RSC Topco, Inc. (BRO) Earnings Call Transcript & Summary

Good morning, and welcome to the call regarding Brown & Brown Inc.'s acquisition of RSC Topco Inc., the holding company of Accession Risk Management Group. Today's call is being recorded. Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call and including answers given in response to your questions, may relate to future results and events or otherwise be forward-looking in nature. Such statements reflect our current views with respect to future events and are intended to fall within the safe harbor provisions of the securities laws. Actual results or events in the future are subject to a number of risks and uncertainties and may differ materially from those currently anticipated or desired or referenced in any forward-looking statements made as a result of a number of factors. Additional discussion of these and other factors affecting the company's business and prospects as well as additional information regarding forward-looking statements is contained in the slide presentation posted in connection with this call and in the company's filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, there are certain non-GAAP financial measures used in this conference call. A reconciliation of any non-GAAP financial measures to the most comparable GAAP financial measure can be found in the investor presentation for this call on the company's website at www.bbrown.com, by clicking on Investor Relations and then Calander Events. I will now turn the call over to Mr. Powell Brown, President and CEO.

Thank you, Olivia. Good morning, everybody, and thank you for joining our call today. I'm here with Andy Watts, our Chief Financial Officer; and Accession's CEO, John Mina. As we -- as a follow-up to our announcement earlier this morning regarding the pending acquisition of Accession, we want to provide an overview of the business, key financial terms and some thoughts. We're limiting the call to one hour and have about 20 minutes of prepared comments. Then we'll open the line for questions. Please keep in mind the purpose of this call is to discuss our pending acquisition of RSC. Therefore, we will not be providing an update on our overall business or outlook as the key themes from our Q1 earnings call have not changed. Before we get into the details of the acquisition, I wanted to mention that effective in the third quarter of this year, we will be consolidating down to 2 segments, Retail and Specialty Distribution. Specialty Distribution will include our programs and wholesale businesses and the segment will be led by Chris Walker and Steve Boyd. Okay. Let's get into the exciting news we've announced this morning. The pending acquisition of RSC, which is the parent company of Accession and Accession owns Risk Strategies and One80. I'm on Slide #5. To help with the strategic reasoning, we thought it would be helpful to begin with a brief discussion about our long-term vision, key items that enable our best-in-class financial metrics as well as our long-term track record of industry-leading profitable growth. Our vision is simple, and that is to be the leading global provider of insurance solutions for our customers. To achieve this, it means we need to have the best capabilities to serve our customers. We've been building these capabilities, and we'll continue to invest in the coming years. I'm on Slide 6. We're extremely proud that we've delivered industry-leading financial metrics over a long period of time. These include total revenue growth, organic revenue growth, EBITDAC margin growth and free cash flow conversion. What fuels our performance is our culture, our teammates and our operating model. As you know, we have a unique performance-based common culture. Our decentralized sales and service model is a key enabler of our strong performance. This is on top of the backbone of our common operating platforms. We are a high-performance team. We have highly talented teammates. And as you know, we are an entrepreneurial meritocracy, which is underpinned by accountability and discipline in everything that we do. M&A has been and will continue to be a part of the strategy. Our mix of strong organic growth and robust M&A engine drive our consistent double-digit growth in total revenues and finally, we have a strong balance sheet to go with that. I'm on Slide 7. We have a proven track record of growing our company organically and inorganically, and they have completed over 690 acquisitions of all sizes. The