Thank you, Kevin. Good morning, everyone, and thank you for joining us for our third quarter 2020 earnings call.

Before we get into the results for the quarter, I want to make some high level comments. First, I'd like to say thank you to all of our teammates and express how pleased I'm with our performance for this quarter.

They continue to be laser focused on delivering innovative solutions for our customers. Operating in the current environment is not easy, but our team finds creative ways to serve and support our existing customers engage with new prospects.

I'm very impressed with how our teammates are leveraging the investments we've made in technology over the past few years to enhance our capabilities and customer interactions. These include everyone from producers, service, marketing, brokers and underwriting teammates.

At this stage, we do not see face-to-face interactions returning to the pre-pandemic levels for quite some time and more than likely the new normal will be different than in the past. As we navigate our way through the pandemic, I'm confident that we will continue to leverage innovation in our sales and service model to help further our growth and support our customers.

We've talked a lot in the past about how we're built for the long term and think about delivering shareholder value. On Tuesday of last week, our Board of Directors increased our quarterly dividend by 9%.

With this increase, we are now on our 27th year of consecutive increases, something we're very proud of. Now let's transition to the results of the quarter.

I'm on slide number three. We had a great quarter and I'm very pleased with our results.

We delivered $674 million of revenue, growing 8.9% in total and 4.3% organically. I'll get into more detail in a few minutes about the performance of our segments.

Our EBITDAC margin was 32.8%, which is up 130 basis points from the third quarter of 2019. Our net income per share for the third quarter was $0.47, increasing 14.6% on an as reported basis.

On an adjusted basis, which excludes the change in acquisition earn-out payables, our net income per share was $0.52, an increase of 33.3% over the prior year. Our team has done an outstanding job of growing our revenue while managing our expense base in response to the dynamics associated with COVID-19.

During the quarter, we completed another six acquisitions with annual revenues of approximately $31 million. We'd like to extend a warm welcome to all of our new teammates that joined during the quarter.

From a capital perspective, we issued $700 million of 10.5-year bonds in September. We're very pleased with a coupon of 2.375%, particularly considering that we issued bonds in March of 2019 with a coupon of 4.5%.

Our insurance was very well received by the debt markets, which we believe is a true reflection of Brown & Brown's credit quality. With this capital and our cash flow generation, we're well positioned to further invest in a disciplined manner in our business and deliver future results.

In summary, we're very pleased with the strong performance for the quarter as the strength of our operating model continues to perform well through these unprecedented economic times. Later in the presentation, Andy will discuss our financial results in more detail.

I'm on slide number four. As you may remember, in April, we thought our third quarter would be the most challenging due to the expected decrease in exposure units for our customers.

And then we performed slightly better than anticipated in the second quarter and during our second quarter earnings call, we indicated that third quarter would not be as low as originally anticipated. As a result of good new business, higher retention and rate increases, we had a really good third quarter.

We saw companies doing their best to restart their businesses, which included some rehiring of employees or taking them off furloughed. We saw employers and we saw individuals who start to lose employee benefits coverage through layoffs or reductions in force, which would also drive a decline in workers compensation coverage.

We saw this in certain industries. However, there are many industries that have been quite resilient or have even grown over the past six months.

As a result of our diversification across geography, customer size, industry lines of coverage and capabilities, we've continued to grow. Please don't take my comments out of context.

We have customers that are struggling, and we're doing our best to help them. We believe that there is going to be challenges over the coming quarters and consequently expect there will be ups and downs in the path to recovery.

During the quarter we saw rate increases similar to the last few quarters and in some cases, they've increased slightly. For the most part admitted market rates are up 3% to 7% across most lines.

Commercial auto rates were the exception, as they remain up 10%. There is a lot of talk about workers compensation rate starting to turn positive during the quarter.

We're not seeing this across the board. Generally workers' compensation rate are not declining as fast as they were in previous quarters.

From an E&S perspective, most rates are up 10% to 20%. Coastal property, both wind and quake are up 15% to 25%.

Professional liability is generally up 10% to 25%, depending on the coverage in the industry. For both of these lines there can be outliers.

One area where we're seeing the most pressure right now is personal lines in California, Florida and the Gulf Coast States. The continued reduction in carrier appetite has been caused by fires and tropical activity, resulting in a reevaluation of all CAT-exposed property.

We believe the reduction in personal lines capacity in CAT areas will continue to decrease in the near term. In connection with the increasing rates, the placement of coverage for many lines, certain industries where customers with significant losses continues to be challenging.

This would include access or umbrella coverage where a carrier or carriers might want to reduce their limit by half, but keep the premium constant. Just to give an example.

We do not expect this trend to change for the next few quarters. We've been active in the M&A space closing six transactions during the quarter with annual revenues of approximately $31 million.

During the first three quarters, we closed 16 transactions with annualized revenues of approximately $117 million. And in addition, we've already closed a few deals for the fourth quarter.

