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Thank you for standing by, and welcome to the TWFG, Inc. Announces Second Quarter 2026 Results Conference Call. [Operator Instructions] As a reminder, today's program is being recorded.

And now I'd like to introduce your host for today's program, Gordy Bunch, CEO. Please go ahead, sir.

Thank you, and good afternoon, everyone. Thank you for joining us today to discuss TWFG's Second Quarter 2026 results. Joining me on today's call is Janice Zwinggi, our Chief Financial Officer. After my remarks, Janice will walk through our financial performance in more detail, and then we'll open up the call for questions.

I am pleased to report TWFG's delivered an outstanding second quarter, reinforcing the strength and scalability of our diversified platform. Total revenues grew 45.1% to $87.5 million. Organic revenue growth rate was 37%. Adjusted EBITDA grew 75.8% to $26.6 million, with margin expansion of 530 basis points to 30.4%. Total written premium grew 26.6% to $569.9 million. These results reflect the compounding benefits of our investments in the MGA platform, carrier partnerships, technology capabilities and talent.

On the organic front, we delivered the outsized high double-digit growth we anticipated last quarter. Reported organic revenue growth rate of 37% reflected the Citizens takeout and renewal dynamics, while underlying core organic growth continued to track in line with our expectations.

New business generation and improving retention drove the results. Consolidated written premium retention reached 93%, up from 89% in the prior year quarter. And Insurance Services retention remained solid at 90%, reflecting strong client relationships and improving carrier availability.

From a profitability perspective, our 30.4% adjusted EBITDA margin benefited from strong growth in the MGA channel, where commission income increased 290% quarter-over-quarter, and now represents 35% of total revenues, up from 15% in the prior year quarter.

The MGA platform carries a structurally higher margin profile than Insurance Services, and the current runoff period for the MGA Florida takeout program also provides a near-term margin benefit because assumed policies generate commission income without corresponding commission expense. We expect that benefit to normalize as more takeout policies renew with full term premiums and standard commission expenses, which is reflected in our updated guidance.

The market environment continues to evolve broadly as expected. Personal auto rates have continued to moderate with mid-single-digit declines in certain subsegments. Homeowners rates are broadly flat with some regional pressure in catastrophe-exposed geographies. Carrier appetite for quality independent agent flow remains strong, and growth-focused carriers continue to offer competitive new business incentives. This environment supports share gain for a diversified platform like ours across both soft and hard markets.

Our strategy remains consistent and disciplined. We are executing across our 4 core priorities: delivering strong double-digit organic growth, executing accretive M&A, investing in technology and platform improvements for our agents and deploying capital with discipline across all these opportunities. This quarter, we made meaningful progress across all 4.

On the acquisition front, we completed the acquisition of Fortress Insurance Services on May 1. Fortress is a well-established Iowa-based agency, which complements our earlier Midwest additions and supports our expansion into attractive long-term growth markets. Integration is on track, and the team is culturally aligned with TWFG.

Fortress rounded out our M&A objectives for 2026 guidance year. So our near-term focus is integration and orientation of first half acquisitions. Any second half transactions will be incremental to the guidance we are providing today. We do have an active M&A pipeline, and there is upside potential.

On capital allocation, our $50 million share repurchase program authorized in February is now essentially complete. Through today, we have repurchased approximately $42.9 million at an average price of $19 per share, retiring approximately 15% of our pre-program Class A share count. We view this as highly accretive capital deployment.

The Board will evaluate any reauthorization in the context of our M&A pipeline, cash generation, valuation and alternative uses of capital. Our balance sheet remains strong and gives us flexibility to invest in growth, pursue accretive M&A and return capital to shareholders.

On technology, we continue to invest in AI-enabled capabilities that make our agents more productive. TWFG is positioned to benefit from AI's continued evolution because we own our technology stack, have 25 years of proprietary underwriting data and are deploying AI to amplify what our people do best.

We remain on track to host our Investor Day, November 12, and we are looking forward to sharing all of our details on our medium-term financial framework, MGA platform strategy, our geographic expansion plans and our technology road map.

Before turning it over to Janice, I want to acknowledge the outstanding execution of our team this quarter. Our results are the product of thousands of individual decisions made every day by our agents, our operators, our carrier partners and our corporate team. I could not be prouder of the entire TWFG family.

With that, I will now turn the call over to Janice to walk through the financials in detail.

Thank you, Gordy. I am pleased to report the following second quarter results, beginning with our top KPI written premium. Total written premium grew $119.6 million or 26.6% to $569.9 million, driven by strong renewal and new business performance.

Renewal premium grew $67.5 million or 19.3% and new business grew $52.1 million or 51.6%. Consolidated written premium retention was 93%, up from 89% in the prior year period and our highest retention rate to date. Excluding TWFG MGA Florida Citizens takeout renewals, retention would have been approximately 88%, consistent with our historical range.

Looking at our primary offering components, Insurance Services written premium grew $49.7 million or 12.8%, driven primarily by renewal growth of $48.1 million or 15.9%, reflecting improved retention and the continued benefit of our corporate branch acquisitions.

Our MGA channel written premium grew $69.9 million or 114.8%, driven by the ramp of our voluntary Florida homeowners program, contributions from APIA, which we acquired in the first quarter, and the continued renewal cycle of our Citizens takeout book.

Total revenues increased $27.2 million or 45.1% to $87.5 million. Commission income grew $26.1 million or 47.8% to $80.6 million, driven by strong MGA performance with growth of 290% to $27.3 million. This performance reflects the higher commission rate business in our MGA platform, including MGA Florida new and renewal takeout business, APIA and TWICO programs, as well as commission derived from our corporate store acquisitions.

Contingent income was $2.2 million, remaining essentially flat quarter-over-quarter. This stability aligns with our conservative posture given carrier loss ratio uncertainty in the softening rate environment. Fee income expanded from $3.3 million to $4.2 million, fueled by solid momentum across branch policy and program-related fees.

Organic revenues reached $75.5 million, representing a $20.4 million increase over the $55.1 million reported in the prior year quarter. This yielded an organic revenue growth rate of 37%, which was positively impacted by the transition of MGA Florida takeout policies passed through 12-month organic threshold. Our core business continues to generate sustainable and consistent organic growth independent of acquisition contributions.

Now turning to expenses. Commission expense grew $8.3 million or 24.4% to $42.5 million. Notably, this expanded at a substantially slower rate than commission income. This operating leverage was primarily driven by higher commission income rates on MGA program business and a takeout dynamic where policies were assumed without corresponding sub-producer commission expense during the runoff period, as well as an increased concentration of corporate store acquisitions carrying minimal commission expense.

Salaries and employee benefits increased $2.3 million or 24.1% to $11.8 million. This expansion was predominantly driven by added headcount from our recent acquisitions alongside ongoing corporate office investments designed to support the expanding scale of our platform.

Other administrative expenses increased $3.2 million or 59% to $8.6 million. This increase reflects our ongoing investments in scalable technology initiatives, the inclusion of acquired corporate store footprint expenses and public company operating infrastructure. Depreciation and amortization increased $3.2 million or 81.1% to $7.1 million, primarily from purchase accounting related to our recent acquisitions.

