Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)


	Three months ended March 31,
		2026		2025
Operating revenue
Management fee revenue - policy issuance and renewal services		$	786,399	$	755,049
Management fee revenue - administrative services		19,475		17,645
Administrative services reimbursement revenue		200,096		210,273
Service agreement revenue		5,941		6,432
Total operating revenue		1,011,911		989,399

Operating expenses
Cost of operations - policy issuance and renewal services		645,028		627,750
Cost of operations - administrative services		200,096		210,273

Total operating expenses		845,124		838,023
Operating income		166,787		151,376

Investment income
Net investment income		23,560		19,948
Net realized and unrealized investment (losses) gains		(765)		502
Net impairment losses recognized in earnings		(676)		(914)

Total investment income		22,119		19,536


Other income		1,420		3,834
Income before income taxes		190,326		174,746
Income tax expense		39,852		36,329
Net income		$	150,474	$	138,417


Net income per share
Class A common stock – basic		$	3.23	$	2.97
Class A common stock – diluted		$	2.88	$	2.65
Class B common stock – basic and diluted		$	485	$	446


Weighted average shares outstanding – Basic
Class A common stock		46,188,850		46,188,903
Class B common stock		2,542		2,542

Weighted average shares outstanding – Diluted
Class A common stock		52,300,180		52,304,384
Class B common stock		2,542		2,542

Dividends declared per share
Class A common stock		$	1.4625	$	1.365
Class B common stock		$	219.375	$	204.75

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 March 31,
		2026		2025
Net income		$	150,474	$	138,417

Other comprehensive (loss) income, net of tax
Change in unrealized holding (losses) gains on available-for-sale securities		(12,535)		5,778
Pension and other postretirement plans		309		(561)
Total other comprehensive (loss) income, net of tax		(12,226)		5,217
Comprehensive income		$	138,248	$	143,634

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(dollars in thousands, except per share data)


	March 31,		December 31,
	2026		2025
Assets	(Unaudited)
Current assets:
Cash and cash equivalents (includes restricted cash of $39,549 and $30,189, respectively)	$	268,616	$	345,874
Available-for-sale securities	53,995		33,902
Available-for-sale securities lent	870		3,436
Receivables from Erie Insurance Exchange and affiliates, net	743,236		735,589
Prepaid expenses and other current assets, net	79,713		66,061

Accrued investment income	14,469		14,311
Total current assets	1,160,899		1,199,173

Available-for-sale securities, net	1,296,154		1,286,566
Equity securities	67,889		70,624
Available-for-sale and equity securities lent	54,417		61,063

Fixed assets, net	579,649		571,476
Agent loans, net	102,436		93,953

Defined benefit pension plan	66,617		24,137

Other assets, net	48,617		48,489
Total assets	$	3,376,678	$	3,355,481

Liabilities and shareholders' equity
Current liabilities:
Commissions payable	$	440,465	$	425,320
Agent incentive compensation	58,393		132,560
Accounts payable and accrued liabilities	229,421		200,701
Dividends payable	68,109		68,109
Contract liability	47,432		47,561
Deferred executive compensation	6,466		9,400
Securities lending payable	49,621		61,936



Total current liabilities	899,907		945,587

Defined benefit pension plan	34,023		33,410

Contract liability	22,936		23,274
Deferred executive compensation	24,023		22,050
Deferred income taxes, net	19,982		24,788
Other long-term liabilities	22,286		22,998
Total liabilities	1,023,157		1,072,107

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	16,500		16,492
Accumulated other comprehensive loss	(64,247)		(52,021)
Retained earnings	3,545,188		3,462,823

Total contributed capital and retained earnings	3,499,611		3,429,464
Treasury stock, at cost; 22,110,132 shares held	(1,171,160)		(1,171,014)
Deferred compensation	25,070		24,924
Total shareholders’ equity	2,353,521		2,283,374
Total liabilities and shareholders’ equity	$	3,376,678	$	3,355,481

