Annual report [Section 13 and 15(d), not S-K Item 405]

RECAST

v3.26.1
RECAST
 12 Months Ended
Mar. 31, 2026
Accounting Changes and Error Corrections [Abstract]  
RECAST RECAST
Effective April 1, 2025, the Company adopted Accounting Standards Update 2018-12, Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts ("LDTI"), as amended by ASU 2019-09 and ASU 2020-11, using the modified retrospective transition method. The transition date is April 1, 2023, which is the beginning of the earliest period presented in these consolidated financial statements.
The comparative financial statements for the fiscal years ended March 31, 2025 and March 31, 2024 have been recast to reflect the effects of LDTI adoption. The adoption affected only the measurement and presentation of long-duration insurance contracts (life insurance and annuity contracts written by Freedom Life); it did not change the accounting for the Group's short-duration insurance contracts or any non-insurance line items. In connection with the adoption, the Group renamed the following financial statement line items: "Insurance underwriting income" to "Net insurance revenue"; "Insurance claims incurred, net of reinsurance" to "Insurance claims and policyholder benefits, net of reinsurance"; and "Liabilities from insurance activity" to "Insurance contract liabilities". A new line "Change in discount rate on liability for future policy benefits" was added to other comprehensive income. These are presentational changes only; prior-period amounts have been conformed to the current-period presentation. The adoption of LDTI did not change net cash provided by or used in operating, investing, or financing activities for any period presented.
March 31, 2025
As previously reported Effect of adoption of ASU 2018-12 As recasted
ASSETS
Cash and cash equivalents $ 837,302  $ —  $ 837,302 
Restricted cash 807,468  —  807,468 
Investment securities 2,814,733  —  2,814,733 
Margin lending, brokerage and other receivables, net
3,319,145  —  3,319,145 
Loans issued 1,595,435  —  1,595,435 
Fixed assets, net 191,103  —  191,103 
Intangible assets, net 54,186  —  54,186 
Goodwill 49,093  —  49,093 
Right-of-use asset 39,828  —  39,828 
Insurance contract assets 37,183  —  37,183 
Other assets, net 168,541  1,100  169,641 
TOTAL ASSETS $ 9,914,017  $ 1,100  $ 9,915,117 
LIABILITIES AND SHAREHOLDERS' EQUITY
Securities repurchase agreement obligations $ 1,418,443  $ —  $ 1,418,443 
Customer liabilities
 4,304,999  —  4,304,999 
Margin lending and trade payables
 1,322,241  —  1,322,241 
Insurance contract liabilities 481,539  (9,106) 472,433 
Current income tax liability 28,919  —  28,919 
Debt securities issued 469,551  —  469,551 
Lease liability 40,525  —  40,525 
Liability arising from continuing involvement 503,705  —  503,705 
Other liabilities 129,737  —  129,737 
TOTAL LIABILITIES $ 8,699,659  $ (9,106) $ 8,690,553 
Commitments and Contingent Liabilities (Note 29) —  —  — 
SHAREHOLDERS' EQUITY
Preferred stock - $0.001 par value; $20,000,000 shares authorized, no shares issued or outstanding
 —  —  — 
Common stock - $0.001 par value; 500,000,000 shares authorized; 60,993,949 shares issued and outstanding as of March 31, 2025
61  —  61 
Additional paid in capital 246,610  —  246,610 
Retained earnings 1,085,565  (7,393) 1,078,172 
Accumulated other comprehensive loss (117,995) 17,599  (100,396)
TOTAL FRHC SHAREHOLDERS' EQUITY $ 1,214,241  $ 10,206  $ 1,224,447 
Non-controlling interest 117  —  117 
TOTAL SHAREHOLDERS' EQUITY $ 1,214,358  $ 10,206  $ 1,224,564 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,914,017  $ 1,100  $ 9,915,117 
Year ended March 31, 2025
As reported Effect of adoption of ASU 2018-12 As recasted
Revenue:  
Fee and commission income $ 505,026  $ —  $ 505,026 
Net loss on trading securities (57,810) —  (57,810)
Interest income 864,453  —  864,453 
Net insurance revenue 617,596  (46,372) 571,224 
Net gain on foreign exchange operations 51,684  —  51,684 
Net gain on derivatives 12,404  —  12,404 
Sales of goods and services 40,102  —  40,102 
Other income 17,072  —  17,072 
TOTAL REVENUE, NET 2,050,527  (46,372) 2,004,155 
Expense:
Fee and commission expense 346,074  428  346,502 
Interest expense 535,895  —  535,895 
Insurance claims and policyholders benefits, net of reinsurance 298,109  (37,621) 260,488 
Payroll and bonuses 288,163  (816) 287,347 
Professional services 28,924  —  28,924 
Stock compensation expense 59,592  —  59,592 
Advertising and sponsorship expense 124,627  —  124,627 
General and administrative expense 162,474  —  162,474 
Allowance for expected credit losses 62,445  —  62,445 
Cost of sales 31,278  —  31,278 
TOTAL EXPENSE 1,937,581  (38,009) 1,899,572 
INCOME BEFORE INCOME TAX 112,946  (8,363) 104,583 
Income tax expense (28,425) —  (28,425)
NET INCOME 84,521  (8,363) 76,158 
Less: Net loss attributable to non-controlling interest in subsidiary (129) —  (129)
NET INCOME/(LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 84,650  $ (8,363) $ 76,287 
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect 4,364  —  4,364 
Reclassification adjustment for net realized loss on available-for-sale investments disposed of in the period, net of tax effect 681  —  681 
Change in discount rate on liability for future policy benefits —  6,807  6,807 
Foreign currency translation adjustments (104,102) —  (104,102)
OTHER COMPREHENSIVE (LOSS)/INCOME (99,057) 6,807  (92,250)
COMPREHENSIVE LOSS BEFORE NON-CONTROLLING INTERESTS $ (14,536) $ (1,556) $ (16,092)
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (129) —  (129)
COMPREHENSIVE LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (14,407) $ (1,556) $ (15,963)
Year ended March 31, 2024
As reported Effect of adoption of ASU 2018-12 As recasted
Revenue:  
Fee and commission income $ 440,333  $ —  $ 440,333 
Net gain on trading securities 133,854  —  133,854 
Interest income 828,224  —  828,224 
Net insurance revenue 264,218  (19,096) 245,122 
Net gain on foreign exchange operations 72,245  —  72,245 
Net loss on derivatives (103,794) —  (103,794)
Sales of goods and services 21,576  —  21,576 
Other income 9,696  —  9,696 
TOTAL REVENUE, NET 1,666,352  (19,096) 1,647,256 
Expense:
Fee and commission expense 154,351  365  154,716 
Interest expense 501,111  —  501,111 
Insurance claims and policyholder benefits, net of reinsurance 139,561  (22,288) 117,273 
Payroll and bonuses 181,023  (740) 180,283 
Professional services 34,238  —  34,238 
Stock compensation expense 22,719  —  22,719 
Advertising and sponsorship expense 38,327  —  38,327 
General and administrative expense 120,888  —  120,888 
Allowance for expected credit losses 21,225  —  21,225 
Cost of sales 17,538  —  17,538 
TOTAL EXPENSE 1,230,981  (22,663) 1,208,318 
INCOME BEFORE INCOME TAX 435,371  3,567  438,938 
Income tax expense (60,419) —  (60,419)
NET INCOME 374,952  3,567  378,519 
Less: Net loss attributable to non-controlling interest in subsidiary (588) —  (588)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 375,540  $ 3,567  $ 379,107 
OTHER COMPREHENSIVE INCOME
Change in unrealized gain on investments available-for-sale, net of tax effect 6,196  —  6,196 
Reclassification adjustment for net realized loss on available-for-sale investments disposed of in the period, net of tax effect (3,209) —  (3,209)
Change in discount rate on liability for future policy benefits —  (4,811) (4,811)
Foreign currency translation adjustments 12,075  —  12,075 
OTHER COMPREHENSIVE INCOME/(LOSS) 15,062  (4,811) 10,251 
COMPREHENSIVE INCOME/(LOSS) BEFORE NON-CONTROLLING INTERESTS $ 390,014  $ (1,244) $ 388,770 
Less: Comprehensive loss attributable to non-controlling interest in subsidiary (588) —  (588)
COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 390,602  $ (1,244) $ 389,358 

