What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-05 compared with 2023-02-06 · 173 added, 202 removed, 822 unchanged (31% of the section changed)

12 unchanged sentences

Other assets 1,545,667 1,291,572

Goodwill 68,930 68,930

Intangible assets 56,338 66,875

17 unchanged sentences

Additional paid-in capital 3,368,407 3,330,138

Accumulated other comprehensive loss — ( 45 )

Retained earnings 7,012,724 5,581,702

18 unchanged sentences

Selling, general, and administrative expenses ( 1,312,642 ) ( 1,381,222 ) ( 1,208,698 )

Loss on debt retirement — ( 61,469 ) —

Goodwill impairment — — ( 20,190 )

Other expense, net ( 13,718 ) ( 2,410 ) ( 17,826 )

Equity income from unconsolidated entities, net 4,561 50,680 17,200

Gain (loss) on debt retirement 663 — ( 61,469 )

Other income (expense), net 37,200 ( 64,398 ) ( 19,610 )

Income before income taxes 3,449,267 3,439,558 2,509,845

31 unchanged sentences

Shareholders' equity, December 31, 2020 266,464 $ 2,665 $ 3,261,412 $ ( 145 ) $ 3,306,057 $ 6,569,989

Cumulative effect of accounting change (see Note 1 )

— — — — ( 735 ) ( 735 )

Stock option exercises 1 — 11 — — 11

7 unchanged sentences

Shareholders' equity, December 31, 2021 249,326 $ 2,493 $ 3,290,791 $ ( 45 ) $ 4,196,276 $ 7,489,515

Stock option exercises 1 — 11 — — 11

Share issuances 676 7 6,024 — — 6,031

9 unchanged sentences

Share repurchases ( 13,793 ) ( 138 ) — — ( 999,862 ) ( 1,000,000 )

Excise tax on share repurchases — — — — ( 9,691 ) ( 9,691 )

Cash paid for shares withheld for taxes — — — — ( 11,991 ) ( 11,991 )

1 unchanged sentence

Net income — — — — 2,602,372 2,602,372

Other comprehensive income — — — 45 — 45

Shareholders' equity, December 31, 2023 212,558 $ 2,126 $ 3,368,407 $ — $ 7,012,724 $ 10,383,257

10 unchanged sentences

Land-related charges 43,115 66,656 12,302

Loss on debt retirement — 61,469 —

Goodwill impairment — — 20,190

(Gain) loss on debt retirement ( 663 ) — 61,469

Depreciation and amortization 80,824 70,918 69,953

Share-based compensation expense 42,989 36,745 32,843

Equity income from unconsolidated entities ( 4,561 ) ( 50,680 ) ( 17,200 )

Distributions of earnings from unconsolidated entities 4,564 49,151 2,110

Share-based compensation expense 48,200 42,989 36,745

Other, net ( 758 ) 1,431 1,586

40 unchanged sentences

and its subsidiaries.

While our subsidiaries engage primarily in the homebuilding business, we also have mortgage banking operations, conducted principally through Pulte Mortgage LLC (“Pulte Mortgage”), and title and insurance brokerage operations.

The consolidated financial statements have been prepared in accordance with U.S.

3 unchanged sentences

All significant intercompany accounts, transactions, and balances have been eliminated in consolidation.

Business acquisitions

On January 24, 2020, we acquired the operations of Innovative Construction Group ("ICG"), an offsite construction framing company located in Jacksonville, Florida, for $ 104 million, of which $ 83.3 million was paid in January 2020 with additional payments of $ 10.4 million in each of 2021 and 2022.

The acquired net assets were recorded at their estimated fair values, including intangible assets of $ 27.8 million associated with customer relationships and $ 1.8 million associated with the ICG tradename, which are being amortized over seven - and five -year useful lives, respectively.

The acquisition also resulted in $ 48.7 million of tax deductible goodwill.

The acquisition of these assets was not material to our results of operations or financial condition.

Use of estimates

2 unchanged sentences

Actual results could differ from those estimates.

Reclassifications

Effective with our first quarter 2023 reporting, we reclassified our closing cost incentives provided to customers, including seller-paid financing costs, from home sale cost of revenues to home sale revenues.

All prior period amounts have been reclassified to conform to the current presentation.

As a result, all sales incentives provided to customers are classified as a reduction of home sale revenues.

This reclassification had the effect of reducing both home sale revenues and home sale cost of revenues by the amount of such closing cost incentives, which totaled $ 226.0 million and $ 189.9 million for the years ended December 31, 2022 and 2021, respectively.

Subsequent events

1 unchanged sentence

Cash and equivalents

Cash and equivalents include institutional money market investments and time deposits with a maturity of three months or less when acquired.

Cash and equivalents include institutional money market investments and time deposits with an original maturity of three months or less.

Cash and equivalents at December 31, 2023 and 2022 also included $ 43.2 million and $ 42.9 million, respectively, of cash from home closings held in escrow for our benefit, typically for less than five days, which are considered deposits in-transit.

5 unchanged sentences

generally this represents ownership interests of at least 20% and not more than 50%.

Under the equity method of accounting, we recognize

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

our proportionate share of the earnings and losses of these entities.

Under the equity method of accounting, we recognize our proportionate share of the earnings and losses of these entities.

Certain of these entities sell land to us.

We defer the recognition of profits from such activities until the time we ultimately sell the related land.

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

We evaluate our investments in unconsolidated entities for recoverability in accordance with ASC 323, “Investments – Equity Method and Joint Ventures”.

If we determine that a loss in the value of the investment is other than temporary, we write down the investment to its estimated fair value.

Any such losses are recorded to equity in (earnings) loss of unconsolidated entities, which is reflected in other expense, net.

Any such losses are recorded to equity in (earnings) loss of unconsolidated entities, which is reflected in other income (expense), net.

