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 15 Segment.

Basis of Presentation

The accompanying 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, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2026 (the “Annual Report”). The Condensed Consolidated Balance Sheet as of December 31, 2025 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, 2025.

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, 2025 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 Expenses (DISE), that requires an entity to disclose in the footnote a tabular format that disaggregates relevant expense captions into the following natural expense categories: purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. 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 impact of adopting this guidance.

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, 2026 and December 31, 2025, thecommissions receivable, net reported in the Condensed Consolidated Balance Sheets had a balance of$50.4 million and$37.3 million, respectively. The Company hadno contract liabilities as of September 30, 2026, December 31, 2025, and January 1, 2025.

The Company’s allowance for expected credit losses is determined based on a combination 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):

Through TWFG MGA FL, LLC (“TWFG MGA FL”), Patriot Select Property & Casualty Insurance Company accounted for 15% and 17% of total revenues for the three and nine months ended September 30, 2026, respectively. For the three and nine months ended September 30, 2025, Progressive Corporation accounted for 11% and 12% of total revenues, 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, 2026 and 2025.

4. INTANGIBLES, ACQUISITIONS, AND DISPOSALS

Customer Lists and Software Acquisitions

During the second quarter of 2026, the Company acquired Fortress Insurance Services and Fortress Wealth Management (“Fortress”) for a total cash consideration of $23.5 million at closing. The acquisition agreement also provides potential to earn contingent payments of up to $5.0 million. The contingent payments are based on the achievement of defined performance metrics over the 24-month and 36-month anniversary periods following the close date. As of September 30, 2026, the contingent payments were not recognized as the conditions for recognition had not been met. The transaction was accounted for as an asset acquisition under the cost accumulation model, with the acquired customer list intangible asset identified as the single substantive asset acquired. The Company recognized a customer list intangible asset with an acquisition-date fair value of $23.5 million which is being amortized on a straight-line basis over eight years.

During the third quarter of 2026, the Company completed a branch conversion acquisition of Select Insurance Solutions, Inc. (“Monteith”) for a total cash consideration of $2.2 million and the issuance of 27,497 shares of Class A common stock valued at $0.7 million for a total consideration of $2.9 million at closing. The transaction was accounted for as an asset acquisition under the cost accumulation model, with the acquired customer list intangible asset identified as the single substantive asset acquired. The Company recognized a customer list intangible asset with an acquisition-date fair value of $2.9 million which is being amortized on a straight-line basis over eight years.

In addition to the acquisitions described above, during the nine months ended September 30, 2026, the Company acquired customer lists totaling $7.9 million. Of this amount, $7.3 million was paid in cash at closings, and the remaining $0.6 million was recorded as future contingent cash payments for the acquired customer lists and included in Deferred Acquisition Payables on the Condensed Consolidated Balance Sheets. Furthermore, the Company reduced a potential earnout of $0.7 million from Deferred Acquisition Payables on the Condensed Consolidated Balance Sheets.

During the nine months ended September 30, 2026, $0.7 million was paid in cash for software acquisitions.

Acquisition of Asset Protection Insurance Associates

During the first quarter of 2026, the Company acquired Asset Protection Insurance Associates (“APIA”), a Texas-based MGA specializing in providing comprehensive insurance solutions for property owners and real estate investors throughout the United States, for a total cash consideration of $22.5 million at closing. The acquisition agreement also provides potential to earn contingent payments of up to $7.0 million. The contingent payments are based on the achievement of defined performance metrics over each of thethree subsequent anniversary periods after the close date. As of September 30, 2026, the contingent payments were not recognized as the conditions for recognition had not been met. The transaction was accounted for as an asset acquisition under the cost accumulation model, with the acquired customer list intangible asset identified as the single substantive asset acquired. The Company recognized a customer list intangible asset with an acquisition-date fair value of $22.0 million which is being amortized on a straight-line basis overten years. The remaining $0.5 million was allocated to other assets assumed through the acquisition.

Acquisition of TWFG MGA FL, LLC

During the second quarter of 2025, the Company acquired a 50.1% equity interest in TWFG MGA FL 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 held by AIH Sub, Inc. The transaction was accounted for as an asset acquisition under the cost accumulation model, withthe 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$29.4 million, and a redeemable noncontrolling interest of$14.7 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.

As part of the acquisition of TWFG MGA FL, the Company also acquired a 5.7% equity interest in AIH Sub, Inc., an unconsolidated related party, for $0.3 million in cash. See Note 8 Stockholders’ Equity for more information regarding the redeemable noncontrolling interest.