I'm now on slide number five. Let's discuss the performance of our four segments.

Our retail segment, organic revenue grew by 4.1% in the third quarter. It's a really strong performance recognized across substantially all lines of business, driven by a combination of good retention, improving new business wins and continued rate increases.

We're very pleased with how our team is prospecting new account in both the traditional face to face model, as well as virtually. Our National Programs segment grew 8.4% organically, delivering another impressive quarter.

Our growth was driven by continued strong performance from many of our programs, including our lender place, our commercial and residential earthquake and our wind programs, just to name a few. Our Wholesale Brokerage segment grew 8.2% organically for the quarter.

We realized improving new business and continued rate increases for most lines of coverage. Brokerage was the fastest growing, while our binding authority business delivered modest growth as many main street businesses are not back to full operation and we experience continued headwinds in the personal line space.

We expect this rate pressure to continue for at least the next few quarters until carriers reevaluate the risk appetite or allocate more capacity to this challenged area. The organic revenue for our services segment decreased 13.1% for the quarter.

The main drivers of the decline were lower claims volume for our social security advocacy businesses, a prior year terminated customer contract and lower claims for many of our other businesses related to COVID-19. We expect organic revenue in the Services segment will be down in the low to mid single-digit range for the fourth quarter.

Overall, it's a strong quarter and we like to say thank you for all -- to all of our teammates who continue to deliver for our customers in this challenging environment. Now, let me turn it over to Andy to discuss our financials in more detail.

Thank you, Powell. Good morning, everybody.

Like previous quarters, we'll discuss our GAAP results and certain non-GAAP financial highlights, including our adjusted results, excluding the impact of the change in acquisition earn-out payables. We're over on the slide number six.

For the third quarter, we delivered total revenue growth of $55.3 million or 8.9% and organic revenue growth of 4.3%. Our EBITDAC increased by 13.2%, growing faster than revenues as we were able to leverage our expense base and further manage our expenses in response to COVID-19.

Both of these factors were able to offset the headwinds associated with certain non-recurring items related to legal cost, the write-off of uncollectible receivables for one of our programs, increased non-cash stock-based compensation and a gain on the disposal of businesses recognized in the prior year. A quick comment regarding our employee compensation and benefits and other operating expenses as a percentage of revenues.

The employee compensation and benefits ratio increased slightly as compared to the prior year, driven by higher non-cash stock-based compensation cost as we were performing above the targets for our long-term stock incentive plans. In addition, with the market recovery during the quarter, there was an increase in the value of deferred compensation liabilities.

Please remember, the impact on EBITDAC margin is substantially zero as this increase was offset within other operating expenses. The ratio of other operating expenses decrease due to the continued management of our variable expenses in response to COVID-19 and to a lesser extent, the benefit of the aforementioned change in deferred compensation cost.

Our income before income taxes increased by 4.3%, growing at a slower pace than EBITDAC. This was driven primarily by the $21 million year-over-year increase in the change in estimated acquisition earn-out payables.

On the next slide, we will discuss our results, excluding this adjustment. Our net income increased by $18.4 million or 15.9% and our diluted net income per share increased by 14.6% to $0.47.

Our effective tax rate for the third quarter was 15.5%, compared to 23.9% in the third quarter of 2019. The lower effective tax rate, which was in line with previous guidance was driven by the tax benefit associated with the vesting of restricted stock awards.

Our weighted average number of shares increased slightly compared to the prior year and our dividends per share increased to $0.085 or 6.3% compared to the third quarter of 2019. Moving on to slide number seven.

This slide presents our results after removing the change in estimated acquisition earn-out payables for both years. We believe this presentation provides a more comparable year-on-year basis.

During the third quarter of 2020, the change in estimated acquisition earn-out payables was about $15 million, representing an increase of approximately $21 million as compared to the third quarter of 2019. Remember that we adjusted certain earn-out liabilities down in the first quarter of this year at the onset of the pandemic, based on our estimates at the time.

Since then, certain businesses have rebounded faster than anticipating causing us to increase the estimated earn-out liabilities in the third quarter of this year. On a year-to-date basis, the net impact of the change in estimated earn-out payables that they charge of about $5 million as compared to a credit of approximately $7 million for the same period last year.

Excluding the change in acquisition earn-out payables in the third quarter of both years, our income before income taxes, grew $27.2 million or 18.6% growing faster than EBITDAC due primarily to lower interest expense. Our net income on adjusted basis increased by $35.3 million or 31.6% and our adjusted diluted net income per share was $0.52, increasing 33.3%.

These grew faster than income before income taxes due to the lower effective tax rate for the quarter. Overall, it was a strong quarter.

Moving to slide number eight. This slide presents the key components of our revenue performance.

For the quarter, our total commissions and fees increased by 8.7% and our contingent commissions and GSCs were substantially flat. Our organic revenues, which exclude the net impact of M&A activity increased by 4.3% for the third quarter.

