Q1 2026 TWFG Inc Earnings Call

May 7, 2026

Operator 2: Good morning. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the TWFG First Quarter 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then one on your telephone keypad. If you would like to withdraw your question, please press star then one again. This call is being recorded and will be available for replay on the company's website. Before we begin, let me remind you that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

Operator: Good morning. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the TWFG First Quarter 2026 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then one on your telephone keypad. If you would like to withdraw your question, please press star then one again. This call is being recorded and will be available for replay on the company's website. Before we begin, let me remind you that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings.

Speaker #3: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then one on your telephone keypad.

Speaker #3: If you would like to withdraw your question, please press star, then one again. This call is being recorded and will be available for replay on the company's website.

Speaker #3: 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.

Speaker #3: Also on calls today, our speakers will reference certain non-GAAP financial measures. Which we believe will provide useful information for investors. The company has posted the reconciliations of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the investor section of the company's website at www.twfg.com.

Operator 2: Also on calls today, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. The company has posted the reconciliations of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the investor section of the company's website at www.twfg.com. It is now my pleasure to introduce Mr. Gordy Bunch, Founder, Chairman, and CEO of TWFG. Sir, the floor is yours.

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

Speaker #3: It is now my pleasure to introduce Mr. Gordy Bunch, founder, chairman, and CEO of TWFG. Sir, the floor is yours.

Speaker #2: Thank you and good afternoon, everyone. Thank you for joining us today to discuss TWFG's first quarter 2026 today's call is Janice Zwinggi, our chief financial officer.

Gordy Bunch: Thank you. Good afternoon, everyone. Thank you for joining us today to discuss TWFG's Q1 2026 results. Joining me on today's call is Janice Zwinggi, our Chief Financial Officer. After my remarks, Janice will walk through our financial performances in more detail. We'll open the call for questions. I am pleased to report that TWFG delivered a strong Q1 that demonstrates the underlying strength and scalability of our platform. Our results reflect a softening market environment, continued disciplined execution across our businesses, and the benefits of our strategic investments in technology, our new MGA programs, and our talent acquisition. For Q1 2026, we delivered a solid 35.3% revenue growth, driven by a combination of double-digit organic growth and contributions from our prior and current year acquisitions. This growth reflects momentum across both our insurance services and MGA platforms.

Speaker #2: After my remarks, Janice will walk through our financial performances in more detail. And then we'll open the call for questions. I am pleased to report that TWFG delivered a strong first quarter that demonstrates the underlying strength and scalability of our platform.

Speaker #2: Our results reflect a softening market environment, continued discipline execution across our businesses, and the benefits of our strategic investments in technology, our new MGA programs, and our talent acquisition.

Speaker #2: For the first quarter 2026, we delivered a solid 35.3% revenue growth. Driven by a combination of double-digit organic growth and contributions from our prior and current-year acquisitions.

Speaker #2: This growth reflects momentum across both our insurance services and MGA platforms. Written premiums grew 23.5%, with strong performances in renewal retention and new business growth.

Gordy Bunch: Written premiums grew 23.5%, with strong performances in renewal retention and new business growth. From a profitability perspective, we delivered 650 basis points margin expansion. This expansion reflects our operating leverage, higher margin profile of our MGA platform, and disciplined execution on integration of our recent acquisitions. There are near-term margin benefits with TWFG MGA Florida takeout program during the runoff period, where policies assumed have a commission without a corresponding commission expense. This margin benefit will decline as more takeout policies renew with new full-term premiums and a normal commission expense. The market has improved meaningfully compared to a year ago. Carriers have re-entered key personal and commercial markets where capacity had been constrained. Pricing trends are moderating and underwriting discipline remains strong across the industry. This creates an ideal environment for a diversified platform like ours to expand.

Speaker #2: From a profitability perspective, we delivered 650 basis points margin expansions. This expansion reflects our operating leverage, higher margin profile of MGA platform, and discipline execution on integration of our recent acquisitions.

Speaker #2: There are near-term margin benefits with TWFG MGA Florida. Takeout program during the runoff period, where policies assumed have the commission without a corresponding commission expense.

Speaker #2: This margin benefit will decline as more takeout policies renew with new full-term premiums and a normal commission expense. The market has improved meaningfully compared to a year ago.

Speaker #2: Carriers have re-entered key personal and commercial lines markets where capacity had been constrained. Pricing trends are moderating, and underwriting discipline remains a strong across the industry.

Speaker #2: This creates an ideal environment for a diversified platform like ours to expand. Our business model spanning retail agencies, corporate branches, and proprietary MGA programs is uniquely positioned to capitalize on these dynamics.

Gordy Bunch: Our business model, spanning retail agencies, corporate branches, and proprietary MGA programs, is uniquely positioned to capitalize on these dynamics. Whether in a hard or soft market cycle, our independent agent network provides stable, recurring revenue and deep carrier and client relationships, creating a competitive advantage difficult to replicate. Our strategy remains consistent and disciplined. We're executing across 4 core priorities to deliver double-digit organic growth, execute accretive M&A, investing in technology and platform improvements for our agents' productivity, deploying capital with discipline across all these investments. On the acquisition front, we completed 2 strategically important transactions in Q1. In March, we acquired Lofton Wells Insurance, which became a corporate location in Memphis, Tennessee. This addition provides scale to our Tennessee operations and positions us in a region with significant long-term growth opportunities.

Gordy Bunch: Our business model, spanning retail agencies, corporate branches, and proprietary MGA programs, is uniquely positioned to capitalize on these dynamics. Whether in a hard or soft market cycle, our independent agent network provides stable, recurring revenue and deep carrier and client relationships, creating a competitive advantage difficult to replicate. Our strategy remains consistent and disciplined. We're executing across four core priorities to deliver double-digit organic growth, execute accretive M&A, investing in technology and platform improvements for our agents' productivity, deploying capital with discipline across all these investments. On the acquisition front, we completed two strategically important transactions in Q1. In March, we acquired Lofton Wells Insurance, which became a corporate location in Memphis, Tennessee. This addition provides scale to our Tennessee operations and positions us in a region with significant long-term growth opportunities.

Speaker #2: Whether in a hard or soft market cycle, our independent agent network provides stable, recurring revenue, and deep carrier and client relationships, creating a competitive advantage difficult to replicate.

Speaker #2: Our strategy remains consistent and disciplined. We're executing across four core priorities to deliver double-digit organic growth, execute a creative M&A, investing in technology, and platform improvements for our agents' productivity.

Speaker #2: Deploying capital with discipline across all these investments. On the acquisition front, we completed two strategically important transactions in the first quarter. In March, we acquired Lopton Wells Insurance, which became a corporate location in Memphis, Tennessee.

Speaker #2: This addition provides scale to our Tennessee operations and positions us in a region with significant long-term growth opportunities. We also completed the acquisition of asset protection insurance associates, a Texas-based MGA specializing in insurance solutions for property owners and real estate investors across the United States.

Gordy Bunch: We also completed the acquisition of Asset Protection Insurance Associates, a Texas-based MGA specializing in insurance solutions for property owners and real estate investors across the United States. APIA brings deep underwriting expertise and expanded distribution network and access to additional program opportunities. This enhances our MGA's capabilities and supports continued margin expansion. Last week, we closed on the acquisition of Fortress Insurance Services out of Iowa, establishing another foothold agency in the Midwest. From a technology standpoint, we continue to prioritize investments that make our platforms more efficient and our clients better served. Our proprietary technology remains a competitive advantage, allowing us to rapidly develop and implement new capabilities, whether built internally or integrated with best-in-class third-party solutions. Our capital position remains solid, providing significant flexibility to invest in growth and pursue strategic opportunities.

Speaker #2: APIA brings deep underwriting expertise and expanded distribution network and access to additional program opportunities. This enhances our MGA's capabilities and supports continued margin expansion.

Speaker #2: And last week, we closed on the acquisition of Fortress Insurance Services out of Iowa. Establishing another foothold agency in the Midwest. From a technology standpoint, we continue to prioritize investments that make our platforms more efficient and our clients better served.

