Q2 2025 TWFG Inc Earnings Call

Deedee: Good morning. My name is Deedee, and I will be your conference operator today. At this time, I would like to welcome everyone to the TWFG second quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then one one on your telephone keypad. If you would like to withdraw your question, please press star one one again. This call is being recorded and will be available for replay on the company's website. Before we begin, let me remind you that today's discussion may contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

Good morning. My name is Dee and I will be your conference operator. Today at this time I would like to welcome everyone. To the twfg second quarter 2025 conference call.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then 11 on your telephone keypad. If you would like to withdraw your question, please press star 11 again.

This call is being recorded and will be available for replay on the company's website.

Before we begin, let me remind you that today's discussion may contain forward-looking statements, and actual results may differ materially from those discussed.

Deedee: Also, on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. The company has posted reconciliation of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release, located on the investors section of the company's website at www.twfg.com. It is now my pleasure to introduce Mr. Gordy Bunch, Founder, Chairman, and CEO of TWFG. Sir, the floor is yours.

Gordy Bunch: Good morning, and thank you for joining us today. Joining me is Janice Zwinggi, our Chief Financial Officer. After our remarks, we will open up the call for your questions. I would like to start off by expressing my appreciation for our agents, employees, carrier partners, clients, and shareholders. The dedication of our team and trust are the foundation of our continued success. Our second quarter results reflect strong execution and growing momentum. We delivered total revenue growth of 13.8% to $60.3 million and organic revenue growth of 10.6%. Adjusted EBITDA rose 40.7% to $15.1 million, with margins expanding to 25.1%. Total written premiums increased 14.4% to $450.3 million. This performance highlights the scalability of our platform and our ability to drive profitable growth even as we invest in expansion.

For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings. Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. The company has posted a reconciliation of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the investor section of the company's website at www.twfg.com. It is now my pleasure to introduce Mr. Gordy Bunch, founder, chairman, and CEO of T.W.F.G. Sir, the floor is yours.

Good morning, and thank you for joining us today. Joining me is Janice Zwinggi, our Chief Financial Officer. After our remarks, we'll open up the call for your questions.

I'd like to start off by expressing my appreciation for our agents, employees, carrier partners, clients, and shareholders.

The dedication of our team and Trust are the foundation of our continued success.

Our second quarter results, reflect a strong execution and growing momentum.

We delivered total revenue growth of 13.8% to 60.3 million and organic Revenue growth of 10.6%.

Adjusted EBITDA rose 40.7% to $15.1 million.

With margins, expanding to 25.1%.

Total written premiums increased, 14.4% to 450.3 million.

Gordy Bunch: During the quarter, we added nine new branch locations, expanded into Kentucky, and completed four acquisitions, including a new TWFG MGA property program in Florida. As always, it is important to note that newly onboarded agents typically take two to three years to reach full productivity. We are confident that today's investments will continue to fuel our future growth trajectory. We continue to see softening in the personal lines market. Carrier capacity is expanding, rate increases are moderating, and certain regions have even seen rate reductions. As the market stabilizes, we are gaining more options for both new and renewal business. This contributed to a retention rate of 89% in Q2, consistent with our long-term averages. Looking ahead to the second half of 2025, we expect moderate rate increases and are monitoring how potential tariffs may impact lost costs.

This performance highlights the scalability of our platform, and our ability to drive profitable growth. Even as we invest in expansion,

During the quarter, we added 9 new branch locations, expanded into Kentucky, and completed 4 acquisitions, including a new MGA property program in Florida.

As always, it's important to note that newly onboarded agents typically take 2 to 3 years to reach full productivity.

we are confident that today's investments will continue to fuel our future growth trajectory

We continue to see softening in the personal lines market.

Carrier capacity is expanding rate, increases are moderating and certain regions have even seen rate reductions

As the market stabilizes, we're gaining more options for both new and renewal business.

This contributed to a retention rate of 89% in Q2.

Consistent with our long-term average.

Looking at.

Gordy Bunch: Our diversified network of agents is well-positioned to capture share as conditions continue to improve. Our strategic focus is focused on four pillars: expanding our national footprint, investing in agent productivity, enhancing our technology infrastructure, and deepening our carrier relationships. We have begun piloting AI-driven tools within our services teams to reduce manual processes and improve responsiveness. We believe these tools will help us scale our platform efficiently while continuing to deliver exceptional service to clients and agents alike. I will now turn it over to our CFO, Janice Zwinggi.

The second half of 2025, we expect moderate rate increases and our modeling, how potential tariffs may impact loss costs.

Our Diversified network of Agents is well positioned to capture share as conditions continue to improve.

Our strategic Focus.

Uh is focused on 4 pillars, expanding our national footprint, investing in agent productivity, enhancing our technology infrastructure and deepening our carrier relationships.

We believe these tools will help us scale our platform efficiently while continuing to deliver exceptional service to clients and agents alike.

Janice Zwinggi: Thank you, Gordy, and good morning, everyone. Before diving into the quarter results, as a reminder, interest income was moved from the revenue line down to other income, so we will be comparable to prior and future periods. Starting with our top KPI, written premium, increased by $56.7 million or 14.4% over the prior year period to $450.3 million. Within our primary offerings, insurance services grew $55 million or 16.5%, and TWFG MGA grew $1.6 million or 2.7%. This increase was a result of growth in both renewals and new business. During the second quarter of 2025, within both of our product offerings, we saw healthy renewal business growth of $45.4 million or 14.9%, as well as new business growth of $11.3 million or 12.6% over the prior year period.

I will now turn it over to our CFO Janice swingy.

Thank you Gordy, and good morning. Everyone before diving into the quarter results, as a reminder interest income was moved from the revenue line down to other income. So, we'll be comparable to Prior and future periods. Starting with our top kpi written premium, increase by 56.7 million, or 14.4%. Over the prior year period to 450.3 million. Within our primary offerings Insurance Services, grew 55 million or 16.5% and pwf gmga agree. 1.6 million or 2.7%?

Janice Zwinggi: Within our insurance services offering, renewal business grew $41.8 million or 16.1%, and new business grew $13.2 million or 17.8% over the prior year period. This growth is reflective of our corporate store acquisitions and expansion into new geographical areas. Within our MGA offering, we saw a shift in renewal and new business growth as compared to the same period in the prior year. In the second quarter of 2024, we saw both property programs open up capacity in an increased rate environment, providing exceptional new business growth during that period. In the second quarter of 2025, these programs faced a slowing rate and more competitive market where we saw a decline in new business growth, resulting from an exceptional to a more normalized growth period. Growth shifted towards renewal business, which grew $3.5 million or 8.1% compared to minimal growth in the same period of the prior year.

