BROWN & BROWN, INC. 10-Q

ITEM 2 — Management’s Discussion and Analysis o f Financial Condition and Results of Operations 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, 2024, and the two discussions should be read together. GENERAL Company Overview — Second Quarter of 2025 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, which are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). 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. We are a diversified insurance agency, wholesale brokerage, insurance programs and service organization headquartered in Daytona Beach, Florida. As an insurance intermediary, our principal sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers. Commission revenues generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, sales or payroll levels) to determine what premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control. We also participate in capitalized captive insurance facilities (the "Captives") for the purpose of having additional capacity to place coverage, drive additional revenues and to participate in underwriting results. The Captives focus on property insurance for earthquake and wind exposed properties underwritten by certain of our MGUs and limit the Company's exposure to claims expenses through reinsurance or by only participating in certain tranches of the underwriting. The volume of business from new and existing customers, fluctuations in insurable exposure units, changes in premium rate levels, changes in general economic and competitive conditions, a reduction of purchased limits, or the occurrence of catastrophic weather events all affect our revenues. For example, higher levels of inflation, an increase in the value of insurable exposure units or a general decline in economic activity, could increase or decrease the value of insurable exposure units. Conversely, increasing costs of litigation settlements and awards could cause some customers to seek higher levels of insurance coverage. Historically, we have grown our revenues as a result of our focus on new business, customer retention and acquisitions. We foster a strong, decentralized sales and service culture, which enables responsiveness to changing business conditions and drives accountability for results. The term “core commissions and fees” excludes profit-sharing contingent commissions, and therefore, it represents the revenues earned directly from specific insurance policies sold, and specific fee-based services rendered. The net change in core commissions and fees reflects the aggregate changes attributable to: (i) net new and lost accounts; (ii) net changes in our customers’ exposure units, deductibles or insured limits; (iii) net changes in insurance premium rates or the commission rate paid to us by our carrier partners; (iv) the net change in fees paid to us by our customers and (v) any businesses acquired or disposed of. We also earn profit-sharing contingent commissions, which are commissions based primarily on underwriting results, but in select situations may reflect additional considerations for volume, growth and/or retention. These commissions, which are included in our commissions and fees in the Consolidated Statements of Income, are estimated and accrued throughout the year based on actual premiums written and knowledge, to the extent it is available, of losses incurred. Payments are primarily received in the first and second quarters of each subsequent year, based upon the aforementioned considerations for the prior year(s), but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until they are received. Over the last three years, profit-sharing contingent commissions have averaged approximately 3.6% of commissions and fee revenues. Fee revenues primarily relate to services other than securing coverage for our customers, and for fees negotiated in lieu of commissions. Fee revenues are generated by: (i) our Programs and Wholesale Brokerage segments, which earn fees primarily for the issuance of insurance policies on behalf of insurance carriers and (ii) our Retail segment in our large-account customer base, where we primarily earn fees for securing insurance for our customers, in our F&I businesses where we earn fees for assisting our customers with creating and selling warranty and service risk management programs and fees for Medicare Set-aside services, Social Security disability services and Medicare benefits advocacy services. Fee revenues as a percentage of our total commissions and fees, represented 21.1% in 2024 and 23.9% in 2023. For the three months ended June 30, 2025, our total commissions and fees growth rate was 8.2%, and our consolidated Organic Revenue growth rate was 3.6%. Historically, investment and other 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. Investment income also includes gains and losses realized from the sale of investments. Other income primarily reflects other miscellaneous revenues. Income before income taxes for the three months ended June 30, 2025 decreased from the second quarter of 2024 by $35 million or 10.1%, due to the gain on disposal recorded in the second quarter of 2024 related to the sale of certain third-party claims administration and 25 adjusting services businesses and Acquisition/Integration Costs associated with the pending acquisition of Accession, partially offset by Organic Revenue growth, leveraging our expense base, net new business and acquisitions completed in the past twelve months. Information Regarding Non-GAAP Financial Measures In the discussion and analysis of our results of operations, in addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), we provide references to the following non-GAAP financial measures as defined in Regulation G of the SEC rules: Organic Revenue, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted and EBITDAC Margin - Adjusted. We present these measures because we believe such information is of interest to the investment community. We believe they provide additional meaningful methods to evaluate the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis due to the impact of certain items that have a high degree of variability, that we believe are not indicative of ongoing performance and that are not easily comparable from period to period. This non-GAAP financial information should be considered in addition to, not in lieu of, the Company’s consolidated income statements and balance sheets as of the relevant date. Consistent with Regulation G, a description of such information is provided below and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations - Segment Information.” We view Organic Revenue and Organic Revenue growth as important indicators when assessing and evaluating our performance on a consolidated basis and for each of our three segments, because they allow us to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that were a part of our business in both the current and prior year and that are expected to continue in the future. We also view EBITDAC, EBITDAC - Adjusted, EBITDAC Margin and EBITDAC Margin - Adjusted as important indicators when assessing and evaluating our performance, as they present more comparable measurements of our operating margins in a meaningful and consistent manner. As disclosed in our most recent proxy statement, we use Organic Revenue growth, and EBITDAC Margin - Adjusted as key performance metrics for our short-term and long-term incentive compensation plans for executive officers and other key employees. Non-GAAP Revenue Measures • Organic Revenue is our core commissions and fees less: (i) the core commissions and fees earned for the first twelve months by newly acquired operations; (ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period) and (iii) Foreign Currency Translation (as defined below). The term “core commissions and fees” excludes profit-sharing contingent commissions; and therefore, represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered. Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth. Non-GAAP Earnings Measures • EBITDAC is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables. • EBITDAC Margin is defined as EBITDAC divided by total revenues. • EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal (as defined below), and (ii) Acquisition/Integration Costs (as defined below) • EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by total revenues. Definitions Related to Certain Components of Non-GAAP Measures • “Acquisition/Integration Costs” means the acquisition and integration costs (e.g., costs associated with regulatory filings; costs for third-party professional services, including legal, accounting, consulting, financial advisory and due diligence; costs and fees associated with entry into the bridge financing commitment; costs of integrating or streamlining processes and information technology systems, including data migration and system integration; costs associated with optimizing vendor agreements and leased office space, including exit costs related to location combinations; and employment-related costs, including severance payments, costs associated with the transition of certain legacy compensation programs and retention-related compensation expenses) arising out of our pending acquisition of Accession, which are not considered to be normal, recurring or part of 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. dollars for the same period in the prior year. 26 • “(Gain)/loss on disposal” a caption on our consolidated statements of income which reflects net proceeds received as compared to net book value related to sales of books of business and other divestiture transactions, such as the disposal of a business through sale or closure. Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments and; therefore, comparability may be limited. This supplemental non-GAAP financial information should be considered in addition to, and not in lieu of, the Company ' s Condensed Consolidated Financial Statements. Acquisitions 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 2025, we acquired 702 insurance intermediary operations. Critical Accounting Policies We have had no changes to our Critical Accounting Policies as described in our most recent Form 10-K for the year ended December 31, 2024. We believe that of our significant accounting and reporting policies, the more critical policies include our accounting for revenue recognition, business combinations and purchase price allocations, intangible asset impairments, non-cash stock-based compensation and reserves for litigation. In particular, the accounting for these areas is subject to uncertainty, because it requires significant use of judgment to be made by management. Different assumptions in the application of these policies could result in material changes in our consolidated financial position or consolidated results of operations. 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, 2024 for details regarding our critical and significant accounting policies. 27 RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 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, (in millions, except percentages) 2025 2024 % Change 2025 2024 % Change REVENUES Core commissions and fees $ 1,204 $ 1,118 7.7 % $ 2,546 $ 2,308 10.3 % Profit-sharing contingent commissions 45 36 25.0 % 88 82 7.3 % Investment and other income 36 24 50.0 % 55 45 22.2 % Total revenues 1,285 1,178 9.1 % 2,689 2,435 10.4 % EXPENSES Employee compensation and benefits 640 585 9.4 % 1,323 1,216 8.8 % Other operating expenses 211 173 22.0 % 398 334 19.2 % (Gain)/loss on disposal — (31 ) (100.0 )% 1 (29 ) (103.4 )% Amortization 50 44 13.6 % 103 86 19.8 % Depreciation 11 11 — % 23 21 9.5 % Interest 51 49 4.1 % 96 97 (1.0 )% Change in estimated acquisition earn-out payables 11 1 NMF 7 (2 ) NMF Total expenses 974 832 17.1 % 1,951 1,723 13.2 % Income before income taxes 311 346 (10.1 )% 738 712 3.7 % Income taxes 77 87 (11.5 )% 169 159 6.3 % Net income before non-controlling interests 234 259 (9.7 )% 569 553 Less: Net income attributable to non-controlling interests 3 2 6 3 Net income attributable to the Company $ 231 $ 257 (10.1 )% $ 563 $ 550 2.4 % Income Before Income Taxes Margin (1) 24.2 % 29.4 % 27.4 % 29.2 % EBITDAC - Adjusted (2) $ 471 $ 420 12.1 % $ 1,005 $ 885 13.6 % EBITDAC Margin - Adjusted (2) 36.7 % 35.7 % 37.4 % 36.3 % Organic Revenue growth rate (2) 3.6 % 10.0 % 5.1 % 9.3 % Employee compensation and benefits relative to total revenues 49.8 % 49.7 % 49.2 % 49.9 % Other operating expenses relative to total revenues 16.4 % 14.7 % 14.8 % 13.7 % (1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. NMF = Not a meaningful figure Commissions and Fees Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended June 30, 2025 increased $95 million to $1,249 million, or 8.2%, over the same period in 2024. Core commissions and fees revenue for the second quarter of 2025 increased $86 million or 7.7%, composed of: (i) approximately $40 million of net new and renewal business, which reflects an Organic Revenue growth rate of 3.6%; (ii) $42 million from acquisitions that had no comparable revenues in the same period of 2024; (iii) an increase from the impact of Foreign Currency Translation of $8 million and an offsetting decrease from (iv) $4 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 2025 increased by $9 million, or 25%, compared to the same period in 2024. 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. 28 Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the six months ended June 30, 2025, increased $244 million to $2,634 million, or 10.2%, over the same period in 2024. Core commissions and fees revenue for the six months ended June 30, 2025 increased $238 million or 10.3%, composed of: (i) approximately $118 million of net new and renewal business, which reflects an Organic Revenue growth rate of 5.1%; (ii) $121 million from acquisitions that had no comparable revenues in the same period of 2024; (iii) an increase from the impact of Foreign Currency Translation of $6 million and (iv) an offsetting decrease of $7 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, 2025 increased by $6 million, or 7.3%, compared to the same period in 2024. 