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

FORM 10-Q

(Mark One)
x☒Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended SeptemberJune 30, 20192021
or
¨☐Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission File Number: 001-39095

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

Delaware
brp-20210630_g1.jpg
61-1937225
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
40104211 W. Boy Scout Blvd., Suite 800, Tampa, Florida 33607
(Address of principal executive offices) (Zip code)Code)
(866) 279-0698
(Registrant'sRegistrant’s telephone number, including area code)
Not Applicable
(Former Name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareBRPNasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d)15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒No c☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes x☒ No c☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerc☐Accelerated filerc☒
Non-accelerated filerc☐Smaller reporting companyx☐
Emerging growth company
x
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  c☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes c☐No x☒
The numberAs of outstanding August 4, 2021, there were 47,147,295 shares of the registrant’s Class A common stock $0.01 par value, asoutstanding and 52,543,601 shares of November 27, 2019 was approximately 18,859,300.

Class B common stock outstanding.



BRP GROUP, INC.
INDEX

Page
Financial Statements (Unaudited)
5
7
8
10
12
3428
4843
4944
4946
4946
4946
4946
5047
5047
5047
5148
5249






Note Regarding Forward-Looking Statements
We have made statements in this report, including matters discussed under Part I, Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1. Legal Proceedings, Part II, Item 1A. Risk Factors and in other sections of this report, that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under Part II, Item 1A. Risk Factors. You should specifically consider the numerous risks outlined under Part I, Item 1A. Risk Factors in our prospectus (the “Prospectus”) relating to our Registration StatementAnnual Report on Form S-1, as amended (Registration No. 333-233908),10-K filed with the SEC pursuant to Rule 424(b) under the Securities Act.on March 11, 2021.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations.




Commonly Used Defined Terms
The following terms have the following meanings throughout this Quarterly Report on Form 10-Q unless the context indicates or requires otherwise:
Book of Business
Book of Business    Insurance policies bound by us with our Partners on behalf of our Clients
Cadence Credit AgreementThird amended and restated credit agreement between Baldwin Risk Partners, LLC as borrower and Cadence Bank, N.A. as lender entered into on March 13, 2019 and subsequently amended on September 21, 2019 with such amendment subsequently amended on October 18, 2019
ClientsOur insureds
ColleaguesOur employees
Credit AgreementsThe Cadence Credit Agreement and the Villages Credit Agreement, collectively
Exchange ActSecurities Exchange Act of 1934, as amended
Insurance Company PartnersInsurance companies with which we have a contractual relationship
Operating GroupsOur reportable segments
PartnersCompanies that we have acquired, or in the case of asset acquisitions, the producers
PartnershipsStrategic acquisitions made by the Company
Risk AdvisorsOur producers
SECU.S. Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
Villages Credit AgreementAmended and restated credit agreement between Baldwin Risk Partners, LLC as borrower and Holding Company of the Villages, Inc. as lender entered into on March 13, 2019



bps    Basis points
Clients    Our insureds
Colleagues    Our employees
Exchange Act    Securities Exchange Act of 1934, as amended
Insurance Company Partners    Insurance companies with which we have a contractual relationship
LIBOR    London Interbank Offered Rate
MGA    Managing General Agent
MSI    Millennial Specialty Insurance, a 2019 Partner
JPM Credit Agreement    Credit Agreement, dated as of October 14, 2020, between Baldwin Risk Partners, LLC, as borrower, JPMorgan Chase Bank, N.A., as the Administrative Agent, the Guarantors party thereto, the Lenders party thereto and the Issuing Lenders party thereto, as amended by the Amendment No. 1 to Credit Agreement dated as of May 7, 2021, Amendment No. 2 to Credit Agreement dated as of June 2, 2021 and Amendment No. 3 to Credit Agreement dated as of August 6, 2021
Operating Groups    Our reportable segments
Partners    Companies that we have acquired, or in the case of asset acquisitions, the producers
Partnerships    Strategic acquisitions made by the Company
Risk Advisors    Our producers
SEC    U.S. Securities and Exchange Commission
Securities Act    Securities Act of 1933, as amended
Tax Receivable Agreement    Tax Receivable Agreement between BRP Group, Inc. and the holders of LLC Units in Baldwin Risk Partners, LLC entered into on October 28, 2019



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page
Financial Statements
BRP Group, Inc.
Balance Sheet (Unaudited)
6
Notes to Balance Sheet (Unaudited)
7
Baldwin Risk Partners, LLC and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
9
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
11
Condensed Consolidated Statements of Members' Equity (Deficit) and Mezzanine Equity (Unaudited)
12
Condensed Consolidated Statements of Cash Flows (Unaudited)
14
Notes to Condensed Consolidated Financial Statements (Unaudited)
16




BRP GROUP, INC.
Condensed Consolidated Balance SheetSheets
(Unaudited)

(in thousands, except share and per share data)June 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$224,479 $108,462 
Restricted cash51,505 33,560 
Premiums, commissions and fees receivable, net209,664 155,501 
Prepaid expenses and other current assets5,156 4,447 
Due from related parties0 19 
Total current assets490,804 301,989 
Property and equipment, net11,558 11,019 
Other assets14,885 11,084 
Intangible assets, net547,227 554,320 
Goodwill671,826 651,502 
Total assets$1,736,300 $1,529,914 
Liabilities, Mezzanine Equity and Stockholders’ Equity
Current liabilities:
Premiums payable to insurance companies$177,578 $135,576 
Producer commissions payable32,367 24,260 
Accrued expenses and other current liabilities49,639 47,490 
Due to related parties65 0 
Current portion of long-term debt5,000 4,000 
Current portion of contingent earnout liabilities90,160 6,094 
Total current liabilities354,809 217,420 
Revolving lines of credit20,000 0 
Long-term debt, less current portion477,985 381,382 
Contingent earnout liabilities, less current portion88,092 158,725 
Other liabilities3,067 2,419 
Total liabilities943,953 759,946 
Commitments and contingencies (Note 14)
Mezzanine equity:
Redeemable noncontrolling interest173 98 
Stockholders’ equity:
Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 46,583,582 and 44,953,166 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively466 450 
Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 49,575,871 and 49,828,383 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively5 5 
Additional paid-in capital404,025 392,139 
Accumulated deficit(19,489)(24,346)
Notes receivable from stockholders(306)(465)
Total stockholders’ equity attributable to BRP Group, Inc.384,701 367,783 
Noncontrolling interest407,473 402,087 
Total stockholders’ equity792,174 769,870 
Total liabilities, mezzanine equity and stockholders’ equity$1,736,300 $1,529,914 
September 30, 2019
Assets
Current assets:
Cash$—
Total assets$—
Commitments and contingencies (Note 3)
Stockholders' Equity
Stockholders' Equity:
Common stock, par value $0.01 per share, 1,000 shares authorized, no shares issued or outstanding$—
Total stockholders' equity$—








































See accompanying Notes to Balance Sheet.Condensed Consolidated Financial Statements. 5



BRP GROUP, INC.
Notes to Balance Sheet
(Unaudited)
1. Business and Basis of Presentation
BRP Group, Inc. (“BRP Group”) was incorporated in the state of Delaware on July 1, 2019. BRP Group was formed for the purpose of completing an initial public offering of its common stock and related transactions in order to carry on the business of Baldwin Risk Partners, LLC (“BRP”) as a publicly-traded entity.
The accompanying balance sheet has been prepared in accordance with accounting principles generally accepted in the United States of America. Statements of income, stockholders' equity and cash flows have not been presented because BRP Group has not engaged in any business or other activities except in connection with its formation.
2. Stockholders' Equity
BRP Group is authorized to issue 1,000 shares of stock with the par value of $0.01 per share.
3. Commitments and Contingencies
BRP Group may be subject to legal proceedings that arise in the ordinary course of business. There are currently no proceedings to which BRP Group is a party, nor does BRP Group have knowledge of any proceedings that are threatened against it.
4. Subsequent Events
On October 28, 2019, BRP Group completed an initial public offering (the “Offering”) of its Class A common stock, in which it sold 18,859,300 shares including 2,459,300 shares pursuant to the underwriters’ over-allotment option, which subsequently settled on November 26, 2019. The shares began trading on the Nasdaq Global Select Market on October 24, 2019. The shares were sold at an initial offering price of $14.00 per share for net proceeds of approximately $241.9 million after deducting underwriting discounts and commissions of $17.8 million and estimated offering expenses of approximately $4.3 million payable by BRP. Pursuant to the reorganization transactions undertaken in connection with the Offering, all outstanding equity units in BRP automatically converted into a single class of LLC units (the “LLC Units”).
Upon the consummation of the Offering, BRP Group's authorized capital stock consists of 300,000,000 shares of Class A common stock with a par value $0.01, 50,000,000 shares of Class B common stock with a par value of $0.0001 per share, and 50,000,000 shares of preferred stock with a par value of $0.01 per share.
In connection with the Offering, BRP Group and BRP entered into a series of transactions to implement an internal reorganization as follows:
BRP amended and restated its amended and restated limited liability company agreement (the “Amended LLC Agreement”) to, among other things, appoint BRP Group as the sole managing member of BRP and to modify BRP's capital structure to reclassify the equity interests into a single class of LLC Units;
as sole managing member of BRP, BRP Group will consolidate the financial results of BRP and a portion of the net income will be allocated to the noncontrolling interest to reflect the entitlement of the owners of BRP's outstanding equity interests (“BRP's LLC Members”) to a portion of BRP's net income;
through a series of internal transactions, BRP issued LLC Units to equity holders of its Partners (other than certain joint ventures) in exchange for all the equity interests in such Partners not held by BRP prior to such exchange;
BRP Group's certificate of incorporation authorized capital stock as discussed above;
each of BRP's members was issued shares of BRP Group's Class B common stock in an amount equal to the number of LLC Units held by each such member following the reclassification of the equity interest into LLC Units;
under the Amended LLC Agreement, BRP's LLC Members have the right to require BRP to redeem all or a portion of their LLC Units for, at BRP Group's election, newly-issued shares of Class A common stock on a one-for-one basis or a cash payment;
BRP Group and BRP's members entered into the Stockholders Agreement, which provides that approval by BRP's LLC Members is required for certain corporate actions; and


BRP Group entered into the Tax Receivable Agreement as discussed below.
Omnibus Incentive Plan
On October 24, 2019, BRP Group adopted the BRP Group, Inc. Omnibus Incentive Plan (the “Incentive Plan”). The purpose of the Incentive Plan is to motivate and reward employees and other individuals to perform at the highest level and contribute significantly to our success, thereby furthering the best interests of BRP Group's shareholders.
In connection with the Offering, BRP Group granted under the Incentive Plan an aggregate of 504,145 shares of Class A common stock to Risk Advisors and each BRP Colleague, subject to various vesting terms (collectively, the “IPO Grants”). These IPO Grants are one time grants solely related to the Offering.
Subject to adjustment, the Incentive Plan permits BRP Group to make awards of 696,000 shares of Class A common stock. Additionally, the number of shares of Class A common stock reserved for issuance under the Incentive Plan will increase automatically on the first day of each fiscal year following the effective date of the Incentive Plan, by the lesser of (i) 2% of outstanding shares of Class A common stock and Class B common stock on the last day of the immediately preceding fiscal year and (ii) such number of shares as determined by BRP Group's board of directors.
Tax Receivable Agreement
On October 28, 2019, BRP Group entered into the Tax Receivable Agreement with BRP's LLC Members that provides for the payment by BRP Group to BRP's LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that BRP Group actually realizes as a result of (i) any increase in tax basis in BRP assets resulting from (a) acquisitions by BRP Group of BRP's LLC Units from BRP's LLC Members in connection with the Offering, (b) the acquisition of LLC Units from BRP's LLC Members using the net proceeds from any future offering, (c) redemptions or exchanges by BRP's LLC Members of LLC Units and the corresponding number of shares of Class B common stock for shares of Class A common stock or cash or (d) payments under the Tax Receivable Agreement, and (ii) tax benefits related to imputed interest resulting from payments made under the Tax Receivable Agreement.




BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
  September 30, 2019 December 31, 2018
Assets    
Current assets:    
Cash and cash equivalents $11,106,139
 $7,995,118
Restricted cash 6,403,532
 —
Premiums, commissions and fees receivable, net 45,234,625
 29,385,275
Prepaid expenses and other current assets 5,663,632
 1,096,430
Due from related parties 44,272
 116,776
Total current assets 68,452,200
 38,593,599
Property and equipment, net 2,794,425
 2,148,264
Deposits and other non-current assets 962,840
 102,698
Deferred financing costs, net 7,362,927
 590,249
Deferred commission expense 3,418,494
 2,881,721
Intangible assets, net 92,392,570
 29,743,832
Goodwill 170,815,670
 65,764,251
Total assets $346,199,126
 $139,824,614
Liabilities, Mezzanine Equity and Members’ Equity (Deficit)
    
Current liabilities:    
Premiums payable to insurance companies $42,889,326
 $23,195,610
Producer commissions payable 7,126,847
 3,955,373
Accrued expenses 8,661,813
 2,764,870
Contract liabilities 4,349,299
 1,449,848
Other current liabilities 204,738
 1,032,405
Current portion of long-term debt —
 527,005
Current portion of contingent earnout liabilities 2,646,695
 301,905
Total current liabilities 65,878,718
 33,227,016
Advisor incentive liabilities 3,085,578
 2,346,868
Revolving lines of credit 105,000,000
 33,860,994
Long-term debt, less current portion —
 1,497,472
Related party debt 88,425,293
 36,880,334
Contingent earnout liabilities, less current portion 32,497,049
 8,947,005
Other long-term liabilities 361,481
 261,684
Total liabilities 295,248,119
 117,021,373
Commitments and contingencies (Note 14)    
Mezzanine equity:    
Redeemable noncontrolling interest 82,607,652
 46,207,466
Redeemable members’ capital 172,238,469
 39,353,918
Members’ equity (deficit):    
Members’ capital (7,031,813 and 6,796,052 units authorized, issued and outstanding, of which 1,927,105 and 2,056,525 are included in redeemable members' capital, at September 30, 2019 and December 31, 2018, respectively) —
 —
Member note receivable (240,438) (89,896)
Accumulated deficit (206,042,198) (63,605,576)
Noncontrolling interest 2,387,522
 937,329
Total members’ equity (deficit) (203,895,114) (62,758,143)
Total liabilities, mezzanine equity and members’ equity (deficit) $346,199,126
 $139,824,614


BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Continued)
(Unaudited)
The following table presents the assets and liabilities of the Company’s consolidated variable interest entities, which are included on the condensed consolidated balance sheets above. The assets in the table below include those assets that can only be used to settle obligations of the consolidated variable interest entities.
(in thousands)June 30, 2021December 31, 2020
Assets of Consolidated Variable Interest Entities That Can Only be Used to Settle the Obligations of Consolidated Variable Interest Entities:
Cash and cash equivalents$228 $143 
Premiums, commissions and fees receivable, net225 130 
Total current assets453 273 
Property and equipment, net19 21 
Other assets5 5 
Total assets$477 $299 
Liabilities of Consolidated Variable Interest Entities for Which Creditors Do Not Have Recourse to the Company:
Premiums payable to insurance companies$36 $5 
Producer commissions payable38 17 
Accrued expenses and other current liabilities12 10 
Total liabilities$86 $32 
  September 30, 2019 December 31, 2018
Assets of Consolidated Variable Interest Entities That Can Only be Used to Settle the Obligations of Consolidated Variable Interest Entities:    
Cash and cash equivalents $1,481,520
 $796,076
Premiums, commissions and fees receivable, net 4,906,363
 3,902,397
Prepaid expenses and other current assets 47,309
 69,163
Due from related parties —
 12,500
Total current assets 6,435,192
 4,780,136
Property and equipment, net 179,641
 114,768
Deposits —
 2,163
Goodwill 4,034,761
 4,034,761
Total assets $10,649,594
 $8,931,828
Liabilities of Consolidated Variable Interest Entities for Which Creditors Do Not Have Recourse to the Company:    
Premiums payable to insurance companies $2,931,517
 $2,077,504
Producer commissions payable 729,581
 514,345
Accrued expenses 433,274
 320,536
Contract liabilities 809
 —
Total liabilities $4,095,181
 $2,912,385

















































See accompanying Notes to Condensed Consolidated Financial Statements.6



BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIESBRP GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands, except share and per share data)2021202020212020
Revenues:
Commissions and fees$119,706 $51,268 $272,534 $105,427 
Operating expenses:
Commissions, employee compensation and benefits89,065 39,263 178,440 73,811 
Other operating expenses19,200 9,546 36,768 18,431 
Amortization expense10,742 4,450 21,279 8,046 
Change in fair value of contingent consideration13,325 4,581 11,822 6,242 
Depreciation expense573 240 1,167 405 
Total operating expenses132,905 58,080 249,476 106,935 
Operating income (loss)(13,199)(6,812)23,058 (1,508)
Other expense:
Interest expense, net(5,848)(1,047)(11,491)(1,632)
Other expense, net(1,057)0 (1,057)0 
Total other expense(6,905)(1,047)(12,548)(1,632)
Income (loss) before income taxes(20,104)(7,859)10,510 (3,140)
Income tax provision0 0 0 12 
Net income (loss)(20,104)(7,859)10,510 (3,152)
Less: net income (loss) attributable to noncontrolling interests(10,348)(4,271)5,653 (1,032)
Net income (loss) attributable to BRP Group, Inc.$(9,756)$(3,588)$4,857 $(2,120)
Comprehensive income (loss)$(20,104)$(7,859)$10,510 $(3,152)
Comprehensive income (loss) attributable to noncontrolling interests(10,348)(4,271)5,653 (1,032)
Comprehensive income (loss) attributable to BRP Group, Inc.(9,756)(3,588)4,857 (2,120)
Basic earnings (loss) per share$(0.22)$(0.18)$0.11 $(0.11)
Diluted earnings (loss) per share$(0.22)$(0.18)$0.11 $(0.11)
Weighted-average shares of Class A common stock outstanding - basic44,671,30820,426,08244,464,31219,959,828
Weighted-average shares of Class A common stock outstanding - diluted44,671,30820,426,08246,160,47419,959,828
  For the Three Months
Ended September 30,		 
For the Nine Months
Ended September 30,
  2019 2018 2019 2018
Revenues:        
Commissions and fees $38,383,455
 $18,538,628
 $101,280,661
 $59,023,915
         
Operating expenses:        
Commissions, employee compensation and benefits 26,787,773
 12,407,704
 67,067,347
 37,887,003
Operating expenses 6,320,213
 3,588,312
 16,711,495
��9,306,295
Amortization expense 3,081,578
 722,971
 6,792,779
 1,812,542
Change in fair value of contingent consideration 535,214
 350,462
 (3,221,909) 877,235
Depreciation expense 184,179
 126,531
 460,364
 366,577
Total operating expenses 36,908,957
 17,195,980
 87,810,076
 50,249,652
         
Operating income 1,474,498
 1,342,648
 13,470,585
 8,774,263
         
Other income (expense):        
Interest expense, net (3,784,866) (1,292,016) (8,998,308) (5,012,174)
Other income (expense), net 4,792
 1,816
 4,792
 (210,096)
Total other expense (3,780,074) (1,290,200) (8,993,516) (5,222,270)
         
Net income (loss) and comprehensive income (loss) (2,305,576) 52,448
 4,477,069
 3,551,993
Less: net income and comprehensive income attributable to noncontrolling interests 1,420,204
 863,351
 3,873,178
 2,709,716
Net income (loss) and comprehensive income (loss) attributable to Baldwin Risk Partners, LLC and Subsidiaries $(3,725,780) $(810,903) $603,891
 $842,277






























See accompanying Notes to Condensed Consolidated Financial Statements.7


BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIES
Condensed Consolidated Statements of Members' Equity (Deficit) and Mezzanine Equity
For the Three and Nine Months Ended September 30, 2019
(Unaudited)
For the Nine Months Ended September 30, 2019
   Members’ Equity (Deficit)  Mezzanine Equity
 Units Members' Capital Member Note Receivable Accumulated Deficit Noncontrolling Interest Total  Redeemable Noncontrolling Interest Redeemable Members’ Capital
Balance at December 31, 20186,796,052
 $—
 $(89,896) $(63,605,576) $937,329
 $(62,758,143)  $46,207,466
 $39,353,918
Net income—
 —
 —
 118,738
 111,806
 230,544
  3,761,372
 485,153
Contributions—
 —
 —
 —
 —
 —
  35,307
 —
Contributions through issuance of Member note receivable—
 —
 (310,136) —
 46,947
 (263,189)  263,189
 —
Repayment of Member note receivable—
 —
 159,594
 —
 —
 159,594
  —
 —
Issuance and vesting of Management Incentive Units to Members475,899
 663,487
 —
 —
 —
 663,487
  —
 —
Issuance of Voting Common Units to redeemable common equity holder293,660
 —
 —
 —
 —
 —
  —
 5,509,355
Issuance of Non-Voting Common Units to Members and NCI Holders61,982
 611,954
 —
 —
 385,710
 997,664
  —
 —
Repurchase of Voting Common Units from Members(595,780) —
 —
 —
 —
 —
  —
 (11,177,429)
Repurchase redemption value adjustments—
 —
 —
 —
 —
 —
  —
 (1,322,571)
Noncontrolling interest issued in business combinations and asset acquisitions—
 —
 —
 —
 1,000,000
 1,000,000
  37,636,673
 —
Change in the redemption value of redeemable interests—
 —
 —
 (140,708,042) —
 (140,708,042)  166,758
 140,541,284
Distributions—
 (1,275,441) —
 (1,847,318) (94,270) (3,217,029)  (5,463,113) (1,151,241)
Balance at September 30, 20197,031,813
 $—
 $(240,438) $(206,042,198) $2,387,522
 $(203,895,114)  $82,607,652
 $172,238,469

For the Three Months Ended September 30, 2019
   Members’ Equity (Deficit)  Mezzanine Equity
 Units Members' Capital Member Note Receivable Accumulated Deficit Noncontrolling Interest Total  Redeemable Noncontrolling Interest Redeemable Members’ Capital
Balance at June 30, 20197,001,813
 $—
 $(255,700) $(128,869,332) $2,424,252
 $(126,700,780)  $65,905,956
 $110,596,275
Net income (loss)—
 —
 —
 (2,577,996) (19,700) (2,597,696)  1,439,904
 (1,147,784)
Contributions—
 —
 —
 —
 —
 —
  1,780
 —
Repayment of Member note receivable—
 —
 15,262
 —
 —
 15,262
  —
 —
Issuance and vesting of Management Incentive Unit to Members30,000
 303,312
 —
 —
 —
 303,312
  —
 —
Noncontrolling interest issued in business combinations and asset acquisitions—
 —
 —
 —
 —
 —
  6,674,137
 —
Change in the redemption value of redeemable interests—
 —
 —
 (74,165,529) —
 (74,165,529)  11,123,992
 63,041,537
Distributions—
 (303,312) —
 (429,341) (17,030) (749,683)  (2,538,117) (251,559)
Balance at September 30, 20197,031,813
 $—
 $(240,438) $(206,042,198) $2,387,522
 $(203,895,114)  $82,607,652
 $172,238,469



BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIESBRP GROUP, INC.
Condensed Consolidated Statements of Members'Stockholders’ Equity (Deficit) and Mezzanine Equity (Continued)
For the Three and Nine Months Ended September 30, 2018
(Unaudited)
For the Three Months Ended June 30, 2021
Stockholders’ Equity
Mezzanine Equity
Class A Common StockClass B Common Stock
(in thousands, except share data)SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitNotes Receivable from StockholdersNon-controlling InterestTotalRedeemable Non-controlling Interest
Balance at March 31, 202145,925,711$460 49,715,644$5 $398,885 $(9,733)$(349)$416,253 $805,521 $125 
Net income (loss)— — — — — (9,756)— (10,396)(20,152)48 
Equity issued in business combinations62,1520 —— (1,773)— — 3,028 1,255 — 
Share-based compensation, net of forfeitures455,9465 — — 5,734 — — (232)5,507 — 
Redemption of Class B common stock139,773 1 (139,773)— 1,179 — — (1,180)0 — 
Repayment of stockholder notes receivable— — — — — — 43 — 43 — 
Balance at June 30, 202146,583,582$466 49,575,871$5 $404,025 $(19,489)$(306)$407,473 $792,174 $173 
For the Nine Months Ended September 30, 2018
   Members’ Equity (Deficit)  Mezzanine Equity
 Units Members' Capital Member Note Receivable Accumulated Deficit Noncontrolling Interest Total  Redeemable Noncontrolling Interest Redeemable Members’ Capital
Balance at December 31, 20176,190,789
 $—
 $—
 $(40,465,787) $547,053
 $(39,918,734)  $23,474,348
 $22,503,733
Adjustment to opening retained earnings due to adoption of ASC Topic 606—
 —
 —
 6,607,552
 184,520
 6,792,072
  —
 —
Adjusted beginning balance after adoption of ASC Topic 6066,190,789
 —
 —
 (33,858,235) 731,573
 (33,126,662)  23,474,348
 22,503,733
Net income (loss)—
 —
 —
 576,990
 (72,759) 504,231
  2,782,475
 265,287
Contributions—
 —
 —
 —
 —
 —
  53,204
 —
Contributions through issuance of Member note receivable—
 —
 (179,792) —
 —
 (179,792)  —
 —
Repayment of Member note receivable—
 —
 44,948
 —
 —
 44,948
  —
 —
Issuance and vesting of Management Incentive Unit to Members343,659
 190,051
 —
 —
 —
 190,051
  —
 —
Issuance of Voting Common Units to redeemable common equity holder251,447
 —
 —
 —
 —
 —
  —
 2,892,145
Issuance of Non-Voting Common Units to NCI Holders—
 —
 —
 —
 289,340
 289,340
  —
 —
Noncontrolling interest issued in business combinations and asset acquisitions—
 —
 —
 —
 —
 —
  13,394,424
 —
Change in the redemption value of redeemable interests—
 —
 —
 (15,719,866) —
 (15,719,866)  5,216,369
 10,503,497
Distributions—
 (190,051) —
 (3,079,795) (49,267) (3,319,113)  (3,305,574) (1,230,154)
Balance at September 30, 20186,785,895
 $—
 $(134,844) $(52,080,906) $898,887
 $(51,316,863)  $41,615,246
 $34,934,508

