As filed with the Securities and Exchange Commission on November 13, 2006

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

AmWINS Group, Inc.

(Exact name of registrant as specified in its charter)


Delaware	6411	13-4009411
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

4064 Colony Road, Suite 450

Charlotte, North Carolina 28211

(704) 943-2000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

M. Steven DeCarlo

President and Chief Executive Officer

AmWINS Group, Inc.

4064 Colony Road, Suite 450

Charlotte, North Carolina 28211

(704) 943-2000

(704) 943-9000 (facsimile)

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:



Patrick S. Bryant Krista R. Bowen Robinson, Bradshaw & Hinson, P.A. 101 North Tryon Street, Suite 1900 Charlotte, North Carolina 28246 (704) 377-2536 (704) 378-4000 (facsimile)		Robert S. Rachofsky LeBoeuf, Lamb, Greene & MacRae LLP 125 West 55th Street New York, New York 10019 (212) 424-8088 (212) 649-9479 (facsimile)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE


(1)		Estimated in accordance with Rule 457(o) under the Securities Act solely for purposes of calculating the registration fee.

(2)		Includes the offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus Dated November 13, 2006

Common Stock

This is the initial public offering of common stock of AmWINS Group, Inc. We are offering shares of common stock.

Prior to this offering, there has been no public market for our common stock. We expect the initial public offering price of our common stock will be between $ and $ per share. We will apply to list our common stock on the New York Stock Exchange under the symbol “AGI.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 10.


	Per Share	Total

Public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to us	$	$

We have granted the underwriters a 30-day option to purchase up to a maximum of additional shares of common stock from us at the public offering price, less the underwriting discounts and commissions, to cover over-allotment of shares, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Delivery of the shares of common stock will be made on or about , 2006.

Joint Book-Running Managers


Merrill Lynch & Co.	Wachovia Securities


Cochran Caronia Waller	William Blair & Company	Piper Jaffray

The date of this prospectus is , 2006.

TABLE OF CONTENTS


Prospectus Summary			1
Risk Factors			10
Forward-Looking Statements			20
The Recapitalization			21
Use of Proceeds			23
Dividend Policy			23
Capitalization			24
Dilution			25
Selected Consolidated Financial Data			26
Unaudited Pro Forma Condensed Combined Financial Statements			29
Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Our Business			50
Management			64
Related Party Transactions			75
Principal Stockholders			77
Description of Capital Stock			78
Shares Eligible for Future Sale			82
Material United States Federal Tax Considerations for Non-United States Holders			85
Underwriting			88
Legal Matters			93
Experts			93
Where You Can Find More Information			93
Index of Financial Statements			F-1
Exhibit 4.2
Exhibit 4.3
Exhibit 4.4
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 10.10
Exhibit 10.11
Exhibit 10.12
Exhibit 10.13
Ex-21
Exhibit 23.1
Exhibit 23.2
Exhibit 23.3
Exhibit 23.4

ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. You should assume that the information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

The name “AmWINS” is a registered trademark of AmWINS Group, Inc. This prospectus also includes other registered and unregistered trademarks and service marks of AmWINS Group, Inc. and other persons, which are the property of their respective holders.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information you should consider before buying shares of our common stock in this offering. To understand us and this offering fully, you should read the entire prospectus carefully, especially the information in the “Risk Factors” section beginning on page 10, and our financial statements and the accompanying notes included elsewhere in this prospectus.

Except where the context otherwise requires, “AmWINS^®,” “our company,” “we,” “us,” and “our” refer to AmWINS Group, Inc., a Delaware corporation, and, where appropriate, its subsidiaries.

All of the outstanding shares of our common stock currently are owned by American Wholesale Insurance Holding Company, LLC, a Delaware limited liability company (Holdings). Prior to the completion of this offering, Holdings will distribute approximately 89% of the outstanding shares of our common stock to its members, who thereafter will own shares of our common stock directly. Unless the context otherwise requires or the text otherwise indicates, all information in this prospectus (1) gives effect to this distribution, (2) assumes no exercise of the underwriters’ over-allotment option and (3) gives effect to a for stock split that will occur prior to the completion of this offering.

AmWINS Group

Overview

We are a leading wholesale distributor of specialty insurance products and services in the United States. We distribute a wide range and diversified mix of property and casualty and group benefits insurance products from insurance carriers to retail insurance brokerage firms. We also offer value-added customized services to support some of these products, including policy underwriting for certain insurance carriers, premium and claims administration and actuarial services. In September 2006, we were recognized by Business Insurance as the largest wholesale insurance broker operating in the United States. We do not take any insurance underwriting risk in the operation of our business.

Our business has grown substantially since January 1, 2003. Revenues for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2006 have grown, period over period, by 63.9%, 45.4%, 68.2% and 50.8%, respectively. From 2003 to 2005, our operating income increased by $21.0 million, or 553%, from $3.8 million to $24.8 million. This growth was driven by both acquisitions and organic growth. Our organic revenue growth for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2006 was 13.3%, 19.1%, 14.4% and 17.7%, respectively.

Our management team has substantial experience with AmWINS and within the insurance industry. We have cultivated an entrepreneurial, decentralized sales culture that provides our brokers and underwriters with flexibility to react to opportunities in the marketplace and better serve the needs of insurance carriers and our retail insurance broker clients. At the same time, we have centralized substantially all of our finance, human resource, legal, licensing, compliance and risk management operations to allow us to effectively oversee our national operations. We believe our centralized infrastructure positions us to achieve synergies when we acquire businesses and add new brokers and offices.

Wholesale distribution of insurance products is an integral part of the insurance industry. As a wholesale distributor, we are a critical intermediary between insurance carriers and retail insurance brokers, which deal directly with insured parties. Many specialty insurance carriers distribute products primarily through wholesale insurance brokers to avoid the cost and complexity of dealing directly with a large number of retail insurance firms. We provide insurance carriers with an efficient variable-cost distribution channel through our licensed brokers in all 50 states and our extensive relationships with retail insurance brokers. Our distribution structure enables the insurance carriers with which we do business to reach a large number of retail insurance brokers.

We have extensive knowledge of the specialty insurance products that we distribute, which allows us to assist retail insurance brokers in placing business outside of their core expertise or capacity. Our size and strong relationships with insurance carriers enhance our ability to provide retail insurance brokers with broader access to the insurance markets. We have established relationships with over 100 insurance carriers, including property/casualty and health/life carriers owned by ACE Limited (ACE), AEGON USA (AEGON), Alleghany Insurance Holdings (Alleghany), American International Group, Inc. (AIG) and The Hartford Financial Services Group, Inc. (The Hartford). We also use our product expertise and relationships with insurance carriers to structure new insurance programs and products to respond to opportunities in the marketplace.

We distribute insurance products and services through our three divisions:


	•	Property & Casualty Brokerage. With most of its operations under the AmWINS Brokerage brand name, our Property & Casualty Brokerage division distributes a broad range of property and casualty insurance products. We place a significant amount of insurance in the excess and surplus (E&S) lines market for businesses and governmental entities that are unable to obtain coverage through standard insurance products because of their risk profile or the nature or size of the risk. For the six months ended June 30, 2006, our Property & Casualty Brokerage division represented approximately 73.3% of our total revenues.

	•	Specialty Underwriting. Our Specialty Underwriting division consists of a number of niche property and casualty insurance programs for which we act as a managing general underwriter (MGU). As an MGU, we act on behalf of insurance carriers who have given us the authority to underwrite and bind coverage for specified risks within prescribed limitations. Our Specialty Underwriting division currently administers a number of programs that offer commercial insurance for specific product lines or industry classes. For the six months ended June 30, 2006, our Specialty Underwriting division represented approximately 8.7% of our total revenues.

	•	Group Benefits. Our Group Benefits division, which has experienced the most significant overall organic revenue growth of our three divisions since January 1, 2002, distributes group health and other benefit products and provides a full range of related administrative services. A substantial and growing part of this division’s business involves the placement and administration of retiree medical and prescription drug programs for businesses and governmental entities that are trying to reduce, control or eliminate the increasing cost of providing retiree benefits. Through our call center, we offer insurance carriers and plan sponsors the ability to outsource plan administration. We currently administer retiree health plans for over 800 employer groups and 74 member groups. Additionally, we operate a third-party claims administrator with over 100,000 lives under management. We also offer pharmacy benefit management (PBM) services and distribute an approved prescription drug plan (PDP) under Part D of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Modernization Act). In addition, we act as the exclusive general agent for small employers, defined as employers with 50 or fewer employees, for Blue Cross Blue Shield of Rhode Island (BCBSRI). For the six months ended June 30, 2006, our Group Benefits division represented approximately 17.8% of our total revenues.

Industry Trends

We believe that we are well positioned to capitalize on many of the trends occurring in our markets, including:

Trends Affecting the Property and Casualty Market


	•	Greater Opportunity with Large Retail Insurance Brokers. Until recently, Aon Corporation (Aon), Marsh & McLennan Companies, Inc. (Marsh) and Willis North America Inc. (Willis), three of the largest retail insurance brokerage firms, owned their own wholesale insurance brokerage operations. During 2005, we acquired Willis’ wholesale insurance brokerage operations, and Aon and Marsh sold their wholesale


		insurance brokerage operations to private equity firms. Before these transactions, it generally was difficult for independent wholesale insurance brokers to conduct a significant amount of business with Aon, Marsh and Willis. Independent wholesale insurance brokers, such as AmWINS, now have greater opportunities to do business with these three firms. Additionally, we recently have observed that a number of other large retail insurance brokerage firms have become more attentive to the number of wholesale insurance brokers they use and the compliance systems and financial position of these brokers. We believe this development may result in a reduction in the number of wholesale distributors used by many larger retail insurance brokerage firms.


	•	Important Sustainable Market. The E&S lines market is a growing part of the commercial property and casualty insurance marketplace. Based on information published by A.M. Best Company, Inc. (A.M. Best), direct premiums written for E&S lines insurance policies in relation to total premiums for the commercial property and casualty lines market increased from approximately 6.4% in 1995 to approximately 12.7% in 2005, and premiums on E&S property and casualty lines insurance increased from $9.2 billion in 1995 to $33.3 billion in 2005. Apart from a slight decline in 1996, the E&S lines market has grown annually in terms of aggregate premium dollars written for the past 15 years for a variety of reasons, including the implementation of more conservative underwriting criteria and risk-selection techniques by standard insurance carriers, the elimination of non-core lines of business by standard insurance carriers and substantial losses resulting from the terrorist attacks on September 11, 2001 and natural disasters. Moreover, as reported by A.M. Best, a significant amount of capital has been invested in the E&S market during the last five years to capitalize on favorable market conditions, as evidenced by an increase in the number of start-up companies entering the E&S market, such as AXIS Capital Holdings Limited (AXIS), Allied World Assurance Company Holdings Limited (Allied World) and Endurance Specialty Holdings Limited (Endurance). Many insurance carriers operating in the E&S market distribute their products primarily through wholesale insurance distributors.

Trends Affecting the Group Benefits Market


	•	Rising Health Care Costs. In the United States, total health care costs increased from $916.5 billion to approximately $1.9 trillion, or approximately 104.5%, from 1993 to 2004, and are projected to reach $4.0 trillion by 2015, according to the U.S. Department of Health and Human Services (HHS). On a per person basis, annual health care spending grew 49.5% during the seven-year period beginning January 1, 1999, reaching an estimated average of $6,683 per person in 2005, with spending projected to grow to approximately $12,357 per person by 2015, according to HHS and U.S. Census Bureau statistics.

	•	Aging Population. As a result of increases in life expectancy, the percentage of U.S. citizens age 65 and older is increasing in proportion to the overall U.S. population. According to the U.S. Census Bureau, the proportion of the population age 65 and older was 12.4%, or 36.8 million people, in 2005, and is expected to increase to 14.2%, or 46.4 million people, by 2015, and to 16.3%, or 54.6 million people, by 2020. The age 65 and over population accounts for a disproportionate percentage of total health care costs. According to data published in Age Estimates in National Health Accounts, Health Care Financing Review, in 1999, people age 65 and older spent, on average, four times the amount on health care than the average person under age 65. The combination of increasing post-retirement life spans and disproportionate benefit costs, coupled with the general rise in health care spending, have led employers to seek ways to manage the costs or shift the burden of providing health benefits to retirees.


	•	Accounting Changes. We believe that recent changes in accounting principles generally accepted in the United States of America (GAAP) have increased the level of attention given to the cost of providing retiree health care benefits. The Governmental Accounting Standards Board (GASB) recently promulgated Statement No. 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other Than Pensions (GASB No. 45). GASB No. 45, which will be phased in beginning in 2007, will require state and local governmental entities either to fund the cost of retiree benefits or recognize this obligation as a liability on their financial statements, as opposed to the prior practice of recognizing these costs on a pay-as-you-go basis. We believe GASB No. 45 is prompting many governmental entities to focus on the costs of retiree benefits and to seek ways to reduce these costs.

	•	Medicare Part D. The Medicare Modernization Act, which created the federal Voluntary Prescription Drug Benefit Program under Part D of the Social Security Act, added a new entitlement for Medicare-eligible beneficiaries for prescription drug costs. Effective as of January 1, 2006, eligible Medicare beneficiaries are able to obtain prescription drug coverage under Part D by enrolling in a PDP or a “Medicare Advantage” plan (MA-PD). Under the Medicare Modernization Act, employers that provide retiree prescription drug benefits now have a greater number of options, including the elimination of these benefits entirely, the establishment of company-sponsored plans that are eligible for a government subsidy, the adoption of a company-sponsored PDP and the establishment of plans designed to supplement the benefits available through a PDP or MA-PD. As a result of the Medicare Modernization Act, insurance products that provide prescription drug benefits for Medicare-eligible individuals now compete with the entitlement program created under Part D. We believe the Medicare Modernization Act generally has resulted in the development of new insurance products available for employers that desire to provide greater benefits than are available through a PDP or MA-PD. We also believe this trend has benefited insurance brokers that have developed the expertise and product distribution capabilities to assist employers in responding to these developments.

Competitive Strengths

We believe that our competitive strengths include:


	•	Extensive Relationships with Retail Insurance Brokers. We believe that our national operations, product expertise, extensive relationships with insurance carriers and focus on compliance make us an attractive business partner for retail insurance brokers. During 2005, we did business with over 4,500 retail insurance brokerage firms, including substantially all of the 100 largest U.S. retail insurance brokers as identified by Business Insurance in July 2006. We also work with small to mid-size retail insurance brokerage firms, which in many cases do not have direct access to certain of the insurance carriers with which we do business. Our extensive relationships with retail insurance brokers make us an attractive distribution channel for insurance carriers.

	•	Established Insurance Carrier Relationships. We have established relationships with over 100 insurance carriers. We believe that many insurance carriers view us as a valued customer because of our expertise, experienced brokers and underwriters and national platform, which enable us to produce a significant amount of business for them. Our access to insurance carriers is key to our business. Through years of experience in the insurance industry, our management has close relationships with the management teams of many insurance carriers at the most senior levels. We understand our insurance carriers’ underwriting preferences for particular lines of business and areas of geographic focus. We believe that the scope of our relationships with insurance carriers and our product knowledge allow us to better serve the needs of our retail insurance brokerage clients.


	•	Proven and Experienced Brokers and Underwriters. As of June 30, 2006, we employed 224 brokers and underwriters, many of whom have substantial experience in the insurance industry. Our brokers and underwriters typically specialize in either certain product lines or industry classes and have, in many cases, developed close relationships with the insurance carrier underwriters for these product lines and industry classes. We believe we have been able to use our size, diverse product knowledge and extensive relationships with insurance carriers to improve the productivity of our existing brokers and recruit new brokers who can leverage these resources to increase revenues.

	•	Seasoned Management Team. Our Chief Executive Officer and division presidents have substantial experience and long-standing relationships developed over an average of 21 years of service in the insurance industry. Our management team draws on its industry experience to identify opportunities to expand our business and collaborate with insurance carriers to help develop products to respond to market trends. Through their extensive relationships in the insurance industry, our management team has contributed to the successful recruitment of key brokers and underwriters to join AmWINS. Having completed nine acquisitions since January 1, 2002, our management team has a proven track record of successfully identifying and structuring acquisitions and integrating the businesses acquired.

	•	Business Diversification. The scope of our operations distinguishes us from traditional property and casualty wholesale insurance brokers. By operating in both the group benefits market and the property and casualty market, we believe we are better positioned to detect, analyze and capitalize on opportunities to expand our business than are companies with a more narrow market focus. In addition, our product diversity and ability to provide value-added underwriting, administrative and other services provide us with broader access to insurance carriers and enhance our ability to help retail insurance brokerage firms deliver products that meet the wide-ranging needs of their clients.

	•	Efficient Use of Information. We believe the way we collect and analyze information using AmLINK, our proprietary enterprise operating system, will improve the efficiency and productivity of our brokers and underwriters. For example, we can access our database to identify individual insurance carrier underwriters that typically underwrite a specific type of business, making it more likely we can place a particular risk for our customers. We also intentionally capture and store data for business we are unable to place so we can analyze missed opportunities and improve our chances to place this business in the future. We believe that AmLINK allows us to more effectively manage and control our operations.

Key Elements of Our Growth Strategy

Our goal is to achieve superior long-term returns for our stockholders while establishing ourselves as the premier national wholesale distributor of insurance products and services. To accomplish this goal, we intend to focus on the following key areas:


	•	Increase Growth by Expanding Distribution. We strive to prudently grow our business by expanding our distribution channels. Since January 1, 2003, we have opened five new offices and hired 106 new brokers, and we intend to continue pursuing opportunities to expand into new geographic markets and increase our presence in existing geographic markets. We also seek to expand our business by marketing our diverse product capabilities through targeted advertisements, client seminars and client marketing events.

	•	Access New Markets and Products. We are focused on expanding our access to new markets and products to better serve the needs of our retail insurance brokerage clients. For example, because certain admitted insurance carriers will not do business directly with small retail insurance brokerage firms, but will do business with us, we are developing our AmWINS Access platform to provide these brokerage firms with access to a greater variety of standard insurance products. We also are actively working to develop new MGU programs. In our Group


		Benefits division, we continue to explore opportunities to work with our insurance carrier partners to develop new products that help employers manage the rising cost of health care.


	•	Capitalize on Industry Changes. We believe that recent governmental investigations into the insurance industry caused many insurance carriers and large retail insurance brokerage firms to pay greater attention to the intermediaries they use. We believe these insurance carriers and brokerage firms increasingly are seeking to solidify their business relationships with financially stable intermediaries with acceptable reporting, compliance and other administrative systems. Aon, Marsh and Willis all recently sold their wholesale insurance brokerage firms, and we believe that we can use our national platform and organizational structure to build upon our relationships with these and other firms. In addition, we intend to pursue opportunities to distribute retiree health products to employer groups to help them better respond to rising health care costs, an aging U.S. population and changes in the way they are required to account for retiree benefits.

	•	Pursue Strategic Acquisitions. We plan to pursue strategic acquisitions that will complement our existing business or potentially expand into new wholesale distribution channels. We have substantial experience in selecting and integrating companies and are positioned to take advantage of acquisition opportunities that arise. We believe that our entrepreneurial culture and centralized administrative support system make us an attractive partner to acquisition targets. We believe this offering enhances our business profile and our ability to structure future acquisitions we decide to pursue.

Our Ownership

In October 2005, investment funds affiliated with Parthenon Capital, LLC (Parthenon Capital), a leading private equity firm, acquired a controlling interest in AmWINS. As of October 31, 2006, including vested options, AmWINS Holdings, LLC (Parthenon HoldCo), a Delaware company formed by Parthenon Capital and its investors, owned % of our outstanding stock, and our officers and employees owned % of our outstanding stock. These share ownership percentages give effect to the distribution by Holdings to its members, in proportion to their relative interests, of approximately 89% of the outstanding shares of our common stock in connection with this offering, based on an assumed initial public offering price of $ (the mid-point of the price range set forth on the cover page of this prospectus).

Our Offices

Founded in 1998, we are a Delaware corporation. Our principal executive offices are located at 4064 Colony Road, Suite 450, Charlotte, North Carolina 28211. Our telephone number at this location is (704) 943-2000, and our website address is www.amwins.com. Information on our website is not intended to be a prospectus and is not incorporated into this prospectus.

The Offering


Common stock offered		shares

Common stock to be outstanding after the offering		shares

Over-allotment shares		shares

Use of proceeds		We estimate that our net proceeds from this offering will be approximately $ million, based on an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) and after deducting the underwriting discounts and commissions and our estimated offering costs of $ million. If the underwriters exercise their over-allotment option in full, we estimate our net proceeds will be approximately $ million. We intend to use approximately $ million of the net proceeds from this offering to repay debt and the remainder for working capital and general corporate purposes, including possible acquisitions.

Risk factors		See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.

Dividend policy		We do not anticipate declaring or paying cash dividends for the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors.

Proposed New York Stock Exchange symbol		AGI

The number of shares of our common stock to be outstanding after this offering is based on shares outstanding at October 31, 2006, and excludes:


	•	1,375,000 shares of common stock issuable upon the exercise of warrants issued to Holdings, with an exercise price of $15.50 per share;

	•	709,740 shares of common stock issuable upon the exercise of outstanding stock options with a weighted average exercise price of $12.69 per share; and

	•	any additional shares of common stock that we may issue in the future to comply with our agreements to pay additional contingent purchase price in connection with certain business acquisitions. For more information about these agreements, refer to the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

Summary Historical Financial Data

The following table sets forth:


	•	our balance sheet data as of June 30, 2006 on an actual basis and as adjusted to reflect:


	•	the sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus); and

	•	the application of the estimated net proceeds from this offering as described under “Use of Proceeds”; and


	•	our statement of operations data:


	•	for the years ended December 31, 2003, 2004 and 2005 (on a combined basis); and

	•	for the six months ended June 30, 2005 and 2006.

You should read the following historical consolidated financial data in conjunction with our audited and unaudited consolidated financial statements, including the notes to the financial statements, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “The Recapitalization” included elsewhere in this prospectus. In the table below and throughout this prospectus, we refer to AmWINS as our “Predecessor” for all periods prior to and including October 27, 2005, the date of our Recapitalization, and as our “Successor” for all periods following the Recapitalization. As a result of the Recapitalization, we have applied push-down accounting, as required by Staff Accounting Bulletin (SAB) No. 54, Application of ‘Pushdown’ Basis of Accounting in Financial Statements of Subsidiaries Acquired by Purchase (SAB No. 54), as interpreted by Emerging Issues Task Force Topic D-97, Pushdown Accounting (EITF D-97), which resulted in a partial write-up in the fair value of our net assets by approximately $84.1 million at October 27, 2005. As a result, our basis of accounting differs from that prior to the Recapitalization, which affects the comparability of our financial data. Although it is generally not permissible under generally accepted accounting principles to combine pre-Recapitalization and post-Recapitalization periods, for comparison purposes, we have done so below for the year ended December 31, 2005. In addition, since 2003, we have acquired a significant number of businesses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Acquisitions and Dispositions.” As a result of these acquisitions and the Recapitalization, our financial information for the periods shown below may not be comparable period-to-period.

We derived the following statement of operations data for the years ended December 31, 2003, 2004 and 2005 from our audited consolidated financial statements appearing elsewhere in this prospectus. We derived the balance sheet data as of June 30, 2006 and the statement of operations data for the six months ended June 30, 2005 and 2006 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements include, in the opinion of management, all adjustments that management considers necessary for the fair presentation of the financial information set forth in these statements. The results of operations for the interim periods are not necessarily indicative of our results of operations for the full year.


	As of June 30, 2006
	Actual		As Adjusted
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	24,261
Goodwill		252,161
Other identifiable intangible assets, net		42,128
Total assets		655,623
Total debt		174,638
Stockholder’s equity		152,386


							Combined
							Year Ended			Six Months Ended
	Years Ended December 31,						December 31,			June 30,
	2003			2004			2005			2005		2006
	Predecessor									Predecessor		Successor
	(in thousands, except per share data)
Statement of Operations Data:^(a)
Commissions and fees	$	57,681		$	83,452		$	140,513		$	56,573	$	82,607
Other income		503			1,152			1,756			384		3,310

Total revenues		58,184			84,604			142,269			56,957		85,917
Employee compensation and benefits (including non-cash equity compensation of $349 for the six months ended June 30, 2006)^(b)		37,594			52,523			83,800			36,187		52,217
Other operating expenses		13,421			16,588			24,929			10,478		16,311
Depreciation		1,256			1,475			2,391			858		1,639
Amortization		2,068			3,873			6,352			2,945		2,368

Total operating expenses		54,339			74,459			117,472			50,468		72,535

Operating income		3,845			10,145			24,797			6,489		13,382
Interest expense		288			2,498			11,465			3,939		8,274
Loss on extinguishment of debt^(c)		—			994			9,799			1,731		—

Income before income taxes and minority interest and discontinued operations		3,557			6,653			3,533			819		5,108
Minority interest		(258	)		(67	)		—			—		—
Income tax expense		406			2,930			2,275			503		2,419

Income from continuing operations		3,409			3,790			1,258			316		2,689
Income from discontinued operations, net of minority interest and income taxes		812			578			—			—		—
Loss on sale of discontinued operations^(d)		—			(67	)		—			—		—

Net income	$	4,221		$	4,301		$	1,258		$	316	$	2,689

Income from continuing operations per share:
Basic	$	0.31		$	0.31		$	0.10	^(e)	$	0.03	$	0.24
Diluted	$	0.31		$	0.31		$	0.10	^(e)	$	0.03	$	0.23
Income from discontinued operations per share:
Basic	$	0.07		$	0.05		$	—		$	—	$	—
Diluted	$	0.07		$	0.05		$	—		$	—	$	—
Loss on sale of discontinued operations per share:
Basic	$	—		$	(0.01	)	$	—		$	—	$	—
Diluted	$	—		$	(0.01	)	$	—		$	—	$	—
Income per share:
Basic	$	0.38		$	0.35		$	0.10	^(e)	$	0.03	$	0.24
Diluted	$	0.38		$	0.35		$	0.10	^(e)	$	0.03	$	0.23
Weighted average shares:
Basic		11,124			12,142			12,249			12,438		11,385
Diluted		11,173			12,202			12,307			12,489		11,465


(a)		See “Management’s Discussion and Analysis of Financial Position and Results of Operations — Acquisitions and Dispositions” for information regarding our acquisitions and dispositions during these periods, which affect the comparability of our financial data for these periods.


(b)		We adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)) as of January 1, 2006, which resulted in the recognition of expense for the period ended June 30, 2006. See Note 1 to our 2005 consolidated financial statements for the pro forma effect of recording this expense in prior periods before adoption of SFAS No. 123(R).


(c)		Reflects the write-off of unamortized financing fees and expenses and associated prepayment fees related to the refinancing of previous credit facilities.


(d)		In November 2004, we sold our premium finance business. The results of operations of this business are segregated and reported as discontinued operations in each of the two years ended December 31, 2004.


(e)		We calculated our earnings per share for the 2005 combined period by dividing our combined net income for 2005 by our weighted average outstanding shares for 2005. Our earnings per share data for 2005 do not necessarily equal the total of our earnings per share for the period prior to the Recapitalization (January 1, 2005 to October 27, 2005) and following the Recapitalization (October 28, 2005 to December 31, 2005) due to differences caused by the number of our weighted average shares outstanding for these periods.

RISK FACTORS

An investment in our common stock involves a number of risks. You should carefully consider the following risk factors in addition to the other information contained in this prospectus before investing in our common stock. If any of the following risks or uncertainties occurs, our business, financial condition and operating results could be materially and adversely affected, the trading price of our common stock could decline and you may lose all or a part of your investment in our common stock.

Risks Related to Our Business and Industry

The loss of the services of any of our highly qualified brokers or our executive officers could harm our business and operating results.

Our future performance depends on our ability to recruit and retain highly-qualified brokers, including brokers who work in the businesses that we have acquired or may acquire in the future. Competition for productive brokers is intense, and our inability to recruit or retain these brokers could harm our business and operating results. Although many of our senior brokers own an equity interest in us and have entered into employment agreements with us, we cannot assure you that these brokers will serve the term of their employment agreements or renew their employment agreements upon expiration. Moreover, we cannot assure you that any of the brokers who leave our firm will comply with the provisions of their employment agreements that preclude them from competing with us or soliciting our customers and employees, or that these provisions will be enforceable under applicable law or sufficient to protect us from the loss of any business. In addition, we do not have employment, non-competition or non-solicitation agreements with all of our brokers. We may not be able to retain or replace the business generated by a broker who leaves our firm or replace that broker with an equally qualified broker who is acceptable to our clients.

Our success also depends on our key executive officers and the skills and relationships they bring to our business, as well as on our ability to attract and retain additional executive officers and key management personnel. Our executive officers are important to our company. In particular, M. Steven DeCarlo, our President and Chief Executive Officer, and Scott M. Purviance, our Chief Financial Officer, were instrumental in structuring and managing our significant growth over the last five years, including the acquisitions that we have completed, and are very involved in the day-to-day management and oversight of our operations. In addition, Samuel H. Fleet has managed our Group Benefits division since July 2000, and Mark M. Smith has overseen our Property & Casualty Brokerage division since our acquisition of Stewart Smith East, Inc. and related affiliates (together, Stewart Smith Group) in April 2005. We do not maintain “key man” life insurance policies for any of our executive officers or key management personnel. The loss of the services of any of our executive officers, particularly Messrs. DeCarlo, Purviance, Fleet or Smith, or our inability to attract and retain additional executive officers or key management personnel, could prevent us from fully implementing our business strategy and could adversely affect our ability to capitalize on market opportunities and grow our business, as well as have an adverse effect on our operating results.

We may be negatively affected by the cyclicality of and the economic conditions in the markets in which we operate.

Premium pricing within the commercial property and casualty insurance market historically has been cyclical based on the underwriting capacity of the insurance carriers operating in this market and has been impacted by general economic conditions. In a period of decreasing insurance capacity, insurance carriers typically raise premium rates. This type of market frequently is referred to as a “hard” market. In a period of increasing insurance capacity, insurance carriers tend to reduce premium rates. This type of market frequently is referred to as a “soft” market. Because our commission rates usually are calculated as a percentage of the gross premium charged for the insurance products that we place, our revenues are affected by the pricing cycle of the market. The frequency and severity of natural disasters and other catastrophic events can affect the timing, duration and extent of industry cycles for many of the product lines we distribute. It is very difficult to predict the severity, timing or duration of these cycles. The cyclical nature of premium pricing in the commercial property and casualty insurance market may make our operating results volatile and unpredictable.

Economic conditions generally and within the insurance industry also may affect:


	•	The commission rates paid by insurance carriers on products we distribute;

	•	The portion of commissions we receive from insurance carriers that we pay to our retail insurance brokerage clients in connection with policy placement. The amount of these commissions is negotiated by us and retail insurance brokers on a case-by-case basis and can be affected by a number of factors, including the amount of business that a retail insurance brokerage firm places with us, competition within the wholesale insurance brokerage market, whether the retail insurance broker is being compensated by its client on a fee basis and the difficulty of obtaining insurance to cover a particular risk;

	•	The fees we charge for certain insurance products we distribute, which are in addition to the commissions we receive and are negotiated on a case-by-case basis; and

	•	The fees we are able to charge for providing ancillary services such as premium and claims administration and actuarial services.

In 2005, our Group Benefits division derived a substantial majority of its revenues from group health insurance plans. Premium rates for group health insurance plans are affected by several factors, including health care costs, which have increased significantly in recent years, and general economic conditions such as changes in the level of employment and other factors that may affect employer spending for employee benefits. Federal and state sponsored health care programs as well as proposals to alter the level of spending under these programs also can affect the market for group health insurance plans. For example, as a result of the adoption of the Medicare Modernization Act, insurance products that provide prescription drug benefits to Medicare-eligible individuals now compete with the entitlement program under Part D of the Social Security Act. Moreover, there are discussions at both the federal and state levels regarding proposals to reform the U.S. health care system, which may affect the procurement practices and operations of health care industry participants. Several groups are urging the U.S. Congress to consider a national health care plan, which could include the replacement of the existing employer-based system of insurance with a “single-payer” financing mechanism under which one governmental entity would collect all health care fees and pay out all health care costs. All of these factors could affect the market for the health insurance products that we place or reduce the commission revenues we receive from placing these products.

If any of our MGU programs are terminated or changed, our business and operating results could be harmed.

In our Specialty Underwriting division, we act as an MGU for insurance carriers that have given us authority to bind coverage on their behalf. Our MGU programs are governed by contracts between us and the insurance carriers. These contracts establish, among other things, the underwriting and pricing guidelines for the program, the scope of our authority and our commission rates for policies that we underwrite under the program. These contracts typically can be terminated by the insurance carrier with very little advance notice. Moreover, upon expiration of the contract term, insurance carriers may request changes in the terms of the program, including the amount of commissions we receive, which could reduce our revenues from the program. The termination of any of our MGU programs, or a change in the terms of any of these programs, could harm our business and operating results. Moreover, we cannot assure you that we will be able to replace any of our MGU programs that are terminated with a similar program with another insurance carrier.

We conduct a significant amount of our Property & Casualty Brokerage business with one retail insurance brokerage firm, the loss of which could harm our business, results of operations and cash flows.

