Item 8. Financial Statements and Supplementary Data.

Index to Consolidated Financial Statements

	Page No.
Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013	42
Consolidated Balance Sheets as of December 31, 2015 and 2014	44
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013	45
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	45
Notes to Consolidated Financial Statements for the years ended December 31, 2015, 2014 and 2013	47
Note 1: Summary of Significant Accounting Policies	47
Note 2: Business Combinations	51
Note 3: Goodwill	57
Note 4: Amortizable Intangible Assets	57
Note 5: Investments	58
Note 6: Fixed Assets	59
Note 7: Accrued Expenses and Other Liabilities	60
Note 8: Long-Term Debt	61
Note 9: Income Taxes	62
Note 10: Employee Savings Plan	64
Note 11: Stock-Based Compensation	64
Note 12: Supplemental Disclosures of Cash Flow Information	68
Note 13: Commitments and Contingencies	69
Note 14: Quarterly Operating Results (Unaudited)	70
Note 15: Segment Information	70
Note 16: Losses and Loss Adjustment Reserve	71
Note 17: Statutory Financial Information	72
Note 18: Subsidiary Dividend Restrictions	72
Note 19: Shareholders’ Equity	72
Report of Independent Registered Public Accounting Firm	74

BROWN & BROWN, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)	For the Year Ended December 31,
	2015				2014				2013
REVENUES
Commissions and fees	$	1,656,951			$	1,567,460			$	1,355,503
Investment income	1,004				747				638
Other income, net	2,554				7,589				7,138
Total revenues	1,660,509				1,575,796				1,363,279
EXPENSES
Employee compensation and benefits	841,439				791,749				683,000
Non-cash stock-based compensation	15,513				19,363				22,603
Other operating expenses	251,055				235,328				195,677
Loss/(gain) on disposal	(619		)		47,425				—
Amortization	87,421				82,941				67,932
Depreciation	20,890				20,895				17,485
Interest	39,248				28,408				16,440
Change in estimated acquisition earn-out payables	3,003				9,938				2,533
Total expenses	1,257,950				1,236,047				1,005,670
Income before income taxes	402,559				339,749				357,609
Income taxes	159,241				132,853				140,497
Net income	$	243,318			$	206,896			$	217,112
Net income per share:
Basic	$	1.72			$	1.43			$	1.50
Diluted	$	1.70			$	1.41			$	1.48
Dividends declared per share	$	0.45			$	0.41			$	0.37

See accompanying notes to Consolidated Financial Statements.

BROWN & BROWN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)	December 31, 2015				December 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	443,420			$	470,048
Restricted cash and investments	229,753				259,769
Short-term investments	13,734				11,157
Premiums, commissions and fees receivable	433,885				424,547
Reinsurance recoverable	31,968				13,028
Prepaid reinsurance premiums	309,643				320,586
Deferred income taxes	24,635				25,431
Other current assets	50,351				45,542
Total current assets	1,537,389				1,570,108
Fixed assets, net	81,753				84,668
Goodwill	2,586,683				2,460,611
Amortizable intangible assets, net	744,680				784,642
Investments	18,092				19,862
Other assets	44,142				36,567
Total assets	$	5,012,739			$	4,956,458
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Premiums payable to insurance companies	$	574,736			$	568,184
Losses and loss adjustment reserve	31,968				13,028
Unearned premiums	309,643				320,586
Premium deposits and credits due customers	83,098				83,313
Accounts payable	63,910				57,261
Accrued expenses and other liabilities	192,067				181,156
Current portion of long-term debt	73,125				45,625
Total current liabilities	1,328,547				1,269,153
Long-term debt	1,079,878				1,152,846
Deferred income taxes, net	360,949				341,497
Other liabilities	93,589				79,217
Commitments and contingencies (Note 13)
Shareholders’ Equity:
Common stock, par value $0.10 per share; authorized 280,000 shares; issued 146,415 shares and outstanding 138,985 shares at 2015, issued 145,871 shares and outstanding 143,486 shares at 2014	14,642				14,587
Additional paid-in capital	426,498				405,982
Treasury stock, at cost 7,430 and 2,385 shares at 2015 and 2014, respectively	(238,775		)		(75,025		)
Retained earnings	1,947,411				1,768,201
Total shareholders’ equity	2,149,776				2,113,745
Total liabilities and shareholders’ equity	$	5,012,739			$	4,956,458

See accompanying notes to Consolidated Financial Statements.

BROWN & BROWN, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Common Stock
(in thousands, except per share data)	Shares		Par Value				Additional Paid-In Capital				Treasury Stock				Retained Earnings				Total
Balance at January 1, 2013	143,878		$	14,388			$	335,872			$	—			$	1,457,073			$	1,807,333
Net income															217,112				217,112
Common stock issued for employee stock benefit plans	1,541		154				33,730												33,884
Income tax benefit from exercise of stock benefit plans							2,358												2,358
Cash dividends paid ($0.37 per share)															(53,546		)		(53,546		)
Balance at December 31, 2013	145,419		14,542				371,960				—				1,620,639				2,007,141
Net income															206,896				206,896
Common stock issued for employee stock benefit plans	442		44				30,405												30,449
Purchase of treasury stock											(75,025		)						(75,025		)
Income tax benefit from exercise of stock benefit plans							3,298												3,298
Common stock issued to directors	10		1				319												320
Cash dividends paid ($0.41 per share)															(59,334		)		(59,334		)
Balance at December 31, 2014	145,871		14,587				405,982				(75,025		)		1,768,201				2,113,745
Net income															243,318				243,318
Common stock issued for employee stock benefit plans	528		53				27,992												28,045
Purchase of treasury stock							(11,250		)		(163,750		)						(175,000		)
Income tax benefit from exercise of stock benefit plans							3,276												3,276
Common stock issued to directors	16		2				498												500
Cash dividends paid ($0.45 per share)															(64,108		)		(64,108		)
Balance at December 31, 2015	146,415		$	14,642			$	426,498			$	(238,775	)		$	1,947,411			$	2,149,776

See accompanying notes to Consolidated Financial Statements.

BROWN & BROWN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(in thousands)	2015				2014				2013
Cash flows from operating activities:
Net income	$	243,318			$	206,896			$	217,112
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization	87,421				82,941				67,932
Depreciation	20,890				20,895				17,485
Non-cash stock-based compensation	15,513				19,363				22,603
Change in estimated acquisition earn-out payables	3,003				9,938				2,533
Deferred income taxes	22,696				7,369				32,247
Amortization of debt discount	157				46				—
Income tax benefit from exercise of shares from the stock benefit plans	(3,276		)		(3,298		)		(2,358		)
(Gain)/loss on sales of investments, fixed assets and customer accounts	(107		)		42,465				(2,806		)
Payments on acquisition earn-outs in excess of original estimated payables	(11,383		)		(2,539		)		(2,788		)
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures:
Restricted cash and investments decrease (increase)	30,016				(9,760		)		(85,445		)
Premiums, commissions and fees receivable (increase)	(7,163		)		(11,160		)		(40,729		)
Reinsurance recoverables (increase) decrease	(18,940		)		12,210				—
Prepaid reinsurance premiums decrease (increase)	10,943				(31,573		)		—
Other assets (increase)	(5,318		)		(12,564		)		(2,583		)
Premiums payable to insurance companies decrease	542				8,164				61,624
Premium deposits and credits due customers (decrease) increase	(2,973		)		2,323				41,049
Losses and loss adjustment reserve increase (decrease)	18,940				(12,210		)		—
Unearned premiums (decrease) increase	(10,943		)		31,573				—
Accounts payable increase	34,206				36,949				5,180
Accrued expenses and other liabilities increase	8,204				11,718				70,872
Other liabilities (decrease)	(23,898		)		(24,727		)		(12,554		)
Net cash provided by operating activities	411,848				385,019				389,374
Cash flows from investing activities:
Additions to fixed assets	(18,375		)		(24,923		)		(16,366		)
Payments for businesses acquired, net of cash acquired	(136,000		)		(696,486		)		(367,712		)
Proceeds from sales of fixed assets and customer accounts	10,576				13,631				5,886
Purchases of investments	(22,766		)		(17,813		)		(18,102		)
Proceeds from sales of investments	21,928				18,278				15,662
Net cash used in investing activities	(144,637		)		(707,313		)		(380,632		)
Cash flows from financing activities:
Payments on acquisition earn-outs	(25,415		)		(9,530		)		(15,491		)
Proceeds from long-term debt	—				1,048,425				30,000
Payments on long-term debt	(45,625		)		(330,000		)		(93		)
Borrowings on revolving credit facilities	—				475,000				31,863
Payments on revolving credit facilities	—				(475,000		)		(31,863		)
Income tax benefit from exercise of shares from the stock benefit plans	3,276				3,298				2,358
Issuances of common stock for employee stock benefit plans	15,890				14,808				12,445
Repurchase of stock benefit plan shares for employees to fund tax withholdings	(2,857		)		(3,252		)		(1,284		)
Purchase of treasury stock	(163,750		)		(75,025		)		—
Prepayment of accelerated share repurchase program	(11,250		)		—				—
Cash dividends paid	(64,108		)		(59,334		)		(53,546		)
Net cash (used in) provided by financing activities	(293,839		)		589,390				(25,611		)
Net (decrease) increase in cash and cash equivalents	(26,628		)		267,096				(16,869		)
Cash and cash equivalents at beginning of period	470,048				202,952				219,821
Cash and cash equivalents at end of period	$	443,420			$	470,048			$	202,952

See accompanying notes to Consolidated Financial Statements.

BROWN & BROWN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1· Summary of Significant Accounting Policies

Nature of Operations

Brown & Brown, Inc., a Florida corporation, and its subsidiaries (collectively, “Brown & Brown” or the “Company”) is a diversified insurance agency, wholesale brokerage, insurance programs and services organization that markets and sells to its customers, insurance products and services, primarily in the property and casualty area. Brown & Brown’s business is divided into four reportable segments: the Retail Segment provides a broad range of insurance products and services to commercial, public entity, professional and individual customers; the National Programs Segment, acting as a managing general agent (“MGA”), provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; the Wholesale Brokerage Segment markets and sells excess and surplus commercial insurance, primarily through independent agents and brokers, as well as Brown & Brown Retail offices; and the Services Segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services, and claims adjusting services. In addition, as the result of our acquisition of The Wright Insurance Group, LLC (“Wright”) in May 2014, we own a flood insurance carrier, Wright National Flood Insurance Company (“Wright Flood”), that is a Wright subsidiary. Wright Flood’s business consists of policies written pursuant to the National Flood Insurance Program, the program administered by the Federal Emergency Management Agency (“FEMA”), and several excess flood insurance policies, all of which are fully reinsured.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. Under ASU 2016-02, the Company will be required to recognize the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating its leases against the requirements of this pronouncement.

In November 2015, FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as a single non-current item on the balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016 with early adoption permitted as of the beginning of any interim or annual reporting period. The Company plans to adopt ASU 2015-17 in the first quarter of 2017. This is not expected to have a material impact on our Consolidated Financial Statements other than reclassifying current deferred tax assets and liabilities to non-current in the balance sheet.

In September 2015, FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” (“ASU 2015-16”), which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2015. The Company has determined that the impact of the adoption of this guidance on the Consolidated Financial Statements would not be material.

