8-KAcquisitions & DispositionsMaterial AgreementsFinancial Events+2

BROWN & BROWN, INC. 8-K Report, Material Agreement (Jan 12, 2012)

Filed January 12, 2012For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) filed an 8-K on January 12, 2012, reporting on two significant events that occurred on January 9, 2012. The company completed the acquisition of Arrowhead General Insurance Agency Superholding Corporation for a base consideration of $395.0 million, with potential for additional earn-out payments of $5.0 million. This acquisition positions Brown & Brown as a significant player in the national insurance program management and managing general agent (MGA) space, particularly in property and casualty insurance. In conjunction with the acquisition, Brown & Brown also secured new financing. This includes a $100.0 million term loan and a $50.0 million revolving line of credit from SunTrust Bank, both maturing on December 31, 2016. Additionally, a $50.0 million uncommitted bridge facility was arranged with JPMorgan Chase Bank, N.A., maturing on February 3, 2012, with the expectation of being repaid by other debt financings. These financing arrangements provide the necessary capital for the Arrowhead acquisition and enhance the company's liquidity.

Key Highlights

  • 1Completed the acquisition of Arrowhead General Insurance Agency Superholding Corporation for approximately $395 million, plus potential earn-outs.
  • 2Arrowhead is a national insurance program manager and a leading MGA in property and casualty insurance.
  • 3Secured a new $100 million term loan and a $50 million revolving credit facility from SunTrust Bank, both maturing December 31, 2016.
  • 4Arranged a $50 million uncommitted bridge facility from JPMorgan Chase Bank, N.A., maturing February 3, 2012.
  • 5The new credit facilities from SunTrust can be increased by up to $50 million each.
  • 6Interest rates and fees on the SunTrust facilities are tied to the company's funded debt-to-EBITDA ratio.
  • 7The financing was funded on January 9, 2012, to support the Arrowhead acquisition.

Frequently Asked Questions

This 8-K filing announces the completion of Brown & Brown's acquisition of Arrowhead General Insurance Agency Superholding Corporation and the related financing arrangements put in place to fund this acquisition.

The upfront cost for the Arrowhead acquisition was approximately $395.0 million, subject to certain adjustments related to options, working capital, tax losses, preferred stock, expenses, and debt.

Brown & Brown secured a $100 million term loan and a $50 million revolving credit facility from SunTrust, both maturing on December 31, 2016. They also have a $50 million bridge facility from JPMorgan Chase maturing on February 3, 2012, expected to be refinanced. Both SunTrust facilities can be expanded by up to $50 million.

Yes, Brown & Brown may pay up to an additional $5.0 million in earn-out payments to certain Arrowhead equityholders within 60 days following the third anniversary of the acquisition's closing date, contingent on Arrowhead's cumulative EBITDA performance in the final year of that three-year period.