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 and Other Income Investment and other income for the three months ended June 30, 2025 increased $12 million from the same period in 2024. Investment income for the six months ended June 30, 2025 increased $10 million, from the same period in 2024. The increase was primarily driven by approximately $13 million of interest income generated by the proceeds received in June 2025 from our follow-on common stock offering and senior notes issuance in connection with the pending acquisition of Accession, which was partially offset by lower average interest rates as compared to the prior year. Employee Compensation and Benefits Employee compensation and benefits expense as a percentage of total revenues was 49.8% for the three months ended June 30, 2025 as compared to 49.7% for the three months ended June 30, 2024, an increase of 9.4%, or $55 million. This increase included $21 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $34 million. This underlying employee compensation and benefits expense increase was primarily related to: (i) an increase in staff costs attributable to new hires; (ii) the increased cost of health insurance; (iii) an increase in producer compensation associated with revenue growth; and (iv) the year-over-year increase of approximately $14 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. Employee compensation and benefits expense as a percentage of total revenues was 49.2% for the six months ended June 30, 2025 as compared to 49.9% for the six months ended June 30, 2024, and increased 8.8%, or $107 million. This increase included $54 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $53 million. This underlying employee compensation and benefits expense increase was primarily related to: (i) an increase in staff costs attributable to new hires; (ii) the increased cost of health insurance; and (iii) an increase in producer compensation associated with revenue growth. Other Operating Expenses Other operating expenses represented 16.4% of total revenues for the second quarter of 2025, as compared to 14.7% for the second quarter of 2024. Other operating expenses for the second quarter of 2025 increased $38 million, or 22.0%, from the same period of 2024. This change includes: (i) $9 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2024; (ii) $37 million of Acquisition/Integration Costs associated with the pending acquisition of Accession; (iii) increased information technology-related costs; and partially offset by (iv) the year-over-year decrease of approximately $14 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. Other operating expenses represented 14.8% of total revenues for the six months ended June 30, 2025, as compared to 13.7% for the six months ended June 30, 2024. Other operating expenses for the first six months of 2025 increased $64 million, or 19.2%, from the same period of 2024. This change includes: (i) $17 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2024; (ii) $37 million of Acquisition/Integration Costs associated with the pending acquisition of Accession; and (iii) increased information technology-related costs. (Gain)/Loss on Disposal Gain on disposal for the second quarter of 2025 decreased $31 million from the second quarter of 2024. Gain on disposal for the six months ended June 30, 2025 decreased $30 million from the six months ended June 30, 2024. These decreases were primarily attributable to the prior year 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 Amortization expense for the second quarter of 2025 increased $6 million, or 13.6%, compared to the second quarter of 2024. Amortization expense for the six months ended June 30, 2025 increased $17 million, or 19.8%, compared to the six months ended June 30, 29 2024. 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 Depreciation expense for the second quarter of 2025 remained flat, compared to the second quarter of 2024. Depreciation expense for the six months ended June 30, 2025 increased $2 million, or 9.5%, compared to the six months ended June 30, 2024. 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 2025 increased $2 million, or 4.1%, compared to the second quarter of 2024. Interest expense for the six months ended June 30, 2025 decreased $1 million, or 1.0%, compared to the first six months of 2024. Underlying interest expense for both the second quarter and the six-month period ended June 30, 2025 would have decreased by excluding approximately $5 million related to the issuance and sale of notes in June 2025 in connection with the pending acquisition of Accession. Change in Estimated Acquisition Earn-Out Payables Accounting Standards Codification (“ASC”) Topic 805 - Business Combinations is the authoritative guidance requiring an acquirer to recognize 100% of the fair value of acquired assets, including goodwill, and assumed liabilities (with only limited exceptions) upon initially obtaining control of an acquired entity. Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase price arrangements) at the acquisition date must be included in the purchase price consideration. The recorded purchase price for acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are required to be recorded in the Condensed Consolidated Statements of Income when incurred or reasonably estimated. Estimations of potential earn-out obligations are typically based upon future earnings of the acquired operations or entities, usually for periods ranging from one to three years. 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, 2025 and 2024, 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, (in millions) 2025 2024 2025 2024 Change in fair value of estimated acquisition earn-out payables $ 9 $ (2 ) $ 4 $ (7 ) Interest expense accretion 2 3 3 5 Net change in earnings from estimated acquisition earn-out payables $ 11 $ 1 $ 7 $ (2 ) For the three months and six months ended June 30, 2025, the fair value of estimated earn-out payables was re-evaluated and resulted in increases of $9 million and $4 million, respectively, which resulted in charges to the Condensed Consolidated Statements of Income. As of June 30, 2025, estimated acquisition earn-out payables totaled $151 million, of which $63 million was recorded as accounts payable and $88 million was recorded as other non-current liabilities. Income Taxes The effective tax rate on income from operations for the three months ended June 30, 2025 and 2024 was 24.8% and 25.1%, respectively. The effective tax rate on income from operations for the six months ended June 30, 2025 and 2024 was 22.9% and 22.3%, respectively. The increase for the six months ended June 30, 2025 was driven primarily by the lower tax benefit associated with vesting of restricted stock awards and restricted stock units in 2025 as compared to 2024. 30 RESULTS OF OPERATIONS — SEGMENT INFORMATION As discussed in Note 12 to the Condensed Consolidated Financial Statements, we operate three reportable segments: Retail, Programs and Wholesale Brokerage. On a segmented basis, changes in amortization, depreciation and interest expenses generally result from activity associated with acquisitions. Likewise, other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods. 