For the Six Months Ended June 30, 2021
Stockholders’ Equity
Mezzanine Equity
Class A Common StockClass B Common Stock
(in thousands, except share data)SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitNotes Receivable from StockholdersNon-controlling InterestTotalRedeemable Non-controlling Interest
Balance at December 31, 202044,953,166$450 49,828,383$5 $392,139 $(24,346)$(465)$402,087 $769,870 $98 
Net income— — — — — 4,857 — 5,578 10,435 75 
Equity issued in business combinations216,2842 —— 1,859 — — 1,853 3,714 — 
Share-based compensation, net of forfeitures1,161,62012 — — 7,979 — — 5 7,996 — 
Redemption of Class B common stock252,512 2 (252,512)— 2,048 — — (2,050)— — 
Repayment of stockholder notes receivable— — — — — — 159 — 159 — 
Balance at June 30, 202146,583,582$466 49,575,871$5 $404,025 $(19,489)$(306)$407,473 $792,174 $173 













For the Three Months Ended September 30, 2018
   Members’ Equity (Deficit)  Mezzanine Equity
 Units Members' Capital Member Note Receivable Accumulated Deficit Noncontrolling Interest Total  Redeemable Noncontrolling Interest Redeemable Members’ Capital
Balance at June 30, 20186,386,911
 $—
 $(179,792) $(42,438,083) $845,767
 $(41,772,108)  $36,915,222
 $29,959,326
Net income (loss)—
 —
 —
 (535,403) (32,795) (568,198)  896,146
 (275,500)
Contributions—
 —
 —
 —
 —
 —
  22,436
 —
Repayment of Member note receivable—
 —
 44,948
 —
 —
 44,948
  —
 —
Issuance and vesting of Management Incentive Unit to Members343,659
 97,303
 —
 —
 —
 97,303
  —
 —
Issuance of Voting Common Units to redeemable common equity holder55,325
 —
 —
 —
 —
 —
  —
 636,346
Issuance of Non-Voting Common Units to NCI Holders—
 —
 —
 —
 109,548
 109,548
  —
 —
Noncontrolling interest issued in business combinations and asset acquisitions—
 —
 —
 —
 —
 —
  2,641,203
 —
Change in the redemption value of redeemable interests—
 —
 —
 (7,745,916) —
 (7,745,916)  2,590,387
 5,155,529
Distributions—
 (97,303) —
 (1,361,504) (23,633) (1,482,440)  (1,450,148) (541,193)
Balance at September 30, 20186,785,895
 $—
 $(134,844) $(52,080,906) $898,887
 $(51,316,863)  $41,615,246
 $34,934,508
See accompanying Notes to Condensed Consolidated Financial Statements.8



BRP GROUP, INC.
BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIESCondensed Consolidated Statements of Stockholders’ Equity and Mezzanine Equity (Continued)
(Unaudited)
For the Three Months Ended June 30, 2020
Stockholders’ Equity
Mezzanine Equity
Class A Common StockClass B Common Stock
(in thousands, except share data)SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitNotes Receivable from StockholdersNon-controlling InterestTotalRedeemable Non-controlling Interest
Balance at March 31, 202019,847,354$199 43,544,362$4 $90,443 $(7,182)$(647)$171,988 $254,805 $39 
Net income (loss)— — — — — (3,588)— (4,292)(7,880)21 
Issuance of Class A common stock in offering, net of underwriting discounts and offering costs13,225,000 132 (2,475,000)— 144,525 — — (9,398)135,259 — 
Equity issued in business combinations— — 4,518,948— — — — 39,953 39,953 — 
Share-based compensation, net of forfeitures189,361 2 — — 1,346 — — 296 1,644 — 
Redemptions and repurchases of common stock40,762 — (129,547)— (794)— — (498)(1,292)— 
Repayment of stockholder notes receivable— — — — — — 74 — 74 — 
Contributions— — — — — — — — — 11 
Balance at June 30, 202033,302,477$333 45,458,763$4 $235,520 $(10,770)$(573)$198,049 $422,563 $71 

For the Six Months Ended June 30, 2020
Stockholders’ Equity
Mezzanine Equity
Class A Common StockClass B Common Stock
(in thousands, except share data)SharesAmountSharesAmountAdditional Paid-in CapitalAccumulated DeficitNotes Receivable from StockholdersNon-controlling InterestTotalRedeemable Non-controlling Interest
Balance at December 31, 201919,362,984$194 43,257,738$4 $82,425 $(8,650)$(688)$163,966 $237,251 $23 
Net income (loss)— — — — — (2,120)— (1,069)(3,189)37 
Issuance of Class A common stock in offering, net of underwriting discounts and offering costs13,225,000 132 (2,475,000)— 144,525 — — (9,398)135,259 — 
Equity issued in business combinations487,534 5 4,805,572— 7,672 — — 44,453 52,130 — 
Share-based compensation, net of forfeitures186,197 2 — — 1,692 — — 595 2,289 — 
Redemptions and repurchases of common stock40,762 — (129,547)— (794)— — (498)(1,292)— 
Repayment of stockholder notes receivable— — — — — — 115 — 115 — 
Contributions— — — — — — — — — 11 
Balance at June 30, 202033,302,477$333 45,458,763$4 $235,520 $(10,770)$(573)$198,049 $422,563 $71 





See accompanying Notes to Condensed Consolidated Financial Statements. 9

BRP GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30,
(in thousands)20212020
Cash flows from operating activities:
Net income (loss)$10,510 $(3,152)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization22,446 8,451 
Change in fair value of contingent consideration11,822 6,242 
Share-based compensation expense8,087 3,117 
Amortization of deferred financing costs1,443 195 
Change in fair value of interest rate caps825 0 
Payment of contingent earnout consideration in excess of purchase price accrual(602)(1,316)
Other fair value adjustments94 0 
Changes in operating assets and liabilities, net of effect of acquisitions:
Premiums, commissions and fees receivable, net(52,357)(9,464)
Prepaid expenses and other current assets(2,254)(334)
Due from related parties84 (78)
Accounts payable, accrued expenses and other current liabilities49,321 39,983 
Net cash provided by operating activities49,419 43,644 
Cash flows from investing activities:
Capital expenditures(1,756)(2,619)
Cash consideration paid for asset acquisitions, net of cash received(1,575)(695)
Cash consideration paid for business combinations, net of cash received(24,276)(224,112)
Net cash used in investing activities(27,607)(227,426)
Cash flows from financing activities:
Proceeds from issuance of Class A common stock, net of underwriting discounts0 167,346 
Redemption and repurchase of LLC Units and Class B common stock0 (32,610)
Payment of common stock offering costs0 (769)
Payment of contingent and guaranteed earnout consideration(828)(665)
Proceeds from revolving line of credit20,000 185,637 
Proceeds from long-term debt97,914 0 
Payments on long-term debt(1,000)0 
Payments of debt issuance costs(634)(1,918)
Purchase of interest rate caps(3,461)0 
Proceeds from repayment of stockholder notes receivable159 115 
Other0 11 
Net cash provided by financing activities112,150 317,147 
Net increase in cash and cash equivalents and restricted cash133,962 133,365 
Cash and cash equivalents and restricted cash at beginning of period142,022 71,071 
Cash and cash equivalents and restricted cash at end of period$275,984 $204,436 
  For the Nine Months Ended September 30,
  2019 2018
Cash flows from operating activities:    
Net income $4,477,069
 $3,551,993
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 7,253,143
 2,179,119
Amortization of deferred financing costs 1,117,037
 91,665
Loss on modification and extinguishment of debt 114,839
 —
Issuance of Voting Common Units to redeemable common equity holder —
 2,892,145
Issuance and vesting of Management Incentive Units to Members 663,487
 190,051
Participation unit compensation 149,797
 93,750
Stock-based compensation expense 109,810
 930,155
Change in fair value of contingent consideration (3,221,909) 877,235
Changes in operating assets and liabilities, net of effect of acquisitions:    
Premiums, commissions and fees receivable, net (441,086) 1,309,824
Prepaid expenses and other assets (384,176) (107,429)
Due from related parties 72,504
 (26,273)
Deferred commission expense (536,773) (633,078)
Accounts payable, accrued expenses and other current liabilities 5,015,551
 (1,825,051)
Contract liabilities 105,467
 1,005,148
Other long-term liabilities —
 (552,529)
Net cash provided by operating activities 14,494,760
 9,976,725
Cash flows from investing activities:    
Capital expenditures (1,464,723) (364,560)
Investment in business venture (200,000) —
Cash consideration paid for asset acquisitions, net of cash received (671,342) (6,137,830)
Cash consideration paid for business combinations, net of cash received (99,486,015) (35,091,989)
Net cash used in investing activities (101,822,080) (41,594,379)
Cash flows from financing activities:    
Payment of contingent earnout consideration —
 (2,892,000)
Payment of guaranteed earnout consideration (812,500) (62,500)
Net borrowings on revolving line of credit 71,139,006
 23,878,188
Proceeds from related party debt 51,544,959
 23,520,000
Payments on long-term debt (2,024,477) (420,369)
Payments of debt issuance costs (2,495,199) (355,660)
Proceeds from advisor incentive buy-ins 628,902
 81,510
Proceeds from issuance of Non-Voting Common Units to Members 1,157,258
 154,496
Repurchase of Voting Common Units from Members (12,500,000) —
Contributions 35,307
 53,204
Distributions (9,831,383) (7,854,841)
Net cash provided by financing activities 96,841,873
 36,102,028
Net increase in cash and cash equivalents and restricted cash 9,514,553
 4,484,374
Cash and cash equivalents and restricted cash at beginning of period 7,995,118
 3,123,413
Cash and cash equivalents and restricted cash at end of period $17,509,671
 $7,607,787
     









BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
  For the Nine Months Ended September 30,
  2019 2018
Supplemental schedule of cash flow information:    
Cash paid during the year for interest $7,479,755
 $1,710,954
Disclosure of non-cash investing and financing activities:    
Change in the redemption value of redeemable interests $140,708,042
 $15,719,866
Noncontrolling interest issued in business combinations 38,636,673
 13,394,424
Contingent earnout consideration for business combinations 29,101,001
 5,815,272
Capitalization of issuance to redeemable common member 5,509,355
 —
Capitalization of Offering costs 4,207,209
 —
Contingently returnable consideration for business combinations 321,147
 —
Contingent earnout consideration for asset acquisitions 15,742
 1,042,523
Guaranteed earnout for asset acquisitions —
 250,000
Note payable issued to seller for asset acquisition —
 750,000





































See accompanying Notes to Condensed Consolidated Financial Statements.10




BALDWIN RISK PARTNERS, LLC AND SUBSIDIARIES
BRP GROUP, INC.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the Six Months Ended June 30,
(in thousands)20212020
Supplemental schedule of cash flow information:
Cash paid during the period for interest$11,024 $1,486 
Disclosure of non-cash investing and financing activities:
Equity issued in business combinations$3,714 $52,130 
Contingent earnout liabilities assumed in business combinations7,764 25,188 
Noncash debt issuance costs incurred3,823 0 
Capital expenditures incurred but not yet paid33 0 

See accompanying Notes to Condensed Consolidated Financial Statements. 11

BRP GROUP, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Business and Basis of Presentation
On October 28, 2019, BRP Group, Inc. (“BRP Group”) completed its initial public offering (the “Offering”)was incorporated in the state of Class A common stock and became the sole managing member of Baldwin Risk Partners, LLC ("BRP" or the "Company”). The operations ofDelaware on July 1, 2019. BRP represent the predecessor to BRP Group prior to the Offering. The consolidated entities of BRP are described in more detail under Principles of Consolidation below.
BRP, a Delaware limited liability company, is a diversified insurance agency and services organization that markets and sells insurance products and services to its customers throughout the U.S., although a significant portion of the Company’s business is concentrated in the southeastern U.S. BRP Group and its subsidiaries operate through four Operating Groups, including Middle Market, Specialty, MainStreet, and Medicare, which are discussed in more detail in Note 15.
BRP was formed during 2012 when The term the members of Baldwin Krystyn Sherman Partners, LLC (“BKS”) contributed their units of ownership for an equal number of units in BRP, at which time BKS became a wholly-owned subsidiary of BRP.
“Company” refers to BRP Group was incorporated in the state of Delaware on July 1, 2019.
Initial Public Offering
On October 28, 2019, BRP Group completed the Offering of 18,859,300 shares ofand its Class A common stock including 2,459,300 shares pursuant to the underwriters’ over-allotment option, which subsequently settled on November 26, 2019. The shares began trading on the Nasdaq Global Select Market on October 24, 2019. The shares were sold at an initial offering price of $14.00 per share for net proceeds of approximately $241.9 million after deducting underwriting discounts and commissions of $17.8 million and estimated offering expenses of approximately $4.3 million payable by the Company. Pursuant to the reorganization transactions undertaken in connection with the closing of the Offering, all outstanding equity units in BRP automatically converted into a single class of LLC units (the “LLC Units”).
The accompanying financial statements as of September 30, 2019, including share and per share amounts, do not give effect to the Offering or conversion into LLC Units as they were completed subsequent to September 30, 2019.consolidated subsidiaries.
Principles of Consolidation
The consolidated financial statements include the accounts of BRP Group and its wholly-owned subsidiaries, BRP Main Street Holdings, LLC (“Main Street”), BRP Medicare Insurance Holdings, LLC (“MIH”), BRP Insurance Intermediary Holdings, LLC (“BIH”), BRP Colleague Inc. (“BRP Colleague”), and a 96.6% interest in BKS.
Main Street includes a 45% interest in Laureate Insurance Partners, LLC (“Laureate”), a 75% interest in BRP Ryan Insurance, LLC (“Ryan”), a 90% interest in BRP Bradenton Insurance, LLC (“Bradenton”), a 58.9% interest in BRP Affordable Home Insurance, LLC (“AHI”), a 60% interest in BRP Black Insurance, LLC (“Black”), a 50% interest in The Villages Insurance Partners, LLC (“TVIP”), and a 80% interest in BRP Foundation, LLC (“Foundation”).
MIH includes its wholly-owned subsidiaries, BRP Medicare Insurance I, LLC, BRP Medicare Insurance II, LLC and BRP Medicare Insurance III, LLC.
BIH includes a 70% interest in Millennial Specialty Insurance, LLC and a 60% interest in AB Risk Specialist, LLC (“ABRS”), which holds a 66.7% interest in KB Risk Solutions, LLC (“KBRS”).
BKS includes the accounts of its wholly-owned subsidiary BKS Private Risk Group, LLC, a 50% interest in BKS-IPEO JV Partners, LLC (“iPEO”), a 60% interest in BKS Smith, LLC (“Smith”), a 60% interest in BKS MS, LLC (“Saunders”), a 51% interest in BKS Partners Galati Marine Solutions, LLC (“Galati”), and an 89.1% interest in BKS D&M Holdings, LLC (“D&M Holdings”), which holds an 85% interest in BRP D&M Insurance, LLC (“D&M”).
subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

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

The Company has prepared these consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“Topic 810”). Topic 810 requires that if an enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity should be included in the consolidated financial statements of the enterprise. The Company has recognized TVIP and the Company's joint ventures, which include iPEO, Laureate, Smith, Saunders and Galati,certain entities as variable interest entities of which the Company is the primary beneficiary. Accordingly,beneficiary and has included the accounts of these entities are included in the consolidated financial statements of the Company.statements. Refer to Note 4 for additional information regarding the Company'sCompany’s variable interest entities.
Topic 810 also requires that the equity of a noncontrolling interest shall be reported inon the condensed consolidated balance sheets within total equity of the Company. Certain redeemable noncontrolling interests are reported inon the condensed consolidated balance sheets as mezzanine equity. Topic 810 also requires revenues, expenses, gains, losses, net income or loss, and other comprehensive income or loss to be reported in the consolidated financial statements at consolidated amounts, which include amounts attributable to the owners of the parent and the noncontrolling interests. Refer to the Redeemable Noncontrolling Interest and Noncontrolling Interest sections of Note 2 for additional information.
Unaudited Interim Financial Reporting
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all the information and related notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting of recurring accruals, considered necessary for fair statement have been included. The accompanying balance sheet for the year ended December 31, 20182020 was derived from audited financial statements, but does not include all disclosures required by GAAP. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company'sCompany’s audited consolidated financial statements and the notes thereto for the year ended December 31, 20182020 included in the Prospectus.Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2021.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates underlying the accompanying consolidated financial statements include the application of guidance for revenue recognition, including determination of allowances for estimated policy cancellations; the determination of fair value in relation to business combinations and purchase price allocation, allowances for estimated policy cancellations and doubtful accounts,allocation; impairment of long-lived assets including goodwill, redemption valuegoodwill; valuation of mezzanine equity,the Tax Receivable Agreement liability and the value of incentive units.income taxes; and share-based compensation.
Changes in Presentation
12
A reclassification has been made to the statement of members' equity (deficit) and mezzanine equity for the six months ended June 30, 2019 that affects the balances of noncontrolling interest and redeemable noncontrolling interest at June 30, 2019 as well as the classification between noncontrolling interest and redeemable noncontrolling interest under contributions through issuance of member note receivable for the three months ended September 30, 2019.

Recent Accounting Pronouncements
As an emerging growth company, the Jumpstart Our Business Startups (“JOBS”Act of 2012 (the “JOBS Act”) Act permits the Company an extended transition period for complying with new or revised accounting standards affecting public companies. The Company has elected to use this extended transition period and adopt certain new accounting standards on the private company timeline, which means that the Company’s financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis. The Company has elected the extended transition period for the adoption of the Accounting Standards Updates (“ASU”ASUs”) below, except those where early adoption was both permitted and elected.


In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840, Leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. In March 2019, theThe FASB has subsequently issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements,several additional ASUs related to leases, which improvesimproved upon, provided interpretation of and transition relief for, the guidance issued in ASU 2016-02.2016-02 and extended the adoption date for nonpublic business entities. This guidance is effective for the fiscal years beginning after December 15, 2020,2021, and interim periods within fiscal years beginning after December 15, 2021,2022, with early adoption permitted. The Company is currently evaluating the full effect that the adoption of this standard will have on its consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements (“ASU 2016-13”), which amends the guidance for recognizing credit losses on financial instruments measured at amortized cost. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The FASB has subsequently issued several additional ASUs related to credit losses, which improved upon, provided interpretation of and provided transition relief for, the guidance issued in ASU 2016-13 and extended the adoption date for nonpublic business entities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the full effect that the adoption of this standard will have on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 provides guidance on the classification of contingent consideration payments made after a business combination and other cash receipts and payments. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of this guidance will impact the presentation of the cash flows, but will not otherwise have a significant impact on the Company's results of operations or financial condition.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires that the statement of cash flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as restricted cash. The Company adopted ASU 2016-18 in connection with the acquisition of Millennial Specialty Insurance LLC in April 2019. With the adoption of ASU 2016-18, the statements of cash flows detail the change in the balance of cash and cash equivalents and restricted cash. The adoption of this guidance did not have any effect on cash flows for the nine months ended September 30, 2018.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which amends the guidance on goodwill. Under ASU 2017-04, goodwill impairment is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, while not exceeding the carrying value of goodwill. ASU 2017-04 eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all its assets and liabilities as if that reporting unit had been acquired in a business combination. The Company early adopted this guidance for impairment tests effective January 1, 2019 and it did not have any impact on the Company's financial statements for the current period.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements related to fair value measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements, such as disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and disclosing the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.
2. Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies from those that were disclosed for the year ended December 31, 20182020 in the Prospectus,Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2021, except as noted below.

Derivative Instruments

Revenue Recognition
In connection with the Company's business acquisition of Millennial Specialty Insurance LLC in April 2019, the Company has a new revenue stream for policy fee and installment fee revenue. The Company earns policy fee revenue for acting in its capacity as a managing general agent (“MGA”) on behalfutilizes derivative financial instruments, consisting of interest rate caps, to manage the Insurance Company Partner and fulfilling certain services including delivery of policy documents, processing payments and other administrative functions during the term of the insurance policy. Policy fee revenue is deferred and recognized over the life of the policy. These deferred amountsCompany’s interest rate exposure. Derivative instruments are recognized as deferred policy fee revenue, which is included in contractassets or liabilities at fair value on the condensed consolidated balance sheets. The Company earns installment fee revenue related to policy premiums paidhas not designated these derivatives as hedging instruments for accounting purposes and, accordingly, the changes in fair value of these derivatives are recognized in earnings. Cash payments and receipts under the derivative instruments are classified within cash flows from financing activities on an installment basis for payment processing services performed on behalfthe accompanying statements of the Insurance Company Partner.cash flows. The Company recognizes installment fee revenue indoes not use derivative instruments for trading or speculative purposes.
Concentrations of Credit Risk
Financial instruments that potentially subject the period the servicesCompany to concentrations of credit risk consist of cash and cash equivalents. The Company manages this risk using high creditworthy financial institutions. Interest-bearing accounts and noninterest-bearing accounts are performed.
Restricted Cash
Restricted cash includes amounts that are legally restricted as to use or withdrawal. Restricted cash represents cash collected from customers that is payable to insurance companies and for which segregation of this cash is either (i) requiredinsured by the state of domicile forFederal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits exceed amounts insured by the office conducting the transaction, or (ii) required by contract with the relevant insurance company providing coverage.
Redeemable Noncontrolling Interest
ASC Topic 480, Distinguishing Liabilities from Equity (“Topic 480”), requires noncontrolling interests that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. The equity securities of certain of the Company's noncontrolling interests contain an embedded put feature that is redeemable at the election of the interest holder.FDIC. The Company has no control over whether the put option is exercised and, therefore, redemption is outside the Company's control. As such, these equity securities are recorded as redeemable noncontrolling interests, which are classified in mezzanine equity on the Company’s condensed consolidated balance sheets.
Redeemable noncontrolling interests are reported at estimated redemption value measured as the greater of estimated fair value at the end of each reporting period or the historical cost basis of the redeemable noncontrolling interest adjusted for cumulative earnings or loss allocations. The resulting increases or decreases to redemption value, if applicable, are recognized as adjustments to retained earnings.
The accounts of the following joint ventures have been consolidated into the Company’s consolidated financial statements since their respective inceptions. The noncontrolling ownership interests in the Company's subsidiaries described below are presented as redeemable noncontrolling interest in the consolidated financial statements.
In 2012, the Company formalized a purchase agreement with Insurance Agencies of the Villages, Inc. (“IAV”) in order to acquire a 50% equity stake in TVIP by purchasing units of membership interest.
In 2014, iPEO was formed to join with iPEO Solutions, LLC (“Solutions”) in order to share commissions for services related to Solutions customers. Solutions has a 50% ownership interest in iPEO.
In 2017, Ryan was formed in order to acquire substantially all the assets and liabilities of Ryan Insurance & Financial Services, Inc. from Sean D. Ryan. Sean D. Ryan has a 25% ownership interest in Ryan.
In 2017, AHI was formed in order to acquire substantially all the assets and liabilities of Affordable Home Insurance, Inc. from Dennis P. Gagnon, Jr. (“Gagnon”). Gagnon has since transferred some of his original interest to other employees of AHI (“AHI Members”). Gagnon and AHI Members have a combined 41.1% ownership interest in AHI.
In 2017, D&M was formed in order to acquire substantially all the assets and liabilities of D&M Insurance Solutions, LLC from W. David Cox and Michael P. Ryan. Additionally, D&M Holdings was formed by BKS and KMW Consulting, LLC (“KMW”) to hold D&M. W. David Cox and Michael P. Ryan have a 15% ownership interest in D&M and KMW has a 9.9% ownership interest in D&M Holdings.
In 2017, Bradenton was formed in order to acquire substantially all the assets and liabilities of Bradenton Insurance, Inc. from Robert J. Wentzell and Robert J. Wentzell Family Partnership (collectively, “Wentzell”). Wentzell has a 10% ownership interest in Bradenton.


In 2017, Smith was formed to join with Smith & Associates Real Estate, Inc. (“Smith & Associates”) in order to share commissions for services related to Smith & Associates customers. Smith & Associates has a 40% ownership interest in Smith.
In 2017, Saunders was formed to join with Michael Saunders & Company (“Saunders & Company”) in order to share commissions for services related to Saunders & Company customers. Saunders and Company has a 40% ownership interest in Saunders.
In 2018, Black was formed in order to acquire substantially all the assets and liabilities of Black Insurance and Financial Services, LLC from Christopher R. Black (“Chris Black”). Chris Black has a 40% ownership interest in Black.
In 2018, BIH was formed in order to acquire 60% of the membership interests of ABRS, which owned a 100% membership interest in KBRS, from AB Risk Holdco, Inc. (“AB Holdco”). Additionally, immediately following BIH’s acquisition of the membership interests of ABRS, Emanuel Lauria (“Lauria”) was issued a 33.3% membership interest in KBRS. AB Holdco has a 40% ownership interest in ABRS.
In 2018, BKS acquired substantially all the assets and liabilities of Montoya Property & Casualty Insurance from Montoya and Associates, LLC (“Montoya & Associates”). Montoya & Associates has a 1.5% ownership interest in BKS.
In 2019, BIH acquired 70% of the membership interests of Millennial Specialty Insurance, LLC from Millennial Specialty Holdco, LLC (“MSH”). MSH has a 30% ownership interest in Millennial Specialty Insurance, LLC.
In 2019, BKS Financial Investments, LLC was formed to acquire substantially all the assets and liabilities of Fiduciary Partners Investment Consulting, LLC and BKS acquired substantially all the assets and liabilities of Fiduciary Partners Retirement Group, Inc. (“FPRG”) and Fiduciary Partners Group, LLC. FPRG has a 0.3% ownership interest in BKS.
In 2019, Foundation was formed in order to acquire substantially all the assets and liabilities of Foundation Insurance of Florida, LLCnot experienced any losses from its members (“Foundation Members”). The Foundation Members have a 20% ownership interest in Foundation.deposits.
Redeemable Members’ Capital
Topic 480 requires common units that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. The Voting Common Units of two minority holders contain certain put and call rights in conjunction with termination at the greater of fair value or a floor, as defined in the Company’s amended and restated limited liability operating agreement (“Operating Agreement”). The Company has no control over whether the put option is exercised and, therefore, redemption is outside the Company's control. As such, these equity securities are recorded as redeemable members’ capital, which are classified in mezzanine equity on the Company’s condensed consolidated balance sheets.
The Voting Common Units of the two minority holders are measured as the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the redeemable common units adjusted for cumulative earnings or loss allocations. During March 2019, the Company repurchased 595,780 Voting Common Units of the two minority founders for $12.5 million.
Noncontrolling Interest
Noncontrolling interests are reported at historical cost basis adjusted for cumulative earnings or loss allocations and classified in members’ equity (deficit) on the condensed consolidated balance sheets.
The accounts of the following entities have been consolidated into the Company’s consolidated financial statements since their respective inceptions. The noncontrolling ownership interests in the Company's subsidiaries described below are presented as noncontrolling interest in the condensed consolidated financial statements.
In 2007, Galati was formed to join with GMI Holdings (“GMI”) in order to share commissions from policies related to GMI customers. GMI has a 49% ownership interest in Galati.


