Item 1. FINANCIAL STATEMENTS

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share data)

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Operating revenue
Management fee revenue - policy issuance and renewal services			$	862,879					$	823,853					$	1,649,278					$	1,578,902
Management fee revenue - administrative services			19,619						18,296						39,094						35,941
Administrative services reimbursement revenue			201,554						212,644						401,650						422,917
Service agreement revenue			5,744						5,304						11,685						11,736
Total operating revenue			1,089,796						1,060,097						2,101,707						2,049,496
Operating expenses
Cost of operations - policy issuance and renewal services			684,119						648,280						1,329,147						1,276,030
Cost of operations - administrative services			201,554						212,644						401,650						422,917
Total operating expenses			885,673						860,924						1,730,797						1,698,947
Operating income			204,123						199,173						370,910						350,549
Investment income
Net investment income			22,587						20,030						46,147						39,978
Net realized and unrealized investment gains (losses)			557						479						(208)						981
Net impairment losses recognized in earnings			(591)						(909)						(1,267)						(1,823)
Total investment income			22,553						19,600						44,672						39,136
Other income			1,401						1,974						2,821						5,808
Income before income taxes			228,077						220,747						418,403						395,493
Income tax expense			47,783						46,062						87,635						82,391
Net income			$	180,294					$	174,685					$	330,768					$	313,102
Net income per share
Class A common stock – basic			$	3.87					$	3.75					$	7.10					$	6.72
Class A common stock – diluted			$	3.45					$	3.34					$	6.32					$	5.99
Class B common stock – basic and diluted			$	581					$	563					$	1,065					$	1,008
Weighted average shares outstanding – Basic
Class A common stock			46,189,033						46,189,063						46,188,942						46,188,984
Class B common stock			2,542						2,542						2,542						2,542
Weighted average shares outstanding – Diluted
Class A common stock			52,298,697						52,304,407						52,299,440						52,304,397
Class B common stock			2,542						2,542						2,542						2,542
Dividends declared per share
Class A common stock			$	1.4625					$	1.365					$	2.925					$	2.73
Class B common stock			$	219.375					$	204.75					$	438.75					$	409.50

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 June 30,												Six months ended June 30,
			2026						2025						2026						2025
Net income			$	180,294					$	174,685					$	330,768					$	313,102
Other comprehensive income (loss), net of tax
Change in unrealized holding gains (losses) on available-for-sale securities			1,092						6,261						(11,443)						12,039
Pension and other postretirement plans			308						(183)						617						(744)
Total other comprehensive income (loss), net of tax			1,400						6,078						(10,826)						11,295
Comprehensive income			$	181,694					$	180,763					$	319,942					$	324,397

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)

			June 30,						December 31,
			2026						2025
Assets			(Unaudited)
Current assets:
Cash and cash equivalents (includes restricted cash of $39,608 and $30,189, respectively)			$	282,902					$	345,874
Available-for-sale securities			61,715						33,902
Available-for-sale securities lent			1,973						3,436
Receivables from Erie Insurance Exchange and affiliates, net			753,245						735,589
Prepaid expenses and other current assets, net			92,533						66,061
Accrued investment income			14,194						14,311
Total current assets			1,206,562						1,199,173
Available-for-sale securities, net			1,327,084						1,286,566
Equity securities			150,516						70,624
Available-for-sale and equity securities lent			67,939						61,063
Fixed assets, net			593,365						571,476
Agent loans, net			100,680						93,953
Defined benefit pension plan			62,096						24,137
Other assets, net			48,774						48,489
Total assets			$	3,557,016					$	3,355,481
Liabilities and shareholders' equity
Current liabilities:
Commissions payable			$	457,211					$	425,320
Agent incentive compensation			116,570						132,560
Accounts payable and accrued liabilities			205,760						200,701
Dividends payable			68,109						68,109
Contract liability			48,457						47,561
Deferred executive compensation			9,154						9,400
Securities lending payable			63,157						61,936
Total current liabilities			968,418						945,587
Defined benefit pension plan			34,703						33,410
Contract liability			23,148						23,274
Deferred executive compensation			21,018						22,050
Deferred income taxes, net			19,085						24,788
Other long-term liabilities			23,538						22,998
Total liabilities			1,089,910						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			(62,847)						(52,021)
Retained earnings			3,657,373						3,462,823
Total contributed capital and retained earnings			3,613,196						3,429,464
Treasury stock, at cost; 22,110,132 shares held			(1,170,957)						(1,171,014)
Deferred compensation			24,867						24,924
Total shareholders’ equity			2,467,106						2,283,374
Total liabilities and shareholders’ equity			$	3,557,016					$	3,355,481