See accompanying notes to Consolidated Financial Statements.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three months ended March 31, 2026 and 2025

(dollars in thousands, except per share data)


	Class A common stock		Class B common stock		Additional paid-in-capital		Accumulated other comprehensive loss		Retained earnings		Treasury stock		Deferred compensation		Total shareholders' equity
Balance, December 31, 2025	$	1,992	$	178	$	16,492	$	(52,021)	$	3,462,823	$	(1,171,014)	$	24,924	$	2,283,374

Net income									150,474						150,474
Other comprehensive loss							(12,226)								(12,226)
Dividends declared:
Class A $1.4625 per share									(67,551)						(67,551)
Class B $219.375 per share									(558)						(558)
Net purchase of treasury stock (1)					8						0				8
Deferred compensation											(670)		670		0
Rabbi trust distribution (2)											524		(524)		0
Balance, March 31, 2026	$	1,992	$	178	$	16,500	$	(64,247)	$	3,545,188	$	(1,171,160)	$	25,070	$	2,353,521


	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

*(1)*Net purchases of treasury stock in 2026 and 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 2026 and two in 2025.

See accompanying notes to Consolidated Financial Statements.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Three months ended March 31,
	2026		2025
Cash flows from operating activities
Management fee received	$	802,892	$	760,565
Administrative services reimbursements received	199,831		221,955
Service agreement revenue received	5,941		6,432
Net investment income received	22,837		19,326

Commissions paid to agents	(389,960)		(370,528)
Incentive compensation paid to agents	(134,249)		(79,017)
Salaries and wages paid	(76,066)		(79,844)
Pension contribution and employee benefits paid	(65,201)		(60,501)
General operating expenses paid	(69,161)		(81,938)
Administrative services expenses paid	(204,965)		(218,352)
Income taxes (paid) recovered	(7)		20

Net cash provided by operating activities	91,892		118,118

Cash flows from investing activities
Purchase of investments:
Available-for-sale securities	(187,180)		(131,330)
Equity securities	(3,168)		(6,946)


Proceeds from investments:
Available-for-sale securities sales	106,790		34,721
Available-for-sale securities maturities/calls	39,998		34,278
Equity securities	4,239		11,646


Purchase of fixed assets	(37,414)		(29,674)

Loans to agents and others	(14,811)		(12,568)
Collections on agent and other loans	2,820		2,113
Net cash used in investing activities	(88,726)		(97,760)

Cash flows from financing activities


Dividends paid to shareholders	(68,109)		(63,569)




Net changes in cash collateral for securities lent	(12,315)		5,193
Net cash used in financing activities	(80,424)		(58,376)

Net decrease in cash, cash equivalents and restricted cash	(77,258)		(38,018)
Cash, cash equivalents and restricted cash, beginning of period	345,874		298,397
Cash, cash equivalents and restricted cash, end of period	$	268,616	$	260,379

Supplemental disclosure of noncash transactions
Liability incurred to purchase fixed assets	$	1,549	$	844
Operating lease assets obtained in exchange for lease liabilities	$	738	$	1,319

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. See Note 4, "Segment Information", for the significant expense categories related to providing these services. Included in expenses for these services 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. We continually monitor the financial strength 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 fee revenue 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 three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. For further information, refer to the consolidated financial statements and footnotes included in our Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission ("SEC") on February 23, 2026.

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 adopted accounting standards

We adopted Accounting Standards Update ("ASU") 2025-05, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets", effective with the quarterly period ending March 31, 2026. We applied the guidance prospectively and elected the practical expedient, which allows entities to assume that current conditions as of the balance sheet date do not change over the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets within the scope of "Revenue from Contracts with Customers (Topic 606)". The adoption of this guidance did not have a material impact on our consolidated financial statements and disclosures.

Recently issued accounting standards

In November 2024, the Financial Accounting Standards Board ("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 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.