This increase was a result of growth in both renewals and new business during the second quarter of 2025, within both of our product offerings, we saw healthy renewal business, growth of 45.4 million for 14.9%, as well, as new business growth of 11.3 million or 12.6% over the prior year period.

Within our Insurance Services offering, renewal business grew by $41.8 million, or 16.1%, and new business grew by $13.2 million, or 17.8%, over the prior year period.

This growth is reflective of our corporate store Acquisitions and expansion into new geographical areas.

Within our MGA offering, we saw a shift in renewal and new business growth as compared to the same period in the prior year.

In the second quarter of 2024, we saw both property programs open up capacity and an increased rate environment, providing exceptional new business growth during that period in the second quarter of 2025 these programs faced a slowing rate and more competitive market where we saw a decline in new business growth. Resulting from an exceptional through a more normalized growth period.

Janice Zwinggi: Our consolidated written premium retention was 89% as compared to 93% in the prior year period, with current retention being in line with our long-term projected retention rate of 88%. The decrease quarter over quarter is correlated to the shift in renewal business growth, as previously discussed, and as a result of carriers moderating rate increases and opening up for new business after a period of restricted capacity and aggressive rate increases. Our total revenues increased $7.3 million or 13.8% over the prior year period to $60.3 million. This increase was mainly due to commission income representing 11.1% of the total growth. The remaining 2.7% total growth included contingent income of 1.5% and fee and other income of 1.2%. Commission income increased $5.9 million or 12.1% over the prior year period to $54.6 million, driven by new business growth and solid retention levels.

Growth shifted towards renewal business which grew 3.5 million or 8.1% compared to minimal growth in the same period of the prior year.

Our Consolidated written premium retention was 89% as compared to 93% in the prior year period with current retention being in line with our long-term projected retention rate of 88%.

The decrease quarter of a quarter is correlated to the shift in nubes in renewal business growth as previously discussed. And as a result of carriers moderating rate increases and opening up for new business after a period of restricted capacity and aggressive rate increases.

Our total revenues increase 7.3 million for 13.8% over the prior year period to 60.3 million this increase. It was mainly due to commission, income representing 11.1% of the total growth. The remaining 2.7% total growth included, contingent income of 1.5% and fee and other income of 1.2%

Janice Zwinggi: Insurance services was the main contributor at 14.2% growth or 12.1% of the total growth, while the MGA remains relatively flat over the prior year period. Contingent income increased $0.8 million or 61.6% over the prior year period to $2 million, tracking closely with our written premium growth. Fee income was up $0.6 million or 23.8% to $3.3 million, driven by increases in branch fees, PPA fees, policy fees, and licensing fees. Organic revenues increased $5.7 million, reaching $54.1 million compared to $48.4 million in the same period prior year, for an organic growth rate of 10.6%, driven by new business production, normalized retention levels, and moderating rate increases. Turning to expenses, commission expense increased $2.2 million or 6.8% over the prior year period to $34.2 million, tracking with commission income, taking into account the impact of corporate store acquisition additions and programs with no related commission expense.

commission, income, increased 5.9 million or 12.1% over the prior year period to 54.6 million driven by new business growth and solid retention levels Insurance Services, with the main contributor at 14.2% growth, or 12.1% of the total growth while the MGA remains relatively flat over the prior year period.

Contingent income increased 0.8 million or 61.6% over the prior year period to 2 million tracking closely with our written premium growth.

Tom and I were up $0.6 million, or 23.8%, to $3.3 million, driven by increases in branch fees, PPA fees, policy fees, and licensing fees.

Organic revenues increased by $5.7 million, reaching $54.1 million compared to $48.4 million in the same period last year, for an organic growth rate of 10.6%. This growth was driven by new business production, normalized retention levels, and moderating rate increases.

Janice Zwinggi: Our total salary and employee benefits increased by $2.7 million or 39.3% over the prior year period to $9.5 million, reflecting our scale and the IPO transition, driven by $1.5 million increase from the RSUs issued in connection with the IPO, $0.7 million due to corporate store acquisitions, and $0.5 million due to growth of the business. Other admin expenses increased $1.7 million or 44.2% over the prior year period to $5.4 million, with approximately $0.4 million in IT costs, $0.3 million related to professional and consulting fees, and the remaining $1 million increase was tied to ongoing growth and acquisition integration. Depreciation and amortization increased $0.9 million or 31.4% to $3.9 million, primarily from our recent asset acquisition. Net income for the quarter was $9 million, up 30.1% over the prior year period.

According to expenses commission, expense increased 2.2 million or 6.8% over the prior year period to 34.2 million, tracking with commission income, taking into account, the impact of corporates to acquisition additions and programs with no related commission expense.

Our total salary and employee benefits increased by $2.7 million, or 39.3%, over the prior year period to $9.5 million, reflecting our scale. The IPO transition was driven by a $1.5 million increase from the RSUs issued in connection with the IPO.

And 0.5 million due to growth of the business.

Other admin expenses increased by $1.7 million, or 44.2% over the prior year period, to $5.4 million, with approximately $0.4 million attributed to IT costs, $3 million related to professional and consulting fees, and the remaining $1 million increase tied to ongoing growth and acquisition integration.

Depreciation and amortization increased. 0.9 million for 31.4% to 3.9 million primarily from our recent asset acquisitions.

Janice Zwinggi: Adjusted net income increased 17.3% to $11.5 million, driven by earnings growth and partially offset by higher public company costs, and a $3.4 million increase in tax expense. EBITDA was $11.8 million, and adjusted EBITDA was $15.1 million, up 40.7% over the prior year period. Adjusted EBITDA margin expanded to 25.1% compared to 20.3% in Q2 2024, reflecting both top-line growth and scale. With that, I will turn it back to Gordy.

That income for the quarter was 9 million up 30.1% over the prior year period, adjusted net income increased 17.3% to 11.5 million driven by earnings growth and partially offset by higher public company costs. And a 3.4 million increase in tax expense.

Eva was $11.8 million, and a judge said Eva was $15.1 million, up 40.7% over the prior year period. Adjusted Eva margin expanded to 25.1% compared to 20.3% in Q2 2024, reflecting both topline growth and scale.

Gordy Bunch: Thank you, Janice. With half a year behind us, we are tightening our 2025 guidance as follows: organic revenue growth between 11% to 14%, adjusted EBITDA margin between 21% and 23%, and reaffirming total revenues between $240 million and $255 million. We remain well-capitalized with $160 million in cash and a fully available credit revolver. This gives us flexibility to continue investing in our strategic growth priorities and expanding our M&A initiatives. In closing, I want to thank the entire TWFG team for their continued dedication and our shareholders for their support. We are energized by the opportunities ahead and confident in our ability to deliver long-term value. With that, Janice and I would be happy to answer any questions. Operator, please open the line.