In April 2005, we acquired Willis’ wholesale insurance brokerage operations, formerly operated under the name Stewart Smith Group. Willis accounted for approximately 15% and 13% of our historical revenues for the year ended December 31, 2005 and the six months ended June 30, 2006, respectively. The divestiture by Willis of its wholesale insurance brokerage operations generally has intensified competition among

wholesale insurance brokers for business with Willis. If we lose Willis as a client or there is a substantial reduction in the volume of business we do with Willis, our business, results of operations and cash flows would be materially harmed.

We place a significant amount of our Property & Casualty Brokerage business with one insurance carrier, and the termination or significant reduction of the business we do with this carrier could result in additional expense and loss of market share.

For the year ended December 31, 2005 and the six months ended June 30, 2006, approximately 11.5% and 9.2%, respectively, of our total revenues were derived from insurance policies provided by AIG, which is the largest insurance company operating in the E&S lines market. If AIG seeks to terminate or significantly reduce the amount of business we do with it, we believe that we could locate other insurance carriers to underwrite most of the business that we place with AIG. However, we would incur additional expense and could lose market share in the process of locating other insurance carriers to take this business.

Competition in the industries in which we do business is intense, and if we are unable to compete effectively, our business and operating results will be harmed.

The wholesale insurance brokerage industry is highly competitive, and a number of firms actively compete with us for clients and access to insurance carriers. Our competition includes other wholesale insurance brokerage firms, insurance companies, banks and other financial service companies. Some of our primary competitors have substantially greater resources than we have, which may give them an advantage over us. In addition, our MGU programs directly compete with products offered by other insurance carriers. Our ability to remain competitive will, in large part, determine our future success. If we fail to compete successfully, our business and operating results could be adversely affected.

The divestitures by Aon, Marsh and Willis of their wholesale distribution operations have created growth opportunities for us. However, there can be no assurance that we will succeed in taking advantage of them. Other wholesale brokers will now find it easier to do business with these large retail insurance brokerage firms. Although our business with Aon and Marsh has increased dramatically since their respective divestitures, it is unlikely that we will maintain the same rate of growth with them due to competition from others and the fact that our recent growth rate with them is measured in comparison to a low starting base.

We depend on our information processing systems. Interruption or loss of our information processing systems could harm our business.

Our ability to operate our business depends on our capacity to store, retrieve, process and manage significant databases and expand and upgrade periodically our information processing capabilities. Interruption or loss of our information processing capabilities through loss of stored data, breakdown or malfunctioning of computer equipment and software systems, telecommunications failure, or damage caused by fire, tornadoes, lightning, electrical power outage, natural or other disasters or other disruption could harm our business and operating results. Although we have disaster recovery procedures in place and insurance to protect against certain contingencies, we cannot assure you that our recovery procedures will be effective or that our insurance will continue to be available at reasonable prices, cover all such losses or compensate us for the loss of business occurring during any period in which we are unable to provide services.

If we are unable to successfully acquire or integrate acquired businesses, or if they do not perform as we expect, our competitiveness, operating results and financial condition could be harmed.

One of our growth strategies is to acquire businesses that complement, expand upon or diversify our current operations. We have acquired a number of businesses over the last four years and anticipate that we will continue to look for opportunities to acquire additional businesses. We are unable to predict whether or when we will be able to identify suitable acquisition candidates, consummate any acquisitions we pursue or prevail over our acquisition competitors, who often are larger than we are and have greater resources than we do. Our senior secured credit facilities require our lenders’ consent for certain acquisitions, and we can give

no assurance that we will be able to secure their consent if and when needed. We may also require additional capital to complete acquisitions we deem attractive, but may be unable to secure such capital on satisfactory terms. Our senior secured credit facilities limit the amount of additional debt we may incur, and our ability to secure future financing would depend on a number of factors, some of which are beyond our control, such as prevailing conditions in the capital markets, our future operating performance and then-existing debt levels and cash flows. If we fail to execute our acquisition strategy, it is likely that our revenue and earnings growth will suffer, and we may be unable to remain competitive.

Despite due diligence investigations we conduct before acquiring a business, we may not succeed in identifying all material risks and uncertainties associated with that business. Unanticipated contingencies or liabilities, such as litigation, the loss of significant clients or accounts, the termination or amendment of significant contracts and the loss of key brokers, are inherent risks in acquisitions. Furthermore, these businesses may not achieve expected levels of revenue, profitability or productivity or otherwise operate in a manner consistent with our expectations or comparable to our existing businesses due to events beyond our control, such as changes in market conditions, increased competition and other factors. The failure of the businesses that we acquire to achieve our performance goals could have an adverse impact on our operating results and overall business.

When we acquire an entity, a portion of the purchase price may be allocated to goodwill and other indefinite life intangible assets. The amount of purchase price allocated to goodwill is determined by the excess of the purchase price over the fair market value of identifiable net assets we acquire. Accounting rules require that we conduct annual impairment testing of goodwill and indefinite life intangible assets. Deterioration in our operating results, including the loss of a significant client or clients at one of our acquired businesses, could result in an impairment of goodwill and intangible assets, which would cause us to record a charge for the impairment. Such a charge could adversely affect our results of operations.

We cannot assure you that we can successfully integrate the businesses that we acquire. The integration of a business involves a number of factors that may affect our operations. These factors include:


	•	retention of personnel;

	•	diversion of management’s attention;

	•	difficulties in the integration of acquired operations, systems and processes;

	•	entry into new or unfamiliar markets;

	•	unanticipated problems or liabilities; and

	•	tax and accounting issues.

Our failure to successfully integrate acquired businesses may disrupt our operations and harm our overall business and operating results.

We permit many of our acquired businesses to remain under the day-to-day management of previous owners or other individuals who played a key role in their development. We cannot predict how long these individuals will continue to be actively engaged in our business. In many cases, the reputation and skills of these individuals and the relationships they have with their clients are critical to our success. Our business and operating results could be harmed if any of these individuals retire or otherwise limit their involvement in the day-to-day management of our business, and we are not able to identify a suitable successor or if the individual’s successor is not as successful.

We are subject to errors and omissions claims, which can be costly to defend and could negatively affect us.

We are subject to claims and litigation in the ordinary course of business resulting from alleged and actual errors and omissions. These types of litigation matters can involve claims for substantial amounts of money for direct and consequential damages and significant defense costs. For example, we may be subject to errors and omissions claims if we fail (or are alleged to have failed) to provide an insurance carrier with

complete and accurate information relating to the risk being insured, to request or secure coverage for a particular type of risk, for the requested amounts or on the requested terms, or to comply with state law notice and other requirements typically applicable for insurance policies issued by non-admitted insurance carriers in the E&S lines market. We also are subject to claims that we mishandled the payment of premiums, the adjudication of claims or other administrative functions in our benefit administration business. We are unable to predict with certainty the frequency, nature or magnitude of these claims. It is not always possible to prevent or detect errors and omissions, and the precautions we take may not be effective in all cases.

We have purchased errors and omissions insurance to protect us, subject to deductible amounts, policy exclusions and other conditions, against the risk of liability resulting from alleged and actual errors and omissions. However, our insurance may not adequately protect us against every errors and omissions claim. Moreover, we may not be able to purchase coverage that is appropriate in relation to our assessment of the risks involved on commercially reasonable terms or at all.

Our business and operating results may be negatively affected if our errors and omissions insurance proves to be inadequate or unavailable. In addition, errors and omissions claims may harm our reputation and divert management resources away from operating our business.

We are subject to governmental regulation and supervision, and increased costs of compliance or failure to comply with applicable laws and regulations could increase our expenses, restrict our growth and limit our ability to conduct our business.

Our business is subject to governmental regulation and supervision. State laws grant supervisory agencies, including state insurance departments, broad regulatory authority. State insurance regulators and the National Association of Insurance Commissioners continually reexamine existing laws and regulations, some of which affect us. These supervisory agencies regulate, among other things, the licensing of insurance brokers and group benefits administrators, the handling and investment of third-party funds held in a fiduciary capacity and the marketing practices of insurance brokers, in the context of curbing unfair trade practices. This continual reexamination may result in the enactment of laws and regulations, or the issuance of interpretations of existing laws and regulations, that adversely affect our business. More restrictive laws, rules or regulations may be adopted in the future that could make compliance more difficult and expensive or adversely affect our business. Violations of applicable federal or state laws or regulations could result in the imposition of fines or censures, disciplinary actions, including the revocation of licenses or registrations, damage to our reputation, or a limitation on our business. Moreover, the costs of complying with these regulations may increase our operating expenses.

We also are affected by the governmental regulation and supervision of insurance carriers. For example, if we act as an MGU for an insurance carrier, we may be required to comply with laws and regulations affecting the insurance carrier. Moreover, regulation affecting the insurance carriers with which we place business can affect how we conduct operations.

There have been governmental investigations and private litigation involving some insurance brokerage firms regarding the propriety of contingent commissions and other business practices, and the results of these investigations and litigation matters could harm our business and operating results.

There have been a number of investigations of some large insurance brokerage firms regarding the propriety of certain compensation arrangements between insurance carriers and insurance brokers and other business practices. Some of these investigations have focused on whether retail insurance brokers have adequately disclosed to their customers the receipt of contingent commissions that are paid by insurance carriers to brokers based on the volume of the business placed by the broker with the insurance carrier or other factors. The propriety of these contingent commissions is also the subject of litigation against certain insurance agents involving allegations that the existence of these commission arrangements results in a breach of fiduciary duties by causing brokers to place insurance policies with insurance carriers who pay these commissions instead of based on the coverage needs of their clients. To date, we have not been made or threatened to be made a party to any litigation involving the propriety of contingent commissions. We are

unable to predict how these matters will affect us. However, these investigations and litigation matters may alter the manner in which wholesale insurance brokers are compensated or conduct business.

Our growth strategy may involve opening new offices and hiring new brokers and underwriters, which will require substantial investment by us and may adversely affect our results of operations and cash flows in a particular period. We cannot assure you that we will be able to recover our investment in new offices, brokers or underwriters or that these new offices, brokers or underwriters will achieve profitability.

Our ability to grow organically depends in part on our ability to open new offices and recruit new brokers and underwriters. The costs of opening a new office and hiring the necessary personnel to staff the office can be substantial, and we often are required to commit to multi-year, non-cancellable lease agreements. In addition, we often hire new brokers and underwriters with the expectation that they will not become profitable until two to three years after they are hired. The cost of investing in new offices, brokers and underwriters may affect our results of operations and cash flows in a particular period. Moreover, we cannot assure you that we will be able to recover our investment in new offices, brokers or underwriters or that these offices, brokers and underwriters will achieve profitability.

If insurance carriers begin to transact business without relying on wholesale insurance brokers, our business, results of operations, financial condition and cash flows could suffer.

As a wholesale distributor of insurance products, we act as an intermediary between retail insurance brokers and insurance carriers that, in some cases, will not transact business directly with retail insurance brokers. If insurance carriers change the way they conduct business and begin to transact business with retail insurance brokers without including us, our role in the distribution of insurance products could be eliminated or substantially reduced, and our business, results of operations, financial condition and cash flows could suffer. Such a change could result from a change in business model, advancements in technology or other factors.

Our offices are geographically dispersed across the United States, and we may not be able to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices, which could harm our business and operating results.

Our offices are dispersed across the United States and in many cases are under the day-to-day management of individuals who previously owned acquired businesses or played a key role in the development of an office. These individuals may not report negative developments that occur in their businesses to management on a timely basis because of, among other things, damage to their reputation, the risk that they may lose all or some of their operational control, or the risk that they may be personally liable to us under the indemnification provisions of the agreements pursuant to which their businesses were acquired. Moreover, there can be no assurances that management will be able independently to detect adverse developments that occur in particular offices. Our business and operating results may be harmed if our management does not become aware, on a timely basis, of negative business developments, such as the possible loss of an important client, threatened litigation or regulatory action, or other developments.

In addition, our ability to grow organically will require the cooperation of the individuals who manage our offices. We cannot assure you that these individuals will cooperate with our efforts to improve the operating results in offices for which they are not directly responsible. Our dispersed operations may impede our integration efforts and organic growth, which could harm our business and operating results.

We may lose clients or business as a result of consolidation within the retail insurance brokerage industry.

We derive a substantial portion of our business from our relationships with small to mid-size retail insurance brokerage firms. There has been considerable consolidation in the retail insurance brokerage industry, driven primarily by the acquisition of small and mid-size retail insurance brokerage firms by larger

brokerage firms, financial institutions or other organizations. We expect this trend to continue. As a result, we may lose all or a substantial portion of the business we obtain from retail insurance brokerage firms that are acquired by other firms with their own wholesale insurance brokerage operations or relationships with other wholesale insurance brokerage firms.

As a public company, our costs will increase and our management will be required to devote substantial time to complying with public company regulations.

We have never operated as a public company. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), as well as new rules subsequently implemented by the Securities and Exchange Commission (SEC) and the New York Stock Exchange (NYSE), have imposed various new requirements on public companies, including changes in corporate governance practices, and these requirements will continue to evolve. Our management and other personnel will need to devote a substantial amount of time to comply with these evolving requirements. Moreover, these rules and regulations relating to public companies will increase our legal and financial compliance costs and will make certain activities more time-consuming and costly.

As a public company, we will be required to comply with significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls and disclosure controls that are adequate to satisfy our reporting obligations as a public company. Failure to design, implement and maintain effective internal controls could prevent us from accurately reporting our financial results and could harm our business and operating results. We will also be required to perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, but will need to put in place an internal audit function, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to satisfy the ongoing requirements of Section 404 and the rules of the NYSE.

Risks Related to Our Indebtedness

The terms of our senior secured credit facilities are restrictive and may prevent us from expanding our business. Our failure to comply with any of these terms could result in a default and allow the lenders to require the immediate repayment by us of all amounts that are owed under these facilities. Our substantial indebtedness could also restrict our flexibility and place us at a competitive disadvantage.

Our senior secured credit facilities contain a number of restrictive covenants. These covenants limit our ability, among other things, to:


	•	incur additional indebtedness;

	•	make acquisitions, subject to certain exceptions;

	•	make capital expenditures and other investments; and

	•	pay dividends or repurchase stock.

Our senior secured credit facilities also require us to maintain certain financial ratios and satisfy financial condition tests at the end of each fiscal quarter. An adverse development affecting our business may require us to seek waivers or amendments of these and other covenants. We cannot assure you that we will be able to obtain such waivers or amendments at all, or on terms acceptable to us. Our ability to meet these covenants may be affected by events beyond our control. These covenants may prevent us from obtaining

financing to expand our business, including through acquisitions. A breach of any of these covenants in existing or future financing agreements, or the occurrence of certain change of control events, could result in an event of default under our senior credit facilities and permit our lenders to accelerate the related debt and declare all borrowings outstanding under these facilities to be due and payable. If we are unable to repay debt to our lenders, these lenders could foreclose on our assets.

As of June 30, 2006, as adjusted for this offering, we had total debt of $111.6 million. We may incur additional indebtedness from time to time, in connection with acquisitions or otherwise. The degree to which we are leveraged could have important consequences, including the following: (i) a substantial portion of our cash flow from operations may be dedicated to the payment of principal and interest on our indebtedness and would not be available for other purposes; (ii) our ability to obtain additional financing in the future may be impaired; (iii) we may be more leveraged than certain of our competitors, which may place us at a disadvantage; (iv) our debt agreements may impose significant financial and operating restrictions; and (v) our degree of leverage could make us more vulnerable to changes in general economic conditions.

Risks Related to this Offering

An active market for our common stock may not develop, which may cause our common stock to trade at a discount and make it difficult to sell the common stock you purchase.

Prior to this offering, there has been no public market for our common stock. We cannot assure you that an active trading market for our common stock will develop or be sustained after this offering. The initial public offering price for our common stock will be determined by negotiations among the underwriters and us and will reflect then-existing market conditions. We cannot assure you that the initial public offering price will correspond to the price at which our common stock will trade in the public market subsequent to this offering or that the price of our common stock available in the public market will reflect our actual financial performance. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in the offering.

Future sales of our common stock may cause our stock price to decline.

Sales by us or our stockholders of a substantial number of shares of our common stock in the public markets following this offering, or the perception that these sales might occur, could cause the market price of our common stock to decline or could impair our ability to raise capital or pay for acquisitions using our equity securities. Upon completion of this offering, there will be shares of our common stock outstanding (or shares if the underwriters exercise their over-allotment option in full). Of our outstanding shares, the shares of our common stock sold in this offering will be freely transferable, except for any shares sold in this offering to our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (Securities Act). The remaining shares will be “restricted securities” subject to the volume limitations and the other conditions of Rule 144.

All of our officers and employees who are existing stockholders have entered into an agreement with us under which they will not, for a period of one year from the consummation of this offering, sell or otherwise dispose of any shares of our common stock, without our prior written consent. See “Shares Eligible for Future Sale — Restrictive Agreements.” In addition, we, our directors, executive officers and all existing stockholders have agreed, with limited exceptions, that we and they will not, without the prior written consent of Merrill Lynch, on behalf of the underwriters, directly or indirectly sell or otherwise dispose of any shares of our common stock, for a period of 180 days after the date of this prospectus.

Following the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of shares of our common stock reserved for issuance under our stock-based compensation incentive plans. Subject to the exercise of issued and outstanding options, shares registered under the registration statement on Form S-8 will be available for sale into the public markets after the expiration of the 180-day lock-up agreements. Sales of substantial amounts of these shares, or the perception that these sales may occur, could adversely affect the price of our common stock.

In addition, if either Parthenon HoldCo or Holdings exercises its registration rights under the registration agreement or otherwise determines to sell a significant portion of its shares, our stock price may be negatively affected. The exercise of these registration rights, or similar registration rights for securities we may issue in the future, could result in additional sales of our common stock in the market, which may have an adverse effect on our stock price. See “Shares Eligible for Future Sale — Registration Agreement.”

The issuance of additional stock will dilute our stockholders.

After this offering, we will have an aggregate of shares of common stock authorized but unissued. We may issue all of these shares without any action or approval by our stockholders, except as NYSE rules require. Upon completion of this offering, we will be required to issue:


	•	1,375,000 shares of common stock upon the exercise of warrants that have been issued to Holdings with an exercise price of $15.50 per share;

	•	709,740 shares of common stock upon the exercise of outstanding stock options with a weighted average exercise price of $12.69 per share; and

	•	additional shares of our common stock that we may issue in the future to comply with our agreements to pay additional contingent purchase price in connection with certain business acquisitions. For more information about these agreements, refer to the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

We intend to continue to pursue acquisitions of other businesses and may issue shares of common stock in connection with these acquisitions. In addition, we may need to issue shares to raise additional capital to support our operations or take advantage of opportunities to acquire other businesses. If we issue equity securities to raise capital or acquire a business, the percentage interests of our stockholders will be reduced, our stockholders may experience additional dilution, and the equity securities we issue may have rights, preferences or privileges senior to our common stock.

The price of our common stock may fluctuate substantially, which could negatively affect us and the holders of our common stock.

The trading price of our common stock may fluctuate in response to a number of factors, many of which are beyond our control, including actual or anticipated variations in our quarterly financial results, changes in financial estimates for us by securities analysts and announcements by us or our competitors of significant developments or events, such as business acquisitions, additions or departures of key personnel, legal proceedings or regulatory matters. In addition, our financial results may be below the expectations of securities analysts and investors. If any of these events were to occur, the market price of our common stock could decrease, perhaps significantly. Any volatility of or a significant decrease in the market price of our common stock could also negatively affect our ability to make acquisitions using our common stock as consideration.

In addition, the U.S. securities markets have historically experienced significant price and volume fluctuations. These fluctuations may be unrelated to the operating performance of companies in these markets. Broad market and industry factors may negatively affect the price of our common stock, regardless of our operating performance. You may not be able to sell your common stock at or above the initial public offering price, or at all. Further, if we were to be the object of securities class action litigation as a result of volatility in our common stock price or for other reasons, it could result in substantial costs and diversion of our management’s attention and resources, which could negatively affect our financial results. If we decided to settle any class action litigation against us, our decision to settle might not necessarily be related to the merits of the claim.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price of our common stock will be substantially higher than the net tangible book value per share of our common stock outstanding immediately after this offering. If you purchase our common stock in this offering, you will experience immediate and substantial dilution of $ in the net tangible book value per share of our common stock. Additional dilution will occur upon the exercise of outstanding options. See “Dilution.”

Our principal stockholder may have interests that are different from yours and, therefore, may make decisions that are adverse to your interests.

After this offering, Parthenon HoldCo will beneficially own approximately % of our outstanding voting common stock (or % if the underwriters exercise their over-allotment option in full). As a result, Parthenon HoldCo will have the ability to control matters requiring stockholder approval, including the election of directors and the approval of significant corporate transactions, including mergers, consolidations and the sale of all or substantially all of our assets. Parthenon HoldCo may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. In addition, this concentration of ownership may have the effect of preventing, discouraging or deferring a change of control, which could depress the market price of our common stock.

A company of which more than 50% of the voting power is held by an individual, group or another company meets the definition of a “controlled company” under the rules of the NYSE. A controlled company may elect not to comply with certain of the NYSE’s corporate governance rules, including the requirements that a majority of its board of directors be “independent” and that it maintain compensation and nominating/governance committees of the board consisting entirely of “independent” directors. We expect that upon completion of this offering, we will qualify for this “controlled company” exception because Parthenon HoldCo will hold more than 50% of our common stock. We currently intend to comply with all applicable NYSE governance requirements, subject to any temporary transition relief provided by these rules. However, for so long as we qualify for this controlled company exception, we cannot assure you that Parthenon HoldCo’s influence and ability to control matters requiring stockholder approval, such as the composition of our board of directors, or other factors, will not result in our reliance on these controlled company exemptions. In such event, you would not be afforded the same protections as stockholders of companies that are subject to all of these corporate governance requirements.

Certain provisions of our charter documents and Delaware law could delay or prevent a change in control of our company, which could adversely impact the value of our common stock.

Provisions in our certificate of incorporation and bylaws, each as to be amended and restated in connection with this offering, may delay or prevent a change in control of our company or a change in management. These provisions will include the following:


	•	Our board of directors is classified with three-year terms for each class of directors, which could prevent our stockholders from replacing a majority of our board of directors at an annual meeting and discourage unsolicited stockholder proposals that may be in the best interest of stockholders;

	•	Our board of directors has the right to fill vacancies occurring on our board of directors as a result of an increase in the number of our directors or the resignation, death or removal of a director, which prevents our stockholders from being able to fill vacancies on our board of directors;

	•	Our stockholders may not act by written consent, which means that any stockholder or group of stockholders that control a majority of our outstanding shares of common stock would not be able to take certain actions without holding a stockholders’ meeting;

	•	Stockholders must provide advance notice to nominate persons to serve as directors and to propose other actions to be taken at a stockholders’ meeting, which may discourage or deter a


		potential acquiror from attempting to solicit proxies to elect the acquiror’s own slate of directors or otherwise attempting to acquire control of our company; and


	•	Our board of directors may, without stockholder approval, issue authorized but unissued shares of our common stock or preferred stock, which could be used to impede an acquiror from obtaining control of our company.

In addition, as a Delaware corporation we are subject to Section 203 of the Delaware General Corporation Law, which imposes certain restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. Delaware law prohibits a publicly held corporation from engaging in a “business combination” with an “interested stockholder” for three years after the stockholder becomes an interested stockholder, unless the corporation’s board of directors and stockholders approve the business combination in a prescribed manner. These provisions could make it difficult for a third party to acquire us, or for members of our board of directors to be replaced, even if doing so would be beneficial to our stockholders. Any delay or prevention of a change in control transaction or changes in our board of directors or management could deter potential acquirers or prevent the completion of a transaction in which our stockholders could receive a substantial premium over the then current market price for their shares.

We do not currently intend to pay dividends on our common stock in the foreseeable future.

We currently intend to retain our future earnings to fund the development and growth of our business. It is uncertain when, if ever, we will pay dividends to our stockholders. Our senior secured credit facilities prohibit us from paying dividends, and future debt agreements may contain similar prohibitions. In addition, our principal assets are equity interests in our subsidiaries, and we would have to rely on distributions from these subsidiaries if we were to pay any dividends to our stockholders. You should not invest in our common stock if you require or expect dividend income. For the foreseeable future, we expect that the only return on an investment in us, if any, would come from the capital appreciation of our common stock.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our views about future events and financial performance. Forward-looking statements typically are identified by words such as “may,” “will,” “should,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,” “potential,” “intend,” “continue” and similar expressions, although some forward-looking statements are expressed differently. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, including those set forth in “Risk Factors,” that could cause actual results to differ materially from those projected. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. You should consider carefully the statements under “Risk Factors” and in other sections of this prospectus, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made, and we undertake no ongoing obligation to update these statements.

THE RECAPITALIZATION

On October 27, 2005, Parthenon HoldCo acquired a controlling interest in AmWINS and Holdings in a series of transactions that we refer to as the Recapitalization. In connection with the Recapitalization:


	•	We repaid in full all amounts outstanding under our prior credit facilities with the proceeds from a new first lien credit facility and second lien credit facility with aggregate principal amounts of $123.0 million and $48.0 million, respectively (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Senior Secured Credit Facilities” for more information regarding the terms of these two credit facilities);

	•	Holdings redeemed a portion of its outstanding equity in exchange for shares of our common stock, and we then redeemed these shares for approximately $32.6 million with existing cash resources and a portion of the proceeds from our new credit facilities;

	•	Parthenon HoldCo acquired a majority equity interest in Holdings from a group consisting of our former private equity owner and other equity holders who elected to exercise their “tag-along” right to participate in the sale, as permitted under Holdings’ operating agreement;

	•	Parthenon HoldCo acquired an additional equity interest in Holdings directly from Holdings for approximately $11.6 million, and Holdings used that cash to acquire additional equity in AmWINS; and

	•	All members of our senior management team and a substantial majority of our other employees who owned an interest in Holdings agreed to retain their interests in Holdings as opposed to exercising their tag-along right to participate in the sale to Parthenon HoldCo.

Immediately following the Recapitalization, Parthenon HoldCo owned approximately 70% of the outstanding equity of Holdings, and members of our senior management and our employees owned substantially all of the remaining 30% of our outstanding equity. To account for the Recapitalization, we have applied push-down accounting, as required by SAB No. 54 and EITF D-97. Under the requirements of SAB No. 54, we increased the fair value of our net assets by approximately $84.1 million at October 27, 2005. Our basis of accounting following the Recapitalization differs from that prior to the Recapitalization, which affects the comparability of our financial data. Therefore, our financial information for periods prior to the Recapitalization is not directly comparable to the financial information for periods following the Recapitalization.

In connection with the Recapitalization, we entered into an advisory services agreement with PCap, L.P. (PCap), an affiliate of Parthenon Capital. Under this agreement, PCap received a transaction fee of $2,407,500 plus fees and expenses incurred in connection with the closing of the Recapitalization. PCap is also entitled to an annual management fee of approximately $800,000 and transaction fees in connection with each acquisition, divestiture, financing, refinancing, merger, recapitalization or other similar transaction by AmWINS or its affiliates in an amount equal to 0.75% of the aggregate gross value of the transaction. To date, we have not been required to pay PCap any of these additional transaction fees. We have agreed in principle to amend the advisory services agreement with PCap such that PCap will receive a fee of the lesser of $2,000,000 or 2.0% of the aggregate gross proceeds to AmWINS from this offering. This fee is included in our offering costs. Approximately 60% of this fee is payable upon completion of this offering, with the remainder payable at the end of 2007. We have also agreed in principle to pay PCap a director services fee of $50,000 per quarter so long as a Parthenon-affiliated director serves on our board, subject to a maximum fee of $400,000. We are required to reimburse PCap for its out-of-pocket expenses in connection with the provision of services under the advisory services agreement. The agreement, as proposed to be amended, will terminate as a result of this offering, subject to our obligation to pay the amounts payable prior to termination and the director services fee described above.

In connection with the Recapitalization, we entered into a registration agreement with Holdings and Parthenon HoldCo. Pursuant to the terms of the agreement, the holders of a majority of the shares owned by

Holdings and Parthenon HoldCo may from time to time request us to register all or any portion of their shares of our common stock for sale under the Securities Act. Parthenon HoldCo and Holdings may also participate and sell all or any portion of their shares of our common stock in any registered offering that we initiate under the Securities Act, subject to certain exceptions. In connection with these offerings, we have agreed to pay all fees and expenses of the offering (excluding underwriting discounts and commissions attributable to shares sold by Parthenon HoldCo or Holdings). In addition, for offerings requested by Parthenon HoldCo or Holdings, we have agreed to reimburse them for the fees and expenses of one counsel. For more information about the registration agreement, see “Shares Eligible for Future Sale — Registration Agreement.”

As part of the Recapitalization, Holdings implemented an equity incentive plan for selected members of management of AmWINS. Awards under the plan consist of “profits-only” equity interests in Holdings that entitle their holders to participate in distributions from Holdings on a pro rata basis if and when Parthenon HoldCo has realized specified rates of return on its investment in Holdings. There are four classes of equity incentive interests under the plan, and these classes participate in distributions from Holdings on a pro rata basis if and to the extent Parthenon HoldCo has realized a designated internal rate of return on its investment in Holdings. In general, 20% of these units vested on October 27, 2006, with the remainder vesting ratably over a four-year period.

Prior to this offering, Holdings owned all of the outstanding shares of our common stock. In connection with this offering, Holdings will distribute approximately 89% of the outstanding shares of our common stock to its members (other than the holders of the incentive equity, as described in the preceding paragraph) in proportion to their relative interests. Holdings will continue to own the remaining shares of our common stock until Holdings is able to determine the amount of distributions payable to the holders of the incentive equity.

For additional information regarding the Recapitalization and related transactions and agreements described above, see “Related Party Transactions and “Management — Holdings Equity Compensation Arrangements.”

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $ million from the sale of shares of our common stock in this offering. This estimate is based upon an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus), and after deducting estimated underwriting discounts and commissions and offering costs payable by us. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds will be approximately $ million.

We intend to use approximately $ million of the net proceeds from this offering to repay up to $ million of the amounts outstanding under our first lien credit facility and all amounts outstanding under our second lien credit facility. At June 30, 2006, approximately $122.1 million of debt was outstanding under our first lien credit facility, and approximately $48.0 million of debt was outstanding under our second lien credit facility. The indebtedness under our first lien credit facility bears interest at LIBOR plus 275 to 350 basis points, depending on our financial ratios. As of June 30, 2006, we were paying an interest rate of approximately 8.34% to 8.5% under this facility. The indebtedness under our second lien credit facility bears interest at LIBOR plus 750 basis points, which was 12.75% at June 30, 2006. Our effective rates of interest are lower than the stated interest rates because we have entered into an interest rate swap agreement, which has a total notional amount of $68.5 million. The interest rate swap causes us to pay interest at a fixed rate of 4.74% and receive interest at the three-month LIBOR each quarter through January 2009. Our first lien credit facility consists of a $123.0 million term loan facility and a $25.0 million revolving line of credit that mature on October 27, 2011. The first lien term loan amortizes in quarterly installments of $307,500. Our second lien credit facility is structured as a $48.0 million term loan, which is payable in full on April 27, 2012. We entered into and borrowed a total of $171.0 million under these two credit facilities in connection with the Recapitalization. See “The Recapitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Senior Secured Credit Facilities.” We intend to use the remaining net proceeds to us from this offering for working capital and general corporate purposes, including possible acquisitions. We have no current agreements or commitments with respect to any acquisitions. Pending such uses, we plan to invest the net proceeds in short-term, investment-grade securities.

DIVIDEND POLICY

We have never declared or paid dividends on our capital stock and do not expect to pay dividends in the foreseeable future. We anticipate that we will retain future earnings, if any, to support our operations and to finance the growth and development of our business. Covenants in our senior secured credit facilities currently prohibit us from paying dividends to holders of our capital stock. In addition, because we are a holding company whose primary assets are the equity interests in our subsidiaries, our ability to pay dividends to our stockholders in the future will depend upon the receipt of distributions from our subsidiaries and their receipt of distributions from their subsidiaries. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, earnings, cash needs, growth plans, legal and contractual requirements and other factors that our board of directors deems relevant.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2006 on:


	•	an actual basis; and

	•	as adjusted to reflect:


	•	the sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus); and

	•	the application of the estimated net proceeds from this offering as described under “Use of Proceeds.”

You should read this table together with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Capital Stock” and our consolidated financial statements and related notes included elsewhere in this prospectus.


	As of
	June 30, 2006
	Actual		As Adjusted
	(in thousands)

Cash and cash equivalents	$	24,261

Outstanding debt:
First lien credit facility	$	122,078
Second lien credit facility		48,000
Other debt		4,560

Total debt		174,638

Stockholder’s equity:
Preferred Stock, $ par value; shares authorized; no shares issued and outstanding		—
Common Stock, $0.01 par value; 15,000,000 shares authorized; 11,864,858 shares issued and outstanding, actual; shares issued and outstanding, as adjusted		118
Additional paid-in capital		146,644
Retained earnings		4,807
Accumulated other comprehensive income		817

Total stockholder’s equity		152,386

Total capitalization	$	327,024

The above table does not include:


	•	1,375,000 shares of common stock issuable upon the exercise of warrants issued to Holdings during the third quarter of 2006 with an exercise price of $15.50 per share;

	•	572,240 shares of common stock issuable upon the exercise of stock options outstanding as of June 30, 2006 with a weighted average exercise price of $11.54 per share; and

	•	any additional shares of our common stock that we may issue in the future to comply with our agreements to pay additional contingent purchase price in connection with certain business acquisitions. For more information about these agreements, refer to the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

DILUTION

If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the adjusted net tangible book value per share of common stock upon completion of this offering.

