Item 1. FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)

			Three months ended September 30,												Nine months ended September 30,
			2025						2024						2025						2024
Operating revenue
Management fee revenue - policy issuance and renewal services			$	825,275					$	769,162					$	2,404,177					$	2,195,734
Management fee revenue - administrative services			18,831						17,154						54,772						51,139
Administrative services reimbursement revenue			215,694						206,754						638,611						604,349
Service agreement revenue			6,939						6,816						18,675						19,803
Total operating revenue			1,066,739						999,886						3,116,235						2,871,025
Operating expenses
Cost of operations - policy issuance and renewal services			642,124						613,007						1,918,154						1,757,531
Cost of operations - administrative services			215,694						206,754						638,611						604,349
Total operating expenses			857,818						819,761						2,556,765						2,361,880
Operating income			208,921						180,125						559,470						509,145
Investment income
Net investment income			21,033						17,322						61,011						49,235
Net realized and unrealized investment gains			1,331						2,925						2,312						2,983
Net impairment losses recognized in earnings			(810)						(698)						(2,633)						(3,763)
Total investment income			21,554						19,549						60,690						48,455
Other income			2,286						1,168						8,094						7,871
Income before income taxes			232,761						200,842						628,254						565,471
Income tax expense			49,908						41,012						132,299						117,186
Net income			$	182,853					$	159,830					$	495,955					$	448,285
Net income per share
Class A common stock – basic			$	3.93					$	3.43					$	10.65					$	9.63
Class A common stock – diluted			$	3.50					$	3.06					$	9.48					$	8.57
Class B common stock – basic and diluted			$	589					$	515					$	1,597					$	1,444
Weighted average shares outstanding – Basic
Class A common stock			46,189,068						46,189,059						46,189,012						46,189,038
Class B common stock			2,542						2,542						2,542						2,542
Weighted average shares outstanding – Diluted
Class A common stock			52,305,599						52,306,514						52,304,797						52,301,001
Class B common stock			2,542						2,542						2,542						2,542
Dividends declared per share
Class A common stock			$	1.365					$	1.275					$	4.095					$	3.825
Class B common stock			$	204.75					$	191.25					$	614.25					$	573.75

See accompanying notes to Consolidated Financial Statements. See Note 12, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Consolidated Statements of Operations.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

			Three months ended September 30,												Nine months ended September 30,
			2025						2024						2025						2024
Net income			$	182,853					$	159,830					$	495,955					$	448,285
Other comprehensive income, net of tax
Change in unrealized holding gains on available-for-sale securities			6,105						20,227						18,144						21,014
Pension and other postretirement plans			(1,056)						(1,538)						(1,800)						(6,048)
Total other comprehensive income, net of tax			5,049						18,689						16,344						14,966
Comprehensive income			$	187,902					$	178,519					$	512,299					$	463,251

See accompanying notes to Consolidated Financial Statements. See Note 12, "Accumulated Other Comprehensive Income (Loss)", for amounts reclassified out of accumulated other comprehensive income (loss) into the Consolidated Statements of Operations.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(dollars in thousands, except per share data)

			September 30,						December 31,
			2025						2024
Assets			(Unaudited)
Current assets:
Cash and cash equivalents (includes restricted cash of $28,000 and $23,559, respectively)			$	568,551					$	298,397
Available-for-sale securities			59,833						44,604
Available-for-sale securities lent			4,318						0
Receivables from Erie Insurance Exchange and affiliates, net			780,473						707,060
Prepaid expenses and other current assets, net			73,779						83,902
Accrued investment income			10,937						11,069
Total current assets			1,497,891						1,145,032
Available-for-sale securities, net			970,160						991,726
Equity securities			54,378						85,891
Available-for-sale and equity securities lent			51,836						7,285
Fixed assets, net			557,607						513,494
Agent loans, net			94,740						80,597
Defined benefit pension plan			51,819						21,311
Other assets, net			45,897						43,278
Total assets			$	3,324,328					$	2,888,614
Liabilities and shareholders' equity
Current liabilities:
Commissions payable			$	425,310					$	408,309
Agent incentive compensation			99,717						75,458
Accounts payable and accrued liabilities			199,995						190,028
Dividends payable			63,569						63,569
Contract liability			47,949						42,761
Deferred executive compensation			6,700						14,874
Securities lending payable			54,325						7,513
Total current liabilities			897,565						802,512
Defined benefit pension plan			31,065						28,070
Contract liability			23,361						21,170
Deferred executive compensation			20,798						19,721
Deferred income taxes, net			19,776						6,418
Other long-term liabilities			22,885						23,465
Total liabilities			1,015,450						901,356
Shareholders’ equity
Class A common stock, stated value $0.0292 per share; 74,996,930 shares authorized; 68,299,200 shares issued; 46,189,068 shares outstanding			1,992						1,992
Class B common stock, convertible at a rate of 2,400 Class A shares for one Class B share, stated value $70 per share; 3,070 shares authorized; 2,542 shares issued and outstanding			178						178
Additional paid-in-capital			16,494						16,466
Accumulated other comprehensive loss			(31,247)						(47,591)
Retained earnings			3,467,551						3,162,303
Total contributed capital and retained earnings			3,454,968						3,133,348
Treasury stock, at cost; 22,110,132 shares held			(1,170,699)						(1,169,074)
Deferred compensation			24,609						22,984
Total shareholders’ equity			2,308,878						1,987,258
Total liabilities and shareholders’ equity			$	3,324,328					$	2,888,614

See accompanying notes to Consolidated Financial Statements.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and nine months ended September 30, 2025 and 2024

(dollars in thousands, except per share data)

