Item 1. Financial Statements (Unaudited)

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

		Three months ended June 30,								Six months ended June 30,
(in millions, except per share data)		2026				2025				2026				2025
REVENUES
Commissions and fees		$	1,654			$	1,249			$	3,534			$	2,634
Investment and other income			22				36				43				55
Total revenues			1,676				1,285				3,577				2,689
EXPENSES
Employee compensation and benefits			838				640				1,745				1,323
Other operating expenses			271				211				560				398
Loss on disposal			1				—				—				1
Amortization			110				50				226				103
Depreciation			18				11				35				23
Interest			100				51				199				96
Change in estimated acquisition earn-out payables			(40	)			11				(34	)			7
Mark-to-market of escrow liability			(5	)			—				(69	)			—
Total expenses			1,293				974				2,662				1,951
Income before income taxes			383				311				915				738
Income taxes			94				77				199				169
Net income before non-controlling interests			289				234				716				569
Less: Net income attributable to non-controlling interests			1				3				2				6
Net income attributable to the Company		$	288			$	231			$	714			$	563
Net income per share:
Basic		$	0.86			$	0.79			$	2.14			$	1.94
Diluted		$	0.84			$	0.78			$	1.90			$	1.93

See accompanying Notes to Condensed Consolidated Financial Statements.

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATE****MENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

		Three months ended June 30,								Six months ended June 30,
(in millions)		2026				2025				2026				2025
Net income attributable to the Company		$	288			$	231			$	714			$	563
Foreign currency translation (loss)/gain			(12	)			247				(94	)			371
Comprehensive income attributable to the Company		$	276			$	478			$	620			$	934

See accompanying Notes to Condensed Consolidated Financial Statements.

BROWN & BROWN, INC.

CONDENSED CONSOLIDATE****D BALANCE SHEETS

(UNAUDITED)

(in millions, except per share data)		June 30, 2026				December 31, 2025
ASSETS
Current Assets:
Cash and cash equivalents		$	918			$	1,079
Fiduciary cash			2,613				2,471
Commission, fees and other receivables			1,547				1,438
Fiduciary receivables			1,632				1,515
Reinsurance recoverable			591				647
Prepaid reinsurance premiums			850				980
Other current assets			541				484
Total current assets			8,692				8,614
Fixed assets, net			368				367
Operating lease assets			274				269
Goodwill			15,146				15,087
Amortizable intangible assets, net			4,570				4,906
Other assets			837				748
Total assets		$	29,887			$	29,991
LIABILITIES AND EQUITY
Current Liabilities:
Fiduciary liabilities		$	4,245			$	3,986
Losses and loss adjustment reserve			612				671
Unearned premiums			953				1,053
Accounts payable			807				990
Accrued expenses and other liabilities			683				875
Current portion of long-term debt			413				719
Total current liabilities			7,713				8,294
Long-term debt less unamortized discount and debt issuance costs			7,346				6,894
Operating lease liabilities			248				243
Deferred income taxes, net			925				815
Other liabilities			1,047				1,172
Equity:
Common stock, par value $0.10 per share; authorized 560 shares; issued 359 shares and outstanding 330 shares at 2026, issued 357shares and outstanding 336 shares at 2025			36				36
Additional paid-in capital			6,189				6,160
Treasury stock, at cost 29 shares at 2026 and 21 shares at 2025			(1,348	)			(848	)
Accumulated other comprehensive income			116				210
Non-controlling interests			25				26
Retained earnings			7,590				6,989
Total equity			12,608				12,573
Total liabilities and equity		$	29,887			$	29,991

See accompanying Notes to Condensed Consolidated Financial Statements.

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

		Common Stock
(in millions, except per share data)		Shares Outstanding				Par Value				Additional Paid-In Capital				Treasury Stock				Accumulated Other Comprehensive Income (Loss)				Retained Earnings				Non-Controlling Interest				Total
Balance at December 31, 2025			336			$	36			$	6,160			$	(848	)		$	210			$	6,989			$	26			$	12,573
Net income																							426				1				427
Foreign currency translation																			(82	)											(82	)
Shares issued - employee stock compensation plans:
Employee stock purchase plan											6																				6
Stock incentive plans			3								20																				20
Acquisitions											5																				5
Net non-controlling interest acquired (disposed)																											(3	)			(3	)
Repurchase shares to fund tax withholdings for non-cash stock-based compensation											(26	)																			(26	)
Purchase of treasury stock			(4	)											(250	)															(250	)
Cash dividends paid ($0.165 per share)																							(57	)							(57	)
Balance at March 31, 2026			335			$	36			$	6,165			$	(1,098	)		$	128			$	7,358			$	24			$	12,613
Net income																							288				1				289
Foreign currency translation																			(12	)											(12	)
Shares issued - employee stock compensation plans:
Employee stock purchase plan											4																				4
Stock incentive plans											19																				19
Directors											2																				2
Repurchase shares to fund tax withholdings for non-cash stock-based compensation			(1	)							(1	)																			(1	)
Purchase of treasury stock			(4	)											(250	)															(250	)
Cash dividends paid ($0.165 per share)																							(56	)							(56	)
Balance at June 30, 2026			330			$	36			$	6,189			$	(1,348	)		$	116			$	7,590			$	25			$	12,608
Balance at December 31, 2024			286			$	31			$	1,118			$	(748	)		$	(109	)		$	6,128			$	17			$	6,437
Net income																							331				3				334
Foreign currency translation																			124												124
Shares issued - employee stock compensation plans:
Employee stock purchase plan											4																				4
Stock incentive plans			1								25																				25
Repurchase shares to fund tax withholdings for non-cash stock-based compensation											(40	)																			(40	)
Cash dividends paid ($0.15 per share)																							(43	)							(43	)
Balance at March 31, 2025			287			$	31			$	1,107			$	(748	)		$	15			$	6,416			$	20			$	6,841
Net income																							231				3				234
Foreign currency translation																			247												247
Shares issued - employee stock compensation plans:
Employee stock purchase plan											3																				3
Stock incentive plans											20																				20
Shares issued - public offering			43				4				4,311																				4,315
Directors											1																				1
Repurchase shares to fund tax withholdings for non-cash stock-based compensation											(1	)																			(1	)
Cash dividends paid ($0.15 per share)																							(43	)							(43	)
Balance at June 30, 2025			330			$	35			$	5,441			$	(748	)		$	262			$	6,604			$	23			$	11,617

See accompanying Notes to Condensed Consolidated Financial Statements.

