BRO 10-K & 10-Q changes, risk factors and insider trading

Our success and future performance depend in part upon the continued services of our executive officers, senior management, and other highly skilled personnel. Losing employees who manage or support substantial customer relationships or possess substantial experience or expertise could adversely affect our ability to secure and complete customer engagements and/or innovate, which would adversely affect our results of operations. This risk may be increased by remote or hybrid working arrangements, which may make our employees more vulnerable to solicitations by competing firms. Competition for skilled professionals remains intense, and employers are implementing new offerings to attract talent, including increasing compensation, enhancing health and wellness solutions, and providing in-office and remote work options. We may be unable to retain our employees if we do not offer employment terms that are competitive with the rest of the labor market. We may have to devote significant resources to attract and retain talent, which could negatively affect our business, results of operations and financial condition. Our employees have been, and may continue to be, subject to poaching efforts by our competitors.

Also, if any of our key employees were to join a competitor or form a competing company, some of our customers could choose to use the services of that competitor instead of our services.services, which has occurred in the past and may occur again. While our key employees are generally prohibited by contract from soliciting our employees and customers for a two-year period following separation from employment with us, they are not prohibited from competing with us. Similarly, if an employee joins us from a competitor and is subject to enforceable restrictive covenants, we may be delayed in optimizing the employee’s potential. In addition, regulation or legislation impacting the workforce or the ability to enforce employment-related restrictive covenants (due to applicable laws or regulations), may lead to increased uncertainty and competition for talent.

We rely on information technology and third-party vendors to provide effective and efficient service to our customers, process claims, and timely and accurately report information to carriers, which often involves secure processing of confidential, sensitive, proprietary and other types of information. We face potential threats due to new and increasingly sophisticated methods of attack. Cybersecurity breaches of any of the systems we rely on may result from circumvention of security systems, denial-of-service attacks or other cyber-attacks, software bugs, malicious or destructive code, hacking, social engineering attacks (including “phishing” attacksattacks, business email compromise and digital or telephonic impersonation), computer viruses, ransomware, malware, employee or insider error or threats, malfeasance, social engineering, physical breaches or other actions, any of which could expose us to unauthorized access, exfiltration, manipulation, corruption, loss or disclosure of proprietary, customer, employee or other data, the inability to render services due to system outages or other business disruptions, regulatory action and scrutiny, monetary and reputational damages and significant increases in compliance costs. Further, the advance of generative artificial intelligence (“AI”) may give rise to additional vulnerabilities and potential entry points for cyber threats. With generative AI tools, threat actors may have additional tools to automate breaches or persistent attacks, evade detection, or generate sophisticated phishing emails or other forms of digital impersonation, doing so quickly and without requiring deep technical understanding of potential exploits. In addition, increasing use of generative AI models in our internal systems may create new attack methods for adversaries. Because generative AI is a new field, our understanding of cybersecurity risks resulting from generative AI and protection methods continues to develop, and features that rely on generative AI, including in services provided to us by third parties, may be susceptible to unanticipated cybersecurity threats from sophisticated adversaries and other cybersecurity incidents. Any of the foregoing may be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident. A compromise may not manifest itself for months, or even years, and we may not be able to detect a compromise in a timely manner. In addition, disclosure or media reports of actual or perceived security vulnerabilities to our systems or those of our third-party service providers, even if no breach has been attempted or occurred, could lead to reputational harm, loss of customers and revenue, or increased regulatory actions and scrutiny. The risk of such cybersecurity breaches may be increased by our reliance on work-from-home or other remote work technologies. An interruption of our access to, or an inability to access, our information technology, telecommunications or other systems could significantly impair our ability to perform such functions on a timely basis. If sustained or repeated, such a business interruption, system failure or service denial could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. We have from time to time experienced cybersecurity incidents, such as malware infections, phishing campaigns, ransomware and vulnerability exploit attempts, which to date have not had a material impact on our business.

We are an acquisitive organization, and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risks as we might not adequately identify weaknesses in the acquired company’s information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack. These risks may be exacerbated in connection with the integration of Accession. In the future, any material breaches of cybersecurity, or media reports of the same, even if untrue, could cause us to experience reputational harm, loss of customers and revenue, loss of proprietary data, regulatory actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard customers’ information, impairment of invested capital or financial losses. Such losses may not be insured against or not fully covered through insurance we maintain.

Additionally, our control over and ability to monitor the cybersecurity practices of our third-party vendors and service providers, and other third parties with whom we do business, remains limited, and there can be no assurance that we can prevent, mitigate, or remediate the risk of any compromise or failure in the cybersecurity infrastructure owned or controlled by such third parties. Additionally, any contractual protections with such third parties, including our right to indemnification, if any, may be limited or insufficient to prevent a negative impact on our business from such compromise or failure. Further, we cannot ensure that our and our third-party vendors’ existing insurance coverage will continue to be available on acceptable terms or at all. Certain regulations and contractual obligations require us to inform regulators or affected persons in the event of a breach of confidential, personal or proprietary information on our or our third-party vendors’ systems, which we may need to deliver before we fully understand the impact of such breach resulting in damage to our reputation and our relationship with regulators and customers. As these threats evolve, cybersecurity incidents will be more difficult to detect, defend against, mitigate and remediate. Any of the foregoing may have a material adverse effect on our business, financial condition and reputation.

Our growth strategy partially includes the acquisition of other insurance intermediaries and related businesses. Our ability to successfully identify suitable acquisition candidates, negotiate transactions on favorable terms, complete acquisitions, successfully integrate acquired businesses into our operations, including our recent acquisition of Accession, and expand into new markets requires us to implement and continuously improve our operations and our financial and management information systems. Integrated, acquired businesses may not achieve levels of revenues or profitability comparable to our existing operations, or otherwise perform as expected. In addition, we compete for acquisition and expansion opportunities with firms and banks that may have substantially greater resources than we do. If we are unable to identify appropriate acquisition targets, or if our competitors are more successful in identifying acquisition targets at favorable valuations, we may fail to achieve desired strategic goals and capabilities, and our results of operations may be adversely affected. Additionally, failure to successfully identify and complete acquisitions would likely result in slower growth. Acquisitions also involve a number of risks, such as diversion of management’s attention; difficulties in the integration of acquired operations and retention of employees; increase in expenses and working capital requirements, which could reduce our return on invested capital; entry into unfamiliar markets or lines of business; unanticipated problems or legal liabilities; estimation of acquisition earn-outs; and tax and accounting issues, some or all of which could have a material adverse effect on our results of operations, financial condition and cash flows. Post-acquisition deterioration of operating performance could also result in lower or negative earnings contribution and/or goodwill impairment charges. Additional post-acquisition risks include integration into our existing culture, managing such acquired business or the larger company that results from such acquisition, an inability to establish uniform standards, controls, systems, procedures and policies, risks related to retention of personnel, entry into unfamiliar or complex markets or lines of business, contingencies or liabilities,liabilities not covered by or in excess of escrowed or indemnified amounts, such as those arising from violations of sanctions laws or anti-corruption laws, risk relating to ensuring compliance with licensing and regulatory requirements and tax and accounting issues. Moreover, if we acquire a business operating in regions or industries subject to heightened regulatory scrutiny, we may face significant costs or risks in bringing their operations into compliance with applicable laws and our internal policies. Failure to address these compliance risks could result in regulatory enforcement actions, fines or damage to our reputation. Additionally, with respect to any acquisition transaction, we face risks related to the potential impacts of the transaction on relationships, including with customers, colleagues, suppliers, regulators, competitors and other third parties.