Over to slide number nine. Our Retail segment delivered total revenue growth of 6.5%, driven by acquisition activity over the past 12 months and organic revenue growth of 4.1%, which was driven by growth across most lines of business and slightly lower contingent commissions and GSCs.

For the quarter, retail realized about a 100 basis points of incremental organic revenue growth from the timing of new business and certain renewals we expected to recognize in the fourth quarter of this year. Our EBITDAC margin for the quarter increased by 250 basis points and EBITDAC grew 16.2% due to higher organic revenue growth and cost savings achieved in response to the pandemic, both of which were partially offset by a prior year gain on disposals, higher non-cash stock compensation cost and higher inter-company IT cost.

Our income before income tax margin increased 50 basis points and grew slower than EBITDAC, due primarily to a change in estimated acquisition earn-outs. Over to slide number 10.

Our National Programs segment increased total revenues by $25.1 million or 17.6% and organic revenue by 8.4%. The increase in total revenue was driven by strong organic growth, recent acquisitions and an increase in profit sharing contingent commissions.

EBITDAC growth of 12.7% was slower than total revenue growth due to the write-offs of certain receivables in one of our programs. Combined with higher inter-company IT charges, these items more than offset margin expansion from strong organic growth, as well as variable cost savings in response to COVID-19.

Income before income taxes increased by $600,000 or 1.3% with the growth primarily impacted by increased acquisition earn-out payables and higher intercompany interest expense. Over to slide number 11.

Our Wholesale Brokerage segment delivered total revenue growth of 16.2% and organic revenue growth of 8.2%. Total revenues grew faster than organic revenue due to recent acquisitions.

EBITDAC grew by 21.1% and the margin improved by 160 basis points as compared to the prior year due to strong organic growth and the delivery of reduced variable expenses in response to COVID-19, which more than offset higher inter-company IT charges and higher non-cash stock-based compensation cost. Our income before income taxes, grew by 21.1%, substantially in line with EBITDAC growth.

Over to slide number 12. Total revenues and organic revenues for our services segment declined by 13.1%, driven by the items Powell mentioned earlier.

For the quarter, EBITDAC declined by 22.8%, driven by lower organic revenue and higher inter-company IT expenses. These were partially offset by reducing certain variable expenses in response to the pandemic.

Income before income taxes decreased 59.5% due to a credit of $6.3 million recorded in the third quarter of 2019 for the change in estimated acquisition earn-out payables and there was no adjustment in the third quarter of this year. Few comments regarding cash conversion and outlook for certain items.

Regarding cash flow from operations, as a percentage of revenues, it decreased as expected for the third quarter due primarily to about $50 million of second quarter taxes that were paid in the third quarter as permitted by the Cares Act. For the first nine months of 2020.

Our cash flow from operations as a percentage of revenue was approximately 27% as compared to 25% realized at the same period of the prior year. The increase is driven by our expanded margins, lower cash taxes, and continuing to manage our working capital.

Regarding liquidity and interest expense, Powell mentioned earlier that we issued $700 million of 10.5 year senior notes in late September with spread decreasing materially and the receptivity of the debt markets we thought it was prudent to access the additional capital at long-term rate materially below our prior issuances. Our incremental debt is $500 million as we repaid $200 million on the revolving line of credit.

With the additional debt, our interest expense will increase by approximately $3 million per quarter. With this additional capital, our revolving line of credit and strong generation of cash, we are well positioned from a capital perspective to fund in a disciplined manner, additional investments to help further grow our business.

With that, let me turn it back over to Powell.

Thanks, Andy for a great report. Through 10 months, we've seen 6.4 million acres burn in California, Oregon, Washington and Colorado with 4.3 million of those acres in California alone.

There have been 27 tropical storms and 10 hurricanes with five of these hurricanes hitting the Gulf Coast region and one may hit this week. Rates are also increasing in most instances and interest rates are at historic lows.

All of this is in addition to COVID-19 and the related choppy economic environment. We have customers laying off large numbers of employees and others are the busiest they've ever been.

Even under these extraordinary circumstances, our diversified businesses performed very well. For the first nine months, we grew our business 3.5% organically, delivered improving EBITDAC margins of 32.4%, adjusted EPS was up 21.4%.

Overall, we'd say our performance and financial results have been strong. With rates continuing to rise, you'll see new capital coming to the marketplace opportunistically.

This will be in certain lines of coverage, but not universally across the board. In addition, very few senior leaders at insurance companies will discuss if rates are exceeding loss costs.

When that happens, they usually point to rates moderating or flattening. We're not sure if we've reached at this point yet.

The acquisition space continues to be hot. There's a lot of competition between private equity and long-term strategics.

We don't see this competition slowing down anytime soon. Our ability to continue investing in our business was further bolstered by our recent bond offering.

Quite honestly, I didn't think our cost of borrowing for 10-year money would ever be 2.375%. Our pipeline is good, but as you know, we don't count anything till it's signed.