In December 2025, the FASB issued ASU 2025-11 "Interim Reporting (Topic 270) - Narrow-Scope Improvements", which clarifies current interim disclosure requirements and provides a comprehensive list of required interim disclosures. The guidance also incorporates a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this ASU are required to be adopted for interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments can be applied on a prospective or retrospective basis. We do not expect the standard will have a material impact on our disclosures, and will have no other impact on our consolidated financial statements.

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 months ended March 31, 2026, we recognized revenue of $17.2 million that was included in the contract liability balance as of December 31, 2025. During the three months ended March 31, 2025, we recognized revenue of $15.4 million that was included in the contract liability balance as of December 31, 2024. 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 for the three months ended March 31:



(in thousands)	2026		2025
Management fee revenue - policy issuance and renewal services	$	786,399	$	755,049

Management fee revenue - administrative services	19,475		17,645
Administrative services reimbursement revenue	200,096		210,273
Total revenue from administrative services	$	219,571	$	227,918

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 evaluates performance and decides how to allocate resources for the management operations segment 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, 2025 as filed with the SEC on February 23, 2026.

Beginning in the first quarter of 2026, the significant segment expense categories included in the financial information regularly provided to the CODM were revised to align with the current manner in which the CODM reviews expenses in evaluating performance and allocating resources. Prior-period segment expense disclosures have been recast to conform to the current period presentation. This change did not affect our determination that we have one reportable segment and did not affect the measure of net income.

The following table presents our management operations segment revenue, significant segment expenses regularly provided to the CODM, and net income for the three months ended March 31:



(in thousands)	2026		2025
Management fee revenue	$	805,874	$	772,694
Administrative services reimbursement revenue	200,096		210,273
Service agreement revenue	5,941		6,432
Total operating revenue	1,011,911		989,399

Commissions	464,856		436,860
Personnel costs (1)	92,063		89,989
Sales and advertising (1)	4,905		6,952
Acquisition and underwriting support costs (1)	24,124		26,003
Technology infrastructure costs (1)	25,803		26,071
Professional fees (1)	19,321		26,276
Administrative and other (1)	13,956		15,599
Cost of operations - policy issuance and renewal services	645,028		627,750
Cost of operations - administrative services	200,096		210,273
Total operating expenses (2)	845,124		838,023
Operating income	166,787		151,376

Total investment income	22,119		19,536

Other income	1,420		3,834
Income tax expense	39,852		36,329
Net income	$	150,474	$	138,417

(1) 2025 amounts have been recast to conform to current period presentation.

(2) Management operations segment depreciation and amortization expense included primarily in "Total operating expenses" as reported on our Consolidated Statements of Operations totaled $20.0 million and $15.8 million for the three months ended March 31, 2026 and 2025, respectively. The Exchange and its insurance subsidiaries reimbursed us approximately 32% and 29% in the three months ended March 31, 2026 and 2025, 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 for the three months ended March 31:

















	2026					2025
(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	$	149,242	46,188,850	$	3.23	$	137,284	46,188,903	$	2.97
Dilutive effect of stock-based awards	0		10,530	—		0		14,681	—
Assumed conversion of Class B shares	1,232		6,100,800	—		1,133		6,100,800	—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$	150,474	52,300,180	$	2.88	$	138,417	52,304,384	$	2.65
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$	1,232	2,542	$	485	$	1,133	2,542	$	446

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 March 31, 2026, 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:


	March 31, 2026
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:




Corporate debt securities	$	861,267	$	1,483	$	856,026	$	3,758
Collateralized debt obligations	135,395		0		135,395		0
Commercial mortgage-backed securities	144,118		0		121,417		22,701
Residential mortgage-backed securities	199,063		0		198,156		907
Other debt securities	35,820		0		35,820		0
U.S. Treasury	11,484		0		11,484		0
Total available-for-sale securities (1)	1,387,147		1,483		1,358,298		27,366
Equity securities:
Financial services sector	69,073		2,035		61,376		5,662
Utilities sector	3,662		0		3,662		0
Energy sector	3,011		0		3,011		0
Consumer sector	5,546		0		2,379		3,167
Technology sector	3,470		0		0		3,470

