Arthur J. Gallagher & Co.

Previous wording

The discussion and analysis that follows relates to our financial condition and results of operations for the nine-month period ended September 30, 2024. Readers should review this information in conjunction with the September 30, 2024 unaudited consolidated financial statements and notes included in Item 1 of Part I of this quarterly report on Form 10‑Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our annual report on Form 10-K for the year ending December 31, 2023.

Current wording

The discussion and analysis that follows relates to our financial condition and results of operations for the three-month period ended March 31, 2025. Readers should review this information in conjunction with the March 31, 2025 unaudited consolidated financial statements and notes included in Item 1 of Part I of this quarterly report on Form 10‑Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our annual report on Form 10-K for the year ending December 31, 2024.

Previous wording

For Information on fiscal third quarter 2023 results and similar comparisons, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-Q for the fiscal three and nine-month periods ended September 30, 2023.

Current wording

For Information on fiscal first quarter 2024 results and similar comparisons, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-Q for the fiscal three-month period ended March 31, 2024.

Previous wording

Net gains on divestitures, which are primarily net proceeds received related to sales of books of business and other divestiture transactions, such as the disposal of a business through sale or closure.

Current wording

Net (gains) losses on divestitures, which are primarily net proceeds received related to sales of books of business and other divestiture transactions, such as the disposal of a business through sale or closure.

Previous wording

Transaction-related costs, which are associated with completed, future and terminated acquisitions. Costs primarily relate to the acquisitions of Willis Re, Buck, Cadence Insurance, Eastern Insurance and My Plan Manager. These include costs related to regulatory filings, legal and accounting services, insurance and incentive compensation.

Current wording

Transaction-related costs, which are associated with completed, future and terminated acquisitions. Costs primarily relate to the acquisitions of Willis Re, Buck, Cadence Insurance, Eastern Insurance and Woodruff Sawyer, which closed on April 10, 2025, and the pending acquisition of AssuredPartners. These include costs related to regulatory filings, legal and accounting services, insurance and incentive compensation.

Previous wording

EBITDAC, as adjusted and EBITDAC Margin, as adjusted -Adjusted EBITDAC is EBITDAC adjusted to exclude net gains on divestitures, acquisition integration costs, workforce related charges, lease termination related charges, acquisition related adjustments, transaction related costs, legal and tax related costs and the period-over-period impact of foreign currency translation as applicable, and Adjusted EBITDAC margin is Adjusted EBITDAC divided by total adjusted revenues (defined above). These measures for the brokerage and risk management segments provide a meaningful representation of our operating performance, and are also presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

Current wording

EBITDAC, as adjusted and EBITDAC Margin, as adjusted -Adjusted EBITDAC is EBITDAC adjusted to exclude net gains on divestitures, acquisition integration costs, workforce related charges, lease termination related charges, acquisition related adjustments, transaction related costs, and the period-over-period impact of foreign currency translation as applicable, and Adjusted EBITDAC margin is Adjusted EBITDAC divided by total adjusted revenues (defined above). These measures for the brokerage and risk management segments provide a meaningful representation of our operating performance, and are also presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

Previous wording

EPS, as adjusted and Net Earnings, as adjusted -Adjusted net earnings have been adjusted to exclude the after-tax impact of net gains on divestitures, acquisition integration costs, the impact of foreign currency translation, workforce related charges, lease termination related charges, acquisition related adjustments, transaction related costs, amortization of intangible assets, legal and tax related costs and effective income tax rate impact, as applicable. Adjusted EPS is Adjusted Net Earnings divided by diluted weighted average shares outstanding. This measure provides a meaningful representation of our operating performance (and as such should not be used as a measure of our liquidity), and for the overall business is also presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

Current wording

EPS, as adjusted and Net Earnings, as adjusted -Adjusted net earnings have been adjusted to exclude the after-tax impact of net gains on divestitures, acquisition integration costs, the impact of foreign currency translation, workforce related charges, lease termination related charges, acquisition related adjustments, transaction related costs, amortization of intangible assets, and effective income tax rate impact, as applicable. Adjusted EPS is Adjusted Net Earnings divided by diluted weighted average shares outstanding. This measure provides a meaningful representation of our operating performance (and as such should not be used as a measure of our liquidity), and for the overall business is also presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

