What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-28 compared with 2025-07-28 · 217 added, 232 removed, 370 unchanged (55% of the section changed)

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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.

Company Overview — Second Quarter of 2025

Company Overview — Third 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.

We are a diversified insurance agency, wholesale brokerage, insurance programs, specialty insurance business 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.

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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.

We also participate in capitalized captive insurance facilities for the purpose of having additional capacity to place coverage, drive additional revenues and to participate in underwriting results.

The limit the Company's exposure to claims expenses through reinsurance or by only participating in certain tranches of the underwriting.

We also operate registered insurance companies to support our national flood insurance program and to support our cross-collateralized segregated captive cell businesses.

We do not participate in earnings of the collateralized segregated captive cells.

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.

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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.

(i) our Specialty Distribution segment, 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%.

For the three months ended September 30, 2025, our total commissions and fees growth rate was 34.2%, and our consolidated Organic Revenue growth rate was 3.5%.

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.

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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

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.

Income before income taxes for the three months ended September 30, 2025 decreased from the third quarter of 2024 by $6 million or 1.9%, due to Acquisition/Integration Costs associated with the acquisition of Accession and increases in the change in estimated acquisition earnout payables, partially offset by Organic Revenue growth, leveraging our expense base, net new business and income from acquisitions completed in the past twelve months.

Information Regarding Non-GAAP Financial Measures

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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 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 two 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.

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• 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 - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal (as defined below), (ii) Acquisition/Integration Costs (as defined below) and (iii) mark-to-market of escrow liability (as defined below).

• EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by total revenues.

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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.

and employment-related costs, including severance payments, costs associated with the transition of certain legacy compensation programs, retention-related compensation expenses, and incentive payments) arising out of our acquisition of Accession and acquisitions previously completed by 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.

• “(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.

• “(Gain)/loss on disposal” is a caption on our consolidated statements of income which reflects net proceeds received as compared to the net book value related to sales of books of business and other divestiture transactions.

• “ Mark-to-market of escrow liability ” is a caption on our consolidated statements of income which reflects the non-cash change in the fair value associated with certain shares of the Company’s common stock held in escrow.

The change is driven by fluctuations in our stock price between the beginning of the quarter and the end of the quarter.

These escrowed shares represent a portion of the merger consideration payable in connection with our acquisition of Accession.

The escrowed shares secure certain indemnification obligations of the Accession equity holders related to businesses that are in run-off or discontinued.

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;

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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 2025, we acquired 702 insurance intermediary operations.

From 1993 through the third quarter of 2025, we acquired 713 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, 2024 for details regarding our critical and significant accounting policies.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

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

Three months ended September 30,

Nine months ended September 30,

(in millions, except percentages)

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earn-out payables

Mark-to-market of escrow liability

Total expenses

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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, 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:

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended September 30, 2025 increased $395 million to $1,550 million, or 34.2%, over the same period in 2024.

Core commissions and fees revenue for the third quarter of 2025 increased $349 million or 30.9%, composed of:

(i) approximately $40 million of net new and renewal business, which reflects an Organic Revenue growth rate of 3.5%;

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(iii) an increase from the impact of Foreign Currency Translation of $5 million and an offsetting decrease from (iv) $3 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.

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:

Profit-sharing contingent commissions for the third quarter of 2025 increased by $46 million, or 170%, compared to the same period in 2024.

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

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the nine months ended September 30, 2025, increased $638 million to $4,183 million, or 18.0%, over the same period in 2024.

Core commissions and fees revenue for the nine months ended September 30, 2025 increased $587 million or 17.1%, composed of:

(i) approximately $157 million of net new and renewal business, which reflects an Organic Revenue growth rate of 4.6%;

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(iii) an increase from the impact of Foreign Currency Translation of $11 million and (iv) an offsetting decrease of $10 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.

Profit-sharing contingent commissions for the nine months ended September 30, 2025 increased by $51 million, or 46.4%, compared to the same period in 2024.

This increase was driven primarily by (i) improved underwriting results, increased premium volume 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.