In August 2015, FASB issued ASU No. 2015-15, “Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements”. This standard is in addition to ASU No. 2015-03 and adds SEC paragraphs pursuant to an SEC Staff Announcement that the SEC staff would not object to an entity deferring and presenting debt issuance costs associated with a line-of-credit arrangement as an asset and subsequently amortizing the costs ratably over the term of the arrangement. The Company plans to adopt ASU 2015-03 in the first quarter of 2016. As the Company’s debt issuance costs are not material, implementation of this update is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In April 2015, FASB issued ASU No. 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”), which issues guidance on determining whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software. If a cloud computing arrangement does not contain a software license, it should be accounted for as a service contract. This guidance is effective for fiscal years beginning after December 15, 2015 and for interim periods within those fiscal years, with early adoption permitted. The Company has to this point not been a party to any material cloud computing arrangements and as such has determined the impact of the adoption of this guidance on the Consolidated Financial Statements to be immaterial.

In April 2015, FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of

that debt liability, consistent with debt discounts, and not recorded as separate assets. This update is effective for reporting periods beginning after December 15, 2015, and is to be applied on a retrospective basis. The Company plans to adopt ASU 2015-03 in the first quarter of 2016. As the Company’s debt issuance costs are not material, implementation of this update is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In August 2014, FASB issued ASU No. 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which addresses management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for fiscal years beginning after December 15, 2016 and for interim periods within those fiscal years, with early adoption permitted. The Company does not expect to early adopt this guidance, and it believes the adoption of this guidance will not have an impact on the Consolidated Financial Statements.

In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets, and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company beginning January 1, 2018, after FASB voted to delay the effective date by one year. At that time, the Company may adopt the new standard under the full retrospective approach or the modified retrospective approach. The Company is currently evaluating its revenue streams against the requirements of this pronouncement.

Principles of Consolidation

The accompanying Consolidated Financial Statements include the accounts of Brown & Brown, Inc. and its subsidiaries. All significant inter-company account balances and transactions have been eliminated in the Consolidated Financial Statements.

Segment results for prior periods have been recast to reflect the current year segmental structure. Certain reclassifications have been made to the prior-year amounts reported in this Annual Report on Form 10-K in order to conform to the current year presentation.

Revenue Recognition

Commission revenues are recognized as of the effective date of the insurance policy or the date on which the policy premium is processed into our systems, whichever is later. Commission revenues related to installment billings are recognized on the latter of effective or invoiced date, with the exception of our Arrowhead business which follows a policy of recognizing on the latter of effective or processed date into our systems regardless of the billing arrangement. Management determines the policy cancellation reserve based upon historical cancellation experience adjusted for any known circumstances. Subsequent commission adjustments are recognized upon our receipt of notification from insurance companies concerning matters necessitating such adjustments. Profit-sharing contingent commissions are recognized when determinable, which is generally when such commissions are received from insurance companies, or when we receive formal notification of the amount of such payments. Fee revenues and commissions for workers’ compensation programs are recognized as services are rendered.

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents principally consist of demand deposits with financial institutions and highly liquid investments with quoted market prices having maturities of three months or less when purchased.

Restricted Cash and Investments, and Premiums, Commissions and Fees Receivable

In our capacity as an insurance agent or broker, the Company typically collects premiums from insureds and, after deducting its authorized commissions, remits the net premiums to the appropriate insurance company or companies. Accordingly, as reported in the Consolidated Balance Sheets, “premiums” are receivable from insureds. Unremitted net insurance premiums are held in a fiduciary capacity until Brown & Brown disburses them. Where allowed by law, Brown & Brown invests these unremitted funds only in cash, money market accounts, tax-free variable-rate demand bonds and commercial paper held for a short term. In certain states in which Brown & Brown operates, the use and investment alternatives for these funds are regulated and restricted by various state laws and agencies. These restricted funds are

reported as restricted cash and investments on the Consolidated Balance Sheets. The interest income earned on these unremitted funds, where allowed by state law, is reported as investment income in the Consolidated Statement of Income.

In other circumstances, the insurance companies collect the premiums directly from the insureds and remit the applicable commissions to Brown & Brown. Accordingly, as reported in the Consolidated Balance Sheets, “commissions” are receivables from insurance companies. “Fees” are primarily receivables due from customers.

Investments

Certificates of deposit, and other securities, having maturities of more than three months when purchased are reported at cost and are adjusted for other-than-temporary market value declines. As part of the acquisition of Wright in 2014, we acquired additional investments, which include U.S. Government, Municipal, domestic corporate and foreign corporate bonds as well as short-duration fixed income funds. Investments within the portfolio or funds are held as available for sale and are carried at their fair value. Any gain/loss applicable from the fair value change is recorded, net of tax, as other comprehensive income under the equity section of the Consolidated Balance Sheet. Realized gains and losses are reported on the Consolidated Statement of Income, with the cost of securities sold determined on a specific identification basis.

Fixed Assets

Fixed assets, including leasehold improvements, are carried at cost, less accumulated depreciation and amortization. Expenditures for improvements are capitalized, and expenditures for maintenance and repairs are expensed to operations as incurred. Upon sale or retirement, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in other income. Depreciation has been determined using the straight-line method over the estimated useful lives of the related assets, which range from three to 15 years. Leasehold improvements are amortized on the straight-line method over the shorter of the useful life of the improvement or the term of the related lease.

Goodwill and Amortizable Intangible Assets

All of our business combinations initiated after June 30, 2001 are accounted for using the purchase method. Acquisition purchase prices are typically based on a multiple of average annual operating profit earned over a one to three year period within a minimum and maximum price range. The recorded purchase prices for all acquisitions consummated after January 1, 2009 include an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations are recorded in the Consolidated Statement of Income when incurred.

The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions contained in the respective purchase agreements. In determining fair value, the acquired business’ future performance is estimated using financial projections developed by management for the acquired business and this estimate reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These estimates are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made.

Amortizable intangible assets are stated at cost, less accumulated amortization, and consist of purchased customer accounts and non-compete agreements. Purchased customer accounts and non-compete agreements are amortized on a straight-line basis over the related estimated lives and contract periods, which range from five to 15 years. Purchased customer accounts primarily consist of records and files that contain information about insurance policies and the related insured parties that are essential to policy renewals.

The excess of the purchase price of an acquisition over the fair value of the identifiable tangible and amortizable intangible assets is assigned to goodwill. While goodwill is not amortizable, it is subject to assessment at least annually, and more frequently in the presence of certain circumstances, for impairment by application of a fair value-based test. The Company compares the fair value of each reporting unit with its carrying amount to determine if there is potential impairment of goodwill. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. Fair value is estimated based on multiples of earnings before interest, income taxes, depreciation, amortization and change in estimated acquisition earn-out payables (“EBITDAC”), or on a discounted cash flow basis. Brown & Brown completed its most recent annual assessment as of November 30, 2015 and determined that the fair value of goodwill exceeded the carrying value of such assets. In addition, as of December 31, 2015, there are no accumulated impairment losses.

The carrying value of amortizable intangible assets attributable to each business or asset group comprising Brown & Brown is periodically reviewed by management to determine if there are events or changes in circumstances that would indicate that its carrying amount may not be recoverable. Accordingly, if there are any such changes in circumstances during the year, Brown & Brown assesses the carrying value of its amortizable intangible assets by considering the estimated future undiscounted cash flows generated by the corresponding business or asset group. Any impairment identified through this assessment may require that the carrying value of related amortizable intangible assets be adjusted. There were no impairments recorded for the years ended December 31, 2015, 2014 and 2013.

Income Taxes

Brown & Brown records income tax expense using the asset-and-liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and the income tax bases of Brown & Brown’s assets and liabilities.

Brown & Brown files a consolidated federal income tax return and has elected to file consolidated returns in certain states. Deferred income taxes are provided for in the Consolidated Financial Statements and relate principally to expenses charged to income for financial reporting purposes in one period and deducted for income tax purposes in other periods.

Net Income Per Share

Basic EPS is computed based on the weighted average number of common shares (including participating securities) issued and outstanding during the period. Diluted EPS is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the exercise of stock options. The dilutive effect of stock options is computed by application of the treasury-stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding for the years ended December 31:

(in thousands, except per share data)	2015				2014				2013
Net income	$	243,318			$	206,896			$	217,112
Net income attributable to unvested awarded performance stock	(5,695		)		(5,186		)		(5,446		)
Net income attributable to common shares	$	237,623			$	201,710			$	211,666
Weighted average number of common shares outstanding – basic	141,113				144,568				144,662
Less unvested awarded performance stock included in weighted average number of common shares outstanding – basic	(3,303		)		(3,624		)		(3,629		)
Weighted average number of common shares outstanding for basic earnings per common share	137,810				140,944				141,033
Dilutive effect of stock options	2,302				1,947				1,591
Weighted average number of shares outstanding – diluted	140,112				142,891				142,624
Net income per share:
Basic	$	1.72			$	1.43			$	1.50
Diluted	$	1.70			$	1.41			$	1.48

Fair Value of Financial Instruments

The carrying amounts of Brown & Brown’s financial assets and liabilities, including cash and cash equivalents; restricted cash and short-term investments; investments; premiums, commissions and fees receivable; reinsurance recoverable; prepaid reinsurance premiums; premiums payable to insurance companies; losses and loss adjustment reserve; unearned premium; premium deposits and credits due customers and accounts payable, at December 31, 2015 and 2014, approximate fair value because of the short-term maturity of these instruments. The carrying amount of Brown & Brown’s long-term debt approximates fair value at December 31, 2015 and 2014 as our fixed-rate borrowings of $623.6 million approximate their values using market quotes of notes with the similar terms as ours, which we deem a close approximation of current market rates. Of the $623.6 million, $25.0 million is related to short-term notes which approximates its carrying value due to its proximity to maturity. The estimated fair value of the $529.4 million remaining on the term loan under our J.P. Morgan Credit Facility approximates the carrying value due to the variable interest rate based on adjusted LIBOR. See Note 2 to our Consolidated Financial Statements for the fair values related to the establishment of intangible assets and the establishment and adjustment of earn-out payables. See Note 5 for information on the fair value of investments and Note 8 for information on the fair value of long-term debt.

Stock-Based Compensation

The Company granted stock options and grants non-vested stock awards to its employees, officers and directors. The Company uses the modified-prospective method to account for share-based payments. Under the modified-prospective method, compensation cost is recognized for all share-based payments granted on or after January 1, 2006 and for all awards granted to employees prior to January 1, 2006 that remained unvested on that date. The Company uses the alternative-transition method to account for the income tax effects of payments made related to stock-based compensation.

The Company uses the Black-Scholes valuation model for valuing all stock options and shares purchased under the Employee Stock Purchase Plan (the “ESPP”). Compensation for non-vested stock awards is measured at fair value on the grant date based upon the number of

shares expected to vest. Compensation cost for all awards is recognized in earnings, net of estimated forfeitures, on a straight-line basis over the requisite service period.