Previous wording

Organic Revenues (a non-GAAP measure) - For the brokerage segment, organic change in base commission and fee revenues, supplemental revenues and contingent revenues exclude the first twelve months of such revenues generated from acquisitions and such revenues related to divested operations, which include disposals of a business through sale or closure, run-off of a business and the restructuring and/or repricing of programs and products in each year presented. These revenues are excluded from organic revenues in order to help interested persons analyze the revenue growth associated with the operations that were a part of our business in both the current and prior period. In addition, organic change in base commission and fee revenues, supplemental revenues and contingent revenues excludes the period‑over‑period impact of foreign currency translation to improve the comparability of our results between periods. For the risk management segment, organic change in fee revenues excludes the first twelve months of such revenues generated from acquisitions and such revenues related to divested operations in each year presented. In addition, change in organic

Current wording

Organic Revenues (a non-GAAP measure) - For the brokerage segment, organic change in base commission and fee revenues, supplemental revenues and contingent revenues exclude the first twelve months of such revenues generated from acquisitions and such revenues related to divested operations, which include disposals of a business through sale or closure, run-off of a business and the restructuring and/or repricing of programs and products in each year presented. These revenues are excluded from organic revenues in order to help interested persons analyze the revenue growth associated with the operations that were a part of our business in both the current and prior period. In addition, organic change in base commission and fee revenues, supplemental revenues and contingent revenues excludes the period‑over‑period impact of foreign currency translation to improve the comparability of our results between periods. For the risk management segment, organic change in fee revenues excludes the first twelve months of such revenues generated from acquisitions and such revenues related to divested operations in each year presented. In addition, change in organic growth in fee revenues excludes the period-over-period impact of foreign currency translation to improve the comparability of our results between periods.

Previous wording

These revenue items are excluded from organic revenues in order to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that are expected to continue in the current year and beyond, as well as eliminating the impact of the items that have a high degree of variability. We have historically viewed organic revenue growth as an important indicator when assessing and evaluating the performance of our brokerage and risk management segments. We also believe that using this non‑GAAP measure allows readers of our financial statements to measure, analyze and compare the growth from our brokerage and risk management segments in a meaningful and consistent manner.

Current wording

These revenue items are excluded from organic revenues in order to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that are expected to continue in the current year and beyond, as well as eliminating the impact of the items that have a high degree of variability. We have historically viewed organic revenue growth as an important

Previous wording

Reconciliation of Non-GAAP Information Presented to GAAP Measures - This quarterly report on Form 10‑Q includes tabular reconciliations to the most comparable GAAP measures, as follows: for EBITDAC (on pages 47 and 54), for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share (on pages 41 and 42), for organic revenue measures (on pages 48 and 54), respectively, for the brokerage and risk management segments, for adjusted compensation and operating expenses and adjusted EBITDAC margin, (on pages 50 and 51) for the brokerage segment and (on pages 55 and 56) for the risk management segment.

Current wording

Reconciliation of Non-GAAP Information Presented to GAAP Measures - This quarterly report on Form 10‑Q includes tabular reconciliations to the most comparable GAAP measures, as follows: for EBITDAC (on pages 42 and 49), for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share (on page 38), for organic revenue measures (on pages 43 and 49), respectively, for the brokerage and risk management segments, for adjusted compensation and operating expenses and adjusted EBITDAC margin, (on page 45) for the brokerage segment and (on pages 50 and 51) for the risk management segment.

Previous wording

We are engaged in providing insurance brokerage, reinsurance brokerage, consulting services, and third-party property/casualty claims settlement and administration services to entities and individuals around the world. In the nine-month period ended September 30, 2024, we generated approximately 65% of our revenues for the combined brokerage and risk management segments domestically and 35% internationally, primarily in Australia, Canada, New Zealand and the U.K. We have three reportable segments: brokerage, risk management and corporate. The brokerage and risk management segments contributed approximately 86% and 14%, respectively, to revenues during the nine-month period ended September 30, 2024. The corporate segment did not generate any significant revenues in the nine-month period ended September 30, 2024. Our major sources of operating revenues are commissions, fees and supplemental and contingent revenues from brokerage operations and fees from risk management operations. Interest income is earned on cash, cash equivalents and fiduciary cash and revenues are generated from premium financing.

