Baldwin Insurance Group Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
BWIN$31.98+0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001781755-24-000030
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001781755-24-000048
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 135 current paragraphs.
67 unchanged; 41 reworded; 27 added; 18 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
The Baldwin Insurance Group, Inc. is a holding company and sole managing member of The Baldwin Insurance Group Holdings, LLC (formerly Baldwin Risk Partners, LLC) (“Baldwin Holdings”) and its sole material asset is its ownership interest in Baldwin Holdings, through which all of our business has been and is conducted. In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the words “Baldwin,” the “Company,” “we,” “us” and “our” refer to The Baldwin Insurance Group, Inc., together with its consolidated subsidiaries, including Baldwin Holdings and its consolidated subsidiaries and affiliates.
Current report
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Current report
Commissions, employee compensation and benefits expense increased $19.1 million, or 8%, for the quarter ended June 30, 2024 compared to the same period of 2023, primarily as a result of outside commissions, which increased $16.5 million, or 32%, due to growth in our UCTS and MIS Operating Groups. The quarter also included an increase of $2.3 million for Colleague earnout incentives, which relate to contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues.
Current report
Commissions, employee compensation and benefits expense increased $50.2 million, or 11%, for the year-to-date period ended June 30, 2024 compared to the same period of 2023, primarily related to outside commissions, which increased $32.0 million, or 33%, due to growth in our UCTS and MIS Operating Groups. In addition, variable inside commissions increased $7.3 million and benefits and other expense increased $5.3 million. The year-to-date period also included an increase of $5.9 million for Colleague earnout incentives, which relate to contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues.
Current report
Amortization expense increased $2.2 million and $3.1 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, primarily due to the acceleration of trade names amortization in connection with our rebranding, offset in part by the write-off of intangible assets in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current report
Loss on Extinguishment and Modification of Debt
Current report
Loss on extinguishment and modification of debt of $14.7 million for each of the quarter and year-to-date periods ended June 30, 2024 relates to the May 2024 debt refinancing.
Current report
Other Income (Expense), Net
Current report
Other income (expense), net, decreased $3.1 million and $1.1 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, driven by gains recognized on interest rate caps during the 2023 periods in connection with an interest rate cap that expired in March 2024.
Current report
IAS commissions and fees increased $10.2 million and $32.4 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively. Growth in our core commissions and fees was driven by 24% and 20% sales velocity (new business as a percentage of prior year commissions and fees) for the quarter and year-to-date periods, respectively, and resultant new business across Client industry sectors, offset in part by rate and exposure headwinds concentrated in our real estate book of (4)% and (1)% for the quarter and year-to-date periods, respectively. The growth in our core commissions and fees was further partially offset by a reduction in profit-sharing revenue of $1.2 million and $0.9 million for the quarter and year-to-date periods, respectively.
Current report
IAS investment income increased $0.5 million and $1.4 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, due to improvements in our cash management strategy and growing yield on our invested cash.
Current report
Commissions, employee compensation and benefits expense for IAS increased $13.5 million and $32.2 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, primarily due to an increase in Colleague compensation of $6.1 million and $14.9 million, respectively, driven by continued investments in headcount to support the growth of existing and new products, coupled with an increase in Colleague compensation embedded in IAS that was previously recognized in Corporate and Other. The quarter and year-to-date periods also included increases related to variable inside commissions of $3.3 million and $9.6 million, respectively, and Colleague earnout incentives of $2.3 million and $5.9 million, respectively, which relate to contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues.
Current report
Amortization expense for IAS increased $2.5 million and $2.8 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, due to the acceleration of trade names amortization in connection with rebranding within IAS.
Current report
UCTS investment income increased $0.3 million and $1.1 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, due to improvements in our cash management strategy and growing yield on our invested cash.
Current report
Amortization expense for UCTS decreased $1.0 million and $1.1 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, primarily due to the write-off of intangible assets in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current report
Total Other Income
Current report
Commissions, employee compensation and benefits expense for MIS increased $8.2 million and $17.5 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, primarily due to outside commissions, which increased $4.7 million, or 32%, for the quarter, and $9.7 million, or 33%, for the year-to-date period, relating to growth in our Westwood and legacy Mainstreet businesses. The quarter and year-to-date periods also included an increase in Colleague compensation of $2.8 million and $5.4 million, respectively, driven by continued investments in headcount to support the growth of existing and new products, coupled with an increase in Colleague compensation embedded in MIS that was previously recognized in Corporate and Other.
Current report
Other operating expenses for MIS increased $1.3 million and $1.2 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same period of 2023, respectively, due to higher technology-related costs to support the growth of the business.
Current report
Amortization expense in MIS increased $0.6 million and $1.1 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, primarily driven by the amortization of intangible assets recorded in connection with our Westwood Partnership.
Current report
Corporate and Other records the elimination of intercompany commissions from the Operating Groups. During the quarter and year-to-date periods ended June 30, 2024, UCTS recorded commissions and fees shared within the same Operating Group of $3.8 million and $6.7 million, respectively; UCTS recorded commissions and fees passed through to other Operating Groups of $14.3 million and $28.4 million, respectively; and MIS recorded commissions and fees shared within the same Operating Group of $0.3 million and $1.0 million, respectively.