Our net tangible book value as of June 30, 2006 was approximately $(141.9) million, or $ per share of our common stock. Net tangible book value represents the amount of our total tangible assets minus our total liabilities, divided by the shares of our common stock that were outstanding on June 30, 2006. Tangible assets represent total assets excluding goodwill and other intangible assets. After giving effect to the sale by us of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus) after deducting estimated underwriting discounts and commissions and offering costs, and the application of our estimated net proceeds therefrom as set forth in “Use of Proceeds,” our net tangible book value on June 30, 2006 would have been approximately $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to new investors purchasing shares of our common stock in this offering at the assumed initial public offering price. The following table shows this immediate per share dilution:


Assumed initial public offering price per share	$
Historical net tangible book value per share as of June 30, 2006	$
Increase per share attributable to new investors	$

As adjusted net tangible book value per share after this offering		$

Dilution per share to new investors		$

The following table summarizes, as of June 30, 2006, the differences between the average price per share paid by our existing stockholders and by new investors purchasing shares of common stock in this offering at an assumed initial public offering price of $ per share, before deducting estimated underwriting discounts and commissions and offering costs payable by us:

Shares Purchased

Total Consideration

Average Price

Number

Percent

Amount

Percent

per Share

Existing stockholders

New investors

Total

The discussion and tables above are based on the number of shares of common stock outstanding as of June 30, 2006. The discussion and tables do not include the following shares:


	•	shares of common stock that may be issued pursuant to the underwriters’ over-allotment option;

	•	1,375,000 shares of common stock issuable upon the exercise of warrants issued to Holdings during the third quarter of 2006 with an exercise price of $15.50 per share;

	•	572,240 shares of common stock issuable upon the exercise of stock options outstanding as of June 30, 2006 with a weighted average exercise price of $11.54 per share; and

	•	additional shares of our common stock that we may issue in the future to comply with our agreements to pay additional contingent purchase price in connection with certain business acquisitions. For more information about these agreements, refer to the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

To the extent any such shares of common stock are issued, new investors may experience further dilution.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth:


	•	our statement of operations data for:


	•	the years ended December 31, 2001, 2002, 2003 and 2004;

	•	the period from January 1, 2005 to October 27, 2005, the date of the Recapitalization, the period from October 28, 2005 to December 31, 2005, and on a “combined” basis for all of 2005; and

	•	the six months ended June 30, 2005 and 2006; and


	•	our balance sheet data as of December 31, 2001, 2002, 2003, 2004, 2005 and June 30, 2006.

You should read the following selected consolidated financial data in conjunction with our audited and unaudited consolidated financial statements, including the notes to the financial statements, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “The Recapitalization” included elsewhere in this prospectus. In the table below and throughout this prospectus, we refer to AmWINS as our “Predecessor” for all periods prior to October 27, 2005, the date of the Recapitalization, and as our “Successor” for all periods following the Recapitalization. As a result of the Recapitalization, we have applied push-down accounting, as required by SAB No. 54 and EITF D-97, which resulted in a partial write-up in the fair value of our net assets, by approximately $84.1 million at October 27, 2005. As a result, our basis of accounting differs from that prior to the Recapitalization, which affects the comparability of our financial data. In addition, since 2001, we have acquired a significant number of businesses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Acquisitions and Dispositions.” As a result of these acquisitions and the Recapitalization, our financial information for the periods shown below may not be directly comparable.

We derived the following statement of operations data for the years ended December 31, 2003, 2004 and 2005 and the balance sheet data at December 31, 2004 and December 31, 2005 from our audited consolidated financial statements appearing elsewhere in this prospectus. We derived the following statement of operations data for the years ended December 31, 2001 and 2002 and the balance sheet data at December 31, 2001, 2002 and 2003 from our unaudited consolidated financial statements that are not included in this prospectus. We derived the statement of operations data for the six months ended June 30, 2005 and 2006 and the balance sheet data at June 30, 2006 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements include, in the opinion of management, all adjustments that management considers necessary for the fair presentation of the financial information set forth in these statements. The results of operations for the interim periods are not necessarily indicative of our results of operations for the full year.


																For the		Combined
																Period from		Year
													For the Period			October 28 to		Ended			Six Months Ended
	Years Ended December 31,												Ended October 27,			December 31,		December 31,			June 30,
	2001			2002			2003			2004			2005			2005		2005			2005		2006
	Predecessor												Predecessor			Successor					Predecessor		Successor
	(in thousands, except per share data)
Statement of Operations Data:^(a)
Commissions and fees	$	13,259		$	36,160		$	57,681		$	83,452		$	110,791		$	29,722	$	140,513		$	56,573	$	82,607
Other income		693			(652	)		503			1,152			850			906		1,756			384		3,310

Total revenues		13,952			35,508			58,184			84,604			111,641			30,628		142,269			56,957		85,917
Employee compensation and benefits (including non-cash equity compensation of $349 for the six months ended June 30, 2006)^(b)		10,994			21,163			37,594			52,523			66,412			17,388		83,800			36,187		52,217
Other operating expenses		5,629			7,851			13,421			16,588			19,431			5,498		24,929			10,478		16,311
Depreciation		1,410			1,318			1,256			1,475			1,855			536		2,391			858		1,639
Amortization		2,044			1,261			2,068			3,873			5,716			636		6,352			2,945		2,368

Total operating expenses		20,077			31,593			54,339			74,459			93,414			24,058		117,472			50,468		72,535

Operating (loss) income		(6,125	)		3,915			3,845			10,145			18,227			6,570		24,797			6,489		13,382
Interest expense		466			290			288			2,498			8,516			2,949		11,465			3,939		8,274
Restructuring		1,056			—			—			—			—			—		—			—		—
Loss on disposal of subsidiary		2,365			—			—			—			—			—		—			—		—
Loss on extinguishment of debt^(c)		—			—			—			994			9,799			—		9,799			1,731		—

(Loss) income before income taxes and minority interest and discontinued operations		(10,012	)		3,625			3,557			6,653			(88	)		3,621		3,533			819		5,108
Minority interest		—			(153	)		(258	)		(67	)		—			—		—			—		—
Income tax (benefit) expense		(15	)		(4,380	)		406			2,930			772			1,503		2,275			503		2,419

(Loss) income from continuing operations		(9,997	)		8,158			3,409			3,790			(860	)		2,118		1,258			316		2,689
Income from discontinued operations, net of minority interest and income taxes		903			866			812			578			—			—		—			—		—
Loss on sale of discontinued operations^(d)		—			—			—			(67	)		—			—		—			—		—

Net (loss) income	$	(9,094	)	$	9,024		$	4,221		$	4,301		$	(860	)	$	2,118	$	1,258		$	316	$	2,689

(Loss) income from continuing operations per share:
Basic	$	(0.95	)	$	0.76		$	0.31		$	0.31		$	(0.07	)	$	0.19	$	0.10	^(e)	$	0.03	$	0.24
Diluted	$	(0.95	)	$	0.76		$	0.31		$	0.31		$	(0.07	)	$	0.19	$	0.10	^(e)	$	0.03	$	0.23
Income from discontinued operations per share:
Basic	$	0.09		$	0.08		$	0.07		$	0.05		$	—		$	—	$	—		$	—	$	—
Diluted	$	0.09		$	0.08		$	0.07		$	0.05		$	—		$	—	$	—		$	—	$	—
Loss on sale of discontinued operations per share:
Basic	$	—		$	—		$	—		$	(0.01	)	$	—		$	—	$	—		$	—	$	—
Diluted	$	—		$	—		$	—		$	(0.01	)	$	—		$	—	$	—		$	—	$	—
(Loss) income per share:
Basic	$	(0.86	)	$	0.84		$	0.38		$	0.35		$	(0.07	)	$	0.19	$	0.10	^(e)	$	0.03	$	0.24
Diluted	$	(0.86	)	$	0.84		$	0.38		$	0.35		$	(0.07	)	$	0.19	$	0.10	^(e)	$	0.03	$	0.23
Weighted average shares:
Basic		10,544			10,682			11,124			12,142			12,444			11,321		12,249			12,438		11,385
Diluted		10,544			10,707			11,173			12,202			12,444			11,416		12,307			12,489		11,465


	As of December 31,								As of December 31,		As of June 30,
	2001		2002		2003		2004		2005		2006
	Predecessor								Successor		Successor
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	2,736	$	8,626	$	9,539	$	10,055	$	19,151	$	24,261
Goodwill		8,863		29,806		39,100		82,102		243,409		252,161
Other identifiable intangible assets, net		3,387		13,294		13,229		26,904		42,292		42,128
Total assets		63,121		188,838		212,609		267,185		622,495		655,623
Total debt		9,912		3,406		5,850		37,895		171,299		174,638
Stockholder’s equity		6,939		50,722		62,450		79,680		144,081		152,386


(a)		See “Management’s Discussion and Analysis of Financial Position and Results of Operations — Acquisitions and Dispositions,” for information regarding our acquisitions and dispositions during these periods, which affect the comparability of our financial data for these periods.

(b)		We adopted the provisions of SFAS No. 123(R) as of January 1, 2006, which resulted in the recognition of expense for the period ended June 30, 2006. See Note 1 to our 2005 consolidated financial statements for the pro forma effect of recording this expense in prior periods before adoption of SFAS No. 123(R).

(c)		Reflects the write-off of unamortized financing fees and expenses and associated prepayment fees related to the refinancing of previous credit facilities.

(d)		In November 2004, we sold our premium finance business. The results of operations of this business are segregated and reported as discontinued operations in each of the four years ended December 31, 2004.

(e)		We calculated our earnings per share for the 2005 combined period by dividing our combined net income for 2005 by our weighted average outstanding shares for 2005. Our earnings per share data for 2005 do not necessarily equal the total of our earnings per share for the period prior to the Recapitalization (January 1, 2005 to October 27, 2005) and following the Recapitalization (October 28, 2005 to December 31, 2005) due to differences caused by the number of our weighted average shares outstanding for these periods.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements are based on the historical consolidated financial statements of AmWINS, the historical combined financial statements of Stewart Smith Group and the historical consolidated financial statements of Communitas, Inc. (Communitas) which are included elsewhere in this prospectus. Certain amounts presented in the historical consolidated financial statements of Communitas have been reclassified to conform to the presentation that follows. The unaudited pro forma condensed combined financial statements give effect to:


	•	our acquisition of Stewart Smith Group, which was completed on April 13, 2005;

	•	the Recapitalization, which was completed on October 27, 2005;

	•	our acquisition of Communitas, which was completed on April 21, 2006; and

	•	the borrowing of an aggregate of $171.0 million under our current first lien and second lien credit facilities in connection with the Recapitalization.

For additional information regarding these transactions, see “The Recapitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Acquisitions and Dispositions.”

The following unaudited pro forma condensed combined financial statements have been prepared in accordance with the assumptions and adjustments described in the accompanying notes. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2005 give effect to the transactions described above as if they had been completed on January 1, 2005. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2006 give effect to our acquisition of Communitas as if it had been completed on January 1, 2005.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements and accompanying notes of AmWINS, Stewart Smith Group and Communitas, which are included elsewhere in this prospectus. The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the consolidated results of operations that we would have reported had these transactions been completed as of the date presented, and should not be taken as representative of our future consolidated results of operations.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended December 31, 2005


	Historical
	AmWINS		Stewart					Total			Pro Forma			Pro Forma
	Combined		Smith Group		Communitas			Acquisitions			Adjustments			Total
	(in thousands, except per share data)

Statement of Operations Data:
Commissions and fees	$	140,513	$	13,314	$	11,031		$	24,345		$	—		$	164,858
Other income		1,756		504		—			504			—			2,260

Total revenues		142,269		13,818		11,031			24,849			—			167,118
Employee compensation and benefits		83,800		8,606		6,958			15,564			—			99,364
Other operating expenses		24,929		4,472		4,287			8,759			—			33,688
Depreciation		2,391		91		601			692			—			3,083
Amortization		6,352		9		—			9			(2,498	)^(a)		4,645
												662	^(b)
												120	^(c)

Total operating expenses		117,472		13,178		11,846			25,024			(1,716	)		140,780


Operating income (loss)		24,797		640		(815	)		(175	)		1,716			26,338
Interest expense		11,465		42		271			313			2,261	^(d)		14,039
Loss on extinguishment of debt		9,799							—			(8,068	)^(e)		1,731

Income (loss) before income taxes		3,533		598		(1,086	)		(488	)		7,523			10,568
Income tax expense		2,275		205		—			205			2,934	^(f)		5,414

Net income (loss)	$	1,258	$	393	$	(1,086	)	$	(693	)	$	4,589		$	5,154

Income per share:
Basic	$	0.10												$	0.46
Diluted	$	0.10												$	0.46
Weighted average shares:
Basic		12,249										129	^(g)		11,208
												(1,170	)^(h)
Diluted		12,307										129	^(g)		11,266
												(1,170	)^(h)

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the six months ended June 30, 2006


	Historical
	AmWINS					Pro Forma			Pro Forma
	Combined		Communitas			Adjustments			Total
	(in thousands, except per share data)

Statement of Operations Data:
Commissions and fees	$	82,607	$	3,688			—		$	86,295
Other income		3,310		—			—			3,310

Total revenues		85,917		3,688			—			89,605
Employee compensation and benefits (including non-cash equity compensation of $349 for the six months ended June 30, 2006)		52,217		2,181			—			54,398
Other operating expenses		16,311		1,677			—			17,988
Depreciation		1,639		251			—			1,890
Amortization		2,368		—			40	⁽ⁱ⁾		2,408

Total operating expenses		72,535		4,109			40			76,684


Operating income (loss)		13,382		(421	)		(40	)		12,921
Interest expense		8,274		41			—			8,315

Income (loss) before income taxes		5,108		(462	)		(40	)		4,606
Income tax expense (benefit)		2,419		—			(16	)^(f)		2,403

Net income (loss)	$	2,689	$	(462	)	$	(24	)	$	2,203

Income per share:
Basic	$	0.24							$	0.19
Diluted	$	0.23							$	0.19
Weighted average shares:
Basic		11,385					79	^(j)		11,464
Diluted		11,465					79	^(j)		11,544

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

(a) Reflects the reduction in amortization of definite-lived intangible assets resulting from the Recapitalization that would have been incurred by AmWINS had the Recapitalization occurred on January 1, 2005. In connection with the Recapitalization, we partially revalued our assets to their fair value, which resulted in an increase in the recorded amount of definite-lived intangible assets and an increase in the useful lives over which these assets are amortized. The net impact of these changes in definite-lived intangible assets resulted in a reduction in amortization. See Note 1 to our 2005 consolidated financial statements for our policy regarding amortization of identifiable intangible assets.

(b) Reflects additional amortization of definite-lived intangible assets resulting from the Stewart Smith Group acquisition that would have been incurred by AmWINS had the acquisition occurred on January 1, 2005. See Note 1 to our 2005 consolidated financial statements for our policy regarding amortization of identifiable intangible assets.

(c) Reflects additional amortization of definite-lived intangible assets resulting from the Communitas acquisition that would have been incurred by AmWINS had the acquisition occurred on January 1, 2005. See Note 1 to our 2005 consolidated financial statements for our policy regarding amortization of identifiable intangible assets.

(d) Reflects additional interest expense that would have been incurred assuming we refinanced our debt in connection with the Recapitalization on January 1, 2005.

Repayment of prior debt:


Interest and amortization of financing fees	$	(8,829	)

New borrowings:
New first lien term loan at LIBOR plus 325 basis points		6,702
New second lien term loan at LIBOR plus 750 basis points		3,858
Amortization of financing fees related to the above items		530

		11,090

Pro forma increase in interest expense	$	2,261

Our rates of interest on substantially all the debt we incurred in connection with the Recapitalization are based on three-month LIBOR. As such, we used the daily average of three-month LIBOR to calculate the interest we would have incurred from January 1, 2005 to the date of the Recapitalization had the Recapitalization occurred on January 1, 2005.

If the variable interest rate used above increases or decreases by 12.5 basis points, the annualized effect of that change would be to increase or decrease interest expense by $176,000.

(e) Reflects the elimination of loss on extinguishment of debt associated with the Recapitalization. These charges were incurred in connection with the refinancing of debt incurred in connection with the acquisition of Stewart Smith Group in April 2005. We would not have recognized these charges had we completed the Recapitalization and our acquisition of Stewart Smith Group on January 1, 2005.

(f) Reflects a 39% effective tax rate applied to the incremental pro forma income (loss) before income taxes. The effective tax rate was based on a federal statutory rate of 34% and a blended state tax rate of 5%, net of federal benefit.

(g) Reflects the impact of additional shares issued in connection with the Communitas acquisition assuming the shares were issued on January 1, 2005.

(h) Reflects the impact of the redemption of shares in connection with the Recapitalization.

(i) Reflects additional amortization of definite-lived intangible assets resulting from the Communitas acquisition that would have been incurred by AmWINS had the acquisition occurred on January 1, 2005.

(j) Reflects the impact of additional shares issued in connection with the Communitas acquisition assuming the shares were issued on January 1, 2005.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. This discussion includes forward-looking statements that involve risks and uncertainties which may cause our actual results to differ materially from those anticipated in these forward-looking statements. For more information about these risks and uncertainties, refer to “Forward-Looking Statements” and “Risk Factors.”

Overview

We are a leading wholesale distributor of specialty insurance products and services. We operate our business through three divisions, as follows:


	•	Property & Casualty Brokerage. Our Property & Casualty Brokerage division distributes property and casualty insurance products through our retail insurance brokerage clients.

	•	Specialty Underwriting. Our Specialty Underwriting division operates our MGU programs. As an MGU, we have contractual authority from various insurance carriers to underwrite, bind, issue and administer insurance policies on their behalf. This division also distributes its products through our retail insurance brokerage clients.

	•	Group Benefits. Our Group Benefits division distributes group benefit insurance products through retail insurance brokerage clients and provides related administrative services.

The Recapitalization

On October 27, 2005, we completed the transactions described in “The Recapitalization.” As a result of the Recapitalization, we have applied push-down accounting, as required by SAB No. 54 and EITF D-97, which resulted in a partial write-up in the fair value of our net assets by approximately $84.1 million at October 27, 2005. For more information regarding the accounting treatment of the Recapitalization, refer to “The Recapitalization” and Note 1 to our 2005 consolidated financial statements included elsewhere in this prospectus.

As a result of the Recapitalization, our basis of accounting differs from that prior to the Recapitalization. Therefore, our financial data with respect to periods prior to the Recapitalization may not be comparable to the data for the periods subsequent to the Recapitalization. Our results of operation data shown in “Selected Financial Data” for the year ended December 31, 2005 reflect our historical results for the period prior to the Recapitalization, our historical results for the period after the Recapitalization and a total “combined” presentation reflecting the sum of these two periods. Although it is generally not permissible under generally acceptable accounting principles to combine pre-Recapitalization and post-Recapitalization periods, for comparison purposes we have done so in “Selected Consolidated Financial Data” above, and we have also based our discussion below of full-year 2005 results on our combined results for 2005.

Acquisitions and Dispositions

Acquisitions of businesses have been and will continue to be part of our growth strategy. We historically have used a combination of cash, seller notes and equity to pay the purchase price of our

acquisitions. The following table summarizes our acquisition activity since January 1, 2003 and the allocation of the initial purchase price among these forms of consideration:


							Six Months Ended
	Years Ended December 31,						June 30,
	2003		2004		2005		2006
	(in thousands, except number of acquisitions closed)

Number of acquisitions closed		2		2		1		2
Consideration:¹
Cash	$	1,965	$	40,229	$	100,000	$	7,300
Equity		3,412		11,688		—		2,000
Seller notes		2,999		2,000		—		—

Total consideration	$	8,376	$	53,917	$	100,000	$	9,300


1		These numbers exclude the effect of any working capital or related adjustments made when we completed these acquisitions and do not include any amounts paid or payable by us as additional purchase price based on the performance of the acquired businesses. These amounts also exclude transaction expenses and any cash acquired as part of the acquisition.

We have structured a number of our acquisitions to provide for contingent purchase price payments that depend upon the business reaching specified financial targets in the future (commonly referred to as earnouts). See “— Commitments and Contingencies — Contingent Purchase Price for Acquisitions.” We generally pay this contingent purchase price in a combination of cash and equity and account for these payments as an increase to the purchase price of the business acquired. We may use this structure for any acquisitions we complete in the future.

During 2006, we acquired Communitas and the policy administration division of CBCA Administrators, Inc. (CBCA), two businesses based in Texas, to expand the products and services we provide through our Group Benefits division. One business provides group benefit claims administration services, which we historically had not provided, and the other business provides several unique administrative services for insurance company clients as well as premium administration services for associations similar to certain existing services provided by our Group Benefits division. Additionally in August 2006, we entered into an agreement to sell certain assets of our Specialty Underwriting division to a start-up insurance company. If this transaction is completed, we expect to receive total consideration of approximately $3.6 million and record a gain of approximately $3.4 million. We expect this transaction to close in the fourth quarter of 2006.

In April 2005, we acquired Stewart Smith Group from Willis for $100.0 million. This acquisition is our largest acquisition to date. Stewart Smith Group operated Willis’ property and casualty wholesale brokerage operation. By acquiring Stewart Smith Group, we expanded our geographic presence, added a significant number of new brokers and gained a significant business relationship with Willis. For more information about Stewart Smith Group, see “Unaudited Pro Forma Condensed Combined Financial Statements” and the audited combined financial statements of Stewart Smith Group included elsewhere in this prospectus.

In 2004, we completed the following transactions:


	•	acquired The Quaker Agency of the South, Inc. (Quaker), a property and casualty wholesale insurance brokerage business based in Charlotte, North Carolina;

	•	acquired Property Risk Services LLC (PRS), a wholesale insurance brokerage firm based in New Jersey that specializes in the placement of large complex property accounts; and

	•	sold Capitol Payment Plan, Inc., a premium finance business.

In 2003, we completed the following transactions:


	•	acquired the New Jersey office of a national wholesale insurance brokerage firm engaged primarily in the placement of property and casualty insurance products;


	•	acquired an MGU firm, Seaboard Underwriters, Inc. and its affiliates (together, Seaboard), based in North Carolina; and

	•	sold a small retail benefits brokerage firm that placed group medical insurance products for companies located primarily in the state of New Jersey.

Although we believe that we will continue to have opportunities to complete acquisitions in the future, there can be no assurance that we will be successful in identifying and completing additional acquisitions. Acquisitions involving a purchase price paid at closing in excess of $3.0 million require approval of the lenders under our senior secured credit facilities. Any change in our financial results, financial condition or markets could affect our ability to identify and complete acquisitions.

As a result of our acquisitions, our results for the periods discussed below and shown in “Selected Consolidated Financial Data” may not be directly comparable. The financial statements of Stewart Smith Group, Quaker and Communitas have been included in this prospectus pursuant to the requirements of Rule 3-05 of Regulation S-X.

Revenues

The following table sets forth revenues for each of our divisions, expressed as a percentage of total revenues for the periods indicated:


										Six Months Ended
	Years Ended December 31,									June 30,
	2003			2004			2005*			2005			2006

Property & Casualty Brokerage		49.0	%		57.3	%		72.0	%		67.9	%		73.3	%
Specialty Underwriting		30.7	%		23.3	%		13.8	%		15.5	%		8.7	%
Group Benefits		19.6	%		18.8	%		13.8	%		16.6	%		17.8	%
Other^(a)		0.7	%		0.6	%		0.4	%		0.0	%		0.2	%

Total		100	%		100	%		100	%		100	%		100	%


*		Shown on a combined basis.


^(a)		Reflects revenues not generated by our reportable segments.

Commissions and Fees. Our commissions and fees consist of commissions paid by insurance companies and fees paid for services we provide, net of the portion of the commissions and fees we pay to retail insurance brokers. For certain placements, we also charge additional fees that are billed to our retail insurance brokerage clients. The commissions we receive from insurance carriers typically are calculated as a percentage of the premiums paid for the insurance products we distribute. For property and casualty products, we typically earn our commissions on the later of the effective date of the policy or the date coverage is bound. For group benefits products and services, we typically earn our commissions and administrative fees monthly based on eligible enrollment for each plan. We pay our retail insurance brokerage clients a portion of the gross commissions we receive from insurance carriers for placing all types of insurance. Insurance carriers often pay a greater commission rate to wholesale insurance brokers than to retail insurance brokers. Thus, we frequently are able to pay our retail insurance broker clients the same commission rates they would receive if they placed the business directly with an insurance carrier.

Because commission revenues are generally calculated as a percentage of the premiums paid for a policy, they are affected by fluctuations in the amount of premium charged by insurance carriers. These premiums fluctuate based on, among other factors, the amount of capital available in the insurance marketplace, the type of risk being insured, the nature of the insured party, and the amount of insurance purchased. If premiums increase or decrease, our revenues typically move in a corresponding fashion. In a declining premium rate environment, the resulting decline in our revenue may be offset, in whole or in part, by an increase by insurance carriers of their commission rates and the fact that insured parties may use the savings generated by the reduction in premium rates to purchase greater coverage. In an increasing pricing environment, the resulting

increase in our revenue may be offset, in whole or in part, by a decrease by insurance carriers of their commission rates and the fact that insured parties may determine to reduce the amount of coverage they purchase.

The market for property and casualty insurance products is cyclical from a capacity and pricing perspective. In 2001, capital available to underwrite property and casualty insurance contracted significantly, primarily due to realized underwriting losses from earlier years, lower returns on investments and the effect of the September 11, 2001 terrorist attacks, which resulted in increasing premium rates. We refer to a period of reduced capacity and rising premium rates as a “hard” market. During 2004, we began to see an increase in underwriting capacity for property insurance products, which resulted in declining premium rates for most lines of property insurance that we place. We refer to a period of increased capacity for insurance and decreasing premium rates as a “soft” market. Although this trend continued well into 2005, the consequences of Hurricanes Katrina, Rita and Wilma significantly reduced capacity and increased prices within the property market, which accelerated in 2006, primarily as a result of increased reinsurance costs for the primary insurance carriers. Our casualty lines of business have not experienced the same trend toward higher pricing and have experienced declining rates in 2006.

The market for group benefit insurance is dominated by health insurance products. Premium rates in the health insurance industry have increased steadily in recent years due to increasing health care costs, offset slightly by declining employment levels. According to the Employee Benefit Research Institute, total spending on employee benefits, excluding retirement savings benefits, grew from an estimated $446.8 billion in 1999 to an estimated $686.1 billion in 2005, accounting for approximately 10.3% of employers’ total spending on compensation in 2005. A substantial part of our Group Benefits revenues is derived from retiree medical and prescription drug plans, reflecting a trend by employers to reduce or eliminate the cost of providing health benefits to retired employees. The retiree medical and prescription drug plans that we distribute and administer often allow companies and governmental entities to reduce or eliminate this benefit while providing their retirees with an alternative insured plan at attractive group rates.

Gross commission rates for the property and casualty insurance products that we distribute, whether acting as a wholesale broker or as an MGU, generally range from 10% to 25% of the annual premium for the policy. Commissions for our Property & Casualty Brokerage business, net of commissions paid to retail insurance brokers, typically range from 4% to 12%, and net commissions for our Specialty Underwriting business generally range from 7% to 12%. Gross commission rates for the group benefit insurance products that we distribute generally range from 2% to 15% of the annual premium for the policy, and our net commissions from these products usually range from 1% to 10% of the gross premium.

Our revenues fluctuate seasonally based on policy renewal dates in our Property & Casualty Brokerage and Specialty Underwriting divisions. July and December are our largest revenue months due to the concentration of renewals on July 1st and December 31st. Accordingly, our revenues in the first two calendar quarters of any year historically have been lower than our revenues in the following two quarters. In addition, our quarterly revenues may be affected by new placements, cancellations or non-renewals of large property and casualty policies, because commission revenue is earned on the effective date as opposed to ratably over the year.

Other Income. We also generate additional revenues, which we classify as other income, from other commissions and fees. Other income includes profit-based contingent commissions earned by some of our MGU programs and a profit commission we receive from a related party reinsurance entity with respect to our Group Benefits prescription drug product. These profit commissions are based on the profitability of the business that we underwrite or broker on the insurance carrier’s behalf. Profit-based contingent commissions typically range from 1% to 5% of the annual premium and are generally paid within 75 to 180 days after year end. We record these commissions as other income when they are paid, unless we have the necessary information to calculate them during the period they are earned. We receive virtually no volume-based contingent commissions from insurance carriers. However, from time to time, we pay certain retail insurance brokerage clients additional commissions depending on the volume of business they do with us, and we account for these additional commissions as a reduction to other income in the periods the related revenue is

earned from the placement of business for these retail insurance brokers. Other income also includes actuarial and consulting services provided by our corporate division and investment income that consists primarily of interest earned on premiums collected and held in a fiduciary capacity before being remitted to insurance carriers.

Expenses

Our most significant operating expenses relate to employee compensation, including bonuses and benefits, and other operating expenses, which consist primarily of rent, insurance, professional fees, technology costs, travel and entertainment and advertising. Compensation for a majority of our brokers is based on a percentage of the revenues they generate, after deducting their base salary compensation. Bonuses for the remaining employees are discretionary based on an evaluation of their individual performance and the performance of their particular office as well as our entire firm. A substantial portion of our depreciation and amortization expense consists of amortization of definite-lived intangible assets, such as purchased customer accounts and noncompete agreements, which were acquired as part of our business acquisitions. We also have interest expense relating to our credit facilities and seller notes issued in our business acquisitions.

The following table sets forth these operating expenses as a percentage of revenue for the periods indicated:


							Six Months Ended
	Years Ended December 31,						June 30,
	2003		2004		2005*		2005		2006

Total revenue		100.0%		100.0%		100.0%		100.0%		100.0%
Employee compensation and benefits		64.6%		62.1%		58.9%		63.5%		60.8%
Other operating expenses		23.1%		19.6%		17.5%		18.4%		19.0%
Depreciation and amortization		5.7%		6.3%		6.1%		6.7%		4.7%
Interest expense		0.5%		3.0%		8.1%		6.9%		9.6%


*		Shown on a combined basis.

Results of Operations

Overview

Our business has grown substantially since January 1, 2003. Revenues for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2006 have grown, period over period, by 63.9%, 45.4%, 68.2% and 50.8%, respectively. From 2003 to 2005, our operating income increased by $21.0 million, or 553%, from $3.8 million to $24.8 million. This growth was driven by both acquisitions and organic growth, as described in the next paragraph. Our organic revenue growth for the years ended December 31, 2003, 2004 and 2005 and the six months ended June 30, 2006 was 13.3%, 19.1%, 14.4% and 17.7%, respectively.

Although we have acquired a number of businesses since January 1, 2003, we focus on our ability to generate organic revenue growth. We calculate organic revenue by comparing the change in our revenues, period over period, excluding revenues of businesses acquired during the first 12 months following the acquisition date. We include revenues from acquired businesses in the current period and base period beginning in the 13th month following the acquisition date, as both periods will fully reflect the revenues of the acquired business. The only exception we have made to our approach to calculating organic growth relates to our acquisition of Stewart Smith Group, which we acquired on April 13, 2005. We fully integrated Stewart Smith Group with our other Property & Casualty Brokerage businesses effective January 1, 2006, and we are unable to identify separately its operating results after January 1, 2006. We have audited operating results for Stewart Smith Group for the entire 2005 year, and we have measured our organic growth for all periods in 2006 by comparing our 2006 results of operations to the comparable period in 2005 on a pro forma basis with the operating results of Stewart Smith Group included for all of 2005. With respect to the disposition of

Capitol Payment Plan, Inc. (CPP), we have excluded the revenue of CPP in all years for purposes of calculating organic growth in all years presented. This approach is consistent with the presentation of CPP as discontinued operations in our consolidated financial statements.

Our Property & Casualty Brokerage division has generated a majority of our revenues since January 1, 2003, and its operating results include the effects of the industry cycles in the property and casualty market. Our Property & Casualty Brokerage business generally performs better in hard markets characterized by increasing premium rates, although our operating results depend also on market factors affecting the specific types of products we place. General market conditions for property and casualty insurance products have fluctuated over the last five years. Commencing in 2001, premium rates generally increased across all lines of property and casualty markets before stabilizing during late 2003 and declining in 2004 and 2005. Following the effects of the 2005 hurricane season, premium rates for property insurance began to increase substantially. This trend did not occur in the casualty lines in which we operate, which continue to experience a declining rate environment.

Unlike the property and casualty market, the market for group benefits, particularly group health products, has continued to experience rate increases over the past five years. We historically have experienced a high level of recurring revenues in our Group Benefits division, primarily because of the fact that employers who sponsor many of the health, retiree medical and retiree prescription drug plans we distribute have outsourced the administration of these plans to us, which makes it more difficult to change plans.