Current wording

We are engaged in providing insurance brokerage, reinsurance brokerage, consulting services, and third-party property/casualty claims settlement and administration services to entities and individuals around the world. In the three-month period ended March 31, 2025, we generated approximately 66% of our revenues for the combined brokerage and risk management segments domestically and 34% internationally, primarily in Australia, Canada, New Zealand and the U.K. We have three reportable segments: brokerage, risk management and corporate. The brokerage and risk management segments contributed approximately 89% and 11%, respectively, to revenues during the three-month period ended March 31, 2025. The corporate segment did not generate any significant revenues in the three-month period ended March 31, 2025. Our major sources of operating revenues are commissions, fees and supplemental and contingent revenues from brokerage operations and fees from risk management operations. Interest income is earned on cash, cash equivalents and fiduciary cash and revenues are generated from premium financing.

Previous wording

We use the Council of Insurance Agents and Brokers (which we refer to as CIAB) insurance pricing quarterly survey as an indicator of the insurance rate environment. The CIAB represents the leading domestic and international insurance brokers, who write approximately 85% of the commercial property/casualty premiums in the U.S. The third quarter 2024 survey had not been published as of the filing date of this report. The second quarter 2024 survey indicated that commercial property/casualty rates increased by 5.2% on average and we expect a similar trend to be noted when the CIAB's third quarter 2024 survey report is issued, which would indicate overall continued price firming and hardening in most lines of business.

Current wording

We use the Council of Insurance Agents and Brokers (which we refer to as CIAB) insurance pricing quarterly survey as an indicator of the insurance rate environment. The CIAB represents the leading domestic and international insurance brokers, who write approximately 85% of the commercial property/casualty premiums in the U.S. The first quarter 2025 survey had not been published as of the filing date of this report. The fourth quarter 2024 survey indicated that commercial property/casualty rates increased by 5.4% on average and we expect a similar trend to be noted when the CIAB's first quarter 2025 survey report is issued, which would indicate overall continued price firming and hardening in most lines of business.

Previous wording

We believe increases in property/casualty rates will continue for the remainder of 2024 and in 2025 due to rising loss costs, a firm reinsurance market, increased frequency of natural catastrophe and weather related losses, prior year reserve volatility and social inflation. U.S. hurricane losses in 2024, including losses from Helene and Milton, may cause insurance and reinsurance carriers to increase property catastrophe pricing upon renewal. Additionally, if loss trends deteriorate over the coming quarters, or if profitability concerns on casualty lines increase, it could lead to a more difficult rate and conditions environment in certain lines. The combination of increasing insurable values (due to inflation, including wage inflation), a tight labor market and low unemployment is likely contributing to increases in client insured exposures. Additionally, we expect that our history of strong new business generation, solid retentions and enhanced value‑added services for our carrier partners should all result in further organic growth opportunities around the world. Overall, we believe that in a positive rate environment with increasing exposures, our professionals can demonstrate their expertise and high‑quality, value-added capabilities by strengthening our clients’ insurance portfolios and delivering insurance and risk management solutions within our clients’ budgets. Based on our experience, insurance and reinsurance carriers appear to be making rational pricing decisions and are providing adequate capacity in the market for nearly all lines of coverage.

Current wording

We believe increases in property/casualty rates will continue for the remainder of 2025 due to rising loss costs, increased frequency of natural catastrophe and weather related losses, prior year reserve volatility and social inflation. We estimate global insured natural catastrophe losses were approximately $56 billion during first quarter 2025, including approximately $40 billion of insured losses due to the California wildfires. Further global natural catastrophe loss activity from severe convective storms, hurricanes and earthquakes during the remainder of 2025 may cause insurance and/or reinsurance carriers to increase property pricing upon renewal. Additionally, if loss trends deteriorate over the coming quarters, or if profitability concerns on casualty lines increase, it could lead to a more difficult rate and conditions environment in certain lines. The combination of increasing insurable values, a tight labor market and low unemployment is likely contributing to increases in client insured exposures and we have yet to see any meaningful changes in our customers’ business activity from the prospect of tariffs. Additionally, we expect that our history of strong new business generation, solid retentions and enhanced value‑added services for our carrier partners should result in further organic growth opportunities around the world. Overall, we believe that in a positive rate environment with increasing exposures, our professionals can demonstrate their expertise and high‑quality, value-added capabilities by strengthening our clients’ insurance portfolios and delivering insurance and risk management solutions within our clients’ budgets. Based on our experience, insurance and reinsurance carriers appear to be making rational pricing decisions and are providing adequate capacity in the market for nearly all lines of coverage.

