Q4 2025 TWFG Inc Earnings Call

February 26, 2026

Speaker #1: Good morning , my name is Franz and I'll be your conference operator today . At this time , I would like to welcome everyone to the fourth quarter 2025 conference call All lines have been placed on mute to prevent any background noise .

Speaker #1: 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 One on your telephone If you would like to withdraw your question , please press star one again .

Speaker #1: 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 Also on today's call , our speakers will reference certain non-GAAP financial measures , which we believe will provide useful information for the investors .

Operator: 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.

Operator: Also, on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for the investors. The company has posted reconciliations for 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.

Speaker #1: The company has posted reconciliations for 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 It is now my pleasure to introduce Mr. Gordy Bunch , founder , chairman and CEO of EFG Sir , the floor is yours

Speaker #2: Thank you . Operator , and good morning , everyone . Thank you for joining us today to discuss fourth quarter and full year 2025 results .

Gordy Bunch: Thank you, operator. Good morning, everyone. Thank you for joining us today to discuss TWFG's Q4 and full year 2025 results. Joining me on the call is Janice Zwinggi, our Chief Financial Officer. After my remarks, Janice will walk through our financial performance in more detail, then we'll open up the call for questions. For full year 2025 results, I'd like to start by thanking our employees, agents, carrier partners, board, shareholders, and clients. 2025 was a transformational year for TWFG as we successfully embarked on year two as a public company, none of it would have been possible without the dedication and execution of our teams across the country. For full year 2025, total revenue increased 21.3% to $247.1 million.

Speaker #2: Joining me on the call is Janice Zwinggi . Our chief Financial officer After my remarks , Janice will walk through our financial performance in more detail .

Speaker #2: And then we'll open up the call for questions For full year 2025 results . I'd like to start by thanking our employees , agents , carrier partners , board shareholders , and clients .

Speaker #2: 2025 was a transformational year for TWFG, Inc. as we successfully embarked on year two as a public company and none of it would have been possible without the dedication and execution of our teams across the country .

Gordy Bunch: 2025 was a transformational year for TWFG as we successfully embarked on year two as a public company, none of it would have been possible without the dedication and execution of our teams across the country. For full year 2025, total revenue increased 21.3% to $247.1 million.

Speaker #2: For our full year 2025 total revenue increased 21.3% to 247.1 million , driven by a combination of double digit organic growth , strong performances across both our retail and MGA platforms , and a disciplined execution on accretive acquisitions .

Gordy Bunch: driven by a combination of double-digit organic growth, strong performances across both our retail and MGA platforms, and a disciplined execution on accretive acquisitions. Organic revenue for the year was 11.6%, reflecting sustained momentum in new business production, a healthy retention, and the continued expansion of our distribution footprint. that enhance our platform and carrier relationships. Conditions within personal lines remain constructive, supporting continued new business growth and stable retention across our core markets. Throughout 2025, we continued to expand our national footprint through a mix of recruiting, tuck-in transactions, and accretive acquisitions. Importantly, we remain disciplined in our approach. Early in 2026, TWFG has entered into a definitive agreement to acquire the Lofton Wells Insurance Agency. That will become a corporate location in Memphis, Tennessee, on 1 March.

Speaker #2: Organic revenue for the year was 11.6% , reflecting sustained momentum in new business production . A healthy retention and the continued expansion of our distribution footprint that enhance our platform and carry relationships , conditions within personal lines remain constructive , supporting continued new business growth and stable retention across our core markets throughout 2025 .

Gordy Bunch: Throughout 2025, we continued to expand our national footprint through a mix of recruiting, tuck-in transactions, and accretive acquisitions. Importantly, we remain disciplined in our approach. Early in 2026, TWFG has entered into a definitive agreement to acquire the Lofton Wells Insurance Agency. That will become a corporate location in Memphis, Tennessee, on 1st March.

Speaker #2: We continue to expand our national footprint through a mix of recruiting , tuck in transactions and accretive acquisitions Importantly , we remain disciplined in our approach early in 2026 , TWFG, Inc. entered into a definitive agreement to acquire the Lofton , Wells Insurance Agency that will become a corporate location in Memphis , Tennessee , on March 1st .

Speaker #2: This new corporate location will add additional scale to our existing Tennessee operations and provides us with strength in a region we intend to continue growing into .

Gordy Bunch: This new corporate location will add additional scale to our existing Tennessee operations and provides us with strength in a region we intend to continue growing into. TWFG General Agency has also entered into a definitive agreement to acquire Asset Protection Insurance Associates, a Texas-based MGA specializing in providing comprehensive insurance solutions for property owners and real estate investors throughout the United States. The Commercial Lines National MGA Specialty Program provides TWFG General Agency with access to additional distribution partners for our existing proprietary programs, as well as adds a high-quality management team in which we can create additional proprietary programs with. As we evaluate additional M&A opportunities, our focus remains on acquiring high-quality, culturally aligned targets that enhance our platform and carrier relationships. As always, organic growth remains our foundation, with M&A serving as a complementary growth lever.

Speaker #2: TWFG, Inc. general agency has also entered into a definitive agreement to acquire asset protection Insurance Associates , a Texas based MGA specializing in providing comprehensive insurance solutions for property owners and real estate investors throughout the United States .

Speaker #2: The commercial lines National MGA Specialty Program provides TWFG, Inc. general agency with access to additional distribution partners for our existing proprietary programs . As well as adds a high quality management team in which we can create additional proprietary programs with as we evaluate additional M&A opportunities .

Gordy Bunch: The Commercial Lines National MGA Specialty Program provides TWFG General Agency with access to additional distribution partners for our existing proprietary programs, as well as adds a high-quality management team in which we can create additional proprietary programs with. As we evaluate additional M&A opportunities, our focus remains on acquiring high-quality, culturally aligned targets that enhance our platform and carrier relationships. As always, organic growth remains our foundation, with M&A serving as a complementary growth lever.

Speaker #2: Our focus remains on acquiring high quality , closely aligned targets that enhance our platform and carrier relationships . As always , organic growth remains our foundation with M&A serving as a complementary growth lever Before turning the call over to Janice , I would like to share our perspective on artificial intelligence impact on our industry and TWFG, Inc. particular , as AI has been an area we've been investing in for some time as a tool to accelerate agent productivity in their efforts to best serve our clients and their complex insurance needs The market reacted to a February 2026 launch of AI powered insurance comparison tools within consumer facing chatbot platforms , tools designed primarily to quote standardized personal lines .

Gordy Bunch: Before turning the call over to Janice, I would like to share our perspective on artificial intelligence's impact on our industry and TWFG in particular, as AI has been an area we've been investing in for some time as a tool to accelerate agent productivity in their efforts to best serve our clients and their complex insurance needs. The market reacted to a February 2026 launch of AI-powered insurance comparison tools within consumer-facing chatbot platforms. Tools designed primarily to quote standardized personal lines products, such as monoline auto. This product, by nature, has been viewed as commoditized and low-advice transaction that has been subject to direct channel competition for over 20 years. We believe there is an important distinction between monoline lower-limit auto clientele and those needing advice for higher limits, bundling with homeowners, and needing umbrella coverages.

Speaker #2: Products such as Monoline auto . This product by nature , has been viewed as commoditized , a low advice transaction that has been subject to direct channel competition for over 20 years .

Gordy Bunch: This product, by nature, has been viewed as commoditized and low-advice transaction that has been subject to direct channel competition for over 20 years. We believe there is an important distinction between monoline lower-limit auto clientele and those needing advice for higher limits, bundling with homeowners, and needing umbrella coverages.

Speaker #2: We believe there is an important distinction between Monoline lower limit auto clientele and those needing advice for higher limits . Bundling with homeowners and needing umbrella coverages and contrast to the direct channel Tfg's independent agent network specializes in providing tailored , multi-line coverage solutions across personal , commercial and specialty lines .

Gordy Bunch: In contrast to the direct channel, TWFG's independent agent network specializes in providing tailored, multi-line coverage solutions across personal, commercial, and specialty lines. Precisely the categories where human expertise, relationship with clients, carrier relationships, and professional judgment are most consequential and most difficult to replicate. TWFG agents have relationships with the clients they serve and the communities they live in. Our agents sponsor Little League, coach soccer, attend PTO meetings, are part of faith-based communities, volunteer with numerous charities, serve as elected officials, and are physically present for their customers. That physical connection is important when our clients endure significant losses from hurricanes, floods, tornadoes, wildfires, water damage, accidents, litigation, cyberattacks, theft, business interruption, and loss of life.

Speaker #2: Precisely the categories were human expertise , relationship with clients , carrier relationships , and professional judgment are most consequential and most difficult to replicate .

Speaker #2: TWFG, Inc. agents have relationships with the clients they serve , and the communities they live in . Our agents sponsor Little League , coach soccer , attend PTO meetings , are part of faith based communities , volunteer with numerous charities , serve as elected officials , and are physically present for their customers .

Gordy Bunch: Our agents sponsor Little League, coach soccer, attend PTO meetings, are part of faith-based communities, volunteer with numerous charities, serve as elected officials, and are physically present for their customers. That physical connection is important when our clients endure significant losses from hurricanes, floods, tornadoes, wildfires, water damage, accidents, litigation, cyberattacks, theft, business interruption, and loss of life.

Speaker #2: That physical connection is important . When our clients endure significant losses from hurricanes , floods , tornadoes , wildfires , water damage , accidents , litigation , cyber attacks , theft , business interruption and loss of life .

Speaker #2: Many of these larger catastrophes become a shared experience as being in the community impacted by a hurricane or wildfire means our agents have suffered similar losses and are feeling and dealing with the same issues their customers are experiencing that shared life experience is not easily disintermediated for those with complex insurance and relationship needs , our clients own homes , small businesses , large businesses , operate nonprofits and have layers of insurance needs where a trusted advisor is required to navigate the nuances of coverages and their unique exposures .

Gordy Bunch: Many of these larger catastrophes become a shared experience, as being in the community impacted by a hurricane or wildfire means our agents have suffered similar losses and are feeling and dealing with the same issues their customers are experiencing. That shared life experience is not easily disintermediated for those with complex insurance and relationship needs. Our clients own homes, small businesses, large businesses, operate nonprofits, and have layers of insurance needs, where a trusted advisor is required to navigate the nuances of coverages and their unique exposures. TWFG's exclusive and independent agent models are purpose-built for complexity. The company's agents serve as trusted advisors who navigate multi-carrier markets, customize coverage programs, and advocate for clients at the point of sale and during a claim. Functions that demand contextual knowledge, professional accountability, and carrier relationships developed over decades.

Speaker #2: Tfg's exclusive and independent agent models are purpose built for complexity . The company's agents serve as trusted advisors who navigate Multicarrier markets , customized coverage programs , and advocate for clients at the point of sale and during a claim functions that demand contextual knowledge .

Gordy Bunch: TWFG's exclusive and independent agent models are purpose-built for complexity. The company's agents serve as trusted advisors who navigate multi-carrier markets, customize coverage programs, and advocate for clients at the point of sale and during a claim. Functions that demand contextual knowledge, professional accountability, and carrier relationships developed over decades.

Speaker #2: Professional accountability , and carrier relationships developed over decades rather than representing a displacement threat , AI tooling is increasingly being deployed by independent agents as a productivity accelerator faster quoting , enhanced communication and more efficient account management .

