ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion updates the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and the two discussions should be read together.
GENERAL
Company Overview — Third Quarter of 2025
The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes to those Financial Statements included elsewhere in this Quarterly Report on Form 10-Q, which are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition, please see “Information Regarding Non-GAAP Financial Measures” below concerning important information on non-GAAP financial measures contained in our discussion and analysis.
We are a diversified insurance agency, wholesale brokerage, insurance programs, specialty insurance business and service organization headquartered in Daytona Beach, Florida. As an insurance intermediary, our principal sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers. Commission revenues generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, sales or payroll levels) to determine what premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control. We also participate in capitalized captive insurance facilities for the purpose of having additional capacity to place coverage, drive additional revenues and to participate in underwriting results. The limit the Company's exposure to claims expenses through reinsurance or by only participating in certain tranches of the underwriting. We also operate registered insurance companies to support our national flood insurance program and to support our cross-collateralized segregated captive cell businesses. We do not participate in earnings of the collateralized segregated captive cells.
The volume of business from new and existing customers, fluctuations in insurable exposure units, changes in premium rate levels, changes in general economic and competitive conditions, a reduction of purchased limits, or the occurrence of catastrophic weather events all affect our revenues. For example, higher levels of inflation, an increase in the value of insurable exposure units or a general decline in economic activity, could increase or decrease the value of insurable exposure units. Conversely, increasing costs of litigation settlements and awards could cause some customers to seek higher levels of insurance coverage. Historically, we have grown our revenues as a result of our focus on new business, customer retention and acquisitions. We foster a strong, decentralized sales and service culture, which enables responsiveness to changing business conditions and drives accountability for results.
The term “core commissions and fees” excludes profit-sharing contingent commissions, and therefore, it represents the revenues earned directly from specific insurance policies sold, and specific fee-based services rendered. The net change in core commissions and fees reflects the aggregate changes attributable to: (i) net new and lost accounts; (ii) net changes in our customers’ exposure units, deductibles or insured limits; (iii) net changes in insurance premium rates or the commission rate paid to us by our carrier partners; (iv) the net change in fees paid to us by our customers and (v) any businesses acquired or disposed of.
We also earn profit-sharing contingent commissions, which are commissions based primarily on underwriting results, but in select situations may reflect additional considerations for volume, growth and/or retention. These commissions, which are included in our commissions and fees in the Consolidated Statements of Income, are estimated and accrued throughout the year based on actual premiums written and knowledge, to the extent it is available, of losses incurred. Payments are primarily received in the first and second quarters of each subsequent year, based upon the aforementioned considerations for the prior year(s), but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until they are received. Over the last three years, profit-sharing contingent commissions have averaged approximately 3.6% of commissions and fee revenues.
Fee revenues primarily relate to services other than securing coverage for our customers, and for fees negotiated in lieu of commissions. Fee revenues are generated by: (i) our 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%.
Historically, investment and other income has consisted primarily of interest earnings on operating cash and where permitted, on premiums collected and held in a fiduciary capacity before being remitted to insurance companies. Our policy as it relates to the Company’s capital is to invest available funds in high-quality, short-term money-market funds and fixed income investment securities. Investment income also includes gains and losses realized from the sale of investments. Other income primarily reflects other miscellaneous revenues.
Income before income taxes for the three months ended September 30, 2025 decreased from the third quarter of 2024 by $6 million or 1.9%, due to Acquisition/Integration Costs associated with the acquisition of Accession and increases in the change in estimated acquisition earnout payables, partially offset by Organic Revenue growth, leveraging our expense base, net new business and income from acquisitions completed in the past twelve months.
Information Regarding Non-GAAP Financial Measures
In the discussion and analysis of our results of operations, in addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), we provide references to the following non-GAAP financial measures as defined in Regulation G of the SEC rules: Organic Revenue, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted and EBITDAC Margin - Adjusted. We present these measures because we believe such information is of interest to the investment community. We believe they provide additional meaningful methods to evaluate the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis due to the impact of certain items that have a high degree of variability, that we believe are not indicative of ongoing performance and that are not easily comparable from period to period. This non-GAAP financial information should be considered in addition to, not in lieu of, the Company’s consolidated income statements and balance sheets as of the relevant date. Consistent with Regulation G, a description of such information is provided below and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations - Segment Information.”
We view Organic Revenue and Organic Revenue growth as important indicators when assessing and evaluating our performance on a consolidated basis and for each of our 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. As disclosed in our most recent proxy statement, we use Organic Revenue growth, and EBITDAC Margin - Adjusted as key performance metrics for our short-term and long-term incentive compensation plans for executive officers and other key employees.
Non-GAAP Revenue Measures
•Organic Revenue is our core commissions and fees less: (i) the core commissions and fees earned for the first twelve months by newly acquired operations; (ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period) and (iii) Foreign Currency Translation (as defined below). The term “core commissions and fees” excludes profit-sharing contingent commissions; and therefore, represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered. Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth.
Non-GAAP Earnings Measures
•EBITDAC is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables.
•EBITDAC Margin is defined as EBITDAC divided by total revenues.
•EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal (as defined below), (ii) Acquisition/Integration Costs (as defined below) and (iii) mark-to-market of escrow liability (as defined below).
•EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by total revenues.
Definitions Related to Certain Components of Non-GAAP Measures
•“Acquisition/Integration Costs” means the acquisition and integration costs (e.g., costs associated with regulatory filings; costs for third-party professional services, including legal, accounting, consulting, financial advisory and due diligence; costs and fees associated with entry into the bridge financing commitment; costs of integrating or streamlining processes and information technology systems, including data migration and system integration; costs associated with optimizing vendor agreements and leased office space, including exit costs related to location combinations; and employment-related costs, including severance payments, costs associated with the transition of certain legacy compensation programs, retention-related compensation expenses, and incentive payments) arising out of our acquisition of Accession and acquisitions previously completed by Accession, which are not considered to be normal, recurring or part of ongoing operations.
•“Foreign Currency Translation” means the period-over period impact of foreign currency translation, which is calculated by applying current-year foreign exchange rates to the various functional currencies in our business to our reporting currency of U.S. dollars for the same period in the prior year.
•“(Gain)/loss on disposal” is a caption on our consolidated statements of income which reflects net proceeds received as compared to the net book value related to sales of books of business and other divestiture transactions.
•“Mark-to-market of escrow liability” is a caption on our consolidated statements of income which reflects the non-cash change in the fair value associated with certain shares of the Company’s common stock held in escrow. The change is driven by fluctuations in our stock price between the beginning of the quarter and the end of the quarter. These escrowed shares represent a portion of the merger consideration payable in connection with our acquisition of Accession. The escrowed shares secure certain indemnification obligations of the Accession equity holders related to businesses that are in run-off or discontinued.
Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments and; therefore, comparability may be limited. This supplemental non-GAAP financial information should be considered in addition to, and not in lieu of, the Company's Condensed Consolidated Financial Statements.
Acquisitions
Part of our business strategy is to attract high-quality insurance intermediaries and service organizations to join our operations. From 1993 through the third quarter of 2025, we acquired 713 insurance intermediary operations.
Critical Accounting Policies
We have had no changes to our Critical Accounting Policies as described in our most recent Form 10-K for the year ended December 31, 2024. We believe that of our significant accounting and reporting policies, the more critical policies include our accounting for revenue recognition, business combinations and purchase price allocations, intangible asset impairments, non-cash stock-based compensation and reserves for litigation. In particular, the accounting for these areas is subject to uncertainty, because it requires significant use of judgment to be made by management. Different assumptions in the application of these policies could result in material changes in our consolidated financial position or consolidated results of operations. Refer to Note 1 in the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2024 for details regarding our critical and significant accounting policies.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.
Financial information relating to our condensed consolidated financial results is as follows:
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Three months ended September 30, |
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Nine months ended September 30, |
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(in millions, except percentages) |
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2025 |
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|
2024 |
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% Change |
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2025 |
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2024 |
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|
% Change |
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REVENUES |
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Core commissions and fees |
|
$ |
1,477 |
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$ |
1,128 |
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|
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30.9 |
% |
|
$ |
4,022 |
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|
$ |
3,435 |
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|
|
17.1 |
% |
Profit-sharing contingent commissions |
|
|
73 |
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|
|
27 |
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|
|
170.4 |
% |
|
|
161 |
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|
|
110 |
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|
|
46.4 |
% |
Investment and other income |
|
|
56 |
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|
|
31 |
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80.6 |
% |
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|
112 |
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|
77 |
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|
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45.5 |
% |
Total revenues |
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|
1,606 |
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|
|
1,186 |
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35.4 |
% |
|
|
4,295 |
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|
|
3,622 |
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|
|
18.6 |
% |
EXPENSES |
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Employee compensation and benefits |
|
|
793 |
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|
607 |
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30.6 |
% |
|
|
2,116 |
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|
|
1,823 |
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|
|
16.1 |
% |
Other operating expenses |
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|
276 |
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|
|
165 |
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67.3 |
% |
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|
672 |
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|
|
499 |
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|
|
34.7 |
% |
(Gain)/loss on disposal |
|
|
— |
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|
|
(1 |
) |
|
|
(100.0 |
)% |
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|
1 |
|
|
|
(30 |
) |
|
|
(103.3 |
)% |
Amortization |
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|
93 |
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|
|
45 |
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|
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106.7 |
% |
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|
196 |
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|
|
131 |
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|
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49.6 |
% |
Depreciation |
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|
14 |
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|
|
11 |
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|
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27.3 |
% |
|
|
37 |
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|
|
33 |
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|
|
12.1 |
% |
Interest |
|
|
100 |
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|
50 |
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|
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100.0 |
% |
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|
197 |
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|
147 |
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34.0 |
% |
Change in estimated acquisition
earn-out payables |
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11 |
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(8 |
) |
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NMF |
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18 |
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(9 |
) |
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NMF |
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Mark-to-market of escrow liability |
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8 |
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— |
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NMF |
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8 |
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— |
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NMF |
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Total expenses |
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1,295 |
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|
|
869 |
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|
|
49.0 |
% |
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|
3,245 |
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|
|
2,594 |
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|
25.1 |
% |
Income before income taxes |
|
|
311 |
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|
|
317 |
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|
|
(1.9 |
)% |
|
|
1,050 |
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|
|
1,028 |
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|
|
2.1 |
% |
Income taxes |
|
|
82 |
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|
|
78 |
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|
|
5.1 |
% |
|
|
251 |
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|
|
237 |
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|
|
5.9 |
% |
Net income before non-controlling interests |
|
|
229 |
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|
|
239 |
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|
|
(4.2 |
)% |
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|
799 |
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|
791 |
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|
Less: Net income attributable to non-controlling interests |
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2 |
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5 |
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|
9 |
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|
8 |
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|
Net income attributable to the Company |
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$ |
227 |
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|
$ |
234 |
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|
|
(3.0 |
)% |
|
$ |
790 |
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|
$ |
783 |
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|
|
0.9 |
% |
Income Before Income Taxes
Margin (1) |
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|
19.4 |
% |
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|
26.7 |
% |
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|
|
24.4 |
% |
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|
28.4 |
% |
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|
EBITDAC - Adjusted (2) |
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$ |
587 |
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$ |
414 |
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|
41.8 |
% |
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$ |
1,594 |
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|
$ |
1,300 |
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|
22.6 |
% |
EBITDAC Margin - Adjusted (2) |
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|
36.6 |
% |
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34.9 |
% |
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|
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37.1 |
% |
|
|
35.9 |
% |
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|
Organic Revenue growth rate (2) |
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|
3.5 |
% |
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|
9.5 |
% |
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|
|
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4.6 |
% |
|
|
9.4 |
% |
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|
Employee compensation and benefits
relative to total revenues |
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|
49.4 |
% |
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51.2 |
% |
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|
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|
49.3 |
% |
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|
50.3 |
% |
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Other operating expenses relative
to total revenues |
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17.2 |
% |
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13.9 |
% |
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15.6 |
% |
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13.8 |
% |
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|
(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
Commissions and Fees
Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended 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.
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.
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. This increase included $219 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 $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.
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. This change includes: (i) $85 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2024; (ii) $87 million of Acquisition/Integration Costs associated with the acquisition of Accession, $9 million of which is included in the $60 million related to acquisitions that had no comparable costs in the same period of 2024; and (iii) increased information technology-related costs.
(Gain)/Loss on Disposal
Gain on disposal for the third quarter of 2025 decreased $1 million from the third quarter of 2024. Gain on disposal for the nine months ended September 30, 2025 decreased $31 million from the nine months ended September 30, 2024. These decreases were primarily attributable to the prior year finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023. Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.
Amortization
Amortization expense for the third quarter of 2025 increased $48 million, or 106.7%, compared to the third quarter of 2024. Amortization expense for the nine months ended September 30, 2025 increased $65 million, or 49.6%, compared to the nine months ended September 30, 2024. This change reflects the amortization of new intangibles from businesses acquired within the past twelve months, net of certain intangible assets becoming fully amortized or written off in the (Gain)/Loss on disposal.