Previous wording

The following provides information that management believes is helpful when comparing revenues before reimbursements, net earnings, EBITDAC and diluted net earnings per share for the three and nine-month periods ended September 30, 2024 with the same periods in 2023. In addition, these tables provide reconciliations to the most comparable GAAP measures for adjusted revenues,

Current wording

The following provides information that management believes is helpful when comparing revenues before reimbursements, net earnings, EBITDAC and diluted net earnings per share for the three-month period ended March 31, 2025 with the same period in 2024. In addition, these tables provide reconciliations to the most comparable GAAP measures for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share. Reconciliations of EBITDAC for the brokerage and risk management segments are provided on pages 42 and 49, respectively, of this filing.

Previous wording

For the Three-Month Periods Ended September 30 Reported GAAP to Adjusted Non-GAAP Reconciliation:

Current wording

For the Three-Month Periods Ended Reported GAAP to Adjusted Non-GAAP Reconciliation:

Previous wording

*For the three-month period ended September 30, 2024, the pretax impact of the brokerage segment adjustments totals $238.1 million, mostly due to non-cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $60.6 million relating to these items. For the three-month period ended September 30, 2024, the pretax impact of the risk management segment adjustments totals $6.5 million, with a corresponding adjustment to the provision for income taxes of $1.9 million relating to these items. For the three-month period ended September 30, 2024, the pretax impact of the corporate segment adjustments totals $8.9 million, with a corresponding adjustment to the benefit for income taxes of $1.2 million. A detailed reconciliation of the 2024 provision (benefit) for income taxes is shown on page 43.

Current wording

*For the three-month period ended March 31, 2025, the pretax impact of the brokerage segment adjustments totals $292.0 million, mostly due to non-cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $73.7 million relating to these items. For the three-month period ended March 31, 2025, the pretax impact of the risk management segment adjustments totals $10.7 million, with a corresponding adjustment to the provision for income taxes of $2.9 million relating to these items. For the three-month period ended March 31, 2025, the pretax impact of the corporate segment adjustments totals $23.1 million, with a corresponding adjustment to the benefit for income taxes of $3.1 million. A detailed reconciliation of the 2025 provision (benefit) for income taxes is shown on page 39.

Previous wording

The brokerage segment accounted for 86% of our revenues during the nine-month period ended September 30, 2024. Our brokerage segment is primarily comprised of retail, wholesale and reinsurance brokerage operations. Our brokerage segment generates revenues by:

Current wording

The brokerage segment accounted for 89% of our revenues during the three-month period ended March 31, 2025. Our brokerage segment is primarily comprised of retail, wholesale and reinsurance brokerage operations. Our brokerage segment generates revenues by:

Previous wording

As previously disclosed, our IRC 831(b) (or “micro-captive”) advisory services business has been under audit by the IRS since 2013. Among other matters, the IRS is investigating whether we have been acting as a tax shelter promoter in connection with these operations. Additionally, the IRS is conducting a criminal investigation related to IRC 831(b) micro-captive underwriting enterprises. We have been advised that we are not a target of the criminal investigation. We are fully cooperating with both matters.

Current wording

As previously disclosed, our IRC 831(b) (or “micro-captive”) advisory services business has been under a promoter investigation by the IRS since 2013. Among other matters, the IRS is investigating whether we have been acting as a tax shelter promoter in connection with these operations. Additionally, the IRS is conducting a criminal investigation related to IRC 831(b) micro-captive underwriting enterprises. We have been advised that we are not a target of the criminal investigation. We are fully cooperating with both matters.

