TWFG, Inc.

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization

TWFG, Inc. (“TWFG” or the “Company”) was incorporated as a Delaware corporation on January 8, 2024 for the purpose of facilitating an initial public offering (“IPO”). TWFG is a holding company with its principal asset being a controlling ownership in TWFG Holding Company, LLC (“TWFG Holding”) and its consolidated subsidiaries. All of TWFG’s business is conducted through TWFG Holding and its consolidated subsidiaries, and the financial results of TWFG Holding and its consolidated subsidiaries are included in the Condensed Consolidated Financial Statements of TWFG.

TWFG is a leading, high-growth, independent distribution platform for personal and commercial insurance in the United States. TWFG and its subsidiaries operate throughone reportable segment, which is discussed in more detail in Note 14 Segment.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of the Company and its consolidated subsidiaries are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The interim financial information is unaudited but reflects all normal adjustments that are necessary to provide a fair statement of results for the interim periods presented. Accordingly, these Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025 (the “Annual Report”). The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Correction of Prior Period Balances

Subsequent to the issuance of the Company’s consolidated financial statements as of and for the nine months ended September 30, 2024, management identified an immaterial presentation error in which certain amounts of investment income were previously included within revenue instead of within non-operating income. As a result, the Company restated the prior period financial statements to correct the errors within the Condensed Consolidated Statements of Income for all periods presented to reflect the correction. Additionally, comparative prior period amounts in the applicable notes to the Condensed Consolidated Financial Statements have been corrected.

Management evaluated the materiality of the error and concluded that it is not material to the prior period financial statements. The correction had no impact on previously reported net income. The following table presents the effects of the correction to the Company’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2024.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements and notes thereto requires management to make estimates, judgments, and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and in the notes thereto. Such estimates and assumptions could change in the future as circumstances change or more information becomes available, which could affect the amounts reported and disclosed herein.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes in the Company’s significant accounting policies from those that were disclosed for the year ended December 31, 2024 in the Annual Report.

Recent Accounting Pronouncements Not Yet Adopted

Disaggregation of Income Statement Expense

On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Disaggregation of Income Statement Expense (DISE), that requires an entity to disclose in the footnote a tabular format that disaggregates relevant expense captions in to the following natural expense categories: purchase of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion and amortization or other amounts of depletion expense. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application and early adoption is permitted. The Company is currently evaluating the impacts.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosures, that requires disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, and additional information about federal, state, local and foreign income taxes. The standard also requires annual disclosure of income taxes paid (net of refunds received), disaggregated by jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2024. The standard is to be applied on a prospective basis, although optional retrospective application is permitted. The Company will adopt ASU 2023-09 at the end of the fiscal year December 31, 2025 and does not expect a material effect on its Consolidated Financial Statements and tax disclosures related to the adoption.

3. REVENUES

The following table presents the disaggregation of revenues by major source (in thousands):

The Company operates throughtwo primary offerings, which are Insurance Services and TWFG MGA. The following table presents the disaggregation of revenues by offerings (in thousands):

As of September 30, 2025 and December 31, 2024, thecommissions receivable, net reported in the Condensed Consolidated Balance Sheets had a balance of $27.5 million and $27.1 million, respectively. The Company hadno contract liabilities as of September 30, 2025, December 31, 2024, and January 1, 2024.

The Company’s allowance for expected credit losses is determined based on a combina tion of factors: credit quality indicators, including, but not limited to, payment status, historical charge-offs, financial strength of the insurance carriers for commissions receivable, and production performance and age of balances for receivables from agents.

The following table provides a summary of changes in the Company’s allowance for expected credit losses

(in thousands):

The Progressive Corporation accounted for 11% and 12% of total revenues for the three and nine months ended September 30, 2025, respectively, and 11% and 12% of total revenues for the three and nine months ended September 30, 2024, respectively. No other customers individually accounted for 10% or more of the Company’s total revenues for the three and nine months ended September 30, 2025 and 2024.