Speaker #2: Our proprietary technology remains a competitive advantage. Allowing us to rapidly develop and implement new capabilities whether built internally or integrated with best-in-class third-party solutions.

Speaker #2: Our capital position remains solid, providing significant flexibility to invest in growth and pursue strategic opportunities. Before turning to Janice, I want to address the topic of AI.

Gordy Bunch: Before turning to Janice, I want to address the topic of AI becoming a central conversation in our industry's future. AI, if you look at the SEC filings across insurance brokers over the past 5 years, is an increasing reference in everybody's earning releases and conversations. Machine learning mentions have increased tenfold in that time span. Not by accident, the industry is embracing the change and many people have questions on how AI matters. It does matter, and it will have an impact on the industry. It's whether your company is positioned to harness it strategically and implement it in a way that is beneficial across your distribution and your platforms. Last quarter, we shared our perspective that AI will improve the independent distribution channel for those that can embrace and implement the technology.

Gordy Bunch: Before turning to Janice, I want to address the topic of AI becoming a central conversation in our industry's future. AI, if you look at the SEC filings across insurance brokers over the past five years, is an increasing reference in everybody's earning releases and conversations. Machine learning mentions have increased tenfold in that time span. Not by accident, the industry is embracing the change and many people have questions on how AI matters. It does matter, and it will have an impact on the industry. It's whether your company is positioned to harness it strategically and implement it in a way that is beneficial across your distribution and your platforms. Last quarter, we shared our perspective that AI will improve the independent distribution channel for those that can embrace and implement the technology.

Speaker #2: Becoming a central conversation in our industry's future. AI, if you look at the SEC filings across insurance brokers over the past five years, is an increasing reference in everybody's earning releases and conversations.

Speaker #2: Machine learning mentions have increased tenfold in that time span. Not by accident, the industry is embracing the change and many people have questions on how AI matters.

Speaker #2: It does matter, and it will have an impact on the industry. It's whether your company is positioned to harness its strategically and implement it in a way that is beneficial across your distribution and your platforms.

Speaker #2: Last quarter, we shared our perspective that AI will improve the independent distribution channel for those that can embrace and implement the technology. Today, I want to update you on our progress, on why we believe TWFG is best positioned as a net beneficiary of this evolution.

Gordy Bunch: Today, I want to update you on our progress on why we believe TWFG is best positioned as a net beneficiary of this evolution. We've made significant investments in AI leadership and capabilities. Over the past year, we appointed a chief technology officer focused specifically on AI strategy, cloud architecture, and platform modernization. We've grown our technology team to 44 dedicated professionals, software engineers, infrastructure specialists, and product developers, representing a third of our non-sales corporate employee base. Critically, we are investing in proprietary AI solutions that embedded with our 25 years of underwriting knowledge and data assets. We are deploying AI tools like Claude to make each engineer more productive, and we are being intentional about how we deploy engineering talent towards revenue generation and competitive advantage, creating efficiencies, not just a cost reduction. We do have competitive advantages in AI space. First, proprietary data.

Speaker #2: We've made significant investments in AI leadership and capabilities. Over the past year, we appointed a chief technology officer focused specifically on AI strategy. Cloud architecture and platform modernization.

Speaker #2: We've grown our technology team to 44 dedicated professionals, software engineers, infrastructure specialists, and product developers. Representing a third of our non-sales corporate employee base.

Speaker #2: Critically, we are investing in proprietary AI solutions that embedded with our 25 years of underwriting knowledge and data assets we are deploying AI tools like Claude to make each engineer more productive, and we are being intentional about how we deploy engineering talent.

Speaker #2: Towards revenue generation and competitive advantage creating efficiencies not just a cost reduction. We do have competitive advantages in AI space. First, proprietary data. Our MGA and agency platforms have accumulated millions of underwriting data points and decisions over the past 25 years.

Gordy Bunch: Our MGA and agency platforms have accumulated millions of underwriting data points and decisions over the past 25 years. In an AI-driven environment, that data becomes more valuable, not less. It creates a structural competitive moat difficult for competitors to repeat. Second, we own our technology. We build and control our core platforms. This means we're not dependent on third-party vendors or constrained by standardized solutions. When new AI capabilities emerge, we can integrate them quickly or build them ourselves. That flexibility is a genuine competitive advantage. Third, balanced deployment. Unlike others pursuing pure automation, we are deploying AI to amplify what our people do best. For our agents, AI accelerates quote turnaround time, automates routine account management, and identifies coverage gaps, bringing them to build relationships and provide trusted advice. For our underwriting teams, AI improves risk assessment, velocity of decision-making, and precision.

Speaker #2: In an AI-driven environment, that data becomes more valuable, not less. It creates a structural competitive moat difficult for competitors to repeat. Second, we own our technology.

Speaker #2: We build and control our core platforms; this means we're not dependent on third-party vendors or constrained by standardized solutions. When new AI capabilities emerge, we can integrate them quickly or build them ourselves.

Speaker #2: That flexibility is a genuine competitive advantage. Third, balanced deployment. Unlike others pursuing pure automation, we are deploying AI to amplify what our people do best.

Speaker #2: For our agents, AI accelerates quote turnaround time. Automates routine account management and identifies coverage gaps. Bringing them to build relationships and provide trusted advice.

Speaker #2: For our underwriting teams, AI improves risk assessment, velocity of decision-making, and precision. For our operations, it drives efficiencies that we expect will translate directly into margin expansion over time.

Gordy Bunch: For our operations, it drives efficiencies that we expect will translate directly into margin expansion over time. The enduring competitive advantage remains human expertise, community presence, and professional judgment. Our agents are embedded in their communities. They show up when clients face their most vulnerable moments, whether it's a catastrophic loss, a complex coverage question, or a claim dispute. We are at an inflection point. The companies that will dominate insurance distribution aren't those choosing between AI or human advisory. They're the ones integrating both strategically. TWFG owns our technology. We have deep insurance expertise, we have the financial resources to invest, and we have a cultural commitment to innovation that's been part of our DNA for 25 years.

Speaker #2: The enduring competitive advantage remains human expertise. Community presence and professional judgment. Our agents are embedded in their communities, they show up when clients face their most vulnerable moments, whether it's a catastrophic loss, a complex coverage question, or a claim dispute.

Speaker #2: We are in an inflection point. The companies that will dominate insurance distribution aren't those choosing between AI or human advisory. They're the ones integrating both strategically.

Gordy Bunch: They're the ones integrating both strategically. TWFG owns our technology. We have deep insurance expertise, we have the financial resources to invest, and we have a cultural commitment to innovation that's been part of our DNA for 25 years. We are positioned to be a net beneficiary of AI's continued evolution, and we're excited to demonstrate that to you at an upcoming Investor Day that we will host early in Q4. With that, I will now turn the call over to Janice to walk through the financial details.

Speaker #2: TWFG owns our technology. We have deep insurance expertise. We have the financial resources to invest. And we have a cultural commitment to innovation that's been part of our DNA for 25 years.

Speaker #2: We are positioned to be a net beneficiary of AI's continued evolution, and we're excited to demonstrate that to you at an upcoming investor day that we will host early in the fourth quarter.

Gordy Bunch: We are positioned to be a net beneficiary of AI's continued evolution, and we're excited to demonstrate that to you at an upcoming Investor Day that we will host early in Q4. With that, I will now turn the call over to Janice to walk through the financial details.

Speaker #2: With that, I will now turn the call over to Janice to walk through the financial details.

Speaker #1: Thank you, Gordy, and good afternoon, everyone. I am pleased to report the following first-quarter results, beginning with our top KPI: written premium. Total written premium grew $87 million, or 23.5%, to $458.2 million, with strong performances in renewal retention and new business growth.

