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, 2023, and the two discussions should be read together.

GENERAL

Company Overview — Second Quarter of 2024

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. 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 and insurance programs 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 operate capitalized captive insurance facilities (the "Captives") for the purpose of having additional capacity to place coverage, drive additional revenues and to participate in underwriting results. The Captives focus on property insurance for earthquake and wind exposed properties underwritten by certain of our MGUs and limit the Company's exposure to claims expenses through reinsurance or by only participating in certain tranches of the underwriting.

The volume of business from new and existing customers, fluctuations in insurable exposure units, changes in premium rate levels, changes in general economic and competitive conditions, a reduction of purchased limits, or the occurrence of catastrophic weather events all affect our revenues. For example, higher levels of inflation, an increase the value of insurable exposure units or a general decline in economic activity, could decrease the value or amount of insurable exposure units. Conversely, increasing costs of litigation settlements and/or 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 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 3.3% of commissions and fees revenue.

Fee revenues primarily relate to services other than securing coverage for our customers, and for fees negotiated in lieu of commissions. Fee revenues are generated by: (i) our Programs and Wholesale Brokerage segments, which earn fees primarily for the issuance of insurance policies on behalf of insurance carriers and (ii) our Retail segment in our large-account customer base, where we primarily earn fees for securing insurance for our customers, in our automobile dealer services (“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, were 23.9% in 2023 and 25.8% in 2022.

For the three months ended June 30, 2024, our total commissions and fees growth rate was 11.4%, and our consolidated Organic Revenue growth rate was 10.0%.

Historically, investment income has consisted primarily of interest earnings on operating cash and where permitted, on premiums and advance premiums collected and held in a fiduciary capacity before being remitted to insurance companies. Our policy as it relates to the Company’s capital is to invest available funds in high-quality, short-term money-market funds and fixed income investment securities. Investment income also includes gains and losses realized from the sale of investments. Other income primarily reflects other miscellaneous revenues.

Income before income taxes for the three months ended June 30, 2024 increased from the second quarter of 2023 by $92 million or 36.2%, driven by net new business, increased investment income and profit-sharing contingent commissions, acquisitions completed in the past twelve months and the gain on disposal of certain businesses.

Effective for fiscal year 2024, in conjunction with the divestiture of certain businesses within our Services segment in the fourth quarter of 2023, we aligned our business from four to three segments, and we now report our financial results in the following three reportable segments: Retail, Programs (formerly National Programs) and Wholesale Brokerage. See Note 12 of the Notes to Condensed Consolidated Financial Statements for further information.

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 and because we believe it provides additional meaningful methods to evaluate the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis due to the impact of certain items that have a high degree of variability, that we believe are not indicative of ongoing performance and that are not easily comparable from period to period. This non-GAAP financial information should be considered in addition to, not in lieu of, the Company’s consolidated income statements and balance sheets as of the relevant date. Consistent with Regulation G, a description of such information is provided below and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Quarterly Report on Form 10-Q under “Results of Operations - Segment Information.”

We view Organic Revenue and Organic Revenue growth as important indicators when assessing and evaluating our performance on a consolidated basis and for each of our three segments, because they allow us to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that were a part of our business in both the current and prior year and that are expected to continue in the future. We also view EBITDAC, EBITDAC - Adjusted, EBITDAC Margin and EBITDAC Margin - Adjusted as important indicators when assessing and evaluating our performance, as they present more comparable measurements of our operating margins in a meaningful and consistent manner. As disclosed in our most recent proxy statement, we use Organic Revenue growth, and EBITDAC Margin - Adjusted as key performance metrics for our short-term and long-term incentive compensation plans for executive officers and other key employees.

Beginning January 1, 2024, we no longer exclude Foreign Currency Translation from the calculation of EBITDAC - Adjusted and EBITDAC Margin - Adjusted. Prior periods are presented accordingly on the same basis so that the calculations of EBITDAC - Adjusted and EBITDAC Margin - Adjusted are comparable for both periods. We no longer exclude Foreign Currency Translation from the calculation of these earnings measures because fluctuations in Foreign Currency Translation affect both our revenues and expenses, largely offsetting each other. Therefore, excluding Foreign Currency Translation from these earnings measures provides no meaningful incremental value in evaluating our financial performance.

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, (ii) for 2022 and 2023, Acquisition/Integration Costs (as defined below) and (iii) for 2023, the 1Q23 Nonrecurring Cost (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, legal/accounting services, due diligence and the costs of integrating our information technology systems) arising out of our

acquisitions of GRP (Jersey) Holdco Limited and its business ("GRP"), Orchid Underwriters Agency and CrossCover Insurance Services, and BdB Limited companies, which are not considered to be normal, recurring or part of the 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.

“1Q23 Nonrecurring Cost” means approximately $11.0 million expensed and substantially paid in the first quarter of 2023 to resolve a business matter, which is not considered to be normal, recurring or part of the ongoing operations.

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

Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments and, therefore comparability may be limited. This supplemental non-GAAP financial information should be considered in addition to, and not in lieu of, the Company's Condensed Consolidated Financial Statements.

Acquisitions

Part of our business strategy is to attract high-quality insurance intermediaries and service organizations to join our operations. From 1993 through the second quarter of 2024, we acquired 660 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, 2023. 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, 2023 for details regarding our critical and significant accounting policies.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.