Reinsurance

The Company protects itself from claims related losses by reinsuring all claims risk exposure. The only line of insurance the Company underwrites is flood insurance associated with Wright. However, all exposure is reinsured with FEMA for basic admitted policies conforming to the National Flood Insurance Program. For excess flood insurance policies, all exposure is reinsured with a reinsurance carrier with an AM Best Company rating of “A” or better. Reinsurance does not legally discharge the ceding insurer from the primary liability for the full amount due under the reinsured policies. Reinsurance premiums, commissions, expense reimbursement and related reserves related to ceded business are accounted for on a basis consistent with the accounting for the original policies issued and the terms of reinsurance contracts. Premiums earned and losses and loss adjustment expenses incurred are reported net of reinsurance amounts. Other underwriting expenses are shown net of earned ceding commission income. The liabilities for unpaid losses and loss adjustment expenses and unearned premiums are reported gross of ceded reinsurance recoverable.

Balances due from reinsurers on unpaid losses and loss adjustment expenses, including an estimate of such recoverables related to reserves for incurred but not reported (“IBNR”) losses, are reported as assets and are included in reinsurance recoverable even though amounts due on unpaid loss and loss adjustment expense are not recoverable from the reinsurer until such losses are paid. The Company does not believe it is exposed to any material credit risk through its reinsurance as the reinsurer is FEMA for basic admitted flood policies and a national reinsurance carrier for excess flood policies, which has an AM Best Company rating of “A” or better. Historically, no amounts due from reinsurance carriers have been written off as uncollectible.

Unpaid Losses and Loss Adjustment Reserve

Unpaid losses and loss adjustment reserve include amounts determined on individual claims and other estimates based on the past experience of WNFIC and the policyholders for IBNR claims, less anticipated salvage and subrogation recoverable. The methods of making such estimates and for establishing the resulting reserves are continually reviewed and updated, and any adjustments resulting therefrom are reflected in operations currently.

WNFIC engages the services of outside actuarial consulting firms (the “Actuaries”) to assist on an annual basis to render an opinion on the sufficiency of the Company’s estimates for unpaid losses and related loss adjustment reserve. The Actuaries utilize both industry experience and the Company’s own experience to develop estimates of those amounts as of year-end. These estimated liabilities are subject to the impact of future changes in claim severity, frequency and other factors. In spite of the variability inherent in such estimates, management believes that the liabilities for unpaid losses and related loss adjustment reserve is adequate.

Premiums

Premiums are recognized as income over the coverage period of the related policies. Unearned premiums represent the portion of premiums written that relate to the unexpired terms of the policies in force and are determined on a daily pro rata basis. The income is recorded to the commissions and fees line of the income statement.

NOTE 2· Business Combinations

During the year ended December 31, 2015, the Company acquired the assets and assumed certain liabilities of thirteen insurance intermediaries and four books of business (customer accounts). Additionally, miscellaneous adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). Such adjustments are presented in the “Other” category within the following two tables. All of these businesses were acquired primarily to expand Brown & Brown’s core business and to attract and hire high-quality individuals. The recorded purchase price for all acquisitions consummated after January 1, 2009 included an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations will be recorded in the Consolidated Statement of Income when incurred.

The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements. In determining fair value, the acquired business’s future performance is estimated using financial projections developed by management for the acquired business and reflects market participant assumptions regarding revenue growth and/or profitability. The expected future payments are estimated on the basis of the earn-out formula and performance targets specified in each purchase agreement compared to the associated financial projections. These payments are then discounted to present value using a risk-adjusted rate that takes into consideration the likelihood that the forecasted earn-out payments will be made.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. For the year ended December 31, 2015, several adjustments were made within the permitted measurement period that resulted in a decrease in the aggregate purchase price of the affected acquisitions of $503,442 relating to the assumption of certain liabilities.

Cash paid for acquisitions was $136.0 million and $721.9 million in the twelve-month periods ended December 31, 2015 and 2014, respectively. We completed thirteen acquisitions (excluding book of business purchases) in the twelve-month period ended December 31, 2015. We completed ten acquisitions (excluding book of business purchases) in the twelve-month period ended December 31, 2014.

The following table summarizes the purchase price allocation made as of the date of each acquisition for current year acquisitions and significant adjustments made during the measurement period for prior year acquisitions:

(in thousands)
Name	Business Segment		Effective Date of Acquisition		Cash Paid				Other Payable				Recorded Earn-Out Payable				Net Assets Acquired				Maximum Potential Earn- Out Payable
Liberty Insurance Brokers, Inc. and Affiliates (Liberty)	Retail		February 1, 2015		$	12,000			$	—			$	2,981			$	14,981			$	3,750
Spain Agency, Inc. (Spain)	Retail		March 1, 2015		20,706				—				2,617				23,323				9,162
Bellingham Underwriters, Inc. (Bellingham)	National Programs		May 1, 2015		9,007				500				3,322				12,829				4,400
Fitness Insurance, LLC (Fitness)	Retail		June 1, 2015		9,455				—				2,379				11,834				3,500
Strategic Benefit Advisors, Inc. (SBA)	Retail		June 1, 2015		49,600				400				13,587				63,587				26,000
Bentrust Financial, Inc. (Bentrust)	Retail		December 1, 2015		10,142				391				319				10,852				2,200
MBA Insurance Agency of Arizona, Inc. (MBA)	Retail		December 1, 2015		68				8,442				6,063				14,573				9,500
Smith Insurance, Inc. (Smith)	Retail		December 1, 2015		12,096				200				1,047				13,343				6,350
Other	Various		Various		12,926				95				4,584				17,605				8,212
Total					$	136,000			$	10,028			$	36,899			$	182,927			$	73,074

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition. The data included in the ‘Other’ column shows a negative adjustment for purchased customer accounts. This is driven mainly by the final valuation adjustment for the acquisition of Wright.

(in thousands)	Liberty				Spain				Bellingham				Fitness				SBA				Bentrust				MBA				Smith				Other				Total
Other current assets	$	2,486			$	324			$	—			$	9			$	652			$	—			$	—			$	—			$	169			$	3,640
Fixed assets	40				50				25				17				41				36				33				73				59				374
Goodwill	10,010				15,748				9,608				8,105				39,859				8,166				13,471				10,374				21,040				136,381
Purchased customer accounts	4,506				7,430				3,223				3,715				23,000				2,789				7,338				3,526				(2,135		)		53,392
Non-compete agreements	24				21				21				—				21				43				11				31				156				328
Other assets	—				—				—				—				14				—				—				—				—				14
Total assets acquired	17,066				23,573				12,877				11,846				63,587				11,034				20,853				14,004				19,289				194,129
Other current liabilities	(42		)		(250		)		(48		)		(12		)		—				(182		)		(6,280		)		(504		)		(4,895		)		(12,213		)
Deferred income tax, net	—				—				—				—				—				—				—				—				2,576				2,576
Other liabilities	(2,043		)		—				—				—				—				—				—				(157		)		635				(1,565		)
Total liabilities assumed	(2,085		)		(250		)		(48		)		(12		)		—				(182		)		(6,280		)		(661		)		(1,684		)		(11,202		)
Net assets acquired	$	14,981			$	23,323			$	12,829			$	11,834			$	63,587			$	10,852			$	14,573			$	13,343			$	17,605			$	182,927

The weighted average useful lives for the acquired amortizable intangible assets are as follows: purchased customer accounts, 15 years; and non-compete agreements, 5 years.

Goodwill of $136.4 million was allocated to the Retail, National Programs and Wholesale Brokerage Segments in the amounts of $113.8 million, $18.0 million and $4.6 million, respectively. Of the total goodwill of $136.4 million, $91.1 million is currently deductible for income tax purposes and $8.4 million is non-deductible. The remaining $36.9 million relates to the recorded earn-out payables and will not be deductible until it is earned and paid.

For the acquisitions completed during 2015, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues from the acquisitions completed through December 31, 2015, included in the Consolidated Statement of Income for the year ended December 31, 2015, were $28.2 million. The income before income taxes, including the inter-company cost of capital charge, from the acquisitions completed through December 31, 2015, included in the Consolidated Statement of Income for the year ended December 31, 2015, was $1.5 million. If the acquisitions had occurred as of the beginning of the respective periods, the Company’s results of operations would be as shown in the following table. These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.

(UNAUDITED)	For the Year Ended December 31,
(in thousands, except per share data)	2015				2014
Total revenues	$	1,688,297			$	1,630,992
Income before income taxes	$	411,497			$	356,426
Net income	$	248,720			$	217,053
Net income per share:
Basic	$	1.76			$	1.50
Diluted	$	1.73			$	1.48
Weighted average number of shares outstanding:
Basic	137,810				140,944
Diluted	140,112				142,891

Acquisitions in 2014

During the year ended December 31, 2014, Brown & Brown acquired the assets and assumed certain liabilities of nine insurance intermediaries, all of the stock of one insurance intermediary that owns an insurance carrier and five books of business (customer accounts). The cash paid for these acquisitions was $721.9 million. Additionally, miscellaneous adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). Such adjustments are presented in the “Other” category within the following two tables. All of these acquisitions were acquired primarily to expand Brown & Brown’s core business and to attract and hire high-quality individuals.

For the year ended December 31, 2014, several adjustments were made within the permitted measurement period that resulted in a decrease in the aggregate purchase price of the affected acquisitions of $25,941 relating to the assumption of certain liabilities.

The following table summarizes the purchase price allocation made as of the date of each acquisition for current year acquisitions and significant adjustment made during the measurement period for prior year acquisitions:

(in thousands)
Name	Business Segment		Effective Date of Acquisition		Cash Paid				Other Payable				Recorded Earn-Out Payable				Net Assets Acquired				Maximum Potential Earn- Out Payable
The Wright Insurance Group, LLC	National Programs		May 1, 2014		$	609,183			$	1,471			$	—			$	610,654			$	—
Pacific Resources Benefits Advisors, LLC ("PacRes")	Retail		May 1, 2014		90,000				—				27,452				117,452				35,000
Axia Strategies, Inc ("Axia")	Wholesale Brokerage		May 1, 2014		9,870				—				1,824				11,694				5,200
Other	Various		Various		12,798				433				3,953				17,184				9,262
Total					$	721,851			$	1,904			$	33,229			$	756,984			$	49,462

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition.

(in thousands)	Wright				PacRes				Axia				Other				Total
Cash	$	25,365			$	—			$	—			$	—			$	25,365
Other current assets	16,474				3,647				101				742				20,964
Fixed assets	7,172				53				24				1,724				8,973
Reinsurance recoverable	25,238				—				—				—				25,238
Prepaid reinsurance premiums	289,013				—				—				—				289,013
Goodwill	420,209				76,023				7,276				10,417				513,925
Purchased customer accounts	213,677				38,111				4,252				4,384				260,424
Non-compete agreements	966				21				41				166				1,194
Other assets	20,045				—				—				—				20,045
Total assets acquired	1,018,159				117,855				11,694				17,433				1,165,141
Other current liabilities	(14,322		)		(403		)		—				(249		)		(14,974		)
Losses and loss adjustment reserve	(25,238		)		—				—				—				(25,238		)
Unearned premiums	(289,013		)		—				—				—				(289,013		)
Deferred income tax, net	(46,566		)		—				—				—				(46,566		)
Other liabilities	(32,366		)		—				—				—				(32,366		)
Total liabilities assumed	(407,505		)		(403		)		—				(249		)		(408,157		)
Net assets acquired	$	610,654			$	117,452			$	11,694			$	17,184			$	756,984

The weighted average useful lives for the acquired amortizable intangible assets are as follows: purchased customer accounts, 15 years; and non-compete agreements, 3.4 years.