Investment and other income for the three months ended September 30, 2025 increased $25 million from the same period in 2024.

Investment income for the nine months ended September 30, 2025 increased $35 million, from the same period in 2024.

The increase was driven by approximately $42 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, which was held in preparation for the closing of the acquisition of Accession.

The increase year over year 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.

Employee compensation and benefits expense as a percentage of total revenues was 49.4% for the three months ended September 30, 2025 as compared to 51.2% for the three months ended September 30, 2024, an increase of 30.6%, or $186 million.

This increase included $164 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024.

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(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.

and (iii) an increase in producer compensation associated with revenue growth.

Employee compensation and benefits expense as a percentage of total revenues was 49.3% for the nine months ended September 30, 2025 as compared to 50.3% for the nine months ended September 30, 2024, and increased 16.1%, or $293 million.

This increase included $219 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024.

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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.

Other operating expenses represented 17.2% of total revenues for the third quarter of 2025, as compared to 13.9% for the third quarter of 2024.

Other operating expenses for the third quarter of 2025 increased $111 million, or 67.3%, from the same period of 2024.

This change includes:

(i) $68 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.

(ii) $50 million of Acquisition/Integration Costs associated with the acquisition of Accession, $9 million of which is included in the $60 million related to acquisitions that had no comparable costs in the same period of 2024;

and (iii) increased information technology-related costs.

Other operating expenses represented 15.6% of total revenues for the nine months ended September 30, 2025, as compared to 13.8% for the nine months ended September 30, 2024.

Other operating expenses for the first nine months of 2025 increased $173 million, or 34.7%, from the same period of 2024.

This change includes:

(i) $85 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;

(ii) $87 million of Acquisition/Integration Costs associated with the acquisition of Accession, $9 million of which is included in the $60 million related to acquisitions that had no comparable costs in the same period of 2024;

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.

Gain on disposal for the third quarter of 2025 decreased $1 million from the third quarter of 2024.

Gain on disposal for the nine months ended September 30, 2025 decreased $31 million from the nine months ended September 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 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,

Amortization expense for the third quarter of 2025 increased $48 million, or 106.7%, compared to the third quarter of 2024.

Amortization expense for the nine months ended September 30, 2025 increased $65 million, or 49.6%, compared to the nine months ended September 30, 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 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.

Depreciation expense for the third quarter of 2025 increased $3 million, or 27.3%, compared to the third quarter of 2024.

Depreciation expense for the nine months ended September 30, 2025 increased $4 million, or 12.1%, compared to the nine months ended September 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.

Interest expense for the third quarter of 2025 increased $50 million, or 100.0%, compared to the third quarter of 2024.

Interest expense for the nine months ended September 30, 2025 increased $50 million, or 34.0%, compared to the first nine months of 2024.

The increase is due to higher debt balances resulting from debt issuance second quarter of 2025 to fund the acquisition of Accession, which was partially offset by decreases in the floating rate benchmark used on our adjustable-rate debt.

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, 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 .

As of September 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,

Three months ended September 30,

Nine months ended September 30,

(in millions)

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Net change in earnings from estimated acquisition earn-out payables

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.

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.

For the three months and nine months ended September 30, 2025, the fair value of estimated earn-out payables was re-evaluated and resulted in increases of $10 million and $14 million, respectively, which resulted in charges to the Condensed Consolidated Statements of Income.

As of September 30, 2025, estimated acquisition earn-out payables totaled $575 million, of which $262 million was recorded as accounts payable and $313 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended September 30, 2025 and 2024 was 26.4% and 24.6%, respectively.

The effective tax rate on income from operations for the nine months ended September 30, 2025 and 2024 was 23.9% and 23.1%, respectively.

The increase for the three months ended September 30, 2025 was primarily driven by non-deductibility of certain costs associated with the acquisition of Accession.

The increase for the nine months ended September 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 as well as the non-deductibility of certain costs associated with the acquisition of Accession.

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.

As discussed in Note 12 to the Condensed Consolidated Financial Statements, we operate two reportable segments:

Retail and Specialty Distribution.

