PHMPulteGroup

Adjustments to reserves are recorded in the period in which the change in estimate occurs. During 2024 2025 and 2023, 2024, we reduced general liability reserves by $333.9 $42.3 million and $130.8 $333.9 million, respectively, as a result of changes in estimates resulting from actual claim experience observed being less than anticipated in previous actuarial projections. The changes in actuarial estimates were driven by changes in actual claims experience that, in turn, impacted actuarial estimates for potential future claims. These changes in actuarial estimates did not involve any significant changes in actuarial methodology but did impact the development of estimates for future periods, which resulted in adjustments to the IBNR portion of our recorded liabilities. There were no material adjustments to individual claims. Rather, the adjustments reflect an overall lower level of losses related to construction defect claims in recent years as compared with our previous experience. We attribute the favorable experience in more recent years to a variety of factors, including improved construction techniques, rising home values, and increased participation from our subcontractors in resolving claims. The cumulative effect of these factors, as evidenced by the favorable claims experience for an extended period, have resulted in our actuarial estimates placing less weight on older, higher cost policy years and relatively more weight on more recent, lower cost policy years.

$2.4 In the normal course of business, we post letters of credit and surety bonds pursuant to certain performance-related obligations, as security for certain land option agreements, and under various insurance programs. The majority of these letters of credit and surety bonds are in support of our land development and construction obligations to various municipalities, other government agencies, and utility companies related to the construction of roads, sewers, and other infrastructure. We had outstanding letters of credit and surety bonds totaling $357.1 million and $3.1 billion, respectively, at December 31, 2023. 2025, and $321.1 million and $2.9 billion, respectively, at December 31, 2024. In the event any such letter of credit or surety bonds is drawn, we would be obligated to reimburse the issuer of the letter of credit or surety bond. We do not believe that a material amount, if any, of the letters of credit or surety bonds will be drawn. Our surety bonds generally do not have stated expiration dates; rather, we are released from the surety bonds as the underlying contractual performance is completed. Because significant construction and development work has been performed related to the applicable projects but has not yet received final acceptance by the respective counterparties, the aggregate amount of surety bonds outstanding is in excess of the projected cost of the remaining work to be performed.

Our business was could be materially and adversely disrupted by the outbreak and worldwide spread of contagious diseases, including epidemics, pandemics, or other serious public health threats, such as the COVID-19 and could be materially and adversely disrupted pandemic, as well as by another epidemic or pandemic like COVID-19, or similar public threat, or the fear of such an event, and the events. Public health emergencies may result in measures that taken by international, federal, state state, and local governments, agencies, law enforcement and/or enforcement, and or health authorities implement to address it. authorities, including travel restrictions, quarantines, business closures, workforce limitations, and other regulatory or emergency actions. These measures could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period of time.

In December 2023, FASB issued 2025, we adopted ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which requires expanded disclosure of our income rate reconciliation and income taxes paid. We adopted ASU 2023-09 is effective for us for annual periods beginning after December 31, 2024. We are currently evaluating following the impact ASU 2023-09 will prospective method. Accordingly, prior period disclosures have on our financial statement disclosures. not been modified. See Note 8.