Due to uncertainties in the estimation process and the significant volatility in demand for new housing, actual results could differ significantly from such estimates.

2 unchanged sentences

We assess goodwill for impairment annually in the fourth quarter and if events or changes in circumstances indicate the carrying amount may not be recoverable.

In accordance with ASC 350, "Intangibles", management evaluates the recoverability of goodwill by comparing the carrying value of the Company’s reporting units to their fair value.

Fair value is determined using accepted valuation methods, including the use of discounted cash flows supplemented by market-based assessments of fair value.

As a result of the significant decline in equity market valuations that occurred during the period between our acquisition of ICG in January 2020 and March 31, 2020, we determined that an event-driven goodwill impairment test was appropriate for the ICG goodwill, which resulted in an impairment totaling $ 20.2 million in the first quarter of 2020.

This impairment was not the result of any unique factors specific to ICG's operations but, rather, reflected the broad-based declines in the market capitalizations of publicly-traded construction companies in the short period of time between the acquisition and the March 31, 2020 valuation date.

Intangible assets also include tradenames and customer relationships acquired in connection with acquisitions and totaled $ 66.9 million, net of accumulated amortization of $ 87.7 million, at December 31, 2022, and $ 78.0 million, net of accumulated amortization of $ 76.6 million, at December 31, 2021.

Intangible assets consist of primarily of tradenames acquired in connection with acquisitions and totaled $ 56.3 million, net of accumulated amortization of $ 98.2 million, at December 31, 2023, and $ 66.9 million, net of accumulated amortization of $ 87.7 million, at December 31, 2022.

Such tradenames are generally being amortized over 20-year lives.

Our customer relationships intangible asset resulted from the ICG acquisition and is being amortized over seven years .

Amortization expense totaled $ 10.5 million, $ 11.1 million, and $ 16.5 million in 2023, 2022 and 2021, respectively, and is expected to be $ 10.0 million in 2024, $ 9.3 million in 2025, $ 8.9 million in 2026, $ 6.5 million in 2027, and $ 6.3 million in 2028.

18 unchanged sentences

Company contributions to the plan totaled $ 27.8 million, $ 27.6 million, and $ 23.4 million in 2023, 2022, and 2021, respectively.

Other expense, net

Other expense, net consists of the following ($000’s omitted):

Other income (expense), net

Other income (expense), net consists of the following ($000’s omitted):

2023 2022 2021

5 unchanged sentences

Interest expense ( 469 ) ( 284 ) ( 502 )

Equity in earnings of unconsolidated entities ( Note 4 )

50,680 17,200 1,880

Miscellaneous, net 10,186 8,592 7,724

Total other expense, net $ ( 13,718 ) $ ( 2,410 ) $ ( 17,826 )

Total other income (expense), net $ 37,200 $ ( 64,398 ) $ ( 19,610 )

Earnings per share

14 unchanged sentences

Numerator for diluted earnings per share $ 2,592,938 $ 2,601,242 $ 1,930,022

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Share-based compensation

2 unchanged sentences

We recognize compensation expense for restricted share units, the majority of which cliff vest at the end of three years , ratably over the vesting period.

For share-based awards containing performance conditions, we recognize compensation expense ratably over the vesting period when it is probable that the stated performance targets will be achieved and record cumulative adjustments in the period in which

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

estimates change.

Compensation expense related to our share-based awards is included in selling, general, and administrative expense, except for a small portion recognized in Financial Services expenses.

22 unchanged sentences

Other revenues related to our construction services operations are generally recognized as materials are delivered and installation services are provided.

Financial services revenues - Expected gains and losses from the sale of residential mortgage loans and their related servicing rights are included in the measurement of written loan commitments that are accounted for at fair value through Financial Services revenues at the time of commitment.

Subsequent changes in the fair value of these loans are reflected in Financial Services revenues as they occur.

Financial services revenues - Loan origination fees, commitment fees, and discount points are recognized upon loan origination.

Expected gains and losses from the sale of residential mortgage loans and their related servicing rights are included in the measurement of interest rate lock commitments ("IRLCs") that are accounted for at fair value through Financial Services revenues at the time of commitment.

Subsequent changes in the fair value of IRLCs and residential mortgage available for sale are reflected in Financial Services revenues as they occur.

Interest income is accrued from the date a mortgage loan is originated until the loan is sold.

Mortgage servicing fees represent fees earned for servicing loans for various investors.

Servicing fees are based on a contractual percentage of the outstanding principal balance and are credited to income when related mortgage payments are received or the sub-servicing fees are earned.

Revenues associated with our title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur as each home is closed.

Insurance brokerage commissions relate to commissions on home and other insurance policies placed with third party carriers through various agency channels.

Our performance obligations for policy renewal commissions are considered satisfied upon issuance of the initial policy, and related contract assets for estimated future renewal commissions are included in other assets and totaled $ 57.3 million and $ 44.3 million at December 31, 2022 and 2021, respectively.

Mortgage servicing fees represent fees earned for servicing loans until the loans are sold.

Servicing fees are based on a contractual percentage of the outstanding principal balance and are credited to income when related mortgage payments are received.

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Revenues associated with our title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur as each home is closed.

Insurance agency commissions relate to commissions on home and other insurance policies placed with third party carriers through various agency channels.

Our performance obligations for policy renewal commissions are considered satisfied upon issuance of the initial policy.

The related contract assets for estimated future renewal commissions are included in other assets and totaled $ 74.0 million and $ 57.3 million at December 31, 2023 and 2022, respectively.

Sales incentives

When sales incentives involve a discount on the selling price of the home, we record the discount as a reduction of revenue at the time of house closing.

If the sales incentive requires us to provide a free product or service to the customer, the cost of the free product or service is recorded as cost of revenues at the time of house closing.

Sales incentives primarily relate to discounts on the selling price of the home, payment of closing costs, or free products or services offered to the customer.