We may enter new lines of business, implement new technologies, or offer new products and services within existing lines of business either through acquisitions or through initiatives to generate organic revenue growth. These new lines of business, technologies, products, and services may present us with additional risks,risks or increased regulatory burden, particularly in instances where the markets are new or not fully developed or where participants in such markets are new entrants. Such risks include the investment of significant time and resources; the possibility that these efforts will not be successful and could result in reputational damage to us; the possibility that the marketplace does not accept our products or services, that new technologies are not effective, or that we are unable to retain customers that adopt our new products or services; and the risk of new or additional liabilities associated with these efforts, including potential errors and omissions or other claims. External factors, such as compliance with new or revised regulations, competitive alternatives and shifting market preferences may also impact the successful implementation of a line of business, product or service. If the entry into new lines of business, products or services is not successfully integrated into our business, the intended benefits will not be achieved, which may adversely affect our business, results of operations and financial condition.

We have substantial operations in the United Kingdom, as well as operations in Belgium, Bermuda, Canada, Cayman Islands, France, Germany, Hong Kong, Republic of Ireland,India, Italy, Malaysia, the Netherlands, Republic of Ireland, Singapore and United Arab Emirates. In the future, we intend to continue to consider additional international expansion opportunities. Our international operations may be subject to a number of risks, including:

Difficulties in staffing and managing international operationsoperations, increased travel, infrastructure and legal and compliance costs and risks associated with multiple international locations;

Political and economic instability (including acts of terrorismterrorism, military actions, armed conflicts and outbreaks of war) either in the United States or globally;

Adverse trade policies, trade wars or tariffs, and adverse changes to any of the policies of either the U.S. or any of the international jurisdictions in which we operate;

We are continuously taking steps to upgrade and expand our information systems capabilities, including how we electronically interact with our customers, vendors, insurance carriers and other intermediaries. Maintaining, protecting and enhancing these capabilities to keep pace with evolving industry and regulatory standards, and changing customer preferences, requires an ongoing commitment of significant resources. In addition, data quality, integrity and availability is increasingly important to the success of our business strategies, operations, and our ability to leverage our data, both in our products and as a strategic asset. If the information we rely upon to run our businesses was found to be inaccurate or unreliable or if we fail to effectively maintain our information systems and data integrity,quality, integrity and availability, we could experience operational disruptions, regulatory or other legal problems, increases in operating expenses, loss of existing customers, difficulty in attracting new customers and/or maintaining third-party relationships or suffer other adverse consequences.

Additionally, AI and RPA heavily rely on the collection and analysis of extensive data sets and interaction between systems. Due to the impracticality of incorporating all relevant data into the models or algorithms used by AI and RPA it is inevitable that data sets within these models will contain inaccuracies and errors, and potential biases. This could potentially render such models inadequate or flawed, negatively impacting the effectiveness of the technology.technology or our services. We are exposed to the risks associated with these inaccuracies, errors and biases, along with the adverse impacts that such flawed models could have on our business and operations. Furthermore, governance and ethical issues relating to the use of AI or RPA may also result in reputational harm, liability and/or financial losses.

AI, RPA and related applications are developing rapidly. The use of these technologies by customers or underwriting enterprises may impact the way our business operates, and its use by our competitors and new market entrants with competing services derived from their AI capabilities may give them a competitive advantageadvantage. thatIn addition, emerging AI-enabled platforms may enable insurers or third parties to quote, market, or sell insurance products directly to customers, potentially bypassing traditional intermediaries and reducing demand for our services. We cannot bepredict predictedthe effect of these changes at this time, and itthey may decrease the demand for our services or negatively affect our assumptions regarding the competitive landscape of our business. Further, the rapid development of these technologies may require significant efforts to upskill or reskill existing employees. Consequently, it is difficult to predict all risks associated with these new technologies, which may eventually impact our business, results of operations, or financial condition.

Our business is exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods, tornadoes, droughts, extreme weather or other climate events. The occurrence of any of these events may cause a decrease to our profit-sharing contingent commissions, which are special revenue-sharing commissions paid by insurance companies based primarily upon the profitability of policies placed with such companies, generally during the prior year. The occurrence of natural disasters could also result in reduced underwriting capacity by insurance carriers, making it more difficult for us to place business.business, as well as cause us to incur operational challenges. If access to underwriting markets for certain lines of coverage becomes unavailable or difficult due to the impact of natural disasters, this may have a negative impact on our customers’ access to coverage and our ability to issue policies, which could negatively impact our business. Natural disasters may also subject our insurance company subsidiary operations, including the captive insurance facilities in which we participate, to claims expenses, which may be volatile.

A significant portion of our businesses are concentrated in Florida, Michigan, Massachusetts, California, Massachusetts,New Georgia,York and New York,Georgia where for the year ended December 31, 2024,2025, we derived approximately 20%,16%, 9%, 7%,8%, 7%,6%, 6%, and 5% of our annual revenue, respectively. We believe the current regulatory environment for insurance intermediaries in these states is no more restrictive than in other jurisdictions. The insurance business in the U.S. is primarily a state-regulated industry, and therefore, state legislatures may enact laws that adversely affect the insurance industry.

Inflation can adversely affect us by increasing our costs, including salary costs. While moderate inflation generally benefits our industry by increasing insurable asset values, significant inflation is often accompanied by higher interest rates, which can have negative effects on the global economy. Lower levels of inflation may reduce our revenue growth by slowing the increase in insurable asset values. Any sustained inflation or significant increases in inflation, such as the wage inflation experienced during the fiscal year ended December 31, 2022, and interest rates could have an adverse effect on our business, results of operations and financial condition.

WE ARE SUBJECT TO LIMITED UNDERWRITING RISK THROUGH OUR PARTICIPATION IN CAPITALIZED CAPTIVE INSURANCE FACILITIES, WHICH MAY SUBJECT US TO LIMITED CLAIMS EXPENSES.