Net Gains on Disposals

The Company recognized a net gain on disposals of $1.0 million for the nine months ended September 30, 2026. 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 of.

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

(1)As of September 30, 2026, customer lists, computer software, and customer relationship intangible assets had weighted-average remaining amortization periods of 6.28 years,2.53 years, and 4.72 years, respectively. The weighted-average amortization period for all amortizable intangible assets as of September 30, 2026 was 5.92 years.

(2)For the year ended December 31, 2025, the Company recognized a net gain of $1.1 million on the sale of customer lists.

The following table presents the future amortization for intangible assets as of September 30, 2026 (in thousands):

5. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following as of the dates indicated (in thousands). There have been no material changes in the composition of other current liabilities from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

6. DEBT AND DEFERRED ACQUISITION PAYABLES

The following is a summary of the Company’s outstanding Debt and Deferred Acquisition Payables (in thousands):

(1)See Note 4 Intangibles, Acquisitions, and Disposals and Note 7 Fair Value Measurements.

(2)As of September 30, 2026, all contingent considerations obligations are classified as current, and long-term Deferred Acquisition Payables consist solely of long-term acquisition notes payables.

Future maturities of the Company’s total outstanding bank debt and Deferred Acquisition Payables-notes as of September 30, 2026 were as follows (in thousands):

For thethree and nine months ended September 30, 2026, the Company incurred interest expense of$0.1 millionand$0.2 million, respectively. For the three and nine months ended September 30, 2025, the Company incurred interest expense of$0.1 million and $0.2 million, respectively.

Term Loans

There were no material changes to the terms of the Company’s term loan or related interest rate swap agreements during the nine months ended September 30, 2026. See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for a complete description of these arrangements.

Revolving Credit Agreement

On August 12, 2026, the Company entered into an Amended and Restated Credit Agreement (the “Revolving Credit Agreement”) with TWFG Holding, as borrower (in such capacity, the “Borrower”), PNC Bank, National Association, as administrative agent, swing-line loan lender and issuing lender, the guarantors party thereto, and the lenders party thereto, which amended and restated the Company’s existing revolving credit facility originally dated May 23, 2023, and previously amended on June 20, 2024.

The Revolving Credit Agreement provides for aggregate revolving commitments of up to $125.0 million, including a $12.5 million swing-line sub facility and a $12.5 million letter of credit sub facility, and includes an uncommitted accordion feature that permits the Company to seek up to an additional $75.0 million of revolving commitments, subject to the terms and conditions of the Revolving Credit Agreement. The Borrower may borrow, repay and reborrow under the Revolving Credit Agreement. The revolving loans mature on August 12, 2031.

Borrowings under the Revolving Credit Agreement bear interest, at the Borrower’s election, at either Daily SOFR (as defined in the Revolving Credit Agreement) or one-month Term SOFR (as defined in the Revolving Credit Agreement), plus an applicable margin ranging from 1.75% to 2.75% per annum based on the Company’s consolidated leverage ratio. Swing-line loans will bear interest at the Base Rate (as defined in the Revolving Credit Agreement) plus an applicable margin at a rate of 1.00% per annum lower than the applicable margin for Daily SOFR or Term SOFR Rate loans as set forth above, based on the consolidated leverage ratio of the Company.

The obligations under the Revolving Credit Agreement are guaranteed by the Company and certain subsidiaries of the Borrower (the “Guarantors”). The Revolving Credit Agreement is secured by substantially all the assets of the Borrower and the Guarantors. The Revolving Credit Agreement contains customary affirmative and negative covenants and requires the Company to maintain a minimum consolidated debt service coverage ratio of 1.25 to 1.00 and a maximum consolidated leverage ratio of 3.00 to 1.00, subject to a temporary increase in the leverage ratio covenant to 3.50 to 1.00 following certain permitted acquisitions.

As of September 30, 2026, the Company hadno outstanding borrowings under the Revolving Credit Agreement and available borrowing capacity of $125.0 million. The Company was in compliance with all financial covenants under the Revolving Credit Agreement as of September 30, 2026.

The carrying amount of the Company’s variable rate debt as of September 30, 2026 and December 31, 2025 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 Payables-Notes

The Company’s deferred acquisition payables — notes represent seller notes issued in connection with acquisitions of customer list intangible assets in April 2023, March 2024, and October 2024. There were no material changes to the terms of these notes during the nine months ended September 30, 2026. See Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for a complete description of each note’s terms, interest rates, and repayment schedules.

