Greetings, welcome to the BRP Group Incorporated third quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Austin Rock, Director of Strategy and Partnership. Thank you, Austin. You may begin.
Thank you operator, good afternoon. By now, everyone should have access to our earnings announcement and slide presentation, which was released prior to this call, and which may also be found on the investor relations portion of our website at baldwinriskpartners.com. Before we begin our formal remarks, a reminder that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them.
We refer all of you to our recent filings with the SEC, including our Form 10-Q filed today, for a more detailed discussion of the assumptions, risks, uncertainties, and other factors that could impact the future operating results and financial condition. For a more detailed discussion of the assumptions, risks, uncertainties, and other factors that could impact the future operating results and financial condition of BRP Group, including those we refer to the effects of COVID-19 and related government shutdowns, stay-at-home orders, business closures, travel restrictions, social distancing, and other preventative measures, business disruptions, economic contraction, and COVID-19 related developments by generally referencing COVID-19 or the pandemic. We disclaim any intentions or obligations to update or revise any forward-looking statements, except to the extent required by applicable law. Also, our discussion today will include references to certain non-GAAP measures.
A reconciliation of these measures to the most comparable GAAP measure can be found within our earnings announcement and earnings supplement slide presentation, both posted on our website at ir.baldwinriskpartners.com or in our SEC filings. In addition, this call is being webcast, and an archived version will be available after the call on the investor relations portion of our website. With that, I will now hand the call to Trevor Baldwin, Chief Executive Officer of BRP Group.
Thanks, Austin, and good afternoon, everyone. Welcome to our third quarter of 2020 earnings call. We appreciate your taking the time to join us and your interest in BRP Group. During today's call, I will provide some brief highlights on our accomplishments during the quarter. Brad Hale, our Chief Accounting Officer, will then provide a more detailed review of our Q3 results, and Kris Wiebeck, our Chief Financial Officer, will wrap up with a few quick comments on our balance sheet and certain expectations regarding our outlook for the future. We will then open up the line for questions. In summary, we had another phenomenal quarter in Q3, which is further validation of the thoughtful and differentiated approach we have taken to build a business positioned to grow and thrive, even in the face of the ongoing economic headwinds.
For the quarter, we recorded strong year-over-year organic revenue growth of 20% and total revenue growth of 72%. We also saw double-digit organic growth in all four of our operating segments during the quarter, with Specialty led by MGA of the Future at 43%, leading the group. While rate and retention were healthy across all of our segments, overall, our organic growth continues to be predominantly powered by our ability to win new business, highlighting our ability to quickly adapt to continue delivering tailored solutions to clients amidst broader economic challenges. On the partnership front, first and foremost, we are extremely excited to welcome the Insgroup team to the BRP family.
As mentioned on our call last week, we have long admired the business Brian and his team have built, their culture, strong track record of organic growth, and presence and scale in Houston, Texas, which is the fastest-growing top 20 MSA in the country, make them an excellent fit. We are excited about the meaningful role we think they can play in helping achieve our intermediate goal of becoming a top 10 broker in the U.S. over what is now the next eight years. Looking ahead in terms of number, size, and the quality of near-term opportunities, we continue to have a very strong pipeline and anticipate a busy finish to Q4 on the partnership front.
Over the past six months, our partnership team and myself have been on the road frequently, taking the time to safely meet with potential partners to share our optimism and resolve for an exciting future. It is my belief that hopefully, as the world and business environment return to normal, you will see these efforts contribute to the strength and success of our partnership pipeline. As a reminder, the exact timing of partnerships is subject to change. To wrap up, none of what we have been able to accomplish would have been possible without the tenacity and tireless support of our colleagues, who have continued to put clients first amidst a very challenging environment. To all of you, a huge thank you. You are the engine that powers BRP, and thanks to your efforts, our business is truly in the strongest position it has been in the firm's history.
With that, I will turn over the call to Brad to go into more detail on our Q3 results.
Thanks, Trevor. Good afternoon to everyone on the call. For the third quarter, we generated revenue growth of 72% to $65.8 million. The revenue growth was driven once again by our hybrid growth model, namely organic growth combined with contributions from new partnerships. As Trevor mentioned, we once again generated double-digit organic revenue growth on a year-over-year basis, recording 20% organic growth for the quarter, thanks to strong performance across all of our operating groups. Given that partnerships are an important portion of our ongoing growth strategy, in our regulatory filings, we also provide revenue metrics on an unaudited pro forma basis. This provides investors with a more apples-to-apples comparison as if our 2020 partnerships had been acquired on January 1, 2020. For the third quarter of 2020, unaudited pro forma revenue was $66.1 million, up 70% from the prior year.
Unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been attained if the partnerships had occurred on that date, nor the results that may be obtained in the future. GAAP net loss for the third quarter of 2020 was $7.6 million, or $0.10 per fully diluted share. Adjusted net income for the third quarter of 2020, which excludes share-based compensation, amortization, and other one-time expenses, was $9 million or $0.11 per fully diluted share. A table reconciling GAAP net income to adjusted net income can be found in our earnings release and our 10-Q filed with the SEC. Adjusted EBITDA for the third quarter of 2020 rose 48% over the prior year period to $10.9 million. Adjusted EBITDA margin was 17% for the third quarter of 2020, compared to 19% in the prior year period.
As a reminder, our adjusted EBITDA margins are seasonal in nature, with Q1 being the strongest quarter. We usually record lower margins in the second half of the year, with Q4 being our seasonally lowest margin quarter. We expect this trend to continue this year, especially given the seasonality of some of our recently added partners. Additionally, we plan to continue investing in the business as we have in Q2 and Q3 of this year. As a result, we expect fourth quarter margins will be similarly impacted. Additionally, as we do every quarter in the earnings supplement available on our IR website, we have updated the quarterly pro forma financial statements to reflect the partnerships we closed in the third quarter as if we owned those businesses since the beginning of the year, which increases the Q1 and Q2 revenue versus what we presented last quarter.
As a reminder, the pro forma financials we present are not projections of future performance. Additionally, results for our individual operating segments can be found in the earnings supplement as well. Our MGA of the Future platform continues to outperform, growing 43% compared to the prior year period. The third quarter is typically the seasonally strongest for the MGA, and during the quarter, policies in force increased by over 54,000 from June 30th, 2020. As of November 11th, policies in force have increased further to over 510,000. We remain bullish on the MGA in terms of its ongoing sustainable contributions to our organic revenue growth, expanding penetration within our current network, and utilizing its scalable and efficient technology to create new products that can be distributed across the BRP platform.
As we have mentioned in the past, we continue to make progress on the rollout of both our Florida homeowner solution with our filings submitted to the state of Florida and a private flood product for which we have secured reinsurance capacity. With that, I will now turn the call over to Kris.
Thanks, Brad, good afternoon to everyone on the call. A few closing remarks before we hit Q&A. As you may have seen last month, we significantly enhanced the capacity on our balance sheet, pricing a new seven-year, $400 million senior secured first lien term loan facility at a very reasonable cost of capital, as well as retaining and extending our $400 million revolving facilities maturity into 2025. As Trevor noted in his remarks, after the announcement of our partnership with Insgroup, we maintain a very strong partnership pipeline. Pro forma for the completion of Insgroup, between our cash on hand, the remaining proceeds from the new term loan facility, and our $400 million revolver, we maintain roughly $590 million of capacity to execute on that pipeline and to remain front-footed as we head into 2021.
As we've said before, we continue to believe that three and a half to four times leverage is a prudent run rate for our business, and we'd be comfortable taking leverage opportunistically up to around four and a half. Our current leverage pro forma for the Insgroup partnership is 2.4x. As we move ahead, we expect that the effects of COVID-19 will continue to have an impact on the broader economy for Q4 and into Q1 2021. However, should the recent positive vaccine news come to fruition, we believe that the economy could improve materially over 2021. That being said, we believe we have clearly demonstrated over the past couple of quarters that our business model and growth strategy is extremely resilient in the face of economic headwinds, thanks to our commitment to investing in our technology, our tools, and our people.
As such, for Q4, we still feel confident in our ability to generate organic growth on the low end of our longer-term 10%-15% double-digit organic growth goals. As Brad mentioned, we continue to make investments into the client-facing side of the business, as well as to bolster our growth services and partnership integration teams. We continue to believe that the past six months and the current environment is one that affords us great opportunities to invest capital both organically and through partnerships. As to next year, I do want to remind everyone that it typically takes 12-18 months for us to realize full pro forma EBITDA from partnerships, particularly larger partnerships, as we work to integrate them into the broader BRP platform.