BROWN & BROWN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Six months ended June 30,
(in millions)		2026				2025
Cash flows from operating activities:
Net income before non-controlling interests		$	716			$	569
Adjustments to reconcile net income before non-controlling interests to net cash provided by operating activities:
Amortization			226				103
Depreciation			35				23
Non-cash stock-based compensation			49				52
Change in estimated acquisition earn-out payables			(34	)			7
Mark-to-market of escrow liability			(69	)			—
Deferred income taxes			128				(2	)
Net loss on sales/disposals of investments, businesses, fixed assets and customer accounts			—				2
Payments on acquisition earn-outs in excess of original estimated payables			(40	)			(1	)
Other			8				2
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures:
Commissions, fees and other receivables (increase) decrease			(143	)			(139	)
Reinsurance recoverable (increase) decrease			56				1,142
Prepaid reinsurance premiums (increase) decrease			130				(9	)
Other assets (increase) decrease			(112	)			(11	)
Losses and loss adjustment reserve increase (decrease)			(59	)			(1,143	)
Unearned premiums increase (decrease)			(100	)			55
Accounts payable increase (decrease)			(11	)			5
Accrued expenses and other liabilities increase (decrease)			(194	)			(132	)
Other liabilities increase (decrease)			22				15
Net cash provided by operating activities			608				538
Cash flows from investing activities:
Additions to fixed assets			(38	)			(32	)
Payments for businesses acquired, net of cash acquired			(30	)			(161	)
Proceeds from sales of businesses, fixed assets and customer accounts			3				10
Other investing activities			(6	)			(4	)
Net cash used in investing activities			(71	)			(187	)
Cash flows from financing activities:
Fiduciary receivables and liabilities, net			157				119
Payments on acquisition earn-outs			(184	)			(45	)
Proceeds from long-term debt			—				4,192
Payments on long-term debt			(31	)			(188	)
Deferred debt issuance costs			(3	)			(36	)
Borrowings on revolving credit facility			225				150
Payments on revolving credit facility			(50	)			(400	)
Proceeds from issuance of common stock, net of expenses			—				4,315
Repurchase shares to fund tax withholdings for non-cash stock-based compensation			(27	)			(41	)
Purchase of treasury stock			(500	)			—
Cash dividends paid			(112	)			(86	)
Other financing activities			(1	)			1
Net cash (used in) provided by financing activities			(526	)			7,981
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash inclusive of fiduciary cash			(27	)			85
Net (decrease) increase in cash, cash equivalents and restricted cash inclusive of fiduciary cash			(16	)			8,417
Cash, cash equivalents and restricted cash inclusive of fiduciary cash at beginning of period			3,815				2,502
Cash, cash equivalents and restricted cash inclusive of fiduciary cash at end of period		$	3,799			$	10,919

See accompanying Notes to Condensed Consolidated Financial Statements. Refer to Note 10 for the reconciliations of cash, cash equivalents and restricted cash inclusive of fiduciary cash.

NOTES TO CONDEN****SED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 Nature of Operations

Brown & Brown, Inc., a Florida corporation, and its subsidiaries (collectively, “Brown & Brown” or the “Company”) is a diversified insurance agency, wholesale brokerage, insurance programs and service organization that markets and sells insurance products and services, primarily in the property, casualty and employee benefits areas. Brown & Brown’s business is divided into two reportable segments. The Retail segment provides a broad range of risk management products and services to commercial, public and quasi-public entities, and to professional and individual customers. These products and services include property and casualty insurance and reinsurance, employee benefits, private client services, captive solutions, consulting services and financial and wealth solutions, as well as non-insurance warranty services and products through the Retail segment’s automobile and recreational vehicle dealer services (“F&I”) businesses. The Specialty Distribution segment consists of our programs, wholesale brokerage and specialty businesses. The programs businesses, which act as managing general underwriters (“MGUs”), provide targeted products and services designated for specific industries, trade groups, governmental entities and market niches, which are delivered to the insured directly, to affinity groups, through wholesale brokers or through a global network of independent agents, including Brown & Brown retail agents. These products and services include specialty property and casualty insurance, financial lines, life and health benefits, reinsurance, travel/accident and health insurance, captive administrative services, warranty services and specialty packages of coverages. The wholesale brokerage business underwrites and places excess and surplus commercial and personal lines insurance, typically for specialized or hard-to-place types of risks, primarily through a global network of independent agents and brokers, including Brown & Brown retail agents. The specialty business offers solutions across affinity and administrative services, captives, reinsurance, travel/accident, warranty, and life & health.

The Company primarily operates as an agent or broker not assuming underwriting risks. However, we also operate and/or participate in various ancillary insurance operations, including: (1) reinsurance companies and stand-alone captives that assume underwriting risk; (2) series captive insurance companies (“SCICs”); (3) protected cell companies; (4) segregated account companies; (5) a quota share captive; and (6) an excess of loss layer captive (collectively, the "Captives"). These ancillary insurance operations facilitate additional underwriting capacity, generate incremental revenues and/or enable the Company to participate in certain underwriting results. The Company also operates a write-your-own flood insurance carrier, Wright National Flood Insurance Company (“WNFIC”). WNFIC’s underwriting business consists of policies written pursuant to the National Flood Insurance Program (“NFIP”), the program administered by the Federal Emergency Management Agency (“FEMA”) to which premiums and underwriting exposure are ceded, and excess flood policies which are fully reinsured in the private market.

In conjunction with the acquisition of RSC, the holding company for Accession Risk Management Group, Inc., in the third quarter of 2025, the Company realigned its business from three to two segments. As a result of the segment reorganization, the Company consolidated its Programs and Wholesale Brokerage segments into a new Specialty Distribution segment. The Company now reports its financial results in the following two reportable segments: Retail and Specialty Distribution. The historical results, discussion and presentation of our business segments as set forth in the accompanying Condensed Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of income, balance sheets, statements of cash flows, statements of comprehensive income or statements of equity resulting from these changes. See Note 12 of these Notes to Condensed Consolidated Financial Statements for further information.