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:

Wholesale Brokerage

As such, management primarily focuses on Organic Revenue growth, the growth in profit-sharing contingent commissions 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, 2025 and 2024, and the growth rates for Organic Revenue for the three months ended September 30, 2025, including by segment, are as follows:

Specialty Distribution

(in millions)

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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, 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:

Wholesale Brokerage

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, including by segment, and the growth rates for Organic Revenue for the three months ended September 30, 2024, including by segment, are as follows:

Specialty Distribution

(in millions)

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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, 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:

Wholesale Brokerage

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, 2025 and 2024, including by segment, and the growth rates for Organic Revenue for the nine months ended September 30, 2025, including by segment, are as follows:

Specialty Distribution

(in millions)

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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:

Wholesale Brokerage

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:

Specialty Distribution

(in millions)

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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, 2025, 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, 2025, including by segment, is as follows:

(in millions)

Specialty Distribution

Total Revenues

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Acquisition/Integration Costs

Mark-to-market of escrow liability

EBITDAC - Adjusted (2)

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(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.

(3) Amount reflects the positive impact of approximately $29 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 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 September 30, 2024, including by segment, is as follows:

(in millions)

Wholesale Brokerage

Specialty Distribution

Total Revenues

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Acquisition/Integration Costs

Mark-to-market of escrow liability

EBITDAC - Adjusted (2)

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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:

non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the nine months ended September 30, 2025, including by segment, is as follows:

(in millions)

Wholesale Brokerage

Specialty Distribution

Total Revenues

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Acquisition/Integration Costs

Mark-to-market of escrow liability

EBITDAC - Adjusted (2)

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(2) A non-GAAP financial measure.

(3) Amount reflects the positive impact of approximately $42 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 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:

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)

Wholesale Brokerage

Specialty Distribution

Total Revenues

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Acquisition/Integration Costs

Mark-to-market of escrow liability

EBITDAC - Adjusted (2)

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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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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 Retail segment’s total revenues for the three months ended September 30, 2025 increased 37.8%, or $242 million, as compared to the same period in 2024, to $883 million.

The $228 million increase in core commissions and fees revenue was driven by:

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(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 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.

Profit-sharing contingent commissions for the third quarter of 2025 increased $10 million at $18 million, as compared to the same period in 2024.

This increase was due to acquisitions completed within the last twelve months.

The Retail segment’s total commissions and fees increased by 37.2%, and the Organic Revenue growth rate was 2.7% for the third 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.

Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines of coverage, certain adjustments to incentive commissions and a regulatory change for one of our UK businesses.

Income before income taxes for the three months ended September 30, 2025 increased 36.7%, or $44 million, as compared to the same period in 2024, to $164 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) an increase in amortization expense.

EBITDAC - Adjusted for the three months ended September 30, 2025 increased 45.3%, or $77 million, as compared to the same period in 2024, to $247 million.

EBITDAC Margin - Adjusted for the three months ended September 30, 2025 increased to 28.0% from 26.5% 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.

(i) leveraging our expense base;

and (ii) the timing of revenues and profit associated with certain recent acquisitions.

The Retail segment’s total revenues for the nine months ended September 30, 2025 increased 18.8%, or $394 million, as compared to the same period in 2024, to $2,487 million.

The $379 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;

increase of $51 million related to net new and renewal business;

(i) approximately $311

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 $68 million related to net new and renewal business;

(iii) an increase from the impact of Foreign Currency Translation of $9 million;

and (iv) an offsetting decrease of $10 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.

Profit-sharing contingent commissions for the nine months of 2025 increased 33.3%, or $10 million, as compared to the same period in 2024, to $40 million.

This increase was due to acquisitions completed within the last twelve months.

The Retail segment’s total commissions and fees increased by 18.6%, and the Organic Revenue growth rate was 3.3% for the first nine 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.

Renewal business was impacted by timing of certain nonrecurring revenue items, slowing rate increases, rate decreases for certain lines of coverage, certain adjustments to incentive commissions and a regulatory change for one of our UK businesses.