Moving to profitability. Net income for the quarter rose to $17.3 million compared to $9 million in the prior year quarter. Adjusted net income expanded 76.1% to $20.3 million, delivering an adjusted net income margin of 23.2%, up from 19.1% in the prior year quarter.

Adjusted EBITDA grew 75.8% to $26.6 million and adjusted EBITDA margin expanded 530 basis points to 30.4% compared to 25.1% in the prior year quarter. This expansion reflects strong operating leverage across our platforms, including the higher margin profile of our MGA operations, the accretive impact of our acquisitions and the continued cost discipline as we scale.

Finally, adjusted diluted earnings per share increased to $0.38 compared to $0.20 in the prior year quarter, which was primarily attributable to higher adjusted net income during the period. From a cash and capital perspective, our balance sheet remains strong. Operating cash flow for the first half of 2026 was $32.5 million, up 29% from $25.2 million in the first half of 2025.

As of June 30, we had $73.7 million in unrestricted cash and cash equivalents plus $19 million in restricted cash. We have full unused capacity on our $50 million revolving credit facility and only $3 million of term debt outstanding, giving us total liquidity of approximately $142.7 million.

And with that, I will now turn it back to Gordy for closing remarks.

Thank you, Janice. Turning to our outlook. We are raising our 2026 guidance based on the strong first half performance and our line of sight to the balance of the year. We now expect total revenues of $300 million to $320 million, up from $285 million to $300 million.

Organic revenue growth of 13% to 17%, up from 10% to 15%. And adjusted EBITDA margins of 23% to 27%, up from 22% to 25%. As we look ahead, our strategy is unchanged and the drivers of our performance are compounding. We believe our diversified platform spanning independent agencies, corporate branches and proprietary MGA programs is positioned to capitalize on the current market dynamics.

The MGA platform is scaling through 3 durable growth drivers: APIA's proprietary commercial MGA, MGA's Florida's voluntary homeowners program, TWICO's Texas homeowner program and the renewal tail of our Citizens takeout portfolio. Our corporate branch model continues to deliver operating leverage, while our technology and AI investments are making agents more productive and improving client services.

The insurance industry remains complex and fragmented, which increases the value of trusted advice. Deep carrier relationships and local market expertise will win the day. Our proprietary technology and 25 years of data create a competitive moat, while the TWFG family culture continues to support employee engagement, agent loyalty and client retention.

In closing, I want to thank our employees, our agents, our carrier partners and our shareholders for their continued trust and commitment to TWFG. The years ahead will bring tremendous opportunities for all of us, and we look forward to sharing more of our medium-term financial framework and strategic road map at our Investor Day on November 12, 2026.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Tommy McJoynt from KBW.

The first one here, when we look at the strong cash flows that the business generates and seeing plenty of dry powder on the credit facilities, is it reasonable to not model either additional acquisitions or continued pace of buybacks in the back half of the year?

Good question, Tommy. Hopefully, I articulated that we do have an active M&A pipeline. We -- when we do our modeling for guidance, we do our assumed amount of M&A in our base guidance. We don't generally adjust that upward unless we end up in a definitive agreement. There is potential upside in the back half of the year for M&A activity, but it's not built into our base guide. So that would be potential upside that's not captured in our updated guidance.

Okay. Got it. And then switching over as we start thinking about organic growth and some of the comps that you've seen in the first half of the year. So has the Florida MGA tailwinds to the organic growth in the first half of the year, have those been significant enough that we might expect to see organic face some really tough comps in the first half of '27?

Are they significant enough where organic could turn negative or be close to 0? Can you help us just sensitize to how much of a tailwind it has been and how much of a difficult comp it could be in '27?

Sure. So if I'm looking at the impact of Florida, really, the first impact to organic was in the second quarter. And the offset to that is going to be in the fourth quarter of '26. So the takeout policies when they were in runoff were being paid on an earned basis through the expiration of the policy.

And then when it renewed into its natural expiration date, it renewed into a different period. So we do have premium that was present in the fourth quarter and a little in the third quarter of 2025 that has already renewed in the first quarter or second quarter of 2026 that won't be there to lap in the third and fourth quarter of '26. We do have that factored in. So if I'm looking at third quarter, third quarter for us, we're still going to be in the double-digit teens for organic even with that dynamic.

The fourth quarter is where we have the bigger headwind, where we had compounding runoff policies in that period that have already renewed into a different period. And that's why when you look at the full guidance for full calendar year 2026, we're giving you that 13% to 17%.

So I would look at fourth quarter right now as a flattish organic, and that would really be just taking out the noise from prior year takeout policies that were present in that period that now showed up in first quarter, second quarter of this year. And a little bit into the third quarter of this year.

And then if you take out the impacts of takeout business in the second quarter, our core organic still would have been in the high teens. So it kind of gets you to where we think there's noise with Citizens takeout depending on the period that the earned premium was present and then what period did the policy actually renew into for a long-term basis.

As far as the impact rolling into '27, Janice, you'd have to answer that. I don't think we have a tremendous amount of takeout business that ends up skewing '27 data.

Yes, Gordy, that's correct. And we're still fine-tuning '27. We'll have a better idea as we get closer to the end of this year to see on the new business for Florida and even the renewals, how we're going to play out. But you hit it on the head there.

And our next question comes from the line of Mike Zaremski from BMO Capital Markets.

The first is regarding the organic growth trajectory for Agency-in-a-Box and Corporate Branches, so ex the MGAs. It appears there's increasing momentum. Gordy, in your prepared remarks, I think you talked about this environment being more conducive for share gains. And you obviously talked about pricing still being a bit of an absolute headwind. I'm not sure if it's increased sequentially or not.

But can you kind of talk to bigger picture or maybe smaller picture too, what -- why you think this environment is more conducive for share gains and whether pricing is still impacting the organic rate of growth? Or is it kind of still -- is it more steady pricing, kind of, at the same negative level as previous quarters?

Yes. Good question, Mike. So we do still see pricing as you follow all the carriers, every carrier out there is still having excellent combined ratios, and there's a significant amount of competition for growth. So we are seeing the nationals, the regionals and the super regionals still working on their pricing algorithms.

We are seeing PIF count growth, albeit at a lower average premium. And so we do end up with new business velocity that supports the long-term organic. We're just not going to have any of the gains that you're going to have in a more rate-taking environment where that would support pushing it up even further.

So Agency-in-a-Box and corporate stores, they're still getting good organic growth, but a lot of that is being supported by now retention and new business growth versus in the hard market, you had more from retention and rate. So being able to add more policies and policyholders into the portfolio as rates normalize and go back to mid-single-digit increases, that should support a rebound to the organic in the out periods.

So we're still holding good. If we look at isolating the organic for retail, it's still going to be a double-digit organic year for 2026. And we think that's very strong given where we've seen the peers reporting.

Got it. That's helpful, Gordy. Just maybe nitpicking here, knowing cash flows can be volatile from quarter-to-quarter. Any -- just came in, I guess, meaningfully lower than consensus had expected. Anything we should be cognizant of there or just normal volatility?

You're talking about the cash flow from adjusted net income?

Correct. I think the $4 million-ish figure.

Yes. I think that's netting out this tax distributions to LLC unitholders and distributions to that shareholder class. Janice, you can correct me if I'm wrong, but exclusive of those distributions, you may be able to shed a little more light on Mike's question.

