Baldwin Insurance Group Inc

Previous 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.

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 platform (“MSI”), 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

•Insurance Advisory Solutions provides expertly-designed commercial risk management, employee benefits and private risk management solutions for businesses and high-net-worth individuals, as well as their families. Risk management solutions typically involve the sale of a wide variety of both commercial and personal lines insurance products that mitigate risks for firms and individuals. Employee benefits solutions can include health plans, dental plans, and retirement accounts for firms and their employees. We are privileged to have partnered with some of the highest quality independent insurance brokers across the country with vast and varied strategic capabilities and expertise. We have been intentional in recognizing and elevating this talent across the organization to build world class industry-focused practice groups and product Centers of Excellence that can be leveraged by the entire firm.

Current wording

•Insurance Advisory Solutions (“IAS”) provides expertly-designed commercial risk management, employee benefits and private risk management solutions for businesses and high-net-worth individuals, as well as their families. Risk management solutions typically involve the sale of a wide variety of both commercial and personal lines insurance products that mitigate risks for firms and individuals. Employee benefits solutions can include health plans, dental plans, and retirement accounts for firms and their employees. We are privileged to have partnered with some of the highest quality independent insurance brokers across the country with vast and varied strategic capabilities and expertise. We have been intentional in recognizing and elevating this talent across the organization to build world class industry-focused practice groups and product Centers of Excellence that can be leveraged by the entire firm.

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 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.

Current wording

•Underwriting, Capacity & Technology Solutions (“UCTS”) consists of two distinct businesses—MSI and our newly launched reinsurance brokerage business, Juniper Re. Through MSI, 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 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 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.

Current wording

•Mainstreet Insurance Solutions(“MIS”) 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.

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 and six months ended June 30, 2024 and 2023 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 nine months ended September 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 and six months ended June 30, 2024 and 2023.

Current wording

The following is a discussion of our consolidated results of operations for the three and nine months ended September 30, 2024 and 2023.

Previous wording

We earn commissions and fees by facilitating the arrangement between Insurance Company Partners and Clients for the carrier to provide insurance to the insured party. Our commissions are usually a percentage of the premium paid by the insured and generally depend on the type of insurance, the particular Insurance Company Partner and the nature of the services provided. Under certain arrangements with Clients, we earn pre-negotiated service fees for insurance placement services. Additionally, we earn policy fees for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of Insurance Company Partners, including delivery of policy documents, processing payments and other administrative functions. We may also receive profit-sharing commissions, which represent forms of variable consideration paid by Insurance Company Partners associated with the placement of coverage. Profit-sharing commissions are generally based primarily on underwriting results, but may also contain considerations for volume, growth or retention. Other revenue streams include other ancillary income, premium financing income, and marketing income based on negotiated cost reimbursement for fulling specific targeted Medicare marketing campaigns.

Current wording

We earn commissions and fees by facilitating the arrangement between Insurance Company Partners and Clients for the carrier to provide insurance to the insured party. Our commissions are usually a percentage of the premium paid by the insured and generally depend on the type of insurance, the particular Insurance Company Partner and the nature of the services provided. Under certain arrangements with Clients, we earn pre-negotiated service fees for insurance placement services. Additionally, we earn policy fees for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of Insurance Company Partners, including delivery of policy documents, processing payments and other administrative functions. We may also receive profit-sharing commissions, which represent forms of variable consideration paid by Insurance Company Partners associated with the placement of coverage. Profit-sharing commissions are generally based on underwriting results, but may also contain considerations for volume, growth or retention. Other revenue streams include other ancillary income, premium financing income, and marketing income based on negotiated cost reimbursement for fulling specific targeted Medicare marketing campaigns.

Previous 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.

Current wording

Commissions and fees increased $121.1 million, or 13%, for the year-to-date period ended September 30, 2024 compared to the same period of 2023 driven by organic growth in core commissions and fees of $150.3 million related to new and renewal business across Client industry sectors and continued outperformance from MSI. This growth was offset in part by commissions and fees of $21.3 million derived from our Wholesale Business between March and September of 2023, for which there were no comparable revenues earned in 2024. In addition, profit-sharing and other revenue decreased $5.4 million for the year-to-date period, which is primarily a function of strong profit sharing revenue in the 2023 period, driven by both historically strong underwriting performance in the 2023 period and timing differences for UCTS, offset in part by improvements in loss ratios and the number of policies sold for MIS.

Previous 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.

