Baldwin Insurance Group Inc
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 25, 2025
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-K
Period ended 2023-12-31; filed 2024-02-28.
0001781755-24-000016
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-25.
0001781755-25-000017
ITEM 7. 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 168 previous paragraphs and 168 current paragraphs.
66 unchanged; 58 reworded; 41 added; 43 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 15 previous and 14 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 (41)
Current report
Interest expense, net, for the year ended December 31, 2024 was $123.6 million, an increase of $4.2 million, or 3%, year over year. Interest expense, net, increased as a result of higher average borrowings, offset in part by lower average interest rates resulting from our May 2024 debt refinancing and federal rate reductions. We expect interest expense to remain relatively flat on a year-over-year basis. Refer to the Liquidity and Capital Resources section further below for additional information on our May 2024 refinancing.
Current report
During the year ended December 31, 2024, we reported a gain on divestitures of $39.0 million, which was driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024. We also reported a loss on extinguishment and modification of debt of $15.1 million related to our May 2024 debt refinancing.
Current report
Adjusted net income for the year ended December 31, 2024 was $176.9 million, an increase of $45.8 million year over year. Adjusted diluted EPS was $1.50 for 2024, an increase of 34% over $1.12 for 2023.
Current report
Commissions, employee compensation and benefits expense increased $120.7 million, or 13%, year over year, primarily related to outside commissions, which increased $74.1 million, after excluding outside commissions related to the Wholesale Business between March and December of 2023 of $15.8 million, due to growth in UCTS and MIS. In addition, colleague earnout incentives, which relate to contingent earnout liabilities that were reclassified, at the partner's option, to an earnout incentive bonus payable to colleagues, increased $33.4 million. Other increases, after excluding amounts related to the Wholesale Business between March and December of 2023, were driven by continued investments in headcount to support the growth of existing and new products, including colleague compensation (fixed compensation plus share-based compensation) of $21.5 million, inside advisor commissions of $15.5 million, and benefits and other expense of $12.3 million. These increases were partially offset by commissions, employee compensation and benefits expense of $23.7 million incurred by our Wholesale Business between March and December of 2023, for which there were no comparable costs incurred in 2024, and a decrease in severance expense of $12.6 million relating primarily to the retirement of two of our executive officers at the end of 2023.
Current report
Other operating expenses increased $2.1 million year over year, driven by higher advertising and marketing costs of $2.5 million in connection with our rebranding, travel and entertainment of $2.1 million to support the growth in IAS, payment processing fees for our MGA business of $1.9 million, and legal claims and settlements expense of $1.4 million. These increases were offset by decreases to several other operating expenses due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post partnership integration operational efficiencies gained, including lower partnership integration and infrastructure-related costs of $3.7 million and rent expense of $2.2 million.
Current report
Amortization expense increased $10.0 million year over year, 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.
Current report
Change in fair value of contingent consideration was a $4.9 million gain for the year ended December 31, 2024 compared to a $61.1 million loss for the same period of 2023. Several of our partnership agreements contain provisions that permit former selling shareholders to allocate portions of the earnout proceeds to colleagues who meaningfully contributed to the partnered firm’s achievement of the earnout. When this determination is made, we record compensation expense that is an offset to the change in contingent consideration and neutral to net income. As a result of this practice, the change in fair value of contingent consideration for the year ended December 31, 2024 was reduced by $39.3 million of colleague earnout incentives, which were reclassified, at the partner's option, from contingent earnout liabilities to an earnout incentive 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. This gain was offset in part by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Current report
Interest expense, net, increased $4.2 million year over year resulting from higher average borrowings, offset in part by lower average interest rates resulting from the May 2024 debt refinancing and federal rate reductions. We expect interest expense to remain relatively flat on a year-over-year basis due to an anticipated increase in borrowings from our revolving credit facility to fund the settlement of contingent earnout liabilities, offset by lower expected average interest rates.
Current report
Gain on Divestitures
Current report
Gain on divestitures of $39.0 million for the year ended December 31, 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.
Current report
Loss on Extinguishment and Modification of Debt
Current report
Loss on extinguishment and modification of debt of $15.1 million for the year ended December 31, 2024 relates to the May 2024 debt refinancing.
Current report
Long term debt increased $428.0 million and our revolving line of credit decreased $341.0 million due to the May 2024 refinancing in which we upsized the term loan under a new $840 million senior secured first lien term loan facility and entered into a new senior secured first lien revolving facility with commitments in an aggregate principal amount of $600 million. Proceeds from the May 2024 refinancing were used to paydown our revolving line of credit.
