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Item 2. Management’s Discussion and Analysis

2026-04-27 compared with 2025-10-28 · 174 added, 297 removed, 290 unchanged (62% 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, 2025, and the two discussions should be read together.

Company Overview — Third Quarter of 2025

Company Overview — First Quarter of 2026

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.

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

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

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

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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.

Furthermore, 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 term “core commissions and fees” excludes Contingents;

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:

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(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.

We also earn Contingents, 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.

Payments are primarily received in the first and second quarters of each subsequent underwriting year, based upon the prior year(s) underwriting results, but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until it is received.

Over the last three years, annual Contingents have averaged approximately 4.4% of total 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 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 September 30, 2025, our total commissions and fees growth rate was 34.2%, and our consolidated Organic Revenue growth rate was 3.5%.

(i) our Specialty Distribution segment, which earns 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.

Annual fee revenues as a percentage of our total commissions and fees, represented 22.2% in 2025 and 21.1% in 2024.

For the three months ended March 31, 2026, our total commissions and fees growth rate was 35.7%.

Our consolidated Organic Revenue growth rate was flat and our Organic Revenue with Contingents growth rate was 2.2%.

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 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.

Income before income taxes for the three months ended March 31, 2026 increased from the first quarter of 2025 by $106 million or 24.8%, driven by increased Contingents, leveraging our expense base, acquisitions completed in the past twelve months and the change in mark-to-market of escrow liability.

This growth was partially offset by Acquisition/Integration Costs and the change in estimated acquisition earn-out payables.

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.

Organic Revenue, Organic Revenue with Contingents, 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.

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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 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 view Organic Revenue and Organic Revenue growth (including Organic Revenue with Contingents and its 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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(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;

(ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period);

(iii) Foreign Currency Translation (as defined below) and (iv) the Litigation-Related Impact.

The term “core commissions and fees” excludes Contingents;

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.

Growth of Organic Revenue can be expressed as a dollar amount or a percentage rate.

• Organic Revenue with Contingents is Organic Revenue plus Organic Contingents (as defined below).

Growth of Organic Revenue with Contingents can be expressed as a dollar amount or a percentage rate.

Non-GAAP Earnings Measures

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

• “ Litigation-Related Impact ” means the core commissions and fees attributable to (i) the loss of specifically identified customer accounts and (ii) new business generated in the prior year by certain former employees, in each case in connection with the conduct of a competitor that is the subject of pending litigation in multiple jurisdictions.

• “ Organic Contingents ” are Contingents, less (i) Contingents earned for the first twelve months by newly acquired stand-alone operations and (ii) Contingents earned from divested stand-alone operations (Contingents generated from stand-alone operations sold or terminated during the comparable period).

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 third quarter of 2025, we acquired 713 insurance intermediary operations.

From 1993 through the first quarter of 2026, we acquired 725 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, 2025 for details regarding our critical and significant accounting policies.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

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 September 30,

Nine months ended September 30,

Three months ended March 31,

(in millions, except percentages)

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Organic Revenue growth rate (2)

Organic Revenue with Contingents growth rate (2)

Employee compensation and benefits

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Commissions and Fees

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%;

(ii) $307 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 $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 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%;

(ii) $429 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 $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 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.

Commissions and fees, including Contingents and earned premiums, for the three months ended March 31, 2026 increased $495 million to $1,880 million, or 35.7%, over the same period in 2025.

Core commissions and fees revenue for the first quarter of 2026 increased $441 million or 32.9%, composed of:

(i) $435 million from acquisitions that had no comparable revenues in the same period of 2025;

(ii) an increase from the impact of Foreign Currency Translation of $19 million and an offsetting decrease from (iii) $3 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months and (iv) $10 million related to the Litigation-Related Impact.

Contingents for the first quarter of 2026 increased by $54 million, or 126%, compared to the same period in 2025.

This increase was driven primarily by (i) improved underwriting results for our carrier partners, growth in premium volume and qualifying for certain Contingents that we did not qualify for in the prior year and (ii) recent acquisitions.