Goodwill of $513.9 million was allocated to the Retail, National Programs, Wholesale Brokerage and Services Segments in the amounts of $86.4 million, $420.0 million, $7.7 million and $(0.2) million, respectively. Of the total goodwill of $513.9 million, $141.9 million is currently deductible for income tax purposes and $338.8 million is non-deductible. The remaining $33.2 million relates to the recorded earn-out payables and will not be deductible until it is earned and paid.

For the acquisitions completed during 2014, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues and income before income taxes, including the inter-company cost of capital, from the acquisitions completed through December 31, 2014, included in the Consolidated Statement of Income for the year ended December 31, 2014, were $112.2 million and $(1.3) million, respectively. If the acquisitions had occurred as of the beginning of the respective periods, the Company’s results of operations would be as shown in the following table. These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.

(UNAUDITED)	For the Year Ended December 31,
(in thousands, except per share data)	2014				2013
Total revenues	$	1,630,162			$	1,520,858
Income before income taxes	$	358,229			$	409,522
Net income	$	218,150			$	248,628
Net income per share:
Basic	$	1.51			$	1.72
Diluted	$	1.49			$	1.70
Weighted average number of shares outstanding:
Basic	140,944				141,033
Diluted	142,891				142,624

Acquisitions in 2013

During the year ended December 31, 2013, Brown & Brown acquired the assets and assumed certain liabilities of eight insurance intermediaries, all of the stock of one insurance intermediary and one book of business (customer accounts). The cash paid for these acquisitions was $408.1 million. Additionally, miscellaneous adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification Topic 805 — Business Combinations

(“ASC 805”). Such adjustments are presented in the “Other” category within the following two tables. All of these acquisitions were acquired primarily to expand Brown & Brown’s core business and to attract and hire high-quality individuals.

For the year ended December 31, 2013, several adjustments were made within the permitted measurement period that resulted in a decrease in the aggregate purchase price of the affected acquisitions of $504,300 relating to the assumption of certain liabilities.

The following table summarizes the aggregate purchase price allocation made as of the date of each acquisition for current year acquisitions and adjustment made during the measurement period for prior year acquisitions:

(in thousands)
Name	Business Segment		Effective Date of Acquisition		Cash Paid				Other Payable				Recorded Earn-Out Payable				Net Assets Acquired				Maximum Potential Earn- Out Payable
The Rollins Agency, Inc.	Retail		June 1, 2013		$	13,792			$	50			$	2,321			$	16,163			$	4,300
Beecher Carlson Holdings, Inc.	Retail; National Programs		July 1, 2013		364,256				—				—				364,256				—
ICA, Inc.	Services		December 31, 2013		19,770				—				727				20,497				5,000
Other	Various		Various		10,254				502				2,043				12,799				7,468
Total					$	408,072			$	552			$	5,091			$	413,715			$	16,768

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired as of the date of each acquisition.

(in thousands)	Rollins				Beecher				ICA				Other				Total
Cash	$	—			$	40,360			$	—			$	—			$	40,360
Other current assets	393				57,632				—				1,573				59,598
Fixed assets	30				1,786				75				24				1,915
Goodwill	12,697				265,174				12,377				5,696				295,944
Purchased customer accounts	3,878				101,565				7,917				5,623				118,983
Non-compete agreements	31				2,758				21				76				2,886
Other assets	—				—				107				1				108
Total assets acquired	17,029				469,275				20,497				12,993				519,794
Other current liabilities	(866		)		(80,090		)		—				(194		)		(81,150		)
Deferred income tax, net	—				(22,764		)		—				—				(22,764		)
Other liabilities	—				(2,165		)		—				—				(2,165		)
Total liabilities assumed	(866		)		(105,019		)		—				(194		)		(106,079		)
Net assets acquired	$	16,163			$	364,256			$	20,497			$	12,799			$	413,715

The weighted average useful lives for the acquired amortizable intangible assets are as follows: purchased customer accounts, 15 years; and non-compete agreements, 5 years.

Goodwill of $295.9 million was allocated to the Retail, National Programs, Wholesale Brokerage and Services Segments in the amounts of $257.2 million, $27.1 million, $(0.8) million and $12.4 million, respectively. Of the total goodwill of $295.9 million, $41.6 million is currently deductible for income tax purposes and $249.2 million is non-deductible. The remaining $5.1 million relates to the recorded earn-out payables and will not be deductible until it is earned and paid.

For the acquisitions completed during 2013, the results of operations since the acquisition dates have been combined with those of the Company. The total revenues and income before income taxes, including the inter-company cost of capital, from the acquisitions completed through December 31, 2013, included in the Consolidated Statement of Income for the year ended December 31, 2013, were $63.8 million and $0.9 million, respectively. If the acquisitions had occurred as of the beginning of the respective periods, the Company’s results of operations would be as shown in the following table. These unaudited pro forma results are not necessarily indicative of the actual results of operations that would have occurred had the acquisitions actually been made at the beginning of the respective periods.

(UNAUDITED)	For the Year Ended December 31,
(in thousands, except per share data)	2013				2012
Total revenues	$	1,439,918			$	1,329,262
Income before income taxes	$	373,175			$	329,291
Net income	$	226,562			$	198,826
Net income per share:
Basic	$	1.57			$	1.39
Diluted	$	1.55			$	1.36
Weighted average number of shares outstanding:
Basic	141,033				139,634
Diluted	142,624				142,010

For acquisitions consummated prior to January 1, 2009, additional consideration paid to sellers as a result of the purchase price earn-out provisions are recorded as adjustments to intangible assets when the contingencies are settled. The net additional consideration paid by the Company in 2015 as a result of those adjustments totaled $0. The net additional consideration paid by the Company in 2014 as a result of these adjustments totaled $26,000, all of which was allocated to goodwill. Of the $26,000 net additional consideration paid, $26,000 was recorded in other payables.

As of December 31, 2015, the maximum future contingency payments related to all acquisitions totaled $137.4 million, all of which relates to acquisitions consummated subsequent to January 1, 2009.

ASC Topic 805-Business Combinations is the authoritative guidance requiring an acquirer to recognize 100% of the fair values of acquired assets, including goodwill, and assumed liabilities (with only limited exceptions) upon initially obtaining control of an acquired entity. Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase arrangements) at the acquisition date must be included in the purchase price consideration. As a result, the recorded purchase prices for all acquisitions consummated after January 1, 2009 include an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations will be recorded in the Consolidated Statement of Income when incurred. Potential earn-out obligations are typically based upon future earnings of the acquired entities, usually between one and three years.

As of December 31, 2015, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables, for the years ended December 31, 2015, 2014 and 2013 were as follows:

	For the Year Ended December 31,
(in thousands)	2015				2014				2013
Balance as of the beginning of the period	$	75,283			$	43,058			$	52,987
Additions to estimated acquisition earn-out payables	36,899				34,356				5,816
Payments for estimated acquisition earn-out payables	(36,798		)		(12,069		)		(18,278		)
Subtotal	75,384				65,345				40,525
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables	2,990				7,375				570
Interest expense accretion	13				2,563				1,963
Net change in earnings from estimated acquisition earn-out payables	3,003				9,938				2,533
Balance as of December 31,	$	78,387			$	75,283			$	43,058

Of the $78.4 million estimated acquisition earn-out payables as of December 31, 2015, $25.3 million was recorded as accounts payable and $53.1 million was recorded as other non-current liabilities. Included within additions to estimated acquisition earn-out payables are any adjustments to opening balance sheet items prior to the one-year anniversary date and may therefore differ from previously reported amounts. Of the $75.3 million estimated acquisition earn-out payables as of December 31, 2014, $26.0 million was recorded as accounts payable and $49.3 million was recorded as an other non-current liability. Of the $43.1 million estimated acquisition earn-out payables as of December 31, 2013, $6.3 million was recorded as accounts payable and $36.8 million was recorded as an other non-current liability.

NOTE 3· Goodwill

The changes in the carrying value of goodwill by reportable segment for the years ended December 31, are as follows:

(in thousands)	Retail				National Programs				Wholesale Brokerage				Services				Total
Balance as of January 1, 2014	$	1,141,485			$	475,596			$	268,562			$	120,530			$	2,006,173
Goodwill of acquired businesses	94,080				420,063				47				(239		)		513,951
Goodwill disposed of relating to sales of businesses	(3,696		)		(9,564		)		(46,253		)		—				(59,513		)
Balance as of December 31, 2014	$	1,231,869			$	886,095			$	222,356			$	120,291			$	2,460,611
Goodwill of acquired businesses	113,767				18,009				4,605				—				136,381
Goodwill disposed of relating to sales of businesses	—				(2,238		)		—				(8,071		)		(10,309		)
Balance as of December 31, 2015	$	1,345,636			$	901,866			$	226,961			$	112,220			$	2,586,683

NOTE 4· Amortizable Intangible Assets

Amortizable intangible assets at December 31, 2015 and 2014 consisted of the following:

	December 31, 2015														December 31, 2014
(in thousands)	Gross Carrying Value				Accumulated Amortization				Net Carrying Value				Weighted Average Life (Years)(1)		Gross Carrying Value				Accumulated Amortization				Net Carrying Value				Weighted Average Life (Years)(1)
Purchased customer accounts	$	1,398,986			$	(656,799	)		$	742,187			15.0		$	1,355,550			$	(574,285	)		$	781,265			14.9
Non-compete agreements	29,440				(26,947		)		2,493				6.8		29,139				(25,762		)		3,377				6.8
Total	$	1,428,426			$	(683,746	)		$	744,680					$	1,384,689			$	(600,047	)		$	784,642

(1)	Weighted average life calculated as of the date of acquisition.

Amortization expense for amortizable intangible assets for the years ending December 31, 2016, 2017, 2018, 2019 and 2020 is estimated to be $84.5 million, $81.6 million, $76.3 million, $71.8 million, and $64.5 million, respectively.

NOTE 5· Investments

At December 31, 2015, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals	$	11,876			$	6			$	(26	)		$	11,856
Foreign government	50				—				—				50
Corporate debt	4,505				7				(16		)		4,496
Short duration fixed income fund	1,663				27				—				1,690
Total	$	18,094			$	40			$	(42	)		$	18,092

For securities in a loss position, the following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015:

(in thousands)	Less than 12 Months								12 Months or More								Total
	Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals	$	8,998			$	26			$	—			$	—			$	8,998			$	26
Foreign Government	50				—				—				—				50				—
Corporate debt	2,731				14				284				2				3,015				16
Total	$	11,779			$	40			$	284			$	2			$	12,063			$	42

The unrealized losses from corporate issuers were caused by interest rate increases. At December 31, 2015, the Company had 35 securities in an unrealized loss position. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at December 31, 2015.