Gordy Bunch: Rather than representing a displacement threat, AI tooling is increasingly being deployed by independent agents as a productivity accelerator, enabling faster quoting, enhanced communication, and more efficient account management, consistent with TWFG's own technology strategy. TWFG's technology strategy has been one of our competitive advantages. Owning our proprietary technology platforms has positioned TWFG to be in a position to pivot, create, and implement innovative technologies internally as they appear, or to quickly integrate with third-party vendors as needed.... We recently made a series of senior leadership appointments specifically to accelerate our technology and underwriting platforms. Our new chief technology officer focuses on AI strategy, cloud architecture, and core platform modernization. Our new chief underwriting officer has decades of experience in insurance technology and product development. TWFG employs 44 technology-related positions, from software engineers, developers, quality assurance, business analysts, database engineers, and infrastructure.

Speaker #2: Consistent with Tfg's own technology strategy Tools . Technology strategy has been one of our competitive advantages owning our proprietary technology platforms has positioned TWFG, Inc. to be in a position to pivot , create and implement innovative technologies internally as they appear or to quickly integrate with third party vendors as needed .

Gordy Bunch: Owning our proprietary technology platforms has positioned TWFG to be in a position to pivot, create, and implement innovative technologies internally as they appear, or to quickly integrate with third-party vendors as needed.... We recently made a series of senior leadership appointments specifically to accelerate our technology and underwriting platforms. Our new chief technology officer focuses on AI strategy, cloud architecture, and core platform modernization.

Speaker #2: We recently made a series of senior leadership appointments specifically to accelerate our technology and underwriting platforms . Our new chief Technology officer focuses on AI strategy , cloud architecture and core platform modernization .

Gordy Bunch: Our new chief underwriting officer has decades of experience in insurance technology and product development. TWFG employs 44 technology-related positions, from software engineers, developers, quality assurance, business analysts, database engineers, and infrastructure.

Speaker #2: Our new chief Underwriting officer has decades of experience in insurance technology and product development . TWFG, Inc. employs 44 technology related positions from software engineers , developers , quality assurance , business analyst , database engineers , and infrastructure .

Speaker #2: This workforce is receiving help from AI coding assistant , Cloud that makes each software engineer increasingly more productive . AI is a force multiplier for our initiatives , including our corporate sales office , employees , our technology teams represent 32% of our corporate employee base .

Gordy Bunch: This workforce is receiving help from AI coding assistant, Claude, that makes each software engineer increasingly more productive. AI is a force multiplier for our initiatives. Excluding our corporate sales office employees, our technology teams represent 32% of our corporate employee base. TWFG is much more of a technology company than many may appreciate. We are positioned to be a net beneficiary of AI's continued evolution in insurance distribution, leveraging AI to make our agents more productive, our platforms more capable, and our clients better served. While the human expertise, community presence, client relationships, and professional judgment that define the TWFG models remains precisely what no algorithm can replicate. TWFG's competitive mode starts with our proprietary software and deepens with our organization's diversification and business mix, omni-channel distribution models, proprietary programs, and 25 years of proprietary data.

Speaker #2: TWFG, Inc. is much more of a technology company than many may appreciate . We are positioned to be a net beneficiary of AI's continued evolution in insurance distribution , leveraging AI to make our agents more productive .

Speaker #2: Our platforms more capable , and our clients better served . While the human expertise , community presence , client relationships , and professional judgment that define the TWFG, Inc. models remains precisely what no algorithm can replicate TWFG, Inc. competitive moat starts with our proprietary software and deepens with our organizations diversification and business mix .

Gordy Bunch: While the human expertise, community presence, client relationships, and professional judgment that define the TWFG models remains precisely what no algorithm can replicate. TWFG's competitive mode starts with our proprietary software and deepens with our organization's diversification and business mix, omni-channel distribution models, proprietary programs, and 25 years of proprietary data.

Speaker #2: Omnichannel distribution models , proprietary programs , and 25 years of proprietary data . Our retail distribution is highly preferred , focusing on clients that own homes and businesses .

Gordy Bunch: Our retail distribution is highly preferred, focusing on clients that own homes and businesses as our core clientele. The recent commentary is not the first time when the market has questioned the ongoing role of the independent agent. In 2013, McKinsey sparked a similar distribution debate when they published Agents of the Future: The Evolution of Property and Casualty Insurance Distribution, and more specifically, the chapter titled The End of an Era for the Local Insurance Agent. The prediction was the demise of the independent agents, with most expected to be out of business within five to 10 years if they failed to adopt new technology. Instead, the independent agent channel grew in total numbers of agencies, increased their total P&C market share from 57% to 61.5% since 2013.

Speaker #2: As our core clientele . The recent commentary is not the first time when the market has questioned the ongoing role of the independent agent in 2013 , McKinsey sparked a similar distribution debate when they published agents of the future The Evolution of Property and Casualty Insurance Distribution , and more specifically , the chapter titled The End of an era , where the local insurance agent , the prediction was the demise of the independent agents with most expected to be out of business within 5 to 10 years if they failed to adopt new technology .

Gordy Bunch: The prediction was the demise of the independent agents, with most expected to be out of business within five to 10 years if they failed to adopt new technology. Instead, the independent agent channel grew in total numbers of agencies, increased their total P&C market share from 57%-61.5% since 2013.

Speaker #2: Instead , the independent agent channel grew in total numbers of agencies increased their total PNC market share 57% to 61.5% . Since 2013 , controlled 87.2% of all US commercial lines premiums , and 25 grew .

Gordy Bunch: Controlled 87.2% of all US commercial lines premiums in 2025, grew their homeowners market share from 30% to 39% between 2013 and 2025, also increased their auto market share from 30% to 34% since 2013. Today, all major insurance carriers operate directly to consumers and through independent agent models. AI entering the direct channel is not new, given comparative shopping without the need for human interaction has existed for the past 20 years. Property and casualty is a $1 trillion addressable market, evenly split between personal and commercial lines, we see significant runway to grow our share. I want to close with a few final thoughts on the AI opportunity ahead.

Gordy Bunch: Controlled 87.2% of all US commercial lines premiums in 2025, grew their homeowners market share from 30%-39% between 2013 and 2025, also increased their auto market share from 30%-34% since 2013. Today, all major insurance carriers operate directly to consumers and through independent agent models. AI entering the direct channel is not new, given comparative shopping without the need for human interaction has existed for the past 20 years.

Speaker #2: Their homeowners market share from 30% to 39% between 2013 and 2025 , and also increased their auto market share from 30% to 34% .

Speaker #2: Since 2013 . Today , all major insurance carriers operate directly to consumers and through independent agent models . AI entering the direct channel is not new given comparative shopping without the need for human interaction .

Speaker #2: Has existed for the past 20 years . Property and casualty is a $1 trillion addressable market , evenly split between personal and commercial lines , and we see significant runway to grow our share .

Gordy Bunch: Property and casualty is a $1 trillion addressable market, evenly split between personal and commercial lines, we see significant runway to grow our share. I want to close with a few final thoughts on the AI opportunity ahead.

Speaker #2: I want to close with a few final thoughts on the AI opportunity ahead . We are embracing deploying AI across our platform and underwriting agent tools and back office workflows , and we will continue to partner with best in class third parties while building our own proprietary AI capabilities .

Gordy Bunch: We are embracing deploying AI across our platform and underwriting agent tools and back-office workflows, and we will continue to partner with best-in-class third parties while building our own proprietary AI capabilities. With that, I'll turn it over to Janice to walk through the financials in more detail.

Speaker #2: With that , I'll turn it over to Janice to walk through the financials in more detail

Speaker #3: Thank you . Gordy , and good morning , everyone . I am pleased to report the following fourth quarter results , beginning with our top KPI written premium .

Janice Zwinggi: Thank you, Gordie. Good morning, everyone. I am pleased to report the following Q4 results, beginning with our top KPI, written premium. Total written premium increased $82 million or 22.7% to $443.4 million. We saw strong double-digit growth across both of our primary offerings. Insurance services grew $53.6 million or 17.4% to $361.3 million, and TWFG MGA had a spike in growth of $28.5 million or 53.2% to $82.1 million. This was mainly due to the acquisition of TWFG MGA Florida, with written premiums of approximately $27.1 million, consisting of renewals, $9.7 million, and new business growth of $17.4 million.

Speaker #3: Total written premium increased 82 million , or 22.7% to 443.4 million . We saw strong double digit growth across both of our primary offerings .

Speaker #3: Insurance services grew 53.6 million , or 17.4% , to 361.3 million , and EFG Mga had a spike in growth of 28.5 million , or 53.2% , to 82.1 million .

Speaker #3: This was mainly due to the acquisition of TWFG, Inc. mga Florida , with written premiums of approximately 27.1 million , consisting of renewals 9.7 million and new business growth of 17.4 million .

Speaker #3: We saw consolidated growth in both renewals of 58.2 million , or 21.3% , and new business of 23.8 million , or 27.2% , over the prior year period , while maintaining a 92% retention rate .

Janice Zwinggi: We saw consolidated growth in both renewals of $58.2 million or 21.3% and new business of $23.8 million or 27.2% over the prior-year period, while maintaining a 92% retention rate. Overall premium growth was driven by continued expansion of our corporate branch footprint, strong MGA momentum following the acquisition of MGA Florida, and improving carrier access across multiple geographies. While a softening rate environment typically translates to increased customer shopping, our retention performance underscores the stability and engagement of our client base. Total revenues increased $17.1 million or 33% to $68.8 million. This was driven by accelerating new business activity, moderating rate increases, expanding MGA contributions, and solid economic activity in our core markets. Commission income increased $15.6 million or 35.8% to $59.4 million.

Speaker #3: Overall premium growth was driven by continued expansion of our corporate grants footprint , strong MGA momentum following the acquisition of MGA Florida and improving carrier access across multiple geographies , while a softening rate environment typically translates to increased customer shopping , our retention performance underscores the stability and engagement of our client base .

Speaker #3: Total revenues increased 17.1 million , or 33% , to 68.8 million . This was driven by accelerating new business activity , moderating rate increases , expanding MGA contributions and solid economic activity in our core markets , Commission income , increased 15.6 million , or 35.8% , to 59.4 million , reflecting expansion across both insurance services and MGA platforms and supported by strong renewal and new business activity .

Janice Zwinggi: Total revenues increased $17.1 million or 33% to $68.8 million. This was driven by accelerating new business activity, moderating rate increases, expanding MGA contributions, and solid economic activity in our core markets. Commission income increased $15.6 million or 35.8% to $59.4 million.

Janice Zwinggi: reflecting expansion across both insurance services and MGA platforms, and supported by strong renewal and new business activity. Organic revenues increased $5.2 million, reaching approximately $50 million, representing an organic growth rate of 11.7%. We continue to demonstrate solid momentum across both our agency and MGA platforms. Turning to expenses, commission expense increased $4 million or 13.8% to $32.9 million, reflecting our production growth. This tracks with commission income growth, taking into account the impact of the 2025 acquisitions, programs with no related commission expense, and commission rate changes period over period. Salaries and employee benefits increased $2.4 million or 30.7% to $10 million, driven by headcount growth associated with acquisitions, corporate functional hires, and public company infrastructure.

Speaker #3: Organic revenues increased 5.2 million , reaching approximately 50 million , representing an organic rate of 11.7% . We continue to demonstrate solid momentum across both our agency and MGA platform .

Speaker #3: Turning to expenses , commission expense , increased 4 million , or 13.8% , to 32.9 million , reflecting our production growth This tracks with commission income growth taking into account the impact of the 2025 acquisitions programs with no related commission expense and commission rate changes period over period salaries and employee benefits increased 2.4 million , or 30.7% , to 10 million , driven by headcount growth associated with acquisitions .