4. INTANGIBLES, ACQUISITIONS, AND DISPOSALS

During the nine months ended September 30, 2025, the Company acquired customer lists and computer software totaling $47.6 million, of which $44.0 million and $0.5 million was paid in cash at closings, respectively. The additional $3.1 million relates to future contingent cash payments for the acquired customer lists which are recorded in the deferred acquisition payable on the Condensed Consolidated Balance Sheets.

In June 2025, the Company acquired a 50.1% equity interest in TWFG MGA FL, LLC for a total cash consideration of$9.7 million at closing. The acquisition agreement also provides for a contingent payment of up to $5.0 million, payable upon achievement of defined performance metrics within one year of closing, and includes a put option for the remaining 49.9% interest. The transaction was accounted for as an asset acquisition under the cost accumulation model, with the acquired customer relationship intangible asset identified as the single substantive asset acquired.

The Company recognized a customer relationship intangible asset with an acquisition-date fair value of $21.0 million, and a redeemable noncontrolling interest of $10.5 million, representing the fair value of the ownership interest held by AIH Sub, Inc. The customer relationship intangible asset is being amortized on a straight-line basis oversix years.

Subsequent to the acquisition date, the estimated fair value of the contingent consideration associated with the earn-out increased due to higher expected policy volume and performance relative to the original assumptions. This change in estimate is reflected in the measurement of the related intangible asset in current and future periods in accordance with the cost accumulation model.

In October 2025, the Company’s Florida MGA began servicing a meaningful number of new policies. This development is expected to result in achievement of the full $5.0 million earn out for the June 2025 acquisition to be recognized in the 4th quarter of 2025.

Additionally, the Company acquired 5.7% equity interest in AIH Sub, Inc. for $0.3 million in cash, a related party as a result of this transaction. (See Note 7 Stockholders’ Equity for more information regarding the redeemable noncontrolling interest.)

The Company recognized a net gain on disposals of $0.6 million for thenine months ended September 30, 2025. The gains on disposals were attributable to the sale of books of business to third parties. Occasionally, the Company will sell books of business that it believes to be in its best interest to dispose.

The following table presents information about the Company’s intangible assets (in thousands):

(1) Customer Lists, Computer Software, and Customer Relationship intangible assets acquired during the nine months ended September 30, 2025 have a weighted average amortization period of 7.5 years,4.5 years, and 5.5 years, respectively. The weighted-average amortization period for all intangible assets acquired in 2025 is 7 years.

The following table presents the future amortization for intangible assets as of September 30, 2025 (in thousands):

5. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following as of the dates indicated (in thousands):

6. DEBT

The following is a summary of the Company’s outstanding debt (in thousands):

As of September 30, 2025, current and non-current deferred acquisition payable was comprised of deferred acquisition notes of $1.3 million and deferred acquisition payables of $3.8 million on the Condensed Consolidated Balance Sheet. In the prior year, current and non-current deferred acquisition payable was comprised of deferred acquisition notes of $1.7 million and deferred acquisition payables ofzero. For the period ended September 30, 2025, the current portion of deferred acquisition notes and deferred acquisition payables were $0.6 million and $1.9 million, respectively. In the prior year, the current portion of deferred acquisition notes and deferred acquisition payables were $0.6 million andzero, respectively.

Future maturities of the Company’s outstanding debt as of September 30, 2025 were as follows (in thousands):

For the three and nine months ended September 30, 2025, the Company incurred interest expense of$0.1 millionand$0.2 million, respectively. For thethree and nine months ended September 30, 2024, the Company incurred interest expense of$0.4 million and $2.1 million, respectively.

Term Loans

The 7-year term loan was entered into on December 4, 2020, with the original principal of $13.0 million, which matures on December 6, 2027. The Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations related to its term loans.