With that, I will turn it back to boarding.

Thank you, Janice.

With happy year behind us, we are tightening our 2025 guidance as follows organic Revenue growth.

Between 11 to 14%.

Adjusted ibida margin between 21, and 23% and reaffirming total revenues between 240 million and 2555 million.

We will remain well capitalized with $160 million in cash and a fully available credit revolver. This gives us the flexibility to continue investing in our strategic growth priorities.

And expanding our m&a initiatives.

In closing, I want to thank the entire twfg team for their continued dedication and our shareholders for their support.

We are energized by the opportunities ahead in confident in our ability to deliver long-term value.

With that Janice. And I would be happy to answer any questions.

Deedee: Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Mike Zuramski of BMO. Your line is open.

Operator, please open the line.

Thank you to ask a question.

Please, press star, 1, 1, 1 on your telephone, and wait, for your name to be announced.

To withdraw your question. Please press star 1 1, again please, stand by while we compile the Q&A roster.

Mike Zuramski: Hey, good morning. Thanks. My first question is about the profit margins this quarter. The commission expense ratio is much better than expected and appears to be driving much of the upside on earnings in the guide. Maybe you can help unpack how to think about what's taking place there. I'm assuming the MGA is impacting it the most, but maybe there was, I think you talked about incentives you're optimistic about last quarter. Maybe those didn't come to fruition as much. That's my first question.

And our first question comes from Mike Samski of BMO. Your line is open.

Hey, good morning, thanks. Um, my first question is, um, about the um,

Gordy Bunch: At a high level, Mike, commission expense is lower due to commission revenues also being lower. There is a ratio implied in those projections that will pay out X percentage of the commission income. That does drive part of it. I will let Janice Zwinggi give you a little more detail on other components that help drive expansion of profitability.

Profit margins this quarter, um, the commission, uh, expense ratio was, you know, much better than expected and, um, appears to be driving much of the, uh, uh, upside on earnings and the guide. Um, maybe you can help unpack, uh, um, how to think about what's taking place there. Um, I'm assuming, you know, the MGAs impacting at the most, but maybe there was, I think you talked about incentives. You're optimistic about last quarter. Maybe those didn't come to fruition as much. Um, that's my first question.

Mike Zuramski: Sure. A big portion of that was the corporate store acquisitions that we are adding that have 0% commission expense. That makes the ratio look lower compared to the commission income growth. That was really driven by the later acquisitions that we did in 2023 and also the acquisitions that we did in 2025. Those really made a big difference in the drop to 6%, I think, of commission expense.

At a, at a high level, uh, Mike, uh, commissioned expenses lower, uh, due to commission revenues also being lower. Um, there's a ratio implied and those projections that, you know, will pay out X, percentage of of commission income. So that, that does Drive part of it. I'll let Janice give you a little more, uh, detail. On other components that help Drive, uh, expansion of the profitability.

Sure. Uh, so a big portion of that was the corporate store Acquisitions that we're adding that have 0% commission expense. So that makes the ratio look lower compared to the commission income growth.

Um, and that was really driven by the, uh, later acquisitions that we did in 2023.

Gordy Bunch: Yeah. On top of that, the margin we are achieving on acquired corporate locations is exceeding the model margin, which is giving us some margin expansion off of those business units. The commission expense stands out a little bit, but that is more a reflection of lower commission income. The profitability is coming from operating margins are improving on the corporate locations.

Mike Zuramski: Got it. So, I guess from your answer, I will tease out maybe offline. It sounds like a good amount of this is run rateable. Some of it is not. It is going to be driven by growth, but maybe growth being below expectations. But it does sound like some of this could be a trend. Okay, got it. Maybe pivoting back.

And also the acquisitions that we did in Q2 2025. So, um, those really made a big difference in the drop to 6%. I think of commission expense growth. Yeah. And then on top of that, the margins we're achieving on acquired corporate locations are exceeding the modeled margin, uh, which is giving us some market expansion off of those business units. Uh, so yeah, the commission expense stands out a little bit, but that's for our own reflection of lower commission income. Um, but the profitability is coming from operating margins or improving on the complications.

Got it. So I guess from your answer I I I'll seek out maybe offline. It sounds like a good amount of this is is run rateable. Um, some of its not. Um, it's going to be driven by by by growth but um maybe a growth being below expectations, but it does sound like, um,

Gordy Bunch: We will frame it, we'll frame it as this. We are not guiding to the quarter's 25.1 margin. We are still giving you guys an EBITDA margin on the full calendar year that is between, what, 21% and 23%. So we did have some, was it gain on sale? Gave us a little bit of a lift in the quarter. That is not a repeatable portion of that EBITDA margin. So we do not want you just to gross up the margin and to say run rate it out at the Q2.

Some of this, it could be a trend. Okay, got it. Um,

Maybe, you know, pivoting back, we will frame it, we will frame it as this, you know, we're not guiding to the, to the quarters 25.1 margin, you know, we're still uh, you know, giving you guys an even bit of margin on the full calendar year. Um,

You know, that’s between what 21 and 23. Yeah. So we did have some um,

Was it gained on sale uh gave us a little bit of a lift in the quarter. Uh that's not a repeatable uh portion of that, even a margin. So we don't want you just to gross up the margin to say, run, run rate it out for the Q2.

Mike Zuramski: Yeah, got it. That's helpful. Maybe pivoting, I'm sure there will be more questions on organic growth, but maybe starting with, maybe you can talk about what's changed in the last few months versus prior expectations. That will help us give us a flavor of how to, you know, we can see your implied growth in the back half of the year, but maybe you could talk about what's changed in the dynamics there and help us think through what's going on.

It's got it. That's that's helpful. Um, maybe pivoting, I'm sure you'll they'll be more questions on organic growth, but maybe starting with, um, maybe you can talk about kind of what what's changed in in the last few months versus prior expectations. And that'll help us give us a flavor of of how to, you know, we can see your implied, uh, growth in the back half of the year, but maybe you could talk about what's changed in the Dynamics there and help us kind of think through, um, um,

Gordy Bunch: Sure. I think at the highest level, you look at the overall market conditions. If you look at prior year 2024, the market was very hard for personal lines. A lot of capacity was constrained. Rate was flowing through. Our agents and customers had fewer choices in the market. As we roll into 2025, the market is starting to soften. By the time we hit Q2 2025, you are starting to see additional capacity providers enter the marketplace at lower average premiums, not just for property, but also for private passenger auto. I think when we look at some of the other companies that have already reported, you can see that there is more competition in the overall market. Our customers, as they renew in Q2 of 2025, have more options.

