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DATE

Thursday, May 7, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — Richard Bunch
  • Chief Financial Officer — Janice Zwinggi

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TAKEAWAYS

  • Total Revenue -- $72.8 million, representing 35.3% growth, driven by both organic strength and acquisition contributions.
  • Written Premium -- $458.2 million, up $87 million or 23.5%, with renewal growth of $59 million (21%) and new business up $28 million (31%).
  • Organic Revenue -- $54.3 million, increasing by $5 million, equating to 10.1% organic growth supported by improved carrier capacity and new business production.
  • Insurance Services Revenue -- Up $46 million or 14.5%, reflecting steady momentum in this segment.
  • MGA Revenue -- Rose by $41 million or 77.3%, mainly due to the MGA Florida acquisition in the second quarter of the prior year.
  • Consolidated Retention -- 92%; excluding the effects of new acquisitions or book sales, underlying retention would have been about 88%.
  • Commission Income -- $67.1 million, advancing by $18.3 million or 37.4%, and reflecting activity across both insurance services and MGA platforms.
  • Commission Expense -- $37 million, increasing by $5.2 million or 16.4%, outpaced by commission income growth, partly due to programs with minimal or no commission expense.
  • Salaries and Employee Benefits -- $9.9 million, up by $1.7 million (20.8%), attributed to headcount growth from acquisitions and corporate investments.
  • Other Administrative Expenses -- $7.4 million, growing by $2.7 million or 56.4% due to acquisitions and technology investment.
  • Depreciation and Amortization -- $6.2 million, up from purchase accounting on recent acquisitions.
  • Net Income -- $13.1 million, climbing by $6.2 million or 90.8% with net margin improvement to 18% from 12.7%.
  • Adjusted Net Income -- $16.2 million, up 75.2%, with a 22.2% adjusted margin versus 17.1% in the comparable period.
  • Adjusted EBITDA -- $21.2 million, an increase of 73.9%; margin expanded by 650 basis points to 29.1% from 22.6%, driven by revenue mix shift and cost management.
  • Cash Flow from Operating Activities -- $22.7 million, up from $15.6 million.
  • Adjusted Free Cash Flow -- $15.2 million, up from $13.6 million, enabled by net income growth and working capital efficiencies.
  • Liquidity -- $124.8 million in unrestricted cash; full $50 million revolving credit facility remains undrawn; $3.5 million of term debt outstanding.
  • Share Repurchase -- $40 million of $50 million authorized buyback completed as of the call; $16.7 million repurchased through March 31 and "continued to be active" in the market.
  • Recent Acquisitions -- Three completed: Lofton Wells Insurance (Tennessee, corporate location), Asset Protection Insurance Associates (Texas-based MGA), and Fortress Insurance Services (Iowa).
  • Technology Staffing -- 44 technology employees, making up a third of the non-sales corporate base, focused on AI, cloud architecture, and modernization.
  • Guidance Reaffirmation -- Revenue expected to grow 15%-20% (to $285 million-$300 million), organic growth of 10%-15%, and adjusted EBITDA margin between 22%-25%.
  • MGA Florida Takeout Program -- Contributed to margin expansion but expected to decline as policies renew with full-term commission expenses.
  • AI Investment -- Significant commitment to proprietary AI development, leveraging 25 years of data, and investing in talent and internal tools for underwriting and agent productivity.
  • Contingent Income Forecasting -- Projected more conservatively due to softening market; "currently projecting a little bit lower on a premium to contingency basis."

SUMMARY

TWFG, Inc. (TWFG 1.19%) demonstrated substantial expansion through a combination of double-digit organic growth and targeted acquisitions, resulting in considerable revenue and profitability gains. The company maintained high client retention while integrating several acquisitions, enhancing both its underwriting capabilities and geographic footprint. Management outlined that technology, especially AI and proprietary platforms, remains central to improving operational efficiency, developing distribution advantages, and supporting margin expansion. The firm executed aggressively on its capital return policy, finalizing the majority of its share repurchase authorization and underscoring disciplined balance sheet management. Strategic tailwinds from the firm's MGA Florida takeout program, new business growth in key markets, and ongoing investment in AI position TWFG for continued organic and inorganic expansion, with the full-year outlook reaffirmed based on current operating momentum.

  • Management stated there are no structural impediments to additional M&A activity, but emphasized selectivity and focus on post-acquisition integration before expanding the pipeline further.
  • TWFG expects a sharp uplift in organic growth in the second quarter, with high double-digit organic revenue performance anticipated due to renewal timing and new voluntary programs.
  • Share repurchase activity was bounded by SEC 10b-18-1 volume restrictions, with nearly 80% of the $50 million program completed by the time of the call.
  • The margin benefit from the MGA Florida takeout is anticipated to gradually normalize as more policies renew and commission expenses return to standard levels.
  • Management highlighted the enduring value of human advice and local relationships, suggesting that AI integration is intended to augment—not replace—professional judgment and client engagement within the agency network.

INDUSTRY GLOSSARY

  • MGA (Managing General Agent): An insurance intermediary with underwriting authority from carriers, able to bind coverage and manage programs on behalf of insurers.
  • Takeout Program: The process by which a company assumes policies from another insurer (often from residual markets in states like Florida), typically to grow its book and leverage short-term economic advantages.
  • Contingent Income: Revenue derived from profit-sharing arrangements with insurance carriers, typically based on underwriting performance or loss ratios over a set period.
  • Admitted vs. E&S: "Admitted" refers to insurers licensed by state regulators; "E&S" (Excess & Surplus) carriers provide coverage for risks insurers in the admitted market decline to write.

Full Conference Call Transcript

Richard Bunch: 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.

Janice Zwinggi: 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.

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

Jon Paul Newsome: 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?

Richard Bunch: 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.

Jon Paul Newsome: 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?

Richard Bunch: 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.

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

Thomas Mcjoynt-Griffith: 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?

Richard Bunch: 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.

Thomas Mcjoynt-Griffith: Got it. And then switching over, when we think about your acquisition appetite, you held true to your expectations for starting M&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?

Richard Bunch: 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.

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

Rowland Mayor: 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.

Richard Bunch: 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.

Rowland Mayor: 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.

Richard Bunch: 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.

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

Michael Zaremski: 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?

Richard Bunch: I would look at it this way, Mike. When we gave you our guidance at the beginning of the year, we had an assumed retention rate of the portfolio. As you are aware, Florida is a softening marketplace. 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.

Michael Zaremski: 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.

Richard Bunch: 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.

Michael Zaremski: 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?

Richard Bunch: 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.

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

Brian Meredith: 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?

Richard Bunch: 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.

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

Richard Bunch: Great question. We're probably an outlier here. We're being very disciplined in how we're viewing contingents. We entered the year knowing that the market was softening and expecting combined ratios and loss ratios to eventually be impacted by the lower rate environment. 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.

Brian Meredith: 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?

Richard Bunch: I think it's too early to predict 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.

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

Pablo Singzon: 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?

Richard Bunch: 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.

Janice Zwinggi: 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.

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

Janice Zwinggi: Yes.

Operator: 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.

Richard Bunch: 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.

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