We rely on a large number of vendors and other third parties to provide services, data and information such as technology, information security, funds transfers, business process management, and administration and support functions that are critical to the operations of our business. These third parties include agents and other brokers and intermediaries, insurance markets, data providers, payroll service providers, software and system vendors, health plan providers, custodians, risk modeling providers, and providers of human resource functions. Certain parties may receive, or otherwise have access to, confidential customer, employee, or company information. Some of these providers are located outside the U.S., which exposes us to business disruptions and political risks inherent when conducting business outside of the U.S. As we do not control many of the actions of these third parties, we are subject to the risk that their decisions, actions, inactions or operations may adversely impact us and replacing these service providers could create significant delay in services or operations and/or additional expense A failure by the third parties to: (i) comply with service level agreements in a high quality and timely manner, particularly during periods of our peak demand for their services, (ii) maintain adequate internal controls that may impact our own financial reporting, or (iii) adequately maintain the confidentiality of any of our data or trade secrets or adequately protect or properly use other intellectual property to which they may have access, could result in economic, financial and/or reputational harm to us. These third parties also face their own technology, operating, business and economic risks, and any significant failures by them, including the improper use or disclosure of our confidential customer, employee, or Company information or failure to comply with applicable law, could cause harm to our reputation or otherwise expose us to financial liability. An interruption in or the cessation of service by any service provider as a result of systems failures, capacity constraints, non-compliance with legal, regulatory or contractual obligations, financial difficulties or for any other reason could disrupt our operations, impact our ability to offer certain products and services, and result in contractual or regulatory penalties, liability claims from customers or employees, damage to our reputation and harm to our business.expense.

At December 31, 2024,2025, our executive officers, directors and certain of their family members collectively beneficially owned approximately 15.6%13.1% of our outstanding common stock, of which J. Hyatt Brown, our chairman of the board, and his sons, J. Powell Brown, our president and chief executive officer, and P. Barrett Brown, our executive vice president and the president of our Retail segment,president, beneficially owned approximately 15.0%.12.6%. As a result, our executive officers, directors and certain of their family members have significant influence over (i) the election of our board of directors, (ii) the approval or disapproval of any other matters requiring shareholder approval and (iii) our affairs and policies.

We are subject to a variety of continuously evolving and developing laws and regulations globally regarding privacy, data protection and data security, including those related to the collection, storage, retention, handling, use, processing, disclosure, cross-border transfer, destruction and security of personal data. Significant uncertainty exists as privacy and data protection laws evolveevolve. Such laws are complex and may be interpreted and applied differently from jurisdiction to jurisdictionjurisdiction, which may create inconsistent or conflicting requirements. Additionally, these laws often develop in ways we cannot predict. These laws apply to transfers of information among our affiliates, as well as to transactions we enter into with third-party vendors. For example, the European Union’s General Data Privacy Regulation (“GDPR”) requires companies to satisfy requirements regarding the handling of personal and sensitive data, including its processing, protection and the ability of persons whose data is stored to correct or delete such data about themselves. Failure to comply with GDPR requirements could result in penalties of up to 4% of worldwide revenue. Additionally, a judgement by the Court of Justice of the European Union on Schrems II made cross border data transfers to organizations outside of the European Economic Area more onerous and uncertain. In addition, legislators and regulators in the U.S. have enacted and are proposing new and more robust privacy and cybersecurity laws and regulations in light of the broad-based cyber-attacks at a number of companies, including the New York State Department of Financial Services Cybersecurity Requirements for Financial Services Companies and the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act. Some jurisdictions provide right of action for data breaches or for collection of certain categories of personal information without consent, which may result in increased litigation. We expect additional jurisdictions to continue to adopt new privacy regulations and that existing regulations may be amended as governments continue to legislate with respect to personal data. Additionally, we are also subject to the terms of our privacy policies and contractual obligations to third parties related to privacy, data protection and information security. We also expect to be subject to a variety of laws and regulations governing AI and RPA, such as the EU AI Act, which was enacted in August 2024. These laws and regulations are still evolving, and while we are assessing how regulators may apply existing consumer protection, data protection and other similar laws to AI, there is uncertainty regarding the scope of new laws and how existing laws will apply. Due to this uncertainty, we may face challenges complying with existing and new laws, including achieving compliance within the required periods for compliance, and our policies and governance frameworks may not be successful in mitigating these risks. Additionally, due to the high level of uncertainty concerning the flow of personal information between these jurisdictions, our ability to offer existing and new services and increase our costs and compliance burden may be impaired.

Many statutory requirements, both in the United States and abroad, include obligations for companies to notify individualsindividuals, or the applicable regulatory authority, of security breaches involving certain personal information,information before we fully understand or appreciate the extent of the breach, which could result from breaches experienced by us or our vendors. Additionally, many privacy laws and related rules and regulations require us to provide individuals with information on how their personal data is used within the Company or collected from our websites. In addition to government regulation, privacy advocates and industry groups have and may in the future propose self-regulatory standards from time to time. These and other industry standards may legally or contractually apply to us, or we may elect to comply with such standards. We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. Data protection laws also include strict notification requirements for organizations related to confirmed or suspected breaches. With such a limited time available to validate indicators, there is an increased risk of reporting a false alarm or immaterial breach, which may lead to reputational damage despite there not being an actual data breach. We have implemented privacy policies detailing how we collect, use, disclose, transfer across borders, retain, and otherwise process personal information but our employees, third-party vendors or other third parties we work with may not fully adhere to such policies. Such non-compliance could lead to enforcement actions or investigations if our practices are deemed deceptive, unfair, or misrepresentative of our actual practices.

These and similar initiatives around the world could increase the cost of developing, implementing or securing our servers and require us to allocate more resources towards enhanced technologies, further contributing to our technology and compliance costs. In addition, enforcement actions and investigations by regulatory authorities related to data security incidents and privacy violations generally continue to increase. The enactment of more restrictive laws, rules, regulations or future enforcement actions or investigations could impact us through increased costs or restrictions on our business,business and noncompliance could result in regulatory penalties and significant legal liability. Failure to comply with some of these obligations, especially those related to data retention requirements, could expose us to regulatory fines and other penalties.

We are responsible for maintaining the security and privacy of our customers’ confidential and proprietary information and the personal data of their employees. We have put in place administrative, physical, procedures and technological safeguards designed to protect the security and privacy of this information; however, we cannot guarantee that this information will not be improperly disclosed or accessed.accessed, or that the administrative, physical, procedures and technological safeguards are adequate to ensure that this information is timely disposed of or deleted in a manner compliant with such policies and applicable law or regulation. Disclosure of this information, or other security breach of our information systems, or those of third-party vendors we rely on,on could harm our reputation and subject us to liability under our contracts and laws that protect personal data, resulting in increased costs or loss of revenues. These risks may be exacerbated in connection with the integration of Accession.

We have completed several acquisitions that have introduced us to various new geographic markets, subjecting us to additional non-U.S. laws, regulations and policies which did not previously apply to us. These laws and regulations are complex, change frequently, have become more stringent over time, could increase our cost of doing business, and could result in conflicting legal requirements. These laws and regulations include international labor and employment laws and data privacy requirements. We will beare subject to the risk that we, our employees and our agents may take actions determined to be in violation of any of these laws, regulations or policies, for which we might be held responsible. Actual or alleged violations could result in substantial fines, sanctions, civil or criminal penalties, curtailment of operations in certain jurisdictions, competitive or reputational harm, litigation or regulatory action and other consequences that might adversely affect our results of operations, financial condition or strategic objectives. Additionally, new or evolving laws or regulations may also lead our customers to include contractual requirements in their agreements with us, which may increase our costs of compliance or introduce additional organizational complexity.

