TWFG Q3 2025 Earnings Call Transcript

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Provided by Quartr
November 13, 2025

Key Takeaways

  • Positive Sentiment: Q3 results — Total revenues rose to $64.1M (+21%) and adjusted EBITDA grew to $17M with margins expanding to 26.5%, reflecting operating leverage and accretive M&A.
  • Positive Sentiment: Premiums and guidance — Written premium was $467.7M (+16.9% YoY) with a 91% retention rate, and management tightened FY2025 guidance to $240–245M revenue, 11–13% organic growth, and 24–25% adjusted EBITDA margins.
  • Positive Sentiment: M&A and recruiting momentum — The company added retail and corporate locations plus 370 MGA agents in the quarter and closed the Alabama Insurance Agency (23 retail locations), and expects a more active M&A cadence in 2026.
  • Negative Sentiment: Market softening risk — Personal lines are normalizing with moderated rates and increased carrier availability, which can drive customer shopping and lower average premiums; management expects the full-cycle impact to abate by Q2 2026.
  • Neutral Sentiment: MGA margin anomaly — A Florida MGA program produced commission income without corresponding commission expense (boosting margins this quarter), but management says this will partly normalize as policies renew.
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Earnings Conference Call
TWFG Q3 2025
00:00 / 00:00

Transcript Sections

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Operator

Good morning, and welcome to TWFG's Third Quarter 2025 Earnings Conference Call. All participants are in a listen-only mode. Following management's prepared remarks, we will open the line for questions. As a reminder, today's call may include forward-looking statements that are subject to risk and uncertainties. Actual results could differ materially. For more information, please review our filings with the SEC. And now, I'd like to turn the call over to Gordy Bunch, Chief Executive Officer. Please go ahead.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Thank you, Operator, and good morning, everyone. TWFG delivered another strong quarter of performance, reflecting both the resilience of our distribution platform and continued scalability of our operating model. Total revenues increased 21% quarter-over-quarter to $64.1 million, supported by 10.2% organic revenue growth and M&A revenues, while adjusted EBITDA grew 45% to $17 million, expanding margins by 430 basis points to 26.5%. That margin expansion underscores the earnings power of our distribution platform and execution on accretive M&A as we leverage scale and financial discipline. We continue to see encouraging signs of personal lines normalization. Carrier appetite has returned, rate increases have moderated, and underwriting discipline remains strong, all of which are helping to normalize retention and new business growth across our platform. Our diversified model, spanning retail, MGA, and affiliated agencies, positions us to capitalize on both hard and soft market cycles.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Our third-quarter recruiting and M&A activities were productive, with the addition of eight new retail locations, one new corporate location, and 370 independent agents to our MGA platform. Following the quarter, we completed the acquisition of Alabama Insurance Agency, adding 23 additional retail locations and marking Alabama as our newest state expansion. These additions strengthen our foundation heading into the fourth quarter and enhance our ability to serve clients across a broader national footprint. Strategically, our priorities remain unchanged: investing in our technology initiatives, executing our accretive M&A goals, expanding our retail and MGA distribution channels, and executing disciplined capital deployment to support these priorities. I'll now turn the call over to Janice Zwinggi, our CFO, to discuss some of the financial highlights.

Janice Zwinggi
Janice Zwinggi
CFO at TWFG

Good morning, and thank you, Gordy. Starting with our top KPI, written premium increased by $67.6 million, or 16.9%, over the prior year period to $467.7 million. We saw strong double-digit growth within both of our primary offerings. Insurance services grew $56 million, or 16.5%, and the MGA had a spike in growth of $11.7 million, or 19.2%. This increase was a result of healthy growth in both renewals of $51 million, or 16.4%, and new business of $16.6 million, or 18.7%. Our consolidated written premium retention remained strong at 91%. While a softening rate environment typically translates to increased customer shopping, our retention performance underscores the stability and engagement of our client base. Our total revenues increased $11 million, or 21.3%, over the prior year period to $64.1 million.

Janice Zwinggi
Janice Zwinggi
CFO at TWFG

This increase was driven primarily by commission income growth of $10 million, or 20.8%, to $58.3 million as a result of continued expansion in both of our product offerings and supported by strong renewal and new business activity. Higher contingent income and increased Fee-based revenues from one of our MGA programs also contributed to the revenue growth. Organic revenues increased $5 million, reaching $54.2 million compared to $49.2 million in the prior year period, for an organic growth rate of 10.2%, demonstrating solid momentum across both our agency and MGA platforms and positioning us well to meet our full-year growth targets. From a profitability standpoint, adjusted EBITDA of $17 million grew 44.7%, translating to a margin of 26.5%, which was up more than 400 basis points from the prior year quarter. This expansion reflects operating leverage, expense discipline, and an increasing mix of higher-margin corporate branch locations.