Depreciation
Depreciation expense for the third quarter of 2025 increased $3 million, or 27.3%, compared to the third quarter of 2024. Depreciation expense for the nine months ended September 30, 2025 increased $4 million, or 12.1%, compared to the nine months ended September 30, 2024. Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, partially offset by the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.
Interest Expense
Interest expense for the third quarter of 2025 increased $50 million, or 100.0%, compared to the third quarter of 2024. Interest expense for the nine months ended September 30, 2025 increased $50 million, or 34.0%, compared to the first nine months of 2024. The increase is due to higher debt balances resulting from debt issuance second quarter of 2025 to fund the acquisition of Accession, which was partially offset by decreases in the floating rate benchmark used on our adjustable-rate debt.
Change in Estimated Acquisition Earn-Out Payables
Accounting Standards Codification (“ASC”) Topic 805 - Business Combinations is the authoritative guidance requiring an acquirer to recognize 100% of the fair value of acquired assets, including goodwill, and assumed liabilities (with only limited exceptions) upon initially obtaining control of an acquired entity. Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase price arrangements) at the acquisition date must be included in the purchase price consideration. The recorded purchase price for acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are required to be recorded in the Condensed Consolidated Statements of Income when incurred or reasonably estimated. Estimations of potential earn-out obligations are typically based upon future earnings of the acquired operations or entities, usually for periods ranging from one to three years.
The net charge or credit to the Consolidated Statements of Income for the period is the combination of the net change in the estimated acquisition earn-out payables liability, and the accretion of the present value discount on those liabilities.
As of September 30, 2025 and 2024, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:
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Three months ended September 30, |
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Nine months ended September 30, |
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(in millions) |
|
2025 |
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|
2024 |
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|
2025 |
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|
2024 |
|
Change in fair value of estimated acquisition earn-out payables |
|
$ |
10 |
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|
$ |
(9 |
) |
|
$ |
14 |
|
|
$ |
(15 |
) |
Interest expense accretion |
|
|
1 |
|
|
|
1 |
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|
|
4 |
|
|
|
6 |
|
Net change in earnings from estimated acquisition earn-out payables |
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$ |
11 |
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|
$ |
(8 |
) |
|
$ |
18 |
|
|
$ |
(9 |
) |
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.
Income Taxes
The effective tax rate on income from operations for the three months ended September 30, 2025 and 2024 was 26.4% and 24.6%, respectively. The effective tax rate on income from operations for the nine months ended September 30, 2025 and 2024 was 23.9% and 23.1%, respectively. The increase for the three months ended September 30, 2025 was primarily driven by non-deductibility of certain costs associated with the acquisition of Accession. The increase for the nine months ended September 30, 2025 was driven primarily by the lower tax benefit associated with vesting of restricted stock awards and restricted stock units in 2025 as compared to 2024 as well as the non-deductibility of certain costs associated with the acquisition of Accession.
RESULTS OF OPERATIONS — SEGMENT INFORMATION
As discussed in Note 12 to the Condensed Consolidated Financial Statements, we operate two reportable segments: Retail and Specialty Distribution. On a segmented basis, changes in amortization, depreciation and interest expenses generally result from activity associated with acquisitions. Likewise, other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods. As such, management primarily focuses on 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
(in millions) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
Commissions and fees |
|
$ |
877 |
|
|
$ |
639 |
|
|
$ |
673 |
|
|
$ |
516 |
|
|
$ |
1,550 |
|
|
$ |
1,155 |
|
Total change |
|
$ |
238 |
|
|
|
|
|
$ |
157 |
|
|
|
|
|
$ |
395 |
|
|
|
|
Total growth % |
|
|
37.2 |
% |
|
|
|
|
|
30.4 |
% |
|
|
|
|
|
34.2 |
% |
|
|
|
Profit-sharing contingent
commissions |
|
|
(18 |
) |
|
|
(8 |
) |
|
|
(55 |
) |
|
|
(19 |
) |
|
|
(73 |
) |
|
|
(27 |
) |
Core commissions and fees |
|
$ |
859 |
|
|
$ |
631 |
|
|
$ |
618 |
|
|
$ |
497 |
|
|
$ |
1,477 |
|
|
$ |
1,128 |
|
Acquisitions |
|
|
(210 |
) |
|
|
|
|
|
(97 |
) |
|
|
|
|
|
(307 |
) |
|
|
|
Dispositions |
|
|
|
|
|
(3 |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
(3 |
) |
Foreign Currency Translation |
|
|
|
|
|
4 |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
5 |
|
Organic Revenue (2) |
|
$ |
649 |
|
