CSX Corporation

Company Overview

Business Model: CSX Corporation, through its principal operating subsidiary CSX Transportation, Inc. (CSXT), is a leading transportation company providing rail-based freight services. These services include traditional rail, intermodal container and trailer transport, rail-to-truck transfers, and bulk commodity operations. CSXT operates an approximately 20,000 route-mile rail network serving 26 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec, with access to over 70 port terminals. The Company's intermodal business connects customers to railroads via trucks and terminals. CSXT also manages real estate activities primarily supporting railroad operations. Other subsidiaries include Quality Carriers, Inc., a bulk liquid chemicals truck transportation provider; CSX Intermodal Terminals, Inc., operating intermodal terminals and drayage services; Total Distribution Services, Inc., serving the automotive industry; TRANSFLO Terminal Services, Inc., facilitating rail-to-truck product transfers; and CSX Technology, Inc., providing support services. The operating model emphasizes scheduled service, customer service improvement, asset optimization, and employee engagement to increase market share, reduce costs, and generate strong free cash flow.

Market Position: CSX Corporation is one of the nation's leading transportation companies. The Company and the broader rail industry provide an expansive and interconnected transportation network critical to North American commerce, offering an economical and environmentally efficient means to transport goods over land. CSXT's network allows it to directly serve every major market in the eastern United States. The Company faces competition from other railroads, motor carriers, and to a lesser extent, barges, ships, and pipelines, with Norfolk Southern Railway being its primary rail competitor.

Recent Strategic Developments:

• Pan Am Systems, Inc. Acquisition (2022): On June 1, 2022, CSX Corporation completed the acquisition of Pan Am Systems, Inc., parent company of Pan Am Railways, Inc. This expanded CSXT’s reach in the Northeastern United States, adding a nearly 1,200-mile rail network and a joint interest in the more than 600-mile Pan Am Southern system. The acquisition was funded with $422 million in common stock and $178 million in cash.
• Property Rights Sale to Commonwealth of Virginia (2022): Completed in 2022, this agreement involved the sale of certain property rights in three CSX-owned line segments to the Commonwealth of Virginia. Total proceeds of $525 million were collected, and total gains of $493 million were recognized over the course of the transaction.
• Quality Carriers Acquisitions: During 2024 and 2023, Quality Carriers, Inc. completed several immaterial acquisitions of previous independent affiliates, adding $22 million and $6 million in goodwill, respectively.

Geographic Footprint: CSXT's rail network spans approximately 20,000 route miles, serving 26 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec. It provides access to over 70 ocean, river, and lake port terminals along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes, and the St. Lawrence Seaway. Key transportation corridors include the Interstate 90 Corridor (Chicago/Midwest to New York/New England), Interstate 95 Corridor (Southeast to Mid-Atlantic/Northeast), Southeastern Corridor (Chicago, St. Louis, Memphis to Nashville, Birmingham, Atlanta, and other Southeast markets), and the Coal Network (Appalachian mountain region and Illinois basin to industrial areas and port facilities).

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Operating Margin: 36.1%
• Net Margin: 23.9%

Investment in Growth:

• R&D Expenditure: Not explicitly disclosed as a separate line item.
• Capital Expenditures: $2.53 billion (2024) vs. $2.26 billion (2023)
  • Track: $1.04 billion (2024)
  • Bridges, Signals, PTC and Other: $802 million (2024)
  • Strategic Projects and Commercial Facilities: $364 million (2024)
  • Locomotives: $250 million (2024)
  • Freight Cars: $74 million (2024)
• Strategic Investments:
  • Goodwill Impairment: $108 million charge for Quality Carriers, Inc. in 2024, driven by lower than expected financial performance projections and higher discount rates.
  • Blue Ridge Subdivision Rebuild: Approximately $50 million in 2024, with total spending estimated to exceed $400 million, due to impacts from Hurricane Helene.