Sales incentives are recorded as a reduction of home sale revenues.

Inventory and cost of revenues

7 unchanged sentences

Interest expense is allocated over the period based on the timing of home closings.

Cost of revenues includes the construction cost, average lot cost, estimated warranty costs, and closing costs applicable to the home.

Cost of revenues includes the construction cost, average lot cost, and estimated warranty costs applicable to the home.

Sales commissions are classified within selling, general, and administrative expenses.

12 unchanged sentences

We record net realizable value adjustments for land held for sale within Homebuilding land sale cost of revenues.

Land option agreements

We enter into land option agreements in order to procure land for the construction of homes in the future.

Pursuant to these land option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices.

Such contracts enable us to defer acquiring portions of properties owned by third parties or unconsolidated entities until we have determined whether and when to exercise our option, which may serve to reduce our financial risks associated with long-term land holdings.

Option deposits and pre-acquisition costs (such as environmental testing, surveys, engineering, and entitlement costs) are capitalized if the costs are directly identifiable with the land under option, the costs would be capitalized if we owned the land, and acquisition of the property is probable.

Such costs are reflected in other assets and are reclassified to inventory upon taking title to the land.

We write off deposits and pre-acquisition costs when it becomes probable that we will not go forward with the project or recover the capitalized costs.

Such decisions take into consideration changes in local market conditions, the timing of required land purchases, the availability and best use of

Warranty liabilities

Home buyers are provided with a limited warranty against certain building defects, including a one-year comprehensive limited warranty and coverage for certain other aspects of the home's construction and operating systems for periods of up to (and in

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

necessary incremental capital, and other factors.

We record any such write-offs of deposits and pre-acquisition costs within other expense, net.

If an entity holding the land under option is a variable interest entity (“VIE”), our deposit represents a variable interest in that entity.

No VIEs required consolidation at either December 31, 2022 or 2021 because we determined that we were not the primary beneficiary.

Our maximum exposure to loss related to these VIEs is generally limited to our deposits and pre-acquisition costs under the applicable land option agreements.

The following provides a summary of our interests in land option agreements ($000’s omitted):

December 31, 2022 December 31, 2021

Pre-acquisition

Costs Remaining Purchase

Price Deposits and

Pre-acquisition

Costs Remaining Purchase

Land options with VIEs $ 213,895 $ 2,130,398 $ 179,604 $ 2,329,187

Other land options 264,860 3,269,843 225,318 3,128,691

$ 478,755 $ 5,400,241 $ 404,922 $ 5,457,878

Warranty liabilities

limited instances exceeding) 10 years.

We estimate the costs to be incurred under these warranties and record a liability in the amount of such costs at the time revenue is recognized (see Note 11 ).

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See Note 11 for discussion of the risks retained related to mortgage loan originations.

Expected gains and losses from the sale of residential mortgage loans and their related servicing rights are included in the measurement of written loan commitments that are accounted for at fair value through Financial Services revenues at the time of commitment.

Expected gains and losses from the sale of residential mortgage loans and their related servicing rights are included in the measurement of IRLCs that are accounted for at fair value through Financial Services revenues at the time of commitment.

Subsequent changes in the fair value of these loans are reflected in Financial Services revenues as they occur.

2 unchanged sentences

Net gains from the sale of mortgages during 2023, 2022, and 2021 were $ 149.8 million, $ 157.3 million, and $ 251.3 million, respectively, and have been included in Financial Services revenues .

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Mortgage servicing rights

10 unchanged sentences

Derivative instruments and hedging activities

We are party to interest rate lock commitments ("IRLCs") with customers resulting from our mortgage origination operations.

We are party to IRLCs with customers resulting from our mortgage origination operations.

At December 31, 2023 and 2022, we had aggregate IRLCs of $ 404.7 million and $ 653.2 million, respectively, which were originated at interest rates prevailing at the date of commitment.

Since we can terminate a loan commitment if the borrower does not comply with the terms of the contract, and some loan commitments may expire without being drawn upon, these commitments do not necessarily represent future cash requirements.

Since we can terminate a loan commitment if the borrower does not comply with the terms of the

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

contract, and some loan commitments may expire without being drawn upon, these commitments do not necessarily represent future cash requirements.

We evaluate the creditworthiness of these transactions through our normal credit policies.

1 unchanged sentence

Forward contracts on mortgage-backed securities are the predominant derivative financial instruments we use to minimize market risk during the period from the time we extend an interest rate lock to a loan applicant until the time the loan is sold to an investor.

At December 31, 2022 and 2021, we had unexpired forward contracts of $ 1.0 billion and $ 903.0 million, respectively, and whole loan investor commitments of $ 285.9 million and $ 310.0 million, respectively.

At December 31, 2023 and 2022, we had unexpired forward contracts of $ 745.0 million and $ 1.0 billion, respectively, and whole loan investor commitments of $ 207.9 million and $ 285.9 million, respectively.

Changes in the fair value of IRLCs and other derivative financial instruments are recognized in Financial Services revenues, and the fair values are reflected in other assets or other liabilities, as applicable.

9 unchanged sentences

$ 4,060 $ 27,657 $ 15,780 $ 22,590

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Credit losses

1 unchanged sentence

We assess and monitor each counterparty’s ability to pay amounts owed by considering contractual terms and conditions, the counterparty’s financial condition, macroeconomic factors, and business strategy.

At December 31, 2022 and 2021, we reported $ 222.9 million and $ 208.4 million of assets in-scope under Accounting Standards Codification 326, "Financial Instruments - Credit Losses" ("ASC 326").

These assets consist primarily of insurance receivables, contract assets related to insurance brokerage commissions, accounts receivable, and vendor rebate receivables.

Our assets exposed to credit losses consist primarily of insurance receivables, contract assets related to insurance agency commissions, accounts receivable, and vendor rebate receivables.

