Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

6 Months Ended

Jun. 30, 2024

Supplemental Cash Flow Elements [Abstract]

Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

NOTE 10 Supplemental Disclosures of Cash Flow Information and Non-Cash Financing and Investing Activities

During the six months ended June 30, 2024, the Company had a minimal impact from foreign exchange rate changes on cash and cash equivalents inclusive of fiduciary cash reported on its Condensed Consolidated Statements of Cash Flows.

Pursuant to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023, the Company is entitled to future consideration payments upon achievement of certain conditions in accordance with the terms of the sale agreement. During the second quarter of 2024, the Company received $57 million from the settlement of two of the contingent payments.

During the second quarter, the Company completed the issuance of the 2034 Senior Notes. The net proceeds to the Company from the issuance of the 2034 Senior Notes, after deducting underwriting discounts and estimated offering expenses, were approximately $593 million. A portion of those proceeds totaling $395 million have been placed in short-term US Treasury Bills. These US Treasury Bills are presented as cash and cash equivalents on the Condensed Consolidated Balance Sheet as they will mature in less than 90 days from the date of the purchase. There was another $100 million placed in money market funds also presented as cash and cash equivalents on the Condensed Consolidated Balance Sheet due to their liquidity profile. The Company intends to use the cash to redeem its 4.200% senior notes due September 2024 and for general corporate purposes.

During 2023, the Company accrued for and deferred $91 million related to certain federal income tax payments. This deferral was allowed under Hurricane Idalia tax relief, which was announced by the Internal Revenue Service on August 30, 2023. These deferral of income tax payments were paid by the deadline of February 15, 2024. On March 15, 2023, the Company paid $31 million of accrued federal income tax payments originally due in the fourth quarter of 2022, which was deferred under a similar tax deferral announced by the Internal Revenue Service associated with Hurricane Ian which was announced on September 29, 2022. During the first quarter of 2024, the Company also made tax payments of approximately $30 million associated with the gain on disposal of certain third-party claims administration and adjusting services businesses sold in the fourth quarter of 2023.

Cash paid during the period for interest and income taxes are summarized as follows:

	Six months ended June 30,
(in millions)	2024		2023
Cash paid during the period for:
Interest	$	94	$	93
Income taxes, net of refunds	$	267	$	163

Significant non-cash investing and financing activities are summarized as follows:

	Six months ended June 30,
(in millions)	2024		2023
Other payables issued for agency acquisitions and purchased customer accounts	$	7	$	2
Estimated acquisition earn-out payables issued for agency acquisitions	$	19	$	40

The Company's restricted cash balance is composed of funds held in separate premium trust accounts as required by state law or, in some cases, by agreement with carrier partners. The following is a reconciliation of cash and cash equivalents inclusive of restricted cash as of June 30, 2024 and 2023.

(in millions)	June 30, 2024		December 31, 2023
Table to reconcile restricted and non-restricted fiduciary cash
Restricted fiduciary cash	$	1,587	$	1,412
Non-restricted fiduciary cash		280		191
Total restricted and non-restricted fiduciary cash at the end of the period	$	1,867	$	1,603

The Company's fiduciary cash increased as of June 30, 2024 compared to December 31, 2023 due to growth in the business, normal seasonality and acquisition activity during 2024.

	Balance as of June 30,
(in millions)	2024		2023
Table to reconcile cash and cash equivalents inclusive of fiduciary cash
Cash and cash equivalents	$	1,107	$	628
Fiduciary cash		1,867		1,635
Total cash and cash equivalents inclusive of restricted cash at the end of the period	$	2,974	$	2,263