Income before income taxes for the nine months ended September 30, 2025 increased 17.8%, or $87 million, as compared to the same period in 2024, to $575 million.

The primary factors driving this increase were:

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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.

EBITDAC - Adjusted for the nine months ended September 30, 2025 increased 21.1%, or $135 million, as compared to the same period in 2024, to $776 million.

EBITDAC Margin - Adjusted for the nine months ended September 30, 2025 increased to 31.2% from 30.6% in the same period in 2024.

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

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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.

Specialty Distribution Segment

The Specialty Distribution Segment is composed of our programs business, known as Arrowhead Programs;

our wholesale brokerage business, known as Bridge Specialty Group;

and our new specialty program business, known as Arrowhead Specialty .

Approximately 81% of the Specialty Distribution segment’s commissions and fees revenue is commission based.

Arrowhead Programs manages a diverse portfolio of professional liability, personal lines, commercial lines, public entity and specialty programs supported by over 100 well-capitalized insurance carriers.

In most cases, the insurance carriers that support these programs have delegated underwriting and, in many instances, claims-handling authority These programs are generally distributed through a global network of independent agents and brokers, including Brown & Brown retail agents, and offer targeted products and services designed for businesses, individuals, specific industries, trade groups, professions, public entities, municipalities, and niche markets.

This division also operates our write-your-own flood insurance carrier, WNFIC and participates in a quota share captive and an excess of loss layer captive.

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.

Bridge Specialty Group, offers global wholesale brokerage and delegated binding/underwriting capabilities across multiple lines, to independent agents and brokers, including Brown & Brown retail agents.

Our teams across the globe provide deep industry knowledge and expertise, for placements across multiple lines of coverage based on access to admitted, excess and surplus lines carriers, as well as the Lloyd’s markets in the United Kingdom.

Arrowhead Specialty is composed of our newly acquired specialty businesses from One80 Intermediaries, a segment of Accession, which offer solutions across affinity organizations, administrative services, captives, reinsurance, travel/accident, warranty, and life & health.

Arrowhead Programs' and Arrowhead Specialty's captives businesses provide additional underwriting capacity that enables 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.

Financial information relating to our Programs segment is as follows:

Three months ended June 30,

Six months ended June 30,

These captives limit the Company's exposure to claims expenses either through reinsurance or by participating in limited tranches of the underwriting risk.

Financial information relating to our Specialty Distribution segment is as follows:

Three months ended September 30,

Nine months ended September 30,

(in millions, except percentages)

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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 Specialty Distributions segment’s total revenues for the three months ended September 30, 2025 increased 30.0%, or $157 million, as compared to the same period in 2024, to $681 million.

The $121 million increased in core commissions and fees revenue was driven by:

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and (ii) approximately $23 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.

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

Profit-sharing contingent commissions for the third quarter of 2025 increased approximately $36 million as compared to the third quarter of 2024.

This increase is a result of favorable loss ratios, increased premiums, and to a lesser extent acquisitions completed in the past twelve months.

The Specialty Distribution segment’s total commissions and fees increased by 30.4%, and the Organic Revenue growth rate was 4.6% for the three months ended September 30, 2025.

The Organic Revenue growth was driven by net new and retained business, as well as exposure unit expansion, but was partially offset by declining rates on catastrophe ("CAT") property.

Income before income taxes for the three months ended September 30, 2025 increased 21.4%, or $45 million, as compared to the same period in 2024, to $255 million due to:

(i) the growth of EBITDAC – Adjusted described below, partially offset by:

(ii) increased amortization expense;

and (iii) an increase in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the three months ended September 30, 2025 increased 26.7%, or $63 million, from the same period in 2024, to $299 million.

EBITDAC Margin - Adjusted for the three months ended September 30, 2025 decreased to 43.9% from 45.0% in the same period in 2024.

EBITDAC Margin - Adjusted decreased due to:

(i) businesses acquired within the last twelve months that have lower margins than our average segment margins;

partially offset by:

(ii) increase in profit-sharing contingent commissions;

(iii) Organic Revenue growth;

and (iv) leveraging our expense base.