Business Segment Analysis

Rail

Financial Performance (2024):

• Revenue: $13.70 billion (-1% YoY)
• Operating Income: $5.35 billion (-2% YoY)
• Operating Margin: 39.0%
• Key Growth Drivers:
  • Merchandise: Overall revenue increased 3% due to pricing gains and higher volumes. Chemicals revenue increased 10% (volume +7%) driven by plastics, crude oil, natural gas liquids, and other industrial chemicals. Forest Products revenue increased 3% (volume +4%) from pulpboard, paper, and building products. Minerals revenue increased 5% (volume +1%) due to higher cement shipments. Automotive revenue increased 1% (volume +1%) from new business wins. Agricultural and Food Products revenue decreased 1% (volume -1%) due to lower food, consumer products, wheat, and export grains, partially offset by domestic feed grain and ethanol. Metals and Equipment revenue decreased 6% (volume -7%) due to lower steel and scrap. Fertilizers revenue decreased 2% (volume -7%) from declines in short-haul phosphates.
  • Intermodal: Revenue decreased 1% (volume +5%). Volume growth was driven by international shipments (higher imports through east coast ports and inventory replenishments) and domestic shipments (growth with key customers despite a soft trucking environment).
  • Coal: Revenue decreased 10% (volume -3%). Export coal increased due to higher metallurgical and thermal coal shipments. Domestic coal decreased due to lower shipments to utility plants and river/lake terminals.

Product Portfolio:

• Merchandise: Shipments in diverse markets including chemicals, agricultural and food products, automotive, minerals, forest products, metals and equipment, and fertilizers.
• Intermodal: Combines rail and truck transportation for manufactured consumer goods in containers, serving major markets east of the Mississippi River through a network of approximately 30 terminals.
• Coal: Transports domestic coal, coke, and iron ore to power plants, steel manufacturers, and industrial plants, as well as export coal to deep-water port facilities (primarily for steelmaking, with domestic coal mainly for electricity generation).

Market Dynamics: The rail segment's performance is influenced by diverse market demands across its commodity groups. Intermodal benefits from cost and environmental advantages over long-haul trucking. The coal market faces declining domestic demand from coal-fired power plants and volatility in export coal.

Trucking

Financial Performance (2024):

• Revenue: $844 million (-4% YoY)
• Operating Income: -$108 million (vs. $27 million in 2023)
• Operating Margin: -12.8%
• Key Growth Drivers: Revenue decreased due to lower fuel and capacity surcharges. The segment recorded a $108 million goodwill impairment charge in 2024, driven by lower than previously expected financial performance projections and higher discount rates, reflecting an extended trucking recession.

Product Portfolio:

• Quality Carriers, Inc. is the largest provider of bulk liquid chemicals truck transportation in North America.

Market Dynamics: The trucking segment's performance is sensitive to fuel and capacity surcharges and broader trucking industry conditions, including recessionary pressures.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $2.20 billion (65 million shares) in 2024, compared to $3.48 billion (112 million shares) in 2023. Total repurchase authority remaining as of December 31, 2024, was $2.6 billion under a $5 billion program approved in October 2023.
• Dividend Payments: $930 million in 2024, compared to $882 million in 2023.
• Dividend Yield: Not explicitly stated, but 2024 dividends per share were $0.48.
• Future Capital Return Commitments: On February 12, 2025, the Board of Directors authorized an 8% increase in the quarterly cash dividend to $0.13 per common share, effective March 2025, marking the 21st consecutive annual dividend increase. Future share repurchases are expected to be funded by cash on hand, cash generated from operations, and debt issuances.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: $933 million
• Total Debt: $18.50 billion (including current maturities)
• Net Cash Position: -$17.50 billion (Net Debt)
• Credit Rating:
  • Fitch: A- (Stable)
  • Moody's: A3 (Stable)
  • S&P: BBB+ (Stable)
• Debt Maturity Profile: Total long-term debt maturities (including current portion) are $18.50 billion. Key maturities include $606 million in 2025, $704 million in 2026, $998 million in 2027, $1.00 billion in 2028, $950 million in 2029, and $14.24 billion thereafter.
• Liquidity: The Company has access to a $1.2 billion five-year unsecured revolving credit facility expiring in February 2028, with no outstanding balances as of December 31, 2024. It also has a $1.0 billion commercial paper program, also with no outstanding debt.