In summary, we are very excited about our third quarter results and the momentum we have carried in the fourth quarter with the closing of our new facilities and the Insgroup announcement. We are enthusiastic about the success we've had in Q3 and strengthening our near-term partnership pipeline. Finally, as we reflect on our recent first-year anniversary as a public company, we are quite proud of the success we've been able to generate for all of our stakeholders over the past four quarters during an abnormal time in history, growing double digits organically over that time period and announcing $120 million of annualized partnership revenue. While we are proud of our performance, we are optimistic for a return to normalcy in 2021. I would echo Trevor's thank you to our colleagues.
The tangible result of all of their efforts is that we believe our business is positioned the best it has ever been. With that, I thank you for your time and will now open the call for Q&A. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question comes from Meyer Shields with KBW. Please proceed with your question.
Great, thanks. I want to spend a little time talking about client receptivity in middle market, just in terms of whether as time has passed and we've sort of settled into a routine, there's more receptivity for the extensive diagnostics for the growth drivers.
Hey, Meyer. Yeah, great question. What I would say is we were incredibly intentional at the onset of the COVID environment about rewriting our entire sales playbook to position our risk advisors to be able to approach clients in an unobtrusive manner that still enabled us to go through our highly consultative risk mapping process. That's really been one of the hallmarks of how we've been able to maintain the level of organic growth that we have, despite the headwinds of the economic challenges, the shutdowns, and inaccessibility of normal sales channels.
Okay. No, that's helpful to know. Also, I know there's a lot of confusion or concern broadly about the Medicare market. It looks like things are holding up pretty well. I was hoping you could give us your view about what the market looks like, both in terms of developing organic growth and maybe acquisition pipeline.
Yeah. As we shared on the call earlier, all four of our segments reported double-digit organic growth. That would include the Medicare business. As we've talked about in the past, COVID has certainly had an impact on the Medicare business model, when you think about the fact that the population that we're serving is typically more at risk to the virus. A lot of those interactions historically have been in more of a face-to-face environment. With the onset of COVID, we made some pretty significant investments into our technology infrastructure, launching our digital enrollment platform under the Guided Medicare Solutions brand in June and July of this year. Thus far, since the start of AEP, we've actually had 38% of our overall enrollment going to that new digital platform, which is really terrific uptake.
Positioning our agents to remain quite effective despite some of the challenges associated with getting in front of people. With all that being said, there's certainly an impact from the COVID environment. I think as we look broadly across the Medicare landscape, I would expect less churn this year as a result of probably less kind of shopping activity as folks are spending more time indoors or not in some of the typical settings that agents are getting in front of people. Overall, our performance in the Medicare business through AEP thus far has been consistent with how the business has performed in the COVID environment year to date.
Okay. That's fantastic. Thanks so much, Trevor.
Thanks, Meyer.
Thank you. Our next question comes from Elyse Greenspan with Wells Fargo. Please proceed with your question.
Hi, thanks. Good evening. My first question, you guys said for the fourth quarter would be at the low end of the long-term target of 10%-15% organic. You guys also told us that last quarter for the third quarter, you printed 20%. Obviously things in the third quarter trended better. I guess it's a two-part question, I guess. What trended better than you had expected when you made those comments in reference to the third quarter? Why wouldn't that continue in the fourth quarter? Is there just some conservatism given the ongoing uncertainty with COVID-19?
Yeah, great question, Elyse. A couple of things. One, I think when you look at the dynamics of our business in the third quarter versus the fourth quarter, the third quarter is the seasonally largest quarter for the MGA of the Future, which as you know, is the fastest organically growing part of our business. When you look at the relative contributions from that part of our business in the third quarter compared to the fourth quarter, there's more opportunity for really outsized performance in Q3 than Q4 as a result of the continued outperformance by MGA of the Future.
When we were guiding down to the bottom end of that range for Q3, there was some concern relative to the new policy issuances we would see in the month of August related to student housing as a result of the COVID-19 environment, a lot of students not going back on campus. While we saw some of that actually occur with new policy issuances in the month of August for the MGA of the Future, actually only up about 10% year-over-year. We really outperformed in the month of September, that more than made up for that shortcoming, which caused that overall outperformance. As we look towards Q4, that is our seasonally weakest quarter in the MGA of the Future in terms of relative revenue contribution to the overall business.
When you combine that, you combine the uncertainties of the COVID-19 environment, and you combine what is really a continued choppy economic environment, we feel like the lower end of that 10%-15% range is really probably the accurate number for Q4. The outperformance in Q3 is certainly a story of terrific performance in the MGA of the Future, as well as continued strong performance across our entire business in the face of some pretty significant operating challenges.