The Organic Revenue with Contingents growth rate was 2.2% driven by the increase in Organic Contingents.

Investment and Other Income

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.

Investment and other income for the three months ended March 31, 2026 increased $2 million from the same period in 2025.

The increase was driven primarily by acquisitions that had no comparable investment and other income in the same period of 2025, substantially 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 49.4% 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.

Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $22 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.

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.

Employee compensation and benefits expense as a percentage of total revenues was 47.7% for the three months ended March 31, 2026 as compared to 48.6% for the three months ended March 31, 2025, an increase of 32.8%, or $224 million.

This increase included $241 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2025.

Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $74 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.

Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2026 and 2025 decreased by $17 million.

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

(i) lower non-cash stock-based compensation expense driven by the company's performance;

(ii) a decrease in claims costs within our self-insured health plan;

(iii) a decrease in commissions, base compensation and bonuses driven by the Litigation-Related Impact;

partially offset by (iv) an increase in staff costs attributable to new hires and annual compensation increases.

Other Operating Expenses

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) $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.

Other operating expenses represented 15.2% of total revenues for the first quarter of 2026, as compared to 13.2% for the first quarter of 2025.

Other operating expenses for the first quarter of 2026 increased $103 million, or 55.4%, from the same period of 2025.

This change includes:

(i) $95 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2025;

(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;

(ii) $26 million of Acquisition/Integration Costs associated with the Transaction, $20 million of which is included in the $95 million related to acquisitions that had no comparable costs in the same period of 2025;

and (iii) increased information technology-related costs.

(Gain)/Loss on Disposal

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.

Gain on disposal for the first quarter of 2026 increased $3 million from the first quarter of 2025.

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 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.

Amortization expense for the first quarter of 2026 increased $63 million, or 118.9%, compared to the first quarter of 2025.

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 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.

Depreciation expense for the first quarter of 2026 increased $6 million, or 54.5%, compared to the first quarter of 2025.

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 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.

Interest expense for the first quarter of 2026 increased $53 million, or 115.2%, compared to the first quarter of 2025.

The increase is due to higher debt balances resulting from debt issuance in the second quarter of 2025 to fund the Transaction, 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 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 .

As of March 31, 2026 and 2025, 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 September 30,

Nine months ended September 30,

Three months ended March 31,

(in millions)

Change in fair value of estimated acquisition earn-out payables

Change in fair value

Interest expense accretion

Net change in earnings from estimated acquisition earn-out payables

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.

For the three months and three months ended March 31, 2026, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $1 million and $6 million, respectively, which resulted in credits to the Condensed Consolidated Statements of Income.

As of March 31, 2026, estimated acquisition earn-out payables totaled $393 million, of which $193 million was recorded as accounts payable and $200 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended March 31, 2026 and 2025 was 19.9% and 21.8%, respectively.

The decrease for the three months ended March 31, 2026 was primarily driven by the non-taxable treatment of the mark-to-market of escrow liability.

RESULTS OF OPERATIONS — SEGMENT INFORMATION

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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 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:

Likewise, other income consists primarily of miscellaneous income;

and therefore, it can fluctuate between comparable periods.

As such, management primarily focuses on Organic Revenue growth, the growth in Contingents 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 and Organic Revenue with Contingents, both non-GAAP financial measures, for the three months ended March 31, 2026 and 2025, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the three months ended March 31, 2026, including by segment, are as follows:

Specialty Distribution

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Total growth %

Profit-sharing contingent

Core commissions and fees

Foreign Currency Translation

Litigation-Related Impact

Organic Revenue (2)

1 unchanged sentence

Organic Revenue growth rate (2)

(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.