See accompanying notes to Consolidated Financial Statements.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three and six months ended June 30, 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) income			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
Net income															180,294									180,294
Other comprehensive income												1,400												1,400
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)									0									0						0
Deferred compensation																		(793)			793			0
Rabbi trust distribution (2)																		996			(996)			0
Balance, June 30, 2026			$	1,992		$	178		$	16,500		$	(62,847)		$	3,657,373		$	(1,170,957)		$	24,867		$	2,467,106

			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

*(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 one outside director stock compensation plan participant and four incentive compensation deferral plan participants in 2026, and three incentive compensation deferral plan participants in 2025.

See accompanying notes to Consolidated Financial Statements.

ERIE INDEMNITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

						Six months ended June 30,
						2026						2025
Cash flows from operating activities
Management fee received						$	1,656,098					$	1,474,277
Administrative services reimbursements received						410,927						500,337
Service agreement revenue received						11,698						11,735
Net investment income received						46,038						37,795
Commissions paid to agents						(825,406)						(783,117)
Incentive compensation paid to agents						(137,949)						(85,401)
Salaries and wages paid						(130,034)						(139,121)
Pension contribution and employee benefits paid						(80,554)						(78,227)
General operating expenses paid						(148,455)						(154,610)
Administrative services expenses paid						(395,538)						(414,543)
Income taxes paid						(100,011)						(73,431)
Net cash provided by operating activities						306,814						295,694
Cash flows from investing activities
Purchase of investments:
Available-for-sale securities						(529,834)						(208,686)
Equity securities						(95,633)						(14,517)
Proceeds from investments:
Available-for-sale securities sales						387,027						63,703
Available-for-sale securities maturities/calls						85,548						67,415
Equity securities						10,908						16,769
Other investments						252						—
Purchase of fixed assets						(78,933)						(49,931)
Loans to agents and others						(18,700)						(18,166)
Collections on agent and other loans						4,708						6,841
Net cash used in investing activities						(234,657)						(136,572)
Cash flows from financing activities
Dividends paid to shareholders						(136,218)						(127,138)
Net changes in cash collateral for securities lent						1,089						27,646
Net cash used in financing activities						(135,129)						(99,492)
Net (decrease) increase in cash, cash equivalents and restricted cash						(62,972)						59,630
Cash, cash equivalents and restricted cash, beginning of period						345,874						298,397
Cash, cash equivalents and restricted cash, end of period						$	282,902					$	358,027
Supplemental disclosure of noncash transactions
Liability incurred to purchase fixed assets						$	5,255					$	844
Operating lease assets obtained in exchange for lease liabilities						$	2,999					$	2,523
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. 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 six months ended June 30, 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 issued accounting standards

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

Investments

Equity securities – Equity securities primarily include non-redeemable preferred stocks and exchange-traded funds (ETFs) with underlying holdings of fixed maturity securities. These securities are reported at fair value, with changes in fair value recognized in net realized and unrealized investment gains (losses). Securities that we intend to sell as of the reporting date are classified as current assets.