Counterparties associated with these assets are generally highly rated.

Allowances on the aforementioned in-scope assets were not material as of December 31, 2022.

Allowances on the aforementioned assets were not material as of December 31, 2023.

New accounting pronouncements

On January 1, 2020, we adopted ASC 326, which changed the impairment model for most financial assets and certain other instruments from an "incurred loss" approach to a new "expected credit loss" methodology.

We adopted ASC 326 using the modified retrospective transition method.

The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses.

Our adoption of ASC 326 resulted in a $ 0.7 million decrease to retained earnings as of January 1, 2020.

On January 1, 2020, we adopted ASU No.

2017-04, "Intangibles - Goodwill and Other (Topic 350):

Simplifying the Accounting for Goodwill Impairment", which removed the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.

Under the new standard, goodwill impairment is determined by evaluating the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

The standard was followed in the previously mentioned assessment of the ICG goodwill.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", as amended by ASU 2021-01 in January 2021, which provides optional expedients and exceptions for applying U.S.

In 2023, we adopted ASU 2020-04, "Reference Rate Reform (Topic 848)", as amended by ASU 2021-01 in January 2021, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the cessation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2024.

We will adopt these standards when LIBOR is discontinued and do not expect that the adoption will have a material impact on our consolidated financial statements or related disclosures.

Our adoption of ASU 2020-04 did not have a material impact on the Company's condensed consolidated financial statements.

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" ("ASU 2023-07"), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis.

ASU 2023-07 is effective for us for annual periods beginning after January 1, 2024 and interim periods beginning after January 1, 2025.

We are currently evaluating the impact ASU 2023-07 will have on our financial statement disclosures.

In December 2023, FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires expanded disclosure of our income rate reconciliation and income taxes paid.

ASU 2023-09 is effective for us for annual periods beginning after January 1, 2025.

We are currently evaluating the impact ASU 2023-09 will have on our financial statement disclosures.

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Inventory and land held for sale

5 unchanged sentences

120,522 72,058

$ 11,795,370 $ 11,326,017

(a) Consolidated inventory not owned includes land sold to third parties for which the Company retains a repurchase option.

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In all periods presented, we capitalized all Homebuilding interest costs into inventory because the level of our active inventory exceeded our debt levels .

6 unchanged sentences

Interest in inventory, end of period $ 139,078 $ 137,262 $ 160,756

Land option agreements

We enter into land option agreements in order to procure land for the construction of homes in the future.

Such costs are reflected in other assets and are reclassified to inventory upon taking title to the land.

We write off deposits and pre-acquisition costs when it becomes probable that we will not go forward with the project or recover the capitalized costs.

Such decisions take into consideration changes in local market conditions, the timing of required land purchases, the availability and best use of necessary incremental capital, and other factors.

We record any such write-offs of deposits and pre-acquisition costs within other income (expense), net.

If an entity holding the land under option is a variable interest entity (“VIE”), our deposit represents a variable interest in that entity.

No VIEs required consolidation at either December 31, 2023 or 2022 because we determined that we were not the primary beneficiary.

Our maximum exposure to loss related to these VIEs is generally limited to our deposits and pre-acquisition costs under the applicable land option agreements.

The following provides a summary of our interests in land option agreements ($000’s omitted):

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

December 31, 2023 December 31, 2022

Pre-acquisition

Costs Remaining Purchase

Price Deposits and

Pre-acquisition

Costs Remaining Purchase

Land options with VIEs $ 238,070 $ 1,916,558 $ 213,895 $ 2,130,398

Other land options 466,139 4,531,566 264,860 3,269,843

$ 704,209 $ 6,448,124 $ 478,755 $ 5,400,241

Land-related charges

3 unchanged sentences

Land impairments Home sale cost of revenues 19,603 2,990 —

Write-offs of deposits and pre-acquisition costs Other expense, net 63,559 12,283 12,390

Write-offs of deposits and pre-acquisition costs Other income (expense), net 23,512 63,559 12,283

Total land-related charges $ 43,115 $ 66,656 $ 12,302

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Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio

Arizona, California, Colorado, Nevada, New Mexico, Washington

We also have a reportable segment for our Financial Services operations, which consist principally of mortgage banking, title, and insurance brokerage operations.

Arizona, California, Colorado, Nevada, New Mexico, Oregon, Utah, Washington

We also have a reportable segment for our Financial Services operations, which consist principally of mortgage banking, title, and insurance agency operations.

The Financial Services segment operates generally in the same markets as the Homebuilding segments.

6 unchanged sentences

2023 2022 2021

Revenues (a) :

Northeast $ 969,628 $ 1,063,568 $ 1,112,778

7 unchanged sentences

Consolidated revenues $ 16,061,578 $ 16,002,979 $ 13,736,995

Income before income taxes (a) :

Income before income taxes (a)(b) :

Northeast $ 218,159 $ 244,233 $ 215,193

Southeast 620,969 692,279 417,880

939,034 585,680 362,276

Florida 1,212,675 939,034 585,680

Midwest 368,321 363,028 287,956

6 unchanged sentences

Consolidated income before income taxes $ 3,449,267 $ 3,439,558 $ 2,509,845

(a) Includes certain land-related charges (see the following table and Note 2 ).

(b) Includes goodwill impairment charge totaling $ 20.2 million in 2020 (see Note 1 ).

(a) All periods reflect the reclassification of closing cost incentives to home sale revenues from home sale cost of revenues ( Note 1 ).

(b) Includes certain land-related charges (see the following table and Note 2 ).

(d) Other homebuilding includes the amortization of intangible assets, amortization of capitalized interest, and other items not allocated to the operating segments.