Janice Zwinggi: This tracks with commission income growth, taking into account the impact of the 2025 acquisitions, programs with no related commission expense, and commission rate changes period over period. Salaries and employee benefits increased $2.4 million or 30.7% to $10 million, driven by headcount growth associated with acquisitions, corporate functional hires, and public company infrastructure.

Speaker #3: Corporate functional hires and public company infrastructure . Other administrative expenses increased 1.7 million , or approximately 35% , to 6.7 million , primarily due to increase in technology costs .

Janice Zwinggi: Other administrative expenses increased $1.7 million, or approximately 35% to $6.7 million, primarily due to increase in technology costs, the result of acquisitions and compliance initiatives. Depreciation and amortization increased to $5.8 million, driven by the recent acquisitions. From a profitability perspective, net income was up 76.2% to $14.4 million, with a net income margin of 21%. Adjusted net income rose 58.9% to $16.7 million, equating to a margin of 24.3%. Adjusted EBITDA increased 56.9% to $21.7 million, for a margin of 31.6%, compared to 26.8% in the prior year period. This expansion reflects operating leverage, expense discipline, and an increasing mix of higher margins in our corporate branch locations and in the MGA operations.

Speaker #3: The result of acquisitions and compliance initiatives , depreciation and amortization increased to 5.8 million , driven by the recent acquisitions from a perspective , net income was up 76.2% to 14.4 million , with a net income margin of 21% .

Speaker #3: Adjusted net income rose 58.9% to 16.7 million , equating to a margin of 24.3% . Adjusted EBITDA increased 56.9% to 21.7 million , for a margin of 31.6% , compared to 26.8% in the prior year period .

Speaker #3: This expansion reflects operating leverage expense discipline and an increase mix of higher margins in our corporate branch locations and in the MGA operations from a liquidity perspective , we ended the year with a very strong balance sheet with unrestricted cash of 155.9 million .

Janice Zwinggi: This expansion reflects operating leverage, expense discipline, and an increasing mix of higher margins in our corporate branch locations and in the MGA operations.

Janice Zwinggi: From a liquidity perspective, we ended the year with a very strong balance sheet with unrestricted cash of $155.9 million. We had no borrowings on our $50 million revolving credit facility and had only $4 million of term debt outstanding. This provides us with significant flexibility to invest in growth and continue to pursue strategic opportunities. With that, I will turn it back to Gordie.

Speaker #3: We had no borrowings on our $50 million revolving credit facility and had only $4 million of term debt outstanding. This provides us with significant flexibility to invest in growth and continue to pursue strategic opportunities.

Speaker #3: With that , I will turn it back to Gordie

Speaker #2: Thank you . Janice Looking ahead as we enter 2026 , we do so with a strong momentum . The investments we've made in people , technology and infrastructure position us to expect to continue delivering double digit organic growth , expanding margins and generating strong free cash flow .

Gordy Bunch: Thank you, Janice. Looking ahead, as we enter 2026, we do so with a strong momentum. The investments we've made in people, technology, and infrastructure position us to expect to continue delivering double-digit organic growth, expanding margins, and generating strong free cash flow. Our conviction in this business is reflected in our recent announced share repurchase program of up to $50 million. We believe current valuations represent a compelling opportunity to create shareholder value. We are prepared to be aggressive buyers of our own stock at these levels. For 2026 guidance, total revenues are expected to grow 15% to 20%, coming in between $285 million and 300 million. Adjusted EBITDA margin expected to be in the range of 22% to 25%. Organic revenue growth rate expected to be in the range of 10% to 15%.

Speaker #2: Our conviction in this business is reflected in our recent announced share repurchase program of up to $50 million . We believe current valuations represent a compelling opportunity to create shareholder value , and we are prepared to be aggressive buyers of our own stock at these levels for 2026 .

Gordy Bunch: For 2026 guidance, total revenues are expected to grow 15% to 20%, coming in between $285 million and 300 million. Adjusted EBITDA margin expected to be in the range of 22% to 25%. Organic revenue growth rate expected to be in the range of 10%-15%.

Speaker #2: Guidance , total revenues are expected to grow 15 to 20% , coming in between 285 million and 300 million . Adjusted EBITDA margin is expected to be in the range of 22 to 25% .

Speaker #2: Organic revenue growth rate expected to be in the range of 10 to 15% . The guidance reflects continued platform growth , a competitive stock market environment , investments in new AI tools and executing on our accretive M&A plans .

Gordy Bunch: The guidance reflects continued platform growth, a competitive soft market environment, investments in new AI tools, and executing on our accretive M&A plans. TWFG continues to have a fortress balance sheet, high free cash flows and momentum for continued success in 2026 and beyond. As we continue to execute against our long-term strategy, we are confident in our ability to continue delivering sustainable, profitable growth and long-term value for our shareholders. With that, operator, please open the line for questions.

Speaker #2: TWFG, Inc. continues to have a fortress balance sheet , high free cash flows , and momentum for continued success in 2026 and beyond as we continue to execute against our long term strategy , we are confident in our ability to continue delivering sustainable , profitable growth and long term value for our shareholders .

Speaker #2: With that , operator , please open the line for questions

Speaker #1: Thank you . We will now begin the question and answer session . If you would like to ask a question , please press star one on your telephone keypad to join the queue .

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from Mike Zaremski from BMO. Please go ahead.

Speaker #1: If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question,

Speaker #1: If you are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from Mike Zarembski from BMO.

Speaker #1: Please go ahead

Speaker #4: Hey , thanks . Good morning . First question on the the organic growth guidance . Maybe you could help parse out the Florida MTA growth kind of versus the underlying book .

Mike Zaremski: Hey, thanks. Good morning. First question on the organic growth guidance. Maybe you could help parse out the Florida MGA growth kind of versus the underlying book, I guess, you know, versus agency in a box or any kind of parsing out you thought was worth mentioning?

Speaker #4: I guess . You know , versus agency in the box or any kind of parsing out . You thought was worth mentioning

Speaker #5: Yeah , we don't really do segment reporting at this point . We certainly will benefit briefly from MGA , Florida in the second quarter , where we pick up renewals that will be coming into the 13th , 14th and 15th months since acquisition .

Gordy Bunch: Yeah, we don't really do segment reporting at this point. We certainly will benefit briefly from MGA Florida in Q2, where we pick up renewals that will be coming into the 13th, 14th, and 15th month since acquisition. Beyond that, their organic contribution is really going to be coming from the new program, new homeowners program launch that started really in earnest Q4. We don't have a high projection of new business policies driving organic coming from that voluntary writing. As you know, the Florida marketplace is having a repricing and a softening.

Speaker #5: But beyond that , their organic contributions really going to be coming from the new program , new new homeowners program launch that started really in earnest .

Speaker #5: The fourth quarter . We don't have a high projection of new business policies driving organic coming from that voluntary writing . As you know , the Florida marketplace is having a repricing and a softening .

Speaker #5: So I think we're looking at their contribution as going to be more present in the second quarter, less meaningful in the latter half of the year, because we have all the written premiums that were inorganic in '25 that they have to grow above in '26.

Gordy Bunch: I think we're looking at their contribution is going to be more present in Q2, less meaningful in the latter half of the year, because we have all the written premiums that were inorganic in 2025, that they have to grow above in 2026. The projection we're giving you is a conservative view of the voluntary writings ramping up alongside our core business pre-2025 of agency in a box and corporate store growth.

Speaker #5: So it's the the projection we're giving you is a conservative view of voluntary writings ramping up alongside our core business pre 2025 of agency in a box and corporate store growth

Mike Zaremski: That's helpful color for modeling. Maybe, switching gears to written premium retention in the MGA. Extremely strong. It looks like jumped from low 80s to low 90s. Any color there?

Speaker #4: That's helpful color for for modeling . Maybe I'm switching gears to written premium retention and the MGA extremely strong . It looks like jump from low 80s to low 90s .

Mike Zaremski: That's helpful color for modeling. Maybe, switching gears to written premium retention in the MGA. Extremely strong. It looks like jumped from low 80s to low 90s. Any color there?

Speaker #4: Any any color there

Speaker #5: On the MGA , I think it's relatively the market opening up allows our agents in that channel to be in a better position to defend customers shopping from the hard market price to now a softening market .

Gordy Bunch: On the MGA, I think it's relatively the market opening up allows our agents in that channel to be in a better position to defend customer shopping from the hard market price increases to now a softening market. As those markets reopened, reposition their own rates, that allowed better retention or rewriting of those customers to another market within our platform that offered the customer a better renewal rate. There was periods of time where carriers were constraining new business production, taking a lot of rate, and then we went through, in, you know, really the Q2 2025, you started that accelerated softening market cycle. Not every carrier was on the same timeline for when they started filing rate reductions.

Speaker #5: So as as those markets reopened , reposition their own rates that allowed better retention or rewriting of those customers to another market within our platform .

Speaker #5: That offered the customer a better renewal rate . So there was a periods of time where carriers were constraining new business production , taking a lot of rate , and then we went through and , you know , really second quarter of 25 , you started that accelerated softening market cycle .

Gordy Bunch: There was periods of time where carriers were constraining new business production, taking a lot of rate, and then we went through, in, you know, really the Q2 2025, you started that accelerated softening market cycle. Not every carrier was on the same timeline for when they started filing rate reductions.

Speaker #5: Not every carrier was on the same timeline for when they started filing rate reductions . So as we got to to the end of the year , a lot of that has started to catch up .

Gordy Bunch: As we got to the end of the year, a lot of that had started to catch up. Think about market leaders that file rates more frequently being ahead of the curve, taking market from our GA agents earlier in 2025. Towards the latter part of 2025, the markets we represent inside the MGA model had their pricing adjusted to be more competitive in that current softening market environment, allowing better retention and also opening up for new business growth, allowing those agents to rewrite accounts and add new business as well.

Speaker #5: So I think about market leaders that file rates more frequently , being ahead of the curve , taking market from our GA agents early , earlier in 25 and towards the latter part of 25 .

Speaker #5: The markets we represent inside MGA model had their pricing adjusted to be more competitive in that current softening market environment , allowing better retention and and also opening up for new business growth , allowing those agents to rewrite accounts and add new business as well

Speaker #4: Okay . Got it . That's that's helpful . I'll think through kind of whether that that dynamic will persist . I guess . Just lastly , thanks for your your thoughtful comments on on technology and how you guys are accelerating your technology initiatives by , by hiring folks at , I guess , Gordy , as a as a founder and a builder of of products , right , including technology products , I was curious , you know , if you if you felt there was any rationale , rational behavior behind the stock market kind of really negatively impacting a lot of stocks due to kind of these new , exciting technologies that allow folks to build things in a more efficient way than the past .

Mike Zaremski: Okay, got it. That's helpful. I'll think through kind of whether that dynamic will persist. I guess just lastly, thanks for your thoughtful comments on technology and how you guys are really accelerating your technology initiatives by hiring folks, et cetera. I guess, Gordie, as a founder and a builder of products, right, including technology products, I was curious, you know, if you felt there was any rationale, like, rational behavior behind the stock markets, kind of really negatively impacting a lot of stocks due to kind of these new exciting technologies that allow folks to build things in a more efficient way than the past. You know, I appreciate, you know, the...

Speaker #4: You know , appreciate , you know , the you probably don't think that stocks should have been impacted nearly as much as it it is .