Um, what's going on?

Sure. So I think I think at the highest level, uh, you look at the overall market conditions. So if you look at, um, prior year, 2024 Market was very hard for personal lines, a lot of capacity was constrained. Uh, rate was flowing through our agents and customers had fewer choices, uh, in the market as we roll into 25 Market, starting to soften by the time we hit Q2 25.

Gordy Bunch: Even if there is still a little rate flowing through, we may have two or three options that might be at pricing that is equivalent to prior year expiration or even below prior year written. That is where we saw a mixed shift of the business from renewal retention going in a higher lift in our overall new business as a percentage of the mix. We kind of expected this all to start coming through. I think what is driving the overall lower organic is probably going to be just the extent of the rate differential between expiring terms and what is available at renewal and what is also available at new business. That is much harder to predict and gauge in a forward-looking estimate.

You're starting to see additional capacity providers. Uh, enter the marketplace at lower average premiums, uh, not just for property, but also for private passenger Auto. I think, when you, we look at some of the other companies that have already reported, uh, you can, you can see that there is more competition in the overall market. And, uh, so our customers, as they renew, and the Q2 of 25 have more options, so even if they're still a little rate flowing through, uh, we may have 2 or 3 options that might be at pricing. That's equivalent to Prior year, expiration or even below prior year written. And, uh, that's where we saw a mixed shift of the business, uh, from renewal, uh, retention going in in a higher lift in our overall, new business, as a percentage of the mix.

Mike Zuramski: Okay. Got it. As a follow-up to that, maybe you can kind of, you know, we know your geographic footprint. Can you maybe at a high level just paint a picture of, you know, are there certain footprints where rates went from like double digits immediately to low singles, or is it just happening in certain pockets of, I just want to understand if there is like a regional, very regional bias to this that we should be thinking through that is potentially temporary if rates are, you know, now negative, but, you know, long-term, they probably are going to go back to positive or any other color would be helpful. Thank you.

So, we kind of expected this all to start coming through. I think, what's, uh, driving the overall, uh, lower on organic is probably going to be just the extent of the rate, uh, differential between expiring terms and, uh, what's available at renewal and what's also available at new business. That's much harder to predict engage, uh, in a, in a forward-looking estimate.

Okay, got it. And um, as a follow-up to that, maybe you can kind of

um,

Gordy Bunch: Let me kind of bifurcate between auto and home. Auto on a national basis is relatively softening and stabilizing. We still expect mid-single-digit rate to flow through. With the markets on private passenger auto being more open for new business growth, we are starting to see some of those incentives that we mentioned in Q1 starting to come into the distribution. The offset to that is auto is a six-month cycle. Policies are written on six-month terms. So Q2 will have more of an impact on auto. Q3 will be kind of the balance. Then once you get past that two-quarter cycle, the impact of private passenger auto gets more stable. We are being able to add exposure in private passenger auto in a way that we weren't last year. So we are seeing growth with new business. On the homeowner side, you are going to see differential by region.

You know we know your G your Geographic footprint. Um can you maybe at a high level just paint a picture of you know is there are there certain Footprints where rates went from like double digits immediately to low singles or is it just happening in certain pockets? Of of I just want to understand if there's like a regional very Regional bias to this that we should be thinking through. Um that's potentially temporary. If rates are, you know, now negative but you know, long term they probably are going to go back to positive or um any other color would be helpful. Thank you.

Yeah, let me let me kind of bifurcate between auto and home, uh, Auto on a national basis is relatively softening and stabilizing. We still expect, you know, mid single-digit rate to flow through, uh, with the markets on private passenger, Auto being more open for new business growth. Uh, we are starting to see some of those incentives, uh, that we mentioned in the in q1, starting

They come in into the distribution. Um, you know, the offset to that it's Auto is a 6 month cycle policies are written on 6-month terms. So the, you know, Q2 will have more of an impact on auto, Q3 will be kind of the balance. And then once you get past that 2 quarter cycle, the impact of private passenger Auto gets more stable.

on the, um,

Gordy Bunch: We don't have a large footprint in Florida, but there is some price deceleration in Florida given the results that that state's had. We are also seeing some price deceleration in Louisiana, more stable than, say, Texas, our core state. But there are pockets that do have more rate downward trajectory in the current period that we don't anticipate being a long-term trend. But structurally, the entire country's not in a moderated mode on property. There's still some states that are taking rate. So it's really going to come down to a blend of where we're getting our growth, where we have our current footprint. But that does have an impact on organic. If you have a policy that was $6,000 last year and it can be written with two or three different markets at $5,000 this year, those do have impacts on it.

Homeowner side. You're going to see differential by region.

Uh, we don't have a large footprint in Florida, uh, but there is some price deceleration in Florida. Given the results that that states had, uh, we are also seeing some price deceleration in Louisiana. Um, you know, more stable and safe Texas, our Core State, but there are Pockets uh you know that do have more rate downward trajectory and then the current period that we don't anticipate being a long-term trend.

uh, but you know,

Gordy Bunch: But we don't see like felt like commercial lines where you have a wildly dramatic drop in rate that then continues for a longer period of time. The CAT costs are still kind of that base underlying force that will keep rate at a more elevated over the long-term historical. So we just got to get through these renewal cycles. It's more acute, like I said, in Louisiana, Florida, but more stable in, say, our core state like Texas. Other states are more normalized, mid-single digit to double digit. Rates are still flowing through those lagging states.

Structurally the the entire country is not in a moderated mode on property. There's still some states that are taking rate, so it's really going to come down to a blend of, you know, where we're getting our growth, where we have our current footprint, um, but that, that does have an impact on organic if you have a policy that was $6,000 last year and it can be written with 2 or 3 different markets at 5. Uh, this year, those those do have impacts on on it. Um, but we don't see like

It's not like commercial lines, where you have a wildly dramatic drop in rate that then, you know, continues for a longer period of time. The cat costs are still kind of that base underlying.

Uh, the force that will keep rape at a more elevated, uh, over the long-term historical.

Mike Zuramski: Thank you.

So, we just got to get through these renewal cycles, and it's more acute, like I said, in Louisiana and Florida. But, you know, more stable in, say, our core state like Texas and other states are more normalized. You know, mid-single digits of double-digit rates are still falling through those lagging states.

Deedee: Thank you. Our next question comes from Pablo Sengzon of JP Morgan. Your line is open.