Janice Zwinggi
Janice Zwinggi
CFO at TWFG

On the expense side, commission expense increased $3.9 million, or 13%, over the prior year period to $34.6 million, tracking with commission income growth, taking into account the impact of corporate store acquisitions and programs with no related commission expense. Salaries and benefits increased $1.6 million, or 19.2%, over the prior year period to $9.9 million, driven by investments in new corporate branch acquisitions, headcount growth, and public company infrastructure. Other administrative expenses increased 8% to $5.2 million, reflecting technology upgrades and compliance initiatives. Net income was $9.6 million, up 40% over the prior year period, with a net margin of 15%. Adjusted net income rose 55% to $13 million, equating to an adjusted net income margin of 20%.

Janice Zwinggi
Janice Zwinggi
CFO at TWFG

We also delivered operating cash flow of $15 million and ended the quarter with $151 million in cash and no draws in our revolver, leaving us well-positioned to sign both organic initiatives and potential tuck-in M&A. For the full year 2025, we've tightened the ranges on our guidance to reflect our year-to-date performance, recent expansion activity, and current market conditions. We expect total revenues between $240 million-$245 million, an organic revenue growth rate in the range of 11%-13%, and adjusted EBITDA margins between 24% and 25%. As the personal lines market continues to soften and carrier availability expands, our current recruiting and acquisition initiatives, including the addition of new retail locations, independent agents, and the Alabama Insurance Agency, provide further momentum and earnings visibility heading into year-end. Together with our balanced capital allocation and disciplined execution, these factors reinforce our confidence in achieving our full-year 2025 targets.

Janice Zwinggi
Janice Zwinggi
CFO at TWFG

I'll now hand the call back to Gordy for closing remarks.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Thank you, Janice. As we close out the third quarter, I'm proud of how our teams continue to execute. We've proven that investing for growth and focusing on margin expansion can coexist, and that our TWFG family culture remains one of our greatest advantages. TWFG is squarely aligned with that playbook, focused on profitable growth, accretive M&A, deepening carrier and agency relationships, and expanding our retail and MGA footprint to sustain our long-term growth objectives. We enter the final quarter of the year with momentum, a fortress balance sheet, and a clear view toward our long-term objective: to build one of the best high-growth, independent agent-centric, data-driven distribution platforms in the country. I want to thank our employees, agents, carriers, and shareholders for their continued trust and commitment to TWFG. With that, Operator, let's open the line for questions.

Operator

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tommy McJoynt of KBW. Please go ahead, Tommy.

Tommy McJoynt
Tommy McJoynt
Director of Equity Research at KBW

Hey, good morning, guys. Thanks for taking our questions. The first one, I think, is going to be related to the M&A front, but I just want to check. If I look at the statement of cash flows, there is a $10 million line that's attributed to other investments. Could you clarify what that is? Is that related to M&A?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Sure. We've long had our own Premium Finance operations, and we've been outsourcing operations for years and also using credit facilities to fund those Premium Finance Notes. With so much capital in our coffers, we deployed our own capital into the Premium Finance operations, giving us a higher yield on that operating business.

Tommy McJoynt
Tommy McJoynt
Director of Equity Research at KBW

Okay. Got it. So is that an accretive transaction? I guess, is that needle-moving.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

I'd say it's highly accretive. Yeah, highly accretive for us. You're getting 4%+ interest in most interest-bearing instruments, and the yield of swapping out our capital for the credit facility that was funding the Premium Finance notes put us well above 7% on the same deposits.

Tommy McJoynt
Tommy McJoynt
Director of Equity Research at KBW

Okay. Got it. Then staying on the M&A front, you obviously are constantly looking at a pipeline of potential acquisitions. As we think about the 2026 pipeline, what are your expectations right now? That you guys put more capital to work on the M&A front, do more deals, or how do you think about it relative to the pace that we're seeing this year?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

I think we'll be executing a little bit earlier in the cycle in 2026 than we did in 2025. Depending on how we view M&A throughout the calendar year, we should exceed 2026. I mean, exceed 2025. Thank you. Sorry.

Tommy McJoynt
Tommy McJoynt
Director of Equity Research at KBW

Yep. Understood. Thank you.

Operator

Thank you. Our next question comes from the line of Paul Newsome at Piper Sandler. Your line is open, Paul.