Financial information relating to our condensed consolidated financial results is as follows:

		Three months ended June 30,												Six months ended June 30,
(in millions, except percentages)		2024				2023				% Change				2024				2023				% Change
REVENUES
Core commissions and fees		$	1,118			$	1,003				11.5	%		$	2,308			$	2,084				10.7	%
Profit-sharing contingent commissions			36				33				9.1	%			82				60				36.7	%
Investment income			22				10				120.0	%			40				17				135.3	%
Other income, net			2				1				100.0	%			5				2				150.0	%
Total revenues			1,178				1,047				12.5	%			2,435				2,163				12.6	%
EXPENSES
Employee compensation and benefits			585				530				10.4	%			1,216				1,101				10.4	%
Other operating expenses			173				162				6.8	%			334				322				3.7	%
Gain on disposal			(31	)			—			NMF					(29	)			(6	)		NMF
Amortization			44				41				7.3	%			86				83				3.6	%
Depreciation			11				10				10.0	%			21				20				5.0	%
Interest			49				48				2.1	%			97				95				2.1	%
Change in estimated acquisition earn-out payables			1				2				(50.0	)%			(2	)			—			NMF
Total expenses			832				793				4.9	%			1,723				1,615				6.7	%
Income before income taxes			346				254				36.2	%			712				548				29.9	%
Income taxes			87				64				35.9	%			159				122				30.3	%
Net income before non-controlling interests			259				190				36.3	%			553				426
Less: Net income attributable to non-controlling interests			2				—								3				—
Net income attributable to the Company		$	257			$	190				35.3	%		$	550			$	426				29.1	%
Income Before Income Taxes Margin (1)			29.4	%			24.3	%							29.2	%			25.3	%
EBITDAC - Adjusted (2)		$	420			$	358				17.3	%		$	885			$	757				16.9	%
EBITDAC Margin - Adjusted (2)			35.7	%			34.2	%							36.3	%			35.0	%
Organic Revenue growth rate (2)			10.0	%			11.2	%							9.3	%			11.9	%
Employee compensation and benefits relative to total revenues			49.7	%			50.6	%							49.9	%			50.9	%
Other operating expenses relative to total revenues			14.7	%			15.5	%							13.7	%			14.9	%
Capital expenditures		$	27			$	13				107.7	%		$	39			$	25				56.0	%
Total assets at June 30,														$	15,944			$	14,072				13.3	%

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

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

Commissions and Fees

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended June 30, 2024 increased $118 million to $1,154 million, or 11.4%, over the same period in 2023. Core commissions and fees revenue for the second quarter of 2024 increased $115 million or 11.5%, composed of: (i) approximately $98 million of net new and renewal business, which reflects an Organic Revenue growth rate of 10.0%; (ii) $44 million from acquisitions that had no comparable revenues in the same period of 2023; (iii) an increase from the impact of Foreign Currency Translation of $1 million and (iv) an offsetting decrease of $28 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months. Profit-sharing contingent commissions for the second quarter of 2024 increased by $3 million, compared to the same period in 2023.

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the six months ended June 30, 2024, increased $246 million to $2,390 million, or 11.5%, over the same period in 2023. Core commissions and fees revenue for the six months ended June 30, 2024 increased $224 million or 10.7%, composed of: (i) approximately $189 million of net new and renewal business, which reflects an Organic Revenue growth rate of 9.3%; (ii) $85 million from acquisitions that had no comparable revenues in the same period of 2023; (iii) an increase from the impact of Foreign Currency Translation of $5 million and (iv) an offsetting decrease of $55 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months. Profit-sharing contingent commissions for the six months ended June 30, 2024 increased by $22 million, or 36.7%, compared to the same period in 2023. This increase was driven primarily by (i) improved underwriting results and qualifying for certain prior year profit-sharing contingent commissions in excess of estimates that we did not qualify for in the prior year and (ii) recent acquisitions.

Investment Income

Investment income for the three months ended June 30, 2024 increased $12 million, from the same period in 2023. Investment income for the six months ended June 30, 2024 increased $23 million, from the same period in 2023. The increases were primarily driven by higher average interest rates compared to the prior year.

Other Income

Other income for the three months ended June 30, 2024 increased $1 million to $2 million as compared to the same period in 2023 and other income for the six months ended June 30, 2024 increased by $3 million, or 150.0%, as compared to the same period in 2023. Other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods.

Employee Compensation and Benefits

Employee compensation and benefits expense as a percentage of total revenues was 49.7% for the three months ended June 30, 2024 as compared to 50.6% for the three months ended June 30, 2023, and increased 10.4%, or $55 million. This increase included $20 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2023. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2024 and 2023 increased by $35 million, or 6.7%. This underlying employee compensation and benefits expense increase was primarily related to: (i) an increase in staff salaries and bonuses attributable to new hires; (ii) an increase in producer compensation associated with revenue growth and (iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company, partially offset by (iv) employee compensation and benefits associated with businesses divested in the fourth quarter of 2023.

Employee compensation and benefits expense as a percentage of total revenues was 49.9% for the six months ended June 30, 2024 as compared to 50.9% for the six months ended June 30, 2023, and increased 10.4%, or $115 million. This increase included $41 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2023. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2024 and 2023 increased by $74 million, or 6.7%. This underlying employee compensation and benefits expense increase was primarily related to: (i) an increase in staff salaries and bonuses attributable to new hires; (ii) an increase in producer compensation associated with revenue growth and (iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company, partially offset by (iv) employee compensation and benefits associated with businesses divested in the fourth quarter of 2023.

Other Operating Expenses

Other operating expenses represented 14.7% of total revenues for the second quarter of 2024, as compared to 15.5% for the second quarter of 2023. Other operating expenses for the second quarter of 2024 increased $11 million, or 6.8%, from the same period of 2023. This increase includes: (i) $8 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 2023; (ii) increased information technology related costs; (iii) and to a lesser extent, increased variable costs associated with revenue growth, offset by (iv) other operating expenses associated with businesses divested in the fourth quarter of 2023.