The Specialty Distribution segment’s total revenues for the nine months ended September 30, 2025 increased 16.8%, or $249 million, as compared to the same period in 2024, to $1,731 million.

The $209 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;

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)

Core commissions and fees

Profit-sharing contingent commissions

Investment and other income

Total revenues

Employee compensation and benefits

Other operating expenses

(Gain)/loss on disposal

Change in estimated acquisition

earn-out payables

Total expenses

Income before income taxes

Income Before Income Taxes

EBITDAC - Adjusted (2)

EBITDAC Margin - Adjusted (2)

Organic Revenue growth rate (2)

Employee compensation and benefits

relative to total revenues

Other operating expenses relative to

total revenues

(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

(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;

approximately $117 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024;

(ii) approximately $90 million of net new business, renewal business and fee revenues;

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

Profit-sharing contingent commissions for the nine months ended September 30, 2024 increased approximately $41 million, or by 51.3%, as compared to the same period in 2024.

This increase is a result of favorable loss ratios, increased premiums, and to a lesser extent acquisitions completed in the past twelve months.

The Specialty Distribution segment’s total commissions and fees increased by 17.1%, and the Organic Revenue growth rate was 6.5%, for the nine months ended September 30, 2025.

The Organic Revenue growth was driven by hurricane claims revenue, net new and retained business, and exposure unit expansion, but was partially offset by declining rates on CAT property.

Income before income taxes for the nine months ended September 30, 2025 increased 12.0%, or $70 million to $654 million, from the same period in 2024.

Income before income taxes increased due to:

(i) the drivers of EBITDAC - Adjusted described below;

(ii) decreased interest expense;

partially offset by:

(iii) gain on disposal recorded in the prior year;

(iv) increased amortization expense;

and (v) an increase in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the nine months ended September 30, 2025 increased 18.6%, or $119 million to $759 million, as compared to the same period in 2024.

EBITDAC Margin - Adjusted for the nine months ended September 30, 2025 increased to 43.8% from 43.2% in 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.

(i) the increase in profit-sharing contingent commissions;

(ii) Organic Revenue growth;

and (iii) leveraging our expense base;

while being partially offset by (iv) businesses acquired within the last twelve months that have lower margins than our average segment margins.

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.

2 unchanged sentences

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 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 September 30, 2025 provided up to $600 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.

2 unchanged sentences

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.

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.

Including the expansion options under all existing credit agreements, the Company has access to up to $1,500 million of incremental borrowing capacity as of September 30, 2025.

Cash and cash equivalents totaled $1,190 million at September 30, 2025 reflecting an increase of $515 million from the $675 million balance at December 31, 2024.

This increase is due to the cash generated in quarter and cash assumed in connection with the 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.

Our ratio of current assets to current liabilities was 1.18 and 1.10 for September 30, 2025 and December 31, 2024, respectively.

Cash flows generated from operating activities totaled $1,006 million and $813 million for the nine months ended September 30, 2025 and 2024, respectively, representing an increase of $193 million.

Operating cash flows generated in 2025 included $799 million from net income before non-controlling interests with $359 million of non-cash adjustments, offset by $152 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.

The growth in cash from operations is primarily due to recent acquisitions 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.

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.

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.

Cash flows used for investing activities were $7,701 million and $119 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $7,582 million.

During the nine months ended September 30, 2025, the Company completed 37 acquisitions (including book purchases) and paid $7,659 million, net of cash, and cash and cash equivalents held in a fiduciary capacity acquired, most notably for the purchase of Accession Risk Management Group for $7,461 million, Tim Parkman, Inc.

for $69 million and NBS Insurance Agency for $43 million.

Net cash paid for acquisitions increased $7,541 million in the nine months ended September 30, 2025, up from $118 million during the same period in 2024.

The Company received cash proceeds from the sale of businesses, fixed assets and customer accounts totaling $10 million during the nine months ended September 30, 2025, compared to $60 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.

Capital expenditures amounted to $48 million and $62 million in the nine months ended September 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.