Also included are insurance reserve reversals of $ 65.0 million, $ 81.1 million, and $ 93.4 million in 2022, 2021 and 2020, respectively, partially offset by reserves against insurance receivables of $ 17.8 million in 2020 (see Note 11 ) and a loss on debt retirement of $ 61.5 million in 2021 (see Note 5 ).

Also included are insurance reserve reversals of $ 130.8 million, $ 65.0 million, and $ 81.1 million in 2023, 2022 and 2021, respectively, partially offset by a loss on debt retirement of $ 61.5 million in 2021 ( Note 5 ).

PULTEGROUP, INC.

38 unchanged sentences

Southeast 786,698 826,240 80,451 27,963 1,721,352 1,994,492

Florida 1,417,657 1,081,836 125,253 51,889 2,676,635 3,195,091

1,405,934 1,211,087 205,843 48,139 2,871,003 3,420,924

Midwest 621,144 685,139 14,265 3,472 1,324,020 1,476,166

1 unchanged sentence

West 1,473,617 1,688,498 190,082 — 3,352,197 3,752,089

Other homebuilding (a)

Other homebuilding (b)

27,980 336,867 9,879 — 374,726 2,140,954

8 unchanged sentences

Southeast 793,539 544,867 102,336 20,169 1,460,911 1,668,053

Florida 943,110 866,266 289,388 — 2,098,764 2,545,457

1,417,657 1,081,836 125,253 51,889 2,676,635 3,195,091

Midwest 523,194 689,541 22,467 — 1,235,202 1,382,227

1 unchanged sentence

West 1,662,251 1,528,863 238,758 — 3,429,872 3,771,808

Other homebuilding (a)

Other homebuilding (b)

31,236 321,086 11,772 — 364,094 1,470,919

2 unchanged sentences

$ 5,440,186 $ 5,134,432 $ 679,341 $ 72,058 $ 11,326,017 $ 14,796,515

(a) Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments.

(a) Florida includes goodwill of $ 28.6 million, net of cumulative impairment charges of $ 20.2 million.

(b) Other homebuilding primarily includes cash and equivalents, capitalized interest, intangibles, deferred tax assets, and other corporate items that are not allocated to the operating segments.

Other homebuilding also includes goodwill of $ 40.4 million.

Investments in unconsolidated entities

3 unchanged sentences

In 2023, 2022, and 2021, we recognized earnings from unconsolidated joint ventures of $ 4.6 million , $ 50.7 million , and $ 17.2 million, respectively.

We received distributions from our unconsolidated joint ventures of $ 21.7 million, $ 53.9 million, and $ 27.9 million in 2022, 2021, and 2020, respectively.

We received distributions of capital from our unconsolidated joint ventures of $ 3.3 million, $ 21.7 million, and $ 53.9 million in 2023, 2022, and 2021, respectively.

We made capital contributions to our unconsolidated joint ventures of $ 23.4 million, $ 64.7 million, and $ 101.6 million in 2023, 2022, and 2021, respectively.

At December 31, 2023, aggregate outstanding debt of unconsolidated joint ventures was $ 73.5 million, of which $ 33.2 million related to one joint venture in which we have a 50% interest.

In connection with this loan, we and our joint venture partner provided customary limited recourse guaranties in which our maximum financial loss exposure is limited to our pro rata share of the debt outstanding.

In connection with this loan, we and our joint venture partner

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

provided customary limited recourse guaranties in which our maximum financial loss exposure is limited to our pro rata share of the debt outstanding.

The timing of cash flows related to a joint venture and any related financing agreements varies by agreement.

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At December 31, 2023, we were in compliance with all of the covenants and requirements under the senior notes.

We retired outstanding debt totaling $ 123.3 million, $ 4.9 million, and $ 836.9 million during 2023, 2022, and 2021, respectively.

The retirements in 2023 included open market repurchases of $ 44.6 million and $ 56.1 million of our unsecured senior notes scheduled to mature in 2026 and 2027, respectively.

The retirements in 2021 included a tender offer to retire $ 200.0 million and $ 100.0 million of our unsecured notes scheduled to mature in 2026 and 2027, respectively.

The retirement in 2021 resulted in a loss of $ 61.5 million that included the write-off of debt issuance costs, unamortized discounts and premiums, and transaction fees related to the repurchased debt and which is reflected in other income (expense), net.

Other notes payable

Other notes payable include non-recourse and limited recourse collateralized notes with third parties that totaled $ 71.0 million and $ 55.2 million at December 31, 2023 and 2022, respectively.

These notes have maturities ranging up to four years , are secured by the applicable land positions to which they relate, and generally have no recourse to any other assets.

These notes have maturities ranging up to six years , are secured by the applicable land positions to which they relate, and generally have no recourse to any other assets.

The stated interest rates on these notes range up to 6 %.

We recorded inventory through seller financing of $ 46.7 million, $ 39.1 million, and $ 50.9 million in 2023, 2022, and 2021, respectively.

We retired outstanding debt totaling $ 4.9 million, $ 836.9 million, and $ 65.3 million during 2022, 2021, and 2020, respectively.

The retirements in 2021 included a tender offer to retire $ 200.0 million and $ 100.0 million of our unsecured notes scheduled to mature in 2026 and 2027, respectively.

Revolving credit facility

We maintain a revolving credit facility ("Revolving Credit Facility") maturing in June 2027 that has a maximum borrowing capacity of $ 1.3 billion and contains an uncommitted accordion feature that could increase the capacity to $ 1.8 billion, subject to certain conditions and availability of additional bank commitments.

The Revolving Credit Facility also provides for the issuance of letters of credit that reduce the available borrowing capacity under the Revolving Credit Facility, up to the maximum borrowing capacity.

The Revolving Credit Facility also provides for the issuance of letters of credit that reduce the available borrowing capacity under the Revolving Credit Facility, up to the

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

maximum borrowing capacity.