A number of factors relating to our acquisition growth affected our income from continuing operations from January 1, 2003 through December 31, 2005, including the effect of additional amortization of definite-lived intangible assets acquired as part of these acquisitions, the impact of additional debt we have incurred to finance certain of these acquisitions and the effect of refinancing our debt. Our annualized amortization and interest expense increased, in the aggregate, from $2.4 million in 2003 to $17.8 million in 2005. Moreover, since January 1, 2003, we have refinanced our debt on three occasions: in February 2004 in connection with our acquisition of PRS, in April 2005 in connection with our acquisition of Stewart Smith Group and in October 2005 in connection with the Recapitalization. In 2005, we incurred a loss on the early extinguishment of debt of $9.8 million, compared to a similar charge of $1.0 million in 2004.

As a private company, we have incurred a substantial amount of debt to fund our acquisition growth as well as the repurchase of shares in connection with the Recapitalization. We intend to use a portion of the net proceeds from this offering to repay a substantial amount of the debt outstanding under our current credit facilities, thus reducing our interest cost going forward and substantially decreasing our debt-to-equity ratio. This repayment will result in a prepayment penalty of $0.5 million and a pro-rata write-off of unamortized debt issuance costs of approximately $1.1 million.

Segment Operating Results

We conduct our business through three divisions: (i) Property & Casualty Brokerage; (ii) Specialty Underwriting; and (iii) Group Benefits. We do not allocate certain revenues and costs to our operating divisions, and these items are shown as “Other.” These items primarily consist of corporate-related income and expenses, including corporate overhead, amortization, depreciation, interest income and expense and income taxes, as well as inter-segment eliminations. We measure the profitability of our operating divisions without allocation of the expenses classified as “Other.” We refer to this measure of profitability as segment income (loss). The variability of our segment operating margins is affected by our revenues because a significant component of our operating expenses is fixed. Our revenues are affected by many factors, including the prevailing commission rates, the cyclical nature of many of our markets, particularly the E&S lines market, and other economic factors that may affect our business. A significant portion of our segment expenses are fixed and therefore difficult to adjust in response to short-term revenue fluctuations. Conversely, this fixed cost structure may benefit us as revenue grows. These fixed expenses consist of lease expenses under long-term office lease agreements, employee benefits expense and fixed compensation payable to our employees. Certain other segment expenses such as bonus compensation payable based on revenue generation, particularly in our Property & Casualty Brokerage division, are variable. For additional information regarding segment revenues and operating expenses, refer to Note 13 of our 2005 consolidated financial statements included elsewhere in this prospectus.

The following table reconciles segment information to our consolidated results and provides a summary of other key financial information for each segment.


										Six Months Ended
	Year Ended December 31,									June 30,			June 30,
	2003			2004			2005*			2005			2006
	(in thousands)

Revenue
Property & Casualty Brokerage	$	28,504		$	48,476		$	102,496		$	38,693		$	62,970
Specialty Underwriting		17,905			19,716			19,592			8,811			7,484
Group Benefits		11,379			15,890			19,623			9,441			15,268
Other		396			522			558			12			195

Total	$	58,184		$	84,604		$	142,269		$	56,957		$	85,917


Segment income (loss)
Property & Casualty Brokerage	$	3,730		$	10,491		$	26,702		$	7,504		$	19,518
Specialty Underwriting		4,709			4,762			3,865			1,364			238
Group Benefits		3,153			5,624			7,718			3,509			4,909
Other		(4,423	)		(5,384	)		(4,745	)		(2,085	)		(7,276	)

Total		7,169			15,493			33,540			10,292			17,389

Depreciation		1,256			1,475			2,391			858			1,639
Amortization		2,068			3,873			6,352			2,945			2,368
Interest expense		288			2,498			11,465			3,939			8,274
Loss on extinguishment of debt		—			994			9,799			1,731			—

Total		3,612			8,840			30,007			9,473			12,281

Income before income taxes	$	3,557		$	6,653		$	3,533		$	819		$	5,108

*Shown on a combined basis.

Six Months Ended June 30, 2006 Compared with Six Months Ended June 30, 2005

Revenues

Commissions and Fees. Commissions and fees increased $26.0 million, or 46.0%, to $82.6 million for the six months ended June 30, 2006, compared to the same period in 2005. Acquisitions accounted for approximately $16.0 million of the revenue growth, with the remaining $10.0 million generated from our existing businesses, resulting in an organic growth rate of approximately 17.7%. This organic growth was attributable primarily to growth in our Property & Casualty Brokerage and Group Benefits divisions.

The organic growth of approximately $10.2 million in Property & Casualty Brokerage was attributable to the hardening property market in the first part of 2006. In addition to significant rate increases, insurance carriers sharply reduced the limits of insurance they were willing to underwrite during this period. These market conditions have required some insured parties to increase the number of insurance carriers participating in their insurance programs to be able to buy the limits they require, which has contributed to our organic growth.

Our Group Benefits division’s organic growth of $1.1 million for the six months ended June 30, 2006 was driven primarily by new accounts using the retiree medical and prescription drug products we distribute. Our Specialty Underwriting division’s revenue declined by $1.3 million primarily due to a decline in revenue from our commercial trucking MGU program due to the termination of its underwriting contract with the insurance carrier. This operation is in the process of replacing the single national underwriting contract with a number of regional underwriting contracts.

Other Income. Other income increased $2.9 million to $3.3 million for the six months ended June 30, 2006, compared to the same period in 2005. This increase is primarily attributable to an increase in investment income and an increase in profit commission income from our Group Benefits division. The increase in investment income was primarily attributable to greater fiduciary cash balances as a result of our acquisition of Stewart Smith Group in April 2005 and to increased interest rates earned on those balances.

Expenses

Operating Expenses

Employee Compensation and Benefits. Employee compensation and benefits expenses increased $16.0 million, or 44.3%, to $52.2 million for the six months ended June 30, 2006, compared to the same period in 2005. This growth was primarily due to additional personnel, including personnel of acquired businesses, increased bonus expense attributable to our revenue-based bonus compensation plan for our brokers and rate increases on our corporate sponsored benefit plans. As a percentage of revenues, compensation and employee benefits expenses were 60.8% for the first six months of 2006 compared to 63.5% for the comparable 2005 period. This decrease primarily reflects the fact that many of our employee compensation and benefit expenses are fixed and did not increase in proportion to revenue increases. We incurred $0.3 million in non-cash equity compensation in 2006 as a result of the adoption of SFAS No. 123(R). SFAS No. 123(R) requires that compensation cost be recognized for all equity-based awards granted on or after January 1, 2006 and for all equity-based awards granted prior to January 1, 2006 that remain unvested as of that date.

Other Operating Expenses. Other operating expenses increased $5.8 million, or 55.7%, to $16.3 million for the six months ended June 30, 2006 compared to the same period in 2005. This increase was primarily attributable to additional expenses associated with businesses acquired in 2005 and 2006. As a percentage of revenue, other operating expenses were 19.0% in the first six months of 2006, compared to 18.4% for the same period in 2005. The increase was attributable to a $0.5 million management fee paid to an affiliate of Parthenon Capital. See “Related Party Transactions.” There was no comparable management fee during the first six months of 2005.

Depreciation. Depreciation increased $0.8 million, or 91%, to $1.6 million for the six months ended June 30, 2006, compared to the same period in 2005. The increase in depreciation was primarily due to capital expenditures on new computers, leasehold improvements and software and depreciation associated with assets of acquired businesses.

Amortization. Amortization decreased $0.6 million, or 19.6%, to $2.4 million for the six months ended June 30, 2006, compared to the same period in 2005. The decrease was due to an increase in the estimated useful lives of our definite-lived intangible assets resulting from the partial revaluation of our assets in connection with the Recapitalization.

Non-Operating Expenses

Interest Expense. Interest expense increased $4.3 million, or 110.1%, to $8.3 million for the six months ended June 30, 2006, compared to the same period in 2005. This increase was attributable to debt incurred in connection with our acquisition of Stewart Smith Group and the Recapitalization. In April 2005, we increased our debt by $114.8 million in connection with our acquisition of Stewart Smith Group (including transaction expenses and $8.2 million of working capital for general corporate purposes), and in October 2005 we increased our debt by an additional $21.6 million in connection with the Recapitalization. Additionally, our average cost of borrowing was higher for the first six months of 2006 compared to the first six months of 2005, which contributed to the increase in interest expense.

Loss on Extinguishment of Debt. In April 2005, we incurred a non-cash expense for the write-off of $1.7 million of unamortized financing fees and expenses and related prepayment fees associated with the refinancing of our credit facilities in connection with our acquisition of Stewart Smith Group. There was no comparable write-off in the first six months of 2006.

Income Taxes. Income taxes increased $1.9 million, or 381.0%, to $2.4 million for the six months ended June 30, 2006 compared to the same period in 2005. The increase in income tax expense was due primarily to higher income before income taxes, partially offset by a decrease in our effective tax rate to 47.4% in the first six months of 2006 from 61.4% in the first six months of 2005. The effective tax rate differs from the federal statutory rate of 34% primarily because of certain expenses that are not deductible for tax purposes, as well as the effects of state taxes, which vary significantly by state.

Year Ended December 31, 2005 Compared with the Year Ended December 31, 2004

Revenues

Commissions and Fees. Commissions and fees increased $57.1 million, or 68.4%, to $140.5 million in 2005 compared to 2004. This growth was due primarily to the acquisition of Stewart Smith Group in April 2005, the acquisition of Quaker in December 2004 and organic growth of our existing businesses. Acquisitions accounted for $45.4 million of the revenue growth, with the remaining $11.7 million generated from our existing businesses, resulting in an organic growth rate of 14.0%.

The organic growth was driven by our Property & Casualty Brokerage and Group Benefits divisions. The organic growth of $8.2 million, or 16.7%, from our Property & Casualty Brokerage division was due primarily to revenue growth from four new offices opened during 2004 as well as the hiring of new brokers. This growth was generated despite a property market that was softening during the first eight months of 2005 prior to Hurricanes Katrina, Rita and Wilma, which generated over $56 billion in insured property losses for the insurance industry, according to the Insurance Information Institute.

Our Group Benefits division generated organic growth of $3.7 million, or 24.2%, in 2005. This growth was attributable primarily to the continued growth of our retiree medical and prescription drug products and the related PBM services we began providing during 2004.

Other Income. Other income increased $0.6 million, or 52.4%, to $1.8 million in 2005 compared to 2004. This increase was primarily attributable to an increase in investment income offset partially by a decrease in profit commissions from certain underwriting programs. The increase in investment income was primarily attributable to greater fiduciary balances as a result of our acquisitions of Stewart Smith Group and Quaker in April 2005 and December 2004, respectively.

Expenses

Employee Compensation and Benefits. Employee compensation and benefits increased $31.3 million, or 59.5%, to $83.8 million in 2005 compared to 2004. This increase was primarily attributable to the impact of the acquisitions referred to above. As a percentage of revenues, compensation and employee benefits were 58.9% in 2005 compared to 62.1% in 2004. This decrease primarily reflects the fact that many of our employee compensation and benefit expenses are fixed and did not increase in proportion to revenue increases. Additionally, the increased productivity of many brokers hired during 2004 contributed to the reduction in employee compensation and benefits expense as a percentage of net revenue.

Other Operating Expenses. Other operating expenses increased $8.3 million, or 50.3%, to $24.9 million in 2005 compared to 2004. The increase in these expenses was primarily attributable to acquisitions. As a percentage of revenue, other operating expenses were 17.5% in 2005 compared to 19.6% in 2004. Our organic growth rate did not require a commensurate increase in certain other operating expenses such as office rent, office supplies, information technology and telephone costs.

Depreciation. Depreciation increased $0.9 million, or 62.1%, to $2.4 million in 2005 compared to 2004. The increase in depreciation was primarily due to capital expenditures on new computers, leasehold improvements and software and the depreciation associated with assets acquired as a part of acquisitions.

Amortization. Amortization increased $2.5 million, or 64.0%, to $6.4 million in 2005 compared to 2004 due primarily to additional amortization for definite-lived intangible assets acquired as part of our acquisitions.

Non-Operating Expenses

Interest Expense. Interest expense increased by $9.0 million, or 359.0%, to $11.5 million in 2005 compared to 2004. This increase was attributable to an increase in our debt incurred in connection with our acquisition of Stewart Smith Group and the Recapitalization. In April 2005, we increased our debt by $114.8 million in connection with our acquisition of Stewart Smith Group (including transaction expenses and $8.2 million of working capital for general corporate purposes), and in October 2005, we increased our debt by an additional $21.6 million in connection with the Recapitalization.

Loss on Extinguishment of Debt. In 2005, we incurred $9.8 million of expenses for the write-off of unamortized financing fees and expenses and related prepayment fees in connection with refinancing our prior credit facilities. We refinanced our credit facilities in connection with our acquisition of Stewart Smith Group and in connection with the Recapitalization. In 2004, we incurred a non-cash expense related to the write-off of $1.0 million of unamortized financing fees and expenses and related prepayment fees in connection with the refinancing of a prior credit facility.

Income Taxes. Income tax expense decreased $0.7 million, or 22.4%, to $2.3 million in 2005 compared to 2004. The decrease in the income tax expense is due primarily to lower income before income taxes as a result of the $9.8 million loss from early extinguishment of debt, offset by an increase in our effective tax rate to 64.4% in 2005 from 44.0% in 2004. The effective tax rate differs from the federal statutory rate of 34% primarily because of certain expenses that are not deductible for tax purposes, as well as the effects of state taxes. The effect of these items was magnified by the impact of lower levels of pretax income in 2005.

Year Ended December 31, 2004 Compared with Year Ended December 31, 2003

Revenues

Commissions and Fees. Commissions and fees increased $25.8 million, or 44.7%, to $83.5 million in 2004 compared to 2003. This growth was due primarily to the acquisition of PRS in February 2004, the acquisition of Quaker in December 2004 and organic growth of our existing businesses. Acquisitions accounted for $15.0 million of the revenue growth, with the remaining $10.8 million generated from our existing businesses, resulting in an organic growth rate of 19.8%. Our Property & Casualty Brokerage division accounted for $5.6 million, or 50.4%, of this organic growth, resulting in an organic growth rate of 18.6% primarily as a result of the opening of four new offices in 2004 and the hiring of new brokers in these offices as well as our existing offices. Our Group Benefits division accounted for $3.9 million, or 35%, of the organic growth, driven primarily by the growth of our retiree health products. This resulted in an organic growth rate of 35.5% in this division.

Other Income. Other income increased $0.7 million, or 129.0%, to $1.2 million in 2004 compared to 2003. This increase was primarily attributable to an increase in fees charged to a partially owned subsidiary that was sold during 2004 and miscellaneous other items.

Expenses

Employee Compensation and Benefits. Employee compensation and benefits increased $14.9 million, or 39.7%, to $52.5 million in 2004 compared to 2003. This increase was primarily attributable to the impact of the acquisitions referred to above. As a percentage of revenues, compensation and employee benefits expenses were 62.1% in 2004 compared to 64.6% in 2003. This decrease was primarily related to significantly higher operating margins generated by PRS in relation to our existing Property & Casualty Brokerage division operating margins combined with the fact that many of our employee compensation and benefit expenses are fixed and did not increase in proportion to revenue increases. Offsetting some of this benefit was the impact of opening four new offices during 2004 combined with start-up costs related to a new middle market property underwriting facility in the Specialty Underwriting division.

Other Operating Expenses. Other operating expenses increased $3.2 million, or 23.6%, to $16.6 million in 2004 compared to 2003. The increase in other operating expenses was primarily due to

expenses of acquired businesses. As a percentage of revenue, other operating expenses were 19.6% in 2004 compared to 23.1% in 2003. Our organic growth did not require a commensurate increase in certain significant other operating expenses such as office rent, office supplies, information technology and communication costs.

Depreciation. Depreciation increased $0.2 million, or 17.4%, to $1.5 million in 2004 compared to 2003 due primarily to the purchase of new computers, equipment and software and the depreciation associated with assets acquired as a part of acquisitions.

Amortization. Amortization increased $1.8 million, or 87.3%, to $3.9 million in 2004 compared to 2003 due primarily to additional amortization for definite-lived intangible assets acquired as part of our acquisitions.

Non-Operating Expenses

Interest Expense. Interest expense increased $2.2 million, or 767.4%, to $2.5 million in 2004 compared to 2003. This increase is related primarily to a $40 million debt facility that we obtained in February 2004 in connection with our acquisition of PRS and, to a lesser extent, a full year of interest on seller debt we issued in connection with acquisitions that were completed in 2003.

Loss on Extinguishment of Debt. In 2004, we incurred a non-cash expense related to the write-off of $1.0 million of unamortized financing fees and expenses and related prepayment fees in connection with the refinancing of a prior credit facility. There was no comparable charge in 2003.

Income Taxes. Income tax expense increased $2.5 million to $2.9 million in 2004 compared to 2003. The effective tax rate increased to 44.0% in 2004 from 12.0% in 2003. The 2003 effective rate was reduced by the reduction of the valuation allowance on net operating loss carryforwards.

Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, capital expenditures, debt service, acquisitions and other commitments and contractual obligations. We historically have derived our liquidity from our cash flow from operations, bank financing and sales of our equity to third parties.

When considering our liquidity, it is important to note that we hold cash in a fiduciary capacity as a result of premiums received from insured parties that have not yet been paid to insurance carriers. The fiduciary cash is recorded as an asset on our balance sheet with a corresponding liability, net of our commissions, to insurance carriers. In addition, for policy premiums that have been billed but not collected, we record a receivable on our balance sheet for the full amount of the premiums billed, with a corresponding liability, net of our commissions, to insurance carriers. We earn interest on the premium cash during the period of time between receipt of the funds and payment of these funds to insurance carriers.

We believe that the proceeds of this offering, funds generated from our operations and funds available under our senior secured credit facilities will be sufficient to satisfy our existing commitments and provide us with adequate financial flexibility. However, if circumstances change, we may need to raise debt or equity capital in the future.

Senior Secured Credit Facilities

In connection with the Recapitalization, we entered into two syndicated senior secured credit facilities. These facilities consist of a first lien credit facility with a $123.0 million term loan and a $25.0 million revolving line of credit and a second lien credit facility with a $48.0 million term loan. The first lien revolving credit facility also provides for the issuance of letters of credit up to $5.0 million. We have granted a security interest in all of our assets, including the equity in our subsidiaries, to the lenders under these two credit facilities as collateral for the loans. We borrowed $171.0 million under these facilities in connection with the Recapitalization. As of June 30, 2006, there was $122.1 million outstanding under the first lien term loan, $48.0 million outstanding under the second lien term loan and $3.8 million outstanding under

the first lien revolving line of credit. We expect to use a portion of the net proceeds from this offering to repay $ million of the amounts outstanding under our first lien credit facility and all of the amounts outstanding under our second lien credit facility.

The first lien credit facility, including the revolving line of credit, matures on October 27, 2011, and the second lien credit facility matures on April 27, 2012. The first lien term loan amortizes in quarterly installments of $307,500, and the second lien credit facility has no required amortization. The first lien term loan bears interest at LIBOR plus 275 to 350 basis points, depending on the ratio of our total debt to our EBITDA. The interest rate on our outstanding borrowings under the first lien credit facility as of June 30, 2006 ranged from 8.34% to 8.5%, based on LIBOR maturity dates. The second lien credit facility bears interest at LIBOR plus 750 basis points. The interest rate on our outstanding borrowings under the second lien credit facility as of June 30, 2006 was 12.75%. Our effective rates of interest are lower than the stated interest rates because of our interest rate swap agreement, which has a total notional amount of $68.5 million. The interest rate swap causes us to pay interest at a fixed rate of 4.74% and receive interest at the 3-month LIBOR each quarter through January 2009.

Our credit facilities also include various customary restrictive covenants that, subject to certain exceptions, prohibit us and our subsidiaries from, among other things, (i) incurring additional indebtedness or guarantees, (ii) creating liens or other encumbrances on property or granting negative pledges, (iii) entering into mergers or similar transactions, (iv) selling or transferring certain property, (v) declaring dividends or making other restricted payments and (vi) making investments. The credit facilities also contain financial covenants requiring us to maintain minimum fixed charge coverage, interest coverage and total debt to EBITDA ratios and limiting our capital expenditures in any fiscal year. Failure to comply with these covenants may result in an acceleration of the borrowings outstanding under the facilities. As of June 30, 2006, we were in compliance with all of the covenants in our credit facilities.

Cash Flow

Cash and Cash Equivalents

At June 30, 2006, we had cash and marketable securities, excluding premium cash that we hold in trust for insurance carriers, of $24.3 million, as compared to $19.2 million at December 31, 2005.

The following table summarizes our cash flow activity for the years ended December 31, 2003, 2004 and 2005 and for the first six months of 2005 and 2006:


										Six Months Ended
	Years Ended December 31,									June 30,
Net Cash Provided by (Used in)	2003			2004			2005*			2005			2006
							(in thousands)

Operating activities of continuing operations	$	6,918		$	13,837		$	18,776		$	6,650		$	8,411
Investing activities of continuing operations		(4,972	)		(37,707	)		(105,583	)		(104,054	)		(8,370	)
Financing activities of continuing operations		343			24,386			95,903			107,596			5,069


*		Shown on a combined basis.

Operating Activities of Continuing Operations

Net cash from operations was $6.9 million, $13.8 million and $18.8 million for 2003, 2004, and 2005, respectively, and $6.7 million and $8.4 million for the six months ended June 30, 2005 and 2006, respectively. The increase primarily reflects growth in net income excluding non-cash charges, partially offset by increased cash interest paid attributable to increased average borrowings.

Investing Activities of Continuing Operations

Net cash used in investing activities was $8.4 million for the first six months of 2006 compared to $104.1 million for the comparable 2005 period. Cash flows used in investing activities in 2005 included the previously discussed acquisition of Stewart Smith Group in 2005 for approximately $103.0 million, including transaction expenses.

Net cash used in investing activities was $105.6 million in 2005 compared to $37.7 million in 2004. Cash used in investing activities in 2005 included the acquisition of Stewart Smith Group for approximately $103.0 million (including transaction expenses) compared with the 2004 acquisitions of Quaker and PRS acquisitions for cash consideration of approximately $40.5 million. In addition, 2004 investing activities included proceeds from the sale of our premium finance business for $6.1 million.

Net cash used in investing activities was $37.7 million in 2004 compared to $5.0 million in 2003. Cash flows used in investing activities included the Quaker and PRS acquisitions in 2004, for cash consideration of approximately $40.5 million, compared with the 2003 acquisitions of the New Jersey office of a wholesale insurance brokerage firm and Seaboard, for cash consideration of approximately $3.0 million.

Financing Activities of Continuing Operations

Net cash provided by financing activities was $5.1 million for the first six months of 2006 compared to $107.6 million for the comparable period of 2005. Cash provided by financing activities in 2005 included issuance of long-term debt, net of repayments, of $107.7 million.

Net cash provided by financing activities was $95.9 million in 2005 compared to $24.4 million in 2004. Cash provided by financing activities in 2005 included issuance of long-term debt, net of repayments, of $122.0 million, compared to $28.4 million in 2004. In addition, 2005 financing activities included cash payments by us related to the repurchase of shares of $32.6 million and cash received from the issuance of shares of $11.6 million in connection with the Recapitalization.

Net cash provided by financing activities was $24.4 million in 2004 compared to $0.3 million in 2003. Cash flows provided by financing activities included issuance of long-term debt, net of repayments, of $28.4 million in 2004 compared to repayments of long-term debt, net of issuance, of $0.1 million in 2003.

Contractual Obligations

As of December 31, 2005, our contractual obligations were as follows:


	Payments Due by Period
			Less than						More than
Contractual Obligations ¹	Total		1 year		1-3 Years		3-5 Years		5 Years
	(in thousands)

Long-term debt	$	170,693	$	1,230	$	2,460	$	2,460	$	164,543
Capital lease obligations		2,017		736		1,156		125		—
Seller notes		606		606		—		—		—
Operating leases		23,804		5,693		8,911		5,355		3,845
Interest obligations²		94,935		16,534		32,987		32,562		12,852

Total	$	292,055	$	24,799	$	45,514	$	40,502	$	181,240


(1)		Excludes additional earnout consideration payable under acquisition agreements. See “—Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

(2)		Includes all interest payments through the stated maturity of the related long-term debt. Variable rate interest obligations are estimated based on interest rates in effect at June 30, 2006, and, as applicable, the variable rate interest includes the effects of our interest rate swaps through the expiration of those swap agreements.

Capital Expenditures

Our capital expenditures are primarily for office furniture, computers, communication equipment and software. Our senior secured credit facilities restrict us from making capital expenditures in excess of $3.3 million per year plus 50% of any amounts not utilized in the prior year. We spent $1.8 million, $1.6 million and $2.1 million on capital expenditures during 2003, 2004 and 2005, respectively. For the six months ended June 30, 2006, we spent $1.7 million on capital expenditures, compared to $0.7 million for the same period in 2005. We anticipate that our total capital expenditures for 2006 will be between $3.0 million and $3.5 million, which currently would be permitted under our senior secured credit facilities.

Commitments and Contingencies

Legal Matters

Various claims and legal proceedings that seek remedies or damages, all arising from the ordinary course of business, are pending against us with respect to insurance placed by us or other contractual matters. Our management does not believe that any liability that may finally be determined with respect to these claims and proceedings will have a material adverse effect on our consolidated financial position or future results of operations.

Contingent Purchase Price for Acquisitions

In order to better determine the economic value of the businesses we have acquired, we have incorporated contingent consideration, or earnout, provisions into the structure of certain acquisitions. These arrangements generally provide for the payment of additional consideration to the sellers upon the satisfaction of certain financial targets by the acquired businesses. Contingent consideration is recorded when the outcome of the contingency is determinable beyond a reasonable doubt. Contingent consideration paid to the sellers of our acquired businesses is treated as additional purchase consideration. We are obligated to pay additional purchase price to the former owners of some of the businesses we have acquired, as described below.


	•	Property Risk Services. In connection with our acquisition of PRS, we agreed to pay the former owners of PRS additional purchase price for the acquired business based on the performance of the business during the years ending December 31, 2004, 2005, 2006, 2007 and 2008. Specifically, we must pay the former owners of PRS the amount by which EBITDA of PRS for the year in question exceeds the greater of $6,000,000 or 35% of its net revenues for the year. Each former owner of PRS may elect to receive up to 75% of this payment in cash, and the remainder will be paid in our common stock. We have the option to pay the entire amount in cash. We paid additional consideration of $0.9 million and $0.8 million for the years ended 2004 and 2005, respectively. We anticipate that the additional consideration for 2006 will be substantially higher.

	•	Quaker. In connection with the Quaker acquisition, we agreed to pay additional purchase price based on the performance of the acquired business for the first and second years following the acquisition. We were not required to make an additional purchase price payment in 2005. We agreed to pay additional purchase price equal to 50% of the amount by which the revenues of the acquired business during 2006 exceed $7,990,545, provided that the EBITDA margin of this business (which is calculated by dividing the EBITDA of the business by the net revenues of the business) is at least 40%. If the EBITDA margin is less than 40%, our obligation to pay additional purchase price will decrease by 10% for each percentage point by which the EBITDA margin is less than 40%. We are required to pay the additional purchase price in shares of our common stock.

	•	Communitas. In connection with the acquisition of Communitas, we agreed to pay the former owners of Communitas a maximum amount of $7.0 million in additional purchase price based on the performance of the acquired business during the period from April 21, 2007 to April 21,


		2008. We have the option to make all or any portion of any additional purchase price payment in cash or in shares of our common stock.


	•	CBCA Premium Administration Division. In connection with the acquisition of the premium administration division of CBCA, we agreed to pay a maximum amount of $3.3 million in additional purchase price to the sellers of this business based on the performance of the acquired business during the period from June 1, 2006 to September 1, 2009. We are required to pay the entire amount of the additional purchase price in cash.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in accordance with GAAP requires management to make estimates that affect the reported amounts of our assets, liabilities, revenues and expenses. We periodically evaluate these estimates, which are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. If actual performance should differ from historical experience or if the underlying assumptions were to change, our financial condition and results of operations might be materially impacted. In addition, some accounting policies require significant judgment to apply complex principles of accounting to certain transactions, such as acquisitions, in determining the most appropriate accounting treatment. See Note 1 to our 2005 consolidated financial statements.

We believe the following significant accounting estimates and policies are material to our financial reporting and are subject to a degree of subjectivity and/or complexity.

Revenue Recognition and Reserves

Commission income and fees from the sale of property and casualty insurance products are recorded as of the effective date of the insurance coverage or the date the coverage is bound, whichever is later. At that point, the earnings process has been completed, and we can reasonably estimate the impact of policy cancellations for refunds and establish reserves based primarily on our historical cancellation experience, as adjusted for significant known circumstances as well as management’s judgment about known conditions. Commission income from the sale of group benefits insurance products or services is recognized as earned over the policy or contract period, which typically corresponds to the monthly billing cycle based on eligibility. We carry a reserve for policy cancellations, which is evaluated periodically and adjusted as necessary based upon historical cancellation experience. Subsequent commission adjustments are recognized upon notification from insurance carriers.

Commission revenue is reported net of commission paid to retail insurance brokers. Profit commission income is generally recognized based on the receipt of cash from these arrangements. Revenues may be recorded in advance of cash receipts in cases where the amounts due to be received have been calculated or have been confirmed by the insurance company. Profit commission income is primarily derived from profit sharing agreements related to the Specialty Underwriting and Group Benefits divisions. We pay volume-based incentive commissions to certain retail insurance brokers. These contingent commission expenses generally are recognized based on the timing of the revenue earned from placing business for these retail insurance brokers.

Business Acquisitions and Purchase Price Allocations

We account for business combinations in accordance with the provisions of SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. These standards require that all business combinations be accounted for using the purchase method. Accordingly, the net assets and results of operations of these acquired businesses are included in our financial statements on their respective acquisition dates. These statements provide guidance on the initial recognition and measurement of goodwill and other intangible assets arising from such business combinations and require that goodwill and intangible assets with indefinite lives be tested for impairment annually applying a fair value test rather than being amortized. In connection with these acquisitions, we record the estimated value of the net tangible assets purchased and the

value of the identifiable intangible assets purchased, which typically consist of purchased customer accounts and noncompete agreements. Purchased customer accounts include the physical records and files obtained from acquired businesses that contain information about insurance policies, customers and other matters essential to policy renewals, but primarily represent the present value of the underlying cash flows expected to be received over the estimated future renewal periods of insurance policies comprising those purchased customer accounts. The valuation of purchased customer accounts involves significant estimates and assumptions concerning matters such as cancellation frequency, expenses and discount rates. Any change in these assumptions could affect the carrying value of purchased customer accounts. Noncompete agreements are valued based on the duration and any unique features of each specific agreement. Purchased customer accounts and noncompete agreements are amortized based on the expected undiscounted cash flows over the related estimated lives and contract periods, which range from seven to 14 years. The excess of the purchase price of an acquisition over the fair value of the identifiable tangible and intangible assets is assigned to goodwill and is not amortized.

Both the allocation of the purchase price to intangible assets we acquire and the determination of the estimated useful lives of intangible assets other than goodwill require significant judgment by management and affect the amount of future amortization and possible impairment charges. If historical fact patterns, such as the rate of attrition of acquired customer accounts, were to change, we might be required to allocate a greater portion of the purchase price to goodwill or accelerate the amortization of purchased accounts, which might in turn have a material adverse effect on our financial position or results of operations.

We evaluate long-lived assets, including identifiable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair market value. We assess the recoverability of our long-lived and intangible assets by determining whether the unamortized balances can be recovered through undiscounted future net cash flows of the related assets. The amount of impairment, if any, is measured based on projected discounted future net cash.

Income Taxes

Determining our consolidated provision for income tax expense, deferred tax assets and liabilities and any related valuation allowance involves judgment. We record deferred tax assets and liabilities for the estimated future tax effects attributed to temporary differences and carryforwards based on provisions of the enacted tax law and current tax rates. We also project how our revenues will be apportioned for purposes of state income tax liabilities. We do not anticipate the effects of future changes in tax laws or rates. Temporary differences are differences between the tax basis of an asset or liability and its reported amount in our financial statements. Carryforwards primarily include items such as capital loss carryforwards, which may be carried forward subject to certain limitations. A summary of the significant deferred tax assets and liabilities relating to our temporary differences and carryforwards is included in Note 9, “Income Taxes,” to our 2005 consolidated financial statements.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123(R), which replaces SFAS No. 123 and supersedes APB Opinion No. 25. This revised statement, which requires the cost of all share-based payment transactions be recognized in the financial statements, establishes fair value as the measurement objective and requires entities to apply a fair-value-based measurement method in accounting for share-based payment transactions. The revised statement applies to all awards granted, modified, repurchased or cancelled after January 1, 2006. SFAS No. 123(R) permits nonpublic entities which used the fair value method of disclosure to account for the adoption of this revised standard using either the modified prospective or modified retrospective method. Effective January 1, 2006, we adopted SFAS No. 123(R) and accounted for the adoption using the modified prospective method. The prospective method requires

compensation cost to be recognized as a component of salary and employee benefits expense beginning on January 1, 2006 based on the requirements of SFAS No. 123(R) for all share-based payments granted after January 1, 2006. For awards granted prior to January 1, 2006, compensation cost must be recognized, as of January 1, 2006, for the portion of awards for which the requisite service has not been rendered.