Janice Zwinggi: Thank you, Gordy, and good afternoon, everyone. I am pleased to report the following Q1 results, beginning with our top KPI, written premium. Total written premium grew $87 million or 23.5% to $458.2 million, with strong performances in renewal retention and new business growth. We saw growth in renewals of $59 million or 21% and new business of $28 million or 31% growth with a consolidated retention of 92%. This growth was driven by our acquisition strategy, notably the acquisition of TWFG MGA Florida and several corporate store locations, combined with strong underlying organic growth.

Speaker #1: We saw growth in renewals of 59 million, or 21%, and new business of 28 million, or 31% growth, with a consolidated retention of 92%.

Speaker #1: This growth was driven by our acquisition strategy notably the acquisition of TWFG, MGA Florida, and several corporate store locations, combined with strong underlying organic growth.

Speaker #1: Looking at our primary offering components, insurance services grew 46 million, or 14.5%, and the MGA had exceptional growth of 41 million, or 77.3%, over the prior year period, primarily driven by the MGA Florida acquisition in the second quarter of last year.

Janice Zwinggi: Looking at our primary offering components, insurance services grew $46 million or 14.5%, and the MGA had exceptional growth of $41 million or 77.3% over the prior year period, primarily driven by the MGA Florida acquisition in the Q2 of last year. Retention remains solid at 92%, a testament to the strength of our client relationships. Excluding the impact of recent acquisitions and certain books of business sales, our underlying retention would have been approximately 88%, which is in line with our historical retention rate. Total revenues increased $19 million or 35.3% to $72.8 million, driven by a combination of organic revenue growth and strong contributions from our acquisitions.

Speaker #1: Retention remained solid at 92%, a testament to the strength of our client relationships. Excluding the impact of recent acquisitions and certain book of business sales, our underlying retention would have been approximately 88%, which is in line with our historical retention rate.

Speaker #1: Total revenues increased 19 million, or 35.3%, to 72.8 million, driven by a combination of organic revenue growth and strong contributions from our acquisitions. Commission income, which is our largest revenue component, grew 18.3 million, or 37.4%, to 67.1 million, reflecting expansion across both our insurance services and MGA platforms, supported by strong renewal and new business activity.

Janice Zwinggi: Commission income, which is our largest revenue component, grew $18.3 million or 37.4% to $67.1 million, reflecting expansion across both our insurance services and MGA platforms, supported by strong renewal and new business activity. Organic revenues reached $54.3 million, up $5 million from the prior year, representing an organic growth rate of 10.1%. This organic growth reflects solid momentum across both of our platforms, underpinned by accelerating new business production, improved carrier capacity, and a moderating rate environment. This growth demonstrates the underlying momentum of our core platforms independent of acquisition contributions. Moving to operating expenses, commission expense grew $5.2 million or 16.4% to $37 million, reflecting strong production growth while maintaining consistent commission ratios.

Speaker #1: Organic revenues reached 54.3 million, up 5 million from the prior year, representing an organic growth rate of 10.1%. This organic growth reflects solid momentum across both of our platforms, underpinned by accelerating new business production, improved carrier capacity, and a moderating rate environment.

Speaker #1: This growth demonstrates the underlying momentum of our core platforms independent of acquisition contributions. Moving to operating expenses, commission expense grew 5.2 million, or 16.4%, to 37 million, reflecting strong production growth while maintaining consistent commission ratios.

Speaker #1: Commission expense grew at a lesser degree as compared to commission income growth, due mainly to programs and corporate branches with zero or minimal commission expense.

Janice Zwinggi: Commission expense grew at a lesser degree as compared to commission income growth, due mainly to programs and corporate branches with zero or minimal commission expense. Salaries and employee benefits increased $1.7 million or 20.8% to $9.9 million, driven by headcount increases from acquisitions and corporate office investments to support long-term growth. Other administrative expenses increased $2.7 million or 56.4% to $7.4 million, primarily driven by our completed acquisitions and ongoing investments in our technology initiatives. Depreciation and amortization expense increased to $6.2 million, reflecting purchase accounting from our acquisitions. From a profitability and cash flow perspective, net income was up $6.2 million or 90.8% to $13.1 million, reflecting profitability on our core business growth and contributions from our acquisitions.

Speaker #1: Salaries and employee benefits increased 1.7 million, or 20.8%, to 9.9 million, driven by headcount increases from acquisitions and corporate office investments to support long-term growth.

Speaker #1: Other administrative expenses increased 2.7 million, or 56.4%, to 7.4 million, primarily driven by our completed acquisitions and ongoing investments in our technology initiatives. Depreciation and amortization expense increased to 6.2 million, reflecting purchase accounting from our acquisitions.

Speaker #1: From a profitability and cash flow perspective, net income was up 6.2 million, or 90.8%, to 13.1 million, reflecting profitability on our core business growth and contributions from our acquisitions.

Speaker #1: Our net income margin improved to 18%, up from 12.7% in the first quarter of 2025. Adjusted net income increased 75.2% to 16.2 million, with an adjusted net income margin of 22.2%, up from 17.1% in the first quarter of '25.

Janice Zwinggi: Our net income margin improved to 18%, up from 12.7% in Q1 2025. Adjusted net income increased 75.2% to $16.2 million with an adjusted net income margin of 22.2%, up from 17.1% in Q1 2025. Adjusted EBITDA grew 73.9% to $21.2 million, reflecting strong operating leverage across our platforms and the higher margin profile of our MGA operations. The adjusted EBITDA margin expanded significantly by 650 basis points to 29.1% compared to 22.6% in the prior year quarter. This quarter-over-quarter improvement was driven by the favorable revenue mix shift towards higher margin MGA business, continued cost discipline as we scale, and the accretive impact of our acquisitions.

Speaker #1: Adjusted EBITDA grew 73.9% to 21.2 million, reflecting strong operating leverage across our platforms and the higher margin profile of our MGA operations. The adjusted EBITDA margin expanded significantly by 650 basis points to 29.1% compared to 22.6% in the prior year quarter.

Speaker #1: This quarter over quarter improvement was driven by the favorable revenue mix shift towards higher margin MGA business, continued cost discipline as we scale, and the accretive impact of our acquisitions.

Speaker #1: From a cash perspective, cash flow from operating activities was 22.7 million, compared to 15.6 million in the prior year quarter. Adjusted free cash flow was 15.2 million, up from 13.6 million in the first quarter of 2025, driven by increased net income and strong working capital management.

Janice Zwinggi: From a cash perspective, cash flow from operating activities was $22.7 million compared to $15.6 million in the prior year quarter. Adjusted free cash flow was $15.2 million, up from $13.6 million in Q1 2025, driven by increased net income and strong working capital management. From a liquidity and capital resource perspective, our balance sheet remains strong. As of 31 March, we had $124.8 million in unrestricted cash and cash equivalents. We have full unused capacity on our $50 million revolving credit facility and only $3.5 million of term debt outstanding. On capital allocation, we remained disciplined. Our $50 million share repurchase program announced in February has progressed significantly.

Speaker #1: From a liquidity and capital resource perspective, our balance sheet remained strong. As of March 31st, we had 124.8 million in unrestricted cash and cash equivalents.

Speaker #1: We have full unused capacity on our 50 million revolving credit facility and only 3.5 million of term debt outstanding. On capital allocation, we remained disciplined.

Speaker #1: Our 50 million share repurchase program announced in February has progressed significantly. We repurchased 16.7 million through March 31st and have continued to be active in the market, bringing total repurchases to approximately 40 million as of today.

Janice Zwinggi: We repurchased $16.7 million through 31 March and have continued to be active in the market, bringing total repurchases to approximately $40 million as of today. We have $10 million remaining capacity under the program. With that, I will now turn it back to Gordy for closing remarks.

Speaker #1: We have 10 million remaining capacity under the program. And with that, I will now turn it back to Gori for closing remarks.

Speaker #2: Thank you, Janice. As we look back at the first quarter 2026, I am very pleased with our execution. Our team has delivered strong organic growth, meaningful margin expansion, and disciplined capital deployment.