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 six months ended June 30, 2026, we recognized revenue of $13.7 million and $30.9 million that was included in the contract liability balance as of December 31, 2025. During the three and six months ended June 30, 2025, we recognized revenue of $12.3 million and $27.7 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:

			Three months ended June 30,									Six months ended June 30,
(in thousands)			2026			2025						2026			2025
Management fee revenue - policy issuance and renewal services			$	862,879		$	823,853					$	1,649,278		$	1,578,902
Management fee revenue - administrative services			19,619			18,296						39,094			35,941
Administrative services reimbursement revenue			201,554			212,644						401,650			422,917
Total revenue from administrative services			$	221,173		$	230,940					$	440,744		$	458,858

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:

			Three months ended June 30,												Six months ended June 30,
(in thousands)			2026						2025						2026						2025
Management fee revenue			$	882,498					$	842,149					$	1,688,372					$	1,614,843
Administrative services reimbursement revenue			201,554						212,644						401,650						422,917
Service agreement revenue			5,744						5,304						11,685						11,736
Total operating revenue			1,089,796						1,060,097						2,101,707						2,049,496
Commissions			508,097						463,442						972,953						900,302
Personnel costs (1)			88,809						85,789						180,872						175,778
Sales and advertising (1)			8,061						9,729						12,966						16,681
Acquisition and underwriting support costs (1)			23,968						27,838						48,092						53,841
Technology infrastructure costs (1)			25,086						24,311						50,889						50,382
Professional fees (1)			19,191						24,192						38,512						50,468
Administrative and other (1)			10,907						12,979						24,863						28,578
Cost of operations - policy issuance and renewal services			684,119						648,280						1,329,147						1,276,030
Cost of operations - administrative services			201,554						212,644						401,650						422,917
Total operating expenses (2)			885,673						860,924						1,730,797						1,698,947
Operating income			204,123						199,173						370,910						350,549
Total investment income			22,553						19,600						44,672						39,136
Other income			1,401						1,974						2,821						5,808
Income tax expense			47,783						46,062						87,635						82,391
Net income			$	180,294					$	174,685					$	330,768					$	313,102

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

(2) Management operations segment depreciation and amortization expense included primarily in "Total operating expenses" as reported on our Consolidated Statements of Operations totaled $20.8 million and $16.1 million for the three months ended June 30, 2026 and 2025, respectively, and $40.8 million and $31.9 million for the six months ended June 30, 2026 and 2025, respectively. The Exchange and its insurance subsidiaries reimbursed us approximately 33% and 29% in the six months ended June 30, 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:

						Three months ended June 30,
						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						$	178,818					46,189,033						$	3.87					$	173,254					46,189,063						$	3.75
Dilutive effect of stock-based awards						0						8,864						—						0						14,544						—
Assumed conversion of Class B shares						1,476						6,100,800						—						1,431						6,100,800						—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares						$	180,294					52,298,697						$	3.45					$	174,685					52,304,407						$	3.34
Class B – Basic EPS:
Income available to Class B stockholders						$	1,476					2,542						$	581					$	1,431					2,542						$	563
Class B – Diluted EPS:
Income available to Class B stockholders						$	1,476					2,542						$	581					$	1,430					2,542						$	563
						Six months ended June 30,
						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						$	328,060					46,188,942						$	7.10					$	310,538					46,188,984						$	6.72
Dilutive effect of stock-based awards						0						9,698						—						0						14,613						—
Assumed conversion of Class B shares						2,708						6,100,800						—						2,564						6,100,800						—
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares						$	330,768					52,299,440						$	6.32					$	313,102					52,304,397						$	5.99
Class B – Basic EPS:
Income available to Class B stockholders						$	2,708					2,542						$	1,065					$	2,564					2,542						$	1,008
Class B – Diluted EPS:
Income available to Class B stockholders						$	2,708					2,542						$	1,065					$	2,563					2,542						$	1,008

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 June 30, 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:

						June 30, 2026
(in thousands)						Total						Level 1						Level 2						Level 3
Available-for-sale securities:
Corporate debt securities						$	784,374					$	1,441					$	782,455					$	478
Collateralized debt obligations						232,721						0						232,721						0
Commercial mortgage-backed securities						147,722						0						134,760						12,962
Residential mortgage-backed securities						208,685						0						207,590						1,095
Other debt securities						45,834						0						45,834						0
U.S. Treasury						13,886						0						13,886						0
Total available-for-sale securities (1)						1,433,222						1,441						1,417,246						14,535
Equity securities:
Exchange-traded funds						82,746						82,746						0						0
Non-redeemable preferred stocks:
Financial services sector						71,526						2,068						63,854						5,604
Utilities sector						3,170						0						3,170						0
Energy sector						3,975						0						3,975						0
Consumer sector						5,578						0						2,412						3,166
Technology sector						7,546						0						0						7,546
Communications sector						1,464						0						1,464						0
Total non-redeemable preferred stocks (2)						93,259						2,068						74,875						16,316
Total equity securities						176,005						84,814						74,875						16,316
Total						$	1,609,227					$	86,255					$	1,492,121					$	30,851

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

*(2)*This includes $25.5 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:
Non-redeemable preferred stocks:
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 non-redeemable preferred stocks (2)						90,763						2,593						76,105						12,065
Total equity securities						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 Quarterly Change:

(in thousands)						Beginning balance at March 31, 2026						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 June 30, 2026
Available-for-sale securities:
Corporate debt securities						$	3,758					$	(112)					$	119					$	14					$	(3,513)					$	212					$	0					$	478
Commercial mortgage-backed securities						22,701						(515)						134						0						(1,074)						3,013						(11,297)						12,962
Residential mortgage- backed securities						907						0						(4)						0						(23)						1,095						(880)						1,095
Total available-for-sale securities						27,366						(627)						249						14						(4,610)						4,320						(12,177)						14,535
Equity securities						12,299						740						—						3,300						(44)						21						0						16,316
Total Level 3 securities						$	39,665					$	113					$	249					$	3,314					$	(4,654)					$	4,341					$	(12,177)					$	30,851

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 June 30, 2026
Available-for-sale securities:
Corporate debt securities						$	3,939					$	(99)					$	(20)					$	816					$	(4,214)					$	1,023					$	(967)					$	478
Commercial mortgage-backed securities						23,021						(899)						(6)						0						(1,276)						10,535						(18,413)						12,962
Residential mortgage-backed securities						794						1						(15)						0						(38)						1,233						(880)						1,095
Total available-for-sale securities						27,754						(997)						(41)						816						(5,528)						12,791						(20,260)						14,535
Equity securities						12,065						818						—						3,450						(44)						27						0						16,316
Total Level 3 securities						$	39,819					$	(179)					$	(41)					$	4,266					$	(5,572)					$	12,818					$	(20,260)					$	30,851

Level 3 Assets – 2025 Quarterly Change:

(in thousands)						Beginning balance at March 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 June 30, 2025
Available-for-sale securities:
Corporate debt securities						$	6,030					$	12					$	21					$	968					$	(217)					$	2,377					$	(3,015)					$	6,176
Collateralized debt obligations						695						(4)						5						0						(696)						0						0						0
Commercial mortgage-backed securities						9,129						(240)						104						1,997						(1,098)						9,719						(3,177)						16,434
Residential mortgage- backed securities						923						0						0						0						(18)						0						(905)						0
Total available-for-sale securities						16,777						(232)						130						2,965						(2,029)						12,096						(7,097)						22,610
Equity securities						8,647						(9)						—						2,500						0						0						(498)						10,640
Total Level 3 securities						$	25,424					$	(241)					$	130					$	5,465					$	(2,029)					$	12,096					$	(7,595)					$	33,250