Cash Flow Generation:

• Operating Cash Flow: $5.25 billion (2024) vs. $5.51 billion (2023). The decrease was primarily due to $387 million in federal and state tax payments related to the 2023 tax year (previously postponed) and lower cash-generating net earnings.
• Free Cash Flow: $2.78 billion (2024) vs. $3.35 billion (2023). The decrease was primarily due to higher property additions and less cash from operating activities.
• Cash Conversion Metrics: Working capital deficit of $456 million at December 2024, compared to a surplus of $136 million at December 2023. This $592 million decrease was driven by $420 million decrease in cash as property additions ($2.5 billion), share repurchases ($2.2 billion), and dividend payments ($930 million) more than offset operating cash flow ($5.2 billion).

Operational Excellence

Production & Service Model: The Company operates a scheduled service plan focused on improving customer service, optimizing assets, and increasing employee engagement. This model aims to enhance competitiveness, reduce costs, and generate free cash flow. CSXT owns or long-term leases over 3,500 locomotives (89% freight, 6% switching, 5% auxiliary units, with an average age of 25 years) and 64,104 units of equipment (45,197 freight cars and 18,907 containers). Approximately 67% of owned locomotives and 90% of owned/leased equipment were in active service as of December 31, 2024, with the remainder in storage to allow for flexible fleet adjustment based on demand.

Supply Chain Architecture: Key Suppliers & Partners:

• Locomotive Maintenance & Rebuild: Third-party agreement for long-term locomotive maintenance and rebuild program covering approximately 1,900 locomotives, with commitments through at least 2035 for maintenance and 2028 for rebuilds. Payments for this program totaled $311 million in 2024.
• Railroad Operations: Conrail, jointly owned with Norfolk Southern Corporation, operates shared asset areas (Detroit, North Jersey, South Jersey/Philadelphia) and charges fees for right-of-way usage, equipment rentals, and transportation services.
• Railcar Provision: TTX Company, in which CSX Corporation owns about 20% of common stock, provides standardized fleets of intermodal, automotive, and general use railcars to its owner-railroads.

Facility Network:

• Track and Infrastructure: Approximately 20,000 route miles, with total track miles of 35,539 (19,773 single mainline, 5,649 other mainline, 9,227 terminals and switching yards, 890 passing sidings and turnouts).
• Yards and Terminals: Operates numerous yards and terminals for rail and intermodal service, serving as connectivity points and sorting facilities. Largest yards/terminals by 2024 annual volume include Waycross, GA (915,159 units), Bedford Park Intermodal Terminal (Chicago) (899,537 units), and Nashville, TN (687,659 units).
• Corridors: Four major transportation networks: I-90 Corridor (Chicago/Midwest to New York/New England), I-95 Corridor (Southeast to Mid-Atlantic/Northeast), Southeastern Corridor (Chicago, St. Louis, Memphis to Southeast markets), and Coal Network (Appalachian/Illinois basin to industrial areas and ports).

Operational Metrics (2024 vs. 2023):

• Train Velocity: 18.3 miles per hour (+2% improvement)
• Dwell: 10.3 hours (-10% deterioration)
• Cars Online: 127,291 (-1% deterioration)
• On-Time Originations: 73% (-5% deterioration)
• On-Time Arrivals: 65% (-8% deterioration)
• Carload Trip Plan Performance: 79% (-6% deterioration)
• Intermodal Trip Plan Performance: 91% (-4% deterioration)
• Fuel Efficiency: 0.98 gallons per 1,000 gross ton-miles (+4% improvement)
• Total Revenue Ton-Miles: 194.3 billion (0% change)
• Total Gross Ton-Miles: 384.4 billion (+1% improvement)
• FRA Personal Injury Frequency Index: 1.19 (-27% deterioration)
• FRA Train Accident Rate: 3.40 (+1% improvement)

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Rail Network: Direct service through its extensive rail network to major population centers and thousands of production and distribution facilities, with connections to other Class I railroads and over 240 short-line and regional railroads.
• Intermodal Terminals: Operates a system of approximately 30 intermodal terminals, predominantly in the eastern United States, providing truck-like service for longer shipments of manufactured consumer goods.
• Rail-to-Truck Transfers: TRANSFLO Terminal Services, Inc. connects non-rail served customers to rail benefits by transferring products from rail to trucks, particularly for chemicals and agriculture (plastics, ethanol).
• Automotive Distribution: Total Distribution Services, Inc. serves the automotive industry with distribution centers and storage locations.
• Trucking Services: Quality Carriers, Inc. provides bulk liquid chemicals truck transportation across North America.

