What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-28 compared with 2024-07-22 · 181 added, 172 removed, 406 unchanged (47% of the section changed)

1 unchanged sentence

The following discussion updates the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the two discussions should be read together.

Company Overview — Second Quarter of 2024

Company Overview — Third Quarter of 2024

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes to those Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

In addition, please see “Information Regarding Non-GAAP Financial Measures” below concerning important information on non-GAAP financial measures contained in our discussion and analysis.

Effective for fiscal year 2024, in conjunction with the divestiture of certain businesses within our Services segment in the fourth quarter of 2023, we aligned our business from four to three segments, and we now report our financial results in the following three reportable segments:

Retail, Programs (formerly National Programs) and Wholesale Brokerage.

See Note 12 of the Notes to Condensed Consolidated Financial Statements for further information.

We are a diversified insurance agency, wholesale brokerage and insurance programs organization headquartered in Daytona Beach, Florida.

23 unchanged sentences

Fee revenues as a percentage of our total commissions and fees, were 23.9% in 2023 and 25.8% in 2022.

For the three months ended June 30, 2024, our total commissions and fees growth rate was 11.4%, and our consolidated Organic Revenue growth rate was 10.0%.

Historically, investment income has consisted primarily of interest earnings on operating cash and where permitted, on premiums and advance premiums collected and held in a fiduciary capacity before being remitted to insurance companies.

For the three months ended September 30, 2024, our total commissions and fees growth rate was 10.1%, and our consolidated Organic Revenue growth rate was 9.5%.

Historically, investment income has consisted primarily of interest earnings on operating cash and where permitted, on premiums collected and held in a fiduciary capacity before being remitted to insurance companies.

Our policy as it relates to the Company’s capital is to invest available funds in high-quality, short-term money-market funds and fixed income investment securities.

1 unchanged sentence

Other income primarily reflects other miscellaneous revenues.

Income before income taxes for the three months ended June 30, 2024 increased from the second quarter of 2023 by $92 million or 36.2%, driven by net new business, increased investment income and profit-sharing contingent commissions, acquisitions completed in the past twelve months and the gain on disposal of certain businesses.

Retail, Programs (formerly National Programs) and Wholesale Brokerage.

See Note 12 of the Notes to Condensed Consolidated Financial Statements for further information.

Income before income taxes for the three months ended September 30, 2024 increased from the third quarter of 2023 by $75 million or 31.0%, driven by Organic Revenue growth, leveraging our expense base, net new business, increased investment income, acquisitions completed in the past twelve months and the change in estimated acquisition earn-out payables.

Information Regarding Non-GAAP Financial Measures

8 unchanged sentences

Beginning January 1, 2024, we no longer exclude Foreign Currency Translation from the calculation of EBITDAC - Adjusted and EBITDAC Margin - Adjusted.

Prior periods are presented accordingly on the same basis so that the calculations of EBITDAC - Adjusted and EBITDAC Margin - Adjusted are comparable for both periods.

Prior periods are presented on the same basis so that the calculations of EBITDAC - Adjusted and EBITDAC Margin - Adjusted are comparable for both periods.

We no longer exclude Foreign Currency Translation from the calculation of these earnings measures because fluctuations in Foreign Currency Translation affect both our revenues and expenses, largely offsetting each other.

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• “Acquisition/Integration Costs” means the acquisition and integration costs (e.g., costs associated with regulatory filings, legal/accounting services, due diligence and the costs of integrating our information technology systems) arising out of our

acquisitions of GRP (Jersey) Holdco Limited and its business ("GRP"), Orchid Underwriters Agency and CrossCover Insurance Services, and BdB Limited companies, which are not considered to be normal, recurring or part of the ongoing operations.

acquisitions of GRP (Jersey) Holdco Limited and its business, Orchid Underwriters Agency and CrossCover Insurance Services, and BdB Limited companies, which are not considered to be normal, recurring or part of the ongoing operations.

• “Foreign Currency Translation” means the period-over period impact of foreign currency translation, which is calculated by applying current-year foreign exchange rates to the various functional currencies in our business to our reporting currency of U.S.

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Part of our business strategy is to attract high-quality insurance intermediaries and service organizations to join our operations.

From 1993 through the second quarter of 2024, we acquired 660 insurance intermediary operations.

From 1993 through the third quarter of 2024, we acquired 664 insurance intermediary operations.

Critical Accounting Policies

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Refer to Note 1 in the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2023 for details regarding our critical and significant accounting policies.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.

Financial information relating to our condensed consolidated financial results is as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in millions, except percentages)

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Capital expenditures

Total assets at June 30,

Total assets at September 30,

(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.

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Commissions and Fees

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended June 30, 2024 increased $118 million to $1,154 million, or 11.4%, over the same period in 2023.

Core commissions and fees revenue for the second quarter of 2024 increased $115 million or 11.5%, composed of:

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended September 30, 2024 increased $106 million to $1,155 million, or 10.1%, over the same period in 2023.

Core commissions and fees revenue for the third quarter of 2024 increased $106 million or 10.4%, composed of:

(i) approximately $95 million of net new and renewal business, which reflects an Organic Revenue growth rate of 9.5%;

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(iii) an increase from the impact of Foreign Currency Translation of $2 million and (iv) an offsetting decrease of $26 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months.

Profit-sharing contingent commissions for the second quarter of 2024 increased by $3 million, compared to the same period in 2023.

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the six months ended June 30, 2024, increased $246 million to $2,390 million, or 11.5%, over the same period in 2023.

Core commissions and fees revenue for the six months ended June 30, 2024 increased $224 million or 10.7%, composed of:

Profit-sharing contingent commissions for the third quarter of 2024 were flat when compared to the same period in 2023.