Other operating expenses represented 13.7% of total revenues for the six months ended June 30, 2024, as compared to 14.9% for the six months ended June 30, 2023. Other operating expenses for the first six months of 2024 increased $12 million, or 3.7%, from the same period of 2023. This increase includes: (i) $17 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 2023; (ii) increased information technology related costs; (iii) and to a lesser extent, increased variable costs associated with revenue growth, offset by (iv) the 1Q23 Nonrecurring Cost and (v) other operating expenses associated with businesses divested in the fourth quarter of 2023.

(Gain)/Loss on Disposal

Gain on disposal for the second quarter of 2024 increased $31 million from the second quarter of 2023. Gain on disposal for the six months ended June 30, 2024 increased $23 million from the six months ended June 30, 2023. Activity for (Gain)/Loss on disposal for the three and six months ended June 30, 2024 was primarily attributable to finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023. Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.

Amortization

Amortization expense for the second quarter of 2024 increased $3 million, or 7.3%, compared to the second quarter of 2023. Amortization expense for the six months ended June 30, 2024 increased $3 million, or 3.6%, compared to the six months ended June 30, 2023. This change reflects the amortization of new intangibles from businesses acquired within the past twelve months, net of certain intangible assets becoming fully amortized or written off in the (Gain)/Loss on disposal.

Depreciation

Depreciation expense for the second quarter of 2024 increased $1 million, or 10.0%, compared to the second quarter of 2023. Depreciation expense for the six months ended June 30, 2024 increased $1 million, or 5.0%, compared to the six months ended June 30, 2023. 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, net of the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.

Interest Expense

Interest expense for the second quarter of 2024 increased $1 million, or 2.1%, compared to the second quarter of 2023. Interest expense for the six months ended June 30, 2024 increased $2 million, or 2.1%, compared to the first six months of 2023.

Change in Estimated Acquisition Earn-Out Payables

Accounting Standards Codification (“ASC”) Topic 805 - Business Combinations is the authoritative guidance requiring an acquirer to recognize 100% of the fair value of acquired assets, including goodwill, and assumed liabilities (with only limited exceptions) upon initially obtaining control of an acquired entity. Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase price arrangements) at the acquisition date must be included in the purchase price consideration. The recorded purchase price for acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in these earn-out obligations are required to be recorded in the Condensed Consolidated Statements of Income when incurred or reasonably estimated. Estimations of potential earn-out obligations are typically based upon future earnings of the acquired operations or entities, usually for periods ranging from one to three years.

The net charge or credit to the Consolidated Statements of Income for the period is the combination of the net change in the estimated acquisition earn-out payables liability, and the accretion of the present value discount on those liabilities.

As of June 30, 2024 and 2023, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair Value Measurement. The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:

		Three months ended June 30,								Six months ended June 30,
(in millions)		2024				2023				2024				2023
Change in fair value of estimated acquisition earn-out payables		$	(2	)		$	—			$	(7	)		$	(4	)
Interest expense accretion			3				2				5				4
Net change in earnings from estimated acquisition earn-out payables		$	1			$	2			$	(2	)		$	—

For the three months and six months ended June 30, 2024, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $2 million and $7 million, respectively, which resulted in credits to the Condensed Consolidated Statements of Income.

As of June 30, 2024, estimated acquisition earn-out payables totaled $169 million, of which $93 million was recorded as accounts payable and $76 million was recorded as other non-current liabilities.

Income Taxes

The effective tax rate on income from operations for the three months ended June 30, 2024 and 2023 was 25.1% and 25.2%, respectively. The effective tax rate on income from operations for the six months ended June 30, 2024 and 2023 was 22.3% and 22.4%, respectively.

RESULTS OF OPERATIONS — SEGMENT INFORMATION

As discussed in Note 12 to the Condensed Consolidated Financial Statements, we operate three reportable segments: Retail, Programs and Wholesale Brokerage. On a segmented basis, changes in amortization, depreciation and interest expenses generally result from activity associated with acquisitions. Likewise, other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods. As such, in evaluating the operational efficiency of a segment, management primarily focuses on the Organic Revenue growth rate and EBITDAC Margin.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended June 30, 2024 and 2023, and the growth rates for Organic Revenue for the three months ended June 30, 2024, including by segment, are as follows:

2024		Retail (1)								Programs								Wholesale Brokerage								Total
(in millions, except percentages)		2024				2023				2024				2023				2024				2023				2024				2023
Commissions and fees		$	643			$	589			$	353			$	308			$	158			$	139			$	1,154			$	1,036
Total change		$	54							$	45							$	19							$	118
Total growth %			9.2	%							14.6	%							13.7	%							11.4	%
Profit-sharing contingent commissions			(7	)			(15	)			(25	)			(15	)			(4	)			(3	)			(36	)			(33	)
Core commissions and fees		$	636			$	574			$	328			$	293			$	154			$	136			$	1,118			$	1,003
Acquisitions			(21	)			—				(20	)			—				(3	)			—				(44	)			—
Dispositions			—				(2	)			—				(26	)			—				—				—				(28	)
Foreign Currency Translation							1								—								—								1
Organic Revenue (2)		$	615			$	573			$	308			$	267			$	151			$	136			$	1,074			$	976
Organic Revenue growth (2)		$	42							$	41							$	15							$	98
Organic Revenue growth rate (2)			7.3	%							15.4	%							11.0	%							10.0	%

(1) The Retail segment includes commissions and fees reported in the “Other” column of the Segment Information in Note 12 of this 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended June 30, 2023 and 2022, including by segment, and the growth rates for Organic Revenue for the three months ended June 30, 2023, including by segment, are as follows:

2023		Retail (1)								Programs								Wholesale Brokerage								Total
(in millions, except percentages)		2023				2022				2023				2022				2023				2022				2023				2022
Commissions and fees		$	589			$	476			$	308			$	251			$	139			$	112			$	1,036			$	839
Total change		$	113							$	57							$	27							$	197
Total growth %			23.7	%							22.7	%							24.1	%							23.5	%
Profit-sharing contingent commissions			(15	)			(10	)			(15	)			(10	)			(3	)			(2	)			(33	)			(22	)
Core commissions and fees		$	574			$	466			$	293			$	241			$	136			$	110			$	1,003			$	817
Acquisition revenues			(87	)			—				(8	)			—				(13	)			—				(108	)			—
Dispositions							(5	)			—				(5	)			—				(2	)			—				(12	)
Foreign Currency Translation							—								—								—								—
Organic Revenue (2)		$	487			$	461			$	285			$	236			$	123			$	108			$	895			$	805
Organic Revenue growth (2)		$	26							$	49							$	15							$	90
Organic Revenue growth rate (2)			5.6	%							20.8	%							13.9	%							11.2	%

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

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the six months ended June 30, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2024, including by segment, are as follows:

2024		Retail (1)								Programs								Wholesale Brokerage								Total
(in millions, except percentages)		2024				2023				2024				2023				2024				2023				2024				2023
Commissions and fees		$	1,446			$	1,320			$	645			$	562			$	299			$	262			$	2,390			$	2,144
Total change		$	126							$	83							$	37							$	246
Total growth %			9.5	%							14.8	%							14.1	%							11.5	%
Profit-sharing contingent commissions			(21	)			(30	)			(51	)			(23	)			(10	)			(7	)			(82	)			(60	)
Core commissions and fees		$	1,425			$	1,290			$	594			$	539			$	289			$	255			$	2,308			$	2,084
Acquisitions			(39	)			—				(40	)			—				(6	)			—				(85	)			—
Dispositions			—				(3	)			—				(51	)			—				(1	)			—				(55	)
Foreign Currency Translation			—				4				—				—				—				1				—				5
Organic Revenue (2)		$	1,386			$	1,291			$	554			$	488			$	283			$	255			$	2,223			$	2,034
Organic Revenue growth (2)		$	95							$	66							$	28							$	189
Organic Revenue growth % (2)			7.4	%							13.5	%							11.0	%							9.3	%

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

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the six months ended June 30, 2023 and 2022, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2023, including by segment, are as follows:

2023		Retail (1)								Programs								Wholesale Brokerage								Total
(in millions, except percentages)		2023				2022				2023				2022				2023				2022				2023				2022
Commissions and fees		$	1,320			$	1,091			$	562			$	438			$	262			$	215			$	2,144			$	1,744
Total change		$	229							$	124							$	47							$	400
Total growth %			21.0	%							28.3	%							21.9	%							22.9	%
Profit-sharing contingent commissions			(30	)			(27	)			(23	)			(18	)			(7	)			(6	)			(60	)			(51	)
Core commissions and fees		$	1,290			$	1,064			$	539			$	420			$	255			$	209			$	2,084			$	1,693
Acquisition revenues			(166	)			—				(28	)			—				(28	)			—				(222	)			—
Dispositions			—				(14	)			—				(10	)			—				(4	)			—				(28	)
Foreign Currency Translation			—				—				—				(1	)			—				—				—				(1	)
Organic Revenue (2)		$	1,124			$	1,050			$	511			$	409			$	227			$	205			$	1,862			$	1,664
Organic Revenue growth (2)		$	74							$	102							$	22							$	198
Organic Revenue growth % (2)			7.0	%							24.9	%							10.7	%							11.9	%

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

(2) A non-GAAP financial measure.

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2024, including by segment, is as follows:

(in millions)		Retail				Programs				Wholesale Brokerage				Other				Total
Total Revenues		$	646			$	359			$	159			$	14			$	1,178
Income before income taxes			129				183				47				(13	)			346
Income Before Income Taxes Margin(1)			20.0	%			51.0	%			29.6	%		NMF					29.4	%
Amortization			29				12				3				—				44
Depreciation			5				4				1				1				11
Interest			19				7				3				20				49
Change in estimated acquisition earn-out payables			1				1				(1	)			—				1
EBITDAC(2)			183				207				53				8				451
EBITDAC Margin(2)			28.3	%			57.7	%			33.3	%		NMF					38.3	%
(Gain)/loss on disposal			(2	)			(29	)			—				—				(31	)
EBITDAC - Adjusted(2)		$	181			$	178			$	53			$	8			$	420
EBITDAC Margin - Adjusted(2)			28.0	%			49.6	%			33.3	%		NMF					35.7	%

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

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2023, including by segment, is as follows:

(in millions)		Retail				Programs				Wholesale Brokerage				Other				Total
Total Revenues		$	591			$	310			$	139			$	7			$	1,047
Income before income taxes			106				124				38				(14	)			254
Income Before Income Taxes Margin(1)			17.9	%			40.0	%			27.3	%		NMF					24.3	%
Amortization			28				11				3				(1	)			41
Depreciation			5				3				1				1				10
Interest			22				9				3				14				48
Change in estimated acquisition earn-out payables			2				—				(2	)			2				2
EBITDAC(2)			163				147				43				2				355
EBITDAC Margin(2)			27.6	%			47.4	%			30.9	%		NMF					33.9	%
(Gain)/loss on disposal			—				—				—				—				—
Acquisition/Integration Costs			3				—				—				—				3
1Q23 Nonrecurring Cost			—				—				—				—				—
EBITDAC - Adjusted(2)		$	166			$	147			$	43			$	2			$	358
EBITDAC Margin - Adjusted(2)			28.1	%			47.4	%			30.9	%		NMF					34.2	%

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

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2024, including by segment, is as follows:

(in millions)		Retail				Programs				Wholesale Brokerage				Other				Total
Total Revenues		$	1,452			$	657			$	301			$	25			$	2,435
Income before income taxes			367				285				88				(28	)			712
Income Before Income Taxes Margin(1)			25.3	%			43.4	%			29.2	%		NMF					29.2	%
Amortization			58				23				6				(1	)			86
Depreciation			10				8				2				1				21
Interest			38				16				6				37				97
Change in estimated acquisition earn-out payables			—				1				(3	)			—				(2	)
EBITDAC(2)			473				333				99				9				914
EBITDAC Margin(2)			32.6	%			50.7	%			32.9	%		NMF					37.5	%
(Gain)/loss on disposal			(1	)			(28	)			—				—				(29	)
EBITDAC - Adjusted(2)		$	472			$	305			$	99			$	9			$	885
EBITDAC Margin - Adjusted(2)			32.5	%			46.4	%			32.9	%		NMF					36.3	%

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

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2023, including by segment, is as follows:

(in millions)		Retail				Programs				Wholesale Brokerage				Other				Total
Total Revenues		$	1,324			$	565			$	262			$	12			$	2,163
Income before income taxes			320				199				69				(40	)			548
Income Before Income Taxes Margin(1)			24.2	%			35.2	%			26.3	%		NMF					25.3	%
Amortization			56				22				6				(1	)			83
Depreciation			10				6				2				2				20
Interest			44				19				6				26				95
Change in estimated acquisition earn-out payables			(1	)			—				(2	)			3				—
EBITDAC(2)			429				246				81				(10	)			746
EBITDAC Margin(2)			32.4	%			43.5	%			30.9	%		NMF					34.5	%
(Gain)/loss on disposal			—				(6	)			—				—				(6	)
Acquisition/Integration Costs			6				—				—				—				6
1Q23 Nonrecurring Cost			—				—				—				11.0				11.0
EBITDAC - Adjusted(2)		$	435			$	240			$	81			$	1			$	757
EBITDAC Margin - Adjusted(2)			32.9	%			42.5	%			30.9	%		NMF					35.0	%

(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

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 June 30,												Six months ended June 30,
(in millions, except percentages)		2024				2023				% Change				2024				2023				% Change
REVENUES
Core commissions and fees		$	637			$	575				10.8	%		$	1,427			$	1,292				10.4	%
Profit-sharing contingent commissions			7				15				(53.3	%)			21				30				(30.0	%)
Investment income			1				—			NMF					2				—			NMF
Other income, net			1				1				—	%			2				2				—	%
Total revenues			646				591				9.3	%			1,452				1,324				9.7	%
EXPENSES
Employee compensation and benefits			355				323				9.9	%			755				686				10.1	%
Other operating expenses			110				105				4.8	%			225				209				7.7	%
(Gain)/loss on disposal			(2	)			—			NMF					(1	)			—			NMF
Amortization			29				28				3.6	%			58				56				3.6	%
Depreciation			5				5				—	%			10				10				—	%
Interest			19				22				(13.6	%)			38				44				(13.6	%)
Change in estimated acquisition earn-out payables			1				2				(50.0	%)			—				(1	)			(100.0	%)
Total expenses			517				485				6.6	%			1,085				1,004				8.1	%
Income before income taxes		$	129			$	106				21.7	%		$	367			$	320				14.7	%
Income Before Income Taxes Margin (1)			20.0	%			17.9	%							25.3	%			24.2	%
EBITDAC - Adjusted (2)		$	181			$	166				9.0	%		$	472			$	435				8.5	%
EBITDAC Margin - Adjusted (2)			28.0	%			28.1	%							32.5	%			32.9	%
Organic Revenue growth rate (2)			7.3	%			5.6	%							7.4	%			7.0	%
Employee compensation and benefits relative to total revenues			55.0	%			54.7	%							52.0	%			51.8	%
Other operating expenses relative to total revenues			17.0	%			17.8	%							15.5	%			15.8	%
Capital expenditures		$	20			$	9				122.2	%		$	27			$	15				80.0	%
Total assets at June 30,														$	8,676			$	8,192				5.9	%

(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 Retail segment’s total revenues for the three months ended June 30, 2024 increased 9.3%, or $55 million, as compared to the same period in 2023, to $646 million. The $62 million increase in core commissions and fees revenue was driven by: (i) approximately $21 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023; (ii) an increase of $42 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $1 million and (iv) a decrease of $2 million related to commissions and fees recorded in 2023 from businesses since divested. Profit-sharing contingent commissions for the second quarter of 2024 decreased 53.3%, or $8 million, as compared to the same period in 2023, to $7 million. This decrease was primarily the result of not qualifying for certain profit-sharing contingent commissions in 2024, due to higher loss ratios experienced by our insurance carrier partners, that we qualified for in the prior year. The Retail segment’s total commissions and fees increased by 10.8%, and the Organic Revenue growth rate was 7.3% for the second quarter of 2024. 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 increases in exposure units, as well as continued rate increases for property and casualty, employee benefits and auto.

Income before income taxes for the three months ended June 30, 2024 increased 21.7%, or $23 million, as compared to the same period in 2023, to $129 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.

EBITDAC - Adjusted for the three months ended June 30, 2024 increased 9.0%, or $15 million, as compared to the same period in 2023, to $181 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2024 decreased to 28.0% from 28.1% in the same period in 2023. The decrease in EBITDAC Margin - Adjusted was primarily driven by: (i) a decrease in profit-sharing contingent commissions and, to a lesser extent, (ii) higher non-cash stock-based compensation and (iii) higher performance-based compensation associated with the increased level of Organic Revenue growth which was partially offset by (iv) the net increase in revenue as described above and (v) leveraging our expense base.