|
$ |
632 |
|
|
$ |
521 |
|
|
$ |
498 |
|
|
$ |
1,170 |
|
|
$ |
1,130 |
|
Organic Revenue growth (2) |
|
$ |
17 |
|
|
|
|
|
$ |
23 |
|
|
|
|
|
$ |
40 |
|
|
|
|
Organic Revenue growth rate (2) |
|
|
2.7 |
% |
|
|
|
|
|
4.6 |
% |
|
|
|
|
|
3.5 |
% |
|
|
|
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
(in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Commissions and fees |
|
$ |
639 |
|
|
$ |
599 |
|
|
$ |
516 |
|
|
$ |
450 |
|
|
$ |
1,155 |
|
|
$ |
1,049 |
|
Total change |
|
$ |
40 |
|
|
|
|
|
$ |
66 |
|
|
|
|
|
$ |
106 |
|
|
|
|
Total growth % |
|
|
6.7 |
% |
|
|
|
|
|
14.7 |
% |
|
|
|
|
|
10.1 |
% |
|
|
|
Profit-sharing contingent
commissions |
|
|
(8 |
) |
|
|
(9 |
) |
|
|
(19 |
) |
|
|
(18 |
) |
|
|
(27 |
) |
|
|
(27 |
) |
Core commissions and fees |
|
$ |
631 |
|
|
$ |
590 |
|
|
$ |
497 |
|
|
$ |
432 |
|
|
$ |
1,128 |
|
|
$ |
1,022 |
|
Acquisitions |
|
|
(16 |
) |
|
|
|
|
|
(19 |
) |
|
|
|
|
|
(35 |
) |
|
|
|
Dispositions |
|
|
|
|
|
— |
|
|
|
|
|
|
(26 |
) |
|
|
|
|
|
(26 |
) |
Foreign Currency Translation |
|
|
|
|
|
2 |
|
|
|
|
|
|
— |
|
|
|
|
|
|
2 |
|
Organic Revenue (2) |
|
$ |
615 |
|
|
$ |
592 |
|
|
$ |
478 |
|
|
$ |
406 |
|
|
$ |
1,093 |
|
|
$ |
998 |
|
Organic Revenue growth (2) |
|
$ |
23 |
|
|
|
|
|
$ |
72 |
|
|
|
|
|
$ |
95 |
|
|
|
|
Organic Revenue growth rate (2) |
|
|
3.9 |
% |
|
|
|
|
|
17.7 |
% |
|
|
|
|
|
9.5 |
% |
|
|
|
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
(in millions) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
Commissions and fees |
|
$ |
2,474 |
|
|
$ |
2,086 |
|
|
$ |
1,709 |
|
|
$ |
1,459 |
|
|
$ |
4,183 |
|
|
$ |
3,545 |
|
Total change |
|
$ |
388 |
|
|
|
|
|
$ |
250 |
|
|
|
|
|
$ |
638 |
|
|
|
|
Total growth % |
|
|
18.6 |
% |
|
|
|
|
|
17.1 |
% |
|
|
|
|
|
18.0 |
% |
|
|
|
Profit-sharing contingent
commissions |
|
|
(40 |
) |
|
|
(30 |
) |
|
|
(121 |
) |
|
|
(80 |
) |
|
|
(161 |
) |
|
|
(110 |
) |
Core commissions and fees |
|
$ |
2,434 |
|
|
$ |
2,056 |
|
|
$ |
1,588 |
|
|
$ |
1,379 |
|
|
$ |
4,022 |
|
|
$ |
3,435 |
|
Acquisitions |
|
|
(312 |
) |
|
|
|
|
|
(117 |
) |
|
|
|
|
|
(429 |
) |
|
|
|
Dispositions |
|
|
|
|
|
(10 |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
(10 |
) |
Foreign Currency Translation |
|
|
|
|
|
9 |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
11 |
|
Organic Revenue (2) |
|
$ |
2,122 |
|
|
$ |
2,055 |
|
|
$ |
1,471 |
|
|
$ |
1,381 |
|
|
$ |
3,593 |
|
|
$ |
3,436 |
|
Organic Revenue growth (2) |
|
$ |
67 |
|
|
|
|
|
$ |
90 |
|
|
|
|
|
$ |
157 |
|
|
|
|
Organic Revenue growth % (2) |
|
|
3.3 |
% |
|
|
|
|
|
6.5 |
% |
|
|
|
|
|
4.6 |
% |
|
|
|
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
Retail (1) |
|
|
Specialty Distribution |
|
|
Total |
|
(in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Commissions and fees |
|
$ |
2,086 |
|
|
$ |
1,919 |
|
|
$ |
1,459 |
|
|
$ |
1,274 |
|
|
$ |
3,545 |
|
|
$ |
3,193 |
|
Total change |
|
$ |
167 |
|
|
|
|
|
$ |
185 |
|
|
|
|
|
$ |
352 |
|
|
|
|
Total growth % |
|
|
8.7 |
% |
|
|
|
|
|
14.5 |
% |
|
|
|
|
|
11.0 |
% |
|
|
|
Profit-sharing contingent
commissions |
|
|
(30 |
) |
|
|
(40 |
) |
|
|
(80 |
) |
|
|
(48 |
) |
|
|
(110 |
) |
|
|
(88 |
) |
Core commissions and fees |
|
$ |
2,056 |
|
|
$ |
1,879 |
|
|
$ |
1,379 |
|
|
$ |
1,226 |
|
|
$ |
3,435 |
|
|
$ |
3,105 |
|
Acquisitions |
|
|
(55 |
) |
|
|
|
|
|
(65 |
) |
|
|
|
|
|
(120 |
) |
|
|
|
Dispositions |
|
|
|
|
|
(3 |
) |
|
|
|
|
|
(78 |
) |
|
|
|
|
|
(81 |
) |
Foreign Currency Translation |
|
|
|
|
|
6 |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
7 |
|
Organic Revenue (2) |
|
$ |
2,001 |
|
|
$ |
1,882 |
|
|
$ |
1,314 |
|
|
$ |
1,149 |
|
|
$ |
3,315 |
|
|
$ |
3,031 |
|
Organic Revenue growth (2) |
|
$ |
119 |
|
|
|
|
|
$ |
165 |
|
|
|
|
|
$ |
284 |
|
|
|
|
Organic Revenue growth % (2) |
|
|
6.3 |
% |
|
|
|
|
|
14.4 |
% |
|
|
|
|
|
9.4 |
% |
|
|
|
(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.
(2) A non-GAAP financial measure.
The reconciliation of 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) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total |
|
|
Total Revenues |
|
$ |
883 |
|
|
$ |
681 |
|
|
$ |
42 |
|
|
$ |
1,606 |
|
|
Income before income taxes |
|
|
164 |
|
|
|
255 |
|
|
|
(108 |
) |
|
|
311 |
|
|
Income Before Income Taxes Margin(1) |
|
|
18.6 |
% |
|
|
37.4 |
% |
|
NMF |
|
|
|
19.4 |
% |
|
Amortization |
|
|
66 |
|
|
|
27 |
|
|
|
— |
|
|
|
93 |
|
|
Depreciation |
|
|
8 |
|
|
|
5 |
|
|
|
1 |
|
|
|
14 |
|
|
Interest |
|
|
(11 |
) |
|
|
9 |
|
|
|
102 |
|
|
|
100 |
|
|
Change in estimated acquisition
earn-out payables |
|
|
10 |
|
|
|
1 |
|
|
|
— |
|
|
|
11 |
|
|
EBITDAC(2) |
|
|
237 |
|
|
|
297 |
|
|
|
(5 |
) |
|
|
529 |
|
|
EBITDAC Margin(2) |
|
|
26.8 |
% |
|
|
43.6 |
% |
|
NMF |
|
|
|
32.9 |
% |
|
(Gain)/loss on disposal |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Acquisition/Integration Costs |
|
|
10 |
|
|
|
2 |
|
|
|
38 |
|
|
|
50 |
|
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
8 |
|
|
EBITDAC - Adjusted(2) |
|
$ |
247 |
|
|
$ |
299 |
|
|
$ |
41 |
|
|
$ |
587 |
|
|
EBITDAC Margin - Adjusted(2) |
|
|
28.0 |
% |
|
|
43.9 |
% |
|
NMF |
|
|
|
36.6 |
% |
(3) |
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
(3) Amount reflects the positive impact of approximately $29 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company’s acquisition of Accession.