In June 2006, FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting treatment for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently assessing the impact of FIN 48 on our financial position and results of operations.

In September 2006, FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit the use of fair value as the relevant measurement attribute. The provisions of SFAS No. 157 are to be applied prospectively as of fiscal periods beginning after November 15, 2007. We are currently assessing what impact, if any, SFAS No. 157 will have on our consolidated financial position and results of operations.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk that we will incur losses due to adverse changes in market rates and prices. We have exposure to market risk primarily through our financing activities. Our primary market risk exposure is to changes in interest rates. We use both fixed and variable rate debt as sources of financing. We have not entered, and do not plan to enter, into any derivative financial instruments for trading or speculative purposes.

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. Our exposure to interest rate changes primarily results from our financing activities.

Our outstanding debt under our first lien credit facility at June 30, 2006 was $122.1 million. Interest on borrowings under this facility is at LIBOR plus 275 to 350 basis points, depending on the ratio of total debt to our EBITDA. Our outstanding debt under our second lien credit facility at June 30, 2006 was $48.0 million. Interest on borrowings under this facility is at LIBOR plus 750 basis points. Based on the outstanding balance at June 30, 2006, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.1 million on an annual basis, net of the effect of our interest rate swap agreement.

In January 2006, we entered into an interest rate swap agreement with a total notional amount of $68.5 million. The interest rate swap resulted in us paying interest at a fixed rate of 4.74% and receiving interest at three-month LIBOR each quarter through January 2009. We use this interest rate swap to manage interest cost and cash flows associated with the variable interest rates on our senior secured credit facility.

OUR BUSINESS

Overview

We are a leading wholesale distributor of specialty insurance products and services in the United States. We distribute a wide range and diversified mix of property and casualty and group benefit insurance products from insurance carriers to retail insurance brokerage firms. We also offer value-added customized services to support some of these products, including policy underwriting for certain insurance carriers, premium and claims administration and actuarial services. In September 2006, we were recognized by Business Insurance as the largest wholesale insurance broker operating in the United States. We do not take any insurance underwriting risk in the operation of our business.

We provide insurance carriers with an efficient variable-cost distribution channel through our licensed brokers in all 50 states and our extensive relationships with retail insurance brokers. Our distribution structure enables the insurance carriers with which we do business to reach a large number of retail insurance brokers. We have cultivated an entrepreneurial, decentralized sales culture that provides our brokers and underwriters with flexibility to react to opportunities in the marketplace and better serve the needs of insurance carriers and our retail insurance broker clients. At the same time, we have centralized substantially all of our finance, human resource, legal, licensing, compliance and risk management operations to allow us to effectively oversee our national operations. We believe our centralized infrastructure enables us to integrate new brokers and offices.

We have extensive knowledge of the specialty insurance products that we distribute, which allows us to assist retail insurance brokers in placing business outside of their core expertise or capacity. Our size and strong relationships with insurance carriers enhance our ability to provide retail insurance brokers with better and broader access to the insurance markets. We have established relationships with over 100 insurance carriers, including property/casualty and health/life carriers owned by ACE, AEGON, Alleghany, AIG and The Hartford. We also use our product expertise and relationships with insurance carriers to structure new insurance programs and products to respond to opportunities in the marketplace.

We distribute insurance products and services through our three divisions: Property & Casualty Brokerage, Specialty Underwriting and Group Benefits.

Industry Background

We distribute insurance products in two distinct markets: property and casualty, and group benefits.

Property and Casualty

Insurance carriers sell commercial property and casualty insurance products in the United States through “admitted” insurance carriers, which are carriers that are licensed in the state in which the risk is located, and “non-admitted” insurance carriers, which sell their products in the E&S lines market. Within the admitted market, there are standard insurance products and specialty insurance products. For standard insurance products, insurance rates and forms are regulated, products and coverage are relatively uniform, and insurance carriers tend to compete for customers primarily on the basis of reputation, financial strength, price, claims service and commissions. Specialty insurance products are sold to insured parties with more difficult risks that do not fit the underwriting criteria of standard insurance products. Although price tends to be a key basis of competition among specialty insurance carriers, the coverage terms also are an important competitive factor.

The E&S lines market generally provides insurance for businesses that are unable to obtain coverage from admitted insurance carriers because of their risk profile or the unique nature or size of the risk. State insurance regulations often require an insured party to be declined by one or more admitted insurance carriers before obtaining insurance in the E&S lines market. Insurance carriers operating in the E&S lines market depend on wholesale and retail insurance brokers to have the necessary licenses required to distribute their E&S lines insurance products in the states where the insured party or risk is located. Participation in the E&S

lines market requires knowledge of the insurance products available, a relationship with the insurance carriers that operate in this market and an understanding of the risks that they are willing to insure.

The E&S lines market is a growing part of the commercial property and casualty insurance marketplace. Based on information published by A.M. Best, direct premiums written for E&S lines insurance policies in relation to total premiums for the commercial property and casualty lines market increased from approximately 6.4% in 1995 to approximately 12.7% in 2005, and premiums on E&S property and casualty lines insurance increased from $9.2 billion in 1995 to $33.3 billion in 2005. Apart from a slight decline in 1996, the E&S lines market has grown annually in terms of aggregate premium dollars written for the past 15 years for a variety of reasons, including the implementation of more conservative underwriting criteria and risk-selection techniques by standard insurance carriers, the elimination of non-core lines of business by standard insurance carriers and substantial losses during this period resulting from the terrorist attacks on September 11, 2001 and natural disasters. Moreover, as reported by A.M. Best, a significant amount of capital has been invested in the E&S market during the last five years to capitalize on favorable market conditions, as evidenced by an increase in the number of start-up companies entering the E&S market, such as AXIS, Allied World and Endurance. Many insurance carriers operating in the E&S market distribute their products primarily through wholesale insurance distributors.

Until recently, Aon, Marsh and Willis, three of the largest retail insurance brokerage firms, owned their own wholesale insurance brokerage operations. During 2005, we acquired Willis’ wholesale insurance brokerage operations, and Aon and Marsh sold their wholesale insurance brokerage operations to private equity firms. Before these transactions, it generally was difficult for independent wholesale insurance brokers to conduct a significant amount of business with Aon, Marsh and Willis. Independent wholesale insurance brokers, such as AmWINS, now have greater opportunities to do business with these three firms. Additionally, we recently have observed that a number of other large retail insurance brokerage firms have become more attentive to the number of wholesale insurance brokers they use and the compliance systems and financial position of these brokers. We believe this development may result in a reduction in the number of wholesale distributors used by many larger retail insurance brokerage firms.

Group Benefits

Group benefit insurance products are sold by life and health insurance carriers, which transact business with both wholesale and retail insurance brokers and, in some cases, directly with the sponsoring organization. Wholesale distributors of group benefit products generally place specialized group benefit products for unusual, unique or specific types of coverage. Some wholesale distributors also provide administrative services, such as premiums, claims and other administrative services, to both insurance carriers and sponsoring organizations to support these products.

Health insurance products represent a significant portion of spending for employee group benefits. Based on information published by the Employee Benefit Research Institute, in 2004 total spending by employers for group health benefits was $482.5 billion. Health care spending has continued to increase significantly. According to data published by HHS, health care costs increased $916.5 billion to approximately $1.9 trillion, or approximately 104.5%, from 1993 to 2004, and are projected to reach $4.0 trillion by 2015. Moreover, individual health care spending is increasing. On a per person basis, annual health care spending grew 49.5% during the seven-year period beginning on January 1, 1999, reaching an estimated average of $6,683 per person in 2005, with spending projected to grow to approximately $12,357 per person by 2015, according to HHS and U.S. Census Bureau statistics.

The cost of health care for the 65 and over population represents a substantial part of health care spending. Although the population age 65 and over comprises less than 13.0% of the U.S. population, it accounted for 36.0% of all health care expenditures in 1999 according to data published in Age Estimates in National Health Accounts, Health Care Financing Review. According to this same source people age 65 and over spent, in 1999, on average, four times the amount on health care than the average person under age 65. Moreover, the U.S. population is aging. Based on information published by the U.S. Census Bureau, it is

estimated that 12.4% of the population was age 65 or older in 2005, and this percentage is projected to grow to 14.2% in 2015 and 16.3% in 2020 as baby boomers start reaching age 65 in 2011.

We believe that recent changes in GAAP have increased the level of attention given to the cost of providing retiree health care benefits. GASB No. 45, which will be phased in beginning in 2007, will require state and local governmental entities either to fund the cost of retiree benefits or recognize this obligation as a liability on their financial statements, as opposed to the prior practice of recognizing these costs on a pay-as-you-go basis. We believe GASB No. 45 is prompting many governmental entities to focus on the costs of retiree benefits and to seek ways to reduce these costs.

The Medicare Modernization Act, which created the federal Voluntary Prescription Drug Benefit Program under Part D of the Social Security Act, added a new entitlement for Medicare-eligible beneficiaries for prescription drug costs. Effective as of January 1, 2006, eligible Medicare beneficiaries are able to obtain prescription drug coverage under Part D by enrolling in a PDP or a “Medicare Advantage” plan (MA-PD). Under the Medicare Modernization Act, employers that provide retiree prescription drug benefits now have a greater number of options, including the elimination of these benefits entirely, the establishment of company-sponsored plans that are eligible for a government subsidy, the adoption of a company-sponsored PDP and the establishment of plans designed to supplement the benefits available through a PDP or MA-PD. As a result of the Medicare Modernization Act, insurance products that provide prescription drug benefits for Medicare-eligible individuals now compete with the entitlement program created under Part D. We believe the Medicare Modernization Act generally has resulted in the development of new insurance products available for employers that desire to provide greater benefits than are available through a PDP or MA-PD. We also believe this trend has benefited insurance brokers that have developed the expertise and product distribution capabilities to assist employers in responding to these developments.

Our Group Benefits division derives a substantial portion of its revenues from the placement of retiree health insurance products. In many cases, U.S. employers are not legally obligated to offer employee health benefit plans and typically have the discretion to unilaterally reduce or eliminate these plan benefits. Several factors are causing employers to change the way they provide retiree health care, including the rapidly increasing cost of health care and the overall aging of the U.S. population. Other factors that we believe may affect the market for retiree health insurance products are the promulgation of accounting standards requiring governmental employers to estimate their liability for future benefits in their financial statements, as discussed above.

The Wholesale Distribution Channel for Specialty Insurance Products and Services

Retail insurance brokers typically work directly with insured parties to evaluate their insurance needs, determine the appropriate amount and type of coverage, and locate an insurance carrier capable of providing the necessary coverage. Wholesale insurance brokers act as intermediaries between insurance carriers and retail insurance brokers by assisting retail insurance brokers in placing business they would not be able to place themselves because the type of risk is outside of their core expertise or they lack direct access to certain insurance carriers. Wholesale insurance brokers often provide retail insurance brokers with specialty and E&S insurance products offered by admitted and non-admitted insurance carriers. It is not uncommon for retail insurance brokerage firms to use several wholesale insurance brokerage firms to place the same type of insurance. Similarly, insurance carriers typically distribute their products through multiple wholesale insurance brokerage firms.

We believe the wholesale distribution channel allows insurance carriers to distribute their products more efficiently. Insurance carriers use wholesale insurance brokers because of their product expertise and distribution capabilities, allowing them to reduce or avoid the infrastructure and personnel costs associated with maintaining relationships with a large number of retail insurance brokerage firms. In some cases, wholesale insurance brokers act as an MGU for an insurance carrier. An MGU generally has authority to bind coverage on behalf of an insurance carrier for a specific type of risk, subject to agreed-upon guidelines and limits. MGUs receive submissions for insurance directly from retail insurance brokers and evaluate, price and make underwriting decisions regarding these submissions and issue policies on behalf of an insurance carrier.

An MGU typically does not, however, take underwriting risks for the products that it distributes. Insurance carriers typically create MGU programs for harder-to-place insurance products in niche product lines or industry classes, in cases where historical data indicate that these types of programs can be operated profitably.

The distribution channel for property and casualty insurance products placed through insurance brokers is depicted below:


¹		This chart illustrates typical transactions in the brokered market for insurance products. Wholesale insurance brokers also place standard insurance products, and retail insurance brokers may also have the ability to directly place E&S and specialty insurance products.

For group benefit insurance products, retail insurance brokers generally use wholesale insurance brokers to place products for unusual, unique or specific types of coverage.

Although there has been considerable consolidation among brokerage firms, both the retail and wholesale segments of the insurance brokerage industry remain fragmented. The wholesale insurance brokerage segment consists of over 450 firms operating in the United States based on information published by the National Association of Professional Surplus Lines Offices. Based on information published in the Journal of Risk and Insurance, in 2004 there were approximately 39,000 independent retail insurance firms in the United States.

Wholesale insurance brokers typically are compensated by commissions paid by the insurance carrier, although they can also receive fees in addition to commissions for placing certain insurance policies. Commissions generally are calculated as a percentage of the gross premium for the underlying insurance policy. Many factors affect commission rates, including the type of insurance, competition among insurance carriers for that type of insurance, the particular insurance carrier involved, market cycles, and the nature of

the services provided by the wholesale insurance broker. When retail insurance brokers use wholesale insurance brokers to assist in placing coverage, they will agree how to split commissions paid by the insurance carrier. Historically, insurance carriers have frequently paid a greater commission rate on products distributed through wholesale insurance brokers because of the expertise provided by wholesale insurance brokers and because insurance carriers have lower infrastructure and other distribution costs for products distributed through the wholesale distribution channel. In addition, some wholesale insurance brokers receive contingent commissions that depend on the volume of business they place with a particular company or the profitability of that business.

Competitive Strengths

We believe that our competitive strengths include:


	•	Extensive Relationships with Retail Insurance Brokers. We believe that our national operations, product expertise, extensive relationships with insurance carriers and focus on compliance make us an attractive business partner for retail insurance brokers. During 2005, we did business with over 4,500 retail insurance brokerage firms, including substantially all of the 100 largest U.S. retail insurance brokers as identified by Business Insurance in July 2006. We also work with small to mid-size retail insurance brokerage firms, which in many cases do not have direct access to certain of the insurance carriers with which we do business. Our extensive relationships with retail insurance brokers make us an attractive distribution channel for insurance carriers.

	•	Established Insurance Carrier Relationships. We have established relationships with over 100 insurance carriers. We believe that many insurance carriers view us as a valued customer because of our expertise, experienced brokers and underwriters and national platform, which enable us to produce a significant amount of business for them. Our access to insurance carriers is key to our business. Through years of experience in the insurance industry, our management has close relationships with the management teams of many insurance carriers at the most senior levels. We understand our insurance carriers’ underwriting preferences for particular lines of business and areas of geographic focus. We believe that the scope of our relationships with insurance carriers and our product knowledge allow us to better serve the needs of retail insurance brokerage clients.

	•	Proven and Experienced Brokers and Underwriters. As of June 30, 2006, we employed 224 brokers and underwriters, many of whom have substantial experience in the insurance industry. Our brokers and underwriters typically specialize in either certain product lines or industry classes and have, in many cases, developed close relationships with the insurance carrier underwriters for these product lines and industry classes. We believe we have been able to use our size, diverse product knowledge and extensive relationships with insurance carriers to improve the productivity of our existing brokers and recruit new brokers who can leverage these resources to increase revenues.

	•	Seasoned Management Team. Our Chief Executive Officer and division presidents have substantial experience and long-standing relationships developed over an average of 21 years of service in the insurance industry. Our management team draws on its industry experience to identify opportunities to expand our business and collaborate with insurance carriers to help develop products to respond to market trends. Through their extensive relationships in the insurance industry, our management team has contributed to the successful recruitment of key brokers and underwriters to join AmWINS. Having completed nine acquisitions since January 1, 2002, our management team has a proven track record of successfully identifying and structuring acquisitions and integrating the businesses acquired.

	•	Business Diversification. The scope of our operations distinguishes us from traditional property and casualty wholesale insurance brokers. By operating in both the group benefits market and the property and casualty market, we believe we are better positioned to detect,


		analyze and capitalize on opportunities to expand our business than are companies with a more narrow market focus. In addition, our product diversity and ability to provide value-added underwriting, administrative and other services provide us with broader access to insurance carriers and enhance our ability to help retail insurance brokerage firms deliver products that meet the wide-ranging needs of their clients.


	•	Efficient Use of Information. We believe the way we collect and analyze information using AmLINK, our proprietary enterprise operating system, will improve the efficiency and productivity of our brokers and underwriters. For example, we can access our database to identify individual insurance carrier underwriters that typically underwrite a specific type of business, making it more likely we can place a particular risk for our customers. We also intentionally capture and store data for business we are unable to place so we can analyze missed opportunities and improve our chances to place this business in the future. We believe that AmLINK allows us to more effectively manage and control our operations.

Key Elements of Our Growth Strategy


	•	Increase Growth by Expanding Distribution. We strive to prudently grow our business by expanding our distribution channels. Since January 1, 2003, we have opened five new offices and hired 106 new brokers, and we intend to continue pursuing opportunities to expand into new geographic markets and increase our presence in existing geographic markets. We also seek to expand our business by marketing our diverse product capabilities through targeted advertisements, client seminars and client marketing events.

	•	Access New Markets and Products. We are focused on expanding our access to new markets and products to better serve the needs of our retail insurance brokerage clients. For example, because certain admitted insurance carriers will not do business directly with small retail insurance brokerage firms, but will do business with us, we are developing our AmWINS Access platform to provide these brokerage firms with access to a greater variety of standard insurance products. We also are actively working to develop new MGU programs. In our Group Benefits division, we continue to explore opportunities to work with our insurance carrier partners to develop new products that help employers manage the rising cost of health care.

	•	Capitalize on Industry Changes. We believe that recent governmental investigations into the insurance industry caused many insurance carriers and large retail insurance brokerage firms to pay greater attention to the intermediaries they use. We believe these carriers and brokerage firms increasingly are seeking to solidify their business relationships with financially stable intermediaries with acceptable reporting, compliance and other administrative systems. Aon, Marsh and Willis all recently sold their wholesale insurance brokerage firms, and we believe that we can use our national platform and organizational structure to build upon our relationships with these and other firms. In addition, we intend to pursue opportunities to distribute retiree health products to employer groups to help them better respond to rising health care costs, an aging U.S. population and changes in the way they are required to account for retiree benefits.

	•	Pursue Strategic Acquisitions. We plan to pursue strategic acquisitions that will complement our existing business or potentially expand into new wholesale distribution channels. We have substantial experience in selecting and integrating companies and are positioned to take advantage of acquisition opportunities that arise. We believe that our entrepreneurial culture and centralized administrative support system make us an attractive partner to acquisition targets. We believe this offering enhances our business profile and ability to structure future acquisitions we decide to pursue.

Products and Services

We distribute our products and provide our services through our three divisions described below:

Property & Casualty Brokerage

Our Property & Casualty Brokerage division provides access to a broad range of specialty property and casualty insurance products. With a national platform of over 20 offices located across the United States, we are involved in the placement of many lines of property and casualty insurance products, including complex, multi-layered property and casualty insurance as well as stand-alone property catastrophe, general commercial liability, commercial automobile liability, automobile physical damage, umbrella/excess liability and excess workers’ compensation insurance. Our casualty products also include a broad range of financial insurance products such as directors’ and officers’ liability, professional liability, and fidelity and surety insurance. We believe our knowledge and experience allow us to assist retail insurance brokers with virtually all types of property and casualty insurance products.

Historically, our Property & Casualty Brokerage division has generated a substantial majority of its commission revenues by distributing insurance products in the E&S lines market. Many of the insurance carriers operating in this market also offer specialized and standard insurance products in the admitted market. One of our key growth strategies is to increase the amount of business we do with admitted insurance carriers through programs such as our AmWINS Access program, which provides small retail insurance brokerage firms with a greater variety of standard insurance products by offering access to additional insurance carriers that do not deal directly with these small firms. Our Property & Casualty Brokerage division also has some binding authority programs for specific types of risk that generally involve small premiums, very limited authority and little flexibility as to price and terms.

For the six months ended June 30, 2006, we earned 50.6% of our revenues in this division from the placement of property insurance products, with the remaining 49.4% attributable to casualty insurance products.

As of June 30, 2006, Property & Casualty Brokerage had 472 employees, including 165 brokers.

Specialty Underwriting

Through our Specialty Underwriting division, we operate our stand-alone MGU programs. Under our MGU programs, insurance carriers have authorized us to bind coverage on their behalf, subject to underwriting guidelines, policy limits and pricing parameters that typically are developed by us and our insurance carriers on a collaborative basis and that vary widely from program to program. We have MGU programs with many major property and casualty insurance carriers, including insurers owned by ACE, AIG, Munich American Reinsurance Company, Fireman’s Fund Insurance Company, Lloyd’s of London (Lloyd’s), Markel, Scottsdale Insurance Company and Zurich Financial Services Group (Zurich). Although a component of the commissions we receive for acting as an MGU sometimes depends on the overall profitability of the underlying program, we do not take underwriting risks for any of the insurance products we distribute.

As an MGU, we have underwriting authority from one or more insurance carriers for insurance products in certain product lines or industries. We receive requests for insurance directly from retail insurance brokers. We evaluate the risk based on the information submitted, and if we decide to bind coverage, we price and issue policies on behalf of the insurance carriers that we represent. We typically also bill and collect premiums on behalf of insurance carriers. However, we currently do not administer claims for any of our programs.

Our primary MGU programs currently consist of:


	•	Refuse Haulers. We underwrite commercial automobile, general liability and workers’ compensation insurance for refuse haulers. This program has been endorsed since 1987 by the Environmental Industry Association, an international trade association for companies that manage solid and medical waste or manufacture and distribute waste equipment.


	•	Storage Tanks. We underwrite pollution liability insurance for businesses with underground and aboveground storage tanks, such as convenience stores, fuel oil dealerships, hospitals, hotels, petroleum distributors and service stations.

	•	Apartments and Condominiums. We underwrite property, general liability and umbrella insurance for owners of apartments and condominiums in California.

	•	Woodworking. We underwrite primarily property insurance for businesses with woodworking operations, such as sawmills, furniture manufacturers, wood chip mills and wood treatment plants.

	•	Welding Distributors. We underwrite all lines of property and liability insurance except workers’ compensation for businesses that supply gas and propane tanks to welders.

	•	Pizza Delivery. We underwrite various types of insurance, including property, automobile and workers’ compensation, for businesses that own pizza delivery franchises.

	•	Long-Haul Commercial Trucking. We underwrite commercial automobile liability, physical damage and cargo insurance for long-haul trucking carriers.

	•	Middle Market Property. We underwrite property insurance for owners of mid-size commercial property.

We use our on-staff actuaries to support our MGU programs. Our actuarial staff provides actuarial and catastrophe management analysis to our insurance carrier partners to help improve the overall profitability of these programs. Our actuaries also monitor the performance of our programs and work with our underwriters and insurance carriers to develop rate tracking mechanisms, pricing models and other underwriting tools. The ability to analyze loss rates for our MGU programs enables us to develop more accurate product pricing and modeling parameters, which we believe makes us an attractive business partner for the insurance carriers that have given us underwriting authority.

One of our strategic goals is to use our existing product expertise and relationships with insurance carriers to develop new MGU programs. We currently are evaluating a number of potential programs. We plan to pursue opportunities to develop or acquire new programs, which may involve recruiting underwriters who have developed niche product expertise as well as strategic acquisitions of businesses that have their own MGU programs.

As of June 30, 2006, our Specialty Underwriting division had 117 employees, including 39 underwriters.

Group Benefits

Through our Group Benefits division, we distribute a range of employee benefit products, including:


	•	retiree medical and prescription drug insurance plans, which have represented a significant part of our growth in this division since January 1, 2003;

	•	group benefit products designed for member groups, such as trade associations, chambers of commerce, unions and professional organizations; and

	•	group benefit products sold by BCBSRI, which has appointed us as its exclusive general agent for employer groups with 50 or fewer employees.

We also distribute a Medicare-approved PDP under Part D of the Social Security Act, primarily to employer groups that desire for their Medicare-eligible retirees to participate in an eligible PDP.

We also provide a range of related services, including:


	•	premium administration services for insurance carriers, employers and member organizations;

	•	third-party claims administration services for insurance carriers and employer groups;


	•	PBM services for insurance carriers, employer groups, unions, member groups and third-party administrators; and

	•	other ancillary services, including limited-authority underwriting services for certain insurance carriers.

The following is a list of the products and services offered by our Group Benefits division:

A substantial part of our business in this division involves the placement of retiree medical and prescription drug insurance products. We believe that demand for these insurance products is driven in part by a desire by employers, particularly those with self-funded plans, to control, reduce or eliminate the rising costs of retiree health benefits and the administrative burden of providing these benefits. Using the knowledge we gained over a number of years from placing and administering group benefit plans for member groups, in 2002 we began to focus on distributing a group retiree health benefit product, known as Retiree Benefit Advantage, for companies experiencing financial difficulty. This product allows employers to implement an insured medical/prescription drug plan that may be funded by the employer, its retired employees or both on a shared basis, at attractive group rates. In connection with our entry into this product line, we substantially increased the size and capabilities of our call center to permit us to support this product with an array of administrative services, including plan enrollment and billing and collection, thereby allowing employers to outsource the administration of retiree benefits to us.

Our first significant account for our Retiree Benefit Advantage product was a large public manufacturing company that filed for bankruptcy protection in the second half of 2001. Faced with the prospect of terminating retiree health benefits as a result of its financial difficulties, this company and its non-union retirees elected to acquire a retiree group health insurance plan placed and administered by us. As employers have increasingly sought to control and reduce the cost of retiree benefits in response to the rising cost of health care and the aging of the U.S. population, we have also been able to distribute our retiree health products to financially sound companies and governmental entities that in many cases have elected to replace their self-funded retiree health plans with a group insurance product. We have placed retiree health and prescription drug plans for a number of employer groups, including Aon, Brown University, Brunswick Corporation, Continental Tire North America, Inc., Nationwide Financial Services, Inc., Snap-On Incorporated, Tenneco Inc. and Yale New Haven Health System.

The enactment of Medicare Part D under the Social Security Act generally has provided employers with more options regarding prescription drug benefits for retirees age 65 and older. Under Part D of the Social Security Act, effective January 1, 2006 eligible Medicare beneficiaries are able to obtain prescription

drug coverage by enrolling in a PDP or a MA-PD that offers prescription drug coverage. Employers who provide prescription drug benefits to retirees can elect to: (i) continue providing these benefits with no governmental assistance; (ii) implement a plan offering the actuarial equivalent of a Medicare Part D plan with a subsidy payment from the U.S. government; (iii) create their own PDP or MA-PD; (iv) terminate their retiree prescription drug benefits; or (v) supplement coverage available to Medicare-eligible retirees through an independent PDP or MA-PD.

As a result of the Medicare Modernization Act, insurance products that cover prescription drug benefits for Medicare-eligible individuals now compete with the entitlement program created under Part D of the Social Security Act. We believe the Medicare Modernization Act generally has resulted in the development of new insurance products available for employers that desire to continue to offer their retired employees access to prescription drug benefits. We distribute a PDP designed specifically for employer groups as well as customized insurance products that permit employers to supplement the benefits available to their retired employees through an independent PDP or MA-PD.

We also place and administer a wide array of group benefit products for member organizations. These products are acquired by national, regional and local member groups that frequently do not have the capability or desire to administer these plans and that seek ways to make membership in their organizations more appealing. Through our relationships with our insurance carrier partners, we are able to help design customized group benefit plans to respond to the varying needs of these organizations.

We are able to handle virtually all aspects of administering the types of group benefit products that we place, including plan enrollment, eligibility, billing, collection and claims administration. We have made a substantial investment in a call center that we use to provide assistance and support for the plans we administer. We provide administrative services to both insurance carriers and employers for plans that we distribute as well as plans distributed by others. We currently administer retiree health plans for over 800 employer groups and 74 member groups. In addition, in April 2006 we acquired Communitas, which provides third-party claim administrative services primarily for self-insured group health plans. As of June 30, 2006, Communitas administered plans covering more than 100,000 lives.

One advantage of providing administrative services for the retiree health plans we distribute is that it increases the likelihood that we will remain the wholesale insurance broker for the plan. After an employer has outsourced the administration of a retiree health plan, it is more difficult to re-establish the ability to administer the plan internally or to transition the plan to a new outsourced provider. The costs, administrative burden and confusion that such a switch could create among an organization’s retirees all create potential customer retention advantages for us.

As of June 30, 2006, our Group Benefits division had 249 full-time employees, including 20 brokers.

Acquisition Strategy

We seek opportunities to acquire companies whose businesses would complement, expand upon or diversify our current operations. We often are familiar with the owners or management of acquisition targets before we initiate discussions with them. We believe that our operating philosophy makes us an attractive business partner because it offers the management team of acquisition targets access to the resources of a large national firm without losing the entrepreneurial freedom of a small firm. We believe our technology, marketing, finance and other resources as well as our long-standing relationships in key markets are appealing to the owners and managers of wholesale distribution firms.

We are experienced in acquiring companies. Since January 1, 2002, we have acquired nine businesses. We perform due diligence on all acquisition targets, and we evaluate their ongoing business operations and key business drivers. Our due diligence efforts typically involve the assistance of our actuarial staff to evaluate the business and product risks associated with acquisition targets.

We generally consider a variety of factors in negotiating acquisitions, including cash flow, rates of return and strategic fit. Frequently, we require that part of the purchase price be deferred or subject to an earnout to align the interests of the sellers with ours and to protect us from post-acquisition uncertainties. We

typically retain management of the firms that we acquire to continue to oversee the day-to-day sales operations of the acquired business. Our acquisition contracts, which typically include employment agreements for the key brokers and underwriters involved in the acquired business, generally subject the former owners and key brokers and underwriters of the business being acquired to various restrictions, including non-competition and non-solicitation covenants. After an acquisition has been completed, we integrate the acquired company’s accounting and other systems into our company-wide systems.

There are certain risks inherent in pursuing growth through acquisitions. Accordingly, we can give no assurance that we will be successful in identifying, acquiring or integrating businesses that enhance our business or results of operations or otherwise perform as we expect. See “Risk Factors — Risks Related to Our Business and Industry — If we are unable to successfully acquire or integrate acquired businesses, or if they do not perform as we expect, our competitiveness, operating results and financial condition could be harmed.”

Operations

As of October 31, 2006, we had 32 offices located across the United States. Substantially all of our Property & Casualty Brokerage offices operate under the “AmWINS Brokerage” brand name. Most of the Specialty Underwriting and Group Benefits businesses continue to operate under their original names because of their close association with the products they have distributed for a number of years.

Although our operations are spread across the United States, we adhere to a “one firm” philosophy, with the intent that our employees and customers view us as one firm nationally. Substantially all of our operations are connected through a centralized IT system. We have centralized substantially all of our human resources, marketing, finance, merger and acquisition, legal, licensing, compliance and risk management operations. We also provide our businesses with technical, underwriting and regulatory support. We have implemented our enterprise operating system, AmLINK, to centralize the majority of our premium collection, accounting and administrative functions in our Charlotte service center and a satellite service center in Chicago. Although we have focused on centralizing our administrative operations, we remain committed to our decentralized sales and product development culture to provide our brokers with greater flexibility to adapt to the changing needs of their customers.

Sales and Marketing

Virtually all of our sales and marketing efforts are directed at developing and maintaining relationships with retail insurance brokers and key employees of insurance carriers who underwrite the products that we distribute. We seek to develop new business with retail insurance brokers who can benefit from our expertise and access to insurance carriers. We also strive to maintain frequent contact with key insurance carrier underwriting personnel so that we understand their product preferences and they understand our distribution capabilities.

Our decentralized sales culture provides our brokers with the entrepreneurial freedom and flexibility they need to better serve their clients and detect client-specific opportunities for new business. Our sales efforts are driven by individual brokers and underwriters under the direction of the management of our offices, practice groups and divisions. We foster an environment that recognizes and rewards cooperation among our brokers. We believe our ability to work in teams helps us better compete for large and complex accounts.

We support our localized sales efforts through a national marketing program. Our marketing department works closely with each division’s management team to develop a marketing strategy that best suits each division. We market ourselves through trade publications, trade shows, trade seminars and other events sponsored by us, as well through our website and other sales and marketing materials.

Clients

During 2005, we placed business for more than 4,500 retail insurance brokerage firms of varying sizes, ranging from large, multinational retail insurance brokers such as Aon, Marsh and Willis to small, one-office firms. We have entered into agreements with Aon, Marsh and Willis under which they have appointed

us on a national basis to work with them. Although we do business with all of the large, national retail insurance brokerage firms, we derive a substantial part of our business from mid-size retail insurance brokers. For the six months ended June 30, 2006, our 10 largest retail insurance brokerage clients represented less than 30.5% of our consolidated revenues.