acquisitions highlighted on this slide represents some of the strategically important deals we've completed in the past. These acquisitions have helped us grow from approximately $300 million in 2000 to nearly $5 billion last year. Our acquisition of Accession will be a major step in our journey to the next intermediate goal of $8 billion and beyond. I'm on Slide #8. As I mentioned earlier about the importance of having a wide array of capability -- I mentioned earlier about the importance of having a wide array of capabilities. We believe the acquisition of Accession adds to our overall value and makes the total combined organization of Brown & Brown stronger together. We're not looking for one and one for to just equal 2. We're looking for 2 plus. Accession has a similar decentralized sales-focused operating model and culture, which we're excited to work with and collaborate with their team of 5,000-plus professionals. The addition of their capabilities, along with ours, will enable us to better serve our customers and continue to provide world-class insurance solutions. As we've gotten to know John and his team over the past 5 to 6 months, we align quickly on culture, similar operating models and intense focus on talent, the desire to scale the importance of specialties, a proven acquisition and integration model, and lastly, as a passion for incredible customer service. I'm on Slide 9. Let's talk for a moment about the strategic rationale. Accession is a high-quality, diversified integrated business, key term, which operates mainly in the middle market and aligns very well with Brown & Brown and further deepens our industry leadership. Accession has been highly acquisitive, completing over 190 acquisitions since their inception in 1997. They have a very successful M&A playbook and integration plan, much like Brown & Brown. The combination will position us to enhance future M&A opportunities. This acquisition combines 2 highly compatible businesses with an entrepreneurial sales-based cultures that are deeply embedded in our local communities. We both focus on client service and sales growth, our organization's focus on our customers and our teammates. And without talented teammates, we cannot get and keep our customers. Accession has a very strong financial profile with 2024 pro forma adjusted revenue of $1.7 billion and adjusted EBITDA of $600 million. We're paying about $9.8 billion for this astounding -- outstanding business, an incredible team and our anticipating strong performance results over the coming quarters and years. Andy will get into more details about the financial terms and returns in a few moments. I'm on Slide 10. Accession today looks a lot like Brown & Brown 10 years ago. It's a premier North American insurance distribution platform with a fully integrated business model and is the 9th largest privately held insurance broker. Risk Strategies makes up 70% of the business while One80 is 30%. And as you know, here at Brown & Brown, retail is about 60% of our total revenue and specialty distribution is about 40%. Accession has 2 distinct businesses operating in the middle market branded as Risk Strategies with a focus on small commercial, middle market and upper middle market, corporate clients and high net worth individuals. They also have an outstanding specialty distribution business called One80, which was launched in 2019 and now operates over 100 unique programs and with binding and wholesale brokerage operations. Accession placed over $15 billion of premium in 2024 and operates in over 200 locations in the United States and Canada with over 5,500 teammates. I'm now on Slide 11. We'd like to highlight some complementary solutions Accession will be adding to the Brown & Brown suite of products of services. Together, we create a stronger, more capable and resilient platform. We don't have a significant amount of concentration or overlap in any single area that would highlight the strength and I would highlight the strengths of Risk Strategies and One80. Accession brings differentiation to us in areas like agriculture, health care, private equity, reinsurance and captives. We bring capabilities with complex casualty, trade credit, multinational placements, large group employee benefits and surety, just to name a few. We see opportunities to extend capabilities across channels and verticals that neither firm could capture in the near term. Now, let me turn it over to Andy so he can share more details regarding the transaction.