Organic Contingents

Organic Revenue with Contingents (2)

Organic Revenue with Contingents growth (2)

Organic Revenue with Contingents growth rate (2)

(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 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 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:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measures, for the three months ended March 31, 2025 and 2024, including by segment, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the three months ended March 31, 2025, including by segment, are as follows:

Specialty Distribution

2 unchanged sentences

Total growth %

Profit-sharing contingent

Core commissions and fees

Foreign Currency Translation

Litigation-Related Impact

Organic Revenue (2)

1 unchanged sentence

Organic Revenue growth rate (2)

(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 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)

Commissions and fees

Total growth %

Profit-sharing contingent

Core commissions and fees

Foreign Currency Translation

Organic Revenue (2)

Organic Revenue growth (2)

Organic Revenue growth % (2)

(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 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)

Commissions and fees

Total growth %

Profit-sharing contingent

Core commissions and fees

Foreign Currency Translation

Organic Revenue (2)

Organic Revenue growth (2)

Organic Revenue growth % (2)

(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 September 30, 2025, including by segment, is as follows:

(in millions)

Specialty Distribution

Total Revenues

Income before income taxes

Income Before Income Taxes Margin (1)

Change in estimated acquisition

earn-out payables

EBITDAC Margin (2)

(Gain)/loss on disposal

Acquisition/Integration Costs

Mark-to-market of escrow liability

EBITDAC - Adjusted (2)

EBITDAC Margin - Adjusted (2)

(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 $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

(in millions)

Specialty Distribution

Total Revenues

Income before income taxes

Income Before Income Taxes Margin (1)

Change in estimated acquisition

earn-out payables

EBITDAC Margin (2)

(Gain)/loss on disposal

Acquisition/Integration Costs

Mark-to-market of escrow liability

EBITDAC - Adjusted (2)

EBITDAC Margin - Adjusted (2)

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

Organic Contingents

Organic Revenue with Contingents (2)

Organic Revenue with Contingents growth (2)

Organic Revenue with Contingents growth rate (2)

(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

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:

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 March 31, 2026, including by segment, is as follows:

(in millions)

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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 nine months ended September 30, 2024, including by segment, is as follows:

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended March 31, 2025, including by segment, is as follows:

(in millions)

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Financial information relating to our Retail segment is as follows:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(in millions, except percentages)

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Organic Revenue growth rate (2)

Organic Revenue with Contingents growth rate (2)

Employee compensation and benefits

5 unchanged sentences

NMF = Not a meaningful figure

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 Retail segment’s total revenues for the three months ended March 31, 2026 increased 33.4%, or $303 million, as compared to the same period in 2025, to $1,210 million.

The $282 million increase in core commissions and fees revenue was driven by:

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(ii) an increase of $9 million related to net new and renewal business;

(iii) an increase from the impact of Foreign Currency Translation of $4 million and (iv) an offsetting decrease of $3 million related to commissions and fees recorded in 2024 from businesses since divested.

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 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) 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 $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 $15 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 nine months of 2025 increased 33.3%, or $10 million, as compared to the same period in 2024, to $40 million.

(iv) an offsetting decrease of $1 million related to commissions and fees recorded in 2025 from businesses since divested;

and (v) an offsetting decrease of $10 million related to the Litigation-Related Impact.

Contingents for the first quarter of 2026 increased $16 million to $30 million, as compared to the same period in 2025.

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 Retail segment’s total commissions and fees increased by 32.9%.

The Organic Revenue growth rate was 1.0% and the Organic Revenue with Contingents growth rate was 1.3% for the first quarter of 2026.

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 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.

Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines of coverage, and a change to the revenue model in our specialty pharmacy consulting business.

Income before income taxes for the three months ended March 31, 2026 increased 11.6%, or $33 million, as compared to the same period in 2025, to $317 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 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:

(i) the net increase in revenue as described above;

(ii) the timing of revenues associated with recent acquisitions;

and (iii) leveraging our expense base.

and (v) Acquisition/Integration Costs.

EBITDAC - Adjusted for the three months ended March 31, 2026 increased 29.0%, or $98 million, as compared to the same period in 2025, to $436 million.

EBITDAC Margin - Adjusted for the three months ended March 31, 2026 decreased to 36.0% from 37.3% in the same period in 2025.

The decrease in EBITDAC Margin - Adjusted was primarily driven by:(i) the timing of revenues and profit associated with certain recent acquisitions which was partially offset by;

(ii) leveraging our expense base;

and (ii) lower compensation as a result of teammate defections associated with our pending litigation with a start-up US broker.