In 2017, Laureate was formed to join with Tavistock Insurance Partners, LLC (“Tavistock”) and Matthew Hammer (“Hammer”) in order to share commissions for services related to Tavistock customers. Tavistock has a 50% ownership interest in Laureate and Hammer has a 5% ownership interest in Laureate.
In 2019, BKS acquired substantially all the assets and liabilities of Lykes Insurance, Inc. from Lykes Bros. Inc. Certain former employees of Lykes Insurance, Inc. have a 0.7% ownership interest in BKS.
One of the Company's Risk Advisors holds 19,639 Non-Voting Common Units in BKS.
3. Business Combinations
The Company completed four5 business combinations for an aggregate purchase price of $173.5$41.1 million during the ninesix months ended SeptemberJune 30, 2019.2021. In accordance with ASC Topic 805, Business Combinations (“Topic 805”), total consideration was first allocated to the fair value of assets acquired, including liabilities assumed, with the excess being recorded as goodwill. For financial statement purposes, goodwill is not amortized but rather is evaluated for impairment at least annually or more frequently if an event or change in circumstances occurs that indicates goodwill may be impaired. Goodwill is deductible for tax purposes and will be amortized over a period of fifteen15 years.
The intangible assets acquired in connection with business combinations during the nine months ended September 30, 2019 have an estimated weighted-average life as follows:
13
Weighted-Average Life
Purchased customer accounts16.6years
Software5years
Carrier relationships20years
Trade names5years

The recorded purchase price for certainmost business combinations includes an estimation of the fair value of continentcontingent consideration obligations associated with potential earnout provisions, which are generally based on earnings before income taxes, depreciation and amortization (“EBITDA”).recurring revenue. The contingent earnout consideration amounts identified in the tables below are measured at fair value within Level 3 of the fair value hierarchy as discussed further in Note 13. Any subsequent changes in the fair value of contingent earnout liabilities will be recorded in the condensed consolidated statements of comprehensive income (loss) when incurred.
The recorded purchase price for certainmany business combinations also includes an estimation of the fair value of noncontrollingequity interests, which areis calculated based on a valuationthe value of the entityCompany’s Class A common stock on the closing date taking into account a discount for lack of marketability. Any equity interests granted in shares of Class B common stock also include an upward adjustment for the cash flow associated with the relevant percentage applied.Tax Receivable Agreement.
The Company completed the following four business combinations during the ninesix months ended SeptemberJune 30, 2019:2021:
Lykes Insurance, Inc.•LeaseTrack Services LLC and Effective Coverage LLC (“Lykes”LeaseTrack”), a Middle Market PartnershipSpecialty Partner effective February 1, 2021, was made to provide a complementary service offering to the MGA of the Future’s Master Tenant product for property managers and distribution partners.
•Riley Financial, Inc. (operating as “Medicare Help Now”), a Medicare Partner effective March 1, 2019,2021, was made to further bolster the Company’s Medicare business presence in the Pacific Northwest.
•Tim Altman, Inc. (operating as “Only Medicare Solutions”), a Medicare Partner effective April 1, 2021, was made to expand the Company’s Middle Market business presence in Florida.Pacific Northwest Medicare Advantage presence.
Millennial Specialty•Seniors’ Insurance LLCServices of Washington, Inc. (“MSI”Seniors’ Insurance Services”), a Specialty PartnershipMedicare Partner effective April 1, 2019,30, 2021, was made to obtain access to certain technologystrengthen and invest in executive talent for building and growing the MGA of the Future and to apply its functionality to other insurance placement products, as well as to expand the Company's market shareCompany’s Medicare presence in specialty renter’s insurance. MGA of the Future is a national renter's insurance product distributed via sub-agent partnersPacific Northwest.
•Mid-Continent Companies, Ltd. and property management software providers, which has expanded distribution capabilities for new products through the Company's wholesale and retail networks.
Fiduciary Partners Retirement Group, Inc., Fiduciary Partners Group, LLC and Fiduciary Partners Investment Consulting, LLCMid-Continent Securities Ltd. (“Fiduciary Partners”Mid-Continent”), a Middle Market PartnershipPartner effective July 1, 2019, was made to expand our employee benefits group business in the Middle Market Operating Group.
Foundation Insurance of Florida, LLC (“Foundation Insurance”), a MainStreet Partnership effective date of August 1, 2019,April 30, 2021, was made to expand the Company's MainStreet businessCompany’s capabilities and Middle Market presence in Florida.Texas.
The operating results of these business combinations have been included in the condensed consolidated statements of comprehensive income (loss) since their respective acquisition dates. The Company recognized total revenues and net incomeloss from itsthese business combinations of $29.5$2.3 million and $1.5 million,$785,000, respectively, for the ninesix months ended SeptemberJune 30, 2019.


2021.
Acquisition-related costs incurred in connection with these business combinations are recorded in other operating expenses in the condensed consolidated statements of comprehensive income (loss). The Company incurred acquisition-related costs from itsthese business combinations of $502,000$835,000 for the ninesix months ended SeptemberJune 30, 2019.2021.
Due to the complexity of valuing the consideration paid and the purchase price allocation and the timing of these activities, certain amounts included in the consolidated financial statements may be provisional and subject to additional adjustments within the measurement period as permitted by Topic 805. Specifically, the Company's valuations of premiums, commissions and fees receivable in accordance with Topic 606 are estimates subject to change based on relevant factors over the policy period. The valuations of intangible assets are also estimates based on assumptions of factors such as discount rates and growth rates. Accordingly, these assets are subject to measurement period adjustments as determined after the passage of time. Any measurement period adjustments related to prior period business combinations are reflected as current period adjustments in accordance with Topic 805. Refer to Note 8 for information regarding measurement period adjustments recorded during the six months ended June 30, 2021.
14

The table below provides a summary of the total consideration and the estimated purchase price allocations made for each of the business acquisitions that became effective during the ninesix months ended SeptemberJune 30, 2019. Due2021. The “All Others” column includes amounts for the Medicare Help Now, Only Medicare Solutions, Seniors’ Insurance Services and Mid-Continent business combinations.
(in thousands)LeaseTrackAll OthersTotals
Cash consideration paid$12,984 $14,021 $27,005 
Fair value of contingent earnout consideration6,116 1,648 7,764 
Fair value of equity interest1,652 2,062 3,714 
Deferred payment0 2,592 2,592 
Total consideration$20,752 $20,323 $41,075 
Cash$100 $155 $255 
Restricted cash20 2 
Premiums, commissions and fees receivable729 1,077 1,806 
Property and equipment43 0 43 
Other assets0 13 13 
Intangible assets5,200 11,797 16,997 
Goodwill15,026 7,553 22,579 
Total assets acquired21,100 20,595 41,695 
Premiums payable to insurance companies(318)0 (318)
Producer commissions payable(4)(268)(272)
Accrued expenses and other current liabilities(26)(4)(30)
Total liabilities acquired(348)(272)(620)
Net assets acquired$20,752 $20,323 $41,075 
Maximum potential contingent earnout consideration$8,500 $10,462 $18,962 
The factors contributing to the complexityrecognition of valuing the consideration paidamount of goodwill are based on expanding business presence into new geographic locations and service markets, strategic benefits expected to be realized from acquiring the purchase price allocationPartners’ assembled workforce and technology, in addition to other synergies gained from integrating the timing of these activities, certain amounts includedPartners’ operations into our consolidated structure.
The intangible assets acquired in the condensed consolidated financial statements may be provisional and subject to additional adjustments within the measurement period as permitted by Topic 805. Any measurement period adjustments related to prior periodconnection with business combinations have been reflected as current period adjustments forduring the ninesix months ended SeptemberJune 30, 20192021 have the following values and estimated weighted-average lives:
(in thousands, except weighted-average lives)AmountWeighted-Average Life
Purchased customer accounts$9,669 17.9 years
Distributor relationships4,858 20.0 years
Software2,095 5.0 years
Trade names375 4.6 years
15

Future annual estimated amortization expense over the next five years for intangible assets acquired in accordanceconnection with Topic 805.business combinations during the six months ended June 30, 2021 is as follows:
   Lykes MSI Fiduciary Partners Foundation Insurance Totals
Cash consideration paid $36,044,000
 $45,505,000
 $2,550,000
 $20,800,000
 $104,899,000
Fair value of contingent earnout consideration —
 25,603,000
 151,454
 3,346,547
 29,101,001
Fair value of noncontrolling interest 1,000,000
 30,962,536
 637,500
 6,036,637
 38,636,673
Fair value of contingently returnable consideration —
 —
 (321,147) —
 (321,147)
Trust balance adjustment —
 1,137,918
 —
 —
 1,137,918
Total consideration $37,044,000
 $103,208,454
 $3,017,807
 $30,183,184
 $173,453,445
           
Cash $471,635
 $6,029,268
 $—
 $50,000
 $6,550,903
Premiums, commissions and fees receivable 951,246
 14,436,999
 20,019
 —
 15,408,264
Other assets 17,778
 306,970
 1,300
 —
 326,048
Intangible assets          
Purchased customer accounts 8,742,000
 11,240,000
 1,874,000
 8,709,000
 30,565,000
Carrier relationships —
 6,000,000
 —
 —
 6,000,000
Software —
 30,000,000
 —
 —
 30,000,000
Trade names —
 1,820,000
 —
 —
 1,820,000
Goodwill 28,692,525
 53,764,165
 1,123,988
 21,470,741
 105,051,419
Total assets acquired 38,875,184
 123,597,402
 3,019,307
 30,229,741
 195,721,634
Premiums and producer commissions payable (1,831,184) (17,447,050) —
 —
 (19,278,234)
Deferred revenue —
 (2,793,984) —
 —
 (2,793,984)
Other current liabilities —
 (147,914) (1,500) (46,557) (195,971)
Total liabilities acquired (1,831,184) (20,388,948) (1,500) (46,557) (22,268,189)
Net assets acquired $37,044,000
 $103,208,454
 $3,017,807
 $30,183,184
 $173,453,445
           
Maximum potential contingent earnout consideration $—
 $61,500,000
 $2,225,000
 $21,750,000
 $85,475,000
Concurrently with the Lykes Partnership, certain former employees of Lykes purchased 4,658 Non-Voting Common Units of BKS for approximately $433,000, which resulted in a noncontrolling interest in BKS.
(in thousands)Amount
For the remainder of 2021$568 
20221,297 
20231,265 
20241,320 
20251,391 
The following unaudited pro forma consolidated results of operations are provided for illustrative purposes only and have been presented as if the acquisitions of Lykes, MSI, Fiduciary PartnersLeaseTrack, Medicare Help Now, Only Medicare Solutions, Seniors’ Insurance Services and Foundation InsuranceMid-Continent occurred on January 1, 2018.2020. This unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had occurred on that date, nor of the results that may be obtained in the future.
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands, except per share data)2021202020212020
Pro forma results:
Revenues$120,195 $52,880 $276,248 $110,724 
Net income (loss)(20,028)(8,055)12,081 (1,329)
Net income (loss) attributable to BRP Group, Inc.(9,719)(3,656)5,614 (1,518)
Basic earnings (loss) per share$(0.22)$(0.18)$0.13 $(0.08)
Diluted earnings (loss) per share$(0.22)$(0.18)$0.12 $(0.08)
Weighted-average shares of Class A common stock outstanding - basic44,686 20,642 44,537 20,176 
Weighted-average shares of Class A common stock outstanding - diluted44,686 20,642 46,239 20,176 
  For the Three Months
Ended September 30,		 For the Nine Months Ended September 30,
  2019 2018 2019 2018
Total revenues $38,800,566
 $31,656,150
 $115,837,987
 $94,225,271
Net income (loss) (2,183,808) 3,282,393
 9,772,443
 10,496,985


4. Variable Interest Entities
Topic 810 requires a reporting entity to consolidate a variable interest entity (“VIE”) when the reporting entity has a variable interest or combination of variable interests that provide the entity with a controlling financial interest in the VIE. The Company continually assesses whether it has a controlling financial interest in each of its VIEs to determine if it is the primary beneficiary of the VIE and should, therefore, consolidate each of the VIEs. A reporting entity is considered to have a controlling financial interest in a VIE if it has (i) the power to direct the activities of a VIE that most significantly impact the VIE'sVIE’s economic performance, and (ii) the obligation to absorb the losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.
The Company has determined that it is the primary beneficiary of its VIEs, which, at June 30, 2021 and December 31, 2020, include TVIPLaureate Insurance Partners, LLC (“Laureate”), BKS Smith, LLC (“Smith”), BKS MS, LLC (“Saunders”) and the Company’s joint ventures, iPEO, Laureate, Smith, Saunders andBKS Partners Galati andMarine Solutions, LLC (“Galati”). The Company has consolidated these entitiesits VIEs into the consolidated financial statements.
Total revenues and expenses of the Company’s consolidated VIEs included in the condensed consolidated statements of comprehensive income (loss) were $250,000 and $161,000, respectively, for the three months ended June 30, 2021 and $165,000 and $150,000, respectively, for the three months ended June 30, 2020. Total revenues and expenses of the Company’s consolidated VIEs included in the condensed consolidated statements of comprehensive income (loss) were $463,000 and $317,000, respectively, for the six months ended June 30, 2021 and $403,000 and $339,000, respectively, for the six months ended June 30, 2020.
16

The assets of the consolidated VIEs can only be used to settle the obligations of the consolidated VIEs and the creditors of the liabilities of the consolidated VIEs do not have recourse to the Company.
Total revenues and expenses of the Company's consolidated VIEs included in the condensed consolidated statements of comprehensive income (loss) were $3.3 million and $2.4 million, respectively, for the three months ended September 30, 2019, $2.9 million and $2.2 million, respectively, for the three months ended September 30, 2018, $11.1 million and $7.1 million, respectively, for the nine months ended September 30, 2019 and $10.1 million and $6.7 million, respectively, for the nine months ended September 30, 2018.
The following tables provide a summary of the carrying amounts of the assets and liabilities of the Company'sCompany’s consolidated VIEs at each of the balance sheet dates:
At June 30, 2021
(in thousands)LaureateSmithSaundersTotal
Assets
Cash and cash equivalents$193 $9 $26 $228 
Premiums, commissions and fees receivable, net0 120 105 225 
Total current assets193 129 131 453 
Property and equipment, net19 0 0 19 
Other assets5 0 0 5 
Total assets$217 $129 $131 $477 
Liabilities
Premiums payable to insurance companies$4 $32 $0 $36 
Producer commissions payable20 0 18 38 
Accrued expenses and other current liabilities12 0 0 12 
Total liabilities$36 $32 $18 $86 
At December 31, 2020
(in thousands)LaureateSmithSaundersTotal
Assets
Cash and cash equivalents$120 $5 $18 $143 
Premiums, commissions and fees receivable, net3 52 75 130 
Total current assets123 57 93 273 
Property and equipment, net21 0 0 21 
Other assets5 0 0 5 
Total assets$149 $57 $93 $299 
Liabilities
Premiums payable to insurance companies$4 $0 $1 $5 
Producer commissions payable0 4 13 17 
Accrued expenses and other current liabilities10 0 0 10 
Total liabilities$14 $4 $14 $32 
17
  At September 30, 2019
  TVIP iPEO Laureate Smith Saunders Total
Assets            
Cash and cash equivalents $1,441,613
 $7,837
 $23,821
 $159
 $8,090
 $1,481,520
Premiums, commissions and fees receivable, net 1,395,029
 3,458,920
 1,242
 2,492
 48,680
 4,906,363
Prepaid expenses and other current assets 35,805
 5,552
 4,425
 —
 1,527
 47,309
Total current assets 2,872,447
 3,472,309
 29,488
 2,651
 58,297
 6,435,192
Property and equipment, net 145,242
 —
 34,399
 —
 —
 179,641
Goodwill 4,034,761
 —
 —
 —
 —
 4,034,761
Total assets $7,052,450
 $3,472,309
 $63,887
 $2,651
 $58,297
 $10,649,594
Liabilities            
Premiums payable to insurance companies $296,842
 $2,629,160
 $240
 $5,084
 $191
 $2,931,517
Producer commissions payable 344,672
 367,063
 1,166
 —
 16,680
 729,581
Accrued expenses 433,274
 —
 —
 —
 —
 433,274
Contract liabilities 809
 —
 —
 —
 —
 809
Total liabilities $1,075,597
 $2,996,223
 $1,406
 $5,084
 $16,871
 $4,095,181



  At December 31, 2018
  TVIP iPEO Laureate Smith Saunders Total
Assets            
Cash and cash equivalents $770,196
 $646
 $24,872
 $259
 $103
 $796,076
Premiums, commissions and fees receivable, net 1,170,739
 2,725,471
 122
 —
 6,065
 3,902,397
Prepaid expenses and other current assets 50,311
 13,948
 4,904
 —
 —
 69,163
Due from related parties —
 —
 12,500
 —
 —
 12,500
Total current assets 1,991,246
 2,740,065
 42,398
 259
 6,168
 4,780,136
Property and equipment, net 73,723
 —
 41,045
 —
 —
 114,768
Deposits 2,163
 —
 —
 —
 —
 2,163
Goodwill 4,034,761
 —
 —
 —
 —
 4,034,761
Total assets $6,101,893
 $2,740,065
 $83,443
 $259
 $6,168
 $8,931,828
Liabilities            
Premiums payable to insurance companies $28,744
 $2,043,246
 $—
 $—
 $5,514
 $2,077,504
Producer commissions payable 226,956
 281,885
 —
 5,161
 343
 514,345
Accrued expenses 316,212
 2,007
 1,439
 505
 373
 320,536
Total liabilities $571,912
 $2,327,138
 $1,439
 $5,666
 $6,230
 $2,912,385
5. Revenue
The following table provides disaggregated commissions and fees revenue by major source:
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
 For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
 2019 2018 2019 2018
(in thousands)(in thousands)2021202020212020
Direct bill revenue (1)
 $17,663,486
 $12,631,632
 $53,257,805
 $38,234,171
Direct bill revenue (1)
$50,358 $22,430 $144,863 $50,539 
Agency bill revenue (2)
 14,253,187
 4,143,598
 31,084,397
 13,349,345
Agency bill revenue (2)
47,293 20,256 82,633 36,685 
Profit-sharing revenue (3)
 1,586,861
 553,969
 7,877,062
 4,727,964
Profit-sharing revenue (3)
8,175 2,626 18,467 7,750 
Policy fee and installment fee revenue (4)
 2,719,353
 —
 5,112,315
 —
Policy fee and installment fee revenue (4)
4,792 3,653 9,268 7,035 
Consulting and service fee revenue (5)
 1,111,616
 768,880
 2,337,181
 1,985,561
Consulting and service fee revenue (5)
5,726 793 11,006 1,508 
Other income (6)
 1,048,952
 440,549
 1,611,901
 726,874
Other income (6)
3,362 1,510 6,297 1,910 
Total commissions and fees $38,383,455
 $18,538,628
 $101,280,661
 $59,023,915
Total commissions and fees$119,706 $51,268 $272,534 $105,427 
__________
(1)Direct bill revenue represents commission revenue earned by facilitating the arrangement between individuals/businesses and Insurance Company Partners by providing insurance placement services to Clients with Insurance Company Partners, primarily for private risk management, commercial risk management, employee benefits and Medicare insurance types.
(2)Agency bill revenue primarily represents commission revenue earned by facilitating the arrangement between individuals/businesses and Insurance Company Partners by providing insurance placement services to Clients with Insurance Company Partners. The Company acts as an agent on behalf of the Client for the term of the insurance policy.
(3)Profit-sharing revenue represents bonus-type revenue that is earned by the Company as a sales incentive provided by certain Insurance Company Partners.
(4)Policy fee revenue represents revenue earned for acting in the capacity of an MGA on behalf of the Insurance Company Partner and fulfilling certain services including delivery of policy documents, processing payments and other administrative functions. Installment fee revenue represents revenue earned by the Company for providing payment processing services on behalf of the Insurance Company Partner related to policy premiums paid on an installment basis.
(5)Service fee revenue is earned by receiving negotiated fees in lieu of a commission and consulting revenue is earned by providing specialty insurance consulting.
(6)Other income consists primarily of Medicare marketing income that is based on agreed-upon cost reimbursement for fulfilling specific targeted marketing campaigns.

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

(2)    Agency bill revenue primarily represents commission revenue earned by facilitating the arrangement between individuals or businesses and Insurance Company Partners by providing insurance placement services to Clients. The Company acts as an agent on behalf of the Client for the term of the insurance policy.
(3)    Profit-sharing revenue represents bonus-type revenue that is earned by the Company as a sales incentive provided by certain Insurance Company Partners.
(4)    Policy fee revenue represents revenue earned for acting in the capacity of an MGA on behalf of the Insurance Company Partner and fulfilling certain services including delivery of policy documents, processing payments and other administrative functions. Installment fee revenue represents revenue earned by the Company for providing payment processing services on behalf of the Insurance Company Partner related to policy premiums paid on an installment basis.
(5)    Service fee revenue is earned by receiving negotiated fees in lieu of a commission and consulting revenue is earned by providing specialty insurance consulting.
(6)    Other income consists of Medicare marketing income that is based on agreed-upon cost reimbursement for fulfilling specific targeted marketing campaigns in addition to other fee income and premium financing income generated across all Operating Groups.
The application of ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), requires the use of management judgment. The following are the areas of most significant judgment as it relates to Topic 606:
•The Company considers the policyholders as representative of its customers in the majority of contractual relationships, with the exception of contracts in its Medicare operating segment, where the Insurance Company Partner is considered its customer.
•Contracts in the Medicare operating segment are multi-year arrangements in which the Company is entitled to renewal commissions. However, the Company has applied a constraint to renewal commission that limits revenue recognized on new policies to the policy year in effect, and revenue recognized on renewed policies to the receipt of periodic cash, when a risk of significant reversals exists based on: (i) insufficient history; and (ii) the influence of external factors outside of the Company’s control, including policyholder discretion over plans and Insurance Company Partner relationship, political influence, and a contractual provision, which limits the Company’s right to receive renewal commissions to ongoing compliance and regulatory approval of the relevant Insurance Company Partner and compliance with the Centers for Medicare and Medicaid Services.
•The Company recognizes separately contracted commissions revenue at the effective date of insurance placement and considers any ongoing interaction with the customer to be immaterial in the context of the contract.
•Variable consideration includes estimates of direct bill commissions, a reserve for policy cancellations and an estimate of profit-sharing revenue.
•Costs to obtain a contract are deferred and recognized over five years, which represents management’s estimate of the average period over which a Client maintains its initial coverage relationship with the original Insurance Company Partner.
•Due to the relatively short time period between the information gathering phase and binding insurance coverage, the Company has determined that costs to fulfill contracts are not significant. Therefore, costs to fulfill a contract are expensed as incurred.
18

6. Contract Assets and Liabilities
Contract assets arise when the Company recognizes revenue for amounts which have not yet been billed and contract liabilities relate to payments received in advance of performance under the contract before the transfer of a good or service to the customer. Contract assets are included in premiums, commissions and fees receivable, net and contract liabilities are included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. The balances of contract assets and liabilities arising from contracts with customers wereare as follows:
 September 30, 2019 December 31, 2018
(in thousands)(in thousands)June 30, 2021December 31, 2020
Contract assets $21,420,851
 $20,672,287
Contract assets$129,999 $80,213 
Contract liabilities 4,349,299
 1,449,848
Contract liabilities17,778 11,606 
During the ninesix months ended SeptemberJune 30, 2019,2021, the Company recognized revenue of $1.4$10.5 million related to the contract liabilities balance at December 31, 2018.2020.
7. Deferred Commission Expense
The Company pays an incremental amount of compensation in the form of producer commissions on new business. In connectionaccordance with the adoption of ASC Topic 340, Other Assets and Deferred Costs, on January 1, 2018, these incremental costs are deferred and amortized over five years.years, which represents management’s estimate of the average benefit period for new business. Deferred commission expense represents employee commissions that are capitalized and not yet expensed.expensed and are included in other assets on the condensed consolidated balance sheets. The table below provides a rollforward of deferred commission expense for each of the three and ninesix months ended SeptemberJune 30, 20192021 and 2018:2020:
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands)2021202020212020
Balance at beginning of period$5,164 $3,792 $4,751 $3,621 
Costs capitalized1,351 617 2,186 1,109 
Amortization(479)(349)(901)(670)
Balance at end of period$6,036 $4,060 $6,036 $4,060 
  For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
  2019 2018 2019 2018
Balance at beginning of period $3,093,617
 $2,353,975
 $2,881,721
 $—
Adoption of ASC Topic 340 —
 —
 —
 1,927,000
Costs capitalized 598,927
 388,514
 1,279,748
 1,125,568
Amortization (274,050) (182,411) (742,975) (492,490)
Balance at end of period $3,418,494
 $2,560,078
 $3,418,494
 $2,560,078
8. Intangible Assets, Net and Goodwill
The Company recognizes certain separately identifiable intangible assets acquired in connection with business combinations and asset acquisitions. The Company had two transactions that were accounted for as asset acquisitions during the nine months ended September 30, 2019 in which substantially all the fair value of the gross assets acquired of $687,000 was concentrated in purchased customer accounts. Refer to Note 3 for a summary of intangible assets acquired in connection with business combinations during the ninesix months ended SeptemberJune 30, 2019.2021. Intangible assets consist of the following:
June 30, 2021December 31, 2020
(in thousands)Gross Carrying ValueAccumulated AmortizationNet Carrying ValueGross Carrying ValueAccumulated AmortizationNet Carrying Value
Purchased customer accounts (1)
$508,613 $(34,370)$474,243 $501,512 $(18,604)$482,908 
Distributor relationships37,238 (2,157)35,081 32,380 (1,377)31,003 
Software32,828 (14,182)18,646 30,828 (10,801)20,027 
Trade names (1)
14,658 (2,145)12,513 14,439 (932)13,507 
Carrier relationships7,859 (1,115)6,744 7,859 (984)6,875 
Totals$601,196 $(53,969)$547,227 $587,018 $(32,698)$554,320 
  September 30, 2019 December 31, 2018
  Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value
Purchased customer accounts $64,587,299
 $(7,788,104) $56,799,195
 $33,291,531
 $(4,371,926) $28,919,605
Software 30,889,158
 (3,568,311) 27,320,847
 569,906
 (494,915) 74,991
Carrier relationships 6,000,000
 (230,475) 5,769,525
 —
 —
 —
Trade names 2,612,518
 (109,515) 2,503,003
 792,518
 (43,282) 749,236
Totals $104,088,975
 $(11,696,405) $92,392,570
 $34,653,955
 $(4,910,123) $29,743,832
__________
(1)    During the six months ended June 30, 2021, the Company recorded measurement period adjustments relating to certain businesses acquired in the fourth quarter of 2020, which decreased purchased customer accounts and trade names by $4.6 million and $156,000, respectively.
Amortization expense recorded for intangible assets was $3.1$10.7 million and $0.7$4.5 million for the three months ended SeptemberJune 30, 20192021 and 2018,2020, respectively, and $6.8$21.3 million and $1.8$8.0 million for the ninesix months ended SeptemberJune 30, 20192021 and 2018,2020, respectively.