			Class A common stock			Class B common stock			Additional paid-in-capital			Accumulated other comprehensive (loss) income			Retained earnings			Treasury stock			Deferred compensation			Total shareholders' equity
Balance, December 31, 2024			$	1,992		$	178		$	16,466		$	(47,591)		$	3,162,303		$	(1,169,074)		$	22,984		$	1,987,258
Net income															138,417									138,417
Other comprehensive income												5,217												5,217
Dividends declared:
Class A $1.365 per share															(63,048)									(63,048)
Class B $204.75 per share															(521)									(521)
Net purchase of treasury stock (1)									28									0						28
Deferred compensation																		(869)			869			0
Rabbi trust distribution (2)																		407			(407)			0
Balance, March 31, 2025			$	1,992		$	178		$	16,494		$	(42,374)		$	3,237,151		$	(1,169,536)		$	23,446		$	2,067,351
Net income															174,685									174,685
Other comprehensive income												6,078												6,078
Dividends declared:
Class A $1.365 per share															(63,048)									(63,048)
Class B $204.75 per share															(521)									(521)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(963)			963			0
Rabbi trust distribution (2)																		167			(167)			0
Balance, June 30, 2025			$	1,992		$	178		$	16,494		$	(36,296)		$	3,348,267		$	(1,170,332)		$	24,242		$	2,184,545
Net income															182,853									182,853
Other comprehensive income												5,049												5,049
Dividends declared:
Class A $1.365 per share															(63,048)									(63,048)
Class B $204.75 per share															(521)									(521)
Deferred compensation																		(367)			367			0
Balance, September 30, 2025			$	1,992		$	178		$	16,494		$	(31,247)		$	3,467,551		$	(1,170,699)		$	24,609		$	2,308,878

*(1)*Net purchases of treasury stock in 2025 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock-based compensation awards.

*(2)*Distributions of our Class A shares were made from the rabbi trust to three incentive compensation deferral plan participants in 2025.

			Class A common stock			Class B common stock			Additional paid-in-capital			Accumulated other comprehensive (loss) income			Retained earnings			Treasury stock			Deferred compensation			Total shareholders' equity
Balance, December 31, 2023			$	1,992		$	178		$	16,466		$	(13,400)		$	2,803,689		$	(1,169,165)		$	23,075		$	1,662,835
Net income															124,552									124,552
Other comprehensive loss												(1,830)												(1,830)
Dividends declared:
Class A $1.275 per share															(58,891)									(58,891)
Class B $191.25 per share															(486)									(486)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(861)			861			0
Rabbi trust distribution (2)																		709			(709)			0
Balance, March 31, 2024			$	1,992		$	178		$	16,466		$	(15,230)		$	2,868,864		$	(1,169,317)		$	23,227		$	1,726,180
Net income															163,903									163,903
Other comprehensive loss												(1,893)												(1,893)
Dividends declared:
Class A $1.275 per share															(58,891)									(58,891)
Class B $191.25 per share															(486)									(486)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(518)			518			0
Rabbi trust distribution (2)																		1,538			(1,538)			0
Balance, June 30, 2024			$	1,992		$	178		$	16,466		$	(17,123)		$	2,973,390		$	(1,168,297)		$	22,207		$	1,828,813
Net income															159,830									159,830
Other comprehensive income												18,689												18,689
Dividends declared:
Class A $1.275 per share															(58,891)									(58,891)
Class B $191.25 per share															(486)									(486)
Net purchase of treasury stock (1)									0									0						0
Deferred compensation																		(422)			422			0
Balance, September 30, 2024			$	1,992		$	178		$	16,466		$	1,566		$	3,073,843		$	(1,168,719)		$	22,629		$	1,947,955

*(1)*Net purchases of treasury stock in 2024 include the repurchase of our Class A common stock in the open market that were subsequently distributed to satisfy stock-based compensation awards.

*(2)*Distributions of our Class A shares were made from the rabbi trust to five incentive compensation deferral plan participants in 2024.

See accompanying notes to Consolidated Financial Statements.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

						Nine months ended September 30,
						2025						2024
Cash flows from operating activities
Management fee received						$	2,418,043					$	2,162,259
Administrative services reimbursements received						609,462						557,361
Service agreement revenue received						18,671						19,804
Net investment income received						59,253						49,047
Commissions paid to agents						(1,230,933)						(1,067,993)
Incentive compensation paid to agents						(89,926)						(88,299)
Salaries and wages paid						(200,461)						(189,088)
Pension contribution and employee benefits paid						(96,557)						(90,217)
General operating expenses paid						(236,538)						(229,675)
Administrative services expenses paid						(631,913)						(581,527)
Income taxes paid						(104,001)						(123,881)
Net cash provided by operating activities						515,100						417,791
Cash flows from investing activities
Purchase of investments:
Available-for-sale securities						(221,616)						(373,381)
Equity securities						(15,767)						(25,665)
Other investments						—						(7,000)
Proceeds from investments:
Available-for-sale securities sales						78,021						156,357
Available-for-sale securities maturities/calls						135,335						152,174
Equity securities						29,289						29,953
Other investments						3						—
Purchase of fixed assets						(84,925)						(78,202)
Loans to agents and others						(30,746)						(32,317)
Collections on agent and other loans						9,354						7,675
Net cash used in investing activities						(101,052)						(170,406)
Cash flows from financing activities
Dividends paid to shareholders						(190,706)						(178,132)
Net changes in cash collateral for securities lent						46,812						7,905
Net cash used in financing activities						(143,894)						(170,227)
Net increase in cash, cash equivalents and restricted cash						270,154						77,158
Cash, cash equivalents and restricted cash, beginning of period						298,397						144,055
Cash, cash equivalents and restricted cash, end of period						$	568,551					$	221,213
Supplemental disclosure of noncash transactions
Liability incurred to purchase fixed assets						$	24,259					$	10,792
Operating lease assets obtained in exchange for lease liabilities						$	2,962					$	7,106
Receipt of donated equipment						$	1,967					$	—

See accompanying notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Nature of Operations

Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange"). The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance.

Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the subscribers at the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance and investment management services for the Exchange's insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these two capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints Indemnity as each subscriber's attorney-in-fact to transact certain business on their behalf. In accordance with the subscriber's agreement for acting as attorney-in-fact in these two capacities, we retain a management fee calculated as a percentage of the direct and affiliated assumed premiums written by the Exchange.

The policy issuance and renewal services we provide on behalf of the subscribers at the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as incentive compensation, which is earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.

Consistent with its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The subscriber's agreement and service agreements provide for reimbursement of amounts incurred for these services to Indemnity. Reimbursements are settled at cost. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department.

Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange’s ability to grow or sustain its financial condition, including but not limited to a significant downgrade in financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly could have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for net management fee and other reimbursements. See Note 13, "Concentrations of Credit Risk".