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the nine months ended September 30, 2024, increased $352 million to $3,545 million, or 11.0%, over the same period in 2023.

Core commissions and fees revenue for the nine months ended September 30, 2024 increased $330 million or 10.6%, composed of:

(i) approximately $284 million of net new and renewal business, which reflects an Organic Revenue growth rate of 9.4%;

1 unchanged sentence

(iii) an increase from the impact of Foreign Currency Translation of $7 million and (iv) an offsetting decrease of $81 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months.

Profit-sharing contingent commissions for the six months ended June 30, 2024 increased by $22 million, or 36.7%, compared to the same period in 2023.

This increase was driven primarily by (i) improved underwriting results and qualifying for certain prior year profit-sharing contingent commissions in excess of estimates that we did not qualify for in the prior year and (ii) recent acquisitions.

Profit-sharing contingent commissions for the nine months ended September 30, 2024 increased by $22 million, or 25.0%, compared to the same period in 2023.

This increase was driven primarily by (i) improved underwriting results and qualifying for certain profit-sharing contingent commissions that we did not qualify for in the prior year and (ii) recent acquisitions.

Investment Income

Investment income for the three months ended June 30, 2024 increased $12 million, from the same period in 2023.

Investment income for the six months ended June 30, 2024 increased $23 million, from the same period in 2023.

The increases were primarily driven by higher average interest rates compared to the prior year.

Other income for the three months ended June 30, 2024 increased $1 million to $2 million as compared to the same period in 2023 and other income for the six months ended June 30, 2024 increased by $3 million, or 150.0%, as compared to the same period in 2023.

Investment income for the three months ended September 30, 2024 increased $14 million from the same period in 2023.

Investment income for the nine months ended September 30, 2024 increased $37 million, from the same period in 2023.

The increases were primarily driven by higher average interest rates and cash balances compared to the prior year.

Other income for the three months ended September 30, 2024 decreased $2 million from the same period in 2023, and other income for the nine months ended September 30, 2024 increased by $2 million, or 50.0%, as compared to the same period in 2023.

Other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods.

Employee Compensation and Benefits

Employee compensation and benefits expense as a percentage of total revenues was 49.7% for the three months ended June 30, 2024 as compared to 50.6% for the three months ended June 30, 2023, and increased 10.4%, or $55 million.

Employee compensation and benefits expense as a percentage of total revenues was 51.2% for the three months ended September 30, 2024 as compared to 49.8% for the three months ended September 30, 2023, an increase of 14.1%, or $75 million.

This increase included $20 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2023.

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This underlying employee compensation and benefits expense increase was primarily related to:

(i) an increase in staff salaries and bonuses attributable to new hires;

(ii) an increase in producer compensation associated with revenue growth and (iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company, partially offset by (iv) employee compensation and benefits associated with businesses divested in the fourth quarter of 2023.

Employee compensation and benefits expense as a percentage of total revenues was 49.9% for the six months ended June 30, 2024 as compared to 50.9% for the six months ended June 30, 2023, and increased 10.4%, or $115 million.

(i) an increase in staff costs attributable to new hires;

(ii) an increase in producer compensation associated with revenue growth;

(iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company and (iv) the year-over-year increase of approximately $18 million in the value of deferred compensation liabilities driven by changes in the market prices of our deferred compensation plan, with such amount substantially offset within other operating expenses as we hold assets to fund these liabilities, partially offset by (v) employee compensation and benefits associated with businesses divested in the fourth quarter of 2023.

Employee compensation and benefits expense as a percentage of total revenues was 50.3% for the nine months ended September 30, 2024 as compared to 50.5% for the nine months ended September 30, 2023, and increased 11.6%, or $190 million.

This increase included $55 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2023.

1 unchanged sentence

This underlying employee compensation and benefits expense increase was primarily related to:

(i) an increase in staff salaries and bonuses attributable to new hires;

(i) an increase in staff costs attributable to new hires;

(ii) an increase in producer compensation associated with revenue growth;

(iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company and (iv) the year-over-year increase of approximately $19 million in the value of deferred compensation liabilities driven by changes in the market prices of our deferred compensation plan, with such amount substantially offset within other operating expenses as we hold assets to fund these liabilities, partially offset by (v) employee compensation and benefits associated with businesses divested in the fourth quarter of 2023.

Other Operating Expenses

Other operating expenses represented 14.7% of total revenues for the second quarter of 2024, as compared to 15.5% for the second quarter of 2023.

Other operating expenses for the second quarter of 2024 increased $11 million, or 6.8%, from the same period of 2023.

This increase includes:

(i) $8 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 2023;

(ii) increased information technology related costs;

(iii) and to a lesser extent, increased variable costs associated with revenue growth, offset by (iv) other operating expenses associated with businesses divested in the fourth quarter of 2023.

Other operating expenses represented 13.7% of total revenues for the six months ended June 30, 2024, as compared to 14.9% for the six months ended June 30, 2023.

Other operating expenses for the first six months of 2024 increased $12 million, or 3.7%, from the same period of 2023.

This increase includes:

Other operating expenses represented 13.9% of total revenues for the third quarter of 2024, as compared to 15.7% for the third quarter of 2023.

Other operating expenses for the third quarter of 2024 decreased $3 million, or 1.8%, from the same period of 2023.

This change includes:

(i) the year-over-year decrease of approximately $18 million in the value of assets held to fund the associated liabilities within our deferred compensation plan, which was substantially offset within employee compensation and benefits, as noted above and (ii) other operating expenses associated with businesses divested in the fourth quarter of 2023, offset by (iii) $8 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 2023;

(iv) increased information technology related costs;

(v) and to a lesser extent, increased variable costs associated with revenue growth.