Current report
Other operating expenses in Corporate and Other decreased $3.5 million for the quarter ended June 30, 2024 compared to the same period of 2023 due to lower costs for professional fees of $2.9 million and travel and entertainment of $0.8 million.
Current report
Interest expense, net, in Corporate and Other increased $2.2 million and $5.7 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, resulting from higher average borrowings, offset in part by a lower average interest rate for the quarterly period resulting from the May 2024 debt refinancing. We expect interest expense to remain relatively flat or increase slightly in the near-term.
Current report
Loss on Extinguishment and Modification of Debt
Current report
Loss on extinguishment and modification of debt in Corporate and Other of $14.7 million for each of the quarter and year-to-date periods ended June 30, 2024 relates to the May 2024 debt refinancing.
Current report
Other Income (Expense), Net
Current report
Other income (expense), net, in Corporate and Other decreased $1.9 million and $0.5 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, driven by gains recognized on interest rate caps during the 2023 periods in connection with an interest rate cap that expired in March 2024.
Current report
On May 24, 2024, we repaid in full our then-outstanding debt with proceeds from an offering of $600 million in aggregate principal amount of 7.125% senior secured notes due May 15, 2031 (the “Senior Secured Notes”) and borrowings under a new $840 million senior secured first lien term loan facility maturing May 24, 2031 (the “2024 Term Loan”). In connection with the refinancing, we also established a new senior secured first lien revolving facility with commitments in an aggregate principal amount of $600 million maturing May 24, 2029 (the “2024 Revolving Facility” and, together with the 2024 Term Loan, the “2024 Credit Facility”). Proceeds from the issuance of the Senior Secured Notes and the 2024 Term Loan were also used to pay related fees, costs, expenses and accrued interest. Refer to Note 8 to our condensed consolidated financial statements included in Part I, Item 1. Financial Statements of this report for more information relating to the terms of the Senior Secured Notes and 2024 Credit Facility.
Removed paragraphs (18)
Previous report
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
Previous report
Commissions, employee compensation and benefits expenses increased $31.1 million, or 13%, year over year as a result of increases in outside commissions and Colleague compensation and benefits. Outside commissions increased $15.5 million, or 34%, in line with growth in core commissions and fees. Colleague compensation and benefits increased $10.6 million, or 6%, from supporting the growth of our business. Notably, we are beginning to see operating leverage in our fixed salary expense, which we expect to continue over the next several quarters. Commissions, employee compensation and benefits expense also increased $3.6 million related to contingent earnout liabilities that were reclassified, at the Partner's option, to an earnout incentive bonus that will be paid out to Colleagues.
Previous report
IAS commissions and fees increased $22.2 million, or 11%, year over year to $221.1 million. Growth in our core commissions and fees was driven by 17% sales velocity (new business as a percentage of prior year commissions and fees) and resultant net new business across Client industry sectors, as well as by growth arising from rate and exposure of 3.5%. Additionally, difficulties previously experienced in the construction industry, which caused a slowdown in job starts during 2023, have normalized in 2024.
Previous report
IAS investment income increased $0.9 million year over year due to improvements in our cash management strategy and growing yield on our invested cash.
Previous report
Commissions, employee compensation and benefits expense for IAS increased $18.7 million, or 15%, year over year, primarily as a result of colleague compensation and benefits, which increased $13.4 million, or 11%, in line with the growth in IAS’ commissions and fees. IAS commissions, employee compensation and benefits expense for 2024 also included $3.6 million related to contingent earnout liabilities that were reclassified, at the Partner's option, to an earnout incentive bonus payable to Colleagues.
Previous report
Other Operating Expenses,
Previous report
UCTS investment income increased $0.8 million year over year due to improvements in our cash management strategy and growing yield on our invested cash.
Previous report
Other Income
Previous report
Commissions, employee compensation and benefits expense for MIS increased $9.3 million, or 27%, year over year due to outside commissions, which increased $5.0 million, or 35%, relating to growth in our Westwood and legacy Mainstreet businesses, and Colleague compensation and benefits, which increased $4.1 million, or 20%, in line with growth in commissions and fees.
Previous report
Other operating expenses for MIS were flat year over year. Significant drivers include lower costs for advertising and marketing and licenses and taxes, offset in part by higher technology-related costs and travel and entertainment.
Previous report
Change in fair value of contingent consideration for MIS was a $0.2 million gain for the three months ended March 31, 2024 as compared to a $1.1 million loss for the same period of 2023. The fair value gain related to contingent consideration for 2024 was impacted by an unfavorable change in revenue growth trends for one of our partners.
Previous report
Corporate and Other records the elimination of intercompany commissions from the Operating Groups. During the first quarter of 2024, UCTS recorded intercompany commissions of $17.0 million related to the QBE Program Administrator Agreement and agency bill arrangements, and MIS recorded intercompany commissions of $0.7 million under agency bill and direct bill arrangements.
Previous report
JPM Credit Agreement
Previous report
As of March 31, 2024, our JPM Credit Agreement provides for senior secured credit facilities in an aggregate principal amount of $1.62 billion, which consists of (i) a term loan facility in the principal amount of $1.02 billion maturing in October 2027 (the “Term Loan B”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of $600.0 million maturing in April 2027 (the “Revolving Facility”).