Revolving Credit Agreement

The Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank National Association provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not toexceed $50.0 million (as amended on June 20, 2024, the “Revolving Facility”). Borrowings constituting revolving loans under the Revolving Credit Agreement incur interest at the Term SOFR Rate (as defined therein) for the applicable interest period plus a margin based on the consolidated leverage ratio of the Company between 2% and 2.75%, and a 0.10% adjustment. The borrowings under the Revolving Facility may be used by the Company for permitted acquisitions, working capital and general corporate purposes. The Company pays a commitment fee on unutilized amounts under the Revolving Facility of 0.20% up to 0.35% based on the consolidated leverage ratio. For the period ended September 30, 2025 and December 31, 2024, the Revolving Facility had an unutilized capacity of $50.0 million and $50.0 million, respectively.

Each of the Revolving Facility and the term loans requires the Company to maintain a consolidated leverage ratio of no greater than 2.00 to 1.00 (or, after the occurrence of certain acquisitions,2.50 to 1.00). As of September 30, 2025 and December 31, 2024, the Company was in compliance with these covenants. The carrying amount of the Company’s variable rate debt as of September 30, 2025 and December 31, 2024 approximates fair value due to the short-term reset of the interest rate based on SOFR and the absence of a credit spread.

Deferred Acquisition Payable

In April 2023, the Company acquired customer list intangible assets for a total consideration of $4.3 million, of which $3.0 million was paid in cash at closing. The remaining balance was settled through the issuance of a note payable monthly over three years beginning in April 2024 and bears an annual interest of 3.75%.

In March 2024, the Company acquired customer list intangible assets, of which approximately $0.4 million of the purchase price was settled through the issuance of a non-interest bearing note andwas recorded as deferred acquisition payable. The note is payable monthly over a period of 70 months. The deferred acquisition payable was recorded at fair value with an imputed interest rate of 5.00%.

In October 2024, the Company acquired customer list intangible assets, of which approximately $0.4 million of the purchase price was settled through the issuance of a non-interest bearing note and was recorded as deferred acquisition payable. The note is payable monthly over a period of 60 months. The deferred acquisition payable was recorded at fair value with an annual imputed interest rate of 4.69%.

The portion of the Company’s acquisition-related notes due within 12 months or less from the financial statement date is reported in the Condensed Consolidated Balance Sheets as deferred acquisition payable, current, while amounts due after 12 months from the financial statement date are included in deferred acquisition payable, non-current. See Note 4 Intangible Assets and Acquisitions and Note 11 Related Party Transactions for more information regarding the purchase of the customer list intangible assets.

Fair value information about financial instruments not measured at fair value

The following table presents the Company’s debt that is not measured at fair value on a recurring basis:

(1) The carrying value of the Company’s borrowings under its various credit agreements approximates its fair value due to the variable interest rate based upon adjusted SOFR.

(2) The deferred acquisition payable represents cash payments that are due to the seller paid out over a future period. The fair value of the acquisition payable is based on an estimate using a discounted cash flow analysis and current finance rates for similar types of financing arrangements.

7. STOCKHOLDERS’ EQUITY

The Company’s board of directors (the “Board”) approved an amended and restated certificate of incorporation (the “Restated Certificate of Incorporation”), which became effective on July 17, 2024 in connection with the IPO. The Restated Certificate of Incorporation authorizes the issuance ofthree classes of common stock: Class A common stock, par value $0.01 per share (“Class A Common Stock”), non-economic Class B common stock, par value $0.00001 per share (“Class B Common Stock” or “Class B Voting Stock”), and non-economic Class C common stock, par value $0.00001 per share (“Class C Common Stock” or “Class C Voting Stock”), and preferred stock.