NMF = Not a meaningful figure
The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended September 30, 2024, including by segment, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total |
|
Total Revenues |
|
$ |
641 |
|
|
$ |
524 |
|
|
$ |
21 |
|
|
$ |
1,186 |
|
Income before income taxes |
|
|
120 |
|
|
|
210 |
|
|
|
(13 |
) |
|
|
317 |
|
Income Before Income Taxes Margin(1) |
|
|
18.7 |
% |
|
|
40.1 |
% |
|
NMF |
|
|
|
26.7 |
% |
Amortization |
|
|
29 |
|
|
|
16 |
|
|
|
— |
|
|
|
45 |
|
Depreciation |
|
|
6 |
|
|
|
5 |
|
|
|
— |
|
|
|
11 |
|
Interest |
|
|
18 |
|
|
|
10 |
|
|
|
22 |
|
|
|
50 |
|
Change in estimated acquisition
earn-out payables |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
(1 |
) |
|
|
(8 |
) |
EBITDAC(2) |
|
|
171 |
|
|
|
236 |
|
|
|
8 |
|
|
|
415 |
|
EBITDAC Margin(2) |
|
|
26.7 |
% |
|
|
45.0 |
% |
|
NMF |
|
|
|
35.0 |
% |
(Gain)/loss on disposal |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
Acquisition/Integration Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
EBITDAC - Adjusted(2) |
|
$ |
170 |
|
|
$ |
236 |
|
|
$ |
8 |
|
|
$ |
414 |
|
EBITDAC Margin - Adjusted(2) |
|
|
26.5 |
% |
|
|
45.0 |
% |
|
NMF |
|
|
|
34.9 |
% |
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a
non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the nine months ended September 30, 2025, including by segment, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total |
|
|
Total Revenues |
|
$ |
2,487 |
|
|
$ |
1,731 |
|
|
$ |
77 |
|
|
$ |
4,295 |
|
|
Income before income taxes |
|
|
575 |
|
|
|
654 |
|
|
|
(179 |
) |
|
|
1,050 |
|
|
Income Before Income Taxes Margin(1) |
|
|
23.1 |
% |
|
|
37.8 |
% |
|
NMF |
|
|
|
24.4 |
% |
|
Amortization |
|
|
139 |
|
|
|
57 |
|
|
|
— |
|
|
|
196 |
|
|
Depreciation |
|
|
19 |
|
|
|
14 |
|
|
|
4 |
|
|
|
37 |
|
|
Interest |
|
|
19 |
|
|
|
27 |
|
|
|
151 |
|
|
|
197 |
|
|
Change in estimated acquisition
earn-out payables |
|
|
13 |
|
|
|
5 |
|
|
|
— |
|
|
|
18 |
|
|
EBITDAC(2) |
|
|
765 |
|
|
|
757 |
|
|
|
(24 |
) |
|
|
1,498 |
|
|
EBITDAC Margin(2) |
|
|
30.8 |
% |
|
|
43.7 |
% |
|
NMF |
|
|
|
34.9 |
% |
|
(Gain)/loss on disposal |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
Acquisition/Integration Costs |
|
|
10 |
|
|
|
2 |
|
|
|
75 |
|
|
|
87 |
|
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
8 |
|
|
EBITDAC - Adjusted(2) |
|
$ |
776 |
|
|
$ |
759 |
|
|
$ |
59 |
|
|
$ |
1,594 |
|
|
EBITDAC Margin - Adjusted(2) |
|
|
31.2 |
% |
|
|
43.8 |
% |
|
NMF |
|
|
|
37.1 |
% |
(3) |
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
(3) Amount reflects the positive impact of approximately $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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Retail |
|
|
Specialty Distribution |
|
|
Other |
|
|
Total |
|
Total Revenues |
|
$ |
2,093 |
|
|
$ |
1,482 |
|
|
$ |
47 |
|
|
$ |
3,622 |
|
Income before income taxes |
|
|
488 |
|
|
|
584 |
|
|
|
(44 |
) |
|
|
1,028 |
|
Income Before Income Taxes Margin(1) |
|
|
23.3 |
% |
|
|
39.4 |
% |
|
NMF |
|
|
|
28.4 |
% |
Amortization |
|
|
86 |
|
|
|
45 |
|
|
|
— |
|
|
|
131 |
|
Depreciation |
|
|
15 |
|
|
|
14 |
|
|
|
4 |
|
|
|
33 |
|
Interest |
|
|
56 |
|
|
|
32 |
|
|
|
59 |
|
|
|
147 |
|
Change in estimated acquisition
earn-out payables |
|
|
(2 |
) |
|
|
(7 |
) |
|
|
— |
|
|
|
(9 |
) |
EBITDAC(2) |
|
|
643 |
|
|
|
668 |
|
|
|
19 |
|
|
|
1,330 |
|
EBITDAC Margin(2) |
|
|
30.7 |
% |
|
|
45.1 |
% |
|
NMF |
|
|
|
36.7 |
% |
(Gain)/loss on disposal |
|
|
(2 |
) |
|
|
(28 |
) |
|
|
— |
|
|
|
(30 |
) |
Acquisition/Integration Costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Mark-to-market of escrow liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
EBITDAC - Adjusted(2) |
|
$ |
641 |
|
|
$ |
640 |
|
|
$ |
19 |
|
|
$ |
1,300 |
|
EBITDAC Margin - Adjusted(2) |
|
|
30.6 |
% |
|
|
43.2 |
% |
|
NMF |
|
|
|
35.9 |
% |
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
Retail Segment
The Retail segment provides a broad range of insurance products and services to commercial, public and quasi-public, professional and individual insured customers, and non-insurance risk-mitigating products through our F&I businesses. Approximately 78% of the Retail segment’s commissions and fees revenue is commission based.