Previous report
The Term Loan B accrues interest at term SOFR plus a credit spread adjustment between 11 bps and 43 bps, based on the term SOFR rate, plus an applicable margin of 350 bps, subject to a term SOFR floor of 50 bps. At March 31, 2024, the outstanding borrowings on the Term Loan B of $996.2 million had an applicable interest rate of 8.94%.
Previous report
Borrowings under the Revolving Facility accrue interest at SOFR plus 210 bps to SOFR plus 310 bps based on total net leverage ratio. Baldwin Holdings will pay a letter of credit fee equal to the margin then in effect with respect to SOFR loans under the Revolving Facility multiplied by the daily amount available to be drawn under any letter of credit, a fronting fee and any customary documentary and processing charges for any letter of credit issued under the JPM Credit Agreement. The outstanding borrowings on the Revolving Facility of $334.0 million had an applicable interest rate of 8.50% at March 31, 2024. The Revolving Facility is also subject to a commitment fee of 0.40% on the unused capacity at March 31, 2024.
Previous report
We have entered into interest rate cap agreements to limit the potential impact of interest rate changes on cash flows. The interest rate caps limit the variability of the base rate to the amount of the cap. The interest rate cap agreements in place at March 31, 2024 mitigate the interest rate volatility on $1.2 billion of debt to a maximum base rate of 7.00% through November 2025.
Previous report
The Revolving Facility and the Term Loan B are collateralized by a first priority lien on substantially all the assets of Baldwin Holdings, including a pledge of all equity securities of certain of its subsidiaries. The JPM Credit Agreement contains covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business, make certain investments or restrict Baldwin Holdings’ ability to make dividends or other distributions to Baldwin. In addition, the JPM Credit Agreement contains financial covenants requiring us to maintain our Total First Lien Net Leverage Ratio (as defined in the JPM Credit Agreement) at or below 7.00 to 1.00.
Reworded paragraphs (41)
Previous wording
The Baldwin Insurance Group, Inc. (formerly BRP Group, Inc.) (“Baldwin,” the “Company,” “we,” “us” or “our”) is an independent insurance distribution firm providing indispensable expertise and insights that strive to give our Clients the confidence to pursue their purpose, passion and dreams. As a team of dedicated entrepreneurs and insurance professionals, we have come together to help protect the possible for our Clients. We do this by delivering bespoke Client solutions, services, and innovation through our comprehensive and tailored approach to risk management, insurance, and employee benefits. We support our Clients, Colleagues, Insurance Company Partners and communities through the deployment of vanguard resources and capital to drive our organic and inorganic growth. When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our fifth stakeholder, our stockholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits. Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our Partnership strategy, and continuing to build out our MGA of the Future platform, which delivers proprietary, technology-enabled insurance solutions to our internal Risk Advisors as well as to a growing channel of external distribution partners. We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation.
Current wording
Baldwin is an independent insurance distribution firm providing indispensable expertise and insights that strive to give our Clients the confidence to pursue their purpose, passion and dreams. As a team of dedicated entrepreneurs and insurance professionals, we have come together to help protect the possible for our Clients. We do this by delivering bespoke Client solutions, services, and innovation through our comprehensive and tailored approach to risk management, insurance, and employee benefits. We support our Clients, Colleagues, Insurance Company Partners and communities through the deployment of vanguard resources and capital to drive our organic and inorganic growth. When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our fifth stakeholder, our stockholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits. Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our Partnership strategy, and continuing to build out our MGA of the Future platform, which delivers proprietary, technology-enabled insurance solutions to our internal Risk Advisors as well as to a growing channel of external distribution partners. We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation.
Previous wording
We represent over two million Clients across the United States and internationally. Our nearly 4,000 Colleagues include approximately 700 Risk Advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 110 offices in 22 states, all of which are equipped to provide diversified products and services to empower our Clients at every stage through our three Operating Groups.
Current wording
We represent over two million Clients across the United States and internationally. Our 4,000 Colleagues include approximately 700 Risk Advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 110 offices in 24 states, all of which are equipped to provide diversified products and services to empower our Clients at every stage through our three Operating Groups.
Previous wording
•Underwriting, Capacity & Technology Solutions consists of two distinct businesses—our MGA of the Future platform and our newly launched reinsurance brokerage business, Juniper Re. Through our MGA of the Future platform, we manufacture proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our Risk Advisors across our other Operating Groups and externally via select distribution partners, with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is the national embedded renters insurance product sold at point of lease via integrations with property management software providers. As a prominent growth driver for the Company, we have invested heavily in the expansion of our MGA of the Future product suite, which is now comprised of more than 12 products across both commercial and personal lines, including new product launches in 2023 (high-net-worth homeowners, flood and commercial property products). UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through the end of February 2024.
Current wording
•Underwriting, Capacity & Technology Solutions consists of two distinct businesses—our MGA of the Future platform and our newly launched reinsurance brokerage business, Juniper Re. Through our MGA of the Future platform, we manufacture proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our Risk Advisors across our other Operating Groups and externally via select distribution partners, with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is the national embedded renters insurance product sold at point of lease via integrations with property management software providers. As a prominent growth driver for the Company, we have invested heavily in the expansion of our MGA of the Future product suite, which is now comprised of more than 20 products across commercial, personal and professional lines, including new product launches in 2023 (high-net-worth homeowners, flood and commercial property products). UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through the end of February 2024.