Note 2. Significant Accounting Policies

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X, and include the accounts of Indemnity and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. For further information, refer to the consolidated financial statements and footnotes included in our Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission ("SEC") on February 27, 2025.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently issued accounting standards

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which requires entities to disclose specific categories in an effective tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments can be applied on either a prospective or retrospective basis. We plan to adopt the standard in our consolidated financial statements for the year ending December 31, 2025, and we expect the standard will impact certain of our income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires entities to disclose disaggregated information about certain income statement expense line items. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments can be applied on either a prospective or retrospective basis. This will have no impact on our consolidated financial statements, and we are currently evaluating the impact of adoption on our disclosures.

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets", which provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under "Revenue from Contracts with Customers (Topic 606)". Under the practical expedient, entities may assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. An entity that elects the practical expedient should apply the amendments on a prospective basis. We do not expect the standard will have a material impact on our consolidated financial statements and disclosures.

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", which removes all references to prescriptive and sequential software development project stages and requires an entity to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The amendments can be applied on a prospective, modified or retrospective basis. We are currently evaluating the impact of adoption on our consolidated financial statements and disclosures.

Note 3. Revenue

The majority of our revenue is derived from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange. In accordance with the subscriber’s agreement, we retain a management fee calculated as a percentage, not to exceed 25%, of all direct and affiliated assumed written premiums of the Exchange. We allocate a portion of our management fee revenue, currently 25% of the direct and affiliated assumed written premiums of the Exchange, between the two performance obligations we have under the subscriber’s agreement. The first performance obligation is to provide policy issuance and renewal services to the subscribers (policyholders) at the Exchange, and the second is to act as attorney-in-fact on behalf of the subscribers at the Exchange, as well as the service provider for the Exchange's insurance subsidiaries, with respect to all administrative services.

The transaction price, including management fee revenue and administrative services reimbursement revenue, includes variable consideration and is allocated based on the estimated standalone selling prices developed using industry information and other available information for similar services. A constraining estimate of variable consideration exists related to the potential for management fees to be returned if a policy were to be cancelled mid-term. Management fees are returned to the Exchange when policyholders cancel their insurance coverage mid-term and premiums are refunded to them. The constraining estimate is determined using the expected value method, based on both historical and current information. The estimated transaction price, as reduced by the constraint, reflects consideration expected for performance of our services. We update the transaction price and the related allocation at least annually based upon the most recent information available or more frequently if there have been significant changes in any components considered in the transaction price.

The first performance obligation is to provide policy issuance and renewal services that result in executed insurance policies between the Exchange or one of its insurance subsidiaries and the subscriber (policyholder). The subscriber (policyholder) receives economic benefits when substantially all the policy issuance or renewal services are complete and an insurance policy is issued or renewed by the Exchange or one of its insurance subsidiaries. It is at the time of policy issuance or renewal that the allocated portion of revenue is recognized.

Consistent with its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through the subscribers' attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the subscribers at the Exchange with respect to its administrative services as enumerated in the subscriber's agreement. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Collectively, these services represent a second performance obligation under the subscriber’s agreement and the service agreements. The revenue allocated to this performance obligation is recognized over a four-year period representing the time over which these services are provided. The portion of revenue not yet earned is recorded as a contract liability in the Consolidated Statements of Financial Position. During the three and nine months ended September 30, 2025, we recognized revenue of $9.0 million and $36.7 million, respectively, that was included in the contract liability balance as of December 31, 2024. During the three and nine months ended September 30, 2024, we recognized revenue of $8.7 million and $35.6 million, respectively, that was included in the contract liability balance as of December 31, 2023. The administrative services expenses we incur and the related reimbursements we receive are recorded gross in the Consolidated Statements of Operations.

Indemnity records a receivable from the Exchange for management fee revenue when the premium is written or assumed from affiliates by the Exchange. Indemnity collects the management fee from the Exchange when the Exchange collects the premiums from the subscribers (policyholders). As the Exchange issues policies almost exclusively with annual terms, cash collections generally occur within one year.

The following table disaggregates revenue by our two performance obligations:

			Three months ended September 30,									Nine months ended September 30,
(in thousands)			2025			2024						2025			2024
Management fee revenue - policy issuance and renewal services			$	825,275		$	769,162					$	2,404,177		$	2,195,734
Management fee revenue - administrative services			18,831			17,154						54,772			51,139
Administrative services reimbursement revenue			215,694			206,754						638,611			604,349
Total revenue from administrative services			$	234,525		$	223,908					$	693,383		$	655,488

Note 4. Segment Information

We have one reportable segment: management operations. All segment revenue is derived in the United States, the majority of which is from the subscriber’s agreement between us and the subscribers (policyholders) at the Exchange, our sole customer, as further described in Note 3, "Revenue". Our chief operating decision maker ("CODM") is our Executive Council, which includes our Chief Executive Officer ("CEO"), Chief Financial Officer, executive vice presidents and certain senior vice presidents reporting directly to the CEO as applicable. The CODM assesses performance for the management operations segment and decides how to allocate resources based on net income, as reported in our Consolidated Statements of Operations. Net income is used to monitor budget versus actual results. Total assets as reported in our Consolidated Statements of Financial Position, all of which are located in the United States, are reviewed by the CODM for purposes of decision making. The accounting policies of our management operations segment are the same as those described in Note 2, "Significant Accounting Policies, of Notes to Consolidated Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025.

The following table presents our management operations segment revenue, significant segment expenses regularly provided to the CODM and net income:

			Three months ended September 30,												Nine months ended September 30,
(in thousands)			2025						2024						2025						2024
Management fee revenue			$	844,106					$	786,316					$	2,458,949					$	2,246,873
Administrative services reimbursement revenue			215,694						206,754						638,611						604,349
Service agreement revenue			6,939						6,816						18,675						19,803
Total operating revenue			1,066,739						999,886						3,116,235						2,871,025
Commissions			461,513						420,516						1,361,815						1,216,227
Underwriting and policy processing			53,097						51,449						156,264						150,350
Information technology			56,294						54,825						178,748						158,914
Sales and advertising			14,342						18,725						51,498						52,886
Customer service			12,176						11,300						35,253						31,726
Administrative and other			44,702						56,192						134,576						147,428
Cost of operations - policy issuance and renewal services			642,124						613,007						1,918,154						1,757,531
Cost of operations - administrative services			215,694						206,754						638,611						604,349
Total operating expenses (1)			857,818						819,761						2,556,765						2,361,880
Operating income			208,921						180,125						559,470						509,145
Total investment income			21,554						19,549						60,690						48,455
Other income			2,286						1,168						8,094						7,871
Income tax expense			49,908						41,012						132,299						117,186
Net income			$	182,853					$	159,830					$	495,955					$	448,285

(1) Management operations segment depreciation and amortization expense included in "Total operating expenses" as reported on our Consolidated Statements of Operations totaled $18.4 million and $14.4 million in the third quarter of 2025 and 2024, respectively, and $50.3 million and $41.5 million for the nine months ended September 30, 2025 and 2024, respectively. The Exchange and its insurance subsidiaries reimbursed us approximately 30% and 28% for the nine months ended September 30, 2025 and 2024, respectively, for depreciation and amortization expense on assets supporting administrative services. See our Consolidated Statements of Cash Flows for segment expenditures on fixed asset additions.