Other operating expenses represented 13.8% of total revenues for the nine months ended September 30, 2024, as compared to 15.2% for the nine months ended September 30, 2023.

Other operating expenses for the first nine months of 2024 increased $9 million, or 1.8%, from the same period of 2023.

This change includes:

(i) $24 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 2023;

(ii) increased information technology related costs;

(iii) and to a lesser extent, increased variable costs associated with revenue growth, offset by (iv) the 1Q23 Nonrecurring Cost and (v) other operating expenses associated with businesses divested in the fourth quarter of 2023.

(iii) and to a lesser extent, increased variable costs associated with revenue growth, offset by (iv) the 1Q23 Nonrecurring Cost (v) other operating expenses associated with businesses divested in the fourth quarter of 2023 and (vi) the year-over-year decrease of approximately $19 million in the value of assets held to fund the associated liabilities within our deferred compensation plan, which was substantially offset within employee compensation and benefits, as noted above.

(Gain)/Loss on Disposal

Gain on disposal for the second quarter of 2024 increased $31 million from the second quarter of 2023.

Gain on disposal for the six months ended June 30, 2024 increased $23 million from the six months ended June 30, 2023.

Activity for (Gain)/Loss on disposal for the three and six months ended June 30, 2024 was primarily attributable to finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.

Gain on disposal for the third quarter of 2024 decreased $2 million from the third quarter of 2023.

Gain on disposal for the nine months ended September 30, 2024 increased $21 million from the nine months ended September 30, 2023.

Activity for (Gain)/Loss on disposal for the nine months ended September 30, 2024 was primarily attributable to finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.

Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.

Amortization expense for the second quarter of 2024 increased $3 million, or 7.3%, compared to the second quarter of 2023.

Amortization expense for the six months ended June 30, 2024 increased $3 million, or 3.6%, compared to the six months ended June 30, 2023.

Amortization expense for the third quarter of 2024 increased $4 million, or 9.8%, compared to the third quarter of 2023.

Amortization expense for the nine months ended September 30, 2024 increased $8 million, or 6.5%, compared to the nine months ended September 30, 2023.

This change reflects the amortization of new intangibles from businesses acquired within the past twelve months, net of certain intangible assets becoming fully amortized or written off in the (Gain)/Loss on disposal.

Depreciation expense for the second quarter of 2024 increased $1 million, or 10.0%, compared to the second quarter of 2023.

Depreciation expense for the six months ended June 30, 2024 increased $1 million, or 5.0%, compared to the six months ended June 30, 2023.

Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, net of the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.

Depreciation expense for the third quarter of 2024 increased $1 million, or 10.0%, compared to the third quarter of 2023.

Depreciation expense for the nine months ended September 30, 2024 increased $3 million, or 10.0%, compared to the nine months ended September 30, 2023.

Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, partially offset by the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.

Interest Expense

Interest expense for the second quarter of 2024 increased $1 million, or 2.1%, compared to the second quarter of 2023.

Interest expense for the six months ended June 30, 2024 increased $2 million, or 2.1%, compared to the first six months of 2023.

Interest expense for the third quarter of 2024 increased $2 million, or 4.2%, compared to the third quarter of 2023.

Interest expense for the nine months ended September 30, 2024 increased $4 million, or 2.8%, compared to the first nine months of 2023.

Change in Estimated Acquisition Earn-Out Payables

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The net charge or credit to the Consolidated Statements of Income for the period is the combination of the net change in the estimated acquisition earn-out payables liability, and the accretion of the present value discount on those liabilities.

As of June 30, 2024 and 2023, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820- Fair Value Measurement .

As of September 30, 2024 and 2023, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820- Fair Value Measurement .

The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in millions)

2 unchanged sentences

Net change in earnings from estimated acquisition earn-out payables

For the three months and six months ended June 30, 2024, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $2 million and $7 million, respectively, which resulted in credits to the Condensed Consolidated Statements of Income.

As of June 30, 2024, estimated acquisition earn-out payables totaled $169 million, of which $93 million was recorded as accounts payable and $76 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended June 30, 2024 and 2023 was 25.1% and 25.2%, respectively.

The effective tax rate on income from operations for the six months ended June 30, 2024 and 2023 was 22.3% and 22.4%, respectively.

For the three months and nine months ended September 30, 2024, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $9 million and $15 million, respectively, which resulted in credits to the Condensed Consolidated Statements of Income.

As of September 30, 2024, estimated acquisition earn-out payables totaled $137 million, of which $73 million was recorded as accounts payable and $64 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended September 30, 2024 and 2023 was 24.6% and 27.3%, respectively.

The decrease in the effective tax rate for the quarter was primarily impacted by the change in the market value of Company-owned life insurance associated with our deferred compensation plan and certain prior year nonrecurring items.

The effective tax rate on income from operations for the nine months ended September 30, 2024 and 2023 was 23.1% and 23.9%, respectively.

RESULTS OF OPERATIONS — SEGMENT INFORMATION

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Likewise, other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods.