NOTE 2 Basis of Financial Reporting

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of recurring accruals) necessary for a fair presentation have been included. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes thereto set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosures of contingent assets and liabilities, at the date of the Condensed Consolidated Financial Statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Fair Value of Financial Instruments

The Company has categorized its assets and liabilities that are recognized at fair value on a recurring basis into a three-level fair value hierarchy. Fair value accounting establishes a framework for measuring fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The framework includes a fair value hierarchy that prioritizes the inputs to the valuation technique used to measure fair value.

The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety. The three levels of the hierarchy in order of priority of inputs to the valuation technique are defined as follows:

Level 1 - observable inputs such as quoted prices for identical assets in active markets;

Level 2 - inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and

Level 3 - unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.

The carrying amounts of the Company’s financial assets and liabilities, including cash and cash equivalents; fiduciary cash; fiduciary receivables, commissions, fees and other receivables; fiduciary liabilities; accounts payable and accrued expenses and other liabilities, at June 30, 2026, and December 31, 2025, approximate fair value, because of the short-term maturity of these instruments. Acquisition earnout payables and newly acquired intangible assets are measured at fair value using level 3 inputs.

Recently Issued Accounting Pronouncements

In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." This ASU clarifies the guidance in Accounting Standards Codification (“ASC”) Topic 270 - Interim Reporting, adding a comprehensive list of required interim disclosures and a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim periods within annual periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating these new disclosure requirements.

In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." This ASU was issued to modernize the accounting for software costs that are accounted for under Subtopic 350-40, including removing references to "project stages" and adding the "probable-to-complete recognition threshold." This ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating these new accounting requirements.

In November 2024, the FASB issued ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)" which requires disclosure of specific information about certain costs and expenses in the notes to the financial statements. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating these new disclosure requirements.

NOTE 3 Revenues

The following tables present the revenues disaggregated by revenue source:

		Three months ended June 30, 2026
(in millions)		Retail				Specialty Distribution				Other (8)				Total
Base commissions (1)		$	657			$	465			$	—			$	1,122
Fees (2)			226				166				—				392
Other supplemental commissions (3)			31				6				—				37
Profit-sharing contingent commissions (4)			26				59				—				85
Earned premium (5)			—				18				—				18
Investment income (6)			7				7				8				22
Other income, net (7)			—				—				—				—
Total revenues		$	947			$	721			$	8			$	1,676

		Three months ended June 30, 2025
(in millions)		Retail				Specialty Distribution				Other (8)				Total
Base commissions (1)		$	483			$	395			$	—			$	878
Fees (2)			173				95				—				268
Other supplemental commissions (3)			31				10				—				41
Profit-sharing contingent commissions (4)			7				38				—				45
Earned premium (5)			—				17				—				17
Investment income (6)			3				7				25				35
Other income, net (7)			—				1				—				1
Total revenues		$	697			$	563			$	25			$	1,285

		Six months ended June 30, 2026
(in millions)		Retail				Specialty Distribution				Other (8)				Total
Base commissions (1)		$	1,502			$	891			$	—			$	2,393
Fees (2)			446				325				—				771
Other supplemental commissions (3)			139				10				—				149
Profit-sharing contingent commissions (4)			56				126				—				182
Earned premium (5)			—				39				—				39
Investment income (6)			11				12				16				39
Other income, net (7)			2				—				2				4
Total revenues		$	2,156			$	1,403			$	18			$	3,577

		Six months ended June 30, 2025
(in millions)		Retail				Specialty Distribution				Other (8)				Total
Base commissions (1)		$	1,099			$	737			$	—			$	1,836
Fees (2)			350				184				(1	)			533
Other supplemental commissions (3)			128				13				—				141
Profit-sharing contingent commissions (4)			22				66				—				88
Earned premium (5)			—				36				—				36
Investment income (6)			4				13				36				53
Other income, net (7)			1				1				—				2
Total revenues		$	1,604			$	1,050			$	35			$	2,689

(1)

Base commissions 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, or sales and 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.

(2)

Fee revenues relate to fees for services other than securing coverage for our customers, including fees negotiated in lieu of commissions, and F&I products and services.

(3)

Other supplemental commissions include additional commissions over base commissions received from insurance carriers based on predetermined growth or production measures. This includes incentive commissions and guaranteed supplemental commissions.

(4)

Profit-sharing contingent commissions are based primarily on underwriting results, but may also reflect considerations for volume, growth and/or retention.

(5)

Earned premium relates to the premiums earned in the Captives.

(6)

Investment income consists primarily of interest on cash and investments.

(7)

Other income consists primarily of other miscellaneous income.

(8)

Fees within Other reflect the elimination of intercompany revenues.

The following table presents the revenues disaggregated by geographic area where our services are being performed:

		Three months ended June 30,								Six months ended June 30,
(in millions)		2026				2025				2026				2025
U.S.		$	1,449			$	1,073			$	3,086			$	2,247
U.K.			168				164				323				304
Other			59				48				168				138
Total revenues		$	1,676			$	1,285			$	3,577			$	2,689

Contract Assets and Liabilities

The balances of contract assets and contract liabilities arising from contracts with customers as of June 30, 2026 and December 31, 2025 were as follows:

(in millions)		June 30, 2026				December 31, 2025
Contract assets		$	964			$	908
Contract liabilities		$	172			$	168

Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which have not yet been billed in the Company's systems and are reflected in commissions, fees and other receivables in the Company's Condensed Consolidated Balance Sheets. The increase in contract assets over the balance as of December 31, 2025, is due to the timing of policy renewals and contingent accruals in the six months ended June 30, 2026.

Deferred revenue (contract liabilities) relates to payments received in advance of performance under the contract before the transfer of a good or service to the customer. Deferred revenue is reflected within accrued expenses and other liabilities for those to be recognized in less than twelve months and in other liabilities for those to be recognized more than twelve months from the date presented in the Company's Condensed Consolidated Balance Sheets.

As of June 30, 2026, deferred revenue totaled $172 million and consisted of $132 million and $40 million classified as short term and long term, respectively. As of December 31, 2025, deferred revenue totaled $168 million and consisted of $127 million and $41 million classified as short term and long term, respectively.