The interest rate on borrowings under the Revolving Credit Facility may be based on either the Secured Overnight Financing Rate or a base rate plus an applicable margin, as defined therein.

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Outstanding balances under the Revolving Credit Facility are guaranteed by certain of our wholly-owned subsidiaries.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 2023, we had no borrowings outstanding, $ 312.7 million of letters of credit issued, and $ 937.3 million of remaining capacity under the Revolving Credit Facility.

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Financial Services debt

Pulte Mortgage maintains a master repurchase agreement with third party lenders (the "Repurchase Agreement") that matures on July 27, 2023.

In August 2023, Pulte Mortgage entered into a master repurchase agreement (the "Repurchase Agreement"), which matures on August 14, 2024.

The Repurchase Agreement replaced a substantially similar agreement that previously existed with different lenders.

The maximum aggregate commitment was $ 850.0 million during the seasonally high borrowing period from December 27, 2023 through January 15, 2024.

At all other times, the maximum aggregate commitment ranges from $ 600.0 million to $ 700.0 million.

The Repurchase Agreement also contains an accordion feature that could increase the commitment by $ 50.0 million above its active commitment level.

The purpose of the changes in capacity during the term of the agreement is to lower associated fees during seasonally lower volume periods of mortgage origination activity.

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We declared quarterly cash dividends totaling $ 149.8 million, $ 143.1 million, and $ 148.1 million in 2023, 2022, and 2021, respectively.

Under a share repurchase program authorized by our Board of Directors, we repurchased 24.2 million, 17.7 million, and 4.5 million shares in 2022, 2021, and 2020, respectively, for a total of $ 1.1 billion, $ 897.3 million, and $ 170.7 million in 2022, 2021, and 2020, respectively.

On January 31, 2022, the Board of Directors increased our share repurchase authorization by $ 1.0 billion.

Under a share repurchase program authorized by our Board of Directors, we repurchased 13.8 million, 24.2 million, and 17.7 million shares in 2023, 2022, and 2021, respectively, for a total of $ 1.0 billion, $ 1.1 billion, and $ 897.3 million in 2023, 2022, and 2021, respectively.

On April 24, 2023, the Board of Directors increased our share repurchase authorization by $ 1.0 billion.

At December 31, 2023, we had remaining authorization to repurchase $ 382.9 million of common shares.

On January 29, 2024, the Board of Directors increased our share repurchase authorization by $ 1.5 billion.

Under our stock compensation plans, we accept shares as payment under certain conditions related to stock option exercises and vesting of restricted shares and share units, generally related to the payment of tax obligations.

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We maintain a stock award plan for both employees and non-employee directors.

The plan provides for the grant of a variety of equity awards, including options (generally non-qualified options), restricted share units ("RSUs"), and performance share units ("PSUs") to key employees (as determined by the Compensation and Management Development Committee of the Board of Directors) for periods not to exceed ten years .

The plan provides for the grant of a variety of equity awards, including time-based and performance-based restricted share units ("RSUs") to key employees for periods not to exceed ten years .

Non-employee directors are awarded an annual distribution of common shares.

RSUs represent the right to receive an equal number of common shares and are converted into common shares upon distribution.

RSUs generally cliff vest after three years , and RSU holders earn cash or accrued dividends during the vesting period.

PSUs vest upon attainment of the stated performance targets and minimum service requirements and are converted into common shares upon distribution.

Time-based RSUs generally cliff vest after three years , and RSU holders earn cash or accrued dividends during the vesting period.

Performance-based RSUs vest upon attainment of the stated performance targets and minimum service requirements and are converted into common shares upon distribution.

As of December 31, 2023, there were 10.6 million shares that remained available for grant under the plan.

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2023 2022 2021

RSUs and PSUs $ 33,323 $ 25,192 $ 22,065

RSUs $ 28,112 $ 33,323 $ 25,192

Other long-term incentive plans 20,088 9,666 11,553

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

RSUs and PSUs

A summary of RSUs and PSUs is presented below (000’s omitted, except per share data):

A summary of RSUs is presented below (000’s omitted, except per share data):

2023 2022 2021

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We maintain long-term incentive plans for senior management and other employees that provide awards based on the achievement of stated performance targets over three-year periods.

Awards are stated in dollars but are settled in common shares based on the stock price at the end of the performance period.

If the share price falls below a floor of $ 5.00 per share at the end of the performance period or we do not have a sufficient number of shares available under our stock incentive plans at the time of settlement, then a portion of each award will be paid in cash.

We adjust the liabilities and recognize the expense associated with the awards based on the probability of achieving the stated performance targets at each reporting period.

Liabilities for these awards totaled $ 21.6 million and $ 22.6 million at December 31, 2022 and 2021, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Awards are denominated in either restricted stock units or dollars that are settled in common shares based on the stock price at the end of the performance period.

We recognize the expense associated with the awards based on the probability of achieving the stated performance targets at each reporting period.

Components of current and deferred income tax expense (benefit) are as follows ($000’s omitted):

2023 2022 2021

Current expense (benefit)

Current expense

Federal $ 622,205 $ 615,434 $ 430,686

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$ 742,629 $ 715,657 $ 504,357

Deferred expense (benefit)

Deferred expense

Federal $ 72,854 $ 55,653 $ 57,743

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$ 104,266 $ 106,584 $ 59,168

Income tax expense (benefit) $ 822,241 $ 563,525 $ 321,855

Income tax expense $ 846,895 $ 822,241 $ 563,525

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table reconciles the statutory federal income tax rate to the effective income tax rate:

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The effective tax rates differ from the federal statutory rate primarily due to state income tax expense, benefits associated with federal energy efficient home credits, and changes in valuation allowances relating to projected utilization of certain state net operating loss ("NOL") carryforwards.

Income tax expense for 2020 includes a benefit of $ 56.8 million associated with the extension of federal energy efficient home credits related to homes closed in prior open tax years.