Communications sector	1,416		0		1,416		0
Total equity securities (2)	86,178		2,035		71,844		12,299

Total	$	1,473,325	$	3,518	$	1,430,142	$	39,665

*(1)*This includes $37.0 million of securities lent under a securities lending agreement.

*(2)*This includes $18.3 million of securities lent under a securities lending agreement.


	December 31, 2025
(in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities:




Corporate debt securities	$	844,479	$	998	$	839,542	$	3,939
Collateralized debt obligations	133,267		0		133,267		0
Commercial mortgage-backed securities	140,541		0		117,520		23,021
Residential mortgage-backed securities	187,226		0		186,432		794
Other debt securities	35,152		0		35,152		0
U.S. Treasury	24,163		0		24,163		0
Total available-for-sale securities (1)	1,364,828		998		1,336,076		27,754
Equity securities:
Financial services sector	74,614		2,593		66,350		5,671
Utilities sector	3,696		0		3,696		0
Energy sector	2,713		0		2,713		0
Consumer sector	5,563		0		2,393		3,170
Technology sector	3,224		0		0		3,224

Communications sector	953		0		953		0
Total equity securities (2)	90,763		2,593		76,105		12,065
Total	$	1,455,591	$	3,591	$	1,412,181	$	39,819

(1) This includes $44.4 million of securities lent under a securities lending agreement.

(2) This includes $20.1 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 – 2026 Year-to-Date Change:


(in thousands)	Beginning balance at December 31, 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 March 31, 2026
Available-for-sale securities:
Corporate debt securities	$	3,939	$	13	$	(139)	$	802	$	(701)	$	811	$	(967)	$	3,758

Commercial mortgage-backed securities	23,021		(384)		(140)		0		(202)		7,522		(7,116)		22,701
Residential mortgage-backed securities	794		1		(11)		0		(15)		138		0		907

Total available-for-sale securities	27,754		(370)		(290)		802		(918)		8,471		(8,083)		27,366
Equity securities	12,065		78		—		150		0		6		0		12,299
Total Level 3 securities	$	39,819	$	(292)	$	(290)	$	952	$	(918)	$	8,477	$	(8,083)	$	39,665

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 March 31, 2025
Available-for-sale securities:
Corporate debt securities	$	6,268	$	18	$	(54)	$	2,117	$	(575)	$	1,099	$	(2,843)	$	6,030
Collateralized debt obligations	0		0		(5)		700		0		0		0		695
Commercial mortgage-backed securities	24,089		(382)		300		0		(1,289)		1,353		(14,942)		9,129
Residential mortgage-backed securities	0		0		0		0		0		923		0		923

Total available-for-sale securities	30,357		(364)		241		2,817		(1,864)		3,375		(17,785)		16,777
Equity securities	6,974		655		—		1,000		0		18		0		8,647
Total Level 3 securities	$	37,331	$	291	$	241	$	3,817	$	(1,864)	$	3,393	$	(17,785)	$	25,424

*(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:


	March 31, 2026				December 31, 2025
(in thousands)	Carrying value		Fair value		Carrying value		Fair value
Agent loans, net (1)	$	120,524	$	116,073	$	109,331	$	113,850
Other loans receivable, net (2)	16,126		16,069		15,491		12,509


Held-to-maturity securities, net (3)	4,833		4,748		4,833		4,863

(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:


	March 31, 2026
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value




Available-for-sale securities:
Corporate debt securities	$	864,414	$	6,444	$	9,591	$	861,267
Collateralized debt obligations	135,831		99		535		135,395
Commercial mortgage-backed securities	144,079		1,934		1,895		144,118
Residential mortgage-backed securities	209,697		588		11,222		199,063
Other debt securities	35,908		271		359		35,820
U.S. Treasury	11,575		11		102		11,484
Total available-for-sale securities, net (1)	1,401,504		9,347		23,704		1,387,147

Held-to-maturity securities - states & political subdivisions	4,833		0		85		4,748

Total fixed maturity securities, net	$	1,406,337	$	9,347	$	23,789	$	1,391,895

*(1)*This includes an estimated fair value of $37.0 million of securities lent under a securities lending agreement.


	December 31, 2025
(in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:




Corporate debt securities	$	834,885	$	12,779	$	3,185	$	844,479
Collateralized debt obligations	133,224		207		164		133,267
Commercial mortgage-backed securities	139,516		2,808		1,783		140,541
Residential mortgage-backed securities	196,624		982		10,380		187,226
Other debt securities	34,863		543		254		35,152
U.S. Treasury	24,116		106		59		24,163
Total available-for-sale securities, net (1)	1,363,228		17,425		15,825		1,364,828
Held-to-maturity securities - states & political subdivisions	4,833		30		0		4,863
Total fixed maturity securities, net	$	1,368,061	$	17,455	$	15,825	$	1,369,691

*(1)*This includes an estimated fair value of $44.4 million of securities lent under a securities lending agreement.

The amortized cost and estimated fair value of our fixed maturity securities at March 31, 2026 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.


	March 31, 2026
	Amortized		Estimated
(in thousands)	cost		fair value
Available-for-sale securities:
Due in one year or less	$	54,888	$	54,861
Due after one year through five years	588,721		588,118
Due after five years through ten years	205,037		203,455
Due after ten years	552,858		540,713
Total available-for-sale securities, net (1) (2)	1,401,504		1,387,147

Held-to-maturity securities - due after ten years	4,833		4,748

Total fixed maturity securities, net	$	1,406,337	$	1,391,895

*(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 March 31, 2026.

*(2)*This includes an estimated fair value of $37.0 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, 2025 as filed with the SEC on February 23, 2026. 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:


	March 31, 2026
	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	$	404,232	$	7,025	$	37,403	$	2,566	$	441,635	$	9,591	842
Collateralized debt obligations	89,699		483		3,395		52		93,094		535		128
Commercial mortgage-backed securities	43,321		275		16,736		1,620		60,057		1,895		94
Residential mortgage-backed securities	86,494		848		78,346		10,374		164,840		11,222		176
Other debt securities	14,420		118		3,457		241		17,877		359		40
U.S. Treasury	7,772		102		0		0		7,772		102		2
Total available-for-sale securities	$	645,938	$	8,851	$	139,337	$	14,853	$	785,275	$	23,704	1,282
Quality breakdown of available-for-sale securities:
Investment grade	$	533,288	$	4,779	$	123,311	$	12,799	$	656,599	$	17,578	642
Non-investment grade	112,650		4,072		16,026		2,054		128,676		6,126		640
Total available-for-sale securities	$	645,938	$	8,851	$	139,337	$	14,853	$	785,275	$	23,704	1,282


	December 31, 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	$	72,699	$	1,555	$	41,040	$	1,630	$	113,739	$	3,185	418
Collateralized debt obligations	57,917		120		3,909		44		61,826		164		83
Commercial mortgage-backed securities	16,103		59		19,956		1,724		36,059		1,783		70
Residential mortgage-backed securities	17,675		27		92,019		10,353		109,694		10,380		146
Other debt securities	3,936		39		3,655		215		7,591		254		27
U.S. Treasury	13,296		59		0		0		13,296		59		3
Total available-for-sale securities	$	181,626	$	1,859	$	160,579	$	13,966	$	342,205	$	15,825	747
Quality breakdown of available-for-sale securities:
Investment grade	$	144,472	$	433	$	144,604	$	12,773	$	289,076	$	13,206	371
Non-investment grade	37,154		1,426		15,975		1,193		53,129		2,619		376
Total available-for-sale securities	$	181,626	$	1,859	$	160,579	$	13,966	$	342,205	$	15,825	747