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 June 30, 2025
Available-for-sale securities:
Corporate debt securities						$	6,268					$	30					$	(33)					$	3,085					$	(792)					$	3,476					$	(5,858)					$	6,176
Collateralized debt obligations						0						(4)						0						700						(696)						0						0						0
Commercial mortgage-backed securities						24,089						(622)						404						1,997						(2,387)						11,072						(18,119)						16,434
Residential mortgage-backed securities						0						0						0						0						(18)						923						(905)						0
Total available-for-sale securities						30,357						(596)						371						5,782						(3,893)						15,471						(24,882)						22,610
Equity securities						6,974						646						—						3,500						0						18						(498)						10,640
Total Level 3 securities						$	37,331					$	50					$	371					$	9,282					$	(3,893)					$	15,489					$	(25,380)					$	33,250

*(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:

						June 30, 2026												December 31, 2025
(in thousands)						Carrying value						Fair value						Carrying value						Fair value
Agent loans, net (1)						$	119,672					$	116,064					$	109,331					$	113,850
Other loans receivable, net (2)						18,993						15,923						15,491						12,509
Held-to-maturity securities, net (3)						4,833						4,848						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:

						June 30, 2026
(in thousands)						Amortized cost						Gross unrealized gains						Gross unrealized losses						Estimated fair value
Available-for-sale securities:
Corporate debt securities						$	784,968					$	4,200					$	4,794					$	784,374
Collateralized debt obligations						233,053						155						487						232,721
Commercial mortgage-backed securities						147,887						1,550						1,715						147,722
Residential mortgage-backed securities						220,319						421						12,055						208,685
Other debt securities						46,032						187						385						45,834
U.S. Treasury						13,938						3						55						13,886
Total available-for-sale securities, net (1)						1,446,197						6,516						19,491						1,433,222
Held-to-maturity securities - states & political subdivisions						4,833						15						0						4,848
Total fixed maturity securities, net						$	1,451,030					$	6,531					$	19,491					$	1,438,070

*(1)*This includes an estimated fair value of $44.4 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 June 30, 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.

						June 30, 2026
						Amortized						Estimated
(in thousands)						cost						fair value
Available-for-sale securities:
Due in one year or less						$	63,311					$	63,363
Due after one year through five years						546,224						545,677
Due after five years through ten years						188,795						187,998
Due after ten years						647,867						636,184
Total available-for-sale securities, net (1) (2)						1,446,197						1,433,222
Held-to-maturity securities - due after ten years						4,833						4,848
Total fixed maturity securities, net						$	1,451,030					$	1,438,070

*(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 June 30, 2026.

*(2)*This includes an estimated fair value of $44.4 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:

						June 30, 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						$	432,603					$	4,186					$	13,788					$	608					$	446,391					$	4,794					273
Collateralized debt obligations						146,226						463						2,566						24						148,792						487						144
Commercial mortgage-backed securities						36,406						261						16,335						1,454						52,741						1,715						100
Residential mortgage-backed securities						99,078						1,393						73,795						10,662						172,873						12,055						185
Other debt securities						25,741						169						3,347						216						29,088						385						57
U.S. Treasury						10,404						55						0						0						10,404						55						3
Total available-for-sale securities						$	750,458					$	6,527					$	109,831					$	12,964					$	860,289					$	19,491					762
Quality breakdown of available-for-sale securities:
Investment grade						$	725,388					$	5,879					$	106,979					$	12,807					$	832,367					$	18,686					734
Non-investment grade						25,070						648						2,852						157						27,922						805						28
Total available-for-sale securities						$	750,458					$	6,527					$	109,831					$	12,964					$	860,289					$	19,491					762

						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:

						Three months ended June 30, 2026
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	1,029					$	2,167					$	15,357					$	1,879
Provision and recoveries						(1)						0						289						0
Sales/collections and write-offs						(562)						0						0						0
Balance, end of period						$	466					$	2,167					$	15,646					$	1,879

						Six months ended June 30, 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						274						0						545						199
Sales/collections and write-offs						(710)						0						0						0
Balance, end of period						$	466					$	2,167					$	15,646					$	1,879