The Retail segment’s total revenues for the six months ended June 30, 2024 increased 9.7%, or $128 million, as compared to the same period in 2023, to $1,452 million. The $135 million increase in core commissions and fees revenue was driven by: (i) approximately $39 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023; (ii) an increase of $95 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 2023 from businesses since divested. Profit-sharing contingent commissions for the six months of 2024 decreased 30.0%, or $9 million, as compared to the same period in 2023, to $21 million. This decrease was primarily the result of not qualifying for certain profit-sharing contingent commissions in 2024, due to higher loss ratios experienced by our insurance carrier partners, that we qualified for in the prior year. The Retail segment’s total commissions and fees increased by 10.4%, and the Organic Revenue growth rate was 7.4% for the first six months of 2024. The Organic Revenue growth rate was driven by net new business written during the preceding 12 months and growth on renewals of existing customers. Renewal business was impacted by rate increases with continued increases in property and casualty, employee benefits and auto.

Income before income taxes for the six months ended June 30, 2024 increased 14.7%, or $47 million, as compared to the same period in 2023, to $367 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.

EBITDAC - Adjusted for the six months ended June 30, 2024 increased 8.5%, or $37 million, as compared to the same period in 2023, to $472 million. EBITDAC Margin - Adjusted for the six months ended June 30, 2024 decreased to 32.5% from 32.9% in the same period in 2023. The decrease in EBITDAC Margin - Adjusted was primarily driven by: (i) a decrease in profit-sharing contingent commissions and, to a lesser extent, (ii) higher non-cash stock-based compensation and (iii) higher performance-based compensation associated with increased level of Organic Revenue growth, which was partially offset by, (iv) the net increase in revenue as described above and (v) leveraging our expense base.

Programs Segment

The Programs segment manages over 60 programs supported by over 100 well-capitalized carrier partners. In most cases, the insurance carriers that support these programs have delegated underwriting and, in many instances, claims-handling authority to our programs operations. These programs are generally distributed through a nationwide network of independent agents and Brown & Brown retail agents, and offer targeted products and services designed for specific industries, trade groups, professions, public entities and market niches. This segment also operates our write-your-own flood insurance carrier, WNFIC and operates two Captives. WNFIC’s underwriting business consists of policies written on behalf of and fully ceded to the NFIP, as well as excess flood policies, which are fully reinsured in the private market. The Captives provide additional underwriting capacity that enable growth in core commissions and fees, and allow us to participate in underwriting results with limited exposure to claims expenses. The Company has traditionally participated in underwriting profits through profit-sharing contingent commissions. These Captives give us another way to continue to participate in underwriting results while limiting exposure to claims expenses. The Captives focus on property insurance for earthquake and wind exposed properties underwritten by certain of our MGUs. The Captives limit the Company's exposure to claims expenses either through reinsurance or by participating in limited tranches of the underwriting risk.

The Programs segment operations can be grouped into five broad categories: Professional Programs, Personal Lines Programs, Commercial Programs, Public Entity-Related Programs and Specialty Programs. Approximately 76% of the Programs segment’s commissions and fees revenue is commission based.

Financial information relating to our Programs segment is as follows:

		Three months ended June 30,												Six months ended June 30,
(in millions, except percentages)		2024				2023				% Change				2024				2023				% Change
REVENUES
Core commissions and fees		$	328			$	293				11.9	%		$	594			$	539				10.2	%
Profit-sharing contingent commissions			25				15				66.7	%			51				23				121.7	%
Investment income			5				2				150.0	%			10				3			NMF
Other income, net			1				—			NMF					2				—			NMF
Total revenues			359				310				15.8	%			657				565				16.3	%
EXPENSES
Employee compensation and benefits			111				101				9.9	%			219				204				7.4	%
Other operating expenses			70				62				12.9	%			133				121				9.9	%
(Gain)/loss on disposal			(29	)			—			NMF					(28	)			(6	)		NMF
Amortization			12				11				9.1	%			23				22				4.5	%
Depreciation			4				3				33.3	%			8				6				33.3	%
Interest			7				9				(22.2	)%			16				19				(15.8	)%
Change in estimated acquisition earn-out payables			1				—			NMF					1				—			NMF
Total expenses			176				186				(5.4	)%			372				366				1.6	%
Income before income taxes		$	183			$	124				47.6	%		$	285			$	199				43.2	%
Income Before Income Taxes Margin (1)			51.0	%			40.0	%							43.4	%			35.2	%
EBITDAC - Adjusted (2)		$	178			$	147				21.1	%		$	305			$	240				27.1	%
EBITDAC Margin - Adjusted (2)			49.6	%			47.4	%							46.4	%			42.5	%
Organic Revenue growth rate (2)			15.4	%			20.8	%							13.5	%			24.9	%
Employee compensation and benefits relative to total revenues			30.9	%			32.6	%							33.3	%			36.1	%
Other operating expenses relative to total revenues			19.5	%			20.0	%							20.2	%			21.4	%
Capital expenditures		$	6			$	3				100.0	%		$	10			$	8				25.0	%
Total assets at June 30,														$	4,723			$	3,997				18.2	%

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

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

The Programs segment’s total revenues for the three months ended June 30, 2024 increased 15.8%, or $49 million, as compared to the same period in 2023, to $359 million. The $35 million increase in core commissions and fees revenue was driven by: (i) approximately $20 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023; (ii) approximately $41 million of net new business, renewal business, and fee revenues and (iii) an offsetting decrease of $26 million related to commissions and fees revenue from businesses divested in the preceding twelve months. Profit-sharing contingent commissions for the second quarter of 2024 increased approximately $10 million as compared to the second quarter of 2023. This increase was driven by improved underwriting results, qualifying for certain contingent commissions that we did not qualify for in the prior year, increased written premium and acquisitions completed in the past twelve months.