Finally, we continue to drive our technology agenda across the company through digitization, data and automation and prioritize technology investments around the following. One, continually optimizing and enhancing our data and analytics program.

Two, expanding our digital delivery capabilities around products and services. And three, engaging an initiatives designed to drive greater efficiency and velocity through our underlying processes.

We are constantly thinking about how we can serve our customers better and faster. In closing, we thought it was a really good quarter.

With that, let me turn it back over to Kevin to open it up for the Q&A session.

Good morning, everyone. Looks like you had a great quarter.

First on the organic revenue growth results. I was wondering if you could give us some more color on the balance between the impact of rate increases versus new business.

You did call out, Powell, in your comments about customers hurting. And I'm wondering if the organic is more a reflection of rate increases and their new business opportunities are down, but maybe you could give some perspective on that.

And then throw out some comments about the performance of Hays.

Okay. So number one, let's talk about -- historically, Greg, as you know, we've talked about the impact of rates were somewhere between 25% and 33% and the overall impact in exposure units was a bigger impact on our business.

We're going back over a 20-year period when I say that, that's number one. Number two, we -- our new business is good, but it is not as pre-pandemic levels.

So I would acknowledge that. But I do believe it's a combination of all of the above.

And so, I'm very pleased with growth in new business in a number of our offices. One, some places in the country are seeing more rate impact than others, i.e.

coastal areas. Our retention levels are up and even if that's slightly incremental improvement there that helped.

So I think it's a combination of all of the above. Number one.

The second question, we've been very, very pleased with the Hays team in joining Brown & Brown and their performance, as well as the rest of our team continues to be really good. So we're very, very pleased with that acquisition and lots of good things going on there.

Great. My follow-up question would be just around the expense side.

I know you called out lower T&E, I guess we would like to know -- I have some ideas on where you think if there's going to be higher travel and entertainment next year, if we should see margin pressure in this area. And also I think you called out lower taxes.

I'm wondering if the taxes are going to -- or tax rates are going to revert next to year a higher level?

Okay. So as it relates to higher variable expenses next year, we do believe that there is kind of a slow, steady increase as people start to travel again and entertain visitors and things like that.

And we can't tell you when that's going to happen. But yes, we do believe that that will work its way into our results next year; number one.

Number two, we don't speculate on the outcome of the elections. And as you know, the important thing really is -- will be the decision if the House and the Senate are in the same party or if they're in different parties, and how things will get through Congress.

So I would tell you that we like you are waiting with great interest and have considered a lot of scenarios regarding who ends and what that potential impact could be to Brown & Brown. But I think that we are positioned well to continue to invest and grow the business, regardless of the ultimate outcome of next Tuesday.

Okay. Perfect.

Greg, I'll just add to that, just as you're thinking about rate next year, barring anything that happens through all of the elections, we would expect our effective tax rate would go up a little bit next year. Remember, we got the tax benefit in the third quarter of this year, which drove our effective down to 15.5%.

We wouldn't see that same level of benefit next year. So it will go up a little bit, okay.

Thank you for the clarification. Just one follow-up on point number one, regarding gradual increase in T&E.

Powell, as you look across the entire enterprise, as you think about things, returning to whatever the new normal looks like, is it conceivable that there could be a little or no margin expansion next year as life returns to whatever the new normal is?

Yes.

Got it. All right, thanks for your answers, guys.

Thanks, good morning. One question I was hoping you can help us with is with regard to the pace with which your policyholders or your insurers are filing claims.

Can we see that pick up dramatically between the second quarter and the third quarter?

No, I wouldn't. I just want to make sure it's a little grainy reception there.

You wanted to know was there a marked increase in number of claims with our insurers between Q2 and Q3, is that what you said?

Exactly right, yes.

Yes. No, we haven't seen that.

I would tell you that in the second quarter there were lots of claims filed in anticipation or potential coverage around BI claims on pandemic, but I would not say that there was some huge jump between Q2 and Q3, no.

Okay. And then -- I'm trying to get a little bit more insight into one aspect of the business.

And I know you don't break out the volumes of maybe the smallest accounts. But hope you can give us a little bit of color on that, the perception is that, that segment of the industry is most vulnerable to the pressures of pandemic.

I was wondering how that translates into the book -- into that segment of your book?

Yes. All right.

So let's think about it at a high level and where we have, what you might call small business. Small business, let's just for sake of this discussion make it simple, at premiums under, let's say, $30,000 a year.

So you have that in commercial. I mean you have that commercial exposure in retail.

You have a lot of that in Binding Authority in wholesale, and we have a lot of that in National Programs; so that's number one. Number two, in addition, you have some personal lines business, which is being impacted, as we said because of either fires or windstorm in coastal areas.

So yes, we are seeing continued pressure on the small businesses, because, as -- when you go home, of you live outside a major city and you go by a shopping center and there is a place that you use to go and have dinner, and they're sort of open, and they're operating at 50% and as there are people sitting outside, that exposure basis is down substantially. And in some instances, they are not making it.