Gordy Bunch: Thank you, Janice. As we look back at Q1 2026, I am very pleased with our execution. Our team has delivered strong organic growth, meaningful margin expansion, and disciplined capital deployment, all hallmarks of our business model. Particularly encouraging is that our success is not dependent on any single factor. Rather, it reflects the strength and resilience of our diversified platform. Our independent agent network continues to win market share. Our MGA platform is scaling efficiently while expanding margins. Our corporate branch model continues to demonstrate operational leverage, and our technology investments are making our agents more productive and our clients better served. We believe TWFG is uniquely positioned for sustained growth in the current environment. The insurance industry is more complex and fragmented than ever.

Speaker #2: All hallmarks of our business model. What's particularly encouraging is that our success is not dependent on any single factor. Rather, it reflects the strength and resilience of our diversified platform.

Speaker #2: Our independent agent network continues to win market share, our MGA platform is scaling it efficiently, while expanding margins. Our corporate branch model continues to demonstrate operational leverage, and our technology investments are making our agents more productive and our clients better served.

Speaker #2: We believe TWFG is uniquely positioned for sustained growth in the current environment. The insurance industry is more complex and fragmented than ever. Our agents provide trusted advice, deep carrier relationships, and local market expertise.

Gordy Bunch: Our agents provide trusted advice, deep carrier relationships, and local market expertise, attributes that become even more valuable as complexity increases. Our proprietary technology and data assets built over 25 years creates a competitive advantage that are difficult to replicate. Our cultural advantage, what we call the TWFG family, continues to drive employee engagement, agent loyalty, and client retention. Looking ahead, we are reaffirming our full year 2026 guidance. We expect total revenues to grow 15% to 20%, reaching $285 to 300 million. We anticipate organic revenue in the range of 10% to 15%, and we expect adjusted EBITDA margins to be in the range of 22% to 25%. Our Q1 results were consistent with these expectations.

Speaker #2: Attributes that become even more valuable as complexity increases. Our proprietary technology and data assets, built over 25 years, create a competitive advantage that our difficult to replicate.

Speaker #2: And our cultural advantage—what we call the TWFG family—continues to drive employee engagement, agent loyalty, and client retention. Looking ahead, we are reaffirming our full year 2026 guidance.

Speaker #2: We expect total revenues to grow 15 to 20 percent, reaching 285 to 300 million. We anticipate organic revenue in the range of 10 to 15 percent.

Speaker #2: And we expect adjusted EBITDA margins to be in the range of 22 to 25 percent. Our first quarter results were consistent with these expectations.

Speaker #2: We believe the strength of our organic growth engine continued momentum across both our agency and MGA platforms, and a favorable carrier environment support these targets.

Gordy Bunch: We believe the strength of our organic growth engine, continued momentum across both our agency and MGA platforms and a favorable carrier environment support these targets. In closing, I want to thank our employees, agents, carrier partners, and shareholders for their continued trust and commitment to TWFG. The years ahead will bring tremendous opportunities for all. With that, operator, please open the line for questions.

Speaker #2: In closing, I want to thank our employees, agents, carrier partners, and shareholders for their continued trust and commitment to TWFG. The years ahead will bring tremendous opportunities for all.

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

Speaker #3: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue.

Operator 2: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and 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 speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Paul Newsome with Piper Sandler. Your line is open.

Operator: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and 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 speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Paul Newsome with Piper Sandler. Your line is open.

Speaker #3: If you would like to withdraw your question, simply press *1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Speaker #3: Press *1 to join the queue. And our first question comes from the line of Paul Newsome with Piper Sander. Your line is open.

Paul Newsome: Good morning. I was wondering if you had any thoughts or about what could happen with your organic growth sort of over the course of the year. It came in at the low end of your guidance for this quarter. Doesn't mean it's gonna do that for the rest of the year. Is there anything that would suggest that this is not the right run rate for the rest of the year?

Speaker #4: Good morning. I was wondering if you had any thoughts or about what could happen with your organic growth sort of over the course of the year.

Speaker #4: It came in at the low end of your guidance this for this quarter. Doesn't mean it's going to do that for the rest of the year.

Speaker #4: But is there anything that would suggest that this is not the right run rate for the rest of the year?

Gordy Bunch: Good question, Paul. We know we have some structural tailwinds coming into Q2. That is informing our guidance on organic growth being that 10% to 15%. We should have outsized, or double-digit, high double-digit organic in Q2, given what we know that structural advantage has coming into Q2. The 10.1 is a good result for Q1, given the softening market and pricing and expanding beyond auto and its property. We feel very confident in the full guidance that we've provided, which is why we're reaffirming that 10% to 15%, knowing we've got good structural tailwinds for organic in Q2 and looking towards the back half, looking for that to continue.

Speaker #5: Yeah, good question, Paul. So we know we have some structural tailwinds coming into the second quarter. That is informing our guidance on organic growth being that 10 to 15 percent.

Speaker #5: We should have outsized or double-digit high double-digit organic in the second quarter. Given what we know that structural advantage has coming into the second quarter.

Speaker #5: The 10.1 is a good result for the first quarter, given the softening market and pricing and expanding beyond auto and its property. We feel very confident in the full guidance that we've provided.

Speaker #5: Which is why we're reaffirming that 10 to 15 percent, knowing we've got good structural tailwinds for organic in the second quarter. And looking towards the back half, looking for that to continue.

Speaker #4: This is a little bit more of a modeling question, but it's related to the organic piece that reconciles the biggest piece that reconciles your revenue growth with the organic growth is this acquisition adjustment number.

Paul Newsome: This is a little bit more of a modeling question, but it's related to the organic growth. The biggest piece that reconciles your revenue growth with the organic growth, is this acquisition adjustment number. It's been last couple of quarters, you know, you know, 10, 14-ish. At least my math suggests that that needs to drop off to reconcile what you, for the rest of the year to rec it to have sort of organic in your range, but also revenue in the range. Maybe I'm getting my math wrong, but is should that piece be dropping off given the acquisitions you've announced?

Speaker #4: And it's been the last couple of quarters 10, 14-ish. But at least by math suggests that that needs to drop off to reconcile what you for the rest of the year to have sort of organic in your range, but also revenue in the range.

Speaker #4: Maybe I'm getting my math wrong. But should that piece be dropping off, given the acquisitions you've announced?

Gordy Bunch: Acquisitions drop off after they've been in our operations for 12 months. There is that I think that's my point, organic adjustment where we're removing things that were not part of the prior 12-month organic calc and then adding back in plus their base from the prior year to reset how we do the organic calc. For those who are unfamiliar, anything we acquire, the first 12 months of operations of the acquired portfolio remains in an inorganic calculation. It's excluded from our 10.1% organic for Q1. Then we buy things throughout the calendar year, there's going to be differences in adjustments quarter to quarter, depending on the date we closed the acquisition.

Speaker #5: Acquisitions drop off after they've been in our operations for 12 months. So there is that you touched on organic adjustment where we're moving removing things that were not part of the prior 12-month organic calc and then adding back in, plus their base from the prior year, to reset how we do the organic calc.

Speaker #5: So for those who are unfamiliar, anything we acquire, the first 12 months of operations, of the acquired portfolio, remains in an inorganic calculation. So it's excluded from our 10.1 percent organic for the first quarter.

Speaker #5: And then we buy things throughout the calendar year. So there's going to be differences and adjustments quarter to quarter. Depending on the date we closed the acquisition.

Gordy Bunch: You know, on organic, you know, It's a component of our retention of prior business plus new business, which we had strong retention and, good new business growth that supported the 10% as a whole for Q1.

Speaker #5: On organic, it's not just it's a component of our retention, of prior year business, plus new business. Which we had strong retention and good new business growth that supported the 10 percent as a whole.

Speaker #5: In the first quarter.

Speaker #4: All right. Appreciate the help. Thank you.

Paul Newsome: All right. Appreciate the help. Thank you.

Speaker #3: Our next question comes from the line of Tommy McJoint with KBW. Your line is open.

Operator 2: Our next question comes from the line of Tommy McJoynt with KBW. Your line is open.