Future annual estimated amortization expense over the next five years for acquired intangible assets is as follows:
19
  Amount
For the remainder of 2019 $3,084,645
2020 11,832,926
2021 11,995,271
2022 12,217,030
2023 12,002,633
2024 7,238,846

Refer to Note 3 for a summary of goodwill recorded in connection with business combinations during the ninesix months ended SeptemberJune 30, 2019.2021. The changes in carrying value of goodwill by reportable segmentOperating Group for the period are as follows:
(in thousands) Middle Market Specialty MainStreet Medicare Total
Balance at December 31, 2020$526,858 $65,319 $38,892 $20,433 $651,502 
Goodwill of acquired businesses3,374 15,026 0 4,179 22,579 
Measurement period adjustments (1)
(2,255)0 0 0 (2,255)
Balance at June 30, 2021$527,977 $80,345 $38,892 $24,612 $671,826 
   Middle Market  Specialty  MainStreet  Medicare  Total
Balance at December 31, 2018 $25,860,255
 $9,951,299
 $17,421,189
 $12,531,508
 $65,764,251
Goodwill of acquired businesses 29,816,513
 53,764,165
 21,470,741
 —
 105,051,419
Balance at September 30, 2019 $55,676,768
 $63,715,464
 $38,891,930
 $12,531,508
 $170,815,670
__________
(1)    Measurement period adjustments relating to businesses acquired in the fourth quarter of 2020 increased accrued expenses and other current liabilities by $93,000, decreased property and equipment by $124,000 and decreased cash consideration by $2.5 million.
9. Long-Term Debt
At December 31, 2018, the Company had outstanding borrowings under a syndicated credit agreement with certain financial instruments (as subsequently amended and restated, the “Cadence Credit Agreement”), which provided for a $2.2 million term loan (the “Term Loan”), a $2.0 million revolving credit facility to be used for working capital purposes (the “Working Capital Line”) and a $50.0 million revolving credit facility to be used for acquisition purposes (the “Acquisitions Line” and collectively with the Working Capital Line, the “Revolving Lines of Credit”) due in May 2023.
On March 13, 2019,October 14, 2020, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A to provide senior secured credit facilities in an aggregate principal amount of $800.0 million (the "JPM Credit Agreement"), which consisted of (i) a term loan facility in the third amended and restated Cadence Credit Agreement, which (i) increased the borrowing capacityprincipal amount of the Acquisitions Line to $103.0 million; (ii) increased the outstanding balance of the Acquisitions Line by $50.8 million; (iii) paid off the outstanding balance of the$400.0 million maturing in 2027 (the “Existing Term Loan B”) and (ii) a revolving credit facility with funds fromcommitments in an aggregate principal amount of $400.0 million maturing in 2025 (the “Revolving Facility”).
The Existing Term Loan B accrued interest at LIBOR plus 400 basis points (“bps”) with a floor of 4.75%. Borrowings under the Acquisitions Line; and (iv) extendedRevolving Facility accrue interest at LIBOR plus 200 bps to LIBOR plus 300 bps based on the maturity datetotal net leverage ratio. The outstanding borrowings on the Revolving LinesFacility of Credit to March 13, 2024. The remaining terms of the Cadence Credit Agreement remained substantially unchanged.
The Company recorded debt issuance costs related to the refinancing of approximately $775,000 during the nine months ended September 30, 2019. The refinancing was accounted for as a partial extinguishment and partial modification at the individual tranche and syndicated lender level. Most of the previously unamortized deferred financing costs continue to be amortized over the term of the new agreement. The Company recorded a loss on debt modification and extinguishment related to the refinancing of $115,000 during the nine months ended September 30, 2019.
On September 21, 2019, the Company executed the first amendment to the third amended and restated Cadence Credit Agreement (the "Amendment"), which became effective concurrent with the Offering and resulted in a total borrowing capacity of $10.0$20.0 million for the Working Capital Line and $115.0 million for the Acquisitions Line. The Amendment also extended the maturity date of the Cadence Credit Agreement to October 28, 2024.
The outstanding balance of the Working Capital Line and the Acquisitions Line was $2.0 million and $103.0 million, respectively, at September 30, 2019.


The Revolving Lines of Credit are collateralized by a first priority lien on substantially all the assets of the Company, including a pledge of all equity securities of each of its subsidiaries. Thehad an applicable interest rate of 2.34% at June 30, 2021. In addition, the Revolving LinesFacility is subject to a commitment fee of 0.30%.
On May 7, 2021, the Company entered into Amendment No. 1 to the JPM Credit is based on either London Inter-bank Offered Rate (“LIBOR”) plusAgreement, under which (a) the applicable margin orfinancial covenant requiring the Base RateCompany to maintain a Total First Lien Net Leverage Ratio (as defined in the CadenceJPM Credit Agreement) at or below 5.00 to 1.00 was amended to increase such level to 6.00 to 1.00, and (b) the financial covenant requiring the Company to maintain a Debt Service Coverage Ratio (as defined in the JPM Credit Agreement) at or above 2.25 to 1.00 was removed.
On June 2, 2021, the Company entered into Amendment No. 2 to the JPM Credit Agreement to provide for a new senior secured first lien term loan facility in an aggregate principal amount of $500.0 million maturing in 2027 (the “New Term Loan B”). The New Term Loan B bears interest at LIBOR plus the applicable margin and is based on the senior leverage based pricing grid below, provided that under no circumstances will350 bps, subject to a LIBOR be less than 1.00% or the Base Rate be less than 2.00%:
Senior leverage ratioApplicable margin for LIBOR loansApplicable margin for Base Rate loans
< 3.50x
350 bps250 bps
> 3.50x425 bps325 bps
floor of 50 bps. The applicable interest rate on the Term Loan B at June 30, 2021 was 4.00%. The Company used a portion of the proceeds from the New Term Loan B to repay in full the Company’s obligations under the Existing Term Loan B. The remaining terms of the New Term Loan B and the terms of the Revolving Lines of Credit was 5.52% and 6.00% at September 30, 2019 and December 31, 2018, respectively.Facility remained relatively unchanged.
The JPM Credit Agreement requires the Company to meet certain financial covenants and comply with customary affirmative and negative covenants as listed in the underlying agreement. The Company was in compliance with these covenants at SeptemberJune 30, 2019.2021.
Interest Rate Caps
10. Members' Equity (Deficit) and Noncontrolling Interest
At September 30, 2019 and December 31, 2018, members' equity (deficit) included Voting Common UnitsThe Company entered into interest rate caps to mitigate its exposure to interest rate risk by limiting the impact of interest rate changes on cash flows. In March 2021, the Company executed three interest rate cap agreements, each with a notional amount of $300.0 million (the “Interest Rate Cap Agreements”), which collectively limit the exposure of the majority founder, Management Incentive Units (“Incentive Units”) and certain noncontrolling interests without redemption rights.
Incentive Units
In March 2019, the Company granted 343,659 Incentive Units in BRPvariable component of interest rates under its Term Loan B to a membermaximum of senior management, which included 224,125 that vest according to time-based benchmarks4.75%. The Interest Rate Cap Agreements were entered into with financial institutions at positions with participating interest rate caps of 0.75%, 1.50%, and 119,534 that vest according to performance-based benchmarks. These time-based Incentive Units2.50%, expiring on March 10, 2022, March 10, 2024 and performance-based Incentive Units had a grant-dateMarch 8, 2026, respectively. The interest rate caps are recorded at an aggregate fair value of $5.89$2.6 million at June 30, 2021 and $2.75, respectively. The time-based portionincluded as a component of this Member’s Incentive Units and certain performance-based Incentive Units participate in distributions fromother assets on the date of issuance. This Member does not have a higher distribution preference in the event of liquidation.
In March 2019, the Company granted 42,240 performance-based Incentive Units in BRP to a member of senior management with a grant-date fair value of $2.75.
In May 2019, the Company granted 60,000 time-based Incentive Units in BRP to a member of senior management with a grant-date fair value of $19.38.
In September 2019, the Company granted 30,000 time-based Incentive Units in BRP to a member of senior management with a grant-date fair value of $18.91.
condensed consolidated balance sheets. The Company recorded expensea fair value loss of $825,000 related to Incentive Units of $303,000 and $97,000the interest rate caps for the three and six months ended SeptemberJune 30, 2019 and 2018, respectively, and $663,000 and $190,000 for the nine months ended September 30, 2019 and 2018, respectively,2021, which is included in commissions, employee compensation and benefitsas a component of other expense, net in the condensed consolidated statements of comprehensive income (loss).


Valuation Assumptions
The fair value of each time-based and performance-based Incentive Unit is estimated on the grant date using the Black-Scholes Model using the assumptions noted in the following table. Expected volatility is based on the historical volatility of a peer group of public and private companies. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The assumptions noted in the table below represent the weighted average of each assumption for each grant during the year.
20
  For the Nine Months Ended September 30,
  2019 2018
Expected volatility 26.1% 26.0%
Expected dividend yield 0.2% —%
Expected life (in years) 7.0
 7.0
Risk-free interest rate 3.1% 3.2%

For the Incentive Units granted in May and September 2019, the individuals are not entitled to dividends and therefore, an estimated dividend yield rate of 1.2% and 1.4%, respectively, has been applied as management's best estimate of future dividends based on projections and industry data.
Non-Voting Noncontrolling Interest
During May 2019, a member of senior management exercised his option to purchase 61,982 Non-Voting Common Units of BRP for $612,000.
11. Advisor Incentive Agreements
Three Risk Advisors have achieved the first milestone related to their advisor incentive agreements and were deemed probable of meeting the performance condition. The Company recorded $110,000 and $280,000 to compensation expense in connection with these milestones for the nine months ended September 30, 2019 and 2018, respectively.
During 2016, one Risk Advisor achieved the final milestone and became eligible for conversion. During the nine months ended September 30, 2018, this Risk Advisor’s advisor incentive agreements were amended and restated to remove the option to convert his advisor incentive right to units of BKS. The amended and restated agreement provides that the Company is obligated to purchase the Risk Advisor’s book of business upon certain termination events. In accordance with ASC 718, Compensation - Stock Compensation, the Company has recorded a liability for the expected buyout amount, which was approximately $1.6 million as of September 30, 2019 and December 31, 2018. The Company does not believe that it is probable that a termination event will occur before September 2020, and therefore, the related advisor incentive liability is reflected as a non-current liability on the condensed consolidated balance sheets. The change in value of the related advisor incentive liability resulted in compensation expense of $616,000 for the nine months ended September 30, 2018.
Approximately $1.0 million and $378,000 of the advisor incentive liabilities balance relates to the value of deposit buy-in amounts for Risk Advisors as of September 30, 2019 and December 31, 2018, respectively. The Company recognized compensation expense related to advisor incentive milestones and other events of $110,000 and $930,000 for the nine months ended September 30, 2019 and 2018, respectively, which is included in commissions, employee compensation and benefits in the condensed consolidated statements of comprehensive income (loss). Advisor incentive liabilities related to deposit buy-in amounts and milestone events are not expected to be settled in the near term and are reflected as non-current liabilities on the condensed consolidated balance sheets.
12.10. Related Party Transactions
Villages TransactionsCommission Revenue
Related Party Debt
During April 2016, theThe Company entered into the Villages Credit Agreement, which providedserves as a broker for a $100.0 million non-revolving line of credit (“Related Party Debt”) with Holding Company of the Villages, Inc. (“The Villages”). The Related Party Debt required quarterly interest payments at a fixed rate per annum of 6.5%, beginning July 1, 2016 and continuing on the first day of each calendar quarter thereafter until maturity in April 2023. The agreement required that the Company issue Voting Common Units to Villages upon closing and concurrently with each additional advance made after the closing date. Advances on the Related Party Debt were to be made solely to finance permitted acquisitions or for general working capital purposes.


During March 2019, the Company amended and restated the Villages Credit Agreement, which (i) increased the principal borrowing amount of the Related Party Debt to $125.0 million, (ii) increased the interest rate to a fixed rate of 8.75% per annum, and (iii) changed the maturity date to September 2024. The Company issued 293,660 Voting Common Units with a share price of $18.76 to Villages on the closing date as consideration for the additional borrowing capacity. As consideration for the increase in the interest rate, the Company is no longer required to issue additional Voting Common Units to Villages upon the closing of each additional advance.
The Company recorded $5.5 million of noncash debt issuance costs related to the 293,660 Voting Common Units issued in connection with the refinancing of the Related Party Debt during the nine months ended September 30, 2019 as these Voting Common Units were issued as consideration for the refinancing. The Company also recorded an additional $1.7 million of debt issuance costs in connection with the refinancing during the nine months ended September 30, 2019. The refinancing did not qualify for extinguishment, and therefore, the previously unamortized deferred financing costs continue to be amortized over the term of the new agreement.
The Company recorded interest expense related to quarterly interest payments to Villages of $1.9 million and $235,000 for the three months ended September 30, 2019 and 2018, respectively, and $4.3 million and $934,000 for the nine months ended September 30, 2019 and 2018, respectively. The outstanding balance of the Related Party Debt was $88.4 million and $36.9 million at September 30, 2019 and December 31, 2018, respectively.
Prior to the March 2019 amendment, the agreement required that the Company issue Voting Common Units to Villages concurrently with each additional advance made on the non-revolving line of credit. The Company issued 251,447 units at a share price of $11.50 in connection with these advances during the nine months ended September 30, 2018 based on the most recent Company valuation. The issuance of these Voting Common Units is reflected in redeemable members' capital in the accompanying condensed consolidated statements of members’ equity (deficit) and mezzanine equity. Total expense incurred related to the issuance of these Voting Common Units was $2.9 million for the nine months ended September 30, 2018. This expense is included in interest expense in the accompanying condensed consolidated statements of comprehensive income (loss), as this most closely represents fees paid to Villages as a replacement for a debt discount.
Mandatory prepayments of the balances due under the loan are required upon the occurrence of certain events, as defined in the credit agreement. The loan is subordinated and there are no personal guarantees.
The credit agreement requires the Company to meet certain financial covenants and comply with customary affirmative and negative covenants as listed in the underlying agreement. The Company was in compliance with these covenants at September 30, 2019.
Commission Revenue
The Company serves as a broker for Villages.affiliated entities. Commission revenue recorded as a result of these transactions with The Villages was $537,000$667,000 and $670,000$452,000 for the three months ended SeptemberJune 30, 20192021 and 2018,2020, respectively, and $1.0$1.3 millionand $1.1 million$721,000 for the ninesix months ended SeptemberJune 30, 20192021 and 2018,2020, respectively.
Rent Expense
The Company has various agreements to lease office space from wholly-owned subsidiaries of The Villages. Total rent expense incurred with respect to The Villages and its wholly-owned subsidiaries was $125,000$130,000 and $121,000$151,000 for the three months ended SeptemberJune 30, 20192021 and 2018,2020, respectively, and $374,000$261,000 and $371,000$284,000 for the ninesix months ended SeptemberJune 30, 20192021 and 2018,2020, respectively.
Other Rent Expense
The Company has various agreements to lease office space from other related parties.party entities. Total rent expense incurred with respect to related parties other than The Villages was $156,000$524,000 and $127,000$516,000 for the three months ended SeptemberJune 30, 20192021 and 2018,2020, respectively, and $454,000$1.0 million and $259,000$764,000 for the ninesix months ended SeptemberJune 30, 20192021 and 2018,2020, respectively.


11. Share-Based Compensation
Omnibus Incentive Plan and Partnership Inducement Award Plan
The Company has an Omnibus Incentive Plan (the “Omnibus Plan”) and a Partnership Inducement Award Plan (the “Inducement Plan” and collectively, the “Plans”) to motivate and reward Colleagues and other individuals, including those who join the Company through Partnerships, to perform at the highest level and contribute significantly to the Company’s success, thereby furthering the best interests of its shareholders. The Omnibus Plan and the Inducement Plan provide for the Company to make awards of 3,844,044 and 1,500,000 shares of Class A common stock, respectively, at June 30, 2021.
During the six months ended June 30, 2021, the Company made awards of restricted stock, unrestricted stock and performance-based restricted stock units under the Plans to its non-employee directors and Colleagues. Performance-based restricted stock unit awards were issued under the Omnibus Plan in connection with the Long-Term Incentive Plan, which is discussed in further detail below. Shares of unrestricted stock issued to directors during the six months ended June 30, 2021 were vested upon issuance while restricted stock issued to Colleagues, Risk Advisors and executive officers generally either cliff vest after 4 years or vest ratably over 3 to 5 years.
The following table summarizes the activity for non-vested awards granted by the Company under the Plans:
SharesWeighted-Average Grant-Date Fair Value Per Share
Outstanding at December 31, 2020826,027 $15.92 
Granted1,331,672 28.92 
Vested and settled(161,335)24.19 
Forfeited(26,611)19.78 
Outstanding at June 30, 20211,969,753 23.98 
The total fair value of shares that vested and settled under the Plans during the six months ended June 30, 2021 was $3.9 million.
Share-based compensation includes expense recognized for management incentive units and advisor incentives, in addition to issuances under the Plans. The Company recognizes share-based compensation expense for the Plans net of actual forfeitures. The Company recorded total share-based compensation expense of $4.5 million and $2.0 million for the three months ended June 30, 2021 and 2020, respectively, and $8.1 million and $3.1 million for the six months ended June 30, 2021 and 2020, respectively, which is included in commissions, employee compensation and benefits expense in the condensed consolidated statements of comprehensive income (loss).
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Long-Term Incentive Plan
On May 3, 2021, the Company’s Compensation Committee approved a new form of performance-based restricted stock unit award agreement (the “Form PSU Award Agreement”) under the Company’s Omnibus Plan in connection with the granting of performance-based restricted stock unit (“PSU”) awards to its executive officers. The Form PSU Award Agreement provides for the granting of PSUs which generally vest in the quarter following the end of a performance period of three years. The number of PSUs, if any, that will be earned pursuant to a PSU award will depend on the level of performance achieved with respect to applicable performance goals during the performance period.
On May 3, 2021, the Compensation Committee awarded the Company’s executive officers incentive compensation awards of (i) PSUs with an aggregate target grant date value of $3.1 million and (ii) restricted stock with an aggregate grant date value of $1.0 million. The restricted stock will vest in equal annual installments over five years, with the first installment vesting on March 15, 2022. The incentive compensation awards have an aggregate maximum value of $8.8 million.
12. Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to BRP Group, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings (loss) per share is computed giving effect to all potentially dilutive shares of Class B common stock.
During the periods presented, potentially dilutive securities include restricted stock awards and shares of Class B common stock that are cancellable upon the redemption or exchange, on a one-for-one basis, of LLC Units for shares of our Class A common stock. The 1,864,337 shares of unvested restricted Class A common stock were excluded from the diluted calculation for the three months ended June 30, 2021 and the 398,024 shares of unvested restricted Class A common stock were excluded from the diluted calculation for the three and six months ended June 30, 2020 as their inclusion would have been anti-dilutive because the Company was in a net loss position during these periods. In addition, the 49,575,871 and 45,458,763 outstanding shares of Class B common stock and the corresponding LLC Units have been excluded from the diluted calculation for all periods presented because including them on an “if-converted” basis would have an anti-dilutive effect. The shares of Class B common stock do not share in the earnings or losses attributable to BRP Group, and therefore, are not participating securities. Accordingly, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included.
The following is a calculation of the basic and diluted weighted-average number of shares of Class A common stock outstanding and earnings (loss) per share for the three and six months ended June 30, 2021 and 2020.
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands, except per share data)2021202020212020
Basic earnings (loss) per share:
Net income (loss) attributable to BRP Group, Inc.$(9,756)$(3,588)$4,857 $(2,120)
Shares used for basic earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding - basic44,67120,42644,46419,960
Basic earnings (loss) per share$(0.22)$(0.18)$0.11 $(0.11)
Diluted earnings (loss) per share:
Net income (loss) attributable to BRP Group, Inc.$(9,756)$(3,588)$4,857 $(2,120)
Shares used for diluted earnings (loss) per share:
Weighted-average shares of Class A common stock outstanding44,671 20,426 44,464 19,960 
Dilutive effect of unvested restricted shares of Class A common stock0 0 1,696 0 
Weighted-average shares of Class A common stock outstanding - diluted44,671 20,426 46,160 19,960 
Diluted earnings (loss) per share$(0.22)$(0.18)$0.11 $(0.11)
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13. Fair Value Measurements
Topic 820 established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy under Topic 820 are described below:
Level 1:
Level 1:    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2:Inputs to the valuation methodology include:
a)Quoted prices for similar assets or liabilities in active markets;
b)Quoted prices for identical or similar assets or liabilities in inactive markets;
c)Inputs other than quoted prices that are observable for that asset or liability;
d)Inputs that are derived principally from or corroborated by observable market data by correlation or other means;
e)If the asset or liability has a specified (contractual) term, the input must be observable for substantially the full term of the asset or liability.
Level 3:Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
An asset’s or liability’sliabilities in active markets that the Company has the ability to access.
Level 2:    Inputs to the valuation methodology are quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3:    Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The fair value measurement level for assets and liabilities within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying amountfollowing table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis within each level of the Company’s Revolving Lines of Credit approximates fair value due to the variable interest rate based on the London Interbank Offered Rate (“LIBOR”) or the applicable base rate, as adjusted.hierarchy:
(in thousands)June 30, 2021December 31, 2020
Level 2
Interest rate caps$2,636 $0 
Level 2 Assets$2,636 $0 
Level 3
Contingent earnout liabilities$178,252 $164,819 
Level 3 Liabilities$178,252 $164,819 
Methodologies used for assets and liabilities measured at fair value on a recurring basis within Level 3 of the fair value hierarchy at SeptemberJune 30, 20192021 and December 31, 20182020 are based on limited unobservable inputs. These methods may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table summarizes Company's liabilities measured at fair value of interest rate caps was $2.6 million at June 30, 2021. The fair value of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on a recurring basis withinthe cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.
The fair value of contingent earnout liabilities is based on sales projections for the acquired entities, which are reassessed each levelreporting period. Based on the Company’s ongoing assessment of the fair value hierarchy:
  September 30, 2019 December 31, 2018
Level 3    
Contingently returnable consideration $321,147
 $—
Level 3 Assets $321,147
 $—
     
Contingent earnout liabilities $35,143,744
 $9,248,910
Level 3 Liabilities $35,143,744
 $9,248,910
The Company's contingently returnable consideration at September 30, 2019 represents aof its contingent right of return from Fiduciary Partners to reimburseearnout liabilities, the Company forrecorded a portion ofnet increase in the purchase price as part of the Fiduciary Partners transaction. The balance of the contingently returnable consideration was determined in connection with the purchase price allocation for the Fiduciary Partners acquisition and there were no changes to theestimated fair value of such liabilities of $11.8 million for the asset at the end of the current period. Accordingly, the contingently returnable consideration is not included in the Level 3 rollforward below.six months ended June 30, 2021. The Company has assessed the maximum estimated refund relatingexposure to the contingently returnable considerationcontingent earnout liabilities to be $1.3$531.0 million at SeptemberJune 30, 2019.2021.