And if you do it in a major city, you see a lot of places that have gone out of business and that has impacted us already and will continue to impact us. And so that is the area at least so far, Meyer, that we would say is -- we're seeing the most impact.

I think that we saw it early, we saw it often, we continue to see it. And there were more medium and larger size businesses as they were financially stable, they were making tough choices, but to protect the business.

In some instances, the smaller business didn't have those financial resources to do that. So yes, we are seeing that in our business.

Okay. That was very helpful.

Thank you so much.

Hi, thanks, good morning. My first question, you guys have kind of done a -- given forward guidance for most quarters this year.

It seems like good time, right? And some kind of high-level and then about some of the segments.

So I'm just trying to, high level, get a sense on how -- previously, you guys had alluded to the Q3 is potentially being the weakest quarter of the year. Now it seems like that was the Q2.

So when we put all of your comments together about pricing, new business, exposures, does it feel like the trough of this was the second quarter. How should we just kind of think about that?

Yes, good morning, Elyse. I think you could think of it that way.

I think, the challenge -- sorry, the challenge on this is -- I know you want a certainty, and there is no one that you will talk to that will be able to give you certainty around what's going to happen in Q4 and Q1 and Q2 of next year. And so, so much of this is, I believe, impacted on -- impacted by what happens with the virus and do we have some limited shutdowns in Q4 as it continues to spike, does that not happen, what happens with the virus and therefore how does that impact the business.

If you looked at it on a trajectory standpoint, you would think that, yes, it is improving. And we don't run our business on hope and a prayer.

And so we don't know -- I know you want that, but we don't know if that's going to be the case. And what we've always said is, we believe our business is a low to mid-single digit organic growth business in a steady state economy.

We are not in a steady state economy, we have unique factors that are positively impacting it, i.e. rates going up.

We have unique factors, i.e. Corona virus and other things that are impacting businesses, where you have businesses going out of business or reducing exposures dramatically.

So let me give you an example, Elyse. If you talk to a number of our construction customers, the number of our construction customers, all over the country, what you would hear over the last quarter and today is, they have very good workflow or a pipeline of work for the next six to nine months.

But at the end of nine months, there is more uncertainty out there, not because they don't have the capacity to do it, it's just people are not, in most instances, bidding as much work right now that far out. Now, in certain places, we're seeing that pickup.

Here in Florida, a lot of people are moving to Florida. So you've got people bidding in contracts all over the place.

So I wish I could -- we could answer that and give you some level of comfort, but we can't. I would tell you that we're very pleased with the way we executed this quarter.

And our three big divisions all delivered. And so we're really pleased with it.

Yes. Elyse, in our commentary, we said there could be ups and downs.

We expect that's going to happen over the coming quarters. So it's not going to be that the fourth quarter will guarantee it's going to look more the third quarter.

It could be up, it could be down, Q1 to be up, Q1 could be down. We just think it's going to be a little bit bumpy as we work our way through this economy right now.

That's helpful. No, I thought like there was a lag, right, within your business and when it ultimately comes into organic, meaning that wouldn't the Q4 for the most part, just to a certain degree, where economy is bumpy, that could more impact organic when we go into 2021?

No, probably, I won't jump to that conclusion. I think it really gets to what ultimately happens on the renewal business underneath, Elyse.

So recall back in Q1 and also in Q2. We took adjustments for revenue that we had recognized previously.

And that's too therefore bring that down to what we think is appropriate for the change in the exposure units. What happens at renewal will be the question.

So, did we get the exposure units, correct? Don't know.

We'll find out as we get to what renewals in the audits that are out there. If companies aren't feeling positive they may drop exposure units further, don't know.

Again, if this is type of things, we're going to watch and see how they play out in the fourth quarter and then in the first quarter. The other thing, Elyse, you got to know that as rates are going up and exposures are potentially going down in instances, there are a number of customers, who are buying different limits or dropping certain coverages because of cost.

So let's just say that, it was a lease manufacturing and you did have $40 million umbrella last year and we came to see you [indiscernible] and you bought a $25 million umbrella and you're paying actually more for the $25 million than you did last year for the $40 million. So you're having people make adjustments in certain areas in excess is a very good example, where they're basically say, I can't pay you more or in certain class of business, where they basically just say, I can't do it, we cannot pay the premium for that level of -- for that coverage and they decide to go bear on something.

So we are starting to see that too. So let's not lose sight of that.

That's helpful. And lastly, just on expenses.

Andy, I think you mentioned some shift with some deferred costs between employee comp and then other operating expenses. Not just to quantify that, but I'm just trying to get a sense of the impact in other operating expenses.

Just as we think about kind of the COVID related savings that could have come through OpEx in the quarter.

Okay. We're going to repeat the questions were here.

It's hard for some people on the line to hear the questions being asked. The question was about what was the size of the deferred comp adjustment?