As such, in evaluating the operational efficiency of a segment, management primarily focuses on the Organic Revenue growth rate and EBITDAC Margin.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended June 30, 2024 and 2023, and the growth rates for Organic Revenue for the three months ended June 30, 2024, including by segment, are as follows:

As such, management primarily focuses on the Organic Revenue growth rate and EBITDAC Margin when evaluating the operational efficiency of a segment.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended September 30, 2024 and 2023, and the growth rates for Organic Revenue for the three months ended September 30, 2024, including by segment, are as follows:

Wholesale Brokerage

(in millions, except percentages)

(in millions)

Commissions and fees

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(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended June 30, 2023 and 2022, including by segment, and the growth rates for Organic Revenue for the three months ended June 30, 2023, including by segment, are as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended September 30, 2023 and 2022, including by segment, and the growth rates for Organic Revenue for the three months ended September 30, 2023, including by segment, are as follows:

Wholesale Brokerage

(in millions, except percentages)

(in millions)

Commissions and fees

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(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the six months ended June 30, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2024, including by segment, are as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the nine months ended September 30, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the nine months ended September 30, 2024, including by segment, are as follows:

Wholesale Brokerage

(in millions, except percentages)

(in millions)

Commissions and fees

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(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the six months ended June 30, 2023 and 2022, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2023, including by segment, are as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the nine months ended September 30, 2023 and 2022, including by segment, and the growth rates for Organic Revenue for the nine months ended September 30, 2023, including by segment, are as follows:

Wholesale Brokerage

(in millions, except percentages)

(in millions)

Commissions and fees

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(2) A non-GAAP financial measure.

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2024, including by segment, is as follows:

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended September 30, 2024, including by segment, is as follows:

(in millions)

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NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended September 30, 2023, including by segment, is as follows:

(in millions)

8 unchanged sentences

Acquisition/Integration Costs

1Q23 Nonrecurring Cost

EBITDAC - Adjusted (2)

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NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2024, including by segment, is as follows:

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the nine months ended September 30, 2024, including by segment, is as follows:

(in millions)

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NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2023, including by segment, is as follows:

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the nine months ended September 30, 2023, including by segment, is as follows:

(in millions)

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Financial information relating to our Retail segment is as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in millions, except percentages)

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Capital expenditures

Total assets at June 30,

Total assets at September 30,

(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.

1 unchanged sentence

NMF = Not a meaningful figure

The Retail segment’s total revenues for the three months ended June 30, 2024 increased 9.3%, or $55 million, as compared to the same period in 2023, to $646 million.

The Retail segment’s total revenues for the three months ended September 30, 2024 increased 6.5%, or $39 million, as compared to the same period in 2023, to $641 million.

The $40 million increase in core commissions and fees revenue was driven by:

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(ii) an increase of $23 million related to net new and renewal business;

(iii) an increase from the impact of Foreign Currency Translation of $1 million and (iv) a decrease of $2 million related to commissions and fees recorded in 2023 from businesses since divested.

Profit-sharing contingent commissions for the second quarter of 2024 decreased 53.3%, or $8 million, as compared to the same period in 2023, to $7 million.

This decrease was primarily the result of not qualifying for certain profit-sharing contingent commissions in 2024, due to higher loss ratios experienced by our insurance carrier partners, that we qualified for in the prior year.

The Retail segment’s total commissions and fees increased by 10.8%, and the Organic Revenue growth rate was 7.3% for the second quarter of 2024.

and (iii) an increase from the impact of Foreign Currency Translation of $2 million.

Profit-sharing contingent commissions for the third quarter of 2024 decreased 11.1%, or $1 million, as compared to the same period in 2023, to $8 million.

This decrease was primarily the result of not qualifying for certain profit-sharing contingent commissions in 2024, due to higher loss ratios experienced by our insurance carrier partners.

The Retail segment’s total commissions and fees increased by 6.5%, and the Organic Revenue growth rate was 3.9% for the third quarter of 2024.

The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers.

Renewal business was impacted by increases in exposure units, as well as continued rate increases for property and casualty, employee benefits and auto.

Income before income taxes for the three months ended June 30, 2024 increased 21.7%, or $23 million, as compared to the same period in 2023, to $129 million.

Renewal business was impacted by timing of certain nonrecurring revenue adjustments to incentive commissions and moderating rates and exposure unit growth.

Income before income taxes for the three months ended September 30, 2024 increased 7.1%, or $8 million, as compared to the same period in 2023, to $120 million.

The primary factors driving this increase were:

(i) a decrease in intercompany interest expense and (ii) the profit associated with the net increase in revenue as described above.

EBITDAC - Adjusted for the three months ended June 30, 2024 increased 9.0%, or $15 million, as compared to the same period in 2023, to $181 million.

EBITDAC Margin - Adjusted for the three months ended June 30, 2024 decreased to 28.0% from 28.1% in the same period in 2023.

The decrease in EBITDAC Margin - Adjusted was primarily driven by:

(i) a decrease in profit-sharing contingent commissions and, to a lesser extent, (ii) higher non-cash stock-based compensation and (iii) higher performance-based compensation associated with the increased level of Organic Revenue growth which was partially offset by (iv) the net increase in revenue as described above and (v) leveraging our expense base.

The Retail segment’s total revenues for the six months ended June 30, 2024 increased 9.7%, or $128 million, as compared to the same period in 2023, to $1,452 million.

(i) a decrease in intercompany interest expense;

(ii) a decrease in estimated acquisition earn-out payables, and (iii) the profit associated with the net increase in revenue as described above.

EBITDAC - Adjusted for the three months ended September 30, 2024 decreased 0.6%, or $1 million, as compared to the same period in 2023, to $170 million.

EBITDAC Margin - Adjusted for the three months ended September 30, 2024 decreased to 26.5% from 28.4% in the same period in 2023.

The change in EBITDAC Margin - Adjusted was primarily driven by:

(i) a decrease in profit-sharing contingent commissions, (ii) higher non-cash stock-based compensation (iii) the timing of certain nonrecurring revenue and adjustments to incentive commissions, (iv) higher compensation due to investments in employees which was partially offset by (v) the net increase in revenue as described above and (vi) leveraging our expense base.