Mike Zaremski: You probably don't think that TWFG stock should have been impacted, nearly as much as it was. Curious if you do think there is some, you know, truth to what the, at least direction, what the market is implying based on these kind of the last few months of technology innovation. Thanks.

Speaker #4: It as it was . But curious if you do think there is some you know , truth to to what the at least market is implying based on these these kind of the last few months of technology and innovation .

Speaker #4: Thanks .

Speaker #5: Sure . Great . Great question . Mike . And you know , I , think that the reaction wasn't just isolated to the insurance sector .

Gordy Bunch: Sure. Great, great question, Mike. You know, I think that the reaction wasn't just isolated to the insurance sector. There were other sectors that had selloffs that related to AI innovations. I think, you know, hopefully in my prepared comments, I hit on all the high notes of, you know, insurance is a highly complex transaction for most. For those that have growing assets, growing liability exposures, you know, they may use AI just like they use Google today to do research. When making a final buying decision, many transition back over to the advisor to go through what they've discovered on their own, through their own research. When it comes down to purchasing, they want to run that past somebody who actually can consult them, understand nuances between all their different exposures.

Speaker #5: There were other sectors that had sell offs that related to AI innovations . And I think , you know , hopefully in my prepared comments , I hit on all the high notes of , you know , insurance is a highly complex transaction for most and for those that have growing assets , growing liability exposures , you know , they may use AI just like they use Google today to do research .

Speaker #5: But when making a final buying decision , many transition back over to the advisor to go through what they've discovered on their own , through their own research .

Gordy Bunch: When making a final buying decision, many transition back over to the advisor to go through what they've discovered on their own, through their own research. When it comes down to purchasing, they want to run that past somebody who actually can consult them, understand nuances between all their different exposures.

Speaker #5: But then when it comes down to purchasing , they want to run that past somebody who actually can consult them , understand nuances between all their different exposures .

Speaker #5: And I do think that AI is going to create more efficiencies within our channel , allowing our agents to sell more product or servicing side to service more product .

Gordy Bunch: I do think that AI is going to create more efficiencies within our channel, allowing our agents to sell more product, our servicing side to service more product. I think what you'll have over time is it will take less full-time employees to support a growing base of customers, because the AI agentic tools that we already know that are in place and that are coming, are gonna replace some of the manual tasks that are existing today in our industry. I know that's been more prominently discussed with claims and underwriting. We do have claims and underwriting within our business model, and we'll be benefiting from that as well.

Speaker #5: So I think what you'll have over time is it will take less full time employees to support a growing base of customers because the AI tools that we already know that are in place and that are coming are going to replace some of the manual tasks that are existing today in our industry .

Speaker #5: And I know that's been more prominently discussed with claims and underwriting. We do have claims and underwriting within our business model, and we'll be benefiting from that as well.

Gordy Bunch: I know that's been more prominently discussed with claims and underwriting. We do have claims and underwriting within our business model, and we'll be benefiting from that as well.

Speaker #5: But all the way through the cycle of just making sure you have consistent connection with your customers . So the automation of those communications , the consistency of those communications , the elimination of repetitive keystrokes across just about every workflow metric within our business is going to create a net beneficiary to us productivity and eventually we don't want to say margin expanding yet , because I don't think anybody has a good handle on what are the long term costs of AI .

Gordy Bunch: All the way through the cycle of just making sure you have consistent connection with your customers, the automation of those communications, the consistency of those communications, the elimination of repetitive keystroking. Just about every workflow metric within our business is going to create a net beneficiary of to us, of productivity, and eventually, we don't want to say margin expanding yet, because I don't think anybody has a good handle on what are the long-term costs of AI. They, we don't really know the long-term pricing models. For sure, efficiency is going to be coming through. As far as I don't think I will be the first person or the second person or the last person to say the market's not always rational.

Speaker #5: They we don't really know the long term pricing models . So for sure , efficiency is going to be coming through . As far as I don't think I will be the first person or the second person or the last person to say the market's not always rational .

Gordy Bunch: They, we don't really know the long-term pricing models. For sure, efficiency is going to be coming through. As far as I don't think I will be the first person or the second person or the last person to say the market's not always rational.

Speaker #5: I think a significant price drop across all of insurance kind of ignores a fundamental that isn't present in every industry . Insurance is required by law .

Gordy Bunch: I think a significant price drop across all of insurance kind of ignores a fundamental that isn't present in every industry. Insurance is required by law. Insurance is regulated in 50 different states. The complexity of insurance across different lines does require context and a cognitive communication to evaluate how different insurance policies relate to each other in someone's overall portfolio management. It's going to be a little bit more difficult for multi-line customers to get all of that out of an algorithm. So I do think we'll benefit from the efficiencies it creates, but long term, I don't think we're going anywhere. I do think, you know, every single person on this call has insurance, and I believe every person on this call has more than one insurance policy.

Speaker #5: Insurance is regulated in 50 different states . The complexity of insurance across different lines does require context and and a cognitive communication to evaluate how different insurance policies relate to each other in someone's overall portfolio .

Speaker #5: Management. And it's going to be a little bit more difficult for multi-line customers to get all of that out of an algorithm.

Speaker #5: And so I do think we'll benefit from the efficiencies it creates . But long term , I don't think we're going anywhere . And I do think , you know , every single person on this call has insurance .

Gordy Bunch: So I do think we'll benefit from the efficiencies it creates, but long term, I don't think we're going anywhere. I do think, you know, every single person on this call has insurance, and I believe every person on this call has more than one insurance policy.

Speaker #5: And I believe every person on this call has more than one insurance policy . So I think when you think about the broad scope of product mix that we offer at TWFG, Inc. , personal lines , commercial lines , specialty lines , life annuities , we have a lot of different places to pivot , pivot , insulate and cross-sell and provide that advisory role for insureds with complex insurance , decision making .

Gordy Bunch: I think when you think about the broad scope of product mix that we offer at TWFG, personal lines, commercial lines, specialty lines, life, annuities, we have a lot of different places to pivot, insulate, cross-sell, and provide that advisory role for insureds with complex insurance decision-making. I think we're here for the long haul.

Speaker #5: So I think we're here for the long haul.

Speaker #4: Thank you

Operator 2: Thank you.

Operator: Thank you.

Speaker #1: And your next question comes from Paul Newsome Pipe from Piper Sandler . Please go ahead .

Operator: Your next question comes from Paul Newsome from Piper Sandler. Please go ahead.

Speaker #6: Good morning . Thanks for the call . I was hoping isn't a very broad brush way . You could focus in on the organic , the components of the organic growth guidance , just kind of what's getting better and what's getting worse because it looks like you're looking for a little bit of an improvement in organic growth prospectively , but you also have other things like the soft market .

Operator 2: Good morning. Thanks for the call. I was hoping, just in a very broad brush way, you could focus in on the organic, the components of the organic growth guidance. Just kind of what's getting better and what's getting worse, because it looks like you're looking for a little bit of an improvement in organic growth respectively, but you also have other things like the soft market, and I would imagine, pushing against that. Maybe if you just sit back, what are the pieces when you thought about the potential for improving organic growth that moved you in that direction?

Paul Newsome: Good morning. Thanks for the call. I was hoping, just in a very broad brush way, you could focus in on the organic, the components of the organic growth guidance. Just kind of what's getting better and what's getting worse, because it looks like you're looking for a little bit of an improvement in organic growth respectively, but you also have other things like the soft market, and I would imagine, pushing against that. Maybe if you just sit back, what are the pieces when you thought about the potential for improving organic growth that moved you in that direction?

Speaker #6: I would imagine pushing against that . But maybe if you just sit back , what are the pieces when you thought about the potential for improving organic growth that moved you in that direction ?

Speaker #5: Sure . That's a good question , Paul . I'll give you kind of a basic overview , and this also will probably be a little more responsive to Mike's question on the same subject .

Gordy Bunch: Sure. That's a good question, Paul Newsome. I'll give you kind of a basic overview, and this also will probably be a little more responsive to Mike Zaremski's question on the same subject. When we're looking at, you know, our 10% to 15% guidance, if you're looking at our, you know, agency in a box corporate store contribution to that, it is still a double-digit projection for our core business. When you look to the top of the range, towards the 15%, that's probably being more coming from new product development and deployment through our MGA products. Let's say, you know, excluding the MGA, we would still have a double-digit organic guide. The MGA creates upside as we deploy new product development or expand capacity, that net new production is all going to be organically contributing.

Gordy Bunch: Sure. That's a good question, Paul Newsome. I'll give you kind of a basic overview, and this also will probably be a little more responsive to Mike Zaremski's question on the same subject. When we're looking at, you know, our 10%-15% guidance, if you're looking at our, you know, agency in a box corporate store contribution to that, it is still a double-digit projection for our core business. When you look to the top of the range, towards the 15%, that's probably being more coming from new product development and deployment through our MGA products.

Speaker #5: When we're looking at , you know , our 10 to 15% guidance , if you're looking at our , you know , agency in a box , corporate store contribution to that , but it is still a double digit projection for our core business .

Speaker #5: When you look to the top of the range, towards the 15%, that's probably being more coming from new product development and deployment through our products.

Speaker #5: And so let's say , you know , excluding the MGA , we would still have a double digit organic guide . The MGA creates upside as we deploy new product development or expand capacity that net new production is all going to be organically contributing .

Gordy Bunch: Let's say, you know, excluding the MGA, we would still have a double-digit organic guide. The MGA creates upside as we deploy new product development or expand capacity, that net new production is all going to be organically contributing.

Speaker #5: And so, I don't know if that's helpful to you. We do know that we have business that's going to be rolling in.

Gordy Bunch: I don't know if that's helpful to you. We do know that we have business that's going to be rolling in, that was inorganic in 25, that will become organic in 26. That's present in our corporate stores, that's present in our MGA. As we model the assumed retention rate, and new business growth rate of those previously acquired businesses that were part of inorganic in the past, they'll be net contributors to organic in 26, as they roll through their 12-month ownership, horizon.

Speaker #5: That was inorganic in 25 . That will become organic in 26 . That's present in our corporate stores , that's present in our MGA .

Speaker #5: And as we model the assumed retention rate and new business growth rate of those previously acquired businesses that were part of inorganic in the past , they'll be net contributors to organic in 26 as they roll through their 12 month ownership horizon

Speaker #6: That's great . And maybe as a follow up or second question , could you give us your view on the outlook for M&A prospectively ?

Operator 2: That's great. Maybe as a follow-up or second question, could you give us your view on the outlook for M&A perspectively? Is it getting easier or harder to find transactions that would fit with your firm?

Paul Newsome: That's great. Maybe as a follow-up or second question, could you give us your view on the outlook for M&A perspectively? Is it getting easier or harder to find transactions that would fit with your firm?

Speaker #6: Is it getting easier or harder to to find transactions that would fit with with your firm ?

Speaker #5: So our M&A pipeline is still very robust . I think , on the but I call transformational sized transactions that are out there .

Gordy Bunch: Our M&A pipeline is still very robust. I think, on the, what I call transformational sized transactions that are out there, we've had, you know, three in our pipeline. All of those will be much longer discussions that will take time to work through. I don't think those larger transactions were helped by the recent market reaction. I think that, you know, puts everybody in a position of saying, "Let's make sure we understand how agencies are going to be valued long term." On the regular day M&A, we have a lot of opportunity there. We're being highly selective. We are looking at the quality of the portfolio that would be coming into the company. We're looking at the cultural fit of the target being acquired. Qualitative is one measure, but there's also strategic.