The Programs segment’s total commissions and fees increased by 11.9%, and the Organic Revenue growth rate was 15.4% for the three months ended June 30, 2024. The Organic Revenue growth was driven by strong new business, good retention and a growth incentive received for one of our programs.

Income before income taxes for the three months ended June 30, 2024 increased 47.6%, or $59 million, as compared to the same period in 2023, to $183 million. Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below along with the gain on disposal of certain businesses.

EBITDAC - Adjusted for the three months ended June 30, 2024 increased 21.1%, or $31 million, from the same period in 2023, to $178 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2024 increased to 49.6% from 47.4% in the same period in 2023. EBITDAC - Adjusted grew due to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023, higher profit-sharing contingent commissions, and leveraging our expense base.

The Programs segment’s total revenues for the six months ended June 30, 2024 increased 16.3%, or $92 million, as compared to the same period in 2023, to $657 million. The $55 million increase in core commissions and fees revenue was driven by: (i) approximately $66 million of net new renewal business and fee revenues; (ii) an offsetting decrease of $51 million related to commissions and fees revenue from business divested in the preceding 12 months and (iii) $40 million from acquisitions that had no comparable revenues in the same period of 2023. Profit-sharing contingent commissions for the six months ended June 30, 2023 increased approximately $28 million, or by 121.7%, as compared to the same period in 2023. This increase was driven by qualifying for certain contingent commissions that we did not qualify for in the prior year from greater written premium, favorable loss ratios, prior year adjustments and acquisitions.

The Programs segment’s total commissions and fees increased by 10.2%, and the Organic Revenue growth rate was 13.5%, for the six months ended June 30, 2024. The Organic Revenue growth was driven primarily by strong net new business across most of our Programs and good retention, a growth incentive received for one of our programs and offset by nonrecurring claims revenue in the prior year.

Income before income taxes for the six months ended June 30, 2024 increased 43.2%, or $86 million, from the same period in 2023, to $285 million. Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below along with the gain on disposal of certain businesses.

EBITDAC - Adjusted for the six months ended June 30, 2024 increased 27.1%, or $65 million, as compared to the same period in 2023, to $305 million. EBITDAC Margin - Adjusted for the six months ended June 30, 2024 increased to 46.4% from 42.5% in the same period in 2023. EBITDAC - Adjusted increased due the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023, higher profit-sharing contingent commissions, and leveraging our expense base.

Wholesale Brokerage Segment

The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, including Brown & Brown retail agents. Approximately 86% of the Wholesale Brokerage segment’s commissions and fees revenue is commission based.

Financial information relating to our Wholesale Brokerage segment is as follows:

		Three months ended June 30,												Six months ended June 30,
(in millions, except percentages)		2024				2023				% Change				2024				2023				% Change
REVENUES
Core commissions and fees		$	154			$	136				13.2	%		$	289			$	255				13.3	%
Profit-sharing contingent commissions			4				3				33.3	%			10				7				42.9	%
Investment income			1				—			NMF					2				—			NMF
Other income, net			—				—				—	%			—				—				—	%
Total revenues			159				139				14.4	%			301				262				14.9	%
EXPENSES
Employee compensation and benefits			82				72				13.9	%			158				139				13.7	%
Other operating expenses			24				24				—	%			44				42				4.8	%
(Gain)/loss on disposal			—				—				—	%			—				—				—	%
Amortization			3				3				—	%			6				6				—	%
Depreciation			1				1				—	%			2				2				—	%
Interest			3				3				—	%			6				6				—	%
Change in estimated acquisition earn-out payables			(1	)			(2	)			(50.0	%)			(3	)			(2	)			50.0	%
Total expenses			112				101				10.9	%			213				193				10.4	%
Income before income taxes		$	47			$	38				23.7	%		$	88			$	69				27.5	%
Income Before Income Taxes Margin (1)			29.6	%			27.3	%							29.2	%			26.3	%
EBITDAC - Adjusted (2)		$	53			$	43				23.3	%		$	99			$	81				22.2	%
EBITDAC Margin - Adjusted (2)			33.3	%			30.9	%							32.9	%			30.9	%
Organic Revenue growth rate (2)			11.0	%			13.9	%							11.0	%			10.7	%
Employee compensation and benefits relative to total revenues			51.6	%			51.8	%							52.5	%			53.1	%
Other operating expenses relative to total revenues			15.1	%			17.3	%							14.6	%			16.0	%
Capital expenditures		$	1			$	1			NMF				$	1			$	1				—	%
Total assets at June 30,														$	1,659			$	1,423				16.6	%

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

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

The Wholesale Brokerage segment’s total revenues for the three months ended June 30, 2024 increased 14.4%, or $20 million, as compared to the same period in 2023, to $159 million. The $18 million net increase in core commissions and fees revenue was driven primarily by: (i) $15 million related to net new and renewal business and (ii) $3 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023. Profit-sharing contingent commissions for the second quarter of 2024 increased $1 million compared to the second quarter of 2023, driven by acquired businesses in the last year. The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.2%, and the Organic Revenue growth rate was 11.0% for the second quarter of 2024. The Organic Revenue growth rate was driven by strong new business and good retention, as well as a combination of rate and exposure unit increases.

Income before income taxes for the three months ended June 30, 2024 increased 23.7%, or $9 million, as compared to the same period in 2023, to $47 million due to: (i) the growth of EBITDAC - Adjusted described below and (ii) a decrease in the change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the three months ended June 30, 2024 increased 23.3%, or $10 million, as compared to the same period in 2023, to $53 million. EBITDAC Margin - Adjusted for the three months ended June 30, 2024 increased to 33.3% from 30.9%, as compared to the same period in 2023. EBITDAC Margin - Adjusted increased due to: (i) certain nonrecurring operating expenses in the prior year; (ii) total revenues growth and (iii) leveraging our expense base.