Financial information relating to our Retail segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
(in millions, except percentages) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core commissions and fees |
|
$ |
859 |
|
|
$ |
631 |
|
|
|
36.1 |
% |
|
$ |
2,436 |
|
|
$ |
2,057 |
|
|
|
18.4 |
% |
Profit-sharing contingent commissions |
|
|
18 |
|
|
|
8 |
|
|
|
125.0 |
% |
|
|
40 |
|
|
|
30 |
|
|
|
33.3 |
% |
Investment and other income |
|
|
6 |
|
|
|
2 |
|
|
|
200.0 |
% |
|
|
11 |
|
|
|
6 |
|
|
|
83.3 |
% |
Total revenues |
|
|
883 |
|
|
|
641 |
|
|
|
37.8 |
% |
|
|
2,487 |
|
|
|
2,093 |
|
|
|
18.8 |
% |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
493 |
|
|
|
364 |
|
|
|
35.4 |
% |
|
|
1,326 |
|
|
|
1,118 |
|
|
|
18.6 |
% |
Other operating expenses |
|
|
153 |
|
|
|
107 |
|
|
|
43.0 |
% |
|
|
395 |
|
|
|
334 |
|
|
|
18.3 |
% |
(Gain)/loss on disposal |
|
|
— |
|
|
|
(1 |
) |
|
|
100.0 |
% |
|
|
1 |
|
|
|
(2 |
) |
|
|
150.0 |
% |
Amortization |
|
|
66 |
|
|
|
29 |
|
|
|
127.6 |
% |
|
|
139 |
|
|
|
86 |
|
|
|
61.6 |
% |
Depreciation |
|
|
8 |
|
|
|
6 |
|
|
|
33.3 |
% |
|
|
19 |
|
|
|
15 |
|
|
|
26.7 |
% |
Interest |
|
|
(11 |
) |
|
|
18 |
|
|
|
(161.1 |
%) |
|
|
19 |
|
|
|
56 |
|
|
|
(66.1 |
%) |
Change in estimated acquisition
earn-out payables |
|
|
10 |
|
|
|
(2 |
) |
|
NMF |
|
|
|
13 |
|
|
|
(2 |
) |
|
NMF |
|
Total expenses |
|
|
719 |
|
|
|
521 |
|
|
|
38.0 |
% |
|
|
1,912 |
|
|
|
1,605 |
|
|
|
19.1 |
% |
Income before income taxes |
|
$ |
164 |
|
|
$ |
120 |
|
|
|
36.7 |
% |
|
$ |
575 |
|
|
$ |
488 |
|
|
|
17.8 |
% |
Income Before Income Taxes
Margin (1) |
|
|
18.6 |
% |
|
|
18.7 |
% |
|
|
|
|
|
23.1 |
% |
|
|
23.3 |
% |
|
|
|
EBITDAC - Adjusted (2) |
|
$ |
247 |
|
|
$ |
170 |
|
|
|
45.3 |
% |
|
$ |
776 |
|
|
$ |
641 |
|
|
|
21.1 |
% |
EBITDAC Margin - Adjusted (2) |
|
|
28.0 |
% |
|
|
26.5 |
% |
|
|
|
|
|
31.2 |
% |
|
|
30.6 |
% |
|
|
|
Organic Revenue growth rate (2) |
|
|
2.7 |
% |
|
|
3.9 |
% |
|
|
|
|
|
3.3 |
% |
|
|
6.3 |
% |
|
|
|
Employee compensation and benefits
relative to total revenues |
|
|
55.8 |
% |
|
|
56.8 |
% |
|
|
|
|
|
53.3 |
% |
|
|
53.4 |
% |
|
|
|
Other operating expenses relative
to total revenues |
|
|
17.3 |
% |
|
|
16.7 |
% |
|
|
|
|
|
15.9 |
% |
|
|
16.0 |
% |
|
|
|
(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The Retail segment’s total revenues for the three months ended September 30, 2025 increased 37.8%, or $242 million, as compared to the same period in 2024, to $883 million. The $228 million increase in core commissions and fees revenue was driven by: (i) approximately $210 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 $17 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 $9 million; and (iv) an offsetting decrease of $10 million related to commissions and fees recorded in 2024 from businesses since divested. Profit-sharing contingent commissions for the nine months of 2025 increased 33.3%, or $10 million, as compared to the same period in 2024, to $40 million. This increase was due to acquisitions completed within the last twelve months. The Retail segment’s total commissions and fees increased by 18.6%, and the Organic Revenue growth rate was 3.3% for the first nine months of 2025. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers. Renewal business was impacted by timing of certain nonrecurring revenue items, slowing rate increases, rate decreases for certain lines of coverage, certain adjustments to incentive commissions and a regulatory change for one of our UK businesses.
Income before income taxes for the nine months ended September 30, 2025 increased 17.8%, or $87 million, as compared to the same period in 2024, to $575 million. The primary factors driving this increase were: (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.
Specialty Distribution Segment
The Specialty Distribution Segment is composed of our programs business, known as Arrowhead Programs; our wholesale brokerage business, known as Bridge Specialty Group; and our new specialty program business, known as Arrowhead Specialty. Approximately 81% of the Specialty Distribution segment’s commissions and fees revenue is commission based.
Arrowhead Programs manages a diverse portfolio of professional liability, personal lines, commercial lines, public entity and specialty programs supported by over 100 well-capitalized insurance carriers. In most cases, the insurance carriers that support these programs have delegated underwriting and, in many instances, claims-handling authority These programs are generally distributed through a global network of independent agents and brokers, including Brown & Brown retail agents, and offer targeted products and services designed for businesses, individuals, specific industries, trade groups, professions, public entities, municipalities, and niche markets. This division also operates our write-your-own flood insurance carrier, WNFIC and participates in a quota share captive and an excess of loss layer captive. WNFIC’s underwriting business consists of policies written on behalf of and fully ceded to the NFIP, as well as excess flood policies, which are fully reinsured in the private market.
Bridge Specialty Group, offers global wholesale brokerage and delegated binding/underwriting capabilities across multiple lines, to independent agents and brokers, including Brown & Brown retail agents. Our teams across the globe provide deep industry knowledge and expertise, for placements across multiple lines of coverage based on access to admitted, excess and surplus lines carriers, as well as the Lloyd’s markets in the United Kingdom.
Arrowhead Specialty is composed of our newly acquired specialty businesses from One80 Intermediaries, a segment of Accession, which offer solutions across affinity organizations, administrative services, captives, reinsurance, travel/accident, warranty, and life & health.
Arrowhead Programs' and Arrowhead Specialty's captives businesses provide additional underwriting capacity that enables growth in core commissions and fees and allow us to participate in underwriting results with limited exposure to claims expenses. The Company has traditionally participated in underwriting profits through profit-sharing contingent commissions. These captives limit the Company's exposure to claims expenses either through reinsurance or by participating in limited tranches of the underwriting risk.
