 million and advertising and marketing of $0.8 million.
Other operating expenses in Corporate and Other decreased $4.8$6.4 million year over yearfor the first nine months of 2023 as compared to the same period of 2022 due to lower costs for professional fees of $2.2 million, licenses and taxes of $1.0 million, dues and subscriptions of $0.7 million and recruiting expense and consulting fees of $0.6 million each. These decreases were partially offset by higher costs for travel and entertainment of $0.8$2.4 million, repairs and maintenance of $1.9 million, licenses and taxes of $1.5 million and consulting fees of $0.9 million.
Amortization Expense
The following table sets forth our amortization by Operating Group and for Corporate and Other by amount and as a percentage of our amortization:
Amortization Expense by Operating Group (in thousands, except percentages)Amortization Expense by Operating Group (in thousands, except percentages)Amortization Expense by Operating Group (in thousands, except percentages)
For the Three Months Ended March 31,For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
20232022Variance20232022Variance20232022Variance
Operating GroupOperating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%Operating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%AmountPercent of ExpenseAmountPercent of ExpenseAmount%
Insurance Advisory SolutionsInsurance Advisory Solutions$12,902 55 %$12,548 71 %$354 %Insurance Advisory Solutions$12,882 55 %$12,576 55 %$306 %$38,669 55 %$37,660 63 %$1,009 %
Underwriting, Capacity & Technology SolutionsUnderwriting, Capacity & Technology Solutions4,528 20 %4,193 24 %335 %Underwriting, Capacity & Technology Solutions4,564 20 %4,275 18 %289 %13,634 20 %12,689 21 %945 %
Mainstreet Insurance SolutionsMainstreet Insurance Solutions5,732 25 %820 %4,912 n/mMainstreet Insurance Solutions5,701 25 %6,328 27 %(627)(10)%17,160 25 %9,559 16 %7,601 80 %
Corporate and OtherCorporate and Other— %— %— — %Corporate and Other36 — %— %35 n/m42 — %— %38 n/m
$23,163 $17,562 $5,601 $23,183 $23,180 $$69,505 $59,912 $9,593 
__________
n/m    not meaningful
Amortization expense increasedwas relatively flat in all our Operating Groups for the third quarter of 2023 as compared to the same period of 2022. Amortization expense in our Mainstreet Insurance Solutions Operating Group year over year, primarilyincreased for the first nine months of 2023 as compared to the same period of 2022, driven by the amortization of intangible assets recorded in connection with our Westwood Partnership. Amortization expense for the Insurance Advisory Solutions and UCTS Operating Groups was relatively flat.
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Change in Fair Value of Contingent Consideration
The following table sets forth our change in fair value of contingent consideration by Operating Group by amount and as a percentage of our change in fair value of contingent consideration:
Change in Fair Value of Contingent Consideration by Operating Group (in thousands, except percentages)Change in Fair Value of Contingent Consideration by Operating Group (in thousands, except percentages)Change in Fair Value of Contingent Consideration by Operating Group (in thousands, except percentages)
For the Three Months Ended March 31,For the Three Months
 Ended September 30,
For the Nine Months
 Ended September 30,
20232022Variance20232022Variance20232022Variance
Operating GroupOperating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%Operating GroupAmountPercent of ExpenseAmountPercent of ExpenseAmount%AmountPercent of ExpenseAmountPercent of ExpenseAmount%
Insurance Advisory SolutionsInsurance Advisory Solutions$18,795 76 %$(6,055)108 %$24,850 n/mInsurance Advisory Solutions$7,863 56 %$24,897 115 %$(17,034)68 %$39,167 71 %$(6,115)56 %$45,282 n/m
Underwriting, Capacity & Technology SolutionsUnderwriting, Capacity & Technology Solutions4,859 20 %(183)%5,042 n/mUnderwriting, Capacity & Technology Solutions5,557 40 %(2,931)(14)%8,488 n/m14,609 27 %(4,828)45 %19,437 n/m
Mainstreet Insurance SolutionsMainstreet Insurance Solutions1,104 %606 (11)%498 82 %Mainstreet Insurance Solutions494 %(271)(1)%765 n/m1,289 %134 (1)%1,155 n/m
$24,758 $(5,632)$30,390 $13,914 $21,695 $(7,781)$55,065 $(10,809)$65,874 
__________
n/m    not meaningful
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We had fair value losses related to contingent consideration across all our Operating Groups for each of the first quarter and year-to-date periods of 2023. These losses were impacted by changes in growth trends of certain partners and lower discount rates,approaching the measurement date for many of the contingent earnout obligations, which resulted in an overall higher contingent earnout liability value.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity needs for the foreseeable future will include cash to (i) provide capital to facilitate the organic growth of our business and to fund future Partnerships, (ii) pay operating expenses, including cash compensation to our employees and expenses related to being a public company, (iii) make payments under the Tax Receivable Agreement, (iv) pay interest and principal due on borrowings under the JPM Credit Agreement, (v) pay contingent earnout liabilities, (vi) pay income taxes, and (vii) fund potential investments in third party businesses that support the growth of our business, which may include the sponsorship of, and a minority, non-controlling interest in, an investment fund, the purpose of which may include facilitating the establishment of additional and alternative capacity that supports the growth of our MGA of the Future business.
