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The Baldwin Insurance Group Q1 2026 Earnings Call Transcript

DATE

Monday, May 4, 2026 at 5 p.m. ET

Call participants

Chief Executive Officer — Trevor Lowry Baldwin
Chief Financial Officer — Bradford Lenzie Hale
Executive Director of Investor Relations — Bonnie Bishop

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Risks

E&S homeowners decline -- CEO Baldwin stated, "our E&S home portfolio was down 30% in Q1; however, we expect it to be down high single digits for the full year," highlighting ongoing weakness from soft property market dynamics.
Medicare headwinds -- Continuing softness in the Medicare business remains a headwind, attributed in multiple remarks to ongoing marketplace disruption.
Adjusted EBITDA margin decline -- Margin fell by approximately 170 basis points year over year, fully explained by CAC consolidation and a UCTS profit-sharing contract, per the CFO.
Substantial working capital use -- $60 million used in working capital, with over $40 million from CAC payouts, led to flat adjusted free cash flow relative to prior-year period.

Takeaways

Total revenue -- $532.2 million, with the reported figure unchanged in CFO segment and company-level statements.
Organic revenue growth -- 2% overall, with segment-level rates of up 4% in Insurance Advisory Solutions, up 3% in Underwriting, Capacity & Technology Solutions, and down 5% in Mainstreet Insurance Solutions.
Adjusted EBITDA -- $137.2 million, representing 21% year-over-year growth compared to $113.8 million.
Adjusted EBITDA margin -- 25.8%, down approximately 170 basis points from 27.5%, with the CFO stating: "The approximately 170 basis point margin decline is fully explained by two items: first, the consolidation of CAC, which has different margin seasonality due to timing and mix of revenues, and second, the UCTS profit sharing contract Trevor mentioned."
GAAP net loss -- $1.9 million, or $0.02 per diluted share, with CFO Hale specifying this figure in prepared remarks.
Adjusted net income -- $89.3 million or $0.63 per fully diluted share, as referenced by CFO Hale.
Commission and fee organic growth -- 3% reported, and total organic growth would be 5% if adjusted for the QBE builder book transition, Medicare market disruption, and IAS revenue recognition timing adjustment.
Pro forma organic revenue growth -- 9%, if CAC, Ovi, and Capstone partnerships were included as if owned in both periods.
CAC, Ovi, Capstone partnership growth -- 27% year over year for the combined partnerships, with CEO Baldwin noting: "Collectively, those three partnerships grew 27% over 2025, a truly remarkable start to the year."
CAC and Capstone segment inclusion -- Organic growth in Insurance Advisory Solutions would have been 10% including CAC and Capstone, with combined sales velocity at 24%.
BAC (Business Advisory Council) new business -- $38 million in new business, up 39% year over year; $92 million total revenue, up 27%.
BAC sales velocity -- 61% across all product lines and 15% in recurring lines, with transaction-related product lines growing 22%.
Cost synergies realized -- $34 million in cost synergies actioned, nearly 80% of a $43 million three-year target.
Revenue synergies realized -- $1 million recognized in quarter, now at nearly $3 million, with $10 million in cross-sell client opportunities active.
UCTS segment adjusted organic growth -- Normalized for a one-time 2025 real estate investor program contingent item, Underwriting, Capacity & Technology Solutions organic growth would have been 9% for the quarter.
Multifamily and Juniper Re growth -- Multifamily business up 10%; Juniper Re up over 90% in revenue for the period.
E&S homeowners revenue decline -- Revenue down roughly 30% in the quarter, with CEO Baldwin stating: "we deliberately maintain underwriting discipline in a soft property environment."
E&S new premium trends -- New premium declined to $2 million–$3 million monthly from $13 million–$14 million; March saw $4 million new premium, the highest in 12 months.
Mainstreet Insurance Solutions normalized growth -- Would be 7% organic growth if normalized for QBE commission rate reduction and Medicare headwinds, which together drove the reported 5% decline.
Share repurchase activity -- $50 million deployed to repurchase 2.2 million shares under a $250 million buyback authorization.
Net leverage -- Ended the quarter at approximately 4.3x; CFO Hale states expectations to maintain leverage in the 4.0x–4.5x range near term.
Tax items -- Net deferred tax liability from partnerships created a $145 million benefit to income tax expense, offset by a $130 million liability for the tax receivable agreement; these impacts are removed from adjusted EBITDA and EPS.
AI productivity gains -- CEO Baldwin reports "the early productivity gains from the tools we are deploying internally are running up to 80%."
3B30 Catalyst program savings -- First phase of role transformation executed, on track to deliver $3 million to $5 million in in-year savings.
Second quarter guidance -- Revenue expected at $485 million–$490 million, mid-single-digit organic revenue growth, adjusted EBITDA of $113 million–$118 million, and adjusted diluted EPS of $0.44–$0.48.
Full-year guidance -- Consolidated guidance remains unchanged, with CEO and CFO expressing confidence in accelerating total organic growth through the year.
Property market -- CEO Baldwin states: "We are seeing pricing levels that have returned to circa 2017 and, for large shared and layered coastal placements, rate decreases at times of 30% to 40%...".
Rate and exposure headwinds -- Q1 rate and exposure imposed a 70 basis point headwind; Q2 expected to be 400%–500% basis points.
Mainstreet embedded mortgage momentum -- Embedded mortgage business went live with Fairway Independent Mortgage in April, with CEO describing early signs as "very encouraging."

Summary

The Baldwin Insurance Group (BWIN 0.27%) reported modest overall organic revenue growth, with major contributions from its CAC, Ovi, and Capstone partnerships boosting pro forma and segment-level results. Execution on cost and revenue synergies surpassed schedule, with $34 million of cost actions already underway and revenue synergies scaling to $3 million post-quarter. The company integrated and launched new embedded mortgage and insurance technology initiatives, reporting early measurable AI-driven productivity and savings from its 3B30 Catalyst efforts. Management reaffirmed full-year guidance and signaled sequential acceleration in organic growth, despite negative impacts from E&S homeowner declines, Medicare softness, and pronounced working capital outflows. The property insurance market saw deep rate compression, with a significant rate and exposure headwind forecast for the second quarter, leading to flat expectations for legacy IAS organic growth before anticipated recovery later in the year.

CEO Baldwin reported in the Q&A that new premium written in E&S home dropped from about $13 million–$14 million to $2 million–$3 million monthly, before rebounding in March with $4 million, suggesting the business “hit the bottom in Q1.”
CFO Hale stated that leverage “hover in the 4.0x to 4.5x range over the intermediate term,” prioritizing buybacks over rapid deleveraging while the stock is priced at a discount.
Leadership highlighted that cross-sell with CAC yielded significant wins, including new large construction and M&A client opportunities previously out of reach for either partner alone.
Full integration of QBE impact and procedural headwinds is expected by the end of the second quarter, leaving the company positioned to return to mid- and high-single-digit organic growth in the latter half of the year.
The company is not currently contemplating large M&A, given where its equity is priced and its stated leverage policy.
Management emphasized the growing impact of proprietary AI process redesign, with CEO Baldwin citing an example where a new insurance product was taken from concept to market-ready in “three days,” compressing a historically months-long timeline.

Industry glossary

Sales velocity: The rate at which new business is won or booked, often expressed as annualized new business as a percentage of prior-year recurring revenue or premium.
MGA: Managing General Agent; an insurance intermediary with underwriting authority and other administrative capabilities, distinct from retail brokers or agents.
E&S: Excess and Surplus; insurance lines that cover unique or higher-risk risks not typically underwritten by standard insurers.
Reciprocal insurance exchange: A type of insurance organization where members exchange insurance contracts, typically managed by an attorney-in-fact, as referenced in the builder book transition to "3."

Full Conference Call Transcript

Trevor Lowry Baldwin: Good afternoon, and thank you for joining us to discuss our first quarter results reported earlier today. I am joined by Bradford Lenzie Hale, Chief Financial Officer, and Bonnie Bishop, Executive Director of Investor Relations. We had a solid start to the year on the heels of closing our partnerships with CAC, Ovi, and Capstone in January. We delivered total revenue of $532 million, adjusted EBITDA of $137 million, adjusted EBITDA margin of 26%, and adjusted diluted earnings per share of $0.63. Overall, commission and fee organic revenue growth was 3%, and total organic revenue growth was 2%.

Adjusting for the impact of the QBE builder book transition, which we lapped on May 1, continued softness in our Medicare business due to the disruption in the Medicare marketplace, and the procedural change impacting the timing of revenue recognition in IAS, overall organic revenue growth would have been 5%. Layering in the impact of the March partnerships as if they had been owned by Baldwin in both comparable periods, overall organic revenue growth would have been 9%. Collectively, those three partnerships grew 27% over 2025, a truly remarkable start to the year.

In Insurance Advisory Solutions, overall organic revenue growth was 4%, driven by sales velocity of 13% before layering in the results from CAC and Capstone, which compares to 14% in the prior-year period. As a reminder, sales velocity is seasonally lowest in the first quarter as a result of a bulk of our employee benefits renewals booking on 1/1. The impact of rate and exposure in the quarter was a 70 basis point headwind. Including both CAC and Capstone, as if those businesses had been owned in the prior-year period, organic growth would have been 10%. Combined sales velocity, including the acquired businesses, was 24%.

We are incredibly enthused by the early contributions from CAC and Capstone, which delivered the strongest quarterly results in each of their respective histories. BAC generated new business of $38 million in the first quarter, up 39% compared to the same period in the prior year, and total revenue was $92 million, representing growth of 27% in relation to 2025. BAC sales velocity in the quarter was 61% across all product lines, and 15% for recurring lines of business. Net growth of transaction-related product lines, which consist primarily of our transaction liability and certain project-specific construction lines of business, was 22%.

Going forward, we will report sales velocity on an aggregate basis, as well as broken out for recurring lines of business. Separately, we will call out net growth in transaction-related product lines. These transaction-related product lines have some variability quarter to quarter due to the variable nature and timing of transactions and project starts. BAC’s strong growth in the quarter was driven by strong new business across key specialty industry groups, strength in the private equity and transaction liability practices, which supported several marquee transactions at the nexus of the AI infrastructure buildout across the U.S. and globally, as well as strong momentum from cross-sell opportunities between the legacy Baldwin and CAC teams.

Our integration work is running ahead of schedule. To date, over $34 million in cost synergies have been actioned, representing nearly 80% of the three-year $43 million target we laid out on our last call. We expect these to materialize in the P&L throughout the balance of this year and in 2027. On the revenue side, in the quarter we realized $1 million of revenue synergies, and as of today, that number has grown to nearly $3 million with over $10 million in client cross-sell opportunities being actively worked.

Four months in, we are tracking ahead of plan on every dimension of this powerful business combination, and the industrial logic we saw is proving to pull through both more quickly and more significantly than we had anticipated. Moving to our Underwriting, Capacity and Technology Solutions segment, organic revenue growth was 3% in the quarter, with core commissions and fees growing by approximately 6%. Importantly, we recognized a large one-time contingent payment in our real estate investor program in 2025, normalizing for which UCTS’s organic growth would have been 9% for the quarter. The underlying momentum across the segment remains strong.

Our multifamily business grew revenue 10% in the quarter, and Juniper Re grew over 90%, both reflecting the durable scale advantages of our proprietary capacity strategy. We did continue to see pressure in our E&S homeowners book. The revenue was down roughly 30% in the quarter, as we deliberately maintain underwriting discipline in a soft property environment. The transition of our builder book from QBE to 3, our inaugural reciprocal insurance exchange, remains on track. 3 is now licensed in seven states and positioned to begin migration of business outside Texas in the back half of the year. Our second proprietary builder program with Hippo and Spinnaker remains on track to launch later this year.

Over time, we expect this to materially increase our capture rate of Westwood’s builder business into new proprietary MSI programs from approximately 30% today, a meaningful multiyear growth opportunity for our MGA, and a meaningful expansion of vital insurance capacity for our builder partners and their homebuyer customers. Our Main Street Insurance Solutions segment organic revenue growth was down 5% in the quarter, driven primarily by continued year-over-year headwinds from the QBE commission rate reduction at Westwood and softness in our Medicare business. Normalizing for impacts of those two headwinds, overall organic revenue growth was 7%. We fully lapped the QBE impact on May 1 and expect organic growth in our MIS segment to begin ramping again from here.

We are also seeing growing momentum in our embedded mortgage businesses, which went live in April with Fairway Independent Mortgage, a top-10 independent mortgage originator in the country. While Fairway has only been live on the platform for one month, early signs are very encouraging. The 3B30 Catalyst program is now fully underway. In the first quarter, we executed the first phase of role transformation within IAS and remain on track to deliver $3 million to $5 million in-year savings. You can find additional information in the 3B30 Catalyst slide in our earnings supplement.

Now, let me address the question of AI directly, because it is increasingly central to how we are running this business and how I expect us to outperform over time. We are leaning into AI with conviction. Over the past several quarters, we have been building our own proprietary AI orchestration layer that enables delivery of fully automated workflows. The early productivity gains from the tools we are deploying internally are running up to 80%. We are embedding AI directly into our operating platforms, including VIP, our proprietary operating system supporting the MGA, and we are using AI to elevate and enhance the work our colleagues do every day.

Catalyst is the operational expression of this strategy—AI-enabled process redesign, bold transformation, and an accelerated path to operating leverage. Said simply, AI is a meaningful tailwind for our business, and we are investing aggressively to capture it. On the question of disintermediation, our thesis is unchanged, and the underlying structural advantages have only strengthened. First, the clients we serve—middle market, upper middle market, and large organizations—have complex, multi-location, multifaceted risks that require deep and specialty advisory solutions, human judgment, and a multitude of risk transfer counterparties and vehicles in order to thoughtfully and effectively manage and finance risk. The CAC combination further shifts our center of gravity upmarket, away from the account segments most exposed to AI commoditization.

Second, our embedded distribution strategy places insurance at the point of major life and business transactions and workflows consumers are unlikely to bypass for a standalone insurance buying experience. Third, our UCTS business vertically integrates our platform across the entire value chain—owning the client relationship, advising on complex risk issues, building proprietary insurance products, and arranging the third-party risk capital that stands behind them. We are the disruptor in this marketplace. The combination of human expertise and judgment, embedded distribution, proprietary product and risk capital formation, and AI-driven productivity is the right architecture for the AI era.

As we enter 2026, we are pleased with our first quarter results and confident in our positioning to accelerate performance ratably through the year and beyond. The underlying momentum across our segments is strong. The idiosyncratic headwinds we have discussed—the QBE commission change we have now lapped, the Medicare market disruption, and the IAS revenue recognition procedural change—will all be substantially behind us by the end of the second quarter. DAC is exceeding our expectations on both revenue and expense synergy execution. The Catalyst program is delivering, and we are deploying AI across our platform with real and measurable productivity gains. Quite simply, our business was built for this era.

We are leaning in to accelerate our impact and our results. I want to extend our gratitude to our clients for their continued trust in us to provide strategic guidance, expert insights, and innovative solutions. And I want to thank our nearly 5,000 colleagues for their dedication to helping our clients protect what is possible. I will now turn it over to Brad, who will detail our financial results.

Bradford Lenzie Hale: Thanks, Trevor, and good afternoon, everyone. For the first quarter, we generated organic revenue growth of 2% and total revenue of $532.2 million. Looking at the segment level, organic revenue growth was up 4% in IAS, up 3% in UCTS, and down 5% in MIS. Adjusted for the three transitory items Trevor walked through, underlying organic revenue growth would have been 5%. We recorded GAAP net loss for the first quarter of $1.9 million, or GAAP diluted earnings per share of $0.02. Adjusted net income for the first quarter, which excludes share-based compensation, amortization, and other one-time expenses, was $89.3 million, or $0.63 per fully diluted share.

A table reconciling GAAP net income attributable to Baldwin to adjusted net income can be found in our earnings release and our 10-Q filed with the SEC. Adjusted EBITDA for the first quarter was up 21% at $137.2 million compared to $113.8 million in the prior-year period. Adjusted EBITDA margin declined approximately 170 basis points year-over-year to 25.8% for the quarter, compared to 27.5% in the prior-year period. The approximately 170 basis point margin decline is fully explained by two items: first, the consolidation of CAC, which has different margin seasonality due to timing and mix of revenues, and second, the UCTS profit sharing contract Trevor mentioned.

Adjusted free cash flow for the first quarter was roughly flat compared to $26 million in Q1 2025. The decrease was driven by working capital timing, which resulted in a $60 million use of cash. More than half of the working capital headwind was from CAC, given a material payout of approximately $40 million in previously accrued cash bonuses and commissions, which Baldwin assumed in the opening balance sheet. As mentioned on the year-end call, we would expect CAC’s free cash flow conversion in the year to be better than legacy Baldwin’s rate. As such, we expect the timing headwind to reverse in quarters two through four.

It is important to remember that Q1 is expected to be our lowest quarter of free cash flow conversion, given the payout of bonuses, as well as the substantial receivables that are built in our employee benefits business, the majority of which renew in January with payment monthly throughout the balance of the year. This was somewhat exacerbated in Q1 2026 because of approximately $15 million of CAC transaction costs, representing a material increase in one-time cash outlay. Our full-year cash flow trajectory remains on track for double-digit growth in 2026. We ended the quarter with net leverage at approximately 4.3x, as we deployed approximately $50 million of our $250 million buyback authorization to repurchase 2.2 million shares.

We will remain prudent in our share repurchase program as we assess overall market conditions and act on market dislocation opportunities relative to other capital allocation alternatives to drive shareholder returns. The January 2026 partnerships with CAC and Ovi generated a significant net deferred tax liability, which resulted in a benefit to income tax expense in Q1 of approximately $145 million from the reversal of the majority of our valuation allowance. As an offset to this benefit, we recorded an above-the-line operating expense to establish a liability associated with our tax receivable agreement of approximately $130 million. Note that the impact of each of these one-time transactions has been removed from adjusted EBITDA and adjusted EPS.

We would expect income tax expense/benefit for the balance of 2026 to be minimal, and changes to the TRA liability will largely flow to the balance sheet going forward, with minimal further expected impact on the P&L. There will be no change to the manner in which we calculate the tax impact to adjusted net income in 2026. Looking ahead, our full-year consolidated guidance remains unchanged. Despite the challenging market backdrop, we remain confident in our ability to accelerate our total organic growth throughout the year. For the second quarter, we expect revenue of $485 million to $490 million and organic revenue growth in the mid-single digits.

We anticipate adjusted EBITDA between $113 million and $118 million and adjusted diluted EPS of $0.44 to $0.48 per share. In summary, we are pleased with the quarter, encouraged by the strong contribution from our recent partnerships across both cost savings and revenue synergies, and by the early operational impact of our 3B30 Catalyst program. Organic growth momentum is building, and we continue to expect a clear inflection in financial results in 2026 as we fully lap the idiosyncratic headwinds of the past year. We remain focused on accelerating execution across our platform, fully integrating our recent partnerships into Baldwin, and leveraging new and innovative technology and AI solutions to enhance our client impact and long-term shareholder value creation.

We will now open the call for questions.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. The first question comes from the line of Charles Gregory Peters with Raymond James. Please go ahead.

Charles Gregory Peters: Well, good afternoon, everyone. For my first question, I would like to focus on the organic revenue results and then briefly the comments you made about the revenue growth at CAC. The one area that caught me by surprise was the result in the UCTS line, which I think you called out there is a one-time item in there. Even on a pro forma basis, it seems like it is tracking lower than I might have envisioned for the year, so maybe you could provide some color there.

And then, just related to your comments around growth, if you could go back and more slowly go through what seems to be some pretty positive indications of growth coming out of CAC, that would be helpful.

Trevor Lowry Baldwin: Yeah. Hey, Greg. This is Trevor. Appreciate the question. So let us start with UCTS. I did mention there was a large one-time contingent item in the prior-year period. Normalizing for that, you are looking at 9% organic in the quarter for UCTS. What I would say is we continue to have very strong underlying momentum in the UCTS segment. Our multifamily portfolio grew double digits in the quarter. Juniper Re continues to have very strong momentum with growth of over 90%. As broader evidence for that underlying momentum, we do expect organic growth to recover to high single digits for UCTS in Q2 and back into the teens in the back half of the year.

In particular, we are seeing continued headwinds in our E&S home portfolio as a result of the soft market dynamics. As we pushed through Q1, the impacts of that in the prior year were already fairly material and should have less of an impact. Specifically, our E&S home portfolio was down 30% in Q1; however, we expect it to be down high single digits for the full year, which should give you a sense of some of the recovery that we expect there over the balance of the year. So the very high level is the underlying momentum at UCTS continues to be quite strong.

It is a double-digit growth business, with the combination of a one-time item and an acute prior-year-period impact from the soft dynamics in E&S home normalizing through the balance of the year. Moving on to CAC, when we announced that partnership, we did it with a ton of conviction. We realized it was a large and unexpected partnership, but we had the conviction to do that because of the wisdom we saw in the industrial logic of the combination, the quality of the people, the scarcity value of the capability set, and how that enables us to continue to grow and strengthen the impact that we can deliver for our clients.

I made mention that the CAC team is a Ferrari—we are going to put them on the track and let them run—and they have come out of the gate quite fast. We expected the results to be strong, to be clear, but the strength of the results has even pleasantly surprised us, both in the speed at which they have pulled through and the scale of the momentum and the opportunities that we are seeing. That goes across every dimension of the partnership, whether it is the expense synergies that we had identified of approximately $43 million—we have already actioned over $34 million of that, well ahead of plan—or on the revenue synergy side.

In what is typically a fairly long sales cycle, we already realized $1 million of revenue in the first quarter and, as of today, nearly $3 million, with more than $10 million of active cross-sell opportunities being worked by the combined teams. There is real strength not in any one pocket of the CAC business, but broadly—whether it is the industry practice groups, their legacy middle market business, or their transaction liability group—which is not only showing growing momentum as they take share in the market, but has strengthened as we have combined them with the legacy Baldwin teams who have been able to leverage those capabilities to drive even more significant impact for our existing clients.

It is all incredibly positive.

Charles Gregory Peters: Great. I think I have to pivot for my follow-up question to the Catalyst program slide you put in your slide deck. You talk about this initiative in the context of the 3B30—getting to the 30% margin target. Can you walk us through the run-rate annualized savings and the positive payback? Does that get us to that 30% run rate that you are thinking about, or are there some more levers you have to pull that are going to help you get to your objective?

Trevor Lowry Baldwin: Yeah. I think this, on a standalone basis, Greg, does not fully get there, but regular-way operating leverage that is in the business in combination with the Catalyst program does. As I mentioned in my prepared remarks, the program is live, it is on track, and the early results are quite positive. You may have seen earlier this morning a press release around our expanded partnership with Anthropic’s cloud on an enterprise basis, as well as my mention in the prepared remarks around the work we have been doing over the past several quarters to build out our own proprietary orchestration layer driving real productivity and efficiency into the operations of our business. The early signs are quite positive.

I can give a more recent example. Our product team at DMGA recently came together in an effort to build and launch an admitted insurance product—a new product for us. Historically, creating an admitted product requires a series of competitive analyses, rate and product feature determination, and filing creation tasks. It is a process that has historically taken months—three on average—and historically requires quite a bit of manual manipulation of documents and data. But the product management team leveraged Claude on top of our proprietary data across each phase of the process and significantly compressed the timeline from what would have been months to three days.

As you think about how that translates into the velocity of new products that we can bring to market—whether that is the new builder products we expect to come later this year, the mortgage product we are working on, or a manufactured home program we are working on for a number of our property management software clients—the impact will be real and significant. We are quite excited for what we are seeing there.

Bradford Lenzie Hale: Yeah, Greg, I would just add it is the combination of the Catalyst program and, as you are aware, we have made some meaningful investments in the business such as mortgage embedded, in addition to the products that Trevor just highlighted. The maturity of those businesses is also a meaningful driver of that margin expansion towards the 3B30 goal.

Charles Gregory Peters: Yeah. That makes sense. Thanks for the detail.

Trevor Lowry Baldwin: Thanks, Greg.

Operator: Thank you. Next question comes from the line of Thomas Patrick McJoynt-Griffith with KBW. Please go ahead.

Thomas Patrick McJoynt-Griffith: Hey, good evening. You sounded pretty optimistic about the early signs of success around cross-sell with CAC Group. Could you give us some examples of where you are actually seeing success there? Is it finding new solutions? Is it taking market share from other brokers? Maybe elaborate on that point. And then, switching gears quickly to one of the headwind one-timers that you have been calling out, the Medicare side. Can you remind us about the cadence or the seasonality there—has the 2026 headwind been sort of baked in, or is that more of a 2027 event?

Trevor Lowry Baldwin: Yeah. I would say it is all of those things, Tommy, and it is going both ways. A couple of quick examples: The CAC team has deep industry capabilities across natural resources, private equity, and real estate, and we have historically had very deep capabilities across construction. One of the CAC colleagues brought forth early in the year an opportunity for a large general contractor prospect that historically they probably would not have pursued because they did not feel like they had all the right capabilities to really serve them at the level that CAC looks to serve their clients.

Because of the combination with our platform, they were able to bring in some of our construction professionals and, through an RFP process, we won that client. The incumbent was a top five global broker. Our competition was both the global broker community as well as the large nationals, and it was a standout win—something that brought a ton of energy and momentum to the team as they saw some of the reverse opportunities that could exist.

Similarly, we have at legacy Baldwin some professionals with deep expertise and strong relationships across private equity and in the M&A universe, and CAC has an incredibly deep bench of talent here—not only on the product side around transaction solutions but also broadly across portfolio solutions. The legacy Baldwin team had a client that was entering into a complex cross-border international M&A transaction. I cannot get into a ton of detail because of NDAs, but this was a highly complex transaction.

The CAC team was able to step in and deliver a set of solutions that helped facilitate a seamless signing of that transaction, and it is a significant six-figure revenue opportunity for an existing client of Baldwin that otherwise likely would have gone to one of our global broker competitors. The pipeline is quite robust across construction, energy, data center, and power generation, as well as broad-based large upmarket complex opportunities, and the momentum continues to build. On Medicare, we expect that headwind to largely resolve itself beginning next quarter. While we are not expecting a miraculous turnaround in results, we do not anticipate a meaningful headwind going forward there.

Operator: Next question comes from the line of Charles William Lederer with BMO Capital Markets. Please go ahead.

Charles William Lederer: Hey, thanks. Just want to go back to UCTS for a second. I know you called out the headwind, but you also had a fairly nice tailwind in the earned premium line there, and if I exclude that, you were down a little bit more in UCTS. Is that all E&S home and the real estate product? And what is going to drive the improvement over the course of the rest of the year? And then maybe just on the buybacks—can you talk about how motivated you feel now to still buy back shares, or now that the stock is closer to peers, maybe it is less of a priority?

Trevor Lowry Baldwin: Yeah. Hey, Charlie. That is right. We did benefit from continued growth in the multifamily earned premium in the captive, which we view as incremental economics on a high-performing overall program. That said, the headwind was almost entirely the one-time contingent as well as the headwinds in the E&S business. We do expect momentum to pick up across most, if not all, of our product sets over the balance of the year, as evidenced by our confidence in high single-digit organic growth in Q2 and returning to teens organic growth in the back half of the year.

Momentum there is strong, and you have got the nuances of a lapped quarter both from where the E&S book stood in the prior year as well as that one-time contingent.

Bradford Lenzie Hale: This is Brad. I would say our capital allocation priorities remain intact. We have repeated them in the past: number one, organic investments; two, M&A; followed by buybacks; and then dividends or debt pay down. As I spoke with you mid-quarter, we are not an indiscriminate buyer. We are thoughtful about the price as we are deploying that capital, but we continue to target the best risk-weighted return alternative. To the extent we see dislocation of price, we will continue to be active.

Trevor Lowry Baldwin: Put differently, we can continue—even at these prices—to buy in our own shares at a meaningful discount to what smaller, lower-quality private agencies trade for today, and so we continue to find our stock price attractive.

Operator: Thank you. Next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan: Hi, thanks. I guess my first question will continue on the buybacks. You did not raise the EPS guide for the year, but you obviously bought back in Q1, and it sounds like, Trevor, based on what you just said, you are open to continuing to buy back your shares. How come not raising the EPS guide? Or is the guidance assuming no additional buyback over the remaining three quarters? And then, you provided some figures on CAC where you highlighted strong new business growth and revenue growth in the first quarter. On the three deals, the revenue and EBITDA contributions that you expect for 2026 have not changed, but it sounds like things are running ahead of expectations.

Are you just waiting to update that, or is it that some are running ahead and some are running below plan relative to the guidance you reaffirmed this quarter? Lastly, on market impact, what are you seeing from an overall pricing perspective in the property market, and what are you embedding when we think about your business over the next three quarters?

Trevor Lowry Baldwin: Yeah, Elyse, we are not going to assume how stock price performance evolves going forward. To the extent we have the opportunity to buy back shares at an attractive price, that could create some upside, and to the extent we do not, that could be because we have seen some recovery in trading dynamics. On the partnerships, broadly the three partnership businesses are running ahead of plan, but we are one quarter in, so it is a little early for us to fully extrapolate that. As mentioned in my prepared remarks, the momentum at CAC is incredibly strong. Some of that momentum is in transaction liability solutions, where there can be variability quarter to quarter and year to year.

The pipeline in that part of the business is, frankly, at an all-time high, and we continue to take share, so we feel good about the momentum, but it is early in the year to fully extrapolate that forward into full-year expectations. On property, the market is deeply soft. We are seeing pricing levels that have returned to circa 2017 and, for large shared and layered coastal placements, rate decreases at times of 30% to 40%—at times things that probably do not make a whole lot of long-term sense, but we are happy to secure those results for our clients.

We do expect to see a more significant rate and exposure headwind in the second quarter, which is the heaviest quarter for property renewals in the year. Whereas we saw 70 basis points of headwind in Q1, I expect that to be 400 to 500 basis points of rate and exposure headwind in Q2. As a result, we expect our legacy IAS segment to be roughly flat from an organic standpoint in the second quarter, before returning to mid- to high single-digit organic growth in the back half of the year as we fully lap the procedural accounting change headwinds.

Based on what we are seeing today, I think rate and exposure headwinds in the back half will be pretty close to flat—maybe a slight headwind in Q3 and a slight headwind or a tailwind in Q4. Overall for the year, we expect rate and exposure to be a 100 to 200 basis point headwind, and all of that is fully incorporated into the expectations we have shared.

Operator: Thank you. Next question comes from the line of Andrew Kligerman with TD Cowen. Please go ahead.

Andrew Kligerman: Hey, thanks a lot. Good evening. I want to follow up on the IAS organic growth. You had 4 points in the quarter of organic, and then CAC, if it were normalized, contributed 4 to the overall book. If IAS and CAC had been there for over a year, you are looking well into the double digits, which is fabulous. Transaction liability can be volatile, but typically when you do an acquisition, you get a good year one and a similar organic in year two. Extracting out the volatility of transaction liability, all else equal, you would probably be looking at high single into double digits potentially next year once you get a full year on board.

Am I thinking about it right with regard to IAS? And then, following up on capital management, it sounds like the intrinsic value of the stock is still attractive here. With respect to leverage, which inched up to 4.3x—part of that is the buyback—where do you see leverage playing out toward the end of the year? Do you get to that 3x to 4x, or are you willing to let it hover around where it is? Lastly, does that imply there is not any M&A of major size in the near- to intermediate-term horizon?

Trevor Lowry Baldwin: Hey, Andrew. At a high level, yes—it is a double-digit organic growth business inclusive of CAC and results, which we think is really a standout outcome in today’s market backdrop. Specific to 2027, it is a bit early for us to opine on organic growth next year. However, everything we are seeing from underlying trends and datasets is very positive. Pipelines are building, cross-sell opportunities are growing. We expect in the back half of the year for legacy IAS organic to re-rate back up into the mid- to high single digits. And as we look at the momentum for CAC, their historical seasonality, and their pipelines, it is incredibly strong.

We are incredibly proud of the results; relative to our peers, they are a complete standout in the quarter, inclusive of CAC and Capstone, and reflect the wisdom of this business combination and the breadth and depth of capabilities we now bring to solve our clients’ challenges.

Bradford Lenzie Hale: We would continue to expect leverage to hover in the 4.0x to 4.5x range over the intermediate term, particularly as we continue to execute on the buyback program. As I said before, we are not price indiscriminate, so that story can change, but that is our current view. We continue to believe that mechanically deleveraging six months earlier, while our equity trades at this material discount, is a destruction—not a creation—of shareholder value, so we are comfortable at this spot, particularly if we can take advantage of market dislocation.

Trevor Lowry Baldwin: On M&A, it is really difficult for us to find a financially prudent way to structure a deal that makes good financial sense based on where our equity trades today. That, plus where leverage sits, creates a bit of a hurdle. We have historically allocated capital to M&A in a way that has created a lot of intrinsic value for shareholders, and while it is very early days, we appear to be off to a great start with the 2026 class of partnerships.

Within the confines of our financial leverage policy and our objectives to delever over time—and subject to having a currency that supports M&A in an accretive fashion—we think it is a very good use of capital over time. But the circumstances of the here and now dictate a more narrow set of priorities.

Operator: Thank you. Next question comes from the line of Pablo Singzon with J.P. Morgan. Please go ahead.

Pablo Singzon: Hi, thank you. First, can you unpack what is going on with the E&S homeowners business? I am a bit surprised there. It seems like pricing in homeowners is not experiencing the same pressure as in personal auto. Are you dealing with a different set of competitors in that business, and that is why you are a little more cautious? And second, could you talk about the Construction Risk Partners business you acquired some time ago? Are you getting some benefit from data center construction and related activity today?

Trevor Lowry Baldwin: On E&S home, we have seen rate come in 40% to 50% plus. Eighteen months ago, we were writing roughly $13 million to $14 million of new premium a month; over the past 12 months we have averaged $2 million to $3 million. As we continue to tweak our product, we are also in the process of rolling out multiple new E&S home product variants to better compete in certain pockets of the market that we continue to find attractive. We expect our new business flow and success to go up. We saw that reflected in March, which had over $4 million of new E&S home premium booked, the highest new-business month we have seen in the past 12 months.

That is one month, not a trend, but we feel like we hit the bottom in Q1 and that you will see us continue to march that back up both through prudent tweaks to product design and pricing, as well as the rollout of incremental E&S home product variants to compete in corners of the market we like. On Construction Risk Partners and the Baldwin Construction practice, the pipeline is the largest and strongest in the history of our construction business, buoyed by an influx of new cross-sell opportunities from CAC and a breadth of opportunities at the nexus of the data center and AI infrastructure buildout.

Overall construction spend this year is roughly flat year over year, if not modestly down—a tale of two cities—with significant spending in data centers offset by slowdowns elsewhere. That means results will be lumpier because data center opportunities are fewer but larger in scale. We have some of those wins under our belt, as well as multiple very large multibillion-dollar opportunities in the near- to intermediate-term pipeline, and we feel good about taking more than our fair share.

Operator: Thank you. Next question comes from the line of Joshua David Shanker with Bank of America. Please go ahead.

Joshua David Shanker: Good evening, everybody. I want to point out that 90% growth in Juniper Re and 27% growth in the new partnerships—staggering numbers. But it also implies a great deal of contraction among the legacy businesses that are older in the portfolio. If someone wanted to make the argument that Baldwin has bought growth, but not long-term runners, and is once again buying growth—what is the pushback on that thesis, given that the stuff you bought before CAC and where Juniper is now growing more slowly?

Trevor Lowry Baldwin: The pushback is in the numbers and the expectations we have already shared, Josh. The headwinds have been well discussed—idiosyncratic drivers from Medicare to the IAS procedural accounting change to the QBE book roll transition to our reciprocal exchange. Normalizing for all three of those, you have a mid single-digit growth business in the quarter, and a business that we expect to grow organically at double-digit rates exiting this year before the impact of the three partnerships that grew 27% in the quarter.

While all businesses have ebbs and flows, and the market impacts here are real and broadly discussed across the industry, we are relatively uniquely positioned versus peers to be talking about a business that is going to accelerate to high single-digit and ultimately double-digit growth by the fourth quarter, despite no expectation for market headwinds to meaningfully abate.

Joshua David Shanker: So you still believe if the insurance distribution industry at year-end is growing mid- to low single digits, Baldwin will still be growing at high single digits, edging toward double digits?

Bradford Lenzie Hale: That is correct.

Joshua David Shanker: Okay. I wish you the best of luck there, then. Very good.

Bradford Lenzie Hale: Thanks, Josh.

Operator: Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to hand the floor over to Trevor Lowry Baldwin, CEO, for closing comments.

Trevor Lowry Baldwin: Thank you all for joining us this evening. As I noted at the open, we are pleased with our first quarter and confident in our trajectory through the balance of the year. The momentum here is real—our embedded distribution, our advisory businesses, across our MGA platform, and as evidenced in the integration of our partnerships—and it is the direct result of the work our colleagues are putting in every day. I want to thank our colleagues for how they show up in support of our clients, one another, and for the firm we are building together. To our clients and insurance company partners, thank you for your continued trust. To our shareholders, thank you for your engagement and support.

We continue to deliver against our Catalyst 3B30 goals and objectives. We look forward to speaking with you again next quarter.

Bonnie Bishop: Thank you.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

Baldwin (BWIN) Q1 2026 Earnings Call Transcript