Paul Newsome
Paul Newsome
Managing Director and Senior Research Analyst at Piper Sandler

Good morning. Thanks for the call. Appreciate the—sorry. Maybe a little bit of additional color on the market environment would be helpful. I was wondering if you could kind of walk through, maybe in addition to some of the pieces of rate-plus, true organic growth plus M&A, just to kind of give us a better sense of, as we go into 2026, what are the moving pieces that will get you to that double-digit organic growth, and what are the things that we should be sensitive to if things change? One of the things I've struggled with is a hard market turned out to be kind of bad for organic growth because of the availability issues, but now we have more availability, but we've got a soft market. Maybe some thoughts there would be helpful, at least for me.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Yeah. First, on the market transitioning from hard to soft, that has an impact on renewal rate and premium retention as those policies that were in force last year come in at lower rates. As the market also then opens up, customers have more access to different carrier options than they had in prior periods, which could lead to even rewriting the account into an even lower rate than what the renewing expiring carrier offered. That cycle plays through a full calendar year. We should see the impact of that abating once we get into the second quarter of 2026. That would give us a full 12-month run of the softening of the market, which really began early in the second quarter of 2025. The availability of additional capacity allows for more clients to be onboarded. The trade-off is lower average premium for the same accounts.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

We are seeing growth in exposure that is offsetting some of that reduced premiums. When we look at organic going into 2026, it is a combination of our same-store sales growth velocity, sales velocity, as well as new program initiatives that we have launched from the MGA, existing program expansion, which then allows for more exposures to be brought in through those channels that are creating additional commission income above the base year. It is really not one area. It is a multitude, all of the different parts of our platform executing against their growth initiatives.

Paul Newsome
Paul Newsome
Managing Director and Senior Research Analyst at Piper Sandler

Maybe a kind of similar question. You've made a lot of additions of new agents over the last year or so. I think you've said in the past, most of them won't have an impact anytime super soon. How is that sort of waterfall of impact from those newly acquainted agents coming? Is there a point where we see some sort of inflection point where those new agents you've accumulated over the last year or so start to have a measurable impact on the growth rate?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Yeah. Their impact is baked into our forecasting. I think, as we talked about it over time, the immediate year they come in, there's not much of an immediate contribution. As they grow their agency over a multi-year process, they start becoming more meaningfully contributive. Now, like I say, we added a lot of stores in 2024. In 2024 and early 2025, they're not contributing a lot to the organic story. As they start getting their portfolios larger, they do become organic contributors, but at a percentage of the larger base now. They're all part of the organic base, and they're going to be part of the organic forecast based on our trend lines. When we look at Agency-in-a-Box, all those recruited locations are in the AIB bucket, and they get baked into there.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

We don't do cohort analysis around those because of the vast diversity of locations, average premiums, and some of them doing their own tuck-in producer acquisitions that then skew the data points. Anyways, they're going to start being contributors. They're part of the base assumption going into the double-digit 2026 projection.

Paul Newsome
Paul Newsome
Managing Director and Senior Research Analyst at Piper Sandler

Thanks. Appreciate the help.

Operator

Thank you. Our next question comes from the line of Pablo Singzon of JPMorgan. Please go ahead, Pablo.

Pablo Singzon
Pablo Singzon
Executive Director at JPMorgan

Hi. Thanks. First, on the MGA channel, so good premium growth this quarter, I think you said 19%. But commission income actually grew much faster. I think it was about 56%, and then commission expense only grew 27%. As a result, the MGA was highly margin-accretive this quarter. I think net commissions over gross commissions were about 52% against, I think, mid-30s historically. Anyway, can you just talk about what happened there, just trends-wise, and what drove the strong result this quarter?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Yeah, sure. We launched a program in Florida at the end of the second quarter. Part of that program, there are two components to it. We are an exclusive TPA MGA for a Florida property program. They had a takeout that materialized in June. That creates a TPA revenue stream for underwriting claims, marketing, and on the earnout of the takeout, there is not a commission expense. So we get a commission revenue without the corresponding commission expense. As those policies renew, they do end up having a commission expense, and you will see a normalization of that ratio between commission income and commission expense. And separate and aside from that, there is a voluntary organic program that is new that is writing new business, albeit in the reported quarter, not really a large contributor, should become a contributor at the end of the fourth quarter and more going into 2026.