Note 5. Earnings Per Share

Class A and Class B basic earnings per share and Class B diluted earnings per share are calculated under the two-class method. The two-class method allocates earnings to each class of stock based upon its dividend rights. Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1. See Note 11, "Capital Stock".

Class A diluted earnings per share is calculated under the if-converted method, which reflects the conversion of Class B shares to Class A shares. Diluted earnings per share calculations include the dilutive effect of assumed issuance of stock-based awards under compensation plans that have the option to be paid in stock using the treasury stock method.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of common stock:

						Three months ended September 30,
						2025																		2024
(dollars in thousands, except per share data)						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders						$	181,356					46,189,068						$	3.93					$	158,521					46,189,059						$	3.43
Dilutive effect of stock-based awards						0						15,731						—						0						16,655						—
Assumed conversion of Class B shares						1,497						6,100,800						—						1,309						6,100,800						—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares						$	182,853					52,305,599						$	3.50					$	159,830					52,306,514						$	3.06
Class B – Basic EPS:
Income available to Class B stockholders						$	1,497					2,542						$	589					$	1,309					2,542						$	515
Class B – Diluted EPS:
Income available to Class B stockholders						$	1,497					2,542						$	589					$	1,309					2,542						$	515
						Nine months ended September 30,
						2025																		2024
(dollars in thousands, except per share data)						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount						Allocated net income (numerator)						Weighted shares (denominator)						Per-share amount
Class A – Basic EPS:
Income available to Class A stockholders						$	491,894					46,189,012						$	10.65					$	444,614					46,189,038						$	9.63
Dilutive effect of stock-based awards						0						14,985						—						0						11,163						—
Assumed conversion of Class B shares						4,061						6,100,800						—						3,671						6,100,800						—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares						$	495,955					52,304,797						$	9.48					$	448,285					52,301,001						$	8.57
Class B – Basic EPS:
Income available to Class B stockholders						$	4,061					2,542						$	1,597					$	3,671					2,542						$	1,444
Class B – Diluted EPS:
Income available to Class B stockholders						$	4,060					2,542						$	1,597					$	3,670					2,542						$	1,444

Note 6. Fair Value

Financial instruments carried at fair value

Our available-for-sale and equity securities are recorded at fair value, which is the price that would be received to sell the asset in an orderly transaction between willing market participants as of the measurement date.

Valuation techniques used to derive the fair value of our available-for-sale and equity securities are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our own assumptions regarding fair market value for these securities. Financial instruments are categorized based upon the following characteristics or inputs to the valuation techniques:

• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 – Unobservable inputs for the asset or liability.

Estimates of fair values for our investment portfolio are obtained primarily from a nationally recognized pricing service. Our Level 1 securities are valued using an exchange traded price provided by the pricing service. Pricing service valuations for Level 2 securities include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. Pricing service valuations for Level 3 securities are based upon proprietary models and are used when observable inputs are not available or in illiquid markets.

Although virtually all of our prices are obtained from third party sources, we also perform internal pricing reviews, including evaluating the methodology and inputs used to ensure that we determine the proper classification level of the financial instrument and reviewing securities with price changes that vary significantly from current market conditions or independent price sources. Price variances are investigated and corroborated by market data and transaction volumes. We have reviewed the pricing methodologies of our pricing service as well as other observable inputs and believe that the prices adequately consider market activity in determining fair value.

In limited circumstances we adjust the price received from the pricing service when, in our judgment, a better reflection of fair value is available based upon corroborating information and our knowledge and monitoring of market conditions such as a disparity in price of comparable securities and/or non-binding broker quotes. In other circumstances, certain securities are internally priced because prices are not provided by the pricing service.

When a price from the pricing service is not available, values are determined by obtaining broker/dealer quotes and/or market comparables. When available, we obtain multiple quotes for the same security. The ultimate value for these securities is determined based upon our best estimate of fair value using corroborating market information. As of September 30, 2025, nearly all of our available-for-sale and equity securities were priced using a third party pricing service.

The following tables present our fair value measurements on a recurring basis by asset class and level of input as of:

						September 30, 2025
(in thousands)						Total						Level 1						Level 2						Level 3
Available-for-sale securities:
Corporate debt securities						$	673,086					$	0					$	670,031					$	3,055
Collateralized debt obligations						90,551						0						90,551						0
Commercial mortgage-backed securities						122,211						0						104,445						17,766
Residential mortgage-backed securities						141,166						0						139,882						1,284
Other debt securities						31,449						0						31,449						0
U.S. Treasury						7,370						0						7,370						0
Total available-for-sale securities (1)						1,065,833						0						1,043,728						22,105
Equity securities:
Financial services sector						60,425						2,122						52,798						5,505
Utilities sector						3,534						0						3,534						0
Energy sector						1,988						0						1,988						0
Consumer sector						4,558						0						1,397						3,161
Technology sector						3,224						0						0						3,224
Communications sector						963						0						963						0
Total equity securities (2)						74,692						2,122						60,680						11,890
Total						$	1,140,525					$	2,122					$	1,104,408					$	33,995

*(1)*This includes $35.9 million of securities lent under a securities lending agreement.

*(2)*This includes $20.3 million of securities lent under a securities lending agreement.

						December 31, 2024
(in thousands)						Total						Level 1						Level 2						Level 3
Available-for-sale securities:
Corporate debt securities						$	643,943					$	0					$	637,675					$	6,268
Collateralized debt obligations						114,127						0						114,127						0
Commercial mortgage-backed securities						124,982						0						100,893						24,089
Residential mortgage-backed securities						133,812						0						133,812						0
Other debt securities						26,751						0						26,751						0
Total available-for-sale securities (1)						1,043,615						0						1,013,258						30,357
Equity securities:
Financial services sector						69,930						1,052						65,378						3,500
Utilities sector						5,629						0						5,629						0
Energy sector						4,117						0						4,117						0
Consumer sector						3,341						54						1,787						1,500
Technology sector						1,974						0						0						1,974
Communications sector						900						0						900						0
Total equity securities						85,891						1,106						77,811						6,974
Total						$	1,129,506					$	1,106					$	1,091,069					$	37,331

(1) This includes $7.3 million of securities lent under a securities lending agreement.