Nature of principal adjustments

The LDTI recast adjustments consist of:

(a) Liability for future policy benefits. The LFPB for the Group's long-duration life insurance and annuity contracts was remeasured under the net premium ratio approach of ASC 944-40 as amended by LDTI. At the transition date (April 1, 2023), the LFPB carrying amount was adjusted to remove amounts previously recorded in AOCI and was remeasured using the upper-medium grade discount rate. For recast periods after the transition date, the LFPB reflects annual cash flow assumption reviews (recognized within Insurance claims and policyholder benefits, net of reinsurance) and quarterly discount rate updates (recognized within Change in discount rate on liability for future policy benefits, net of tax in OCI). The LFPB is included within Insurance contract liabilities on the consolidated balance sheet.

(b) Deferred acquisition costs. Under LDTI, DAC on long-duration contracts is amortized on a straight-line basis over the expected contract term, replacing the Group's previous method of amortization over the coverage period of the related contracts. DAC balances at the transition date were not adjusted; the change in amortization method was applied prospectively from the transition date. DAC is included within Insurance contract assets.

(c) Accumulated other comprehensive income. AOCI was adjusted at the transition date to reflect the difference between the LFPB measured at the locked-in discount rate and at the current upper-medium grade discount rate at April 1, 2023. Subsequent quarterly discount rate updates result in remeasurement gains or losses recognized within Change in discount rate on liability for future policy benefits, net of tax.

(d) Disaggregated presentation. Under LDTI, the Group disaggregates Insurance contract liabilities between long-duration contracts (LFPB) and short-duration claims reserves within Note 17. Comparative periods have been recast to reflect this disaggregation.
(e) Line item renames. The Group renamed certain financial statement line items in connection with LDTI adoption as described above and in Note 2.