On August 16, 2022, the Inflation Reduction Act ("IRA") was enacted, extending the federal efficient home credit through December 2032.

The criteria for homes qualifying for the credit shifted to a higher standard effective January 1, 2023.

We are currently analyzing the impact of the increased requirements on our ability to qualify homes for the credit.

Other tax provisions of the IRA, including the corporate alternative minimum tax effective for tax years ended after December 31, 2022, are not expected to have a material impact on our financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Deferred tax assets and liabilities reflect temporary differences arising from the different treatment of items for tax and accounting purposes.

Components of our net deferred tax asset are as follows ($000’s omitted):

Components of our net deferred tax liability are as follows ($000’s omitted):

At December 31,

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Valuation allowance ( 24,756 ) ( 30,869 )

Net deferred tax asset (liability) $ ( 133,098 ) $ ( 26,481 )

Net deferred tax liability $ ( 237,395 ) $ ( 133,098 )

We have state NOLs in various jurisdictions that may generally be carried forward up to 20 years, depending on the jurisdiction.

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We had $ 58.2 million and $ 23.6 million of gross unrecognized tax benefits at December 31, 2023 and 2022, respectively.

If recognized, $ 18.7 million and $ 17.8 million, respectively, of these amounts would impact our effective tax rate.

If recognized, $ 46.0 million and $ 18.7 million, respectively, of these

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

amounts would impact our effective tax rate.

Additionally, we had accrued interest and penalties of $ 6.3 million and $ 4.1 million at December 31, 2023 and 2022, respectively.

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A reconciliation of the change in the unrecognized tax benefits is as follows ($000’s omitted):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2023 2022 2021

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Increases related to positions taken during the current period — 1,450 267

Decreases related to settlements with taxing authorities — — ( 7,465 )

Decreases related to lapse of the applicable statute of limitations ( 71 ) ( 71 ) ( 1,118 )

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The outcome of these examinations is not yet determinable, and we are not aware of unrecorded liabilities.

The statute of limitations for our major tax jurisdictions remains open for examination for tax years 2017 to 2022.

The statute of limitations for our major tax jurisdictions generally remains open for examination for tax years 2019 to 2023.

Fair value disclosures

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Level 3 Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our assets and liabilities measured or disclosed at fair value are summarized below ($000’s omitted):

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Other notes payable Level 2 70,966 55,228

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair values for agency residential mortgage loans available-for-sale are determined based on quoted market prices for comparable instruments.

Fair values for non-agency residential mortgage loans available-for-sale are determined based on purchase commitments from whole loan investors and other relevant market information available to management.

Fair values for interest rate lock commitments, including the value of servicing rights, and forward contracts on mortgage-backed securities are valued based on market prices for similar instruments.

Fair values for whole loan commitments are based on market prices for similar instruments from the specific whole loan investor.

Fair values for non-agency residential mortgage loans available-for-sale are determined based on purchase commitments from whole loan investor.

Fair values for IRLCs, including the value of servicing rights, and forward contracts on mortgage-backed securities are valued based on market prices for similar instruments.

See Note 1 for a more detailed discussion of these derivative instruments.

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If quoted market prices are not available, fair values are based on quoted market prices of similar issues .

The carrying value of the senior notes payable was $ 2.0 billion at both December 31, 2022 and 2021.

The carrying value of the senior notes payable was $ 1.9 billion at December 31, 2023 and $ 2.0 billion at December 31, 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other assets and accrued and other liabilities

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$ 1,545,667 $ 1,291,572

We record receivables from various parties in the normal course of business, including amounts due from insurance companies (see Note 11 ) and municipalities.

We record receivables from various parties in the normal course of business, including amounts due from insurance companies ( Note 11 ) and municipalities.

In certain instances, we may accept consideration for land sales or other transactions in the form of a note receivable .

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accrued and other liabilities are presented below ($000’s omitted):

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Compensation-related liabilities 250,372 239,459

Warranty liabilities (Note 11)

Land development and construction liabilities 144,121 156,318

Liabilities related to consolidated inventory not owned ( Note 2 )

120,522 72,058

Income tax liabilities ( Note 8 )

Warranty liabilities (Note 11)

120,393 108,348

1 unchanged sentence

91,554 90,083

Liabilities related to consolidated inventory not owned ( Note 2 )

Accrued interest 41,135 42,591

Income tax liabilities 62,400 98,709

Dividends payable ( Note 6 )

43,916 36,696

Accrued interest 36,433 41,135

Loan origination liabilities (Note 11)

10,493 12,378

Other 350,479 323,633

202,383 194,161

$ 1,645,690 $ 1,685,202

(a) Other liabilities primarily include liabilities associated with property taxes, forward contracts on mortgage-backed securities, and other miscellaneous liabilities.

Commitments and contingencies

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Our mortgage operations may be responsible for losses associated with mortgage loans originated and sold to investors in the event of errors or omissions relating to representations and warranties made by us that the loans met certain requirements, including representations as to underwriting standards, the existence of primary mortgage insurance, and the validity of certain borrower representations in connection with the loan.

If a loan is determined to be faulty, we either indemnify the investor for potential future losses, repurchase the loan from the investor, or reimburse the investor's actual losses.

In addition, certain trustees and investors continue to attempt to collect damages based on losses from loans that originated prior to 2009.

Estimating the required liability for these potential losses requires a significant level of management judgment.

During 2020, we increased our loan origination liabilities by $ 26.4 million based on settlements of a number of claims related to loans originated prior to 2009.

Reserves provided (released) are reflected in Financial Services expenses.