In connection with the IPO on July 19, 2024, the Company issued 11,000,000 shares of Class A Common Stock, at a price of $17.00 per share. On July 23, 2024, the underwriters purchased an additional 1,650,000 shares of Class A Common Stock in connection with the underwriters’ full exercise of their option to purchase additional shares, at a price of $17.00 per share. The Company received approximately $192.9 million of net proceeds, including from the full exercise of the underwriters’ option, after deducting underwriting discounts and commissions of approximately $14.4 million and related offering expenses of approximately $7.8 million. In connection with certain reorganization transactions immediately prior to the IPO (the “Reorganization Transactions”), the Company issued (i)2,161,874 shares of Class A Common Stock in exchange for 342,362 limited liability company units of TWFG Holding (“LLC Units”) held by Bunch Family Holdings, LLC (“Bunch Holdings”) and 1,819,512 LLC Units held by certain individuals and entities (the “New Members”), (ii)7,277,651 shares of Class B Common Stock to RenaissanceRe Ventures U.S. LLC (“RenRe”) and GHC Woodlands Holdings LLC (“GHC”) for consideration of $0.00001 per share and (iii)33,893,810 shares of Class C Common Stock to Bunch Holdings for consideration of $0.00001 per share. Immediately after the IPO and the Reorganization Transactions,14,811,874 shares of Class A Common Stock were outstanding, including 12,650,000 shares issued in the IPO plus 342,362 shares issued to Bunch Holdings and 1,819,512 shares issued to New Members, and 7,277,651 shares of Class B Common Stock and 33,893,810 shares of Class C Common Stock were outstanding.

As of September 30, 2025, an additional 193,552 shares of Class A Common Stock were issued upon vesting of restricted stock units (“RSUs”) inaccordance with the Company's 2024 Omnibus Incentive Plan (the “2024 Incentive Plan”). See Note 8 Stock-Based Compensation.

The following table summarizes the capitalization and voting rights of the Company’s classes of stock as of September 30, 2025:

(1) Each share of Class A Common Stock and non-economic Class B Common Stock entitles its holder toone vote per share on all matters submitted to a vote of the stockholders.

(2) Each share of non-economic Class C Common Stock entitles its holders toten votes per share on all matters presented to the stockholders and on which the holders of the Class C Common Stock are entitled to vote; provided, that each share of Class C Common Stock will be entitled toone vote per share automatically (i)12 months following the death or disability of Richard F. (“Gordy”) Bunch III or (ii) upon the first trading day on or after such date that the outstanding shares of non-economic Class C Common Stock represent less than 10% of the then-outstanding Class A Common Stock, non-economic Class B Common Stock and non-economic Class C Common Stock, which, in either instance, may be extended to 18 months upon affirmative approval of a majority of the independent directors.

The Board is authorized to direct the Company to issue shares of preferred stock in one or more series and has the discretion to determine the number and designation of such series and the powers, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Through September 30, 2025, no shares of preferred stock have been issued.

Holders of Class A Common Stock are entitled to receive dividends when and if declared by the Board out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Upon liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A Common Stock will be entitled to receive pro rata our remaining assets available for distribution.

Holders of the Company’s non-economic Class B and non-economic Class C Common Stock do not have any right to receive dividends or to receive a distribution upon a liquidation or winding up of the Company.

Noncontrolling interests

Noncontrolling interests represent the economic interests of TWFG Holding held by Bunch Holdings, RenRe and GHC (collectively, the “Pre-IPO LLC Members” or “Continuing Pre-IPO LLC Members”).

The following table summarizes the ownership of TWFG Holding as of September 30, 2025:

Redeemable noncontrolling interest

In June 2025, the Company completed the acquisition of a 50.1% controlling interest in TWFG MGA FL, LLC. The remaining interest is held by an unrelated third party with a right to put its interest to the Company beginning in 2030 and ending in 2033. The put right consideration to be paid is based on operational performance of TWFG MGA FL, LLC as determined at the time the right is exercised. See Note 4 Intangible Assets and Acquisitions for additional information.

Cash Distributions to Members Related to Their Income Tax Liabilities

As a limited liability company treated as a partnership for income tax purposes, TWFG Holding does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members. Under the TWFG LLC Agreement, TWFG Holding is required to distribute cash, to the extent that TWFG Holding has cash available, on a pro rata basis to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of TWFG Holding’s taxable earnings. TWFG Holding makes such tax distributions to its members quarterly, based on an estimated tax rate and projected year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. TWFG Holding made tax distributions to its members totaling approximately$3.5 million and $15.4 million for the three and nine months ended September 30, 2025, respectively. TWFG Holding made tax distributions to its members totaling zero and approximately$6.1 millionfor the three and nine months ended September 30, 2024, respectively. Non-tax distributions in the amounts of$6.2 million and $1.0 million were made for the nine months ended September 30, 2025 and 2024, respectively. There wereno non-tax distributions made in the three months ended September 30, 2025 and 2024, respectively.