We review the fair value hierarchy classifications each reporting period. Transfers between hierarchy levels may occur due to changes in available market observable inputs.

Level 3 Assets – 2025 Quarterly Change:

(in thousands)						Beginning balance at June 30, 2025						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2025
Available-for-sale securities:
Corporate debt securities						$	6,176					$	21					$	45					$	0					$	(1,252)					$	1,139					$	(3,074)					$	3,055
Commercial mortgage-backed securities						16,434						(226)						99						0						(347)						5,331						(3,525)						17,766
Residential mortgage- backed securities						0						0						0						0						0						1,284						0						1,284
Total available-for-sale securities						22,610						(205)						144						0						(1,599)						7,754						(6,599)						22,105
Equity securities						10,640						0						—						1,250						0						0						0						11,890
Total Level 3 securities						$	33,250					$	(205)					$	144					$	1,250					$	(1,599)					$	7,754					$	(6,599)					$	33,995

Level 3 Assets – 2025 Year-to-Date Change:

(in thousands)						Beginning balance at December 31, 2024						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2025
Available-for-sale securities:
Corporate debt securities						$	6,268					$	51					$	12					$	3,085					$	(2,044)					$	4,615					$	(8,932)					$	3,055
Collateralized debt obligations						0						(4)						0						700						(696)						0						0						0
Commercial mortgage-backed securities						24,089						(848)						503						1,997						(2,734)						16,403						(21,644)						17,766
Residential mortgage-backed securities						0						0						0						0						(18)						2,207						(905)						1,284
Total available-for-sale securities						30,357						(801)						515						5,782						(5,492)						23,225						(31,481)						22,105
Equity securities						6,974						646						—						4,750						0						18						(498)						11,890
Total Level 3 securities						$	37,331					$	(155)					$	515					$	10,532					$	(5,492)					$	23,243					$	(31,979)					$	33,995

Level 3 Assets – 2024 Quarterly Change:

(in thousands)						Beginning balance at June 30, 2024						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2024
Available-for-sale securities:
Corporate debt securities						$	8,543					$	(166)					$	45					$	865					$	(392)					$	1,142					$	(6,396)					$	3,641
Commercial mortgage-backed securities						25,220						(408)						670						1,102						(28)						1,312						(12,108)						15,760
Total available-for-sale securities						33,763						(574)						715						1,967						(420)						2,454						(18,504)						19,401
Equity securities						8,498						517						—						0						0						0						(2,056)						6,959
Total Level 3 securities						$	42,261					$	(57)					$	715					$	1,967					$	(420)					$	2,454					$	(20,560)					$	26,360

Level 3 Assets – 2024 Year-to-Date Change:

(in thousands)						Beginning balance at December 31, 2023						Included in earnings(1)						Included in other comprehensive income (loss)						Purchases						Sales						Transfers into Level 3(2)						Transfers out of Level 3(2)						Ending balance at September 30, 2024
Available-for-sale securities:
Corporate debt securities						$	4,506					$	(141)					$	66					$	5,704					$	(1,215)					$	4,966					$	(10,245)					$	3,641
Commercial mortgage-backed securities						10,994						(1,077)						889						2,907						(33)						18,960						(16,880)						15,760
Residential mortgage-backed securities						1,534						(5)						(24)						0						(40)						0						(1,465)						0
Total available-for-sale securities						17,034						(1,223)						931						8,611						(1,288)						23,926						(28,590)						19,401
Equity securities						7,334						664						—						2,019						(84)						544						(3,518)						6,959
Total Level 3 securities						$	24,368					$	(559)					$	931					$	10,630					$	(1,372)					$	24,470					$	(32,108)					$	26,360

*(1)*These amounts are reported as net investment income and net realized and unrealized investment gains (losses) for each of the periods presented above.

*(2)*Transfers into and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

Financial instruments not carried at fair value

The following table presents the carrying values and fair values of financial instruments categorized as Level 3 in the fair value hierarchy that are recorded at carrying value as of:

						September 30, 2025												December 31, 2024
(in thousands)						Carrying value						Fair value						Carrying value						Fair value
Agent loans, net (1)						$	109,131					$	104,110					$	92,731					$	90,713
Other loans receivable, net (2)						16,069						13,187						11,555						11,555
Held-to-maturity securities, net (3)						4,833						4,876						4,833						4,934

(1) The current portion of agent loans is included in the line item "Prepaid expenses and other current assets, net" in the Consolidated Statements of Financial Position.

(2) The current and long-term portions of other loans receivable are included in the line items "Prepaid expenses and other current assets, net" and "Other assets, net", respectively, in the Consolidated Statements of Financial Position.

(3) Held-to-maturity securities are included in the line item "Other assets, net" in the Consolidated Statements of Financial Position.

Note 7. Investments

Fixed maturity securities

See Note 6, "Fair Value" for additional fair value disclosures. The following tables summarize the amortized cost and estimated fair value, net of credit loss allowance, of our fixed maturity securities as of:

						September 30, 2025
(in thousands)						Amortized cost						Gross unrealized gains						Gross unrealized losses						Estimated fair value
Available-for-sale securities:
Corporate debt securities						$	663,602					$	12,714					$	3,230					$	673,086
Collateralized debt obligations						90,481						238						168						90,551
Commercial mortgage-backed securities						121,053						2,868						1,710						122,211
Residential mortgage-backed securities						151,730						736						11,300						141,166
Other debt securities						31,091						622						264						31,449
U.S. Treasury						7,259						120						9						7,370
Total available-for-sale securities, net (1)						1,065,216						17,298						16,681						1,065,833
Held-to-maturity securities - states & political subdivisions						4,833						43						0						4,876
Total fixed maturity securities, net						$	1,070,049					$	17,341					$	16,681					$	1,070,709

*(1)*This includes an estimated fair value of $35.9 million of securities lent under a securities lending agreement.