Customer Portfolio:

• Diverse Industries: Serves manufacturers, industrial producers, the automotive industry, construction companies, farmers and feed mills, wholesalers and retailers, and energy producers across its merchandise, intermodal, and coal businesses.
• Strategic Partnerships: Engages with other Class I railroads and numerous short-line and regional railroads for network connectivity.

Geographic Revenue Distribution:

• The Company's rail network serves 26 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec. It has access to over 70 ocean, river, and lake port terminals. Specific revenue distribution by region is not detailed beyond the network description.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The freight rail transportation industry is highly competitive, with shippers prioritizing a compelling combination of service and price. Service requirements vary by shipper and commodity. Freight railroads, including CSX Corporation, build and maintain their own rail networks, while other transportation providers often use publicly funded rights-of-way.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Norfolk Southern Railway: CSXT’s primary rail competitor, operating throughout much of the Company’s territory.
• Motor Carriers: Significant competition from deregulated motor carriers operating similar routes across CSX Corporation's service area.
• Barges, Ships, and Pipelines: To a less significant extent, these modes also compete for freight transportation.

Emerging Competitive Threats: Future improvements or expenditures in alternative modes of transportation (e.g., automation, autonomy, electrification in trucking) or less stringent size/weight restrictions on trucks could negatively impact CSX Corporation's competitive position. Future consolidation in the rail industry could also affect the competitive environment.

Competitive Response Strategy: CSX Corporation's operating model focuses on developing and strictly maintaining a scheduled service plan with an emphasis on improving customer service, optimizing assets, and increasing employee engagement to compete for an increased share of the U.S. freight market.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Vulnerability to declines or disruptions in domestic and global economic conditions, impacting demand for commodities and products transported (including import/export volumes). Slower economic growth in Asia, European contractions, and changes in global seaborne coal supply/price can adversely affect coal revenue.
• Technology Disruption: Failure to successfully acquire, develop, implement, or update new or existing technology, including artificial intelligence, could lead to adverse financial impacts or competitive disadvantage.
• Customer Concentration: Not explicitly detailed as a specific risk, but reliance on diverse markets is a mitigating factor.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Rail network difficulties due to locomotive/crew shortages, labor shortages in the broader supply chain (trucking, ports, customer facilities), unpredictable demand increases, extreme weather, regulatory changes affecting freight transport, or reductions in pooled equipment availability.
• Geographic Concentration: Operations primarily east of the Mississippi River and in specific Canadian provinces, exposing the Company to regional economic and environmental factors.
• Capacity Constraints: Potential for operational fluidity deterioration due to network difficulties, impacting service, asset utilization, and efficiency.
• Safety: Inherent risks of train accidents, especially involving hazardous materials, which could result in significant costs, claims, and environmental penalties exceeding insurance coverage.
• Cybersecurity: Reliance on technology systems makes the Company vulnerable to data breaches, cyber-attacks, or similar incidents, which could cause service interruptions, train accidents, data misappropriation, and significant legal/financial exposure.
• Public Health Crises: Epidemics or pandemics could adversely affect demand for transported commodities, cause supply chain disruptions, and impact workforce availability.
• Labor Relations: Failure to complete negotiations on collective bargaining agreements could result in strikes or work stoppages, leading to business loss and increased operating costs.

Financial & Regulatory Risks

• Demand Volatility: Sensitivity to economic cycles and demand for specific commodities (e.g., coal).
• Foreign Exchange: Not explicitly detailed as a material risk in the provided text.
• Credit & Liquidity: Instability in capital markets, significant interest rate increases, or deterioration of financial condition could restrict access to capital and increase financing costs.
• Industry Regulation: New legislation, regulatory changes (e.g., STB rules on competitive access or revenue adequacy), or governmental actions could impact revenues, costs, and profitability.
• Export Controls: Embargoes or changes to trade agreements/policies (e.g., tariffs) could reduce import/export volumes.
• Data Privacy: Risks associated with data breaches and compliance with applicable laws and regulations.