Previous wording

Financial information relating to our brokerage segment results for the three and nine-month periods ended September 30, 2024 compared to the same periods in 2023, is as follows (in millions, except per share, percentages and workforce data):

Current wording

Financial information relating to our brokerage segment results for the three-month period ended March 31, 2025 compared to the same period in 2024, is as follows (in millions, except per share, percentages and workforce data):

Previous wording

The following provides information that management believes is helpful when comparing EBITDAC and adjusted EBITDAC for the three and nine-month periods ended September 30, 2024 compared to the same periods in 2023 (in millions):

Current wording

The following provides information that management believes is helpful when comparing EBITDAC and adjusted EBITDAC for the three-month period ended March 31, 2025 compared to the same period in 2024 (in millions):

Previous wording

Commissions and fees -The aggregate increase in base commissions and fees for the three-month period ended September 30, 2024, compared to the same period in 2023, was due to revenues associated with acquisitions that were made in the twelve-month period ended September 30, 2024 ($133.3 million), and to the organic change in base commissions and fee revenues. The organic change in base commissions and fee revenues were 5.4% and 9.6% for the three-month periods ended September 30, 2024 and 2023, respectively.

Current wording

Commissions and fees -The aggregate increase in base commissions and fees for the three-month period ended March 31, 2025, compared to the same period in 2024, was due to revenues associated with acquisitions that were made in the twelve-month period ended March 31, 2025 ($90.6 million), and to the organic change in base commissions and fee revenues. The organic change in base commissions and fee revenues were 9.1% and 8.8% for the three-month periods ended March 31, 2025 and 2024, respectively.

Previous wording

In our property/casualty brokerage operations, during the three and nine-month periods ended September 30, 2024 we saw continued strong customer retention, higher new business generation and increasing renewal premiums (premium rates and exposures). We believe these favorable trends should continue for the remainder of 2024; however, if economic conditions worsen or premium rate increases slow, we could see our revenue growth soften.

Current wording

In our property/casualty brokerage operations, during the three-month period ended March 31, 2025 we saw continued strong customer retention, higher new business generation and increasing renewal premiums (premium rates and exposures). We believe these favorable trends should continue for the remainder of 2025; however, if economic conditions worsen or premium rate increases slow, we could see our revenue growth soften.

Previous wording

Items excluded from organic revenue computations yet impacting revenue comparisons for the three and nine-month periods ended September 30, 2024 and 2023 include the following (in millions):

Current wording

Items excluded from organic revenue computations yet impacting revenue comparisons for the three-month periods ended March 31, 2025 and 2024 include the following (in millions):

Previous wording

In the three-month period ended September 30, 2024 there were no shares of our common stock issued at the request of sellers and/or in connection with tax-free exchange acquisitions. In the nine-month period ended September 30, 2024 we issued 512,000 shares of our common stock at the request of sellers and/or in connection with tax-free exchange acquisitions. In the three and nine-month periods ended September 30, 2023, we issued 103,000 and 1,936,000 shares, respectively, of our common stock at the request of sellers and/or in connection with tax-free exchange acquisitions.

Current wording

In the three-month periods ended March 31, 2025 and 2024 we issued 49,000 and 357,000 shares, respectively, of our common stock issued at the request of sellers and/or in connection with tax-free exchange acquisitions.

Previous wording

Interest income, premium finance revenues and other income in the three and nine-month periods ended September 30, 2024 increased compared to the same periods in 2023, primarily due to increases in net gains on divestitures and interest income on our own and fiduciary funds.

Current wording

Interest income, premium finance revenues and other income in the three-month period ended March 31, 2025 increased compared to the same period in 2024, primarily due to increases in interest income earned on our own and fiduciary funds, including the $142.6 million interest income earned in the three-month period ended March 31, 2025 related to the proceeds from the AssuredPartners Financing.

Previous wording

Compensation expense -The following provides non-GAAP information that management believes is helpful when comparing compensation expense for the three and nine-month periods ended September 30, 2024 with the same periods in 2023 (in millions):

Current wording

Compensation expense -The following provides non-GAAP information that management believes is helpful when comparing compensation expense for the three-month period ended March 31, 2025 with the same period in 2024 (in millions):

Previous wording

The $173.2 million increase in compensation expense for the three-month period ended September 30, 2024 compared to the same period in 2023, was primarily due to compensation associated with the acquisitions completed in the twelve-month period ended September 30, 2024 ‑ $79.8 million, increases in workforce related charges - $40.5 million, increases in base and incentive compensation related to the hiring of producers and other roles to service and support organic growth, stock compensation and higher benefit costs - $40.2 million in the aggregate, increased acquisition earnout related adjustments - $18.8 million, partially offset by reduced acquisition integration costs - $6.1 million.