						December 31, 2024
(in thousands)						Amortized cost						Gross unrealized gains						Gross unrealized losses						Estimated fair value
Available-for-sale securities:
Corporate debt securities						$	647,861					$	4,767					$	8,685					$	643,943
Collateralized debt obligations						114,142						372						387						114,127
Commercial mortgage-backed securities						126,509						1,458						2,985						124,982
Residential mortgage-backed securities						150,212						62						16,462						133,812
Other debt securities						27,232						147						628						26,751
Total available-for-sale securities, net (1)						1,065,956						6,806						29,147						1,043,615
Held-to-maturity securities - states & political subdivisions						4,833						101						0						4,934
Total fixed maturity securities, net						$	1,070,789					$	6,907					$	29,147					$	1,048,549

*(1)*This includes an estimated fair value of $7.3 million of securities lent under a securities lending agreement.

The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities at September 30, 2025 are shown below by remaining contractual term to maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

						September 30, 2025
						Amortized						Estimated
(in thousands)						cost						fair value
Available-for-sale securities:
Due in one year or less						$	63,952					$	63,710
Due after one year through five years						460,087						465,927
Due after five years through ten years						136,215						138,111
Due after ten years						404,962						398,085
Total available-for-sale securities, net (1) (2)						1,065,216						1,065,833
Held-to-maturity securities - due after ten years						4,833						4,876
Total fixed maturity securities, net						$	1,070,049					$	1,070,709

*(1)*The contractual maturities of our available-for-sale securities are included in the table. However, given our intent to sell certain impaired securities, these securities are classified as current assets in our Consolidated Statement of Financial Position at September 30, 2025.

*(2)*This includes an estimated fair value of $35.9 million of securities lent under a securities lending agreement.

The below securities have been evaluated for credit impairment using criteria described within Note 2, "Significant Accounting Policies, of Notes to Consolidated Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025. The gross unrealized losses are primarily attributable to changes in interest rates and are not deemed to be credit-related. We do not have the intent to sell these securities and it is more likely than not that we would not be required to sell these securities before the anticipated recovery of the amortized cost basis.

The following tables present available-for-sale securities based on length of time in a gross unrealized loss position as of:

						September 30, 2025
						Less than 12 months												12 months or longer												Total
(dollars in thousands)						Fair value						Unrealized losses						Fair value						Unrealized losses						Fair value						Unrealized losses						No. of holdings
Corporate debt securities						$	23,443					$	817					$	107,364					$	2,413					$	130,807					$	3,230					358
Collateralized debt obligations						25,562						69						5,396						99						30,958						168						54
Commercial mortgage-backed securities						4,833						55						19,434						1,655						24,267						1,710						66
Residential mortgage-backed securities						17,132						248						88,556						11,052						105,688						11,300						144
Other debt securities						1,681						25						3,770						239						5,451						264						24
U.S. Treasury						1,469						9						0						0						1,469						9						1
Total available-for-sale securities						$	74,120					$	1,223					$	224,520					$	15,458					$	298,640					$	16,681					647
Quality breakdown of available-for-sale securities:
Investment grade						$	53,947					$	408					$	204,399					$	14,379					$	258,346					$	14,787					344
Non-investment grade						20,173						815						20,121						1,079						40,294						1,894						303
Total available-for-sale securities						$	74,120					$	1,223					$	224,520					$	15,458					$	298,640					$	16,681					647

						December 31, 2024
						Less than 12 months												12 months or longer												Total
(dollars in thousands)						Fair value						Unrealized losses						Fair value						Unrealized losses						Fair value						Unrealized losses						No. of holdings
Corporate debt securities						$	197,619					$	2,486					$	156,059					$	6,199					$	353,678					$	8,685					567
Collateralized debt obligations						33,686						71						11,762						316						45,448						387						77
Commercial mortgage-backed securities						28,333						407						24,966						2,578						53,299						2,985						131
Residential mortgage-backed securities						38,003						1,289						90,209						15,173						128,212						16,462						169
Other debt securities						11,663						150						5,045						478						16,708						628						42
Total available-for-sale securities						$	309,304					$	4,403					$	288,041					$	24,744					$	597,345					$	29,147					986
Quality breakdown of available-for-sale securities:
Investment grade						$	280,332					$	3,701					$	260,480					$	22,664					$	540,812					$	26,365					616
Non-investment grade						28,972						702						27,561						2,080						56,533						2,782						370
Total available-for-sale securities						$	309,304					$	4,403					$	288,041					$	24,744					$	597,345					$	29,147					986

Credit loss allowances

The following tables present a roll-forward of the allowances for credit losses on investments:

						Three months ended September 30, 2025
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	881					$	2,167					$	13,038					$	1,476
Provision and recoveries						417						0						218						111
Sales/collections and write-offs						(64)						0						(25)						0
Balance, end of period						$	1,234					$	2,167					$	13,231					$	1,587

						Nine months ended September 30, 2025
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	513					$	2,167					$	12,198					$	1,312
Provision and recoveries						1,086						0						1,058						275
Sales/collections and write-offs						(365)						0						(25)						0
Balance, end of period						$	1,234					$	2,167					$	13,231					$	1,587

						Three months ended September 30, 2024
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	503					$	2,167					$	11,438					$	957
Provision and recoveries						158						0						474						354
Sales/collections and write-offs						(231)						0						0						0
Balance, end of period						$	430					$	2,167					$	11,912					$	1,311

						Nine months ended September 30, 2024
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	597					$	0					$	11,081					$	957
Provision and recoveries						401						2,167						831						354
Sales/collections and write-offs						(568)						0						0						0
Balance, end of period						$	430					$	2,167					$	11,912					$	1,311

Net investment income

Investment income, net of expenses, was generated from the following portfolios:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2025						2024						2025						2024
Available-for-sale securities						$	14,068					$	12,891					$	41,881					$	36,611
Equity securities						1,220						1,119						3,533						3,536
Limited partnerships (1)						114						(127)						1,269						134
Agent loans (2)						1,633						1,070						4,634						2,891
Cash equivalents and other (2)						4,606						2,940						11,502						7,456
Total investment income						21,641						17,893						62,819						50,628
Less: investment expenses						608						571						1,808						1,393
Net investment income						$	21,033					$	17,322					$	61,011					$	49,235

*(1)*Limited partnership income (losses) include both realized gains (losses) and unrealized valuation changes. Our limited partnership investments are included in the line item "Other assets, net" in the Consolidated Statements of Financial Position. We have made no new significant limited partnership commitments since 2006, and the balance of limited partnership investments is expected to decline over time as additional distributions are received.