The Retail segment’s total revenues for the nine months ended September 30, 2024 increased 8.7%, or $167 million, as compared to the same period in 2023, to $2,093 million.

The $175 million increase in core commissions and fees revenue was driven by:

(i) approximately $55 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023;

(ii) an increase of $95 million related to net new and renewal business;

(iii) an increase from the impact of Foreign Currency Translation of $4 million and (iv) an offsetting decrease of $3 million related to commissions and fees recorded in 2023 from businesses since divested.

Profit-sharing contingent commissions for the six months of 2024 decreased 30.0%, or $9 million, as compared to the same period in 2023, to $21 million.

The Retail segment’s total commissions and fees increased by 10.4%, and the Organic Revenue growth rate was 7.4% for the first six months of 2024.

The Organic Revenue growth rate was driven by net new business written during the preceding 12 months and growth on renewals of existing customers.

Renewal business was impacted by rate increases with continued increases in property and casualty, employee benefits and auto.

Income before income taxes for the six months ended June 30, 2024 increased 14.7%, or $47 million, as compared to the same period in 2023, to $367 million.

(ii) an increase of $119 million related to net new and renewal business and (iii) an offsetting decrease of $3 million related to commissions and fees recorded in 2023 from businesses since divested.

Profit-sharing contingent commissions for the nine months of 2024 decreased 25.0%, or $10 million, as compared to the same period in 2023, to $30 million.

This decrease was primarily the result of not qualifying for certain profit-sharing contingent commissions in 2024, due to higher loss ratios experienced by our insurance carrier partners.

The Retail segment’s total commissions and fees increased by 8.6%, and the Organic Revenue growth rate was 6.3% for the first nine months of 2024.

The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers.

Renewal business was impacted by moderating rates and growth of exposure units.

Income before income taxes for the nine months ended September 30, 2024 increased 13.0%, or $56 million, as compared to the same period in 2023, to $488 million.

The primary factors driving this increase were:

(i) a decrease in intercompany interest expense and (ii) the profit associated with the net increase in revenue as described above.

EBITDAC - Adjusted for the six months ended June 30, 2024 increased 8.5%, or $37 million, as compared to the same period in 2023, to $472 million.

EBITDAC Margin - Adjusted for the six months ended June 30, 2024 decreased to 32.5% from 32.9% in the same period in 2023.

(i) a decrease in intercompany interest expense;

(ii) a decrease in estimated acquisition earn-out payables, and (iii) the profit associated with the net increase in revenue as described above.

EBITDAC - Adjusted for the nine months ended September 30, 2024 increased 5.8%, or $35 million, as compared to the same period in 2023, to $641 million.

EBITDAC Margin - Adjusted for the nine months ended September 30, 2024 decreased to 30.6% from 31.5% in the same period in 2023.

The decrease in EBITDAC Margin - Adjusted was primarily driven by:

(i) a decrease in profit-sharing contingent commissions and, to a lesser extent, (ii) higher non-cash stock-based compensation and (iii) higher performance-based compensation associated with increased level of Organic Revenue growth, which was partially offset by, (iv) the net increase in revenue as described above and (v) leveraging our expense base.

(i) a decrease in profit-sharing contingent commissions and, (ii) higher non-cash stock-based compensation and (iii) higher compensation due to investments in employees, which was partially offset by, (iv) the net increase in revenue as described above and (v) leveraging our expense base.

Programs Segment

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Financial information relating to our Programs segment is as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in millions, except percentages)

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Capital expenditures

Total assets at June 30,

Total assets at September 30,

(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.

1 unchanged sentence

NMF = Not a meaningful figure

The Programs segment’s total revenues for the three months ended June 30, 2024 increased 15.8%, or $49 million, as compared to the same period in 2023, to $359 million.

The Programs segment’s total revenues for the three months ended September 30, 2024 increased 15.7%, or $48 million, as compared to the same period in 2023, to $353 million.

The $51 million increase in core commissions and fees revenue was driven by:

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(ii) approximately $60 million of net new business, renewal business, and fee revenues and (iii) an offsetting decrease of $26 million related to commissions and fees revenue from businesses divested in the preceding twelve months.

Profit-sharing contingent commissions for the second quarter of 2024 increased approximately $10 million as compared to the second quarter of 2023.

This increase was driven by improved underwriting results, qualifying for certain contingent commissions that we did not qualify for in the prior year, increased written premium and acquisitions completed in the past twelve months.

The Programs segment’s total commissions and fees increased by 11.9%, and the Organic Revenue growth rate was 15.4% for the three months ended June 30, 2024.

The Organic Revenue growth was driven by strong new business, good retention and a growth incentive received for one of our programs.

Income before income taxes for the three months ended June 30, 2024 increased 47.6%, or $59 million, as compared to the same period in 2023, to $183 million.

Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below along with the gain on disposal of certain businesses.

EBITDAC - Adjusted for the three months ended June 30, 2024 increased 21.1%, or $31 million, from the same period in 2023, to $178 million.

EBITDAC Margin - Adjusted for the three months ended June 30, 2024 increased to 49.6% from 47.4% in the same period in 2023.

EBITDAC - Adjusted grew due to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023, higher profit-sharing contingent commissions, and leveraging our expense base.

The Programs segment’s total revenues for the six months ended June 30, 2024 increased 16.3%, or $92 million, as compared to the same period in 2023, to $657 million.

Profit-sharing contingent commissions for the third quarter of 2024 decreased approximately $5 million as compared to the third quarter of 2023.