Current wording

The $140.4 million increase in compensation expense for the three-month period ended March 31, 2025 compared to the same period in 2024, was primarily due to increases in base and incentive compensation related to the hiring of producers and other roles to service and support organic growth and higher benefit costs - $103.7 million in the aggregate, compensation associated with the acquisitions completed in the twelve-month period ended March 31, 2025 ‑ $47.2 million, increases in workforce related charges - $6.1 million, increased acquisition integration costs - $3.1 million, partially offset by reduced acquisition earnout related adjustments - $19.7 million.

Previous wording

Operating expense -The following provides non-GAAP information that management believes is helpful when comparing operating expense for the three and nine-month periods ended September 30, 2024 with the same periods in 2023 (in millions):

Current wording

Operating expense -The following provides non-GAAP information that management believes is helpful when comparing operating expense for the three-month period ended March 31, 2025 with the same period in 2024 (in millions):

Previous wording

The $21.1 million increase in operating expense for the three-month period ended September 30, 2024 compared to the same period in 2023, was primarily due to expenses associated with the acquisitions completed in the twelve-month period ended September 30, 2024 ‑ $17.9 million, additional investments in technology - $4.6 million, and increased workforce related charges $0.9 million, partially offset by a decrease in acquisition integration costs - $2.3 million.

Current wording

The $7.0 million increase in operating expense for the three-month period ended March 31, 2025 compared to the same period in 2024, was primarily due to expenses associated with the acquisitions completed in the twelve-month period ended March 31, 2025 ‑ $12.4 million, additional investments in technology, partially offset by savings in real estate expenses related to office consolidations, and lower travel and entertainment related costs - $2.2 million in the aggregate, increased workforce related charges $0.2 million, partially offset by a decrease in acquisition integration costs - $7.8 million.

Previous wording

Depreciation - Depreciation expense increased in the three and nine-month periods ended September 30, 2024 compared to the same periods in 2023 by $1.1 million and $7.7 million, respectively. The increase in depreciation expense in 2024 compared to 2023 was due primarily to the purchases of furniture, equipment and leasehold improvements related to office consolidations and moves, and expenditures related to upgrading computer systems. Also contributing to the increase in depreciation expense was the depreciation expense associated with acquisitions completed in the twelve-month period ended September 30, 2024.

Current wording

Depreciation - Depreciation expense increased in the three-month period ended March 31, 2025 compared to the same period in 2024 by $0.1 million. The increase in depreciation expense in 2025 compared to 2024 was due primarily to the purchases of furniture, equipment and leasehold improvements related to office consolidations and moves, and expenditures related to upgrading computer systems. Also contributing to the increase in depreciation expense was the depreciation expense associated with acquisitions completed in the twelve-month period ended March 31, 2025.

Previous wording

Amortization - The increase in amortization expense in the three and nine-month periods ended September 30, 2024 compared to the same periods in 2023 was primarily due to the impact of amortization expense of intangible assets associated with acquisitions completed in the twelve-month period ended September 30, 2024. Based on the results of impairment reviews during the three and nine-month periods ended September 30, 2024 we wrote off $5.4 million and $19.4 million, respectively, of amortizable assets. Based on the results of impairment reviews during the three and nine-month periods ended September 30, 2023 we wrote off $0.1 million and $3.3 million respectively, of amortizable assets. We review all of our intangible assets for impairment periodically (at least annually for goodwill) and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. We perform such impairment reviews at the division (i.e., reporting unit) level with respect to goodwill and at the business unit level for amortizable intangible assets. In reviewing intangible assets, if the undiscounted future cash flows were less than the carrying amount of the respective (or underlying) asset, an indicator of impairment would exist and further analysis would be required to determine whether or not a loss would need to be charged against current period earnings as a component of amortization expense. Expiration lists, non‑compete agreements and trade names are amortized using the straight-line method over their estimated useful lives (two to fifteen years for expiration lists, two to six years for non-compete agreements and two to fifteen years for trade names).