Previous wording
•Mainstreet Insurance Solutions offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities, with a focus on accessing Clients via sheltered distribution channels, which include, but are not limited to, new home builders, realtors, mortgage originators/lenders, master planned communities, and various other community centers of influence. We have invested deeply in talent, technology and capabilities across MIS, including in Westwood's homeowners solutions that are embedded in many of the top home builders in the U.S., the national expansion of our distribution footprint through our National Mortgage and Real Estate Center, and enhanced digital capabilities focused on improving the Advisor and Client experience. Mainstreet Insurance Solutions also offers consultation for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals through a network of primarily independent contractor agents.
Current wording
•Mainstreet Insurance Solutions offers personal insurance, commercial insurance and life and health solutions to individuals and businesses in their communities, with a focus on accessing Clients via sheltered distribution channels, which include, but are not limited to, new home builders, realtors, mortgage originators/lenders, master planned communities, and various other community centers of influence. We have invested deeply in talent, technology and capabilities across the MIS Operating Group, including in Westwood's homeowners solutions that are embedded in many of the top home builders in the U.S., the national expansion of our distribution footprint through our National Mortgage and Real Estate Center, and enhanced digital capabilities focused on improving the Advisor and Client experience. Mainstreet Insurance Solutions also offers consultation for government assistance programs and solutions, including traditional Medicare, Medicare Advantage and Affordable Care Act, to seniors and eligible individuals through a network of primarily independent contractor agents.
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements for the three months ended March 31, 2024 and the related notes and other financial information included elsewhere in this report.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023 and the related notes and other financial information included elsewhere in this report.
Previous wording
The following is a discussion of our consolidated results of operations for the three months ended March 31, 2024 and 2023.
Current wording
The following is a discussion of our consolidated results of operations for the three and six months ended June 30, 2024 and 2023.
Previous wording
Commissions and fees increased $48.6 million, or 15%, year over year to $378.1 million driven by organic growth in core commissions and fees of $53.8 million related to new and renewal business across Client industry sectors and continued outperformance from our MGA of the Future platform, partially offset by a reduction in profit-sharing and other revenue of $2.7 million, driven by timing differences and historically strong underwriting performance in the prior year period, and foregone commissions and fees of $2.5 million derived from our Wholesale Business in March 2023 and for which there were no comparable revenues earned in March 2024.
Current wording
Commissions and fees increased $41.6 million and $90.1 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, driven by organic growth in core commissions and fees of $57.8 million and $111.7 million, respectively, related to new and renewal business across Client industry sectors and continued outperformance from our MGA of the Future platform. This growth was offset in part by commissions and fees of $9.5 million and $12.0 million derived from our Wholesale Business for the quarter and year-to-date periods of 2023, respectively, for which there were no comparable revenues earned in 2024. In addition, profit-sharing and other revenue decreased $4.7 million and $7.5 million for the quarter and year-to-date periods, respectively, which is primarily a function of strong profit sharing revenue in the 2023 periods, driven by both historically strong underwriting performance in the 2023 periods and timing differences.
Previous wording
Investment income is earned by investing assets held in trust. Investment income increased $1.3 million year over year due to improvements in our cash management strategy and growing yield on our invested cash.
Current wording
Investment income is earned by investing assets held in trust. Investment income increased $1.1 million and $2.4 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, due to improvements in our cash management strategy and growing yield on our invested cash.
Previous wording
Other operating expenses decreased $0.8 million year over year, due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post Partnership integration operational efficiencies gained. The decrease in other operating expenses was driven by lower infrastructure-related costs of $2.7 million and professional fees of $1.1 million, partially offset by higher E&O claims and settlements expense of $1.4 million and payment processing fees for our MGA business of $1.3 million.
Current wording
Other operating expenses decreased $0.9 million and $1.7 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post Partnership integration operational efficiencies gained. The decreases in other operating expenses for the quarter and year-to-date periods were driven by lower professional fees of $2.9 million and $4.0 million, respectively, and infrastructure-related costs of $0.8 million and $3.5 million, respectively, partially offset by higher payment processing fees for our MGA business of $0.7 million and $2.0 million, respectively, E&O claims and settlements expense of $0.5 million and $1.9 million, respectively, licenses and taxes of $0.4 million and $1.3 million, respectively, and travel and entertainment of $0.3 million and $0.4 million, respectively.
Previous wording
Change in fair value of contingent consideration was a $12.7 million loss for the three months ended March 31, 2024 as compared to a $24.8 million loss for the same period of 2023. The fair value loss related to contingent consideration for 2024 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Current wording
Change in fair value of contingent consideration was a $5.6 million loss for the quarter ended June 30, 2024 compared to a $16.4 million loss for the same period of 2023, and an $18.2 million loss for the year-to-date period ended June 30, 2024 compared to a $41.2 million loss for the same period of 2023. The fair value losses related to contingent consideration for the 2024 periods were impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Previous wording
Interest expense, net, increased $3.7 million year over year resulting from the higher interest rate environment. We expect interest expense to remain relatively flat or increase slightly in the near-term.
Current wording
Interest expense, net, increased $2.2 million and $5.9 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, resulting from higher average borrowings, offset in part by a lower average interest rate for the quarterly period resulting from the May 2024 debt refinancing. We expect interest expense to remain relatively flat or increase slightly in the near-term.