Specialty Distribution Segment

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

The Specialty Distribution Segment is composed of three divisions;

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.

and our specialty program business, known as Arrowhead Specialty .

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.

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.

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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.

Our teams across the globe provide 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 offers 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 limit the Company's exposure to claims expenses either through reinsurance or by participating in limited tranches of the underwriting risk.

The Company has traditionally participated in underwriting profits through Contingents.

These captives purchase reinsurance or participate in limited tranches of the underwriting risk in order to limit the Company's exposure to claims expenses.

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

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

(in millions, except percentages)

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Organic Revenue growth rate (2)

Organic Revenue with Contingents growth rate (2)

Employee compensation and benefits

5 unchanged sentences

NMF = Not a meaningful figure

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:

The Specialty Distribution segment’s total revenues for the three months ended March 31, 2026 increased 40.0%, or $195 million, as compared to the same period in 2025, to $682 million.

The $158 million increase in core commissions and fees revenue was driven by:

(i) approximately $165 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025;

and (ii) approximately $23 million of net new business, renewal business, and fee revenues;

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;

and (ii) an increase from the impact of Foreign Currency Translation of $4 million;

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:

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

(iii) a $9 million decrease in net new business, renewal business, and fee revenues;

and (iv) a $2 million decline in core commission and fees revenue from dispositions that had no comparable revenues in the same period of 2026.

Contingents for the first quarter of 2026 increased approximately $38 million as compared to the first quarter of 2025.

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;

The Organic Revenue with Contingents growth rate was 3.9% driven by the increase in Organic Contingents.

The Specialty Distribution segment’s total commissions and fees increased by 40.7%, with Organic Revenue decreasing 2.0% and Organic Revenue with Contingents increasing 3.9% for the three months ended March 31, 2026.

The Organic Revenue with Contingents growth rate was driven by:

(i) increased Contingents;

(ii) net new and retained business;

(iii) and exposure unit expansion;

partially offset by (iv) declining rates on catastrophe ("CAT") property.

Income before income taxes for the three months ended March 31, 2026 increased 33.1%, or $55 million, as compared to the same period in 2025, to $221 million due to:

(i) the growth of EBITDAC – Adjusted described below;

(ii) a decrease in estimated acquisition earn-out payables;

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.

(iii) increased amortization expense;

and (iv) Acquisition/Integration Costs.

EBITDAC - Adjusted for the three months ended March 31, 2026 increased 41.1%, or $81 million, from the same period in 2025, to $278 million.

EBITDAC Margin - Adjusted for the three months ended March 31, 2026 increased to 40.8% from 40.5% in the same period in 2025.

EBITDAC Margin - Adjusted increased due to:

(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.

(i) the increase in Contingents (ii) the timing of revenues associated with recent acquisitions;

and (iii) disciplined expense management.

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.

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

We have the ability to utilize our Revolving Credit Facility 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 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 March 31, 2026 provided additional capacity for up to $475 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.

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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 $1,500 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.

Including the expansion options under all existing credit agreements, the Company has access to up to $1,375 million of incremental borrowing capacity as of March 31, 2026.

Cash and cash equivalents totaled $1,003 million at March 31, 2026 reflecting a decrease of $76 million from the $1,079 million balance at December 31, 2025.

This decrease is primarily due to the payment of annual bonus compensation and deferred contingent consideration paid during the quarter offset by our cash generated.

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 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.

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, mark-to-market escrow liability 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 was 1.02 and 1.04 for March 31, 2026 and December 31, 2025, respectively.

Cash flows generated from operating activities totaled $262 million and $213 million for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $49 million.

Operating cash flows generated in 2026 included $427 million from net income before non-controlling interests with $167 million of non-cash adjustments, offset by $332 million from changes in working capital.

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.

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

Investing Cash Flows

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.

Cash flows used for investing activities were $38 million and $79 million for the three months ended March 31, 2026 and 2025, respectively, a decrease of $41 million.

