Company: ADP
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000008670-25-000015
Chunk: 11

Company: AUTOMATIC DATA PROCESSING INC
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 2
Chunk 11
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, and changes in estimated ultimate incurred losses are included in the PEO segment. 

Additionally, starting in fiscal year 2013, ADP Indemnity paid premiums to enter into reinsurance arrangements with ACE American Insurance Company, a wholly-owned subsidiary of Chubb Limited (“Chubb”), to cover substantially all losses incurred by the Company up to the $1 million per occurrence related to the workers' compensation and employer's liability deductible reimbursement insurance protection for PEO Services' worksite employees. Each of these reinsurance arrangements limits our overall exposure incurred up to a certain limit. The Company believes the likelihood of ultimate losses exceeding this limit is remote. ADP Indemnity recorded a pre-tax benefit of approximately $5.6 million and $9.7 million for the three and nine months ended March 31, 2025, respectively, as compared to approximately $1.6 million and $6.1 million for the three and nine months ended March 31, 2024, respectively. The pre-tax benefit for the three months and nine months ended March 31, 2025 was primarily a result of more favorable actuarial loss development in workers’ compensation reserves as compared to the three and nine months ended March 31, 2024. In July 2024, ADP Indemnity paid a premium of $276 million  to enter into a reinsurance arrangement with Chubb to cover substantially all losses incurred by ADP Indemnity for the fiscal 2025 policy year on terms substantially similar to the fiscal 2024 reinsurance policy. 

Other

The primary components of “Other” are certain corporate overhead charges and expenses that have not been allocated to the reportable segments, including corporate functions, costs related to our transformation office, severance costs, non-recurring gains and losses, the elimination of intercompany transactions, and other interest income and expense.

Non-GAAP Financial Measures

In addition to our U.S. GAAP results, we use the adjusted results and other non-GAAP metrics set forth in the table below to evaluate our operating performance in the absence of certain items and for planning and forecasting of future periods: Adjusted Financial MeasureU.S. GAAP MeasuresAdjusted EBITNet earnings  Adjusted provision for income taxes Provision for income taxesAdjusted net earnings  Net earnings  Adjusted diluted earnings per share  Diluted earnings per shareAdjusted effective tax rate Effective tax rateOrganic constant currencyRevenues

We believe that the exclusion of the identified items helps us reflect the