Previous wording
Gain on divestitures are the result of a $36.4 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current wording
Gain on divestitures for the year-to-date period ended June 30, 2024 was driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Previous wording
(2)Organic revenue for the three months ended March 31, 2023 used to calculate organic revenue growth for the three months ended March 31, 2024 was $327.0 million, which is adjusted to exclude commissions and fees from divestitures.
Current wording
(2)Organic revenue for the three and six months ended June 30, 2023 used to calculate organic revenue growth for the three and six months ended June 30, 2024 was $284.0 million and $611.0 million, respectively, which is adjusted to exclude commissions and fees from divestitures.
Previous wording
IAS generates commissions for placing insurance policies on behalf of its Insurance Company Partners. IAS generates profit-sharing income based on either the underlying book of business or performance, such as loss ratios. IAS also generates fees from consulting and service fee arrangements, which are in place with certain Clients for a negotiated fee.
Current wording
IAS generates commissions for placing insurance policies on behalf of its Insurance Company Partners. In addition, IAS generates profit-sharing income based on either the underlying book of business or performance, such as loss ratios. IAS also generates fees from consulting and service fee arrangements, which are in place with certain Clients for a negotiated fee.
Previous wording
Other operating expenses for IAS decreased $0.9 million year over year, due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post Partnership integration operational efficiencies gained, offset in part by higher costs incurred to support the growth in IAS.
Current wording
Other operating expenses for IAS were relatively flat for each of the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023 due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post Partnership integration operational efficiencies gained, offset in part by higher costs incurred to support the growth in IAS.
Previous wording
Change in fair value of contingent consideration for IAS was a $10.1 million loss for the three months ended March 31, 2024 as compared to a $17.4 million loss for the same period of 2023. The fair value loss related to contingent consideration for 2024 was impacted by positive changes in revenue growth trends of certain Partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Current wording
Change in fair value of contingent consideration for IAS was a $3.8 million loss for the quarter ended June 30, 2024 compared to a $10.8 million loss for the same period of 2023, and a $13.9 million loss for the year-to-date period ended June 30, 2024 compared to a $28.2 million loss for the same period of 2023. The fair value losses related to contingent consideration for the 2024 periods were impacted by positive changes in revenue growth trends of certain Partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Previous wording
The Underwriting, Capacity & Technology Solutions Operating Group (“UCTS”) consists of two distinct businesses—our MGA of the Future platform and our newly launched reinsurance brokerage business, Juniper Re. Through our MGA of the Future platform, we manufacture proprietary, technology-enabled insurance products with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is our national embedded renters insurance product sold at point of lease via integrations with property management software providers. Our MGA of the Future product suite is now comprised of more than 12 products across personal, commercial and specialty lines. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through February 29, 2024.
Current wording
The Underwriting, Capacity & Technology Solutions Operating Group (“UCTS”) consists of two distinct businesses—our MGA of the Future platform and our newly launched reinsurance brokerage business, Juniper Re. Through our MGA of the Future platform, we manufacture proprietary, technology-enabled insurance products with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is our national embedded renters insurance product sold at point of lease via integrations with property management software providers. Our MGA of the Future product suite is now comprised of more than 20 products across personal, commercial and professional lines. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through February 29, 2024.
Previous wording
UCTS commissions and fees increased $16.6 million, or 19%, year over year to $103.0 million. The increase is primarily attributable to higher core commissions and fees, which was driven by continued outperformance in our multi-family business (accounting for $8.8 million of the year-over-year increase in core commissions and fees), momentum in our homeowners and commercial umbrella products (accounting for $8.6 million and $3.0 million, respectively, of the year-over-year increase in core commissions and fees), and new business across our other product lines, partially offset by a year-over-year reduction in profit-sharing revenue driven by timing differences and historically strong underwriting performance in the prior year period.
Current wording
UCTS commissions and fees increased $20.0 million and $36.6 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively. These increases are primarily attributable to higher core commissions and fees, driven by continued outperformance in our multi-family business (accounting for $9.6 million and $18.4 million of the quarter and year-to-date increases in core commissions and fees, respectively), momentum in our homeowners (accounting for $10.0 million and $18.6 million of the quarter and year-to-date increases in core commissions and fees, respectively) and commercial umbrella products (accounting for $4.5 million and $7.6 million of the of the quarter and year-to-date increases in core commissions and fees, respectively), and broad-based strength across our other product lines, including our reinsurance brokerage business. These increases were partially offset by reductions in profit-sharing revenue for each of the periods, which is primarily a function of strong profit sharing revenue in the 2023 periods, driven by both historically strong underwriting performance in the 2023 periods and timing differences.
Previous wording
Commissions, employee compensation and benefits expense for UCTS includes both outside commissions paid to partners that distribute UCTS' MGA products and compensation paid to Colleagues and outside contractors. Commissions, employee compensation and benefits expense for UCTS increased $18.9 million year over year as a result of increases in outside commissions and other compensation. Outside commissions increased $13.3 million, or 31%, in line with the growth in UCTS’ core commissions and fees. Colleague compensation and benefits increased $5.6 million, or 27%, driven by continued investments in headcount to support the growth of existing and new products.