Financial information relating to our Specialty Distribution segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
(in millions, except percentages) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core commissions and fees |
|
$ |
618 |
|
|
$ |
497 |
|
|
|
24.3 |
% |
|
$ |
1,588 |
|
|
$ |
1,379 |
|
|
|
15.2 |
% |
Profit-sharing contingent commissions |
|
|
55 |
|
|
|
19 |
|
|
|
189.5 |
% |
|
|
121 |
|
|
|
80 |
|
|
|
51.3 |
% |
Investment and other income |
|
|
8 |
|
|
|
8 |
|
|
|
— |
% |
|
|
22 |
|
|
|
23 |
|
|
|
(4.3 |
)% |
Total revenues |
|
|
681 |
|
|
|
524 |
|
|
|
30.0 |
% |
|
|
1,731 |
|
|
|
1,482 |
|
|
|
16.8 |
% |
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
252 |
|
|
|
193 |
|
|
|
30.6 |
% |
|
|
653 |
|
|
|
570 |
|
|
|
14.6 |
% |
Other operating expenses |
|
|
132 |
|
|
|
95 |
|
|
|
38.9 |
% |
|
|
321 |
|
|
|
272 |
|
|
|
18.0 |
% |
(Gain)/loss on disposal |
|
|
— |
|
|
|
— |
|
|
|
— |
% |
|
|
- |
|
|
|
(28 |
) |
|
|
100.0 |
% |
Amortization |
|
|
27 |
|
|
|
16 |
|
|
|
68.8 |
% |
|
|
57 |
|
|
|
45 |
|
|
|
26.7 |
% |
Depreciation |
|
|
5 |
|
|
|
5 |
|
|
|
— |
% |
|
|
14 |
|
|
|
14 |
|
|
|
— |
% |
Interest |
|
|
9 |
|
|
|
10 |
|
|
|
(10.0 |
)% |
|
|
27 |
|
|
|
32 |
|
|
|
(15.6 |
)% |
Change in estimated acquisition
earn-out payables |
|
|
1 |
|
|
|
(5 |
) |
|
|
120.0 |
% |
|
|
5 |
|
|
|
(7 |
) |
|
|
171.4 |
% |
Total expenses |
|
|
426 |
|
|
|
314 |
|
|
|
35.7 |
% |
|
|
1,077 |
|
|
|
898 |
|
|
|
19.9 |
% |
Income before income taxes |
|
$ |
255 |
|
|
$ |
210 |
|
|
|
21.4 |
% |
|
$ |
654 |
|
|
$ |
584 |
|
|
|
12.0 |
% |
Income Before Income Taxes
Margin (1) |
|
|
37.4 |
% |
|
|
40.1 |
% |
|
|
|
|
|
37.8 |
% |
|
|
39.4 |
% |
|
|
|
EBITDAC - Adjusted (2) |
|
$ |
299 |
|
|
$ |
236 |
|
|
|
26.7 |
% |
|
$ |
759 |
|
|
$ |
640 |
|
|
|
18.6 |
% |
EBITDAC Margin - Adjusted (2) |
|
|
43.9 |
% |
|
|
45.0 |
% |
|
|
|
|
|
43.8 |
% |
|
|
43.2 |
% |
|
|
|
Organic Revenue growth rate (2) |
|
|
4.6 |
% |
|
|
17.7 |
% |
|
|
|
|
|
6.5 |
% |
|
|
14.4 |
% |
|
|
|
Employee compensation and benefits
relative to total revenues |
|
|
37.0 |
% |
|
|
36.8 |
% |
|
|
|
|
|
37.7 |
% |
|
|
38.5 |
% |
|
|
|
Other operating expenses relative
to total revenues |
|
|
19.4 |
% |
|
|
18.1 |
% |
|
|
|
|
|
18.5 |
% |
|
|
18.4 |
% |
|
|
|
(1) "Income Before Income Taxes Margin" is defined as income before income taxes divided by total revenues.
(2) A non-GAAP financial measure.
NMF = Not a meaningful figure
The 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: (i) approximately $97 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024; and (ii) approximately $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; partially offset by: (ii) increase in profit-sharing contingent commissions; (iii) Organic Revenue growth; and (iv) leveraging our expense base.
The Specialty Distribution segment’s total revenues for the nine months ended September 30, 2025 increased 16.8%, or $249 million, as compared to the same period in 2024, to $1,731 million. The $209 million increase in core commissions and fees revenue was driven by: (i)
approximately $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. This increase is a result of favorable loss ratios, increased premiums, and to a lesser extent acquisitions completed in the past twelve months.
The Specialty Distribution segment’s total commissions and fees increased by 17.1%, and the Organic Revenue growth rate was 6.5%, for the nine months ended September 30, 2025. The Organic Revenue growth was driven by hurricane claims revenue, net new and retained business, and exposure unit expansion, but was partially offset by declining rates on CAT property.
Income before income taxes for the nine months ended September 30, 2025 increased 12.0%, or $70 million to $654 million, from the same period in 2024. Income before income taxes increased due to: (i) the drivers of EBITDAC - Adjusted described below; (ii) decreased interest expense; partially offset by: (iii) gain on disposal recorded in the prior year; (iv) increased amortization expense; and (v) an increase in estimated acquisition earn-out payables.
EBITDAC - Adjusted for the nine months ended September 30, 2025 increased 18.6%, or $119 million to $759 million, as compared to the same period in 2024. EBITDAC Margin - Adjusted for the nine months ended September 30, 2025 increased to 43.8% from 43.2% in the same period in 2024. EBITDAC Margin - Adjusted increased due to: (i) 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.
Other
As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” line items in the Segment Information table includes any revenue and expenses not allocated to reportable segments, and corporate-related items, including the intercompany interest expense charges to reporting segments.
LIQUIDITY AND CAPITAL RESOURCES
The Company seeks to maintain a conservative balance sheet and strong liquidity profile. Our capital requirements to operate as an insurance intermediary are low, and we have been able to grow and invest in our business through a combination of cash that has been generated from operations, the disciplined use of debt and the issuance of equity as part of the purchase price consideration to acquire certain businesses. We have the ability to utilize our Revolving Credit Facility under the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”), which as of September 30, 2025 provided up to $600 million in available cash. We believe that we have access to additional funds, if needed, through the capital markets or private placements to obtain further debt financing under the current market conditions. The Company believes that its existing cash, cash equivalents, short-term investment portfolio and funds generated from operations, together with the funds available under the Revolving Credit Facility and the Loan Agreement, dated March 31, 2022, which provided term loan capacity of $800 million (the “Loan Agreement”), will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for the next twelve months and in the long term.
The Revolving Credit Facility contains an expansion option for up to an additional $500 million of borrowing capacity, subject to the approval of participating lenders. Additionally, the Company may, subject to satisfaction of certain conditions, including receipt of additional term loan commitments by new or existing lenders, increase either Term Loan Commitment under the existing Loan Agreement or the term loans issued thereunder or issue new tranches of term loans in an aggregate additional amount of up to $400 million. Including the expansion options under all existing credit agreements, the Company has access to up to $1,500 million of incremental borrowing capacity as of September 30, 2025.
Cash and cash equivalents totaled $1,190 million at September 30, 2025 reflecting an increase of $515 million from the $675 million balance at December 31, 2024. This increase is due to the cash generated in quarter and cash assumed in connection with the acquisition of Accession.
Operating Cash Flows
Our operating cash flows are primarily derived from the net income generated during the period adjusted for non-cash expenses, which include depreciation, amortization, changes in estimated earnout payables, non-cash stock-based compensation and deferred income taxes while excluding gains and losses on sales/disposals of investments, businesses, fixed assets and customer accounts, payments on acquisition earn-outs in excess of original estimated payables and changes in working capital which relate primarily to the timing of payments of accrued liabilities and receipts of receivables from commissions and fees related to our revenues. Our ratio of current assets to current liabilities was 1.18 and 1.10 for September 30, 2025 and December 31, 2024, respectively.