Current report
Contingent earnout liabilities decreased $130.9 million resulting from settlements of $126.2 million and a change in fair value of contingent consideration gain of $4.9 million, which was impacted by the reclassification of $39.3 million of colleague earnout incentives to commissions, employee compensation and benefits expense.
Current report
Assets and liabilities held for sale of $64.4 million and $43.9 million, respectively, at December 31, 2023 were written off in connection with the sale of our Wholesale Business on March 1, 2024. Refer to Note 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
(1) Other taxes in 2024 include the Tax Receivable Agreement expense and other operating tax expense, such as state taxes, under GAAP.
Current report
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.
Current report
IAS commissions and fees increased $63.8 million, or 10%, year over year to $706.2 million due primarily to organic growth in core commissions and fees. Growth in our core commissions and fees was driven by 21% sales velocity (new business as a percentage of prior year commissions and fees), which improved 410 bps over the prior-year period, and resultant new business across client industry sectors. New business growth was offset by a 510 bps headwind in underlying rate and exposure year over year, largely attributable to catastrophe-exposed real estate and construction project work weakness, as well as a decrease in retention of 140 bps, attributable to rate fatigue. In addition, profit-sharing revenue increased $3.2 million primarily resulting from improvements in loss ratios and the number of policies sold.
Current report
IAS investment income increased $2.0 million year over year due to improvements in our cash management strategy and growing yield on our invested cash.
Current report
Other operating expenses for IAS decreased $2.4 million year over year, driven by cost savings measures we have implemented, including the renegotiation of vendor contracts and post partnership integration operational efficiencies gained, including various expense reductions of $3.8 million and lower professional fees of $1.2 million. These savings were partially offset by higher costs for travel and entertainment to support the growth in IAS of $2.8 million and higher legal claims and settlement expense of $0.4 million.
Current report
IAS amortization expense increased $6.4 million year over year due to the acceleration of trade names amortization in connection with rebranding within IAS.
Current report
Effective January 1, 2024, our FounderShield Partner moved from UCTS to IAS. Prior year results of operations for UCTS below have been recast to conform to the current organizational structure.
Current report
UCTS commissions and fees increased $66.4 million, or 16%, year over year to $468.9 million, due to organic growth in core commissions and fees. Growth in our core commissions and fees was driven by continued outperformance in our multi-family business (accounting for $35.7 million of the increase in core commissions and fees), momentum in our homeowners product (accounting for $36.8 million of the increase in core commissions and fees) and commercial umbrella product (accounting for $9.9 million of the increase in core commissions and fees), and growing contribution from our reinsurance brokerage business and commercial property program. This growth was offset in part by core commissions and fees of $26.8 million derived from our Wholesale Business between March and December of 2023, for which there were no comparable revenues earned in 2024. Core commissions and fees growth, excluding such revenue related to the Wholesale Business between March and December of 2023, was 30%.
Current report
Profit-sharing and other revenue decreased $12.2 million year over year, of which, $7.5 million is a function of strong profit-sharing revenue in 2023, which resulted from historically strong underwriting performance in that year. The remaining decrease relates to profit-sharing and other income earned by our Wholesale Business between March and December of 2023, for which there were no comparable revenues earned in 2024, and a reduction in other income.
Current report
UCTS investment income increased $2.0 million year over year due to improvements in our cash management strategy and growing yield on our invested cash.
Current report
Other operating expenses for UCTS were relatively flat year over year. Other operating expenses for the current year included higher costs due to fulfilling certain administrative functions on behalf of insurance company partners (including an increase in payment processing fees) of $3.2 million, generally higher costs to support the growth of the business and the launch of new products of $1.6 million, legal claims and settlement expense of $0.7 million, and travel and entertainment of $0.5 million to support growth. These increases were offset in part by reductions in partnership integration expenses of $4.2 million and professional fees of $1.2 million.
Current report
UCTS amortization expense decreased $1.0 million year over year, 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
Total other income for UCTS increased $33.2 million year over year, driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current report
Commissions, employee compensation and benefits expense for MIS increased $27.9 million, or 19%, year over year, primarily due to outside commissions, which increased $15.3 million, or 25%, relating to growth in our Westwood and legacy Mainstreet businesses. Other increases included colleague compensation of $7.6 million, inside advisor commissions of $3.5 million and benefits and other of $2.2 million, which were 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.
Current report
Other operating expenses in MIS increased $3.9 million year over year, driven by higher technology-related costs to support the growth of the business of $1.1 million, licenses and taxes of $0.7 million, advertising and marketing of $0.7 million, and travel and entertainment of $0.3 million.
Current report
Corporate and Other records the elimination of intercompany revenue from the operating groups. During 2024, UCTS recorded commissions revenue shared with other operating groups of $77.6 million and MIS recorded commissions revenue shared within the same operating group of $1.6 million.