Okay, that's helpful. Would you say, I guess, away from the MGA of the Future, if we're talking about your other businesses in the quarter, can you talk to what might have performed better or worse than expected? Or did the remaining segments pretty much come in line with expectations?
Yeah, I mean, Elyse, I'd say kind of across the board, the business performed really well. We had double-digit organic growth in every single operating segment. Considering the environment we're operating in, we're really pleased with those results, and I'd say they were at or slightly ahead of expectations.
Okay, that's great. On M&A, when you announced the Insgroup deal and also today alluded to the strong M&A pipeline, you had also mentioned that there could be a flurry to get deals done before the end of the year. I guess, does that statement, do you still expect to see a good amount of deals between now and the end of the year? Second of all, can you give us a sense of the size of the deals in the pipeline? Just relative, are there smaller deals, something larger in the vicinity of Insgroup, or how we could think about the potential pipeline, and when we might see some more deals get announced?
Hey, Elise, it's Kris. I'll take that one. I think, echo what we said in the release, we still have a great pipeline. I think you're right, we do expect things to close before year-end. I think even with the Insgroup, as folks are modeling the revenue for partnerships hitting, Insgroup's willing to get one month of it. The other stuff that would close, we may get a month or there may be none at all in actual this year because things could close up to 12/31. When folks are modeling it, I want to make sure that you're not putting too much in this year. I do think there'll be probably a positive surprise to where folks are thinking we're going to be in Q1 when you move that over.
As far as the type of deals in the pipeline, I think it's similar to what you've seen us do this year. They're high-quality deals that have a history of organic growth, and we think are strong adds to the business. We don't want to comment on anything specifically, because as Trevor said, a deal is never done until it's done.
Okay. Thank you. I appreciate all the color.
Thanks, Elyse.
Thank you. Our next question comes from Pablo Singzon with JPMorgan. Please proceed with your question.
Hi. My first question is related to organic growth. I noticed that there was a pickup in profit-sharing revenues year-over-year. I was wondering to what extent organic growth was driven more by core commissions versus profit sharing, if you have that spiked out separately.
What I'll say, Pablo, is that, this is Brad, the majority was driven by core commissions. We did not see what would be a notable gap like we did in Q1 when we broke those out separately for information purposes. We are seeing some positive performance in contingents, as you indicated, through some more favorable contract terms and also some of the underlying mix and nature of the partnerships from 2020. Overall, the lion's share of what contributed to organic in Q3 is core commissions and fees.
Pablo, this is Trevor. Just to add on to that. What is continuing to be the driver and what is powering our outsized organic growth relative to our peers is truly our ability to generate new business at an outsized rate. As we think about the building blocks of organic growth, and we've talked about this in the past, you look at retention of prior year revenues, which for us tends to be In line with to maybe marginally better than our peers. You look at the combined impact of insurance rate and exposure unit expansion or compression, and on a year-to-date basis, for our middle market segment, that's a little bit over +4%. Up slightly, up a couple of hundred basis points from the second quarter, reflecting continued acceleration in the rate environment. That benefit is also shared by many of our peers.
Really what drives kind of the difference or the delta is our ability to write new business at a rate that meaningfully exceeds what many in our peer group are doing. I attribute that to really the tailored approach in which we engage with prospective clients, the shelter distribution models that we've built out, and how we're able to execute at point of sale on a consistent basis.
Got it. Thanks for that, Trevor. Second question, just to follow to your comments on or maybe Kris's comments on the ongoing investments in the business. I was just wondering if it'd be possible for you to sort of frame that for us, whether, as a percentage of revenue needed for guardrails, and I guess how much you did this year and, potentially how much you see doing next year as well?
Pablo, it's Kris. I'll take that one. A couple of things to call out. One, we have some expenses that are new and some higher interest expense in Q4 than we had in Q3 because of the Term Loan B, right? Unlike the revolver, when you close that debt, you start paying interest day one on the full amount. We fully intend to use that. We don't like paying interest on capital that we're not using, but I think that's going to impact EPS in Q4. I don't think it'll really be material into next year. If you think about what Brad said, similar margin. We've been taking about 200 basis points the past couple quarters lower than we were the prior year and reinvesting that in the business.
I think that's a good rule of thumb is you could take our Q4 from last year, take 200 basis points. That's about the extent. I mean, we have some great investments we can make, but we're also still trying not to take margin back too much. I think that's how you should think about it.