Current wording

Investment income is earned by investing assets held in trust. Investment income increased $1.7 million and $4.1 million for the quarter and year-to-date periods ended September 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

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 wording

Commissions, employee compensation and benefits expense increased $26.7 million, or 12%, for the quarter ended September 30, 2024 compared to the same period of 2023, primarily as a result of outside commissions, which increased $15.4 million, or 26%, due to growth in UCTS and MIS. In addition, Colleague compensation increased $5.4 million, driven by continued investments in headcount to support the growth of existing and new products, and Colleague earnout incentives increased $4.3 million as a result of contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues.

Previous wording

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 wording

Commissions, employee compensation and benefits expense increased $76.9 million, or 11%, for the year-to-date period ended September 30, 2024 compared to the same period of 2023, primarily related to outside commissions, which increased $47.4 million, or 30%, due to growth in UCTS and MIS. The year-to-date period also included an increase in Colleague earnout incentives of $10.3 million, which relate to contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues. Other increases, driven by continued investments in headcount to support the growth of existing and new products, include benefits and other expense of $8.9 million, variable inside commissions of $5.2 million and Colleague compensation of $5.1 million.

Previous 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.

Current wording

Other operating expenses were relatively flat for the year-to-date period ended September 30, 2024 compared to the same period of 2023. Several categories of other operating expenses experienced decreases for the year-to-date period due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post Partnership integration operational efficiencies gained, which included lower professional fees of $4.6 million, Partnership integration and infrastructure-related costs of $3.5 million, and rent expense of $0.8 million. These costs savings were partially offset by higher legal claims and settlements expense of $3.0 million, payment processing fees for our MGA business of $2.0 million, licenses and taxes of $1.5 million, travel and entertainment of $1.4 million to support the growth in IAS, and advertising and marketing of $0.9 million connected to our rebranding.

Previous wording

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 wording

Amortization expense increased $3.7 million and $6.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to the acceleration of trade names amortization in connection with rebranding within IAS and higher amortization of intangible assets recorded in connection with our Westwood Partnership, which are amortized based on a pattern of estimated economic benefit, offset in part by a reduction in amortization related to the write-off of intangible assets in connection with the sale of our Wholesale Business during the first quarter of 2024.

Previous 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.

Current wording

Change in fair value of contingent consideration was a $1.0 million gain for the quarter ended September 30, 2024 compared to a $13.9 million loss for the same period of 2023, and a $17.3 million loss for the year-to-date period ended September 30, 2024 compared to a $55.1 million loss for the same period of 2023. The fair value gain for the quarter ended September 30, 2024 was impacted by $4.3 million of Colleague earnout incentives, which were reclassified, at the Partner's option, from contingent earnout liabilities to a bonus payable to Colleagues, thereby resulting in a gain in the change in fair value of contingent consideration and an increase to commissions, employee compensation and benefits expense. The fair value loss related to contingent consideration for the year-to-date period ended September 30, 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, offset in part by a gain recognized in connection with the reclassification of $10.7 million to Colleague earnout incentives.

Previous 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.

Current wording

Interest expense, net, increased $0.7 million and $6.6 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, resulting from higher average borrowings, offset in part by lower average interest rates resulting from the May 2024 debt refinancing. We expect interest expense to remain relatively flat or increase slightly in the near-term on a year-over-year basis.

Previous wording

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 wording

Loss on extinguishment and modification of debt of $15.1 million for the year-to-date period ended September 30, 2024 relates to the May 2024 debt refinancing.

Previous wording

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 wording

Other income (expense), net, increased $1.4 million and $0.3 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, driven by losses recognized on interest rate caps during the 2023 periods in connection with an interest rate cap that expired in March 2024.

Previous wording

The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net income (loss), which we consider to be the most directly comparable GAAP financial measure:

Current wording

The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net loss, which we consider to be the most directly comparable GAAP financial measure:

Previous 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.

Current wording

(2)Organic revenue for the three and nine months ended September 30, 2023 used to calculate organic revenue growth for the three and nine months ended September 30, 2024 was $294.5 million and $905.6 million, respectively, which is adjusted to exclude commissions and fees from divestitures that occurred during 2024.

Previous wording

The following table reconciles adjusted net income to net income (loss) attributable to Baldwin and reconciles adjusted diluted EPS to diluted earnings (loss) per share, which we consider to be the most directly comparable GAAP financial measures:

Current wording

The following table reconciles adjusted net income to net loss attributable to Baldwin and reconciles adjusted diluted EPS to diluted loss per share, which we consider to be the most directly comparable GAAP financial measures:

Previous wording

The Insurance Advisory Solutions Operating Group (“IAS”) provides expertly-designed commercial risk management, employee benefits and private risk management solutions for businesses and high-net-worth individuals, as well as their families, through our national footprint, which has assimilated some of the highest quality independent insurance brokers in the country with vast and varied strategic capabilities and expertise.