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The Company measures contingently returnable consideration and contingent earnout liabilities at fair value at each reporting period using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The Company uses a probability weighted value analysis as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are sales projections over the earnout period, and the probability outcome percentages assigned to each scenario. Significant increases or decreases to either of these inputs would result in a significantly higher or lower asset or liability with a higher asset capped by the contractual maximum of the contingently returnable consideration and a higher liability capped by the contractual maximum of the contingent earnout consideration.liabilities. Ultimately, the asset and liability will be equivalent to the amount settled, and the difference between the fair value estimate and amount settled will be recorded in earnings for business combinations, or as a reduction of the cost of the assets acquired for asset acquisitions. Refer to Note 3 for additional information regarding contingently returnable consideration and contingent earnout consideration recorded in connection with business acquisitions.combinations.
The fair value of the contingent earnout liabilityliabilities is based on salesthe present value of the expected future payments to be made to Partners in accordance with the provisions outlined in the respective purchase agreements, which is a Level 3 fair value measurement. In determining fair value, the Company estimates the Partner’s future performance using financial projections developed by management for the acquired entities, whichPartner and market participant assumptions that were derived for revenue growth, profitability based on earnings before income taxes, depreciation and amortization (“EBITDA”), or the number of rental units tracked. Revenue and EBITDA growth rates generally ranged from 10% to 24% at June 30, 2021 and from 7% to 20% at December 31, 2020. The Company estimates future payments using the earnout formula and performance targets specified in each purchase agreement and these financial projections. These payments are reassessed each reporting period. Based ondiscounted to present value using a risk-adjusted rate that takes into consideration market-based rates of return that reflect the Company's ongoing assessmentability of the Partner to achieve the targets. These discount rates generally ranged from 5.25% to 18.50% at June 30, 2021 and from 5.00% to 18.00% at December 31, 2020. Changes in financial projections, market participant assumptions for revenue growth and profitability, or the risk-adjusted discount rate, would result in a change in the fair value of contingent earnout liability, the Company recorded a net decrease in the estimated fair value of such liabilities for prior period acquisitions of $3.2 million for the nine months ended September 30, 2019. The Company has assessed the maximum estimated exposure to the contingent earnout liabilities to be $104.4 million at September 30, 2019.consideration.
The following table sets forth a summary of the changes in the fair value of the Company’s contingently returnable consideration and contingent earnout liabilities, which are measured at fair value on a recurring basis utilizing Level 3 assumptions in their valuation:
For the Three Months Ended June 30,For the Six Months Ended June 30,
2021 (1)
20202020
2021 (1)
20202020
(in thousands)Contingent Earnout LiabilitiesContingently Returnable ConsiderationContingent Earnout LiabilitiesContingent Earnout LiabilitiesContingently Returnable ConsiderationContingent Earnout Liabilities
Balance at beginning of period$165,283 $258 $53,855 $164,819 $70 $48,769 
Fair value of contingent consideration issuances (2)
1,074 — 21,951 3,041 — 25,188 
Change in fair value of contingent consideration13,325 129 4,710 11,822 317 6,559 
Payment of contingent consideration(1,430)— (1,981)(1,430)— (1,981)
Balance at end of period$178,252 $387 $78,535 $178,252 $387 $78,535 
__________
(1)    There was no contingently returnable consideration at June 30, 2021 or December 31, 2020.
(2)    During the six months ended June 30, 2021, the Company recorded measurement period adjustments relating to businesses acquired in the fourth quarter of 2020. These adjustments decreased contingent earnout liabilities by $4.7 million, which offsets issuances of $7.8 million from business combinations in the current period.
Substantially all of the change in fair value of contingent consideration during the six months ended June 30, 2021 and 2020 related to assets and liabilities that were held at the end of the respective periods.
Fair Value of Other Financial Instruments
The fair value of long-term debt is classified as Level 2 within the fair value hierarchy. Fair value is based on an estimate using a discounted cash flow analysis based on current borrowing rates for similar types of borrowing arrangements. The fair value of long-term debt was approximately $484.1 million at June 30, 2021 compared to a carrying value of $500.0 million. The fair value of long-term debt was approximately $402.0 million at December 31, 2020 compared to a carrying value of $399.0 million. The carrying value of long-term debt is netted against unamortized debt discount and issuance costs of $17.0 million and $13.6 million at June 30, 2021 and December 31, 2020, respectively, for balance sheet presentation.
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  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2019 2018 2019 2018
Balance at beginning of period $31,110,529
 $6,678,775
 $9,248,910
 $4,055,418
Payment of contingent consideration —
 —
 —
 (2,892,000)
Fair value of contingent consideration recorded in connection with business combinations 3,498,001
 1,567,306
 29,101,001
 5,815,272
Change in fair value of contingent consideration 535,214
 350,462
 (3,221,909) 877,235
Fair value of contingent consideration recorded in connection with asset acquisitions —
 301,905
 15,742
 1,042,523
Balance at end of period $35,143,744
 $8,898,448
 $35,143,744
 $8,898,448

14. Commitments and Contingencies
The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.
15. Segment Information
BRP’sBRP Group’s business is divided into four4 Operating Groups: Middle Market, Specialty, MainStreet, and Medicare.
•Middle Market provides private risk management, commercial risk management and employee benefits solutions for mid-to-large size businesses and high net worth individuals and families.
•Specialty represents a wholesale co-brokerage platform that delivers specialty insurers, professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement. With the addition of the MSI Partnership in April 2019 as discussed in Note 3, Specialty also represents a leading technology platform.platform, MGA of the Future, which is a national renter'srenter’s insurance product distributed via sub-agent partners and property management software providers, which has expanded distribution capabilities for new products through our wholesale and retail networks.
•MainStreet offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities.
•Medicare offers consultation for government assistance programs and solutions, including traditional Medicare and Medicare Advantage, to seniors and Medicare-eligible individuals through a network of agents.


In the Middle Market, MainStreet, and Specialty Operating Groups, the Company generates commissions and fees from insurance placement under both agency bill and direct bill arrangements. In addition, BRPthe Company generates profit sharing income in each of those segments based on either the underlying book of business or performance, such as loss ratios. In the Middle Market Operating Group only, the Company generates fees from service fee and consulting arrangements. Service fee arrangements are in place with certain customers in lieu of commission arrangements.
In the Medicare Operating Group, BRPthe Company generates commissions and fees in the form of direct bill insurance placement and marketing income. Marketing income is earned through co-branded marketing campaigns with the Company’s Insurance Company Partners.
The Company’s chief operating decision maker, the chief executive officer, uses net income before interest, taxes, depreciation, amortization, and one-time transactional-related expenses or non-recurring items to manage resources and make decisions about the business. There are no intersegment net sales that occurred during the reporting periods.
Summarized financial information concerning BRP’sthe Company’s Operating Groups is shown in the following tables. The “CorporateCorporate and Other” columnOther non-reportable segment includes any expenses not allocated to the Operating Groups and corporate-related items, including related party and third-party interest expense. Intersegment revenue and expenses are eliminated through the Corporate and Other column. Service center expenses and other overhead are allocated to the Company’s Operating Groups based on either revenue or headcount as applicable to each expense.
For the Three Months Ended June 30, 2021
(in thousands)Middle MarketSpecialtyMainStreetMedicare Corporate and Other Total
Commissions and fees (1)
$76,109 $30,105 $8,576 $5,152 $(236)$119,706 
Net income (loss)(5,699)1,640 978 468 (17,491)(20,104)
__________
(1)    The Middle Market Operating Group recorded intercompany commissions and fees revenue from activity with the Specialty Operating Group of $109,000 for the three months ended June 30, 2021. The MainStreet Operating Group recorded intercompany commissions and fees revenue from activity with the Middle Market Operating Group of $61,000 for the three months ended June 30, 2021. The Medicare Operating group recorded intercompany commissions and fees revenue from activity with itself of $66,000 for the three months ended June 30, 2021. These intercompany commissions and fees are eliminated through Corporate and Other.
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For the Three Months Ended June 30, 2020
For the Three Months Ended September 30, 2019
 Middle Market  Specialty  MainStreet  Medicare  Corporate and Other  Total
(in thousands)(in thousands)Middle MarketSpecialtyMainStreetMedicare Corporate and Other Total
Commissions and fees$12,836,312
 $16,731,645
 $6,642,398
 $2,173,100
 $—
 $38,383,455
Commissions and fees$20,718 $19,456 $7,704 $3,390 $0 $51,268 
Net income (loss)295,383
 2,190,648
 1,015,245
 388,192
 (6,195,044) (2,305,576)Net income (loss)2,425 (3,223)956 (167)(7,850)(7,859)
For the Six Months Ended June 30, 2021
(in thousands)Middle MarketSpecialtyMainStreetMedicare Corporate and Other Total
Commissions and fees (1)
$186,664 $55,187 $16,798 $14,604 $(719)$272,534 
Net income (loss)35,755 3,473 2,272 2,750 (33,740)10,510 
 For the Three Months Ended September 30, 2018
  Middle Market  Specialty  MainStreet  Medicare  Corporate and Other  Total
Commissions and fees$7,977,676
 $3,578,550
 $5,019,716
 $1,962,686
 $—
 $18,538,628
Net income (loss)(783,031) 752,194
 978,807
 468,023
 (1,363,545) 52,448
__________
(1)    The Middle Market Operating Group recorded intercompany commissions and fees revenue from activity with the Specialty Operating Group of $468,000 for the six months ended June 30, 2021. The MainStreet Operating Group recorded intercompany commissions and fees revenue from activity with the Middle Market Operating Group of $91,000 for the six months ended June 30, 2021. The Medicare Operating group recorded intercompany commissions and fees revenue from activity with itself of $160,000 for the six months ended June 30, 2021. These intercompany commissions and fees are eliminated through Corporate and Other.
For the Six Months Ended June 30, 2020
For the Nine Months Ended September 30, 2019
 Middle Market  Specialty  MainStreet  Medicare  Corporate and Other  Total
(in thousands)(in thousands)Middle MarketSpecialtyMainStreetMedicare Corporate and Other Total
Commissions and fees$41,481,507
 $32,496,887
 $18,942,096
 $8,360,171
 $—
 $101,280,661
Commissions and fees$42,750 $36,872 $16,012 $9,793 $0 $105,427 
Net income (loss)10,475,213
 1,590,276
 4,595,260
 2,833,226
 (15,016,906) 4,477,069
Net income (loss)10,614 (4,912)2,200 2,447 (13,501)$(3,152)
(in thousands)Middle MarketSpecialtyMainStreetMedicare Corporate and Other Total
Total assets at June 30, 2021$1,266,614 $214,940 $57,730 $54,958 $142,058 $1,736,300 
Total assets at December 31, 20201,194,185 188,360 58,957 43,675 44,737 1,529,914 
 For the Nine Months Ended September 30, 2018
  Middle Market  Specialty  MainStreet  Medicare  Corporate and Other  Total
Commissions and fees$26,319,848
 $9,856,382
 $15,709,654
 $7,138,031
 $—
 $59,023,915
Net income (loss)2,942,669
 882,994
 3,869,073
 2,322,312
 (6,465,055) 3,551,993
 At September 30, 2019
  Middle Market  Specialty  MainStreet  Medicare  Corporate and Other  Total
Total assets$99,240,800
 $152,903,730
 $59,403,011
 $17,221,114
 $17,430,471
 $346,199,126
 At December 31, 2018
  Middle Market  Specialty  MainStreet  Medicare  Corporate and Other  Total
Total assets$59,042,649
 $28,684,378
 $27,621,420
 $17,972,225
 $6,503,942
 $139,824,614


16. Subsequent Events
Business Partnerships
On October 28, 2019,July 1, 2021, the Company used a portionpurchased certain assets and intellectual and intangible rights and assumed certain liabilities of RogersGray Inc., Breakwater Brokerage, LLC and Monomoy Insurance Group, LLC (collectively, “RogersGray”) for upfront consideration consisting of $138.1 million of cash (which was reduced by the proceeds it received from the salevalue of LLC Unitsshares of Class A common stock issued to BRP GroupRogersGray colleagues in connection with the OfferingPartnership) and 1,950,232 LLC Units (and the corresponding 1,950,232 shares of Class B common stock). RogersGray will also have the opportunity to repayreceive additional contingent consideration payable in fullcash, shares of Class A common stock, or a combination of both at the outstanding indebtednessCompany’s sole option. The Partnership enhances and accrued interest underfurther expands the VillagesCompany’s geographic footprint and product offerings in New England and the broader Northeast region. The Company has not yet completed its evaluation and determination of consideration paid, certain assets and liabilities acquired, or treatment of this transaction as either a business combination or asset acquisition in accordance with Topic 805.
On August 2, 2021, the Company purchased certain assets and intellectual and intangible rights and assumed certain liabilities of FounderShield LLC, AlphaRoot LLC, ReShield LLC, and Scale Underwriting Services LLC (collectively, “FounderShield”) for upfront consideration consisting of $26.7 million of cash (which was reduced by the value of shares of Class A common stock issued to FounderShield colleagues in connection with the Partnership), 304,628 shares of Class A common stock and 364,174 LLC Units (and the corresponding 364,174 shares of Class B common stock). FounderShield will also have the opportunity to receive additional contingent consideration payable in cash, shares of Class A common stock, or a combination of both at the Company’s sole option. The Partnership brings to BRP Group unique expertise for rapidly-scaling companies in numerous high-growth industry verticals across the Technology & Fintech, Life Sciences and Emerging Markets sectors. The Company has not yet completed its evaluation and determination of consideration paid, certain assets and liabilities acquired, or treatment of this transaction as either a business combination or asset acquisition in accordance with Topic 805.

26

On August 2, 2021, the Company purchased certain assets and intellectual and intangible rights and assumed certain liabilities of The Capital Group, LLC, The Capital Group Association Consultants, LLC, US Underwriters, LLC, and TCG Financial Management Company, LLC, including the membership interests of The Capital Group Investment Advisory Services, LLC (collectively, “TCG”) for upfront consideration consisting of $40.4 million of cash (which was reduced by the value of shares of Class A common stock issued to TCG colleagues in connection with the Partnership) and 653,324 LLC Units (and the corresponding 653,324 shares of Class B common stock). TCG will also have the opportunity to receive additional contingent consideration payable in cash, shares of Class A common stock, or a combination of both at the Company’s sole option. The Partnership adds scale and density in the critical D.C. Metro region. The Company has not yet completed its evaluation and determination of consideration paid, certain assets and liabilities acquired, or treatment of this transaction as either a business combination or asset acquisition in accordance with Topic 805.
JPM Credit Agreement
On August 6, 2021, the Company entered into Amendment No. 3 to the JPM Credit Agreement, inunder which the aggregate principal amount of $89.0 million and concurrently terminated the Villages Credit Agreement.
On November 25, 2019, the Company repaid a portion of the Revolving LinesFacility was increased from $400.0 million to $475.0 million. The other terms of Credit in the amountRevolving Facility and the terms of $65.0 million, which results in remaining borrowing capacity of $85.0 million under the Cadence Credit Agreement.New Term Loan B remained unchanged.

27




ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and in the Prospectus.Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A. Risk Factors and Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q and in the Prospectus.Annual Report on Form 10-K.
THE COMPANY
We areBRP Group, Inc. (“BRP Group,” the “Company,” “we,” “us” or “our”) is a rapidly growing independent insurance distribution firm delivering solutions that give our clientsClients the peace of mind to pursue their purpose, passion and dreams. We support our clients,Clients, Colleagues, Insurance Company Partners and communities through the deployment of vanguard resources and capital to drive organic and inorganic growth. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits. Our growth plan includes increased geographic representation across the U.S., expanded client value propositions and new lines of insurance to meet the needs of evolving lifestyles, business risks and healthcare funding. We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation. We believe we are the second fastest growing insurance broker based on our fiscal year 2018 results.
We represent over 400,000 clients600,000 Clients across the United States and internationally. Our more than 5002,100 Colleagues include over 160approximately 340 Risk Advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have over 40approximately 100 offices (in four states),in 18 states, all of which are equipped to provide diversified products and services to empower our clients at every stage through our four Operating Groups.
•Middle Market provides expertly-designed private risk management, commercial risk management and employee benefits solutions for mid-to-large-size businesses and high net worth individuals, as well as their families.
•MainStreet offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities.
•Medicare offers consultation for government assistance programs and solutions to seniors and Medicare-eligible individuals through a network of agents.
•Specialty delivers specialty insurers, professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement.
In 2011, we adopted the “Azimuth” as our corporate constitution. Named after a historical navigation tool used to find “true north,” the Azimuth asserts our core values, business basics and stakeholder promises. The ideals encompassed by the Azimuth support our mission to deliver indispensable, tailored insurance and risk management insights and solutions to our clients. We strive to be regarded as the preeminent insurance advisory firm fueled by relationships, powered by people and exemplified by client adoption and loyalty. This type of environment is upheld by the distinct vernacular we use to describe our services and culture. We are a firm, instead of an agency; we have Colleagues, instead of employees; we have Risk Advisors, instead of producers/agents. We serve clientsClients instead of customers and we refer to our acquisitions as Partnerships. We believerefer to insurance brokerages that our highly differentiated culture, guided by the Azimuth, contributes greatly to our success and the scalability of our business model. As a result, we have earned accolades suchacquired, or in the case of asset acquisitions, the producers, as being ranked as one of the fastest-growing privately held companies in America for seven consecutive years and named in lists of best companies for which to work.
The Offering
On October 28, 2019, BRP Group completed the offering (the "Offering") of its Class A common stock, in which it sold 18,859,300 shares, including 2,459,300 shares pursuant to the underwriters’ over-allotment option, which subsequently settled on November 26, 2019. The shares began trading on the Nasdaq Global Select Market on October 24, 2019. The shares were sold at an initial offering price of $14.00 per share for net proceeds of approximately $241.9 million after deducting underwriting discounts and commissions of $17.8 million and estimated offering expenses of approximately $4.3 million payable by BRP.


Partners.
Seasonality
The insurance brokerage market is seasonal. Transactional activity withseasonal and our business clients typically peaks near the end of each quarter and year, while transactional activity with individuals typically slows around the holidays. Our results of operations are somewhat affected by these seasonal trends. Our Adjusted EBITDA and Adjusted EBITDA Margins may be lower in the third and fourth quarters and higherare typically highest in the first two quartersquarter and lowest in the fourth quarter. This variation is primarily due primarilyto fluctuations in our revenues, while overhead remains consistent throughout the year. Our revenues are generally highest in the first quarter due to the impact of contingent payments received in the first quarter from Insurance Company Partners that we cannot readily estimate before receipt without the risk of significant reversal and a higher degree of first quarter policy commencements and renewals in Medicare and certain Middle Market lines of business such as employee benefits and commercial. In addition, wea higher proportion of our first quarter revenue is derived from our highest margin businesses. As discussed further below, the COVID-19 pandemic may experience higherskew these general trends due to reduced amounts of new business and reductions in business from existing Clients related to the pandemic.
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Partnerships can significantly impact Adjusted EBITDA and Adjusted EBITDA Margins in a given year and may increase the first and second quarters dueamount of seasonality within the business, especially results attributable to the mix among segments. This isPartnerships that have not been fully integrated into our business or owned by us for a result of the timing of revenue recognition in our highest margin businesses being concentrated in the first half of the year, as well as overall commissions and fees being higher in the first half of the year, while corporate overhead remains consistent throughout thefull year.
ACQUISITIONS (PARTNERSHIPS)PARTNERSHIPS
StrategicWe utilize strategic acquisitions, which we refer to as Partnerships, to complement and expand our business have beenbusiness. We source Partnerships through proprietary deal flow, competitive auctions and will likely remain an important partcultivated industry relationships. We are currently considering Partnership opportunities in all of our competitive strategy. Operating Groups, including businesses to complement or expand our MGA of the Future that are valued at higher purchase price multiples than businesses in our other Operating Groups.
The financial impact of Partnerships may affect the comparability of our results from period to period. Our acquisition strategy also entails certain risks, including the risks that we may not be able to successfully source, value, close, integrate and effectively manage businesses that we acquire. To mitigate that risk, we have a professional team focused on finding new Partners and integrating new Partnerships. We plan to execute on numerous Partnerships annually as it is a key pillar in our long-term growth strategy over the next ten years.
We completed sixfive Partnerships for an aggregate purchase price of $174.1$41.1 million during the ninesix months ended SeptemberJune 30, 20192021 and tennine Partnerships for an aggregate purchase price of $65.5$309.4 million during the ninesix months ended SeptemberJune 30, 2018. The most significant2020. Partnerships that we have completed during 2019 are discussed2021 added $1.8 million of premiums, commissions and fees receivable, $17.0 million of intangible assets and $22.6 million of goodwill to the condensed consolidated balance sheet.
We entered into Amendment No. 2 to the JPM Credit Agreement in greater detail below. June 2021 for an upsized, new $500 million senior secured first lien term loan facility maturing in 2027 (the “New Term Loan B”), which represented a $100 million increase in the aggregate principal amount of our existing senior secured first lien term loan facility, and Amendment No. 3 to the JPM Credit Agreement in August 2021 for an upsize of the aggregate principal amount of the revolving credit facility thereunder from $400.0 million to $475.0 million. These transactions provide us incremental capacity to assist in funding our Partnership pipeline with a reduction in our cost of capital.
For additional information on the Partnerships that we have completed during 2019,2021, see Note 3 to BRP'sour condensed consolidated financial statements included in Part I, Item 1. Financial Statements of this report.
Effective March 1, 2019, we entered into an asset purchase agreement
NOVEL CORONAVIRUS (COVID-19)
The extent to purchase certain assetswhich the COVID-19 pandemic and intellectual and intangible rights and assume certain liabilitiesthe related economic impact may affect our financial condition or results of Lykes Insurance, Inc. (“Lykes”), a Middle Market Partnership for cash consideration of $36.0 million and fair value of noncontrolling interest of $1.0 million.operations is uncertain. The acquisition was made to expand our Middle Market business presence in Florida. We recognized total revenues and net income from the Lykes Partnership of $6.6 million and $1.3 million, respectively, for the nine months ended September 30, 2019. As a resultextent of the Lykes Partnership, we recognized goodwill inimpact on our operational and financial performance will depend on various factors, including the amountavailability, effectiveness and utilization of $28.7 million. The factors contributingvaccines for COVID-19 and its variant strains, new information that may emerge concerning the severity of COVID-19 and its variants, actions to contain or limit their spread, including any related federal, state or local governmental orders or restrictions and the recognitionduration and spread of the amountoutbreak.
Our Clients and Colleagues remain our first priority and we will continue to evaluate conditions with their safety in mind. We have funded the BRP True North Colleague Fund to assist with relief for COVID-19 and other qualifying disasters for our Colleagues experiencing extraordinary hardship and are currently matching Colleague donations dollar-for-dollar.
We intend to continue to execute on our strategic plans and operational initiatives during the pandemic. However, given the uncertainty regarding the spread and severity of goodwill are basedCOVID-19 and its variant strains, the nature of societal responses and the adverse effects on strategic benefitsthe national and global economy, the related financial impact on our business cannot be accurately predicted at this time. See Part I, Item 1A. “Risk Factors - The ongoing novel coronavirus (COVID-19) pandemic could and resulting government actions (including travel bans, lock downs, maximum occupancy limits and similar actions) could result in declines in business and increases in claims that are expected to be realized from acquiring Lykes' assembled workforcecould adversely affect our business, financial condition and results of operations” in addition to other synergies gained from integrating Lykes' operations into our consolidated structure. We incurred approximately $152,000 in acquisition-related costs for Lykes forAnnual Report on Form 10-K filed with the nine months ended September 30, 2019.SEC on March 11, 2021.
Effective April 1, 2019, we entered into a securities purchase agreement to purchase the membership interests of Millennial Specialty Insurance LLC (“MSI”), a Specialty Partnership, for cash consideration of $45.5 million, fair value of contingent earnout consideration of $25.6 million, fair value of noncontrolling interest of $31.0 million and a trust balance adjustment of $1.1 million. The Partnership was made to obtain access to certain technology and invest in executive talent for building and growing MGA of the Future and to apply its functionality to other insurance placement products, as well as to expand our market share in specialty renter’s insurance. MGA of the Future is a national renter's insurance product distributed via sub-agent partners and property management software providers, which has expanded distribution capabilities for new products through our wholesale and retail networks. We recognized total revenues and net loss from the MSI Partnership of $21.7 million and $4,000, respectively, for the nine months ended September 30, 2019. As a result of the MSI Partnership, we recognized goodwill in the amount of $53.8 million. The factors contributing to the recognition of the amount of goodwill are based on strategic benefits that are expected to be realized from acquiring MSI’s MGA platform. We incurred approximately $215,000 in acquisition-related costs for MSI for the nine months ended September 30, 2019. The maximum potential contingent earnout consideration available to be earned by MSI is $61.5 million.


