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What changed in Baldwin Insurance Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Baldwin Insurance Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+365 added−332 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-25)

Top changes in Baldwin Insurance Group, Inc.'s 2025 10-K

365 paragraphs added · 332 removed · 272 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn 2024, we developed and implemented a new 12-16 week program for one of our key client experience leader roles. • Enhancement of two of our core sales training programs: ◦ SCORE is a 10-week intensive training for new and developing risk advisors within our IAS business, offered across multiple modalities. ◦ SCORE PRO is a 2-day advanced sales development program for established risk advisors interested in taking their business development skills to the next level. • Additional leadership training and resources to support our leaders, including: ◦ Leadership Essentials: A leadership program designed to support newly hired and promoted leaders.
Biggest changeIn 2025, we added enhanced touch points for advisors with at least 18 months experience in their role to further support them while they develop a robust pipeline. ◦ SCORE PRO is a 2-day advanced sales development program for established risk advisors interested in taking their business development skills to the next level. • Ongoing leadership training and resources to support our leaders, including: ◦ Leadership Essentials: A leadership program designed to support newly hired and promoted leaders.
Business Strategy We believe our business strategy is centered around using the results of outstanding service to clients to reinvest the vast majority of retained earnings into future growth, which we believe over time produces better and more sustainable results for all of our stakeholders, including our clients, colleagues, insurance company partners, the communities in which we work and live, and our stockholders.
Business Strategy Our business strategy is centered around using the results of outstanding service to clients to reinvest the vast majority of retained earnings into future growth, which we believe over time produces better and more sustainable results for all of our stakeholders, including our clients, colleagues, insurance company partners, the communities in which we work and live, and our stockholders.
Over time, our organic growth will be driven primarily by our ability to continue to win new business, our ability to offer and advise on a broader array of insurance solutions in an increasingly larger geographic footprint, and to capture an increasingly larger portion of the economics associated with the sale of insurance.
Over time, our organic growth will be driven primarily by our ability to continue to win new business, our ability to offer and advise on a broader array of insurance solutions in an increasingly larger geographic footprint, and our ability to capture an increasingly larger portion of the economics associated with the sale of insurance.
We actively seek out our colleagues’ input through our formal and anonymous Baldwin Pulse Engagement survey, asking for feedback on a variety of topics including career path opportunities, trust in team and leadership, and feeling valued.
We actively seek out our colleagues’ input through our formal and anonymous Baldwin Engagement Pulse survey, asking for feedback on a variety of topics including career path opportunities, trust in team and leadership, and feeling valued.
Cultivating an Ethical Environment for our Colleagues and Clients We take very seriously our responsibility to operate with the highest level of integrity and foster an ethical environment for both our colleagues and clients.
Cultivating an Ethical Environment for our Colleagues and Clients We take our responsibility to operate with the highest level of integrity and foster an ethical environment for both our colleagues and clients very seriously.
These instructor-facilitated workshops provide new leaders with tools and resources to help guide and support their efforts in interviewing and hiring, communication, coaching, and influencing others. ◦ The Baldwin Group Leader Playbook: A comprehensive on-demand resource that helps leaders model Azimuth values, develop themselves as coaches, hire and onboard top talent, and execute their roles with excellence. • Strategic Partnerships to offer robust curriculum for our colleagues and support their capabilities for professional and self-development. ◦ The Institutes: We’re proud to partner with the premier educational purveyor of technical acumen to the insurance industry, The Institutes.
These instructor-facilitated workshops provide new leaders with tools and resources to help guide and support their efforts in interviewing and hiring, communication, coaching, and influencing others. ◦ The Baldwin Group Leader Playbook: A comprehensive on-demand resource that helps leaders model Azimuth values, develop themselves as coaches, hire and onboard top talent, and execute their roles with excellence. • Strategic Partnerships to offer robust curriculum for our colleagues and support their capabilities for professional and self-development. ◦ The Institutes: We’re proud to partner with this premier educational purveyor of technical acumen to the insurance industry.
Our offerings include: • Health & Wellness: Comprehensive medical coverage, mental health services, and an Employee Assistance Program (EAP) • Retirement Savings: A competitive 401(k) plan with employer matching, aiding colleagues in future planning • Flexible Time Off: Paid sick leave, recognition of 11 national holidays, and a Summer Friday Initiative providing half-days off during the summer season • Parental & Family Support: Adoption Assistance Program and parental leave after one year of service • Financial & Legal Guidance: Expert referral services for financial and legal planning • Wellness & Fitness: The Baldwin Vitality Wellness Program in partnership with AAPTIV for customizable fitness benefits • Health Savings Accounts (HSA): An employer contribution of $600+ to mitigate medical costs. 12 To promote an environment where all colleagues can learn, grow, and thrive, we provide education and training on a variety of topics, including technical, professional, business development, client experience, leadership, and regulatory and compliance.
Our offerings include: • Health & Wellness: Comprehensive medical coverage, mental health services, and an Employee Assistance Program (EAP) • Retirement Savings: A competitive 401(k) plan with employer matching, aiding colleagues in future planning • Flexible Time Off: Paid sick leave, recognition of 11 national holidays, and a Summer Friday Initiative providing half-days off during the summer season • Parental & Family Support: Adoption Assistance Program and Parental Leave after one year of service • Financial & Legal Guidance: Expert referral services for financial and legal planning • Wellness & Fitness: The Baldwin Thrive Wellness Program by Personify in partnership with Aaptiv for customizable fitness benefits • Health Savings Accounts (HSA): An employer contribution of $600+ to mitigate medical costs. 12 To promote an environment where all colleagues can learn, grow, and thrive, we provide education and training on a variety of topics, including technical, professional, business development, client experience, leadership, and regulatory and compliance.
We have taken, and will continue to take, a two-pronged approach to growing our business, which includes investing meaningfully into our existing businesses to drive organic growth, and to drive inorganic growth via our partnership strategy.
We have taken, and will continue to take, a two-pronged approach to growing our business, which includes investing meaningfully into our existing businesses to drive organic growth, and driving inorganic growth via our partnership strategy.
We are continuously recognized for our people-first approach, our commitment to a culture of continuous learning, and for providing a place where our colleagues learn, grow, and thrive. • Baldwin continued to be Great Place to Work-Certified™ and once again ranked as a Fortune Best Workplaces in Financial Services and Insurance™ in 2024. • We were also recognized by Top Workplaces USA as a 2024 nationally recognized employer for making the world a better place to work by prioritizing a people-centered culture and giving employees a voice.
We are continuously recognized for our people-first approach, our commitment to a culture of continuous learning, and for providing a place where our colleagues learn, grow, and thrive. • Baldwin continued to be Great Place to Work-Certified™ and once again ranked as a Fortune Best Workplaces in Financial Services and Insurance™ in 2025. • We were also recognized by Top Workplaces USA as a 2025 nationally recognized employer for making the world a better place to work by prioritizing a people-centered culture and giving employees a voice.
Mainstreet Insurance Solutions also offers consultation for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals through a network of primarily independent contractor agents. 10 Competition The business of providing insurance products and services is highly competitive.
MIS also offers consultation for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals through a network of primarily independent contractor agents. 10 Competition The business of providing insurance products and services is highly competitive.
We have a variety of ways we promote our culture, support our communities, and take care of each other within the Baldwin family. • We promote our colleagues actively participating in community outreach by providing three days of Community Service PTO. • Our IAS International Aid and Development Practice enables International Development Organizations and Non-Governmental Organizations to operate safely and securely, to help the most vulnerable communities in some of the highest risk communities in the world. • To help any qualifying colleague experiencing extraordinary hardship, we provide the Baldwin True North Colleague Fund (operated by America’s Charities, a 501(c)(3) non-profit organization), to which colleagues can also contribute by making a donation.
We have a variety of ways we promote our culture, support our communities, and take care of each other within the Baldwin family. • We provide three days of Community Service PTO to promote our colleagues actively participating in community outreach. • Our IAS International Aid and Development Practice enables International Development Organizations and Non-Governmental Organizations to operate safely and securely, helping the most vulnerable communities in some of the highest risk communities in the world. • To help any qualifying colleague experiencing extraordinary hardship, we maintain The Baldwin Group True North Colleague Fund (operated by America’s Charities, a 501(c)(3) non-profit organization), to which colleagues can also contribute by making a donation.
When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our fifth stakeholder, our stockholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits.
When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our stockholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits.
No material part of our business depends upon a single client or on a few clients. The loss of any one client would not have a material adverse effect on our operations. In 2024, our largest single client represented less than 1% of our core commissions and fees.
No material part of our business depends upon a single client or on a few clients. The loss of any one client would not have a material adverse effect on our operations. In 2025, our largest single client represented less than 1% of our core commissions and fees.
Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our partnership strategy, and continuing to build out our MGA platform (“MSI”), which delivers proprietary, technology-enabled insurance solutions to our internal risk advisors as well as to a growing channel of external distribution partners.
Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our partnership strategy, and continuing to build out MSI, which delivers proprietary, technology-enabled insurance solutions to our internal risk advisors as well as to a growing channel of external distribution partners.
ITEM 1. BUSINESS The Company The Baldwin Insurance Group, Inc. is a holding company and sole managing member of The Baldwin Insurance Group Holdings, LLC (formerly Baldwin Risk Partners, LLC) (“Baldwin Holdings”) and its sole material asset is its ownership interest in Baldwin Holdings, through which all of our business is conducted.
ITEM 1. BUSINESS The Company The Baldwin Insurance Group, Inc. is a holding company and sole managing member of The Baldwin Insurance Group Holdings, LLC (“Baldwin Holdings”) and its sole material asset is its ownership interest in Baldwin Holdings, through which all of our business is conducted.
We highly value the powerful and innovative results that come from seeking and weighing a broad range of perspectives and we strive to hire and promote talent that brings wide ranging diversity of thought, background, and experience. • More than half of our executive leadership team joined Baldwin from other industries, bringing unique background and thoughtful insight on our continued best path to success. • As of December 31, 2024, women comprise 59% of our colleague population and 50% of our leadership positions. • We benefit from a wide age range and experience level within the firm.
We highly value the powerful and innovative results that come from seeking and weighing a broad range of perspectives and we strive to hire and promote talent that brings wide ranging diversity of thought, background, and experience. • Half of our executive leadership team joined Baldwin from other industries, bringing unique background and thoughtful insight on our continued best path to success. • As of December 31, 2025, women comprise 59% of our colleague population and 52% of our leadership positions. • We benefit from a wide age range and experience level within the firm.
We have a robust mix of entry-level and post-college colleagues. This balanced representation fosters our talent strategy of providing great mentoring and learning opportunities for our developing colleagues. • Our talent acquisition team continues to proactively source and contact underrepresented candidates as part of our recruiting process for open roles.
We have a robust mix of entry-level and post-college colleagues. This balanced representation fosters our talent strategy of providing great mentoring and learning opportunities for our developing colleagues. • Our talent acquisition team continues to proactively source to engage culturally congruent candidates as part of our recruiting process for open roles.
Our commitment to rewarding our colleagues is evidenced by merit increases and bonuses we have continued to pay each year. 11 Culture and Belonging Part of how we operate and support each other as a “Best Team” as outlined in our Azimuth, is by operating with transparency and striving to make it easy for colleagues to know and trust each other striving to always do the right thing in an open and authentic way.
Our commitment to rewarding our colleagues is evidenced by merit increases and bonuses we have continued to pay each year. 11 Culture and Belonging Part of how we operate and support each other as a “Best Team” as outlined in our Azimuth, is by operating with transparency, fostering an environment where it’s easy for colleagues to know and trust each other, and striving to do the right thing in an open and authentic way.
In 2011, we adopted the “Azimuth” as our corporate and cultural constitution. Named after a historical navigation tool used to find “true north,” the Azimuth asserts our core values, business basics and stakeholder promises. The ideals encompassed by the Azimuth support our mission to deliver indispensable, tailored insurance and risk management insights and solutions to our clients.
Named after a historical navigation tool used to find “true north,” the Azimuth asserts our core values, business basics and stakeholder promises. The ideals encompassed by the Azimuth support our mission to deliver indispensable, tailored insurance and risk management insights and solutions to our clients.
Insurance premiums are cyclical in nature and may vary widely based on market conditions. Various factors, including competition for market share among underwriting enterprises, increased underwriting capacity and improved economies of scale following consolidations, can result in flat or reduced property/casualty premium rates (a “soft” market). A soft market tends to put downward pressure on commission revenues.
Various factors, including competition for market share among underwriting enterprises, increased underwriting capacity and improved economies of scale following consolidations, can result in flat or reduced property/casualty premium rates (a “soft” market). A soft market tends to put downward pressure on commission revenues.
In 2024, two insurance company partners accounted for an aggregate of approximately 19% of our core commissions and fees.
In 2025, two insurance company partners accounted for an aggregate of approximately 17% of our core commissions and fees.
Importantly, we hire for competency, capability, and potential, while maintaining a competitive culture that values and rewards results. Baldwin continues to focus on attracting and retaining the very best talent and creating an environment that is known to be a destination for top talent. We maintain a strong annual retention rate, which was 79% for 2024.
We hire based on competency, capability, and potential, while maintaining an ethos that values performance and rewards results. Baldwin continues to focus on attracting and retaining the very best talent and creating an environment that is known to be a destination for top talent. We maintain a strong annual retention rate, which was 81% for 2025.
Furthermore, payments under the Tax Receivable Agreement will give rise to additional tax benefits and therefore additional payments under the Tax Receivable Agreement itself. 15 Available Information We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC.
Available Information We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC.
Dedicated landing pages for WebCE and The Institutes make navigating ongoing education seamless and keeps our colleagues on the vanguard of industry changes. We also promote colleague growth and development through an ongoing performance feedback model, including 90-day and 120-day check-ins for new colleagues, and a formal year-end performance check-in for all colleagues.
Dedicated landing pages for WebCE and The Institutes make navigating ongoing education seamless and keeps our colleagues on the vanguard of industry changes. We also promote colleague growth and development through our continuous coaching ongoing performance model, including quarterly performance goal setting and check-ins, and a year-end performance check-in for all colleagues.
Ongoing investments to date focused on, but are not limited to, the continued buildout of our MSI platform, the continued buildout of our tech-enabled homeowners efforts (both in MSI and in our Mainstreet Insurance Solutions business), enterprise-wide technology initiatives, the exploration of potential alternative capacity solutions, and the continued hiring of risk advisors and sales leadership infrastructure in our Insurance Advisory Solutions and Mainstreet Insurance Solutions operating groups. 9 Operating Groups Effective January 1, 2024, the Company’s FounderShield Partner moved from the Underwriting, Capacity & Technology Solutions operating group to the Insurance Advisory Solutions operating group.
Ongoing investments to date focused on, but are not limited to, the continued buildout of our MSI platform, the continued buildout of our tech-enabled homeowners efforts (both in MSI and in our Mainstreet Insurance Solutions business), enterprise-wide technology initiatives, the continued buildout of alternative capacity solutions, and the continued hiring of risk advisors and sales leadership infrastructure in our Insurance Advisory Solutions and Mainstreet Insurance Solutions operating groups. 9 Operating Groups Baldwin’s business is divided into three operating groups: Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions and Mainstreet Insurance Solutions.
In January of 2025, we received final approval and a Certificate of Authority from the Texas Department of insurance to form a Texas-domiciled reciprocal insurance exchange (the “Reciprocal”), for which we intend to serve as and own the Attorney-in-Fact (“AIF”).
In January 2025, we received final approval and a Certificate of Authority from the Texas Department of Insurance to form a Texas-domiciled reciprocal insurance exchange (the “Reciprocal”). Baldwin holds an investment in Builder Risk Management, LLC, which serves as the Attorney-in-Fact (the “AIF”) for the Reciprocal.
Factors contributing to our organic growth include net new business growth, fees, rate increases, retention, exposure unit growth, and contingent commissions. Contributions to organic revenue growth from recent partnerships begins after we have owned the partner firm for 12 months. We did not execute any partnerships during 2024 and we continue to anticipate relatively little partnership activity in 2025.
Factors contributing to our organic growth include net new business growth, fees, rate increases, retention, exposure unit growth, and contingent commissions. Contributions to organic revenue growth from recent partnerships begin after we have owned the partner firm for 12 months.
Some examples of the ways we continued to support colleague growth and colleague development in 2024 are listed below. • Expansion of our Azimuth Institute: The Azimuth Institute is our formal program to provide foundational and progressive training for all of our IAS client-facing roles in the areas of job skills, system training, insurance acumen, power skills, business development and leadership training for leaders.
Some examples of the ways we continued to support colleague growth and colleague development in 2025 are listed below. • Expansion of our Azimuth Institute: The Azimuth Institute is our formal program to provide foundational and progressive training for all of our IAS client-facing roles in the areas of job skills, system training, insurance acumen, power skills, business development and leadership training for leaders. • Enhancement of two of our core sales training programs: ◦ SCORE is a 10-week intensive training for new and developing risk advisors within our IAS business, offered across multiple modalities.
Our 4,000 plus colleagues include over 700 risk advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 110 offices in 24 states, all of which are equipped to provide diversified products and services to empower our clients at every stage through our three operating groups.
Among them are approximately 900 risk advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 125 offices in 24 states, all of which are equipped to provide diversified products and services to empower our clients at every stage through our three operating groups. In 2011, we adopted the “Azimuth” as our corporate and cultural constitution.
Though partnerships have contributed meaningful inorganic growth to Baldwin and we expect them to contribute to our long-term growth strategy, we anticipate they will be episodic in nature going forward. Adding new colleagues through partnerships can significantly bolster our geographic footprint, product expertise, and end-client industry expertise, while adding incremental industry-leading talent to our organization.
Our partnership strategy has contributed meaningful inorganic growth to Baldwin and we expect to remain active and opportunistic in pursuing potential transactions that will contribute to our long-term growth strategy. Adding new colleagues through partnerships can significantly bolster our geographic footprint, product expertise, and end-client industry expertise, while adding incremental industry-leading talent to our organization.
Baldwin Holdings is currently taxed as a partnership for federal income tax purposes and, as a result, its members, including Baldwin, pay taxes with respect to their allocable shares of its net taxable income.
All of our business is conducted through Baldwin Holdings and its consolidated subsidiaries and affiliates, and the financial results of Baldwin Holdings and its consolidated subsidiaries are included in the consolidated financial statements of Baldwin. 15 Baldwin Holdings is currently taxed as a partnership for federal income tax purposes and, as a result, its members, including Baldwin, pay taxes with respect to their allocable shares of its net taxable income.
We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation. We represent over three million clients across the United States and internationally.
We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation. We represent over three million clients across the United States and internationally. Our team now comprises approximately 5,000 colleagues—including those who joined us through our January 2026 partnerships.
The firm also partners with over 5,400 independent contracted agents, primarily supporting our Medicare business. Baldwin is a place for colleagues to build a career, not just have a job, and we believe every colleague should feel a sense of ownership in the firm. To promote that connection, we grant all newly-hired colleagues shares of Baldwin common stock.
We have 4,955 full-time colleagues (99% of total colleague population) and 65 part-time colleagues. The firm also partners with over 8,300 independent contracted agents, primarily supporting our Medicare business. Baldwin is a place for colleagues to build a career, not just have a job, and we believe every colleague should feel a sense of ownership in the firm.
We have been intentional in recognizing and elevating this talent across the organization to build world class industry-focused practice groups and product Centers of Excellence that can be leveraged by the entire firm. Underwriting, Capacity & Technology Solutions Operating Group (“UCTS”) UCTS consists of three distinct businesses—MSI, our reinsurance brokerage business, Juniper Re, and our captive management business.
We have been intentional in recognizing and elevating this talent across the organization to build world class industry-focused practice groups and product Centers of Excellence that can be leveraged by the entire firm.
In the United States, our industry is comprised of large, global participants, such as those described in the section titled “Competition” below. The remainder of our industry is highly fragmented and comprised of over 30,000 regional and community participants that vary significantly in size and scope.
In the United States, our industry is comprised of large, global participants alongside a highly fragmented group of regional and community participants that vary significantly in size and scope.
Despite the recent consolidation in the insurance brokerage industry, the industry remains highly fragmented, and the number of independent agencies has remained roughly constant since 2006. The fragmented industry landscape presents us with the opportunity to continue acquiring high-quality partners. 7 Commission revenues are generally based on a percentage of the premiums paid by insureds and normally follow premium levels.
While the insurance brokerage industry has experienced recent consolidation, it remains highly fragmented, creating opportunities for us to continue acquiring high-quality partners. 7 Commission revenues are generally based on a percentage of the premiums paid by insureds and normally follow premium levels. Insurance premiums are cyclical in nature and may vary widely based on market conditions.
In 2024, we made a significant investment in the development of new middle market oriented commercial lines products, which will go live in the first half of 2025. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through the end of February 2024.
In 2025, we launched two new middle market oriented commercial lines products, and continue to maintain a pipeline of new programs across personal, commercial and professional lines, with several slated to launch in 2026. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through the end of February 2024.
We share “Give a Wows” with colleagues during our quarterly Town Hall meetings. Nurture and Grow Talent At Baldwin, we care about our colleagues and their families from a holistic perspective and take great care in supporting them in meaningful ways.
Colleagues and leaders can send eCards, award points, boost recognition, and fuel motivation. Appreciation posts are further recognized during our quarterly all colleague Town Call meetings. Nurture and Grow Talent At Baldwin, we care about our colleagues and their families from a holistic perspective and take great care in supporting them in meaningful ways.
We believe our success attracting high quality partners has validated our differentiated value proposition—we have consummated partnerships with 35 firms since the beginning of 2020, for a total of $538.7 million of Acquired Revenue, which includes eight “Top 100” firms since 2020, more than any other peer in our industry.
We believe our success attracting high quality partners has validated our differentiated value proposition—we have consummated partnerships with 37 firms since the beginning of 2020, for a total of $909.0 million of acquired revenue, which includes nine “Top 100” firms since 2020, including our recently announced partnership with CAC Group, a nationally recognized specialty and middle-market insurance brokerage firm.
Our colleagues are inspired by and deeply committed to the Best Team Wins approach outlined in our cultural guide, The Azimuth. Powered by People As of December 31, 2024, we had over 4,000 colleagues, the vast majority of whom are full-time. There were 4,052 full-time colleagues (98% of total colleague population) and 64 part-time colleagues.
Our colleagues are inspired by and deeply committed to the Best Team Wins approach outlined in our cultural guide, The Azimuth. Powered by People We now have approximately 5,000 colleagues, including those who joined us through our January 2026 partnerships, the vast majority of whom are full-time.
Baldwin has pledged up to $250,000 to the fund and is honored to provide an additional dollar-for-dollar match for colleague contributions up to another $250,000. • We believe in having fun at work and celebrating our successes by promoting peer recognition at all levels of the firm through our “Give a Wow” compliment program.
Baldwin has pledged up to $250,000 to the fund and is honored to provide an additional dollar-for-dollar match for colleague contributions up to another $250,000. • We believe recognition should be visible, meaningful, and part of everyday work, and we reinforce that through Bravo, our social recognition platform, to celebrate contributions across the firm.
We are in the process of finalizing a third-party led capitalization of the Reciprocal, ahead of beginning to write business into the Reciprocal two to three months thereafter. Based on how we intend to structure the Reciprocal, we do not expect to consolidate the Reciprocal's financial results, but the AIF entity will be a subsidiary in our UCTS operating group.
The third-party led capitalization of the Reciprocal closed and funded in full on May 6, 2025, and we began writing business into the Reciprocal late in the second quarter of 2025. Based on the structure of the Reciprocal, we do not consolidate the Reciprocal’s financial results, and the AIF entity is treated as an equity method investment in UCTS.
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Prior year segment reporting information has been recast to conform to the current organizational structure. Baldwin’s business is divided into three operating groups: Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions and Mainstreet Insurance Solutions.
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Underwriting, Capacity & Technology Solutions Operating Group (“UCTS”) UCTS consists of three distinct divisions—MSI, our Capacity Solutions group (which includes our reinsurance brokerage business, Juniper Re, our reinsurance MGA business, MultiStrat, and our captive management business), and the Captive business.
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Our performance feedback processes enable every colleague to have clear alignment with how we execute on our goals, maximize their performance potential, and drive their own development and growth through individual action plans.
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UCTS includes TBG Assurance Company, LLC, a wholly-owned protected cell captive insurance company (“PCC”) domiciled in Tennessee, which was established to allow Baldwin to further participate in the underwriting results of a small portion of its MGA programs. The PCC allows for the creation of multiple independent cells (series) within a single legal entity, TBG Assurance Company, LLC (the “Core”).
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All of our business is conducted through Baldwin Holdings and its consolidated subsidiaries and affiliates, and the financial results of Baldwin Holdings and its consolidated subsidiaries are included in the consolidated financial statements of Baldwin.
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The initial series, MSI Multifamily Series Protected Cell (the “MSI Cell” and, collectively with the Core, the “Captive”) became effective January 1, 2025.
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To promote that connection, we grant all newly-hired colleagues shares of Baldwin common stock.
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Our agile continuous coaching framework ensures every colleague has clear alignment to our goals and priorities, and connects them with tools and resources to maximize their performance and development.
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In addition, we have prepared a California Climate Impact Statement in accordance with the recommended framework of the Task Force on Climate-related Financial Disclosures.
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The statement is available on our investor relations website under the “Governance” section, titled “Climate-Related Financial Risk Report.” Reference to the location of this financial risk report is being provided for informational purposes and shall not be deemed incorporated by reference into this Annual Report.
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Furthermore, payments under the Tax Receivable Agreement will give rise to additional tax benefits and therefore additional payments under the Tax Receivable Agreement itself.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, we may have to adjust our budgets for future acquisitions, capital expenditures, dividend payments, loan repayments and other expenditures to account for unexpected changes in commissions and fees, and any decreases in premium rates may adversely affect our business, financial condition and results of operations. 20 Because the commissions and fees we earn on the sale of certain insurance products is based on premiums and commission rates set by our insurance company partners, any decreases in these premiums or commission rates, or actions by our insurance company partners seeking repayment of commissions, could result in commissions and fees decreases or expenses to us.
Biggest changeAs a result, we may have to adjust our budgets for future acquisitions, capital expenditures, dividend payments, loan repayments and other expenditures to account for unexpected changes in commissions and fees, and any decreases in premium rates may adversely affect our business, financial condition and results of operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources for additional information. Short selling could increase the volatility of our stock price of our Class A Common Stock.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources for additional information. Short selling could increase the volatility of the price of our Class A Common Stock.
The trading price of our Class A common stock is likely to be volatile and subject to wide price fluctuations in response to various factors, including: • market conditions in the broader stock market in general, or in our industry in particular; • actual or anticipated fluctuations in our quarterly financials and results of operations; • introduction of new products and services by us or our competitors; • issuance of new or changed securities analysts’ reports or recommendations; • investor perceptions of us and the industries in which we or our clients operate; • low trading volumes or sales, or anticipated sales, of large blocks of our Class A common stock, including those by our existing investors or our partners; • concentration of Class A common stock ownership; • additions or departures of key personnel; • regulatory or political developments; • litigation and governmental investigations; • changing economic and political conditions; • the perceived adequacy of our ESG efforts; • our ability or perceived ability to: ◦ attract new clients, successfully deploy and implement our products, obtain client renewals and provide our clients with excellent client support; ◦ increase our network of insurance company partners and the profit-sharing, override and/or contingent commissions that we earn from such insurance company partners; ◦ adequately expand, train, integrate and retain our colleagues, including our executive officers and senior leaders, and maintain or increase our sales force’s productivity; ◦ improve our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; ◦ successfully introduce new products and enhance existing products; ◦ successfully deploy information technology assets for use by our colleagues and interaction with our clients and insurance company partners; ◦ adapt to the ever-changing regulatory and legal landscape; ◦ protect sensitive, personal and confidential information and data within Baldwin’s custody from third-party bad actors; ◦ successfully identify and acquire new partners; ◦ successfully integrate partnerships into the Company in an operationally efficient manner; ◦ service our existing indebtedness; ◦ access the capital markets or otherwise obtain access to capital to satisfy future needs of the Company; ◦ successfully introduce our products to new markets and geographies; and ◦ successfully compete against larger companies and new market entrants. • announced or completed acquisitions of businesses or technologies by us or our competitors; and • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including developments relating to the health care industry and the marketing and sale of Medicare plans. 48 These and other factors may cause the market price and demand for shares of our Class A common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of Class A common stock and may otherwise negatively affect the liquidity of our Class A common stock.
The trading price of our Class A common stock is likely to be volatile and subject to wide price fluctuations in response to various factors, including: • market conditions in the broader stock market in general, or in our industry in particular; • actual or anticipated fluctuations in our quarterly financials and results of operations; • introduction of new products and services by us or our competitors; • issuance of new or changed securities analysts’ reports or recommendations; • investor perceptions of us and the industries in which we or our clients operate; • low trading volumes or sales, or anticipated sales, of large blocks of our Class A common stock, including those by our existing investors or our partners; • concentration of Class A common stock ownership; • additions or departures of key personnel; • regulatory or political developments; • litigation and governmental investigations; • changing economic and political conditions; • the perceived adequacy of our ESG efforts; • our ability or perceived ability to: ◦ attract new clients, successfully deploy and implement our products, obtain client renewals and provide our clients with excellent client support; ◦ increase our network of insurance company partners and the profit-sharing, override and/or contingent commissions that we earn from such insurance company partners; ◦ adequately expand, train, integrate and retain our colleagues, including our executive officers and senior leaders, and maintain or increase our sales force’s productivity; ◦ improve our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; ◦ successfully introduce new products and enhance existing products; ◦ successfully deploy information technology assets for use by our colleagues and interaction with our clients and insurance company partners; ◦ adapt to the ever-changing regulatory and legal landscape; ◦ protect sensitive, personal and confidential information and data within Baldwin’s custody from third-party bad actors; ◦ successfully identify and acquire new partners; ◦ successfully integrate partnerships into the Company in an operationally efficient manner; ◦ service our existing indebtedness; ◦ access the capital markets or otherwise obtain access to capital to satisfy future needs of the Company; ◦ successfully introduce our products to new markets and geographies; and ◦ successfully compete against larger companies and new market entrants. • announced or completed acquisitions of businesses or technologies by us or our competitors; and • new laws or regulations or new interpretations of existing laws or regulations applicable to our business, including developments relating to the health care industry and the marketing and sale of Medicare plans. 49 These and other factors may cause the market price and demand for shares of our Class A common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of Class A common stock and may otherwise negatively affect the liquidity of our Class A common stock.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability. • Certain of our results of operations and financial metrics may be difficult to predict as a result of seasonality. • E&O claims against us, and other incidents, claims, risks, exposures and/or liabilities that require us to make claims against our insurance policies, may negatively affect our business, financial condition and results of operations. • Non-compliance with or changes in laws, regulations or licensing requirements applicable to us could restrict our ability to conduct our business and/or could adversely affect our business, financial condition and results of operations. • Proposed tort reform legislation, if enacted, could decrease demand for casualty insurance, thereby reducing our commissions revenues. • Our business depends on information processing systems.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability. 17 • Certain of our results of operations and financial metrics may be difficult to predict as a result of seasonality. • E&O claims against us, and other incidents, claims, risks, exposures and/or liabilities that require us to make claims against our insurance policies, may negatively affect our business, financial condition and results of operations. • Non-compliance with or changes in laws, regulations or licensing requirements applicable to us could restrict our ability to conduct our business and/or could adversely affect our business, financial condition and results of operations. • Proposed tort reform legislation, if enacted, could decrease demand for casualty insurance, thereby reducing our commissions revenues. • Our business depends on information processing systems.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • attract new clients, successfully deploy and implement our products, obtain client renewals and provide our clients with excellent client support; • increase our network of insurance company partners and the profit-sharing, override and/or contingent commissions that we earn from such insurance company partners; • adequately expand, train, integrate and retain our colleagues, including our executive officers and senior leaders, and maintain or increase our sales force’s productivity; • improve our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; 29 • successfully introduce new products and enhance existing products; • successfully deploy information technology assets for use by our colleagues and interaction with our clients and insurance company partners; • adapt to the ever-changing regulatory and legal landscape; • protect sensitive, personal and confidential information and data within Baldwin’s custody from third-party bad actors; • successfully identify and acquire new partners; • successfully integrate partnerships into the Company in an operationally efficient manner; • service our existing indebtedness; • access the capital markets or otherwise obtain access to capital to satisfy future needs of the Company; • successfully introduce our products to new markets and geographies; and • successfully compete against larger companies and new market entrants.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • attract new clients, successfully deploy and implement our products, obtain client renewals and provide our clients with excellent client support; • increase our network of insurance company partners and the profit-sharing, override and/or contingent commissions that we earn from such insurance company partners; • adequately expand, train, integrate and retain our colleagues, including our executive officers and senior leaders, and maintain or increase our sales force’s productivity; • improve our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; 30 • successfully introduce new products and enhance existing products; • successfully deploy information technology assets for use by our colleagues and interaction with our clients and insurance company partners; • adapt to the ever-changing regulatory and legal landscape; • protect sensitive, personal and confidential information and data within Baldwin’s custody from third-party bad actors; • successfully identify and acquire new partners; • successfully integrate partnerships into the Company in an operationally efficient manner; • service our existing indebtedness; • access the capital markets or otherwise obtain access to capital to satisfy future needs of the Company; • successfully introduce our products to new markets and geographies; and • successfully compete against larger companies and new market entrants.
Further, the Majority Holder irrevocably agreed, on behalf of itself and the other Holders, not to designate any nominee for election to service on our board of directors if the Independent Committee determines in good faith that action by our board of directors in furtherance of the nomination of such person to our board of directors would not be in the best interests of the Company and its stockholders in their capacity as such. 43 In connection with the Consent Agreement, our board of directors, with the consent of the Majority Holder under the 2019 Stockholders Agreement, has amended our By-laws to, among other things: • create a committee of our board of directors, composed of all directors then in office who our board of directors determines both (i) qualify as an independent director under the corporate governance standards of Nasdaq (as defined in the 10-K) and (ii) have no relationship with the Company or any Holder that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director (such committee, the “Independent Committee”); and • empower the Independent Committee, acting unanimously, to make any and all determinations contemplated or required by the Consent Agreement, subject to any additional power and authority as may be delegated to the Independent Committee by our board of directors from time to time.
Further, the Majority Holder irrevocably agreed, on behalf of itself and the other Holders, not to designate any nominee for election to service on our board of directors if the Independent Committee determines in good faith that action by our board of directors in furtherance of the nomination of such person to our board of directors would not be in the best interests of the Company and its stockholders in their capacity as such. 44 In connection with the Consent Agreement, our board of directors, with the consent of the Majority Holder under the 2019 Stockholders Agreement, has amended our By-laws to, among other things: • create a committee of our board of directors, composed of all directors then in office who our board of directors determines both (i) qualify as an independent director under the corporate governance standards of Nasdaq (as defined in the 10-K) and (ii) have no relationship with the Company or any Holder that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director (such committee, the “Independent Committee”); and • empower the Independent Committee, acting unanimously, to make any and all determinations contemplated or required by the Consent Agreement, subject to any additional power and authority as may be delegated to the Independent Committee by our board of directors from time to time.
Under PIPA, we are required, among other things, to appoint a data protection officer responsible for ensuring compliance with PIPA, to effect data subject rights (including for example and under certain circumstances, the right to access, the right to correct, the right to erasure, and the right to object, etc.), to establish appropriate legal bases for processing personal data, and to assess the level of protection provided by an overseas third-party recipient of personal data in advance of any transfer to any such third party. 41 Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy or cybersecurity.
Under PIPA, we are required, among other things, to appoint a data protection officer responsible for ensuring compliance with PIPA, to effect data subject rights (including for example and under certain circumstances, the right to access, the right to correct, the right to erasure, and the right to object, etc.), to establish appropriate legal bases for processing personal data, and to assess the level of protection provided by an overseas third-party recipient of personal data in advance of any transfer to any such third party. 42 Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy or cybersecurity.
These factors, which are not within our control, include the capacity of our insurance company partners to place new business, underwriting and non-underwriting profits of our insurance company partners, consumer demand for insurance products, the availability of comparable products from other insurance companies at a lower cost and the availability of alternative insurance products, such as government benefits and self-insurance products, to consumers.
These factors, which are not within our control, include the capacity of our insurance and reinsurance company partners to place new business, underwriting and non-underwriting profits of our insurance and reinsurance company partners, consumer demand for insurance products, the availability of comparable products from other insurance companies at a lower cost and the availability of alternative insurance products, such as government benefits and self-insurance products, to consumers.
RISK FACTORS Summary Risk Factors Some of the factors that could materially and adversely affect our business, financial condition, results of operations or prospects, include the following: • We may not have sufficient cash flows from operating activities, cash on hand and available capital sources to service any indebtedness, pay contingent earnout liabilities, or finance other working capital needs, which could force us to sell assets, cease operations or take other detrimental actions for our business. • We have debt outstanding that could adversely affect our financial flexibility and subjects us to restrictions and limitations that could significantly impact our ability to effectively operate our business. • We may incur significant additional indebtedness, which may affect our ability to satisfy our obligations under the 2024 Credit Agreement and indenture governing our Senior Secured Notes. • Downgrades in our credit ratings could increase future debt financing costs and limit the future availability of debt financing. • Macroeconomic conditions, political events, other market conditions in the U.S. and around the world and a decline in economic activity could have a material adverse effect on our financial condition and results of operations. • Volatility or declines in premiums or other adverse trends in the insurance industry may seriously undermine our profitability. • Because the commissions and fees we earn on the sale of certain insurance products is based on premiums and commission rates set by our insurance company partners, any decreases in these premiums or commission rates, or actions by our insurance company partners seeking repayment of commissions, could result in commissions and fees decreases or expenses to us. • Quarterly and annual variations in our commissions that result from the timing of policy renewals and the net effect of new and lost business production may have unexpected effects on our results of operations. • Conditions impacting our insurance company partners or other parties with whom we do business may impact us. • If we are unable to apply technology effectively in driving value for our clients through technology-based solutions or gain internal efficiencies through the application of technology and related tools, our results of operations, client relationships, growth and compliance programs could be adversely affected. • Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our business, financial condition and results of operations may be negatively affected. 16 • Our inability to retain or hire qualified colleagues, as well as the loss of any of our executive officers or senior leaders, could negatively impact our reputation and/or ability to retain existing business and generate new business. • The occurrence of natural or man-made disasters, health epidemics and pandemics, and associated governmental responses, could result in declines in business and increases in claims that could adversely affect our business, financial condition and results of operations. • Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability. • Our ownership of one or more protected cells in certain captive insurance companies (and/or other ownership or participation in similar risk-bearing structures or facilities) will subject us to limited underwriting risk through such ownership and/or participation and may also subject us to limited claims expenses. • If our ability to enroll individuals during enrollment periods is impeded, our business, results of operations and financial condition could be harmed. • Partnerships have been, and may in the future continue to be, important to our growth.
RISK FACTORS Summary Risk Factors Some of the factors that could materially and adversely affect our business, financial condition, results of operations or prospects include the following: • We may not have sufficient cash flows from operating activities, cash on hand and available capital sources to service any indebtedness, pay contingent earnout liabilities, or finance other working capital needs, which could force us to sell assets, cease operations or take other detrimental actions for our business. • We have debt outstanding that could adversely affect our financial flexibility and subjects us to restrictions and limitations that could significantly impact our ability to effectively operate our business. • We may incur significant additional indebtedness, which may affect our ability to satisfy our obligations under the JPM Credit Agreement and indenture governing our Senior Secured Notes. • Downgrades in our credit ratings could increase future debt financing costs and limit the future availability of debt financing. • Macroeconomic conditions, political events, other market conditions in the U.S. and around the world and a decline in economic activity could have a material adverse effect on our financial condition and results of operations. • Volatility or declines in premiums or other adverse trends in the insurance industry may seriously undermine our profitability. • Because the commissions and fees we earn on the sale of certain insurance products are based on premiums and commission rates set by our insurance company partners, any decreases in these premiums or commission rates, or actions by our insurance company partners seeking repayment of commissions, could result in commissions and fees decreases or expenses to us. 16 • Quarterly and annual variations in our commissions that result from the timing of policy renewals and the net effect of new and lost business production may have unexpected effects on our results of operations. • Conditions impacting our insurance company partners or other parties with whom we do business may impact us. • If we are unable to apply technology effectively in driving value for our clients through technology-based solutions or gain internal efficiencies through the application of technology and related tools, our results of operations, client relationships, growth and compliance programs could be adversely affected. • We utilize artificial intelligence, which could expose us to liability or adversely affect our business. • Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our business, financial condition and results of operations may be negatively affected. • Our inability to retain or hire qualified colleagues, as well as the loss of any of our executive officers or senior leaders, could negatively impact our reputation and/or ability to retain existing business and generate new business. • The occurrence of natural or man-made disasters, health epidemics and pandemics, and associated governmental responses, could result in declines in business and increases in claims that could adversely affect our business, financial condition and results of operations. • Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability. • Our ownership of one or more protected cells in certain captive insurance companies (and/or other ownership or participation in similar risk-bearing structures or facilities) will subject us to limited underwriting risk through such ownership and/or participation and may also subject us to limited claims expenses. • If our ability to enroll individuals during enrollment periods is impeded, our business, results of operations and financial condition could be harmed. • Partnerships have been, and may in the future continue to be, important to our growth.
In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to reduce or curtail our operations. We have debt outstanding that could adversely affect our financial flexibility and subjects us to restrictions and limitations that could significantly impact our ability to effectively operate our business.
In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to reduce or curtail our operations. 18 We have debt outstanding that could adversely affect our financial flexibility and subjects us to restrictions and limitations that could significantly impact our ability to effectively operate our business.
Such an expense could have a material adverse effect on our financial condition and results of operations, particularly if the expense is greater than the amount of related commissions and fees retained by us. The commission rates are set by our insurance company partners and are based on the premiums that the insurance company partners charge.
Such an expense could have a material adverse effect on our financial condition and results of operations, particularly if the expense is greater than the amount of related commissions and fees retained by us. The commission rates are set by our insurance and reinsurance company partners and are based on the premiums that the insurance and reinsurance company partners charge.
Approval may be withheld even if the transaction would be in the stockholders’ best interest if the state insurance department determines that the transaction would be detrimental to policyholders. We may issue a substantial amount of our common stock in the future, which could cause dilution to investors and otherwise adversely affect our stock price.
Approval may be withheld even if the transaction would be in the stockholders’ best interest if the state insurance department determines that the transaction would be detrimental to policyholders. We may issue a substantial amount of our common stock in the future, which could cause dilution to investors and otherwise adversely affect the price of our Class A common stock.
Any changes in U.S. trade policy could trigger retaliatory actions by affected countries, resulting in “trade wars,” which could affect volume of economic activity in the U.S., including demand for our services. 19 For example, the demand for insurance policies may be depressed by higher levels of inflation.
Any changes in U.S. trade policy could trigger retaliatory actions by affected countries, resulting in “trade wars,” which could affect the volume of economic activity in the U.S., including demand for our services. For example, the demand for insurance policies may be depressed by higher levels of inflation.
Capacity could also be reduced by our insurance company partners’ failing or withdrawing from writing certain coverages and/or geographic areas that we offer our clients. Commission rates and premiums can change based on prevailing legislative, economic and competitive factors that affect our insurance company partners.
Capacity could also be reduced by our insurance and reinsurance company partners’ failing or withdrawing from writing certain coverages and/or geographic areas that we offer our clients. Commission rates and premiums can change based on prevailing legislative, economic and competitive factors that affect our insurance company partners.
Because profit-sharing contingent commissions and override commissions materially affect our commissions and fees, any decrease in their payment to us could adversely affect our results of operations, profitability and our financial condition. 21 See “—Our business had historically been highly concentrated in the Southeastern United States.
Because profit-sharing contingent commissions and override commissions materially affect our commissions and fees, any decrease in their payment to us could adversely affect our results of operations, profitability and our financial condition. See “—Our business had historically been highly concentrated in the Southeastern United States.
Additionally, to the extent that we need funds and Baldwin Holdings is restricted from making such distributions to us under applicable law or regulation, as a result of covenants in its debt agreements or otherwise, we may not be able to obtain such funds on terms acceptable to us, or at all, and, as a result, could suffer a material adverse effect on our liquidity and financial condition. 46 Risks Relating to Ownership of our Class A Common Stock Some provisions of Delaware law and our certificate of incorporation and by-laws may deter third parties from acquiring us and diminish the value of our Class A common stock.
Additionally, to the extent that we need funds and Baldwin Holdings is restricted from making such distributions to us under applicable law or regulation, as a result of covenants in its debt agreements or otherwise, we may not be able to obtain such funds on terms acceptable to us, or at all, and, as a result, could suffer a material adverse effect on our liquidity and financial condition. 47 Risks Relating to Ownership of our Class A Common Stock Some provisions of Delaware law and our certificate of incorporation and by-laws may deter third parties from acquiring us and diminish the value of our Class A common stock.
The payment obligations under the Tax Receivable Agreement are our obligations and not obligations of Baldwin Holdings. 45 The actual increases in tax basis with respect to future taxable redemptions, exchanges or purchases of LLC Units, as well as the amount and timing of any payments we are required to make under the Tax Receivable Agreement will depend on a number of factors, including the market value of our Class A common stock at the time of future redemptions or exchanges, the prevailing federal tax rates applicable to us over the life of the Tax Receivable Agreement (as well as the assumed combined state and local tax rate), the amount and timing of the taxable income that we generate in the future and the extent to which future redemptions, exchanges or purchases of LLC Units are taxable transactions.
The payment obligations under the Tax Receivable Agreement are our obligations and not obligations of Baldwin Holdings. 46 The actual increases in tax basis with respect to future taxable redemptions, exchanges or purchases of LLC Units, as well as the amount and timing of any payments we are required to make under the Tax Receivable Agreement will depend on a number of factors, including the market value of our Class A common stock at the time of future redemptions or exchanges, the prevailing federal tax rates applicable to us over the life of the Tax Receivable Agreement (as well as the assumed combined state and local tax rate), the amount and timing of the taxable income that we generate in the future and the extent to which future redemptions, exchanges or purchases of LLC Units are taxable transactions.
While we still maintain a concentration in the Southeastern United States, our rapid growth has resulted in our having several regional concentrations of our business, such that adverse economic conditions, natural disasters, loss trends or regulatory changes in one of these regions could adversely affect our financial condition. • We derive a significant portion of our commissions and fees from a limited number of our insurance company partners, the loss of which could result in additional expense and loss of market share. • Our business may be harmed if we lose our relationships with insurance and reinsurance company partners, fail to maintain good relationships with insurance and reinsurance company partners, become dependent upon a limited number of insurance and reinsurance company partners or fail to develop new insurance and reinsurance company partner relationships. • Our business, and therefore our results of operations and financial condition, may be adversely affected by conditions that result in reduced insurer and/or reinsurer capacity. • We rely on third parties to perform key functions of our business operations, enabling our provision of services to our clients.
While we still maintain a concentration in the Southeastern United States, our rapid growth has resulted in our having several regional concentrations of our business, such that adverse economic conditions, natural disasters, loss trends or regulatory changes in one of these regions could adversely affect our financial condition. • We derive a significant portion of our commissions and fees from a limited number of our insurance company partners, the loss of which could result in additional expense and loss of market share. • Our business may be harmed if we lose our relationships with insurance and reinsurance company partners, referral partners or other trading partners, fail to maintain good relationships with insurance and reinsurance company partners, referral partners or other trading partners, become dependent upon a limited number of insurance and reinsurance company partners, referral partners or other trading partners, or fail to develop new insurance and reinsurance company partner, referral partner or other trading partner relationships. • Our business, and therefore our results of operations and financial condition, may be adversely affected by conditions that result in reduced insurer and/or reinsurer capacity. • We rely on third parties to perform key functions of our business operations, enabling our provision of services to our clients.
Defending or enforcing our trademark rights, branding practices and other intellectual property could result in the expenditure of significant resources and divert the attention of management, which in turn may materially and adversely affect our business and results of operations, even if such defense or enforcement is ultimately successful. 38 Failure to obtain, maintain, protect, defend or enforce our intellectual property rights, or allegations that we have infringed, misappropriated or otherwise violated the intellectual property rights of others, could harm our reputation, ability to compete effectively, business, financial condition and results of operations.
Defending or enforcing our trademark rights, branding practices and other intellectual property could result in the expenditure of significant resources and divert the attention of management, which in turn may materially and adversely affect our business and results of operations, even if such defense or enforcement is ultimately successful. 39 Failure to obtain, maintain, protect, defend or enforce our intellectual property rights, or allegations that we have infringed, misappropriated or otherwise violated the intellectual property rights of others, could harm our reputation, ability to compete effectively, business, financial condition and results of operations.
If one or more of these analysts cease to cover our Class A common stock, we could lose visibility in the trading market for our Class A common stock, which in turn could cause our Class A common stock price to decline. 49 If we experience material weaknesses or significant deficiencies in the future, or otherwise fail to maintain an effective environment of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
If one or more of these analysts cease to cover our Class A common stock, we could lose visibility in the trading market for our Class A common stock, which in turn could cause the price of our Class A common stock to decline. 50 If we experience material weaknesses or significant deficiencies in the future, or otherwise fail to maintain an effective environment of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
While we still maintain a concentration in the Southeastern United States, our rapid growth has resulted in our having several regional concentrations of our business, such that adverse economic conditions, natural disasters, loss trends or regulatory changes in one of these regions could adversely affect our financial condition.” 24 Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
While we still maintain a concentration in the Southeastern United States, our rapid growth has resulted in our having several regional concentrations of our business, such that adverse economic conditions, natural disasters, loss trends or regulatory changes in one of these regions could adversely affect our financial condition.” 25 Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.
These requirements may also apply to transfers of information among our affiliates, as well as to transactions we enter into with unaffiliated third-parties. 39 Cybersecurity risks have significantly increased in recent years, in part, because of the proliferation of new technologies, the use of the internet and telecommunications technologies to exchange information and conduct transactions, and the increased sophistication and activities of computer hackers, organized crime, terrorists, and other external parties, including foreign state actors.
These requirements may also apply to transfers of information among our affiliates, as well as to transactions we enter into with unaffiliated third-parties. 40 Cybersecurity risks have significantly increased in recent years, in part, because of the proliferation of new technologies, the use of the internet and telecommunications technologies to exchange information and conduct transactions, and the increased sophistication and activities of computer hackers, organized crime, terrorists, and other external parties, including foreign state actors.
Data breaches or other security incidents with respect to our or our vendors’ information processing systems may hurt our business, financial condition and results of operations. 17 • We are a holding company with our principal asset being our 58% ownership interest in Baldwin Holdings, and our Pre-IPO LLC Members, whose interest in our business may be different from yours, have approval rights over certain transactions and actions taken by us or Baldwin Holdings. • In certain circumstances, Baldwin Holdings will be required to make distributions to us and the other holders of LLC Units, and the distributions that Baldwin Holdings will be required to make may be substantial. • We will be required to pay Baldwin Holdings’ LLC Members and any other persons that become parties to the Tax Receivable Agreement for certain tax benefits we may receive, and the amounts we may pay could be significant.
Data breaches or other security incidents with respect to our or our vendors’ information processing systems may hurt our business, financial condition and results of operations. • We are a holding company with our principal asset being our 61% ownership interest in Baldwin Holdings, and our Pre-IPO LLC Members, whose interest in our business may be different from yours, have approval rights over certain transactions and actions taken by us or Baldwin Holdings. • In certain circumstances, Baldwin Holdings will be required to make distributions to us and the other holders of LLC Units, and the distributions that Baldwin Holdings will be required to make may be substantial. • We will be required to pay Baldwin Holdings’ LLC Members and any other persons that become parties to the Tax Receivable Agreement for certain tax benefits we may receive, and the amounts we may pay could be significant.
In addition, as our organization grows and we are required to implement more complex organizational structures, or if we experience a change in management, management philosophy or business strategy, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture, which could negatively impact our future success. 31 Our results may be adversely affected by changes in the mode of compensation in the insurance industry.
In addition, as our organization grows and we are required to implement more complex organizational structures, or if we experience a change in management, management philosophy or business strategy, we may find it increasingly difficult to maintain the beneficial aspects of our corporate culture, which could negatively impact our future success. 32 Our results may be adversely affected by changes in the mode of compensation in the insurance industry.
Inquiries and proceedings initiated by the government could adversely impact our health insurance licenses, require us to pay fines, require us to modify marketing and business practices, result in litigation and otherwise harm our business, operating results or financial condition. 36 In May 2021, CMS changed its process for the submission and approval of marketing materials related to Medicare Advantage and Medicare Part D prescription drug plans.
Inquiries and proceedings initiated by the government could adversely impact our health insurance licenses, require us to pay fines, require us to modify marketing and business practices, result in litigation and otherwise harm our business, operating results or financial condition. 37 In May 2021, CMS changed its process for the submission and approval of marketing materials related to Medicare Advantage and Medicare Part D prescription drug plans.
New competition as a result of these or other competitive or industry developments could cause the demand for our products and services to decrease, which could in turn adversely affect our business, financial condition and results of operations. 23 Our inability to retain or hire qualified colleagues, as well as the loss of any of our executive officers or senior leaders, could negatively impact our reputation and/or ability to retain existing business and generate new business.
New competition as a result of these or other competitive or industry developments could cause the demand for our products and services to decrease, which could in turn adversely affect our business, financial condition and results of operations. 24 Our inability to retain or hire qualified colleagues, as well as the loss of any of our executive officers or senior leaders, could negatively impact our reputation and/or ability to retain existing business and generate new business.
As a result, the Holders may not be inclined to permit us to issue additional shares of Class A common stock, including for the facilitation of acquisitions, if it would dilute their holdings below the Substantial Ownership Requirement. 44 Furthermore, Holders’ interests may not be fully aligned with yours, which could lead to actions that are not in your best interests.
As a result, the Holders may not be inclined to permit us to issue additional shares of Class A common stock, including for the facilitation of acquisitions, if it would dilute their holdings below the Substantial Ownership Requirement. 45 Furthermore, Holders’ interests may not be fully aligned with yours, which could lead to actions that are not in your best interests.
The 2024 Credit Agreement and indenture governing the Senior Secured Notes contain covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business or make certain investments and require us to comply with certain financial covenants.
The JPM Credit Agreement and indenture governing the Senior Secured Notes contain covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business or make certain investments and require us to comply with certain financial covenants.
We compete for clients on the basis of reputation, client service, program and product offerings and our ability to tailor products and services to meet the specific needs of a client. 22 We actively compete with numerous integrated financial services organizations as well as insurance company partners and brokers, producer groups, individual insurance agents, investment management firms, independent financial planners and broker-dealers.
We compete for clients on the basis of reputation, client service, program and product offerings and our ability to tailor products and services to meet the specific needs of a client. 23 We actively compete with numerous integrated financial services organizations as well as insurance company partners and brokers, producer groups, individual insurance agents, investment management firms, independent financial planners and broker-dealers.
In addition, the 2024 Credit Agreement limits the amount of distributions that Baldwin Holdings can make to us and the purposes for which distributions could be made. Accordingly, we may not be able to pay dividends to our Class A common stockholders even if our board of directors would otherwise deem it appropriate. Refer to Item 7.
In addition, the JPM Credit Agreement limits the amount of distributions that Baldwin Holdings can make to us and the purposes for which distributions could be made. Accordingly, we may not be able to pay dividends to our Class A common stockholders even if our board of directors would otherwise deem it appropriate. Refer to Item 7.
The restrictions in the 2024 Credit Agreement and indenture governing the Senior Secured Notes may prevent us from taking actions that we believe would be in the best interest of our business and our stockholders and may make it difficult for us to execute our business strategy successfully or effectively compete with companies that are not similarly restricted.
The restrictions in the JPM Credit Agreement and indenture governing the Senior Secured Notes may prevent us from taking actions that we believe would be in the best interest of our business and our stockholders and may make it difficult for us to execute our business strategy successfully or effectively compete with companies that are not similarly restricted.
During higher inflationary periods, our rent expenses may increase significantly, which may adversely affect to our business, financial condition, results of operations, and cash flows.
During higher inflationary periods, our rent expenses may increase significantly, which may adversely affect our business, financial condition, results of operations, and cash flows.
The failure to adhere to or successfully implement procedures to respond to these laws, rules and regulations could result in legal liability or impairment to our reputation. 37 Further, despite security measures we and our vendors take, our systems and those of our vendors may be vulnerable to physical break-ins, unauthorized access, viruses or other disruptive problems.
The failure to adhere to or successfully implement procedures to respond to these laws, rules and regulations could result in legal liability or impairment to our reputation. 38 Further, despite security measures we and our vendors take, our systems and those of our vendors may be vulnerable to physical break-ins, unauthorized access, viruses or other disruptive problems.
Any of these matters could have a material adverse effect on our business, financial condition and results of operations. 30 Increasing scrutiny and changing expectations from investors, clients and our colleagues with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks.
Any of these matters could have a material adverse effect on our business, financial condition and results of operations. 31 Increasing scrutiny and changing expectations from investors, clients and our colleagues with respect to our environmental, social and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks.
Risks Relating to our Organizational Structure We are a holding company with our principal asset being our 58% ownership interest in Baldwin Holdings, and our Pre-IPO LLC Members, whose interest in our business may be different from yours, have approval rights over certain transactions and actions taken by us or Baldwin Holdings.
Risks Relating to our Organizational Structure We are a holding company with our principal asset being our 61% ownership interest in Baldwin Holdings, and our Pre-IPO LLC Members, whose interest in our business may be different from yours, have approval rights over certain transactions and actions taken by us or Baldwin Holdings.
We derive commissions and fees from the sale of insurance products that are paid by our insurance company partners from whom our clients purchase insurance.
We derive commissions and fees from the sale of insurance products that are paid by our insurance and reinsurance company partners from whom our clients purchase insurance.
Because payments for the sale of insurance products are processed internally by our insurance company partners, we may not receive a payment that is otherwise expected in any particular period until after the end of that period, which can adversely affect our ability to budget for significant future expenditures.
Because payments for the sale of insurance products are processed internally by our insurance and reinsurance company partners, we may not receive a payment that is otherwise expected in any particular period until after the end of that period, which can adversely affect our ability to budget for significant future expenditures.
To the extent that reinsurance becomes less widely available or significantly more expensive, we may not be able to procure the amount or types of coverage that our clients desire, and the coverage we are able to procure for our clients may be more expensive or limited. 28 We rely on third parties to perform key functions of our business operations, enabling our provision of services to our clients.
To the extent that reinsurance becomes less widely available or significantly more expensive, we may not be able to procure the amount or types of coverage that our clients desire, and the coverage we are able to procure for our clients may be more expensive or limited. 29 We rely on third parties to perform key functions of our business operations, enabling our provision of services to our clients.
It is not always possible to prevent or detect E&O and other types of claims, and the precautions we take may not be effective in all cases. 32 We have E&O insurance coverage to protect against the risk of liability resulting from our alleged and actual E&O.
It is not always possible to prevent or detect E&O and other types of claims, and the precautions we take may not be effective in all cases. 33 We have E&O insurance coverage to protect against the risk of liability resulting from our alleged and actual E&O.
As a result, litigation may materially adversely affect our businesses, financial condition and results of operations. 35 The marketing and sale of Medicare plans are subject to numerous, complex and frequently changing laws and regulations, and non-compliance or changes in laws and regulations could harm our business, results of operations and financial condition.
As a result, litigation may materially adversely affect our businesses, financial condition and results of operations. 36 The marketing and sale of Medicare plans are subject to numerous, complex and frequently changing laws and regulations, and non-compliance or changes in laws and regulations could harm our business, results of operations and financial condition.
Subsequent to the execution of the Consent Agreement, the Company and certain of the parties to the Stockholders Agreement entered into a new stockholders agreement on October 30, 2024 (the “2024 Stockholders Agreement”) in response to the Lawsuit (as defined and discussed in Note 20 to our consolidated financial statements included in Part II, Item 8.
Subsequent to the execution of the Consent Agreement, the Company and certain of the parties to the Stockholders Agreement entered into a new stockholders agreement on October 30, 2024 (the “2024 Stockholders Agreement”) in response to the Lawsuit (as defined and discussed in Note 22 to our consolidated financial statements included in Part II, Item 8.
We may issue a significant amount of our common stock in the future for other purposes as well, including in connection with financings, including to finance the cash portion of acquisition consideration to execute on our partnership strategy, for compensation purposes, in connection with strategic transactions or for other purposes. 47 We expect that our stock price will be volatile, which could cause the value of your investment to decline, and you may not be able to resell your shares for a profit.
We may issue a significant amount of our common stock in the future for other purposes as well, including in connection with financings, including to finance the cash portion of acquisition consideration to execute on our partnership strategy, for compensation purposes, in connection with strategic transactions or for other purposes. 48 We expect that the price of our Class A common stock will be volatile, which could cause the value of your investment to decline, and you may not be able to resell your shares for a profit.
We may need to expend resources to address questions or concerns regarding our relationships with these insurance company partners, which diverts management resources away from business operations. 34 Our business is subject to risks related to legal proceedings, regulatory investigations, and governmental inquiries and actions.
We may need to expend resources to address questions or concerns regarding our relationships with these insurance company partners, which diverts management resources away from business operations. 35 Our business is subject to risks related to legal proceedings, regulatory investigations, and governmental inquiries and actions.
Furthermore, during inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense in case we decide to refinance our existing long-term borrowings, including the 2024 Credit Agreement, or incur in any additional indebtedness.
Furthermore, during inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense in case we decide to refinance our existing long-term borrowings, including the JPM Credit Agreement, or incur any additional indebtedness.
Unfavorable ratings of Baldwin or our industry, as well as omission of inclusion of our stock into ESG-oriented investment funds may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on our stock price.
Unfavorable ratings of Baldwin or our industry, as well as omission of inclusion of our stock into ESG-oriented investment funds may lead to negative investor sentiment and the diversion of investment to other companies or industries, which could have a negative impact on the price of our Class A common stock.
If this occurred, not only would we be negatively impacted by the general economic decline, but a drop in the stock market affecting our stock price could negatively impact our ability to grow through mergers and acquisitions financed using our common stock.
If this occurred, not only would we be negatively impacted by the general economic decline, but a drop in the stock market affecting the price of our Class A common stock could negatively impact our ability to grow through mergers and acquisitions financed using our common stock.
Our board of directors will take into account general economic and business conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions and covenants contained in the 2024 Credit Agreement, business prospects and other factors that our board of directors considers relevant.
Our board of directors will take into account general economic and business conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions and covenants contained in the JPM Credit Agreement, business prospects and other factors that our board of directors considers relevant.
A failure to comply with the restrictions under the 2024 Credit Agreement and/or indenture governing the Senior Secured Notes could result in a default under the financing obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions.
A failure to comply with the restrictions under the JPM Credit Agreement and/or indenture governing the Senior Secured Notes could result in a default under the financing obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions.
In addition, if we are unable to disclose that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets, and our stock price may be adversely affected.
In addition, if we are unable to disclose that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets, and the price of our Class A common stock may be adversely affected.
We may incur significant additional indebtedness, which may affect our ability to satisfy our obligations under the 2024 Credit Agreement and indenture governing our Senior Secured Notes. Under the terms of the 2024 Credit Agreement and indenture governing the Senior Secured Notes, we may be able to incur significant additional indebtedness, including secured indebtedness, in the future.
We may incur significant additional indebtedness, which may affect our ability to satisfy our obligations under the JPM Credit Agreement and indenture governing our Senior Secured Notes. Under the terms of the JPM Credit Agreement and indenture governing the Senior Secured Notes, we may be able to incur significant additional indebtedness, including secured indebtedness, in the future.
Additionally, our insurance company partners or their affiliates may, under certain circumstances, seek the chargeback or repayment of commissions as a result of policy lapse, surrender, cancellation, rescission, default or upon other specified circumstances.
Additionally, our insurance and reinsurance company partners or their affiliates may, under certain circumstances, seek the chargeback or repayment of commissions as a result of policy lapse, surrender, cancellation, rescission, default or upon other specified circumstances.
Ensuring that our collection, use, retention, security, transfer, storage, disposition and other processing of personal information complies with applicable laws, regulations, rules and standards regarding data privacy and cybersecurity in relevant jurisdictions can increase operating costs, impact the development of new products or services, and reduce operational efficiency. 40 At the federal level, we are subject to, among other laws, rules and regulations, the Gramm-Leach-Bliley Act ("GLBA"), which requires financial institutions to, among other things, periodically disclose their privacy policies and practices relating to sharing personal information and, in some cases, enables retail customers to opt out of the sharing of certain personal information with unaffiliated third parties.
Ensuring that our collection, use, retention, security, transfer, storage, disposition and other processing of personal information complies with applicable laws, regulations, rules and standards regarding data privacy and cybersecurity in relevant jurisdictions can increase operating costs, impact the development of new products or services, and reduce operational efficiency. 41 At the federal level, we are subject to, among other laws, rules and regulations, the GLBA, which requires financial institutions to, among other things, periodically disclose their privacy policies and practices relating to sharing personal information and, in some cases, enables retail customers to opt out of the sharing of certain personal information with unaffiliated third parties.
However, should any regulatory agency take a contrary position and prevail, we will be required to change the manner in which we pay fees to such colleagues or principals or require entities receiving such payments to become registered or licensed. 33 State insurance laws grant supervisory agencies, including state departments of insurance, departments of financials services, and similar regulatory authorities, broad administrative authority.
However, should any regulatory agency take a contrary position and prevail, we will be required to change the manner in which we pay fees to such colleagues or principals or require entities receiving such payments to become registered or licensed. 34 State insurance laws grant supervisory agencies, including state departments of insurance, departments of financial services, and similar regulatory authorities, broad administrative authority.
The termination, amendment or consolidation of our relationship with our insurance and reinsurance company partners could harm our business, financial condition and results of operations. Our business, and therefore our results of operations and financial condition, may be adversely affected by conditions that result in reduced insurer and/or reinsurer capacity.
The termination, amendment or consolidation of our relationship with our insurance and reinsurance company partners, referral partners or other trading partners could harm our business, financial condition and results of operations. Our business, and therefore our results of operations and financial condition, may be adversely affected by conditions that result in reduced insurer and/or reinsurer capacity.
We are a holding company, and our principal asset is our direct or indirect ownership of 58% of the outstanding LLC Units. We have no independent means of generating commissions and fees. 42 Further, we are a party to the 2019 Stockholders Agreement entered into in connection with the initial public offering with the Pre-IPO LLC Members.
We are a holding company, and our principal asset is our direct or indirect ownership of 61% of the outstanding LLC Units. We have no independent means of generating commissions and fees. 43 Further, we are a party to the 2019 Stockholders Agreement entered into in connection with the initial public offering with the Pre-IPO LLC Members.
The 2024 Credit Agreement restricts the ability of Baldwin Holdings to make distributions to us, which could affect our ability to make payments under the Tax Receivable Agreement.
The JPM Credit Agreement restricts the ability of Baldwin Holdings to make distributions to us, which could affect our ability to make payments under the Tax Receivable Agreement.
If our ability to market and sell Medicare-related health insurance and individual and family health insurance is constrained during an enrollment period for any reason, such as technology failures, reduced allocation of resources, any inability to timely employ, license, train, certify and retain our colleagues and our contractors and their health insurance risk advisors to sell health insurance, interruptions in the operation of our website or systems or issues with government-run health insurance exchanges, we could acquire fewer members, suffer a reduction in our membership and our business, results of operations and financial condition could be harmed. 25 Partnerships have been, and may in the future continue to be, important to our growth.
If our ability to market and sell Medicare-related health insurance and individual and family health insurance is constrained during an enrollment period for any reason, such as technology failures, reduced allocation of resources, any inability to timely employ, license, train, certify and retain our colleagues and our contractors and their health insurance risk advisors to sell health insurance, interruptions in the operation of our website or systems or issues with government-run health insurance exchanges, we could acquire fewer members, suffer a reduction in our membership and our business, results of operations and financial condition could be harmed.
As of December 31, 2024, we had total consolidated debt outstanding of approximately $1.44 billion, collateralized by substantially all of Baldwin Holdings' assets, including a pledge of all equity securities Baldwin Holdings holds in each of its subsidiaries.
As of December 31, 2025, we had total consolidated debt outstanding of approximately $1.7 billion, collateralized by substantially all of Baldwin Holdings' assets, including a pledge of all equity securities Baldwin Holdings holds in each of its subsidiaries.
Consequently, inflation is expected to increase our operating expenses (both compensation and non-compensation related) over time and may adversely impact our results of operating cash flow.
Consequently, inflation is expected to increase our operating expenses (both compensation and non-compensation related) over time and may adversely impact our results of operations and cash flows.
These are not guaranteed payments and our insurance company partners may change the calculations or potentially elect to stop paying them at all on an annual basis. Over the last two years contingent commissions generally have been in the range of 7.0% to 9.0% of the year’s total core commissions and fees.
These are not guaranteed payments and our insurance company partners may change the calculations or potentially elect to stop paying them at all on an annual basis. Over the last two years contingent commissions generally have been in the range of 6.5% to 8.5% of the year’s total core commissions and fees.
We may not be able to successfully identify and acquire partners or integrate partners into our company, and we may become subject to certain liabilities assumed or incurred in connection with our partnerships that could harm our business, results of operations and financial condition.
We may not be able to successfully identify and acquire partners or integrate partners into our company, and we may become subject to certain liabilities assumed or incurred in connection with our partnerships that could harm our business, results of operations and financial condition. • We are exposed to risk of impairment of goodwill.
Our ability to identify and complete acquisitions, or if we are inefficient or unsuccessful at integrating any partner into our operations, may impact our ability to achieve our planned rates of growth or improve our market share, profitability or competitive position in specific markets or services.
However, we expect to remain active and opportunistic in pursuing potential transactions. Our ability to identify and complete acquisitions, or if we are inefficient or unsuccessful at integrating any partner into our operations, may impact our ability to achieve our planned rates of growth or improve our market share, profitability or competitive position in specific markets or services.
The risks we face include: • diversion of management time and focus from operating our core business to acquisition integration challenges; • excessive costs of deploying our business support and financial management tools in acquired companies; • delays in the successful integration of the partner into our operations; • failure to successfully integrate the partner into our operations, including cultural challenges associated with integrating and retaining colleagues; • failure to achieve anticipated efficiencies or benefits, including through the loss of key clients or personnel of the partner; • failure to realize our strategic objectives for the partner or further develop the partner; and • the consequences of the conduct of our acquired companies prior to their acquisition by us, including the occurrence of data breaches or other cybersecurity attacks during the integration of information systems, as well as increased costs associated with implementing state and regulatory compliance procedures, including data privacy and cybersecurity protections.
The risks we face include: • diversion of management time and focus from operating our core business to acquisition integration challenges; • excessive costs of deploying our business support and financial management tools in acquired companies; • delays in the successful integration of the partner into our operations; • failure to successfully integrate the partner into our operations, including cultural challenges associated with integrating and retaining colleagues; • failure to achieve anticipated efficiencies or benefits, including through the loss of key clients or personnel of the partner; • failure to realize our strategic objectives for the partner or further develop the partner; • the consequences of the conduct of our acquired companies prior to their acquisition by us, including the occurrence of data breaches or other cybersecurity attacks during the integration of information systems, as well as increased costs associated with implementing state and regulatory compliance procedures, including data privacy and cybersecurity protections; and • failure to realize expected revenue synergies or other anticipated benefits from our partnerships, including the CAC Group Transaction, and the possibility that our experience operating such partnerships requires us to adjust our expectations regarding the impact of acquisitions on our operating results.
As of December 31, 2024, our cash and cash equivalents were $148.1 million and we had $588.0 million of available borrowing capacity on the Revolving Facility under the 2024 Credit Agreement. We will continue to expend substantial cash resources for the foreseeable future for servicing our debt obligations and future earnout payment liabilities.
As of December 31, 2025, our cash and cash equivalents were $123.7 million and we had $477.0 million of available borrowing capacity on the Revolving Facility under the JPM Credit Agreement. We will continue to expend substantial cash resources for the foreseeable future for servicing our debt obligations and future earnout payment liabilities.
Should our dependence on a smaller number of insurance and reinsurance company partners increase, whether as a result of the termination of insurance and reinsurance company partner relationships, insurance and reinsurance company partner consolidation or otherwise, we may become more vulnerable to adverse changes in our relationships with our insurance and reinsurance company partners, particularly in states where we offer insurance products from a relatively small number of insurance and reinsurance company partners or where a small number of insurance companies dominate the market.
Should our dependence on a smaller number of insurance and reinsurance company partners, referral partners or other trading partners increase, whether as a result of the termination of insurance and reinsurance company partner, referral partner or other trading partner relationships, the consolidation of insurance and reinsurance company partners, referral partners or other trading partners, or otherwise, we may become more vulnerable to adverse changes in our relationships with these counterparties, particularly in states where we offer insurance products from a relatively small number of insurance and reinsurance company partners, where a small number of insurance companies dominate the market, or where a significant portion of our commission and fees is directly or indirectly derived from our relationships with referral partners or other trading partners.
Based on estimates of the partners’ future performance using financial projections for the earnout period, the aggregate estimated contingent earnout liabilities included on our consolidated balance sheet at December 31, 2024 was $145.6 million, of which $4.7 million must be settled in cash and the remaining $140.8 million can be settled in cash or stock at our option.
Based on estimates of the partners’ future performance using financial projections for the earnout period, the aggregate estimated contingent earnout liabilities included on our consolidated balance sheet at December 31, 2025 was $23.3 million, of which $9.2 million must be settled in cash and the remaining $14.1 million can be settled in cash or stock at our option.
The undiscounted estimated contingent earnout obligation at December 31, 2024 was $185.2 million, of which $5.0 million must be settled in cash and the remaining $180.2 million can be settled in cash or stock at our option. The maximum estimated exposure to the contingent earnout liabilities was $268.8 million at December 31, 2024.
The undiscounted estimated contingent earnout obligation at December 31, 2025 was $26.6 million, of which $9.2 million must be settled in cash and the remaining $17.4 million can be settled in cash or stock at our option. The maximum estimated exposure to the contingent earnout liabilities was $50.0 million at December 31, 2025.
We may not be able to successfully identify and acquire partners or integrate partners into our company, and we may become subject to certain liabilities assumed or incurred in connection with our partnerships that could harm our business, results of operations and financial condition. • An impairment of goodwill could have a material adverse effect on our financial condition and results of operations. • In connection with the implementation of our corporate strategies, we face risks associated with the entry into new lines of business and the growth and development of these businesses. • Our business had historically been highly concentrated in the Southeastern United States.
An impairment of goodwill could have a material adverse effect on our financial condition and results of operations. • In connection with the implementation of our corporate strategies, we face risks associated with the entry into new lines of business and the growth and development of these businesses. • Our business had historically been highly concentrated in the Southeastern United States.
Should either of these insurance company partners seek to terminate their respective arrangements with us or in the case of material financial impairment of such insurance company partners, we could be forced to move our business to other insurance company partners and additional expense and loss of market share could possibly result. 27 Our business may be harmed if we lose our relationships with insurance and reinsurance company partners, fail to maintain good relationships with insurance and reinsurance company partners, become dependent upon a limited number of insurance and reinsurance company partners or fail to develop new insurance and reinsurance company partner relationships.
Should either of these insurance company partners seek to terminate their respective arrangements with us or in the case of material financial impairment of such insurance company partners, we could be forced to move our business to other insurance company partners and additional expense and loss of market share could possibly result.
Persons receiving shares of our common stock in connection with these acquisitions may be more likely to sell off their common stock, which may influence the price of our common stock.
Any such issuance will also increase the number of outstanding shares of common stock that will be eligible for sale in the future. Persons receiving shares of our common stock in connection with these acquisitions may be more likely to sell off their common stock, which may influence the price of our common stock.
Our business could also be harmed if we fail to develop new insurance and reinsurance company partner relationships.
Our business could also be harmed if we fail to develop new insurance and reinsurance company partner relationships. Similarly, our business enters into contractual agreements with referral partners and other trading partners.
From time to time, either through partnerships or internal development, we may enter new lines of business or offer new products and services within existing lines of business. These new lines of business or new products and services may present additional risks, particularly in instances where the markets are not fully developed.
These new lines of business or new products and services may present additional risks, particularly in instances where the markets are not fully developed.
As traditional risk-bearing insurance companies continue to outsource the production of premium commissions and fees to non-affiliated brokers or agents such as us, those insurance companies may seek to further minimize their expenses by reducing the commission rates payable to insurance brokers or agents.
This could negatively impact us because fees are generally not indexed for inflation and might not increase with premiums as commissions do or with the level of service provided. 20 As traditional risk-bearing insurance companies continue to outsource the production of premium commissions and fees to non-affiliated brokers or agents such as us, those insurance companies may seek to further minimize their expenses by reducing the commission rates payable to insurance brokers or agents.
Our results of operations depend on the continued capacity of our insurance and reinsurance company partners to underwrite risk and provide coverage, in turn which depends on those insurance and reinsurance company partners’ ability to procure reinsurance.
Our results of operations depend on the continued capacity of our insurance and reinsurance company partners to underwrite risk and provide coverage, which in turn depends on those insurance company partners’ ability to procure reinsurance. Capacity could also be reduced by insurance and reinsurance company partners failing or withdrawing from writing certain coverages that we offer to our clients.
If we are unable to apply technology effectively in driving value for our clients through technology-based solutions or gain internal efficiencies through the application of technology and related tools, our results of operations, client relationships, growth and compliance programs could be adversely affected.
Such failures or insurance withdrawals on the part of our insurance company partners could occur for any number of reasons, including large unexpected payouts related to climate events or other emerging risk areas. 22 If we are unable to apply technology effectively in driving value for our clients through technology-based solutions or gain internal efficiencies through the application of technology and related tools, our results of operations, client relationships, growth and compliance programs could be adversely affected.
Our investments in new products and services may not generate the expected returns, which could hinder our ability to generate organic growth in the future. Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our business, financial condition and results of operations may be negatively affected.
Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our business, financial condition and results of operations may be negatively affected. The business of providing insurance products and services is highly competitive and we expect competition to intensify.
Quarterly and annual fluctuations in commissions and fees based on increases and decreases associated with the timing of new business, policy renewals and payments from our insurance company partners may adversely affect our financial condition, results of operations and cash flows.
Quarterly and annual fluctuations in commissions and fees based on increases and decreases associated with the timing of new business, policy renewals and payments from our insurance company partners may adversely affect our financial condition, results of operations and cash flows. 21 Profit-sharing contingent commissions are special revenue-sharing override commissions paid by our insurance company partners based on the attainment of certain metrics such as the profitability, volume or growth of the business placed with such companies generally during the prior year.
As of September 30, 2024, Lowry Baldwin through the Voting Agreement beneficially owns 23.9% of the voting power of our common stock.
As of December 31, 2025, Lowry Baldwin through the Voting Agreement beneficially owns 16.98% of the voting power of our common stock.
We compare the fair value of each reporting unit with its carrying amount to determine if there is potential impairment of goodwill. Management reviews the carrying value attributed to each reporting unit at least annually to determine if the facts and circumstances suggest that there is impairment.
The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units. We compare the fair value of each reporting unit with its carrying amount to determine if there is potential impairment of goodwill.
Macroeconomic conditions, political events, other market conditions in the U.S. and around the world and a decline in economic activity could have a material adverse effect on our financial condition and results of operations.
We may also face the risk of a credit rating downgrade if we do not retire or refinance the debt to levels acceptable to the credit rating agencies in a timely manner. 19 Macroeconomic conditions, political events, other market conditions in the U.S. and around the world and a decline in economic activity could have a material adverse effect on our financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe TCRC updates the full board of directors on cybersecurity matters periodically. 50 Our information security team for IAS, MIS and Corporate is led by our Chief Digital & Information Officer (“CDIO”), who also serves as our Chief Information Security Officer (“CISO”) for IAS, MIS and Corporate.
Biggest changeThe Retail CTO (as defined below), the Chief Information Security Officer (“CISO”) for IAS, MIS and Corporate, who also serves as our General Counsel, and the UCTS CTO/CISO (as defined below) report to the TCRC periodically, and the TCRC updates the full board of directors on cybersecurity matters periodically.
We also carry insurance that provides certain, limited protection against potential losses arising from a cybersecurity incident. The Technology & Cyber Risk Committee of our board of directors (the “TCRC”) is responsible for overseeing and reviewing our cybersecurity program and cybersecurity risk exposure and the steps taken to monitor and mitigate such exposure.
We also carry insurance that provides certain, limited protection against potential losses arising from a cybersecurity incident. 51 The Technology & Cyber Risk Committee of our board of directors (the “TCRC”) is responsible for overseeing and reviewing our cybersecurity program and cybersecurity risk exposure and the steps taken to monitor and mitigate such exposure.
These audits help us assess our internal preparedness, adherence to best practices and industry standards, and compliance with applicable laws and regulations as well as help us to identify areas for continued focus and improvement. We conduct annual information security awareness training for employees involved in the systems or processes connected to confidential and sensitive information.
These audits help us assess our internal preparedness, guidance based on best practices and industry standards, and compliance with applicable laws and regulations as well as help us to identify areas for continued focus and improvement. We conduct annual information security awareness training for employees involved in the systems or processes connected to confidential and sensitive information.
Our information security team for UCTS is led by our Chief Technology Officer—UCTS (“CTO”), who also serves as our CISO for UCTS. Our CTO/CISO reports to our President, The Baldwin Group & CEO, Underwriting, Capacity and Technology Operations.
Our information security team for UCTS is led by our Chief Technology Officer—UCTS (“UCTS CTO”), who also serves as our CISO for UCTS. Our UCTS CTO/CISO reports to our President, The Baldwin Group & CEO, Underwriting, Capacity and Technology Operations.
Our CTO/CISO oversees a team of information security professionals who are devoted full time to assessing and managing cybersecurity threats on a day-to-day basis. Our CTO/CISO also attends each quarterly meeting of the TCRC to brief members on information security matters and discuss cybersecurity risks generally.
Among other functions, our UCTS CTO/CISO oversees a team of information security professionals who are devoted full time to assessing and managing cybersecurity threats on a day-to-day basis. Our UCTS CTO/CISO also attends each quarterly meeting of the TCRC to brief members on information security matters and discuss cybersecurity risks generally.
In addition, our management team has established an internal Cyber Steering Committee (the “Cyber SteerCo”), which includes processes designed to identify, assess, categorize, and monitor key current and evolving risks facing us, including cybersecurity risks. Each of the CDIO/CISO and CTO/CISO sit on the Cyber SteerCo along with our General Counsel and former CISO.
In addition, our management team has established an internal Cyber Steering Committee (the “Cyber SteerCo”), which includes processes designed to identify, assess, categorize, and monitor key current and evolving risks facing us, including cybersecurity risks. Each of the Retail CTO and UCTS CTO/CISO sits on the Cyber SteerCo along with our General Counsel and CISO.
Our CDIO/CISO oversees a team of information security professionals who are devoted full time to assessing and managing cybersecurity threats on a day-to-day basis. Our CDIO/CISO attends each quarterly meeting of the TCRC to brief members on information security matters and discuss cybersecurity risks generally.
Among other functions, our Retail CTO oversees a team of information security professionals who are devoted full time to assessing and managing cybersecurity threats on a day-to-day basis. Our Retail CTO attends each quarterly meeting of the TCRC to brief members on information security matters and discuss cybersecurity risks generally.
Our CTO/CISO has served in the role since 2022 and has experience in application security, intrusion detection, penetration testing, complex threat modeling, and unconventional cyber-attack vectors, having previously led technology teams across various sectors, including financial services and travel management.
Our UCTS CTO/CISO has served in the role since 2024 and has experience in application security, intrusion detection, penetration testing, CTEM, and unconventional cyber-attack vectors, having previously led technology teams across various sectors, including financial services and travel management.
Our CDIO/CISO reports to our President, The Baldwin Group & CEO, Retail Brokerage Operations. Our CDIO/CISO has served in the role since 2021 and has experience in application security, intrusion detection, penetration testing, Continuous Threat Exposure Management ("CTEM"), and unconventional cyber-attack vectors, having previously led technology teams at Comerica Bank, HSBC, Citibank and General Electric.
Our Retail CTO has served in the role since 2025 and has experience in application security, intrusion detection, penetration testing, Continuous Threat Exposure Management ("CTEM"), and unconventional cyber-attack vectors, having previously led technology teams at Players Health, Everest Reinsurance, Quanta Holdings, and Converium (now part of SCOR).
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The TCRC also monitors and reviews our strategic artificial intelligence initiatives, the risk exposure related to such initiatives, and the steps being taken to mitigate such exposure.
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Our information security team for IAS, MIS and Corporate is led by our Retail Brokerage Chief Technology Officer (“Retail CTO”). Our Retail CTO reports to our President, The Baldwin Group & CEO, Retail Brokerage Operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThese offices are generally located in shopping centers, small office parks and office buildings, with lease terms expiring through the next ten years. These facilities are suitable for our needs and we believe that they are well maintained. ITEM 3. LEGAL PROCEEDINGS Please refer to Note 20 to our consolidated financial statements included in Part II, Item 8.
Biggest changeThese offices are generally located in shopping centers, small office parks and office buildings, with lease terms expiring through the next ten years. These facilities are suitable for our needs and we believe that they are well maintained. ITEM 3. LEGAL PROCEEDINGS Please refer to Note 22 to our consolidated financial statements included in Part II, Item 8.
ITEM 2. PROPERTIES Our corporate headquarters is located in leased offices in Tampa, Florida. The leases consist of approximately 105,000 square feet and expire in August 2030. Our insurance brokerage business leases office space in approximately 110 operating locations located in 24 states throughout the U.S.
ITEM 2. PROPERTIES Our corporate headquarters is located in leased offices in Tampa, Florida. The leases consist of approximately 105,000 square feet and expire in August 2030. Our insurance brokerage business leases office space in approximately 125 operating locations located in 24 states throughout the U.S.
Financial Statements and Supplementary Data of this report for a discussion of legal proceedings to which the Company is subject. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 51 PART II
Financial Statements and Supplementary Data of this report for a discussion of legal proceedings to which the Company is subject. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 52 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSales of Unregistered Securities None. 52 Issuer Purchases of Equity Securities The following table provides information about our repurchase of shares of our Class A common stock during the three months ended December 31, 2024: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Value that may yet be Purchased under the Plans or Programs October 1, 2024 to October 31, 2024 55,914 $ 49.10 — $ — November 1, 2024 to November 30, 2024 6,235 36.72 — — December 1, 2024 to December 31, 2024 64,301 48.93 — — Total 126,450 $ 48.40 — $ — __________ (1) We purchased 126,450 shares during the three months ended December 31, 2024, which were acquired from our employees to cover required tax withholding on the vesting of shares granted under the Baldwin Omnibus Incentive and Partnership Inducement Award Plans.
Biggest changeSales of Unregistered Securities None. 53 Issuer Purchases of Equity Securities The following table provides information about our repurchase of shares of our Class A common stock during the three months ended December 31, 2025: Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Value that may yet be Purchased under the Plans or Programs October 1, 2025 to October 31, 2025 75,791 $ 27.16 — $ — November 1, 2025 to November 30, 2025 349 27.38 — — December 1, 2025 to December 31, 2025 21,795 27.92 — — Total 97,935 $ 27.33 — $ — __________ (1) We purchased 97,935 shares during the three months ended December 31, 2025, which were acquired from our employees to cover required tax withholding on the vesting of shares granted under the Baldwin Omnibus Incentive and Partnership Inducement Award Plans.
Performance Graph The following performance graph compares the cumulative total shareholder return of an investment in our Class A common stock from December 31, 2019 through December 31, 2024 to the cumulative total return of the Russell 2000 Index (“Russell 2000”) and the Standard & Poor Composite 1500 Insurance Brokers Index (“S&P 1500”).
Performance Graph The following performance graph compares the cumulative total shareholder return of an investment in our Class A common stock from December 31, 2020 through December 31, 2025 to the cumulative total return of the Russell 2000 Index (“Russell 2000”) and the Standard & Poor Composite 1500 Insurance Brokers Index (“S&P 1500”).
The graph assumes that $100 was invested on December 31, 2019 and the reinvestment of dividends, if any. The share price performance presented below is not necessarily indicative of future results. 53 ITEM 6. RESERVED
The graph assumes that $100 was invested on December 31, 2020 and the reinvestment of dividends, if any. The share price performance presented below is not necessarily indicative of future results. ITEM 6. RESERVED 54
On February 20, 2025, there were 113 stockholders of record of our Class A common stock and 57 stockholders of record of our Class B common stock. The number of record holders does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers.
On February 20, 2026, there were 358 stockholders of record of our Class A common stock and 50 stockholders of record of our Class B common stock. The number of record holders does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(2) Organic revenue for the year ended December 31, 2023 used to calculate organic revenue growth for the year ended December 31, 2024 was $1.18 billion, which is adjusted to exclude commissions and fees from divestitures that occurred during 2024. 60 Adjusted Net Income and Adjusted Diluted EPS The following table reconciles adjusted net income to net loss attributable to Baldwin and reconciles adjusted diluted EPS to diluted loss per share, which we consider to be the most directly comparable GAAP financial measures: For the Years Ended December 31, (in thousands, except per share data) 2024 2023 Net loss attributable to Baldwin $ (24,518) $ (90,141) Net loss attributable to noncontrolling interests (16,563) (73,878) Amortization expense 102,730 92,704 Share-based compensation 65,503 56,222 Colleague earnout incentives 41,917 8,020 Gain on divestitures (38,953) — Loss on extinguishment and modification of debt 15,113 — Transaction-related partnership and integration expenses 10,501 20,728 Depreciation 6,194 5,698 Income tax expense 6,537 — Amortization of deferred financing costs 5,841 5,129 Severance 5,756 18,514 Change in fair value of contingent consideration (4,949) 61,083 Loss on interest rate caps, net of cash settlements 2,544 12,588 Other (1) 18,682 28,834 Adjusted pre-tax income 196,335 145,501 Adjusted income taxes (2) 19,437 14,405 Adjusted net income $ 176,898 $ 131,096 Weighted-average shares of Class A common stock outstanding - diluted 63,455 60,135 Dilutive weighted-average shares of Class A common stock 3,598 3,874 Exchange of Class B common stock (3) 50,896 53,132 Adjusted diluted weighted-average shares outstanding 117,949 117,141 Diluted loss per share $ (0.39) $ (1.50) Effect of exchange of Class B common stock and net loss attributable to noncontrolling interests per share 0.04 0.10 Other adjustments to loss per share 2.01 2.64 Adjusted income taxes per share (0.16) (0.12) Adjusted diluted EPS $ 1.50 $ 1.12 ___________ (1) Other addbacks to adjusted net income include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses.
Biggest change(3) Other addbacks to adjusted EBITDA include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. 62 Adjusted Net Income and Adjusted Diluted EPS The following table reconciles adjusted net income to net loss attributable to Baldwin and reconciles adjusted diluted EPS to diluted loss per share, which we consider to be the most directly comparable GAAP financial measures: For the Years Ended December 31, (in thousands, except per share data) 2025 2024 Net loss attributable to Baldwin $ (33,813) $ (24,518) Net loss attributable to noncontrolling interests (20,341) (16,563) Amortization expense 121,316 102,730 Share-based compensation 71,113 65,503 Transaction-related partnership and integration expenses 23,051 10,501 Transformation costs (1) 7,003 — Severance 6,790 5,756 Depreciation 6,514 6,194 Loss on extinguishment and modification of debt 6,226 15,113 Change in fair value of contingent consideration 5,594 (4,949) Other amortization/accretion, net 4,190 5,841 Income tax expense (2) 2,172 6,537 Colleague earnout incentives (1,779) 41,917 Impairment of right-of-use assets 1,275 — Gain on divestitures (290) (38,953) Loss on interest rate caps, net of cash settlements 18 2,544 Other (3) 21,762 18,682 Adjusted pre-tax income 220,801 196,335 Adjusted income taxes (4) 21,859 19,437 Adjusted net income $ 198,942 $ 176,898 Weighted-average shares of Class A common stock outstanding - diluted 67,939 63,455 Dilutive weighted-average shares of Class A common stock 3,229 3,598 Exchange of Class B common stock (5) 47,737 50,896 Adjusted diluted weighted-average shares outstanding 118,905 117,949 Diluted loss per share $ (0.50) $ (0.39) Effect of exchange of Class B common stock and net loss attributable to noncontrolling interests per share 0.04 0.04 Other adjustments to loss per share 2.31 2.01 Adjusted income taxes per share (0.18) (0.16) Adjusted diluted EPS $ 1.67 $ 1.50 ___________ (1) Transformation costs represent certain non-recurring colleague compensation and technology-related expenses related to our $3B/30 Catalyst Program, which is designed to accelerate the infusion of automation, business process optimization and artificial intelligence to transform and elevate our workforce and unlock new avenues for growth.
Adjusted diluted EPS measures our per share earnings excluding certain expenses as discussed above and assuming all shares of Class B common stock were exchanged for Class A common stock on a one-for-one basis. Adjusted diluted EPS is calculated as adjusted net income divided by adjusted diluted weighted-average shares outstanding.
Adjusted diluted EPS measures our per share earnings excluding certain expenses as discussed above for adjusted net income and assuming all shares of Class B common stock were exchanged for Class A common stock on a one-for-one basis. Adjusted diluted EPS is calculated as adjusted net income divided by adjusted diluted weighted-average shares outstanding.
We define adjusted net income as net income (loss) attributable to Baldwin adjusted for depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related partnership and integration expenses, severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.
We define adjusted net income as net income (loss) attributable to Baldwin adjusted for depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related partnership and integration expenses, transformation costs, severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.
Tax Receivable Agreement Baldwin is a party to the Tax Receivable Agreement with Baldwin Holdings’ LLC Members that provides for the payment by Baldwin to Baldwin Holdings’ LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that Baldwin actually realizes as a result of (i) any increase in tax basis in Baldwin Holdings assets resulting from (a) previous acquisitions by Baldwin of LLC Units from Baldwin Holdings’ LLC Members, (b) the acquisition of LLC Units from Baldwin Holdings’ LLC Members using the net proceeds from any future offering, (c) redemptions or exchanges by Baldwin Holdings’ LLC Members of LLC Units and the corresponding number of shares of Class B common stock for shares of Class A common stock or cash or (d) payments under the Tax Receivable Agreement, and (ii) tax benefits related to imputed interest resulting from payments made under the Tax Receivable Agreement. 70 Holders of LLC Units (other than Baldwin) may, subject to certain conditions and transfer restrictions described above, redeem or exchange their LLC Units for shares of Class A common stock of Baldwin on a one-for-one basis.
Tax Receivable Agreement Baldwin is a party to the Tax Receivable Agreement with Baldwin Holdings’ LLC Members that provides for the payment by Baldwin to Baldwin Holdings’ LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that Baldwin actually realizes as a result of (i) any increase in tax basis in Baldwin Holdings assets resulting from (a) previous acquisitions by Baldwin of LLC Units from Baldwin Holdings’ LLC Members, (b) the acquisition of LLC Units from Baldwin Holdings’ LLC Members using the net proceeds from any future offering, (c) redemptions or exchanges by Baldwin Holdings’ LLC Members of LLC Units and the corresponding number of shares of Class B common stock for shares of Class A common stock or cash or (d) payments under the Tax Receivable Agreement, and (ii) tax benefits related to imputed interest resulting from payments made under the Tax Receivable Agreement. 72 Holders of LLC Units (other than Baldwin) may, subject to certain conditions and transfer restrictions described above, redeem or exchange their LLC Units for shares of Class A common stock of Baldwin on a one-for-one basis.
Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements that may impact us. 72 CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements that may impact us. 74 CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next twelve months and beyond. See Item 1A. “Risk Factors—Risks Relating to our Business Operations and Industry—Partnerships have been, and may in the future continue to be, important to our growth.
We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next 12 months and beyond. See Item 1A. “Risk Factors—Risks Relating to our Business Operations and Industry—Partnerships have been, and may in the future continue to be, important to our growth.
We define adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related partnership and integration expenses, severance, and certain non-recurring items, including those related to raising capital.
We define adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related partnership and integration expenses, transformation costs, severance, and certain non-recurring items, including those related to raising capital.
Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period because the relevant partners had not yet reached the twelve-month owned mark, but which have reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue.
Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period because the relevant partners had not yet reached the 12-month owned mark, but which have reached the 12-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue.
Effects of Inflation Certain of our lease agreements feature annual rent escalations either fixed or based on a consumer price index or other index, which, historically, have not had a material impact on our results of operations, including our results of operations for the years ended December 31, 2024, 2023 and 2022.
Effects of Inflation Certain of our lease agreements feature annual rent escalations either fixed or based on a consumer price index or other index, which, historically, have not had a material impact on our results of operations, including our results of operations for the years ended December 31, 2025, 2024 and 2023.
Our operating lease obligations represent noncancelable agreements for our corporate headquarters and office space for our insurance brokerage business. Our operating lease agreements expire through August 2035. These obligations do not include leases with an initial term of twelve months or less, which are expensed as incurred.
Our operating lease obligations represent noncancelable agreements for our corporate headquarters and office space for our insurance brokerage business. Our operating lease agreements expire through August 2035. These obligations do not include leases with an initial term of 12 months or less, which are expensed as incurred.
Our commissions are usually a percentage of the premium paid by the insured and generally depend on the type of insurance, the particular insurance company partner and the nature of the services provided. Under certain arrangements with clients, we earn pre-negotiated service fees for insurance placement services.
Our commissions are usually a percentage of the premium paid by the insured and generally depend on the type of insurance, the particular insurance or reinsurance company partner and the nature of the services provided. Under certain arrangements with clients, we earn pre-negotiated service fees for insurance placement services.
We have recorded a full valuation allowance against the deferred tax assets at Baldwin as of December 31, 2024, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
We have recorded a full valuation allowance against the deferred tax assets at Baldwin as of December 31, 2025, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
Deferred tax assets have been reduced by a full valuation allowance at December 31, 2024 due to a determination that it is more likely than not that all of the deferred tax assets will not be realized based on the weight of all available evidence.
Deferred tax assets have been reduced by a full valuation allowance at December 31, 2025 due to a determination that it is more likely than not that all of the deferred tax assets will not be realized based on the weight of all available evidence.
LIQUIDITY AND CAPITAL RESOURCES Our primary liquidity needs for the foreseeable future will include cash to (i) provide capital to facilitate the organic growth of our business and to fund future partnerships, (ii) pay operating expenses, including cash compensation to our colleagues and expenses related to being a public company, (iii) make payments under the Tax Receivable Agreement, (iv) pay interest and principal due on borrowings under the 2024 Credit Facility and Senior Secured Notes, (v) pay contingent earnout liabilities, (vi) pay income taxes, and (vii) fund potential investments in third-party businesses that support the growth of our business, which may include Emerald Bay or sponsorship of, and a minority, non-controlling interest in, other investment funds, the purpose of which may include facilitating the establishment of additional and alternative capacity that supports the growth of our MSI business.
LIQUIDITY AND CAPITAL RESOURCES Our primary liquidity needs for the foreseeable future will include cash to (i) provide capital to facilitate the organic growth of our business and to fund future partnerships, (ii) pay operating expenses, including cash compensation to our colleagues and expenses related to being a public company, (iii) make payments under the Tax Receivable Agreement, (iv) pay interest and principal due on borrowings under the JPM Credit Facility and Senior Secured Notes, (v) pay contingent earnout liabilities, (vi) pay income taxes, and (vii) fund potential investments in third party businesses that support the growth of our business, which may include sponsorship of, and a minority, non-controlling interest in, other investment funds, the purpose of which may include facilitating the establishment of additional and alternative capacity that supports the growth of our MSI business.
Although we have recently sustained high levels of inflation, we do not anticipate the inflation rates for 2025 to have a material impact on our results of operations. We have monitored and will continue to monitor the components of compensation costs and operating expenses for the potential impact of inflation.
Although we have recently sustained high levels of inflation, we do not anticipate the inflation rates for 2026 to have a material impact on our results of operations. We have monitored and will continue to monitor the components of compensation costs and operating expenses for the potential impact of inflation.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 and the related notes and other financial information included in Item 8.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023 and the related notes and other financial information included in Item 8.
It consists of (i) base compensation comprising salary, bonuses and benefits paid and payable to colleagues, commissions paid to colleagues and outside commissions paid to others; and (ii) equity-based compensation associated with the grants of restricted and unrestricted stock awards to senior management, colleagues, risk advisors and directors.
It consists of (i) base compensation comprising salary, bonuses and benefits paid and payable to colleagues, and commissions paid to colleagues, and (ii) equity-based compensation associated with the grants of restricted and unrestricted stock awards to senior management, colleagues, risk advisors and directors.
The allowance for estimated policy cancellations is determined based on an evaluation of historical and current cancellation data. Medicare contracts in the MIS operating group are multi-year arrangements in which we are entitled to renewal commissions.
The allowance for estimated policy cancellations is determined based on an evaluation of historical and current cancellation data. Medicare contracts in MIS are multi-year arrangements in which we are entitled to renewal commissions.
For example, commissions and fees from a partner acquired on June 1, 2023 are excluded from organic revenue for 2023. However, after June 1, 2024, results from June 1, 2023 to December 31, 2023 for such partners are compared to results from June 1, 2024 to December 31, 2024 for purposes of calculating organic revenue growth in 2024.
For example, commissions and fees from a partner acquired on June 1, 2024 are excluded from organic revenue for 2024. However, after June 1, 2025, results from June 1, 2024 to December 31, 2024 for such partners are compared to results from June 1, 2025 to December 31, 2025 for purposes of calculating organic revenue growth in 2025.
(3) Assumes the full exchange of Class B common stock for Class A common stock pursuant to the Amended LLC Agreement. 61 INSURANCE ADVISORY SOLUTIONS OPERATING GROUP RESULTS IAS provides expertly-designed commercial risk management, employee benefits and private risk management solutions for businesses and high-net-worth individuals, as well as their families, through our national footprint, which has assimilated some of the highest quality independent insurance brokers in the country with vast and varied strategic capabilities and expertise.
(5) Assumes the full exchange of Class B common stock for Class A common stock pursuant to the Amended LLC Agreement. 63 INSURANCE ADVISORY SOLUTIONS OPERATING GROUP RESULTS IAS provides expertly-designed commercial risk management, employee benefits and private risk management solutions for businesses and high-net-worth individuals, as well as their families, through our national footprint, which has assimilated some of the highest quality independent insurance brokers in the country with vast and varied strategic capabilities and expertise.
Critical Accounting Estimates We have determined that there are significant judgments and uncertainties included in the application of guidance for impairment of intangible assets and goodwill; valuation of contingent consideration; and valuation allowance for deferred tax assets.
Critical Accounting Estimates We have determined that there are significant judgments and uncertainties included in the application of guidance for the valuation of acquired relationships, impairment of intangible assets and goodwill, valuation of contingent consideration and valuation allowance for deferred tax assets.
Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Item 1A. Risk Factors. The following is a discussion of our consolidated results of operations for the years ended December 31, 2024 and 2023.
Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under Item 1A. Risk Factors. 56 The following is a discussion of our consolidated results of operations for the years ended December 31, 2025 and 2024.
We did not record impairment charges for intangible assets in 2024, 2023 or 2022. 74 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Impairment of Goodwill Goodwill is not amortized but rather tested at least annually for impairment, or more often if events or changes in circumstances indicate it is more-likely-than-not that the carrying amount of the asset may not be recoverable.
We did not record impairment charges for intangible assets in 2025, 2024 or 2023. 77 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Impairment of Goodwill Goodwill is not amortized but rather tested at least annually for impairment, or more often if events or changes in circumstances indicate it is more-likely-than-not that the carrying amount of the asset may not be recoverable.
We calculate organic revenue based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from new partners and (ii) commissions and fees from divestitures.
We calculate organic revenue based on commissions and fees for the relevant period by excluding (i) the first 12 months of commissions and fees generated from new partners and (ii) commissions and fees from divestitures.
We expect to continue to experience a general rise in commissions, employee compensation and benefits expense commensurate with expected revenue growth as our compensation arrangements with our colleagues and risk advisors contain significant bonus or commission components driven by the results of our operations.
We expect to continue to experience a general rise in colleague compensation and benefits expense commensurate with expected revenue growth as our compensation arrangements with our colleagues and risk advisors contain significant bonus or commission components driven by the results of our operations.
The Company also determined there were no triggering events through December 31, 2024 that would cause the Company to perform an interim period analysis.
The Company also determined there were no triggering events through December 31, 2025 that would cause the Company to perform an interim period analysis.
Financial Statements and Supplementary Data of this report for more information relating to the terms of the Senior Secured Notes and 2024 Credit Facility.
Financial Statements and Supplementary Data of this report for more information relating to the terms of the Senior Secured Notes and JPM Credit Facility.
Goodwill is tested for impairment at the reporting unit level, which represents the operating segment. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, including goodwill.
Goodwill is tested for impairment at the reporting unit level. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, including goodwill.
The fair values of the earnout arrangements are estimated by discounting the expected future contingent payments to present value using a variation of the income approach, specifically using a Monte Carlo Simulation approach. We have 9 partners with a corresponding contingent consideration liability still outstanding at December 31, 2024.
The fair values of the earnout arrangements are estimated by discounting the expected future contingent payments to present value using a variation of the income approach, specifically using a Monte Carlo Simulation approach. We have five partners with a corresponding contingent consideration liability still outstanding at December 31, 2025.
If we had concluded that it was more likely than not that the full deferred tax assets will be realized, our valuation allowance would have been reversed and we would have recognized deferred tax assets of approximately $169.1 million, before indirect tax considerations, on our consolidated balance sheet at December 31, 2024.
If we had concluded that it was more likely than not that the full deferred tax assets will be realized, our valuation allowance would have been reversed and we would have recognized deferred tax assets of approximately $210.7 million, before indirect tax considerations, on our consolidated balance sheet at December 31, 2025.
Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration for IAS was a $10.5 million gain for the year ended December 31, 2024 compared to a $38.3 million loss for the same period of 2023.
Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration for IAS was a $5.5 million loss for the year ended December 31, 2025 compared to a $10.5 million gain for the same period of 2024.
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the Senior Secured Notes and the 2024 Term Loan, estimated payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the Senior Secured Notes, Term Loans and Revolving Facility, estimated payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
We believe that adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance. 58 Adjusted EBITDA margin is adjusted EBITDA divided by total revenues.
We believe that adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance. 60 Adjusted EBITDA margin is calculated as adjusted EBITDA divided by total revenue.
Total Other Income Total other income for UCTS increased $33.2 million year over year, driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024. 65 MAINSTREET INSURANCE SOLUTIONS OPERATING GROUP RESULTS MIS offers personal insurance, commercial insurance, and life and health solutions to individuals and businesses in their communities, with a focus on accessing clients via sheltered distribution channels, which include, but are not limited to, new home builders, realtors, mortgage originators/lenders, master planned communities, and various other community centers of influence.
Total Other Income (Expense), Net Total other income (expense), net for UCTS decreased $34.5 million year over year, driven by a $35.1 million gain recorded during 2024 in connection with the sale of our Wholesale Business. 67 MAINSTREET INSURANCE SOLUTIONS OPERATING GROUP RESULTS MIS offers personal insurance, commercial insurance, and life and health solutions to individuals and businesses in their communities, with a focus on accessing clients via sheltered distribution channels, which include, but are not limited to, new home builders, realtors, mortgage originators/lenders, master planned communities, and various other community centers of influence.
Net loss for the year ended December 31, 2024 was $41.1 million, or a $0.39 loss per fully diluted share, compared to a net loss of $164.0 million, or a $1.50 loss per fully diluted share, in the same period of 2023.
Net loss for the year ended December 31, 2025 was $54.2 million, or a $0.50 loss per fully diluted share, compared to a net loss of $41.1 million, or a $0.39 loss per fully diluted share, in the same period of 2024.
During 2024, we exchanged 2,869,808 LLC Units of Baldwin Holdings on a one-for-one basis for shares of Baldwin's Class A common stock and cancelled the corresponding shares of Baldwin's Class B common stock. We receive an increase in our share of the tax basis in the net assets of Baldwin Holdings due to the interests being redeemed.
During 2025, we exchanged 2,848,868 LLC Units of Baldwin Holdings on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock. We receive an increase in our share of the tax basis in the net assets of Baldwin Holdings due to the interests being redeemed.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the SEC on February 28, 2024.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the SEC on February 25, 2025.
Operating lease expense was $21.5 million and $23.2 million for the years ended December 31, 2024 and 2023, respectively. (2) Represents scheduled debt obligation and estimated interest payments for our Senior Secured Notes and 2024 Term Loan. (3) Represents the total expected future payments to be made to partners and colleagues for earnout-related obligations at December 31, 2024.
Operating lease expense was $20.8 million and $21.5 million for the years ended December 31, 2025 and 2024, respectively. (2) Represents scheduled debt obligation and estimated interest payments for our Senior Secured Notes, Term Loans and the Revolving Facility. (3) Represents the total expected future payments to be made to partners and colleagues for earnout-related obligations at December 31, 2025.
We did not record goodwill impairment charges during 2024, 2023 or 2022. 75 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Valuation of Contingent Consideration Substantially all of our partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contingent consideration arrangements, which are based on the acquired company achieving thresholds related to future revenues, total insured value or number of rented units.
We did not record goodwill impairment charges during 2025, 2024 or 2023. 78 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Valuation of Contingent Consideration Substantially all of our partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contingent consideration arrangements, which are based on the acquired company achieving thresholds related to future revenues, EBITDA or retention rates.
Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration was a $4.9 million gain for the year ended December 31, 2024 compared to a $61.1 million loss for the same period of 2023.
Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration was a $5.6 million loss for the year ended December 31, 2025 compared to a $4.9 million gain for the same period of 2024.
Change in Fair Value of Contingent Consideration Change in fair value of contingent consideration for UCTS was a $5.1 million loss for the year ended December 31, 2024 compared to a $20.9 million loss for the same period of 2023.
Change in Fair Value of Contingent Consideration The change in fair value of contingent consideration for UCTS was a $1.4 million gain for the year ended December 31, 2025 compared to a $5.1 million loss for the same period of 2024.
In the near term, we intend to fund our earnout obligations with cash and cash equivalents, including unused proceeds from the issuance of the Senior Secured Notes and the 2024 Term Loan, cash flow from operations and available borrowings under the 2024 Revolving Facility.
In the near term, we intend to fund our earnout obligations with cash and cash equivalents, including unused proceeds from the issuance of the Incremental Term Loans, cash flow from operations and available borrowings under the Revolving Facility.
From time to time, we will consider raising additional debt or equity financing if and as necessary to support our growth, including in connection with the exploration of partnership opportunities or to refinance existing obligations on an opportunistic basis.
From time to time, we will consider raising additional debt or equity financing if and as necessary to support our growth, including in connection with the exploration of partnership opportunities or to refinance existing obligations on an opportunistic basis. In addition, we continue to evaluate our capital structure and current market conditions related to our capital structure.
The key assumptions used in our valuation were: (i) forecast of revenue, total insured value or number of rented units, (ii) the volatility associated with the revenues, total insured value or number of rented units, (iii) risk-adjusted discount rate applied to forecasted revenues, total insured value or number of rented units, and (iv) the credit-adjusted discount rate related to the payment of the contingent consideration.
The key assumptions used in our valuation were: (i) forecast of revenue, EBITDA or retention rates, (ii) the volatility associated with the revenues, EBITDA or retention rates, (iii) risk-adjusted discount rate applied to forecasted revenues, EBITDA or retention rates, and (iv) the credit-adjusted discount rate related to the payment of the contingent consideration.
Our MGA product suite is now comprised of more than 20 products across personal, commercial and professional lines. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through February 29, 2024. Effective January 1, 2024, our FounderShield Partner moved from UCTS to IAS.
Our MGA product suite is now comprised of more than 20 products across personal, commercial and professional lines. UCTS’ Wholesale Business was sold in the first quarter of 2024, and its operations are included in our results through February 29, 2024.
The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised. 69 Our debt obligations at December 31, 2024 include borrowings outstanding under the Senior Secured Notes of $600.0 million and the 2024 Term Loan of $835.8 million.
The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised. 71 Our debt obligations at December 31, 2025 include borrowings outstanding under the Senior Secured Notes of $600.0 million, the Term Loan of $1.004 billion and the Revolving Facility of $107.0 million.
Any changes in the estimated fair value of contingent consideration and adjustments to the estimated fair value related to unobservable inputs will be recognized within change in fair value of contingent consideration in the consolidated statements of comprehensive loss. We recognized a $4.9 million benefit related to the change in fair value of contingent consideration in 2024.
Any changes in the estimated fair value of contingent consideration and adjustments to the estimated fair value related to unobservable inputs will be recognized within change in fair value of contingent consideration in the consolidated statements of comprehensive loss. We recognized a $5.6 million expense related to the change in fair value of contingent consideration in 2025.
If we did not have a valuation allowance established, we would have recognized an income tax benefit of approximately $3.1 million, before indirect tax considerations, for the year ended December 31, 2024. 77
If we did not have a valuation allowance established, we would have recognized an income tax benefit of approximately $13.7 million, before indirect tax considerations, for the year ended December 31, 2025. 80
EXECUTIVE SUMMARY OF 2024 FINANCIAL RESULTS We are an independent insurance distribution firm providing indispensable expertise and insights that strive to give our clients the confidence to pursue their purpose, passion and dreams. The following is a summary of our 2024 financial results.
See also “Note Regarding Forward-Looking Statements.” EXECUTIVE SUMMARY OF 2025 FINANCIAL RESULTS We are an independent insurance distribution firm providing indispensable expertise and insights that strive to give our clients the confidence to pursue their purpose, passion and dreams. The following is a summary of our 2025 financial results.
Quantitative and Qualitative Disclosures About Market Risk for further discussion of the impact of interest rates on our results of operations, financial condition and cash flows. 57 Gain on Divestitures Gain on divestitures of $39.0 million for the year ended December 31, 2024 was driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Quantitative and Qualitative Disclosures About Market Risk for further discussion of the impact of interest rates on our results of operations, financial condition and cash flows. Gain on Divestitures Gain on divestitures decreased $38.7 million year over year, driven by a $35.1 million gain recorded during 2024 in connection with the sale of our Wholesale Business.
Financing Activities The primary sources and uses of cash for financing activities relate to the issuance of our Class A common stock; debt servicing costs in connection with our long-term debt and revolving line of credit, as well as purchases, sales and settlements of interest rate caps to mitigate interest rate volatility on that debt; payment of contingent earnout consideration; and other equity transactions.
Financing Activities The primary sources and uses of cash for financing activities relate to the issuance of our Class A common stock, debt servicing costs in connection with our long-term debt and revolving line of credit, payment of contingent earnout consideration, and other equity transactions.
At December 31, 2024, we had $1.4 billion of goodwill. Our goodwill is included in each of our operating groups at the following amounts: Insurance Advisory Solutions—$932.5 million Underwriting, Capacity & Technology Solutions—$235.6 million Mainstreet Insurance Solutions—$244.3 million On October 1, 2024, we performed an impairment evaluation for each of our reporting units beginning with a qualitative assessment.
Our goodwill is included in each of our operating groups at the following amounts: Insurance Advisory Solutions—$932.5 million Underwriting, Capacity & Technology Solutions—$241.9 million Mainstreet Insurance Solutions—$342.8 million On October 1, 2025, we performed an impairment evaluation for each of our reporting units beginning with a qualitative assessment.
Estimated interest payments for outstanding borrowings on the Senior Secured Notes and 2024 Term Loan in the table above were calculated based on the applicable interest rates at December 31, 2024 of 7.125% and 7.61%, respectively, through their respective due dates of May 15, 2031 and May 24, 2031.
Estimated interest payments for outstanding borrowings under the Senior Secured Notes, Term Loans, and Revolving Facility in the table above were calculated based on the applicable interest rates at December 31, 2025 of 7.125%, 6.25%, and 6.39%, respectively, through their respective maturity dates of May 15, 2031, May 24, 2031, and May 24, 2029.
Revenues for the year ended December 31, 2024 were $1.4 billion, an increase of $170.5 million, or 14%, year over year. Core commissions and fees grew organically by $190.0 million as a result of new and renewal business from clients across industry sectors and continued outperformance from MSI.
Revenues for the year ended December 31, 2025 were $1.5 billion, an increase of $115.8 million, or 8%, year over year. Core commissions and fees grew organically by $98.5 million as a result of new and renewal business from clients across industry sectors and continued outperformance from MSI. Commissions and fees contributed by partnership activity were $23.6 million.
Partnerships can significantly impact adjusted EBITDA and adjusted EBITDA margins in a given year and may increase the amount of seasonality within the business, especially results attributable to partnerships that have not been fully integrated into our business or owned by us for a full year.
Partnerships can significantly impact adjusted EBITDA and adjusted EBITDA margins in a given year and may increase the amount of seasonality within the business, especially results attributable to partnerships that have not been fully integrated into our business or owned by us for a full year. 57 Commissions and Fees We earn commissions and fees by facilitating the arrangement between insurance company and reinsurance company partners and clients for the insurance and/or reinsurance company to provide insurance and/or reinsurance to the insured party.
The undiscounted estimated contingent earnout obligation presented in the table above represents the total expected future payments to be made to the partners. The undiscounted estimated contingent earnout obligation at December 31, 2024 was $185.2 million, of which $5.0 million must be settled in cash and the remaining $180.2 million can be settled in cash or stock at our option.
The undiscounted estimated contingent earnout obligation presented in the table above represents the total expected future payments to be made to the partners. The undiscounted estimated contingent earnout obligation of $26.6 million at December 31, 2025 includes $9.2 million that must be settled in cash and the remaining $17.4 million can be settled in cash or stock at our option.
As of December 31, 2024, we have recorded a Tax Receivable Agreement liability of $4.8 million associated with the payments to be made to current or former Baldwin Holdings’ LLC Members subject to the Tax Receivable Agreement. Deferred Tax Assets To determine the realizability of our deferred tax assets, we analyzed all evidence – both positive and negative.
As of December 31, 2025 and 2024, we have recorded a Tax Receivable Agreement liability of $4.5 million and $4.8 million, respectively, associated with the payments to be made to current or former Baldwin Holdings’ LLC Members subject to the Tax Receivable Agreement.
Organic Revenue and Organic Revenue Growth The following table reconciles organic revenue and organic revenue growth to commissions and fees, which we consider to be the most directly comparable GAAP financial measure: For the Years Ended December 31, (in thousands, except percentages) 2024 2023 Commissions and fees $ 1,377,116 $ 1,211,828 Partnership commissions and fees (1) — (44,696) Organic revenue $ 1,377,116 $ 1,167,132 Organic revenue growth (2) $ 196,922 $ 187,213 Organic revenue growth % (2) 17 % 19 % __________ (1) Includes the first twelve months of such commissions and fees generated from newly acquired partners.
Organic Revenue and Organic Revenue Growth The following table reconciles organic revenue and organic revenue growth to commissions and fees, which we consider to be the most directly comparable GAAP financial measure: For the Years Ended December 31, (in thousands, except percentages) 2025 2024 Commissions and fees $ 1,493,680 $ 1,377,116 Partnership commissions and fees (1) (23,588) — Organic revenue $ 1,470,092 $ 1,377,116 Organic revenue growth (2) $ 100,049 $ 196,922 Organic revenue growth % (2) 7 % 17 % __________ (1) Includes the first 12 months of such commissions and fees generated from newly acquired partners.
Adjusted EBITDA for the year ended December 31, 2024 was $312.5 million, an increase of $62.3 million year over year. Adjusted EBITDA margin was 22.5% for 2024, a 200 basis point expansion compared to 20.5% in 2023. Adjusted net income for the year ended December 31, 2024 was $176.9 million, an increase of $45.8 million year over year.
Adjusted EBITDA for the year ended December 31, 2025 was $341.5 million, an increase of $29.0 million year over year. Adjusted EBITDA margin was 22.7% for 2025, a 20 basis point expansion compared to 22.5% in 2024. Adjusted net income for the year ended December 31, 2025 was $198.9 million, an increase of $22.0 million year over year.
Based on the weight of evidence, the Company has determined that its deferred tax assets are not more likely than not to be realized. Accordingly, we maintain a full valuation allowance against our deferred tax assets.
The Company has a history of cumulative losses over a three-year period (2023, 2024 and 2025), which indicates significant negative evidence. Based on the weight of evidence, the Company has determined that its deferred tax assets are not more likely than not to be realized. Accordingly, we maintain a full valuation allowance against our deferred tax assets.
Adjusted diluted EPS was $1.50 for 2024, an increase of 34% over $1.12 for 2023. Organic revenue for the year ended December 31, 2024 was $1.4 billion compared to $1.2 billion for the same period of 2023. Organic revenue growth was $196.9 million, or 17%, for 2024 compared to $187.2 million, or 19%, for 2023.
Adjusted diluted EPS was $1.67 for 2025, an increase of 11% over $1.50 for 2024. Organic revenue for the year ended December 31, 2025 was $1.47 billion compared to $1.38 billion for the same period of 2024. Organic revenue growth was $100.0 million, or 7%, for 2025 compared to $196.9 million, or 17%, for 2024.
At December 31, 2024, we recorded $145.6 million of contingent consideration liabilities related to the 9 contingent consideration arrangements still outstanding and the total potential maximum of the remaining contingent consideration payments is $268.8 million.
At December 31, 2025, we recorded $23.3 million of contingent consideration liabilities related to the five contingent consideration arrangements still outstanding and the total potential maximum of the remaining contingent consideration payments is $50.0 million.
If all remaining revenue, insured value, and rented units targets were to be achieved, our partners would be entitled to payments of up to $258.8 million in calendar year 2025 for achieving targets through September 30, 2025; and $10.0 million in calendar year 2026 for achieving targets through September 30, 2026.
If all remaining revenue, EBITDA and retention rate targets were to be achieved, our partners would be entitled to payments of up to $39.0 million in calendar year 2026 for achieving targets through September 30, 2026; and $5.5 million in calendar year 2027 for achieving targets through September 30, 2027; and $5.5 million in calendar year 2028 for achieving targets through September 30, 2028.
UCTS commissions and fees increased $66.4 million, or 16%, year over year to $468.9 million, due to organic growth in core commissions and fees.
UCTS commissions and fees increased $75.7 million, or 16%, year over year to $544.6 million, primarily due to organic growth in core commissions and fees.
The fair value loss related to contingent consideration for 2024 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
The fair value loss related to contingent consideration for the year ended December 31, 2025 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates, in addition to a loss recognized in reclassifying $1.8 million of earnouts from colleague earnout incentives.
As the Company emerges from its cumulative loss position, we will reassess the realizability of our deferred tax assets and the necessity for a full valuation allowance. 71 Sources and Uses of Cash The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated: For the Years Ended December 31, Variance (in thousands) 2024 2023 Net cash provided by operating activities $ 102,151 $ 44,644 $ 57,507 Net cash provided by (used in) investing activities 13,299 (21,922) 35,221 Net cash used in financing activities (29,644) (26,230) (3,414) Net increase (decrease) in cash and cash equivalents and restricted cash 85,806 (3,508) 89,314 Cash and cash equivalents and restricted cash at beginning of year 226,963 230,471 (3,508) Cash and cash equivalents and restricted cash at end of year $ 312,769 $ 226,963 $ 85,806 Operating Activities The primary sources and uses of cash for operating activities are net income (loss) adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration.
As the Company emerges from its cumulative loss position, we will reassess the realizability of our deferred tax assets and the necessity for a full valuation allowance. 73 Sources and Uses of Cash The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated: For the Years Ended December 31, Variance (in thousands) 2025 2024 Net cash provided by (used in) operating activities $ (29,418) $ 51,453 $ (80,871) Net cash provided by (used in) investing activities (140,276) 13,299 (153,575) Net cash provided by financing activities 203,822 21,054 182,768 Net increase in cash and cash equivalents and fiduciary cash 34,128 85,806 (51,678) Cash and cash equivalents and fiduciary cash at beginning of period 312,769 226,963 85,806 Cash and cash equivalents and fiduciary cash at end of period $ 346,897 $ 312,769 $ 34,128 Operating Activities The primary sources and uses of cash for operating activities are net loss adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration.
Interest expense, net, for the year ended December 31, 2024 was $123.6 million, an increase of $4.2 million, or 3%, year over year. Interest expense, net, increased as a result of higher average borrowings, offset in part by lower average interest rates resulting from our May 2024 debt refinancing and federal rate reductions.
Interest expense, net, for the year ended December 31, 2025 was $121.4 million, a decrease of $2.2 million, or 2%, year over year, as a result of lower average interest rates due to the 2025 Refinancings and federal rate reductions, offset in part by higher average borrowings.
Commissions and fees increased $165.3 million, or 14%, year over year to $1.4 billion driven by organic growth in core commissions and fees of $190.0 million related to new and renewal business across client industry sectors and continued outperformance from MSI.
Commissions and fees increased $116.6 million, or 8%, year over year to $1.5 billion, driven by organic growth in core commissions and fees of $98.5 million related to new and renewal business across client industry sectors and continued outperformance from MSI, partnership activity of $23.6 million, and organic growth in profit-sharing and other revenue of $1.5 million.
These estimates are influenced by many factors, including historical financial information, guideline public company data, and management's expectations for future revenue of the acquired businesses, total insured value and number of rented units, as well as market conditions, economic conditions and the company’s performance.
These estimates are influenced by many factors, including historical financial information, guideline public company data, and management's expectations for future revenue, EBITDA or retention rates of the acquired businesses, as well as market conditions, economic conditions and the company’s performance. Changes in these inputs could have a significant impact on the fair value of the contingent consideration liability.
The aggregate estimated contingent earnout liabilities included on our consolidated balance sheet at December 31, 2024 was $145.6 million, of which $4.7 million must be settled in cash and the remaining $140.8 million can be settled in cash or stock at our option.
The aggregate estimated contingent earnout liabilities included on our condensed consolidated balance sheet of $23.3 million at December 31, 2025 includes $9.2 million that must be settled in cash and the remaining $14.1 million can be settled in cash or stock at our option.
Many variables go into estimating future cash flows, including estimates of our future revenue growth and operating results. When estimating our projected revenue growth and future operating results, we consider industry trends, economic data, and our competitive advantage. During the last three years, we have not made any changes in the accounting methodology used to evaluate impairment of goodwill.
Many variables go into estimating future cash flows, including estimates of our future revenue growth and operating results. When estimating our projected revenue growth and future operating results, we consider historical performance, industry trends, economic data, and our competitive advantage.
Profit-sharing commissions are generally based on underwriting results, but may also contain considerations for volume, growth or retention. Other revenue streams include other ancillary income, premium financing income, and marketing income based on negotiated cost reimbursement for fulfilling specific targeted Medicare marketing campaigns.
Other revenue streams include other ancillary income, premium financing income, and marketing income based on negotiated cost reimbursement for fulfilling specific targeted Medicare marketing campaigns.
Loss on Extinguishment and Modification of Debt Loss on extinguishment and modification of debt in Corporate and Other of $15.1 million relates to the May 2024 debt refinancing.
Loss on Extinguishment and Modification of Debt Loss on extinguishment and modification of debt in Corporate and Other of $6.2 million for year ended December 31, 2025 relates to the 2025 Refinancings. Loss on extinguishment and modification of debt of $15.1 million for the same period of 2024 relates to the JPM Credit Facility refinancing completed in May 2024.
Interest Expense, Net Interest expense, net, increased $4.2 million year over year resulting from higher average borrowings, offset in part by lower average interest rates resulting from the May 2024 debt refinancing and federal rate reductions.
Interest Expense, Net Interest expense, net, decreased $2.2 million year over year as a result of lower average interest rates due to the 2025 Refinancings and federal rate reductions, offset in part by higher average borrowings.
Loss on Extinguishment and Modification of Debt Loss on extinguishment and modification of debt of $15.1 million for the year ended December 31, 2024 relates to the May 2024 debt refinancing. FINANCIAL CONDITION—COMPARISON OF CONSOLIDATED FINANCIAL CONDITION AT DECEMBER 31, 2024 TO DECEMBER 31, 2023.
Loss on Extinguishment and Modification of Debt Loss on extinguishment and modification of debt of $6.2 million for the year ended December 31, 2025 relates to the 2025 Refinancings. Loss on extinguishment and modification of debt of $15.1 million for the same period of 2024 relates to the JPM Credit Facility refinancing completed in May 2024.
Net cash provided by operating activities increased $57.5 million year over year, driven by better operating leverage. Investing Activities The primary sources and uses of cash for investing activities relate to cash consideration paid to fund partnerships and other investments to grow our business.
Investing Activities The primary sources and uses of cash for investing activities relate to cash consideration paid to fund partnerships, proceeds from divested assets, and other investments to grow our business.
At December 31, 2024, we had $953.5 million of intangible assets, which are included in each of our reporting units and in Corporate and Other at the following amounts: Insurance Advisory Solutions—$636.9 million Underwriting, Capacity & Technology Solutions—$103.8 million Mainstreet Insurance Solutions—$206.5 million Corporate and Other—$6.2 million We performed a qualitative analysis of each of our asset groups as of October 1, 2024 and determined that there were no events or changes in circumstances that had occurred to indicate that the carrying amount of our intangible assets may not be recoverable.
At December 31, 2025, we had $978.4 million of intangible assets, which are recorded in each asset class at the following amounts: Acquired relationships—$908.4 million Software—$68.0 million Trade Names—$2.1 million We performed a qualitative analysis for each of our asset classes as of October 1, 2025 and determined that there were no events or changes in circumstances that had occurred to indicate that the carrying amount of our intangible assets may not be recoverable.
(2) Other addbacks to adjusted EBITDA include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses.
(2) Income tax expense includes the Tax Receivable Agreement expense. (3) Other addbacks to adjusted net income include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. (4) Represents corporate income taxes at assumed effective tax rate of 9.9% applied to adjusted pre-tax income.
For the Years Ended December 31, Variance (in thousands, except percentages) 2024 2023 Amount % Revenues: Core commissions and fees $ 455,845 $ 377,294 $ 78,551 21 % Profit-sharing and other income 13,032 25,205 (12,173) (48) % Commissions and fees 468,877 402,499 66,378 16 % Investment income 4,062 2,040 2,022 99 % Total revenues 472,939 404,539 68,400 17 % Operating expenses: Commissions, employee compensation and benefits 361,717 298,108 63,609 21 % Other operating expenses 41,313 41,995 (682) (2) % Amortization expense 14,950 15,963 (1,013) (6) % Change in fair value of contingent consideration 5,085 20,930 (15,845) (76) % Depreciation expense 568 621 (53) (9) % Total operating expenses 423,633 377,617 46,016 12 % Operating income 49,306 26,922 22,384 83 % Total other income 34,107 859 33,248 n/m Income before income taxes $ 83,413 $ 27,781 $ 55,632 200 % __________ n/m not meaningful Commissions and Fees UCTS generates (i) commissions for underwriting and placing insurance policies on behalf of its insurance company partners; (ii) policy fee and installment fee revenue for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of insurance company partners, including delivery of policy documents, processing payments and other administrative functions; (iii) profit-sharing income, generally based on the profitability of the underlying book of business of the policies it generates on behalf of its insurance company partners; and (iv) fees from service fee arrangements, which are in place with certain customers for a negotiated fee.
For the Years Ended December 31, Variance (in thousands, except percentages) 2025 2024 Amount % Revenues: Core commissions and fees $ 527,245 $ 455,845 $ 71,400 16 % Profit-sharing and other income 17,345 13,032 4,313 33 % Commissions and fees 544,590 468,877 75,713 16 % Investment income 4,862 4,062 800 20 % Total revenues 549,452 472,939 76,513 16 % Operating expenses: Colleague compensation and benefits 116,504 101,513 14,991 15 % Outside commissions 264,910 260,204 4,706 2 % Other operating expenses 75,452 41,313 34,139 83 % Amortization expense 21,114 14,950 6,164 41 % Change in fair value of contingent consideration (1,405) 5,085 (6,490) (128) % Depreciation expense 656 568 88 15 % Total operating expenses 477,231 423,633 53,598 13 % Operating income 72,221 49,306 22,915 46 % Total other income (expense), net (426) 34,107 (34,533) (101) % Income before income taxes and share of net earnings of equity method investee $ 71,795 $ 83,413 $ (11,618) (14) % Commissions and Fees UCTS generates (i) commissions for underwriting and placing insurance policies and/or treaties on behalf of its insurance company partners and reinsurance company partners; (ii) policy fee and installment fee revenue for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of insurance or reinsurance company partners, including delivery of policy documents, processing payments and other administrative functions; (iii) profit-sharing income, generally based on the profitability of the underlying book of business of the policies it generates on behalf of its insurance company partners and reinsurance company partners; (iv) fees from service fee arrangements, which are in place with certain clients for a negotiated fee; and (v) assumed premium earned in the Captive business.
Additionally, we earn policy fees for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of insurance company partners, including delivery of policy documents, processing payments and other administrative functions. We may also receive profit-sharing commissions, which represent forms of variable consideration paid by insurance company partners associated with the placement of coverage.
Additionally, we earn policy fees for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of insurance or reinsurance company partners, including delivery of policy documents, processing payments and other administrative functions, and the Captive business earns revenue from assumed premium.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2024, the 2024 Term Loan bore interest based on a variable rate of term SOFR, plus an applicable margin of 325 bps. An increase of 100 basis points on the term SOFR rate at December 31, 2024 would have increased our annual interest expense for the 2024 Credit Facility by $8.4 million.
Biggest changeAt December 31, 2025, we had outstanding borrowings of $1.004 billion under the Term Loans and $107.0 million under our Revolving Facility. Taking the interest rate swap into consideration, an increase of 100 basis points on the term SOFR rate at December 31, 2025 would have increased our annual interest expense under the JPM Credit Facility by $6.1 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the potential loss arising from adverse changes in market rates and prices, such as premium amounts, interest rates and equity prices. We are exposed to market risk through our investments and borrowings under the 2024 Credit Facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the potential loss arising from adverse changes in market rates and prices, such as premium amounts, interest rates and equity prices. We are exposed to market risk through our investments and borrowings under the JPM Credit Facility.
We use derivative instruments to mitigate our risk related to the effect of rising interest rates on our cash flows. However, we do not use derivative instruments for trading or speculative purposes. Our invested assets are held primarily as cash and cash equivalents and restricted cash.
We use derivative instruments to mitigate our risk related to the effect of rising interest rates on our cash flows. However, we do not use derivative instruments for trading or speculative purposes. Our invested assets are held primarily as cash and cash equivalents and fiduciary cash.
The fair values of our invested assets at December 31, 2024 and 2023 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material. At December 31, 2024, we had $835.8 million of borrowings outstanding under the 2024 Term Loan and no outstanding borrowings under our 2024 Revolving Facility.
The fair values of our invested assets at December 31, 2025 and 2024 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material. In January 2025, the JPM Credit Agreement was amended to provide for $100 million of incremental term B loans.
Removed
We have entered into interest rate cap agreements to limit the potential impact of interest rate changes on cash flows. The interest rate caps limit the variability of the base rate to the amount of the cap.
Added
In September 2025, the JPM Credit Agreement was amended to (i) reprice the Existing 2025 Term Loans with interest at term SOFR, plus an applicable margin of 250 bps; (ii) provide for $75 million of incremental term B loans; and (iii) reduce the applicable margin for the Revolving Facility to term SOFR, plus a credit spread adjustment of 10 bps, plus an applicable margin of 175 bps to 250 bps based on total net leverage ratio.
Removed
The interest rate cap agreements in place at December 31, 2024 mitigate the interest rate volatility on $1.2 billion of debt to a maximum base rate of 7.00% through November 2025. 78
Added
Also in September 2025, we entered into a floating-to-fixed interest rate swap agreement with a notional amount of $500 million, which exchanges the variable rate of the Term Loans, which are indexed to 1-month term SOFR, for a fixed rate of 3.244%.
Added
The objective of the swap, for which we elected hedge accounting, is to manage our exposure to interest rate risk by converting a portion of the floating rate cash flows of the Term Loans into fixed rate payments. This strategy provides predictability in interest expense and aligns with our risk management policy.
Added
Other than the amendments to the JPM Credit Agreement to increase the aggregate principal amount of the Term Loans to $1.006 billion and reprice the Term Loans and Revolving Facility, and entering into the interest rate swap agreement, there have been no material changes in market risk from the information presented in Part II, Item 7A.
Added
Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2024. 81

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