Current report
Commissions, employee compensation and benefits expense in Corporate and Other decreased $58.0 million year over year, driven by a reduction in colleague compensation of $31.5 million, 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 allocated to the operating groups. Other decreases included severance of $11.9 million relating to the retirement of two of our executive officers at the end of 2023 as mentioned above, and $11.5 million relating to an increase in intercompany commissions expense eliminations.
Current report
Other operating expenses in Corporate and Other increased $1.3 million year over year due to an increase in tax receivable agreement expense of $4.6 million, higher advertising and marketing costs of $1.4 million connected to our rebranding, and higher licenses and taxes expense of $0.7 million. These increases were offset in part by decreases 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, which resulted in various costs savings of $2.1 million, and reductions in professional fees of $2.0 million and travel and entertainment of $1.5 million.
Current report
Corporate and Other amortization expense increased $1.0 million year over year due to capitalized software development costs.
Current report
Interest expense, net, in Corporate and Other increased $4.0 million year over year resulting from higher average borrowings, offset in part by lower average interest rates resulting from the May 2024 debt refinancing and federal rate reductions. We expect interest expense to remain relatively flat on a year-over-year basis due to an anticipated increase in borrowings from our revolving credit facility to fund the settlement of contingent earnout liabilities, offset by a lower expected average interest rate.
Current report
Loss on Extinguishment and Modification of Debt
Current report
Loss on extinguishment and modification of debt in Corporate and Other of $15.1 million relates to the May 2024 debt refinancing.
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 11 to our consolidated financial statements included in Part II, Item 8. Financial Statements and Supplementary Data of this report for more information relating to the terms of the Senior Secured Notes and 2024 Credit Facility.
Current report
On January 10, 2025, the 2024 Credit Agreement was amended to, among other things, provide for $100 million of incremental term B loans (the loans thereunder, the “2025 Term Loans”), increasing the aggregate principal amount of our existing $835.8 million senior secured first lien term loan facility maturing on May 24, 2031 to $935.8 million. The proceeds of the 2025 Term Loans were used to repay in full all of the 2024 Term Loans outstanding under the 2024 Credit Agreement.
Showing the first 40 of 41 passages. Open the source sections for the rest.
Removed paragraphs (43)
Previous report
Interest expense, net, for the year ended December 31, 2023 was $119.5 million, an increase of $48.4 million, or 68%, year over year. Interest expense, net, increased as a result of the higher interest rate environment during 2023 and, to a lesser extent, higher average borrowings outstanding on our credit facility.
Previous report
Other income (expense), net, for the year ended December 31, 2023 was $(0.7) million, a decrease of $26.9 million year over year. Other income (expense), net, decreased as a result of a fair value gain recognized on interest rate caps in 2022 in connection with rising interest rates and market estimates for future rate increases.
Previous report
Major Sources of Commissions and Fees
Previous report
The following table sets forth our commissions and fees by major source for the years ended December 31, 2023 and 2022:
Previous report
Commission revenue represents commissions earned from providing insurance placement services to Clients. Commission revenue increased by $180.8 million, or 23%, year over year. Commission revenue grew organically by $140.0 million as a result of new and renewal business across all industries. In addition, 2023 commission revenue grew $40.7 million from the impact of 2022 Partnerships for which there were no comparable revenues in the same period of 2022.
Previous report
Profit-sharing revenue represents bonus-type revenue earned as a sales incentive provided by certain Insurance Company Partners. Profit-sharing revenue increased by $27.3 million, or 41%, year over year driven by improvements in performance against profit-sharing measures such as premium volumes and loss ratio-related parameters.
Previous report
Consulting and service fee revenue represents negotiated fees earned for providing insurance placement services to Clients and specialty insurance consulting revenue. Consulting and service fee revenue increased by $13.4 million, or 22%, year over year, driven by growth in service fees earned by our legacy risk management and captive businesses.
Previous report
Policy fee and installment fee revenue represents revenue earned by our UCTS Operating Group for acting in the capacity of an MGA and providing payment processing services and other administrative functions on behalf of Insurance Company Partners. Policy fee and installment fee revenue increased by $10.0 million, or 18%, year over year driven by growth in our multi-family product.
Previous report
Investment Income
Previous report
Commissions, employee compensation and benefits expense increased $191.9 million, or 27%, year over year, due in part to the correlation of compensation to our revenue growth and as a result of investing in our future as we continue to launch new products in our MGA of the Future product suite and expand the distribution footprint of our national mortgage and real estate channel. Colleague compensation and benefits increased $77.4 million, or 16%, from supporting the growth of our business. Outside commissions increased $49.1 million, or 31%, due to a change in business mix and overall growth in the business. The increase in commissions, employee compensation and benefits expense also includes $25.1 million attributable to the impact of 2022 Partnerships for which there was no comparable compensation expense in the same period of 2022. Other increases to commissions, employee compensation and benefits expense include severance of $17.3 million related to the retirement of two of our executive officers and Colleague terminations, and share-based compensation expense of $8.8 million.
Previous report
Other operating expenses increased $16.6 million year over year driven by investments in technology to support our growth of $17.3 million, lead generation fees relating to the expansion of our national mortgage and real estate channel of $2.2 million, rent expense of $2.7 million and payment processing fees for our MGA business of $1.5 million. These increases were partially offset by lower costs for repairs and maintenance of $4.0 million and professional fees of $2.9 million.
Previous report
Amortization Expense
Previous report
Amortization expense increased by $11.0 million year over year driven in part by amortization of intangible assets recorded in connection with our Westwood Partnership.
Previous report
Change in fair value of contingent consideration was a $61.1 million loss for the year ended December 31, 2023 as compared to a $32.3 million loss for the same period of 2022. The fair value loss related to contingent consideration for 2023 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Previous report
Interest expense, net, increased by $48.4 million year over year resulting primarily from the higher interest rate environment and, to a lesser extent, higher average borrowings outstanding on our credit facility. We expect interest expense to increase slightly in 2024 as interest rates are expected to remain high in the near-term.
Previous report
Other Income (Expense), Net
Previous report
Other income (expense), net, decreased by $26.9 million year over year driven by a $26.2 million gain recognized on interest rate caps for 2022 in connection with rising interest rates and market estimates for future rate increases. Comparatively, we recognized a $1.7 million loss on interest rate caps for 2023.
Previous report
Accrued expenses and other current liabilities increased $27.2 million as a result of higher accrued compensation and benefits of $8.8 million and accrued expenses of $10.2 million related to bonus and severance expense. Accrued expenses and other current liabilities also include an earnout incentive bonus of $8.0 million related to a portion of a contingent earnout earned by one of our Partners, which is payable to certain Colleagues at the Partner's option.
Previous report
Long term debt increased $160.1 million and our revolving line of credit decreased $164.0 million. During 2023, we increased our long-term debt borrowings with an incremental loan of $170.0 million and we used $165.0 million of the proceeds to partially repay outstanding amounts on the revolving line of credit, resulting in increased available borrowing capacity under the revolving line of credit to pay our future earnout obligations.
Previous report
Contingent earnout liabilities increased $9.5 million resulting from an increase of $61.1 million related to fair value adjustments impacted by positive changes in revenue growth trends of certain Partners, offset in part by $52.3 million of settlements.
Previous report
At December 31, 2023, assets and liabilities held for sale were $64.4 million and $43.9 million, respectively, as a result of our intention to sell our specialty wholesale broker business as describe in Note 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Assets held for sale are primarily comprised of premiums, commissions and fees receivable, net, intangible assets, net and goodwill, which reclassified $36.5 million, $11.7 million and $9.5 million from each of the respective financial statement captions. Liabilities held for sale are primarily comprised of premiums payable to insurance companies of $42.3 million.
Previous report
IAS commissions and fees increased $68.1 million, or 12%, year over year to $626.8 million. Core commissions and fees grew organically by $58.9 million, which 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%. Certain industries, such as construction, were impacted by a difficult financing environment, which caused a slowdown in job starts. Renewal business was impacted by rate increases across many property-related policies, partially offset by premium rate reductions in lines such as Directors and Officers Liability. IAS commissions and fees also increased from profit-sharing and other revenue of $9.3 million driven by improvements in performance against profit-sharing measures such as premium volumes and loss ratio-related parameters.
Previous report
Other operating expenses for IAS increased $5.5 million year over year, driven by our investment in technology to support our growth and integration activity of $6.2 million and travel and entertainment costs of $2.9 million. These increases were partially offset by lower costs for professional fees of $1.5 million, software and internet expenses of $1.3 million and consulting fees of $1.1 million.
Previous report
n/m not meaningful
Previous report
UCTS commissions and fees increased $110.3 million, or 36%, year over year to $418.0 million. The increase is primarily attributable to higher core commissions and fees of $99.0 million, which was driven by continued outperformance in our multi-family business (accounting for $28 million of the year-over-year increase in core commissions and fees) and momentum in our homeowners and commercial umbrella products (accounting for $33 million and $17 million, respectively, of the year-over-year increase in core commissions and fees), with the remaining contribution attributable to new business across our other product lines. Profit-sharing and other revenue increased by $11.3 million driven by strong underwriting performance in our multi-family and homeowners product suite.
Previous report
Other operating expenses for UCTS increased $13.4 million year over year, driven by continued investments in infrastructure to support the growth of the business of $10.1 million and payment processing fees for our MGA business of $1.5 million.
Previous report
Commissions, employee compensation and benefits expense for MIS increased $50.5 million. or 52%, year over year, due in part to the correlation of compensation to our revenue growth and as a result of investing in our future as we continue to expand the distribution footprint of our national mortgage and real estate channel. Significant drivers of commissions, employee compensation and benefits expense include Colleague compensation and benefits, which increased $12.2 million, or 21%, and outside commissions, which increased $9.4 million, or 25%. The increase in commissions, employee compensation and benefits expense also includes $24.5 million attributable to the impact of 2022 Partnerships for which there was no comparable compensation expense in the same period of 2022.
Previous report
Other operating expenses in MIS increased $6.0 million year over year, driven by higher lead generation fees relating to the expansion of our national mortgage and real estate channel of $4.3 million, investment in technology to support our growth of $2.5 million and travel and entertainment of $1.1 million. These increases were partially offset by lower costs for professional fees of $1.7 million.
Previous report
Amortization Expense
Previous report
The fair value loss related to contingent consideration for MIS of $1.8 million in 2023 was primarily related to our Westwood Partnership, which outperformed on our platform since the date of Partnership.
Previous report
n/m not meaningful
Previous report
The Corporate and Other non-reportable segment records the elimination of intercompany revenue from the Operating Groups. During 2023, UCTS recorded intercompany commissions and fees of $65.9 million related to the QBE Program Administrator Agreement and agency bill arrangements, and MIS recorded intercompany commissions of $1.8 million under agency bill and direct bill arrangements.
Previous report
The Corporate and Other non-reportable segment records the elimination of intercompany commissions, employee compensation and benefits expense from the Operating Groups. Corporate and Other commissions, employee compensation and benefits decreased from higher intercompany commissions expense elimination of $24.9 million, which was offset by higher severance expense of $13.0 million related to the retirement of two of our executive officers and Colleague terminations, and higher advisor commissions expense of $13.1 million.
Previous report
Other operating expenses in Corporate and Other decreased $8.2 million year over year driven by lower costs for travel and entertainment of $3.2 million, repairs and maintenance of $2.1 million, licenses and taxes of $1.6 million, advertising and marketing of $1.3 million and consulting fees of $1.1 million. These decreases were partially offset by higher costs for rent expense of $1.9 million.
Previous report
Interest expense, net, increased by $48.3 million year over year resulting primarily from the higher interest rate environment and, to a lesser extent, higher average borrowings outstanding on our credit facility. We expect interest expense to increase slightly in 2024 as interest rates are expected to remain high in the near-term.
Previous report
Other Income (Expense), Net
Previous report
Other income (expense), net, decreased by $27.8 million year over year driven by a $26.2 million gain recognized on interest rate caps for 2022 in connection with rising interest rates and market estimates for future rate increases. Comparatively, we recognized a $1.7 million loss on interest rate caps for 2023.
Previous report
JPM Credit Agreement
Previous report
As of December 31, 2023, 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 December 31, 2023, the outstanding borrowings on the Term Loan B of $998.7 million had an applicable interest rate of 8.97%.
Showing the first 40 of 43 passages. Open the source sections for the rest.
Reworded paragraphs (58)
Previous wording
We are a rapidly growing independent insurance distribution firm delivering solutions that give our Clients the peace of mind to pursue their purpose, passion and dreams. The following is a summary of our 2023 financial results:
Current wording
We are 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. The following is a summary of our 2024 financial results.
Previous wording
Revenues for the year ended December 31, 2023 were $1.2 billion, an increase of $237.8 million, or 24%, year over year. Core commissions and fees grew organically by $161.7 million as a result of new and renewal business from Clients across industry sectors and continued outperformance from our MGA of the Future platform. 2023 commissions and fees also grew $44.7 million from the impact of 2022 Partnerships for which there were no comparable revenues in the same period of 2022 and $25.5 million from profit-sharing and other revenue driven by improvements in performance on our profit-sharing arrangements. In addition, investment income grew $6.7 million due to an improved cash management strategy and growing yield on our invested cash.
Current wording
Revenues for the year ended December 31, 2024 were $1.4 billion, an increase of $170.5 million, or 14%, year over year. Core commissions and fees grew organically by $190.0 million as a result of new and renewal business from clients across industry sectors and continued outperformance from MSI. In addition, profit-sharing and other revenue grew organically by $6.9 million as a function of improvements in loss ratios and the number of policies sold for MIS and IAS, offset in part by a reduction in UCTS profit-sharing revenue, which resulted from historically strong underwriting performance in 2023. This growth was offset in part by commissions and fees of $28.8 million derived from our Wholesale Business between March and December of 2023, for which there were no comparable revenues earned in 2024 as a result of the sale of the business in the first quarter of 2024. In addition, investment income grew $5.2 million due to an improved cash management strategy and growing yield on our invested cash.
Previous wording
Operating expenses for the year ended December 31, 2023 were $1.3 billion, an increase of $249.3 million, or 25%, year over year. The increase in operating expenses was primarily attributable to commissions, employee compensation and benefits, which grew in part due to the correlation of compensation to our revenue growth and as a result of investing in our future as we continue to launch new products in our MGA of the Future product suite and expand the distribution footprint of our national mortgage and real estate channel. Change in fair value of contingent consideration increased due to positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates. Other operating expenses increased in part as a result of our continued investments in technology and new product development and expansion.
Current wording
Operating expenses for the year ended December 31, 2024 were $1.3 billion, an increase of $67.3 million, or 5%, year over year. The increase in operating expenses was primarily attributable to commissions, employee compensation and benefits, resulting in part from the correlation of compensation to our revenue growth, and as a result of investing in our future as we continue to launch new products in our MSI product suite and expand our business. This increase was offset in part by a decrease in the change in fair value of contingent consideration, which was primarily impacted by a gain recognized in connection with the reclassification of colleague earnout incentives into compensation expense.
Previous wording
Net loss for the year ended December 31, 2023 was $164.0 million, an increase of $87.3 million compared to a net loss of $76.7 million in the same period of 2022.
Current wording
Net loss for the year ended December 31, 2024 was $41.1 million, or a $0.39 loss per fully diluted share, compared to a net loss of $164.0 million, or a $1.50 loss per fully diluted share, in the same period of 2023.
Previous wording
Adjusted EBITDA for the year ended December 31, 2023 was $250.2 million, an increase of $53.7 million year over year. Adjusted EBITDA Margin was 21% for 2023 compared to 20% for 2022.
Current wording
Adjusted EBITDA for the year ended December 31, 2024 was $312.5 million, an increase of $62.3 million year over year. Adjusted EBITDA margin was 22.5% for 2024, a 200 basis point expansion compared to 20.5% in 2023.
Previous wording
Organic Revenue for the year ended December 31, 2023 was $1.2 billion as compared to $700.1 million for the same period of 2022. Organic Revenue Growth was $187.2 million, or 19%, for 2023 compared to $132.6 million, or 23%, for 2022. Refer to the Non-GAAP Financial Measures section below for reconciliations of Adjusted EBITDA, Adjusted EBITDA Margin, Organic Revenue and Organic Revenue Growth to the most directly comparable GAAP financial measures.
Current wording
Organic revenue for the year ended December 31, 2024 was $1.4 billion compared to $1.2 billion for the same period of 2023. Organic revenue growth was $196.9 million, or 17%, for 2024 compared to $187.2 million, or 19%, for 2023.
Previous wording
For a discussion of our 2021 financial results and a comparison of financial results for the years ended December 31, 2022 to 2021, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the SEC on February 28, 2023 and the Company's Current Report on Form 8-K (relating to the Company's reclassification of historical segment information) filed with the SEC on May 9, 2023.
Current wording
For a discussion of our 2022 financial results and a comparison of financial results for the years ended December 31, 2023 to 2022, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K filed with the SEC on February 28, 2024.
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 and fees 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 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 fulfilling 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 fulfilling specific targeted Medicare marketing campaigns.
Previous wording
Commissions and fees increased by $231.1 million, or 24%, year over year to $1.2 billion driven by organic growth in core commissions and fees of $161.7 million related to new and renewal business across Client industry sectors and continued outperformance from our MGA of the Future platform. Commissions and fees also increased $44.7 million from the impact of 2022 Partnerships for which there were no comparable revenues in the same period of 2022 and $25.5 million from profit-sharing and other revenue driven by improvements in performance on our profit-sharing arrangements.
Current wording
Commissions and fees increased $165.3 million, or 14%, year over year to $1.4 billion driven by organic growth in core commissions and fees of $190.0 million related to new and renewal business across client industry sectors and continued outperformance from MSI. In addition, profit-sharing and other revenue grew organically $6.9 million as a function of improvements in loss ratios and the number of policies sold for MIS and IAS, offset in part by a reduction in UCTS profit-sharing revenue, which resulted from historically strong underwriting performance in 2023. This growth was offset in part by commissions and fees of $28.8 million derived from our Wholesale Business between March and December of 2023, for which there were no comparable revenues earned in 2024 as a result of the sale of the business in the first quarter of 2024.
Previous wording
Investment income is earned by investing assets held in trust. Investment income earned in 2023 was $6.7 million 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 $5.2 million year over year due to improvements in our cash management strategy and growing yield on our invested cash.
Previous wording
Refer to Item 7A. Qualitative and Quantitative Disclosures About Market Risk for further discussion of the impact of rising interest rates on our results of operations, financial condition and cash flows.
Current wording
Refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion of the impact of interest rates on our results of operations, financial condition and cash flows.
Previous wording
Our total assets and total liabilities increased $39.8 million and $160.9 million, respectively, year over year. The most significant changes in assets and liabilities are described below.
Current wording
Our total assets and total liabilities increased $32.8 million and $42.9 million, respectively, year over year. The most significant changes in assets and liabilities are described below.
Previous wording
Premiums, commissions and fees receivable, net increased $95.8 million and premiums payable to insurance companies increased $84.3 million. The increase in each can be attributed to our revenue growth and the timing of cash collections and payments.
Current wording
Premiums, commissions and fees receivable, net increased $74.3 million and premiums payable to insurance companies increased $85.7 million. The increase in each can be attributed to our revenue growth and the timing of cash collections and payments.
Previous wording
Intangible assets, net decreased $82.6 million as a result of amortization expense of $92.7 million, offset in part by capitalized software development costs of $18.3 million related to infrastructure to support our business.
Current wording
Intangible assets, net decreased $63.9 million as a result of amortization expense of $102.7 million, offset in part by capitalized software development costs of $38.4 million related to infrastructure to support our business.
Previous wording
Adjusted EBITDA, Adjusted EBITDA Margin, Organic Revenue, Organic Revenue Growth, Adjusted Net Income and Adjusted Diluted Earnings Per Share (“EPS”), are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, including commissions and fees (for Organic Revenue and Organic Revenue Growth), net income (loss) (for Adjusted EBITDA and Adjusted EBITDA Margin), net income (loss) attributable to BRP Group (for Adjusted Net Income) or diluted earnings (loss) per share (for Adjusted Diluted EPS), which we consider to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for commissions and fees, net income (loss), net income (loss) attributable to BRP Group, diluted earnings (loss) per share or other consolidated income statement data prepared in accordance with GAAP. Other companies in our industry may define or calculate these non-GAAP financial measures differently than we do, and accordingly, these measures may not be comparable to similarly titled measures used by other companies.
Current wording
Adjusted EBITDA, adjusted EBITDA margin, organic revenue, organic revenue growth, adjusted net income and adjusted diluted earnings per share (“EPS”), are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, including commissions and fees (for organic revenue and organic revenue growth), net income (loss) (for adjusted EBITDA and adjusted EBITDA margin), net income (loss) attributable to Baldwin (for adjusted net income) or diluted earnings (loss) per share (for adjusted diluted EPS), which we consider to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for commissions and fees, net income (loss), net income (loss) attributable to Baldwin, diluted earnings (loss) per share or other consolidated income statement data prepared in accordance with GAAP. Other companies in our industry may define or calculate these non-GAAP financial measures differently than we do, and accordingly, these measures may not be comparable to similarly titled measures used by other companies.
Previous wording
We calculate Organic Revenue based on commissions and fees for the relevant period by excluding the first twelve months of commissions and fees generated from new Partners. Organic Revenue Growth is the change in Organic Revenue period-to-period, with prior period results adjusted to include commissions and fees that were excluded from Organic Revenue in the prior period because the relevant Partners had not yet reached the twelve-month owned mark, but which have reached the twelve-month owned mark in the current period. For example, revenues from a Partner acquired on June 1, 2022 are excluded from Organic Revenue for 2022. However, after June 1, 2023, results from June 1, 2022 to December 31, 2022 for such Partners are compared to results from June 1, 2023 to December 31, 2023 for purposes of calculating Organic Revenue Growth in 2023. Organic Revenue Growth is a key metric used by management and our board of directors to assess our financial performance. We believe that Organic Revenue and Organic Revenue Growth are appropriate measures of operating performance as they allow investors to measure, analyze and compare growth in a meaningful and consistent manner.
Current wording
We calculate organic revenue based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from new partners and (ii) commissions and fees from divestitures. Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period because the relevant partners had not yet reached the twelve-month owned mark, but which have reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue. For example, commissions and fees from a partner acquired on June 1, 2023 are excluded from organic revenue for 2023. However, after June 1, 2024, results from June 1, 2023 to December 31, 2023 for such partners are compared to results from June 1, 2024 to December 31, 2024 for purposes of calculating organic revenue growth in 2024. Organic revenue growth is a key metric used by management and our board of directors to assess our financial performance. We believe that organic revenue and organic revenue growth are appropriate measures of operating performance as they allow investors to measure, analyze and compare growth in a meaningful and consistent manner.
