Baldwin Insurance Group Q1 Earnings Call Highlights

Key Points

• Baldwin reported Q1 revenue of $532 million, adjusted EBITDA of $137 million and adjusted diluted EPS of $0.63, with adjusted EBITDA margin near 26% (down ~170 bps year‑over‑year); GAAP net loss was $1.9 million and net leverage sat at ~4.3x after ~$50 million of share repurchases.
• Organic revenue grew 2% (commissions/fees +3%) but would have been ~5% excluding three transitory headwinds and ~9% if CAC, Obie and Capstone had been owned in the prior year; CAC grew 27% year‑over‑year and the company has realized ~$34 million of targeted cost synergies with >$10 million of cross‑sell opportunities in the pipeline.
• Guidance was unchanged: Q2 revenue $485–$495 million, mid‑single‑digit organic growth, adjusted EBITDA $113–$118 million and adj EPS $0.44–$0.48; management cautioned about a 400–500 bps property renewal headwind in Q2 but expects the transitory issues to be largely behind by end‑Q2 and cited AI (including an expanded Anthropic partnership) as a significant productivity tailwind.

Baldwin Insurance Group NASDAQ: BWIN reported first-quarter 2026 results following the early-January closing of partnerships with CAC, Obie, and Capstone, with management emphasizing improving momentum as several “idiosyncratic” headwinds begin to roll off later this year.

Chief Executive Officer Trevor Baldwin said the company delivered total revenue of $532 million, adjusted EBITDA of $137 million, and adjusted diluted earnings per share of $0.63. Adjusted EBITDA margin was 26% on the company’s presentation, while Chief Financial Officer Brad Hale cited 25.8% for the quarter, down about 170 basis points from the prior year period.

Organic growth and the impact of transitory headwinds

Management reported commission and fee organic revenue growth of 3% and total organic revenue growth of 2% in the quarter. Baldwin said that adjusting for the impact of the QBE builder book transition, softness in Medicare tied to marketplace disruption, and a procedural change affecting the timing of revenue recognition in the company’s Insurance Advisory Solutions (IAS) segment, overall organic growth “would have been 5%.”

He added that if CAC, Obie, and Capstone were assumed to have been owned in both comparable periods, overall organic revenue growth “would have been 9%.” Baldwin said the three January partnerships collectively grew 27% over the first quarter of 2025.

Hale reiterated the segment-level organic growth picture: IAS organic revenue growth was up 4%, Underwriting, Capacity and Technology Solutions (UCTS) was up 3%, and Mainstreet Insurance Solutions (MIS) was down 5%. Adjusted for the three transitory items, Hale said underlying organic growth would have been 5%.

Segment performance: IAS, UCTS, and MIS

Insurance Advisory Solutions (IAS): Baldwin said IAS organic growth was 4%, driven by “sales velocity” of 13% before including CAC and Capstone, compared with 14% a year ago. He noted a 70-basis-point headwind from rate and exposure in the quarter. Including CAC and Capstone as if owned in the prior year period, Baldwin said IAS organic growth would have been 10% and combined sales velocity would have been 24%.

UCTS: Baldwin said UCTS organic revenue growth was 3%, with core commissions and fees up about 6%. He highlighted a large one-time contingent payment recorded in the company’s real estate investor program in the first quarter of 2025; normalizing for that item, he said UCTS organic growth “would have been 9%.” He also pointed to strong results in multifamily (revenue up 10%) and at Juniper Re (growth of over 90%).

Management also discussed pressure in the E&S homeowners book, where Baldwin said revenue was down roughly 30% as the company “deliberately maintain[s] underwriting discipline in a soft property environment.” In response to questions, Baldwin said E&S Home has seen rates come in “40%-50%+,” and described a sharp slowdown in new premium flow versus 18 months ago. He said March showed over $4 million of new E&S Home premium, the strongest month in the past year, and the company is rolling out additional E&S Home product variants and making product and pricing tweaks to resume growth.

MIS: Baldwin said MIS organic revenue growth declined 5% primarily due to lingering year-over-year impacts from the QBE commission rate reduction at Westwood and softness in Medicare. Normalizing for those factors, he said MIS organic growth would have been 7%. Baldwin said the company “fully lapped the QBE impact on May 1” and expects MIS organic growth to “begin ramping again from here.” He also cited early traction in embedded mortgage distribution, noting the platform went live in April with Fairway Independent Mortgage.

CAC integration, synergies, and cross-sell examples

Baldwin repeatedly pointed to CAC as a key driver of the quarter’s momentum. He said CAC posted its strongest quarterly results in its history, generating $38 million of new business in the first quarter (up 39% year over year) and $92 million of total revenue (up 27%). CAC sales velocity was 61% across all product lines and 15% for recurring lines, according to Baldwin.

