Debt

3 Months Ended

Mar. 31, 2026

Debt Disclosure [Abstract]

Debt

3. DEBT

Outstanding debt totaled $347 million as of March 31, 2026, consisting of $297 million of long-term debt, net of unamortized discount and debt issuance costs, and $50 million of short-term debt.

On March 3, 2026, we completed a public debt offering, issuing $300 million of senior notes maturing June 1, 2036, with interest payable semi-annually at a rate of 5.375 percent. The notes were issued at a discount, resulting in proceeds of $297 million after deducting the discount and issuance costs. The discount is being amortized to interest expense over the life of the debt using the effective interest method. The average rate on long-term debt was 5.38 percent for the three months ended March 31, 2026. The estimated fair value of the senior notes was $288 million as of March 31, 2026. The fair value of our long-term debt is based on limited observable prices and is therefore classified as a Level 2 liability within the fair value hierarchy.

We repaid $50 million that was outstanding under our revolving credit facility with PNC Bank, N.A. (PNC) on February 20, 2026, which had been drawn in 2023. The borrowing carried an adjustable interest rate of 5.27 percent as of February 20, 2026. The credit facility with PNC, which was entered into during the first quarter of 2023, provided borrowing capacity of $100 million and had a three-year term that was scheduled to expire on May 29, 2026. On February 26, 2026, we entered into an amended and restated credit agreement with PNC to extend the maturity date to February 26, 2031. The amended agreement provides borrowing capacity of $150 million and may be increased to $200 million under certain conditions.

On November 12, 2025, we borrowed $50 million from the Federal Home Loan Bank of Chicago (FHLBC), which replaced the $50 million borrowed in 2024. The borrowing matures on November 12, 2026, but may be repaid early at set quarterly dates. Interest is paid monthly at an annualized rate of 4.21 percent.

Due to the lack of marketability and short tenor of our short-term borrowings, its fair value approximates carrying value. The average rate on short-term debt was 4.61 percent during the first quarter of 2026, compared to 5.18 percent during the first quarter of 2025. The weighted average interest rate on short-term debt outstanding was 4.21 percent as of March 31, 2026.