So for this quarter, the market impact was around $4 million between salaries and benefits, as well as other operating expenses. On a year-to-date basis, the adjustment is actually getting fairly small.

It's kind of how those general work out through the year.

Okay. That's helpful.

Thank you for the color.

Thank you, Elyse.

Hey, good morning. Maybe for Andy.

First question on -- I see there is a bunch of outstanding debt with a coupon over 4%. Is there any opportunity to retire some of that.

Does that it makes sense financially and issue in the [indiscernible]?

We would always evaluate that. But probably the economics right now would not makes sense to do that at this stage, Mike, just because of that and everything.

Okay, got it. I guess I'm thinking about some of the comments, that Powell you made about the rate environment.

On one hand, you kind of said that given a lot of carriers are now kind of on the table that rate is in excess of loss trend, that could mean that, the rate momentum dissipates in the coming year. I guess, on the other hand, maybe this is a some minority of their portfolio, you can get more color.

I think you talked about a very challenging environment for certain companies where you even mentioned that a carrier might want to reduce or limit by half, to keep the premium constant and you expect that to -- that trend to remain for the next few quarters too. So just -- maybe just give me some more color on the rate environment and what you guys are seeing and is that is an extreme example you gave.

Sure. So to repeat the question for everybody.

The question really is, can you provide a little more color on the rate environment? And do you think there could be moderation next year or will you see extreme examples, like the umbrella example that I gave where you have half the limit for the same price?

So let's go back to something that we said in the script, which was, we believe there's going to be certain opportunistic capital that will come into the marketplace. Where do you think we will see that, you might ask.

And we believe we'll see that in lines of business that can be quickly or easily accessed, particularly short tail business like CAT property, but it could also be on claims made business and professional liability, it could be in reinsurance, it could be in a number of different areas, but not going to impact, let's say. automobile or it's not going to impact a traditional general liability account in the middle of the United States, I believe, manufacturing of the product or whatever the case maybe.

That's number one. Number two.

Mike, we said that insurance companies senior leaders are going to be very careful, although there have been one or two that have missed it. But about how their rate increases are tracking towards low cost increases and do we see something that would moderate.

So I don't -- the industry would say that, for example, casualty has not made money for a number of years. And I believe that to be the case.

I believe that to be GL, auto, a lot of these things, but then the reality is, can you have a 10% increase on top of a 10% increase on top of a 10% increase. Let's say three years in a row.

And I tend to think the answer to that is, it becomes more difficult. And when I say that, there is a tolerance level that the customer base can actually stomach and/or then they start to take units off the road they start doing things that mitigate costs wherever they can.

So when I talk about -- when we talk about an umbrella that you get half the limit for the same price or more, those are typically on very large accounts, but not exclusively. So umbrella business is very much impacted, but somebody could drop their umbrella.

But again, if you've got rates that are up 3% to 7% and admitted market and auto up maybe 10% or more, that may chug along, but in some of those areas that you're seeing 15%, 20%, 25% increases, I don't think they're going to be going up as much next year. So CAT property, there's going to be a point where other markets are going to say the returns are high enough to where we want to pile in.

And so there will be a moderating of that at some point and I don't know exactly when that's going to happen. But it's going to happen.

And so it creates all kinds of challenges to place the business. It also creates all kinds of opportunities, when people are very frustrated with their broker that may not be doing the best job for them and we can come in and help -- hopefully save the day.

Okay, that's helpful. And just a last quickie -- again, on a macro level as well.

I mean would you -- should we be thinking kind of stimulus if it's something that's passed after the election would be a positive for organic growth in some of your customers and vice versa. And is that's something we should kind of think about when we think with our numbers as the year progresses.

Yes. I think, first of all, we're not going to speculate on if that happens or if it doesn't happen.

So we don't know. But if in fact it were to happen, I think you would have a slightly positive impact, because -- but there is going to be a point regardless of if it's now or in the future where the stimulus will stop.

And so, there will be a reckoning there at some point. And so, having said that, the businesses that are kind of right on the line might get another three months, let's say.

And some of those might fall under that small business category that we talked about earlier. And then the question is, does the economy pickup enough in that period, so they can make it.

Not yet to be determined, but we typically think about it, Mike, not so much about the quarter impact, what we think about ultimately the fact that that's going to have to stop. And so there is still a day of reckoning there.

And there's going to be some fallout, I think, in some industries, absolutely in consolidation.

I guess so. Thank you.

See you next quarter.

Hey, good morning everybody. My first question goes to the M&A activity.

It seems like it's been picking up a little bit. Is that just a function of more in-person meetings again.

And maybe you can talk a little bit about how you see the pipeline? And then is there an increased appetite for M&A, a decrease appetite in M&A and any color you can offer about that?

Sure. Good morning, Yaron.

I would tell you, number one, there's just a lot of activity. That's first and foremost.