Willis accounted for approximately 15% of our revenues for the year ended December 31, 2005 and 13% of our revenues for the six months ended June 30, 2006. If we lose Willis as a retail insurance brokerage client or there is a substantial reduction in the volume of business we do with Willis, our business and operating results would be materially harmed.

In connection with our acquisition of Stewart Smith Group from Willis, we entered into a business agreement with Willis that: (i) requires Willis to name us as the broker of record for each policy placed by us for Willis, unless Willis determines that naming us as the broker of record is not in the best interest of its client; (ii) requires Willis to engage us for the placement and renewal of an insurance policy acquired by a client of Willis for which we are the broker of record, unless Willis determines that the engagement of us is not in the best interest of the client; (iii) requires Willis and us to negotiate and reach an agreement on a case-by-case basis regarding how to share commissions paid in connection with the placement of insurance policies by us for Willis, and if we are unable to agree, generally provides terms on which we share commissions with Willis; (iv) requires Willis to provide us with 10-days’ advance notice if it determines to use another brokerage firm for this business; and (v) prohibits Willis from using certain designated brokers of Stewart Smith Group who terminate their employment with us and accept employment with any of our competitors. The agreement expires on April 13, 2009, and will renew for successive one-year periods after that date unless either party provides notice of non-renewal to the other party. In addition, either party may terminate the agreement if the other party materially breaches any provision of the agreement.

Insurance Carriers

We have been appointed to do business with over 100 insurance carriers, including large insurance carriers operating internationally as well as smaller insurance carriers operating in the United States. Our five largest insurance carriers in terms of total premiums placed during 2005 by us were ACE, AIG, Alleghany, Lloyd’s and Zurich.

We periodically review the performance, financial health and ratings of all insurance carriers with which we do business, and we generally advise our clients against doing business with any insurance carrier failing to maintain a financial strength rating of at least “A−” and a financial size category of at least “VII” (often expressed together in a manner such as “A−, VII”) from A.M. Best.

For the year ended December 31, 2005 and the six months ended June 30, 2006, approximately 11.5% and 9.2%, respectively, of our revenues were derived from insurance policies provided by AIG. If AIG terminated or significantly reduced the amount of business we place with it, we would need to locate other insurance carriers to underwrite this business, which would increase our expenses and could result in the loss of market share while we located other insurance carriers for this business.

In our Specialty Underwriting division, we act as an MGU for insurance carriers that have given us authority to bind coverage on their behalf. Our MGU programs are governed by contracts between us and the insurance carriers that have given us authority to bind insurance under the program. These contracts typically can be terminated by the insurance carrier with very little advance notice. The termination of any of our MGU programs, or a change in the terms of any of these programs, could harm our business and operating results.

Competition

The largest competitors of our Property & Casualty Brokerage division are Swett & Crawford Group, CRC Insurance Services, Inc., which is owned by BB&T Corporation, Crump Insurance Services, Inc. and Risk Placement Services, Inc., which is owned by Arthur J. Gallagher & Co. In this division, we also compete with a number of smaller wholesale insurance brokers. Our Property & Casualty Brokerage division competes for clients on the basis of product knowledge, access to insurance carriers and markets and quality of client service. We believe that property and casualty insurance carriers and large retail insurance brokerage firms are becoming more attentive to the compliance systems and financial position of the wholesale insurance brokers they use, which we believe has caused many of these firms to decrease the number of wholesale insurance brokers they use. We believe our size, scope of operations, product diversity and infrastructure enable us to compete favorably in our markets.

Our Specialty Underwriting division competes with a variety of sources for standard and specialized insurance products that provide coverage similar to the types of products we distribute. In many cases, our competitors are other insurance carriers that provide these products. In addition, we frequently compete with small to mid-size wholesale distribution firms that provide products that are similar to the products offered by our MGU programs. According to information provided by Business Insurance, the largest MGU firms in the United States are Victor O. Schinnerer & Co., Inc. (a subsidiary of Marsh), K&K Insurance Group (a subsidiary of Aon), Arrowhead General Insurance Agency, Inc. and U.S. Risk Insurance Company, Inc. Our MGU programs compete for clients on the basis of product coverage and pricing.

Our Group Benefits division competes with a variety of other businesses, including retail insurance brokerage firms that distribute products similar to the types of insurance products we distribute, insurance carriers that distribute these products directly to retail insurance brokers or insured parties, benefit consultants that are able to assist in the distribution of these products and a number of other companies that provide group benefit administrative services. Although there are no large, national wholesale distribution firms with which we regularly compete, we do compete with several large retail insurance brokerage firms, including clients of ours, that distribute products similar to the types of products we distribute. Our Group Benefits division competes for clients on the basis of product design and pricing, product knowledge and ability to provide ancillary administrative services, as well as the cost of these services.

Governmental Regulation

Our insurance brokerage and administrative service activities are subject to regulation and supervision by state authorities. These requirements are generally designed to protect insured parties by establishing minimum standards of conduct and practice. Although the scope of regulation and form of supervision may vary from state to state, insurance laws generally grant broad discretion to supervisory authorities in adopting regulations and supervising regulated activities. Generally, in every state in which we do business as an insurance broker, we are required to be licensed or to have received regulatory approval to conduct business. In addition, most states require that our employees who engage in brokerage activities in that state be licensed personally. We also are affected by the governmental regulation and supervision of insurance carriers. For example, if we act as an MGU for an insurance carrier, we may be required to comply with laws and regulations affecting the insurance carrier. Moreover, regulation affecting the insurance carriers with which we place business can affect how we conduct operations.

Laws and regulations vary from state to state and are always subject to amendment or interpretation by regulatory authorities. These authorities have substantial discretion as to the decision to grant, renew and revoke licenses and approvals. Our continuing ability to do business in the states in which we currently operate depends on the validity of and continued good standing under the licenses and approvals pursuant to which we operate. More restrictive laws, rules or regulations may be adopted in the future that could make compliance more difficult and expensive or adversely affect our business. See “Risk Factors — Risks Related to Our Business and Industry — We are subject to governmental regulation and supervision, and increased costs of compliance or failure to comply with applicable laws and regulations could increase our expenses, restrict our growth and limit our ability to conduct our business.”

Employees

As of June 30, 2006, we employed approximately 900 employees. None of our employees is represented by a labor union. We believe that our relationship with our employees is good.

Legal Proceedings

In the ordinary course of our business, we are involved in various claims and legal proceedings relating to our business. We maintain errors and omissions and employee practices insurance that is intended to cover many of these claims. Based on information currently available and discussions with legal counsel, our management does not believe that any pending or threatened proceedings will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Properties

Our headquarters are located in Charlotte, North Carolina. We own no real property, and lease all space for our office locations throughout the United States. We believe that our offices are in good condition and adequate for our current needs. If necessary, we expect that suitable additional space will be available as required.

MANAGEMENT

Executive Officers and Directors

The following table presents information concerning the persons who will be our executive officers and directors upon the completion of this offering:


Name	Age		Position

M. Steven DeCarlo		48	President and Chief Executive Officer; Director
Scott M. Purviance		36	Chief Financial Officer, Vice President and Secretary
Samuel H. Fleet		45	President — Group Benefits Division
J. Scott Reynolds		42	President — Specialty Underwriting Division
Mark M. Smith		53	President — Property & Casualty Brokerage Division
David W. Dabbs		44	General Counsel
Kristin L. Downey		33	Director of Human Resources
Brian P. Golson		36	Director
Marc R. Rubin		33	Director
John C. Rutherford		57	Director

M. Steven DeCarlo has served as President and Chief Executive Officer of AmWINS since December 2000. Prior to joining AmWINS, Mr. DeCarlo held various management positions with Royal & SunAlliance USA, Inc. from 1988 to 2000, including Senior Vice President for Business Insurance (1998-2000) and Executive Vice President and Chief Financial Officer of Royal Specialty Underwriting Inc., Royal & SunAlliance’s excess and surplus division (1988-1998). He has served on the AmWINS board of directors since he joined AmWINS in December 2000.

Scott M. Purviance has been the Chief Financial Officer, Vice President and Secretary of AmWINS since July 2001. Previously, Mr. Purviance was Vice President of Finance for the Business Insurance Division of Royal & SunAlliance USA, Inc. (1999-2001) and was employed as an accountant by PricewaterhouseCoopers LLP (1992-1999).

Samuel H. Fleet has served as President of our Group Benefits division since April 2004. Mr. Fleet founded National Employee Benefit Companies, Inc. (NEBCO) and related companies and served as the principal executive officer of these companies until they were acquired by us in July 2000. Mr. Fleet has continued to serve as President of NEBCO since that time.

J. Scott Reynolds has served as President of our Specialty Underwriting division since April 2006. Mr. Reynolds formerly served as Chief Actuary of AmWINS from July 2002 to April 2006. Prior to joining AmWINS, Mr. Reynolds worked as Actuarial and Pricing Manager of the Business Insurance Division of Royal & SunAlliance USA, Inc. (1999-2002).

Mark M. Smith has served as President of our Property & Casualty Brokerage division since April 2005. Prior to that time, Mr. Smith served as the Chief Executive Officer and President of Stewart Smith Group from December 1999 to April 2005, when we acquired Stewart Smith Group. From 1990 to 1999, Mr. Smith served in various other executive positions with Stewart Smith Group and its affiliates.

David W. Dabbs has served as General Counsel of AmWINS since September 2006. Prior to joining AmWINS, Mr. Dabbs was engaged in the private practice of law for over 16 years. From 1997 to 2006, Mr. Dabbs was a partner in the firm of Robinson, Bradshaw & Hinson, P.A.

Kristin L. Downey has served as Director of Human Resources of AmWINS since December 2002. Prior to joining AmWINS, Ms. Downey was employed by PricewaterhouseCoopers LLP, where she spent five years in the Assurance and Business Advisory Services (ABAS) practice and two years as the Recruiting Manager for the Carolinas ABAS and Tax practice.

Brian P. Golson has served as a director of AmWINS since October 2005. Mr. Golson is a Partner at Parthenon Capital LLC. Prior to joining Parthenon Capital LLC in 2002, Mr. Golson was the Chief Financial Officer and Vice President of Operations at Everdream Corporation, a software company headquartered in Fremont, California.

Marc R. Rubin has served as a director of AmWINS since October 2005. Mr. Rubin is a Principal of Parthenon Capital LLC, which he joined in 2000. Prior to joining Parthenon Capital LLC, Mr. Rubin was a Principal at The Parthenon Group, a strategic advisory firm.

John C. Rutherford has served as a director of AmWINS since October 2005. Mr. Rutherford is a founder and Managing Partner of Parthenon Capital LLC and is co-founder and former Chairman of The Parthenon Group. Before founding The Parthenon Group in 1998, Mr. Rutherford was a director of Bain & Company.

Board of Directors

Our board of directors currently consists of four directors, each of whom has been appointed pursuant to the operating agreement of Holdings, which currently entitles Parthenon HoldCo to designate a majority of our directors. We expect to amend these provisions in connection with the consummation of this offering to provide that our board of directors will consist of such number of directors as determined by our board and elected by our stockholders in accordance with our bylaws.

None of our current directors is “independent” as defined under the rules of the NYSE. Under the phase-in provisions of the NYSE rules relating to the governance of companies such as AmWINS that are listing in conjunction with an initial public offering, we have a period of 12 months from the completion of this offering to comply with the rule that a majority of our directors be “independent” within the meaning of the NYSE rules. In addition, the phase-in rules require that our Compensation, Audit and Governance Committees include at least one “independent” director at the time of initial listing upon completion of this offering, that a majority of the members of these committees be independent within 90 days of initial listing and that all members of these committees be independent within 12 months of initial listing. We intend to restructure our board of directors and key committees to comply with these independence requirements as soon as possible, but in no event later than the NYSE phase-in deadlines.

Controlled Company

Upon the completion of this offering, because Parthenon HoldCo will own more than 50% of the voting power of AmWINS, we will be a “controlled company” within the meaning of the NYSE corporate governance standards. We do not currently intend to rely upon any of the “controlled company” exemptions from the NYSE corporate governance standards. See “Risk Factors — Risks Related to this Offering — Our principal stockholder may have interests that are different from yours and, therefore, make decisions that are adverse to your interests.”

Committees of the Board of Directors

Our board of directors will establish three committees: an Audit Committee, a Compensation Committee and a Governance Committee.

Audit Committee. The primary function of our Audit Committee will be to assist our board of directors in overseeing our accounting and financial reporting processes generally, the audits of our financial statements and our systems of internal controls regarding finance and accounting. Our Audit Committee’s responsibilities will include:


	•	selecting and overseeing our independent registered public accounting firm;

	•	reviewing the qualifications, performance and independence of our independent registered public accounting firm;


	•	approving all audit and non-audit services rendered by our independent registered public accounting firm;

	•	reviewing our annual and quarterly financial statements with our management and independent registered public accounting firm;

	•	reviewing the integrity and adequacy of our financial reporting processes;

	•	reviewing and resolving any disagreements between our management and our independent registered public accounting firm in connection with the preparation of our financial statements;

	•	establishing procedures for the confidential, anonymous submission by our employees of concerns or complaints regarding questionable accounting or auditing matters;

	•	reviewing and approving all related party transactions involving us and our directors and executive officers; and

	•	preparing a report that the SEC requires us to include in our annual proxy statements.

We will, within the time period required by the NYSE rules described above, appoint independent directors to our Audit Committee as required by the rules of the SEC and the listing standards of the NYSE, including the financial literacy requirements. Our board of directors will adopt a written charter of our Audit Committee, which will be posted on our website on or before the completion of this offering.

Compensation Committee. Our Compensation Committee’s primary function will be to assist our board of directors in determining compensation paid to our executive officers and directors. Its responsibilities will include:


	•	reviewing and recommending compensation plans in which our executive officers and directors participate;

	•	overseeing our executive compensation programs;

	•	approving the compensation paid to our chief executive officer and directors;

	•	reviewing and administering our equity-based compensation plans; and

	•	preparing the report that the SEC requires us to include in our annual proxy statement.

We will appoint independent directors, within the meaning of the NYSE listing standards, to serve on our Compensation Committee within the time period required by the NYSE. Our board of directors will adopt a written charter for our Compensation Committee, which will be posted on our website on or before the completion of this offering.

Governance Committee. Our Governance Committee will assist our board of directors regarding matters involving our corporate governance. Its responsibilities will include:


	•	identifying, evaluating and recommending candidates for appointment and reelection to our board of directors;

	•	evaluating the composition, size and governance of our board of directors;

	•	reviewing and recommending changes, as needed, to our corporate governance principles;

	•	conducting or overseeing periodic evaluations of the board of directors and management; and

	•	reviewing compliance with our code of ethics.

We will appoint independent directors to serve on our Governance Committee as required by the NYSE listing standards. Our board of directors will adopt a written charter for our Governance Committee, which will be posted on our website on or before the completion of the offering.

Compensation Committee Interlocks and Insider Participation

We will appoint directors to our Compensation Committee that have never been employed by us as an officer or employee. None of our executive officers has ever served as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our board of directors.

Compensation of Directors

In 2005 and 2006, we did not pay our directors any compensation for service as directors. We did, however, reimburse directors for out-of-pocket expenses they incurred in connection with their attendance at meetings of the board of directors and board committees. We have agreed in principle to amend our advisory services agreement with PCap, L.P., an affiliate of Parthenon Capital, such that PCap will receive a director services fee of $50,000 per quarter so long as a Parthenon-affiliated director serves on our board, subject to a maximum fee of $400,000. We have also agreed to reimburse PCap for certain expenses incurred by Parthenon-affiliated directors who serve on our board. See “Related Party Transactions — Parthenon Advisory Services Agreement.”

Executive Compensation

The following summary compensation table sets forth information concerning the cash and non-cash compensation during 2005 earned by, awarded to or paid to our chief executive officer and each of our four other most highly compensated executive officers during the year ended December 31, 2005. We refer to these officers as our “named executive officers” in other parts of this prospectus.

Summary Compensation Table

Long-Term

Compensation

2005 Annual Compensation

Awards

Other Annual

Restricted

Securities

Name and

Compensation

Stock

Underlying

All Other

Principal Position

Salary ($)

Bonus ($)

($)

Awards (#)

Options/SARs (#)

Compensation ($)

M. Steven DeCarlo

400,000

385,000

23,810⁽¹

⁾

11,961

⁽²⁾

President and Chief Executive Officer

Samuel H. Fleet

300,000

1,395,583

12,000⁽³

⁾

7,825

⁽²⁾

President of Group Benefits division

Mark M. Smith⁽⁴⁾

519,250

19,459⁽⁵

⁾

319,922⁽⁶

⁾

41,632⁽⁷

⁾

4,688

⁽²⁾

President of Property & Casualty Brokerage division

Scott M. Purviance

225,000

115,000

12,008⁽⁸

⁾

15,766

⁽²⁾

Vice President and Chief Financial Officer

Stephen J. Vaccaro, Jr.⁽⁹⁾

400,000

6,300

⁽²⁾

Former President of Specialty Underwriting division


(1)	This amount includes a $15,000 automobile allowance and $5,400 of country club membership dues.

(2)	For each of Mr. DeCarlo and Mr. Purviance, the number consists of a $6,300 matching contribution to each of their 401(k) accounts, $5,460 and $9,403, respectively, we paid for life and disability insurance and $201 and $63, respectively, paid as earnings under a suspended deferred compensation plan. For Mr. Fleet, this number consists of a $6,300 matching contribution to his 401(k) and $1,525 paid as earnings under a suspended deferred compensation plan. For Mr. Smith, this number consists of a $4,688 matching contribution to his 401(k) account. The number for Mr. Smith does not include a $1,000,000 transaction fee that was paid to Mr. Smith in connection with our 2005 acquisition of Stewart Smith Group. See “Related Party Transactions — Smith Transaction Fee.” For Mr. Vaccaro, this number consists of a $6,300 matching contribution to his 401(k) account.

(3)	This amount consists of a $6,000 automobile allowance and $6,000 of country club membership dues.

(4)	Mr. Smith’s employment began on April 13, 2005.


(5)	This amount includes $10,574 of country club membership dues and a $8,885 automobile allowance.

(6)	These are Class Z units in Holdings that we granted to Mr. Smith in April 2005, as described below. We estimate that the value of these units was $22,891 as of December 31, 2005.

(7)	These options are for common units in Holdings, as described below.

(8)	This amount includes $4,560 of country club membership dues and $7,448 for reimbursement of personal trip expenses.

(9)	Mr. Vaccaro’s employment terminated on April 15, 2006.

Holdings Equity Compensation Arrangements

Prior to this offering, all of our outstanding capital stock was held by Holdings. From time to time, Holdings has issued incentive equity awards to certain members of our management team and other employees, including the following:


	•	“Profits-only” interests issued by Holdings in March 2002 to M. Steven DeCarlo, our President and Chief Executive Officer, and Scott M. Purviance, our Vice President, Chief Financial Officer and Secretary. These interests are evidenced by Class Y units of Holdings, 656,000 of which are held by Mr. DeCarlo and 164,000 of which are held by Mr. Purviance. The Class Y units entitle Messrs. DeCarlo and Purviance to receive their respective pro rata shares of distributions made by Holdings in excess of $25 million. These units vested over the three-year period following the date of grant and were fully vested as of December 31, 2005.

	•	“Profits-only” interests issued by Holdings in April 2005 to Mark M. Smith, President of our Property & Casualty Brokerage division. These interests are evidenced by 319,922 Class Z units of Holdings and entitle Mr. Smith to receive a pro rata share of distributions made by Holdings in excess of approximately $151 million. In accordance with the terms of an exchange agreement between Holdings and Mr. Smith, these units vest over the five-year period following the date of grant, subject to immediate vesting in the event of a change in control of Holdings or AmWINS.

	•	Restricted units issued in the second quarter of 2006 by Holdings to certain non-executive officer employees of AmWINS. These units consist of common units of Holdings, which generally participate in all distributions from Holdings on a pro rata basis. These units vest in full on January 1, 2011.

	•	Performance-based “profits-only” interests that Holdings agreed to issue in connection with the Recapitalization, which were issued in the third quarter of 2006 to certain members of our management team, including certain of the named executive officers. These interests are evidenced by Class B units, Class C units, Class D units and Class E units of Holdings. These incentive units participate in distributions from Holdings on a pro rata basis if and to the extent that Parthenon HoldCo has received distributions from Holdings representing an annualized compounded internal rate of return on its investment in Holdings in excess of 10% (for Class B units), 20% (for Class C units), 30% (for Class D units) and 40% (for Class E units). In general, 20% of these units vested on October 27, 2006, and the remainder vest ratably over a four year period thereafter. Mr. DeCarlo received 137,500 of each class of these units, Mr. Purviance received 37,500 of each class of these units, and Mr. Fleet received 25,000 of each class of these units.

In our consolidated financial statements, we record compensation expense in accordance with SFAS No. 123(R) for the unit awards that were granted or vest on or after January 1, 2006.

In addition, in the second quarter of 2006, Holdings implemented a Unit Purchase Plan pursuant to which selected key employees who are “accredited investors,” as defined in Regulation D adopted under the Securities Act, were offered the opportunity to acquire common units in Holdings for $15.29 per unit. In accordance with the terms of the Unit Purchase Plan, employees who elected to participate in the Unit Purchase Plan received a loan from AmWINS for 50% of the purchase price. The full amount of interest and principal on this loan is payable in full in one installment on the fifth anniversary of the date these notes were

issued. All of our executive officers who purchased units under the Unit Purchase Plan have repaid in full all amounts outstanding under their notes. The note receivable has been recorded in prior periods against the total amount of equity recorded.

Immediately prior to the completion of this offering, the outstanding units of Holdings, including the units discussed above, were as follows:


Class of Unit	No. of Units Outstanding

Common Units		10,230,156
Class B Units		343,750
Class C Units		343,750
Class D Units		343,750
Class E Units		343,750
Class Y Units		820,000
Class Z Units		319,922

Total Units		12,745,078

In connection with this offering, Holdings will distribute approximately 89% of our outstanding shares of common stock to the holders of common units, Class Y units and Class Z units. The remaining outstanding shares of our common stock will continue to be held by Holdings pending the final determination of the amounts payable to the holders of Class B, Class C, Class D and Class E units.

The table below sets out information about option grants to named executive officers in 2005. In September 2006, Mr. Smith exercised his option to acquire 29,100 common units.

Options/SARs Grants in 2005

Percentage

Potential Realizable

Number of

of Total

Value at Assumed

Securities

Options/SARs

Annual Rates of Stock

Underlying

Granted to

Exercise or

Price Appreciation for

Options/SARs

Employees in

Base Price

Expiration

Options Term

Name

Granted(#)

Fiscal Year

($/Share)

Date

5% ($)

10% ($)

M. Steven DeCarlo

n/a

Samuel H. Fleet

n/a

Mark M. Smith

41,632

)

12.01

10/01/06

n/a

Scott M. Purviance

n/a

Stephen J. Vaccaro, Jr.

n/a


(1)	The options for common units we granted to Mr. Smith were the only options to purchase Holdings units that we granted in 2005. In 2005, we also granted 254,974 options to purchase AmWINS common stock. None of these options were granted to our named executive officers.

The next table provides information about the number and value of options for units in Holdings that our named executive officers held on December 31, 2005. Although we have issued options to purchase AmWINS common stock under our 2002 Stock Option plan, described below, none of our named executive officers held any such options at the end of 2005, or exercised options for AmWINS common stock or Holdings units in 2005.

Aggregated Options/SARs Exercises in 2005 and Year-End Options/SARs Values


	Number of Securities Underlying				Value of Unexercised
	Unexercised Options/SARs				In-the- Money Options/SARs at
	at Fiscal Year-End (#)				Fiscal Year-End ($)
	Exercisable		Unexercisable		Exercisable		Unexercisable

M. Steven DeCarlo		75,000 common units		0		0		0
Samuel H. Fleet		—		—		—		—
Mark M. Smith		41,632 common units		0	$	61,199		0

Scott M. Purviance		—		—		—		—
Stephen J. Vaccaro, Jr.		—		—		—		—

Equity Compensation Arrangements

2002 Stock Option Plan

In 2002, we adopted the American Wholesale Insurance Group, Inc. 2002 Stock Option Plan (2002 Stock Option Plan). The purpose of the plan is to allow eligible persons who provide services to us to acquire a proprietary interest in us as an incentive to continue their employment or service. Persons eligible to participate in this plan are our employees, non-employee members of our board of directors or the board of directors of any of our subsidiaries and consultants and other independent advisors who provide services to us. The plan permits us to grant options to purchase up to 762,582 shares of our common stock. Upon completion of this offering, we will suspend the 2002 Stock Option Plan, after which time no additional options will be granted under the plan. This action will not affect options that are currently outstanding under the 2002 Stock Option Plan. As of October 31, 2006, we had issued options to acquire an aggregate of 709,740 shares of our common stock under this plan at exercise prices ranging from $7.50 per share to $17.50 per share, with a weighted average exercise price of $12.69 per share. The named executive officers do not hold any of these options.

The 2002 Stock Option Plan permits us to grant incentive stock options, which are options that comply with the requirements of Section 422 of the Internal Revenue Code, and non-statutory options that do not meet the requirements of Section 422. We are permitted to grant incentive stock options only to our employees. We may grant non-statutory stock options to anyone who is eligible to participate in the plan. To date, all options granted under the plan have been non-statutory options.

Our board of directors currently administers the plan. The board of directors is authorized to determine who will receive options under the plan and the terms and conditions of option grants. The board also has the power to (1) accelerate the date upon which options become exercisable, including in connection with a transaction or series of transactions that results in a change in control of AmWINS; (2) interpret the plan; (3) make all determinations under the plan; and (4) amend the plan.

The maximum term of the options under the 2002 Stock Option Plan is 10 years. Upon exercise of an option, the exercise price must be paid in cash, by certified, bank or cashier’s check or in such other manner as permitted by the board of directors, which may include the surrender of shares of common stock or other unexercised options held by the optionee.

Employment Agreements

M. Steven DeCarlo

In September 2005, we entered into an employment agreement with Mr. DeCarlo that provides for his employment as our President and Chief Executive Officer. Either AmWINS or Mr. DeCarlo can terminate his employment for any reason on 30 days’ written notice. For the calendar year 2006, Mr. DeCarlo’s base salary is $720,000. Under the employment agreement, Mr. DeCarlo also receives certain perquisites, which are included in the Summary Compensation Table. In addition, Mr. DeCarlo is eligible to receive an annual bonus in the amount of $280,000 so long as at the time of payment, AmWINS is in compliance with the financial covenants in its senior credit facilities and in any other material loan or debt financing agreement, and the payment would not result in a default under such loan agreements. Mr. DeCarlo also is entitled to receive all employee benefits generally available to executives of AmWINS. The agreement requires Mr. DeCarlo to comply with restrictive covenants relating to non-competition, non-solicitation, no-hire and confidentiality for specified periods following termination of his employment.

Upon any termination of employment, Mr. DeCarlo is entitled to receive all accrued but unpaid base salary and benefits, any accrued but unused vacation pay, any other amounts or benefits owed under employee benefit plans and any unreimbursed business expenses. In addition, if we terminate Mr. DeCarlo’s employment without “cause” (as defined in the agreement) or if he terminates his employment for “good reason” (as defined in the agreement), he is entitled to:

(1) continued payment of his base salary (including club dues and automobile allowance) for a period of 12 months following the date of termination;

(2) to the extent permitted by our plans, comparable health insurance and benefits for him and his dependents for a period of two years from the date of termination (at active employee rates); and

(3) on the date the annual bonus would be paid, a pro rata portion of the bonus through the termination date.

If employment terminates as a result of Mr. DeCarlo’s death, in addition to the benefits described in this paragraph, his beneficiary will also receive the proceeds of a life insurance policy with an aggregate benefit of not less than $3,000,000. If Mr. DeCarlo’s employment terminates as a result of his “disability” (as defined in the agreement), he will be entitled to receive, in addition to the benefits described above, the proceeds of an insurance policy with an aggregate benefit of $1,000,000.

Pursuant to the employment agreement, in 2006 Holdings awarded Mr. DeCarlo 137,500 Class B units of Holdings, 137,500 Class C units of Holdings, 137,500 Class D units and 137,500 Class E units. Twenty percent of the units vested on October 27, 2006, and the remaining units are vesting monthly on a pro rata basis through October 27, 2010. In the event of Mr. DeCarlo’s death, his estate would receive an additional six months of vesting.

Scott M. Purviance

We entered into an employment agreement with Mr. Purviance in September 2005 to provide for his employment as our Chief Financial Officer. Either AmWINS or Mr. Purviance can terminate his employment for any reason on 30 days’ written notice. For calendar year 2006, Mr. Purviance’s base salary is $300,000. Mr. Purviance also is entitled to country club membership dues, up to a maximum monthly amount of $500. In addition, Mr. Purviance is eligible to receive an annual incentive bonus in an amount of up to $110,000, as determined by our board of directors, and after this offering, by the Compensation Committee. Mr. Purviance also is entitled to receive all employee benefits generally available to executives of AmWINS. The employment agreement requires Mr. Purviance to comply with restrictive covenants relating to non-competition, non-solicitation, no-hire and confidentiality for specified periods following termination of his employment.

Upon any termination of employment, Mr. Purviance is entitled to receive all accrued but unpaid base salary and benefits, any accrued but unused vacation pay, any other amounts or benefits owed under employee

benefit plans and any unreimbursed business expenses. In addition, if we terminate Mr. Purviance’s employment without “cause” (as defined in the agreement) or as a result of his death or disability, or if he terminates his employment for “good reason” (as defined in the agreement), he would be entitled to continued payment of his base salary (including club dues) for a period of 12 months following the date of termination and, to the extent permitted by our plans, comparable health insurance and benefits for him and his dependents for that one-year period (at active employee rates).

Pursuant to the employment agreement, in 2006 Holdings awarded Mr. Purviance 37,500 Class B units, 37,500 Class C units, 37,500 Class D units and 37,500 Class E units. Twenty percent of the units vested on October 27, 2006, and the remaining units are vesting monthly on a pro rata basis through October 27, 2010.

Samuel H. Fleet

In May 2003, our subsidiary, NEBCO, entered into an employment agreement with Mr. Fleet providing for his employment as NEBCO’s President. The original term of Mr. Fleet’s employment agreement expired on June 30, 2006. Pursuant to the renewal terms of the agreement, the term was extended to June 30, 2007, and the agreement will continue to renew for successive one-year renewal terms unless either we or Mr. Fleet provides notice of non-renewal at least 90 days prior to the expiration date. Mr. Fleet’s base salary for calendar year 2006 is $300,000. Mr. Fleet’s salary will increase each year as mutually determined by Mr. Fleet and NEBCO, subject to a minimum annual increase of 5% in base salary. Under the employment agreement, Mr. Fleet also is entitled to additional payments for country club membership dues, up to a maximum monthly amount of $500, and actual expenses incurred in connection with the ownership or lease and maintenance of his automobile, up to a monthly maximum of $500. Mr. Fleet also is entitled to participate in any other employee benefit made available during the term of his employment to persons performing similar services for NEBCO and its affiliates and in equity plans of NEBCO or AmWINS in which similarly situated executive officers are eligible to participate. Mr. Fleet also participates in NEBCO’s Management Bonus Plan, under which he is eligible for an annual cash bonus. Under the Management Bonus Plan, an annual bonus pool is established based on exceeding certain financial targets. These targets are currently specified levels of EBITDA margin (as defined in the agreement) and growth in net revenues (as defined in the agreement). Mr. Fleet is eligible for one-third of the bonus pool, as well as the remainder after other participants are paid their discretionary bonuses. The agreement requires Mr. Fleet to abide by restrictive covenants relating to non-competition, non-solicitation and confidentiality for specified periods following termination of his employment.

If AmWINS consummates a “change of control” (as defined in the agreement) transaction during the term of Mr. Fleet’s employment and either the agreement is not assumed by the acquiring entity, or during the one-year period following the change of control, Mr. Fleet’s employment is terminated other than for “cause” (as defined in the agreement) or by reason of death or permanent disability, or Mr. Fleet terminates his employment for “good reason” (as defined in the agreement), then Mr. Fleet is entitled to a lump-sum payment equal to his then-current base salary for one year.

NEBCO can terminate Mr. Fleet’s employment at any time and for any reason, with or without cause. If Mr. Fleet resigns without “good reason” or NEBCO terminates his employment for cause or as a result of his death or permanent disability, Mr. Fleet or his estate, as applicable, is entitled to his base salary received through the date of termination. In the event of a termination as a result of Mr. Fleet’s death or disability, NEBCO must also pay a pro rata portion of his bonus for the year.

If NEBCO terminates Mr. Fleet’s employment without cause or Mr. Fleet terminates his employment for good reason, Mr. Fleet will be entitled to his base salary for a period of one year after the date of termination. In addition, Mr. Fleet will receive his pro rata bonus through the date of termination.

Mark M. Smith

We entered into an employment agreement with Mr. Smith in April 2005 in connection with our acquisition of Stewart Smith Group. Under the employment agreement, Mr. Smith serves as President of our Property & Casualty Brokerage division..