We have historically financed our operations and funded our debt service through the sale of our insurance products and services, and we have financed significant cash needs to fund growth through the acquisition of Partners through debt and equity financing.
In the near term, we intend to fund our earnout obligations with cash and cash equivalents, cash flow from operations and available borrowings. During the third quarter of 2023, we increased our borrowings under the Term Loan B by $170.0 million and we used $165.0 million of the proceeds to partially repay outstanding amounts under the Revolving Facility, which increased our available borrowing capacity to pay our future earnout obligations. From time to time, we will consider raising additional debt or equity financing if and as necessary to support our growth, including in connection with the exploration of Partnership opportunities or to refinance existing obligations on an opportunistic basis.
At March 31,September 30, 2023, our cash and cash equivalents were $81.3$79.0 million, and we had $115.0$276.0 million of available borrowing capacity on the Revolving Facility under the JPM Credit Agreement. We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next twelve months and beyond.
In the near term, we intend to fund our earnout obligations with cash and cash equivalents, cash flow from operations and available borrowings. In connection with our continuous exploration of Partnership opportunities, we will consider raising additional debt or equity financing if and as necessary to support our growth.
JPM Credit Agreement
OurAs of September 30, 2023, our JPM Credit Agreement provides for senior secured credit facilities in an aggregate principal amount of $1.45$1.62 billion, which consists of (i) a term loan facility in the principal amount of $850.0 million$1.02 billion maturing in October 2027 (the “Term Loan B”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of $600.0 million maturing in April 2027 (the “Revolving Facility”).
The Term Loan B bearsaccrues interest at LIBORterm 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 LIBORterm SOFR floor of 50 bps. The applicable interest rateAt September 30, 2023, the outstanding borrowings on the Term Loan B at March 31, 2023 was 8.21%of $1.0 billion had an applicable interest rate of 8.94%.
Borrowings under the Revolving Facility accrue interest at SOFR plus 210 bps to SOFR plus 310 bps based on total net leverage ratio. BRP will pay a letter of credit fee equal to the margin then in effect with respect to SOFR loans under the Revolving Facility multiplied by the daily amount available to be drawn under any letter of credit, a fronting fee and any customary documentary and processing charges for any letter of credit issued under the JPM Credit Agreement. The outstanding borrowings on the Revolving Facility of $485.0$324.0 million had an applicable interest rate of 7.90%8.42% at March 31,September 30, 2023. The Revolving Facility is also subject to a commitment fee of 0.40% on the unused capacity at March 31,September 30, 2023.
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We have entered into interest rate cap agreements to limit the potential impact of interest rate changes on cash flows. The interest rate caps limit the variability of the base rate to the amount of the cap. The interest rate cap agreements in place at March 31,September 30, 2023 mitigate the interest rate volatility on $300.0 million of debt to a maximum base rate of 1.50% through March 2024 and mitigate the interest rate volatility on $1.2 billion of debt to a maximum base rate of 7.00%. through November 2025.
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The Revolving Facility and the Term Loan B are collateralized by a first priority lien on substantially all the assets of BRP, including a pledge of all equity securities of certain of its subsidiaries. The JPM Credit Agreement contains covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business, make certain investments or restrict BRP’s ability to make dividends or other distributions to BRP Group. In addition, the JPM Credit Agreement contains financial covenants requiring us to maintain our Total First Lien Net Leverage Ratio (as defined in the JPM Credit Agreement) at or below 7.00 to 1.00.