And I think we said in the last call if you'd asked me -- if you'd asked Andy and myself in April, what do you think is going to happen in M&A, and we really thought about it. We thought there was a potential likelihood that it is sort of stopped for six months.

And it really sort of stopped for six weeks or eight weeks and then it started picking back up again. So you have generally a lot of activity.

That's number one. Number two.

In the last six weeks there has been an increased interest in the possibility of doing things between now and end of the year with the potential that there would be President and or Congress that would be in a position to increase cap gains taxes, which means they would want to take some chips off the table and the lower tax structure, tax rate this year. So I think you're going to see two things happen between now and the end of the year potentially as a result of that.

But really if they're not in the pipe now, if somebody raised their hand last week, unless you've got everything working perfectly, it takes a while. And so it may or may not be able to get done by then.

So, I would also tell you just as a broad statement, if you tell -- if you could look at our numbers and you know that we are having some reduction in variable expenses, well, other agencies are having a reduction in variable expenses. And what we want to make sure that we do is we want to buy businesses based on ongoing concern basis, what does that look like and that's hard to anticipate.

So the key is getting your arms around the revenue streams and expense levels on an ongoing basis in the business. And a lot of that is just talking with the people in that process, figuring out culturally is there a fit.

And then financially, is there some way to structure something that's a win-win. We feel really good about the opportunities that are out there.

As we said in the past, although it's very competitive, the interesting thing is, there are distinctions unknown. not only PE buyers but among strategics.

And that does not mean one is the -- only good or is better necessarily than the other, they are different. And so, usually those things are sorted out in that bidding process.

So let's just say the pricing is, you could throw a blanket over the pricing that three or four firms put up. It ultimately comes down to their cultural fit.

And I tell people that we know are meeting the process. And then it may not be with Brown & Brown.

But we always say pick the firm you feel the most comfortable with culturally and then go get in the core and figure out how to cut a deal with them, because if you do a deal with a firm that just gives you the highest number, many times that may be PE. That seller is not going to be there most of the time in three years, because they'll be frustrated because culturally, it might be different than what they did, but they went for the dollars only.

So it's just a difference of philosophy.

All right. I appreciate the full answer.

And then my second question, you call out the potential impact about the change in capital gains tax, any other key considerations that you're looking at into the selection things that could directly impact your business.

Sure. The question really is, are there any changes other than cap gains tax that we're thinking through for this election.

And so, the short answer is, sure. So let's think about that for just a moment.

One of the things I talked a lot about is the evolution of healthcare in the United States. And so, we have a large healthcare business and I'm talking specifically about the providing of health insurance.

I'm not talking about the ancillary line, talking about the health insurance. And is there some variation of Obama Care or ACA that is modified going forward.

That's a possibility. How does that impact.

Number two, CAT gains and/or things like carried interest. And if in fact that's eliminated, and what would that potentially do to PE buyers.

And so there's a number of things. There is speculation around security taxes going from a limit to an unlimited number.

There is a whole bunch of things that we talked about and evaluated, you think about the impact of Federal and State taxes and the interplay between those. Some of you that live in states like California or New York or New Jersey or Connecticut are going to get the opportunity to fund more of the deficits in the states that you live in, which is going to create a departure of more people coming to places like Florida and Texas and other states that don't have income tax.

And so, how is that all going to work. And so it's going to be really interesting in the next, let's say, couple of years to see that kind of evolution/migration to places more amenable tax structure states.

Got it. Thank you.

Welcome.

Yes. Thank you.

Good morning. The receivables write-off in National Programs, what was the amount?

Mark, what you said, was your question on [indiscernible]. Yes, so the write-off there was around about $3 million.

$3 million. And then the tax rate for next year, is 3Q still a lower tax rate or is it going to be steady throughout the whole year?

No, it will go back up next year, probably a better view when you think about 2021 is actually look at 2019 on the facing by the quarters.

Okay. So maybe a little lower in 3Q, but not that much.

No, it -- Yes. It won't be that much lower.

Again, look at 2019, that will be a much better barometer. The reason why this year was lower was the vesting of the restricted stock that we had Mark.

And we won't see that same level in 2021.

Okay. And then the IT charges, inter-company IT charges have had an impact on margins for quite some time.

Does that moderate, say, next year or is that still going to be a kind of the headwinds?

It will probably start to moderate out next year. So it's -- as you know, we've been making investments in technology back starting in 2016.

A lot of that we funded at the corporate level. And then as those programs have matured out, we've been charging them out to the segments over time.

And then finally the contingents and supplementals next quarter, any body language on that?

No, we don't really have a view on those Mark. Again, as you probably recall with the new accounting rules.

We are accruing for those throughout the year based upon the placement of the policies. So we don't really have a view on cash collection until we get into next year.

Thank you very much.

Yes. Sure, Mark.

Thank you.

Yes. Thanks and good morning.

Good morning.

Earlier this year it felt like there was the position from you guys that we're not going to have an expense program. We have incentives in place for regional management to run their ship correctly.