We are subject to various actual and potential claims, including the claims detailed in “We are subject to risks related to Accession’s business, including underwriting risk in connection with certain captive insurance companies” above, regulatory actions and other proceedings, including those relating to alleged errors and omissions in connection with the placement or servicing of insurance and/or the provision of services in the ordinary course of business, of which we cannot, and likely will not be able to, predict the outcome with certainty. Because we often assist customers with matters involving substantial amounts of money, including the placement of insurance and the handling of related claims that customers may assert, errors and omissions claims against us may arise alleging potential liability for all or part of the amounts in question. Also, the failure of an insurer with whom we place business could result in errors and omissions claims against us by our customers, which could adversely affect our results of operations and financial condition. Claimants may seek large damage awards, and these claims may involve potentially significant legal costs, including punitive damages. Such claims, lawsuits and other proceedings could, for example, include claims for damages based upon allegations that our employees or sub-agents failed to procure coverage, report claims on behalf of customers, provide insurance companies with complete and accurate information relating to the risks being insured or appropriately apply funds that we hold for our customers on a fiduciary basis. In addition, given the long-tail nature of professional liability claims, errors and omissions matters can relate to matters dating back many years. Risk of errors or omissions may be higher in circumstances where we have significant numbers of departures or new joiners or other disruptions to our business, such as changes in ways of working. Such risks may also be higher in parts of our business that are not well-integrated with the rest of the Company for reasons of geography, culture, language, historical practice or other circumstances.

We conduct business throughout all of the United States of America and are subject to comprehensive regulation and supervision by government agencies in each of those states. The primary purpose of such regulation and supervision is to provide safeguards for policyholders rather than to protect the interests of our shareholders, and it is difficult to anticipate how changes in such regulation would be implemented and enforced. As a result, such regulation and supervision could reduce our profitability or growth by increasing compliance costs, technology compliance, restricting the products or services we may sell, the markets we may enter, the methods by which we may sell our products and services, or the prices we may charge for our services and the form of compensation we may accept from our customers, carriers and third parties. The laws of the various state jurisdictions establish supervisory agencies with broad administrative powers with respect to, among other things, licensing of entities to transact business, licensing of agents, admittance of assets, regulating premium rates, approving policy forms, regulating unfair trade and claims practices, determining technology and data protection requirements, establishing reserve requirements and solvency standards, requiring participation in guarantee funds and shared market mechanisms, and restricting payment of dividends. Also, in response to perceived excessive cost or inadequacy of available insurance, states have from time to time created state insurance funds and assigned risk pools, which compete directly, on a subsidized basis, with private insurance providers. We act as agents and brokers for such state insurance funds and assigned risk pools in California, Florida, New York, Washington as well as certain other states. These state funds and pools could choose to reduce the sales or brokerage commissions we receive. Any such reductions, in a state in which we have substantial operations could affect the profitability of our operations in such state or cause us to change our marketing focus. Further, state insurance regulators and the National Association of Insurance Commissioners continually reexamine existing laws and regulations, and such reexamination may result in the enactment of insurance-related laws and regulations, or the issuance of interpretations thereof that adversely affect our business. Certain federal financial services modernization legislation could lead to additional federal regulation of the insurance industry in the coming years, which could result in increased expenses or restrictions on our operations. Other legislative developments that could adversely affect us include: changes in our business compensation model as a result of regulatory developments (for example, potential changes to the Affordable Care Act); and federal and state governments establishing programs to provide health insurance or, in certain cases, property insurance in catastrophe-prone areas or other alternative market types of coverage that compete with or completely replace, insurance products offered by insurance carriers. Also, as climate change issues become more prevalent, the U.S. and other governments are beginning to respond to these issues. This increasing governmental focus on climate change may result in new environmental regulations, new or enhanced reporting, diligence or disclosure rules that may negatively affect us and our customers and could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. This could cause us to incur additional direct costs in complying with any new environmental regulations, as well as increased indirect costs resulting from our customers incurring additional compliance costs that get passed on to us. These costs may adversely impact our results of operations and financial condition.

INCREASING SCRUTINY AND CHANGING LAWS ANDOR COMPETING EXPECTATIONS FROM REGULATORS, INVESTORS AND CUSTOMERS WITH RESPECT TO OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) PRACTICES AND DISCLOSURE CAN IMPOSE ADDITIONAL COSTS ON US OR EXPOSE US TO REPUTATIONALREPUTATIONAL, LITIGATION OR OTHER RISKS.

There is increasedcontinued and sometimes conflicting focus, including from governments, non-governmental organizations, regulators (including the SEC), investors and customers, on ESG issues such as environmental stewardship, climate change, greenhouse gas emissions, diversity and inclusion, human rights, racial justice and workplace conduct. Negative public perception, adverse publicity or negative comments in social media and other forums could damage our reputation if we do not, or are not perceived to, adequately or appropriately address any one or more of these issues. Any harm to our reputation could impact employee engagement and retention and the willingness of customers and others to do business with us. In addition, negative public perception resulting from the potential conflict with anti-ESG initiatives from certain U.S. state governments and other stakeholders could damage our reputation with investors, customers, employees and regulators. Public opinion and potential legal actions regarding ESG-related initiatives remain highly dynamic and can vary across stakeholders and geographies. Balancing these competing expectations globally is complex.

Laws and regulations related to ESG issues continue to evolve, including in the U.S., the U.K. and the EU. New laws and regulations may impose additional compliance or disclosure obligations on us.us, and we may face inconsistent or conflicting requirements across jurisdictions. In particular, heightened demand for, and scrutiny of, ESG-related strategies and advice has increased the risk that we could be perceived as, or accused of, making inaccurate or misleading statements, commonly referred to as “greenwashinggreenwashing,” or that we have otherwise run afoul of regulation.regulations. Such perceptions or accusations could damage our reputation, result in litigation or regulatory enforcement actions, and adversely affect our business. Furthermore, perceptions of our efforts to achieve ESG goals or advance ESG-related strategies may differ widely among stakeholders and could present risks to our reputation and business, including litigation risk. For example, in the U.S. there has been increased legal scrutiny on inclusion and diversity-related programs and initiatives.

New government regulations could also result in new or more stringent forms of ESG oversight and new mandatory and voluntary reporting, diligence and disclosure, such as the Corporate Sustainability Reporting Directive in the European Union. TheseThe impact of new laws, rules and regulations of our business could affect our operations or require significant expenditures. Our failure to meet expectations, whether the expectations are set by us, by investors or by other stakeholders, or any other failure to make progress in this area on a timely basis, or at all, could negatively impact our reputation and our business.