Thank you.

Thank you.

And our next question.

Pablo Sengzon: Hi. Good morning, Gordy. Thanks for your detailed explanation on organic growth. I was just hoping to get a longer-term perspective here. I think if you look historically, TWFG has been a mid-teens organic grower. Maybe you saw some benefit from the hard market cycle in 2022 and 2023, but it was actually much less than the price that was flowing through the system. Now with prices moderating more broadly, how would you frame, I guess, more quantitatively the benefit you are getting from pricing today? Where do you see that benefit moving in a more mutual environment? Just trying to get a sense of what the growth curve might look like in this environment. Going up, you did not get much of a benefit. As things are moderating, I am curious to see your view on what the growth curve looks like.

Comes from Pablo Singson of JP Morgan. Your line is open.

Gordy Bunch: Right. So we still see double-digit organic growth in the near term and in the projected period forward. A lot of that, as we discussed in prior quarters, is just a shift between renewal retention and new business growth. We are seeing that new business growth that kind of offsets the retention ratio that shrank from 93% to 89% in this quarter. I think if you go back and look at our notes from spring of 2024, we had kind of predicted this mix of shift between renewal premium retention and new business growth normalizing at 88%. We have seen that kind of manifesting in the last two quarters. We have additional market capacity that was not present in the prior periods. We will have the ability to add more customers, retain more customers, albeit at maybe a lower average premium than in a rate-increasing environment.

Um, hi, good morning Gordy. Thanks for your detailed, explanation on that growth. I was just hoping to get served a longer term perspective here, right? So, I think if you look historically, it wouldn't serve me, the teams organic grower. And maybe you saw some benefit from the hard Market cycle and 23323, but it was actually much less than the price of the swing to the system, right? But now with prices moderate more, broadly, how would you frame? You know, I guess more quantitatively, the benefits you're getting from pricing today and where do you see that benefit moving in? A more mutually environment, just sort of trying to get a sense of what the growth curve might look like in this environment, right? Because going up you didn't get much of a benefit uh but you know, as things are moderating. Um here's to see how you, you know, your view on what the growth curve looks like.

Right. So, uh, we still see double digit organic growth, um, in the, the near term and and in the projected, uh, period forward, uh, a lot of that as we discussed in, in Prior quarters, it's just a shift between renewal retention and new business growth. Um, we are seeing that new business growth that kind of offsets the retention, um, ratio, uh, that's ranked from 93% to 89% in this quarter. Uh, I think if you go back and look at our notes from, uh, spring of 24, we had kind of predicted this mix of shift between, uh, renewal premium retention and new business growth, uh, normalizing an 88%. So we've seen that kind of manifesting the last 2 quarters. Uh we have additional Market capacity that wasn't present in the prior periods. So we'll have the ability to add more customers retain more customers. I'll be that. That maybe a low.

Gordy Bunch: But the offset is we will have more total customers because of the ability to grow new business now that carriers are in growth mode. We are still looking at double-digit organic in the forward period. We reaffirmed organic for full year 2025 between, I want to say, 11% and 13%. Is that right?

Lower average premium, uh, than in a, a rate, increasing environment. But the offset is, we'll have more total, more total customers because of the ability to grow new business. Uh, now that carriers are are in growth mode.

Pablo Sengzon: Got it. Yep. Gotcha.

Um so we're still looking at Double Digit organic uh in the Ford uh periods we reaffirmed uh organic for 4 year 2025 between. I want to say 11 and 13%.

Gordy Bunch: Sorry. 11% to 14%. Sorry.

Is that right? Got it? Yep, gotcha, yeah.

Pablo Sengzon: Yep. Yep. 14. Yep. I guess to summarize what you said, right, it seems like I recognize the dynamics of what you said. That is all correct. But it seems like the magnitude of price moderation, price decreases, whatever you want to call it, is not enough to offset all of that, right? Because in another world, if prices were going down by 30 points, it sort of does not matter what happens to new business and renewal, right? You know, a certain level of the price decrease will just be too large. But from what you were saying, it seems like, yeah, prices are slowing down, but sort of the normal dynamics which you described should, you know, ultimately result in whatever growth you are guiding to, right? Is that the message?

Gordy Bunch: That is right. We have lived through July, so we have a little bit of line of sight to seeing that where we are guiding to makes sense. If we saw something different, we would have adjusted further. Again, Q2 of 2024 was an exceptional growth period. Q2 2025, in our opinion, was still an excellent quarter. Top-line revenue growth, all things being considered, you are comparing an exceptional organic growth quarter to still an excellent growth quarter when you are doing the prior period analysis. Having the ability to still have the growth in the face of moderating rate environment and increasing capacity, we are feeling good about the trajectory of where we are headed. Still more than 2X, I think, the industry average organic, and we still are guiding to that double-digit forward-looking projection.

You know, look to meet with salt and whatever growth you had, your garden do right? Is that the message?

That's right. And, you know, you know, we've lived through July. So we have a little bit of a line of sight, uh, to, you know, seeing that we're regarding to make sense. If we saw something different, we would have adjusted further. Um, and again, you know, Q2 of 24 was an exceptional growth period, uh, Q2 25. In our opinion was still an excellent quarter Topline, uh, Revenue growth. Uh, all things being considered you're comparing a exceptional, uh, organic growth quarter, to still an excellent growth quarter, uh, you know, when you're doing the prior period analysis. So uh, having the ability to still have the growth in in the face of moderating rate um environment and increasing capacity, uh we're feeling good about the trajectory of where we're headed.

Pablo Sengzon: Okay. Understood. My second main question, I realize I sneak one in there, but this one's more about the broad revenue outlook and maybe more about M&A. I think you affirmed your revenue outlook for the year, and I think the base for 2024 taking out interest income is $204 million. With $240 million to $255 million this year, there's something like 18% to 25% growth. If you're saying that organic is 11% to 14%, then that would imply the balance is M&A. Let's call it 7 to 11 points. The question then is, in the first half, at least by the math I'm doing, it seems like the M&A contribution has been lower than 7 to 11, right? If you compare organic versus the low revenue growth, maybe you're getting two to three points from M&A or something like that.

Um I'm still more more than 2x I think the industry average organic um and we still are guiding to that double digit. Uh, forward looking projection.

Okay, understood. And then, um, my second main question, I realized I think one in there, but this one's more about the broad revenue outlook, and maybe more about M&A, right? So I think, uh, you're from your Revenue Authority for the year and I think the base for '24 taking out interest income is $204 million, right? So with $240, $250, $555 this year, there's something like 18 to...

25% growth.