No, I think that was the majority of it, Gordy, was the distributions. But I don't have it -- I'm sorry, I don't have it in front of me, the cash...

Okay. Got it. We were just looking at the $9.8 million versus $9.6 million in the prior year. So I think consensus was more -- had a bigger increase. So we can take it offline, too.

Right. Well, we did use some cash for our acquisitions this year. So more so than the prior year. But you're right, the tax distribution of members was similar to what it was in Q2 '25.

[Operator Instructions] Our next question comes from the line of Rowland Mayor from RBC Capital Markets.

Gordy, I wanted to quickly ask, you had talked about potential transformative acquisitions prior to all the volatility in the stock. With the share somewhat recovering that, are those deals potentially back on the table later this year?

I would say we have an active M&A pipeline and with recovery, those opportunities will be resurfaced and revisited. And we did not incorporate any of that potential in our updated guidance, which does imply there could be upside at the back half of '26. So we are back in a position where we can start to entertain those transactions again.

And then for my follow-up, the contingents are up a bit, but I don't think they drove the margin upside you had reported. Could you maybe walk through the moving pieces on the margin this year and maybe unit contribution?

Let me try to answer the contingent question first. I think as we noted in the first quarter call, our contingency for our guidance for '26 is below the actualized ratios we had in 2025. We entered the calendar year knowing we were going into a softening market where pricing was coming down, anticipating that the loss ratio metrics of those profit-sharing agreements would degradate over time.

So far, we have not seen that play out. The carriers are still showing excellent profitability year-to-date. I did mention last call that we will update the contingency after the third quarter. The third quarter is when we get our lock-in agreements and we have great line of sight to where we think those will ultimately come in.

So there is still upside in the margin and upside on total revenue relative to contingent income as we get into that third quarter update. And I know this year, we're doing updates more frequently to guidance just based on some of the lumpiness with Florida and then also this contingency dynamic.

And our next question is a follow-up from the line of Mike Zaremski from BMO Capital Markets.

Great. Gordy, going back to your comments on '27, if I interpreted correctly or heard correctly, not having significant headwinds. I thought the Florida MGA takeouts would post a headwind just because it's unlikely they renew 100% of policies. Is that not the case? Maybe you can help us understand, are you now expecting a better renewal rate on those policies? Or is there new growth dynamic to the Florida MGA or et cetera, that we're not appreciating?

Certainly. So I'll frame it like this. The first quarter, second quarter, both had better renewal retention dynamics than our base model. And so we have, in the back half of '26, increased our retention assumptions based now on having a longer data set to work from.

In the MGA Florida, I think what's less appreciated is that we have a voluntary program that is separate and aside from the Citizens takeout business. That's true organic new customers coming through the 700-plus appointed agencies that write voluntary new clients through the MGA Florida program.

And so part of what drove the second quarter organic into the 37% range, a large contribution of that was voluntary new business not tied to Citizens takeout. So net new customers through a newly appointed distribution channel via that MGA Florida expansion.

And so that voluntary program will continue to exist going into the back half of '26 and into '27. It has actually been present since May of 2025. It didn't start getting significant production traction until the later half of the first quarter of '26 and then really had significant growth in the second quarter of '26. So there is that offsetting renewal retention pressure from the ability to rewrite new accounts in that voluntary market.

Got it. Okay. That's super helpful. And maybe since there's still plenty of time, one more follow-up. Maybe you can give us any update on a year plus ago when you did the, I guess, deal with, I believe it was American National. That was kind of somewhat of a unique, kind of, not an acquisition, but right, agent acquisition.

Maybe you can kind of give us any update on how that's been playing out and whether that's -- any quantification to -- we'd love numbers and kind of how the rest of the book is rolling over on the auto side, which I know didn't come with it, et cetera.

Sure. So we don't have cohort analytics to share with you, but I can say that one positive shift in that portfolio on that group of agents, when we added them into our distribution, they were personal lines only and still restricted for commercial lines.

As of the end of June, they no longer are commercial lines restricted. So we are in the process now of onboarding those agencies to add commercial lines portfolio into their TWFG relationship. So we do see that as a conduit for additional growth. The vast, vast majority of them have done very well in our business model and moved the expiring nonrenewing property into our platform.

The auto now that we're in a softer market. So when they came in midway through 2024, we were still in the midst of a hard market. And our auto rates at that point through our platform were not constructive for their clients to move. Now that we've expanded with additional carriers, as well as the incumbent carriers moving price down and becoming more competitive, that's starting to migrate over as well. So they're part of that supporting the Agency-in-a-Box growth story and can impact it even more now that we're able to add commercial lines into their portfolios.

And our next question comes from the line of Pablo Singzon from JPMorgan.

I joined the call late, so apologies if this is covered already. But Gordy, the first question I had was some of your competitors are talking about comp and commission rates being renegotiated by carriers in the sort of, I guess, more open environment where they want to grow. Have you seen the same on your end? And what -- yes, I guess, sort of perspective on what's going on with you and your carriers? And how do you think that affects your growth trajectory from here?

So I think we are getting what I would call new business incentives, quarterly incentives. They're coming out with what we would call a spiff, which is incenting downstream to our service employees. And so you are seeing carriers trying to compete not just on price, but on comp in order to get portfolio and retain either their market share or grow their market share.

I don't look at some of those near-term compensation agreements as long-term factors because they tend to be short in nature. And next time a hard market presents itself, they disappear pretty quick. But we are getting that. We are getting new business incentives. We are getting quarterly incentives. And then some of the markets are coming out more favorably on the profit sharing and contingency side as well, as they're all fighting for growth.

And that's just a component of a soft market. Some carriers are offering book roll incentives, which we tend not to participate in. We like to be loyal to the carriers that have provided their capacity to us in good times and bad times. And so we try to just work with our markets and say, if we have a carrier that's out of market on comp and the rest of our portfolio is moving upward, we do share that feedback with the market, letting them know that they're no longer in a competitive environment. Even if their product and pricing is competitive, if they're not competitive on compensation, that's something that we do raise and try to address with them.

But I will say in a soft market environment, it is very much an incentive-driven environment now for the carriers to try to get everybody's attention to turn their way. And they can do that with comp or they can do that with rate, or even underwriting guidelines that are also loosening up substantially from where they were just 2 years ago.

And then my follow-up, I was wondering if you strip out the effect of the Florida book, what did you say is sort of your new business growth rate for, sort of, the core agency franchise?

I don't know that I gave that metric. I know, Pablo, you said you came on late, so I will say that I did already state that excluding Florida takeout business and the renewals thereof, our organic still would have been in the high teens. So hopefully, that's helpful to answer your question.

I don't know, Janice, if you have a new business percentage for just retail. I do think we had a shift in growth where our new business ratio was higher than the contributing renewal portfolio from the prior period. But I don't have that in front of me, Pablo, maybe Janice does.

I have -- well, what we did disclose was that consolidated retention, excluding MGA Florida, was 88% compared to the 93% that we have. And if I can disclose this, the MGA piece was 110%, but excluding Florida, it would be 71%. So the consolidated retention of 88% is more in line with our norm.

I think he was more -- to know about the new business mix of Insurance Services. So how much of it...

Yes, the renewal is what spiked up so much on Insurance Services, not so much the new business.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Gordy Bunch for any further remarks.