At December 31, 2014, the Company’s amortized cost and fair values of fixed maturity securities are summarized as follows:

(in thousands)	Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals	$	10,774			$	7			$	(1	)		$	10,780
Foreign government	50				—				—				50
Corporate debt	5,854				9				(11		)		5,852
Short duration fixed income fund	3,143				37				—				3,180
Total	$	19,821			$	53			$	(12	)		$	19,862

The following table shows the investments’ gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2014:

(in thousands)	Less than 12 Months								12 Months or More								Total
	Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
U.S. Treasury securities, obligations of U.S. Government agencies and Municipals	$	3,994			$	1			$	—			$	—			$	3,994			$	1
Foreign Government	50				—				—				—				50				—
Corporate debt	4,439				11				—				—				4,439				11
Total	$	8,483			$	12			$	—			$	—			$	8,483			$	12

The unrealized losses in the Company’s investments in U.S. Treasury Securities and obligations of U.S. Government Agencies and bonds from corporate issuers were caused by interest rate increases. At December 31, 2014, the Company had 38 securities in an unrealized loss position. The contractual cash flows of the U.S. Treasury Securities and obligations of the U.S. Government agencies investments are either guaranteed by the U.S. Government or an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. The corporate securities are highly rated securities with no indicators of potential impairment. Based on the ability and intent of the Company to hold these investments until recovery of fair value, which may be maturity, the bonds were not considered to be other-than-temporarily impaired at December 31, 2014.

The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2015 by contractual maturity are set forth below:

(in thousands)	Amortized Cost				Fair Value
Years to maturity:
Due in one year or less	$	5,726			$	5,722
Due after one year through five years	12,038				12,041
Due after five years through ten years	330				329
Total	$	18,094			$	18,092

The amortized cost and estimated fair value of the fixed maturity securities at December 31, 2014 by contractual maturity are set forth below:

(in thousands)	Amortized Cost				Fair Value
Years to maturity:
Due in one year or less	$	5,628			$	5,628
Due after one year through five years	13,863				13,897
Due after five years through ten years	330				337
Total	$	19,821			$	19,862

The expected maturities in the foregoing table may differ from the contractual maturities because certain borrowers have the right to call or prepay obligations with or without penalty.

Proceeds from sales of the Company’s investment in fixed maturity securities were $5.6 million including maturities for the year ended December 31, 2015. The gains and losses realized on those sales for the year ended December 31, 2015 were insignificant.

Proceeds from sales of the Company’s investment in fixed maturity securities were $0.2 million including maturities for the year ended December 31, 2014. There were no gains and losses realized on those sales for the year ended to December 31, 2014.

Realized gains and losses are reported on the Consolidated Statement of Income, with the cost of securities sold determined on a specific identification basis.

At December 31, 2015, investments with a fair value of approximately $4.0 million were on deposit with state insurance departments to satisfy regulatory requirements.

NOTE 6· Fixed Assets

Fixed assets at December 31 consisted of the following:

(in thousands)	2015				2014
Furniture, fixtures and equipment	$	169,682			$	161,539
Leasehold improvements	32,132				30,030
Land, buildings and improvements	3,370				3,739
Total cost	205,184				195,308
Less accumulated depreciation and amortization	(123,431		)		(110,640		)
Total	$	81,753			$	84,668

Depreciation and amortization expense for fixed assets amounted to $20.9 million in 2015, $20.9 million in 2014, and $17.5 million in 2013.

NOTE 7· Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities at December 31 consisted of the following:

(in thousands)	2015				2014
Accrued bonuses	$	76,210			$	76,891
Accrued compensation and benefits	39,366				36,241
Accrued rent and vendor expenses	29,225				29,039
Reserve for policy cancellations	9,617				9,074
Accrued interest	6,375				6,527
Other	31,274				23,384
Total	$	192,067			$	181,156

NOTE 8· Long-Term Debt

Long-term debt at December 31, 2015 and 2014 consisted of the following:

(in thousands)	December 31, 2015				December 31, 2014
Current portion of long-term debt:
Current portion of 5-year term loan facility expires 2019	$	48,125			$	20,625
5.370% senior notes, Series D, quarterly interest payments, balloon due 2015	—				25,000
5.660% senior notes, Series C, semi-annual interest payments, balloon due 2016	25,000				—
Total current portion of long-term debt	73,125				45,625
Long-term debt:
Note agreements:
5.660% senior notes, Series C, semi-annual interest payments, balloon due 2016	—				25,000
4.500% senior notes, Series E, quarterly interest payments, balloon due 2018	100,000				100,000
4.200% senior notes, semi-annual interest payments, balloon due 2024	498,628				498,471
Total notes	598,628				623,471
Credit agreements:
5-year term-loan facility, periodic interest and principal payments, currently LIBOR plus up to 1.75%, expires May 20, 2019	481,250				529,375
5-year revolving-loan facility, periodic interest payments, currently LIBOR plus up to 1.50%, plus commitment fees up to 0.25%, expires May 20, 2019	—				—
Revolving credit loan, quarterly interest payments, LIBOR plus up to 1.40% and availability fee up to 0.25%, expires December 31, 2016	—				—
Total credit agreements	481,250				529,375
Total long-term debt	1,079,878				1,152,846
Current portion of long-term debt	73,125				45,625
Total debt	$	1,153,003			$	1,198,471

On December 22, 2006, the Company entered into a Master Shelf and Note Purchase Agreement (the “Master Agreement”) with a national insurance company (the “Purchaser”). The initial issuance of notes under the Master Agreement occurred on December 22, 2006, through the issuance of $25.0 million in Series C Senior Notes due December 22, 2016, with a fixed interest rate of 5.66% per year. On February 1, 2008, $25.0 million in Series D Senior Notes due January 15, 2015, with a fixed interest rate of 5.37% per year, were issued. On September 15, 2011, and pursuant to a Confirmation of Acceptance (the “Confirmation”), dated January 21, 2011, in connection with the Master Agreement, $100.0 million in Series E Senior Notes were issued and are due September 15, 2018, with a fixed interest rate of 4.50% per year. The Series E Senior Notes were issued for the sole purpose of retiring existing senior notes. On January 15, 2015, the Series D Notes were redeemed at maturity using cash proceeds to pay off the principal of $25.0 million plus any remaining accrued interest. As of December 31, 2015, there was an outstanding debt balance issued under the provisions of the Master Agreement of $125.0 million.

On July 1, 2013, in conjunction with the acquisition of Beecher Carlson Holdings, Inc., the Company entered into a revolving loan agreement (the “Wells Fargo Agreement”) with Wells Fargo Bank, N.A. that provided for a $50.0 million revolving line of credit (the “Wells Fargo Revolver”). The maturity date for the Wells Fargo Revolver is December 31, 2016, at which time all outstanding principal and unpaid interest will be due. On April 16, 2014, in connection with the signing of the Credit Facility (as defined below) an amendment to the agreement was established to reduce the total revolving loan commitment from $50.0 million to $25.0 million. The Wells Fargo Revolver may be increased by up to $50.0 million (bringing the total amount available to $75.0 million). The calculation of interest and fees for the Wells Fargo Agreement is generally based on the Company’s funded debt-to-EBITDA ratio. Interest is charged at a rate equal to 1.00% to 1.40% above LIBOR or 1.00% below the Base Rate, each as more fully described in the Wells Fargo Agreement. Fees include an up-front fee, an availability fee of 0.175% to 0.25%, and a letter of credit margin fee of 1.00% to 1.40%. The obligations under the Wells Fargo Revolver are unsecured and the Wells Fargo Agreement includes various covenants, limitations and events of default that are customary for similar facilities for similar borrowers. There were no borrowings against the Wells Fargo Revolver as of December 31, 2015 and 2014.

On April 17, 2014, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A. as administrative agent and certain other banks as co-syndication agents and co-documentation agents (the “Credit Agreement”). The Credit Agreement in the amount of $1,350.0 million provides for an unsecured revolving credit facility (the “Credit Facility”) in the initial amount of $800.0 million and unsecured term loans in the initial amount of $550.0 million, either or both of which may, subject to lenders’ discretion, potentially be increased by up to $500.0 million. The Credit Facility was funded on May 20, 2014 in conjunction with the closing of the Wright acquisition, with the $550.0 million term loan being funded as well as a drawdown of $375.0 million on the revolving loan facility. Use of these proceeds was to retire

existing term loan debt and to facilitate the closing of the Wright acquisition as well as other acquisitions. The Credit Facility terminates on May 20, 2019, but either or both of the revolving credit facility and the term loans may be extended for two additional one-year periods at the Company’s request and at the discretion of the respective lenders. Interest and facility fees in respect to the Credit Facility are based on the better of the Company’s net debt leverage ratio or a non-credit enhanced senior unsecured long-term debt rating. Based on the Company’s net debt leverage ratio, the rates of interest charged on the term loan are 1.00% to 1.75%, and the revolving loan is 0.85% to 1.50% above the adjusted LIBOR rate for outstanding amounts drawn. There are fees included in the facility which include a facility fee based on the revolving credit commitments of the lenders (whether used or unused) at a rate of 0.15% to 0.25% and letter of credit fees based on the amounts of outstanding secured or unsecured letters of credit. The Credit Facility includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers. As of December 31, 2015 and 2014, there was an outstanding debt balance issued under the provisions of the Credit Facility in total of $529.4 million and $550.0 million respectively, with no borrowings outstanding relative to the revolving loan. Per the terms of the agreement, scheduled principal payments of $48.1 million are due in 2016.

On September 18, 2014, the Company issued $500.0 million of 4.20% unsecured senior notes due in 2024. The senior notes were given investment grade ratings of BBB-/Baa3 with a stable outlook. The notes are subject to certain covenant restrictions and regulations which are customary for credit rated obligations. At the time of funding, the proceeds were offered at a discount of the original note amount which also excluded an underwriting fee discount. The net proceeds received from the issuance were used to repay the outstanding balance of $475.0 million on the revolving Credit Facility and for other general corporate purposes. As of December 31, 2015 and 2014, there was an outstanding debt balance of $500.0 million exclusive of the associated discount balance.

The Master Agreement, Wells Fargo Agreement and the Credit Agreement all require the Company to maintain certain financial ratios and comply with certain other covenants. The Company was in compliance with all such covenants as of December 31, 2015 and 2014.

The 30-day Adjusted LIBOR Rate as of December 31, 2015 was 0.44%.

Interest paid in 2015, 2014 and 2013 was $37.5 million, $25.1 million, and $16.5 million, respectively.

At December 31, 2015, maturities of long-term debt were $73.1 million in 2016, $55.0 million in 2017, $155.0 million in 2018, $371.3 million in 2019 and $500.0 million in 2024.

NOTE 9· Income Taxes

Significant components of the provision for income taxes for the years ended December 31 are as follows:

(in thousands)	2015				2014				2013
Current:
Federal	$	118,490			$	109,893			$	94,007
State	17,625				15,482				13,438
Foreign	430				109				805
Total current provision	136,545				125,484				108,250
Deferred:
Federal	18,416				5,987				28,469
State	4,280				1,440				3,723
Foreign	—				(58		)		55
Total deferred provision	22,696				7,369				32,247
Total tax provision	$	159,241			$	132,853			$	140,497

A reconciliation of the differences between the effective tax rate and the federal statutory tax rate for the years ended December 31 is as follows:

	2015		2014		2013
Federal statutory tax rate	35.0%		35.0%		35.0%
State income taxes, net of federal income tax benefit	3.9		3.3		3.5
Non-deductible employee stock purchase plan expense	0.3		0.3		0.3
Non-deductible meals and entertainment	0.3		0.4		0.3
Other, net	0.1		0.1		0.2
Effective tax rate	39.6%		39.1%		39.3%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax reporting purposes.