						Three months ended June 30, 2025
(in thousands)						Available-for-sale securities						Held-to-maturity securities						Other loans receivable						Agent loans
Balance, beginning of period						$	826					$	2,167					$	12,592					$	1,476
Provision and recoveries						304						0						446						0
Sales/collections and write-offs						(249)						0						0						0
Balance, end of period						$	881					$	2,167					$	13,038					$	1,476

						Six months ended June 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						669						0						840						164
Sales/collections and write-offs						(301)						0						0						0
Balance, end of period						$	881					$	2,167					$	13,038					$	1,476

Net investment income

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

						Three months ended June 30,												Six months ended June 30,
(in thousands)						2026						2025						2026						2025
Available-for-sale securities						$	16,770					$	14,530					$	34,002					$	27,813
Equity securities						1,706						1,149						3,013						2,313
Limited partnerships (1)						(16)						83						716						1,155
Agent loans						2,030						1,557						3,934						3,001
Cash equivalents and other						3,010						3,509						5,773						6,896
Total investment income						23,500						20,828						47,438						41,178
Less: investment expenses						913						798						1,291						1,200
Net investment income						$	22,587					$	20,030					$	46,147					$	39,978

*(1)*Limited partnership (losses) 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 gains (losses)

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

						Three months ended June 30,												Six months ended June 30,
(in thousands)						2026						2025						2026						2025
Available-for-sale securities:
Gross realized gains						$	3,074					$	331					$	4,095					$	680
Gross realized losses						(4,037)						(762)						(4,909)						(1,373)
Net realized losses on available-for-sale securities						(963)						(431)						(814)						(693)
Equity securities						1,520						910						606						1,669
Miscellaneous						0						0						0						5
Net realized and unrealized investment gains (losses)						$	557					$	479					$	(208)					$	981

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

						Three months ended June 30,												Six months ended June 30,
(in thousands)						2026						2025						2026						2025
Equity securities:
Net gains recognized during the period						$	1,520					$	910					$	606					$	1,669
Less: net gains (losses) recognized on securities sold						32						15						(7)						149
Net unrealized gains recognized on securities held at reporting date						$	1,488					$	895					$	613					$	1,520

Net impairment (losses) recoveries recognized in earnings

Impairments on investments were as follows:

						Three months ended June 30,												Six months ended June 30,
(in thousands)						2026						2025						2026						2025
Available-for-sale securities:
Intent to sell						$	(349)					$	(417)					$	(339)					$	(417)
Credit recovered (impaired)						1						(304)						(274)						(669)
Total available-for-sale securities						(348)						(721)						(613)						(1,086)
Expected credit losses:
Agent loans						0						0						(199)						(164)
Other loans receivable						(243)						(188)						(455)						(573)
Net impairment losses recognized in earnings						$	(591)					$	(909)					$	(1,267)					$	(1,823)

Securities lending transactions

As of June 30, 2026, the estimated fair value of loaned securities was $69.9 million, consisting of $44.4 million of available- for-sale securities and $25.5 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 $63.2 million and $61.9 million as of June 30, 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 $9.1 million and $4.5 million of non-cash collateral as of June 30, 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 June 30, 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 June 30, 2026. Investments with a fair value of $110.5 million were pledged as collateral on the line of credit at June 30, 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 June 30, 2026. The bank requires compliance with certain covenants, which include leverage ratios and debt restrictions. We are in compliance with all covenants at June 30, 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 six months ended June 30, 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. We plan to make an additional discretionary contribution of $30 million during the third quarter of 2026, which will further improve the plan's funded status. 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:

			Three months ended June 30,												Six months ended June 30,
(in thousands)			2026						2025						2026						2025
Service cost for benefits earned			$	9,591					$	8,862					$	19,181					$	17,724
Interest cost on benefit obligation			15,513						14,676						31,027						29,351
Expected return on plan assets			(19,889)						(20,069)						(39,778)						(40,138)
Prior service cost amortization			458						422						916						844
Net actuarial gain amortization			(68)						(655)						(135)						(1,309)
Settlement gain (1)			—						—						—						(477)
Pension plan cost (2)			$	5,605					$	3,236					$	11,211					$	5,995