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 June 30, 2025 and 2024, and the growth rates for Organic Revenue for the three months ended June 30, 2025, including by segment, are as follows: 2025 Retail (1) Programs Wholesale Brokerage Total (in millions) 2025 2024 2025 2024 2025 2024 2025 2024 Commissions and fees $ 694 $ 643 $ 374 $ 353 $ 181 $ 158 $ 1,249 $ 1,154 Total change $ 51 $ 21 $ 23 $ 95 Total growth % 7.9 % 5.9 % 14.6 % 8.2 % Profit-sharing contingent commissions (7 ) (7 ) (30 ) (25 ) (8 ) (4 ) (45 ) (36 ) Core commissions and fees $ 687 $ 636 $ 344 $ 328 $ 173 $ 154 $ 1,204 $ 1,118 Acquisitions (29 ) (1 ) (12 ) (42 ) Dispositions (3 ) (1 ) — (4 ) Foreign Currency Translation 6 1 1 8 Organic Revenue (2) $ 658 $ 639 $ 343 $ 328 $ 161 $ 155 $ 1,162 $ 1,122 Organic Revenue growth (2) $ 19 $ 15 $ 6 $ 40 Organic Revenue growth rate (2) 3.0 % 4.6 % 3.9 % 3.6 % (1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items. (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, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the three months ended June 30, 2024, including by segment, are as follows: 2024 Retail (1) Programs Wholesale Brokerage Total (in millions) 2024 2023 2024 2023 2024 2023 2024 2023 Commissions and fees $ 643 $ 589 $ 353 $ 308 $ 158 $ 139 $ 1,154 $ 1,036 Total change $ 54 $ 45 $ 19 $ 118 Total growth % 9.2 % 14.6 % 13.7 % 11.4 % Profit-sharing contingent commissions (7 ) (15 ) (25 ) (15 ) (4 ) (3 ) (36 ) (33 ) Core commissions and fees $ 636 $ 574 $ 328 $ 293 $ 154 $ 136 $ 1,118 $ 1,003 Acquisitions (21 ) (20 ) (3 ) (44 ) Dispositions (2 ) (26 ) — (28 ) Foreign Currency Translation 1 — — 1 Organic Revenue (2) $ 615 $ 573 $ 308 $ 267 $ 151 $ 136 $ 1,074 $ 976 Organic Revenue growth (2) $ 42 $ 41 $ 15 $ 98 Organic Revenue growth rate (2) 7.3 % 15.4 % 11.0 % 10.0 % (1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items. (2) A non-GAAP financial measure. 31 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, 2025 and 2024, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2025, including by segment, are as follows: 2025 Retail (1) Programs Wholesale Brokerage Total (in millions) 2025 2024 2025 2024 2025 2024 2025 2024 Commissions and fees $ 1,598 $ 1,446 $ 697 $ 645 $ 339 $ 299 $ 2,634 $ 2,390 Total change $ 152 $ 52 $ 40 $ 244 Total growth % 10.5 % 8.1 % 13.4 % 10.2 % Profit-sharing contingent commissions (22 ) (21 ) (49 ) (51 ) (17 ) (10 ) (88 ) (82 ) Core commissions and fees $ 1,576 $ 1,425 $ 648 $ 594 $ 322 $ 289 $ 2,546 $ 2,308 Acquisitions (102 ) (2 ) (17 ) (121 ) Dispositions (7 ) (1 ) 1 (7 ) Foreign Currency Translation 5 1 — 6 Organic Revenue (2) $ 1,474 $ 1,423 $ 646 $ 594 $ 305 $ 290 $ 2,425 $ 2,307 Organic Revenue growth (2) $ 51 $ 52 $ 15 $ 118 Organic Revenue growth % (2) 3.6 % 8.8 % 5.2 % 5.1 % (1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items. (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: 2024 Retail (1) Programs Wholesale Brokerage Total (in millions) 2024 2023 2024 2023 2024 2023 2024 2023 Commissions and fees $ 1,446 $ 1,320 $ 645 $ 562 $ 299 $ 262 $ 2,390 $ 2,144 Total change $ 126 $ 83 $ 37 $ 246 Total growth % 9.5 % 14.8 % 14.1 % 11.5 % Profit-sharing contingent commissions (21 ) (30 ) (51 ) (23 ) (10 ) (7 ) (82 ) (60 ) Core commissions and fees $ 1,425 $ 1,290 $ 594 $ 539 $ 289 $ 255 $ 2,308 $ 2,084 Acquisitions (39 ) (40 ) (6 ) (85 ) Dispositions (3 ) (51 ) (1 ) (55 ) Foreign Currency Translation 4 — 1 5 Organic Revenue (2) $ 1,386 $ 1,291 $ 554 $ 488 $ 283 $ 255 $ 2,223 $ 2,034 Organic Revenue growth (2) $ 95 $ 66 $ 28 $ 189 Organic Revenue growth % (2) 7.4 % 13.5 % 11.0 % 9.3 % (1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items. (2) A non-GAAP financial measure. 32 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, 2025, including by segment, is as follows: (in millions) Retail Programs Wholesale Brokerage Other Total Total Revenues $ 697 $ 381 $ 182 $ 25 $ 1,285 Income before income taxes 127 180 53 (49 ) 311 Income Before Income Taxes Margin (1) 18.2 % 47.2 % 29.1 % NMF 24.2 % Amortization 35 12 3 — 50 Depreciation 6 3 1 1 11 Interest 15 6 3 27 51 Change in estimated acquisition earn-out payables 9 — 2 — 11 EBITDAC (2) 192 201 62 (21 ) 434 EBITDAC Margin (2) 27.5 % 52.8 % 34.1 % NMF 33.8 % (Gain)/loss on disposal — — — — — Acquisition/Integration Costs — — — 37 37 EBITDAC - Adjusted (2) $ 192 $ 201 $ 62 $ 16 $ 471 EBITDAC Margin - Adjusted (2) 27.5 % 52.8 % 34.1 % NMF 36.7 % (3) (1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. (3) Amount reflects the positive impact of approximately $13 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company’s pending acquisition of Accession. 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 June 30, 2024, including by segment, is as follows: (in millions) Retail Programs Wholesale Brokerage Other Total Total Revenues $ 646 $ 359 $ 159 $ 14 $ 1,178 Income before income taxes 129 183 47 (13 ) 346 Income Before Income Taxes Margin (1) 20.0 % 51.0 % 29.6 % NMF 29.4 % Amortization 29 12 3 — 44 Depreciation 5 4 1 1 11 Interest 19 7 3 20 49 Change in estimated acquisition earn-out payables 1 1 (1 ) — 1 EBITDAC (2) 183 207 53 8 451 EBITDAC Margin (2) 28.3 % 57.7 % 33.3 % NMF 38.3 % (Gain)/loss on disposal (2 ) (29 ) — — (31 ) Acquisition/Integration Costs — — — — — EBITDAC - Adjusted (2) $ 181 $ 178 $ 53 $ 8 $ 420 EBITDAC Margin - Adjusted (2) 28.0 % 49.6 % 33.3 % NMF 35.7 % (1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. 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 33 non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2025, including by segment, is as follows: (in millions) Retail Programs Wholesale Brokerage Other Total Total Revenues $ 1,604 $ 709 $ 341 $ 35 $ 2,689 Income before income taxes 411 302 97 (72 ) 738 Income Before Income Taxes Margin (1) 25.6 % 42.6 % 28.4 % NMF 27.4 % Amortization 73 24 7 (1 ) 103 Depreciation 12 7 1 3 23 Interest 30 12 6 48 96 Change in estimated acquisition earn-out payables 3 2 2 — 7 EBITDAC (2) 529 347 113 (22 ) 967 EBITDAC Margin (2) 33.0 % 48.9 % 33.1 % NMF 36.0 % (Gain)/loss on disposal 1 — — — 1 Acquisition/Integration Costs — — — 37 37 EBITDAC - Adjusted (2) $ 530 $ 347 $ 113 $ 15 $ 1,005 EBITDAC Margin - Adjusted (2) 33.0 % 48.9 % 33.1 % NMF 37.4 % (3) (1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. (3) Amount reflects the positive impact of approximately $13 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company’s pending acquisition of Accession. 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: (in millions) Retail Programs Wholesale Brokerage Other Total Total Revenues $ 1,452 $ 657 $ 301 $ 25 $ 2,435 Income before income taxes 367 285 88 (28 ) 712 Income Before Income Taxes Margin (1) 25.3 % 43.4 % 29.2 % NMF 29.2 % Amortization 58 23 6 (1 ) 86 Depreciation 10 8 2 1 21 Interest 38 16 6 37 97 Change in estimated acquisition earn-out payables — 1 (3 ) — (2 ) EBITDAC (2) 473 333 99 9 914 EBITDAC Margin (2) 32.6 % 50.7 % 32.9 % NMF 37.5 % (Gain)/loss on disposal (1 ) (28 ) — — (29 ) Acquisition/Integration Costs — — — — — EBITDAC - Adjusted (2) $ 472 $ 305 $ 99 $ 9 $ 885 EBITDAC Margin - Adjusted (2) 32.5 % 46.4 % 32.9 % NMF 36.3 % (1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. NMF = Not a meaningful figure Retail Segment The Retail segment provides a broad range of insurance products and services to commercial, public and quasi-public, professional and individual insured customers, and non-insurance risk-mitigating products through our F&I businesses. Approximately 78% of the Retail segment’s commissions and fees revenue is commission based. 