Effective August 1, 2019, we entered into an asset purchase agreement with an unrelated third party to purchase certain assets and intellectual and intangible rights and assume certain liabilities of Foundation Insurance of Florida, LLC (“Foundation Insurance”) for cash consideration of $20.8 million, fair value of noncontrolling interest of $6.0 million and fair value of contingent earnout consideration of $3.3 million. The Partnership was made to expand our MainStreet business presence in Florida. We recognized total revenues and net income from the Foundation Insurance Partnership of $875,000 and $199,000, respectively, for the nine months ended September 30, 2019. As a result of the Foundation Insurance Partnership, we recognized goodwill in the amount of $21.5 million. The factors contributing to the recognition of the amount of goodwill are based on strategic benefits that are expected to be realized from acquiring Foundation Insurance's assembled workforce in addition to other synergies gained from integrating Foundation Insurance's operations into our consolidated structure. We incurred approximately $51,000 in acquisition-related costs for Foundation Insurance for the nine months ended September 30, 2019. The maximum potential contingent earnout consideration available to be earned by Foundation Insurance is $21.8 million.
RESULTS OF OPERATIONS FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20192021 AND 20182020
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements for the yearthree and six months ended December 31, 2018June 30, 2021 and the related notes and other financial information included elsewhere in the Prospectus.this report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Part II,I, Item 1A. Risk Factors.Factors in our Annual Report on Form 10-K filed with the SEC on March 11, 2021.
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The following is a discussion of our consolidated results of operations for each of the three and ninesix months ended SeptemberJune 30, 20192021 and 2018.2020.
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands)20212020Variance20212020Variance
Revenues:
Commissions and fees$119,706 $51,268 $68,438 $272,534 $105,427 $167,107 
Operating expenses:
Commissions, employee compensation and benefits89,065 39,263 49,802 178,440 73,811 104,629 
Other operating expenses19,200 9,546 9,654 36,768 18,431 18,337 
Amortization expense10,742 4,450 6,292 21,279 8,046 13,233 
Change in fair value of contingent consideration13,325 4,581 8,744 11,822 6,242 5,580 
Depreciation expense573 240 333 1,167 405 762 
Total operating expenses132,905 58,080 74,825 249,476 106,935 142,541 
Operating income (loss)(13,199)(6,812)(6,387)23,058 (1,508)24,566 
Other expense:
Interest expense, net(5,848)(1,047)(4,801)(11,491)(1,632)(9,859)
Other expense, net(1,057)— (1,057)(1,057)— (1,057)
Total other expense(6,905)(1,047)(5,858)(12,548)(1,632)(10,916)
Income (loss) before income taxes(20,104)(7,859)(12,245)10,510 (3,140)13,650 
Income tax provision— — — — 12 (12)
Net income (loss)(20,104)(7,859)(12,245)10,510 (3,152)13,662 
Less: net income (loss) attributable to noncontrolling interests(10,348)(4,271)(6,077)5,653 (1,032)6,685 
Net income (loss) attributable to BRP Group, Inc.$(9,756)$(3,588)$(6,168)$4,857 $(2,120)$6,977 
 For the Three Months
Ended September 30,		   For the Nine Months
Ended September 30,		  
 2019 2018 Variance 2019 2018 Variance
Commissions and fees$38,383,455
 $18,538,628
 $19,844,827
 $101,280,661
 $59,023,915
 $42,256,746
            
Operating expenses:           
Commissions, employee compensation and benefits26,787,773
 12,407,704
 14,380,069
 67,067,347
 37,887,003
 29,180,344
Operating expenses6,320,213
 3,588,312
 2,731,901
 16,711,495
 9,306,295
 7,405,200
Amortization expense3,081,578
 722,971
 2,358,607
 6,792,779
 1,812,542
 4,980,237
Change in fair value of contingent consideration535,214
 350,462
 184,752
 (3,221,909) 877,235
 (4,099,144)
Depreciation expense184,179
 126,531
 57,648
 460,364
 366,577
 93,787
Total operating expenses36,908,957
 17,195,980
 19,712,977
 87,810,076
 50,249,652
 37,560,424
            
Operating income1,474,498
 1,342,648
 131,850
 13,470,585
 8,774,263
 4,696,322
            
Other income (expense):           
Interest expense, net(3,784,866) (1,292,016) (2,492,850) (8,998,308) (5,012,174) (3,986,134)
Other income (expense), net4,792
 1,816
 2,976
 4,792
 (210,096) 214,888
Total other expense(3,780,074) (1,290,200) (2,489,874) (8,993,516) (5,222,270) (3,771,246)
            
Net income (loss)(2,305,576) 52,448
 (2,358,024) 4,477,069
 3,551,993
 925,076
Less: net income attributable to noncontrolling interest1,420,204
 863,351
 556,853
 3,873,178
 2,709,716
 1,163,462
Net income (loss) attributable to Baldwin Risk Partners, LLC and Subsidiaries$(3,725,780) $(810,903) $(2,914,877) $603,891
 $842,277
 $(238,386)



Commissions and Fees
We earn commissions and fees by facilitating the arrangement between Insurance Company Partners and individuals or businesses for the carrier to provide insurance to the insured party. Our commissions and fees are usually a percentage of the premium paid by the insured and generally depends on the type of insurance, the particular Insurance Company Partner and the nature of the services provided. Under certain arrangements with Clients, we earn pre-negotiated service fees in lieu of commissions. Additionally, we may also receive from Insurance Company Partners a profit-sharing commission, or straight override, which represent forms of variable consideration associated with the placement of coverage and are based primarily on underwriting results, but may also contain considerations for volume, growth or retention.
Commissions and fees increased $68.4 million and $167.1 million for the three and six months ended June 30, 2021 as compared to the same periods of 2020, respectively. This increase was related to amounts attributable to Partners acquired during 2020 and 2021 prior to their having reached the twelve-month owned mark (such amounts, the “Partnership Contribution”) and organic growth. The Partnership Contribution accounted for $51.9 million and $143.1 million of the increase to commissions and fees for the quarter and year-to-date periods, respectively, and organic growth accounted for $16.5 million and $23.9 million of the increase for the quarter and year-to-date periods, respectively.
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Major Sources of Commissions and Fees
The following table sets forth our commissions and fees by major source by amount for the periods indicated:
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands)20212020Variance20212020Variance
Direct bill revenue$50,358 $22,430 $27,928 $144,863 $50,539 $94,324 
Agency bill revenue47,293 20,256 27,037 82,633 36,685 45,948 
Profit-sharing revenue8,175 2,626 5,549 18,467 7,750 10,717 
Policy fee and installment fee revenue4,792 3,653 1,139 9,268 7,035 2,233 
Consulting and service fee revenue5,726 793 4,933 11,006 1,508 9,498 
Other income3,362 1,510 1,852 6,297 1,910 4,387 
Total commissions and fees$119,706 $51,268 $68,438 $272,534 $105,427 $167,107 
  For the Three Months
Ended September 30,		   For the Nine Months
Ended September 30,		  
  2019 2018 Variance 2019 2018 Variance
Direct bill revenue $17,663,486
 $12,631,632
 $5,031,854
 $53,257,805
 $38,234,171
 $15,023,634
Agency bill revenue 14,253,187
 4,143,598
 10,109,589
 31,084,397
 13,349,345
 17,735,052
Profit-sharing revenue 1,586,861
 553,969
 1,032,892
 7,877,062
 4,727,964
 3,149,098
Policy fee and installment fee revenue 2,719,353
 —
 2,719,353
 5,112,315
 —
 5,112,315
Consulting and service fee revenue 1,111,616
 768,880
 342,736
 2,337,181
 1,985,561
 351,620
Other income 1,048,952
 440,549
 608,403
 1,611,901
 726,874
 885,027
Total commissions and fees $38,383,455
 $18,538,628
 $19,844,827
 $101,280,661
 $59,023,915
 $42,256,746
CommissionsDirect bill revenue represents commission revenue earned by providing insurance placement services to Clients, primarily for private risk management, commercial risk management, employee benefits and feesMedicare insurance types. Direct bill revenue increased by $19.8$27.9 million and $42.3$94.3 million for the three and ninesix months ended SeptemberJune 30, 20192021 as compared to the same periods of 2018,2020, respectively. This increase was primarily attributable to 2019 Partnerships, which comprised $16.6The Partnership Contribution accounted for $24.0 million and $29.6$88.0 million in commissionsof the increase to direct bill revenue for the quarter and feesyear-to-date periods, respectively. Organic growth for direct bill revenue was $3.9 million and $6.3 million for the quarter and year-to-date periods, respectively.
Agency bill revenue primarily represents commission revenue earned by providing insurance placement services to clients wherein we act as an agent on behalf of the Client. Agency bill revenue increased $27.0 million and $45.9 million for the three and ninesix months ended SeptemberJune 30, 2019,2021 as compared to the same periods of 2020, respectively. The Partnership Contribution accounted for $18.5 million and $34.2 million of the increase to agency bill revenue for the quarter and year-to-date periods, respectively. Organic growth for agency bill revenue was $8.5 million and $11.8 million for the quarter and year-to-date periods, respectively.
Profit-sharing revenue represents bonus-type or contingent revenue that is earned by us as a sales incentive provided by certain Insurance Company Partners. Profit-sharing revenue increased $5.5 million and $10.7 million for the three and six months ended June 30, 2021 as compared to the same periods of 2020, respectively, as a result of the Partnership Contribution of $4.8 million and $10.2 million, respectively, and organic growth of $0.7 million and $0.5 million, respectively. Profit-sharing revenue was affected by higher loss ratios in our Middle Market and MainStreet Operating Groups, which is particularly acute in the Florida homeowners marketplace.
Policy fee and installment fee revenue represents revenue earned for acting in the capacity of an MGA and providing payment processing and services and other administrative functions on behalf of Insurance Company Partners. Policy fee and installment fee revenue increased $1.1 million and $2.2 million during the three and six months ended June 30, 2021 as compared to the same periods of 2020, respectively. These fees are generated by our Specialty Operating Group.
Consulting and service fee revenue represents fees received in lieu of a commission and specialty insurance consulting revenue. Consulting and service fee revenue increased $4.9 million and $9.5 million for the three and six months ended June 30, 2021 as compared to the same periods of 2020, respectively, as a result of the Partnership Contribution of $3.1 million and $7.0 million, respectively, and organic growth of $1.8 million and $2.5 million, respectively.
Other income consists of Medicare marketing income that is based on agreed-upon cost reimbursement for fulfilling specific targeted marketing campaigns in addition to other fee income and premium financing income generated across all Operating Groups. Other income increased $1.9 million and $4.4 million for the three and six months ended June 30, 2021 as compared to the same periods of 2020, respectively. The Partnership Contribution accounted for $1.5 million and $3.9 million for the quarter and year-to-date periods, respectively, and organic growth comprised $0.4 million and a full period of contribution from Partners acquired in 2018.$0.5 million for the quarter and year-to-date periods, respectively.
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Commissions, Employee Compensation and Benefits
Commissions, employee compensation and benefits is our largest expense. It consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to Colleagues, commissions paid to Colleagues and outside commissions paid to others; and (b) equity-based compensation associated with the grants of restricted stock awards to senior management, Colleagues, Risk Advisors and executives. We expect to continue to experience a general rise in commissions, employee compensation and benefits expense commensurate with expected growth in our sales and headcount and as a result of increasing employee compensation related to ongoing public company costs. We operate in competitive markets for human capital and need to maintain competitive compensation levels as we expand geographically and create new products and services.
Our compensation arrangements with our employees contain significant bonus or commission components driven by the results of our operations. Therefore, as we grow commissions and fees, we expect compensation costs to rise.
Commissions, employee compensation and benefits expenses increased by $14.4$49.8 million and $29.2$104.6 million for the three and ninesix months ended SeptemberJune 30, 20192021 as compared to the same periods of 2018,2020, respectively. These increases were driven by new Partners, whichThe Partnership Contribution accounted for $12.3$34.7 million and $26.3$78.4 million of the increase to commissions, employee compensation and benefits for the quarter and year-to-date periods, respectively. Share-based compensation expense increased $2.6 million and $5.0 million, respectively, as a result of equity grants awarded to all newly hired Colleagues, including those who joined us through Partnerships, and grants to reward Colleagues, including members of senior management. The remaining increase in commissions, employee compensation and benefits expense can be attributed to higher commissions expense relating to our organic growth and higher compensation and benefits relating to hiring to support our growth.
Other Operating Expenses
Other operating expenses include travel, accounting, legal and other professional fees, placement fees, rent, office expenses, depreciation and other costs associated with our operations. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations. In addition, we have invested in the expansion of our Tampa offices to accommodate our growth plans, which has resulted in an increase to rent expense beginning in April 2020. Certain corporate expenses are allocated to the Operating Groups.
Other operating expenses increased $9.7 million for the three months ended June 30, 2021 as compared to the same period of 2020, which was primarily attributable to increases in rent expense of $2.0 million relating to expansion of our operating locations, professional fees of $1.6 million related to Partnership transactions and nine month periods, respectively. The remaining increase is aligned with organicpublic company costs, dues and subscriptions of $1.2 million from our investment in technology to support our growth, travel and entertainment of $1.1 million relating to Partnership travel and lodging, software and internet of $1.1 million relating to Partners who joined us in 2020 and consulting fees of $0.7 million relating to our investment in technology to support our growth.
Operating Expenses
OperatingOther operating expenses increased by$18.3 million for the six months ended June 30, 2021 as compared to the same period of 2020, which was primarily attributable to increases in rent expense of $4.7 million relating to expansion of our corporate offices and operating locations, dues and subscriptions of $2.7 million from our investment in technology to support our growth, professional fees of $2.3 million related to Partnership transactions and $7.4public company costs, software and internet of $2.0 million relating to Partners who joined us in 2020, travel and entertainment of $1.1 million relating to Partnership travel and lodging costs, consulting fees of $1.4 million relating to our investment in technology to support our growth, licenses and taxes of $0.7 million and advertising and marketing of $0.6 million.
Amortization Expense
Amortization expense increased $6.3 million and $13.2 million for the three and ninesix months ended SeptemberJune 30, 20192021 as compared to the same periods of 2018, respectively. These increases were primarily attributable to expenses related to the Offering, additional operating expenses from new Partners such as additional rent and increased software costs, increased professional fees, travel, and other expenses related to those new Partners, and continued investments in shared services, including accounting, marketing and human resources, to support our growth.
Amortization Expense
Amortization expense increased by $2.4 million and $5.0 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were2020, respectively, which was driven by amortization related to $49.1 million of intangible assets capitalized in connection withPartners acquired over the MSI Partnership in April 2019 and $8.7 million of purchased customer accounts capitalized in connection with the Lykes Partnership in March 2019. In addition, intangible assets capitalized in connection with our 2018 Partnerships added $1.0 million in additional amortization for the year-to-date period.past twelve months.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration was $535 thousand$13.3 million for the three months ended SeptemberJune 30, 2019 resulting primarily from increases in the projected earnout for two Partners acquired in previous years, offset in part by decreases in the projected earnout2021 as compared to $4.6 million for the MSI Partnership and a Partner acquired in 2018.same period of 2020. Change in fair value of contingent consideration was $350 thousand$11.8 million for the threesix months ended SeptemberJune 30, 2018 resulting primarily from increases in2021 as compared to $6.2 million for the projected earnout for several Partners acquired in 2018.
Changesame period of 2020. The change in fair value of contingent consideration was $(3.2) million for the nine months ended September 30, 2019 resulting primarilyresults from decreasesfluctuations in the projected earnout for several Partners acquired in 2018, offset in part by increases in the projected earnout for the MSI Partnership and a Partner acquired in 2017. Change in fair value of contingent consideration was $877 thousand for the nine months ended September 30, 2018 resulting primarily from increases in the projected earnout for several Partners acquired in 2018 and 2017.relevant measurement basis, normally revenue or EBITDA, of our Partners.

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Interest Expense, Net
Interest expense, net increased by $2.5$4.8 million and $4.0$9.9 million for the three and ninesix months ended SeptemberJune 30, 20192021 as compared to the same periods of 2018, respectively. This increase was attributable to higher total debt balances2020, respectively, resulting from drawsa higher average interest rate and higher average borrowings under the JPM Credit Agreement in effect during the first half of 2021 compared to the credit facilities in place during the first half of 2020.
FINANCIAL CONDITION - COMPARISON OF JUNE 30, 2021TO DECEMBER 31, 2020
Our total assets and total liabilities increased $206.4 million and $184.0 million, respectively, at June 30, 2021 as compared to December 31, 2020. The most significant changes in assets and liabilities are described below.
Cash and cash equivalents and restricted cash increased $134.0 million as a result of operating, investing and financing activities illustrated in the condensed consolidated statement of cash flows and discussed further under the Sources and Uses of Cash section below.
Premiums, commissions and fees receivable, net increased $54.2 million as a result of revenue growth and the timing of revenue recognition under direct bill policies in employee benefits for which payment is received monthly through the duration of the year.
Goodwill increased $20.3 million as a result of Partnerships completed during the first half of 202, offset in part by measurement period adjustments for certain Partnerships formed in the fourth quarter 2020.
Premiums payable to insurance companies and producer commissions payable increased $42.0 million and $8.1 million, respectively, as a result of revenue growth.
Revolving lines of credit increased $20.0 million as a result of borrowing on our Credit AgreementsRevolving Facility for general working capital purposes in the second quarter of 2021.
Long-term debt increased $97.6 million as a result of having upsized our term loan to fund cash consideration for Partnerships in 2019, a higher interest rate on$500.0 million during the Villages Credit Agreement that went into effect in March 2019, and higher amortizationsecond quarter of deferred financing costs.2021.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA, Adjusted EBITDA Margin, Organic Revenue, and Organic Revenue Growth, Adjusted Net Income and Adjusted Diluted Earnings Per Share (“EPS”), are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, including commissions and fees (for Organic Revenue and Organic Revenue Growth) or, net income (loss) (for Adjusted EBITDA and Adjusted EBITDA Margin) net income (loss) attributable to BRP Group, Inc. (for Adjusted Net Income) or diluted earnings (loss) per share (for Adjusted Diluted EPS), which we consider to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for commissions and fees, net income (loss), net income (loss) attributable to BRP Group, Inc. or other consolidated income statement data prepared in accordance with GAAP. Other companies in our industry may define or calculate these non-GAAP financial measures differently than we do, and accordingly these measures may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA eliminates the effects of financing, depreciation, amortization and amortization.change in fair value of contingent consideration. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related expenses related to Partnerships including severance, and certain non-recurring costs, including those related to the Offering and loss on modification and extinguishment of debt.raising capital. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance, and that the presentation of this measure enhances an investor'sinvestor’s understanding of our financial performance.
Adjusted EBITDA Margin is Adjusted EBITDA divided by commissions and fees. Adjusted EBITDA Margin is a key metric used by management and our board of directors to assess our financial performance. We believe that Adjusted EBITDA Margin is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance. We believe that Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.
33

Adjusted EBITDA and Adjusted EBITDA Margin have important limitations as analytical tools. For example, Adjusted EBITDA and Adjusted EBITDA Margin:
•do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;
•do not reflect changes in, or cash requirements for, our working capital needs;
•do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations;
•do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
•do not reflect stock-basedshare-based compensation expense and other non-cash charges; and
•exclude certain tax payments that may represent a reduction in cash available to us.


We calculate Organic Revenue Growth based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from new Partners and (ii) the impact of the change in our method of accounting for commissions and fees from contracts with customers as a result of the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, effective January 1, 2018, under the New Revenue Standard on our 2018 commissions and fees when the impact is measured across periods that are not comparable.Partners. Organic Revenue Growth is the change in Organic Revenue period-to-period, with prior period results adjusted for Organic Revenues that were excluded in the prior period because the relevant Partners had not yet reached the twelve-month owned mark, but which have reachedreach the twelve-month owned mark in the current period. For example, revenues from a Partner acquired on June 1, 20182020 are excluded from Organic Revenue for 2018.2020. However, after June 1, 2019,2021, results from June 1, 20182020 to December 31, 20182020 for such Partners are compared to results from June 1, 20192021 to December 31, 20192021 for purposes of calculating Organic Revenue Growth in 2019.2021. Organic Revenue Growth is a key metric used by management and our board of directors to assess our financial performance. We believe that Organic Revenue and Organic Revenue Growth are appropriate measures of operating performance as they allow investors to measure, analyze and compare growth in a meaningful and consistent manner.
Adjusted Net Income is presented for the purpose of calculating Adjusted Diluted EPS. We define Adjusted Net Income as net income (loss) attributable to BRP Group, Inc. adjusted for amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related expenses related to Partnerships including severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.
Adjusted Diluted EPS measures our per share earnings excluding certain expenses as discussed above and assuming all shares of Class B common stock were exchanged for Class A common stock. Adjusted Diluted EPS is calculated as Adjusted Net Income divided by adjusted dilutive weighted-average shares outstanding. We believe Adjusted Diluted EPS is useful to investors because it enables them to better evaluate per share operating performance across reporting periods.
34

Adjusted EBITDA and Adjusted EBITDA Margin
The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net income (loss), which we consider to be the most directly comparable GAAP financial measure to Adjusted EBITDA:EBITDA and Adjusted EBITDA Margin:
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
 For the Three Months
Ended September 30,		 For the Nine Months
Ended September 30,
(in thousands, except percentages)(in thousands, except percentages)2021202020212020
Commissions and feesCommissions and fees$119,706 $51,268 $272,534 $105,427 
 2019 2018 2019 2018
Net income (loss) $(2,305,576) $52,448
 $4,477,069
 $3,551,993
Net income (loss)$(20,104)$(7,859)$10,510 $(3,152)
Adjustments to net income (loss):        Adjustments to net income (loss):
Amortization expense 3,081,578
 722,971
 6,792,779
 1,812,542
Amortization expense10,742 4,450 21,279 8,046 
Depreciation expense 184,179
 126,531
 460,364
 366,577
Change in fair value of contingent considerationChange in fair value of contingent consideration13,325 4,581 11,822 6,242 
Interest expense, net 3,784,866
 1,292,016
 8,998,308
 5,012,174
Interest expense, net5,848 1,047 11,491 1,632 
Change in fair value of contingent consideration 535,214
 350,462
 (3,221,909) 877,235
Share-based compensation 381,901
 407,355
 773,297
 1,120,206
Share-based compensation4,545 1,978 8,087 3,117 
Transaction-related Partnership expenses 500,048
 312,195
 1,535,445
 681,590
Transaction-related Partnership expenses3,225 2,020 5,670 3,868 
Offering expenses 1,123,509
 —
 2,214,113
 —
Depreciation expenseDepreciation expense573 240 1,167 405 
Change in fair value of interest rate capsChange in fair value of interest rate caps825 — 825 — 
Capital related expensesCapital related expenses— 1,000 — 1,000 
Severance related to Partnership activity —
 —
 300,000
 —
Severance related to Partnership activity— 360 — 413 
Income tax provisionIncome tax provision— — — 12 
Other 92,254
 20,000
 275,870
 20,000
Other1,412 568 2,271 834 
Adjusted EBITDA $7,377,973
 $3,283,978
 $22,605,336
 $13,442,317
Adjusted EBITDA$20,391 $8,385 $73,122 $22,417 
Adjusted EBITDA Margin 19% 18% 22% 23%Adjusted EBITDA Margin17 %16 %27 %21 %
Organic Revenue and Organic Revenue Growth
The following table reconciles Organic Revenue to commissions and fees, which we consider to be the most directly comparable GAAP financial measure to Organic Revenue:
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
 For the Three Months Ended September 30, 2019 For the Nine Months Ended September 30, 2019
 
(in thousands, except percentages)(in thousands, except percentages)2021202020212020
Commissions and fees $38,383,455
 $101,280,661
Commissions and fees$119,706 $51,268 $272,534 $105,427 
Partnership commissions and fees (1)
 (17,519,871) (36,748,949)
Partnership commissions and fees (1)
(51,893)(12,064)(143,108)(34,932)
Organic Revenue $20,863,584
 $64,531,712
Organic Revenue$67,813 $39,204 $129,426 $70,495 
Organic Revenue Growth (2)
 $2,297,499
 $5,479,349
Organic Revenue Growth (2)
$16,482 $6,130 $23,929 $7,584 
Organic Revenue Growth (2)
 12% 9%
Organic Revenue Growth % (2)
Organic Revenue Growth % (2)
32 %19 %23 %12 %
__________
(1)
(1)    Includes the first twelve months of such commissions and fees generated from newly acquired Partners.
(2)Organic Revenue for the three and nine months ended September 30, 2018 used to calculate Organic Revenue Growth for the three and nine months ended September 30, 2019 was $18.6 million and $59.1 million, respectively, which is adjusted to reflect revenues from Partnerships that reach the twelve-month owned mark during the three and nine months ended September 30, 2019.


SEGMENT RESULTS OF OPERATIONS
Additional information regarding the resultsfirst twelve months of operationssuch commissions and fees generated from newly acquired Partners. Amount for the six months ended June 30, 2021 is reduced by approximately $830,000 for the timing of certain cash receipts that were fully constrained under ASC 606 in the post-partnership period for our Middle Market, Specialty, MainStreetpartnership with Agency RM, which closed February 1, 2020.
(2)    Organic Revenue for the three and Medicare Operating Groupssix months ended June 30, 2020 used to calculate Organic Revenue Growth for the three and six months ended June 30, 2021 was $51.3 million and $105.5 million, respectively, which is presented below.adjusted to reflect revenues from Partnerships that reached the twelve-month owned mark during the three and six months ended June 30, 2021.
35

MIDDLE MARKET Adjusted Net Income and Adjusted Diluted EPS
The following table reconciles Adjusted Net Income to net income (loss) attributable to BRP Group, Inc. and reconciles Adjusted Diluted EPS to diluted earnings (loss) per share attributable to BRP Group, Inc. Class A common stock:
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
(in thousands, except per share data)2021202020212020
Net income (loss) attributable to BRP Group, Inc.$(9,756)$(3,588)$4,857 $(2,120)
Net income (loss) attributable to noncontrolling interests(10,348)(4,271)5,653 (1,032)
Amortization expense10,742 4,450 21,279 8,046 
Change in fair value of contingent consideration13,325 4,581 11,822 6,242 
Share-based compensation4,545 1,978 8,087 3,117 
Transaction-related Partnership expenses3,225 2,020 5,670 3,868 
Amortization of deferred financing costs750 119 1,443 195 
Change in fair value of interest rate caps825 — 825 — 
Capital related expenses— 1,000 — 1,000 
Severance related to Partnership activity— 360 — 413 
Other1,412 568 2,271 834 
Adjusted pre-tax income14,720 7,217 61,907 20,563 
Adjusted income taxes (1)
1,457 715 6,129 2,036 
Adjusted Net Income$13,263 $6,502 $55,778 $18,527 
Weighted-average shares of Class A common stock outstanding - diluted44,671 20,426 46,160 19,960 
Dilutive effect of unvested restricted shares of Class A common stock1,862 365 — 344 
Exchange of Class B shares (2)
49,600 45,466 49,694 44,503 
Adjusted dilutive weighted-average shares outstanding96,133 66,257 95,854 64,807 
Adjusted Diluted EPS$0.14 $0.10 $0.58 $0.29 
Diluted earnings (loss) per share$(0.22)$(0.18)$0.11 $(0.11)
Effect of exchange of Class B shares and net income attributable to noncontrolling interests per share0.01 0.06 — 0.06 
Other adjustments to earnings per share0.37 0.23 0.53 0.37 
Adjusted income taxes per share(0.02)(0.01)(0.06)(0.03)
Adjusted Diluted EPS$0.14 $0.10 $0.58 $0.29 
___________
(1)    Represents corporate income taxes at assumed effective tax rate of 9.9% applied to adjusted pre-tax income.
(2)    Assumes the full exchange of Class B shares for Class A common stock pursuant to the Third Amended and Restated Limited Liability Company Agreement of BRP, as amended (the “Amended LLC Agreement”).