Significant components of Brown & Brown’s current deferred tax assets as of December 31 are as follows:

(in thousands)	2015				2014
Current deferred tax assets:
Deferred profit-sharing contingent commissions	$	9,767			$	10,335
Net operating loss carryforwards	10				951
Accruals and reserves	14,858				14,145
Total current deferred tax assets	$	24,635			$	25,431

Significant components of Brown & Brown’s non-current deferred tax liabilities and assets as of December 31 are as follows:

(in thousands)	2015				2014
Non-current deferred tax liabilities:
Fixed assets	$	8,585			$	10,368
Net unrealized holding (loss)/gain on available-for-sale securities	(9		)		56
Intangible assets	393,251				364,938
Total non-current deferred tax liabilities	401,827				375,362
Non-current deferred tax assets:
Deferred compensation	38,966				31,580
Net operating loss carryforwards	2,518				2,796
Valuation allowance for deferred tax assets	(606		)		(511		)
Total non-current deferred tax assets	40,878				33,865
Net non-current deferred tax liability	$	360,949			$	341,497

Income taxes paid in 2015, 2014 and 2013 were $132.9 million, $118.3 million, and $110.2 million respectively.

At December 31, 2015, Brown & Brown had net operating loss carryforwards of $184,218 and $61,217,003 for federal and state income tax reporting purposes, respectively, portions of which expire in the years 2016 through 2034. The federal carryforward is derived from insurance operations acquired by Brown & Brown in 2001. The state carryforward amount is derived from the operating results of certain subsidiaries and from the 2013 stock acquisition Beecher Carlson Holdings, Inc.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2015				2014				2013
Unrecognized tax benefits balance at January 1	$	113			$	391			$	294
Gross increases for tax positions of prior years	773				—				232
Gross decreases for tax positions of prior years	—				(21		)		—
Settlements	(302		)		(257		)		(135		)
Unrecognized tax benefits balance at December 31	$	584			$	113			$	391

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and 2014, the Company had $102,171 and $65,772 of accrued interest and penalties related to uncertain tax positions, respectively.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized was $583,977 as of December 31, 2015 and $113,032 as of December 31, 2014. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

As a result of a 2006 Internal Revenue Service (“IRS”) audit, the Company agreed to accrue at each December 31, for tax purposes only, a known amount of profit-sharing contingent commissions represented by the actual amount of profit-sharing contingent commissions received in the first quarter of the related year, with a true-up adjustment to the actual amount received by the end of the following March. Since this method for tax purposes differs from the method used for book purposes, it will result in a current deferred tax asset as of December 31 each year which will reverse by the following March 31 when the related profit-sharing contingent commissions are recognized for financial accounting purposes.

The Company is subject to taxation in the United States and various state jurisdictions. The Company is also subject to taxation in the United Kingdom. In the United States, federal returns for fiscal years 2012 through 2015 remain open and subject to examination by the IRS. The Company files and remits state income taxes in various states where the Company has determined it is required to file state income taxes. The Company’s filings with those states remain open for audit for the fiscal years 2010 through 2015. In the United Kingdom, the Company’s filings remain open for audit for the fiscal years 2014 and 2015.

The federal income tax returns of The Wright Insurance Group are currently under IRS audit for the year ended December 31, 2013 and the short period ended May 1, 2014. Also during 2015, the previously disclosed 2013 IRS audit of Beecher Carlson Holding, Inc. was closed with no adjustments. The Company’s 2009 through 2012 State of Oregon tax returns were under audit in 2014. The audit was settled in early 2015 with the State of Oregon for an insignificant amount. The Company is currently under audit in the State of Kansas for fiscal years 2012 through 2014. There are no other federal or state income tax audits as of December 31, 2015.

NOTE 10· Employee Savings Plan

The Company has an Employee Savings Plan (401(k)) in which substantially all employees with more than 30 days of service are eligible to participate. Under this plan, Brown & Brown makes matching contributions of up to 4.0% of each participant’s annual compensation. Prior to 2014, the Company’s matching contribution was up to 2.5% of each participant’s annual compensation with a discretionary profit-sharing contribution each year, which equaled 1.5% of each eligible employee’s compensation. The Company’s contributions to the plan totaled $17.8 million in 2015, $15.8 million in 2014, and $14.8 million in 2013.

NOTE 11· Stock-Based Compensation

Performance Stock Plan

In 1996, Brown & Brown adopted and the shareholders approved a performance stock plan, under which until the suspension of the plan in 2010, up to 14,400,000 Performance Stock Plan (“PSP”) shares could be granted to key employees contingent on the employees’ future years of service with Brown & Brown and other performance-based criteria established by the Compensation Committee of the Company’s Board of Directors. Before participants may take full title to Performance Stock, two vesting conditions must be met. Of the grants currently outstanding, specified portions will satisfy the first condition for vesting based on 20% incremental increases in the 20-trading-day average stock price of Brown & Brown’s common stock from the price on the business day prior to date of grant. Performance Stock that has satisfied the first vesting condition is considered “awarded shares.” Awarded shares are included as issued and outstanding common stock shares and are included in the calculation of basic and diluted EPS. Dividends are paid on awarded shares and participants may exercise voting privileges on such shares. Awarded shares satisfy the second condition for vesting on the earlier of a participant’s: (i) 15 years of continuous employment with Brown & Brown from the date shares are granted to the participants (or, in the case of the July 2009 grant to Powell Brown, 20 years); (ii) attainment of age 64 (on a prorated basis corresponding to the number of years since the date of grant); or (iii) death or disability. On April 28, 2010, the PSP was suspended and any remaining authorized, but unissued shares, as well as any shares forfeited in the future, will be reserved for issuance under the 2010 Stock Incentive Plan (the “SIP”).

At December 31, 2015, 5,266,707 shares had been granted under the PSP. As of December 31, 2015, 8,000 shares had not met the first condition for vesting, 1,594,214 shares had met the first condition of vesting and had been awarded, and 3,664,493 shares had satisfied both conditions of vesting and had been distributed to participants. Of the shares that have not vested as of December 31, 2015, the initial stock prices ranged from $8.75 to $25.68.

The Company uses a path-dependent lattice model to estimate the fair value of PSP grants on the grant date.

A summary of PSP activity for the years ended December 31, 2015, 2014 and 2013 is as follows:

	Weighted- Average Grant Date Fair Value				Granted Shares			Awarded Shares			Shares Not Yet Awarded
Outstanding at January 1, 2013	$	8.72			3,691,022			2,394,505			1,296,517
Granted	$	—			—			—			—
Awarded	$	10.25			—			122,021			(122,021	)
Vested	$	4.01			(119,364	)		(119,364	)		—
Forfeited	$	8.73			(1,200,371	)		(101,310	)		(1,099,061	)
Outstanding at December 31, 2013	$	8.62			2,371,287			2,295,852			75,435
Granted	$	—			—			—			—
Awarded	$	—			—			—			—
Vested	$	16.76			(277,009	)		(277,009	)		—
Forfeited	$	9.75			(165,647	)		(115,630	)		(50,017	)
Outstanding at December 31, 2014	$	8.71			1,928,631			1,903,213			25,418
Granted	$	—			—			—			—
Awarded	$	—			—			—			—
Vested	$	5.55			(208,889	)		(208,889	)		—
Forfeited	$	9.78			(117,528	)		(100,110	)		(17,418	)
Outstanding at December 31, 2015	$	9.03			1,602,214			1,594,214			8,000

The total fair value of PSP grants that vested during each of the years ended December 31, 2015, 2014 and 2013 was $6.8 million, $8.4 million and $3.7 million, respectively.

Stock Incentive Plan

On April 28, 2010, the shareholders of Brown & Brown, Inc. approved the Stock Incentive Plan (“SIP”) that provides for the granting of stock options, stock and/or stock appreciation rights to employees and directors contingent on criteria established by the Compensation Committee of the Company’s Board of Directors. The principal purpose of the SIP is to attract, incentivize and retain key employees by offering those persons an opportunity to acquire or increase a direct proprietary interest in the Company’s operations and future success. The SIP includes a sub-plan applicable to Decus Insurance Brokers Limited (“Decus”) which, is a subsidiary of Decus Holdings (U.K.) Limited. The shares of stock reserved for issuance under the SIP are any shares that are authorized for issuance under the PSP and not already subject to grants under the PSP, and that were outstanding as of April 28, 2010, the date of suspension of the PSP, together with PSP shares and SIP shares forfeited after that date. As of April 28, 2010, 6,046,768 shares were available for issuance under the PSP, which were then transferred to the SIP. To date, a substantial majority of stock grants to employees under the SIP vest in four-to-ten years, subject to the achievement of certain performance criteria by grantees, and the achievement of consolidated EPS growth at certain levels by the Company, over three-to-five-year measurement periods.

In 2010, 187,040 shares were granted under the SIP. This grant was conditioned upon the surrender of 187,040 shares previously granted under the PSP in 2009, which were accordingly treated as forfeited PSP shares. The vesting conditions of this grant were identical to those provided for in connection with the 2009 PSP grant; thus the target stock prices and the periods associated with satisfaction of the first and second conditions of vesting were unchanged. Additionally, grants totaling 5,205 shares were made in 2010 to Decus employees under the SIP sub-plan applicable to Decus.

In 2011, 2,375,892 shares were granted under the SIP. Of this total, 24,670 shares were granted to Decus employees under the SIP sub-plan applicable to Decus.

In 2012, 814,545 shares were granted under the SIP, primarily related to the Arrowhead acquisition.

In 2013, 3,719,974 shares were granted under the SIP. Of the shares granted in 2013, 891,399 shares will vest upon the grantees’ completion of between three and seven years of service with the Company, and because grantees have the right to vote the shares and receive dividends immediately after the date of grant these shares are considered awarded and outstanding under the two-class method.

In 2014, 422,572 shares were granted under the SIP. Of the shares granted in 2014, 113,088 shares will vest upon the grantees’ completion of between three and six years of service with the Company, and because grantees have the right to vote the shares and receive

dividends immediately after the date of grant these shares are considered awarded and outstanding under the two-class method. As of December 31, 2014, no shares had met the first condition for vesting.

In 2015, 481,166 shares were granted under the SIP. Of the shares granted in 2015, 158,958 shares will vest upon the grantees’ completion of between five and seven years of service with the Company, and because grantees have the right to vote the shares and receive dividends immediately after the date of grant these shares are considered awarded and outstanding under the two-class method. As of December 31, 2015, no shares had met the first condition for vesting.

Additionally, non-employee members of the Board of Directors received shares annually issued pursuant to the SIP as part of their annual compensation. A total of 36,919 SIP shares were issued to these directors in 2011 and 2012, of which 11,682 were issued in January 2011, 12,627 in January 2012, and 12,610 in December 2012. The shares issued in December 2012 were issued at that earlier time rather than in January 2013 pursuant to action of the Board of Directors. No additional shares were granted or issued to the non-employee members of the Board of Directors in 2013. A total of 9,870 shares were issued to these directors in January 2014 and 15,700 shares were issued in January 2015.

At December 31, 2015, 2,793,832 shares were available for future grants.