Speaker #5: We've had , you know , three in our pipeline , all of those will be much longer discussions that will take time to work through .

Speaker #5: I don't think those larger transactions were helped by the recent market reaction . I think that , you know , puts everybody in a position of saying , let's make sure we understand how agencies are going to be valued long term .

Gordy Bunch: " On the regular day M&A, we have a lot of opportunity there. We're being highly selective. We are looking at the quality of the portfolio that would be coming into the company. We're looking at the cultural fit of the target being acquired. Qualitative is one measure, but there's also strategic.

Speaker #5: But on the regular day , M&A , we have a lot of opportunity there . We're being highly selective . We are looking at the quality of the portfolio that would be coming into the to the company .

Speaker #5: We're looking at the cultural fit of the target being acquired . Qualitative is one measure , but there's also strategic . So is there a geographical expansion and strength that we gain through the acquisition as part of the part of the picture .

Gordy Bunch: Is there a geographical expansion and strength that we gain through the acquisition? as part of the picture. You know, what are the things we can do post-close that enhance the business we're acquiring and the businesses we already own? With that framing, we have quite a bit of opportunity in front of us. In our guide, we've maintained a similar cadence of acquired revenue and acquired EBITDA. I know, I saw some comments that might have expected a higher top-line revenue pick. That certainly can occur if we acquire more than we have in our baseline assumed M&A.

Speaker #5: And then, you know, what are the things we can do post-close that enhance the business we're acquiring and the businesses we already own?

Speaker #5: And with that framing , we have quite a bit of opportunity in front of us in our guide . We maintained a similar cadence of acquired revenue and acquired EBITDA .

Speaker #5: And I know I saw some comments that might have expected a higher top line revenue pick . That certainly can occur . If we acquire more than we have in our baseline , assumed M&A

Speaker #6: That's great . Thank you very much . Appreciate the help . As always

Operator 2: That's great. Thank you very much. Appreciate the help, as always.

Paul Newsome: That's great. Thank you very much. Appreciate the help, as always.

Speaker #1: And your next question comes from Bob Wang from Morgan Stanley . Please go ahead .

Operator: Your next question comes from Bob Huang from Morgan Stanley. Please go ahead.

Speaker #7: Hi . Good morning folks . I just have one question really . So first of all , thank you for providing some grounded thoughts and context on technology and impact on the broker business .

Bob Huang: Hi. Good morning, folks. I just have one question, really. Thank you for providing some grounded thoughts and context on technology and impact on the broker business. If we wanna maybe unpack that a little bit, is there a scenario where if AI and technology will make broking more efficient, that you could potentially see more competitors coming into your space? For example, maybe a broker that's in the ultra-high net worth space that is not really in your market today, but as AI makes things more efficient, they could potentially come into your space. Can you maybe help us think about how you're thinking about the competitive dynamics? Is that changing, and how should we think about the impact to The Woodlands Financial Group?

Speaker #7: But if we want to , maybe unpack that a little bit , is there a scenario where if AI and technology will make broking more efficient , that you could potentially see more competitors coming into your space ?

Speaker #7: So , for example , maybe broker that's in the ultra high net worth space that is not really in the in your market today , but as AI makes things more efficient , they could potentially come into your space .

Speaker #7: Can you maybe help us think about how you're thinking about the competitive dynamics ? Is that changing ? And how should we think about the impact to woodland financials

Bob Huang: Can you maybe help us think about how you're thinking about the competitive dynamics? Is that changing, and how should we think about the impact to The Woodlands Financial Group?

Speaker #5: Sure . Good question . Bob . I would say we ended 2025 with 1.7 billion of premium between the two channels . There's a trillion dollar addressable market .

Gordy Bunch: Sure. Good question, Bob. I would say, we ended 2025 with $1.7 billion of premium between the two channels. There's a trillion-dollar addressable market. I think even if competitors expand into other areas of the business, there is still a wide market share for us to gain. I went back and looked, I didn't put it in my prepared marks, but in 2013, TWFG was substantially smaller when the McKinsey report came out. You know, back then, private equity really wasn't in personal lines or agency brokering space. Since then, they've been coming in, acquiring, consolidating distribution for the last decade plus. Still, the net number of agencies grew in spite of the acquisition and consolidation.

Speaker #5: I think even if competitors expand into other areas of the business , there is still a wide market share for us to gain .

Speaker #5: I went back and looked . I didn't put it in my prepared remarks , but in 2013 , TWFG, Inc. was was substantially smaller when McKinsey report came out and you know , back then , private equity really wasn't in personal lines or agency brokering space .

Speaker #5: And since then they've been coming in , acquiring , consolidating , distribution for the last decade plus . Still , the net number of agencies grew in spite of the acquisition and consolidation .

Gordy Bunch: Since then, they've been coming in, acquiring, consolidating distribution for the last decade plus. Still, the net number of agencies grew in spite of the acquisition and consolidation.

Speaker #5: I think if if others , you know , start to get into personal lines , we have 400 and , you know , 98 billion personal lines that currently don't doesn't reside with TWFG, Inc. .

Gordy Bunch: I think if others, you know, start to get into personal lines, we have $498 billion personal lines that currently doesn't reside with TWFG. I think as our technology improves, as our platform becomes better known as a option for agents to join, launch with, I think we'll be the net beneficiary of a lot of these changes. When you think about the 40+ thousand independent agencies across the US, 38,000 of them are subscale.

Speaker #5: I think as our technology improves as our our platform becomes better known as a option for agents to join , launch with , I think we'll be the net beneficiary of all a lot of these changes .

Speaker #5: So when you think about the 40 plus thousand independent agencies across the US , 38,000 of them are subscale . So I do think if you take what's happening in coming out with technology , the independent agents that are small don't have scale , don't have the resources to adopt and adapt to the changes that are coming .

Gordy Bunch: I do think if you take what's happening and coming out with technology, the independent agents that are small, don't have scale, don't have the resources to adopt and adapt to the changes that are coming, they're going to either get acquired by those with those capabilities, or they're going to look to affiliate. We have that business model to help them bridge what they can't do naturally on their own. We become a home for those. Then we help scale them up, bring them to today's technology and tomorrow's technology going forward, and provide them an opportunity to remain relevant long term. I do think as it pivots, we're going to be a net beneficiary from our existing operations, from a recruiting and development standpoint, and, you know, again, large market share out there for us to grow into.

Speaker #5: They're going to either get acquired by those with those capabilities , or they're going to look to affiliate . And we have that business model to help them bridge what they can't do naturally on their own .

Speaker #5: We become a home for those , and then we help scale them up , bring them to today's technology and tomorrow's technology going forward .

Speaker #5: And provide them an opportunity to remain relevant long term . So I do think as as it pivots , we're going to be in that beneficiary on our existing operations from a recruiting and development standpoint .

Gordy Bunch: I do think as it pivots, we're going to be a net beneficiary from our existing operations, from a recruiting and development standpoint, and, you know, again, large market share out there for us to grow into.

Speaker #5: And , you know , again , large market share out there for us to grow into

Speaker #7: Got it . I really appreciate that . So just net beneficiary or change but also not your first rodeo in change . Is that a fair statement ?

Bob Huang: Got it. Really appreciate that. Not just a net beneficiary of change, but also not your first rodeo in change. Is that a fair statement?

Speaker #5: 100% . If I were to read the headlines from McKinsey in 13 , I should have packed up my tent and closed .

Gordy Bunch: 100%. If I would have read the headlines from McKinsey in 2013, I should have packed up my tent and closed.

Speaker #7: Thank you . I really appreciated that

Bob Huang: Thank you. Really appreciated that.

Speaker #1: And your next question comes from Tommy Joint from KBW . Please go ahead .

Operator: Your next question comes from Tommy McJoynt from KBW. Please go ahead.

Speaker #8: Hey , everyone . This is Molly Knoll . On behalf of Tommy Joint . Thanks so much for taking our questions . I first wanted to just ask if you could provide some color on the softening rate environment and the increased carrier capacity you're seeing , and the tailwinds you're seeing from that .

Molly Knoll ): Hey, everyone. This is Molly Knoll, on behalf of Tommy McJoynt. Thanks so much for taking our questions. I first wanted to just ask if you could provide some color on the softening rate environment, the increased carrier capacity you're seeing, and the tailwinds you're seeing from that. I know you mentioned last quarter that California is an exception because of its hard market, and I was wondering if that's still the case. Thanks.

Speaker #8: And I know you mentioned last quarter that California is an exception because of its hard market. And I was wondering if that's still the case.

Speaker #8: Thanks .

Speaker #5: Yeah . Good question . Appreciate that . The market is broadly softening on auto insurance . We see that across the country , including California , is moderating on auto rate where you still have some persistency on pricing is going to be more your cat exposed geography and more specifically wildfire exposed as compared to historically .

Gordy Bunch: Yeah, good question. Appreciate that. The market is broadly softening on auto insurance. We see that across the country, including California, is moderating on auto rates. Where you still have some persistency on pricing is going to be more your cat-exposed geography and more specifically, wildfire-exposed, as compared to historically, that's usually been a hurricane component. California, with its wildfire exposures, Colorado with wildfire exposures, those two areas still seem to have pricing in property and capacity constraints that we expect to be persistent throughout the year. You still see the fragmented market going between admitted and non-admitted, and a blending in of the California FAIR Plan. Long as you have that blending, that is indicative of a continuously harder market.

Speaker #5: That's usually been a hurricane component . So California , with its wildfire exposures , Colorado with wildfire exposures , those two areas still seem to have pricing in property and capacity constraints that that we expect to be persistent throughout the year .

Speaker #5: You still see the fragmented market going between admitted and non-admitted and a blending in of the California Fair plan . So as long as you have that blending that is indicative of a continuously harder market , California may have some easing in the back half of the year .

Gordy Bunch: You still see the fragmented market going between admitted and non-admitted, and a blending in of the California FAIR Plan. Long as you have that blending, that is indicative of a continuously harder market.

Gordy Bunch: California may have some easing in the back half of the year, if the auto writing companies choose to decide to open back up property in order to help them sell bundled packaged policies. That hasn't really become prominent as of yet. When you look at pricing in our core state of Texas, you have had some price deceleration on the property side. Hurricane cat reinsurance pricing is coming down, not just in Florida, but across all the Gulf Coast states. Auto rates have moderated. You've seen some price deceleration and most of the carriers, and I'm going to go broader than that. All of the carriers we work with today are in growth mode.

Speaker #5: If the auto writing companies choose to decide to open back up property in order to help them sell bundled, packaged policies. But that hasn't really become prominent as of yet.

Speaker #5: When you look at pricing in our core state of Texas , you have had some price deceleration on the property side , hurricane Cat reinsurance pricing is coming down , not just in Florida , but across all the Gulf Coast states .

Speaker #5: Auto rates have moderated . You've seen some price deceleration and most of the carriers . And I'm going to go broader than that .

Gordy Bunch: Auto rates have moderated. You've seen some price deceleration and most of the carriers, and I'm going to go broader than that. All of the carriers we work with today are in growth mode.

Speaker #5: All of the carriers we work with today are in growth mode . And so with that comes , you know , a little more relaxed underwriting guidelines enhanced , you know , new business incentive commissions to drive volume , opening up of some property capacity to get to the bundling that most of the carriers that write multi-line prefer to have bundled clientele .