Contractual Obligations and Commitments
The following table represents our contractual obligations and commitments, aggregated by type, at March 31,September 30, 2023:
Payments Due by PeriodPayments Due by Period
(in thousands)(in thousands)TotalLess than
1 year
1-3 years3-5 yearsMore than
5 years
(in thousands)TotalLess than
1 year
1-3 years3-5 yearsMore than
5 years
Operating leases(1)
Operating leases(1)
$119,101 $19,274 $38,816 $33,791 $27,220 
Operating leases(1)
$113,401 $20,662 $39,344 $33,010 $20,385 
Debt obligations payable(2)
Debt obligations payable(2)
1,778,511 115,076 228,057 1,435,378 — 
Debt obligations payable(2)
1,774,749 126,556 250,364 1,397,829 — 
Undiscounted estimated contingent earnout obligation(3)
Undiscounted estimated contingent earnout obligation(3)
376,821 135,697 237,386 3,738 — 
Undiscounted estimated contingent earnout obligation(3)
332,018 105,568 226,450 — — 
Maximum future contingent payment obligation, less undiscounted estimated contingent earnout obligation567,395 281,816 279,317 6,262 — 
USF GrantUSF Grant4,740 540 1,704 1,696 800 USF Grant4,740 540 1,704 1,696 800 
TotalTotal$2,846,568 $552,403 $785,280 $1,480,865 $28,020 Total$2,224,908 $253,326 $517,862 $1,432,535 $21,185 
__________
(1)    Represents noncancelable operating leases for our facilities. Operating lease expense was $5.5$16.8 million and $4.7$14.5 million for the threenine months ended March 31,September 30, 2023 and 2022, respectively.
(2)    Represents scheduled debt obligations and estimated interest payments under the JPM Credit Agreement.
(3)    Represents the undiscounted estimated contingent earnout obligationtotal expected future payments to be made to Partners at March 31, 2023.September 30, 2023.
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the JPM Credit Agreement, potential payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
Our operating lease obligations represent noncancelable agreements for our corporate headquarters and office space for our insurance brokerage business. Our operating lease agreements expire through December 2030. These obligations do not include leases with an initial term of twelve months or less, which are expensed as incurred. We may extend, terminate or otherwise modify or sub-lease facilities as needed to best suit the needs of our business. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.
Borrowings under our JPM Credit Agreement include $836.0 million$1.0 billion under the Term Loan B and $485.0$324.0 million on the Revolving Facility. Interest payable on outstanding borrowings on the Term Loan B and Revolving Facility in the table above was calculated based on applicable interest rates at March 31,September 30, 2023 of 8.21%8.94% and 7.90%8.42%, respectively, through their respective expiration dates of October 2027 and April 2027.
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Substantially all of our Partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contractual earnout provisions. We record an estimation of the fair value of the contingent earnout obligations at the Partnership date as a component of the consideration paid. Our contingent earnout obligations are measured at fair value at each reporting period based on the present value of the expected future payments to be made to Partners in accordance with the provisions outlined in the respective purchase agreements. The recorded obligations are based on estimates of the Partners’ future performance using financial projections for the earnout period. The aggregate estimated contingent earnout liabilities included on our condensed consolidated balance sheet at March 31,September 30, 2023 was $286.2$273.3 million, of which $24.9$12.5 million must be settled in cash and the remaining $261.3$260.8 million can be settled in cash or stock at our option. The undiscounted estimated contingent earnout obligation presented in the table above represents the fair value of the total expected future payments to be made to the Partners. The undiscounted estimated contingent earnout obligation at September 30, 2023 was $332.0 million, of which $14.4 million must be settled in cash and the remaining $317.6 million can be settled in cash or stock at our option. The maximum futureestimated exposure to the contingent payment obligationearnout liabilities was $847.1 million at March 31, 2023 was $944.2 million, of which $63.1 million must be settled in cash and the remaining $881.1 million can be settled in cash or stock at our option.September 30, 2023.
As of March 31,September 30, 2023, we have a remaining commitment to USF to donate an aggregate $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 this commitment.
