Company: ADP
Filing Date: 2025-08-06
Form Type: 10-K
Source: 0000008670-25-000037
Chunk: 106

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-08-06
Form: 10-K
Item: Item 8
Chunk 106
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 insurance protection for PEO services worksite employees. Each of these reinsurance arrangements limit our overall exposure incurred up to a certain limit. The Company believes the likelihood of ultimate losses exceeding this limit is remote. ADP Indemnity paid a premium of $276 million to enter into a reinsurance arrangement with Chubb Limited to cover substantially all losses incurred by ADP Indemnity for the fiscal 2025 policy year up to $1 million per occurrence. ADP Indemnity paid a premium of $278 million in July 2025 to enter into a reinsurance arrangement to cover substantially all losses for the fiscal 2026 policy year on terms substantially similar to the fiscal 2025 policy.T. Contingencies. In the normal course of business, the Company is subject to loss contingencies, such as claims and assessments arising from litigation and other legal proceedings, contractual indemnities, and tax matters. Accruals for loss contingencies are recorded when the Company determines that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. If the estimate of the amount of the loss is a range and some amount within the range appears to be a better estimate than any other amount within the range, that amount is accrued as a liability. If no amount within the range is a better estimate than any other amount, the minimum amount of the range is accrued as a liability. These accruals are adjusted periodically as assessments change or additional information becomes available. The loss contingencies are included in selling, general and administrative expenses.

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If no accrual is made for a loss contingency because the amount of loss cannot be reasonably estimated, the Company will disclose material contingent liabilities when there is at least a reasonable possibility that a loss or an additional loss may have been incurred. Legal fees and other costs related to litigation and other legal proceedings or services are expensed as incurred and are included in selling, general and administrative expenses.Any claim for insurance recovery is recognized only when realization becomes probable.U. Recently Issued Accounting Pronouncements.  Recently Adopted Accounting PronouncementsEffective June 30, 2025, the Company adopted accounting standard update ("ASU") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." This update resulted in enhanced disclosures about the Company's reportable segments. The adoption of ASU 2023-07 did not have a material impact on the Company's consolidated results of operations, financial condition, or cash flows