Current wording

IAS provides expertly-designed commercial risk management, employee benefits and private risk management solutions for businesses and high-net-worth individuals, as well as their families, through our national footprint, which has assimilated some of the highest quality independent insurance brokers in the country with vast and varied strategic capabilities and expertise.

Previous wording

Effective January 1, 2024, our FounderShield Partner moved from the Underwriting, Capacity & Technology Solutions Operating Group to IAS. Prior year results of operations for IAS below have been recast to conform to the current organizational structure.

Current wording

Effective January 1, 2024, our FounderShield Partner moved from UCTS to IAS. Prior year results of operations for IAS below have been recast to conform to the current organizational structure.

Previous 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.

Current wording

IAS generates (i) commissions for placing insurance policies on behalf of its Insurance Company Partners; (ii) profit-sharing income based on either the underlying book of business or performance, such as loss ratios; and (iii) fees from consulting and service fee arrangements, which are in place with certain Clients for a negotiated fee.

Previous wording

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 wording

IAS commissions and fees increased $10.0 million for the quarter ended September 30, 2024 compared to the same period of 2023, due to higher core commissions and fees, which grew organically by 6%. Growth in our core commissions and fees was driven by 22% sales velocity (new business as a percentage of prior year commissions and fees) and resultant new business across Client industry sectors. Sales velocity for the quarter improved 400 bps over the same period of 2023 despite softness in our construction practice. New business growth was offset in part by rate and exposure of (4.7)% resulting from construction project work weakness and headwinds concentrated in our employee benefits practice. In addition, profit-sharing revenue increased $2.4 million for the quarter.

Previous wording

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 wording

IAS investment income increased $0.5 million and $1.9 million for the quarter and year-to-date periods ended September 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

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 wording

Commissions, employee compensation and benefits expense for IAS increased $15.6 million and $47.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to an increase in Colleague compensation of $10.2 million and $25.1 million, respectively, driven by continued investments in headcount to support our growth, coupled with an increase in Colleague compensation allocated to IAS that was previously recognized in Corporate and Other. The quarter and year-to-date periods also included increases related to Colleague earnout incentives of $4.3 million and $10.3 million, respectively, for contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues. In addition, variable inside commissions increased $8.0 million, or 7%, during the year-to-date period, in line with the growth in IAS’ core commissions and fees.

Previous 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.

Current wording

Other operating expenses for IAS were relatively flat for each of the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023. Other operating expenses for the year-to-date period included higher costs for legal claims and settlement expense of $1.9 million and travel and entertainment of $1.8 million to support the growth in IAS, which were offset in part by $1.8 million of cost savings from measures we have implemented, including the renegotiation of vendor contracts and post Partnership integration operational efficiencies gained, and a reduction in professional fees of $1.1 million.

Previous wording

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 wording

IAS amortization expense increased $3.0 million and $5.7 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to the acceleration of trade names amortization in connection with rebranding within IAS.

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 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.

Current wording

UCTS consists of two distinct businesses—MSI and our newly launched reinsurance brokerage business, Juniper Re. Through MSI, 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 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 generates commissions for underwriting and placing insurance policies on behalf of its Insurance Company Partners. In addition, UCTS generates policy fee and installment fee revenue for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of Insurance Company Partners, including delivery of policy documents, processing payments and other administrative functions. UCTS also generates profit-sharing income, generally based on the profitability on the underlying book of business of the policies it generates on behalf of its Insurance Company Partners. Furthermore, UCTS generates fees from service fee arrangements, which are in place with certain customers for a negotiated fee.

Current wording

UCTS generates (i) commissions for underwriting and placing insurance policies on behalf of its Insurance Company Partners; (ii) policy fee and installment fee revenue for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of Insurance Company Partners, including delivery of policy documents, processing payments and other administrative functions; (iii) profit-sharing income, generally based on the profitability of the underlying book of business of the policies it generates on behalf of its Insurance Company Partners; and (iv) fees from service fee arrangements, which are in place with certain customers for a negotiated fee.

Previous 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.