Geopolitical & External Risks

• Geographic Dependencies: Operations in the U.S. and Canada expose the Company to their respective political and economic conditions.
• Trade Relations: Embargoes or changes to trade agreements/policies, such as tariffs, could result in reduced import and export volumes.
• Sanctions & Export Controls: Compliance requirements and business limitations due to trade restrictions.
• Terrorism/War: Acts of terrorism or war could target rail lines, infrastructure, or IT systems, causing business interruption, increased costs, and liabilities.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Cybersecurity: CSX Corporation maintains a cybersecurity framework integrated across the organization, utilizing various cybersecurity tools, vulnerability scans, and employee training. It partners with a third-party for continuous monitoring at its Security Operation Center (SOC).
• Operational Technology: Investment in technological innovations to detect and avoid human factor incidents, supporting safety performance. This includes capital investment in track, bridges, signals, equipment, and detection technology.
• Artificial Intelligence: The Company acknowledges the risk of adverse financial impacts or competitive disadvantage if it is unable to successfully acquire, develop, implement, or update new or existing technology, including artificial intelligence.

Intellectual Property Portfolio:

• Patent Strategy: Not explicitly detailed in the provided text.
• Licensing Programs: Not explicitly detailed in the provided text.
• IP Litigation: Not explicitly detailed in the provided text.

Technology Partnerships:

• Cybersecurity Partners: Partners with a third-party to provide a managed service for continuous monitoring at its Security Operation Center (SOC). Engages third-party experts, advisors, and cybersecurity professionals for incident response.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Not explicitly detailed in the provided text.

Board Composition: The Audit Committee of the Board of Directors oversees cybersecurity risk, mitigation strategies, and overall resiliency of the Company’s technology infrastructure. CSX Corporation has a cybersecurity expert on the Board and its Audit Committee to provide expanded oversight.

Human Capital Strategy

Workforce Composition (as of December 2024):

• Total Employees: More than 23,500
• Unionized Employees: Approximately 17,500 (members of 12 rail labor unions)
• Geographic Distribution: Employees primarily provide or support transportation services across the Company's network in the U.S. and Canada.
• Skill Mix: Not explicitly detailed, but includes engineers, conductors, and other skilled professional or technical employees.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The Company strives to maintain adequate resources and personnel, including qualified engineers, conductors, and other skilled employees.
• Retention Metrics: Not explicitly detailed.
• Employee Value Proposition: Compensation philosophy, benefits, and culture are not explicitly detailed, but the Company focuses on safety, diversity, and ethical behavior.

Diversity & Development:

• Diversity Metrics (as of December 31, 2024): Approximately 22% of the overall workforce and 35% of management is diverse (males of color and all females).
• Development Programs: Training programs focus on injury and accident prevention and emergency preparedness. All management employees are required, and union employees are highly encouraged, to complete annual ethics training.
• Culture & Engagement: Committed to developing a culture that promotes workforce diversity and inclusion and encourages ethical behavior. Recognized as a “Best Place to Work for Disability Inclusion” for six consecutive years.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Environmental Efficiency: Freight railroads provide the most environmentally efficient means to transport goods over land. Fuel efficiency improved by 4% in 2024.
• Regulatory Compliance: Subject to various federal, state, provincial, and local environmental laws and regulations concerning emissions, waste handling, and hazardous materials.
• Climate-Related Risks: Operations and financial results could be negatively impacted by climate or weather-related risks (e.g., floods, hurricanes, fires, earthquakes) and regulatory/legislative responses (e.g., emission restrictions, caps, taxes).
• Emissions Targets: Not explicitly detailed, but the EPA has regulatory authority over emissions.
• Carbon Neutrality: Not explicitly detailed.
• Renewable Energy: Not explicitly detailed.