Credit loss allowances

The following tables present a roll-forward of the allowances for credit losses on investments for the three months ended March 31:


	2026
(in thousands)	Available-for-sale securities		Held-to-maturity securities		Other loans receivable		Agent loans
Balance, beginning of period	$	902	$	2,167	$	15,101	$	1,680
Provision and recoveries	275		0		256		199
Sales/collections and write-offs	(148)		0		0		0
Balance, end of period	$	1,029	$	2,167	$	15,357	$	1,879



	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	365		0		394		164
Sales/collections and write-offs	(52)		0		0		0
Balance, end of period	$	826	$	2,167	$	12,592	$	1,476

Net investment income

Investment income, net of expenses, was generated from the following portfolios for the three months ended March 31:



(in thousands)	2026		2025
Available-for-sale securities	$	17,232	$	13,283
Equity securities	1,307		1,164
Limited partnerships (1)	732		1,072
Agent loans	1,904		1,444
Cash equivalents and other	2,763		3,387
Total investment income	23,938		20,350
Less: investment expenses	378		402
Net investment income	$	23,560	$	19,948

*(1)*Limited partnership income includes 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.

Net realized and unrealized investment (losses) gains

Realized and unrealized gains (losses) on investments were as follows for the three months ended March 31:



(in thousands)	2026		2025
Available-for-sale securities:
Gross realized gains	$	1,021	$	349
Gross realized losses	(872)		(611)
Net realized gains (losses) on available-for-sale securities	149		(262)
Equity securities	(914)		759
Miscellaneous	0		5
Net realized and unrealized investment (losses) gains	$	(765)	$	502

The portion of net unrealized (losses) gains recognized during the reporting period related to equity securities held at the reporting date is calculated as follows for the three months ended March 31:



(in thousands)	2026		2025
Equity securities:
Net (losses) gains recognized during the period	$	(914)	$	759
Less: net (losses) gains recognized on securities sold	(32)		101
Net unrealized (losses) gains recognized on securities held at reporting date	$	(882)	$	658

Net impairment (losses) recoveries recognized in earnings

Impairments on investments were as follows for the three months ended March 31:



(in thousands)	2026		2025
Available-for-sale securities:
Intent to sell	$	10	$	0
Credit impaired	(275)		(365)
Total available-for-sale securities	(265)		(365)
Expected credit losses:

Agent loans	(199)		(164)
Other loans receivable	(212)		(385)
Net impairment losses recognized in earnings	$	(676)	$	(914)

Securities lending transactions

As of March 31, 2026, the estimated fair value of loaned securities was $55.3 million, consisting of $37.0 million of available- for-sale securities and $18.3 million of equity securities. As of December 31, 2025, the estimated fair value of loaned securities was $64.5 million consisting of $44.4 million of available-for-sale securities and $20.1 million of equity securities. Cash collateral received in connection with these securities lending transactions totaled $49.6 million and $61.9 million as of March 31, 2026 and December 31, 2025 respectively. The cash collateral was reinvested in cash equivalents and is included with "Cash and cash equivalents" in our Consolidated Statements of Financial Position. We also received $8.9 million and $4.5 million of non-cash collateral as of March 31, 2026 and December 31, 2025, respectively, which we are not permitted to sell or repledge. There were no securities lending transactions outstanding with contractual maturities extending 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 March 31, 2026, 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 March 31, 2026. Investments with a fair value of $110.6 million were pledged as collateral on the line of credit at March 31, 2026. 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 March 31, 2026. The bank requires compliance with certain covenants, which include leverage ratios and debt restrictions. We are in compliance with all covenants at March 31, 2026.