We are a diversified insurance agency, wholesale brokerage, insurance programsprograms, specialty insurance business and servicesservice organization headquartered in Daytona Beach, Florida. As an insurance intermediary, our principal sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers. Commission revenues generally represent a percentage of the premium paid by an insured and are affected by fluctuations in both premium rate levels charged by insurance companies and the insureds’ underlying “insurable exposure units,” which are units that insurance companies use to measure or express insurance exposed to risk (such as property values, sales or payroll levels) to determine what premium to charge the insured. Insurance companies establish these premium rates based upon many factors, including loss experience, risk profile and reinsurance rates paid by such insurance companies, none of which we control. We also participate in capitalized captive insurance facilities (the "Captives") for the purpose of having additional capacity to place coverage, drivedriving additional revenues and to participate in underwriting results. The Captives focus on property insurance for earthquake and wind exposed properties underwritten by certain of our MGUs andWe limit the Company's exposure to claims expenses through reinsurance or by only participating in certain tranches of the underwriting. We also operate registered insurance companies to support our national flood insurance program and to support our cross-collateralized segregated captive cell businesses. We do not participate in earnings of the collateralized segregated captive cells.

We have increased revenues every year from 1993 to 2024,2025, with the exception of 2009, when our revenues declined 1.0%. Our revenues grew from $95.6 million in 1993 to $4.8$5.9 billion in 2024,2025, reflecting a compound annual growth rate of 13.5%.14.2%. In the same 31-year32-year period, we increased net income from $8.1 million to over $1.0 billion in 2024,2025, a 16.8%16.9% compound annual growth rate.

The volume of business from new and existing customers, fluctuations in insurable exposure units, changes in premium rate levels, changes in general economic and competitive conditions, a reduction of purchased limitslimits, or the occurrence of catastrophic weather events all affect our revenues. For example, higher levels of inflation, an increase in the value of insurable exposure units,units or a general decline in economic activity, could increase or decrease the value of insurable exposure units. Conversely, increasing costs of litigation settlements and awards could cause some customers to seek higher levels of insurance coverage. Historically, we have grown our revenues as a result of our focus on new business, customer retention and acquisitions. We foster a strong, decentralized sales and service culture, which enables responsiveness to changing business conditions and drives accountability for results.

The term “core commissions and fees” excludes profit-sharing contingent commissions, and therefore, it represents the revenues earned directly from specific insurance policies sold, and specific fee-based services rendered. The net change in core commissions and fees reflects the aggregate changes attributable to: (i) net new and lost accounts; (ii) net changes in our customers’ exposure units, deductibles or insured limits; (iii) net changes in insurance premium rates or the commission rate paid to us by our carrier partners; (iv) the net change in fees paid to us by our customers; and (v) any businesses acquired or disposed of.

We also earn profit-sharing contingent commissions, which are commissions based primarily on underwriting results, but in select situations may reflect additional considerations for volume, growth and/or retention. These commissions, which are included in our commissions and fees in the Consolidated Statements of Income, are estimated and accrued throughout the year based on actual premiums written and knowledge, to the extent it is available, of losses incurred. Payments are primarily received in the first and second quarters of each subsequent year, based upon the aforementioned considerations for the prior year(s), but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until they are received. Over the last three years, profit-sharing contingent commissions have averaged approximately 3.6%4.4% of commissions and fees revenue.fees.

Fee revenues primarily relate to services other than securing coverage for our customers, and for fees negotiated in lieu of commissions. Fee revenues are generated by: (i) our ProgramsSpecialty andDistribution Wholesale Brokerage segments,segment, which earnearns fees primarily for the issuance of insurance policies on behalf of insurance carriers and (ii) our Retail segment in our large-account customer base, where we primarily earn fees for securing insurance for our customers, in our F&I businesses where we earn fees for assisting our customers with creating and selling warranty and service risk management programsprograms, and fees for Medicare Set-aside services, Social Security disability services and Medicare benefits advocacy services. Fee revenues as a percentage of our total commissions and fees, represented 22.2% in 2025 and 21.1% in 2024 and 23.9% in 2023.2024.

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

Income before income taxes for the year ended December 31, 2024,2025, increased by $157$68 million, or 13.7%5.2% over 2023,2024, driven by Organic Revenue growth, increased profit-sharing contingent commissions, leveraging our expense base, net new business, increased investment income, acquisitions completed in the past twelve months and the change in estimatedmark-to-market acquisitionof earn-outescrow payables.liability. This growth was partially offset by aAcquisition/Integration decreaseCosts and the change in theestimated gainacquisition onearn-out disposal primarily associated with the divestiture of certain businesses within the former Services segment during the fourth quarter of 2023.payables.

In the discussion and analysis of our results of operations, in addition to reporting financial results in accordance with generally accepted accounting principles (“GAAP”), we provide references to the following non-GAAP financial measures as defined in Regulation G of the SEC rules: Organic Revenue, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted and EBITDAC Margin - Adjusted. We present these measures because we believe such information is of interest to the investment community. We believe they provide additional meaningful methods to evaluate the Company’s operating performance from period to period.period Theseon measuresa ofbasis operating performancethat may not be otherwise apparent on a GAAP basis due to the impact of certain items that have a high degree of variability, that we believe are not indicative of ongoing performance and that are not easily comparable from period to period. This non-GAAP financial information should be considered in addition to, not in lieu of, the Company’s consolidated income statements and balance sheets as of the relevant date. Consistent with Regulation G, a description of such information is provided below and tabular reconciliations of this supplemental non-GAAP financial information to our most comparable GAAP information are contained in this Annual Report on Form 10-K under “Results of Operations - Segment Information.”

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

Organic Revenue is our core commissions and fees less: (i) the core commissions and fees earned for the first twelve months by newly acquired operations; (ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period) and (iii) Foreign Currency Translation (as defined below). The term “core commissions and fees” excludes profit-sharing contingent commissions; and thereforetherefore, represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered. Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth.

EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal,disposal (as defined below), (ii) for 2022 and 2023, Acquisition/Integration Costs (as defined below) and (iii) formark-to-market 2023,of theescrow 1Q23 Nonrecurring Costliability (as defined below).

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

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

Critical Accounting Policies and Estimates

WeIn haveconnection acquiredwith significantacquisitions, we record the estimated fair value of net tangible assets purchased, the estimated fair value of identifiable intangible assets throughpurchased, acquisitions of businesses. These assetswhich primarily consist of purchased customer accountsaccounts, and the excess of purchase prices over the fair value of identifiable net assets acquired (goodwill). The determinationrecorded purchase prices include an estimation of estimatedthe usefulfair livesvalue andof theliabilities associated with any potential contingent consideration provisions (such as earn-out obligations). The allocation of purchase price to intangible assetsassets, requiresthe determination of the related estimated useful lives and the estimated fair value of earn-out payables require significant judgmentestimates and assumptions and affects the amount of future amortizationexpense recognized. For certain large or complex acquisitions, we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and possibleassumed impairment charges.liabilities.