Operator: Our next question comes from the line of Tommy McJoynt with KBW. Your line is open.

Speaker #6: Hi. Good afternoon. A question on the margin and we can look at it on either adjusted EBITDA or a net income margin basis. We've seen a nice uplift the past couple of quarters, and especially into the first quarter here.

Tommy McJoynt: Hi, good afternoon. A question on the margin, and we can look at it on either adjusted EBITDA or a net income margin basis. We've seen a nice uplift the past couple quarters and especially into the Q1 here. Could you spend some time helping us think about how much that tailwind from the MGA and the Florida side has been? As we think about modeling margin the rest of the year, when does that start to fall off? Is it kind of a gradual decrease through the rest of the year to get to the target range, or is it a sharper step off? Thanks.

Speaker #6: Could you spend some time helping us think about how much that tailwind from the MGA and the Florida side has been? And as we think about modeling margin the rest of the year, when does that start to fall off?

Speaker #6: Is it kind of a gradual decrease through the rest of the year to get to the target range? Or is it a sharper step off?

Speaker #6: Thanks.

Speaker #5: So we know that we have the favorable economics of the takeout impacts, which gives us the commission income without the commission expense. We had takeouts from June of last year, October of last year, November of last year.

Gordy Bunch: We know that we have the favorable economics of the takeout impacts, which gives us the commission income without the commission expense. We had takeouts from June of last year, October of last year, November of last year, small one in December and then an even smaller one in February. The larger of the takeouts were June and October, so they will fade as we get through the calendar year 2026. We'll have small remnants of benefit in the back half of the year from the latter smaller takeouts. Then we do have, you know, other factors that come into play. At, you know, at this point through Q1, we're looking at, you know, reaffirming the guidance of that 22% to 25%.

Speaker #5: Small one in December and then an even smaller one in February. The larger of the takeouts were June and October so they will fade as we get through the calendar year 2026.

Speaker #5: We'll have small remnants of benefit in the back half of the year from the latter smaller takeouts. And then we do have other factors that come into play.

Speaker #5: At this point through the first quarter, we're looking at reaffirming the guidance. That 22 to 25 percent. We know that we have investments in technology.

Gordy Bunch: We know that we have investments in technology. We have growth in other business units coming in. As those policies start to renew, we will have full term commission expenses against those policies that we didn't have in the prior period. We're being very disciplined in how we are viewing the long term. We think that, you know, we're being exactly where we want to be at this point. If we see another quarter like Q1, then we would potentially look at making some guidance coming into our next release.

Speaker #5: We have growth in other business units coming in. And then as those policies start to renew, we will have full-term commission expenses against those policies.

Speaker #5: That we didn't have in the prior period. So we're being very disciplined in how we are viewing the long term. We think that we're being exactly where we want to be at this point.

Speaker #5: And if we see another quarter like the first quarter, then we would potentially look at raising guidance coming into our next release.

Speaker #6: Got it. Thanks for the explanation there. And then, switching over, when we think about your acquisition appetite—you held true to your expectations for starting M&A a bit on the earlier end this year as compared to last year.

Tommy McJoynt: Got it. Thanks for the explanation there. Then switching over, when we think about your acquisition appetite, you know, you held true to your expectations for starting M&A a bit on the earlier end this year as compared to last year. Is there anything preventing you from getting even more aggressive? Surely there's no shortage of targets out there in terms of, you know, potential agencies and acquisition targets that could be accretive, and you guys are sitting on plenty of capital. Anything stopping you guys from getting even more aggressive than the start of the ramp that we saw in the first part of this year?

Speaker #6: Is there anything preventing you from getting even more aggressive? Surely there's no shortage of targets out there in terms of potential agencies and acquisition targets.

Speaker #6: That could be accretive. And you guys are sitting on plenty of capital. So anything stopping you guys from getting even more aggressive than the start of the ramp that we saw in the first part of this year?

Speaker #5: I would say that we have a very healthy pipeline having made the acquisitions we've had year to date, which we announced in the earnings release.

Gordy Bunch: I would say that, you know, we have a very healthy pipeline, having made the acquisitions we've had year to date, which we announced in the earnings release. We're going to be very selective in acquisitions for the balance of the calendar year. The Fortress acquisition that we just announced today is a very sizable operation in Iowa. We want to make sure we get integration and orientation into the TWFG family before we turn our eyes to the next deal. There's nothing preventing us other than our own desire to make sure we do well with integration, making sure that we have solid post-acquisition traction and we don't end up doing too many deals that end up turning that into a less than beneficial outcome. Really want to focus on the assets we've acquired.

Speaker #5: We're going to be very selective in acquisitions for the balance of the calendar year. The fortress acquisition that we just announced today is a very sizable operation in Iowa.

Speaker #5: We want to make sure we get integration and orientation into TWFG family before we turn our eyes to the next deal. So there's nothing preventing us other than our own desire to make sure we do well with integration and making sure that we have solid post-acquisition traction.

Speaker #5: And we don't end up doing too many deals that end up turning that into a less than beneficial outcome. So really want to focus on the assets we've acquired.

Gordy Bunch: APIA, the commercial MGA, getting it through its integration and orientation, and also looking at additional products that we can introduce into that business unit. You're right, we have the capital, we have the credit revolver, we have the pipeline. Structurally, there's nothing preventing us from doing more, H2. It's really just us being opportunistic and selective, knowing that we've achieved our objective for M&A for the calendar year 2026 guidance. Anything we do beyond here would move the guidance up. There could be potential upside from M&A activity, but we'd rather get through the things that we've already acquired before telling you we're gonna do more and changing our guidance for the full year.

Speaker #5: APIA, the commercial MGA, getting it through its integration and orientation. And also looking at additional products that we can introduce into that business unit.

Speaker #5: So you're right. We have the capital. We have the credit revolver. We have the pipeline. So structurally, there's nothing preventing us from doing more on the back half of the year.

Speaker #5: It's really just us being opportunistic and selective. Knowing that we've achieved our objective for M&A for the calendar year 2026 guidance. And anything we do beyond here would move the guidance up.

Speaker #5: So there could be potential upside from M&A activity. But we'd rather get through the things that we've already acquired before telling you we're going to do more and changing our guidance for the full year.

Speaker #6: Makes sense. Thank you.

Tommy McJoynt: Makes sense. Thank you.

Speaker #3: Next question. Comes from the line of Roland Mayer with RBC Capital Markets. Your line is open.

Operator 2: Next question comes from the line of Roland Mayer with RBC Capital Markets. Your line is open.

Operator: Next question comes from the line of Roland Mayer with RBC Capital Markets. Your line is open.

Roland Mayer: Hi, good evening. I wanted to just ask on the other side of Tommy's question, are there any volume limitations or structural limitations on your ability to buy back stock? If I'm doing the math right, I think you've bought back almost like 15% of the Class A shares since the authorization was announced.

Rowland Mayor: Hi, good evening. I wanted to just ask on the other side of Tommy's question, are there any volume limitations or structural limitations on your ability to buy back stock? If I'm doing the math right, I think you've bought back almost like 15% of the Class A shares since the authorization was announced.

Speaker #7: Hi. Good evening. I wanted to just ask on the other side of Tommy's question. Are there any volume limitations or structural limitations on your ability to buy back stock?

Speaker #7: If I'm doing the math right, I think you've bought back almost 15% of the Class A shares since the authorization was announced.

Gordy Bunch: There are 10b-18 volume restrictions that the SEC has, and we have to adhere to those. We authorized a $50 million repurchase plan at our last release. Structurally, you have those boundaries of the amount authorized by the board for repurchase, plus the SEC 10b-18 limits.

Speaker #5: There are 10B, 18, 1 volume restrictions that the SEC has and we have to adhere to those. We authorized a $50 million repurchase plan at our last release.

Speaker #5: And so, structurally, you have those boundaries of the amount authorized by the board for repurchase, plus the SEC 10b-18 (1) limits.

Speaker #7: Okay. That's perfect. Thank you. And then I did want to ask just on the M&A. Was the fortress deal included in the revenue guide?