Thanks, Powell. Good morning, everyone. We're on Slide #12. Accession in total, had over $1.7 billion in pro forma adjusted revenue and $600 million in adjusted pro forma EBITDA in 2024. We are purchasing this well-managed business for a gross purchase price of approximately $9.8 billion with approximately $9.4 billion due at close. The difference is comprised of debt-like item, primarily earn-outs associated with prior acquisitions they completed. Cash makes up roughly 86% of the consideration with 14% of the consideration going to RSC's ownership in the form of stock. Approximately $1.3 billion of Brown & Brown stock will be issued to selling shareholders. Kelso will be taking about $250 million of our stock with the residual going to the teammates of Accession. The stock will have a holding period ranging from 2 to 5 years with a large amount restricted for 5 years. We expect to fund the acquisition with a $4 billion equity raise and the issuance of $4 billion of senior unsecured notes across multiple tenors. In addition to this exciting news, we also want to highlight that this morning, Fitch released their credit rating of BBB flat for Brown & Brown. This rating further demonstrates the credit quality of Brown & Brown. The notes will be issued -- the notes that will be issued are expected to be rated BBB flat, stable by Fitch, Baa3 positive by Moody's, BBB- stable by S&P. We expect our credit ratings will continue to increase over the coming years. The notes will have special mandatory redemption except for the 10-year tranche. With our strong balance sheet and financial performance, we continue to be committed to maintaining our investment-grade rating. We will be acquiring a deferred tax asset valued at approximately $600 million, which we anticipate to be realized over the coming years. $750 million of the $9.8 million of consideration paid has been placed in escrow to cover the potential cost and -- of runoff claims related to certain discontinued businesses. All funds remaining in the escrow will be released to the seller once all obligations have been settled. We believe this escrow is more than sufficient to cover any potential costs associated with the discontinued businesses. As it relates to synergies, we expect to realize over the coming years, we have set a target of $150 million to be delivered by the end of 2028. We anticipate the EBITDA benefits will come from 2 main areas. The first will be modest revenue synergies of $20 million, which will be derived from commission harmonization and optimization with our carrier partners and leveraging our collective capabilities to drive increased new business and improved retention. The next area will be expense synergies of approximately $130 million that will be delivered through 2 main areas. The first will be vendor optimization, which will come through a combination of pricing and redundancy. The second will come from operational optimization. We are planning to further invest in our systems to continue improving teammate efficiency. In addition, we will manage resources through a combination of natural attrition and hiring. We do not anticipate significant redundancies over the coming years as we are a growing business and expect to continue to hiring best in talent -- best-in-class talent. To deliver these synergies, we estimate investing approximately $200 million to $250 million through the end of 2028. In addition, to ensure delivery of our synergies, we have established a robust integration management office with cross-functional teams. Our IMO has been operating for over a month, and we are well on our way. We also plan to issue incremental onetime equity grants with an approximate initial value of $125 million. These grants will be expensed over the next 5 to 7 years and then will vest in 5 to 7 years. We believe we will close this transaction sometime in the third quarter as we have already cleared HSR related the transaction and only have a few pending approvals in foreign jurisdictions. We were buying an outstanding business that is growing and has profit margins similar to ours. As a result, we estimate that Accession's operations would have been in the mid-teens accretive to our adjusted diluted net income per share in 2024 when including synergies. The purchase price multiple is compelling at approximately 12x when taking into account acquired deferred tax assets and including synergies. We believe there is opportunity to deliver strong shareholder returns over the coming years. We are excited to welcome the Accession team to Brown & Brown and look forward to a successful combination. We're on Slide #13. Over the past 10 years, we've grown our revenues on a compounded basis of almost 12%. We've grown from about $1.7 billion in total revenues to over $4.8 billion last year. During this time, we've invested in the business and then realized the benefits of those investments through scaling our operations, our strong performance-based culture is a key driver to our financial results. We're on Slide #14. We generated approximately $1.2 billion of operating cash last year and had about $670 million of operating cash on hand at the end of March. We have a revolving credit facility that has capacity of $800 million and currently has availability of $400 million. Overall, we are in a great capital position. We aim to maintain low leverage with our industry-leading margins and high cash flow conversions. We're committed to net -- and we are committed to investment-grade rating and typically keep our leverage well within our financial policy of 0 to 2.5x on a net leverage basis and 0 to 3x on a gross basis. Our strong balance sheet and cash generation provides flexibility as it helps balance returns and risk while enabling us to make capital allocation decisions towards internal investments, acquisitions, dividends and share buybacks. We're on Slide #15. Over the last 10 years, we've averaged a little over 2x leverage on a gross basis. We typically will lever up modestly every few years when we're able to complete a larger transaction and then we delever on the back of those deals. We naturally delever a 0.25 to 0.5 turn each year and can increase that with accelerated paydowns of our prepayable debt. On a pro forma 2024 basis, adding Accession will take leverage up to roughly 3.4x on a gross basis. This is in line with the leverage we had in 2022 when we acquired GRP, BDB and Orchid. As you can see, we have a proven track record of increasing leverage modestly and then returning back to our normal range. We have a flexible maturity ladder with manageable maturity exposures in each year and no real concentration risk in any given year. As we think about our opportunity in the coming days to add debt for this acquisition, we have adequate room across multiple tenors. Overall, we feel we are in a strong capital position and flexibility in our capital structure to add new debt to help fund this deal. We're on Slide #16. With the strong revenue growth, we discussed earlier, we think what really matters is how we can grow our cash. Like revenues, we've grown our free cash flow on a compounded basis by 12% from $360 million to almost $1.1 billion last year. With that, let me turn it back over to Powell for closing comments.