Gordy Bunch: With that comes, you know, a little more relaxed underwriting guidelines, enhanced, you know, new business incentive commissions to drive volume, opening up of some property capacity to get to the bundling that, most of the carriers that write multiline prefer to have bundled clientele, and I see that playing out throughout the calendar year.

Speaker #5: And I see that playing out throughout the calendar year .

Speaker #8: Great . That's really helpful . Thank you . And then if I could just ask another question , I know you touched on this briefly earlier , but I just wanted to ask a follow up about your M&A pipeline , given the decline in multiples in the public brokers , if that is also leading to a decline in the price of the private brokers that you're looking at in your pipeline .

Molly Knoll ): Great. That's really helpful. Thank you. If I could just ask another question. I know you touched on this briefly earlier, but I just wanted to ask a follow-up about your M&A pipeline. Given the decline in multiples in the public brokers, if that is also leading it to a decline in the price of the private brokers that you're looking at in your pipeline, how significant do you think that decline will be?

Speaker #8: How significant do you think that decline will be?

Speaker #5: So I don't think the private markets have caught up to , you know , how quickly the public market can turn when you look at the sell off and February , that was very acute .

Gordy Bunch: I don't think the private markets have caught up to, you know, how quickly the public market can turn. When you look at the sell-off in February, that was very acute. Most LOIs and purchase agreements that are being negotiated and deals that are going through a process, that extends over a period of months. You probably have people that were in LOIs or leading into closing, that when the public market price correction hits, if it's a small correction, probably not much of a reaction to pricing on the private side. When you have this large of a correction or this large of an overcorrection, depending on how you want to categorize it, I think it does cause some to pause. I think some sellers that were in processes also paused to see where the market's going to normalize.

Speaker #5: Most LOIs and purchase agreements that are being negotiated are deals that are going through a process that extends over a period of months.

Speaker #5: So you probably have people that were in Lois or leading into closing that when the public market price correction hits , if it's a small correction , probably not much of a reaction to pricing on the private side , when you have this large of a correction or this large of an overcorrection , depending on how you want to categorize it .

Gordy Bunch: When you have this large of a correction or this large of an overcorrection, depending on how you want to categorize it, I think it does cause some to pause. I think some sellers that were in processes also paused to see where the market's going to normalize.

Speaker #5: I think it does cause some to pause. I think some sellers that were in processes also paused to see where the market's going to normalize.

Gordy Bunch: It could have an impact on the larger size transactions multiples. When you bifurcate out the valuations of private transactions, organizations that are selling with less than $1 million in revenue really don't price correlate to public markets. That's the vast majority of small, of our smaller size of our pipeline. They've always been at a lower metric. When you get into the, you know, over $20 million, over $50 million in revenue organizations, those are the ones that try to peg pricing to public markets. Depending on what business mix is present within those organizations, you might see some softening of the pricing valuations on the private transactions.

Speaker #5: It could have an impact on the larger size transactions . Multiples . When you when you bifurcate out the valuations of private transactions , organizations that are selling with less than a million of revenue really don't price correlate to public markets .

Speaker #5: And that's the vast majority of small of our smaller size of our of our pipeline . They've always been at a lower metric .

Speaker #5: When you get into the, you know, over $20 million, over $50 million of revenue organizations, those are the ones that try to peg pricing to public markets.

Speaker #5: And depending on what business mix is present within those organizations, you might see some softening of the pricing valuations on the private transactions.

Gordy Bunch: Depending on what business mix is present within those organizations, you might see some softening of the pricing valuations on the private transactions.

Speaker #5: But the smaller , you know , vanilla normal course acquisitions , probably not going to see much of a shift downward as they already are significantly lower valued than the larger , more scaled operations .

Gordy Bunch: The smaller, you know, vanilla, normal course acquisitions, probably not going to see much of a shift downward as they already are significantly lower valued than the larger, more scaled operations.

Speaker #8: Great. Thank you so much.

Molly Knoll ): Great. Thank you so much.

Speaker #1: Your next question comes from Roland Mayer from RBC Capital Markets . Please go ahead .

Operator: Your next question comes from Rowland Mayor, from RBC Capital Markets. Please go ahead.

Speaker #9: Hi . Good morning . I appreciate the AI comments . I wanted to ask just one more on it since everybody's favorite two letters .

Rowland Mayor: Hi, good morning. I appreciate the AI comments. I wanted to ask just one more on it. It's everybody's favorite two letters. Do you think it accelerates the migration out of captive agents? Is that a growth tailwind agency or M&A, or how are you thinking about that?

Rowland Savage: Hi, good morning. I appreciate the AI comments. I wanted to ask just one more on it. It's everybody's favorite two letters. Do you think it accelerates the migration out of captive agents? Is that a growth tailwind agency or M&A, or how are you thinking about that?

Speaker #9: Do you think it accelerates a migration out of captive agents and is that a growth tailwind agency or M&A or how are you thinking about that ?

Speaker #5: I think it can, especially when a captive agent is looking to make that career transition to independent agencies, as they think about how complex that is going to be to land on a solid footing in an industry that has some shifting ground.

Gordy Bunch: I think it can, especially when a captive agent is looking to make that career transition to independent agencies, as they think about how complex that is going to be to land on a solid footing in an industry that has some shifting ground. If someone leaves a captive carrier, they're currently dependent on that carrier for all their technology, training, and support. If you are going into a new environment where the technology is evolving, you know, in real time, and they need to start making those decisions on how do they reestablish themselves, I think an organization like ours is best positioned to capture that migration, and that we have the infrastructure, the technology, the future technology, the training and support, and the markets they're going to need to be competitive in their marketplace.

Speaker #5: And so if someone leaves a captive carrier , they're currently dependent on that carrier for all their technology training and support . And if you are going into a new environment where the technology is evolving , you know , in real time and they need to start making those decisions on how do they reestablish themselves .

Gordy Bunch: If you are going into a new environment where the technology is evolving, you know, in real time, and they need to start making those decisions on how do they reestablish themselves, I think an organization like ours is best positioned to capture that migration, and that we have the infrastructure, the technology, the future technology, the training and support, and the markets they're going to need to be competitive in their marketplace.

Speaker #5: I think an organization like ours is best positioned to capture that migration and that we have the infrastructure , the technology , the future technology , the training and support the markets they're going to need to be competitive in their marketplace .

Gordy Bunch: I do think we will be a net beneficiary of additional migration. That's not just isolated to captive agents. As I mentioned earlier on the call, 38,000 independent agencies are subscale. Meaning they have less than a revenue, they have less than $1 million of revenue, and I think the vast majority of them have less than half a million dollars of revenue. Those smaller, less scaled independent agencies have probably 70% less market access than our agents have. As they, you know, are out there on their island, many of those are going to start having to consider how do they get to the next inflection point of insurance distribution, that's where we are.

Speaker #5: I do think we will be a net beneficiary of additional migration , and that's not just isolated to captive agents . As I mentioned earlier on the call , 38,000 independent agencies are subscale , meaning they have less than a revenue , they have less than $1 million of revenue .

Speaker #5: And I think the vast majority of them have less than half $1 million of revenue . Those smaller , less scaled independent agencies have probably 70% less market access than our agents have .

Speaker #5: And as they , you know , are out there on their island , many of those are going to start having to consider , how do they get to the next inflection point in insurance distribution .

Gordy Bunch: As they, you know, are out there on their island, many of those are going to start having to consider how do they get to the next inflection point of insurance distribution, that's where we are.

Speaker #5: And that's where we are . And I think we'll find more converting into our business model that already exists in the independent channel .

Gordy Bunch: I think we'll find more converting into our business model that already exists in the independent channel, going into that agency in a box model where they can gain immediate scale, improvement in technology, and the support they don't get when they're operating as a truly independent agency.

Speaker #5: Going into that agency in a box model where they can gain immediate scale and improvement in technology and the support , they don't get when they're operating as a truly independent agency

Speaker #9: Thank you . That's super helpful . I wanted to ask on the margin projection . It's down year over year . How much of that is the growth investments and then how much is just difficult , contingent comps ?

Rowland Mayor: Thank you. That's super helpful. I wanted to ask on the margin projection. It's down year-over-year. How much of that is the growth investments, and then how much is just difficult contingent comps? Do the growth investments kind of continue through 2027?

Rowland Savage: Thank you. That's super helpful. I wanted to ask on the margin projection. It's down year-over-year. How much of that is the growth investments, and then how much is just difficult contingent comps? Do the growth investments kind of continue through 2027?

Speaker #9: And do the growth investments kind of continue through '27?

Speaker #5: I'm going to say it's a blend . Part of it is we're , you know , in our full second year as a public company , we have five years to get to full compliance .

Gordy Bunch: I'm going to say it's a blend. Part of it is we're, you know, in our full second year as a public company, we have 5 years to get to full SOC compliance. We're onboarding and creating those internal audit infrastructure teams that are not required today, but will be tomorrow. Some of that's just public company expense flowing through as we continue to get towards that compliance timeline. Some of it is investment in, in technology and infrastructure. The, the third point to your point is, where do contingencies go in 26? I do think we are hedging on contingencies in our projections to make sure that, you know, we had a great outcome in 25.

Gordy Bunch: I'm going to say it's a blend. Part of it is we're, you know, in our full second year as a public company, we have five years to get to full SOC compliance. We're onboarding and creating those internal audit infrastructure teams that are not required today, but will be tomorrow. Some of that's just public company expense flowing through as we continue to get towards that compliance timeline. Some of it is investment in, in technology and infrastructure.

Speaker #5: We're onboarding and creating those internal audit infrastructure teams that are not required today , but will be tomorrow . So some of that's just public company expense flowing through as we continue to get towards that compliance timeline .

Speaker #5: Some of it is investment in technology and infrastructure . And then the third point to your point is we're two contingencies . Go in 26 .

Gordy Bunch: The, the third point to your point is, where do contingencies go in 26? I do think we are hedging on contingencies in our projections to make sure that, you know, we had a great outcome in 25.

Speaker #5: So I do think we are hedging on contingencies in our projections to make sure that , you know , we had a great outcome in 25 .

Speaker #5: That was at the tail of an increased rate environment. Historically, a profitable outcome for the majority of our partners. A non-significant cat event.

Gordy Bunch: That was at the tail of a increased rate environment, historically profitable outcome for the majority of our partners. A non-significant CAT event, you know, California wildfires early in 2025. I think it would be foolish for us to project same and similar outcomes in 2026. We are hedging a little bit on the contingency side, understanding that in a rate declining environment, everybody's signaling growth. There should probably be some loss ratio degradation in 2026 that could lower the metrics of the payouts and related to that profit sharing.

Speaker #5: You know , ex California wildfires early in 25 . I think it would be foolish for us to project same and similar outcomes in 26 .

Speaker #5: So we are hedging a little bit on the contingency side , understanding that in a rate declining environment , everybody signaling growth , there should probably be some loss ratio degradation in 26 that could lower the metrics of the payouts and related to that profit sharing .

Speaker #9: I appreciate that . And if I could sneak in just one more , I know that the agency box margin is kind of capped around 20% just based on the revenue recognition .

Rowland Mayor: I appreciate that. If I could sneak in just one more. I know that the agency box margin is kind of capped around 20%, just based on the revenue recognition. What is the margin profile of the corporate and MGA business? Is that an opportunity as we mix towards those to expand long term?

Rowland Savage: I appreciate that. If I could sneak in just one more. I know that the agency box margin is kind of capped around 20%, just based on the revenue recognition. What is the margin profile of the corporate and MGA business? Is that an opportunity as we mix towards those to expand long term?