*(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 June 30, 2026 and 2025, our effective tax rate was 21.0% and 20.9%, respectively. For the six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2026 and the year ended December 31, 2025. We had approximately $17.8 million of repurchase authority remaining under this program at June 30, 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:

						Three months ended												Three months ended
						June 30, 2026												June 30, 2025
(in thousands)						Before Tax			Income Tax			Net						Before Tax			Income Tax			Net
Investment securities:
AOCI (loss), beginning of period						$	(14,358)		$	(3,015)		$	(11,343)					$	(15,128)		$	(3,178)		$	(11,950)
OCI before reclassifications						71			15			56						6,774			1,423			5,351
Realized investment losses						963			202			761						431			91			340
Impairment losses						348			73			275						721			151			570
OCI						1,382			290			1,092						7,926			1,665			6,261
AOCI (loss), end of period						$	(12,976)		$	(2,725)		$	(10,251)					$	(7,202)		$	(1,513)		$	(5,689)
Pension and other postretirement plans:
AOCI (loss), beginning of period						$	(66,968)		$	(14,064)		$	(52,904)					$	(38,511)		$	(8,087)		$	(30,424)
Amortization of prior service costs						458			96			362						422			88			334
Amortization of net actuarial gain						(68)			(14)			(54)						(655)			(138)			(517)
OCI (loss)						390			82			308						(233)			(50)			(183)
AOCI (loss), end of period						$	(66,578)		$	(13,982)		$	(52,596)					$	(38,744)		$	(8,137)		$	(30,607)
Total
AOCI (loss), beginning of period						$	(81,326)		$	(17,079)		$	(64,247)					$	(53,639)		$	(11,265)		$	(42,374)
Investment securities						1,382			290			1,092						7,926			1,665			6,261
Pension and other postretirement plans						390			82			308						(233)			(50)			(183)
OCI						1,772			372			1,400						7,693			1,615			6,078
AOCI (loss), end of period						$	(79,554)		$	(16,707)		$	(62,847)					$	(45,946)		$	(9,650)		$	(36,296)
						Six months ended												Six months ended
						June 30, 2026												June 30, 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						(15,911)			(3,341)			(12,570)						13,461			2,827			10,634
Realized investment losses						814			171			643						693			146			547
Impairment losses						613			129			484						1,086			228			858
OCI (loss)						(14,484)			(3,041)			(11,443)						15,240			3,201			12,039
AOCI (loss), end of period						$	(12,976)		$	(2,725)		$	(10,251)					$	(7,202)		$	(1,513)		$	(5,689)
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						916			192			724						844			177			667
Amortization of net actuarial gain						(135)			(28)			(107)						(1,309)			(275)			(1,034)
Settlement gain						—			—			—						(477)			(100)			(377)
OCI (loss)						781			164			617						(942)			(198)			(744)
AOCI (loss), end of period						$	(66,578)		$	(13,982)		$	(52,596)					$	(38,744)		$	(8,137)		$	(30,607)
Total
AOCI (loss), beginning of period						$	(65,851)		$	(13,830)		$	(52,021)					$	(60,244)		$	(12,653)		$	(47,591)
Investment securities						(14,484)			(3,041)			(11,443)						15,240			3,201			12,039
Pension and other postretirement plans						781			164			617						(942)			(198)			(744)
OCI (loss)						(13,703)			(2,877)			(10,826)						14,298			3,003			11,295
AOCI (loss), end of period						$	(79,554)		$	(16,707)		$	(62,847)					$	(45,946)		$	(9,650)		$	(36,296)

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 $753.2 million and $735.6 million at June 30, 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 under the program. As of June 30, 2026, our portion of the outstanding loans executed under this agreement is $68.7 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 June 30, 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 June 30, 2026.

We also have contingent obligations for guarantees related to certain real estate development projects supporting revitalization efforts in our community. As of June 30, 2026, our maximum potential obligation related to guarantees is $6.2 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.