Current wording

-45 - operations during the three-month period ended March 31, 2025, we wrote off $40.6 million of amortizable assets. Based on the results of impairment reviews during the three-month period ended March 31, 2024, no impairments were noted. We review all of our intangible assets for impairment periodically (at least annually for goodwill) and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. We perform such impairment reviews at the division (i.e., reporting unit) level with respect to goodwill and at the business unit level for amortizable intangible assets. In reviewing intangible assets, if the undiscounted future cash flows were less than the carrying amount of the respective (or underlying) asset, an indicator of impairment would exist and further analysis would be required to determine whether or not a loss would need to be charged against current period earnings as a component of amortization expense. Expiration lists, non‑compete agreements and trade names are amortized using the straight-line method over their estimated useful lives (two to fifteen years for expiration lists, two to six years for non-compete agreements and two to fifteen years for trade names).

Previous wording

Change in estimated acquisition earnout payables -The change in the expense from the change in estimated acquisition earnout payables in the three and nine-month periods ended September 30, 2024 compared to the same periods in 2023, was primarily due to adjustments made to the estimated fair value of earnout obligations related to revised assumptions due to rising interest rates and increased market volatility and projections of future performance. During the three-month periods ended September 30, 2024 and 2023, we recognized $13.7 million and $17.8 million, respectively, of expense related to the accretion of the discount recorded for earnout obligations in connection with our acquisitions made in the period from 2020 to 2024. During the nine-month periods ended September 30, 2024 and 2023, we recognized $47.3 million and $57.1 million, respectively, of expense related to the accretion of the discount recorded for earnout obligations in connection with our acquisitions made in the period from 2020 to 2024. In addition, during the three-month periods ended September 30, 2024 and 2023, we recognized $29.1 million and $20.4 million of income, respectively, related to net adjustments in the estimated fair value of earnout obligations in connection with revised assumptions due to changes in interest rates, volatility and other assumptions and projections of future performance for 29 and 20 acquisitions, respectively. In addition, during the nine-month periods ended September 30, 2024 and 2023, we recognized $60.2 million and $8.8 million of income, respectively, related to net adjustments in the estimated fair value of earnout obligations in connection with revised assumptions due to changes in interest rates, volatility and other assumptions and projections of future performance for 74 and 59 acquisitions, respectively.

Current wording

Change in estimated acquisition earnout payables -The change in the expense from the change in estimated acquisition earnout payables in the three-month period ended March 31, 2025 compared to the same period in 2024, was primarily due to adjustments made to the estimated fair value of earnout obligations related to revised assumptions due to rising interest rates and increased market volatility and projections of future performance. During the three-month periods ended March 31, 2025 and 2024, we recognized $12.6 million and $18.7 million, respectively, of expense related to the accretion of the discount recorded for earnout obligations in connection with our acquisitions made in the period from 2021 to 2025. In addition, during the three-month periods ended March 31, 2025 and 2024, we recognized $2.8 million of expense and $34.9 million of income, respectively, related to net adjustments in the estimated fair value of earnout obligations in connection with revised assumptions due to changes in interest rates, volatility and other assumptions and projections of future performance for 28 and 37 acquisitions, respectively.

Previous wording

Provision for income taxes - The brokerage segment’s effective income tax rates for the three-month periods ended September 30, 2024 and 2023, were 25.2% and 25.3%, respectively. The brokerage segment’s effective income tax rates for the nine-month periods ended September 30, 2024 and 2023, were 25.4% and 25.5%, respectively. We anticipate reporting an effective tax rate of approximately 24.5% to 26.5% in our brokerage segment based on known changes in tax rates in future periods.

Current wording

Provision for income taxes - The brokerage segment’s effective income tax rates for the three-month periods ended March 31, 2025 and 2024, were 25.7% and 25.5%, respectively. We anticipate reporting an effective tax rate of approximately 24.5% to 26.5% in our brokerage segment based on known changes in tax rates in future periods.

Previous wording

Net earnings attributable to noncontrolling interests -The amounts reported in this line for the three-month periods ended September 30, 2024 and 2023, include noncontrolling interest earnings of $1.5 million and $3.1 million, respectively. The amounts reported in this line for the nine-month periods ended September 30, 2024 and 2023, include noncontrolling interest earnings of $7.8 million and $5.9 million, respectively.

Current wording

Net earnings attributable to noncontrolling interests -The amounts reported in this line for the three-month periods ended March 31, 2025 and 2024, include noncontrolling interest earnings of $4.5 million and $4.3 million, respectively.