Speaker #9: But what is the margin profile of the Corporate and MX business, and is that an opportunity if we mix towards those to expand long term?

Speaker #5: That is correct . Our corporate stores run between 30 and 40% margin . So probably averages out with contingency around

Gordy Bunch: That is correct. Our corporate stores run between 30% and 40% margined, so probably averages out with contingency to around-.

[Company Representative] (TWFG): Thirty-five.

[Company Representative] (TWFG): 35.

Speaker #10: Retention .

Speaker #5: It's just asking specifically about the different buckets . So when when you get down to a corporate locations they're going to run 30 to 40% margins .

Gordy Bunch: He's just asking specifically about the bucket.

[Company Representative] (TWFG): Oh.

Gordy Bunch: When you get down to the corporate locations, they're going to run 30% to 40% margins. That'll blend into around 35%. That's including contingent. MGA, it depends on the program. Programs that are in early stages don't produce any margin because they're, you know, getting through the development costs and expenses. As they mature, they'll run anywhere between 35% to 50% margins.

Gordy Bunch: When you get down to the corporate locations, they're going to run 30%-40% margins. That'll blend into around 35%. That's including contingent. MGA, it depends on the program. Programs that are in early stages don't produce any margin because they're, you know, getting through the development costs and expenses. As they mature, they'll run anywhere between 35%-50% margins.

Speaker #5: That'll blend into around 35% . That's including contingent MGA . It depends on the program . Programs that are in early stages don't produce any margin because they're , you know , getting through their development costs and expenses .

Speaker #5: But as they mature , they'll run anywhere between 35 to 50% margins . So yes , as we continue to grow corporate locations , as we continue to grow , mga , we will get benefit on consolidated margin expansion agency in the box itself as it grows .

[Company Representative] (TWFG): Mm-hmm.

Gordy Bunch: Yes, as we continue to grow corporate locations, as we continue to grow MGA, we will get benefit on consolidated margin expansion. Agency in the box itself, as it grows, that volume does contribute to the contingent side of the equation, so they can help push up margin as well as they continue to grow. We did announce, you know, two transactions that are closing, essentially coming on board next week. One of those is an MGA. As that specialty MGA comes into the fold, that will be beneficial to us as we continue to expand new product, new distribution, in that, in that platform, as well as our existing MGAs, programs are also continuously expanding. Yes, there's margin expansion upside based on the mix, coming through MGA, coming through corporate stores.

Speaker #5: That volume does contribute to the contingent side of the equation . So they can help push up margin as well as they continue to grow .

Speaker #5: We did announce two transactions that are closing , essentially coming on board next week . One of those is an MGA and as that specialty MGA comes into the fold , that will be beneficial to us as we continue to expand new product , new distribution .

Gordy Bunch: One of those is an MGA. As that specialty MGA comes into the fold, that will be beneficial to us as we continue to expand new product, new distribution, in that, in that platform, as well as our existing MGAs, programs are also continuously expanding. Yes, there's margin expansion upside based on the mix, coming through MGA, coming through corporate stores.

Speaker #5: In that in that platform , as well as our existing Mgas programs are also continuously expanding . So , yes , there's margin expansion upside based on the mix coming through MGA , coming through corporate stores .

Gordy Bunch: I think when you look at it, the guide we gave is our view. There is some conservatism in it around contingencies, and I think that's prudent, just given we can all see the price or the filings going in with rate reductions, and that invariably is going to hit combined ratios and loss ratios that are, in some cases, factors in our payouts.

Speaker #5: And so I think when you look at it , the guide we gave is our view . There is some conservatism in it around contingencies .

Speaker #5: And I think that's prudent, just given we can all see the price or the filings going in with rate reductions. And that, invariably, is going to hit combined ratios and loss ratios that are, in some cases, factors in our payouts.

Speaker #9: That's very helpful . Thank you for the answers

Rowland Mayor: That's very helpful. Thank you for the answers.

Rowland Savage: That's very helpful. Thank you for the answers.

Speaker #1: And your next question comes from Pablo Singson from JP Morgan . Please go ahead .

Operator: Your next question comes from Pablo Singzon from JP Morgan. Please go ahead.

Speaker #11: Hi . Good morning . So I guess there are many angles to the AI questions for personal lines . Right ? So if we put aside the debate on first consumer adoption and I guess second , the replaceability of advice provided by agents , which I take from your comments , you think will swing in favor of agents ultimately , I'd be interested to hear your views on why insurers may or may not want to participate in something like a price comparison platform , right ?

Pablo Singzon: Hi, good morning. I guess there are many angles to the AI question for personal lines, right? If we put aside the debate on first consumer adoption, I guess second, the replaceability of advice provided by agents, which I take from your comments, you think will swing in favor of agents ultimately. I'd be interested to hear your views on why insurers may or may not want to participate in something like a price comparison platform, right? That, yeah, you can scrape and optimize. It seems to me that's sort of what people have in mind when they think about the AI threat. I think there have been instances in the past where insurers might, at least in the US, have shown a lack of willingness to join such platforms.

Speaker #11: That I can scrape and optimize. It seems to me that’s sort of what people have in mind when they think about the AI threat.

Pablo Singzon: That, yeah, you can scrape and optimize. It seems to me that's sort of what people have in mind when they think about the AI threat. I think there have been instances in the past where insurers might, at least in the US, have shown a lack of willingness to join such platforms.

Speaker #11: And I think there have been instances in the past where insurers might, at least in the U.S., have shown a lack of willingness to join such platforms.

Speaker #11: So anyway , your thoughts there , Jordi . I'd be interested in hearing . Thanks .

Pablo Singzon: Anyway, your thoughts there, Gordie, I'd be interested in hearing. Thanks.

Speaker #5: Yeah , great question Pablo . And let me , let me . I'm going to kind of go a little deeper into the subject .

Gordy Bunch: Yeah, great question, Pablo. Let me kind of go a little deeper into the subject. Pre-February's announcement, everybody knew direct-to-consumer channels existed. A lot of that was derived through SEO. SEO being the historical, you know, Google searches, and that's how people would find comparative rating sites. That comparative rating experience had various feelings or outcomes. Many of the SEO generative compare your insurance rates were really just lead gen companies that then turned around and sold all your proprietary data off to every Tom, Dick, and Harry carrier and insurance agent that was willing to buy the information you voluntarily entered into a search engine and, or a comparative rating site. People have been bombarded with, you know, marketing post those experiences. They didn't necessarily get great results from that experience.

Speaker #5: 3rd February is announcement . Everybody new direct to consumer channels existed . A lot of that was derived through SEO SEO being the historical Google searches .

Speaker #5: And that's how people would find comparative rating sites that comparative rating experience had various feelings or outcomes . Many of the SEO generative compare your insurance rates were really just lead gen companies that then turned around and sold all your proprietary data off to every Tom , Dick and Harry carrier and insurance agent that was willing to buy the information you voluntarily entered into a search engine and or comparative rating site .

Gordy Bunch: Many of the SEO generative compare your insurance rates were really just lead gen companies that then turned around and sold all your proprietary data off to every Tom, Dickson, and Harry carrier and insurance agent that was willing to buy the information you voluntarily entered into a search engine and, or a comparative rating site. People have been bombarded with, you know, marketing post those experiences. They didn't necessarily get great results from that experience.

Speaker #5: So people have been bombarded with , you know , marketing post those experiences . They didn't necessarily get great results from that experience .

Speaker #5: Those that end up on a direct to consumer carrier site probably are getting a better experience because they're getting actual bindable rates from the capacity provider , but their limited in , you know , what they're going to present as far as coverage options and alternative carrier options that are price optimized going forward .

Gordy Bunch: Those that end up on a direct-to-consumer carrier site probably are getting a better experience because they're getting actual bindable rates from the capacity provider, but they're limited in, you know, what they're going to present as far as coverage options and alternative carrier options that are price optimized. Going forward, you have a period where you're going to have SEO, and SEO search is very expensive. We have looked at acquiring a number of digitally derived agencies over the last several years. Their acquisition cost for a customer as a retailer exceeded the commission received.

Speaker #5: You have a a period where you're going to have SEO and SEO search is very expensive . So we had looked at acquiring a number of digitally derived agencies over the last several years .

Speaker #5: There , acquisition costs for a customer as a retailer exceeded the commission received the retention rate of the customer derived digitally . Through that , SEO process , retained 50% less than the customer that was organically produced through relationships and centers of influence , and the loss ratios of those digitally produced customers were 20% higher and not accretive to the core portfolios .

Gordy Bunch: The retention rate of the customer derived digitally through that SEO process retained 50% less than the customer that it was organically produced through relationships and centers of influence, and the loss ratios of those digitally produced customers were 20% higher, and not accretive to the core portfolios. There's a qualitative reason why we're not chasing the digital customer, and/or why we didn't acquire any of the digital agencies that existed, that we could have. As we talk about forward, GEO is the new search, and that's what is inside of ChatGPT and other AI search, or, I don't know, AI engines. The AI search tool is looking for different components than what SEO searches were doing.

Speaker #5: So there's a there's a qualitative reason why we're not chasing the digital customer and or why we didn't acquire any of the digital agencies that that existed , that we could have as as we talk about Ford Geo is the new search , and that's what is inside of ChatGPT and other AI search or I don't know , AI engines .

Gordy Bunch: As we talk about forward, GEO is the new search, and that's what is inside of ChatGPT and other AI search, or, I don't know, AI engines. The AI search tool is looking for different components than what SEO searches were doing.

Speaker #5: And so, the AI search tool is looking for different components than what SEO searches were doing. So we're working on our digital footprint and making sure that we're optimizing our connection points.

Gordy Bunch: We're working on our digital footprint and making sure that we're optimizing our connection points, our collateral, our material, all the way down to each of our retail stores, to make sure that we are present in the SEO search and that we're present in the GEO search.

Speaker #5: Our collateral, our material all the way down to each of our retail stores, to make sure that we are present in the SEO search and that we're present in the search.

Speaker #5: That being said , we do not derive a significant amount of business from those activities , but you have to be there and you have to be present because , as I mentioned earlier , people will do a lot of online shopping and do a lot of online research , but then they want to select or a subset of them want to select a local advisor to finish out that transaction , provide advice before they bind , get recommendations for things they didn't think about , to ask questions on to make sure that they have better protection than they would have if they placed themselves Another thing I will say , Pablo , you asked about the hesitancy of the American culture to participate in online sales

Gordy Bunch: That being said, we do not derive a significant amount of business from those activities, but you have to be there, and you have to be present because, as I mentioned earlier, people will do a lot of online shopping and do a lot of online research, but then they want to select or a subset of them want to select a local advisor to finish out that transaction, provide advice before they bind, get recommendations for things they didn't think about, to ask questions on, to make sure that they have better protection than they would have if they placed it themselves. Another thing I will say, Pablo, you asked about the hesitancy of the American culture to participate in online sales.

Gordy Bunch: Another thing I will say, Pablo, you asked about the hesitancy of the American culture to participate in online sales.

Pablo Singzon: Yeah, sorry, just it was, it was more of the insurance companies, right? The adoption, I guess, it's an open question, but I mean, insurance companies like, think of brand names like Progressive or so, right? I suppose in theory, they could have sort of like started selling directly in these price comparison platforms and all the, you know, the links established and the ability to bind, right? And obviously, it's not there, right? I guess the question is, do you think that changes even if the, you know, the platform is, I guess, more intelligent now with AI or not, right? I'm just interested here.