This decrease was driven by the expected claims costs associated with Hurricane Helene.

The Programs segment’s total commissions and fees increased by 15.3%, and the Organic Revenue growth rate was 22.8% for the three months ended September 30, 2024.

The Organic Revenue growth was driven by good new business and retention as well as exposure unit expansion.

Income before income taxes for the three months ended September 30, 2024 increased 33.9%, or $39 million, as compared to the same period in 2023, to $154 million.

Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below along with the decrease in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the three months ended September 30, 2024 increased 25.0%, or $34 million, from the same period in 2023, to $170 million.

EBITDAC Margin - Adjusted for the three months ended September 30, 2024 increased to 48.2% from 44.6% in the same period in 2023.

EBITDAC Margin - Adjusted increased due to leveraging our expense base and the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.

The Programs segment’s total revenues for the nine months ended September 30, 2024 increased 16.1%, or $140 million, as compared to the same period in 2023, to $1,010 million.

The $105 million increase in core commissions and fees revenue was driven by:

(i) approximately $66 million of net new renewal business and fee revenues;

(ii) an offsetting decrease of $51 million related to commissions and fees revenue from business divested in the preceding 12 months and (iii) $40 million from acquisitions that had no comparable revenues in the same period of 2023.

Profit-sharing contingent commissions for the six months ended June 30, 2023 increased approximately $28 million, or by 121.7%, as compared to the same period in 2023.

This increase was driven by qualifying for certain contingent commissions that we did not qualify for in the prior year from greater written premium, favorable loss ratios, prior year adjustments and acquisitions.

The Programs segment’s total commissions and fees increased by 10.2%, and the Organic Revenue growth rate was 13.5%, for the six months ended June 30, 2024.

The Organic Revenue growth was driven primarily by strong net new business across most of our Programs and good retention, a growth incentive received for one of our programs and offset by nonrecurring claims revenue in the prior year.

Income before income taxes for the six months ended June 30, 2024 increased 43.2%, or $86 million, from the same period in 2023, to $285 million.

(i) approximately

$126 million of net new renewal business and fee revenues;

(ii) an offsetting decrease of $79 million related to commissions and fees revenue from business divested in the preceding twelve months and (iii) $58 million from acquisitions that had no comparable revenues in the same period of 2023.

Profit-sharing contingent commissions for the nine months ended September 30, 2023 increased approximately $23 million, or by 65.7%, as compared to the same period in 2023.

This increase was driven by qualifying for certain contingent commissions that we did not qualify for in the prior year, favorable loss ratios, prior year adjustments and acquisitions partially offset due to the impact related to expected insured losses resulting from Hurricane Helene.

The Programs segment’s total commissions and fees increased by 14.8%, and the Organic Revenue growth rate was 16.8%, for the nine months ended September 30, 2024.

The Organic Revenue growth was driven primarily by strong net new business across most of our Programs and good retention, a growth incentive received for one of our programs and partially offset by nonrecurring claims revenue in the prior year.

Income before income taxes for the nine months ended September 30, 2024 increased 39.8%, or $125 million, from the same period in 2023, to $439 million.

Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below along with the gain on disposal of certain businesses.

EBITDAC - Adjusted for the six months ended June 30, 2024 increased 27.1%, or $65 million, as compared to the same period in 2023, to $305 million.

EBITDAC Margin - Adjusted for the six months ended June 30, 2024 increased to 46.4% from 42.5% in the same period in 2023.

EBITDAC - Adjusted increased due the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023, higher profit-sharing contingent commissions, and leveraging our expense base.

EBITDAC - Adjusted for the nine months ended September 30, 2024 increased 26.1%, or $98 million, as compared to the same period in 2023, to $474 million.

EBITDAC Margin - Adjusted for the nine months ended September 30, 2024 increased to 46.9% from 43.2% in the same period in 2023.

EBITDAC Margin - Adjusted increased due to leveraging our expense base and the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.

Wholesale Brokerage Segment

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Financial information relating to our Wholesale Brokerage segment is as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in millions, except percentages)

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Capital expenditures

Total assets at June 30,

Total assets at September 30,

(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.

1 unchanged sentence

NMF = Not a meaningful figure

The Wholesale Brokerage segment’s total revenues for the three months ended June 30, 2024 increased 14.4%, or $20 million, as compared to the same period in 2023, to $159 million.

The Wholesale Brokerage segment’s total revenues for the three months ended September 30, 2024 increased 14.0%, or $21 million, as compared to the same period in 2023, to $171 million.

The $14 million net increase in core commissions and fees revenue was driven primarily by:

(i) $12 million related to net new and renewal business and (ii) $2 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023.

Profit-sharing contingent commissions for the second quarter of 2024 increased $1 million compared to the second quarter of 2023, driven by acquired businesses in the last year.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.2%, and the Organic Revenue growth rate was 11.0% for the second quarter of 2024.

The Organic Revenue growth rate was driven by strong new business and good retention, as well as a combination of rate and exposure unit increases.

Income before income taxes for the three months ended June 30, 2024 increased 23.7%, or $9 million, as compared to the same period in 2023, to $47 million due to:

Profit-sharing contingent commissions for the third quarter of 2024 increased $6 million compared to the third quarter of 2023, driven by improved underwriting results, increased written premium and finalization of prior year estimates of profit-sharing contingent commissions.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.4%, and the Organic Revenue growth rate was 8.4% for the third quarter of 2024.

The Organic Revenue growth rate was driven by net new business and a combination of rate and exposure unit increases.