36

OPERATING GROUP
 For the Three Months
Ended September 30,		   For the Nine Months
Ended September 30,		  
 2019 2018 Variance 2019 2018 Variance
Commissions and fees$12,836,312
 $7,977,676
 $4,858,636
 $41,481,507
 $26,319,848
 $15,161,659
            
Operating expenses:           
Commissions, employee compensation and benefits9,202,630
 6,564,516
 2,638,114
 26,955,733
 18,543,420
 8,412,313
Operating expenses2,256,832
 1,806,604
 450,228
 6,253,558
 3,953,756
 2,299,802
Amortization expense552,494
 204,234
 348,260
 1,349,501
 366,701
 982,800
Change in fair value of contingent consideration445,319
 123,216
 322,103
 (3,789,147) 204,151
 (3,993,298)
Depreciation expense96,527
 65,075
 31,452
 260,011
 174,101
 85,910
Total operating expenses12,553,802
 8,763,645
 3,790,157
 31,029,656
 23,242,129
 7,787,527
            
Operating income (loss)282,510
 (785,969) 1,068,479
 10,451,851
 3,077,719
 7,374,132
            
Other income (expense):           
Interest income, net8,081
 1,122
 6,959
 18,570
 1,856
 16,714
Other income (expense), net4,792
 1,816
 2,976
 4,792
 (136,906) 141,698
Total other income (expense)12,873
 2,938
 9,935
 23,362
 (135,050) 158,412
            
Net income (loss)295,383
 (783,031) 1,078,414
 10,475,213
 2,942,669
 7,532,544
Less: net income attributable to noncontrolling interest27,566
 5,862
 21,704
 420,646
 174,082
 246,564
Net income (loss) attributable to Baldwin Risk Partners, LLC and Subsidiaries$267,817
 $(788,893) $1,056,710
 $10,054,567
 $2,768,587
 $7,285,980
 RESULTS
Commissions and feesFees
In the Middle Market, MainStreet and Specialty Operating Group,Groups, we generate commissions and fees from insurance placement under both agency bill and direct bill arrangements. In addition, we generate profit-sharing income in each of those segments based on either the underlying Book of Business or performance, such as loss ratios, andratios. In the Middle Market Operating Group only, we generate fees from service fee and consulting arrangements. Service fee arrangements are in place with certain clientscustomers in lieu of commission arrangements.
Commissions and fees increased by $4.9 million for the three months ended September 30, 2019 as compared to the same period of 2018 resulting primarily from an increase of $3.5 million attributable to Lykes and Fiduciary Partners acquired in 2019 and an increase of $565 thousand attributable to the Middle Market Partners acquired in 2018.
Commissions and fees increased by $15.2 million for the nine months ended September 30, 2019 as compared to the same period of 2018 resulting primarily from an increase of $7.0 million attributable to Lykes and Fiduciary Partners acquired in 2019 and an increase of $6.0 million attributable to Middle Market Partners acquired in 2018.
Commissions, Employee Compensation and Benefits
Commissions, employee compensation and benefits expenses increased by $2.6 million for the three months ended September 30, 2019 as compared to the same period of 2018 resulting primarily from an increase of $2.0 million attributable to Lykes and Fiduciary Partners, increased compensation for sales and support related to our growth, and continued investments in shared services to support our growth.


Commissions, employee compensation and benefits expenses increased by $8.4 million for the nine months ended September 30, 2019 as compared to the same period of 2018 resulting primarily from an increase of $4.2 million attributable to Lykes and Fiduciary Partners, an increase of $3.5 million attributable to Middle Market Partners acquired in 2018, increased compensation for sales and support related to our growth, and continued investments in shared services to support our growth.
Operating Expenses
Operating expenses increased by $450 thousand and $2.3 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were driven by new Partners and organic growth.
Amortization Expense
Amortization expense increased by $348 thousand and $1.0 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were driven by amortization related to $8.7 million of purchased customer accounts capitalized in connection with the Lykes Partnership in March 2019 and $5.7 million of intangible assets capitalized in connection with Middle Market Partnerships in 2018.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration was $445 thousand for the three months ended September 30, 2019 resulting primarily from an increase in the projected earnout for a Partner acquired in 2018, offset in part by a decrease in the projected earnout for another Partner acquired in 2018. Change in fair value of contingent consideration was $123 thousand for the three months ended September 30, 2018 resulting from an increase in the projected earnout for a Partner acquired in 2018.
Change in fair value of contingent consideration was $(3.8) million for the nine months ended September 30, 2019 resulting primarily from decreases in the projected earnout for two Partners acquired in 2018. Change in fair value of contingent consideration was $204 thousand for the nine months ended September 30, 2018 resulting from an increase in the projected earnout for a Partner acquired in 2018.


SPECIALTY OPERATING GROUP
 For the Three Months
Ended September 30,		   For the Nine Months
Ended September 30,		  
 2019 2018 Variance 2019 2018 Variance
Commissions and fees$16,731,645
 $3,578,550
 $13,153,095
 $32,496,887
 $9,856,382
 $22,640,505
            
Operating expenses:           
Commissions, employee compensation and benefits11,836,408
 2,130,721
 9,705,687
 23,693,878
 7,181,482
 16,512,396
Operating expenses847,196
 371,680
 475,516
 2,256,105
 751,401
 1,504,704
Amortization expense2,035,799
 227,197
 1,808,602
 4,338,696
 668,195
 3,670,501
Change in fair value of contingent consideration(199,779) 95,672
 (295,451) 577,700
 287,016
 290,684
Depreciation expense2,744
 1,086
 1,658
 7,797
 12,104
 (4,307)
Total operating expenses14,522,368
 2,826,356
 11,696,012
 30,874,176
 8,900,198
 21,973,978
            
Operating income2,209,277
 752,194
 1,457,083
 1,622,711
 956,184
 666,527
            
Other expense:           
Interest expense, net(18,629) —
 (18,629) (32,435) —
 (32,435)
Other expense, net—
 —
 —
 —
 (73,190) 73,190
Total other expense(18,629) —
 (18,629) (32,435) (73,190) 40,755
            
Net income2,190,648
 752,194
 1,438,454
 1,590,276
 882,994
 707,282
Less: net income attributable to noncontrolling interest765,078
 316,891
 448,187
 834,406
 364,157
 470,249
Net income attributable to Baldwin Risk Partners, LLC and Subsidiaries$1,425,570
 $435,303
 $990,267
 $755,870
 $518,837
 $237,033
Commissions and fees
In the Specialty Operating Group, we generate commissions and fees from insurance placement under both agency bill and direct bill arrangements. In addition, we generate profit-sharing income based on either the underlying Book of Business or performance.
Commissions and fees increased by $13.2 million and $22.6 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were primarily attributable to the MSI Partnership completed in April 2019, which accounted for $12.2 million and $21.7 million of commissions and fees for the three and nine months ended September 30, 2019, respectively. The remainder of the increases were attributable to organic growth. Policies in force for the MSI Partnership grew by 35% to 355,744 at September 30, 2019 from 263,363 at September 30, 2018. Since the MSI Partnership was not completed until April 2019, the 35% policies in force growth was calculated including periods during which MSI was not owned by the Company.
Commissions, Employee Compensation and Benefits
Commissions, employee compensation and benefits expenses increased by $9.7 million and $16.5 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were primarily attributable to the MSI Partnership, which accounted for $8.6 million and $15.1 million of commissions, employee compensation and benefits for the three and nine months ended September 30, 2019, respectively. The remainder of the increases were attributable to organic growth.
Operating Expenses
Operating expenses increased by $476 thousand and $1.5 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were primarily attributable to the MSI Partnership and, to a lesser extent, organic growth.


Amortization Expense
Amortization expense increased by $1.8 million and $3.7 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018. These increases were driven by amortization related to $49.1 million of intangible assets capitalized in connection with the MSI Partnership.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration was $(200) thousand for the three months ended September 30, 2019 resulting primarily from decreases in the projected earnout for the MSI Partnership and a Partner acquired in 2018. Change in fair value of contingent consideration was $96 thousand for the three months ended September 30, 2018 resulting from an increase in the projected earnout for a Partner acquired in 2018.
Change in fair value of contingent consideration was $578 thousand for the nine months ended September 30, 2019 resulting from an increase in the projected earnout for the MSI Partnership, partially offset by a decrease in the projected earnout for a Partner acquired in 2018. Change in fair value of contingent consideration was $287 thousand for the nine months ended September 30, 2018 resulting from an increase in the projected earnout for a Partner acquired in 2018.
MAINSTREET OPERATING GROUP
 For the Three Months
Ended September 30,		   For the Nine Months
Ended September 30,		  
 2019 2018 Variance 2019 2018 Variance
Commissions and fees$6,642,398
 $5,019,716
 $1,622,682
 $18,942,096
 $15,709,654
 $3,232,442
            
Operating expenses:           
Commissions, employee compensation and benefits3,915,056
 2,791,183
 1,123,873
 10,283,850
 8,287,949
 1,995,901
Operating expenses1,014,326
 869,120
 145,206
 2,865,119
 2,448,655
 416,464
Amortization expense363,789
 195,077
 168,712
 749,026
 556,512
 192,514
Change in fair value of contingent consideration289,674
 131,574
 158,100
 320,400
 386,068
 (65,668)
Depreciation expense44,318
 53,956
 (9,638) 122,326
 161,407
 (39,081)
Total operating expenses5,627,163
 4,040,910
 1,586,253
 14,340,721
 11,840,591
 2,500,130
            
Operating income1,015,235
 978,806
 36,429
 4,601,375
 3,869,063
 732,312
            
Other income (expense):           
Interest income (expense), net10
 1
 9
 (6,115) 10
 (6,125)
Total other income (expense)10
 1
 9
 (6,115) 10
 (6,125)
            
Net income1,015,245
 978,807
 36,438
 4,595,260
 3,869,073
 726,187
Less: net income attributable to noncontrolling interest627,560
 540,598
 86,962
 2,618,126
 2,171,477
 446,649
Net income attributable to Baldwin Risk Partners, LLC and Subsidiaries$387,685
 $438,209
 $(50,524) $1,977,134
 $1,697,596
 $279,538
Commissions and fees
In the MainStreet Operating Group, we generate commissions and fees from insurance placement under both agency bill and direct bill arrangements. In addition, we generate profit-sharing income based on either the underlying Book of Business or performance.
Commissions and fees increased by $1.6 million and $3.2 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. The Foundation Insurance Partnership completed in August 2019 accounted for $875 thousand of the increase in each of these periods. The remaining increase is primarily attributable to higher contingent revenue and organic growth.


Commissions, Employee Compensation and Benefits
Commissions, employee compensation and benefits expenses increased by $1.1 million and $2.0 million for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were primarily attributable to compensation for sales and support related to our growth as well as continued investments in shared services to support our growth.
Operating Expenses
Operating expenses increased by $145 thousand and $416 thousand for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were related to our organic growth.
Amortization Expense
Amortization expense increased by $169 thousand and $193 thousand for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were driven by amortization related to $8.7 million of purchased customer accounts capitalized in connection with the Foundation Insurance Partnership in August 2019.
Change in Fair Value of Contingent Consideration
Change in fair value of contingent consideration was $290 thousand for the three months ended September 30, 2019 resulting primarily from an increase in the projected earnout for a Partner acquired in 2017. Change in fair value of contingent consideration was $132 thousand for the three months ended September 30, 2018 resulting from an increase in the projected earnout for a Partner acquired in 2018.
Change in fair value of contingent consideration was $320 thousand for the nine months ended September 30, 2019 resulting from an increase in the projected earnout for a Partner acquired in 2017, partially offset by a decrease in the projected earnout for a Partner acquired in 2018. Change in fair value of contingent consideration was $386 thousand for the nine months ended September 30, 2018 resulting from increases in the projected earnout for Partners acquired in 2018 and 2017.
MEDICARE OPERATING GROUP
 For the Three Months
Ended September 30,		   For the Nine Months
Ended September 30,		  
 2019 2018 Variance 2019 2018 Variance
Commissions and fees$2,173,100
 $1,962,686
 $210,414
 $8,360,171
 $7,138,031
 $1,222,140
            
Operating expenses:           
Commissions, employee compensation and benefits1,179,356
 1,032,424
 146,932
 4,169,597
 3,476,928
 692,669
Operating expenses505,996
 378,937
 127,059
 1,390,223
 1,157,118
 233,105
Amortization expense95,199
 79,103
 16,096
 285,597
 169,056
 116,541
Change in fair value of contingent consideration—
 —
 —
 (330,862) —
 (330,862)
Depreciation expense4,357
 4,199
 158
 12,390
 12,617
 (227)
Total operating expenses1,784,908
 1,494,663
 290,245
 5,526,945
 4,815,719
 711,226
            
Net income388,192
 468,023
 (79,831) 2,833,226
 2,322,312
 510,914
Less: net income attributable to noncontrolling interest—
 —
 —
 —
 —
 —
Net income attributable to Baldwin Risk Partners, LLC and Subsidiaries$388,192
 $468,023
 $(79,831) $2,833,226
 $2,322,312
 $510,914
Commissions and fees
In the Medicare Operating Group, we generate commissions and fees in the form of direct bill insurance placement and marketing income. Marketing income is earned through co-branded marketing campaigns with our Insurance Company Partners.

The following table sets forth our commissions and fees by Operating Group by amount and as a percentage of our commissions and fees:

Commissions and Fees by Operating Group (in thousands, except percentages)
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
20212020Variance20212020Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%AmountPercent of BusinessAmountPercent of BusinessAmount%
Middle Market$76,109 64 %$20,718 40 %$55,391 267 %$186,664 68 %$42,750 41 %$143,914 337 %
Specialty30,105 25 %19,456 38 %10,649 55 %55,187 20 %36,872 35 %18,315 50 %
MainStreet8,576 7 %7,704 15 %872 11 %16,798 6 %16,012 15 %786 5 %
Medicare5,152 4 %3,390 7 %1,762 52 %14,604 5 %9,793 9 %4,811 49 %
Corporate and Other(236)— %— — %(236)— %(719)— %— — %(719)— %
$119,706 $51,268 $68,438 $272,534 $105,427 $167,107 
Commissions and fees for our Middle Market Operating Group increased by $210 thousand and $1.2$55.4 million for the three and nine months ended September 30, 2019second quarter of 2021 as compared to the same periodsperiod of 2018, respectively.2020 as a result of the Partnership Contribution of $50.0 million and organic growth of $5.4 million. Middle Market experienced organic growth in base commissions and fees of $2.9 million, consulting and service fees of $1.8 million and contingents of $0.4 million during the period.
Commissions and fees for our Middle Market Operating Group increased $143.9 million for the first half of 2021 as compared to the same period of 2020 as a result of the Partnership Contribution of $137.1 million and organic growth of $6.8 million. Middle Market experienced organic growth in base commissions and fees of $3.9 million, consulting and service fees of $2.5 million and contingents of $0.2 million during the period.
Commissions and fees for our Specialty Operating Group increased $10.6 million for the second quarter of 2021 as compared to the same period of 2020 as a result of organic growth of $9.8 million, which is attributable to growth in our renter’s insurance product and Connected Risk Solutions, in addition to the Partnership Contribution of $0.9 million.
Commissions and fees for our Specialty Operating Group increased $18.3 million for the first half of 2021 as compared to the same period of 2020 as a result of organic growth of $16.6 million, which is attributable to growth in our renter’s insurance product and Connected Risk Solutions, in addition to the Partnership Contribution of $1.7 million.
Policies in force for Specialty’s MGA of the Future grew by 159,307, or 36%, to 605,295 at June 30, 2021 from 445,988 at June 30, 2020.
Commissions and fees for our MainStreet Operating Group increased $0.9 million for the second quarter of 2021 as compared to the same period of 2020 primarily as a result of organic growth in base commissions and fees.
Commissions and fees for our MainStreet Operating Group increased $0.8 million for the first half of 2021 as compared to the same period of 2020. MainStreet had organic growth in base commissions and fees of $1.4 million, which was offset in part by a decrease in organic contingent revenue of $0.8 million resulting from higher loss ratios due to challenges in the Florida insurance marketplace.
37

Commissions and fees for our Medicare Operating Group increased $1.8 million for the second quarter of 2021 as compared to the same period of 2020 as a result of the Partnership Contribution of $1.2 million and organic growth of $0.6 million.
Commissions and fees for our Medicare Operating Group increased $4.8 million for the first half of 2021 as compared to the same period of 2020 as a result of the Partnership Contribution of $4.4 million and organic growth of $0.4 million. Continued COVID-19 protocols, including social distancing, reduced our Medicare agents' ability to meet person-to-person in our normal venues, which impacted our ability to sell new business during the 2021 Annual Enrollment Period.
Revenue reported for Corporate and Other relates to the elimination of intercompany revenue. During the second quarter of 2021, the Middle Market Operating Group recorded intercompany commissions and fees from activity with the Specialty Operating Group of $109,000; the MainStreet Operating Group recorded intercompany commissions and fees from activity with the Middle Market Operating Group of $61,000; and the Medicare Operating Group recorded intercompany commissions and fees from activity with itself of $66,000. During the first half of 2021, the Middle Market Operating Group recorded intercompany commissions and fees from activity with the Specialty Operating Group of $468,000; the MainStreet Operating Group recorded intercompany commissions and fees from activity with the Middle Market Operating Group of $91,000; and the Medicare Operating Group recorded intercompany commissions and fees from activity with itself of $160,000. These increasesamounts were driven by organic growth.eliminated through Corporate and Other.
Commissions, Employee Compensation and Benefits
The following table sets forth our commissions, employee compensation and benefits by Operating Group by amount and as a percentage of our commissions, employee compensation and benefits:
Commissions, Employee Compensation and Benefits by Operating Group (in thousands, except percentages)
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
20212020Variance20212020Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%AmountPercent of BusinessAmountPercent of BusinessAmount%
Middle Market$50,980 57 %$13,463 34 %$37,517 279 %$107,722 60 %$26,083 35 %$81,639 313 %
Specialty22,427 25 %15,330 39 %7,097 46 %40,379 23 %28,131 38 %12,248 44 %
MainStreet5,880 7 %4,810 12 %1,070 22 %11,026 6 %8,772 12 %2,254 26 %
Medicare3,775 4 %2,215 6 %1,560 70 %8,353 5 %5,231 7 %3,122 60 %
Corporate and Other6,003 7 %3,445 9 %2,558 74 %10,960 6 %5,594 8 %5,366 96 %
$89,065 $39,263 $49,802 $178,440 $73,811 $104,629 
Commissions, employee compensation and benefits expenses increased across all Operating Groups for the second quarter of 2021 as compared to the same period of 2020. The Partnership Contribution accounted for $33.2 million, $0.8 million and $0.7 million of the increase to commissions, employee compensation and benefits expenses in the Middle Market, Specialty and Medicare Operating Groups, respectively. Commissions, employee compensation and benefits expenses also increased across all Operating Groups as a result of continued investments in Growth Services to support our growth, which costs are primarily allocated among the Operating Groups, and continued investment in sales and service talent.
Commissions, employee compensation and benefits expenses increased across all Operating Groups for the first half of 2021 as compared to the same period of 2020. The Partnership Contribution accounted for $74.6 million, $1.5 million and $2.4 million of the increase to commissions, employee compensation and benefits expenses in the Middle Market, Specialty and Medicare Operating Groups, respectively. Commissions, employee compensation and benefits expenses also increased across all Operating Groups as a result of continued investments in Growth Services to support our growth, which costs are primarily allocated among the Operating Groups, and continued investment in sales and service talent.
Commissions, employee compensation and benefits expenses for Corporate and Other increased as a result of additional share-based compensation expense incurred during the quarter.
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Other Operating Expenses
The following table sets forth our other operating expenses by $147 thousandOperating Group by amount and $693 thousandas a percentage of our other operating expenses:
Other Operating Expenses by Operating Group (in thousands, except percentages)
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
20212020Variance20212020Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%AmountPercent of BusinessAmountPercent of BusinessAmount%
Middle Market$10,031 52 %$2,878 30 %$7,153 249 %$18,056 49 %$5,619 30 %$12,437 221 %
Specialty2,153 11 %1,313 14 %840 64 %4,074 11 %2,796 15 %1,278 46 %
MainStreet1,254 7 %1,010 11 %244 24 %2,346 6 %2,007 11 %339 17 %
Medicare1,099 6 %997 10 %102 10 %2,506 7 %1,787 10 %719 40 %
Corporate and Other4,663 24 %3,348 35 %1,315 39 %9,786 27 %6,222 34 %3,564 57 %
$19,200 $9,546 $9,654 $36,768 $18,431 $18,337 
Other operating expenses for our Middle Market Operating Group increased $7.2 million for the second quarter of 2021 as compared to the same period of 2020 driven by higher costs for rent expense of $1.6 million, professional fees of $1.6 million, software and internet of $1.2 million, dues and subscriptions of $0.6 million, colleague education and welfare of $0.4 million and consulting of $0.3 million. Other operating expenses for our Specialty Operating Group increased $0.8 million for the second quarter of 2021 as compared to the same period of 2020 driven by higher costs for bank charges, consulting fees and rent expense of $0.2 million each. The increases in our operating costs are related to our growth, both organically and through Partnerships, during the previous twelve months.
Other operating expenses for our Middle Market Operating Group increased $12.4 million for the first half of 2021 as compared to the same period of 2020 driven by higher costs for rent expense of $3.6 million, software and internet of $1.9 million, dues and subscriptions of $1.5 million, professional fees of $1.0 million, consulting of $0.8 million and travel and entertainment of $0.7 million. Other operating expenses for our Specialty Operating Group increased $1.3 million for the first half of 2021 as compared to the same period of 2020 driven by higher costs for bank charges, rent expense, consulting fees, dues and subscriptions and professional fees of $0.2 million each. Other operating expenses for our Medicare Operating Group increased $0.7 million for the first half of 2021 as compared to the same period of 2020 driven by higher costs for advertising and marketing and rent expense of $0.2 million each. The increases in our operating costs are related to our growth, both organically and through Partnerships, during the previous twelve months.
Other operating expenses in Corporate and Other increased $1.3 million for the second quarter of 2021 as compared to the same period of 2020 due to higher costs for travel and entertainment of $0.5 million, dues and subscriptions of $0.4 million, colleague education and welfare of $0.2 million and rent expense of $0.1 million.
Other operating expenses in Corporate and Other increased $3.6 million for the first half of 2021 as compared to the same period of 2020 due to higher costs for professional fees of $1.1 million, dues and subscriptions of $0.9 million and rent expense of $0.6 million related to expansion of our Tampa offices.
39

Amortization Expense
The following table sets forth our amortization by Operating Group by amount and as a percentage of our amortization:
Amortization Expense by Operating Group (in thousands, except percentages)
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
20212020Variance20212020Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%AmountPercent of BusinessAmountPercent of BusinessAmount%
Middle Market$7,462 69 %$1,384 31 %$6,078 n/m$14,911 70 %$1,955 24 %$12,956 n/m
Specialty2,418 23 %2,325 52 %93 4 %4,727 22 %4,691 58 %36 1 %
MainStreet410 4 %445 10 %(35)(8)%826 4 %876 11 %(50)(6)%
Medicare451 4 %291 7 %160 55 %814 4 %516 6 %298 58 %
Corporate and Other1 — %5 — %(4)(80)%1 — %8 — %(7)(88)%
$10,742 $4,450 $6,292 $21,279 $8,046 $13,233 
__________
n/m    not meaningful
Amortization expense increased for our Middle Market and Medicare Operating Groups for the three and ninesix months ended SeptemberJune 30, 20192021 as compared to the same periods of 2018, respectively. These increases were primarily attributable to compensation for sales and support2020 driven by amortization related to our growth as well as continued investments in shared services to support our growth.
Operating Expenses
Operating expenses increased by $127 thousand and $233 thousandPartners acquired over the past twelve months. Amortization for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were related to organic growth.
Amortization Expense
Amortization expense increased by $16 thousand and $117 thousand for the three and nine months ended September 30, 2019 as compared to the same periods of 2018, respectively. These increases were driven by $5.1 million of customer lists capitalized in connection with three Partnerships completed during 2018.remaining groups was relatively flat.
Change in Fair Value of Contingent Consideration
ChangeThe following table sets forth our change in fair value of contingent consideration was $(331) thousand for the nine months ended September 30, 2019 resultingby Operating Group by amount and as a percentage of our change in fair value of contingent consideration:
Change in Fair Value of Contingent Consideration by Operating Group (in thousands, except percentages)
For the Three Months
 Ended June 30,		For the Six Months
 Ended June 30,
20212020Variance20212020Variance
Operating GroupAmountPercent of BusinessAmountPercent of BusinessAmount%AmountPercent of BusinessAmountPercent of BusinessAmount%
Middle Market$12,569 94 %$444 10 %$12,125 n/m$9,046 77 %$(1,722)(28)%$10,768 n/m
Specialty1,448 11 %3,671 80 %(2,223)(61)%2,483 21 %6,118 98 %(3,635)(59)%
MainStreet(19)— %427 9 %(446)(104)%174 1 %2,054 33 %(1,880)(92)%
Medicare(673)(5)%39 1 %(712)n/m119 1 %(208)(3)%327 (157)%
$13,325 $4,581 $8,744 $11,822 $6,242 $5,580 
__________
n/m    not meaningful
The change in fair value of contingent consideration results from a decreasefluctuations in the projected earnout for a 2018 Partnership.value of the relevant measurement basis, normally revenue or EBITDA of our Partners.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity needs for the foreseeable future will include cash to (i) provide capital to facilitate the organic growth of our business and to fund future Partnerships, (ii) pay operating expenses, including cash compensation to our employees and expenses related to being a public company, (iii) make payments under the Tax Receivable Agreement, (iv) pay interest and principal due on borrowings under the CadenceJPM Credit Agreement, (v) pay contingent earnout liabilities, including the contingent earnout liability of up to $61.5 million due to MSI in the third quarter of 2022, and (vi) pay income taxes. We have historically financed our operations and funded our debt service and distributions to our owners through the sale of our insurance products and services. In addition, we have financed significant cash needs to fund growth through the acquisition of Partners through debt and equity financing.
On October 28, 2019, BRP Group sold an aggregate of 18,859,300 shares of Class A common stock including 2,459,300 shares pursuant to the underwriters’ over-allotment option, which subsequently settled on November 26, 2019. The shares were sold at an initial offering price of $14.00 per share for net proceeds of approximately $241.9 million after deducting underwriting discounts and commissions of $17.8 million and estimated offering expenses of approximately $4.3 million payable by BRP.
40

As of SeptemberAt June 30, 2019,2021, our cash and cash equivalents were $11.1$224.5 million. We believe that our cash and cash equivalents, proceeds from the Offering, cash flow from operations and available borrowings under the CadenceJPM Credit Agreement will be sufficient to fund our working capital and meet our commitments for the foreseeable future. However, we expect that we will require additional funding to continue to execute on our Partnership strategy. Such funding could include the incurrence of additional debt and the issuance of equity. Additional funds may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our long-term Partnership strategy. If we are not able to raise funds when needed, we could be forced to delay or reduce the number of Partnerships that we complete.
Credit Agreements
As of September 30, 2019, we had borrowings under the CadenceJPM Credit Agreement consisting
On October 14, 2020, we entered into the JPM Credit Agreement with JPMorgan Chase Bank, N.A., to provide senior secured credit facilities in an aggregate principal amount of $800.0 million. The amount consists of (i) a $2.0term loan facility in the principal amount of $400.0 million maturing in 2027 (the “Existing Term Loan B”) and (ii) a revolving credit facility to be used for working capital purposeswith commitments in an aggregate principal amount of $400.0 million maturing in 2025 (the "Working Capital Line") and a $103.0 million revolving credit facility to be used for acquisition purposes (the "Acquisitions Line" and collectively with the Working Capital Line, the "Revolving Lines of Credit"“Revolving Facility”). The Revolving Lines of Credit mature on March 13, 2024.
On September 21, 2019,June 2, 2021, we executed an amendment (the "Amendment")entered into Amendment No. 2 to the existing Cadence Credit Agreement, which became effective concurrent with the Offering and resulted in a total borrowing capacity of a $10.0 million Working Capital Line and a $115.0 million Acquisitions Line. The Amendment also extended the maturity date of the existing CadenceJPM Credit Agreement to October 28, 2024. On November 25, 2019, we repaidprovide for a new senior secured first lien term loan facility in an aggregate principal amount of $500.0 million maturing in 2027 (the “New Term Loan B”), a portion of the Revolving Lines ofproceeds from which were used to repay in full the obligations under the Existing Term Loan B. On August 6, 2021, we entered into Amendment No. 3 to the JPM Credit Agreement to provide for an increase in the aggregate principal amount of $65.0the Revolving Facility from $400.0 million which results into $475.0 million. The Revolving Facility and the remaining borrowing capacityproceeds of $85.0 millionthe New Term Loan B are available to finance working capital needs and for other general corporate purposes of BRP and certain of its subsidiaries (including acquisitions and other investments permitted under the CadenceJPM Credit Agreement).
The New Term Loan B bears interest at LIBOR plus 350 basis points (“bps”) with a LIBOR floor of 50 bps. The applicable interest rate on the New Term Loan B at June 30, 2021 was 4.00%. Borrowings under the Revolving Facility accrue interest at LIBOR plus 200 bps to LIBOR plus 300 bps based on total net leverage ratio. BRP will pay a letter of credit fee equal to the margin then in effect with respect to LIBOR loans under the Revolving Facility multiplied by the daily amount available to be drawn under any letter of credit, a fronting fee and any customary documentary and processing charges for any letter of credit issued under the JPM Credit Agreement.