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 cost. These reimbursements represent pension benefits for employees performing administrative services and an allocated share of plan cost for employees in departments that support the administrative functions. For the three months ended March 31, 2026, the Exchange and its insurance subsidiaries reimbursed us for approximately 61% of the annual defined benefit pension cost and 33% of the annual SERP cost. For our funded pension plan, amounts are settled in cash for the portion of pension 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 $47 million contribution in January 2026. 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 includes the following components for the three months ended March 31:



(in thousands)	2026		2025
Service cost for benefits earned	$	9,590	$	8,862
Interest cost on benefit obligation	15,514		14,675
Expected return on plan assets	(19,889)		(20,069)
Prior service cost amortization	458		422
Net actuarial gain amortization	(67)		(654)
Settlement gain (1)	—		(477)
Pension plan cost (2)	$	5,606	$	2,759

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

*(2)*Pension plan cost represents total plan cost before reimbursements between Indemnity and the Exchange and its insurance subsidiaries. The components of pension plan cost 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 March 31, 2026 and 2025, our effective tax rate was 20.9% and 20.8%, respectively.

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 three months ended March 31, 2026 and the year ended December 31, 2025. 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 three months ended March 31, 2026 and the year ended December 31, 2025. We had approximately $17.8 million of repurchase authority remaining under this program at March 31, 2026.

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 for the three months ended March 31:
































	2026						2025
(in thousands)	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
Investment securities:
AOCI (loss), beginning of period	$	1,508	$	316	$	1,192	$	(22,442)	$	(4,714)	$	(17,728)
OCI (loss) before reclassifications	(15,982)		(3,356)		(12,626)		6,687		1,404		5,283
Realized investment (gains) losses	(149)		(31)		(118)		262		55		207
Impairment losses	265		56		209		365		77		288

OCI (loss)	(15,866)		(3,331)		(12,535)		7,314		1,536		5,778
AOCI (loss), end of period	$	(14,358)	$	(3,015)	$	(11,343)	$	(15,128)	$	(3,178)	$	(11,950)

Pension and other postretirement plans:
AOCI (loss), beginning of period	$	(67,359)	$	(14,146)	$	(53,213)	$	(37,802)	$	(7,939)	$	(29,863)

Amortization of prior service costs	458		96		362		422		89		333
Amortization of net actuarial gain	(67)		(14)		(53)		(654)		(137)		(517)
Settlement gain	—		—		—		(477)		(100)		(377)
OCI (loss)	391		82		309		(709)		(148)		(561)
AOCI (loss), end of period	$	(66,968)	$	(14,064)	$	(52,904)	$	(38,511)	$	(8,087)	$	(30,424)

Total
AOCI (loss), beginning of period	$	(65,851)	$	(13,830)	$	(52,021)	$	(60,244)	$	(12,653)	$	(47,591)
Investment securities	(15,866)		(3,331)		(12,535)		7,314		1,536		5,778
Pension and other postretirement plans	391		82		309		(709)		(148)		(561)
OCI (loss)	(15,475)		(3,249)		(12,226)		6,605		1,388		5,217
AOCI (loss), end of period	$	(81,326)	$	(17,079)	$	(64,247)	$	(53,639)	$	(11,265)	$	(42,374)

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 $743.2 million and $735.6 million at March 31, 2026 and December 31, 2025, 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 and guarantees that could be funded by us through this program is $150 million. We have committed to fund a minimum of 30% of each loan executed through this program. As of March 31, 2026, our portion of the outstanding loans executed under this agreement is $68.8 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 March 31, 2026, our maximum potential amount of future payments on the guaranteed portion is $24.3 million. All loan payments under the participation program are current as of March 31, 2026.

We also have contingent obligations for guarantees related to certain real estate development projects supporting revitalization efforts in our community. As of March 31, 2026, our maximum potential obligation related to guarantees is $6.3 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.

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