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Tax Receivable Agreement
We expect to obtain an increase in our share of our tax basis of the assets when BRP’s LLC Units are redeemed or exchanged for shares of BRP Group’s Class A common stock. This increase in tax basis may have the effect of reducing the future amounts paid to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.
We have a Tax Receivable Agreement that provides for the payment by us to the parties to the Tax Receivable Agreement of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of (i) any increase in tax basis in BRP Group’s assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement.
During the threenine months ended March 31,September 30, 2023, we redeemed 834,6412,018,824 LLC Units of BRP on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock. We receive an increase in our share of the tax basis in the net assets of BRP due to the interests being redeemed. We have assessed the realizability of the net deferred tax assets and in that analysis have considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We have recorded a full valuation allowance against the deferred tax assets at BRP Group as of March 31,September 30, 2023, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
SOURCES AND USES OF CASH
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated:
For the Three Months
 Ended March 31,
For the Nine Months
 Ended September 30,
(in thousands)(in thousands)20232022Variance(in thousands)20232022Variance
Net cash used in operating activities$(14,031)$(3,433)$(10,598)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$22,799 $(16,653)$39,452 
Net cash used in investing activitiesNet cash used in investing activities(5,099)(3,132)(1,967)Net cash used in investing activities(16,948)(407,466)390,518 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(24,522)22,736 (47,258)Net cash provided by (used in) financing activities(41,928)446,999 (488,927)
Net increase (decrease) in cash and cash equivalents and restricted cashNet increase (decrease) in cash and cash equivalents and restricted cash(43,652)16,171 (59,823)Net increase (decrease) in cash and cash equivalents and restricted cash(36,077)22,880 (58,957)
Cash and cash equivalents and restricted cash at beginning of periodCash and cash equivalents and restricted cash at beginning of period230,471 227,737 2,734 Cash and cash equivalents and restricted cash at beginning of period230,471 227,737 2,734 
Cash and cash equivalents and restricted cash at end of periodCash and cash equivalents and restricted cash at end of period$186,819 $243,908 $(57,089)Cash and cash equivalents and restricted cash at end of period$194,394 $250,617 $(56,223)
Operating Activities
The primary sources and uses of cash for operating activities are net income (loss) adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration. Net cash used inprovided by operating activities increased $10.6$39.5 million year over year, driven by decreases in cash of $11.4 million relating to net income (loss) adjusted for non-cash items and $13.0 million relating to a higher balance in premiums, commissions and fees receivable resulting from revenue growth and the timing of revenue recognition under direct bill policies in employee benefits for which payment is received monthly through the duration of the year. We also had an increase in cash relating to a decrease inlower contingent earnout consideration payments in excess of the liability recognized at the acquisition date of $10.3 million.
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$26.3 million and better operating leverage year over year.
Investing Activities
The primary sources and uses of cash for investing activities relate to cash consideration paid to fund Partnerships and other investments to grow our business. Net cash used in investing activities increased $2.0decreased $390.5 million year over year, driven by an increasea decrease in capital expenditurescash consideration paid for Partnership activity of $1.7$389.2 million as a result of software development projects for infrastructure to support our business, including key customer relationship management software, and other purchases to support our growth.an overall decrease in Partnership activity during 2023.
Financing Activities
The primary sources and uses of cash for financing activities relate to the issuance of our Class A common stock; debt servicing costs in connection with the JPM Credit Agreement, as well as purchases, sales and settlements of interest rate caps to mitigate interest rate volatility on that debt; payment of contingent earnout consideration; and other equity transactions. Net cash provided by financing activities decreased $47.3$488.9 million year over year to net cash used in financing activities of $41.9 million, driven by a decrease in net proceeds from borrowings on our credit facilities of $60.0$503.4 million, offset in part by an increase in cash from fewer payments of contingent earnout consideration up to the amount of purchase price accrual of $9.3$20.4 million.
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CRITICAL ACCOUNTING ESTIMATES
Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on historical experience, known or expected trends, independent valuations and other factors we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.
There have been no material changes in our critical accounting policies during the threenine months ended March 31,September 30, 2023 as compared to those disclosed in the Critical Accounting Policies and Estimates section under Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the SEC on February 28, 2023.