Roland Mayer: Okay. That's perfect. Thank you. I did wanna ask just on the M&A, was the Fortress deal included in the revenue guide? I don't know what timeline was for closing or getting through that process, I just was curious if the $285 to 300 included an assumption for Fortress.

Rowland Mayor: Okay. That's perfect. Thank you. I did wanna ask just on the M&A, was the Fortress deal included in the revenue guide? I don't know what timeline was for closing or getting through that process, I just was curious if the $285 to 300 included an assumption for Fortress.

Speaker #7: I don't know what timeline was for closing or getting through that process. But I just was curious if the 285 to 300 included an assumption for fortress.

Speaker #5: Yes. When we gave you our guidance at the beginning of the year, we assumed that we would deploy a certain amount of capital acquiring a certain amount of revenue with a certain amount of EBITDA.

Gordy Bunch: Yes. When we gave you our guidance at the beginning of the year, we assumed that we would deploy certain amount of capital, acquiring a certain amount of revenue with a certain amount of EBITDA, and that's what goes into our total guidance for the calendar year. Fortress has gotten us to that full amount that we had in our full calendar year guidance.

Speaker #5: And that's what goes into our total guidance for the calendar year. And so fortress has gotten us to that full amount that we had in our full calendar year guidance.

Speaker #7: That's very helpful. Thank you so much.

Roland Mayer: That's very helpful. Thank you so much.

Rowland Mayor: That's very helpful. Thank you so much.

Speaker #3: Next question. Comes from the line of Mike Zaremski with BMO. Your line is open.

Operator 2: Next question comes from the line of Mike Zaremski with BMO. Your line is open.

Operator: Next question comes from the line of Mike Zaremski with BMO. Your line is open.

Speaker #8: Hey, good afternoon. Thanks. First question to follow up on the excellent profit margin. Question and answer. And we could take it offline too if you'd like.

Mike Zaremski: Hey, good afternoon. Thanks. First question to follow up on the excellent profit margin question and answer. We could take it offline too, if you'd like. But it sounded like there was more profits that, you know, coming from the Florida takeouts that are gonna, I guess, but you're not raising the profit margin guidance 'cause you're gonna kinda spend that expected extra profits on increased expenses in the back part or, you know, later in the year. Is that the right way to think about it?

Mike Zaremski: Hey, good afternoon. Thanks. First question to follow up on the excellent profit margin question-and-answer. We could take it offline too, if you'd like. But it sounded like there was more profits that, you know, coming from the Florida takeouts that are gonna, I guess, but you're not raising the profit margin guidance 'cause you're gonna kinda spend that expected extra profits on increased expenses in the back part or, you know, later in the year. Is that the right way to think about it?

Speaker #8: But my it sounded like there was more profits that coming from the Florida takeouts that are going to, I guess but you're not raising the profit margin guidance because you're going to kind of spend that expected extra profits on increased expenses in the back part or later in the year.

Speaker #8: Is that the right way to think about it?

Speaker #5: I would look at it this way, Mike. When we gave you our guidance at the beginning of the year, we had an assumed retention rate of the portfolio as you're aware, Florida is a softening marketplace.

Gordy Bunch: I would look at it this way, Mike. When we gave you our guidance at the beginning of the year, we had an assumed retention rate of the portfolio. As you are aware, Florida is a softening marketplace, we overachieved our retention of the renewal takeouts in Q1. We know pricing is going to be pressured in the state, we're remaining disciplined in how we're looking at the balance of the calendar year. As I mentioned a little bit ago, if we get through Q2 with similar success, that's going to require us to then update the guidance up as we would have overachieved 2 quarters. We're being disciplined in how we're looking at that portfolio, given its outsized economic benefit.

Speaker #5: And so we overachieved our retention of the renewal takeouts in the first quarter. We know pricing is going to be pressured in the state.

Speaker #5: So we're remaining disciplined. And how we're looking at the balance of the calendar year. As I mentioned a little bit ago, if we get through the second quarter with similar success, that's going to require us to then update the guidance up as we would have overachieved two quarters.

Speaker #5: So, we're being disciplined in how we're looking at that portfolio, given its outsized economic benefit. And we know that the Florida market is dealing with its own property pricing downward.

Gordy Bunch: You know, we know the Florida market is dealing with its own property pricing downward. We're doing well, better than expected. You know, we're being disciplined and not looking to update at this release. If we get through Q2 with similar outcome, yes, there's upside to the margin on guidance.

Speaker #5: And so we're doing well. Better than expected. And we're being disciplined and not looking to update at this release. If we get through the second quarter with similar outcome, then yes, there's upside to the margin on guidance.

Speaker #8: Okay. That's understood. Moving to organic growth. Gordy, you've talked about the impact from improving availability. And how it's having an impact on organic. You talked about the soft market.

Mike Zaremski: Okay. That's understood. Moving to organic growth. Gordy, you've talked about the impact from improving availability, you know, and how it's having an impact on organic. You talked about the soft market. Maybe you can kinda help tease out if that impact is becoming less having a less of an impact on organic or the same or more. We can kind of figure out directionally whether we should continue to kind of build in a bit of a very near-term headwind.

Speaker #8: Maybe you can kind of help tease out if that impact is becoming less having a less of an impact on organic or the same or more.

Speaker #8: And so we can kind of figure out directionally whether we can should continue to kind of build in a bit of a very near-term headwind.

Gordy Bunch: We have a lot of geography that TWFG operates in. Not every geography has the same rate change cadence or significance. If we look at, you know, the balance of the calendar year. We're looking at, you know, rate, property rates. You know, we all know the cat market is softening and that eventually goes through property repricing. Our soft market cycle really started last year, Q2 on the private passenger auto side. I would say that the property portion started softening more towards the end of Q4, early part of Q1. They're kind of disconnected in the timing.

Speaker #5: We have a lot of geography. The TWG operates in. And not every geography has the same rate change cadence or significance. And so if we look at the balance of the calendar year, we're looking at rate property rates we all know the cat market is softening and that eventually goes through property repricing.

Speaker #5: Our soft market cycle really started last year, second quarter on the private passenger auto side. I would say that the property portion started softening more towards the end of the fourth quarter, early part of the first quarter.

Speaker #5: So they're kind of disconnected in the timing. But we've assumed the softening market and our full year guidance. And are not expecting anything dramatic from a pricing standpoint to change that 10 to 15 percent guidance.

Gordy Bunch: We've assumed the softening market at our full year guidance and are not expecting anything dramatic from a pricing standpoint to change that 10% to 15% guidance. You know, as we talked maybe 2 years ago when we were first coming out public, and the market was hard, what happens is, because carriers now offer us capacity and they all have new business incentives, the mix shift of the total portfolio growth becomes less dependent on retention and more driven by exposure growth. New business overtakes policy premium retention. We're kind of seeing that shift occurring in real time, where we might be renewing at a lower average premium, but we're also writing new business and having PIF growth that's offsetting that pricing headwind.

Speaker #5: As we've talked maybe two years ago when we were first coming out public, and the market was hard, what happens is because carriers now offer us capacity and they all have new business incentives, the makeshift of the total portfolio growth becomes less dependent on retention and more driven by exposure growth.

Speaker #5: So new business overtakes policy premium retention. And we're kind of seeing that shift occurring in real time. Where we might be renewing at a lower average premium, but we're also writing new business and having PIF growth that's upsetting that pricing headwind.

Speaker #5: So for us, we're looking at that guidance as being very solid through the first quarter and what we can see through today. Which is why we're maintaining that range.

Gordy Bunch: For us, we're looking at that, you know, guidance as being very solid through Q1 and what we can see through today, which is why we're maintaining that range.

Speaker #8: That's helpful. And maybe just a last on the competitive environment. Just curious, I know you're probably more of a bundled writer. But is the GEICO initiative having an impact on the organic or it's too small to really move the needle?

Mike Zaremski: That's helpful. Maybe just a last, on the competitive environment. Just curious, I know you're probably more of a bundled writer, but is the GEICO initiative having an impact on the organic or it's just too small to really move the needle?