Pablo Singzon
Pablo Singzon
Executive Director at JPMorgan

Gotcha. Got it. Thanks, Gordy. Second question, I guess this one's a bit bigger picture, right? So many of the public brokers have recently announced significant cost reduction or investment programs, which may be good longer term for them, but will eat into their near-term cash flow. I guess the question is, do you anticipate something similar for your company? If not, how would you respond to the objection that you might be underinvesting in the business compared to everyone else?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Yeah. We have not announced our full-year 2026 estimates. We plan to do so as we come out of the K. We are in the midst of our 2026 planning process, looking at those investments. Some of the investments we make, as you recall, our technology operation, our evolution management systems company is outside the public company. Those capital investments are made within that tech environment, which then does not burden the public entity with that capital spend. We will have investments similar to our peers, probably not at the scale of what they are spending. Part of that is just how we are organized, given the ability we can invest in technology outside of the public company operations and benefits of those tech investments then in order to the public company operating business units. It is just subtly different. We will have expansion of management team.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

You'll see an announcement later on this afternoon of some roles and title changes that we put out. As we finish up our 2026 planning, we'll be putting out the full-year estimates alongside our K.

Pablo Singzon
Pablo Singzon
Executive Director at JPMorgan

Okay. Thanks, Gordy.

Operator

Thank you. Once again, to ask a question, please press star one one on your telephone. Our next question comes from the line of Brian Meredith of UBS. Please go ahead, Brian.

Brian Meredith
Brian Meredith
Managing Director at UBS

Yeah. Thanks. Gordy, first question. Back on the MGA. As capacity becomes more available, particularly in the Texas market, and I'm assuming business kind of goes back to the admitted market from the wholesale market, will that create some pressures maybe on growth in the MGA?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Well fortunately for us, our MGA programs are currently all admitted. So if anything, the capacity that's shifting back from E&S into the admitted space is to our benefit.

Brian Meredith
Brian Meredith
Managing Director at UBS

Gotcha. Okay.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Both Texas and Florida are admitted products.

Brian Meredith
Brian Meredith
Managing Director at UBS

Terrific. That's helpful. Thanks. Then second question, I'm just curious, when we think about EBITDA margins for your Corporate versus Agency-in-a-Box business, what's the difference there? Is there a difference in kind of where your Agency-in-a-Box kind of EBITDA margins can go versus the corporate margins, do you think?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

We've talked about Agency-in-a-Box, and the passing through of 80% of the revenue new and renewal kind of puts a cap on what that margin can produce. Because we are at scale as a business operations, we do have a healthy net revenue margin on that business unit. On the corporate locations, our margin's going to be greater than 2x of what we achieve in Agency-in-a-Box because we're retaining 100% of the renewal and have more control and constructive receipt of the profitability of those operations.

Brian Meredith
Brian Meredith
Managing Director at UBS

Makes sense. Thank you.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

I want to circle back, Brian, where I got you. I partially misspoke. Our programs that we originate and operate are all admitted. The Dover Bay program is indeed an E&S program, and I just wanted to clear that up.

Brian Meredith
Brian Meredith
Managing Director at UBS

Okay. Thanks.

Operator

Thank you. Our next question comes from the line of Charlie Lederer of BMO. Your line is open, Charlie.

Charlie Lederer
Charlie Lederer
Research Analyst at BMO

Sorry, I joined late, so I apologize if I'm repeating someone else's question or if you touched on it in your remarks. You made the comment in the press release about the product environment improving significantly. Just curious if you could break that out geographically a little bit, and if you're seeing that for both the new business and renewal side, and I guess how to think about it flowing into P&L near term.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Sure. We did touch on it earlier, but I do not mind repeating. The hard market for personal lines started moving soft in really the beginning of the second quarter of 2025. That changes carrier posturing. Think about the hard market in 2023, 2024, and the early parts of 2025. Carriers are taking significant rate. Carriers are restricting capacity. By restricting capacity, that means they are not running the right new business. They are not wanting to add new production appointments, and that becomes a challenge. Can you guys still hear me?

Charlie Lederer
Charlie Lederer
Research Analyst at BMO

Yeah. Yeah.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

Okay. Sorry. The computer screen went blank, so I thought I was talking into the abyss. So as the market started to soften, carriers start reducing rates. They start opening up geographically for new business growth. They start putting out incentives to get agents to re-engage in the sales process, and it becomes a highly competitive environment. Geographically, I would say that's present everywhere except California. California remains to be a hard market. You're still seeing property shifting between California FAIR Plan, surplus lines. There's fewer carriers right now operating in the California marketplace. You had Safeco make the decision to essentially exit the state by transferring its portfolio to Liberty Mutual. And so capacity is shifting from left pocket to right pocket. We are in both of those carriers' distribution. And so California is still hard on the personal line side. It's relatively soft on the commercial lines.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

You have spotty geographical hardness where you have significant wildfire exposure regardless of state. I would say largely the CAT-exposed hurricane-driven P&L geographies are relatively soft, given the reduction in CAT pricing and the significant availability of CAT out in the market today.