Previous wording

The risk management segment accounted for 14% of our revenue during the nine-month period ended September 30, 2024. Our risk management segment operations provide contract claim settlement, claim administration, loss control services and risk management consulting for commercial, nonprofit, captive and public sector entities, and various other organizations that choose to self-insure property/casualty coverages or choose to use a third-party claims management organization rather than the claim services provided by underwriting enterprises. Revenues for our risk management segment are comprised of fees generally negotiated (i) on a per-claim or per-service basis, (ii) on a cost-plus basis, or (iii) as performance-based fees. We also provide risk management consulting services that are recognized as the services are delivered.

Current wording

The risk management segment accounted for 11% of our revenue during the three-month period ended March 31, 2025. Our risk management segment operations provide contract claim settlement, claim administration, loss control services and risk management consulting for commercial, nonprofit, captive and public sector entities, and various other organizations that choose to self-insure property/casualty coverages or choose to use a third-party claims management organization rather than the claim services provided by underwriting enterprises. Revenues for our risk management segment are comprised of fees generally negotiated (i) on a per-claim or per-service basis, (ii) on a cost-plus basis, or (iii) as performance-based fees. We also provide risk management consulting services that are recognized as the services are delivered.

Previous wording

Financial information relating to our risk management segment results for the three and nine-month periods ended September 30, 2024 as compared to the same periods in 2023, is as follows (in millions, except per share, percentages and workforce data):

Current wording

Financial information relating to our risk management segment results for the three-month period ended March 31, 2025 compared to the same period in 2024, is as follows (in millions, except per share, percentages and workforce data):

Previous wording

The following provides non-GAAP information that management believes is helpful when comparing EBITDAC and adjusted EBITDAC for the three and nine-month periods ended September 30, 2024 to the same periods in 2023 (in millions):

Current wording

The following provides non-GAAP information that management believes is helpful when comparing EBITDAC and adjusted EBITDAC for the three-month period ended March 31, 2025 to the same period in 2024 (in millions):

Previous wording

Fees - In our risk management operations, for the three-month period ended September 30, 2024, new core workers' compensation and general liability claims arising improved from existing clients and new clients coming on board in 2023 and 2024. We believe these favorable new arising claim trends should continue for the remainder of 2024 however, worsening economic conditions or a reversal in the number of workers employed could cause fewer new liability and core workers' compensation claims to arise in future quarters. Organic change in fee revenues for the three-month period ended September 30, 2024 was 6.0% compared to 17.9% for the same period in 2023. Organic change in fee revenues for the nine-month period ended September 30, 2024 was 8.9% compared to 16.8% for the same period in 2023.

Current wording

Fees - In our risk management operations, for the three-month period ended March 31, 2025, client retention was strong and new business was positive. We believe these favorable trends should continue for the remainder of 2025. However, worsening economic conditions or a reversal in the number of workers employed could cause fewer new liability and core workers' compensation claims to arise in future quarters. Organic change in fee revenues for the three-month period ended March 31, 2025 was 3.9% compared to 13.3% for the same period in 2024.

Previous wording

Items excluded from organic fee computations yet impacting revenue comparisons for the three and nine-month periods ended September 30, 2024 and 2023 include the following (in millions):

Current wording

Items excluded from organic fee computations yet impacting revenue comparisons for the three-month periods ended March 31, 2025 and 2024 include the following (in millions):

Previous wording

Interest income and other income - Interest income and other income primarily represents interest income earned on cash, cash equivalents and fiduciary cash. Interest income and other income in the three and nine-month periods ended September 30, 2024 increased compared to the same periods in 2023, primarily due to increases in interest income from increases in interest rates earned on fiduciary cash.

Current wording

Interest income and other income - Interest income and other income primarily represents interest income earned on cash, cash equivalents and fiduciary cash. Interest income and other income in the three-month period ended March 31, 2025 increased compared to the same period in 2024, primarily due to increases in interest income from increased levels of fiduciary cash.

Previous wording

Compensation expense - The following provides non-GAAP information that management believes is helpful when comparing compensation expense for the three and nine-month periods ended September 30, 2024 with thesame periods in 2023 (in millions):

Current wording

Compensation expense - The following provides non-GAAP information that management believes is helpful when comparing compensation expense for the three-month period ended March 31, 2025 with thesame period in 2024 (in millions):