Cash flows generated from operating activities totaled $1,006 million and $813 million for the nine months ended September 30, 2025 and 2024, respectively, representing an increase of $193 million. Operating cash flows generated in 2025 included $799 million from net income before non-controlling interests with $359 million of non-cash adjustments, offset by $152 million from changes in working capital.
The growth in cash from operations is primarily due to recent acquisitions and continued improvements in our working capital over the same period in 2024.
Investing Cash Flows
Cash flows used for investing activities were $7,701 million and $119 million for the nine months ended September 30, 2025 and 2024, respectively, an increase of $7,582 million.
Acquisitions
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.
Dispositions
The Company received cash proceeds from the sale of businesses, fixed assets and customer accounts totaling $10 million during the nine months ended September 30, 2025, compared to $60 million proceeds received in the same period in 2024. The decrease is attributed to the proceeds received during the second quarter of 2024 of $57 million from the settlement of two of the contingent payments related to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.
Capital Expenditures
Capital expenditures amounted to $48 million and $62 million in the nine months ended September 30, 2025 and 2024, respectively, and included purchases of furniture and fixtures, leasehold improvements related to office moves and hardware and software purchases related to information technology investments.
Financing Cash Flows
Net cash flows provided by financing activities totaled $7,851 million and net use of $341 million in the nine months ended September 30, 2025 and 2024, respectively, an increase of $8,192 million.
Fiduciary Receivables and Liabilities
Fiduciary cash represents funds in the Company's possession collected from customers to be remitted to insurance companies and funds from insurance companies to be distributed to insureds for the settlement of claims or refunds. The net change in fiduciary cash is represented by the net change in fiduciary liabilities and fiduciary receivables and is presented as cash flows from financing activities in the statement of cash flows. Financing cash flows reflect a decrease of $145 million and an increase of $83 million in the nine months ended September 30, 2025 and 2024, respectively, related to fiduciary receivables and liabilities.
Acquisition Earn-outs
Payments on acquisition earn-outs related to the original acquisition date estimates totaled $77 million and $100 million in the nine months ended September 30, 2025 and 2024, respectively.
Dividends
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.
Debt
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. and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (collectively, the “Notes Underwriters”), with respect to the offer and sale by the Company of $400 million principal amount of its 4.600% Senior Notes due 2026 (the “2026 Notes”), $500 million principal amount of its 4.700% Senior Notes due 2028 (the “2028 Notes”), $800 million principal amount of its 4.900% Senior Notes due 2030 (the “2030 Notes”), $500 million principal amount of its 5.250% Senior Notes due 2032 (the “2032 Notes”), $1,000 million principal amount of its 5.550% Senior Notes due 2035 (the “2035 Notes”) and $1,000 million principal amount of its 6.250% Senior Notes due 2055 (the “2055 Notes” and, together with the 2026 Notes, the 2028 Notes, the 2030 Notes, the 2032 Notes, and the 2035 Notes, the “Notes”). The Notes Underwriting Agreement contains customary representations, warranties and covenants of the Company, conditions to closing, termination provisions and other terms and conditions customary in agreements of this type. The Notes Underwriting Agreement also contains customary indemnification and contribution rights and obligations of the Company and the Notes Underwriters. The Company 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.
Common Stock
On June 10, 2025, the Company entered into an Underwriting Agreement (the “Common Stock Underwriting Agreement”) with J.P. Morgan Securities LLC and BofA Securities, Inc., as representatives of the several underwriters named therein (collectively, the “Common Stock Underwriters”), with respect to the offer and sale by the Company of 43,137,254 shares of the Company’s common stock, par value $0.10 (the “Common Stock”) at a per share offering price of $102.00 for an aggregate purchase price for net proceeds of $4,315 million after underwriting discounts and fees and expenses. The Company closed the offering of the shares of Common Stock on June 12, 2025. The Company used the net proceeds of the offerings of the shares of Common Stock and the Notes, together with cash on hand, to fund the cash consideration payable under the previously announced acquisition of Accession and to pay fees and expenses associated with the foregoing.
As part of the consideration for the Accession acquisition, the Company issued approximately $1,017 million of its common stock (par value $0.10 per share) to the selling shareholders (the “Common Stock Consideration”), based on the market value of the shares at closing. The number of shares issued was calculated using the Company’s closing stock price of $110.57 per share on June 6, 2025.
Contractual Cash Obligations
As of September 30, 2025, our contractual cash obligations were as follows:
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Payments Due by Period |
|
(in millions) |
|
Total |
|
|
Less than
1 year |
|
|
1-3
years |
|
|
4-5
years |
|
|
After
5 years |
|
Long-term debt |
|
$ |
7,800 |
|
|
$ |
75 |
|
|
$ |
1,575 |
|
|
$ |
1,150 |
|
|
$ |
5,000 |
|
Other liabilities (1) |
|
|
285 |
|
|
|
13 |
|
|
|
26 |
|
|
|
21 |
|
|
|
225 |
|
Operating leases |
|
|
339 |
|
|
|
71 |
|
|
|
120 |
|
|
|
71 |
|
|
|
77 |
|
Interest obligations |
|
|
4,283 |
|
|
|
386 |
|
|
|
665 |
|
|
|
574 |
|
|
|
2,658 |
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Maximum future acquisition contingent payments (2) |
|
|
784 |
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|
|
377 |
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|
|
407 |
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|
|
— |
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|
|
— |
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Total contractual cash obligations (3) |
|
$ |
13,491 |
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|
$ |
922 |
|
|
$ |
2,793 |
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|
$ |
1,816 |
|
|
$ |
7,960 |
|
(1)Does not include the escrow liability which is included within “Other Long-Term Liabilities” issued in connection with our acquisition of Accession. The liability reflects the fair value of shares and cash held in escrow to secure certain indemnification obligations of the Accession equityholders related to businesses that are in run-off or discontinued. Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, the remaining amount in the escrow account will be released to the equityholders. The Company believes this escrow, plus other available funds, is sufficient to cover any potential costs associated with those specified matters subject to indemnification under the Merger Agreement. The fair value of the escrow liability is remeasured at each reporting date, with changes recognized in earnings. The timing and amount of any future settlement remains subject to the achievement of contractual milestones and may vary from the amounts disclosed. The value as of September 30, 2025, was $676 million.
(2)Includes $575 million of current and non-current estimated acquisition earn-out payables. Earn-out payables for acquisitions not denominated in U.S. dollars are measured at the current foreign exchange rate. 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.