Well, thank you, everybody, for taking time to hear what I consider to be our best TWFG quarter to date. We appreciate all your thoughtful questions. I do want to reiterate that our updated guidance is consistent with our business model, our projections and what's in our line of sight.

We did note there are at least 2 potential upsides to revenue and margin that we will update during our third quarter call, that being contingencies, which we get our more fulsome update from our carrier partners in the third quarter. And as well as M&A where we have already achieved our guided M&A activity. We still do have an active M&A pipeline, and there is potential upside for us if we transact any additional acquisitions in the remaining 2 quarters of '26.

So we do appreciate our shareholders, our agents, our staff and everyone who attended today's call, and appreciate and look forward to hosting everybody, November 12. If you can mark your calendars, we will be hosting our Investor Day at the home office of TWFG and look forward to hosting many here in person on November 12. Thank you for your time today, and thank you for your trust. Appreciate you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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. [Operator Instructions] 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 call 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 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.

Thank you, and good afternoon, everyone. Thank you for joining us today to discuss TWFG's First Quarter 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, 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. 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 the first quarter of 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. 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 reentered key personal and commercial lines 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.

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 the first quarter. 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. 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. 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. 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.

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 earnings 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.

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 1/3 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 the AI space. First, proprietary data. 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. 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. 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.

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

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. 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.

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. 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.

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. 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. Commission expense grew at a lesser degree as compared to commission income growth due mainly to programs and corporate branches with 0 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. 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. 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.

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. From a liquidity and capital resource perspective, our balance sheet remains strong. As of March 31, 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. We repurchased $16.7 million through March 31 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.

And with that, I will now turn it back to Gordy for closing remarks.

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, 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. 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. 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. 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. We expect total revenues to grow 15% to 20%, reaching $285 million 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 first quarter results were consistent with these expectations. 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.

[Operator Instructions] And our first question comes from the line of Paul Newsome with Piper Sandler.

I was wondering if you had any thoughts 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. It doesn't mean it's going to do that for the rest of the year. But is there anything that would suggest that this is not the right run rate for the rest of the year?

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%. 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. So 10.1% is a good result for the first quarter, given the softening market and pricing and expanding beyond auto and property. We feel very confident in the full guidance that we provided, which is why we're reaffirming that 10% to 15%, knowing we've got good structural tailwinds for organic in the second quarter and looking towards the back half, looking for that to continue.

This is a little bit more of a modeling question, but it's related to the organic growth. The piece that reconciles -- the biggest piece that reconciles your revenue growth with the organic growth is this acquisition adjustment number. And it's been, last couple of quarters, 10- or 14-ish. But at least my 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. Maybe I'm getting my math wrong, but should that piece be dropping off given the acquisitions you've announced?

Acquisitions drop off after they've been in our operations for 12 months. So there is that -- that's my point, 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. 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% organic for the first quarter. And then we buy things throughout the calendar year. So there's going to be differences in adjustments quarter-to-quarter depending on the date we closed the acquisition. On organic, it's not -- 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% as a whole in the first quarter.

Our next question comes from the line of Tommy McJoynt with KBW.

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. 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? 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?

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, a small one in December and then an even smaller one in February. The larger of the takeouts were June and October, so they were paid as we get through the calendar year 2026. We'll have small remittances 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.

At this point, through the first quarter, we're looking at reaffirming the guidance of that 22%, 25%. We know that we have investments in technology, 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 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. And if we see another quarter like the first quarter, then we would potentially look at making some guidance coming into our next release.

Got it. 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 in 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 potential agencies and acquisition targets 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?

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. 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 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, and we don't end up doing too many deals that ends up turning that into a less than beneficial outcome. So really want to focus on the assets we've acquired, APIA and commercial MGA, getting it through its integration and orientation, and also looking at additional products that we can introduce into that business unit.

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. It's really just us being opportunistic and selective knowing that we've achieved our objective for M&A for the calendar year '26 guidance. And anything we do beyond here would move the guidance up. 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.

Next question comes from the line of Rowland Mayor with RBC Capital Markets.

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 bought back almost 15% of the Class A shares since the authorization was announced.

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. And so structurally, you have those boundaries of the amount authorized by the Board for repurchase plus the SEC 10b-18-1 limits.

Okay. That's perfect. And then I did want to 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, but I was just curious if the $285 million to $300 million included an assumption for Fortress.

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, and that's what goes into our total guidance for the year. And so Fortress has gotten us to that full amount that we had in our full calendar year guidance.

Next question comes from the line of Mike Zaremski with BMO.

First question is a follow-up on the excellent profit margin question and answer. And we could take it offline, too, if you'd like. 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? Is that the right way to think about it?

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. 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. So 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 the second quarter with similar success, that's going to require us to then update the guidance up as we would have overachieved now 2 quarters. So we're being disciplined in how we're looking at that portfolio given its outsized economic benefit. And we know that Florida market is dealing with its own property pricing downward. And so we're doing well, better than expected and 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.

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

We have a lot of geography that TWFG 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. 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 or early part of the first quarter. 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% guidance.

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. 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 PIP growth that's offsetting that pricing headwind. 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.

That's helpful. And maybe just lastly 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 -- it's too small to really move the needle?

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. We still have significant growth with GEICO. And we look at their technology platforms and the product lines that they're still not fully release in every state as going to be a net beneficiary to us as they continue to expand into new geography and open up more lines of business. So GEICO has been a positive other than, like I said, the great differential from incumbents allows us to retain the customer, allows us to write new business, but it has a lower average premium than the incumbent carriers.

Next question comes from the line of Brian Meredith with UBS.

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?

As a first recap, the vast majority of our MGA is admitted. So we're more of an admitted operation than an E&S one. And 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 PIP 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, but we've had a number of new admitted markets open up for new business in that state, which was not present last quarter.

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. 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 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 were not present in the prior period. That acquisition is now past the 12 month. So it's going to give us an upsized organic quarter for the second quarter.

Terrific. Second question, contingents, any views on what contingents could look like for the year?

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. So 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 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. So there could be upside in the fourth quarter as we live further into the calendar year and then those loss ratio sensitive contingencies become a lot clearer. So we're taking a very disciplined approach in how we're approaching contingency in our guidance and in our forecast. And yes, there's some upside there should the combined ratios and loss ratios stay historically good.

Got you. And then one last one, Gordy. I just want to go back to the good discussion you had on AI and I completely agree with you. 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? Do you think, just given the efficiencies, that you all and agencies are generating and maybe competition from AI-generated aggregators and stuff?

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. 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 micro service AI bots or AI agents you may have and the token cost if you're using third-party AI, I don't know that anybody could accurately predict where the cost savings is going to be 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, 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 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 cost, too. 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.

And our last question comes from the line of Pablo Singzon with JPMorgan.

First question, I just wanted to confirm, the reason that organic will be strong in 2Q, I think the takeout books renewing into organic, right? 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?

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. We also have a voluntary program, which is an entirely new form and distribution that we stood out from scratch. And everything that it generates is also organic separate from the takeout. 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. 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. 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.

Yes. 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 Gordy 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. So I feel like -- and with what we've got with the takeouts dropping off starting in July, the June takeout and then October, November -- June and October were the largest ones. And then you'll start seeing the replacements on the renewals after that point in time. And again, we have a pretty -- I mean, we're using a good -- we feel like a comfortable retention rate on those.

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

Yes.

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.

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% adjusted EBITDA. 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, and we feel very compelled by the strategic tailwinds we have coming into the second quarter 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. And our capital allocation strategy is working. $40 million of the $50 million buyback executed, 3 acquisitions completed. We have 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.

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

Good morning. My name is Fran, and I'll be your conference operator today. At this time, I would like to welcome everyone to the TWFG Fourth Quarter 2025 Conference Call. [Operator Instructions] 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 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.

Thank you, operator, and good morning, everyone. Thank you for joining us today to discuss TWFG's fourth quarter 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, 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. 2025 was a transformational year for TWFG as we successfully embarked on year 2 as a public company, and 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, 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 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 has entered into a definitive agreement to acquire the Lofton Wells Insurance Agency. That will become a corporate location in Memphis, Tennessee on March 1. 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. 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 and 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, a 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.

In contrast to the direct channel, TWFG's independent agent network specializes in providing tailored multiline 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, Coke 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.

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 adviser 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 advisers 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. 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. 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 but no algorithm can replicate. TWFG's competitive moat starts with our proprietary software and deepens with our organization's diversification and business mix, 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 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 5 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, controlled 87.2% of all U.S. commercial lines premiums in '25, grew their homeowners market share from 30% to 39% between 2013 and 2025 and 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, and we see significant runway to grow our share. 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. With that, I'll turn it over to Janice to walk through the financials in more detail.

Thank you, Gordy, and good morning, everyone. I am pleased to report the following fourth quarter 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 of $9.7 million and new business growth of $17.4 million.

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, 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 platform. 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.

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. 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 Gordy.

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, and 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%. 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.

[Operator Instructions] And your first question comes from Mike Zaremski from BMO.

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, versus agency in the box or any kind of parsing out you thought was worth mentioning?

Yes. 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 month since acquisition. But beyond that, their organic contribution is really going to be coming from the new program, new homeowners program launch that started really in earnest 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.

So I think we're looking at their contribution is 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. So it's the projection we're giving you is a conservative view of the voluntary writings ramping up. alongside our core business pre-2025 of agency a box and corporate store growth.

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?

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 increases to now a softening market. So as those markets reopened, repositioned 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. So there was periods of time where carriers were constraining new business production, taking a lot of rate and then we went through really second quarter of '25, we started that accelerated softening market cycle.

Not every carrier was on the same time line for when they started filing rate reductions. So as we got to the end of the year, a lot of that has started to catch up. So think about market leaders that file rates more frequently being ahead of the curve, taking market from our GA agents earlier in '25 and towards the latter part of '25, 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.

Okay. Got it. That's helpful. So 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 accelerating your technology initiatives by hiring folks, et cetera. I guess, Gordy, as a founder and a builder of products, right, including technology products, I was curious 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 in the past.

I appreciate that you probably don't think that TWFG stock should have been impacted nearly as much as it was. But curious if you do think there is some truth to what the -- at least directionally what the market is implying based on these kind of the last few months of technology and innovation.

Sure. Great question, Mike. And I think that the reaction wasn't just isolated to the insurance sector. There were other sectors that had sell-offs that related to AI innovations. And I think, hopefully, in my prepared comments, I hit on all the high notes of insurance is a highly complex transaction for most. And for those that have growing assets, growing liability exposures, they may use AI just like they use Google today to do research. But when making a final buying decision, many transition back over to the adviser to go through what they've discovered on their own through their own research. 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.

And 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. 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 agentic 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.

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. But 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 across just about every workflow metric within our business is going to create a net beneficiary 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. 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 is not always rational. 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.

And it's going to be a little bit more difficult for multiline customers to get all of that out of an algorithm. 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 every single person on this call has insurance. 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, personal lines, commercial lines, specialty lines, life, annuities, we have a lot of different places to pivot, insulate and cross-sell and provide that advisory role for insureds with complex insurance decision-making. So I think we're here for the long haul.

And your next question comes from Paul Newsome from Piper Sandler.

I was hoping just in a very broad brush way, you could focus in on the organic -- the components of your 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, I would imagine pushing against that. But maybe as you just step back, what are the pieces when you thought about the potential for improving organic growth that moved you in that direction?

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. When we're looking at our 10% to 15% guidance, if you're looking at our 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.

And so let's say, 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. 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 that was inorganic in '25 that will become organic in '26.

That's present in our corporate stores, that's present in our MGA. 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, there'll be net contributors to organic in '26 as they roll through their 12-month ownership horizon.

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

So our M&A pipeline is still very robust. I think on the, what I would call, transformational sized transactions that are out there, we've had 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 puts everybody in a position of saying, let's make sure we understand how agencies are going to be valued long term.

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 company. 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 gained through the acquisition is part of the picture.

And then what are the things we can do post close that enhance the business we're acquiring and the businesses we already own. And 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. 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.

And your next question comes from Bob Huang from Morgan Stanley.

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. 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?

So 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 Woodland Financials?

Sure. Good question, Bob. I would say we ended 2025 with $1.7 billion of premium between the two channels. There's a $1 trillion 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 remarks, but in 2013, TWFG was substantially smaller when the McKinsey report came out. And back then, private equity really wasn't in personal lines or agency brokering space. 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.

I think if others start to get into personal lines, we have $498 billion of personal lines that currently don't -- doesn't reside with TWFG. I think as our technology improves, as our platform becomes better known as an option for agents to join, launch with, I think we'll be the net beneficiary of a lot of these changes. So when you think about the 40-plus thousand independent agencies across the U.S., 38,000 of them are subscale. So 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. And we have that business model to help them bridge what they can't do naturally on their own, 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 and provide them an opportunity to remain relevant long term. So 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 again, large market share out there for us to grow into.

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

100%. If I would have read the headlines from McKinsey in '13, I should have backed up my [ tag ] and closed.

And your next question comes from Tommy McJoynt from KBW.

This is Molly Knoell on behalf of Tommy McJoynt. 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. 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.

Yes. 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 in more of your cat exposed geography and more specifically wildfire exposed as compared to historically, 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 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 fare plan.

So 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 if the auto writing companies choose to decide to open back up property in order to help them sell bundled package policies, but 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 not going to go broader than that. All of the carriers we work with today are in growth mode. And so with that comes a little more relaxed underwriting guidelines, enhanced 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.

Great. That's really helpful. 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, how significant do you think that decline will be?

So I don't think the private markets have caught up to 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. 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, I think it does cause some to pause.

I think some sellers that were in processes also paused to see where the market is going to normalize. It could have an impact on the larger-sized transactions multiples. When you bifurcate out the valuations of private transactions, organizations that are selling with less than $1 million of revenue really don't price correlate to public markets. And 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 over $20 million, over $50 million of revenue organizations, those are the ones that try to peg pricing to public markets.

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

Your next question comes from Rowland Mayor from RBC Capital Markets.

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? And is that a growth tailwind to agency or M&A? Or how are you thinking about that?

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. 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 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 the markets they're going to need to be competitive in their marketplace. 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 $1 million of revenue. And I think the vast majority of them have less than $0.5 million of revenue.

Those smaller, less scaled independent agencies have probably 70% less market access than our agents have. And as they 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, 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 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.

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? And do the growth investments kind of continue through '27?

I'm going to say it's a blend. Part of it is we're 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. So some of that's just public company expense flowing through as we continue to get towards that compliance time line. Some of it is investment in technology and infrastructure.

And then -- the third point, to your point, is where the contingencies go in '26. So I do think we are hedging on contingencies in our projections to make sure that we had a great outcome in '25. That was at the tail of an increased rate environment, historically profitable outcome for the majority of our partners, a nonsignificant cat event ex California wildfires early in '25.

I think it would be foolish for us to project same and similar outcomes in '26. 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 related to that profit sharing.

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. But what is the margin profile of the corporate and MGA business? And is that an opportunity as we mix towards those to expand long term?

That is correct. Our corporate stores run between 30% and 40% margins. So probably averages out with contingency around -- just asking specifically about the different buckets. So when you get down to the corporate locations are going to run 30% to 40% margins, that will 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 getting through the development costs and expenses. 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, 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 two transactions that are closing and 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 in that platform as well as our existing MGA programs are also continuously expanding.

So yes, there's margin expansion upside based on the mix coming through MGA coming through corporate stores. And so 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.

And your next question comes from Pablo Singzon from JPMorgan.

So I guess there are many angles to the AI question for personal lines, right? So if you 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, that AI can scrape and optimize.

It seems to me that's sort of what people have in mind when they think about the AI threat. 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. So anyway, your thoughts there, Gordy, I'd be interested in hearing.

Yes. Great question, Pablo. And let me -- I'm going to 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 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 comparer 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.

So people have been bombarded with marketing post those experiences. they didn't necessarily get great results from that experience. 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 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. So 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. 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.

So 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 AI engines. 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, 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.

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 adviser 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 place it themselves. Another thing I would say, Pablo, you asked about the hesitancy of the American culture to participate in online sales.

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 [ Esur, ] right? Because I suppose in theory, they could have sort of like started selling directly in these price comparison platforms and all the links established and the ability to buy, right? And obviously, it's not there, right?

So I guess the question is, do you think that changes even if the platform is, I guess, more intelligent now it's AI or not, right? I'd just be interested to hear because 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. So just your thoughts there.

Yes. So 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 fielded underwritten by an independent insurance agent, their acquisition cost of that digital customer has to be so much better that, 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 platforms, they both have a significant investment in independent agency distribution.

Progressive has long had a dual channel approach. GEICO up until the tail end of 2024 never had independent agents. This is Berkshire Hathaway. They have all the capital and resources and some of the smartest people in the insurance sector. They're leaning in on independent agencies. It would be a good question for them is they saw this AI technology probably before 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 2 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. 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 4-wheeler, starts buying investment properties, has to have extended liability. I mean there's all these things that expand a person's layers of insurance needs that happen over a course of a lifetime.

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. 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. And I know you said that was really more carrier related.

And 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 homeowners product have a credit insurance score factor, that's the only way to get to ultimate accuracy.

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. And I don't think a lot of people are there yet to put in that much of the 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 drew fatigue. And this is from an insurance professional just trying to see what does the competition look like?

And 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. 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. 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 of the balance sheet.

And that enterprise risk management component of the property side is going to keep property highly fragmented. So 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. And there's just not a lot of property carriers that are going to provide their capacity in that environment. At least I haven't seen there to be a plethora of them doing it today.

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. Please go ahead.

Thank you, operator, and thank you to everyone who attended today's call. I appreciate all your thoughtful questions. I want to reiterate that we are a -- we have a balance of -- 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 decades into our future to get into the $497 billion of personal lines market share that we don't currently possess, the $0.5 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. Thank you.

Good morning, and welcome to TWFG's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

As a reminder, today's call may include forward-looking statements that are subject to risks and uncertainties. Actual results could differ materially. For more information, please review our filings with the SEC.

And now I like to turn the call over to Gordy Bunch, Chief Executive Officer. Please go ahead.

Thank you, operator. And good morning, everyone.

TWFG delivered another strong quarter of performance, reflecting both the resilience of our distribution platform and continued scalability of our operating model.

Total revenues increased 21% quarter-over-quarter to $64.1 million, supported by 10.2% organic revenue growth and M&A revenues, while adjusted EBITDA grew 45% to $17 million, expanding margins by 430 basis points to 26.5%. That margin expansion underscores the earnings power of our distribution platform and execution on accretive M&A as we leverage scale and financial discipline.

We continue to see encouraging signs of personal lines normalization. Carrier appetite has returned, rate increases have moderated, and underwriting discipline remains strong, all of which are helping to normalize retention and new business growth across our platform.

Our diversified model spanning retail, MGA, and affiliated agencies, positions us to capitalize on both hard and soft market cycles.

Our third quarter recruiting and M&A activities were productive with the addition of 8 new retail locations, one new corporate location, and 370 independent agents to our MGA platform. Following the quarter, we completed the acquisition of Alabama Insurance Agency, adding 23 additional retail locations and marking Alabama as our newest state expansion. These additions strengthen our foundation heading into the fourth quarter and enhance our ability to serve clients across a broader national footprint.

Strategically, our priorities remain unchanged: Investing in our technology initiatives, executing our accretive M&A goals, expanding our retail and MGA distribution channels, and executing disciplined capital deployment to support these priorities.

I'll now turn the call over to Janice Zwinggi, our CFO, to discuss some of the financial highlights.

Good morning, and thank you, Gordy.

Starting with our top KPI, written premium increased by $67.6 million or 16.9% over the prior year period to $467.7 million. We saw strong double-digit growth within both of our primary offerings, insurance services grew $56 million or 16.5%, and the MGA had a spike in growth of $11.7 million or 19.2%. This increase was a result of healthy growth in both renewals of $51 million or 16.4% and new business of $16.6 million or 18.7%. Our consolidated written premium retention remains strong at 91%.

While a softening rate environment typically translates to increased customer shopping, our retention performance underscores the stability and engagement of our client base.

Our total revenues increased $11 million or 21.3% over the prior year period to $64.1 million. This increase was driven primarily by commission income growth of $10 million or 20.8% to $58.3 million as a result of continued expansion in both of our product offerings and supported by strong renewal and new business activity. Higher contingent income and increased fee-based revenues from one of our MGA programs also contributed to the revenue growth.

Organic revenues increased $5 million, reaching $54.2 million compared to $49.2 million in the prior year period for an organic growth rate of 10.2%, demonstrating solid momentum across both our agency and MGA platforms and positioning us well to meet our full year growth targets.

From a profitability standpoint, adjusted EBITDA of $17 million, grew 44.7%, translating to a margin of 26.5%, which was up more than 400 basis points from the prior year quarter. This expansion reflects operating leverage, expense discipline, and an increasing mix of higher-margin corporate branch locations.

On the expense side, commission expense increased $3.9 million or 13% over the prior year period to $34.6 million, tracking with commission income growth, taking into account the impact of corporate store acquisitions and programs with no related commission expense.

Salaries and benefits increased $1.6 million or 19.2% over the prior year period to $9.9 million, driven by investments in new corporate branch acquisitions, headcount growth, and public company infrastructure.

Other administrative expenses increased 8% to $5.2 million, reflecting technology upgrades and compliance initiatives.

Net income was $9.6 million, up 40% over the prior year period, with a net margin of 15%. Adjusted net income rose 55% to $13 million, equating to an adjusted net income margin of 20%.

We also delivered operating cash flow of $15 million and ended the quarter with $151 million in cash and no draws on our revolver, leaving us well positioned to fund both organic initiatives and potential tuck-in M&A.

For the full year 2025, we've tightened the ranges on our guidance to reflect our year-to-date performance, recent expansion activity and current market conditions. We expect total revenues between $240 million and $245 million, and organic revenue growth rate in the range of 11% to 13% and adjusted EBITDA margins between 24% and 25%.

As the personal lines market continues to soften and carrier availability expands, our current recruiting and acquisition initiatives, including the addition of new retail locations, independent agents, and the Alabama Insurance Agency provide further momentum and earnings visibility heading into year-end. Together with our balanced capital allocation and disciplined execution, these factors reinforce our confidence in achieving our full year 2025 targets.

I'll now hand the call back to Gordy for closing remarks.

Thank you, Janice. As we close out the third quarter, I'm proud of how our teams continue to execute. We've proven that investing for growth and focusing on margin expansion can coexist and that our TWFG family culture remains one of our greatest advantages. TWFG is squarely aligned with that playbook, focused on profitable growth, accretive M&A, deepening carrier and agency relationships, and expanding our retail and MGA footprint to sustain our long-term growth objectives.

We enter the final quarter of the year with momentum, a fortress balance sheet, and a clear view toward our long-term objective: to build one of the best, high-growth, independent, agent-centric, data-driven, distribution platforms in the country. I want to thank our employees, agents, carriers, and shareholders for their continued trust and commitment to TWFG.

With that, operator, let's open the line for questions.

[Operator Instructions] Our first question comes from the line of Tommy McJoynt of KBW.

The first one, I think, is going to be related to the M&A front, but I just want to check on that. If I look at the statement of cash flows, there is a $10 million line that's attributed to other investments. Could you clarify what that is? Is that related to M&A?

Sure. So we've long had our own premium finance operations, and we have been outsourcing operations for years and also using credit facilities to fund those premium finance notes. With so much capital in our coffers, we deployed our own capital into the premium finance operations, giving us a higher yield on that operating business.

So is that an accretive transaction? I guess, is that needle moving?

I'd say it's highly accretive, yes, highly accretive for us. You're getting 4% plus interest in most interest-bearing instruments and the yield of swapping out our capital for the credit facility that was funding the premium finance notes put us well above 7% on the same deposits.

And then staying on the M&A front, you obviously are constantly looking at a pipeline of potential acquisitions. As we think about the 2026 pipeline, would your expectations right now that you guys put more capital to work on the M&A front, do more deals or how do you think about it relative to the pace that we're seeing this year?

I think we'll be executing a little bit earlier in the cycle in '26 than we did in '25. And depending on how we view M&A throughout the calendar year, we should exceed '26.

Our next question comes from the line of Paul Newsome of Piper Sandler.

Maybe a little bit of additional color on the market environment would be helpful. And I was wondering if you could kind of walk through maybe in addition to some of the pieces of rate plus -- true organic growth plus M&A, just to kind of give us a better sense of as we go into '26, what are the moving pieces that will get you to that double-digit organic growth? And what are the things that we should be sensitive to if things change? Like one of the things I struggle with is hard market turned out to be kind of bad for organic growth because of the availability issues, but now we have more availability, but soft market. So maybe some thoughts there would be helpful, at least for me.

Yes. First, on the market transitioning from hard to soft, that has an impact on renewal rate and premium retention as those policies that were enforced last year come in at lower rates. As the market also then opens up, customers have more access to different carrier options than they had in prior periods, which could lead to even rewriting the account into an even lower rate than what the renewing expiring carrier offered.

That cycle plays through the full calendar year. So we should see the impact of that abating once we get into the second quarter of '26. That would give us a full 12-month run of the softening of the market, which really began early in the second quarter of '25. The availability of additional capacity allows for more clients to be onboarded. The trade-off is lower average premium for the same accounts.

We are seeing growth in exposure that is offsetting some of that reduced premiums. When we look at our organic going into '26, it's a combination of our same-store sales growth velocity, sales velocity as well as new program initiatives that we've launched from the MGA, existing program expansion, which then allows for more exposures to be brought in through those channels that are creating additional commission income above the base year.

So it's really not one area. It's a multitude, all of the different parts of our platform executing against their growth initiatives.

And maybe a kind of sort of similar question. You've made a lot of additions of new agents over the last year or so. I think you've said in the past, most of them won't have an impact anytime super soon. How is that sort of waterfall of impact from those newly acquainted agents coming? And is there a point where we see some sort of inflection point where that -- those new agents you've accumulated over the last year or so start to have a measurable impact on the growth rate?

Yes, their impact is baked into our forecasting. And I think as we've talked about over time, the immediate year they come in, there's not much of an immediate contribution as they grow their agency over a multiyear process, they start becoming more meaningfully contributed.

Now as, like I say, we added a lot of stores in '24. So in '24 and early '25, they're not contributing a lot to the organic story. As they start getting their portfolios larger, they do become organic contributors, but at a percentage of the larger base now. So they're all part of the organic base. And so they're going to be part of the organic forecast based on our trend lines.

So when we look at Agency-in-a-Box, all those recruited locations are in the AIB bucket. And so they get baked into there. We don't do cohort analysis around those, because of the vast diversity of locations, average premiums, and some of them doing their own tuck-in producer acquisitions that then skew the data points. Anyways, they're going to start being contributors, they're part of the base assumption going into the double-digit 2026 projection.

Our next question comes from the line of Pablo Singzon of JPMorgan.

First, on the MGA channel. So good premium growth this quarter. I think you said 19%, but commission income actually grew much faster. I think it was about 56% and then commission expense only grew 27%. As a result, the MGA was highly margin accretive this quarter. I think net commissions over gross commissions are about 52% against, I think, mid-30s historically.

Anyway, can you just talk about what happened there, business trends wise, and what drove the strong results this quarter?

Yes, sure. So we launched a program in Florida at the end of the second quarter. Part of that program -- there's 2 components to it. We are an exclusive TPA, MGA for Florida Property Program. They had a takeout that materialized in June. That creates a TPA revenue stream for underwriting claims, marketing, and on the earn-out of the takeout, there's not a commission expense. So we get a commission revenue without the corresponding commission expense. As those policies renew, they do end up having a commission expense, and you'll see a normalization of that ratio between commission income and commission expense.

And then separate and aside from that, there is a voluntary organic program that's writing new business, albeit in the reported quarter, not really a large contributor, should become a contributor at the end of fourth quarter and more going into 2026.

And then second question, I guess, this one is a bit bigger picture, right? So many of the public brokers have recently announced significant cost reduction or investment programs, which may be good longer term for them, but good near-term cash flow. So I guess the question is, do you anticipate something similar for your company? And if not, how would you respond to the objection that you might be underinvesting in the business compared to everyone else?

Yes, we haven't announced our full year 2026 estimates. We plan to do so as we come out of the [ K ]. We're in the midst of our 2026 planning process, looking at those investments. Some of the investments we make, as you recall, our technology operation, our evolution management systems company is outside the public company. Those capital investments are made within that tech environment, which then doesn't burden the public entity with that capital spend.

We will have investments similar to our peers, probably not at the scale of what they're spending. And part of that is just how we're organized, given the ability we can invest in technology outside of the public company operations and benefits of those tech investments then inure to the public company operating business units. So that's just totally different.

We will have expansion of management team. You'll see an announcement later on this afternoon some roles and title changes that we put out. And then as we finish up our '26 planning, we'll be putting out the full year estimates alongside our K.

[Operator Instructions] Our next question comes from the line of Brian Meredith of UBS.

Gordy, first question, back on the MGA. So as capacity becomes more available, particularly in the Texas market, and I'm assuming business kind of goes back to the admitted market from the, call it, wholesale ENS market. Will that create some pressures maybe on growth in the MGA?

Well, fortunately, for us, our MGA programs are currently all admitted. So if anything, the capacity that's shifting back from ENS into the admitted space inures to our benefit. So both Texas and Florida are admitted products.

And then second question, I'm just curious, when we think about EBITDA margins for your corporate versus Agency-in-a-Box business, what's the difference there? And is there a difference in kind of where your Agency-in-a-Box kind of EBITDA margins can go versus the corporate margins, you think?

So we've talked about Agency-in-a-Box and the passing through of 80% of the revenue and renewal kind of puts a cap on what that margin can produce. Because we are at scale as business operations, we do have a healthy net revenue margin on that business unit.

On the corporate locations, our margin is going to be greater than 2x of what we achieve in Agency-in-a-Box, because we're retaining 100% of the renewal and have more control and constructive receipt of the profitability of the operations.

Makes sense, thank you.

And I want to circle back, Brian, while I got you, so I partially misspoke. Our programs that we originate and operate are all admitted. The Dover Bay program is indeed an ENS program. And I just wanted to clear that up.

Our next question comes from the line of Charlie Lederer of BMO.

Sorry, I joined late, so I apologize if I'm repeating someone else's question or if you touched on in prepared remarks.

You made the comment in the press release about the product environment improving significantly. Just curious if you could break that out geographically a little bit and if you're seeing that in both the new business and renewal side? And I guess, how to think about what's flowing in the P&L near term?

Sure. So we did touch on it earlier, but I don't mind repeating the hard market for personal lines started moving soft in really the beginning of the second quarter of '25, that changes carrier fostering. So think about the hard market '23, '24 and the early parts of '25, carriers are taking significant rate, carriers are restricting capacity. By restricting capacity, that means they're not writing the right new business. They're not wanting to add new production appointments, and that becomes a challenge.

So as the market started to soften, carriers start reducing rates, they start opening up geographically for new business growth, they start putting out incentives to get agents to reengage in the sales process, and it becomes a highly competitive environment.

Geographically, I would say that's present everywhere except California. California remains to be a hard market. You're still seeing property shifting between California FAIR Plan, surplus lines. There is fewer carriers right now operating in the California marketplace. You had Safeco make the decision to essentially exit the state by transferring its portfolio to Liberty Mutual. And so capacity is shifting from left pocket to right pocket. We are in both of those carriers' distribution.

And so California is still hard on the personal lines side, it's relatively soft on the commercial lines. And then you have spotty geographical hardness where you have significant wildfire exposure regardless of state. And then I'd say largely the cat-exposed, hurricane-driven, PML geographies are relatively soft given the reduction in cat pricing and the significant availability of cat out in the market today.

Maybe on the M&A pipeline that you talked about, can you give us a sense of, if it's a commercial or personal tilt toward that in terms of how your business mix might evolve in the next year or so?

So when we're looking at M&A, the first thing we're looking at is the cultural fit of the organization. Secondarily, the quality of the portfolio, is it accretive, meaning, does the portfolio have similar loss ratio qualitative characteristics as our core portfolio? Is there some geographical expansion benefit of the acquisition? So does it possess unique carrier contracts and programs that benefit the large organization, so there's an immediate accretion, the EBITDA margin of the operating business and is there some internal scale lift of that post closing.

We don't really focus on, is it personal, is it commercial, is it retail, is it MGA, is it network? we really look at the qualitative accretiveness of the totality of everything. And so we have in our pipe, and we have in our near term a little flavor of everything.

So if I look in the rear, the last 2 acquisitions that we closed were, I would say, majority commercial lines, retail organizations. And part of that was geography. We picked up some scale in New York with the Angers & Litz acquisition that we announced in August. And then we had a larger operation in Louisiana that was also more commercially focused in the [ McGuinness ] operation we acquired in June.

As I look at the first quarter '26 pipeline, I would say it's a little bit of everything. So we have one entirely commercial organization that's in the pipe, we have several that are a mix, so more of a multiline agency flavor where you have probably 40% to 50% personal, 60% to 50% commercial. And then we have some that are entirely personal lines.

So I think that's a good question to ask, and I'll probably use your question as an opportunity to talk about premium projections. When we look at our acquisitions and we put together our base analyst model, I think, we use the assumption that the majority of our acquisitions and deployed capital we're going to be buying retail-oriented businesses that generate a lower, average commission but would project a higher premium.

Our internal view is we're less sensitive to premium because we're not a carrier. We're more focused on the acquired revenue and the EBITDA output of the acquiring business. So when we acquire program-oriented type businesses, it's going to bring in less premium than you may have projected, but it's going to bring in a higher average commission than you projected. So when we hear or we see that there is a miss on premium, we're not a carrier. We just use premium as a barometer of how you can project future revenues and maybe we got to be a little bit more strategic about how we communicate that, because to the extent that we expand programs, and we will, because they present a higher-margin for us, it's going to be a lower premium, but a higher revenue and a higher EBITDA margin off of what we put in our base M&A assumptions.

So I think when we come around and provide '26 guidance, you're going to see us trying to update those assumptions, because I think when you look at our actual results from an M&A basis, we're achieving on the acquired revenue, we're achieving on or maybe overachieving on the EBITDA margin. And then where we see various questions is what the premium number didn't come in.

I think for me as an investor and owner of the business, I'm more focused on the revenue, and the net income, and the earnings and the ability to reinvest those earnings into the growth of the business long-term than the top line premium that I don't get to retain because we're not a carrier balance sheet organization. Is that fair?

Very fair. Thank you. Just one last one on the contingent line of [indiscernible] and what contingents might look like in 4Q?

So we do. One of the reasons we were very confident in our full year guidance as we made it through the 9-month treadmill and obstacle course known as insurance. We've got those third quarter lock-in opportunities so we can lock in some of those contingencies that are in our base level projections. So we have a high confidence in achieving what we've got in our current pro forma through the full calendar year.

I would now like to turn the conference back to Gordy Bunch for closing remarks.

Well, we again appreciate all of our shareholders, our staff, even the analysts, investors that are working with us. We think we have a great opportunity going into 2026 with our strong balance sheet, our very healthy M&A pipeline, our organic strategies for existing operations, the expansion of our programs. We look to execute on all the different levers that we have to ensure consistent growth and profitability across the organization.

I look forward to further feedback and appreciate everybody again. And thank you for attending our call.

This concludes today's conference call. Thank you for participating. You may now disconnect.