The Baldwin Insurance Group, Inc.

Greetings and welcome to the Baldwin Group's fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Bonnie Bishop, Executive Director, Investor Relations. Please go ahead.

Thank you. Welcome to the Baldwin Group's fourth quarter 2025 earnings call. Today's call is being recorded. Fourth quarter and full year financial results, supplemental information, and Form 10-K were issued earlier this afternoon and are available on the company's website at ar.baltwin.com. Please note that remarks made today may include forward-looking statements subject to various assumptions, risks, and uncertainties. The company's actual results may differ materially from those contemplated by such statements. For a more detailed discussion, please refer to the note regarding forward-looking statements in the company's earnings release and our most recent form, 10-K, both of which are available on the Baldwin website. During the call today, the company may also discuss certain non-GAAP financial measures. For a more detailed discussion of these non-GAAP financial measures and historical reconciliation to the most closely comparable GAAP measures, please refer to the company's earnings release and supplemental information. both of which have been posted on the company's website at ir.baldwin.com. I will now turn the call over to Trevor Baldwin, Chief Executive Officer of the Baldwin Group.

Good afternoon, and thank you for joining us to discuss our fourth quarter and full year 2025 results. I'm joined by Brad Hale, Chief Financial Officer, and Bonnie Bishop, Executive Director of Investor Relations. Earlier this month, Our industry experienced one of the most dramatic sell-offs in nearly two decades after the launch of AI-powered insurance applications and chat GPT triggered fears of widespread broker disintermediation, eviscerating nearly $40 billion of market capitalization across our public broker peers in a matter of days. I wanted to start with a few direct thoughts on this, as moments like these are exactly the kinds of moments that reveal the difference between businesses that are built for the future and those that are not. The critical question being debated today is whether AI will be a true competitor to brokers or an enabler for them. I believe the answer is both. AI will almost certainly drive a divergence of fortunes and success for talent and firms alike. Firms operating as transactional middlemen and commoditized insurance product lines should be concerned. At the Baldwin Group, based on our end markets, intentional go-to-market strategies, and the overall complexion of our business, AI is a step function multiplier, enabling significant gains in productivity and enhancing our organizational speed and agility. I'll spend a few minutes addressing how we think about this and why, at the Baldwin Group, we have been purpose-built for this era. In personal lines, which comprises approximately 38% of our total pro forma revenue, roughly 80% of that revenue emanates from embedded insurance distribution platforms, which we believe represent one of the ultimate moats in this environment. While the market is worrying about consumers asking a chatbot for insurance, in our embedded businesses, we are focused on being the insurance solution of convenience, sold through a trusted partner alongside a primary transaction such as buying a home, securing a mortgage, or renting an apartment. We don't wait for our clients to search. We are already there. Our Westwood platform, which inclusive of the HIPPO business we acquired, generated $190 million in pro forma revenue in 2025, seamlessly embeds directly into the home buying experience for 20 of the top 25 home builders in the United States who, in aggregate, sold 57% of all new homes sold in the U.S. in 2024. When a consumer buys a new home through one of our builder partners, Westwood binds a policy roughly 55% of the time, and over 85% of those bound policies are escrowed in the consumer's mortgage payment. That is a deeply embedded, highly persistent revenue stream. Our national mortgage and real estate platform serves as an extension of our mortgage and real estate partners' client experiences, bringing protection directly into the consumer's moment of home purchase and financing through our proprietary technology platform, Coverage Navigator. In 2025, we onboarded 12 new partners, including New American Funding, a top 20 mortgage originator in the U.S., who moved to our platform from a competitor and it's seen dramatic increases in conversion rates. I'm thrilled to announce that yesterday we signed a 10-year exclusive agreement with Fairway Independent Mortgage Corporation, the sixth largest independent mortgage lender in the U.S. with over 67,000 loans originated in 2024. We currently expect to go live with Fairway on our coverage navigator platform in the second quarter. The growing momentum here is palpable. and will drive deeper moats around our embedded business. Our renter's insurance platform, which wrote over 280 million of premium in 2025, embeds directly into property management software, allowing a renter to purchase an insurance policy at point of lease in under 60 seconds. 100% of the premium flowing through this channel is into our own proprietary products, built and managed by our MGA platform, MSI. Overall, these embedded solutions are easier, more intuitive, and more seamless than initiating a separate process with a standalone AI agent. We've been investing heavily in embedded solutions as a direct strategy to transform how personal insurance is bought and sold because we foresaw the risk of disintermediation through technology. We are the disruptor in this marketplace. And importantly, since early 2024, We've been building AI into these platforms and are seeing real productivity gains, including digital agents taking phone calls and binding policies when coverage discussions are not required. Now, shifting gears to small commercial. This is an area where we do believe AI can positively transform the insurance buying experience, given the traditional brokerage economics for these small accounts are broken. High labor costs and low retention often result in low to negative margins. Fortunately, we've been proactively disrupting ourselves here via our Founders Shield digital platform, migrating small business clients to a digitally guided experience. The results have been significant. On average, for clients who have migrated to this platform, retention increased from 82% to 92%. Margins swung positively by approximately 40 percentage points, and growth accelerated to 25% annually as the digitally guided buying experience led to cross-sell and up-sell. We ended 2025 with $17 million of retail brokerage revenue on this digital platform and are in the process of migrating the remaining roughly $30 million of small business revenue onto this platform. While small relative to our overall business, we believe this platform will be a growth driver for us over time. Importantly, we are not waiting for an AI agent to disintermediate this business, but rather are leveraging our digital-first platform to serve it better and more profitably than any human-intensive model could. Turning to our IF segment, we've intentionally constructed a business that skews toward clients with both scale and complexity, where deep product and sector experience are critical factors in the choice of an insurance advisor. The addition of CAC amplifies that strategy, bringing substantial expertise in complex industry sectors and risk products. Of our roughly $1 billion of pro forma IS revenues, inclusive of CAC, approximately 70% is commercial insurance for midsize to large clients, 20% is employee benefits brokerage and consulting, and 10% is personal insurance for high net worth families. Approximately 80% of IES revenue comes from clients generating at least $50,000 of revenue for Baldwin, meaning they are generally spending more than $500,000 in insurance premiums across complex and sophisticated insurance program structures. We have organized the business around industry and product specialties, and one example I'm particularly excited about is our cross-functional team of experts from construction to natural resources, real estate, and complex property that is serving clients involved in data center development across all phases of the life cycle. From project sponsors to developers of solar, wind, geothermal, natural gas, nuclear, and energy storage projects to power producers and energy off-takers, this convergence of traditionally siloed practices allows us to move at speed with rapidly changing markets and is exactly the kind of advisory work that AI augments rather than replaces. Lastly, our UCTF segment wraps a strategic moat around the broader Baldwin platform. In this business, we build and manage proprietary insurance products. We price and analyze risk, adjudicate claims, and facilitate the formation and management of third-party risk capital. AI will only enhance and accelerate our capabilities and productivity across all these domains. We have long held the view that the broker of the future, the broker for an AI world, integrates across the value chain end to end, owning the client relationship, building and managing risk transfer products, and arranging for the formation and management of risk capital. The proprietary product flowing through our embedded channels further insulates us from perceived risks of disintermediation as they are only available through us. It is our product and access runs through our platform exclusively. We are incredibly excited for this moment. We are structurally set up to quickly take advantage of the operational gains afforded by AI. Quite simply, the Baldwin Group was built for this era. With that, I will now turn to our results. Fourth quarter organic revenue growth of 3% was below our historical performance and reflects several headwinds we've previously discussed, including a 22% decline in profit sharing revenue that is largely timing related. Core commissions and fees organic growth was 5%. On a full year basis, we delivered core commission and fee organic revenue growth of 8%. Total organic revenue growth of 7%, adjusted EBITDA growth of 9%, 20 basis points of margin expansion, and adjusted diluted earnings per share growth of 11%. These full-year results place us at the top end of organic growth across our peer set. Normalizing for the one-time impacts from transitioning our QVE builder book to our reciprocal and the procedural change impacting the timing of revenue recognition in IAS, Commission and fee organic growth would have been 8% in the fourth quarter and 10% for the full year 2025. Overall, organic growth would have normalized to 5% in the fourth quarter and 9% for the full year 2025. Additionally, the disruption in the Medicare marketplace impacting our Medicare business was a 100 basis point headwind to organic growth in the fourth quarter and a 70 basis point headwind for the full year 2025. Despite the revenue headwinds in the fourth quarter, profitability pulled through. Adjusted EBITDA margin expanded 100 basis points in the quarter to 20.1%, and adjusted diluted earnings per share grew 15% to 31 cents per share. This was driven by the structural margin opportunity inherent across our platform, as well as core operating leverage, and was in the face of the $7 million decline in contingent commissions, which have a 100% flow through to EBITDA. At the segment level, UCTS once again delivered outstanding results in the quarter with 16% organic growth and adjusted EBITDA margin expansion of approximately 330 basis points. Strong performance was powered by continued growth in multifamily, better than expected results in our commercial umbrella portfolio and builder product and contributions from Juniper Reef. In Main Street, our core commission and fees organic revenue growth was 2%, while total organic growth was negative 4%, reflecting some pressure and timing of contingents. The quarter was negatively impacted by the continued QBE transition headwind at Westwood and Medicare retention challenges. As a reminder, the year-over-year QBE Commission headwind should subside in May of this year, and we expect tailwinds over time related to the economics associated with managing the reciprocal. Normalizing for the impact of the QBE transition, total organic revenue growth would have been 2% for the quarter and 6% for the year. Further isolating out the impact of the disruption in the Medicare industry, organic revenue growth would have been 6% in the quarter and 8% for the year. Despite the top-line headwinds, adjusted EBITDA margin expanded 460 basis points to 31.8%, an exceptional profitability result, showcasing the immense operating leverage we have as our investments in building our embedded mortgage business earn in. In IAS, fourth quarter, core commission and fee, organic revenue growth was flat. while total organic revenue growth was negative 2%, reflecting timing pressure on contingents and rate and exposure headwinds of nearly 10%, inclusive of the procedural accounting change we have previously discussed. Removing the impact of the procedural accounting change, total organic revenue growth would have been negative 1% for the quarter and 4% for the year. Underlying business momentum remains strong. Sales velocity was 19%. top decile for our industry, and client retention improved by nearly 300 basis points in the fourth quarter. We increased our investment and frontline revenue generating talent by 44% in the year, taking our net unvalidated producer pay from 1.6% to 2.3% of commission and fee revenue. Our client franchise, new business pipeline, and overall business momentum is incredibly strong. We enter 2026 with optimism and excitement for our building momentum. On January 1st, we closed our partnerships with CAC Group, OB, and Capstone. On a combined basis, these three partnerships delivered approximately $350 million of 2025 pro forma revenue, and we expect them to deliver roughly $400 million of revenue and approximately $110 million of adjusted EBITDA post synergies in 2026. Given the market's understandable skepticism around synergy achievement, the Baldwin and CAC teams worked diligently to action all headcount related changes last week, which represent the largest quantum of expected expense synergies. Today, our integration efforts are ahead of schedule. New business momentum and collaboration across our collective teams is incredibly strong. And the strategic rationale for the wisdom of this business combination is playing out faster and stronger than anticipated. As of yesterday, the CAC team has 32 million of closed one new business in 2026, as compared to 20 million in the prior year period, and is already actively working on 11 million of combined cross-sell opportunities with their new Baldwin colleagues. highlighting the momentum we have started the year with. Our theme for 2026 is accelerate. The Goldilocks era for insurance intermediaries is behind us. The conditions that once lifted all boats have given way to a market that rewards only those with true capability, discipline, and cohesion. At Baldwin, that shift plays directly into the strategy we have been executing for years. We have been thoughtfully assembling, piece by piece, a diversified, vertically integrated platform designed to thrive in any market cycle, not just the easy ones. Central to this acceleration is our 3B30 Catalyst program, which we launched in the third quarter of 2025. In 2026, Catalyst becomes operational in earnest. We are executing the first phase of role transformation within IAS, consolidating core technology platforms to improve connectivity and data clarity across the firm, and infusing AI and automation into workflows to elevate colleague impact and enhance the client experience. We expect 3 to 5 million of Catalyst-related savings this year, ramping meaningfully in 2027 and beyond. This is how we translate AI into a tangible competitive advantage. We remain anchored to our aspirational North Star of $3 billion in revenue and a 30% adjusted EBITDA margin over the intermediate term. With that, I'll turn it over to Brad to detail our financial results. Thanks, Trevor, and good afternoon, everyone.