34 Financial information relating to our Retail segment is as follows: Three months ended June 30, Six months ended June 30, (in millions, except percentages) 2025 2024 % Change 2025 2024 % Change REVENUES Core commissions and fees $ 687 $ 637 7.8 % $ 1,577 $ 1,427 10.5 % Profit-sharing contingent commissions 7 7 — % 22 21 4.8 % Investment and other income 3 2 50.0 % 5 4 25.0 % Total revenues 697 646 7.9 % 1,604 1,452 10.5 % EXPENSES Employee compensation and benefits 385 355 8.5 % 833 755 10.3 % Other operating expenses 120 110 9.1 % 241 225 7.1 % (Gain)/loss on disposal — (2 ) (100.0 %) 1 (1 ) (200.0 %) Amortization 35 29 20.7 % 73 58 25.9 % Depreciation 6 5 20.0 % 12 10 20.0 % Interest 15 19 (21.1 %) 30 38 (21.1 %) Change in estimated acquisition earn-out payables 9 1 NMF 3 — NMF Total expenses 570 517 10.3 % 1,193 1,085 10.0 % Income before income taxes $ 127 $ 129 (1.6 %) $ 411 $ 367 12.0 % Income Before Income Taxes Margin (1) 18.2 % 20.0 % 25.6 % 25.3 % EBITDAC - Adjusted (2) $ 192 $ 181 6.1 % $ 530 $ 472 12.3 % EBITDAC Margin - Adjusted (2) 27.5 % 28.0 % 33.0 % 32.5 % Organic Revenue growth rate (2) 3.0 % 7.3 % 3.6 % 7.4 % Employee compensation and benefits relative to total revenues 55.2 % 55.0 % 51.9 % 52.0 % Other operating expenses relative to total revenues 17.2 % 17.0 % 15.0 % 15.5 % (1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. NMF = Not a meaningful figure The Retail segment’s total revenues for the three months ended June 30, 2025 increased 7.9%, or $51 million, as compared to the same period in 2024, to $697 million. The $50 million increase in core commissions and fees revenue was driven by: (i) approximately $29 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; (ii) an increase of $19 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $6 million and (iv) an offsetting decrease of $3 million related to commissions and fees recorded in 2024 from businesses since divested. Profit-sharing contingent commissions for the second quarter of 2025 remained flat at $7 million, as compared to the same period in 2024. The Retail segment’s total commissions and fees increased by 7.8%, and the Organic Revenue growth rate was 3.0% for the second quarter of 2025. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers. Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines and the timing of certain non-recurring revenue. Income before income taxes for the three months ended June 30, 2025 decreased 1.6%, or $2 million, as compared to the same period in 2024, to $127 million. The primary factors driving this decrease were: (i) an increase in estimated acquisition earn-out payables, and (ii) amortization and depreciation expense growing faster than total revenues, partially offset by (iii) a decrease in intercompany interest expense and (iv) the profit associated with the net increase in revenue as described above. EBITDAC - Adjusted for the three months ended June 30, 2025 increased 6.1%, or $11 million, as compared to the same period in 2024, to $192 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2025 decreased to 27.5% from 28.0% in the same period in 2024. The change in EBITDAC Margin - Adjusted was primarily driven by: (i) the timing of revenues and profit associated with certain recent acquisitions; and (ii) the impact of Foreign Currency Translation, which was partially offset by; (iii) leveraging our expense base. The Retail segment’s total revenues for the six months ended June 30, 2025 increased 10.5%, or $152 million, as compared to the same period in 2024, to $1,604 million. The $150 million increase in core commissions and fees revenue was driven by: (i) approximately $102 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; (ii) an 35 increase of $51 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $5 million; and (iv) an offsetting decrease of $7 million related to commissions and fees recorded in 2024 from businesses since divested. Profit-sharing contingent commissions for the six months of 2025 increased 4.8%, or $1 million, as compared to the same period in 2024, to $22 million. The Retail segment’s total commissions and fees increased by 10.4%, and the Organic Revenue growth rate was 3.6% for the first six months of 2025. 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 timing of certain nonrecurring revenue as well as rate and exposure unit growth. Income before income taxes for the six months ended June 30, 2025 increased 12.0%, or $44 million, as compared to the same period in 2024, to $411 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, partially offset by (iii) an increase in estimated acquisition earn-out payables, and (iv) amortization and depreciation expense growing faster than total revenues. EBITDAC - Adjusted for the six months ended June 30, 2025 increased 12.3%, or $58 million, as compared to the same period in 2024, to $530 million. EBITDAC Margin - Adjusted for the six months ended June 30, 2025 increased to 33.0% from 32.5% in the same period in 2024. The increase in EBITDAC Margin - Adjusted was primarily driven by: (i) the net increase in revenue as described above; (ii) the timing of revenues associated with recent acquisitions; and (iii) leveraging our expense base. Programs Segment The Programs segment manages over 60 programs supported by over 100 well-capitalized carrier partners. In most cases, the insurance carriers that support these programs have delegated underwriting and, in many instances, claims-handling authority to our programs operations. These programs are generally distributed through a nationwide network of independent agents and Brown & Brown retail agents, and offer targeted products and services designed for specific industries, trade groups, professions, public entities and market niches. This segment also operates our write-your-own flood insurance carrier, WNFIC and operates two Captives. WNFIC’s underwriting business consists of policies written on behalf of and fully ceded to the NFIP, as well as excess flood policies, which are fully reinsured in the private market. The Captives provide additional underwriting capacity that enable growth in core commissions and fees, and allow us to participate in underwriting results with limited exposure to claims expenses. The Company has traditionally participated in underwriting profits through profit-sharing contingent commissions. These Captives give us another way to continue to participate in underwriting results while limiting exposure to claims expenses. The Captives focus on property insurance for earthquake and wind exposed properties underwritten by certain of our MGUs. The Captives limit the Company's exposure to claims expenses either through reinsurance or by participating in limited tranches of the underwriting risk. The Programs segment operations can be grouped into five broad categories: Professional Programs, Personal Lines Programs, Commercial Programs, Public Entity-Related Programs and Specialty Programs. Approximately 80% of the Programs segment’s commissions and fees revenue is commission based. 