In connection with acquisitions, we record the estimated value of the net tangible assets purchased and the value of the identifiable intangible assets purchased, which primarily consist of purchased customer accounts. Purchased customer accounts include the right to represent insureds or claimants supported by the physical records and files obtained from acquired businesses that contain information about insurance policies, customers and other matters essential to policy renewals ofand delivery of services. Their value primarily represents the present value of the underlying net cash flows expected to be received over the estimated future duration of the acquired customer relationships. The valuation of purchased customer accounts involves significant estimates and assumptions concerning matters such as cancellation frequency, expenses and discount rates. Any change in these assumptions could affect the carrying value of purchased customer accounts. Purchased customer accounts are amortized on a straight-line basis over the related estimated lives,lives which generally average approximately 15 years. The excess of the purchase price of an acquisition over the fair value of the identifiable tangible and intangible assets is assigned to goodwill and is not amortized.

The recorded purchase prices for all acquisitions include an estimationMany of the fairacquisitions we complete contain provisions for potential earn-out obligations. The amounts recorded as earn-out payables are based upon the terms of the purchase agreements and the present value of liabilitiesexpected associatedfuture withpayments anyto potentialbe earn-outmade provisions,to wherethe ansellers earn-outresulting isfrom partestimated future operating results of the negotiatedacquired transaction.entities over a period subsequent to the acquisition date, typically one to three years. The earn-out payables are measured at estimated fair value as of the acquisition date and are included in purchase price consideration. Subsequent changes in the fair value of earn-out obligations are recorded in the Consolidated Statement of Income as a result of updated expectations for the performance of the associated business.businesses.

Management assesses the recoverability of our goodwill and our amortizable intangibles and other long-livedintangible assets annually and whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Any of the following factors,factors are examples, that if present, may trigger an impairment review: (i) a significant underperformance relative to historical or projected future operating results, (ii) a significant negative industry or economic trend, and (iii) a significant decline in our market capitalization. If the recoverability of these assets is unlikely because of the existence of one or more of the above-referenced factors, an impairment analysis is performed. Management must make assumptions regarding estimated future cash flows and other factors to determine the fair value of these assets. If these estimates or related assumptions change in the future, we may be required to revise the assessment and, if appropriate, record an impairment charge. We completed our most recent evaluation of impairment for goodwill as of November 30, 2024 and determined that the fair value of goodwill exceeded the carrying value of such assets. Additionally, there have been no impairments recorded for amortizable intangible assets for the years ended December 31, 2024 and 2023.

We are subject to numerousvarious litigation and claims that arise in the ordinary course of business. If it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss is estimable, an accrual for the costs to resolve these claims is recorded in accrued expenses in the accompanying financial statements. Professional fees related to these claims are included in other operating expenses in the accompanying Consolidated Statement of Income as incurred. Management, with the assistance of in-house and outside counsel, determines whether it is probable that a liability has been incurred and estimates the amount of loss based upon analysis of individual issues. New developments or changes in settlement strategy in dealing with these matters may significantly affect the required reserves and affect our net income.

Commissions and fees, including profit-sharing contingent commissions and earned premiums for 2024,2025, increased $506.0$1,058 million to $4,705$5,763 million, or 12.1%22.5% over 2023.2024. Core commissions and fees in 20242025 increased $470$969 million, composed of: (i) approximately $415$126 million of net new and renewal business, which reflects an Organic Revenue growth rate of 10.4%2.8%; (ii) $146$836 million from acquisitions that had no comparable revenues in the same period of 20232024; (iii) an increase from the impact of Foreign Currency Translation of $10$18 million and (iv) an offsetting decrease of $101$11 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months. Profit-sharing contingent commissions for 20242025 increased by $36$89 million, or 27.7%,53.6%, compared to the same period in 2023.2024. This increase was driven primarily by (i) improved underwriting results, overallincreased growthpremium ofvolume the business, as well asand qualifying for certain profit-sharing contingent commissions that we did not qualify for in the prior year and (ii) recent acquisitions.

Investment and Other Income

Employee compensation and benefits expense as a percentage of total revenues was 49.7% for the year ended December 31, 2025 as compared to 50.1% for the year ended December 31, 2024 as compared to 51.4% for the year ended December 31, 2023,2024, and increased 10.0%,22.0%, or $219$529 million. This increase included $69$448 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2023.2024. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 20242025 and 20232024 increased by $150$81 million, or 6.9%.million. This underlying employee compensation and benefits expense increase was primarily related to: (i) an increase in staff costs attributable to new hires; (ii) the increased cost of health insurance; (iii) an increase in producer compensation associated with revenue growth; (iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company and (iv) the year-over-year increase of approximately $21$12 million in the value of deferred compensation liabilities driven by changes in the market prices of our deferred compensation plan, with such amount substantially offset within other operating expenses as we hold assets to fund these liabilities, partially offset by (v) employee compensation and benefits associated with certain third-party claims administration and adjusting services businesses divested in the fourth quarter of 2023.liabilities.

Other operating expenses represented 14.8%16.2% of total revenues for 20242025 as compared to 15.3%14.8% for the year ended December 31, 2023.2024. Other operating expenses for 20242025 increased $60$249 million, or 9.2%,35.1%, from the same period of 2023.2024. This change includes: (i) $27$161 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 20232024; (ii) $113 million of Acquisition/Integration Costs that had no comparable costs in the same period of 2024; and (iii) increased information technology-related costs;costs, (iii) and to a lesser extent, increased variable costs associated with revenue growth,partially offset by (iv) the 1Q23 Nonrecurring Cost (v) other operating expenses associated with certain third-partylower claims administrationcosts andwithin adjustingour services businesses divested in the fourth quarter of 2023captives and (viv) the year-over-year decrease of approximately $21$12 million in the value of assets held to fund the associated liabilities within our deferred compensation plan, which was substantially offset within employee compensation and benefits, as noted above.

The Company recognized a net gainsloss on disposalsdisposal of $2 million in 2025 and a net gain on disposal $31 million in 2024 and $143 million in 2023.2024. The gainsamount onfor disposal2024 werewas primarily attributable to the sellingprior year finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023 and settlement of certain related contingent payments in 2024.2023. Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.

Depreciation expense for 20242025 increased $4$11 million to $44$55 million, or 10.0%25.0% over 2023.2024. Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, partially offset by the impact of fixed assets that became fully depreciated or written off in the (gain or )/loss on disposal.

For the years ended December 31, 20242025 and 2023,2024, the fair value of estimated earn-out payables was reevaluated and increased by $16 million for 2025 and decreased by $6 million for 2024 and increased by $14 million for 2023,2024, which are creditscharges and charges,credits, exclusive of interest expense accretion, to the Consolidated Statements of Income for 20242025 and 2023.2024.

As discussed in Note 15 “Segment Information” of the Notes to Consolidated Financial Statements, we operate threetwo reportable segments: Retail, ProgramsRetail and WholesaleSpecialty Brokerage.Distribution. On a segmented basis, changes in amortization, depreciation and interest expenses generally result from activity associated with acquisitions. Likewise, other income consists primarily of miscellaneous income and therefore can fluctuate between comparable periods. As such, management primarily focuses on the Organic Revenue growth rate and EBITDAC Margin when evaluating the operational efficiency of a segment.