Net cash flows provided by financing activities totaled $7,851 million and net use of $341 million in the nine months ended September 30, 2025 and 2024, respectively, an increase of $8,192 million.

Fiduciary Receivables and Liabilities

1 unchanged sentence

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.

Financing cash flows reflect a decrease of $145 million and an increase of $83 million in the nine months ended September 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.

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.

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.

Payments on acquisition earn-outs related to the original acquisition date estimates totaled $77 million and $100 million in the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025 and 2024, the Company paid cash dividends of $137 million and $111 million, respectively, an increase of $26 million, or 23.4%.

On October 22, 2025, the Board of Directors approved a quarterly cash dividend of $0.165 per share to be paid on November 19, 2025.

Net cash proceeds from long term debt totaled $3,899 million in the nine months ended September 30, 2025, compared to net cash use of $206 million in the same period of 2024.

Total debt at September 30, 2025 was $7,728 million net of unamortized discount and debt issuance costs, which was an increase of $3,904 million compared to December 31, 2024.

million, offset by the addition of deferred debt issuance costs of $37 million, $206 million of payments on outstanding term loan balances and net payments on the Revolving Credit Facility of $50 million.

During the nine months ended September 30, 2025, 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 $175 million as of September 30, 2025.

The Company's next scheduled principal payment is due in December 2025 and is equal to $6 million.

During the nine months ended September 30, 2025, the Company repaid $37 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 $375 million as of September 30, 2025.

The Company’s next scheduled principal payment is $13 million due in December 2025.

During the nine months ended September 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.

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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.

The Company used the net proceeds of the offering of the Notes, together with the proceeds from the offering of shares of common stock and cash on hand, to fund the cash consideration payable under the Merger Agreement, and to pay fees and expenses associated with the foregoing.

As of September 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.

During the third quarter, the Company drew $300 million on the Revolving Credit Facility in connection with the closing of Accession Risk Management Group and repaying $100 million during the same quarter.

There is an outstanding balance of $200 million on the Revolving Credit Facility as of September 30, 2025.

On June 10, 2025, the Company entered into an Underwriting Agreement (the “Common Stock Underwriting Agreement”) with J.P.

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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.

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.

The Company used 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.

As part of the consideration for the Accession acquisition, the Company issued approximately $1,017 million of its common stock (par value $0.10 per share) to the selling shareholders (the “Common Stock Consideration”), based on the market value of the shares at closing.

The number of shares issued was calculated using the Company’s closing stock price of $110.57 per share on June 6, 2025.

Contractual Cash Obligations

As of June 30, 2025, our contractual cash obligations were as follows:

As of September 30, 2025, our contractual cash obligations were as follows:

Payments Due by Period

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Total contractual cash obligations (3)

(1) Includes $23 million of future lease commitments expected to commence later in 2025.

(1) Does not include the escrow liability which is included within “Other Long-Term Liabilities” issued in connection with our acquisition of Accession.

The liability reflects the fair value of shares and cash held in escrow to secure certain indemnification obligations of the Accession equityholders related to businesses that are in run-off or discontinued.

Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, the remaining amount in the escrow account will be released to the equityholders.

The Company believes this escrow, plus other available funds, is sufficient to cover any potential costs associated with those specified matters subject to indemnification under the Merger Agreement.

The fair value of the escrow liability is remeasured at each reporting date, with changes recognized in earnings.

The timing and amount of any future settlement remains subject to the achievement of contractual milestones and may vary from the amounts disclosed.

The value as of September 30, 2025, was $676 million.

(2) Includes $575 million of current and non-current estimated acquisition earn-out payables.

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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.

Certain acquisition agreements include provisions with no maximum potential earn-out amount.

The amount recorded for these acquisitions as of September 30, 2025 is $431 million.

(3) Does not include approximately $56 million of current liability for a dividend of $0.1650 per share approved by the Board of Directors on October 22, 2025 to be paid on November 12, 2025.

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, 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.

The fair value of our invested assets at September 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”).

As of September 30, 2025, we had $550 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, 2025, 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, 2025, 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