The Company uses the closing stock price on the day prior to the grant date to determine the fair value of SIP grants and then applies an estimated forfeiture factor to estimate the annual expense. Additionally, the Company uses the path-dependent lattice model to estimate the fair value of grants with PSP-type vesting conditions as of the grant date. SIP shares that satisfied the first vesting condition for PSP-like grants or the established performance criteria are considered awarded shares. Awarded shares are included as issued and outstanding common stock shares and are included in the calculation of basic and diluted EPS.

A summary of SIP activity for the years ended December 31, 2015, 2014 and 2013 is as follows:

	Weighted- Average Grant Date Fair Value				Granted Shares			Awarded Shares			Shares Not Yet Awarded
Outstanding at January 1, 2013	$	22.91			3,157,311			37,408			3,119,903
Granted	$	31.95			3,719,974			—			3,719,974
Awarded	$	30.71			—			966,215			(966,215	)
Vested	$	—			—			—			—
Forfeited	$	23.88			(271,184	)		(7,906	)		(263,278	)
Outstanding at December 31, 2013	$	27.96			6,606,101			995,717			5,610,384
Granted	$	31.02			422,572			113,088			309,484
Awarded	$	—			—			—			—
Vested	$	—			—			—			—
Forfeited	$	27.41			(369,626	)		(47,915	)		(321,711	)
Outstanding at December 31, 2014	$	28.19			6,659,047			1,060,890			5,598,157
Granted	$	31.74			481,166			164,646			316,520
Awarded	$	—			—			—			—
Vested	$	—			—			—			—
Forfeited	$	26.32			(863,241	)		(95,542	)		(767,699	)
Outstanding at December 31, 2015	$	28.74			6,276,972			1,129,994			5,146,978

Employee Stock Purchase Plan

The Company has a shareholder-approved Employee Stock Purchase Plan (“ESPP”) with a total of 17,000,000 authorized shares of which 5,194,928 were available for future subscriptions as of December 31, 2015. Employees of the Company who regularly work more than 20 hours per week are eligible to participate in the ESPP. Participants, through payroll deductions, may allot up to 10% of their compensation, up to a maximum of $25,000, to purchase Company stock between August 1st of each year and the following July 31st (the “Subscription Period”) at a cost of 85% of the lower of the stock price as of the beginning or end of the Subscription Period.

The Company estimates the fair value of an ESPP share option as of the beginning of the Subscription Period as the sum of: (1) 15% of the quoted market price of the Company’s stock on the day prior to the beginning of the Subscription Period, and (2) 85% of the value of a one-year stock option on the Company stock using the Black-Scholes option-pricing model. The estimated fair value of an ESPP share option as of

the Subscription Period beginning in August 2015 was $6.43. The fair values of an ESPP share option as of the Subscription Periods beginning in August 2014 and 2013, were $6.39 and $8.36, respectively.

For the ESPP plan years ended July 31, 2015, 2014 and 2013, the Company issued 539,389, 512,521, and 487,672 shares of common stock, respectively. These shares were issued at an aggregate purchase price of $14.4 million, or $26.62 per share, in 2015, $13.4 million, or $26.16 per share, in 2014, and $10.5 million, or $21.44 per share, in 2013.

For the five months ended December 31, 2015, 2014 and 2013 (portions of the 2015-2016, 2014-2015 and 2013-2014 plan years), 231,803; 235,794; and 222,526 shares of common stock (from authorized but unissued shares), respectively, were subscribed to by ESPP participants for proceeds of approximately $6.8 million, $6.3 million and $5.9 million, respectively.

Incentive Stock Option Plan

On April 21, 2000, Brown & Brown adopted, and the shareholders approved, a qualified incentive stock option plan (the “ISOP”) that provides for the granting of stock options to certain key employees for up to 4,800,000 shares of common stock. On December 31, 2008, the ISOP expired. The objective of the ISOP was to provide additional performance incentives to grow Brown & Brown’s pre-tax income in excess of 15% annually. The options were granted at the most recent trading day’s closing market price and vest over a one-to-ten-year period, with a potential acceleration of the vesting period to three-to-six years based upon achievement of certain performance goals. All of the options expire 10 years after the grant date.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options on the grant date. The risk-free interest rate is based upon the U.S. Treasury yield curve on the date of grant with a remaining term approximating the expected term of the option granted. The expected term of the options granted is derived from historical data; grantees are divided into two groups based upon expected exercise behavior and are considered separately for valuation purposes. The expected volatility is based upon the historical volatility of the Company’s common stock over the period of time equivalent to the expected term of the options granted. The dividend yield is based upon the Company’s best estimate of future dividend yield.

A summary of stock option activity for the years ended December 31, 2015, 2014 and 2013 is as follows:

Stock Options		Shares Under Option			Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2013		738,792			$	18.39			4.9		$	8,891
Granted		—			$	—
Exercised		(115,847	)		$	17.56
Forfeited		—			$	—
Expired		—			$	—
Outstanding at December 31, 2013		622,945			$	18.55			4.1		$	7,289
Granted		—			$	—
Exercised		(106,589	)		$	18.48
Forfeited		(46,000	)		$	18.48
Expired		—			$	—
Outstanding at December 31, 2014		470,356			$	18.57			3.1		$	5,087
Granted		—			$	—
Exercised		(151,767	)		$	18.48
Forfeited		(49,000	)		$	19.36
Expired		—			$	—
Outstanding at December 31, 2015		269,589			$	18.48			2.2		$	2,395
Ending vested and expected to vest at December 31, 2015		269,589			$	18.48			2.2		$	2,395
Exercisable at December 31, 2015		164,589			$	18.48			2.2		$	2,241
Exercisable at December 31, 2014		316,356			$	18.48			3.2		$	4,565
Exercisable at December 31, 2013		422,945			$	18.48			4.2		$	5,460

The following table summarizes information about stock options outstanding at December 31, 2015:

Options Outstanding											Options Exercisable
Exercise Price		Number Outstanding			Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price				Number Exercisable			Weighted Average Exercise Price
$18.48		269,589			2.2		$	18.48			164,589			$	18.48
Totals		269,589			2.2		$	18.48			164,589			$	18.48

The total intrinsic value of options exercised, determined as of the date of exercise, during the years ended December 31, 2015, 2014 and 2013 was $2.2 million, $1.3 million and $1.6 million, respectively. The total intrinsic value is calculated as the difference between the exercise price of all underlying awards and the quoted market price of the Company’s stock for all in-the-money stock options at December 31, 2015, 2014 and 2013, respectively.

There are no option shares available for future grant under the ISOP since this plan expired as of December 31, 2008.

Summary of Non-Cash Stock-Based Compensation Expense

The non-cash stock-based compensation expense for the years ended December 31 is as follows:

(in thousands)		2015				2014				2013
Stock Incentive Plan		$	11,111			$	14,447			$	15,934
Employee Stock Purchase Plan		3,430				2,425				3,538
Performance Stock Plan		972				2,354				2,310
Incentive Stock Option Plan		—				137				821
Total		$	15,513			$	19,363			$	22,603

Summary of Unrecognized Compensation Expense

As of December 31, 2015, there was approximately $115.0 million of unrecognized compensation expense related to all non-vested share-based compensation arrangements granted under the Company’s stock-based compensation plans. That expense is expected to be recognized over a weighted-average period of 5.1 years.

NOTE 12· Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

Our Restricted Cash balance is comprised of funds held in separate premium trust accounts as required by state law or, in some cases, per agreement with our carrier partners. In the second quarter of 2015, certain balances that had previously been reported as held in restricted premium trust accounts were reclassified as non-restricted as they were not restricted by state law or by contractual agreement with a carrier. The resulting impact of this change was a reduction in the balance reported on our Consolidated Balance Sheet as Restricted Cash and Investments and a corresponding increase in the balance reported as Cash and Cash Equivalents of approximately $33.0 million as of December 31, 2015 as compared to the corresponding account balances as of December 31, 2014 of $32.2 million which was reflected as Restricted Cash. While these referenced funds are not restricted, they do represent premium payments from customers to be paid to insurance carriers and this change in classification should not be viewed as a source of operating cash.

	For the Year Ended December 31,
(in thousands)	2015				2014				2013
Cash paid during the period for:
Interest	$	37,542			$	25,115			$	16,501
Income taxes	$	132,874			$	118,290			$	110,190

Brown & Brown’s significant non-cash investing and financing activities are summarized as follows:

	For the Year Ended December 31,
(in thousands)	2015				2014				2013
Other payables issued for purchased customer accounts	$	10,029			$	1,930			$	1,425
Estimated acquisition earn-out payables and related charges	$	36,899			$	33,229			$	5,091
Notes received on the sale of fixed assets and customer accounts	$	7,755			$	6,340			$	1,108

NOTE 13· Commitments and Contingencies

Operating Leases

Brown & Brown leases facilities and certain items of office equipment under non-cancelable operating lease arrangements expiring on various dates through 2042. The facility leases generally contain renewal options and escalation clauses based upon increases in the lessors’ operating expenses and other charges. Brown & Brown anticipates that most of these leases will be renewed or replaced upon expiration. At December 31, 2015, the aggregate future minimum lease payments under all non-cancelable lease agreements were as follows:

(in thousands)
2016	$	40,900
2017	37,109
2018	31,612
2019	25,962
2020	21,283
Thereafter	38,406
Total minimum future lease payments	$	195,272

Rental expense in 2015, 2014 and 2013 for operating leases totaled $46.0 million, $49.0 million, and $43.0 million, respectively.

Legal Proceedings

The Company records losses for claims in excess of the limits of, or outside the coverage of, applicable insurance at the time and to the extent they are probable and estimable. In accordance with ASC Topic 450-Contingencies, the Company accrues anticipated costs of settlement, damages, losses for liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, the Company expenses these costs as incurred. If the best estimate of a probable loss is a range rather than a specific amount, the Company accrues the amount at the lower end of the range.

The Company’s accruals for legal matters that were probable and estimable were not material at December 31, 2015 and 2014. We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could adversely impact the Company’s operating results, cash flows and overall liquidity. The Company maintains third-party insurance policies to provide coverage for certain legal claims, in an effort to mitigate its overall exposure to unanticipated claims or adverse decisions. However, as (i) one or more of the Company’s insurance carriers could take the position that portions of these claims are not covered by the Company’s insurance, (ii) to the extent that payments are made to resolve claims and lawsuits, applicable insurance policy limits are eroded and (iii) the claims and lawsuits relating to these matters are continuing to develop, it is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by unfavorable resolutions of these matters. Based on the AM Best Company ratings of these third-party insurers, management does not believe there is a substantial risk of an insurer’s material nonperformance related to any current insured claims.

On the basis of current information, the availability of insurance and legal advice, in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows.