During the six months ended June 30, 2026 and 2025, the net amount of revenue recognized related to performance obligations satisfied in a previous period was $32 million and $22 million, consisting of additional variable consideration received on our incentives and Contingents.

Other Assets and Deferred Cost

Incremental cost to obtain - The Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans in the Retail segment, in which the Company pays an incremental amount of compensation on new business. These incremental costs are deferred and amortized over a 15-year period. The cost to obtain balance within the other assets caption in the Company's Condensed Consolidated Balance Sheets was $155 million and $143 million as of June 30, 2026 and December 31, 2025, respectively. For the six months ended June 30, 2026, the Company deferred $19 million of incremental cost to obtain customer contracts. The Company recorded expense of $7 million associated with the incremental cost to obtain customer contracts for the six months ended June 30, 2026.

Cost to fulfill - The Company defers certain costs to fulfill contracts and recognizes these costs as the associated performance obligations are fulfilled. The cost to fulfill balance within the other current assets caption in the Company's Condensed Consolidated Balance Sheets was $197 million and $208 million as of June 30, 2026 and December 31, 2025, respectively. For the six months ended June 30, 2026, the Company had net expense of $10 million related to the release of previously deferred contract fulfillment costs associated with performance obligations that were satisfied in the period, net of current year deferrals for costs incurred that related to performance obligations yet to be fulfilled.

NOTE 4 Net Income Per Share

Basic net income per share is computed based on the weighted average number of common shares (including participating securities) issued and outstanding during the period. Diluted net income per share is computed based on the weighted average number of common shares issued and outstanding plus equivalent shares, assuming the issuance of all potentially issuable common shares. The dilutive effect of potentially issuable common shares is computed by application of the treasury stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding:

		Three months ended June 30,								Six months ended June 30,
(in millions, except per share data)		2026				2025				2026				2025
Numerator:
Net income attributable to the Company		$	288			$	231			$	714			$	563
Less: Net income attributable to unvested awarded performance stock			(4	)			(3	)			(9	)			(6	)
Net income attributable to common shares – basic		$	284			$	228			$	705			$	557
Less: Gain on mark-to-market of escrow liability (1)			(5	)			—				(69	)			—
Net income attributable to common shares – diluted		$	279			$	228			$	636			$	557
Denominator:
Weighted average number of common shares outstanding			333				295				334				291
Less: Unvested awarded performance stock			(4	)			(3	)			(4	)			(4	)
Weighted average number of common shares outstanding – basic			329				292				330				287
Dilutive effect of stock compensation plans			1				1				1				2
Dilutive effect of contingently issuable shares (1)			4				—				4				—
Weighted average number of shares outstanding – diluted			334				293				335				289
Net income per share:
Basic		$	0.86			$	0.79			$	2.14			$	1.94
Diluted		$	0.84			$	0.78			$	1.90			$	1.93

(1)

The calculation of diluted net income per share for the three and six months ended June 30, 2026, excludes the gain on the mark-to-market of escrow liability in the numerator and includes the shares held in escrow in the denominator, in accordance with ASC 260 - Earnings Per Share, which requires this treatment in periods where the combined effect of these adjustments is accretive to earnings.

NOTE 5 Business Combinations

During the six months ended June 30, 2026, the Company acquired all of the stock of three insurance intermediaries, purchased the assets and assumed certain liabilities of eight insurance intermediaries, and purchased three books of business (customer accounts) for a total of 14 acquisitions. Additionally, adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by ASC 805 — Business Combinations.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Condensed Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805. The recorded purchase price for all acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations are recorded in the Condensed Consolidated Statements of Income when incurred. The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements.

On August 1, 2025, the Company completed the acquisition of Accession pursuant to the Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provided for escrowed consideration in the form of cash and shares of the Company’s common stock. Both the cash and shares are held in an escrow account. Escrowed shares, which were issued at the closing of the acquisition, total approximately 4.4 million shares. Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, any amounts remaining in the escrow account will be released to the equityholders. The amount of the cash balance will change over time based upon payment of any indemnification obligations of the equityholders associated with the discontinued businesses, as well as dividends paid on the shares and interest income earned on the cash. 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 value of the shares and cash held in the escrow account is presented within long-term liabilities (other liabilities), and the restricted cash is presented within other assets in the Company's Condensed Consolidated Balance Sheets. The value of the shares placed in escrow changes as the share price of the Company increases or decreases as compared to the value at the start of the applicable reporting period. In accordance with ASC 480 - Distinguishing Liabilities from Equity and ASC 815 - Derivatives and Hedging, periodic share value changes will be recorded as a mark-to-market of the escrow liability in the Company's Consolidated Statements of Income. This mark-to-market adjustment is non-cash.

As of June 30, 2026, the total balance of the escrow liability was $552 million, with $284 million in escrowed shares and $271 million in cash, net of reimbursements receivable of $3 million. The shares held in escrow are measured at fair value on a recurring basis as defined in ASC 820 - Fair Value Measurement. The change in the fair value of the shares during the three and six months ended June 30, 2026, resulted in decreases to expense of $5 million and $69 million, respectively.

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired through the six months ended June 30, 2026 as of the date of each acquisition and adjustments made during the measurement period of the prior year acquisitions.

(in millions)	Other (1)				Measurement Period Adjustments				Total
Business Segment	Retail & Specialty Distribution				Retail & Specialty Distribution
Effective date of acquisition	Various				Various
Cash paid	$	44			$	(13	)		$	31
Other payable		1				(19	)			(18	)
Recorded earn-out payable		8				—				8
Total consideration		53				(32	)			21
Maximum potential earn-out payable		18				—				18
Allocation of purchase price:
Cash and cash equivalents, inclusive of fiduciary cash		1				—				1
Commission, fees, and other receivables		—				(29	)			(29	)
Fiduciary receivables		—				19				19
Other current assets		4				(25	)			(21	)
Goodwill		31				106				137
Purchased customer accounts and other intangibles (2)		21				(89	)			(68	)
Other assets		(1	)			27				26
Total assets acquired		56				9				65
Fiduciary liabilities		(1	)			(20	)			(21	)
Other current liabilities		—				(24	)			(24	)
Deferred income tax, net		(2	)			12				10
Other liabilities		—				(9	)			(9	)
Total liabilities assumed		(3	)			(41	)			(44	)
Net assets acquired	$	53			$	(32	)		$	21

(1)

The other column represents a summarization of current year acquisitions with total consideration of less than $50 million per acquisition.

