TWFG, Inc. Q4 FY2025 earnings call

• 2025 was transformational, total revenue up 21.3% to 247.1 million driven by organic growth, retail and MGA platforms, and accretive acquisitions. • Expanded national footprint through recruiting, tuck-in transactions, and accretive acquisitions, including acquiring Lofton Wells Insurance Agency and Asset Protection Insurance Associates. • AI is a force multiplier, with technology strategy as a competitive advantage, recent senior leadership appointments to accelerate technology and underwriting platforms, 44 technology-related positions, and AI coding assistant helping productivity. • Technology teams represent 32% of corporate employee base. • Emphasized distinction between independent agent network providing tailored solutions vs. commoditized direct channel products. • Fourth quarter results: full written premium up, insurance services and MGA growth, total revenues up, commission income up, organic revenues up, expenses increased but profitability improved with strong balance sheet

Full written premium increased $82 million or 22.7% to $443.4 million. Insurance services grew 53.6 million, or 17.4%, to 361.3 million, and TWFT MGA had a spike in growth of 28.5 million, or 53.2%, to 82.1 million. Total revenues increased 17.1 million or 33% to 68.8 million. Commission income increased 15.6 million or 35.8% to 59.4 million. Organic revenues increased $5.2 million, reaching approximately $50 million, representing an organic growth rate of 11.7%. Commission expense increased 4 million or 13.8% to 32.9 million. Salaries and employee benefits increased 2.4 million or 30.7% to 10 million. Other administrative expenses increased $1.7 million, or approximately 35%, to $6.7 million. Depreciation and amortization increased to 5.8 million. Net income was up 76.2% to 14.4 million, with a net income margin of 21%. Adjusted net income rose 58.9% to 16.7 million, equating to a margin of 24.3%. Adjusted EBITDA increased 56.9% to $21.7 million for a margin of 31.6%

• 2026 total revenues expected to grow 15% to 20%, between $285 million and $300 million. • Adjusted EBITDA margin expected to be in the range of 22% to 25%. • Organic revenue growth rate expected to be in the range of 10 to 15%. • Reflects continued platform growth, competitive stock market environment, investments in new AI tools, and executing on accretive M&A plans

• Softening rate environment could impact customer shopping and retention. • Uncertainty around long-term costs of AI and its pricing models. • Potential impact of market corrections on private broker valuations and M&A multiples. • Persistent pricing and capacity constraints in certain cat-exposed geographies like California wildfire-exposed areas

Q: On organic growth guidance and parsing Florida MGA growth vs underlying book.

A: Don't do segment reporting, mga florida's contribution more in second quarter from renewals, new homeowners program launch in fourth quarter, conservative view on voluntary writings.

Q: On written premium retention in MGA.

A: Market opening allows agents to defend customers from softening market, carriers repositioning rates allowing better retention and new business growth.

Q: On stock market impact on TDFG stock and AI.

A: Market not always rational, insurance complexity requires context and cognitive communication, AI creates efficiencies but human expertise still irreplaceable.

Q: On organic growth components and M&A perspective.

A: 10-15% guidance includes core business double digit projection, mga creates upside from new product development, M&A pipeline robust with transformational-sized transactions in pipeline.

Q: On AI impact on migration out of captive agents and M&A.

A: AI can accelerate migration, organization positioned to capture migration, 38,000 subscale independent agencies can convert to agency in a box model.

Q: On softening rate environment and M&A pipeline valuations.

A: Market broadly softening on auto, cat-exposed geographies have persistent pricing, private markets not caught up to public market turn, small transactions not much affected, larger transactions may see softening.

Q: On AI and insurers on price comparison platforms.

A: Digitally derived customers have higher loss ratios and acquisition costs, insurers hesitant due to data requirements and customer fatigue, Geico leaning into independent agencies, property side highly fragmented