Changes in these liabilities were as follows ($000's omitted):

2022 2021 2020

Liabilities, beginning of period $ 12,381 $ 11,969 $ 25,159

Reserves provided (released), net 472 618 26,410

Payments ( 475 ) ( 206 ) ( 39,600 )

Liabilities, end of period $ 12,378 $ 12,381 $ 11,969

Given the unsettled claims, changes in values of underlying collateral over time, and other uncertainties regarding the ultimate resolution of known and potential claims, actual costs could differ from our current estimates.

Community development and other special district obligations

A community development district (“CDD”) or similar development authority is a unit of local government created under various state statutes that utilizes the proceeds from the sale of bonds to finance the construction or acquisition of infrastructure assets of a development.

A portion of the liability associated with the bonds, including principal and interest, is assigned to each parcel of land within the development.

This debt is typically paid by subsequent special assessments levied by the CDD on the landowners.

Generally, we are only responsible for paying the special assessments for the period during which we are the landowner of the applicable parcels and we include our estimated obligations as part of our land development budgets.

If a loan is determined to be faulty, we either indemnify the investor for

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

potential future losses, repurchase the loan from the investor, or reimburse the investor's actual losses.

Reserves provided are reflected in Financial Services expenses, and liabilities related to these exposures totaled $ 10.5 million and $ 12.4 million at December 31, 2023 and 2022, respectively.

Letters of credit and surety bonds

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Warranty liabilities, end of period $ 120,393 $ 108,348 $ 107,117

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Self-insured risks

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However, we retain a significant portion of the overall risk for such claims either through our own self-insured per occurrence and aggregate retentions, deductibles, policies issued by our captive insurance subsidiaries, and any potential claims in excess of available insurance policy limits.

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our general liability insurance includes coverage for certain construction defects.

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Rather, the adjustments reflect an overall lower level of losses related to construction defect claims in recent years as compared with our previous experience.

We attribute this favorable experience to a variety of factors, including improved construction techniques, rising home values, and increased participation from our subcontractors in resolving claims.

Costs associated with our insurance programs are classified within selling, general, and administrative expenses.

Changes in these liabilities were as follows ($000's omitted):

We attribute the favorable experience in more recent years to a variety of factors, including improved construction techniques, rising home values, and increased participation from our subcontractors in resolving claims.

Costs associated with

PULTEGROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

our insurance programs are classified within selling, general, and administrative expenses.

Changes in these liabilities were as follows ($000's omitted):

2023 2022 2021

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(a) Includes net changes in amounts expected to be recovered from our insurance carriers, which are recorded in other assets (see below).

In certain instances, we have the ability to recover a portion of our costs under various insurance policies or from subcontractors or other third parties.

Estimates of such amounts are recorded when recovery is considered probable.

As reflected in Note 10 , our receivables from insurance carriers totaled $ 43.7 million and $ 57.5 million at December 31, 2022 and 2021, respectively.

Estimates of anticipated recoveries of our costs under various insurance policies or from subcontractors or other third parties are recorded when recovery is considered probable.

Such receivables are recorded in other assets and totaled $ 26.9 million and $ 43.7 million at December 31, 2023 and 2022, respectively.

The insurance receivables relate to costs incurred or to be incurred to perform corrective repairs, settle claims with customers, and other costs related to the continued progression of both known and anticipated future construction defect claims that we believe to be insured related to previously closed homes.

Given the complexity inherent with resolving construction defect claims in the homebuilding industry as described above, there typically is a significant lag between our payment of claims and our reimbursements from applicable insurance carriers.

In addition, disputes between homebuilders and carriers over coverage positions relating to construction defect claims are common.

Resolution of claims with carriers takes time, involves the exchange of significant amounts of information, and frequently involves legal action.

In 2020, we recorded reserves against insurance receivables of $ 17.8 million in connection with policy settlement negotiations with certain of our carriers.

We believe collection of our recorded insurance receivables is probable based on the legal merits of our positions after review by legal counsel, the high credit ratings of our carriers, and our long history of collecting significant amounts of insurance reimbursements under similar insurance policies related to similar claims.

While the outcomes of these matters cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows.

Given the complexity inherent with resolving construction defect claims in the homebuilding industry, there generally exists a significant lag between our payment of claims and our reimbursements from applicable insurance carriers or third parties.

We lease certain office space and equipment for use in our operations.

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Leases with an initial term of 12 months or less are not recorded on the balance sheet.

ROU assets and lease liabilities were $ 73.5 million and $ 90.1 million, respectively, at December 31, 2022, and $ 74.3 million and $ 92.7 million at December 31, 2021, respectively.

ROU assets and lease liabilities were $ 77.4 million and $ 91.6 million, respectively, at December 31, 2023, and $ 73.5 million and $ 90.1 million, respectively, at December 31, 2022.

We recorded an additional $ 20.6 million and $ 14.5 million of lease liabilities under operating leases during 2023 and 2022, respectively.

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Self-insured Risks

Description of the Matter The Company’s reserves for self-insured risks totaled $635.9 million at December 31, 2022, of which the majority relates to incurred but not reported (IBNR) losses associated with exposures to construction defects on homes previously sold.

Description of the Matter The Company’s reserves for self-insured risks totaled $563.1 million at December 31, 2023, of which the majority relates to incurred but not reported (IBNR) losses associated with exposures to construction defects on previously closed homes.

As discussed in Notes 1 and 11 of the consolidated financial statements, the Company reserves for costs associated with construction defect claims (including IBNR losses and expected claims management expense) based on actuarial analyses of the Company’s historical claims activity.

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For example, we tested controls over management’s review of the significant actuarial assumptions and the data inputs used by management when estimating IBNR losses.

To test the IBNR reserve associated with construction defects exposures, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data used in management’s estimation calculations and reviewing the Company’s reinsurance contracts by policy year to assess the Company’s self-insured retentions, deductibles, and coverage limits, which represent inputs to the actuarial models.

Furthermore, we involved our actuarial specialists to assist in our assessment of the methodologies used by management to estimate the IBNR reserve.

7 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data