The Retail segment’s total revenues in 20242025 increased 8.8%,24.8%, or $221$677 million, over 2023,2024, to $2,729$3,406 million. The $223$638 million increase in core commissions and fees was driven by the following: (i) approximately $81$559 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 20232024; (ii) an increase of $143$74 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $8$14 million; and (iv) an offsetting decrease of $6$11 million related to commissions and fees recorded in 20232024 from businesses since divested. Profit-sharing contingent commissions in 20242025 decreasedincreased 12.0%,63.6%, or $6$28 million, over 2023,2024, to $44$72 million. This decreaseincrease was due primarily to acquisitions completed within the resultlast oftwelve not qualifying for certain profit-sharing contingent commissions in 2024, due to higher loss ratios experienced by our insurance carrier partners.months. The Retail segment’s total commissions and fees increased 8.7%24.5% and the Organic Revenue growth rate was 5.8%2.8% for 2024.2025. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers. Renewal business was impacted by moderatingtiming insuranceof premiumcertain ratesnonrecurring revenue items, slowing rate increases, rate decreases for certain lines of coverage, certain adjustments to incentive commissions and exposurea units.regulatory change for one of our UK businesses.

Company Overview — FirstSecond Quarter of 2026

We also earn Contingents, which are commissions based primarily on underwriting results, but in select situations may reflect additional considerations for volume, growth and/or retention. These commissions, which are included in our commissions and fees in the Consolidated Statements of Income, are estimated and accrued throughout the year based on actual premiums written and knowledge, to the extent it is available, of losses incurred. Payments are primarily received in the first and second quarters of each subsequent underwriting year, based upon the prior year(s) underwriting results, but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until itthey isare received. Over the last three years, annual Contingents have averaged approximately 4.4% of total commissions and fee revenues.

For the three months ended MarchJune 31,30, 2026, our total commissions and fees growth rate was 35.7%.32.4%. Our consolidated Organic Revenue growthdecreased rateby was flat0.7% and our Organic Revenue with Contingents growth rate was 2.2%.0.7%.

Income before income taxes for the three months ended MarchJune 31,30, 2026 increased from the firstsecond quarter of 2025 by $106$72 million or 24.8%,23.2%, driven by increased Contingents, leveraging our expense base, synergies realized from the acquisition of Accession, acquisitions completed in the past twelve months and the change in mark-to-marketestimated ofacquisition escrowearn-out liability.payables. This growth was partially offset by Acquisition/Integration Costs and the change in estimated acquisition earn-out payables.Costs.

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

“Mark-to-market of escrow liability” is a caption on our consolidated statements of income which reflects the non-cash change in the fair value associated with certain shares of the Company’s common stock held in escrow. The change is driven by fluctuations in our stock price between the beginning of the quarterperiod and the end of the quarter.period. These escrowed shares represent a portion of the merger consideration payable in connection with our acquisition of Accession. The escrowed shares secure certain indemnification obligations of the Accession equity holders related to businesses that are in run-off or discontinued.

Part of our business strategy is to attract high-quality insurance intermediaries and service organizations to join our operations. From 1993 through the firstsecond quarter of 2026, we acquired 725732 insurance intermediary operations.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCHJUNE 31,30, 2026 AND 2025

Commissions and fees, including Contingents and earned premiums, for the three months ended MarchJune 31,30, 2026 increased $495$405 million to $1,880$1,654 million, or 35.7%,32.4%, over the same period in 2025. Core commissions and fees revenue for the firstsecond quarter of 2026 increased $441$365 million or 32.9%,30.3%, composed of: (i) $435$393 million from acquisitions that had no comparable revenues in the same period of 2025; (ii) an increase from the impact of Foreign Currency Translation of $19$2 million and an offsetting decrease from (iii) $3$4 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months and; (iv) $10$18 million related to the Litigation-Related Impact.Impact and (v) $8 million of net new and renewal business, which combined reflected an overall Organic Revenue decrease of 0.7%. Contingents for the firstsecond quarter of 2026 increased by $54$40 million, or 126%,88.9%, compared to the same period in 2025. This increase was driven primarily by (i) improved underwriting results for our carrier partners, growth in premium volume and qualifying for certain Contingents that we did not qualify for in the prior year andyear, (ii) recent acquisitions.acquisitions and (iii) our enhanced carrier engagement model. The Organic Revenue with Contingents growth rate was 2.2% driven by the increase in Organic Contingents.0.7%.

Employee compensation and benefits expense as a percentage of total revenues was 47.7%50.0% for the three months ended MarchJune 31,30, 2026 as compared to 48.6%49.8% for the three months ended MarchJune 31,30, 2025, an increase of 32.8%,30.9%, or $224$198 million. This increase included $241$203 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2025. Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2026 and 2025 decreased by $17$5 million. This underlying employee compensation and benefits expense decrease was primarily related to: (i) lower non-cash stock-based compensation expense driven by the company's performance; (ii) a decrease in claims costs within our self-insured health plan; (iii) a decrease in commissions, base compensation and bonuses drivenresulting byfrom the Litigation-Related Impact; partially offset by (iv) an increase in staff costs attributable to new hires and annual compensation increases.

Other operating expenses represented 15.2%16.2% of total revenues for the firstsecond quarter of 2026, as compared to 13.2%16.4% for the firstsecond quarter of 2025. Other operating expenses for the firstsecond quarter of 2026 increased $103$60 million, or 55.4%,28.4%, from the same period of 2025. This change includes: (i) $95$72 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2025; (ii) $26 million of Acquisition/Integration Costs associated with the Transaction, $20 million of which is included in the $95 million related to acquisitions that had no comparable costs in the same period of 2025; and (iiiii) increased information technology-related costs.

Gain on disposal for the firstsecond quarter of 2026 increaseddecreased $3$1 million from the firstsecond quarter of 2025. Gain on disposal for the six months ended June 30, 2026 increased $1 million from the six months ended June 30, 2025. Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.

Amortization expense for the firstsecond quarter of 2026 increased $63$60 million, or 118.9%,120.0%, compared to the firstsecond quarter of 2025. Amortization expense for the six months ended June 30, 2026 increased $123 million, or 119.4%, compared to the six months ended June 30, 2025. This change reflects the amortization of new intangibles from businesses acquired within the past twelve months, net of certain intangible assets becoming fully amortized or written off in the (Gain)/Loss on disposal.

Depreciation expense for the firstsecond quarter of 2026 increased $6$7 million, or 54.5%,63.6%, compared to the firstsecond quarter of 2025. Depreciation expense for the six months ended June 30, 2026 increased $12 million, or 52.2%, compared to the six months ended June 30, 2025. Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, partially offset by the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.

Interest expense for the firstsecond quarter of 2026 increased $53$49 million, or 115.2%,96.1%, compared to the second quarter of 2025. Interest expense for the six months ended June 30, 2026 increased $103 million, or 107.3%, compared to the first quartersix months of 2025. The increase is due to higher debt balances resulting from a debt issuance in the second quarter of 2025 to fund the Transaction, which was partially offset by decreases in the floating rate benchmark used on our adjustable-rate debt.