Charlie Lederer
Charlie Lederer
Research Analyst at BMO

Thanks. Maybe on the M&A pipeline that you talked about, can you give us a sense of if there's a commercial or personal tilt toward that in terms of how your business mix might evolve in the next year or so?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

So when we're looking at M&A, the first thing we're looking at is the cultural fit of the organization. Secondarily, the quality of the portfolio. Is it accretive? Meaning, does the portfolio have similar loss ratio qualitative characteristics as our core portfolio? Is there some geographical expansion benefit of the acquisition? Does it possess unique carrier contracts and programs that benefit the larger organization so there's an immediate accretion? The EBITDA margin of the operating business, and is there some internal scale lift of that post-closing? We do not really focus on, is it personal? Is it commercial? Is it retail? Is it MGA? Is it network? We really look at the qualitative accretiveness of the totality of everything. And so we have in our pipe, and we have in our near term, a little flavor of everything.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

So, if I look in the rear, the last two acquisitions we closed were, I would say, majority commercial lines retail organizations. And part of that was geography. We picked up some scale in New York with the Angers & Litz acquisition that we announced in August. We had a larger operation in Louisiana that was also more commercially focused in the McGuinness operation that we acquired in June. As I look at the first quarter 2026 pipeline, I would say it's a little bit of everything. We have one entirely commercial organization that's in the pipe. We have several that are a mix, so more of a multi-line agency flavor where you have probably 40%-50% personal, 60%-50% commercial. We have some that are entirely personal lines.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

So I think that's a good question to ask, and I'll probably use your question as an opportunity to talk about premium projections. When we look at our acquisitions and we put together our base analyst model, I think we use the assumption that the majority of our acquisitions and deployed capital were going to be buying retail-oriented businesses that generate a lower average commission but would project a higher premium. Our internal view is we're less sensitive to premium because we're not a carrier. We're more focused on the acquired revenue and the EBITDA output of the acquiring business. So when we acquire program-oriented type businesses, it's going to bring in less premium than you may have projected, but it's going to bring in a higher average commission than you projected. When we hear or we see that there's a miss on premium, we're not a carrier.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

We just use premium as a barometer of how you can project future revenues. Maybe we got to be a little bit more strategic about how we communicate that because to the extent that we expand programs, and we will because they present a higher margin for us, it is going to be a lower premium but a higher revenue and a higher EBITDA margin off of what we put in our base M&A assumptions. I think when we come around and provide 2026 guidance, you are going to see us trying to update those assumptions because I think when you look at our actual results from an M&A basis, we are achieving on the acquired revenue. We are achieving on or maybe overachieving on the EBITDA margin. And then where we see there are questions is, the premium number did not come in.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

I think for me as an investor and owner of the business, I'm more focused on the revenue and the net income and the earnings and the ability to reinvest those earnings into the growth of the business long-term than the top-line premium that I don't get to retain because we're not a carrier balance sheet organization. Is that fair?

Charlie Lederer
Charlie Lederer
Research Analyst at BMO

Very fair. Thank you. It's helpful. Just one last one on the Contingent Financing. What do you do and what contingents might look like for Q?

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

We do. One of the reasons we were very confident in our full-year guidance is we made it through the nine-month treadmill and obstacle course known as insurance. We got those third-quarter lock-in opportunities so we can lock in some of those contingencies that are in our base-level projections. So we have a high confidence in achieving what we've got in our current performer through the full calendar year.

Charlie Lederer
Charlie Lederer
Research Analyst at BMO

Thank you.

Operator

Thank you. I would now like to turn the conference back to Gordy Bunch for closing remarks. Sir.

Gordy Bunch
Gordy Bunch
CEO, Chairman, and Director at TWFG

We again appreciate all of our shareholders, our staff, even the analysts and investors that are working with us. We think we have a great opportunity going into 2026 with our strong balance sheet, our very healthy M&A pipeline, our organic strategies for existing operations, the expansion of our programs. We look to execute on all the different levers that we have to ensure consistent growth and profitability across the organization. We look forward to further feedback and appreciate everybody again, and thank you for attending our call.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
Analysts
    • Brian Meredith
      Managing Director at UBS
    • Charlie Lederer
      Research Analyst at BMO
    • Pablo Singzon
      Executive Director at JPMorgan
    • Paul Newsome
      Managing Director and Senior Research Analyst at Piper Sandler
    • Tommy McJoynt
      Director of Equity Research at KBW
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