8. STOCK-BASED COMPENSATION

2024 Omnibus Incentive Plan

On July 17, 2024, the Company adopted the 2024 Incentive Plan for its directors, officers, employees, consultants and advisors. The 2024 Incentive Plan authorizes the granting of stock options, restricted stock, RSUs, stock appreciation rights, and other stock-based awards. The Company has reserved 4,346,667 shares of Class A Common Stock for issuance under the 2024 Incentive Plan, subject to annual increases pursuant to the terms of the 2024 Incentive Plan. During the nine months ended September 30, 2025, the Company granted 51,652 RSUs and 38,716 performance stock units (“PSUs”) under the 2024 Incentive Plan, and 3,929,169 shares of Class A Common Stock remain available for future grant.

Stock-Based Compensation Expense

Stock-based compensation expense recorded in salaries and employee benefits for the three and nine months ended September 30, 2025 was $1 million and $3.7 million, respectively. For the three and nine months ended September 30, 2024, stock-based compensation expense recorded in salaries and employee benefits was $1 million. There was no equity or equity-based compensation plan maintained by the Company prior to its IPO on July 19, 2024.

Stock-Based Awards

RSUs

The Company withholds and sells shares of Class A Common Stock associated with net settlements to cover tax withholding obligations upon the vesting of RSUs for certain employees under its 2024 Incentive Plan. During the nine months ended September 30, 2025,285,192 RSUs vested and the Company withheld 91,640 RSUs for $2.8 million, resulting in the net issuance of 193,552 shares of Class A Common Stock. The vesting of RSUs is shown net of this withholding on the Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders’/Members’ Equity and Condensed Consolidated Statements of Cash Flows.

Stock-based awards granted in the period include RSUs with service-based vesting conditions. Outstanding RSUs and related activity for the nine months ended September 30, 2025 were as follows:

PSUs

The Company has granted performance and service based awards to certain key employees, in the form of PSUs, which are earned based on the achievement of certain performance targets and continuous service. The PSUs are subject to a two-year measurement period during which the number of Class A Common Stock to be issued in settlement of the PSUs remains uncertain until the end of the measurement period and will cliff vest based on the level of achievement with respect to the applicable performance criteria. The PSUs are divided intotwo tranches:50% EBITDA PSUs and 50% Revenue PSUs. The EBITDA PSUs performance vest based on the achievement of certain cumulative EBITDA targets over the performance period. The Revenue PSUs performance vest based on the achievement of certain cumulative organic revenue targets over the performance period. In addition, the PSUs granted to certain employees are contingent generally upon the employee’s continuous service with the Company through the third anniversary of the grant date. Subsequent to such measurement period, the vesting of PSUs is subject to certification by the compensation committee of the Board.

If the vesting conditions of the PSUs are not met the awards will be forfeited. Outstanding PSUs and related activity for the nine months ended September 30, 2025 were as follows:

Summary of Unamortized Compensation Expense

As of September 30, 2025, the Company estimated there to be $4.0 million ofunamortized compensation expense related to all non-vested stock-based compensation arrangements granted under the Company’s stock-based compensation plans, based upon current projections of grants measured against performance criteria. That expense is expected to be recognized over a weighted-average period of 1.6 years.