Gordy Bunch: GEICO has become more relevant in our portfolio, not less. Again, it is price advantage. Last year, even though it was allowing us to write more business, it was, you know, also moving policies from a higher average premium to a lower average premium. We still have significant growth with GEICO. You know, we look at their technology platforms and the product lines that they're still not fully released in every state, as gonna be a net beneficiary to us as they continue to expand into new geography and open up more lines of business. You know, GEICO's been a positive other than, you know, like I said, the rate differential from incumbents, allows us to retain the customer, allows us to write new business, but it is a lower average premium than the incumbent carriers.

Speaker #5: GEICO has become more relevant in our portfolio, not less. And again, it is price advantage. So last year, even though it was allowing us to write more business, it was also moving policies from a higher average premium to a lower average premium.

Speaker #5: We still have significant growth with GEICO, and we look at their technology platforms and the product lines that they're still not fully released in every state.

Speaker #5: As going to be a net beneficiary to us as they continue to expand into the new geography and open up more lines of business.

Speaker #5: So GEICO has been a positive other than like I said, the rate differential from incumbents. Allows us to retain the customer. Allows us to write new business.

Speaker #5: But it is a lower average premium than the incumbent carriers.

Speaker #8: Understood. Thank you.

Mike Zaremski: Understood. Thank you.

Speaker #9: Next question comes from the line of Brian Meredith with UBS. Your line is open.

Operator 2: Next question comes from the line of Brian Meredith with UBS. Your line is open.

Operator: Next question comes from the line of Brian Meredith with UBS. Your line is open.

Speaker #10: Yeah. Thanks. So Gordy, a couple of questions here. First, I'm just curious, what is the organic growth of your MGA business this quarter? And are you seeing a slowdown in business moving into the non-admitted market?

Brian Meredith: Yeah, thanks. Gordy, a couple questions here. First, I'm just curious, what is the organic growth of your MGA business this quarter? Are you seeing a slowdown in business moving into the non-admitted market?

Gordy Bunch: As a first recap, the vast majority of our MGA is admitted.

Speaker #5: So as a first recap, the vast majority of our MGA is admitted. So we're more of an admitted operation than an ENS one. And our admitted portfolio is growing.

Gordy Bunch: As a first recap, the vast majority of our MGA is admitted.

Brian Meredith: Okay.

Gordy Bunch: We're more of an admitted operation than an E&S one. Our admitted portfolios are growing. As we've been able to introduce new products in new states, as we've expanded our own product in our core state, we are able to grow PIF and premium in both the admitted programs. On the E&S side, I would say for states like California, we're seeing less dependency on the E&S homeowners market as more of the traditional carriers are starting to open up capacity in California. That could change with some of the more recent actions from the DOI, we've had a number of new admitted markets open up for new business in that state, which it was not present last quarter.

Speaker #5: As we've been able to introduce new products and new states, as we've expanded our own product in our core state, we are able to grow PIF and premium in both the admitted programs.

Speaker #5: On the ENS side, I would say for states like California, we're seeing less dependency on the ENS homeowners market as more of the traditional carriers are starting to open up capacity in California.

Speaker #5: That could change with some of the more recent actions from the DOI. But we've had a number of new admitted markets open up for new business in that state, which was not present last quarter.

Gordy Bunch: We don't really break out the organic by business unit. You know, Florida's got a combination of new business, new program, voluntary writings that aren't part of the calculations for inorganic versus organic. Our full year guidance includes basically a blend of all the different businesses coming together on a consolidated basis. We don't really have a breakout of that in between. We do know that coming into Q2, we're going to have a, you know, good benefit of policies renewing in the quarter that were not present in the prior period. That acquisition is now past the 12th month, so it's going to give us an upsized organic quarter for Q2.

Speaker #5: We don't really break out the organic by business unit. And Florida has got a combination of new business, new program, voluntary writings that aren't part of the calculations for inorganic versus organic.

Speaker #5: Our full year guidance includes basically a blend of all the different businesses coming together on a consolidated basis. So we don't really have a breakout.

Speaker #5: Of that in between. We do know that coming into the second quarter, we're going to have a good benefit of policies renewing in the quarter that we're not present in the prior period.

Speaker #5: That acquisition is now past the 12-month. So it's going to give us an upsize organic quarter for the second quarter.

Speaker #8: Yeah. It's terrific. Second question, contingents, any views on what contingents could look like for the year?

Brian Meredith: Yeah. That's terrific. Second question. Contingents, any views on what contingents could look like for the year?

Gordy Bunch: Great question. We're probably an outlier here. We're being very disciplined in how we're viewing contingents. We entered the year, knowing that the market was softening and expecting combined ratios and loss ratios to eventually be impacted by the lower rate environment. If you track our contingent line, we're currently projecting a little bit lower on a premium to contingency basis, anticipating that there should be some loss ratio degradation by the lower rate environment. So far that hasn't manifested, but we're not looking to adjust our current contingent in our forecast. We get more substantial confidence on that line after the Q3. We get lock-in provisions, and carriers then give us more substantial updates on where we're at in those profit-sharing agreements.

Speaker #5: Great question. We're probably an outlier here. We're being very disciplined in how we're viewing contingents. We entered the year knowing that the market was softening.

Speaker #5: And expecting combined ratios and loss ratios to eventually be impacted by the lower rate environment. So, if you track our contingent line, we're currently projecting a little bit lower on a premium-to-contingency basis.

Speaker #5: Anticipating that there should be some loss ratio segregation by the lower rate environment. So far, that hasn't manifested. But we're not looking to adjust our current contingent in our forecast.

Speaker #5: We get more substantial confidence on that line. After the third quarter. We get lock-in provisions and carriers then give us more substantial updates on where we're at in those profit-sharing agreements.

Speaker #5: So there could be upside in the fourth quarter as we live further into the calendar year. And then those loss ratios sensitive contingencies become a lot clearer.

Gordy Bunch: There could be upside in Q4 as we live further into the calendar year, and then those loss ratio sensitive contingencies become a lot clearer. We're taking a very disciplined approach in how we're approaching contingency in our guidance and in our forecasts. Yes, there's some upside there, should the combined ratios and loss ratios stay historically good.

Speaker #5: So we're taking a very disciplined approach in how we're approaching contingency in our guidance and in our forecasts. And yes, there's some upside there.

Speaker #5: Should the combined ratios and loss ratios stay historically good.

Speaker #8: Gotcha. And then one last one, Gordy. I just want to go back to the good discussion you had on AI and completely agree with you.

Brian Meredith: Gotcha. Then one last one. Gordy, I just want to go back to the good discussion you had on AI and completely agree with you. One of the debates that I'm having with some people is, you know, with AI and what's going on, not only the benefits you're seeing from an AI productivity perspective, will that over time force call it commission rates to decline, do you think? Just given the efficiencies that, you know, y'all and agencies are generating and maybe competition from, you know, AI-generated aggregators and stuff.

Speaker #8: But one of the debates that I'm having with some people is with AI and what's going on, not only the benefits you're seeing from an AI productivity perspective, will that over time force call it commission rates to decline?

Speaker #8: Do you think? Just given the efficiencies that y'all and agencies are generating and maybe competition from AI-generated aggregators and stuff?

Speaker #5: I think it's too early to predict that that's an outcome. I did read the Chubb article that you're probably referencing. Nobody yet knows. The long-term cost of the AI tools.

Gordy Bunch: I think it's too early to predict that that's an outcome. You know, I did read the Chubb article that you're probably referencing. You know, nobody yet knows the long-term cost of the AI tools. I think it's presumptuous to believe that all the AI tools are going to inherently create a cost savings. The amount of energy it takes to operate these server farms, and in many cases, the number of different microservice AI bots or AI agents you may have, and the token costs if you're using third-party AI, I don't know that anybody could accurately predict where the cost savings is gonna be, this early in the AI deployment.