(2)

The weighted average useful life of purchased customer accounts is 15 years.

For the six months ended June 30, 2026, adjustments were made within the permitted measurement period that resulted in a net increase to goodwill of $106 million. These measurement-period adjustments have been reflected as current-period adjustments in the six months ended June 30, 2026 in accordance with the guidance in ASC 805. The measurement-period adjustments included a decrease to cash consideration paid of $13 million from a working capital true up payment and a $27 million favorable impact on current-period earnings, recorded to change in estimated acquisition earn-out payables in the Condensed Consolidated Statements of Income.

Acquisition Earn-Out Payables

As of June 30, 2026 and 2025, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820 - Fair Value Measurement. The resulting additions, payments, and 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)		2026				2025				2026				2025
Balance as of the beginning of the period		$	393			$	143			$	541			$	167
Additions from new acquisitions			2				12				8				17
Assumed estimated acquisition earn-out payables			19				—				27				—
Disposals			(6	)			—				(6	)			—
Payments			(59	)			(20	)			(224	)			(46	)
Subtotal			349				135				346				138
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value			(44	)			9				(45	)			4
Interest expense accretion			4				2				11				3
Net change in earnings from estimated acquisition earn-out payables			(40	)			11				(34	)			7
Foreign currency translation adjustments			1				5				(2	)			6
Balance as of June 30,		$	310			$	151			$	310			$	151

Of the $310 million of estimated acquisition earn-out payables as of June 30, 2026, $136 million was recorded as accounts payable and $174 million was recorded as other non-current liabilities. Included within the additions to estimated acquisition earn-out payables are any adjustments to opening balance sheet items within the allowable measurement period, which may therefore differ from previously reported amounts.

Certain acquisition agreements include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of June 30, 2026 was $190 million. The maximum future acquisition contingency payments totaled $371 million, excluding the uncapped earn-out payables, as of June 30, 2026.

NOTE 6 Goodwill

The changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2026 are as follows:

(in millions)		Retail				Specialty Distribution				Total
Balance as of December 31, 2025		$	9,173			$	5,914			$	15,087
Acquisitions			27				4				31
Adjustments during measurement period (1)			79				27				106
Disposals			(13	)			—				(13	)
Foreign currency translation adjustments			(52	)			(13	)			(65	)
Balance as of June 30, 2026		$	9,214			$	5,932			$	15,146

(1)

Provisional estimates of fair value of acquired assets and liabilities are established at the time of each acquisition and are subsequently reviewed and finalized within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments to goodwill.

NOTE 7 Amortizable Intangible Assets

Amortizable intangible assets consisted of the following:

		June 30, 2026												December 31, 2025
(in millions)		Gross carrying value				Accumulated amortization				Net carrying value				Gross carrying value				Accumulated amortization				Net carrying value
Purchased customer accounts and other		$	6,865			$	(2,274	)		$	4,591			$	6,852			$	(2,037	)		$	4,815
Foreign currency translation adjustments			(28	)			7				(21	)			103				(12	)			91
Total		$	6,837			$	(2,267	)		$	4,570			$	6,955			$	(2,049	)		$	4,906

Estimated amortization expense for intangible assets for each of the next five years is as follows:

(in millions)
2026 (Remainder)		$	220
2027			427
2028			422
2029			402
2030			391
Thereafter			2,708
Total		$	4,570

NOTE 8 Long-Term Debt

Long-term debt consisted of the following:

(in millions)		June 30, 2026				December 31, 2025
Current portion of long-term debt:
Current portion of 5-year term loan facility, periodic interest and principal payments, SOFR plus up to 1.50%, expires June 5, 2031		$	13			$	—
Current portion of 5-year term loan facility, periodic interest and principal payments, SOFR plus up to 1.750%, expires October 27, 2026			—				169
4.600% senior notes, semi-annual interest payments, balloon due 2026			400				400
Current portion of 5-year revolving loan facility, periodic interest payments,SOFR plus up to 1.525%, plus commitment fees up to 0.225%, expires October 27, 2026			—				100
Current portion of 5-year term loan facility expires 2027			—				50
Total current portion of long-term debt			413				719
Long-term debt:
4.700% senior notes, semi-annual interest payments, balloon due 2028			500				500
4.500% senior notes, semi-annual interest payments, balloon due 2029			350				350
4.900% senior notes, semi-annual interest payments, balloon due 2030			800				800
2.375% senior notes, semi-annual interest payments, balloon due 2031			700				700
4.200% senior notes, semi-annual interest payments, balloon due 2032			600				600
5.250% senior notes, semi-annual interest payments, balloon due 2032			500				500
5.650% senior notes, semi-annual interest payments, balloon due 2034			600				600
5.550% senior notes, semi-annual interest payments, balloon due 2035			1,000				1,000
4.950% senior notes, semi-annual interest payments, balloon due 2052			600				600
6.250% senior notes, semi-annual interest payments, balloon due 2055			1,000				1,000
Total notes			6,650				6,650
Credit agreements:
3-year term loan facility, periodic interest payments, SOFR plus up to 1.375%, expires June 5, 2029			250				—
5-year term loan facility, periodic interest and principal payments, SOFR plus up to 1.50%, expires June 5, 2031			237				—
5-year term loan facility, periodic interest and principal payments, SOFR plus up to 1.750%, expires March 31, 2027			—				313
5-year revolving loan facility, periodic interest payments,SOFR plus up to 1.30%, plus commitment fees up to 0.20%, expires June 5, 2031			275				—
Total credit agreements			762				313
Unamortized portion of debt discounts related to note agreements (contra)			(17	)			(18	)
Debt issuance costs (contra)			(49	)			(51	)
Total long-term debt, less unamortized discount and debt issuance costs			7,346				6,894
Current portion of long-term debt			413				719
Total debt		$	7,759			$	7,613

Note agreements: 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 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 June 30, 2026 and December 31, 2025, the aggregate outstanding balance of these notes was $4,200 million exclusive of the associated discount balance.