9. INCOME TAXES

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Condensed Consolidated Financial Statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

Prior to the Reorganization Transactions, we were organized as Delaware limited liability companies and Delaware limited partnerships and were treated as flow-through entities for U.S. federal income tax purposes. Income tax expense was $1.0 million and $2.3 million for the three and nine months ended September 30, 2025, respectively. The estimated effective tax rate was 9.22% and 8.13%for the three and nine months ended September 30, 2025, respectively, which is different from the 21% statutory rate primarily because income tax expense is recognized only on the portion of earnings attributable to the Company in the periods following the consummation of the Reorganization Transactions.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The OBBBA introduced multiple U.S. federal income tax changes, such as deductibility of domestic research and development expenses, deductibility on certain property additions and limitations on interest expense deduction. The Company has included the impact of these provisions on its consolidated financial statements.

As of September 30, 2025 and December 31, 2024, the Company did not have any material uncertain tax positions.

10. DEFINED CONTRIBUTION PLAN

TWFG Holding sponsors a Safe Harbor defined contribution plan (the “Plan”). The sponsor is part of a controlled group that includes both TWFG Insurance Services LLC and TWFG General Agency LLC (“TWFG-GA”). The Plan allows employees who are age 21 or older and have completed 3 months of service to participate.

Each year, participants may defer between 1% and 100% of eligible compensation, not to exceed the maximum dollar amount as allowed under Section 402(g) of the Internal Revenue Code. Effective January 1, 2008, the Plan was amended to allow the Company to meet the provisions of the regulations. The Plan provides a Company matching of 100% on the first 4% of eligible compensation that a participant contributes to the Plan.

For the three and nine months ended September 30, 2025, the Company recognized expenses related to the Plan of$0.2 million and$0.5 million, respectively. For thethree and nine months ended September 30, 2024, the Company recognized expenses related to the Plan of $0.2 million and $0.4 million, respectively. The Company at its election may make discretionary profit share contributions. Contributions are subject to certain limitations. For the three and nine months ended September 30, 2025 and 2024, the Company elected not to make any additional discretionary contributions.

11. RELATED PARTY TRANSACTIONS

The Company earned $3.9 million and $9.9 million in commissions, respectively, and $0.9 million and $2.6 million in fee income, respectively, from The Woodlands Insurance Company (“TWICO”), a related party, during the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, the Company earned $3.0 million and $6.0 million in commissions, respectively, and $0.9 million and $1.8 million in fee income, respectively, from TWICO. These amounts are included in commission income and fee income in the Condensed Consolidated Statements of Income.

On September 1, 2025, TWICO and TWFG-GA amended their managing general agency and claims administration agreement, which reflects an increase in the percentage of commissions paid to TWFG-GA from 20% to 25%, a profit sharing arrangement, and requires TWICO to reimburse TWFG-GA for actual expenses incurred or allocated by TWFG-GA for licensing, statistical accounting and management services performed by TWFG-GA. The transaction was approved by the Audit Committee pursuant to the Company’s Related Party Transaction Approval Policy and approved by the Texas Department of Insurance.

The Company incurred $0.8 million and $2.3 million in net license fees during the three and nine months ended September 30, 2025, respectively, under its software licensing agreement with Evolution Agency Management LLC, a related party. For the three and nine months ended September 30, 2024, the Company incurred license fees of $0.5 million and $1.4 million, respectively. These amounts are included in other administrative expenses in the Condensed Consolidated Statements of Income.

The Company purchased the assets of Ralph E. Wade Insurance Agency Inc. in April 2023 for a total consideration of $4.3 million, of which $3.0 million was paid in cash, and the remaining balance of $1.3 million, was settled through the issuance of an interest-bearing note, payable monthly, over three years beginning in April 2024. The portion of the balance due within 12 months or less from the financial statement date is reported in the Condensed Consolidated Balance Sheets as deferred acquisition payable, current, while the amount due after 12 months from the financial statement date is included in deferred acquisition payable, non-current.

In December 2024, the Company commenced a 10-year lease for additional office space with Parkwood 2, LLC, a related party owned by the Continuing Pre-IPO LLC Members.

There were no other material changes in related party transactions from those disclosed in the Company’s Annual Report.