Speaker #11: It was it was more of the insurance companies . Right , because the adoption , I guess it's an open question , but I mean , insurance companies like think of brand names like progressive or so on .

Speaker #11: Right? Because I suppose in theory they could have sort of, like, started selling directly in these price comparison platforms and all the, you know, all the links established and ability to bind, right.

Speaker #11: And obviously it's not there . Right ? So I guess the question is , do you think that changes even if the , you know , the platform is I guess , more intelligent now it's AI or not , right ?

Speaker #11: I'm just interested to hear because clearly here it seems like there's a hesitancy for major insurers to be in some platform where they can be priced compared and optimized against each other and so on .

Gordy Bunch: Sure.

Pablo Singzon: Clearly here, it seems like there's a hesitancy for major insurers to be on some platform where they can be price compared and optimized against each other and so on. Just your thoughts there?

Speaker #11: So, just your thoughts there.

Speaker #5: Yeah , so , so think about the fact that if the if the loss ratio is derived from digital derived customers today are higher and significantly higher than the business that is , you know , field underwritten by an independent insurance agent , their acquisition cost of that digital customer has to be so much better that , you know , that makes sense for them to continue to put their capacity at risk for a lower combined rate or for a higher combined ratio .

Gordy Bunch: Yeah. Think about the fact that if the loss ratios derived from digitally derived customers today are higher and significantly higher than the business that is, you know, field underwritten by an independent insurance agent, their acquisition cost of that digital customer has to be so much better that, you know, that makes sense for them to continue to put their capacity at risk for a lower combined rate or for a higher combined ratio. If you think about Progressive, GEICO, the top two direct-to-consumer customer or platforms, they both have a significant investment in independent agency distribution. You know, Progressive has long had a dual-channel approach. GEICO, up until the very tail end of 2024, never had independent agents. This is, you know, Berkshire Hathaway. They have all the capital and resources and...

Speaker #5: If you think about progressive Geico , the top two direct to consumer customer are platforms . They both have a significant investment in independent agency distribution .

Gordy Bunch: You know, Progressive has long had a dual-channel approach. GEICO, up until the very tail end of 2024, never had independent agents. This is, you know, Berkshire Hathaway. They have all the capital and resources and...

Speaker #5: You know , progressive has long had a dual channel approach . Geico up until the tail end of 2024 . Never had independent agents .

Speaker #5: This is , you know , Berkshire Hathaway . They have all the capital and resources and are some of the smartest people in the insurance sector .

Gordy Bunch: Are some of the smartest people in the insurance sector. They're leaning in on independent agencies. It would be a good question for them, you know, they saw this AI technology probably before, you know, anybody else, and they're still leaning in on expanding independent agencies across the United States because they understand, after operating direct-to-consumer for, you know, two decades, that customers at different life inflection points change their buying behavior. If you're a low liability auto customer who rents an apartment, your insurance needs aren't that complex. As you get married, buy a house, and now you have a significant investment and 30 years of debt, you want to make sure you have what you need on the property side. You now are going to start being talked to about life insurance to protect the mortgage expense.

Speaker #5: They're leaning in on independent agencies . It would be a good question for them is they saw this AI technology probably before , you know .

Speaker #5: Anybody else and they're still leaning in on expanding independent agencies across the United States because they understand after operating direct to consumer for two decades , that customers at different life inflection points change their their buying behavior .

Speaker #5: If you're a low liability auto customer who rents an apartment , your insurance needs aren't that complex . As you get married , buy a house , and now you have a significant investment in 30 years of debt , you want to make sure you have what you need on the property side .

Gordy Bunch: As you get married, buy a house, and now you have a significant investment and 30 years of debt, you want to make sure you have what you need on the property side. You now are going to start being talked to about life insurance to protect the mortgage expense.

Speaker #5: You now are going to start being talked to about life insurance to protect the mortgage expense. You're eventually going to have kids, and that's going to raise new concerns about liabilities and exposures.

Gordy Bunch: You're eventually going to have kids, and that's going to raise new concerns about liabilities and exposures. Someone buys a boat, gets a trailer, gets a jet ski, gets a four-wheeler, starts buying investment properties, has to have extended liability. I mean, there's all these things that expand a person's, you know, layers of insurance needs that happen over a course of a lifetime. I think even GEICO would tell you that they see that their customers end up with preferences at some point to exit the direct channel, and they want to have local advice and counsel, which is why I believe they leaned in on coming into the independent space.

Speaker #5: Someone buys a boat , gets a trailer , gets a jet ski , gets a four Wheeler , starts buying investment properties . Has to have extended liability .

Speaker #5: I mean , there's all these things that expand a person's , you know , layers of insurance needs that happen over the course of a lifetime .

Gordy Bunch: I think even GEICO would tell you that they see that their customers end up with preferences at some point to exit the direct channel, and they want to have local advice and counsel, which is why I believe they leaned in on coming into the independent space.

Speaker #5: So I think even Geico would tell you that they see that their customers end up with preferences at some point to exit the direct channel , and they want to have local advice and counsel , which is why I believe they leaned in on coming into the independent space .

Gordy Bunch: Maybe you didn't ask the questions, but I thought I heard it, and I'll say the hesitancy of the American culture to participate, and I know you said that was really more carrier-related. I just ask anybody on this call, who's going to go into ChatGPT right now and put in their Social Security number? Because most of our insurance products today are credit scored or insurance scored oriented, and in order to get an accurate comparative quote, you have to do that extra step. If the rate filings for the auto product, the homeowner's product, have a credit insurance score factor, that's the only way to get to ultimate accuracy. You know, even within an agency-derived comparative environment, we can do comparative quotes with soft hits, but it won't be bindable, actual, final pricing until you get that last score hit.

Speaker #5: Maybe you didn't ask the question , but I thought I heard it and I'll say the hesitancy of the American culture to participate .

Speaker #5: And I know you said that was really more carrier related , but I just asked anybody on this call who's going to go into ChatGPT right now ?

Speaker #5: And put in their Social Security number Because most of our insurance products today are credit scores or insurance scored oriented . And in order to get an accurate comparative quote , you have to do that extra step .

Speaker #5: If the rate filings for the auto product , the homeowners product having a credit insurance score factor , that's the only way to get to ultimate accuracy .

Gordy Bunch: If the rate filings for the auto product, the homeowner's product, have a credit insurance score factor, that's the only way to get to ultimate accuracy. You know, even within an agency-derived comparative environment, we can do comparative quotes with soft hits, but it won't be bindable, actual, final pricing until you get that last score hit.

Speaker #5: You know , even within an agency derived comparative environment , we can do comparative quotes with soft hits , but it won't be findable .

Speaker #5: Actual final pricing until you get that last score hit . And I don't think a lot of people are there yet to put in that much of their information .

Gordy Bunch: I don't think a lot of people are there yet to put in that much of their information. We did have one of our agents go to one of the sites that was being announced. The experience, it wasn't awesome, and the amount of questions they were being asked, you know, drew fatigue. This is from an insurance professional just trying to see, well, what does the competition look like? We know it's going to evolve, we know it's going to improve, but like I mentioned earlier, we're going to be embracing all these changes, interpreting and integrating where it makes sense for us. On the property side, Pablo, there isn't one carrier that could take all the customers that came through an online funnel and provide them all with, you know, property insurance.

Speaker #5: We did have one of our agents go to one of the sites that was being announced . The experience . It wasn't awesome , and the amount of questions they were being asked , you know , drew fatigue .

Speaker #5: And this is from an insurance professional just trying to see , well , does the competition look like and we know it's going to evolve .

Speaker #5: We know it's going to improve . But like I mentioned earlier , we're going to be embracing all these changes , interpreting and integrating where it makes sense for us .

Speaker #5: And on the property side , Pablo , there isn't one carrier that could take all the customers that came through an online funnel and provide them all with property , insurance .

Gordy Bunch: On the property side, Pablo, there isn't one carrier that could take all the customers that came through an online funnel and provide them all with, you know, property insurance.

Speaker #5: The mere post-Hurricane Andrew 1993 . Everybody changed their underwriting criteria , started looking at PML probable maximum loss and exposure of aggregated property within specific geography to their balance sheet , and that enterprise risk management component of the property side is going to keep property highly fragmented .

Gordy Bunch: The mere, you know, post-Hurricane Andrew, 1993, everybody changed their underwriting criteria, started looking at PML, probable maximum loss, and exposure of aggregated property within specific geography to their balance sheet. That enterprise risk management component of the property side is going to keep property highly fragmented. Even the carriers that do write auto direct and do it well, they're going to have to have others supplement the property offerings, in order to be able to do bundling with customers. There's just not a lot of property carriers that are going to provide their capacity in that, in that environment. At least I haven't seen there to be a plethora of them doing it today.

Speaker #5: So even the carriers that do right auto direct and do it well , they're going to have to have supplement the property offerings in order to be able to do bundling with customers .

Speaker #5: And there's just not a lot of property Carriers that are going to provide their capacity in that , in that environment , at least I haven't seen there to be a plethora of them doing it today

Gordy Bunch: There's just not a lot of property carriers that are going to provide their capacity in that, in that environment. At least I haven't seen there to be a plethora of them doing it today.

Speaker #11: Thanks, Gordon. I think that was worth a few questions. Thank you.

Pablo Singzon: Thanks, Gordie. I think that was worth two questions. Thank you.

Speaker #12: Okay

Gordy Bunch: Okay.

Speaker #1: There are no further questions at this time . And now I would like to turn the call back over to Gordy Bunch for the closing remarks .

Operator: There are no further questions at this time. Now, I would like to turn the call back over to Gordy Bunch for the closing remarks. Please go ahead.

Speaker #1: Please go ahead .

Speaker #5: Thank you . Operator . And thank you to everyone who attended today's calls . I appreciate all your thoughtful questions . Want to reiterate that , you know , we are a we have a balance of a fortress of a fortress balance sheet in our possession .

Gordy Bunch: Thank you, operator, thank you to everyone who attended today's calls. I appreciate all your thoughtful questions. Want to reiterate that, you know, we have a fortress balance sheet in our possession. We are not levered. We have cash on hand, undrawn credit facilities, a great M&A pipeline, a disciplined M&A pipeline, looking to transact on accretive, quality sub-acquisitions. Our core business, outside of recent acquisitions, still projecting that low double-digit organic growth. We see, you know, decades in our future to get into the, you know, $497 billion of personal lines market share that we don't currently possess, the half a trillion in commercial lines that we can continue to expand into. We see tailwinds coming out of 2025, going into 2026.

Speaker #5: We are we are not levered . We have cash on hand , undrawn credit facilities , a great M&A pipeline , a disciplined M&A pipeline looking to transact on accretive quality sub acquisitions .

Speaker #5: Our core business outside of recent acquisitions , still projecting that low double digit organic growth . We see , you know , decades in our future to get into the , you 497 billion of personal lines market share that we don't currently possess .

Gordy Bunch: We see, you know, decades in our future to get into the, you know, $497 billion of personal lines market share that we don't currently possess, the half a trillion in commercial lines that we can continue to expand into. We see tailwinds coming out of 2025, going into 2026.

Speaker #5: The half a trillion in commercial lines that we can continue to expand into. We see tailwinds coming out of '25 going into '26. We appreciate all your thoughtful questions, and we look forward to delivering for our shareholders throughout the year.

Gordy Bunch: We appreciate all your thoughtful questions, and we look forward to delivering for our shareholders throughout the year. Thank you.

Q4 2025 TWFG Inc Earnings Call

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