The Wholesale Brokerage segment’s total revenues for the six months ended June 30, 2024 increased 14.9%, or $39 million, as compared to the same period in 2023, to $301 million. The $34 million net increase in core commissions and fees revenue was driven primarily by: (i) $28 million related to net new and renewal business and (ii) $6 million related to core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2023. Profit-sharing contingent commissions for the first six months of 2024 increased approximately $3 million compared to the same period of 2023. The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.3%, and the Organic Revenue growth rate was 11.0% for the first six months of 2024. The Organic Revenue growth rate was driven by strong new business and good retention, as well as a combination of rate and exposure unit increases.

Income before income taxes for the six months ended June 30, 2024 increased 27.5%, or $19 million, as compared to the same period in 2023, to $88 million due to: (i) the growth of EBITDAC - Adjusted described below and (ii) a decrease in the change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the six months ended June 30, 2024 increased 22.2%, or $18 million, as compared to the same period in 2023, to $99 million. EBITDAC Margin - Adjusted for the six months ended June 30, 2024 increased to 32.9% from 30.9% in the same period in 2023 due to: (i) certain nonrecurring operating expenses in the prior year; (ii) total revenues growth and (iii) leveraging our expense base.

Other

As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” column 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, which as of June 30, 2024 provided up to $800 million in available cash.

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. On March 31, 2022, the Company entered into a Loan Agreement (the “Loan Agreement") which provided term loan capacity of $800 million. Additionally, the Company may, subject to satisfaction of certain conditions, including receipt of additional term loan commitments by new or existing lenders, increase either Term Loan Commitment under the existing Loan Agreement or the term loans issued thereunder or issue new tranches of term loans in an aggregate additional amount of up to $400 million. Including the expansion options under all existing credit agreements, the Company has access to up to $1,700 million of incremental borrowing capacity as of June 30, 2024.

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, will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for at least the next twelve months and in the long term.

Contractual Cash Obligations

As of June 30, 2024, our contractual cash obligations were as follows:

		Payments Due by Period
(in millions)		Total				Less than 1 year				1-3 years				4-5 years				After 5 years
Long-term debt		$	4,150			$	725			$	575			$	350			$	2,500
Other liabilities			230				14				24				19				173
Operating leases (1)			251				50				87				55				59
Interest obligations			1,658				178				303				238				939
Maximum future acquisition contingent payments (2)			485				212				203				65				5
Total contractual cash obligations (3)		$	6,774			$	1,179			$	1,192			$	727			$	3,676

(1)

Includes $1.0 million of future lease commitments expected to commence later in 2024.

(2)

Includes $169 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. Six of the estimated acquisition earn-out payables assumed in connection with the acquisitions of GRP (Jersey) Holdco Limited and Kentro Capital Limited included provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of June 30, 2024 is $4 million. The Company deems a significant increase to this amount to be unlikely.

(3)

Does not include approximately $37 million of current liability for a dividend of $0.1300 per share approved by the Board of Directors on July 17, 2024.

Debt

Total debt at June 30, 2024 was $4,116 million net of unamortized discount and debt issuance costs, which was an increase of $320 million compared to December 31, 2023. The increase includes: the issuance of $600 million senior notes and the amortization of discounted debt related to our various unsecured senior notes, and debt issuance cost amortization of $2 million; offset by the repayment of $275 million in floating rate debt balances and the addition of deferred financing costs and discount on debt of $7 million.

During the six months ended June 30, 2024, the Company repaid $13 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments. The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $206 million as of June 30, 2024. The Company's next scheduled principal payment is due September 30, 2024 and is equal to $6 million.

During the six months ended June 30, 2024, the Company repaid $13 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments. The Term A-2 Loans had an outstanding balance of $444 million as of June 30, 2024. The Company’s next scheduled principal payment is due September 30, 2024 and is equal to $13 million.

On February 13, 2024, the Company drew down on the Revolving Credit Facility $150 million, and the proceeds were used for general corporate purposes. During the six months ended June 30, 2024, the Company repaid $250 million of the outstanding balance on the Revolving Credit Facility. The Revolving Credit Facility had no outstanding balance as of June 30, 2024.

On June 11, 2024, the Company completed the issuance of $600 million aggregate principal amount of 5.650% senior notes due 2034 (the “2034 Senior Notes”). The net proceeds to the Company from the issuance of the 2034 Senior Notes, after deducting underwriting discounts and estimated offering expenses, were approximately $593 million. The 2034 Senior Notes were given investment grade ratings of BBB- stable outlook and Baa3 positive outlook. The 2034 Senior Notes will mature in June 2034. Interest on the 2034 Senior Notes will be payable semi-annually in arrears. The 2034 Senior Notes are senior unsecured obligations of the Company and will rank equal in right of payment to all of the Company’s existing and future senior unsecured indebtedness. The Company may redeem the 2034 Senior Notes in whole or in part at any time and from time to time, at the “make whole” redemption prices specified in the prospectus supplement for the 2034 Senior Notes being redeemed, plus accrued and unpaid interest thereon. The Company intends to use the net proceeds from the offering of the 2034 Senior Notes to redeem its 4.200% senior notes due September 2024, and for general corporate purposes. As of June 30, 2024 there was a total outstanding debt balance of $600 million exclusive of the associated discount balance on the 2034 Senior Notes.

During the six months ended June 30, 2024, the Company repaid $150 million of principal related to the Term Loans issued under the Term A-1 Loan Commitment (“Term A-1 Loans”). The Term A-1 Loans had an outstanding balance of $150 million as of June 30, 2024.