Current wording

UCTS commissions and fees increased $15.4 million and $52.0 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to higher core commissions and fees, which grew organically by 31% and 36% for the comparative periods, respectively. Growth in our core commissions and fees was driven by continued outperformance in our multi-family business (accounting for $10.9 million and $29.3 million of the quarter and year-to-date increases in core commissions and fees, respectively), momentum in our homeowners (accounting for $8.9 million and $27.5 million of the quarter and year-to-date increases in core commissions and fees, respectively) and commercial umbrella products (accounting for $2.2 million and $9.8 million of the of the quarter and year-to-date increases in core commissions and fees, respectively), and growing contribution from our reinsurance brokerage business and commercial property program. 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. In addition, our Wholesale Business, which was sold in the first quarter of 2023, generated $9.3 million of commissions and fees during the third quarter of 2023 and $21.3 million of commissions and fees between March and September of 2023, for which there were no comparable revenues earned in 2024.

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 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.

Current wording

Commissions, employee compensation and benefits expense for UCTS includes both outside commissions paid to partners that distribute our MGA products and compensation paid to Colleagues. Commissions, employee compensation and benefits expense for UCTS increased $15.4 million and $47.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily driven by outside commissions, which increased $13.9 million, or 23%, for the quarter, and $40.3 million, or 26%, 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 $5.0 million and Colleague compensation of $4.8 million, driven by continued investments in headcount to support the growth of existing and new products, coupled with an increase in Colleague compensation allocated to UCTS that was previously recognized in Corporate and Other.

Previous wording

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 wording

UCTS amortization expense decreased $0.1 million and $1.2 million for the quarter and year-to-date periods ended September 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.

Previous 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.

Current wording

Change in fair value of contingent consideration for UCTS was a $3.0 million loss for the quarter ended September 30, 2024 compared to a $5.5 million loss for the same period of 2023, and a $7.4 million loss for the year-to-date period ended September 30, 2024 compared to a $17.7 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

The Mainstreet Insurance Solutions Operating Group (“MIS”) 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. MIS 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

MIS 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. MIS 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

MIS generates commissions for placing insurance policies on behalf of its Insurance Company Partners. In addition, MIS generates profit-sharing income based on either the underlying book of business or performance, such as loss ratios. MIS also generates commissions and fees in the form of marketing income, which is earned through co-branded marketing campaigns with our Insurance Company Partners.

Current wording

MIS generates (i) commissions for placing insurance policies on behalf of its Insurance Company Partners; (ii) profit-sharing income based on either the underlying book of business or performance, such as loss ratios; and (iii) commissions and fees in the form of marketing income, which is earned through co-branded marketing campaigns with our Insurance Company Partners.

Previous 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.

Current wording

MIS commissions and fees increased $8.4 million and $35.3 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to higher core commissions and fees, which grew organically by $6.2 million, or 11%, for the quarter, and $31.4 million, or 20%, for the year-to-date period. Key drivers of the organic growth in MIS core commissions and fees included our Westwood Partner (accounting for $3.2 million and $15.8 million of the quarter and year-to-date increases in core commissions and fees, respectively), our legacy Mainstreet business (accounting for $2.5 million and $12.0 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 $0.5 million and $3.6 million of the quarter and year-to-date increases in core commissions and fees, respectively). In addition, MIS profit-sharing and other revenue increased $2.2 million and $4.1 million for the quarter and year-to-date periods, respectively, primarily resulting from improvements in loss ratios and the number of policies sold.

Previous wording

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 wording

Commissions, employee compensation and benefits expense for MIS increased $4.8 million and $22.3 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to outside commissions, which increased $3.2 million, or 20%, for the quarter, and $12.8 million, or 28%, 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 higher Colleague compensation of $0.7 million and $6.1 million, respectively, driven by continued investments in headcount to support our growth, coupled with an increase in Colleague compensation allocated to MIS that was previously recognized in Corporate and Other.

Previous wording

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 wording

Other operating expenses for MIS increased $1.4 million and $2.5 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively. The increase in other operating expenses for the quarter and year-to-date periods was driven by higher technology-related costs to support the growth of the business of $0.3 million and $0.9 million, respectively, licenses and taxes of $0.2 million and $0.5 million, respectively, travel and entertainment of $0.2 million and $0.4 million, respectively, and advertising and marketing of $0.4 million and $0.1 million, respectively.

Previous wording

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 wording

MIS amortization expense increased $0.7 million and $1.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily driven by higher amortization of intangible assets recorded in connection with our Westwood Partnership, which are amortized based on a pattern of estimated economic benefit.