Thanks, Andy. Great update. I'm on Slide 17. As we mentioned earlier, we are extremely excited to welcome John and his team to Brown & Brown. Our cultures are very similar. And we have mentioned in the past, cultural alignment is the key to success at Brown & Brown. Accession will give us additional scale and capabilities for our customers and with our carrier partners. They will also enable more collaboration across Retail and Specialty Distribution as a result of having incremental capabilities. We're going to add over 5,000 new teammates and grow exponentially. Both organizations are laser-focused on our customers and always doing the right thing for them. And lastly, we are highly aligned on vision and strategy. Speaking on behalf of the 17,000-plus teammates at Brown & Brown, John, we welcome you and your team of 5,500-plus to Brown & Brown and are excited about the growth opportunities we can capture over the coming years. With that, let me turn it back over to Olivia to explain how you can submit questions.

[Operator Instructions] And now the first question coming from the line of C. Gregory Peters with Raymond James.

I guess, I'd like to start with the culture question, Powell. Based on your commentary, it seems like your due diligence and your knowledge of this company doesn't date back a long period of time. So maybe you can walk us through your perspective of Accession and how it's going to fit with the 5,500-plus new professionals coming inside your organization?

And I know that's what it sounds like because that's the time I've known John Mina for about 9 or 10 months. But what I didn't say is the founder of the company is a friend of mine. So the founder of the company is a gentleman named Mike Christian, and he's one of the good guys, and he founded this business in 1997 and he understands about customers. He's a client man. And so he was the one who started and he is a kind of person that brought in talented people like John Mina and others over many years. And I will tell you that I have observed this company from afar for a long time, but I have known John Mina for multiple years. And what I am very pleased to say is this is a guy of the highest character and he is the consummate insurance professional. So when we say cultural due diligence, fundamentally, we start with founders or leaders and he stepped back from that role to pursue some other things in terms of a foundation and some other things, but he is -- we're very similar, let's just put it that way. And I am pleased to call him my friend. And so it was pretty simple when John Mina, who is sitting to my left currently, and I met, of course, John is going to have a certain level of skepticism because we're a public company. And he used to work for 1 or 2 of those things before. And maybe you didn't think those were as fun as what he was doing now. And so -- but as we started talking, it became very evident to both of us that they were striking number of similarities, and it starts with teammates. I mean, culture is the overriding theme. But the way we think about teammates and the way we think about customers is startling. So you're right in saying, I have not known John Mina for -- I've known him like 9 or 10 months. I've known Mike Christian for a long time. And he's one of the good guys, as is John, but I'm saying he's founded the company in 1997. How about that?

Fair enough. Thanks for the background. I pivot to the financial profile. So maybe you can give us a sense of as -- with the closing anticipated before the end of the year, when we start to push in our numbers, is the organic revenue growth profile expected going forward, similar to ground? And I guess we've got to pick out the Risk business versus the One80 business. And then on a pro forma basis, just any breadcrumbs you want to provide us on how we should think about some of the expenses that you called out, the restructuring expenses and how they're going to ladder in over the business?

All right. Greg, we'll see if we can hit both of those. So I think when we look at the organic growth on both Risk Strategies as well as One80. And we compare it to similar businesses in our world. And keep in mind, we have a higher percentage of our business that leans towards E&S as well as wholesale, as we mentioned during the commentary. So with the backdrop of where pricing has been over the last few years, we've had higher organic growth driven off of that. So we looked at their businesses compared to kind of similar businesses in our world, and they're performing very well. So extremely pleased with that. So hope that gives you an idea of how they're performing, how that matches with our businesses and then you know how we think about growth over the medium to long term for Brown & Brown. I think we've talked about that on previous calls. From a synergy perspective, is -- I think you'll see what we're expecting is -- these will just kind of come in over the next 3, 3.5 years. Our goal is to have all the synergies in our run rate by the end of 2028. And it won't be something we'll just kind of pop overnight. I think it will just be nice and easy over that 3.5-year period. So however you want to kind of feather those in there. And same thing from the cost of the synergies, that would probably be, I'll call it, a little bit light in the back end to '25, and then there'll be a tremendous amount will be really in '26, '27 and '28.

Our next question coming from the line of Elyse Greenspan with Wells Fargo.

I think my first one is just a quick number is one, Andy. I'm looking on Slide 19, and it looks like you guys -- I'm looking at their EBITDA of $476 million and you guys adjust it to $600 million, and I understand the M&A run rate adjustments, but then there's a non-GAAP adjustments, which nets out to $110 million. Is that just taking EBITDA to like what you would define as adjusted EBITDA? Or you -- can you expand on what that $110 million adjustment is?

I think you want to look at the $110 million and the $27 million together. So the $110 million represents a number of items that they had backed out associated with their M&A activities. And the real difference is they used a lot of third parties in which to help them with their M&A, we in-source pretty much everything on our side. And so we were good with taking those out of there because we can realize those. We did put some costs actually back in because we figure we'll have some on our side. And then they had some one-off integration costs that will not recur in 2025. So we were comfortable taking those out. So when we look at the $600 million, we think that's a pretty good starting EBITDA for Brown & Brown on a 2024 basis.

And then my follow-up, I guess, goes back to the synergies, I guess, both the $130 million and the $20 million, Andy. Is that kind of a ground-up analysis, I guess, to come to the expense and revenue synergies? Just trying to understand you guys came up with the numbers and if there could potentially be upside. And then I just want to confirm from your prior answer that the majority of the expense and revenue synergies will come in '26, '27 and '28. And should we think about it like 1/3, 1/3, 1/3 with a little piece this year?

Yes. Maybe we'll grab the last piece because that will be the easier one. Is -- it probably seems reasonable to actually feather it really all in '26, '27, '28. The ability to capture much in the back end of the year. It's going to be a stub period, and then we kind of see in kind of the half year results, that will be a pretty small amount. So probably easier to feather it out and your concept probably doesn't seem unreasonable based upon how we responded to Greg on there. As it relates to kind of the level of detail, our team has been working on this for quite a while. We are not at the stage yet where we have it down to granularity, I'll call it on, let's say, on a per-vendor basis or anything of that nature. But we do have identified across each of our segments, what's at a corporate level what's out of the salaries and related as well as other operating costs. So we made a lot of progress over the last month, and we'll continue to work those down and all of our teams will be kicking that off in Ernst this week now that we've announced the deal.

Our next question coming from the line of Andrew Andersen with Jefferies.

I guess to start, could you talk about the company's cash flow profile and conversion rate and how that might compare to Brown & Brown?

It looks pretty similar to Brown & Brown. As you saw, we talked about the fact that their EBITDAC margins are 35%, which, by the way, very, very similar to our industry-leading margin. So nice to see. We've got 2 great companies in this space. Cash flow conversion pretty similar to where we are as a company. We'll have obviously some noise in there as we have integration costs, but we'll call those out. But otherwise, no, very similar and very strong.

And could you maybe just level set for us with regards to Brown's historical M&A, maybe what type of uplift you've seen in organic for acquired entities and how that may be applicable here?

Got it. So, Andrew, this is Powell. And as you know, in the past, when you make an acquisition, we have not counted organic for the first 12 months of the acquisition. And typically, they have a growth profile that we're very -- get very comfortable with prior to the acquisition. So the uptick that may occur is typically as a result of them getting access to additional capabilities that we have in the system. And so as I said, there will be certain things that Accession teammates can access that I believe will help them grow organically. And we believe that there are things that Brown & Brown teammates, of which we are all the same team now will be upon close, which will help us grow more quickly. But as you know, we don't give forward-looking guidance on IGR.

And our next question coming from the line of Mark Hughes with Truist.

You talked about a provision for runoff claims for businesses that are no longer operating in their programs, are they taking risk on certain programs and you've discontinued that? Is that -- or is that something they had discontinued in earlier periods? And is there still any exposure that they're taking on some programs perhaps?

Mark, Andy here. Yes, these were discontinued operations from a number of years ago. They don't write these policies down inside of their captives anymore. So just -- it's a handful of policies down inside of there. So we were just trying to be conservative in holding back $750 million, we think that more than covers any potential exposure that we would have wrapped around these.

Yes. And then it sounds like they've been very acquisitive in the past in looking at the new capabilities they're bringing you. Powell, is there anything that you would really highlight as this is something you'd wanted to have exposure to for a while, and it's opening up new avenues of growth, but anything on that front would be helpful.

Sure. I think it's a combination of things that jump right to mind, and this is not an exhaustive list. So I would say, number one, they have some very interesting health care capabilities, which will complement some of the things that we do, they're complementary, not duplicative. That's an important thing one. Two, they have a very developed private equity business with a very talented leader and a leadership team. So we have that, but not that developed. So it brings a robustness to our capability. They have some very interesting employee benefits specialisms that we, I believe, can leverage together. Those would be 3 right off the bat inside of the retail and Risk Strategies. In One80, what I would tell you is this, the leader of that business is someone I've known for 20 years, and he is a very astute underwriter by background. And as a result, has implemented some very, very good underwriting capabilities in their programs. And so I believe that with their leadership team there, in One80, they will also add a lot and their programs are not duplicative of ours. So all of a sudden, they bring all these different programs, and there are a number of those that are very nichey that I believe present unique opportunities for us. So that would be the high level, Mark.

And our next question coming from the line of Alex Scott with Barclays.

First one I had is just if you could kind of break apart how much of this is more like binding authority, MGA type of business versus more regular way, either retail or wholesale brokerage? I know you kind of gave us a bunch of split. So I just wanted to make sure I had a clear -- what that mix looks like.

So think of it this way, a very simple way to think of it, $1.2 billion is in retail, $500 million is in programs and wholesale.