36 Financial information relating to our Programs segment is as follows: Three months ended June 30, Six months ended June 30, (in millions, except percentages) 2025 2024 % Change 2025 2024 % Change REVENUES Core commissions and fees $ 344 $ 328 4.9 % $ 648 $ 594 9.1 % Profit-sharing contingent commissions 30 25 20.0 % 49 51 (3.9 )% Investment and other income 7 6 16.7 % 12 12 — % Total revenues 381 359 6.1 % 709 657 7.9 % EXPENSES Employee compensation and benefits 109 111 (1.8 )% 222 219 1.4 % Other operating expenses 71 70 1.4 % 140 133 5.3 % (Gain)/loss on disposal — (29 ) (100.0 )% - (28 ) (100.0 )% Amortization 12 12 — % 24 23 4.3 % Depreciation 3 4 (25.0 )% 7 8 (12.5 )% Interest 6 7 (14.3 )% 12 16 (25.0 )% Change in estimated acquisition earn-out payables — 1 (100.0 )% 2 1 100.0 % Total expenses 201 176 14.2 % 407 372 9.4 % Income before income taxes $ 180 $ 183 (1.6 )% $ 302 $ 285 6.0 % Income Before Income Taxes Margin (1) 47.2 % 51.0 % 42.6 % 43.4 % EBITDAC - Adjusted (2) $ 201 $ 178 12.9 % $ 347 $ 305 13.8 % EBITDAC Margin - Adjusted (2) 52.8 % 49.6 % 48.9 % 46.4 % Organic Revenue growth rate (2) 4.6 % 15.4 % 8.8 % 13.5 % Employee compensation and benefits relative to total revenues 28.6 % 30.9 % 31.3 % 33.3 % Other operating expenses relative to total revenues 18.6 % 19.5 % 19.7 % 20.2 % (1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. NMF = Not a meaningful figure The Programs segment’s total revenues for the three months ended June 30, 2025 increased 6.1%, or $22 million, as compared to the same period in 2024, to $381 million. The $16 million increased in core commissions and fees revenue was driven by: (i) approximately $1 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; and (ii) approximately $15 million of net new business, renewal business, and fee revenues. Profit-sharing contingent commissions for the second quarter of 2025 increased approximately $5 million as compared to the second quarter of 2024. This increase is a result of increased premiums and favorable loss ratios. The Programs segment’s total commissions and fees increased by 5.9%, and the Organic Revenue growth rate was 4.6% for the three months ended June 30, 2025. The Organic Revenue growth was driven by good retention, net new business, and exposure unit expansion, but was partially offset by declining rates on catastrophe CAT property and a growth incentive received in 2024. Income before income taxes for the three months ended June 30, 2025 decreased 1.6%, or $3 million, as compared to the same period in 2024, to $180 million. Income before income taxes decreased due to a gain on disposal recorded in the prior year and partially offset by the drivers of EBITDAC - Adjusted described below. EBITDAC - Adjusted for the three months ended June 30, 2025 increased 12.9%, or $23 million, from the same period in 2024, to $201 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2025 increased to 52.8% from 49.6% in the same period in 2024. EBITDAC Margin - Adjusted increased due to Organic Revenue growth, increase in profit-sharing contingent commissions and leveraging our expense base. The Programs segment’s total revenues for the six months ended June 30, 2025 increased 7.9%, or $52 million, as compared to the same period in 2024, to $709 million. The $54 million increase in core commissions and fees revenue was driven by: (i) approximately $2 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; and (ii) 37 approximately $52 million of net new business, renewal business and fee revenues. Profit-sharing contingent commissions for the six months ended June 30, 2024 decreased approximately $2 million, or by 3.9%, as compared to the same period in 2024. The Programs segment’s total commissions and fees increased by 8.1%, and the Organic Revenue growth rate was 8.8%, for the six months ended June 30, 2025. The Organic Revenue growth was driven by hurricane claims revenue, good retention, net new business and exposure unit expansion, but was partially offset by declining rates on catastrophe ("CAT") property. Income before income taxes for the six months ended June 30, 2025 increased 6.0%, or $17 million to $302 million, from the same period in 2024. Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below partially offset by gain on disposal recorded in the prior year. EBITDAC - Adjusted for the six months ended June 30, 2025 increased 13.8%, or $42 million to $347 million, as compared to the same period in 2024. EBITDAC Margin - Adjusted for the six months ended June 30, 2025 increased to 48.9% from 46.4% in the same period in 2024. EBITDAC Margin - Adjusted increased due to strong Organic Revenue growth and leveraging our expense base. Wholesale Brokerage Segment The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, including Brown & Brown retail agents. Approximately 84% of the Wholesale Brokerage segment’s commissions and fees revenue is commission based. Financial information relating to our Wholesale Brokerage segment is as follows: Three months ended June 30, Six months ended June 30, (in millions, except percentages) 2025 2024 % Change 2025 2024 % Change REVENUES Core commissions and fees $ 173 $ 154 12.3 % $ 322 $ 289 11.4 % Profit-sharing contingent commissions 8 4 100.0 % 17 10 70.0 % Investment and other income 1 1 — % 2 2 (— %) Total revenues 182 159 14.5 % 341 301 13.3 % EXPENSES Employee compensation and benefits 93 82 13.4 % 179 158 13.3 % Other operating expenses 27 24 12.5 % 49 44 11.4 % (Gain)/loss on disposal — — — % — — — % Amortization 3 3 — % 7 6 16.7 % Depreciation 1 1 — % 1 2 (50.0 %) Interest 3 3 — % 6 6 — % Change in estimated acquisition earn-out payables 2 (1 ) NMF 2 (3 ) (166.7 %) Total expenses 129 112 15.2 % 244 213 14.6 % Income before income taxes $ 53 $ 47 12.8 % $ 97 $ 88 10.2 % Income Before Income Taxes Margin (1) 29.1 % 29.6 % 28.4 % 29.2 % EBITDAC - Adjusted (2) $ 62 $ 53 17.0 % $ 113 $ 99 14.1 % EBITDAC Margin - Adjusted (2) 34.1 % 33.3 % 33.1 % 32.9 % Organic Revenue growth rate (2) 3.9 % 11.0 % 5.2 % 11.0 % Employee compensation and benefits relative to total revenues 51.1 % 51.6 % 52.5 % 52.5 % Other operating expenses relative to total revenues 14.8 % 15.1 % 14.4 % 14.6 % (1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues. (2) A non-GAAP financial measure. NMF = Not a meaningful figure The Wholesale Brokerage segment’s total revenues for the three months ended June 30, 2025 increased 14.5%, or $23 million, as compared to the same period in 2024, to $182 million. The $19 million net increase in core commissions and fees revenue was driven primarily 38 by: (i) $6 million related to net new and renewal business (ii) $12 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; and (iii) an increase from the impact of Foreign Currency Translation of $1 million. Profit-sharing contingent commissions for the second quarter of 2025 increased $4 million compared to the second quarter of 2024, 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 14.6%, and the Organic Revenue growth rate was 3.9% for the second quarter of 2025. The Organic Revenue growth rate was driven by net new business and exposure unit increases, while being partially offset by rate decreases for CAT property. Income before income taxes for the three months ended June 30, 2025 increased 12.8%, or $6 million, as compared to the same period in 2024, to $53 million due to: (i) the growth of EBITDAC - Adjusted described below, partially offset by (ii) an increase in the change in estimated acquisition earn-out payables. EBITDAC - Adjusted for the three months ended June 30, 2025 increased 17.0%, or $9 million, as compared to the same period in 2024, to $62 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2025 increased to 34.1% from 33.3%, as compared to the same period in 2024. EBITDAC Margin - Adjusted increased due to: (i) increased profit-sharing contingent commissions; and (ii) leveraging our expense base with total revenue growth, both of which were partially offset by a business acquired within the last twelve months that has lower margins than our average segment margins and higher non-cash stock based compensation. The Wholesale Brokerage segment’s total revenues for the six months ended June 30, 2025 increased 13.3%, or $40 million, as compared to the same period in 2024, to $341 million. The $33 million net increase in core commissions and fees revenue was driven primarily by: (i) $15 million related to net