Got it. That's helpful. Last for me, if you sort of look at the volume of deals that you've done this year, you're doing about $30 million of acquired revenue a quarter. Is there any reason to think why that wouldn't sustain or maybe be even stronger coming into next year?
Yeah. Hey, Pablo, this is Trevor. The first thing I'd say is partnership or M&A is episodic in nature. I think, as we've talked about in the past, the back end of 2020, we're seeing somewhat of a pretty significant pickup in activity. I do think we'll see some of that kind of carry forward into 2021, I'm not sure I would expect anything more than that $30 million a quarter kind of run rate. You just got to remember that that could be zero in one quarter, it could be $60 million in another. We don't get to choose when the very best, most high-quality businesses decide that they want to have a conversation about selling in and becoming a part of our larger entrepreneurial insurance enterprise.
What we do know is that we're being very diligent about continuing to be out in front of folks that we think highly of, building relationships, so that when it is time for them to think about doing something, we're the first phone call they make, and they have a really strong awareness and understanding of our business, our culture, and how we're going to continue to build an organization that can deliver durable double-digit organic growth well into the future.
Got it.
One last comment on margin, Pablo, is I think it's hard to look at each quarter in a silo, particularly with 606 revenue recognition and the timing variability of that. If you take what we provide in the supplement, which is the quarterly phasing of revenue of new partnerships. You can see that there's heavy concentration in Q1. When take a TBA, RBA acquisition or partnership in June and we've built up infrastructure to support that business. 70% or something of their rev rec hits in Q1 based on historical patterns. It's hard to look at it in isolation. I think you have to sort of look across a broader base and see on a pro forma basis as we show in the supplement, what are we doing year-over-year in terms of margin.
That's a good lens to look at too, and I think you'll see that it's more consistent if you look at it on an annualized basis from that perspective.
Got it. If I could just squeeze one small one in. I noted that BRP has made a small investment in Highwing, and I think some of your group peers have made investments or acquisitions in sort of like digital small commercial brokerage. I was wondering if you'd speak to that, what you see in that business going forward. Thank you.
Pablo. We are very excited about the partnership and investment in Highwing, which is a technology platform that is going to bring transparency and efficiency into how we transmit data with our trading partners, enabling us to ultimately have more forthright and efficient relationships that result in more effective placements on behalf of our clients. We're also super excited about the group of peer firms that are invested alongside us with that platform, which represents some of the highest quality independent firms across the country.
Collectively, I think our thought leadership, our collective premium volume, and influence with all of the right insurance companies are going to enable us to develop a solution that allows us to not only monetize the rich data that we have in our organizations, but also deliver superior results to our clients as we're able to bring efficiency and transparency into the placement process.
Got it. Thank you so much.
Thank you. Our next question comes from Marcos Holanda with Raymond James. Please proceed with your question.
Hey, guys. Thanks for taking my question. I wanted to stick with the margin discussion. Just as we think about next year, maybe talk to us about the incremental margin opportunity as we balance your investments in the platform and maybe some T&E that you cut out this year due to COVID-19.
Yeah, I think I'd echo what Brad said earlier, Marcos. The pro forma is probably the best sense. If you look at it on an annualized basis to see kind of where margin's heading. We obviously think that the deals we're doing end up being accretive to that long-term story. In the near term, what we said is we're continuing to invest about 200 basis points more than last year in the business, especially in Q4, kind of with the success we're having on the partnership front, making sure that we're ready and able to serve those new partners well and bring them onto the BRP platform and have them be successful.
Marcos, the other thing I would add is, as we've talked about in the past, we are very focused on executing a playbook that enables us to make investments for the long term to deliver durable double-digit organic growth. Our view is that is going to not only be the right decision for the business, but is the right decision for our shareholders. Because as you've seen with many of our peers, you can pull the margin lever in these businesses really fast and harvest that margin. Our business is not different from a structural perspective in any manner than any of those peers that have done that.
So long as we can continue investing in our business to deliver that outsized organic growth, scaling up our overall revenue stream, that will enable us over a relatively short time period to deliver larger and more durable cash flow streams. Our focus is on building up our business from an organic standpoint and continuing to build and accrete margin over time, but not at the cost of growth.
Got it. Organic's been humming, congrats on that. I guess my last question's on the MGA and the renters product. Nice acceleration here in PIF growth. I'm wondering if there's any sort of synergies running through that number with the Rosenthal Brothers acquisition. 2, you mentioned the flood product. Maybe talk to us a little bit more about that rollout and when we should expect to see that in the numbers.