On integration, Baldwin said the company has “actioned” more than $34 million in cost synergies, representing nearly 80% of the three-year, $43 million target it previously outlined. He said the company expects these savings to materialize in the P&L through “the balance of this year in 2027.” On revenue, Baldwin said the company realized $1 million of revenue synergies in the quarter, which had grown to nearly $3 million as of the call date, with more than $10 million in cross-sell opportunities being actively pursued.

During Q&A, Baldwin provided examples of cross-selling between CAC and legacy Baldwin teams. He described a win involving a large general contractor prospect where combining CAC’s approach with Baldwin’s construction professionals helped the team prevail in an RFP against top global brokers. He also cited a complex cross-border M&A transaction where CAC’s transaction solutions capabilities supported an existing Baldwin client, producing a “significant six-figure revenue opportunity” that he said might otherwise have gone to a global competitor.

Margins, cash flow, leverage, and tax-related items

Hale said the year-over-year decline in adjusted EBITDA margin was “fully explained” by two factors: the consolidation of CAC, which has different margin seasonality due to revenue timing and mix, and the impact of a UCTS profit-sharing contract referenced by Baldwin.

The company reported a GAAP net loss of $1.9 million, or GAAP diluted EPS of $0.02. Hale said adjusted net income (excluding share-based compensation, amortization, and other one-time expenses) was $89.3 million, or $0.63 per diluted share.

Adjusted free cash flow was roughly flat versus $26 million in the first quarter of 2025, with Hale attributing the decline to working capital timing that drove a $60 million use of cash. He said more than half of the working capital headwind came from CAC, including approximately $40 million in payouts of previously accrued bonuses and commissions that Baldwin assumed in the opening balance sheet. He also cited approximately $15 million of CAC transaction costs as a one-time cash outlay. Hale said the company expects the timing headwind to reverse in quarters two through four and maintained that the full-year cash flow trajectory remains on track for double-digit growth in 2026.

Baldwin ended the quarter at approximately 4.3x net leverage. Hale said the company repurchased 2.2 million shares for about $50 million under its $250 million authorization, and management said it would remain “prudent” and opportunistic with buybacks. In Q&A, Hale said the company expects leverage to “hover in this 4 to 4.5 times range over the intermediate term,” particularly if it continues executing repurchases.

Hale also discussed tax items tied to the January 2026 partnerships. He said the CAC and Obie partnerships generated a significant net deferred tax liability that enabled a roughly $145 million benefit to income tax expense due to reversal of the majority of the company’s valuation allowance. As an offset, the company recorded an “above-the-line” operating expense to establish a tax receivable agreement (TRA) liability of approximately $130 million. Hale said both items were removed from adjusted EBITDA and adjusted EPS, and he expects income tax expense/benefit to be minimal for the balance of 2026.

Guidance and market commentary, including AI and property pricing

Hale said full-year consolidated guidance was unchanged. For the second quarter, the company expects:

• Revenue of $485 million to $495 million
• Organic revenue growth in the mid-single digits
• Adjusted EBITDA of $113 million to $118 million
• Adjusted diluted EPS of $0.44 to $0.48

In discussing the pricing environment, Baldwin said the property market is “deeply soft,” with pricing levels returning to “circa 2017” and certain large shared and layered coastal placements seeing rate decreases of “30%-40%.” He said the company expects a more significant rate and exposure headwind in the second quarter—estimated at 400 to 500 basis points—given it is the heaviest quarter for property renewals. Baldwin said the company expects legacy IAS organic growth to be roughly flat in the second quarter before returning to mid- to high-single-digit growth in the back half of the year as it laps the procedural accounting change headwind.

Baldwin also emphasized the company’s focus on AI-driven productivity, citing its proprietary AI orchestration layer and internal productivity gains “upwards of 80%.” He referenced an expanded enterprise partnership with Anthropic’s Claude and provided an example where the company compressed an admitted product development process from roughly three months to three days using Claude and proprietary data. He characterized AI as a “meaningful tailwind” and said the company is investing aggressively.

Looking ahead, Baldwin said the company expects the headwinds from the QBE commission change (now lapped), Medicare disruption, and the IAS revenue recognition procedural change to be “substantially behind us by the end of the second quarter,” and reiterated confidence in accelerating performance through 2026.

About Baldwin Insurance Group NASDAQ: BWIN

Baldwin Insurance Group, Inc NASDAQ: BWIN is a specialty insurance and surety firm that underwrites contract bonds, commercial insurance policies and related risk-management services. Its core offerings include contract and commercial surety, which provide performance and payment guarantees to obligees in construction, service and public-sector projects. In addition, the company delivers complementary commercial lines coverages designed to mitigate liability, property and workers' compensation exposures.

Through a network of regional agency offices primarily across the Midwestern United States, Baldwin Insurance Group serves contractors, developers, small and mid-sized businesses as well as municipal and public-sector clients.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.