Pablo Sengzon: Can you sort of unpack what's, assuming my math is correct, what's behind the numbers there? If you know you're saying you do 7 to 11 for the year, it seems like the first half was a bit light. What are you expecting for the second half?

And if you're saying that organic is 11 to 14, then that would imply the balance is M&A, right? So, it's called 7 to 11 points. So, the question then is, in the first half at least by the math I'm doing, it seems like the M&A contribution has been lower than 7 to 11, right? So if you compare organic versus the revenue growth, maybe you're getting 2 to 3 points from M&A or something like that, right? So, can you sort of unpack? Assuming my math is correct, what's behind the numbers there, right? If you know you're saying you do 7 to 11 for the year.

Gordy Bunch: When you are looking at the M&A contribution, it is always about timing of when you onboard that asset. We closed a few transactions beginning of Q1. We closed a few beginning of Q2 and throughout Q2. Subsequent to Q2, we announced yesterday an acquisition in New York that occurred post-Q2. We have the revenue seasonality of those acquisitions in our forward forecasts. It is about the timing of when we took those in. Something we acquired in May was not that accretive to the first half of the calendar year, but will be more accretive to the back half of the calendar. We had closings April 1st. We had closings May 1st. We had closings June 1st and the quarter from the announced M&A. Those ones will compound into more meaningful contributions in the back half of the year for the M&A contributed revenue.

Seems like first half is a bit light. Uh, what are you expecting for the second half?

When you're looking at um the m&a contribution, it's always about timing of when you on board that asset. So we closed a few transactions beginning of q1. Uh, we closed a few beginning of Q2 and throughout Q2 and subsequent to Q2 we announced yesterday that an acquisition in New York, um, that the current post Q2 so we have the revenue, uh, seasonality of those Acquisitions in our forward forecasts. So it's about the timing of when we, we took those in. So something we acquired in May, uh, wasn't that accreted to the first half of the calendar year, but we'll be more creative to the back half of the calendar and so we had, you know, closings April 1st, we had closings May 1st, we had closings June 1st, then the quarter from the announced m&a and so those ones will compound

Gordy Bunch: That is one of the reasons we reaffirmed our revenue guidance for the full year 2025 is we have line of sight to those impacts of those now acquired, onboarded, and integrating assets joining the TWFG family.

Pablo Sengzon: Great. Thank you.

Into more meaningful contributions in the back half of the year for the M&A, contributed revenue. Um, then that's one of the reasons we reaffirmed our revenue guidance for the full year 2025, as we have insight to those impacts of those now acquired, onboarded, and integrating assets joining the TWFG family.

Deedee: Thank you. As a reminder, to ask a question, please press star one one. Our next question comes from Tommy McToit of KBW. Your line is open.

Great. Thank you.

Thank you. And as a reminder, to ask a question, please press *1 1.

Tommy McToit: Hey, good morning, guys. First question here. Looking ahead, should we assume continued year-over-year adjusted EBITDA margin expansion just as the corporate branch growth, either organic or via acquisitions, outpaces agency in a box production? Maybe more simply, is it feasible that margins get to 25% for a full year in the next couple of years?

And our next question comes from Tommy MC Joy of KBW. Your line is open.

Hey, good morning guys. Um first question here uh looking ahead. Should we assume continued year-over-year uh even up Margin expansion just as the the corporate the corporate Branch growth you know either organic or via Acquisitions. Um outpaces agency in a box production and and maybe more simply. Is it feasible that margins get to 25% for a full year and the next couple years?

Gordy Bunch: It's feasible depending upon what additional acquisitions we have of scale that are operating at, you know, plus 30% margins. We're not currently projecting that in the forward, you know, 2026 or 2027. But it is plausible given that we are achieving greater than 30% margin on the corporate assets. It's going to be a combination of what do we actually acquire? How do we realize that higher margin business into the overall total? How much growth do we have in the lower margin business that runs alongside that? There's a number of margin expansion initiatives via technology and our virtual assistance programs out in the Philippines. We are working on AI initiatives that could lead to better efficiencies within all of our operations as well, which might lead to some cost savings and improved scalability. Our Philippines operation is expanding facilities right now.

It's feasible, uh, depending upon what additional acquisitions we have of scale that are operating at, you know, plus 30% margins. We're not currently projecting that in the forward, uh, you know, uh, 2026 or 2027. Um, but it is plausible given that we are achieving.

Greater than 30% margin on the corporate assets.

Is via technology uh, and uh, you know our virtual assistants programs out in the Philippines. So we are uh, working on AI initiatives that could lead to um,

Gordy Bunch: We anticipate those coming online towards the end of the calendar year. That should give us an opportunity to leverage that labor arbitrage further. So it's plausible. We're not currently projecting it. I think as we get through the remainder of 2025 and we take a refreshed look at the 2026, 2027 projections, we'll provide you an updated margin guidance at that point.

Better efficiencies within all of our operations as well, which might lead to some cost savings, uh, and improved uh, scalability. Uh, and then our Philippines operation is expanding facilities right now. We anticipate those coming online towards the end of the calendar year. Uh, that should give us an opportunity to leverage that uh, labor Arbitrage, uh, further. So it's plausible. We're not currently projecting it. I think as we get through the remainder of 25, uh, and we take a a refreshed, look at the 2627. Uh projections will will provide you an updated margin guidance. Uh, at that point.

Tommy McToit: Thanks. That is helpful. Then actually, just going back to your response to one of the earlier questions on here, I think you referenced a gain on sale that gave us a bit of a margin uplift. What was that referring to, and any way to quantify how much margin increase in that took?

Gordy Bunch: I will let Janice answer that one.

Thanks, that's helpful. Um, and then actually, just going back to your response to one of the earlier questions on here, I think you referenced a gain on sale that gave us a bit of a margin uplift. Um, what was that referring to, and is there any way to quantify how much margin increase in that drug?

Janice Zwinggi: There were two things. The gain on the book of business sale was roughly $600,000. In addition to that, we had an increase of over $1 million in interest income on the IPO proceeds that we didn't have last year in Q2.

Yeah, I'll let Janice answer that one.

Gordy Bunch: If that was the gain on sale book, just the $600,000.

So, there were two things. Yeah. The gain on the book of business sales was roughly $600,000. In addition to that, we had an increase of over $1 million in interest income on the IPO proceeds that we didn't have last year in Q2.

Janice Zwinggi: Yeah, just $600 is the gain on the sale, right?

Tommy McToit: Because that was just the $600 as a one-timer.

Yeah, that would be great on sale though. Just the $600,000. Yeah, just $600's the gain on the sale, right?