During the three months ended March 31, 2026, the Company completed eight acquisitions (including book purchases) and paid $17 million, net of cash, and cash and cash equivalents held in a fiduciary capacity acquired.

Net cash paid for acquisitions decreased $50 million in the three months ended March 31, 2026, down from $67 million during the same period in 2025.

The Company received minimal cash proceeds from the sale of businesses, fixed assets and customer accounts during the three months ended March 31, 2026, compared to $9 million proceeds received in the same period in 2025.

The decrease is attributed to smaller sales of businesses in the current period.

Capital Expenditures

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.

Capital expenditures amounted to $21 million and $17 million in the three months ended March 31, 2026 and 2025, 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 $7,851 million and net use of $341 million in the nine months ended September 30, 2025 and 2024, respectively, an increase of $8,192 million.

Net cash flows used by financing activities totaled $354 million and $218 million in the three months ended March 31, 2026 and 2025, respectively, an increase of $136 million.

Fiduciary Receivables and Liabilities

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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 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.

Financing cash flows reflect a decrease of $76 million and $90 million in the three months ended March 31, 2026 and 2025, respectively, related to fiduciary receivables and liabilities.

Acquisition Earn-outs

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.

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 $5

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.

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 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.

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 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.

Payments on acquisition earn-outs related to the original acquisition date estimates totaled $150 million and $26 million in the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026 and 2025, the Company paid cash dividends of $57 million and $43 million, respectively, an increase of $14 million, or 32.6%.

On April 27, 2026, the board of directors approved a quarterly cash dividend of $0.165 per share to be paid on May 20, 2026.

Net cash proceeds from long term debt totaled $206 million in the three months ended March 31, 2026, compared to net cash use of $19 million in the same period of 2025.

Total debt at March 31, 2026 was $7,822 million net of unamortized discount and debt issuance costs, which was an increase of $209 million compared to December 31, 2025.

The increase includes the drawdown of $225 million on the Revolving Credit Facility and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $3 million, offset by $19 million of payments on outstanding term loan balances.

During the three months ended March 31, 2026, the Company repaid $6 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 $163 million as of March 31, 2026.

The Company's next scheduled principal payment is due in June 2026 and is equal to $6 million.

During the three months ended March 31, 2026, the Company repaid $13 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments.

The Term A-2 Loans had an outstanding balance of $350 million as of March 31, 2026.

The Company’s next scheduled principal payment is $13 million due in June 2026.

During the first quarter, the Company drew $225 million on the Revolving Credit Facility in connection with a share repurchase program.

There is an outstanding balance of $325 million on the Revolving Credit Facility as of March 31, 2026.

On February 12, 2026, the Company entered into accelerated share repurchase agreement ("ASR") with an investment bank to purchase an aggregate $250 million of the Company's common stock.

The program ended on March 9, 2026 and during the period, the Company received a total of 3,574,890 shares of the Company's common stock.

At March 31, 2026, the remaining amount authorized by our board of directors for share repurchases was approximately $1,150 million.

Contractual Cash Obligations

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

As of March 31, 2026, our contractual cash obligations were as follows:

Payments Due by Period

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Total contractual cash obligations (3)

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

(1) Includes the escrow liability which is included within “Other Long-Term Liabilities” issued in connection with the Transaction.

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.

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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.

The value as of March 31, 2026, was $552 million.

(2) Includes $393 million of current and non-current estimated acquisition earn-out payables.

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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.

The amount recorded for these acquisitions as of March 31, 2026 is $248 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 April 27, 2026 to be paid on May 20, 2026.

Quantitative and Qualita tive Disclosures About Market Risk

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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.

Treasury securities, and professionally managed short duration fixed income funds.

These investments are subject to interest rate risk.

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.

The fair value of our invested assets at March 31, 2026 and December 31, 2025 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 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”).

As of March 31, 2026, we had $838 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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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 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.

We are subject to translation exchange rate risk having businesses operating outside of the U.S.

in the following functional currencies, British pounds, Canadian dollar, euros and, to a lesser extent, other currencies.

Based upon our foreign currency rate exposure as of March 31, 2026, 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