The Company maintains notes from other issuances aggregating to a total outstanding debt balance of $2,850 million exclusive of the associated discount balance as of June 30, 2026 and December 31, 2025.

Credit agreements: On June 5, 2026, the Company entered into a Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) with the lenders named therein, JPMorgan Chase Bank, N.A. as administrative agent, Bank of America, N.A.,

Truist Bank and BMO Bank N.A. as co-syndication agents, and U.S. Bank National Association, Fifth Third Bank, National Association, Wells Fargo Bank, National Association, PNC Bank, National Association, HSBC Bank USA, National Association, Citizens Bank, N.A., The Huntington National Bank, and Barclays Bank PLC as co-documentation agents. The Third Amended and Restated Credit Agreement amended and restated the credit agreement dated October 27, 2021, which amended and restated the prior credit agreement, terminated the Company's existing term loan facility, and refinanced the outstanding borrowings thereunder into new term loan facilities. The agreement increased revolving credit commitments from $800 million to $1.25 billion and extended the maturity date to June 5, 2031. The agreement also provides for a $250 million term loan due June 5, 2029 and a $250 million term loan due June 5, 2031. Total borrowings outstanding under the facilities were approximately $775 million as of June 30, 2026.

The Company is required to maintain certain financial ratios and comply with certain other covenants. The Company was in compliance with all such covenants as of June 30, 2026 and December 31, 2025.

At June 30, 2026, the one month term SOFR Rate for the term loan due June 2029 and the term loan due June 2031 was 3.644%. The one month term SOFR Rate on the Revolving Credit Facility due June 2031 was 3.644% as of June 30, 2026.

Fair value information about financial instruments not measured at fair value

The following table presents liabilities that are not measured at fair value on a recurring basis:

		June 30, 2026								December 31, 2025
(in millions)		Carrying Value				Fair Value				Carrying Value				Fair Value
Liabilities:
Current portion of long-term debt		$	400			$	400			$	400			$	402
Long-term debt		$	6,633			$	6,481			$	6,632			$	6,600

The carrying value of the Company's borrowings under various credit agreements approximates its fair value due to the variable interest rate based upon adjusted SOFR. The fair values above, which exclude accrued interest, are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instruments. The fair values of our respective senior notes are considered Level 2 financial instruments, as their values are measured by using observable inputs, other than quoted prices in active markets.

NOTE 9 Leases

Substantially all of the Company's operating lease right-of-use assets and operating lease liabilities represent real estate leases for office space used to conduct the Company's business that expire on various dates through 2041. Leases generally contain renewal options and escalation clauses based upon increases in the lessors’ operating expenses and other charges. The Company anticipates that most of these leases will be renewed or replaced upon expiration, although not necessarily for the same amount of space.

The balances and classification of operating lease right-of-use assets and operating lease liabilities within the Condensed Consolidated Balance Sheets is as follows:

(in millions)			June 30, 2026				December 31, 2025
Assets:
Operating lease right-of-use assets	Operating lease assets		$	274			$	269
Total assets				274				269
Liabilities:
Current operating lease liabilities	Accrued expenses and other liabilities			59				62
Non-current operating lease liabilities	Operating lease liabilities			248				243
Total liabilities			$	307			$	305

The components of lease cost for operating leases were as follows:

	Three months ended June 30,								Six months ended June 30,
(in millions)	2026				2025				2026				2025
Operating leases:
Lease cost	$	20			$	16			$	41			$	30
Variable lease cost		4				2				5				2
Short-term lease cost		1				—				1				—
Operating lease cost		25				18				47				32
Sublease income		(1	)			(1	)			(1	)			(1	)
Total lease cost net	$	24			$	17			$	46			$	31

The weighted average remaining lease term and the weighted average discount rate for operating leases as of June 30, 2026 were:

Weighted average remaining lease term in years			6.0
Weighted average discount rate			4.2	%

Maturities of the operating lease liabilities by fiscal year at June 30, 2026 for the Company's operating leases are as follows:

(in millions)		Operating leases
2026 (Remainder)		$	33
2027			72
2028			61
2029			50
2030			42
Thereafter			92
Total undiscounted lease payments			350
Less: imputed interest			43
Present value of lease payments		$	307

Supplemental cash flow information for operating leases is as follows:

	Three months ended June 30,								Six months ended June 30,
(in millions)	2026				2025				2026				2025
Cash paid for amounts included in measurement of liabilities
Operating cash flows from operating leases	$	20			$	17			$	41			$	33
Right-of-use assets obtained in exchange for new operating liabilities	$	24			$	9			$	31			$	15

NOTE 10 Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

Cash paid during the period for interest and income taxes are summarized as follows:

		Six months ended June 30,
(in millions)		2026				2025
Cash paid during the period for:
Interest		$	198			$	90
Income taxes, net of refunds		$	150			$	268

The increase in interest payments during the six months ended June 30, 2026, was primarily attributable to higher outstanding debt balances incurred to finance the Accession acquisition completed during the third quarter of 2025.

During six months ended June 30, 2025, the Company paid $91 million related to certain federal income tax payments previously deferred from 2024 due to Hurricanes Debby and Milton tax relief.

Significant non-cash investing and financing activities are summarized as follows:

		Six months ended June 30,
(in millions)		2026				2025
Other payables issued for acquisitions and purchased customer accounts		$	(18	)		$	10
Estimated acquisition earn-out payables issued for acquisitions		$	8			$	17
Assumed acquisition earn-out payables		$	27			$	—
Note receivable recorded in connection with the sale of a business		$	25			$	—

The reconciliation of cash, cash equivalents and restricted cash inclusive of fiduciary cash is as follows:

		Balance as of June 30,
(in millions)		2026				2025
Cash and cash equivalents		$	918			$	8,893
Fiduciary cash			2,613				2,026
Restricted cash			268				—
Total cash, cash equivalents and restricted cash inclusive of fiduciary cash at the end of the period		$	3,799			$	10,919

The Company's restricted cash balances relate to amounts held in escrow in accordance with the Merger Agreement. Once all claims related to certain indemnification matters described in the Merger Agreement are resolved, the remaining cash in the escrow account will be released to the equityholders. Restricted cash is presented within other assets in the Company's Condensed Consolidated Balance Sheets.