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

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

As of MarchJune 31,30, 2026 and 2025, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820-Fair820 - Fair Value Measurement. The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:

For the three months and threesix months ended MarchJune 31,30, 2026, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $1$44 million and $6$45 million, respectively, which resulted in credits to the Condensed Consolidated Statements of Income. These adjustments were primarily related to revised estimates for companies acquired in the Transaction.

As of MarchJune 31,30, 2026, estimated acquisition earn-out payables totaled $393$310 million, of which $193$136 million was recorded as accounts payable and $200$174 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended MarchJune 31,30, 2026 and 2025 was 19.9%24.5% and 21.8%,24.8%, respectively. The effective tax rate on income from operations for the six months ended June 30, 2026 and 2025 was 21.7% and 22.9%, respectively. The decrease for the threesix months ended MarchJune 31,30, 2026 was primarily driven by the non-taxable treatment of the mark-to-market of escrow liability.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measures, for the three months ended MarchJune 31,30, 2026 and 2025, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the three months ended MarchJune 31,30, 2026,2026 and 2025, including by segment, are as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue and Organic Revenue with Contingents, both non-GAAP financial measures, for the three months ended MarchJune 31,30, 2025 and 2024, including by segment, and the growth rates for Organic Revenue and Organic Revenue with Contingents for the three months ended MarchJune 31,30, 2025,2025 and 2024, including by segment, are as follows:

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

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended MarchJune 31,30, 2026, including by segment, is as follows:

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended MarchJune 31,30, 2025, including by segment, is as follows:

The Retail segment’s total revenues for the three months ended MarchJune 31,30, 2026 increased 33.4%,35.9%, or $303$250 million, as compared to the same period in 2025, to $1,210$947 million. The $282$227 million increase in core commissions and fees revenue was driven by: (i) approximately $270$236 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025; (ii) an increase of $9$10 million related to net new and renewal business; (iii) an increase from the impact of Foreign Currency Translation of $15$1 million; (iv) an offsetting decrease of $1$2 million related to commissions and fees recorded in 2025 from businesses since divested; and (v) an offsetting decrease of $10$18 million related to the Litigation-Related Impact. Contingents for the firstsecond quarter of 2026 increased $16$19 million to $30$26 million, as compared to the same period in 2025. This increase was due to acquisitions completed within the last twelve months.months and more favorable terms for certain carrier contracts resulting from our enhanced carrier engagement model. The Retail segment’s total commissions and fees increased by 32.9%.35.4%. The Organic Revenue growth rate was 1.0%1.5% and the Organic Revenue with Contingents growth rate was 1.3%2.5% for the firstsecond quarter of 2026. The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers. Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines of coverage, and a change to the revenue model infor our specialty pharmacy consulting business.

Income before income taxes for the three months ended MarchJune 31,30, 2026 increased 11.6%,62.2%, or $33$79 million, as compared to the same period in 2025, to $317$206 million. The primary factors driving this increase were: (i) a decrease in intercompany interest expense; (ii) a decrease in estimated acquisition earn-out payables; and (iiiii) the profit associated with the net increase in revenue as described above, partially offset by (iii) an increase in estimated acquisition earn-out payables, (iv) an increase in amortization expense; and (v) Acquisition/Integration Costs.

EBITDAC - Adjusted for the three months ended MarchJune 31,30, 2026 increased 29.0%,46.9%, or $98$90 million, as compared to the same period in 2025, to $436$282 million. EBITDAC Margin - Adjusted for the three months ended MarchJune 31,30, 2026 decreasedincreased to 36.0%29.8% from 37.3%27.5% in the same period in 2025. The decreasechange in EBITDAC Margin - Adjusted was primarily driven by: (i) theincreased timing of revenues and profit associated with certain recent acquisitions which was partially offset byContingents; (ii) leveraging our expense base; and (iiiii) lower compensation as a result of teammateemployee defectionsdepartures associated with ourthe pendingLitigation-Related litigation with a start-up US broker.Impact.

The Specialty Distribution Segment is composed of three divisions; our programs business, knownoperating as Arrowhead Programs; our wholesale brokerage business, knownoperating as Bridge Specialty Group; and our specialty program business, knownoperating as Arrowhead Specialty.

Bridge Specialty Group offers global wholesale brokerage and delegated binding/underwriting capabilities across multiple lines, to independent agents and brokers, including Brown & Brown retail agents. Our teams across the globe provide deep industry knowledge and expertise, for placements across multiple lines of coverage based on access to admitted, excess and surplus lines carriers, as well as the Lloyd’s markets in the United Kingdom.

The Specialty Distribution segment’s total revenues for the three months ended MarchJune 31,30, 2026 increased 40.0%,28.1%, or $195$158 million, as compared to the same period in 2025, to $682$721 million. The $158$138 million increase in core commissions and fees revenue was driven by: (i) approximately $165$157 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2025; and (ii) an increase from the impact of Foreign Currency Translation of $4$1 million; partially offset by: (iii) a $9$18 million decrease in net new business, renewal business, and fee revenues; and (iv) a $2 million decline in core commission and fees revenue from dispositions that had no comparable revenues in the same period of 2026. Contingents for the firstsecond quarter of 2026 increased approximately $38$21 million as compared to the firstsecond quarter of 2025. This increase is a result of favorable loss ratios, increased premiums, and to a lesser extent acquisitions completed in the past twelve months.months Theand Organicfavorable Revenueloss with Contingents growth rate was 3.9% driven by the increase in Organic Contingents.ratios.

The Specialty Distribution segment’s total commissions and fees increased by 40.7%,28.6%, with Organic Revenue decreasing 2.0%3.5% and Organic Revenue with Contingents increasingdecreasing 3.9%1.6% for the three months ended MarchJune 31,30, 2026. The Organic Revenue with Contingents growth ratedecline was driven by: (i) increased Contingents; (ii) net new and retained business; and (iii) and exposure unit expansion; partiallywhich were more than offset by (iv) declining rates on catastrophe ("CAT") property.

Income before income taxes for the three months ended MarchJune 31,30, 2026 increased 33.1%,8.6%, or $55$20 million, as compared to the same period in 2025, to $221$253 million due to: (i) the growth of EBITDAC –- Adjusted described below; (ii) a decrease in estimated acquisition earn-out payables; partially offset by: (iii) increased amortization expense; and (iv) Acquisition/Integration Costs.Costs; and (v) increased depreciation expense.

EBITDAC - Adjusted for the three months ended MarchJune 31,30, 2026 increased 41.1%,17.1%, or $81$45 million, from the same period in 2025, to $278$308 million. EBITDAC Margin - Adjusted for the three months ended MarchJune 31,30, 2026 increaseddecreased to 40.8%42.7% from 40.5%46.7% in the same period in 2025. EBITDAC Margin - Adjusted increaseddecreased due to: (i) the increasedecline in ContingentsOrganic Revenue; and (ii) theinvestments timingto ofincrease revenuesour associatedcapabilities within recent acquisitionsEurope; andpartially offset by: (iii) disciplinedthe expenseincrease management.in Contingents.