Current wording
Commissions, employee compensation and benefits expense for UCTS includes both outside commissions paid to partners that distribute UCTS' MGA products and compensation paid to Colleagues and advisors. Commissions, employee compensation and benefits expense for UCTS increased $13.5 million and $32.4 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, primarily driven by outside commissions, which increased $13.1 million, or 25%, for the quarter, and $26.5 million, or 28%, for the year-to-date period, in line with the growth in UCTS’ core commissions and fees. The year-to-date period also included increases in benefits and other expense of $4.1 million and Colleague compensation of $3.0 million, driven by continued investments in headcount to support the growth of existing and new products, coupled with an increase in Colleague compensation embedded in UCTS that was previously recognized in Corporate and Other.
Previous wording
Other operating expenses for UCTS were flat year over year. Significant drivers include generally higher costs to support the growth of the business (including an increase in payment processing fees), offset by expense reductions relating to certain cost saving measures we have implemented and a reduction in Partnership integration expenses.
Current wording
Other operating expenses for UCTS increased $1.1 million and $1.2 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively. Significant drivers include generally higher costs to support the growth of the business (including an increase in payment processing fees), partially offset by expense reductions relating to certain cost saving measures we have implemented and a reduction in Partnership integration expenses.
Previous wording
Change in fair value of contingent consideration for UCTS was a $2.8 million loss for the three months ended March 31, 2024 as compared to a $6.3 million loss for the same period of 2023. The fair value loss related to contingent consideration for 2024 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Current wording
Change in fair value of contingent consideration for UCTS was a $1.5 million loss for the quarter ended June 30, 2024 compared to a $5.9 million loss for the same period of 2023, and a $4.3 million loss for the year-to-date period ended June 30, 2024 compared to a $12.1 million loss for the same period of 2023. The fair value losses related to contingent consideration for 2024 were impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Previous wording
Other income for UCTS was driven by a $36.4 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current wording
Total other income for UCTS of $34.1 million for the year-to-date period ended June 30, 2024 was driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Previous wording
MIS commissions and fees increased $13.6 million, or 23%, year over year to $71.7 million. MIS core commissions and fees grew organically by $12.0 million driven by our legacy Mainstreet business (accounting for $5.1 million of the year-over-year increase in core commissions and fees), our Westwood Partner (accounting for $5.0 million of the year-over-year increase in core commissions and fees), and the national mortgage and real estate channel (accounting for $1.8 million of the year-over-year increase in core commissions and fees). In addition, MIS profit-sharing and other revenue increased $1.8 million primarily resulting from improvements in loss ratios and the number of policies sold.
Current wording
MIS commissions and fees increased $13.4 million and $26.9 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively. During the quarter and year-to-date periods, MIS core commissions and fees grew organically by $13.2 million and $25.2 million, respectively, driven by our Westwood Partner (accounting for $7.6 million and $12.6 million of the quarter and year-to-date increases in core commissions and fees, respectively), our legacy Mainstreet business (accounting for $4.4 million and $9.5 million of the quarter and year-to-date increases in core commissions and fees, respectively), and the national mortgage and real estate channel (accounting for $1.3 million and $3.1 million of the quarter and year-to-date increases in core commissions and fees, respectively). In addition, MIS profit-sharing and other revenue increased $1.9 million for the year-to-date period, primarily resulting from improvements in loss ratios and the number of policies sold.
Previous wording
The year-over-year increase in intercompany commissions is related to the QBE Program Administrator Agreement. We expect revenue recognized from this agreement to continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
Current wording
The year-over-year increases in intercompany commissions are related to the QBE Program Administrator Agreement. We expect revenue recognized from this agreement to continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
Previous wording
Corporate and Other records the elimination of intercompany commissions expense from the Operating Groups. Corporate and Other commissions, employee compensation and benefits expense decreased $15.8 million year over year. Significant drivers of the decrease in Corporate and Other commissions include a $4.1 million decrease in administrative compensation due, in part, to a decrease in corporate-related headcount, a $3.8 million increase in intercompany commissions expense eliminations, and a decrease in share-based compensation related to the retirement of two of our executive officers at the end of 2023.
Current wording
Commissions, employee compensation and benefits expense in Corporate and Other decreased $16.0 million and $31.8 million for the quarter and year-to-date periods ended June 30, 2024 compared to the same periods of 2023, respectively, driven by a reduction in Colleague compensation of $12.6 million and $23.6 million, respectively, due in part to a decrease in corporate-related headcount, including the retirement of two of our executive officers at the end of 2023, coupled with a decrease in Colleague compensation previously recognized in Corporate and Other that is now embedded in the Operating Groups. In addition, intercompany commissions expense eliminations increased $2.1 million and $5.8 million for the quarter and year-to-date periods, respectively.
Previous wording
A significant portion of the intercompany commissions, employee compensation and benefits expense recorded to Corporate and Other is related to the QBE Program Administrator Agreement. We expect commissions, employee compensation and benefits expense related to this agreement to continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
Current wording
A significant portion of the intercompany commissions expense recorded to Corporate and Other is related to the QBE Program Administrator Agreement. We expect commissions expense related to this agreement to continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
Previous wording
Other operating expenses in Corporate and Other were flat year over year. Corporate and Other incurred higher costs for our tax receivable agreement and licenses and taxes of $0.5 million each and professional fees of $0.4 million. These increases were offset in part by lower costs for travel and entertainment of $0.5 million and infrastructure-related costs of $0.5 million, which are due, in part, to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and operational efficiencies gained from Partnership integration projects by our Operating Groups during 2023.