RECENT ACCOUNTING PRONOUNCEMENTS
Please refer to Note 1 to our condensed consolidated financial statements included in Item 1. Financial Statements of this report for a discussion of recent accounting pronouncements that may impact us.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the potential loss arising from adverse changes in market rates and prices, such as premium amounts, interest rates and equity prices. We are exposed to market risk through our investments and borrowings under the JPM Credit Agreement. We use derivative instruments to mitigate our risk related to the effect of rising interest rates on our cash flows. However, we do not use derivative instruments for trading or speculative purposes.
Our invested assets are held primarily as cash and cash equivalents and restricted cash. To a lesser extent, we may also utilize certificates of deposit, U.S. treasury securities and professionally managed short duration fixed income funds. These investments are subject to market risk. The fair values of our invested assets at March 31,September 30, 2023 and December 31, 2022 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.
At March 31,September 30, 2023, we had $836.0 million$1.0 billion and $485.0$324.0 million of borrowings outstanding under the Term Loan B and the Revolving Facility, respectively. These borrowings bear interest on a floating basis tied to either the prime rate or one of various other variable rates as defined in the JPM Credit Agreement. The variable rate currently in effect for the Term Loan B accrues interest at 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. Borrowings under the Revolving Facility is LIBOR andaccrue interest at SOFR respectively.plus 210 bps to SOFR plus 310 bps based on total net leverage ratio.
We have entered into interest rate cap agreements to limit the potential impact of interest rate changes on cash flows. The interest rate caps limit the variability of the applicable base rate to the amount of the cap. The interest rate cap agreements in place at March 31,September 30, 2023 mitigate the interest rate volatility on $300.0 million of debt to a maximum base rate of 1.50% through March 2024 and mitigate the interest rate volatility on $1.2 billion of debt to a maximum base rate of 7.00%. through November 2025. Taking the interest rate cap agreements into consideration, an increase of 100 basis points on the variable interest rates in effect at March 31,September 30, 2023 would increasehave increased our annual interest expense for the JPM Credit Agreement by $10.2$10.3 million.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31,September 30, 2023 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our senior management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31,September 30, 2023, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.
ITEM 1A. RISK FACTORS
See the risk factors 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 February 28, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
The following table provides information about our repurchase of shares of our Class A common stock during the three months ended March 31,September 30, 2023:
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Value that may yet be Purchased under the Plans or Programs
January 1, 2023 to January 31, 202363,534 $25.14 — $— 
February 1, 2023 to February 28, 2023143 31.05 — — 
March 1, 2023 to March 31, 2023106,563 26.32 — — 
Total170,240 $25.88 — $— 
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Value that may yet be Purchased under the Plans or Programs
July 1, 2023 to July 31, 202326,949 $24.79 — $— 
August 1, 2023 to August 31, 202321,547 24.82 — — 
September 1, 2023 to September 30, 20233,246 26.62 — — 
Total51,742 $24.92 — $— 
__________
(1)    We purchased 170,24051,742 shares during the three months ended March 31,September 30, 2023, which were acquired from our employees to cover required tax withholding on the vesting of shares granted under our Omnibus Incentive Plan or Partnership Inducement Award Plan.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. OTHER INFORMATION
As previously reported, we are a partyOn 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. In connection with his exit, Mr. Wiebeck has also resigned from his position on the Company’s Board of Directors and all Committees on which he served, and the Company’s Board and such Committees will be reduced by one member, effective at the end of the Company’s 2023 fiscal year.
Pursuant to a Stockholders Agreement executedretirement agreement and general release, in consideration of each executive’s agreement to (a) permanently retire from the insurance industry, (b) release the Company and its affiliates from all releasable claims and (c) adhere to an enhanced set of restrictive covenants, the Company has agreed to (i) pay each retiring executive $4,000,000 in cash ($2,560,000 of which represents severance compensation and $1,440,000 of which represents early payment of the 2023 bonus otherwise payable to each retiring executive under the Company’s 2023 annual incentive plan in respect of 2023 performance), (ii) provide COBRA contribution at comparable levels for up to 12 months following the retirement date and (iii) permit the continued vesting of all outstanding restricted stock and performance-based restricted stock unit awards held by each departing executive subject to all conditions of the applicable award agreements, aside from the conditions relating to continued employment. The payment and other severance obligations will be made in lieu of any other compensation payable to either departing executive under the Company’s 2023 annual incentive plan in respect of 2023 performance. A copy of the retirement agreement and general release will be filed with the Company’s 2023 Annual Report on Form 10-K.