*(2)*2024 amounts have been reclassified to conform to the current period presentation.

Net realized and unrealized investment gains

Realized and unrealized gains (losses) on investments were as follows:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2025						2024						2025						2024
Available-for-sale securities:
Gross realized gains						$	908					$	1,457					$	1,588					$	2,144
Gross realized losses						(337)						(1,315)						(1,710)						(4,639)
Net realized gains (losses) on available-for-sale securities						571						142						(122)						(2,495)
Equity securities						760						2,782						2,429						5,477
Miscellaneous						0						1						5						1
Net realized and unrealized investment gains						$	1,331					$	2,925					$	2,312					$	2,983

The portion of net unrealized gains recognized during the reporting period related to equity securities held at the reporting date is calculated as follows:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2025						2024						2025						2024
Equity securities:
Net gains recognized during the period						$	760					$	2,782					$	2,429					$	5,477
Less: net gains recognized on securities sold						66						146						340						883
Net unrealized gains recognized on securities held at reporting date						$	694					$	2,636					$	2,089					$	4,594

Net impairment losses recognized in earnings

Impairments on investments were as follows:

						Three months ended September 30,												Nine months ended September 30,
(in thousands)						2025						2024						2025						2024
Available-for-sale securities:
Intent to sell						$	(78)					$	(1)					$	(495)					$	(299)
Credit impaired						(417)						(158)						(1,086)						(401)
Total available-for-sale securities						(495)						(159)						(1,581)						(700)
Expected credit losses:
Held-to-maturity securities						0						0						0						(2,167)
Agent loans						(111)						(354)						(275)						(354)
Other loans receivable						(204)						(185)						(777)						(542)
Net impairment losses recognized in earnings						$	(810)					$	(698)					$	(2,633)					$	(3,763)

Securities lending transactions

As of September 30, 2025, the estimated fair value of loaned securities was $56.2 million, comprised of $35.9 million and $20.3 million of available-for-sale and equity securities, respectively. The related cash collateral received was $54.3 million, which was reinvested in cash equivalents and is included with "Cash and cash equivalents" in our Consolidated Statement of Financial Position. We also received $3.6 million of non-cash collateral that we are not permitted to sell or repledge, and there are no securities lending transactions that extend beyond one year from the reporting date.

If we have to return cash collateral on short notice, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell securities prior to recovery, which may negatively impact our financial condition.

Note 8. Bank Line of Credit

We have access to a $100 million bank revolving line of credit with a $25 million letter of credit sublimit that expires on November 1, 2029. As of September 30, 2025, a total of $99.2 million remains available under the facility due to $0.8 million outstanding letters of credit, which reduce the availability for letters of credit to $24.2 million. We had no borrowings outstanding on our line of credit as of September 30, 2025. Investments with a fair value of $121.0 million were pledged as collateral on the line of credit at September 30, 2025. These investments have no trading restrictions and are reported as available-for-sale securities and cash and cash equivalents on our Consolidated Statement of Financial Position as of September 30, 2025. The bank requires compliance with certain covenants, which include leverage ratios and debt restrictions. We are in compliance with all covenants at September 30, 2025.

Note 9. Postretirement Benefits

Pension plans

Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan ("SERP") for certain members of executive and senior management. The pension plan provides benefits to covered individuals satisfying certain age and service requirements. The defined benefit pension plan and SERP each provide benefits through a final average earnings formula.

Although we are the sponsor of these postretirement plans and record the funded status of these plans, there are reimbursements between us and the Exchange and its insurance subsidiaries for their allocated share of pension income or cost. These reimbursements represent pension benefits for employees performing administrative services and an allocated share of plan (income) cost for employees in departments that support the administrative functions. For the nine months ended September 30, 2025, the Exchange and its insurance subsidiaries reimbursed us for approximately 62% of the annual defined benefit pension cost and 35% of the annual SERP cost. For our funded pension plan, amounts are settled in cash for the portion of pension (income) cost allocated to the Exchange and its insurance subsidiaries. For our unfunded SERP, we pay the obligations when due and amounts are settled in cash between entities when there is a payout.

Our defined benefit pension plan funding policy is generally to contribute an amount equal to the greater of the target normal cost for the plan year, or the amount necessary to fund the plan to 100%. Accordingly, we made a $39 million contribution in January 2025. The funded pension plan is presented separately from the unfunded plan as a non-current asset on the Consolidated Statements of Financial Position.

Pension plan cost (income) includes the following components:

			Three months ended September 30,												Nine months ended September 30,
(in thousands)			2025						2024						2025						2024
Service cost for benefits earned			$	8,866					$	8,628					$	26,590					$	25,920
Interest cost on benefit obligation			14,688						13,195						44,039						39,503
Expected return on plan assets			(20,069)						(20,199)						(60,207)						(60,595)
Prior service cost amortization			422						413						1,266						1,199
Net actuarial gain amortization			(633)						(1,695)						(1,942)						(5,180)
Settlement gain (1)			(62)						(59)						(539)						(1,338)
Pension plan cost (income) (2)			$	3,212					$	283					$	9,207					$	(491)

*(1)*Settlement accounting was required due to lump sum payments made under the SERP to former officers in 2025 and 2024.

*(2)*Pension plan cost (income) represents total plan cost (income) before reimbursements between Indemnity and the Exchange and its insurance subsidiaries. The components of pension plan cost (income) other than the service cost components are included in the line item "Other income" in the Consolidated Statements of Operations, net of reimbursements between Indemnity and the Exchange and its insurance subsidiaries.

Note 10. Income Taxes

Income tax expense is provided on an interim basis based upon our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. For the three months ended September 30, 2025 and 2024, our effective tax rate was 21.4% and 20.4%, respectively. For the nine months ended September 30, 2025 and 2024, our effective tax rate was 21.1% and 20.7% respectively.

New tax legislation, referred to as the One Big Beautiful Bill Act ("OBBBA"), was signed into law on July 4, 2025. The OBBBA includes changes to the timing of tax deductions for depreciation and software development expenditures. The impact of the OBBBA is reflected in our income tax provisions and effective tax rate for the quarter ended September 30, 2025.