Mr. Smith’s employment agreement will expire on April 13, 2010. Upon expiration of the initial term, the employment agreement will automatically renew for successive one-year renewal terms unless either we or Mr. Smith provides notice of non-renewal at least 180 days prior to the expiration date. Mr. Smith’s base salary for calendar year 2006 is $750,000. Under the employment agreement, Mr. Smith is also entitled to additional payments for country club membership dues, up to a maximum monthly amount of $1,500, and actual expenses incurred in connection with the ownership or lease and maintenance of his automobile, up to a monthly maximum of $1,500. In addition, Mr. Smith is eligible for an annual cash bonus of up to 200% of his base salary, based on the satisfaction of certain predetermined financial goals for each year, as determined by our board of directors. Mr. Smith is also entitled to participate in any of our other employee benefit and incentive compensation plans made available to senior executives during the term of his employment. Under the agreement, Mr. Smith received an option to purchase up to 41,632 of the common units of Holdings at a purchase price of $12.01 per unit. In September 2006, Mr. Smith exercised his option in part to acquire 29,100 units of Holdings, and the remainder of his option expired on October 1, 2006. Mr. Smith also received Class Z units in Holdings, which entitle him to his proportionate share of the future appreciation in the value of Holdings over and above approximately $151 million. The Class Z units vest on a monthly basis over a period of 60 months, beginning on May 1, 2005, and would fully vest upon a change of control transaction. The agreement requires Mr. Smith to abide by restrictive covenants relating to non-competition, non-solicitation and confidentiality for specified periods following termination of his employment.

If we terminate Mr. Smith’s employment as a result of his death or “permanent disability” (as defined in the agreement), we are required to pay him or his estate, as applicable, his base salary and bonus accrued through the date of termination. If we terminate Mr. Smith’s employment for “cause” (as defined in the agreement), or if he terminates his employment without “good reason” (as defined in the agreement), we are required to pay his base salary due through the date of termination, but all unpaid bonus will be forfeited.

If Mr. Smith’s employment is terminated by us without cause or if he resigns for good reason, then, in addition to his base salary through the date of termination, we must pay him, within 30 days after the bonus for the year is calculated, a lump sum cash payment equal to the pro rata portion of the bonus earned through the date of termination. In addition, we would be required to continue to provide Mr. Smith with comparable health insurance and benefits until the earlier of: (1) the date he obtains other employment that provides reasonable health insurance coverage or (2) April 13, 2008. If Mr. Smith’s employment is terminated between April 13, 2006 and April 13, 2008, he would receive an amount equal to 133% of the greater of (1) the base salary he would have received if he remained employed from the date of termination to April 13, 2008 or (2) one year of base salary. If Mr. Smith’s employment is terminated after April 13, 2008, he would receive an amount equal to 133% of his base salary as of the date of termination.

Section 162(m)

Section 162(m) of the Internal Revenue Code limits publicly held companies to an annual deduction for federal income tax purposes of $1.0 million for compensation paid to their chief executive officer and the four other highest compensated executive officers determined at the end of each year. Under a special rule that applies to corporations that become public through an initial public offering, this limitation in Section 162(m) generally will not apply to compensation that is paid under the 2002 Stock Option Plan and any other compensation plan described in this “Management” section before the first meeting of our stockholders in 2010 at which directors will be elected.

Performance-based compensation that meets certain requirements, including stockholder approval, is excluded from this limitation under Section 162(m). In general, compensation qualifies as performance-based compensation under Section 162(m) if (1) it is conditioned on the achievement of one or more pre-established, objective performance goals, (2) such goal or goals are established by a committee of the board of directors

consisting solely of two or more independent directors and (3) the material terms of the performance goals under which the compensation is payable are disclosed to, and subsequently approved by, the corporation’s stockholders prior to payment. Although awards granted under the plans described above are temporarily exempt from the limitations of Section 162(m), the Compensation Committee will consider the future impact of Section 162(m), along with other relevant considerations, in designing and administering our compensation plans. However, compensation actions may not always qualify for tax deductibility under Section 162(m) or other favorable tax treatment to us.

Limitation on Liability and Indemnification Matters

Our amended and restated certificate of incorporation will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:


	•	any breach of their duty of loyalty to our company or our stockholders;

	•	acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

	•	unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and

	•	any transaction from which the director derived an improper personal benefit.

Our bylaws provide that we are required to indemnify our directors and officers and may indemnify our employees and other agents to the fullest extent permitted by Delaware law. Our bylaws also provide that we must advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity, regardless of whether our bylaws would otherwise permit indemnification. We will enter into agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. These agreements will provide for indemnification for related expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We also maintain directors’ and officers’ liability insurance on behalf of any person who is or was a director, officer, employee or agent of our company or was serving at our request as a director, officer, employee or agent of another corporation or other entity.

RELATED PARTY TRANSACTIONS

After this offering, Parthenon HoldCo, a company formed by Parthenon Capital, will beneficially own approximately % of our outstanding voting common stock (or % if the underwriters exercise their over-allotment option in full). Consequently, following the completion of this offering, Parthenon HoldCo will continue to be our controlling stockholder.

Our related party transactions with Parthenon Capital are as follows:

The Recapitalization

On October 27, 2005 Parthenon HoldCo acquired a controlling interest in Holdings. Equity holders of Holdings who sold their interest to Parthenon HoldCo in the Recapitalization included funds managed by Pegasus Investors, L.P. (Pegasus), which formerly owned a majority of the outstanding equity of Holdings, and Ernest F. Telford, our former Chairman. In connection with the Recapitalization, Holdings redeemed a portion of its outstanding equity in exchange for shares of our common stock, and we then redeemed these shares for approximately $32.6 million, of which $23.2 million was paid to Pegasus and $3.2 million was paid to Mr. Telford. In addition, Parthenon HoldCo acquired an additional equity interest directly in Holdings for approximately $11.6 million, and Holdings used that cash to acquire additional equity in AmWINS. For more information with regard to the Recapitalization, see “The Recapitalization.”

Parthenon Advisory Services Agreement

In connection with the Recapitalization, we entered into an advisory services agreement with PCap, L.P., an affiliate of Parthenon Capital. Under this agreement, PCap received a transaction fee of $2,407,500 plus fees and expenses incurred in connection with the closing of the Recapitalization. PCap is also entitled to an annual management fee of approximately $800,000 and transaction fees in connection with each acquisition, divestiture, financing, refinancing, merger, recapitalization or other similar transaction completed by AmWINS or its affiliates in an amount equal to 0.75% of the aggregate gross value of the transaction. To date, we have not been required to pay PCap any of these additional transaction fees. We have agreed in principle to amend the advisory services agreement with PCap such that PCap will receive a fee of the lesser of $2,000,000 or 2.0% of the aggregate gross proceeds to AmWINS from this offering. Approximately 60% of the fee is payable upon our completion of this offering, with the remainder payable at the end of 2007. We have also agreed in principle to pay PCap a director services fee of $50,000 per quarter for so long as a Parthenon-affiliated director serves on our board, subject to a maximum fee of $400,000. We are required to reimburse PCap for its out-of-pocket expenses in connection with the provision of services under the advisory services agreement. The agreement, as proposed to be amended, will terminate as a result of this offering, subject to our obligation to pay the amounts payable prior to termination and the director services fees described above.

Parthenon Registration Agreement

Pursuant to a Registration Agreement dated as of April 2006, we granted certain registration rights to Holdings and Parthenon HoldCo. Under this agreement, the holders of a majority of the shares owned by Holdings and Parthenon HoldCo may require us to effect up to four underwritten registrations of not less than $10.0 million in value on a Form S-1 or similar long-form registration statement, and an unlimited number of short-form registrations of not less than $1.0 million in value of their shares on Form S-3 or similar form. Subject to certain limitations, we are required to pay the expenses of these registrations, excluding underwriting discounts and commissions of the selling stockholders. We also have granted Holdings and Parthenon HoldCo “piggyback rights” to include their shares in certain registrations we initiate. The registration rights are subject to customary limitations, which are described in “Shares Eligible for Future Sale — Registration Agreement.”

Related party transactions not involving Parthenon Capital or its affiliates are as follows:

Fleet Segregated Portfolio, LLC

Our subsidiary, NEBCO, distributes a PDP issued by an unaffiliated insurer, which is reinsured by Fleet Segregated Portfolio, LLC (Fleet LLC), a company owned by Samuel H. Fleet. On April 1, 2004, Fleet

LLC entered into a profit-sharing agreement with NEBCO whereby Fleet LLC pays 80% of its underwriting profits and investment income to NEBCO. Fleet LLC retains the remaining 20% of profits and investment income. In 2004, we received approximately $200,000 from this profit-sharing arrangement, and Fleet LLC received approximately $50,000. For 2005, we received approximately $625,000, and Fleet LLC received approximately $156,000. In 2006, we have accrued $2,200,000, which is the amount that we have estimated will be payable for the first six months of 2006. We estimate that Fleet LLC will be entitled to receive payments of approximately $550,000 for the first six months of 2006. We are not responsible for any losses arising from the operation of Fleet LLC’s business.

DeCarlo Loan

In November 2002, we loaned M. Steven DeCarlo approximately $205,000 to purchase common units of Holdings held by another member. The loan had an interest rate of 6% and a five-year term. Pursuant to the terms of Mr. DeCarlo’s employment agreement, all amounts due under this loan (approximately $254,000) were forgiven in 2006.

Unit Purchase Plan Loans

In the second quarter of 2006, Holdings implemented a Unit Purchase Plan pursuant to which selected key employees who are “accredited investors,” as defined in Regulation D adopted under the Securities Act, were offered the opportunity to acquire common units in Holdings for $15.29 per unit. In accordance with the terms of the Unit Purchase Plan, employees who elected to participate in the Unit Purchase Plan received a loan from AmWINS for 50% of the purchase price. The full amount of interest and principal on this loan is payable in full in one installment on the fifth anniversary of the date these notes were issued. Of our executive officers, Messrs. Fleet, Purviance, Smith and Reynolds and Ms. Downey elected to participate in the Unit Purchase Plan and acquired 13,080, 3,270, 6,540, 6,540 and 3,270 common units, respectively, under the plan. In connection with these purchases, Messrs. Fleet, Purviance, Smith and Reynolds and Ms. Downey received loans in the amounts of $100,000, $25,000, $50,000, $50,000 and $25,000, respectively. These loans have been repaid in connection with this offering.

Transactions with Holdings

During 2004, 2005 and 2006, we have, on several occasions, issued common stock of AmWINS to Holdings. In 2004, we issued 1,064,717 shares of our common stock to Holdings for aggregate consideration of approximately $12,872,431. In 2005, we issued 1,111,143 shares of our common stock to Holdings for aggregate consideration of $16,212,159.61. In 2006, we issued 182,949 shares of our common stock to Holdings for aggregate consideration of approximately $2,805,340. In addition, on July 28, 2006 and September 29, 2006, we issued to Holdings warrants to purchase up to an aggregate of 1,375,000 shares of our common stock at a price of $15.50 per share. For more information regarding the terms of these warrants, see “Description of Capital Stock — Warrants.”

Smith Transaction Fee

In connection with our April 2005 acquisition of Stewart Smith Group, we paid Mark M. Smith a one-time transaction fee of $1,000,000, which was recorded as a transaction cost of the acquisition.

Sale of Assets of Specialty Underwriting

On August 1, 2006, we entered into an agreement to sell certain assets of our Specialty Underwriting division to Stephen J. Vaccaro, Jr., a former executive officer of AmWINS. Pursuant to the agreement, a company controlled by Mr. Vaccaro agreed to acquire these assets for total consideration of approximately $3.6 million. In connection with the transaction, Holdings also has agreed to redeem 49,615 common units held by Mr. Vaccaro for approximately $668,000. We expect the transaction to be completed in the fourth quarter of 2006.

PRINCIPAL STOCKHOLDERS

The following table presents information as of October 31, 2006 about the beneficial ownership of our common stock by:


	•	each person who we know beneficially owns more than 5% of our shares;

	•	each of our directors;

	•	each of our named executive officers; and

	•	all of our executive officers and directors as a group.

Except as noted below, we believe, based on the information furnished to us, that all persons listed in the table below have sole voting and investment power with respect to their shares. Beneficial ownership is determined in accordance with the rules of the SEC.

All of our outstanding shares of common stock currently are owned by Holdings. In connection with this offering, Holdings will distribute approximately 89% of our outstanding shares of common stock to its members in accordance with the provisions of its operating agreement. We intend to consummate the distribution immediately prior to the completion of this offering. Information in the table below gives effect to the distribution by Holdings to its members and has been based on an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus).

The percentage of beneficial ownership of our common stock before this offering is based on 11,887,406 shares of our common stock outstanding as of October 31, 2006. For purposes of the table below, we have assumed that shares of common stock will be outstanding upon completion of this offering and no exercise of the underwriters’ over-allotment option.

Name and Address of

Shares Beneficially Owned Before Offering

Shares Beneficially Owned After Offering

Beneficial Owner

Number

Percentage

Number

Percentage

AmWINS Holdings, LLC⁽¹⁾

M. Steven DeCarlo⁽²⁾

Samuel H. Fleet

Mark M. Smith

Scott M. Purviance

Stephen J. Vaccaro

Brian P. Golson⁽³⁾

Marc R. Rubin⁽³⁾

John C. Rutherford⁽³⁾

Executive officers and directors as a group
(10 persons)⁽³⁾


*		Indicates less than 1%.

⁽¹⁾		The address of AmWINS Holdings, LLC is c/o Parthenon Capital, 75 State Street, 26th Floor, Boston, MA 02109. AmWINS Holdings, LLC is a Delaware company formed by Parthenon Capital and its investors and is controlled by investment funds affiliated with Parthenon Capital.

⁽²⁾		Mr. DeCarlo’s address is 4064 Colony Road, Suite 450, Charlotte, NC 28211.

⁽³⁾		Excludes shares owned by AmWINS Holdings, LLC, of which Messrs. Golson, Rubin and Rutherford are officers and Messrs. Golson and Rutherford are managers.

DESCRIPTION OF CAPITAL STOCK

Upon completion of this offering, our authorized capital stock will consist of:


	•	shares of common stock, par value $0.01 per share; and

	•	shares of preferred stock, par value $ per share.

At October 31, 2006, we had outstanding 11,887,406 shares of common stock and no shares of preferred stock. As of October 31, 2006, there were outstanding options to acquire 709,740 shares of our common stock at a weighted average exercise price of $12.69 per share. We also are permitted, and in some cases required, to issue additional shares of our common stock under our agreements to pay additional contingent purchase price in connection with certain business acquisitions. For more information about these agreements, refer to the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

The description below summarizes the material rights and terms of our capital stock after giving effect to the amendment and restatement of our certificate of incorporation and bylaws, which will occur prior to the completion of this offering. This summary is not complete. For more detailed information, see the form of our amended and restated certificate of incorporation and bylaws, copies of which will be filed as exhibits to the registration statement of which this prospectus is a part.

Common Stock

Each holder of our common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Except as required by law and by the terms of any series of preferred stock designated by the board of directors pursuant to the amended and restated certificate of incorporation, holders of our common stock have the exclusive right to vote for the election of directors and for all other purposes. Holders of common stock vote together as a single class. Holders of our common stock do not have cumulative voting rights in the election of directors or any other matter.

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payments to creditors and after satisfaction of the liquidation preference, if any, of the holders of any preferred stock then outstanding. Subject to preferences that may apply to any then outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any, as the board of directors may declare from time to time. We do not currently anticipate paying cash dividends.

Holders of common stock have no preemptive or redemption rights and will not be subject to further calls or assessments by us. All of the shares of common stock to be issued and sold in this offering will be validly issued, fully paid and non-assessable.

The rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock that we designate and issue in the future.

Preferred Stock

Our board of directors has the authority, without further action by our stockholders, to issue shares of our authorized preferred stock from time to time in one or more series. The board of directors also has the authority to prescribe for each series of preferred stock it establishes the number of shares in that series, the number of votes, if any, to which the shares in that series are entitled, the consideration for the shares in that series, and the designations, powers, preferences and other rights, qualifications, limitations or restrictions of the shares in that series. It is not possible to determine the actual effects of the issuance of any shares of preferred stock on the rights of holders of common stock until the board of directors determines the specific

rights attached to that preferred stock. However, the effects of issuing preferred stock could include one or more of the following:


	•	restricting dividends on the common stock;

	•	diluting the voting power of the common stock;

	•	impairing the liquidation rights of the common stock; or

	•	delaying or preventing a change of control of us.

We have no current plans to issue any shares of preferred stock.

Warrants

In connection with the issuance by Holdings of Class B, Class C, Class D and Class E units of Holdings to our employees, we issued to Holdings warrants to acquire an aggregate of 1,375,000 shares of our common stock. These warrants generally are exercisable at $15.50 per share, and become exercisable to the extent that an equal number of Class B, Class C, Class D or Class E units vest and become entitled to receive distributions from Holdings. In general, the Class B, Class C, Class D and Class E units vest over a five year period, generally commencing October 27, 2005, and are entitled to participate in distributions from Holdings on a pro rata basis if and to the extent that Parthenon HoldCo has received distributions from Holdings representing an annualized compounded internal rate of return on its investment in Holdings in excess of 10% (for Class B units), 20% (for Class C units), 30% (for Class D units) and 40% (for Class E units). If Parthenon HoldCo sold all of its shares of our common stock at the assumed initial public offering price (the mid-point of the price range set forth on the cover page of this prospectus), and all of these units vest, the warrant would be fully exercisable.

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws and Delaware Law

The following is a summary of provisions of our amended and restated certificate of incorporation and bylaws that may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that you might consider to be in your best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.

Authorized but Unissued Shares of Preferred Stock and Common Stock

The ability to issue authorized but unissued shares of preferred stock and to establish the relative powers, preferences and other rights of each series of preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control of our company or removal of our incumbent directors or management.

Our board of directors also may approve the issuance of authorized but unissued shares of our common stock without further action by our stockholders, unless such action is required in a particular case by applicable laws or regulations or by the NYSE or any other stock exchange upon which our common stock may then be listed. Our stockholders do not have the preemptive right to purchase or subscribe to any additional shares of common stock that we may issue. Authorized but unissued shares may be used for a variety of corporate purposes, including future public or private offerings to raise additional capital or to facilitate acquisitions of other businesses. One of the effects of the existence of authorized but unissued shares may be to enable our board of directors to issue shares to persons friendly to our management, which could render more difficult or discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.

Advance Notification of Stockholder Nominations and Proposals

Our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of candidates for election to the board of

directors, other than nominations made by us. In most circumstances, a stockholder must provide notice of any proposed business or director nominations at least 120 days before the anniversary date of the proxy statement for the immediately preceding annual meeting. The notice must also include descriptions of certain matters as set forth in our bylaws. Although our bylaws do not give the board of directors the power to approve or disapprove stockholder nominations or candidates or proposals regarding other business to be conducted at an annual or special meeting, our bylaws may have the effect of precluding certain actions at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company.

Inability of Stockholders to Act by Written Consent; Special Meetings

Our amended and restated certificate of incorporation provides that our stockholders may not act by written consent in lieu of a meeting and that stockholder action can only be taken at an annual or special meeting of stockholders. Our amended and restated certificate of incorporation further provides that special meetings of stockholders may be called only by a majority of our board of directors or our president. These provisions may lengthen the amount of time required to take stockholder actions. As a result, a stockholder or group of stockholders that controls a majority of our common stock would not be able to amend our bylaws or remove directors except at an annual stockholders’ meeting.

Classified Board of Directors and Related Provisions

Our amended and restated certificate of incorporation provides that our board of directors must be divided into three classes of directors (each class containing approximately one-third of the total number of directors) serving staggered three-year terms. As a result, approximately one-third of our board of directors will be elected each year. This classified board provision will prevent a third party who acquires control of a majority of our outstanding voting stock from obtaining control of our board of directors until the second annual stockholder meeting following the date the acquiror obtains the controlling interest. The number of directors constituting our board of directors is determined from time to time by our board of directors. Our amended and restated certificate of incorporation also provides that directors may be removed only for “cause” and by the affirmative vote of the holders of a majority of all outstanding voting stock entitled to vote. This provision, in conjunction with the provisions of our amended and restated certificate of incorporation authorizing our board of directors to fill vacancies on the board, will prevent stockholders from removing incumbent directors without cause and filling the resulting vacancies with their own nominees.

Voting Requirements on Amending our Amended and Restated Certificate of Incorporation or Bylaws

Our amended and restated certificate of incorporation and our bylaws provide that amendments to certain provisions of our bylaws, including those related to stockholder proposals and calling special meetings of stockholders, must be approved by both our board of directors and by the vote, at a regular or special stockholders’ meeting, of the holders of at least two-thirds of the votes entitled to be cast by the holders of all of our capital stock then entitled to vote. All other amendments to our bylaws require either: (i) approval by a majority of our entire board of directors (without stockholder consent) or (ii) the vote, at a regular or special stockholders’ meeting, of the holders of at least two-thirds of the votes entitled to be cast by the holders of all of our capital stock then entitled to vote. In addition, our amended and restated certificate of incorporation provides that amendments to certain provisions of our certificate of incorporation, including those relating to the classified board, removal of directors, calling of special meetings and no stockholder action by written consent, must be approved by our board of directors and by the vote, at a regular or special stockholders’ meeting, of the holders of at least two-thirds of the votes entitled to be cast by the holders of all of our capital stock then entitled to vote (in addition to the approval of our board of directors).

Delaware Business Combination Statute

We are organized under Delaware law. Section 203 of the Delaware General Corporation Law prohibits a publicly held corporation from engaging in a “business combination” with an “interested stockholder” for three years after the stockholder becomes an interested stockholder, unless the corporation’s

board of directors and stockholders approve the business combination in a prescribed manner. An “interested stockholder” is a person who directly or indirectly owns 15% or more of the corporation’s outstanding voting stock. A “business combination” includes a merger, asset sale or other transaction that results in a financial benefit to the interested stockholder. Section 203 does not prohibit these business combinations if:


	•	before the stockholder becomes an interested stockholder, the corporation’s board approves either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

	•	after the transaction that results in the stockholder becoming an interested stockholder, the interested stockholder owns at least 85% of the corporation’s outstanding voting stock (excluding voting stock held by directors who are also officers and voting stock held in employee stock plans if participants do not have the right to determine whether their plan stock will be tendered in a tender or exchange offer); or

	•	the corporation’s board approves the business combination and the holders of at least two-thirds of the corporation’s outstanding voting stock, excluding voting stock held by the interested stockholder, authorize the business combination.

Because we were not subject to Section 203 prior to the offering, none of our current stockholders would as of the time of the offering be considered an interested stockholder.

Limitations on Director Liability

Section 102(b)(7) of the Delaware General Corporation Law provides that a Delaware corporation may eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock), or (iv) for any transaction from which the director derived an improper personal benefit. Our amended and restated certificate of incorporation will include the provisions permitted by Section 102(b)(7) of the Delaware General Corporation Law.

Under the Delaware General Corporation Law, we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was our director, officer, employee or agent, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Transfer Agent and Registrar

The transfer agent and registrar of our common stock is . Its address is , , , and its telephone number at this location is ( ) - .

Listing

We intend to apply to have our common stock approved for listing on the NYSE under the symbol “AGI.”

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for our common stock. We cannot predict the effect, if any, that sales of shares or the availability of shares for sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of our common stock in the public market, or a perception that such sales may occur, could adversely affect prevailing market prices of our common stock.

When this offering is completed, we will have a total of shares of our common stock outstanding, assuming no exercise of outstanding options or warrants ( shares if the underwriters exercise the over-allotment option in full). All of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless such shares are acquired by our “affiliates” as that term is defined in Rule 144 under the Securities Act. All remaining shares of common stock held by existing stockholders are “restricted securities” as that term is defined in Rule 144. Shares acquired by our affiliates in this offering and restricted securities may be sold in the public market only if registered or sold in accordance with Rule 144 or Rule 701 under the Securities Act.

All of the restricted shares described above will be subject to the 180-day underwriters’ lock-up described below under “— Restrictive Agreements” and “Underwriting.”

In addition, immediately following this offering, options to purchase shares of our common stock and warrants to purchase 1,375,000 shares will be outstanding. Except as described below regarding the registration of common stock issuable upon the exercise of options granted under our stock option plans, these option shares and warrant shares will also be “restricted securities” as described above.

We may become obligated to issue an indeterminate number of additional shares of our common stock pursuant to earnout provisions entered into in connection with certain acquisitions we have made, depending on the extent to which the acquired businesses meet or exceed specified performance goals. Because our obligations under certain of these earnout provisions are not capped by any maximum level of performance, it is not possible to estimate the maximum number of shares that we would be required to issue pursuant to these obligations. Any shares so issued would also be “restricted securities.” For further information regarding these agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commitments and Contingencies — Contingent Purchase Price for Acquisitions.”

Restrictive Agreements

All of our executive officers, directors and existing stockholders will sign lock-up agreements with the underwriters under which they will agree, subject to some exceptions, not to directly or indirectly transfer or dispose of any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock for a period of 180 days after the date of this prospectus except with the prior written consent of Merrill Lynch, on behalf of the underwriters.

In addition, all of our officers and employees who are our existing stockholders have entered into lock-up agreements under which they have agreed not to directly or indirectly make any public sales of our common stock, or to enter into any swap, hedge or other arrangement that transfers in whole or in part the stockholder’s economic interest in our common stock, for a period of one year following the consummation of this offering, without our prior written consent, the consent of Holdings and, for so long as Parthenon HoldCo and its affiliates collectively own at least 35% of the outstanding equity interests in Holdings, Parthenon HoldCo.

As shares held by our executive officers, directors and existing stockholders become available for sale and are sold into the market, the market price of our common stock could decline. After a restricted person’s holding of common stock has been released from the restrictions on sale described above, they will be available for sale to the public subject to satisfaction of the requirements of Rule 144 or Rule 701, which are described below.

Rule 144

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this offering, a person who is deemed to have beneficially owned shares of our common stock for at least one year will be entitled to sell within any three-month period a number of shares that does not exceed the greater of:


	•	1% of the number of shares of our common stock then outstanding (or approximately shares immediately after this offering, assuming no exercise of the underwriters’ over-allotment option and no exercise of outstanding options or warrants); or

	•	the average weekly trading volume of the common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

Sales under Rule 144 are also subject to restrictions on the manner of sale of the common stock, notice requirements and the availability of current public information about us.

Under Rule 144(k), a person who is not deemed to have been an “affiliate” of ours during the three months prior to a proposed sale, and who is deemed to have beneficially owned the shares proposed to be sold for at least two years, generally including the holding period of any prior owner other than an “affiliate,” is entitled to sell those shares without complying with the volume, manner of sale, notice and public information limitations of Rule 144.

Rule 701

In general, under Rule 701 as currently in effect, any of our employees, consultants or advisors who purchased shares from us in connection with a compensatory stock or option plan or other written agreement in a transaction that was completed in reliance on Rule 701 and complied with the requirements of Rule 701 is eligible to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with certain restrictions, including the holding period, contained in Rule 144.

Stock Options

Following the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act covering shares of common stock reserved for issuance under our stock option plans. The Form S-8 will become effective automatically upon filing. As of October 31, 2006, options to purchase 709,740 shares of common stock were issued and outstanding, 294,861 of which have vested. Accordingly, subject to vesting provisions and Rule 144 volume limitations applicable to our affiliates, shares registered under the Form S-8 will be available for sale in the open market after the applicable lock-up agreements expire.

Registration Agreement

Pursuant to a Registration Agreement dated as of April 2006, we have granted certain registration rights to Holdings and Parthenon HoldCo, who collectively will own, directly or indirectly, % of our common stock upon consummation of this offering assuming no exercise of the underwriters’ over-allotment option. Under this agreement, the holders of a majority of the shares owned by Holdings and Parthenon HoldCo may require us to effect up to four underwritten registrations of not less than $10.0 million in value on Form S-1 or similar long-form registration statement, and an unlimited number of short-form registrations of no less than $1.0 million in value of their shares on Form S-3 or similar form. Subject to certain limitations, we are required to pay the expenses of these registrations, excluding underwriting discounts and commissions of the selling stockholders. We also have granted these holders “piggyback rights” to include their shares in certain registrations we initiate.

These rights are subject to customary limitations, including “cutbacks” in the event an underwritten demand or piggyback offering is, in the opinion of the managing underwriters of the offering, oversubscribed by participating sellers. In addition, we are not obligated to effect a demand registration within 90 days after the effective date of any previous demand registration, or any piggyback registration in which the requesting

holders were able to include at 85% of such requested shares. Our board of directors also is permitted to delay any requested demand registration for up to 180 days during any 360 consecutive days if it determines in good faith that filing or pursuing effectiveness of a demand registration would be reasonably likely to materially and adversely affect any material contemplated transaction toward which we have already taken substantial steps or would require disclosure of facts that would be reasonably likely to have a seriously detrimental effect on us.

We and these holders have also agreed to observe customary lock-up periods that may be imposed in connection with underwritten registrations, and have agreed to customary provisions regarding mutual indemnification and contribution for losses arising out of material misstatements or omissions in the offering materials used in these registrations.

MATERIAL UNITED STATES FEDERAL TAX
CONSIDERATIONS FOR NON-UNITED STATES HOLDERS

The following is a general discussion of the principal United States federal income and estate tax consequences of the ownership and disposition of our common stock by a non-U.S. holder. As used in this discussion, the term “non-U.S. holder” means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:


	•	a citizen or resident of the United States;

	•	a corporation or partnership created or organized in or under the laws of the United States or any political subdivision of the United States, other than a partnership treated as a foreign person under U.S. Treasury regulations;

	•	an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

	•	a trust, in general, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust.

For U.S. federal income tax purposes, one way an individual may be treated as a resident of the United States in any calendar year, instead of a nonresident, is by being present in the United States on at least 31 days in that calendar year and for an aggregate of at least 183 days during the current calendar year and the two immediately preceding calendar years. For purposes of this calculation, you would count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Residents are taxed for U.S. federal income purposes as if they were U.S. citizens.

This discussion does not consider:


	•	U.S. state and local or non-U.S. tax consequences;

	•	specific facts and circumstances that may be relevant to a particular non-U.S. holder’s tax position, including, if the non-U.S. holder is a partnership, that the U.S. tax consequences of holding and disposing of our common stock may be affected by certain determinations made at the partner level;

	•	the tax consequences for the stockholders, partners or beneficiaries of a non-U.S. holder;

	•	special tax rules that may apply to particular non-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, U.S. expatriates, broker-dealers and traders in securities; or

	•	special tax rules that may apply to a non-U.S. holder that holds our common stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment.

The following discussion is based on provisions of the U.S. Internal Revenue Code of 1986, as amended (Code) and regulations, rulings and judicial decisions under the Code as of the date of this prospectus. These authorities may be repealed, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. The following discussion also assumes that a non-U.S. holder holds our common stock as a capital asset within the meaning of Section 1221 of the Code.

Non-U.S. holders should consult with their tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of acquiring, holding and disposing of shares of our common stock.

Dividends

We currently do not expect to pay cash dividends on our common stock. Any dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or, if lower, the rate specified by an applicable income tax treaty (provided that the non-U.S. holder complies with applicable certification requirements).

Non-U.S. holders should consult with their tax advisors regarding their entitlement to benefits under an applicable income tax treaty and the manner of claiming the benefits of that treaty. A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS.

Dividends that are effectively connected with a non-U.S. holder’s conduct of a trade or business in the United States or, if provided in an applicable income tax treaty, dividends that are attributable to a permanent establishment in the United States are not subject to the U.S. federal withholding tax. Instead, these effectively connected dividends are taxed in the manner applicable to U.S. persons. In that case, we will not have to withhold U.S. federal withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. In addition, dividends received by a foreign corporation that are effectively connected with the conduct of a trade or business in the United States may be subject to a branch profits tax at a 30% rate, or at a lower rate if provided by an applicable income tax treaty.

Gain on Disposal of Common Stock

A non-U.S. holder generally will not be taxed on gain recognized on a sale or other disposition of our common stock unless:


	•	the non-U.S. holder is an individual who holds our common stock as a capital asset, is present in the United States for 183 days or more during the taxable year of the disposition and either has a “tax home” in the United States for U.S. federal income tax purposes or maintains an office or other fixed place of business in the United States to which the gain is attributable;

	•	the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States or, in some instances if an income tax treaty applies, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; or

	•	we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our common stock.

Individual non-U.S. holders who are subject to U.S. tax because the holder was present in the United States for 183 days or more during the year of disposition are taxed on their gains (including gains from sale of our common stock and net of applicable U.S. losses from sale or exchanges of other capital assets incurred during the year) at a flat rate of 30%. Other non-U.S. holders who may be subject to U.S. federal income tax on the disposition of our common stock will be taxed on such disposition in the same manner in which citizens or residents of the United States would be taxed.

In light of the nature and extent of our real estate interests in United States, we believe that we are not a “U.S. real property holding corporation” for United States federal income tax purposes. If we are or become a U.S. real property holding corporation, so long as our common stock is regularly traded on an established securities market, only a non-U.S. holder who holds or held (at any time during the shorter of the five-year period preceding the date of disposition or the holder’s holding period) more than five percent of our common stock, taking into account certain constructive ownership rules, will be subject to United States federal income tax on the disposition of the common stock.