Income before income taxes for the three months ended September 30, 2024 increased 133.3%, or $32 million, as compared to the same period in 2023, to $56 million due to:

(i) the growth of EBITDAC - Adjusted described below and (ii) a decrease in the change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the three months ended June 30, 2024 increased 23.3%, or $10 million, as compared to the same period in 2023, to $53 million.

EBITDAC Margin - Adjusted for the three months ended June 30, 2024 increased to 33.3% from 30.9%, as compared to the same period in 2023.

EBITDAC - Adjusted for the three months ended September 30, 2024 increased 17.9%, or $10 million, as compared to the same period in 2023, to $66 million.

EBITDAC Margin - Adjusted for the three months ended September 30, 2024 increased to 38.6% from 37.3%, as compared to the same period in 2023.

EBITDAC Margin - Adjusted increased due to:

(i) certain nonrecurring operating expenses in the prior year;

(ii) total revenues growth and (iii) leveraging our expense base.

The Wholesale Brokerage segment’s total revenues for the six months ended June 30, 2024 increased 14.9%, or $39 million, as compared to the same period in 2023, to $301 million.

(i) total revenues growth and (ii) leveraging our expense base.

The Wholesale Brokerage segment’s total revenues for the nine months ended September 30, 2024 increased 14.6%, or $60 million, as compared to the same period in 2023, to $472 million.

The $48 million net increase in core commissions and fees revenue was driven primarily by:

(i) $28 million related to net new and renewal business and (ii) $6 million related to core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023.

Profit-sharing contingent commissions for the first six months of 2024 increased approximately $3 million compared to the same period of 2023.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.3%, and the Organic Revenue growth rate was 11.0% for the first six months of 2024.

(i) $39 million related to net new and renewal business;

(ii) $7 million related to core commissions and fees revenue from acquisitions and dispositions that had no comparable revenues in the same period of 2023;

and (iii) an increase from the impact of Foreign Currency Translation of $1 million.

Profit-sharing contingent commissions for the first nine months of 2024 increased approximately $9 million compared to the same period of 2023 driven by improved underwriting results, increased written premium, finalization of prior-year estimates and acquisitions completed in the past twelve months.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.9%, and the Organic Revenue growth rate was 9.8% for the first nine months of 2024.

The Organic Revenue growth rate was driven by strong new business and good retention, as well as a combination of rate and exposure unit increases.

Income before income taxes for the six months ended June 30, 2024 increased 27.5%, or $19 million, as compared to the same period in 2023, to $88 million due to:

Income before income taxes for the nine months ended September 30, 2024 increased 55.9%, or $52 million, as compared to the same period in 2023, to $145 million due to:

(i) the growth of EBITDAC - Adjusted described below and (ii) a decrease in the change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the six months ended June 30, 2024 increased 22.2%, or $18 million, as compared to the same period in 2023, to $99 million.

EBITDAC Margin - Adjusted for the six months ended June 30, 2024 increased to 32.9% from 30.9% in the same period in 2023 due to:

(i) certain nonrecurring operating expenses in the prior year;

(ii) total revenues growth and (iii) leveraging our expense base.

EBITDAC - Adjusted for the nine months ended September 30, 2024 increased 21.2%, or $29 million, as compared to the same period in 2023, to $166 million.

EBITDAC Margin - Adjusted for the nine months ended September 30, 2024 increased to 35.2% from 33.3% in the same period in 2023 due to:

(i) total revenues growth;

(ii) certain nonrecurring operating expenses in the prior year;

and (iii) leveraging our expense base.

As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” column in the Segment Information table includes any revenue and expenses not allocated to reportable segments, and corporate-related items, including the intercompany interest expense charges to reporting segments.

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Our capital requirements to operate as an insurance intermediary are low and we have been able to grow and invest in our business through a combination of cash that has been generated from operations, the disciplined use of debt and the issuance of equity as part of the purchase price consideration to acquire certain businesses.

We have the ability to utilize our Revolving Credit Facility, which as of June 30, 2024 provided up to $800 million in available cash.

We have the ability to utilize our Revolving Credit Facility, which as of September 30, 2024 provided up to $800 million in available cash.

The Revolving Credit Facility contains an expansion option for up to an additional $500 million of borrowing capacity, subject to the approval of participating lenders.

1 unchanged sentence

Additionally, the Company may, subject to satisfaction of certain conditions, including receipt of additional term loan commitments by new or existing lenders, increase either Term Loan Commitment under the existing Loan Agreement or the term loans issued thereunder or issue new tranches of term loans in an aggregate additional amount of up to $400 million.

Including the expansion options under all existing credit agreements, the Company has access to up to $1,700 million of incremental borrowing capacity as of June 30, 2024.

Including the expansion options under all existing credit agreements, the Company has access to up to $1,700 million of incremental borrowing capacity as of September 30, 2024.

We believe that we have access to additional funds, if needed, through the capital markets or private placements to obtain further debt financing under the current market conditions.

The Company believes that its existing cash, cash equivalents, short-term investment portfolio

and funds generated from operations, together with the funds available under the Revolving Credit Facility, will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for at least the next twelve months and in the long term.

The Company believes that its existing cash, cash equivalents, short-term investment portfolio and funds generated from operations, together with the funds available under the Revolving Credit Facility, will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for at least the next twelve months and in the long-term.

Subsequent to September 30, 2024, the Company exercised a draw down on the Revolving Credit Facility for $350 million in connection with the pending acquisition of Quintes Holding B.V.

that is expected to close in the fourth quarter of 2024.

Contractual Cash Obligations

As of June 30, 2024, our contractual cash obligations were as follows:

As of September 30, 2024, our contractual cash obligations were as follows:

Payments Due by Period

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dollars are measured at the current foreign exchange rate.