Great questions, Marco. The MGA of the Future continues to perform extremely well. To date, the growth you're seeing does not include any revenue synergies from the Rosenthal partnership. I wouldn't expect to begin seeing that really until sometime next year, as we really get their sales team integrated into how that platform operates. When we think about some of the new products in our pipeline, we're on file with the Department of Insurance in the state of Florida for our new homeowners product, and we expect that that should be a first half of 2021 launch. In addition, we have green light on capacity for our private flood solution, and we also expect that to be a first half of 2021 launch.
Depending on kind of the exact timing of those launches, I think you could see those begin to impact the MGA of the Future results either in the tail end of the first half of next year, but certainly going into the second half of next year.
Got it. Thank you for your answers.
Thank you. Our next question comes from Dan Fannon with Jefferies. Please proceed with your question.
Thanks. My question's on MGA of the Future as well, and given the strength you're seeing on the top line, can you remind us how the profitability of that business works and how we should think about the scale and margin expansion of that segment alone given the growth profile or trajectory that it's on?
Dan, I'll start and Brad might follow on. I think the key versus some of our competitors in the space is the business is very profitable today, right? It's generating free cash flow for us. I think that's the first step. If you think about kind of what they did in the quarter, over 50,000 units added in a profitable manner. That's actual policies with us. The broader thing that we've said in the past is they also added about 550 units that we've called turned on before. The units turned on, that's basically growing our additional pipeline of possible capture down the road. Overall, I'd say that the key thing is that the business is profitable. We are continuing to make investments into that business, as Trevor mentioned, for additional products.
The business is doing very well, as you pointed out.
I'll just add to that. To Kris's point, we make money on day one once that policy is sold, without the sort of leading advertising burden and costs. We are sharing that commission with our downstream partners, particularly those property management software companies. There's only so much margin expansion that can come from that when you're in an advisor-type model like that. What I will say is, we've talked about the efficiency of the tech before. From a G&A build and a servicing build, you will see margin accretion there over time, based on how efficient the tech is. To Kris's point, I'm looking at the margin on an individual basis, Dan, and it's basically flat year-over-year, and I think that's directly attributed to the investments we're making in that business with respect to these new products.
We're effectively utilizing that margin to invest in growth there.
Great. A follow-up on Insgroup. Is there seasonality to that business similar to other portions and when we think about modeling it? I know you mentioned on the call last week about the normalization of equity for other deals going back to the low 20s. Given this was the largest deal you've done as a new partner, should we think just in, when you do have larger transactions that the equity component likely goes up similar to this?
Yeah. When you think about the equity component, Dan, I think it's not really tied to the size of the transaction. I think it's tied to the fact that, the management team at Insgroup had a lot of conviction around what we could do together. They didn't think about it as a sale of their business as rather kind of selling in or buying into BRP and becoming part of what we're building and having a lot of conviction around what we can accomplish together. I wouldn't expect that to necessarily continue to be the norm. Although we do see that as a very positive indicator of the bullishness of those business principles on what we're going to be able to accomplish. On the seasonality side, Brad, I think you can provide a little bit more specificity around that.
Yeah. Insgroup is primarily, the largest component of their business is P&C, which is less seasonal in nature, typically than what you'll see in a benefits business. It's not as drastic as the example I provided before. We do see some concentration in the first and second quarters pertaining to that business and slightly lower in the third and fourth. Probably more in line with what we would see in our legacy BKS business on the P&C side and not as drastic as some of the benefits businesses we've partnered with in 2020.
Great. Just the last one on just the new pipeline kind of potential partnerships. This Insgroup obviously gives you scale in the Texas region, something you have talked about for some time. Are there other regions that you view as attractive demographically or just from a business perspective that as you look out, you would like to target in a similar way?
Yeah. When you look at geographies that have economic and demographic tailwinds, when you look at industry sectors that have all the necessary attributes to outgrow the broader economy, those are areas that we have a lot of interest in being over-represented in. It's easier to grow when you have a tailwind at your back.
Okay. All right. Thank you.
Thanks.
There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.
Thank you. I want to thank everybody for taking the time this evening for joining us, just want to remark here on our one-year anniversary as a public company on how proud I am of all the accomplishments that our colleagues have enabled us to have. We're super proud of the results we've generated thus far and are very much excited for what the future holds. Thank you, and we'll look forward to talking with you all soon.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.