The outstanding principal balance of the New Term Loan B is required to be repaid in equal quarterly installments equal to 0.25% of the original principal amount of the New Term Loan B beginning with the fiscal quarter ending September 30, 2021, the balance of which is due at maturity. The Revolving Facility is not subject to amortization.
The Revolving Lines of CreditFacility and the New Term Loan B are collateralized by a first priority lien on substantially all the assets of BRP, including a pledge of all equity securities of eachcertain of its subsidiaries. The interest rate of the Revolving Lines of Credit is based on either London Inter-bank Offered Rate (“LIBOR”) plus the applicable margin or the Base Rate (as defined in the Cadence Credit Agreement) plus the applicable margin and is based on the senior leverage based pricing grid below, provided that under no circumstances will LIBOR be less than 1.00% or the Base Rate be less than 2.00%:
Senior leverage ratioApplicable margin for LIBOR loansApplicable margin for Base Rate loans
< 3.50x
350 bps250 bps
> 3.50x425 bps325 bps
The applicable interest rate on the Revolving Lines of Credit was 5.52% and 6.00% at September 30, 2019 and December 31, 2018, respectively.
The CadenceJPM Credit Agreement contains covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business, make certain investments or make investments. Following the Offering, the Cadence Credit Agreement continues to contain these covenants, including a covenant that restrictsrestrict BRP’s ability to make dividends or other distributions to BRP Group.
In addition, the CadenceJPM Credit Agreement contains financial covenants requiring us to maintain our Total First Lien Net Leverage Ratio (as defined in the CadenceJPM Credit Agreement) at or below 5.006.00 to 1.00 through September 21, 2022 (with scheduled annual step downs to 4.75 to 1.00 and 4.50 to 1.00 beginning in 2022), Debt Service Coverage Ratio (as defined in the Cadence Credit Agreement) at or above 2.00 to 1.00 (with scheduled annual step ups to 2.25 to 1.00 and 2.50 to 1.00 beginning in 2022) and Senior Leverage Ratio (as defined in the Cadence Credit Agreement) at or below 4.50 to 1.00 (with scheduled annual step downs to 4.25 to 1.00 and 4.00 to 1.00 beginning in 2022).
As of September 30, 2019, we had borrowings under the Villages Credit Agreement consisting of a non-revolving line of credit up to $125.0 million. The Villages line of credit bears interest at a fixed rate of 8.75% per annum and matures in September 2024, or such later date as the parties may agree. On October 28, 2019, BRP used a portion of the proceeds it received from the sale of newly-issued LLC Units to BRP Group in connection with the Offering to repay in full the outstanding indebtedness and accrued interest under the Villages Credit Agreement in the amount of $89.0 million and concurrently terminated the Villages Credit Agreement.1.00.
Contractual Obligations
The following table represents our contractual obligations, aggregated by type, asat June 30, 2021:
Payments Due by Period
(in thousands)TotalLess than
1 year		1-3 years3-5 yearsMore than
5 years
Operating leases (1)
$69,682 $11,719 $18,403 $15,447 $24,113 
Debt obligations payable (2)
642,330 25,500 50,100 48,332 518,398 
Maximum future acquisition contingency payments (3)
530,990 125,467 405,523 — — 
Total$1,243,002 $162,686 $474,026 $63,779 $542,511 
__________
(1)    The Company leases facilities and equipment under noncancelable operating leases. Rent expense was $7.4 million and $2.7 million for the six months ended June 30, 2021 and 2020, respectively.
(2)    Represents scheduled debt obligations and estimated interest payments under the JPM Credit Agreement.
(3)    Includes $178.3 million of Septembercurrent and noncurrent estimated contingent earnout liabilities at June 30, 2019:2021.
41

 Payments Due by Period
(in thousands)Total 
Less than
1 year
 1-3 years 3-5 years 
More than
5 years
Operating leases (1)
$33,714,000
 $2,965,000

$7,501,000

$6,366,000
 $16,882,000
Debt obligations payable (2)
272,130,821
 13,606,713

27,213,426

231,310,682
 —
Advisor incentive liabilities3,085,578
 —

3,085,578

—
 —
Participation unit ownership plan872,484
 —

477,431

395,053
 —
Maximum future acquisition contingency payments (3)
104,351,819
 7,512,360

95,901,959

937,500
 —
Total$414,154,702
 $24,084,073
 $134,179,394
 $239,009,235
 $16,882,000
__________
(1)The Company leases facilities and equipment under noncancelable operating leases. Rent expense was $3.2 million and $2.2 million for the nine months ended September 30, 2019 and 2018, respectively.
(2)Represents scheduled debt obligation and interest payments.
(3)Includes $35.1 million of current and noncurrent estimated contingent earnout liabilities at September 30, 2019.
Off-Balance Sheet ArrangementsTax Receivable Agreement
We do not investexpect to obtain an increase in any off-balance sheet vehiclesour share of our tax basis of the assets when BRP’s LLC Units are redeemed or exchanged for shares of BRP Group’s Class A common stock. This increase in tax basis may have the effect of reducing the future amounts paid to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.
We have a Tax Receivable Agreement that provide liquidity, capital resources, market or credit risk support, or engage in any activities that exposeprovides for the payment by us to the parties to the Tax Receivable Agreement of 85% of the amount of cash savings, if any, liabilityin U.S. federal, state and local income tax or franchise tax that is not reflectedwe actually realize as a result of (i) any increase in our consolidated financial statements except for those describedtax basis in BRP Group’s assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the Contractual Obligations section above.

tax receivable agreement.

During the six months ended June 30, 2021, we redeemed 252,512 LLC Units of BRP on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock, which triggered an increase in BRP Group’s tax basis but did not result in a tax benefit to the LLC Unit holders.
SOURCES AND USES OF CASH
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated:
For the Six Months
 Ended June 30,
For the Nine Months Ended September 30,  
2019 2018 Variance
(in thousands)(in thousands)20212020Variance
Net cash provided by operating activities$14,494,760
 $9,976,725
 $4,518,035
Net cash provided by operating activities$49,419 $43,644 $5,775 
Net cash used in investing activities(101,822,080) (41,594,379) (60,227,701)Net cash used in investing activities(27,607)(227,426)199,819 
Net cash provided by financing activities96,841,873
 36,102,028
 60,739,845
Net cash provided by financing activities112,150 317,147 (204,997)
Net increase in cash and cash equivalents and restricted cash9,514,553
 4,484,374
 5,030,179
Net increase in cash and cash equivalents and restricted cash133,962 133,365 597 
Cash and cash equivalents and restricted cash at beginning of period7,995,118
 3,123,413
 4,871,705
Cash and cash equivalents and restricted cash at beginning of period142,022 71,071 70,951 
Cash and cash equivalents and restricted cash at end of period$17,509,671
 $7,607,787
 $9,901,884
Cash and cash equivalents and restricted cash at end of period$275,984 $204,436 $71,548 
Operating Activities
The primary sources and uses of cash for operating activities are net income adjusted for non-cash items and changes in assets and liabilities, or operating working capital. Net cash provided by operating activities increased $4.5$5.8 million for the ninesix months ended SeptemberJune 30, 20192021 as compared to the same period of 20182020 driven by an increase in operating cash resulting from a net increase in cash provided by changes in working capital balances. The majority of this change related tonet income adjusted for noncash items and increases in accounts payable, accrued expensesoperating liabilities balances, partially offset by a decrease in cash relating to a higher balance in premiums, commissions and other current liabilities,fees receivable driven by revenue growth and the timing of revenue recognition under direct bill policies in employee benefits for which can be attributed to growth in our business resulting from Partnerships and organic growth.payment is received monthly through the duration of the year.
Investing Activities
The primary sources and uses of cash for investing activities relate to cash consideration paid for business combinationsto fund Partnerships and asset acquisitions,other investments, as well as capital expenditures. Net cash used in investing activities increased $60.2decreased $199.8 million for the ninesix months ended SeptemberJune 30, 20192021 as compared to the same period of 2018.2020. Cash consideration paid for business combinationsto fund Partnerships and other asset acquisitions increased $58.9decreased $199.0 million primarily as a result of a decrease in the MSI, Lykes and Foundation Insurancesize of the aggregate Partnerships we completed during 2019.the first half of 2021 compared to the same period of 2020.
Financing Activities
The primary sources and uses of cash for financing activities relate to the issuance of our Class A common stock, borrowings from and repayment to our Credit Agreements,credit agreements, payment of debt issuance costs, payment of contingent and guaranteed earnout consideration, distributions and contributions, proceeds from the issuance of membership interests and incentive buy-ins, and other equity transactions. Net cash provided by financing activities increased $60.7decreased $205.0 million for the ninesix months ended SeptemberJune 30, 20192021 as compared to the same period of 2018. Net cash provided by borrowings from our Credit Agreements to fund acquisitions increased $71.5 million2020 primarily as a result of the MSI, Lykes and Foundation Insurance Partnerships during 2019. In addition, cash used to fund the payment of contingent and guaranteed earnout consideration decreased $2.1 million and proceeds from the issuance of membership interests and incentive buy-ins decreased $1.6 millionan equity raise that we completed during the current year period. These increasesfirst half of 2020 which generated $166.6 million in financing cash wereand a decrease in net borrowings on our credit facilities of $68.7 million, offset in part by a decrease in redemptions of LLC Units and Class B common stock resulting in $32.6 million less financing cash payments of $12.5 million related to the repurchase of membership interests from members and an increase in distributions of $2.0 million.outflows.
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CRITICAL ACCOUNTING ESTIMATES
In preparing our financial statements in accordance with GAAP, we are required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, expenses, disclosure of contingent assets and liabilities and accompanying disclosures. We evaluate our estimates and assumptions on an ongoing basis. These estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances; although, actual results may differ from these estimates and assumptions. To the extent that there are differences between our estimates and actual results, our financial condition, results of operations and cash flows will be affected.
There have been no material changes in our critical accounting policies during the three months ended SeptemberJune 30, 20192021 as compared to those disclosed in the Critical Accounting PoliciesEstimates section under Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the Prospectus and Note 2 to BRP's condensed consolidated financial statements included in Part I, Item 1. Financial Statements of this report.SEC on March 11, 2021.
Dividend Policy
There have been no material changes to our dividend policy as described in the Prospectus.


Tax Receivable Agreement
We expect to obtain an increase in our share of our tax basis of the assets when BRP’s LLC Units are redeemed or exchanged for shares of BRP Group’s Class A common stock. This increase in tax basis may have the effect of reducing the future amounts paid to various tax authorities. The increase in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.
We entered into a tax receivable agreement (the “TRA”) on October 23, 2019 that will provide for the payment by us to the parties to the TRA of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of (i) any increase in tax basis in BRP Group’s assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. See “Certain relationships and related party transactions-Tax receivable agreement” in the Prospectus.
During the three and nine months ended September 30, 2019, no distributions or redemptions were made that triggered an increase in BRP Group’s tax basis.
EMERGING GROWTH COMPANY STATUS
We are an emerging growth company, as defined in the Jumpstart Our Business Startups (“JOBS”) Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We have also elected to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments, if applicable.
We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of our Offering or such earlier time that we are no longer an emerging growth company. We wouldwill cease to be an emerging growth company, ifand therefore will no longer be able to take advantage of these exemptions, at December 31, 2021 because we have more than $1.07 billion in annual revenue, we havehad more than $700.0 million in market value of our stock held by non-affiliates measured as of June 30, 2021 (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1.0 billion of non-convertible debt securities over a three-year period..
RECENT ACCOUNTING PRONOUNCEMENTS
Please refer to Note 1 to BRP'sour condensed consolidated financial statements included in Part I, Item 1. Financial Statements of this report for a discussion of recent accounting pronouncements that may impact us.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the potential loss arising from adverse changes in market rates and prices, such as premium amounts, interest rates and equity prices. We are exposed to market risk through our investments and borrowings under the CadenceJPM Credit Agreement. We use derivative instruments to mitigate our risk related to the effect of rising interest rates on our cash flows. However, we do not use derivative instruments for trading or speculative purposes.
Our invested assets are held primarily as cash and cash equivalents, restricted cash, available-for-sale marketable debt securities, non-marketable debt securities, certificates of deposit, U.S. treasury securities and professionally managed short duration fixed income funds. These investments are subject to interest rate risk. The fair values of our invested assets at SeptemberJune 30, 20192021 and December 31, 20182020 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.
Insurance premium pricing has historically been cyclical, based on the underwriting capacity of the insurance industry and economic conditions. External events, such as terrorist attacks, man-made and natural disasters, can also have significant impacts on the insurance market. We use the terms ‘‘soft market’’ and ‘‘hard market’’ to describe the business cycles experienced by the industry. A soft market is an insurance market characterized by a period of declining premium rates, which can negatively affect commissions earned by insurance agents. A hard market is an insurance market characterized by a period of rising premium rates, which, absent other changes, can positively affect commissions earned by insurance agents.
We do not actively invest or trade in equity securities. In addition, we generally dispose of any significant equity securities held by Partners received in conjunction with an acquisition shortly after the acquisition date.

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As of SeptemberAt June 30, 2019,2021, we had $193.4$500.0 million of borrowings outstanding under the JPM Credit Agreements, of which $105.0 million bearsAgreement New Term Loan B. These borrowings bear interest on a floating basis tied to either the prime rate or one of various other variable rates as defined in the JPM Credit Agreement. The variable rate currently in effect for the New Term Loan B is LIBOR.
During March 2021, we entered into three interest rate cap agreements, each with a notional amount of $300.0 million, to limit the potential impact of interest rate changes on cash flows. The interest rate cap agreements mitigate the interest rate volatility on $300.0 million of debt to a maximum of 4.75%. Taking the interest rate cap agreements into consideration, an increase of 100 basis points in the LIBOR and thereforeat June 30, 2021 would have increased our annual interest expense for the JPM Credit Agreement by $2.0 million. However, the interest rate on the New Term Loan B is subject to changesa floor of 4.00% so the interest rate applicable to the New Term Loan B will only change if LIBOR fluctuates in the associated interest expense. The effectexcess of an immediate hypothetical 10% change in interest rates would not have a material effect on our consolidated and combined financial statements.50 bps per annum.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report.Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, because of the material weaknesses in our internal control over financial reporting described in our Annual Report on Form 10-K for the Prospectus,year ended December 31, 2020, our disclosure controls and procedures were not effective as of SeptemberJune 30, 2019.2021.
In the Prospectus, we reported fourNotwithstanding such material weaknesses in internal control over financial reporting, our management concluded that our consolidated financial statements in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented in conformity with GAAP.
Remediation Status of Material Weaknesses
As part of our commitment to strengthening our internal control over financial reporting, we have implemented remedial actions under the oversight our Board of Directors to address these deficiencies, including:
•improving the design of key controls and operationprocedures over business combinations, revenue, information technology and other key business processes;
•implementing new enterprise resource planning (“ERP”) software, in connection with which we updated processes and enhanced our internal controls over financial reporting;
•implementing an ongoing monitoring program to ensure the control framework is appropriately implemented and comprehensively sustained over time;
•further augmenting leadership and staff responsible for internal control over financial reporting; and
•continuing to train employees responsible for control execution and oversight concerning (i) clarified roles and responsibilities, (ii) completeness and accuracy of data used in performing controls and (iii) control execution standards such as timeliness and required evidence.
Though we made progress towards remediation this quarter, the material weakness will not be considered fully remediated until the applicable controls operate for a sufficient period of time and management has concluded, through formal testing, that these controls are operating effectively.
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Changes in Internal Control over Financial Reporting
Except with respect to our ongoing remediation efforts described above, there were no changes in our internal control over financial reporting that were identified in connection withoccurred during the audit of our fiscal year 2018 consolidated financial statements. The material weaknesses relatequarter-ended June 30, 2021 that materially affected, or that are reasonably likely to (i) lack of sufficient number of personnel with the appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately; (ii) insufficient policies and procedures to achieve complete and accurate financial accounting, reporting and disclosures; (iii) insufficient policies and procedures to review, analyze, account for and disclose complex transactions; and (iv) failure to design and maintain controls over the operating effectiveness of information technology. During the quarter ended September 30, 2019, we continued the process of planning and implementing a number of steps to enhancematerially affect our internal control over financial reporting and to address these material weaknesses, including the hiring of key personnel in the accounting department. These material weaknesses still exist at September 30, 2019.reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.
ITEM 1A. RISK FACTORS
There have been no material changes with respect toSee the risk factors disclosedoutlined under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the Prospectus.SEC on March 11, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
The following list sets forth information regarding all unregistered securities sold or issued by us in the three months ended September 30, 2019since March 31, 2021 and the subsequent period prior to the filing of this report.Quarterly Report on Form 10-Q. No underwriters were involved in these sales. There was no general solicitation of investors or advertising, and we did not pay or give, directly or indirectly, any commission or other remuneration, in connection with the offering of these securities. In the transactiontransactions described below, the recipients of the securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the securities issued in this transaction.these transactions.

In connection with•On April 1, 2021, as partial consideration for the reorganization transaction incident toacquisition by BRP Medicare Insurance III, LLC, an indirect subsidiary of BRP Group, of substantially all of the Offering,assets of Tim Altman, Inc. (operating as “Only Medicare Solutions”), BRP Group issued 43,188,23517,982 shares of Class A common stock.
•On April 30, 2021, as partial consideration for the acquisition by Insgroup, LLC and BKS Financial Investments, LLC, each an indirect subsidiary of BRP Group, of substantially all of the assets of Mid-Continent Companies, Ltd. and Mid-Continent Securities Ltd., BRP Group issued 44,170 shares of Class A common stock.
•On July 1, 2021, as partial consideration for the acquisition by Baldwin Krystyn Sherman Partners, LLC and Millennial Specialty Insurance, LLC (“MSI”), each an indirect subsidiary of BRP Group, of substantially all of the assets of RogersGray, Inc., Breakwater Insurance Brokerage, LLC, and Monomoy Insurance Group, LLC, BRP Group issued 7,447 shares of Class A common stock and 1,950,232 shares of Class B common stock par value $0.0001 per share, to certain membersand the corresponding 1,950,232 LLC Units of BRP.
•On July 30, 2021, as partial consideration for the acquisition by Armfield, Harrison & Thomas, LLC (“AHT”), an indirect subsidiary of BRP including certain membersGroup, of substantially all of the assets of EBSME, LLC, BRP Group’s managementGroup issued 28,861 shares of Class A common stock.
•On August 2, 2021, as partial consideration for the acquisition by MSI, an indirect subsidiary of BRP Group, of substantially all of the assets of FounderShield LLC, AlphaRoot LLC, ReShield LLC, and boardScale Underwriting Services LLC, BRP Group issued 304,628 shares of directors. TheClass A common stock and 364,174 shares of Class B common stock and the corresponding 364,174 LLC Units of BRP.
•On August 2, 2021, as partial consideration for the acquisition by AHT and BRP Financial Services Holdings, LLC, each an indirect subsidiary of BRP Group, of substantially all of the assets of The Capital Group, LLC, The Capital Group Association Consultants, LLC, US Underwriters, LLC, and TCG Financial Management Company, LLC, and the membership interests of The Capital Group Investment Advisory Services, LLC, BRP Group issued 653,324 shares of Class B common stock and the corresponding 653,324 LLC Units of BRP.
•On August 4, 2021, as partial consideration for the acquisition of substantially all of the assets of River Oak Risk, LLC and River Oak Risk Holdings, LLC, BRP Group issued 179,845 shares of Class A common stock.
The securities described above were issued to a limited number of investors, all of which had sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment, and for nominal consideration.

The offer, sale and issuance of the securities described above were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering.


UseSubject to the terms of Proceeds from our Initial Public Offeringthe Amended LLC Agreement, each LLC Unit of Common Stock
On October 23, 2019, BRP Group's registration statement on Form S-1 (File No. 333-233908)) was declared effective by the SEC in connectionis redeemable or exercisable (along with the Offering. At the closingcancellation of the Offering on October 28, 2019, BRP Group sold 18,859,300 sharescorresponding share of Class B common Stock) into one share of Class A common stock including 2,459,300stock.
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Issuer Purchases of Equity Securities
The following table provides information about our repurchase of shares pursuant to the underwriters’ over-allotment option, which subsequently settled on November 26, 2019, at an initial public offering price of $14.00 per share and received gross proceeds of $264.0 million, which resulted in net proceeds to us of $246.2 million, after deducting underwriting discounts and commissions of $17.8 million and before fees and expenses incurred in connection with the Offering. J.P. Morgan Securities LLC, BofA Securities, Inc., Jefferies LLC, Wells Fargo Securities, LLC, Raymond James & Associates, Inc. and Keefe, Bruyette & Woods, Inc. acted as underwriters for the Offering.
BRP Group used all of the net proceeds from the Offering to acquire 14,000,000 newly-issued LLC Units from BRP, 1,800,000 LLC Units from Lowry Baldwin, our Chairman, and 600,000 LLC Units from The Villages Invesco, LLC, one of our significant shareholders, at a purchase price per LLC Unit equal to the initial public offering price of Class A common stock after underwriting discounts and commissions.during the three months ended June 30, 2021:
BRP used a portion
Total Number of Shares Purchased(1)
Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Value that may yet be Purchased under the Plans or Programs
April 1, 2021 to April 30, 202134,332 $28.06 — $— 
May 1, 2021 to May 31, 2021964 24.58 — — 
June 1, 2021 to June 30, 2021— — — — 
Total35,296 $27.96 — $— 
__________
(1)    We purchased 35,296 shares during the three months ended June 30, 2021, which were acquired from our employees to cover required tax withholding on the vesting of shares granted under the proceeds from the sale of LLC Units to BRP Group, as follows: (i) approximately $4.3 million to pay fees and expenses incurred in connection with the Offering and the related reorganization transactions and (ii) $89.0 million to repay in full the outstanding indebtedness and accrued interest under the Villages Credit Agreement. BRP intends to use the remaining net proceeds for general corporate purposes such as for working capital and for potential strategic acquisitions of, or investments in, other businesses or technologies that we believe will complement our current business and expansion strategies, as disclosed in the Prospectus.Inc. Omnibus Incentive Plan.
Other than the net proceeds used to repay the Villages Credit Agreement as described above and to acquire 1,800,000 LLC Units from Lowry Baldwin, our Chairman, and 600,000 LLC Units from The Villages Invesco, LLC, one of our significant shareholders, none of the net proceeds from Offering were used to make payments, directly or indirectly, to (i) any of our directors, officers or their associates, (ii) any persons owning 10% or more of our common shares or (iii) any of our affiliates.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.

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ITEM 6. EXHIBITS
The following exhibits are filed as a part of this Quarterly Report on Form 10-Q:
Exhibit No.Description of Exhibit
31.1*10.1
Form of Performance-Based Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 10.1 of the registrant's Current Report on Form 8-K/A filed with the Securities and Exchange Commission on May 6, 2021).
10.2
Amendment No. 1 to Credit Agreement, dated as of May 7, 2021, by and among Baldwin Risk Partners, LLC, a Delaware limited liability company, JPMorgan Chase Bank, N.A., as the Administrative Agent, the Guarantors party thereto, the Lenders party thereto and the Issuing Lenders party thereto (incorporated herein by reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2021).
10.3
Amendment No. 2 to Credit Agreement, dated as of June 2, 2021, by and among Baldwin Risk Partners, LLC, a Delaware limited liability company, JPMorgan Chase Bank, N.A., as the Administrative Agent, the Guarantors party thereto, the Lenders party thereto and the Issuing Lenders party thereto (incorporated herein by reference to Exhibit 10.1 of the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 2, 2021).
31.1*
Certification of the Registrant'sRegistrant’s Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934
31.2*
Certification of the Registrant'sRegistrant’s Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934
32*
Certification of the Registrant'sRegistrant’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data File (formatted in inline XBRL and included in Exhibit 101)
__________
*
*    Filed or furnished herewith


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BRP GROUP, INC.
Date: August 9, 2021By:BRP GROUP, INC.
Date: December 2, 2019By:/s/ Trevor L. Baldwin
Trevor L. Baldwin
Chief Executive Officer
Date: December 2, 2019August 9, 2021By:/s/ Kristopher A. WiebeckBradford Hale
Kristopher A. WiebeckBradford Hale
Chief Financial Officer



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