Janice Zwinggi: Yep.

Gordy Bunch: That's correct.

So just the $600 is a one-time.

Tommy McToit: Okay. Thank you.

Yep, that's correct.

Deedee: Thank you. We have a follow-up from Pablo Sengzon of JP Morgan. Your line is open.

Okay, thank you.

Thank you.

Pablo Sengzon: Oh, hey, this is thanks for speaking to me again. Gordy, I had just another question on M&A. I was hoping you could provide a broad sense of, you know, and it can be a very loose range, right, of the properties you are considering in M&A. Would it be fair to assume that the deals you have closed thus far, what you paid for them, are a decent size below where you are trading in the public market? Thank you.

And we have a follow-up from Pablo Singson of JP Morgan. Your line is open.

Gordy Bunch: Yeah. So M&A, we are acquiring assets of various sizes. The range in what we are paying depends on the growth of the asset, the profitability margin, and the overall size of the business. So it is not a static number, but we are, on a blended basis through the quarters that we have had, it is still coming out pretty close to what we modeled. Not wanting to get too specific on exactly multiples that we paid, it is a very robust pipeline we have going forward. We are in active conversations with sellers. Trying to project what we ultimately paid for previously closed deals is probably not in our best interest. For your purposes, it is relatively aligned with the M&A model that we used last year.

Oh, hey, this is thanks for speaking with me again. So, uh, gory I was, uh, just another question that m&a. Um, I I was, um, hoping you could provide a broad sense of, you know, and it, it can be a very loose range, right? Of the properties. You're considering, um, and and, and, and would it be fair to assume that the DLC have closed thus far, what you paid for them are, you know, a decent sized below where you're trading in the public market. Thank you.

Yeah, so M&A, uh, we're acquiring assets of various sizes. So the range in what we're paying depends on the growth of the assets, the profitability margin, and the overall size of the business, so it's not a static number. Um, but we are, you know, on a blended basis through, you know, the quarters that we've had, can still come out pretty close to what we modeled.

um, so not wanting to get too specific on on exactly multiples that we paid, uh,

It's a very robust pipeline we have going forward, and so we're in active conversations with sellers, trying to project what we've ultimately paid for previously closed deals. Probably not in our best interest.

Gordy Bunch: As we are looking at our forecast for the remainder of 2025, achieving that mid-year convention and what we projected, and now things that we possibly acquire in Q3, Q4, will be accretive against that model.

Pablo Sengzon: Yep. Thank you for that, Gordy.

Um, but for your purposes relatively in line with the m&a model, uh, that we used uh, last year. And uh, as we're looking at our forecast for the remainder of 25, uh, achieving that mid-year Convention of what we projected. Uh, and now things that we, uh, possibly acquire in Q3 and Q4, uh, will be a creative against that model,

Deedee: Thank you. We have a follow-up from Mike Zuramski of BMO. Your line is open.

Yep, thank you for that Gordy.

Thank you.

Mike Zuramski: Hey, morning. Thanks for taking the follow-up. My question is on the MGA side of the business. One of your public peers discussed on their earnings call approximately a week ago about a meaningful increased competition into the E&S home insurance marketplace. Obviously, you talked about a lot of softening in home. Curious, the competitor also talked about that causing underwriting standards that might not cause them to be comfortable about underwriting as much E&S home business. Just curious if you have any comments. Is the softening you are seeing also taking place in the E&S marketplace, and how is it impacting your MGA's trajectory?

And we have a follow-up from Mike samski of BMO. Your line is open.

Hey, um morning, thanks for the taking, the follow-up, my questions on the uh, MGA side of the business. Um, 1 of the your public peers, um, discussed on their earnings call approximately a week ago, about a meaningful increase competition into the ens home insurance Marketplace. Obviously, you talked about a lot of, um, you know, softening and and and home. But, um,

Curious. Um, our um, the competitor also talked about that causing, you know, um, underwriting standards that that might not, you know, cause them to be comfortable about underwriting as much ens home business. Um, just curious if you have any comments are are, are are is a soft thing. You're seeing also taking place in in the NS Marketplace and

Gordy Bunch: Yeah, good question, Mike. I want to clarify the property programs we have. Our core program, FICO, is admitted. It is a Texas-based program. It did take rate in this calendar year. That did impact retention slightly. The biggest differential trying to compare Q2 of 2024 versus Q2 of 2025 for that program is last calendar year, a lot of the market for property in Texas went relatively catatonic. Progressive shut down new business April 1st of 2024, which gave us an outsized growth in that program in Q2 of 2024. If we are looking at how that compared to Q2 of 2025, we are retaining that portfolio, adding new PIF. But the growth differential between the two calendar years does have that relative mix to it of, you know, we had outsized growth last year when the market was closed.

Your mga's trajectory.

Yeah, good question. Uh, Mike and I, and I want to clarify the, the property programs. We have our our core core program Pico is it is admitted. Uh, it's a, a Texas based program. Uh, it did take great, um, in this calendar year, uh, that did, uh, impact, uh, retention slightly, uh, the biggest differential trying to compare Q, uh, to of 24 versus Q2 of 25 for that program is, uh, last calendar year. Um, a lot of the market for property in Texas, uh, went relatively catatonic, uh, Progressive and shut down new business, April 1st of 2024, uh, which gave us an outsized growth and that program in Q2 24. Uh, if we're looking at how that compared to Q2 255, you know, we're retaining that portfolio, uh, adding adding new Pips.

Um, but the growth differential between the 2 calendar years. Uh, it does have that, um,

Gordy Bunch: We also constrained our own growth going into the second quarter. The reinsurance for that program renews June 1st. Wanting to make sure you have longevity in that program and growth forward, you really have to see what your costs of that program are going to be. Reinsurance is a huge component. At that renewal, we looked to include growth in the CAT program that was purchased. That growth was restrained. We self-inflicted our own growth trajectory by staying closed in geography that we could have added additional risks in to later into the hurricane season. That gives us a better overall economic use of that CAT program. That program should have growth potential for us in Q3 and Q4 as we have loosened up some of those guidelines to open up geography that we were actually closed in for Q2.

Uh, relative to it, you know, we had outside growth last year when the market was, uh, closed.

We also constrained our own growth uh, going into the second quarter.

Uh the reinsurance uh for that program renews June 1st. Uh wanting to make sure you have longevity in that program and growth. Uh forward. Uh, you really have to see what your your costs. Uh, of that program are going to be and reinsurance is a huge component. So at that renewal uh we uh look to include uh growth.

In the, uh, CAP program that was purchased.