Supply Chain Sustainability:

• Responsible Sourcing: Not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed.
• Product Impact: Not explicitly detailed.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Not explicitly detailed in the provided text.
• Economic Sensitivity: Demand for commodities and products transported is negatively affected by declines or disruptions in general domestic and global economic conditions. Slower economic growth in Asia, contraction of European economies, and changes in global seaborne coal supply or price adversely impact U.S. export coal volume and revenue.
• Industry Cycles: The coal market has experienced a significant decline over the last decade, and export coal remains subject to volatility. The trucking segment's performance in 2024 was impacted by an extended trucking recession.

Planning & Forecasting: Not explicitly detailed in the provided text.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• U.S. Regulation: Railroad operations are subject to the Surface Transportation Board (STB) (economic regulation, routes, rates, acquisitions), Federal Railroad Administration (FRA) (safety regulations, infrastructure, equipment), Pipeline and Hazardous Materials Safety Administration (PHMSA) (hazardous materials), and Environmental Protection Agency (EPA) (environmental matters).
• Canadian Regulation: Railroad operations are subject to the Canadian Transportation Agency.
• Security Regulation: The Transportation Security Administration (TSA) has broad authority over railroad operating practices with homeland security implications, including security protocols for hazardous materials transport.
• Staggers Act of 1980: Significantly deregulated the U.S. rail industry, allowing railroads to establish their own rates.

Trade & Export Controls:

• Export Restrictions: Legislation preventing hazardous materials transport through certain cities could increase operating costs and accident risk. Embargoes or changes to trade agreements/policies (e.g., tariffs) could reduce import/export volumes.
• Sanctions Compliance: Not explicitly detailed, but trade relations are a risk factor.

Legal Proceedings:

• General Litigation: Involved in various claims and lawsuits related to commercial practices, labor, occupational/personal injury, property/freight damage, environmental matters, and governmental proceedings. Estimated aggregate range of reasonably possible loss in excess of reserves is $3 million to $60 million as of December 31, 2024.
• Fuel Surcharge Antitrust Litigation: Class action lawsuits filed in May 2007 against CSXT and other Class I railroads alleging illegal conspiracy in fuel surcharge practices. Class certification was denied in 2017 and affirmed in 2019. Individual shipper claims are ongoing, with motions for summary judgment filed in July 2024. CSXT believes its practices were lawful and intends to defend vigorously.
• Environmental Litigation (Lower Passaic River): CSXT is indemnifying Pharmacia LLC for liabilities related to real estate in Kearny, New Jersey, along the Lower Passaic River. The EPA seeks investigation and cleanup of hazardous substances in the 17-mile Study Area. An EPA-directed allocation and settlement process is ongoing. In January 2024, EPA filed a motion to enter a Consent Decree with 82 parties for $150 million, which Pharmacia is not part of. The CD was approved in December 2024 and is under appeal. CSXT does not believe its share of remediation costs would be material.
• Regulatory Investigation (SEC): In October 2024, the Company received a subpoena from the SEC's Enforcement Division requesting information related to an accounting restatement disclosed in Q2 2024 and non-financial performance metrics. CSX Corporation is cooperating but cannot anticipate the timing, scope, outcome, or impact of the investigation.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 23.8% in 2024, 24.1% in 2023, and 23.0% in 2022.
• Geographic Tax Planning: Files a consolidated federal income tax return and is subject to income tax in multiple state jurisdictions.
• Tax Reform Impact: The Inflation Reduction Act of 2022 imposes a nondeductible 1% excise tax on the net value of most share repurchases made after December 31, 2022.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains insurance programs for property damage (including business interruption) and casualty claims (third-party liability) with substantial limits.
• Self-Insurance Retention: Retains risk up to $150 million per occurrence for floods and named windstorms, $125 million per occurrence for other property losses, and $100 million per occurrence for casualty claims. Purchases coverage above these self-retention amounts.
• Risk Transfer Mechanisms: Utilizes interest rate derivatives (fixed-to-floating swaps) to hedge interest rate risk on long-term debt. As of December 31, 2024, had a $7 million asset and a $123 million liability from such swaps. Entered into additional swaps in January 2025 to hedge $250 million of notes due 2055.
• Off-Balance Sheet Arrangements: Other commitments total $208 million, primarily surety bonds, guarantees, and letters of credit, not deemed material.