NOTE 11 Legal and Regulatory Proceedings

The Company is involved in numerous pending or threatened proceedings by or against Brown & Brown, Inc. or one or more of its subsidiaries that arise in the ordinary course of business. The damages that may be claimed against the Company in these various proceedings are in some cases substantial, including in certain instances claims for punitive or extraordinary damages. Some of these claims and lawsuits have been resolved; others are in the process of being resolved and others are still in the investigation or discovery phase. The Company will continue to respond appropriately to these claims and lawsuits and vigorously protect its interests.

The Company continues to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could adversely impact the Company’s operating results, cash flows and overall liquidity. The Company maintains third-party insurance policies to provide coverage for certain legal claims, in an effort to mitigate its overall exposure to unanticipated claims or adverse decisions. However, as (i) one or more of the Company’s insurance carriers could take the position that portions of these claims are not covered by the Company’s insurance, (ii) to the extent that payments are made to resolve claims and lawsuits, applicable insurance policy limits are eroded and (iii) the claims and lawsuits relating to these matters are continuing to develop, it is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by unfavorable resolutions of these matters. Based upon the AM Best Company ratings of these third-party insurers and other factors, management does not believe there is a substantial risk of an insurer’s material non-performance related to any current insured claims.

On the basis of current information, the availability of insurance and legal advice, in management’s opinion, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, would have a material adverse effect on its financial condition, operations and/or cash flows.

NOTE 12 Segment Information

In conjunction with the acquisition of Accession in the third quarter of 2025, the Company aligned its business from three to two segments. As a result of the segment reorganization, the Company consolidated its Programs and Wholesale Brokerage segments into a new Specialty Distribution segment. As a result, beginning in the third quarter of 2025, the Company reports its financial results in the following two reportable segments: (i) the Retail segment, which provides a broad range of insurance products and services to commercial, public and quasi-public entities, and to professional and individual customers, and non-insurance risk-mitigating products through our F&I businesses; and (ii) the Specialty Distribution segment, which consists of our programs, wholesale brokerage and specialty businesses. Our programs businesses, which act as MGUs, provide targeted products and services designated for specific industries, trade groups, governmental entities and market niches, which are delivered to the insured directly, to affinity groups, through wholesale brokers or through a global network of independent agents, including Brown & Brown retail agents. Our wholesale brokerage businesses underwrite and place excess and surplus commercial and personal lines insurance, typically for specialized or hard-to-place types of risks, primarily through a global network of independent agents and brokers, including Brown & Brown retail agents. Our specialty business offers solutions across affinity and administrative services, captives, reinsurance, travel/accident, warranty, and life & health.

The balances presented for the three months and six months ended June 30, 2025 have been recast to align with the two-segment structure.

Brown & Brown conducts most of its operations within the U.S. International retail operations include businesses based in Bermuda, Canada, Cayman Islands, India, the Netherlands, Republic of Ireland and the United Kingdom; specialty distribution operations are in Belgium, Canada, France, Germany, Hong Kong, Italy, Malaysia, the Netherlands, Singapore, United Arab Emirates and the United Kingdom. These international operations earned $227 million and $212 million of total revenues for the three months ended June 30, 2026 and 2025, respectively and $491 million and $442 million of total revenues for the six months ended June 30, 2026 and 2025, respectively.

The Company's chief operating decision maker ("CODM"), the president and chief executive officer, regularly receives segment information on total revenue, organic revenue growth, the growth in Contingents, income before income taxes and earnings before interest, income taxes, depreciation, amortization and change in estimated acquisition earn-out payables ("EBITDAC"). The metrics are used to review operating trends, to perform analytical comparisons between periods and to monitor budget to actual variances. The Company's CODM does not use segment assets to make resource allocation decisions; therefore, they have not been presented.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables.

		Three months ended June 30, 2026
(in millions)		Retail				Specialty Distribution				Total
Total segment revenues		$	947			$	721			$	1,668
Reconciliation of revenues
Other (1)											8
Total consolidated revenues										$	1,676
Less: (2)
Employee compensation and benefits			514				273
Other operating expenses			174				146
(Gain)/loss on disposal			1				—
Depreciation and amortization			77				50
Interest expense			5				9
Change in estimated acquisition earn-out payables			(30	)			(10	)
Segment Income before income taxes		$	206			$	253			$	459
Reconciliation of income before income taxes
Other (1)											(76	)
Consolidated Income before income taxes										$	383

		Three months ended June 30, 2025
(in millions)		Retail				Specialty Distribution				Total
Total segment revenues		$	697			$	563			$	1,260
Reconciliation of revenues
Other (1)											25
Total consolidated revenues										$	1,285
Less: (2)
Employee compensation and benefits			385				202
Other operating expenses			120				98
(Gain)/loss on disposal			—				—
Depreciation and amortization			41				19
Interest expense			15				9
Change in estimated acquisition earn-out payables			9				2
Segment Income before income taxes		$	127			$	233			$	360
Reconciliation of income before income taxes
Other (1)											(49	)
Consolidated Income before income taxes										$	311

(1)

"Other" includes any income and expenses not allocated to reportable segments and corporate-related items.

(2)

Significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

		Six months ended June 30, 2026
(in millions)		Retail				Specialty Distribution				Total
Total segment revenues		$	2,156			$	1,403			$	3,559
Reconciliation of revenues
Other (1)											18
Total consolidated revenues										$	3,577
Less: (2)
Employee compensation and benefits			1,128				546
Other operating expenses			354				281
(Gain)/loss on disposal			—				—
Depreciation and amortization			159				100
Interest expense			12				17
Change in estimated acquisition earn-out payables			(19	)			(15	)
Segment Income before income taxes		$	522			$	474			$	996
Reconciliation of income before income taxes
Other (1)											(81	)
Consolidated Income before income taxes										$	915

		Six months ended June 30, 2025
(in millions)		Retail				Specialty Distribution				Total
Total segment revenues		$	1,604			$	1,050			$	2,654
Reconciliation of revenues
Other (1)											35
Total consolidated revenues										$	2,689
Less: (2)
Employee compensation and benefits			833				401
Other operating expenses			241				189
(Gain)/loss on disposal			1				—
Depreciation and amortization			85				39
Interest expense			30				18
Change in estimated acquisition earn-out payables			3				4
Segment Income before income taxes		$	411			$	399			$	810
Reconciliation of income before income taxes
Other (1)											(72	)
Consolidated Income before income taxes										$	738

(1)

"Other" includes any income and expenses not allocated to reportable segments and corporate-related items.