Okay. So you are not giving the split on programs and wholesale right now?

No, we're not going to break that out because, Alex, as we mentioned in our comments, in the third quarter, we're going to be combining our wholesale and programs together. So we won't be breaking those out in detail anymore.

Okay. Fair enough. Could you talk a bit about sensitivity to pricing? I mean it seems like there's a lot of niche focus here. So maybe it's things that are a little less susceptible to some of the pricing pressures that we're seeing in the larger end of the market. And I know that's been -- had limited impact so far in the middle market. But I just wanted to try to get a sense from you how you're viewing potential range of outcomes for pricing and to what degree that affects these type of businesses.

I would make a broad statement to say Accession, specifically Risk Strategies and One80 for that matter, have less exposure to cat property than the historic Brown & Brown business. That's how I would make it. That means that they still are subject to incremental upward pressure in casualty and other lines and all that other stuff. But that doesn't mean that they don't have cat property. They do, but it's not as much of a concentration because of our businesses in the states around the Mid-Atlantic, Florida and then Gulf.

Got it. Maybe could I sneak one last one in? Just because I asked a poor question, the first one. Can you just talk about -- can I ask about geographic distribution of the business? Like does it overlap with you? Is it complementary? Any thoughts there?

It's both. It's -- there's a lot of complementary and there is some overlap. And interestingly enough, in the overlaps, many of those are businesses that are, again, not duplicative. They are complementary. So we're all about leadership and talent. And so we have businesses that operate in the same area where there are multiple offices because we have great leaders and they do very distinct separate things. So we're very excited about that, but good distribution nationally and good in terms of Canada.

Our next question coming from the line of Meyer Shields with KBW.

Just to clarify one thing. The $1.3 billion of stock that you're providing to the sellers, that's not included in the $4 billion of the equity rate, is that correct?

Yes, that's correct, Meyer. That will be a direct issuance to them. The $4 billion will be in a secondary offering.

Okay. Perfect. And then I guess, strategically, and I apologize if you covered this earlier and I missed it. So Brown & Brown has like elements of intentional decentralization as a strategy. Is that true within Accession now as well?

Do you want to touch that? Which is the decentralized sales and service model?

Yes. So our model is largely decentralized right now. So we've centralized some of our practices and process around things like sales force and utilization of pipeline management, but it is still largely decentralized.

Meyer, you want to think about it, it's pretty similar. They've left out on the front line, everything that's important for customer intimacy, but anything that they can do at a regional divisional level, back office, et cetera, same approach ours, it looks really, really similar in nature.

Our next question coming from the line of Rob Cox with Goldman Sachs.

Yes, I just wanted to ask about the net new business profile of the business. I know you guys talked a little bit about the organic growth, but maybe specifically on the net new business profile and then also the mix of commissions versus fees?

Sure. This is John Mina. From the Accession side, our business is largely commission versus fee. It runs at roughly 90% commission, 10% fee. We have some businesses that are exclusively fee, our employee benefits consulting business. For the most part, some of our health care and private equity businesses are fee. But for the most part, we've run on a commission business.

Got it. And the net new business profile?

So are you talking about new from over prior year? Or how are you thinking about that?

Yes, new business versus lost business?

Yes, Rob. I think we touched on that in our earlier comment when I talked about organic in there. So that probably captures it pretty well on their net new business. I mean we've talked about the fact that they're a sales organization focused on bringing in new business as well as retention.

Okay. Got it. And...

I mean, Rob, you can't see the components anyway when we report. It's all about net business and organic growth anyway.

Yes. And lastly, any real risk you guys see to earning the DTA?

No. See minimal, minimal potential to not earn that DTA.

I'm showing no further questions in the queue at this time. I will now turn the call back over to Mr. Powell Brown for any closing remarks.

Thank you, Olivia. Thank you all very much for joining us. As I stated earlier, this is an exciting time for Brown & Brown and Accession as we welcome 5,500-plus new teammates. For those of you that have been around a while, I will bring you back to 13 short years ago when we acquired Arrowhead in January of 2012. And we paid $400 million for a business, and there were a number of people out there that said that it's the biggest thing that we've ever done and that we were changing the business. And the answer is, yes, we have changed the business for the better, we believe. And these new teammates that will be joining are an incredible opportunity, an indication of the organization that we aspire to create and build going forward at $8 billion and beyond. Thank you all very much for your time and your energy. Have a wonderful day. Bye.

This concludes today's conference. Thank you for your participation. You may now disconnect.