Federal Estate Tax

Common stock owned or treated as owned by an individual who is a non-U.S. holder at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

We must report annually to the Internal Revenue Service (IRS) and to each non-U.S. holder the amount of dividends paid to the holder and the amount of tax withheld, if any, with respect to dividends paid to the holder. These information reporting requirements apply even if no tax was required to be withheld. The provisions of an applicable income tax treaty may also require that information returns reporting dividends and withholding be made available to the tax authorities in the country in which the non-U.S. holder resides.

In general, backup withholding will not apply to dividends on our common stock made by us or our paying agents, in their capacities as such, to a non-U.S. holder if the holder has provided the required certification that it is a non-U.S. holder and neither we nor our paying agents have actual knowledge that the holder is a U.S. holder.

In addition, backup withholding and information reporting generally will not apply to proceeds from the disposition of common stock paid to a non-U.S. holder if the holder has provided the required certification that it is a non-U.S. holder and neither we nor our paying agents have actual knowledge that the holder is a U.S. holder.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder may be refunded, or credited against the holder’s U.S. federal income tax liability, if any, if the required information is furnished to the IRS. Non-U.S. holders should consult with their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

UNDERWRITING

We intend to offer the shares through the underwriters for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) and Wachovia Capital Markets, LLC (Wachovia Securities) are acting as representatives. Subject to the terms and conditions described in a purchase agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the number of shares of common stock listed opposite its name below.


		Number of
Underwriter		Shares

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Wachovia Capital Markets, LLC
Cochran Caronia Waller Securities LLC
William Blair & Company, L.L.C.
Piper Jaffray & Co.
Total

The underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the purchase agreement if any of these shares are purchased. If an underwriter defaults, the purchase agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreement may be terminated.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Discounts and Commissions

The representatives have advised us that the underwriters propose initially to offer the shares to the public at the initial public offering price on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial public offering, the public offering price, concession and discount may be changed.

The following table shows the public offering price, underwriting discounts and commissions and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

Per Share

Without Option

With Option

Public offering price

Underwriting discounts and commissions

Proceeds, before expenses, to us

The total expenses of the offering, not including the underwriting discounts and commissions, are estimated at $ and are payable by us.

Over-allotment Option

We have granted an option to the underwriters to purchase up to additional shares at the public offering price less the underwriting discounts and commissions. The underwriters may exercise this

option for 30 days from the date of this prospectus solely to cover any over-allotments. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the purchase agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.

No Sales of Similar Securities

We and all of our executive officers, current directors, persons who will become directors at or prior to the completion of this offering, Parthenon HoldCo and all of our employee stockholders have agreed, subject to certain exceptions, not to sell or transfer any of our common stock or securities convertible into, exchangeable for, exercisable for, or repayable with common stock, for 180 days after the date of this prospectus, subject to an extension, without first obtaining the written consent of Merrill Lynch on behalf of the underwriters. Specifically, we and these other individuals have agreed, with certain exceptions, not to directly or indirectly:


	•	offer, pledge, sell or contract to sell any of our common stock;

	•	sell any option or contract to purchase any of our common stock;

	•	purchase any option or contract to sell any of our common stock;

	•	grant any option, right or warrant for the sale of any of our common stock;

	•	lend or otherwise dispose of or transfer any of our common stock;

	•	request or demand that we file a registration statement related to our common stock; or

	•	enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any of our common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.

This lock-up provision applies to our common stock and to securities convertible into or exchangeable or exercisable for or repayable with our common stock. It also applies to our common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. In the event that either (x) during the last 17 days of the 180-day period referred to above, we issue an earnings release or material news or a material event relating to AmWINS occurs or (y) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results or become aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day restricted period, the restrictions described above shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

New York Stock Exchange Listing

We will apply to list the shares of common stock on the NYSE under the symbol “AGI.”

Before this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations among us and the representatives. In addition to prevailing market conditions, the factors considered in determining the initial public offering price include:


	•	the valuation multiples of publicly traded companies that the representatives believe to be comparable to us;

	•	our financial information;

	•	the history of, and the prospects for, our company and the industry in which we compete;

	•	an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues;

	•	the present state of our development; and


	•	the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

An active trading market for the shares may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price. The underwriters do not expect to sell more than % of the shares in the aggregate to accounts over which they exercise discretionary authority.

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common shares, such as bids or purchases to peg, fix or maintain that price.

In connection with the offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares in the offering. The underwriters may close out any covered short position by either exercising their over-allotment option or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. “Naked” short sales are sales in excess of the overallotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market.

Neither we nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common shares. In addition, neither we nor any of the underwriters makes any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Offer, Sale and Distribution of Shares

In connection with the offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail. In addition, Merrill Lynch will be facilitating Internet distribution for this offering to certain of its Internet subscription customers. Merrill Lynch intends to allocate a limited number of shares for sale to its online brokerage customers. An electronic prospectus will be available on the Internet website maintained by Merrill Lynch. Other than the prospectus in electronic format, the information on the Merrill Lynch website is not part of this prospectus.

Other Relationships

Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us and our affiliates. They have received customary fees and commissions for these transactions. An affiliate of Wachovia Securities is a lender under our senior secured credit facilities.

Notices to Certain European Residents

In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive was implemented in that relevant member state (relevant implementation date) no shares have been offered or will be offered in that relevant member state prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in the relevant member state, all in accordance with the Prospectus Directive, except that with effect from and including the relevant implementation date, offers of shares may be made to the public in that relevant member state at any time:

a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

b) to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43,000,000; and (iii) an annual turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of Merrill Lynch on behalf of the underwriters; or

d) in any other circumstances which do not require the publication by the Corporation of a prospectus pursuant to Article 3 of the Prospectus Directive,

provided that no such offer of shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a relevant member state and each person who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.

For the purpose of the expression an “offer of any shares to the public” in relation to any securities in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer of any shares to be offered so as to enable an investor to decide to purchase any shares, as the same may be varied in that relevant member state by any measure implementing the Prospectus Directive in that relevant member state.

In the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the shares acquired by it have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a relevant member state to qualified investors as so defined or in circumstances in which the prior consent of the underwriters has been obtained to each such proposed offer or resale. Our company, the underwriters and their affiliates, and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement, and agreement. Notwithstanding the above, a person who is not a qualified investor and who has notified the underwriters of such fact in writing may, with the consent of the underwriters, be permitted to subscribe for or purchase shares.

This prospectus and any offer when made are only addressed to and directed at persons in member states of the European Economic Area who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/ EC) (Qualified Investors). In addition, in the United Kingdom, this prospectus is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (Order) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This prospectus must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this prospectus relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons. This prospectus and its contents should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person.

Each underwriter will represent, warrant and agree that (i) it has communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act of 2000 (the FSMA)) received by it in connection with the issue or sale of the shares in circumstances in which section 21(1) of the FSMA does not apply to the company; and (ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the offering of the shares as contemplated by this prospectus in, from or otherwise involving the United Kingdom.

United Kingdom

Each underwriter will represent and agree that:

a) (1) it is a person whose ordinary activities involve it in acquiring, holding, managing, or disposing of investments (as principal or agent) for the purposes of its business, and (2) it has not offered or sold and will not offer or sell the shares other than to persons whose ordinary activities involve them in acquiring, holding, managing, or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage, or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the shares would otherwise constitute a contravention of Section 19 of the FSMA by the issuer;

b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the issuer; and

c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from, or otherwise involving the United Kingdom.

LEGAL MATTERS

The validity of our common stock offered in this offering will be passed upon for us by Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina. Certain legal matters in connection with this offering will be passed upon for the underwriters by LeBoeuf, Lamb, Greene & MacRae LLP, New York, New York.

EXPERTS

The consolidated financial statements of AmWINS Group, Inc. and its subsidiaries as of December 31, 2005 and 2004 and for the period from October 28, 2005 through December 31, 2005, the period from January 1, 2005 through October 27, 2005 and each of the two years in the period ended December 31, 2004; the combined financial statements of Stewart Smith Group as of April 13, 2005, December 31, 2004 and December 31, 2003 and for the period ended April 13, 2005 and each of the two years in the period ended December 31, 2004; and the financial statements of The Quaker Agency of the South, Inc. as of November 2004 and for the 11 months ended November 30, 2004 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of such firm as experts in auditing and accounting.

The consolidated financial statements of Communitas, Inc. as of December 31, 2005 and 2004 and for each of the two years in the period ended December 31, 2005 included in this prospectus have been so included in reliance on the report of BDO Seidman, LLP, an independent registered public accounting firm, given on the authority of such firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act that registers the shares of our common stock to be sold in this offering. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules filed as part of the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The reports and other information we file with the SEC can be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Copies of these materials can be obtained at prescribed rates from the SEC’s Public Reference Room at such address. You may obtain information regarding the operation of the public reference room by calling 1-800-SEC-0330. The SEC also maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

Upon completion of this offering, we will become subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended, and, as a result, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available on or through our website, free of charge.

INDEX OF FINANCIAL STATEMENTS


Audited Financial Statements
AmWINS Group, Inc.
Reports of Independent Registered Public Accounting Firm			F-3
Consolidated Balance Sheets at December 31, 2005 and December 31, 2004			F-5
Consolidated Statements of Operations for the period from October 28, 2005 through December 31, 2005, the period from January 1, 2005 through October 27, 2005 and the years ended December 31, 2004 and December 31, 2003			F-6
Consolidated Statements of Stockholder’s Equity for the period from October 28, 2005 through December 31, 2005, the period from January 1, 2005 through October 27, 2005 and the years ended December 31, 2004 and December 31, 2003			F-7
Consolidated Statements of Cash Flows for the period from October 28, 2005 through December 31, 2005, the period from January 1, 2005 through October 27, 2005 and the years ended December 31, 2004 and December 31, 2003			F-8
Notes to Consolidated Financial Statements			F-9

Stewart Smith Group
Report of Independent Auditors			F-31
Combined Balance Sheets at April 13, 2005 and December 31, 2004 and December 31, 2003			F-32
Combined Statements of Income for the period ended April 13, 2005 and the years ended December 31, 2004 and December 31, 2003			F-33
Combined Statements of Shareholder’s Equity for the period ended April 13, 2005 and the years ended December 31, 2004 and December 31, 2003			F-34
Combined Statements of Cash Flows for the period ended April 13, 2005 and the years ended December 31, 2004 and December 31, 2003			F-35
Notes to Combined Financial Statements			F-36

Communitas, Inc.
Report of Independent Registered Public Accounting Firm			F-41
Consolidated Balance Sheets at December 31, 2005 and 2004			F-42
Consolidated Statements of Operations for the years ended December 31, 2005 and December 31, 2004			F-43
Consolidated Statements of Shareholders’ Equity (Deficit) for the years ended December 31, 2005 and December 31, 2004			F-44
Consolidated Statements of Cash Flows for the years ended December 31, 2005 and December 31, 2004			F-45
Notes to Consolidated Financial Statements			F-46

The Quaker Agency of the South, Inc.
Report of Independent Auditors			F-53
Balance Sheet at November 30, 2004			F-54
Statement of Operations for the 11 months ended November 30, 2004			F-55
Statement of Shareholders’ Equity for the 11 months ended November 30, 2004			F-56
Statement of Cash Flows for the 11 months ended November 30, 2004			F-57
Notes to Financial Statements			F-58

Unaudited Condensed Consolidated Financial Statements
AmWINS Group, Inc.
Condensed Consolidated Balance Sheets at June 30, 2006 and December 31, 2005			F-61
Condensed Consolidated Statements of Operations for the six months ended June 30, 2006 and June 30, 2005			F-62
Condensed Consolidated Statements of Stockholder’s Equity for the six months ended June 30, 2006 and June 30, 2005			F-63

F-1


Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 2006 and June 30, 2005			F-64
Notes to Condensed Consolidated Financial Statements			F-65

Communitas, Inc.
Condensed Consolidated Balance Sheets at March 31, 2006 and December 31, 2005			F-76
Condensed Consolidated Statements of Operations for the three months ended March 31, 2006 and March 31, 2005			F-77
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the three months ended March 31, 2006 and March 31, 2005			F-78
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2006 and March 31, 2005			F-79
Notes to Condensed Consolidated Financial Statements			F-80

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholder of AmWINS Group, Inc.

(a wholly owned subsidiary of American Wholesale Insurance Holding Company, LLC)

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, stockholder’s equity and cash flows present fairly, in all material respects, the financial position of AmWINS Group, Inc. and its subsidiaries (the “Company”) at December 31, 2005, and the results of their operations and their cash flows for the period October 28, 2005 through December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

November 10, 2006

F-3

Report of Independent Registered Public Accounting Firm

To the Stockholder of AmWINS Group, Inc.

(a wholly owned subsidiary of American Wholesale Insurance Holding Company, LLC)

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, stockholder’s equity and cash flows present fairly, in all material respects, the financial position of AmWINS Group, Inc and its subsidiaries (the “Company”) at December 31, 2004, and the results of their operations and their cash flows for the period January 1, 2005 through October 27, 2005 and each of the two years ending December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

November 10, 2006

F-4

AmWINS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	Successor		Predecessor
	December 31,		December 31,
	2005		2004
	(In thousands of dollars, except share data)
ASSETS
Current assets
Cash and cash equivalents	$	19,151	$	10,055
Premium cash		88,047		41,867
Premiums receivable, net		199,406		87,833
Prepaid expenses and other current assets		10,640		8,642
Deferred tax asset		3,812		3,860

Total current assets		321,056		152,257

Fixed assets, net		7,607		4,095
Goodwill		243,409		82,102
Other identifiable intangible assets, net		42,292		26,904
Deferred tax asset		4,223		—
Other noncurrent assets		3,908		1,827

Total assets	$	622,495	$	267,185


LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Current portion of long-term debt	$	1,836	$	5,772
Premiums payable		267,467		124,240
Accounts payable and accrued expenses		36,965		21,951

Total current liabilities		306,268		151,963

Long-term debt		169,463		32,123
Deferred tax liability		—		2,292
Other		2,683		1,127

Total liabilities		478,414		187,505

Stockholder’s equity
Common stock, $.01 par value; 15,000,000 authorized, 11,295,172 and 12,394,914 issued and outstanding		113		124
Additional paid-in capital		141,850		98,805
Retained earnings (accumulated deficit)		2,118		(19,249	)

Total stockholder’s equity		144,081		79,680

Total liabilities and stockholder’s equity	$	622,495	$	267,185

The accompanying notes are an integral part of these financial statements.

F-5

AmWINS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	Successor		Predecessor
	Period From		Period From
	October 28, 2005		January 1, 2005			Years Ended
	Through		Through			December 31,
	December 31, 2005		October 27, 2005			2004			2003
	(In thousands of dollars, except share
	and per share data)
Revenues
Commissions and fees	$	29,722	$	110,791		$	83,452		$	57,681
Other income		906		850			1,152			503

Total revenues		30,628		111,641			84,604			58,184

Expenses
Employee compensation and benefits		17,388		66,412			52,523			37,594
Other operating		5,498		19,431			16,588			13,421
Depreciation		536		1,855			1,475			1,256
Amortization		636		5,716			3,873			2,068

Total operating expenses		24,058		93,414			74,459			54,339

Operating Income		6,570		18,227			10,145			3,845
Interest expense		2,949		8,516			2,498			288
Loss on extinguishment of debt		—		9,799			994			—

Income (loss) before income taxes and minority interest		3,621		(88	)		6,653			3,557
Minority interest		—		—			(67	)		(258	)
Income tax expense		1,503		772			2,930			406

Income (loss) from continuing operations		2,118		(860	)		3,790			3,409
Income from discontinued operations, net of minority interest and income taxes		—		—			578			812
Loss on disposal of subsidiary		—		—			(67	)		—

Net income (loss)	$	2,118	$	(860	)	$	4,301		$	4,221

Earnings (loss) per common share
Basic
Continuing operations	$	.19	$	(.07	)	$	.31		$	.31
Discontinued operations		—		—			.05			.07
Discontinued operations, loss on sale		—		—			(.01	)		—

Net income (loss)	$	.19	$	(.07	)	$	.35		$	.38

Diluted
Continuing operations	$	.19	$	(.07	)	$	.31		$	.31
Discontinued operations		—		—			.05			.07
Discontinued operations, loss on sale		—		—			(.01	)		—

Net income (loss)	$	.19	$	(.07	)	$	.35		$	.38

Weighted average number of shares outstanding
Basic		11,320,583		12,443,857			12,141,694			11,124,226
Diluted		11,415,726		12,443,857			12,201,646			11,172,513

The accompanying notes are an integral part of these financial statements.

F-6

AmWINS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY


										(Accumulated			Accumulated
	Common Stock						Additional			Deficit)			Other		Total
				Par			Paid-in			Retained			Comprehensive		Stockholder’s
	Shares			Value			Capital			Earnings			Income		Equity
	(In thousands of dollars, except share data)

Predecessor
Balances, January 1, 2003		10,741,060		$	107		$	78,386		$	(27,771	)	$	—	$	50,722
Issuance of common stock for contingent consideration on prior acquisitions		257,251			3			3,443			—			—		3,446
Issuance of common stock for acquisitions		282,258			3			3,410			—			—		3,413
Exercise of options		49,628			—			648			—			—		648
Net income		—			—			—			4,221			—		4,221

Balances, December 31, 2003		11,330,197			113			85,887			(23,550	)		—		62,450
Issuance of common stock for contingent consideration on prior acquisitions		68,612			1			885			—			—		886
Issuance of common stock for acquisitions		966,742			10			11,678			—			—		11,688
Issuance of common stock for settlement of management fee liability		29,363			—			355			—			—		355
Net income		—			—			—			4,301			—		4,301

Balances, December 31, 2004		12,394,914			124			98,805			(19,249	)		—		79,680
Issuance of common stock for contingent consideration on prior acquisitions		41,019			—			496			—			—		496
Issuance of common stock for recapitalization, net of issuance costs		786,982			8			6,948			—			—		6,956
Redemption of common stock for recapitalization		(2,210,885	)		(22	)		(32,528	)		—			—		(32,550	)
Net (loss)		—			—			—			(860	)		—		(860	)

Balances, October 27, 2005		11,012,030		$	110		$	73,721		$	(20,109	)	$	—	$	53,722


Successor
Balances, October 28, 2005		11,012,030		$	110		$	137,738		$	—		$	—	$	137,848
Issuance of common stock for acquisition of minority interest in a subsidiary		283,142			3			4,112			—			—		4,115
Net income		—			—			—			2,118			—		2,118

Balances, December 31, 2005		11,295,172		$	113		$	141,850		$	2,118		$	—	$	144,081

The accompanying notes are an integral part of these financial statements.

F-7

AmWINS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Successor			Predecessor
	Period From			Period From
	October 28, 2005			January 1, 2005			Years Ended
	Through			Through			December 31,
	December 31, 2005			October 27, 2005			2004			2003
	(In thousands of dollars, except share and per share data)
Cash flows from operating activities
Net income (loss)	$	2,118		$	(860	)	$	4,301		$	4,221
Adjustments to reconcile net income (loss) to net cash provided by in operating activities
Depreciation and amortization		1,172			7,571			5,348			3,324
Loss on disposal of equipment		14			7			—			—
Loss on sale of subsidiary		—			—			67			—
Income tax benefit from exercise of stock options		—			—			—			48
Loss on extinguishment of debt		—			9,799			994			—
Deferred income taxes		5,487			(4,281	)		1,447			(86	)
Minority interest		—			—			(67	)		(258	)
Changes in operating assets and liabilities
Premium cash		9,236			(36,999	)		1,939			8,317
Premiums receivable		(38,468	)		(1,745	)		(20,252	)		(17,297	)
Prepaid expenses and other current assets		(1,753	)		208			(452	)		(148	)
Other assets		629			(306	)		(45	)		527
Premiums payable		28,755			31,862			17,426			13,277
Accounts payable and accrued expenses		1,504			5,489			1,137			(3,530	)
Other liabilities		(47	)		(616	)		(77	)		179
Net cash provided by discontinued operations		—			—			2,071			(1,656	)

Net cash provided by operating activities		8,647			10,129			13,837			6,918

Cash flows from investing activities
Cash paid for acquisition of businesses, net of cash acquired of $493, $485 and $476		—			(101,340	)		(41,462	)		(2,990	)
Purchase of intangible assets		—			—			—			(42	)
Cash paid for acquisition costs		(40	)		(2,073	)		(749	)		(62	)
Cash received on sale of business		—			—			6,075			—
Purchases of property and equipment		(339	)		(1,791	)		(1,559	)		(1,769	)
Net cash used in discontinued operations		—			—			(12	)		515
Cash contributed to discontinued operations		—			—			—			(624	)

Net cash used in investing activities		(379	)		(105,204	)		(37,707	)		(4,972	)

Cash flows from financing activities
Exercise of options		—			—			—			600
Redemption of common stock		—			(32,550	)		—			—
Issuance of common stock		—			11,584			—			—
Common stock issuance costs		—			(4,628	)		—			—
Debt issuance costs		73			(563	)		(1,444	)		(994	)
Proceeds from long-term debt		—			310,287			46,373			5,760
Repayments on long-term debt		(486	)		(187,814	)		(17,964	)		(5,891	)
Net cash used in discontinued operations		—			—			(2,579	)		868

Net cash (used in) provided by financing activities		(413	)		96,316			24,386			343

Net increase in cash and cash equivalents		7,855			1,241			516			2,289
Cash and cash equivalents
Beginning of period		11,296			10,055			9,539			7,250

End of period	$	19,151		$	11,296		$	10,055		$	9,539

Supplemental disclosures of cash flow information
Cash paid for
Income taxes	$	178		$	838		$	988		$	600
Interest		1,452			7,044			1,879			320
Long-term debt issued for acquisitions		—			—			2,424			2,575
Common stock issued for reduction in liabilities		—			—			355			—

The accompanying notes are an integral part of these financial statements.

F-8

AmWINS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.	Summary of Significant Accounting Policies

General

The operations of AmWINS Group, Inc. and its subsidiaries (the “Company”) consist of wholesale distribution of insurance products through retail agents and brokers. The operating companies conduct business in the capacity of insurance brokers and managing general underwriters.

The Company’s business is divided into three reportable segments: Property & Casualty Brokerage, which brokers a broad range of property and casualty insurance products nationally to retail insurance agents and brokers; Specialty Underwriting, which is comprised of numerous insurance programs for specific industry, trade groups and market niches, where the insurance company has contracted with the Company to provide the underwriting for these programs on their behalf; and Group Benefits, which provides a range of specialty group benefit products to employer groups or associations nationally through retail insurance agents and brokers and provides related administrative services.

Basis of Presentation

The Company is 100% owned by American Wholesale Insurance Holding Company, LLC (“Holdco”). There are no employees or operations of Holdco. All revenues and expenses are generated and recorded at the Company or its subsidiaries and are included in these financial statements. Certain equity incentives issued to employees of the Company from Holdco have been treated as if issued by the Company for purposes of these financial statements.

On October 27, 2005, the Company completed a series of transactions to recapitalize the Company. The majority of the Company’s management and employees that were unitholders in the Company’s parent, Holdco, partnered with a private equity firm, Parthenon Capital, LLC (“Parthenon”), to purchase Holdco’s existing majority private equity unitholder along with certain other retiring or unaffiliated unitholders. Parthenon acquired 7,300,728 Holdco units for $97.5 million and acquired an additional 687,311 Holdco units by investing $11.6 million directly in Holdco, which was subsequently invested in the Company by the issuance of 786,982 shares of common stock to Holdco. In connection with this transaction, the Company redeemed 2,210,885 shares of common stock from Holdco for $32.6 million, which then allowed Holdco to redeem 2,437,864 common units from selling unitholders. The expenses related to the equity transaction, including approximately $4.6 million paid by the Company on behalf of Parthenon, have been reported as a reduction of the proceeds from the issuance of the common stock.

As a result of the recapitalization, the Company applied push-down accounting, as required by Staff Accounting Bulletin No. 54, Application of “Pushdown” Basis of Accounting in Financial Statements of Subsidiaries Acquired by Purchase, as interpreted by the Emerging Issues Task Force Topic D-97, Pushdown Accounting (“EITF D97”), which resulted in a partial write-up in the fair value of its net assets by approximately $84.1 million at October 27, 2005. As a result, the Company’s basis of accounting differs from that prior to the recapitalization and may not be directly comparable. Therefore, the accompanying consolidated financial statements reflect the financial position of the Company as of December 31, 2005 and results of operations of the Company for the period beginning October 28, 2005 through December 31, 2005 (“the period ended December 31, 2005”) as the “Successor” and for the period January 1, 2005 through October 27, 2005 (“the period ended October 27, 2005”) and the years ended December 31, 2004 and 2003 as the “Predecessor.”

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

F-9

AmWINS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany transactions are eliminated through consolidation.

Revenue Recognition

Commission income and fees from the sale of property and casualty insurance products are recorded as of the effective date of the insurance coverage or the date the coverage is bound, whichever is later. Commission income and fees from the sale of benefits insurance products is recognized as earned over the policy period, which typically corresponds to the monthly billing cycle based on eligibility. The Company carries a reserve for policy cancellations which is periodically evaluated and adjusted as necessary based upon historical cancellation experience. The provision for cancellations and allowance for uncollectible premiums was $4.0 million and $2.3 million at December 31, 2005 and 2004, respectively. Subsequent commission adjustments are recognized upon notification from insurance carriers. Commission revenue is reported net of commission incurred to the retail brokers and agents which is recognized on the same basis as the Company’s revenue.

Other income includes profit commissions, interest income and miscellaneous income, net of contingent commissions due to the Company’s retail producers. Profit commission income is generally recognized based on the receipt of cash from these arrangements. Revenues may be recorded in advance of cash receipts in cases where the amounts due to be received have been calculated or have been confirmed by the insurance company. Profit commission income is primarily derived from profit sharing agreements related to Specialty Underwriting and Group Benefits. Contingent commissions due to the Company’s retail producers are generally recognized based on the timing of the revenue earned from placing business for these retailers.

Interest income is recorded as earned. The Company earns interest income on the premiums between the time they are collected from retail agents and brokers and the time they are remitted to the insurance carriers. This activity is part of the normal operations and accordingly is reported in revenues.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Premium Cash

Premium cash consists of cash held in trust accounts for the benefit of insurers related to collected but unremitted premiums.

Premiums Receivable

Premiums receivable consist of amounts due from retail insurance agents and brokers for insurance polices sold. Premium receivables are not collateralized; however, the Company generally has cancellation authority from the insurer if amounts are not paid and therefore has minimal credit risk for uncollected premiums receivable. Premiums receivable are presented net of the provision for cancellations and allowance for uncollectible premiums receivable, if any.

F-10

AmWINS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Premiums Payable

Premiums payable represent amounts due to insurance carriers for their portion of insurance premiums. Premiums payable are recognized when the related premiums receivable are recognized. The Company generally remits payment to insurance carriers when the related amounts are collected from retail insurance agents and brokers or policyholders.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Useful lives range from three to five years for furniture and fixtures and equipment, including software. Leasehold improvements are depreciated using the straight-line method over the term of the related lease.

Goodwill and Other Identifiable Intangible Assets

The Company accounts for business combinations in accordance with the provisions of Statement of Financial Accounting Standards No. 141, Business Combinations (“SFAS No. 141”) and No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”). These standards require that all business combinations be accounted for using the purchase method, provide guidance on the initial recognition and measurement of goodwill and other intangible assets arising from such business combinations, and require that goodwill and intangible assets with indefinite lives not be amortized but instead be tested for impairment annually applying a fair value test. SFAS No. 142 requires the Company to compare the fair value of each reporting unit with its carrying value to determine if there is a potential impairment of goodwill. Based on the aggregation of its business components, the Company’s reporting units correspond to its reportable segments as defined above in the “Description of Operations.” If the fair value of the reporting unit is less than its carrying value, an impairment loss would be recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. Fair value is estimated based on multiples of revenues, earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and estimated future cash flows.

The Company evaluates long-lived assets, including identifiable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair market value. The Company assesses the recoverability of its long-lived and intangible assets by determining whether the unamortized balances can be recovered through undiscounted future net cash flows of the related assets. The amount of impairment, if any, is measured based on projected discounted future net cash flows.

Other identifiable intangible assets include purchased customer accounts and noncompete agreements and are amortized on a straight-line basis over their estimated useful lives and contract periods, which range from five to fifteen years for the period ended October 27, 2005 and the years ended December 31, 2004 and 2003. For the period ended December 31, 2005, other identifiable intangible assets were amortized based on the expected undiscounted cash flows over the related estimated lives and contract periods, which range from seven to fourteen years. Purchased customer accounts obtained from acquired businesses are records and files that contain information regarding retail insurance customers and their accounts that are essential to maintaining that relationship. Intangible assets with finite lives are periodically reviewed to ensure that no conditions exist indicating they may be impaired. No impairments have been recorded for the period ended December 31, 2005.

F-11

AmWINS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Debt Issue Costs

Costs of issuing debt are deferred as an asset and amortized by periodic charges to income using the interest method over the life of the credit facility.

Equity-Based Compensation

The Company accounts for equity-based compensation under the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. The pro forma impact on net income per share as if the fair value of unit-based and stock-based compensation plans had been recorded as a component of compensation expense in the consolidated financial statements as of the date of grant of awards related to such plans, pursuant to the provisions of the Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation and Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, is disclosed as follows:


	Successor			Predecessor
	October 28, 2005			January 1, 2005
	Through			Through			Year Ended			Year Ended
	December 31,			October 27,			December 31,			December 31,
	2005			2005			2004			2003
	(In thousands of dollars, except per share data)
Net income as reported	$	2,118		$	860		$	4,301		$	4,221
Total stock-based employee compensation cost included in the determination of net income, net of related tax effects		—			—			—			74
Total stock-based employee compensation cost determined under fair value method, net of related tax effects		(55	)		(686	)		(175	)		(139	)

Pro forma net income (loss)	$	2,063		$	(1,546	)	$	4,126		$	4,156

Earnings (loss) per share
Basic
As reported	$	0.19		$	(0.07	)	$	0.35		$	0.38

Pro forma	$	0.18		$	(0.12	)	$	0.34		$	0.37

Diluted
As reported	$	0.19		$	(0.07	)	$	0.35		$	0.38

Pro forma	$	0.18		$	(0.12	)	$	0.34		$	0.37

F-12

AmWINS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The weighted average fair value of each option granted was estimated at $4.66, $4.91 and $4.93 for the period ended October 27, 2005 and the years ended December 31, 2004 and 2003, respectively, using the Black-Scholes option-pricing model with the following weighted average assumptions:

Successor

Predecessor

October 28,

January 1,

2005

Year

Through

Ended

December 31,

October 27,

December 31,

2005⁽¹⁾

2005

2004

2003

Dividend yield

—

0.0%

Risk free interest rate

—

4.77%

4.24%

4.27%

Expected lives

—

6 years

Volatility

—

29.3%

33.5%


(1)		There were no options grants made during the Successor period.

Income Taxes

The Company and its subsidiaries account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS No. 109”). SFAS No. 109 requires the liability method of accounting for deferred income taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered.

Deferred tax assets have also been recognized for net operating loss carryforwards. Valuation allowances are then recorded to reduce deferred tax assets to the amounts management concludes are more likely than not to be realized.

F-13

AmWINS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income Per Share

Basic net income per share is computed by dividing net income available to stockholders by the weighted average number of shares outstanding for the period. Basic net income per share excludes the effect of potentially dilutive options. Diluted net income per share reflects potential dilution that could occur if stock options were exercised. The following table sets forth the computations of basic and diluted earnings per share from continuing operations:


	Successor				Predecessor
	October 28, 2005				January 1, 2005
	Through				Through						Year Ended						Year Ended
	December 31, 2005				October 27, 2005						December 31, 2004						December 31, 2003
	Diluted		Basic		Diluted			Basic			Diluted			Basic			Diluted		Basic
	(In thousands of dollars, except share and per share data)
Income (loss) from continuing operations	$	2,118	$	2,118	$	(860	)	$	(860	)	$	3,790		$	3,790		$	3,409	$	3,409
Income from discontinued operations		—		—		—			—			578			578			812		812
(Loss) on disposal of subsidiary		—		—		—			—			(67	)		(67	)		—		—

Net income (loss)	$	2,118	$	2,118	$	(860	)	$	(860	)	$	4,301		$	4,301		$	4,221	$	4,221

Average Equivalent Shares
Shares outstanding		11,320,583		11,320,583		12,443,857			12,443,857			12,141,694			12,141,694			11,124,226		11,124,226
Options to purchase common stock		95,143		—		—			—			59,952			—			48,287		—

Total average equivalent shares		11,415,726		11,320,583		12,443,857			12,443,857			12,201,646			12,141,694			11,172,513		11,124,226

Per-Share Amounts
Earnings (loss) from continuing operations	$	0.19	$	0.19	$	(0.07	)	$	(0.07	)	$	0.31		$	0.31		$	0.31	$	0.31
Earnings from discontinued operations		—		—		—			—

Title of Each Class of

Amount of

Securities to be Registered

Proposed Maximum Aggregate Offering Price(1)(2)

Registration Fee

Common Stock, par value $0.01 per share

$115,000,000

$12,305.00

AmWINS GROUP INC S-1