And we're going to lean on them to do so. And it feels like there was a better improvement in variable expenses in the third quarter than second quarter.

And I was curious if you got any insight from the field operation, what changed or what drove this margin benefits?

Okay. So, Phil, I think that was pretty clear.

I think people could understand the [ph] question. So I'm not going to repeat that.

You got to remember, ours is not a centralized program and I know that there are some firms out there that are saying, we're expecting X amount of expense savings and we think some of it's going to be permanent, some of this is going to be temporary until. And the answer is, remember, we built everything into individual businesses.

So if you are at Atlanta, your whole -- all of your expenses are in Atlanta. If you are in Texas, you got all of your centers that you run in Texas, and depending on the office and the businesses that they service, that's going to dictate the P&E and other variable expenses that are incurred in that office.

So let's just say the Atlanta office for sake of this discussion, right? The number of customers that are all over the country and they have a high number of customers in Arizona, California, Oregon and Washington.

In whatever flat of business that is. And so there are people were on airplanes all the time.

Well that's stopped. So the expenses that will be saved in Atlanta might be dramatically different than if you are in, let's say, Fort Myers, Florida and the vast majority of your customers are within 60 miles driving, and they can still go and drive and see those customers.

So, no, there is not some magic wand or thing relative to the variable expenses in Q3 over Q2. We would just tell you, I think it's a function more of retention, new business and rate increases.

Yes. Phil, I don't jump to the conclusion, just because the margin was up more in the third quarter versus the second quarter, that we were able to take out more variable expenses.

In our prepared commentary, what we were trying to make sure we conveyed is, it was a balancing of the increased organic, as well as managing the expenses. But as we also mentioned, we are anticipating and we are starting to see variable expenses are slowly starting to go up as we are able to engage more with customers and we would anticipate that, that will continue on in the back end of the year and into 2021.

Got it, okay. And look, there was talk about the potential for pricing in excess of loss cost.

Putting aside whether or not that's true at some point in the future if it were true, does that change your positioning, your expectations or the negotiations around profit sharing contingents? As we get pricing in excess of loss cost and there is a forward expectation of maybe better margins at the underwriters, do that change your posturing for the profit sharing you can get?

No, because remember profit sharing or contingency is based on the results that we have. And so insurance is based on law of large numbers, and so you could have rate going up.

But you could have a freak accident where there is truck that you ensure that hit someone and kills somebody, totally unanticipated, and you have a limit loss. So remember, conceptually I think your thought is correct.

In actuality, it's very much based upon the performance of our book of business. And so I don't want you to confuse the overall results of the insurance company with the result of, let's say, the Brown & Brown business inside there.

Understood. Got it, thank you.

Thank you. Kevin.

How many more do we have in the queue, sir.

Okay. We'll take that last question and then we'll go and wrap up for today.

Well, thanks so much for putting me in. I appreciate it.

Powell, I just wonder if you could just give any thoughts on the near-term outlook you see for the lender place business.

Sure. So the question is, the outlook for lender placed business.

I think that, number one, as you know, we made an investment in a business Loan Protector which is additive to Procter and they're both complementary. So that's the first thing.

The second thing is the business that we are writing, some of it is what you'd call expansion of existing accounts, where they're having more things forced on to programs, but I would tell you, it's more us writing new business. And that's very important.

So if you go back to 2009 and 2010 and 2011, the increase was an existing financial institution, that their portfolio is expanding as opposed to us getting more companies with different portfolios. Isn't that how you say that, Andy.

Yes. So I think that, that's a positive thing for us.

And with the investments that we've made. There are lot -- I shouldn't say lot, handful or two handfuls of traditional middle-market lender placed firms and there are like one or two like really big 800 pound gorillas.

And with our investments, not only in the capabilities and the technology, but the size and the portfolios that we handle now, we're able to better compete against all sizes, including those large ones. So we got a lot of cool stuff going on there.

And Mike Cox and his team is doing a great job. So yes, we like the business.

Yes, Mike, we'd want you guys to read into our commentary that we're seeing an uptick in our closure in lender place foreclosures that's out there, that is not what we're seeing. This is just purely on new business or who they were picking up.

Very important thing.

Thanks for that. Appreciate it.

Real quick, because, Andy, you made a comment earlier in the opening remarks that I kind of broke up on me, so I apologize, but I thought I heard you say something on the retail slide something about revenue leak in 4Q.

Yes. We -- this in the third quarter so -- and right on the phone, the question was around the revenue from the fourth quarter into the third quarter.

We'll just call out, we had around about 100 basis points of benefit to the organic in the third quarter, which was really -- that we had anticipated would close in the fourth quarter or originally we had anticipated would renew in the fourth quarter. So that's just a movement between the quarters.

Okay. Thanks, guys.

Thank you. Okay, thank you all very much for your time.

We hope you have a wonderful quarter, and we look forward to talking to you in January. Have a great day.

Thank you very much.