Note 11. Capital Stock

Class A and B common stock

Holders of Class B shares may, at their option, convert their shares into Class A shares at the rate of 2,400 Class A shares per Class B share. There were no shares of Class B common stock converted into Class A common stock during the nine months ended September 30, 2025 and the year ended December 31, 2024. There is no provision for conversion of Class A shares into Class B shares, and Class B shares surrendered for conversion cannot be reissued.

Stock repurchases

In 2011, our Board of Directors approved a continuation of the current stock repurchase program of $150 million, with no time limitation. There were no shares repurchased under this program during the nine months ended September 30, 2025 and the year ended December 31, 2024. We had approximately $17.8 million of repurchase authority remaining under this program at September 30, 2025.

Note 12. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income ("AOCI") (loss) by component, including amounts reclassified to other comprehensive income ("OCI") (loss) and the related line item in the Consolidated Statements of Operations where net income is presented, are as follows:

						Three months ended												Three months ended
						September 30, 2025												September 30, 2024
(in thousands)						Before Tax			Income Tax			Net						Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period						$	(7,202)		$	(1,513)		$	(5,689)					$	(30,405)		$	(6,385)		$	(24,020)
OCI before reclassifications						7,803			1,638			6,165						25,586			5,373			20,213
Realized investment gains						(571)			(120)			(451)						(142)			(30)			(112)
Impairment losses						495			104			391						159			33			126
OCI						7,727			1,622			6,105						25,603			5,376			20,227
AOCI (loss), end of period						$	525		$	109		$	416					$	(4,802)		$	(1,009)		$	(3,793)
Pension and other postretirement plans:
AOCI (loss), beginning of period						$	(38,744)		$	(8,137)		$	(30,607)					$	8,730		$	1,833		$	6,897
OCI (loss) before reclassifications						(1,063)			(223)			(840)						(606)			(127)			(479)
Amortization of prior service costs						422			89			333						413			87			326
Amortization of net actuarial gain						(633)			(133)			(500)						(1,695)			(356)			(1,339)
Settlement gain						(62)			(13)			(49)						(59)			(13)			(46)
OCI (loss)						(1,336)			(280)			(1,056)						(1,947)			(409)			(1,538)
AOCI (loss), end of period						$	(40,080)		$	(8,417)		$	(31,663)					$	6,783		$	1,424		$	5,359
Total
AOCI (loss), beginning of period						$	(45,946)		$	(9,650)		$	(36,296)					$	(21,675)		$	(4,552)		$	(17,123)
Investment securities						7,727			1,622			6,105						25,603			5,376			20,227
Pension and other postretirement plans						(1,336)			(280)			(1,056)						(1,947)			(409)			(1,538)
OCI						6,391			1,342			5,049						23,656			4,967			18,689
AOCI (loss), end of period						$	(39,555)		$	(8,308)		$	(31,247)					$	1,981		$	415		$	1,566
						Nine months ended												Nine months ended
						September 30, 2025												September 30, 2024
(in thousands)						Before Tax			Income Tax			Net						Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period						$	(22,442)		$	(4,714)		$	(17,728)					$	(31,402)		$	(6,595)		$	(24,807)
OCI before reclassifications						21,264			4,465			16,799						23,405			4,915			18,490
Realized investment losses						122			26			96						2,495			524			1,971
Impairment losses						1,581			332			1,249						700			147			553
OCI						22,967			4,823			18,144						26,600			5,586			21,014
AOCI (loss), end of period						$	525		$	109		$	416					$	(4,802)		$	(1,009)		$	(3,793)
Pension and other postretirement plans:
AOCI (loss), beginning of period						$	(37,802)		$	(7,939)		$	(29,863)					$	14,439		$	3,032		$	11,407
OCI (loss) before reclassifications						(1,063)			(223)			(840)						(2,337)			(491)			(1,846)
Amortization of prior service costs						1,266			266			1,000						1,199			252			947
Amortization of net actuarial gain						(1,942)			(408)			(1,534)						(5,180)			(1,088)			(4,092)
Settlement gain						(539)			(113)			(426)						(1,338)			(281)			(1,057)
OCI (loss)						(2,278)			(478)			(1,800)						(7,656)			(1,608)			(6,048)
AOCI (loss), end of period						$	(40,080)		$	(8,417)		$	(31,663)					$	6,783		$	1,424		$	5,359
Total
AOCI (loss), beginning of period						$	(60,244)		$	(12,653)		$	(47,591)					$	(16,963)		$	(3,563)		$	(13,400)
Investment securities						22,967			4,823			18,144						26,600			5,586			21,014
Pension and other postretirement plans						(2,278)			(478)			(1,800)						(7,656)			(1,608)			(6,048)
OCI						20,689			4,345			16,344						18,944			3,978			14,966
AOCI (loss), end of period						$	(39,555)		$	(8,308)		$	(31,247)					$	1,981		$	415		$	1,566

Note 13. Concentrations of Credit Risk

Financial instruments could potentially expose us to concentrations of credit risk, including our unsecured receivables from the Exchange. The majority of our revenue and receivables are from the Exchange and its affiliates. See also Note 1, "Nature of Operations". Net management fee amounts and other reimbursements due from the Exchange and its affiliates were $780.5 million and $707.1 million at September 30, 2025 and December 31, 2024, respectively, which includes a current expected credit loss allowance of $0.7 million in both periods.

Note 14. Commitments and Contingencies

We have an agreement with a bank for an agent loan participation program. The maximum amount of loans to be funded through this program is $150 million. We have committed to fund a minimum of 30% of each loan executed through this program. As of September 30, 2025, outstanding loans executed under this agreement totaled $136.3 million, of which our portion of the loans is $52.7 million. Additionally, we have agreed to guarantee a portion of the funding provided by the other participants in the program in the event of default. As of September 30, 2025, our maximum potential amount of future payments on the guaranteed portion is $16.2 million. All loan payments under the participation program are current as of September 30, 2025.

We also have contingent obligations for guarantees related to certain real estate development projects supporting revitalization efforts in our community. As of September 30, 2025, our maximum potential obligation related to guarantees is $4.0 million.

We are involved in litigation arising in the ordinary course of conducting business. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our consolidated financial condition, results of operations or cash flows. Legal fees are expensed as incurred. We believe that our accruals for legal proceedings are appropriate and, individually and in the aggregate, are not expected to be material to our consolidated financial condition, results of operations or cash flows.

We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in their early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including, but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against, or settlement by, us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Note 15. Subsequent Events

No items were identified in this period subsequent to the financial statement date that required adjustment or additional disclosure.