Speaker #5: So I think it's presumptuous to believe that all the AI tools are going to inherently create a cost savings. The amount of energy it takes to operate these server farms and in many cases, the number of different microservice AI bots or AI agents you may have.

Speaker #5: And the token costs if you're using third-party AI. I don't know that anybody could accurately predict where the cost savings is going to be.

Speaker #5: This early in the AI deployment. I think certainly over time, we believe there will be efficiencies and there will be some margin expansion opportunities.

Gordy Bunch: I think certainly over time, we believe there will be efficiencies, and there will be some margin expansion opportunities, but way too early to predict that. How does the agency economics shift the carrier commission schedules? I think that, you know, we've proven that independent agency distribution provides underwriters with a superior portfolio, better retention, better loss ratios, and I don't see them, you know, immediately directing commission expenses downward in a very competitive marketplace. The industry is so fragmented, I don't know that that would be a wise move for a carrier to be looking at agency comp as an outcome of AI, because AI is improving their infrastructure and their costs too.

Speaker #5: But way too early to predict that. And how does the agency economics shift the carrier commission schedules? I think that we've proven that independent agency distribution provides underwriters with a superior portfolio better retention, better loss ratios, and I don't see them immediately directing commission expenses downward.

Speaker #5: In a very competitive marketplace. The industry is so fragmented. I don't know that that would be a wise move for a carrier to be looking at agency comp as an outcome of AI because AI is improving their infrastructure and their costs too.

Speaker #5: So they certainly might get some relief on how they can lower rate. Based on their expense ratios coming down. But I don't think that needs to come at the expense of distribution.

Gordy Bunch: They certainly might get some relief on how they can lower rate based on their expense ratios coming down, but I don't think that needs to come at the expense of distribution.

Speaker #8: Makes sense. Thank you.

Brian Meredith: Thanks. Thank you.

Speaker #9: And our last question comes from the line of Pablo Singzon with JPMorgan. Your line is open.

Operator 2: Our last question comes from the line of Pablo Singzon with J.P. Morgan, your line is open.

Operator: Our last question comes from the line of Pablo Singzon with J.P. Morgan, your line is open.

Pablo Singzon: Hi. Thank you. First question, I just want to confirm, the reason that organic will be strong in Q2, I think part of the core that they got books renewing into organic, right? That's sort of the first part. I guess you also took out some books in the latter half of 2025. Do they renew in the latter half of 2026, or does everything renew at the same time, which is why Q2 is so strong?

Speaker #10: Hi. Thank you. First question, I just wanted to confirm. The reason that organic will be strong in Q2, I think, are the four that they caught books renewing into organic, right?

Speaker #10: That's sort of the first part. And then I guess you also took out some books in the latter half of '25. Do they renew in the latter half of '26 or does everything renew at the same time, which is why Q2 is so strong?

Speaker #5: There's a couple of points there and I'll let Janice clean up what I don't cover. Yes, we have policies renewing in the second quarter that are going to help drive organic up to high double digits.

Gordy Bunch: There's a couple points there, and I'll let Janice Zwinggi clean up what I don't cover. Yes, we have policies renewing in Q2 that are gonna help drive organic up to high double digits. We also have a voluntary program, which is an entirely new form and distribution that was stood up from scratch, and everything that it generates is also organic, separate from the takeout. There's takeout going into renewal, and then there's voluntary writings, which is new business production from scratch, not a renewing of a takeout policy. The takeouts are also accelerating their new business traction coming into this quarter. That's part of my structural tailwind I'm talking about, which gives us significant confidence in the guidance we've given for the full year organic.

Speaker #5: We also have a voluntary program, which is an entirely new form and distribution that was stood up from scratch. And everything that it generates is also organic, separate from the takeout.

Speaker #5: So there's takeout, takeout going into renewal. And then there's voluntary writings, which is new business production—from scratch, not a renewing of a takeout policy.

Speaker #5: The takeouts are also accelerating their new business traction coming into this quarter. So that's part of my structural tailwind I'm talking about, which gives us significant confidence in the guidance we've given for the full-year organic.

Gordy Bunch: There are policies from all the various takeouts that go into various extended periods of the calendar, and Janice is much closer to how that plays out.

Speaker #5: There are policies from all the various takeouts that go into various extended periods of the calendar. And Janice is much closer to how that plays out.

Janice Zwinggi: Yeah. I mean, another thing too is we're being disciplined on the retention rate that we're using. On renewals and the new direct business, like Gordy mentioned, we're being disciplined on how much we're gonna see because we haven't really seen the cancellations coming through as of yet. I feel like with what we've got with the takeouts dropping off starting in July, the June takeout, October, November. June and October were the largest ones. You'll start seeing the replacements on the renewals after that point in time. Again, I mean, we're using a good, we feel like, a comfortable retention rate on those.

Speaker #11: Yeah. I mean, so another thing too is we're being disciplined on the retention rate that we're using. So on renewals and the new direct business, like we mentioned, we're being disciplined on how much we're going to see because we haven't really seen the cancellations coming through as of yet.

Speaker #11: So I feel like, with what we've got with the takeouts dropping off starting in July, on the June takeout and then October, November—June and October were the largest ones.

Speaker #11: And then you'll start seeing the replacements on the renewals after that point in time. And again, we have a pretty knockdown and we're using a good we feel like a comfortable retention rate on those.

Speaker #5: So the number of policies going into the third and fourth quarter are relatively de minimis.

Gordy Bunch: The number of policies going into Q3 and Q4 are relatively de minimis.

Speaker #11: Yes.

Janice Zwinggi: Yes.

Speaker #9: Ladies and gentlemen, that concludes the question and answer session. I would now like to turn the call back over to Gordy Bunch for closing remarks.

Operator 2: Ladies and gentlemen.

Operator: Ladies and gentlemen.

Gordy Bunch: Pablo?

Operator 2: That concludes the question and answer session. I would now like to turn the call back over to Gordy Bunch for closing remarks.

Operator: That concludes the question-and-answer session. I would now like to turn the call back over to Gordy Bunch for closing remarks.

Gordy Bunch: Well, thank you for attending this afternoon's call. We appreciate all your thoughtful questions. Really 5 things we want you guys to walk away with. Our business is firing on all cylinders. Total revenue up 35.3%. Just to give a, this isn't just a quarter of luck, it's the compounding of strategic investments in technology, M&A, and the people that have helped made this company great for the last 25 years. Our organic growth is strong, really 2x the industry. We feel very compelled by the strategic tailwinds we have coming into Q2 and throughout the remaining part of the year. Our MGA platform is scaling. We're getting new programs and new distribution points in all the different business units. Reaffirming our full guidance for revenue growth, organic growth, and adjusted EBITDA.

Speaker #5: Well, thank you for attending. This afternoon's call, we appreciate all your thoughtful questions. Really five things we want you guys to walk away with.

Speaker #5: Our business is firing on all cylinders. Total revenue is up 35.3%. Just to give it up, this isn't just a quarter of luck; it's the compounding of strategic investments in technology, M&A, and the people that have helped make this company great for the last 25 years.

Speaker #5: Our organic growth is strong. Really 2X the industry. And we feel very compelled by the strategic tailwinds we have coming into the second quarter and throughout the remaining part of the year.

Speaker #5: Our MGA platform is scaling. We're getting new programs, and new distribution points, and all the different business units. Reaffirming our full guidance for revenue growth, organic growth, and adjusted EBITDA.

Speaker #5: And our capital allocation strategy is working. $40 million of the $50 million buyback executed. Three acquisitions completed. We have cash on hand and an undrawn credit facility.

Gordy Bunch: Our capital allocation strategy is working. $40 million of the $50 million buyback executed, 3 acquisitions completed. We have, you know, cash on hand, an undrawn credit facility, a fortress balance sheet to continue to carry our trajectory forward. We appreciate everybody for attending today and look forward to our next call. Thank you.

Speaker #5: A fortress balance sheet to continue to carry our trajectory forward. We appreciate everybody for attending today and look forward to our next call. Thank you.

Operator 2: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.