(2)

Significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

NOTE 13 Insurance Company Subsidiary Operations

The Company operates a write-your-own flood insurance carrier, Wright National Flood Insurance Company. WNFIC’s underwriting business consists of policies written pursuant to the NFIP, the program administered by FEMA to which premiums and underwriting exposure are ceded, and excess flood policies, which are fully reinsured in the private market. Congressional authorization for the NFIP is periodically evaluated and may be subject to potential government shutdowns. The Company sells excess flood policies, which are 100% ceded to a highly rated reinsurance carrier.

The Company operates and/or participates in various ancillary insurance operations, including (1) reinsurance companies and stand-alone captives that assume underwriting risk; (2) series captive insurance companies (SCICs); (3) protected cell companies; (4) segregated account companies; (5) a quota share captive and (6) an excess of loss layer captive. These ancillary insurance operations facilitate additional underwriting capacity, generate incremental revenues and/or enable the Company to participate in certain underwriting results. The Company acquired certain of the insurance operations through the acquisition of Accession. Several of the newly acquired entities were consolidated after determining that they qualify as Variable Interest Entities ("VIEs"), and the Company is the primary beneficiary. These entities are required to follow the regulatory requirements of their respective domiciliary governments. Total assets and liabilities of the Company's consolidated VIE insurance operations included on the consolidated balance sheets were $948 million each, as of June 30, 2026. The assets of the consolidated VIE insurance operations can only be used to settle the obligations of the consolidated VIE insurance operations and the creditors and beneficiaries of the liabilities of the consolidated VIE insurance operations do not have recourse to the Company.

The Company purchases reinsurance from other insurance companies to limit total exposure. In addition, the Company cedes insurance risk to other insurance companies and the U.S. government as permitted by the NFIP. The Company’s SCICs are created for clients to insure their risks and manage the costs of their insurance programs. In these arrangements, the Company acts as a fronting insurer and enters into reinsurance treaties, under which the Company has ceded all of the liabilities to client-owned captive cells through cross collateralization between the cells. The premiums and underwriting exposure related to the Company’s SCIC insurance operations are fully ceded to the client-owned captive cells such that the Company’s SCIC operations have no underwriting risk on a net written basis.

The quota share captive participates in risk sharing on policies placed by certain of our MGU businesses that currently underwrite property insurance for earthquake and wind exposed properties. A large portion of written premiums are ceded to reinsurance companies, limiting, but not fully eliminating the Company's exposure to underwriting losses.

The excess of loss layer captive participates in risk sharing on policies placed by one of our MGU businesses that underwrites risks associated with personal property, excluding flood, primarily in the southeastern United States with one layer of per risk excess reinsurance and three layers of catastrophe per occurrence reinsurance. All four layers have limited reinstatements; and therefore, the layers have capped, maximum aggregate limits.

The effects of reinsurance on premiums written and earned are as follows:

		Six months ended June 30, 2026
(in millions)		Written				Earned
WNFIC:
Direct		$	540			$	540
Ceded			(540	)			(540	)
Net premiums - WNFIC			—				—
Captives:
Direct			145				236
Assumed			105				115
Ceded			(183	)			(312	)
Net premiums - Captives			67				39
Net premiums - Total		$	67			$	39

WNFIC

All premiums written by the Company under NFIP are 100% ceded to FEMA, for which WNFIC received a 28.4% gross expense allowance from January 1, 2026 through June 30, 2026. For the same period, the Company ceded $539 million of written premiums to FEMA for NFIP policies and $1 million to highly rated carriers for excess flood policies.

As of June 30, 2026, the Condensed Consolidated Balance Sheets contained reinsurance recoverable of $131 million and prepaid reinsurance premiums of $554 million, which are related to the WNFIC business. For flood policies, there was no change in the balance in the reserve for losses and loss adjustment expense net of reinsurance recoverable during the period January 1, 2026 through June 30, 2026, as the Company's direct premiums written were 100% ceded to two reinsurers. The gross balance of the reserve for losses and loss adjustment expense for the WNFIC, excluding related reinsurance recoverable, as of June 30, 2026 was $131 million.

Captives

As of June 30, 2026, the Condensed Consolidated Balance Sheet contained the following balances related to the Captives: deferred acquisition costs of $17 million, prepaid reinsurance premiums of $296 million, reinsurance payable of $228 million, the reserve for losses and loss adjustment expense, excluding related reinsurance recoverable, of $481 million and unearned premiums of $399 million.

NOTE 14 Equity

Under the authorization from the Company’s board of directors, shares may be purchased from time to time, at the Company’s discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company’s financial performance and other potential factors. These purchases may be carried out through open market purchases, block trades, accelerated share repurchase plans of up to $250 million each (unless otherwise approved by the board of directors), negotiated private transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

On October 22, 2025, the board of directors approved an additional $1,251 million increase to our existing share repurchase authorization, bringing our total remaining repurchase capacity at that time to approximately $1,500 million of the Company's outstanding common stock.

On February 12, 2026, the Company entered into accelerated share repurchase agreement ("ASR") with an investment bank to purchase an aggregate $250 million of the Company's common stock. The program ended on March 9, 2026 and during the period, the Company received a total of 3,574,890 shares of the Company's common stock.

During the three months ended June 30, 2026, the Company repurchased an additional 4,279,712 shares for $250 million.

At June 30, 2026, the remaining amount authorized by our board of directors for share repurchases was approximately $900 million.

During the first quarter, the Company paid a dividend of $0.165 per share, which was approved by the board of directors on January 21, 2026 and paid on February 11, 2026 for a total of $57 million.

During the second quarter, the Company paid a dividend of $0.165 per share, which was approved by the board of directors on April 27, 2026 and paid on May 20, 2026 for a total of $56 million. On July 22, 2026, the board of directors approved a quarterly cash dividend of $0.165 per share to be paid on August 19, 2026.