new and renewal business and (ii) $17 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024. Profit-sharing contingent commissions for the first six months of 2025 increased approximately $7 million compared to the same period of 2024 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 5.2% for the first six months of 2025. The Organic Revenue growth rate was driven by net new business and exposure unit increases, which were partially offset by rate decreases for CAT property. Income before income taxes for the six months ended June 30, 2025 increased 10.2%, or $9 million, as compared to the same period in 2024, to $97 million due to: (i) the growth of EBITDAC - Adjusted described below and partially offset by (ii) an increase in the change in estimated acquisition earn-out payables. EBITDAC - Adjusted for the six months ended June 30, 2025 increased 14.1%, or $14 million, as compared to the same period in 2024, to $113 million. EBITDAC Margin - Adjusted for the six months ended June 30, 2025 increased to 33.1% from 32.9% in the same period in 2024 due to leveraging our expense base which were partially offset by: (i) business acquired within the last twelve months; and (ii) higher non-cash stock-based compensation. Other As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” line items 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. LIQUIDITY AND CAPITAL RESOURCES The Company seeks to maintain a conservative balance sheet and strong liquidity profile. 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 under the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”), which as of June 30, 2025 provided up to $800 million in available cash. 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 and the Loan Agreement, dated March 31, 2022, which provided term loan capacity of $800 million (the “Loan Agreement”), will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for the next twelve months and in the long term. 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. 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, 2025. 39 Cash and cash equivalents totaled $8,893 million at June 30, 2025 reflecting an increase of $8,218 million from the $675 million balance at December 31, 2024. This increase is due to the proceeds from the follow-on common stock offering and senior notes issuance in the second quarter in connection with the pending acquisition of Accession. Operating Cash Flows Our operating cash flows are primarily derived from the net income generated during the period adjusted for non-cash expenses, which include depreciation, amortization, changes in estimated earnout payables, non-cash stock based compensation and deferred income taxes while excluding gains and losses on sales/disposals of investments, businesses, fixed assets and customer accounts, payments on acquisition earn-outs in excess of original estimated payables and changes in working capital which relate primarily to the timing of payments of accrued liabilities and receipts of receivables from commissions and fees related to our revenues. Our ratio of current assets to current liabilities (the “current ratio”) was 2.75 and 1.10 for June 30, 2025 and December 31, 2024, respectively. Cash flows generated from operating activities totaled $538 million and $373 million for the six months ended June 30, 2025 and 2024, respectively, representing an increase of $165 million. Operating cash flows generated in 2025 included $569 million from net income before non-controlling interests with $186 million of non-cash adjustments, offset by $217 million from changes in working capital. The growth in cash from operations is primarily due to higher operating margins resulting from strong Organic Revenue growth and continued improvements in our working capital over the same period in 2024. Investing Cash Flows Cash flows used for investing activities were $187 million and $77 million for the six months ended June 30, 2025 and 2024, respectively, a decrease of $110 million. Acquisitions During the six months ended June 30, 2025, the Company completed 29 acquisitions (including book purchases) and paid $161 million, net of cash, and cash and cash equivalents held in a fiduciary capacity acquired, most notably for the purchase of NBS Insurance Agency for $54 million and Tim Parkman, Inc. for $69 million. Net cash paid for acquisitions increased $63 million in the six months ended June 30, 2025, up from $98 million during the same period in 2024. Dispositions The Company received cash proceeds from the sale of businesses, fixed assets and customer accounts totaling $10 million during the six months ended June 30, 2025, compared to $58 million proceeds received in the same period in 2024. The decrease is attributed to the proceeds received during the second quarter of 2024 of $57 million from the settlement of two of the contingent payments related to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023. Capital Expenditures Capital expenditures amounted to $32 million and $39 million in the six months ended June 30, 2025 and 2024, respectively, and included purchases of furniture and fixtures, leasehold improvements related to office moves and hardware and software purchases related to information technology investments. Financing Cash Flows Net cash flows provided by financing activities totaled $7,981 million and $375 million in the six months ended June 30, 2025 and 2024, respectively, an increase of $7,606 million. Fiduciary Receivables and Liabilities Fiduciary cash represents funds in the Company's possession collected from customers to be remitted to insurance companies and funds from insurance companies to be distributed to insureds for the settlement of claims or refunds. The net change in fiduciary cash is represented by the net change in fiduciary liabilities and fiduciary receivables and is presented as cash flows from financing activities in the statement of cash flows. Financing cash flows reflect an increase of $119 million and $248 million in the six months ended June 30, 2025 and 2024, respectively, related to fiduciary receivables and liabilities. Acquisition Earn-outs Payments on acquisition earn-outs related to the original acquisition date estimates totaled $45 million and $65 million in the six months ended June 30, 2025 and 2024, respectively. 40 Dividends During the six months ended June 30, 2025 and 2024, the Company paid cash dividends of $86 million and $75 million, respectively, an increase of $11 million, or 14.7%. On July 23, 2025, the Board of Directors approved a quarterly cash dividend of $0.15 per share to be paid on August 20, 2025. Debt Net cash proceeds from long term debt totaled $3,718 million in the six months ended June 30, 2025, compared to net cash proceeds of $319 million in the same period of 2024. Total debt at June 30, 2025 was $7,545 million net of unamortized discount and debt issuance costs, which was an increase of $3,721 million compared to December 31, 2024. The increase includes the issuance of $4,192 million of senior notes net of the unamortized debt discounts and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $2 million, offset by the net repayment of the Revolving Credit Facility of $250 million, the addition of deferred debt issuance costs of $36 million and $188 million of payments on outstanding term loan balances. During the six months ended June 30, 2025, 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 $181 million as of June 30, 2025. The Company's next scheduled principal payment is due in September 2025 and is equal to $6 million. During the six months ended June 30, 2025, the Company repaid $24 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 $388 million as of June 30, 2025. The Company’s next scheduled principal payment is $13 million due in September 2025. During the six months ended June 30, 2025, the Company repaid the outstanding balance on the Term A-1 Loan Commitment (the “Term A-1 Loan Commitment”) of $150 million related to the Loan Agreement, in accordance with the terms of the Loan Agreement using proceeds from the Revolving Credit Facility in connection with the Second Amended and Restated Credit Agreement. On June 11, 2025, the Company entered into an Underwriting Agreement (the “Notes Underwriting Agreement”) with BofA Securities, Inc. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (collectively, the “Notes Underwriters”), with respect to the offer and sale by the Company of $400 million principal amount of its 4.600% Senior Notes due 2026 (the “2026 Notes”), $500 million principal amount of its 4.700% Senior Notes due 2028 (the “2028 Notes”), $800 million principal amount of its 4.900% Senior Notes due 2030 (the “2030 Notes”), $500 million principal amount of its 5.250% Senior Notes due 2032 (the “2032 Notes”), $1,000 million principal amount of its 5.550% Senior Notes due 2035 (the “2035 Notes”) and $1,000 million principal amount of its 6.250% Senior Notes due 2055 (the “2055 Notes” and, together with the 2026 Notes, the 2028 Notes, the 2030 Notes, the 2032 Notes, and the 2035 Notes, the “Notes”). The Notes Underwriting Agreement contains customary representations, warranties and covenants of the Company, conditions to closing, termination provisions and other terms and conditions customary in agreements of this type. The Notes Underwriting Agreement also contains customary indemnification and contribution rights and obligations of the Company and the Notes Underwriters. The Company intends to use the net proceeds from the offering of the shares of Common Stock and cash on hand, to fund the cash consideration payable under the previously announced Agreement and Plan of Merger (the “Merger Agreement”), by and among RSC, the Company, Encore Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company ( “Merger Sub”) and Kelso RSC (Investor), L.P., a Delaware limited partnership, solely in its capacity as the equityholder representative, pursuant to which the Company will acquire Accession, and to pay fees and expenses associated with the foregoing. If the acquisition of Accession is not consummated, each of the notes described above has a special mandatory redemption feature and would require repayment except for the 2035 Notes, which the Company would intend to use those proceeds for general corporate purposes. As of June 30, 2025, the aggregate outstanding balance of these notes was $4,200 million exclusive of the associated discount balance. During the second quarter, the Company repaid the outstanding balance on the Revolving Credit Facility of $400 million with cash on hand. Common Stock On June 10, 2025, the Company entered into an Underwriting Agreement (the “Common Stock Underwriting Agreement”) with J.P. Morgan Securities LLC and BofA Securities, Inc., as representatives of the several underwriters named therein (collectively, the “Common Stock Underwriters”), with respect to the offer and sale by the Company of 43,137,254 shares of the Company’s common stock, par value $0.10 (the “Common Stock”) at a per share offering price of $102.00 for an aggregate purchase price for net proceeds of $4,315 million after underwriting discounts and fees and expenses. The Company closed the offering of the shares of Common Stock on June 12, 2025. The Company intends to use the net proceeds of the offerings of the shares of Common Stock and the Notes, together with cash on hand, to fund the cash consideration payable under the previously announced acquisition of Accession and to pay fees and expenses associated with the foregoing. If the acquisition of Accession is not consummated, the Company intends to use the proceeds from the offerings of shares of common stock for general corporate purposes. 41 Additionally, as part of the consideration for the acquisition of Accession, the Company intends to issue approximately $1,300 million of additional shares of the Company’s common stock, par value $0.10 per share (the “Common Stock Consideration”) to the selling shareholders. The number of shares comprising the Common Stock Consideration will be determined using the $110.57 per share closing price of the Company’s common stock on June 6, 2025. Contractual Cash Obligations As of June 30, 2025, our contractual cash obligations were as follows: Payments Due by Period (in millions) Total Less than 1 year 1-3 years 4-5 years After 5 years Long-term debt $ 7,619 $ 75 $ 1,394 $ 1,150 $ 5,000 Other liabilities 272 15 27 21 209 Operating leases (1) 283 54 96 65 68 Interest obligations 4,369 379 682 588 2,720 Maximum future acquisition contingent payments (2) 429 133 291 5 — Total contractual cash obligations (3) $ 12,972 $ 656 $ 2,490 $ 1,829 $ 7,997 (1) Includes $23 million of future lease commitments expected to commence later in 2025. (2) Includes $151 million of current and non-current estimated acquisition earn-out payables. Earn-out payables for acquisitions not denominated in U.S. dollars are measured at the current foreign exchange rate. Four 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 June 30, 2025 is $1 million. The Company believes a significant increase to this amount is unlikely. (3) Does not include approximately $51 million of current liability for a dividend of $0.1500 per share approved by the Board of Directors on July 23, 2025 to be paid on August 20, 2025. 42 ITEM 3. Quantitative and Qualita tive Disclosures About Market Risk Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates, foreign exchange rates and equity prices. We are exposed to market risk through our investments, revolving credit line, term loan agreements and international operations. Our invested assets are held primarily as cash and cash equivalents, restricted cash, available-for-sale marketable debt securities, non-marketable debt securities, certificates of deposit, U.S. Treasury securities, and professionally managed short-term duration fixed income funds. These investments are subject to interest rate risk. The fair value of our invested assets at June 30, 2025 and December 31, 2024 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, 2025, we had $569 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. The effect of an immediate hypothetical 10% change in interest rates would not have a material effect on our Condensed Consolidated Financial Statements. The majority of our international operations do not have material transactions in currencies other than their functional currency which would expose the Company to transactional currency rate risk. We are subject to translational exchange rate risk having businesses operating outside of the U.S. in the following functional currencies, British pounds, Canadian dollar, and euros. Based upon our foreign currency rate exposure as of June 30, 2025, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Condensed Consolidated Financial Statements.