NOTE 14· Quarterly Operating Results (Unaudited)

Quarterly operating results for 2015 and 2014 were as follows:

(in thousands, except per share data)		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
2015
Total revenues		$	404,298			$	419,447			$	432,167			$	404,597
Total expenses		$	310,520			$	318,533			$	319,337			$	309,560
Income before income taxes		$	93,778			$	100,914			$	112,830			$	95,037
Net income		$	56,951			$	61,005			$	67,427			$	57,935
Net income per share:
Basic		$	0.40			$	0.43			$	0.48			$	0.41
Diluted		$	0.39			$	0.43			$	0.47			$	0.41
2014
Total revenues		$	363,594			$	397,764			$	421,418			$	393,020
Total expenses		$	276,757			$	295,983			$	308,733			$	354,574		(1)
Income before income taxes		$	86,837			$	101,781			$	112,685			$	38,446		(1)
Net income		$	52,415			$	61,755			$	68,331			$	24,395		(1)
Net income per share:
Basic		$	0.36			$	0.43			$	0.47			$	0.17
Diluted		$	0.36			$	0.42			$	0.47			$	0.17

(1)	The Company recognized a pre-tax loss on disposal of $47.4 million as a result of the sale of Axiom effective December 31, 2014. The sale was part of the Company’s strategy to exit the reinsurance brokerage business.

Quarterly financial results are affected by seasonal variations. The timing of the Company’s receipt of profit-sharing contingent commissions, policy renewals and acquisitions may cause revenues, expenses and net income to vary significantly between quarters.

NOTE 15· Segment Information

Brown & Brown’s business is divided into four reportable segments: (1) the Retail Segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers; (2) the National Programs Segment, which acts as a MGA, provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches, all of which are delivered through nationwide networks of independent agents, and Brown & Brown retail agents; (3) the Wholesale Brokerage Segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as Brown & Brown retail agents; and (4) the Services Segment, which provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, Social Security disability and Medicare benefits advocacy services and claims adjusting services.

Brown & Brown conducts all of its operations within the United States of America, except for a wholesale brokerage operation based in London, England, and retail operations in Bermuda and the Cayman Islands. These operations earned $13.4 million, $13.3 million and $12.2 million of total revenues for the years ended December 31, 2015, 2014 and 2013, respectively. Long-lived assets held outside of the United States during each of these three years were not material.

The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its segments based upon revenues and income before income taxes. Inter-segment revenues are eliminated.

Summarized financial information concerning the Company’s reportable segments is shown in the following table. The “Other” column includes any income and expenses not allocated to reportable segments and corporate-related items, including the inter-company interest expense charge to the reporting segment.

Segment results for prior periods have been recast to reflect the current year segmental structure. Certain reclassifications

have been made to the prior-year amounts reported in this Annual Report on Form 10-K in order to conform to the current year

presentation.

	For the year ended December 31, 2015
(in thousands)	Retail				National Programs				Wholesale Brokerage				Services				Other				Total
Total revenues	$	870,346			$	428,734			$	216,996			$	145,365			$	(932	)		$	1,660,509
Investment income	$	87			$	210			$	150			$	42			$	515			$	1,004
Amortization	$	45,145			$	28,479			$	9,739			$	4,019			$	39			$	87,421
Depreciation	$	6,558			$	7,250			$	2,142			$	1,988			$	2,952			$	20,890
Interest expense	$	41,036			$	55,705			$	891			$	5,970			$	(64,354	)		$	39,248
Income before income taxes	$	181,938			$	67,673			$	64,708			$	19,713			$	68,527			$	402,559
Total assets	$	3,507,476			$	2,505,752			$	895,782			$	285,459			$	(2,181,730	)		$	5,012,739
Capital expenditures	$	6,797			$	6,001			$	3,084			$	1,088			$	1,405			$	18,375

	For the year ended December 31, 2014
(in thousands)	Retail				National Programs				Wholesale Brokerage				Services				Other				Total
Total revenues	$	823,686			$	404,239			$	211,911			$	136,558			$	(598	)		$	1,575,796
Investment income	$	67			$	164			$	26			$	3			$	487			$	747
Amortization	$	42,935			$	25,129			$	10,703			$	4,135			$	39			$	82,941
Depreciation	$	6,449			$	7,805			$	2,470			$	2,213			$	1,958			$	20,895
Interest expense	$	43,502			$	49,663			$	1,294			$	7,678			$	(73,729	)		$	28,408
Income before income taxes	$	157,491			$	73,178			$	8,276			$	17,870			$	82,934			$	339,749
Total assets	$	3,229,484			$	2,455,749			$	857,804			$	296,034			$	(1,882,613	)		$	4,956,458
Capital expenditures	$	6,873			$	14,133			$	1,526			$	1,210			$	1,181			$	24,923

	For the year ended December 31, 2013
(in thousands)	Retail				National Programs				Wholesale Brokerage				Services				Other				Total
Total revenues	$	737,349			$	301,372			$	193,710			$	131,489			$	(641	)		$	1,363,279
Investment income	$	82			$	19			$	22			$	1			$	514			$	638
Amortization	$	38,523			$	14,953			$	10,719			$	3,698			$	39			$	67,932
Depreciation	$	5,874			$	5,492			$	2,674			$	1,623			$	1,822			$	17,485
Interest expense	$	34,658			$	24,014			$	2,316			$	7,322			$	(51,870	)		$	16,440
Income before income taxes	$	161,787			$	61,223			$	47,501			$	25,791			$	61,307			$	357,609
Total assets	$	3,012,688			$	1,377,404			$	865,731			$	277,652			$	(1,883,967	)		$	3,649,508
Capital expenditures	$	6,886			$	4,810			$	1,825			$	1,811			$	1,034			$	16,366

NOTE 16· Losses and Loss Adjustment Reserve

Although the reinsurers are liable to the Company for amounts reinsured, our subsidiary, Wright Flood remains primarily liable to its policyholders for the full amount of the policies written whether or not the reinsurers meet their obligations to the Company when they become due. The effects of reinsurance on premiums written and earned at December 31 are as follows:

	2015								2014
(in thousands)	Written				Earned				Written				Earned
Direct premiums	$	599,828			$	610,753			$	439,828			$	408,056
Assumed premiums	—				18				(1		)		199
Ceded premiums	599,807				610,750				439,819				408,246
Net premiums	$	21			$	21			$	8			$	8

All premiums written by Wright Flood under the National Flood Insurance Program are 100% ceded to FEMA, for which Wright Flood received a 30.8% expense allowance from January 1, 2015 through September 30, 2015 and 30.9% from October 1, 2015 through December 31, 2015. As of December 31, 2015 and 2014, the Company ceded $598.4 million and $439.1 million of written premiums, respectively.

Effective April 1, 2014, Wright Flood is also a party to a quota share agreement whereby it cedes 100% of its gross excess flood premiums, which excludes fees, to Arch Reinsurance Company and receives a 30.5% commission. Wright Flood ceded $1.4 million and $0.8 million for the years ended December 31, 2015 and 2014. No loss data exists on this agreement.

Wright Flood also ceded 100%, to Arch Reinsurance Company, of the Homeowners, Private Passenger Auto Liability, and Other Liability Occurrence to Stillwater Insurance Company, formerly known as Fidelity National Insurance Company. This business is in runoff. Therefore, only loss data still exists on this business. As of December 31, 2015, ceded unpaid losses and loss adjustment expenses for Homeowners, Private Passenger Auto Liability and Other Liability Occurrence was $8,698, $16,132 and $4,179, respectively. The incurred but not reported balance was $10,335 for Homeowners, $14,383 for Private Passenger Auto Liability and $8,456 for Other Liability Occurrence.

The reinsurance recoverable balance as of December 31, 2015 was $341.6 million and was comprised of recoverables on unpaid losses and loss expenses of $32.0 million and prepaid reinsurance premiums of $309.6 million. The reinsurance recoverable balance as of December 31, 2014 was $333.6 million that is comprised of recoverables on unpaid losses and loss expenses of $13.0 million and prepaid reinsurance premiums of $320.6 million There was no net activity in the reserve for losses and loss adjustment expense for the years ended December 31, 2015 and 2014, as Wright Flood’s direct premiums written were 100% ceded to three reinsurers. The balance of the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable was $32.0 million as of December 31, 2015 and $13.0 million as of December 31, 2014.

NOTE 17· Statutory Financial Information

Wright Flood maintains minimum amounts of statutory capital and surplus of $7.5 million as required by regulatory authorities. Wright Flood’s statutory capital and surplus exceeded their respective minimum statutory requirements. The statutory capital and surplus of Wright Flood was $15.1 million as of December 31, 2015 and $10.9 million as of December 31, 2014. As of December 31, 2015 and 2014, Wright Flood generated statutory net income of $4.1 million and $2.3 million, respectively.

NOTE 18· Subsidiary Dividend Restrictions

Under the insurance regulations of Texas, the maximum amount of ordinary dividends that Wright Flood can pay to shareholders in a rolling twelve month period is limited to the greater of 10% of statutory adjusted capital and surplus as shown on Wright Flood’s last annual statement on file with the superintendent of the Texas Department of Insurance or 100% of adjusted net income. As an extraordinary dividend of $7.0 million was paid on May 20, 2014, no ordinary dividend could be paid until May 21, 2015. There was no dividend payout in 2015 and the maximum dividend payout that may be made in 2016 without prior approval is $4.1 million.

NOTE 19· Shareholders’ Equity

On July 18, 2014, the Company’s Board of Directors authorized the repurchase of up to $200.0 million of its shares of common stock. This was in addition to the $25.0 million that was authorized in the first quarter and executed in the second quarter of 2014. On September 2, 2014, the Company entered into an accelerated share repurchase agreement (“ASR”) with an investment bank to purchase an aggregate $50.0 million of the Company’s common stock. The total number of shares purchased under the ASR of 1,539,760 was determined upon settlement of the final delivery and was based on the Company’s volume weighted average price per its common share over the ASR period less a discount.

On March 5, 2015, the Company entered into an ASR with an investment bank to purchase an aggregate $100.0 million of the Company’s common stock. As part of the ASR, the Company received an initial delivery of 2,667,992 shares of the Company’s common stock

with a fair market value of approximately $85.0 million. On August 6, 2015, the Company was notified by its investment bank that the March 5, 2015 ASR agreement between the Company and the investment bank had been completed in accordance with the terms of the agreement. The investment bank delivered to the Company an additional 391,637 shares of the Company’s common stock for a total of 3,059,629 shares repurchased under the agreement. The delivery of the remaining 391,637 shares occurred on August 11, 2015. At the conclusion of this contract the Company had authorization for $50.0 million of share repurchases under the original Board authorization.

On July 20, 2015, the Company’s Board of Directors authorized the repurchase of up to an additional $400.0 million of the Company’s outstanding common stock. With this authorization, the Company had total available approval to repurchase up to $450 million, in the aggregate, of the Company’s outstanding common stock.

On November 11, 2015, the Company entered into a third ASR with an investment bank to purchase an aggregate $75 million of the Company’s common stock. The Company received an initial delivery of 1,985,981 shares of the Company’s common stock with a fair market value of approximately $63.75 million. On January 6, 2016 this agreement was completed by the investment bank with the delivery of 363,209 shares of the Company’s common stock. After completion of this third ASR, the Company has approval to repurchase up to $375.0 million, in the aggregate, of the Company’s outstanding common stock.

Under the authorization from the Company’s Board of Directors, shares may be purchased from time to time, at the Company’s discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company’s financial performance and other potential factors. These purchases may be carried out through open market purchases, block trades, accelerated share repurchase plans of up to $100.0 million each (unless otherwise approved by the Board of Directors), negotiated private transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Brown & Brown, Inc.

Daytona Beach, Florida

We have audited the accompanying consolidated balance sheets of Brown & Brown, Inc. and subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Brown & Brown, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2016 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
February 25, 2016