Gordy Bunch: So that is kind of the answer on that particular program. The Dover Bay program that is E&S, that is an exclusive program to its own distribution channel. It is still having growth. We have some opportunities for expansion into additional geography that we are working through. We do think that that has legs. That program does not operate on a premium to commission ratio. If you recall, last year we transitioned that contract to a more level cost that adjusts on an annual basis. That also does skew premium to commission ratios in total. We are not having the same, you know, necessarily correlated E&S impact. Where that is going to flow through to us, Mike, is we do access other E&S markets. If they are lowering their rates, that might flow through into that renewal premium differential that I mentioned earlier.

And that growth was restrained. So really we self-inflicted our own growth trajectory by staying closed in geography that we could have added additional risks in uh, to later into the hurricane season. Uh, that gives us a better overall, uh, economic use of that cap program. And so, uh, that program should have, uh, growth potential for us in Q3 and Q4, uh, as we've loosened up some of those guidelines, uh, to open up geography that we were actually closed in for Q2

So, that's kind of the answer on that particular program, the Dover Paper program, that is, uh, that is an exclusive program to its own distribution channel.

And uh, it's still having growth. Uh, we have some opportunities for expansion into additional geography that we're working through. Uh, so we do think that that has legs that program doesn't operate on a, a premium to commission ratio. If you recall last year, we transitioned that contract, uh, to a More Level cost uh, that adjusts on an annual basis. So that also does SKU premium to commission ratios in total, uh, and uh, but we're not we're not we're not having the same.

Tommy McToit: Got it. Got it. Okay. I am going to, one more follow-up that is helpful. If we are transitioning, I guess maybe knock on wood for consumers, to an environment where pricing is stable, let us just say mid-single digits overall, how do you all think about, or do you, how do you all think about kind of new branch locations? Do you think about them in terms of like numbers and what your, is there like a cadence that you think is that we should be thinking about as normal, or is it going to, is it always going to be inherently kind of a bit volatile?

You know, necessarily correlated ens impact, where, where that's going to flow through to us, uh, Mike, is we do assess other DNS markets and so if they are lowering their rates that might flow through into that, uh, renewal premium differential that I mentioned earlier.

Got it. Um, got it. Okay, I'm gonna, um, one more follow-up that the telephone, um, you know, if we're transitioning, you know, I guess maybe knock on wood, for consumers to an environment.

Where pricing is?

Stable, let's just say mid single digits overall. Um,

how do you all think about or do you? How do you all think about kind of new branch locations? Do you think about them in terms of like numbers and what, uh, you know what?

Gordy Bunch: Yeah, I would say the recruiting is an ongoing effort. The pipeline is solid. The emphasis of how many in any given month or any given quarter is probably not that relative. It is always about the quality of the talent, aligning that talent to our platform, and depending on the type of prospect, the sales cycle to bring on a new location.

Your you know is there like a Cadence that you you that you think is that we should be thinking about as as normal? Or is it going to? Is it always going to be inherently kind of um um a bit volatile?

Yeah, I would say the, you know, recruiting is an ongoing, uh, effort. Uh, the pipeline uh is solid. The

emphasis of, you know, how many in any given month or any given quarter is probably not that that um

Gordy Bunch: It can be either relatively quick, meaning that the individual is not encumbered by existing agreements or portfolios, or it can be relatively long if they are having to dispose of a captive portfolio that they are not allowed to bring with them. We are having success at, you know, smaller, independent agencies that are looking to convert to our model, via an 80/20 relationship, where they can scale up and pick up our infrastructure. I think we are hyper-focused on qualitative onboardings and looking now for those that can bring some portfolio with us so they have more of an immediate benefit to the organization than, say, just all the ones we have done from scratch. They all have different timelines on how they onboard. I think that we will spend more effort into increasing the pipeline, so we have a better pulling of opportunities.

If they're having to dispose of a captive portfolio that they are not allowed to bring with them. Uh and we are having success at you know, smaller uh independent agencies that are looking to convert to our model uh you know, via a 8020 relationship uh where they can scale up and pick up our infrastructure. So I think we're we're hyper focused on qualitative onboarding and looking now for those that can bring some portfolio with us. So they they have more of an immediate benefit uh to to the organization than say, just all the ones we've done from scratch.

But uh, they all have different timelines, uh, on on how the on board.

Gordy Bunch: Geographically, the carriers opening up for more capacity does provide a better outcome. As we are looking to recruit people in, one of their biggest questions are, can I actually write business? One of the attractions to our model is, you know, many of them are living in captive singular carrier environments. Having access to a broader market makes it more attractive. Carriers now willing to appoint, willing to grow, does give us a good trajectory there.

Deedee: Thank you.

I think that, uh, we will spend more effort into increasing the pipeline. Uh, so we have a, a better calling of of opportunities. Uh, geographically, the carrier is opening up, uh, for more, uh, capacity. Does provide a better outcome as we're looking to recruit people in, you know, 1 of their biggest questions. Are, can I actually write business, uh, 1 of the attractions to our model is? You know, many of them are living in uh, you know, captive, singular, carrier environments. So, having access to a broader Market, makes it more attractive. So carriers is now willing to appoint willing to grow? Uh, does give us a good trajectory there.

Gordy Bunch: I should say that not all geography is softening. California is still a state that has a persistent rate, and has good opportunities for us, but it is still a hard market in California, more personal lines.

Thank you.

Can I, can I, should say that? Not all geography is softening. California, you know, still states that have a persistent rate, um, and has, you know, good opportunities for us. But it is still a hard market in California for personal lines.

Gordy Bunch: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Gordy Bunch for closing remarks.

Gordy Bunch: Thank you, Deedee, and thank you all for attending today's call. I just want to reiterate that TWFG remains a highly capitalized, nearly debt-free organization with good tailwinds at our back. Our organic and inorganic strategies are playing out. We will continue to update guidance as we see changes within our performance. We appreciate everybody who's attended this call and look forward to our Q3 call here in the near future. Thank you for attending, and until next time.

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Gordy Bunch for closing remarks.

Thank you, uh DD. Uh and thank you all for attending today's call. Uh, I just want to reiterate that uh twfg remains a highly capitalized. Uh you know, nearly debt for your organization with good. Uh, Tailwind at our back. Uh, our organic and inorganic strategies are playing out.

Um, we will continue to update guidance, uh, as we see, uh, changes, uh, within our, our performance, uh, we appreciate, uh, everybody who's attended this call and look forward to our Q3 call here in the near future.

Gordy Bunch: This concludes today's conference call. Thank you for participating, and you may now disconnect.

So, thank you for attending. And until next time.

And this concludes today's conference call.

Participating, and you may now disconnect.