7. FAIR VALUE MEASUREMENTS

The Company measures certain assets and liabilities at fair value using the three-level hierarchy established under ASC Topic 820. There were no material changes to the Company’s fair value measurement policies during the nine months ended September 30, 2026. See Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for a complete description of the fair value hierarchy and the Company’s valuation methodologies.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis within each level of the fair value hierarchy (in thousands):

(1)The interest rate swap is used to manage the Company’s exposure to interest rate fluctuations related to the Company’s term loans.

(2)The future contingent considerations are recorded in the current and non-current Deferred Acquisition Payables accounts of the Condensed Consolidated Balance Sheet.

Contingent Considerations

Level 3 fair value measurements rely on limited unobservable inputs, which may not reflect net realizable value or future fair values. Although the Company believes its valuation methods align with market practices, different assumptions or methodologies could lead to varying fair value results at the reporting date.

The fair value of contingent consideration liabilities is based on projected performance of the acquired entities, which are reassessed each reporting period. Based on the Company’s ongoing assessment of the fair value of its contingent consideration, during the nine months ended September 30, 2026, the Company recorded a $0.7 million net decrease in the estimated fair value of liabilities which included $0.6 million cash paid for settlements. The Company has assessed the most likely exposure to the contingent consideration obligation to be $6.3 million at September 30, 2026.

The following table sets forth a summary of the changes in the fair value of the Company’s future contingent considerations, which are measured at fair value on a recurring basis utilizing Level 3 assumptions in their valuation (in thousands):

(1)The Deferred Acquisition Payables-contingent considerations are cash payments that are due to the seller paid out over a future period. The fair value of Deferred Acquisition Payables-contingent considerations are based on current market rates for similar types of payment arrangements. The carrying value approximates its fair value compared to current market rates for similar payment arrangements. As of September 30, 2026, all contingent considerations are current.

There were no transfers in or out of the Level 3 hierarchy.

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 various credit agreements approximates its fair value due to the variable interest rate based upon adjusted SOFR.

(2) The Deferred Acquisition Payables-notes are cash payments that are due to the seller paid out over a future period. The fair value of Deferred Acquisition Payables-notes are based on current market rates for similar types of financing arrangements.

8. 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.

During the third quarter of 2026,27,497 shares of Class A Common Stock were issued as part of acquisitions. As of September 30, 2026, an additional 104,001 shares of Class A Common Stock were issued upon vesting of restricted stock units (“RSUs”) in accordance with the Company's 2024 Omnibus Incentive Plan (the “2024 Incentive Plan”). See Note 9 Stock-Based Compensation.

Share Repurchase Program

On February 23, 2026, our Board approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding Class A common stock. Share repurchases may be made from time-to-time on the open market, in privately negotiated transactions, using Rule 10b5-1 trading plans, or in any other manner that complies with the applicable securities law. The timing of purchases and number of shares repurchased under the program will depend upon a variety of factors including the Company’s stock price, trading volume, working capital or other liquidity requirements, and market conditions. The Company is not obligated to purchase any shares under the program and the program may be suspended or discontinued at any time without notice. Through September 30, 2026, the Company repurchased and retired 2,252,349 shares in the open market for a total cost of $43.3 million, consisting of $42.9 million in cash paid for share repurchases and $0.4 million accrued for excise taxes.

The following table summarizes the capitalization and voting rights of the Company’s classes of stock as of September 30, 2026:

(1) Each share of Class A Common Stock and non-economic Class B Common Stock entitles its holders 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, 2026, 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 Family Holdings, LLC, RenaissanceRe Ventures U.S. LLC and GHC Woodlands Holdings LLC (collectively, the “Pre-IPO LLC Members” or “Continuing Pre-IPO LLC Members”). During the second quarter of 2026, RFB Spousal Lifetime Trust and MCB

Spousal Lifetime Trust became holders of noncontrolling interests. See Note 12 Related Party Transactions for additional information.

The following table summarizes the ownership of TWFG Holding as of September 30, 2026:

Redeemable noncontrolling interest

In the second quarter of 2025, the Company completed the acquisition of a 50.1% controlling interest in TWFG MGA FL. The remaining interest is held by AIH Sub, Inc. 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 as determined at the time the right is exercised. See Note 4 Intangibles, Acquisitions, and Disposals 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 is not subject to any entity level U.S. federal income taxes, as these taxes are primarily the obligations of its members. Under the third amended and restated TWFG Holding 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 net taxable income of TWFG Holding. 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 $3.8 million and $14.8 million for the three and nine months ended September 30, 2026, respectively. 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. Non-tax distributions in the amounts ofzero million and $10.4 million were made for the three and nine months ended September 30, 2026, respectively, andzero million and $6.2 million were made for the three and nine months ended September 30, 2025, respectively.