Six of the estimated acquisition earn-out payables assumed in connection with the acquisitions of GRP (Jersey) Holdco Limited and Kentro Capital Limited included provisions with no maximum potential earn-out amount.

The amount recorded for these acquisitions as of June 30, 2024 is $4 million.

Six of the estimated acquisition earn-out payables assumed included provisions with no maximum potential earn-out amount.

The amount recorded for these acquisitions as of September 30, 2024 is $4 million.

The Company deems a significant increase to this amount to be unlikely.

(3) Does not include approximately $37 million of current liability for a dividend of $0.1300 per share approved by the Board of Directors on July 17, 2024.

Total debt at June 30, 2024 was $4,116 million net of unamortized discount and debt issuance costs, which was an increase of $320 million compared to December 31, 2023.

The increase includes:

the issuance of $600 million senior notes and the amortization of discounted debt related to our various unsecured senior notes, and debt issuance cost amortization of $2 million;

offset by the repayment of $275 million in floating rate debt balances and the addition of deferred financing costs and discount on debt of $7 million.

During the six months ended June 30, 2024, the Company repaid $13 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments.

The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $206 million as of June 30, 2024.

The Company's next scheduled principal payment is due September 30, 2024 and is equal to $6 million.

During the six months ended June 30, 2024, the Company repaid $13 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments.

The Term A-2 Loans had an outstanding balance of $444 million as of June 30, 2024.

The Company’s next scheduled principal payment is due September 30, 2024 and is equal to $13 million.

(3) Does not include approximately $43 million of current liability for a dividend of $0.1500 per share approved by the Board of Directors on October 23, 2024.

Total debt at September 30, 2024 was $3,592 million net of unamortized discount and debt issuance costs, which was a decrease of $204 million compared to December 31, 2023.

The decrease includes:

the repayment of $800 million in senior notes and floating-rate debt balances net of Revolving Credit Facility activity and the addition of deferred financing costs and discount on debt of $7 million;

offset by the issuance of $600 million senior notes and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $3 million.

During the nine months ended September 30, 2024, the Company repaid $19 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments.

The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $200 million as of September 30, 2024.

The Company's next scheduled principal payment is due in December 2024 and is equal to $6 million.

During the nine months ended September 30, 2024, the Company repaid $31 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments.

The Term A-2 Loans had an outstanding balance of $425 million as of September 30, 2024.

The Company’s next scheduled principal payment is due in December 2024 and is equal to $13 million.

During the nine months ended September 30, 2024, the Company repaid $150 million of principal related to the Term Loans issued under the Term A-1 Loan Commitment (“Term A-1 Loans”).

The Term A-1 Loans had an outstanding balance of $150 million as of September 30, 2024.

On February 13, 2024, the Company drew down on the Revolving Credit Facility $150 million, and the proceeds were used for general corporate purposes.

During the six months ended June 30, 2024, the Company repaid $250 million of the outstanding balance on the Revolving Credit Facility.

The Revolving Credit Facility had no outstanding balance as of June 30, 2024.

During the nine months ended September 30, 2024, the Company repaid $250 million of the outstanding balance on the Revolving Credit Facility.

The Revolving Credit Facility had no outstanding balance as of September 30, 2024.

On June 11, 2024, the Company completed the issuance of $600 million aggregate principal amount of 5.650% Senior Notes due 2034 (the “2034 Senior Notes”).

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The Company may redeem the 2034 Senior Notes in whole or in part at any time and from time to time, at the “make whole” redemption prices specified in the prospectus supplement for the 2034 Senior Notes being redeemed, plus accrued and unpaid interest thereon.

The Company intends to use the net proceeds from the offering of the 2034 Senior Notes to redeem its 4.200% senior notes due September 2024, and for general corporate purposes.

As of June 30, 2024 there was a total outstanding debt balance of $600 million exclusive of the associated discount balance on the 2034 Senior Notes.

During the six months ended June 30, 2024, the Company repaid $150 million of principal related to the Term Loans issued under the Term A-1 Loan Commitment (“Term A-1 Loans”).

The Term A-1 Loans had an outstanding balance of $150 million as of June 30, 2024.

In September 2024, the Company used a portion of the proceeds from the

2034 Senior Notes to repay $500 million of the 4.200% senior notes due September 2024.

In June 2024, the Company also used $100 million of the proceeds to repay a portion of an outstanding term loan balance.

As of September 30, 2024 there was a total outstanding debt balance of $600 million exclusive of the associated discount balance on the 2034 Senior Notes.

Quantitative and Qualita tive Disclosures About Market Risk

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These investments are subject to interest rate risk.

The fair value of our invested assets at June 30, 2024 and December 31, 2023 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.

The fair value of our invested assets at September 30, 2024 and December 31, 2023 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.

We do not actively invest or trade in equity securities.

In addition, we generally dispose of any significant equity securities received in conjunction with an acquisition shortly after the acquisition date.

As of June 30, 2024, we had $800 million outstanding under the Second Amended and Restated Credit Agreement and the Loan Agreement tied to the Secured Overnight Financing Rate (“SOFR”).

As of September 30, 2024, we had $775 million outstanding under the Second Amended and Restated Credit Agreement and the Loan Agreement tied to the Secured Overnight Financing Rate (“SOFR”).

These agreements bear interest on a floating basis and are therefore subject to changes in the associated interest expense.

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in the following functional currencies, British pounds, Canadian dollar, and euros.

Based upon our foreign currency rate exposure as of June 30, 2024, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Condensed Consolidated Financial Statements.

Based upon our foreign currency rate exposure as of September 30, 2024, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Condensed Consolidated Financial Statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis