The Baldwin Insurance Group, Inc. Q4 FY2025 earnings call

• AI role: AI is both a competitor and enabler, and Baldwin is a step function multiplier with AI. Personal lines embedded solutions are easier and seamless, and AI drives productivity gains. Small commercial's digital platform improves results. IF segment's complex clients and sectors are augmented by AI. UCTF segment's proprietary products are insulated from disintermediation. • Segment details: Personal lines embedded solutions have high revenue and persistence. Small commercial's Founders Shield platform has better retention, margins, and growth. IF segment serves complex clients. UCTF segment builds and manages proprietary insurance products. • Mergers: Closed partnerships with CAC Group, OB, and Capstone, expecting revenue and EBITDA post-synergies. • Catalyst program: The 3B30 Catalyst program launched in Q3 2025, set to be operational in 2026 with role transformation, technology consolidation, and AI/automation integration.

Personal lines makes up approximately 38% of total pro forma revenue, with around 80% of that revenue coming from embedded insurance distribution platforms. The Westwood platform generated $190 million in pro forma revenue in 2025. In small commercial, the Founders Shield digital platform has seen increased retention from 82% to 92%, margins improve by approximately 40 percentage points, and growth accelerate to 25% annually. The IF segment has roughly $1 billion of pro forma revenues, with about 70% being commercial insurance for midsize to large clients, 20% employee benefits brokerage and consulting, and 10% personal insurance for high net worth families. The fourth quarter had 3% organic revenue growth, core commissions and fees organic growth of 5%. Full year core commission and fee organic revenue growth was 8%, total organic revenue growth 7%, adjusted EBITDA growth 9%, 20 basis points margin expansion, and adjusted diluted earnings per share growth 11%. UCTS had 16% organic growth and adjusted EBITDA margin expansion of approximately 330 basis points. Main Street had core commission and fees organic revenue growth 2% and total organic growth negative 4%. IAS had core commission and fee organic revenue growth flat and total organic growth negative 2%.

• Full year 2026: Anticipates total revenue between $2.01 billion and $2.05 billion with mid-single digits or higher organic growth, adjusted EBITDA between $460 million and $480 million, and adjusted diluted earnings per share between $2 and $2.10. • First quarter 2026: Expects revenue between $520 million and $530 million, low single digits organic growth, adjusted EBITDA between $130 million and $140 million, and adjusted diluted EPS between 61 cents and 65 cents per share.

• Market disruption: Industry sell-off due to AI-powered insurance applications and chat GPT fears. • Revenue challenges: Fourth quarter organic revenue growth affected by profit sharing decline, Medicare marketplace disruption, etc. • Synergy concerns: Skepticism around synergy achievement from partnerships like CAC Group.

Q: Expand on AI competitive positioning and defensive moat for embedded solutions like renters.

A: Trevor says AI accelerates divergence between platforms and intermediaries. Baldwin's embedded solutions have proprietary product, proprietary technology, control the value chain, and are in clients' workflows.

Q: Unpack expectations in guidance regarding market headwinds.

A: Anticipates continued headwinds through most of 2026 fading to neutral by year end, related to rate of change and exposure dynamics.

Q: Color on hiring strategy in IAS and softer market environment.

A: Increased investment in frontline revenue generating talent in IAS, with sales velocity top decile but new talent taking time to ramp.

Q: Cadence and momentum on MIS side, homebuilder and mortgage.

A: Normalized Westwood organic growth 9.5%, builder volumes soft but Westwood performs well; new mortgage partnership with Fairway Mortgage and large pipeline.

Q: Retention and stock price impact.

A: Vanguard producer retention 94%, share price performance not impacting retention; need to manage expectations, focus on deleveraging and free cash flow.

Q: Organic growth outlook by business and share repurchase impact.

A: Mid-single-digit guidance with finite end dates for headwinds, not assuming share repurchases in guidance.

Q: View on digital AI agents in open market.

A: Doubts on insurance companies opening quoting algorithms, embedded distribution is a big part of the future.

Q: Share repurchase program and CAC deal.

A: Share repurchase program authorized as no better use of capital than buying own shares at discount; CAC deal was an opportunity.

Q: Confidence in 2026 guidance and IAS rate change.

A: Confident in 2026 guidance, IAS rate and exposure to be net headwind but dissipate as year goes on.