In addition, during the three and nine months ended September 30, 2026, a tax distribution in the amount of $2.6 million was paid to AIH Sub, Inc., the unconsolidated related party holding 49.9% interest in TWFG MGA FL.

9. 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, 2026, the Company granted 150,465 RSUs and 73,000 performance stock units (“PSUs”) under the 2024 Incentive Plan, and 3,780,632 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 was $0.7 million and $2.7 million for the three and nine months ended September 30, 2026, respectively, compared to $1.0 million and $3.7 million for the three and nine months ended September 30, 2025, respectively.

Stock-Based Awards

RSUs

The Company withholds and sells shares of Class A Common Stock associated with net settlements to cover tax withh olding obligations upon the vesting of RSUs for certain employees under its 2024 Incentive Plan. During the nine months ended September 30, 2026,158,536 RSUs vested and the Company withheld 54,535 RSUs for $1.4 million, resulting in the net issuance of 104,001 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’ 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 thenine months ended September 30, 2026 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% Adjusted EBITDA PSUs and 50% Organic Revenue PSUs. The Adjusted EBITDA PSUs performance vest based on the achievement of certain cumulative Adjusted 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, 2026 were as follows:

Summary of Unamortized Compensation Expense

As of September 30, 2026, the Company estimated $4.1 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. This unamortized compensation expense is expected to be recognized over a weighted-average period of 1.9 years.

10. 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.

Income tax expense was $0.6 millionand $2.8 million for the three and nine months ended September 30, 2026, respectively, and $1.0 million and $2.3 million for the three and nine months ended September 30, 2025, respectively. The estimated effective tax rate was 6.26% and 6.57%for thethree and nine months ended September 30, 2026, respectively, and 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.

As of September 30, 2026 and December 31, 2025, the Company did not have any material uncertain tax positions.

11. 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 (“TWFG-IS”) 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, 2026, the Company recognized expenses related to the Plan of $0.2 million and $0.7 million, respectively. For thethree and nine months ended September 30, 2025, the Company recognized expenses related to the Plan of $0.2 million and $0.5 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, 2026 and 2025, the Company elected not to make any additional discretionary contributions.

12. RELATED PARTY TRANSACTIONS

The Company earned $4.0 million and $12.4 million, respectively, in commissions, $0.9 million and $2.7 million, respectively, in fee income, and $0.1 million and $0.4 million, respectively, in contingent income from The Woodlands Insurance Company (“TWICO”), a related party, during the three and nine months ended September 30, 2026. For the three and nine months ended September 30, 2025, the Company earned $3.9 million and $9.9 million, respectively, in commissions, $0.9 million and $2.6 million, respectively, in fee income, andnone in contingent income from TWICO. These amounts are included in commission income, fee income, and contingent 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 of the Board 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 $2.5 million, respectively, in license fees net of administrative expenses during the three and nine months ended September 30, 2026, under its software licensing agreement with Evolution Agency Management LLC (“EVO”), a related party. For the three and nine months ended September 30, 2025, the Company incurred $0.8 million and $2.3 million, respectively, in license fees net of administrative expenses. These amounts are not eliminated and are included in Other Administrative Expenses in the Condensed Consolidated Statements of Income.

On June 5, 2026, Bunch Family Holdings, LLC, the majority holder of the Company’s Class C voting shares, transferred 264,785 shares of Class C common stock to RFB Spousal Lifetime Trust, for which Richard F. Bunch III serves as Trustee, and 264,785 shares of Class C common stock to MCB Spousal Lifetime Trust, for which Michelle C. Bunch serves as Trustee. In connection with these transfers, each transferee became a party to the Tax Receivable Agreement, dated July 17, 2024.

There were no other material changes in related party transactions from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

13. EARNINGS PER SHARE

For thethree and nine months ended September 30, 2026 and September 30, 2025, basic earnings per share was 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. Shares of Class A Common Stock are weighted for the portion of the period in which the shares were outstanding. Diluted earnings per share was 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.

The following tables set forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2026 and 2025 (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:

14. 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.

15. 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 Intangibles, Acquisitions, and Disposals 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.

16. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through November 5, 2026, the issuance date, and determined that no events have occurred that require disclosure.