In connection with our initial public offering (IPO”) witheach executive’s departure, the persons who were members of BRP prior to our IPO. Pursuant to the terms of the StockholdersVoting Agreement so long as the pre-IPO members of BRPby and their permitted transferees (collectively, the “Holders”) beneficially own at least 10% of the aggregate number of outstanding shares of our common stock (the “Substantial Ownership Requirement”), the Holders, acting through approval of the Holders holding a majority of the shares of our Class B common stock held by all of the Holders, have (i) approval rights (the “Consent Requirement”) over certain transactions and actions taken by us and BRP (the “Specified Matters”) and (ii) nomination rights with respect to certain members of our board of directors (the “Board” or theBoard of Directors”), in each case as set forth more fully in the Stockholders Agreement.
On February 8, 2023, a complaint was filed in the Court of Chancery of the State of Delaware (the “Complaint”) alleging that the Consent Requirement with respect to three of the Specified Matters violates Delaware law and our governing documents. We and the Holders disagree with the assertions in the Complaint.
Nevertheless, to reaffirm its commitment to sound corporate governance and potentially spur resolution of the pending litigation, at the request of our Board of Directors,among Lowry Baldwin, Baldwin Insurance Group Holdings, LLC, an entity controlled by Lowry Baldwin, Elizabeth Krystyn, Laura Sherman, Trevor Baldwin, Kris Wiebeck, John Valentine, Dan Galbraith, and Brad Hale, and certain trusts established by such individuals, will be amended to remove Kris Wiebeck and John Valentine, and their related trusts, as parties effective December 31, 2023.
Insider Trading Arrangements and Policies
During the Chairmanquarter ended September 30, 2023, none of our Board of Directors anddirectors or officers adopted or terminated any contract, instruction or written plan for the Holder of a majority of the sharespurchase or sale of our Class B common stock held by allsecurities intended to satisfy the affirmative defense conditions of the Holders (the “Majority Holder”), and the Company have entered into a consent and defense agreement (the “Agreement”). Pursuant to the Agreement, Majority Holder has irrevocably consented to and approved, on behalf of itself and the other Holders,Rule 10b5-1(c) or any Specified Matter that the Independent Committeenon-Rule 10b5-1 trading arrangement (as defined below) determines in good faith is in the best interestsItem 408(c) of our Company and its stockholders in their capacity as such, in satisfaction of the Consent Requirement with respect to such Specific Matter. Further, Majority Holder irrevocably agreed, on behalf of itself and the other Holders, not to designate any nominee for election to service on our Board of Directors if the Independent Committee determines in good faith that action by the Board of Directors in furtherance of the nomination of such person to the Board of Directors would not be in the best interests of our Company and its stockholders in their capacity as such.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, attached hereto as Exhibit 10.1, which is incorporated herein by reference.
In connection with the Agreement, our Board of Directors, with the consent of the Majority Holder under the Stockholders Agreement, has amended our Amended and Restated By-Laws to, among other things:
Create a committee of the Board, composed of all Directors then in office who the Board determines both (i) qualifies as an independent director under the corporate governance standards of Nasdaq and (ii) has no relationship with the Corporation or any Holder that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director (such committee, the “Independent Committee”);
Empower the Independent Committee, acting unanimously, to make any and all determinations contemplated or required by the Agreement;
Make certain conforming and clarifying amendments in connection with the foregoing.
The foregoing description of the amendment to our Amended and Restated By-Laws does not purport to be complete and is qualified in its entirety by reference to the full text of the amendment, attached hereto as Exhibit 3.4, which is incorporated herein by reference.Regulation S-K).
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ITEM 6. EXHIBITS
The following exhibits are filed as a part of this Quarterly Report on Form 10-Q:
Exhibit No.Description of Exhibit
3.1
3.2
3.3
3.4*3.4
10.1*10.1
31.1*
31.2*
32**
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)
__________
*    Filed herewith
**    Furnished herewith and as such are deemed not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BRP GROUP, INC.
Date: May 9,November 7, 2023By:/s/ Trevor L. Baldwin
  Trevor L. Baldwin
  Chief Executive Officer
   
Date: May 9,November 7, 2023By:/s/ Bradford L. Hale
  Bradford L. Hale
  Chief Financial Officer

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