12. EARNINGS PER SHARE

For the three and nine months ended September 30, 2025, basic earnings per share has been calculated by dividing net earnings attributable to Class A common stockholders by the weighted average number of shares of Class A Common Stock outstanding for the same period. All earnings prior to July 19, 2024, the date of the Reorganization Transactions, were entirely allocable to the noncontrolling interests and, as a result, earnings per share information is not applicable for reporting periods prior to that date. Shares of Class A Common Stock are weighted for the portion of the period in which the shares were outstanding. Diluted earnings per share has been calculated in a manner consistent with that of basic earnings per share while considering all potentially dilutive shares of Class A Common Stock outstanding during the periods.

Prior to the IPO and Reorganization Transactions, TWFG Holding’s equity structure included common units. The Company considered the calculation of earnings per unit for periods prior to the IPO and determined that such presentation would not provide meaningful information to the users of these Condensed Consolidated Financial Statements. Therefore, earnings per share information for the three and nine months ended September 30, 2024 has been calculated solely for the post-IPO period. The following tables set forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2025 and 2024 (in thousands, except share and per share amounts):

Diluted earnings per share attributable to common stockholders adjusts the basic earnings per share attributable to common stockholders and the weighted average number of shares of common stock outstanding for the potential dilutive impact of potential common stock. Pursuant to the Reorganization Transactions, Class B Voting Stock and Class C Voting Stock are considered in the calculation of dilutive earnings per share on an if-converted basis as these classes of stock, together with the related LLC Units, have exchange rights into Class A Common Stock that could result in additional Class A Common Stock being issued. Net income attributable to the noncontrolling interests would be added back to net income in the fully dilutive computation and adjusted for income taxes which would have been expensed had the income been recognized by the Company, a taxable entity. All other potentially dilutive securities (such as unvested RSUs and PSUs) are determined based on the treasury stock method.

The Company excluded the following potential shares, presented based on amounts outstanding at each period end, from the computation of diluted weighted average shares outstanding for the periods indicated because including them would have had an antidilutive effect:

13. LITIGATION AND CONTINGENCIES

The Company may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business. Although the results and claims are inherently unpredictable and uncertain, the Company is not presently a party to any litigation the outcome of which, the Company believes, if determined adversely to it, would individually or taken together have a material adverse effect on the Company’s business, operating results, cash flows or financial condition.

The Company records liabilities for loss contingencies when it is probable that a liability has been incurred and the amount is reasonably estimable. The Company does not discount such contingent liabilities and recognizes incremental costs related to the contingencies when incurred.

14. SEGMENT

The Company hasone operating segment and thereforeone reportable segment relating to its business as an independent distribution platform for personal and commercial insurance in the United States. All business activities and operations are reported in theone reportable segment, which applies accounting policies consistent with the consolidated entity. The Company’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, manages the Company’s operations on a consolidated basis asone operating segment for the purpose of evaluating financial performance and allocating resources. See Note 3 Revenue for products and major customers on an entity wide basis.

The segment derives its revenues primarily from the placement of insurance contracts between insurance carriers and insureds. The CODM assesses the financial performance of the segment and decides how to allocate resources based on net income on a consolidated basis. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total consolidated assets. See Note 4 Intangible Assets and Acquisitions for capital expenditures on an entity wide basis.

The CODM uses net income predominantly in the annual operating budget and in the strategic planning and forecasting process. Such profit measure is used to monitor budget versus actual results on an ongoing basis by the CODM and determine how resources are allocated to the various activities of the Company. The CODM also uses net income to evaluate the Company’s performance and assist in determination of management’s incentive compensation.

The following table provides a summary of the segment revenue, segment profit or loss, and significant segment expenses (in thousands):

(1) Other segment items included in segment net income include marketing expenses, survey expenses, office expenses, and certain administrative expenses.

15. SUBSEQUENT EVENTS

Subsequent to the quarter ended September 30, 2025, the Company completed acquisitions in support of its ongoing growth strategy.

The Company has evaluated subsequent events through November 12, 2025, the issuance date and determined that no events have occurred that require disclosure other than the events listed above.