Current wording
Other operating expenses in Corporate and Other decreased $3.3 million for the year-to-date period ended June 30, 2024 compared to the same period of 2023 due to lower costs for professional fees of $2.5 million, travel and entertainment of $1.3 million and infrastructure-related costs of $0.8 million, which are due, in part, to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and operational efficiencies gained from Partnership integration projects by our Operating Groups during 2023. These decreases were offset in part by higher costs for licenses and taxes of $0.9 million and advertising and marketing of $0.4 million.
Previous wording
Our primary liquidity needs for the foreseeable future will include cash to (i) provide capital to facilitate the organic growth of our business and to fund future Partnerships, (ii) pay operating expenses, including cash compensation to our employees and expenses related to being a public company, (iii) make payments under the Tax Receivable Agreement, (iv) pay interest and principal due on borrowings under the JPM Credit Agreement, (v) pay contingent earnout liabilities, (vi) pay income taxes, and (vii) fund potential investments in third party businesses that support the growth of our business, which may include Emerald Bay or sponsorship of, and a minority, non-controlling interest in, other investment funds, the purpose of which may include facilitating the establishment of additional and alternative capacity that supports the growth of our MGA of the Future business.
Current wording
Our primary liquidity needs for the foreseeable future will include cash to (i) provide capital to facilitate the organic growth of our business and to fund future Partnerships, (ii) pay operating expenses, including cash compensation to our Colleagues and expenses related to being a public company, (iii) make payments under the Tax Receivable Agreement, (iv) pay interest and principal due on borrowings under the 2024 Credit Facility and the Senior Secured Notes, (v) pay contingent earnout liabilities, (vi) pay income taxes, and (vii) fund potential investments in third party businesses that support the growth of our business, which may include Emerald Bay or sponsorship of, and a minority, non-controlling interest in, other investment funds, the purpose of which may include facilitating the establishment of additional and alternative capacity that supports the growth of our MGA of the Future business.
Previous wording
In the near term, we intend to fund our earnout obligations with cash and cash equivalents, cash flow from operations and available borrowings. From time to time, we will consider raising additional debt or equity financing if and as necessary to support our growth, including in connection with the exploration of Partnership opportunities or to refinance existing obligations on an opportunistic basis.
Current wording
In the near term, we intend to fund our earnout obligations with cash and cash equivalents, including unused proceeds from the May 2024 refinancing transaction, cash flow from operations and available borrowings. From time to time, we will consider raising additional debt or equity financing if and as necessary to support our growth, including in connection with the exploration of Partnership opportunities or to refinance existing obligations on an opportunistic basis.
Previous wording
As of March 31, 2024, our cash and cash equivalents were $112.1 million, and we had $266.0 million of available borrowing capacity on the Revolving Facility under the JPM Credit Agreement. We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next twelve months and beyond.
Current wording
As of June 30, 2024, our cash and cash equivalents were $208.3 million, and we had $600.0 million of available borrowing capacity on the 2024 Revolving Facility. We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next twelve months and beyond.
Previous wording
(1)Represents noncancelable operating leases for our facilities. Operating lease expense was $5.4 million and $5.5 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(1)Represents noncancelable operating leases for our facilities. Operating lease expense was $10.8 million and $11.1 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
(2) Represents scheduled debt obligations and estimated interest payments under the JPM Credit Agreement.
Current wording
(2)Represents scheduled debt obligations and estimated interest payments for our Senior Secured Notes and 2024 Term Loan.
Previous wording
(3) Represents the total expected future payments to be made to Partners at March 31, 2024.
Current wording
(3)Represents the total expected future payments to be made to Partners at June 30, 2024.
Previous wording
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the JPM Credit Agreement, estimated payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
Current wording
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the Senior Secured Notes and the 2024 Term Loan, estimated payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
Previous wording
Borrowings outstanding under our JPM Credit Agreement include $996.2 million under the Term Loan B and $334.0 million on the Revolving Facility. Estimated interest payments for outstanding borrowings on the Term Loan B and Revolving Facility in the table above were calculated based on applicable interest rates at March 31, 2024 of 8.94% and 8.50%, respectively, through their respective expiration dates of October 2027 and April 2027.
Current wording
Our debt obligations at June 30, 2024 include borrowings outstanding under the Senior Secured Notes of $600 million and the 2024 Term Loan of $840 million. Estimated interest payments for outstanding borrowings on the Senior Secured Notes and 2024 Term Loan in the table above were calculated based on the applicable interest rate at June 30, 2024 of 7.125% and 8.59%, respectively, through their respective due dates of May 15, 2031 and May 24, 2031.
Previous wording
Substantially all of our Partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contractual earnout provisions. We record an estimation of the fair value of the contingent earnout obligations at the Partnership date as a component of the consideration paid. Our contingent earnout obligations are measured at fair value each reporting period based on the present value of the expected future payments to be made to Partners in accordance with the provisions outlined in the respective purchase agreements. The recorded obligations are based on estimates of the Partners’ future performance using financial projections for the earnout period. The aggregate estimated contingent earnout liabilities included on our condensed consolidated balance sheet at March 31, 2024 was $235.9 million, of which $11.3 million must be settled in cash and the remaining $224.6 million can be settled in cash or stock at our option. The undiscounted estimated contingent earnout obligation presented in the table above represents the fair value of the total expected future payments to be made to the Partners. The undiscounted estimated contingent earnout obligation at March 31, 2024 was $256.7 million, of which $12.2 million must be settled in cash and the remaining $244.5 million can be settled in cash or stock at our option. The maximum estimated exposure to the contingent earnout liabilities was $547.7 million at March 31, 2024.
Current wording
Substantially all of our Partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contractual earnout provisions. We record an estimation of the fair value of the contingent earnout obligations at the Partnership date as a component of the consideration paid. Our contingent earnout obligations are measured at fair value each reporting period based on the present value of the expected future payments to be made to Partners in accordance with the provisions outlined in the respective purchase agreements. The recorded obligations are based on estimates of the Partners’ future performance using financial projections for the earnout period. The aggregate estimated contingent earnout liabilities included on our condensed consolidated balance sheet at June 30, 2024 was $210.2 million, of which $9.3 million must be settled in cash and the remaining $200.9 million can be settled in cash or stock at our option. The undiscounted estimated contingent earnout obligation presented in the table above represents the total expected future payments to be made to the Partners. The undiscounted estimated contingent earnout obligation at June 30, 2024 was $222.8 million, of which $10.0 million must be settled in cash and the remaining $212.8 million can be settled in cash or stock at our option. The maximum estimated exposure to the contingent earnout liabilities was $459.5 million at June 30, 2024.
Previous wording
During the three months ended March 31, 2024, we redeemed 800,302 LLC Units of Baldwin Holdings on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock. We receive an increase in our share of the tax basis in the net assets of Baldwin Holdings due to the interests being redeemed. We have assessed the realizability of the net deferred tax assets and in that analysis have considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We have recorded a full valuation allowance against the deferred tax assets at Baldwin as of March 31, 2024, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
Current wording
During the six months ended June 30, 2024, we redeemed 1,478,850 LLC Units of Baldwin Holdings on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock. We receive an increase in our share of the tax basis in the net assets of Baldwin Holdings due to the interests being redeemed. We have assessed the realizability of the net deferred tax assets and in that analysis have considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We have recorded a full valuation allowance against the deferred tax assets at Baldwin as of June 30, 2024, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
Previous wording
The primary sources and uses of cash for operating activities are net income (loss) adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration. Net cash provided by operating activities increased $16.9 million year over year, driven by an increase in cash related to the change in net income (loss) adjusted for non-cash items of $17.0 million and the change in premiums, commissions and fees receivable net of accounts payable, accrued expenses and other current liabilities of $14.4 million, offset in part by a decrease in cash relating to higher contingent earnout consideration payments in excess of the liability recognized at the acquisition date of $15.5 million.
Current wording
The primary sources and uses of cash for operating activities are net income (loss) adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration. Net cash provided by operating activities increased $48.2 million year over year, driven by an increase in cash related to the change in accounts payable, accrued expenses and other current liabilities, net of premiums, commissions and fees receivable of $42.8 million and the change in net income (loss) adjusted for non-cash items of $20.1 million, offset in part by a decrease in cash relating to higher contingent earnout consideration payments in excess of the liability recognized at the acquisition date of $14.2 million.
Previous wording
The primary sources and uses of cash for investing activities relate to cash consideration paid to fund Partnerships and other investments to grow our business. Net cash provided by investing activities increased $49.7 million year over year driven by cash proceeds from divestitures, net of cash transferred of $54.4 million, relating to the sale of our Wholesale Business during the first quarter of 2024.
Current wording
The primary sources and uses of cash for investing activities relate to cash consideration paid to fund Partnerships and other investments to grow our business. Net cash provided by investing activities increased $46.2 million year over year driven by cash proceeds from divestitures, net of cash transferred of $56.4 million, relating primarily to the sale of our Wholesale Business during the first quarter of 2024, offset in part by a decrease in cash relating to higher capital expenditures of $10.1 million.
Previous wording
The primary sources and uses of cash for financing activities relate to the issuance of our Class A common stock; debt servicing costs in connection with the JPM Credit Agreement, as well as purchases, sales and settlements of interest rate caps to mitigate interest rate volatility on that debt; payment of contingent earnout consideration; and other equity transactions. Net cash used in financing activities increased $15.6 million year over year driven by a decrease in cash from additional payments of contingent earnout consideration up to the amount of purchase price accrual of $28.1 million, offset in part by a decrease in net proceeds from borrowings on our credit facilities of $12.6 million.
Current wording
The primary sources and uses of cash for financing activities relate to the issuance of our Class A common stock; debt servicing costs in connection with our long-term debt and revolving line of credit, as well as purchases, sales and settlements of interest rate caps to mitigate interest rate volatility on that debt; payment of contingent earnout consideration; and other equity transactions. Net cash provided by financing activities increased $56.4 million year over year driven by an increase in net proceeds from borrowings on our credit facilities of $122.3 million resulting from the May 2024 debt refinancing, inclusive of the deferred financing costs incurred, offset in part by a decrease in cash from additional payments of contingent earnout consideration up to the amount of purchase price accrual of $52.3 million and an increase in tax distributions to Baldwin Holdings members of $10.7 million.
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Previous report — wording carried elsewhere
Interest expense, net, increased $3.5 million year over year resulting from the higher interest rate environment. We expect interest expense to remain relatively flat or increase slightly in the near-term.