Previous wording
We define Adjusted Net Income as net income (loss) attributable to BRP Group adjusted for depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related Partnership and integration expenses, severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments. We believe that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance.
Current wording
We define adjusted net income as net income (loss) attributable to Baldwin adjusted for depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related partnership and integration expenses, severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments. We believe that adjusted net income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance.
Previous wording
(1) Other addbacks to Adjusted EBITDA include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.
Current wording
(2) Other addbacks to adjusted EBITDA include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses.
Previous wording
(2)Organic Revenue for the year ended December 31, 2022 used to calculate Organic Revenue Growth for the year ended December 31, 2023 was $979.9 million, which is adjusted to reflect revenues from Partnerships that reached the twelve-month owned mark during the year ended December 31, 2023.
Current wording
(2)Organic revenue for the year ended December 31, 2023 used to calculate organic revenue growth for the year ended December 31, 2024 was $1.18 billion, 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 loss attributable to BRP Group and reconciles Adjusted Diluted EPS to diluted 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
(1) Other addbacks to Adjusted Net Income include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.
Current wording
(1) Other addbacks to adjusted net income include certain income and expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses.
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
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 (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
Commissions, employee compensation and benefits expense for IAS increased $48.1 million, or 12%, year over year. Colleague compensation, and benefits increased $33.7 million, or 9%, in correlation with our revenue growth. IAS commissions, employee compensation and benefits expense for 2023 also included $8.5 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.
Current wording
Commissions, employee compensation and benefits expense for IAS increased $87.2 million, or 19%, year over year primarily due to an increase in colleague compensation of $36.4 million, 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. IAS commissions, employee compensation and benefits expense for 2024 also included an increase related to colleague earnout incentives of $30.8 million for contingent earnout liabilities that were reclassified, at the partner's option, to an earnout incentive bonus payable to colleagues. In addition, inside advisor commissions increased $14.5 million, or 9%, in line with the growth in IAS’ core commissions and fees.
Previous wording
Change in fair value of contingent consideration for IAS was a $41.5 million loss for the year ended December 31, 2023 as compared to a $26.4 million loss for the same period of 2022. The fair value loss related to contingent consideration for 2023 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 $10.5 million gain for the year ended December 31, 2024 compared to a $38.3 million loss for the same period of 2023. The fair value gain related to contingent consideration for the year ended December 31, 2024 was impacted by the reclassification of $39.3 million of colleague earnout incentives to commissions, employee compensation and benefits expense, offset in part by positive changes in revenue growth trends of certain partners.
Previous wording
The Underwriting, Capacity & Technology Solutions Operating Group (“UCTS”) consists of three distinct businesses. 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. Our specialty wholesale broker business delivers professionals, individuals and niche industry businesses expanded access to exclusive specialty markets, capabilities and programs requiring complex underwriting and placement. And in the third quarter of 2023, we launched our reinsurance brokerage business, Juniper Re.
Current wording
UCTS consists of three distinct businesses—MSI, our reinsurance brokerage business, Juniper Re, and our captive management business. 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
Commissions, employee compensation and benefits expense for UCTS includes both outside commissions paid to partners that distribute UCTS' MGA products and compensation paid primarily to Colleagues, and to a small extent, outside contractors. Commissions, employee compensation and benefits expense for UCTS increased $92.8 million year over year as a result of increases in outside commissions and other compensation. Outside commissions increased $55.8 million, or 36%, in line with the growth in UCTS commissions and fees. Colleague compensation, and benefits increased $27.9 million, or 45%, 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 our MGA products and compensation paid primarily to colleagues. Commissions, employee compensation and benefits expense for UCTS increased $63.6 million year over year, primarily driven by outside commissions, which increased $66.8 million, or 35%, in line with the growth in UCTS core commissions and fees after excluding outside commissions relating to the Wholesale Business between March and December of 2023 of $15.8 million. Other increases, after excluding amounts relating to the Wholesale Business between March and December of 2023, included benefits and other expense of $7.0 million and colleague compensation of $8.9 million, which were 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. These increases were partially offset by compensation costs of $23.7 million incurred by our Wholesale Business between March and December of 2023, for which there were no comparable costs incurred in 2024.
Previous wording
Change in fair value of contingent consideration for UCTS was a $17.8 million loss for the year ended December 31, 2023 as compared to a $5.4 million loss for the same period of 2022. The fair value loss related to contingent consideration for 2023 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 $5.1 million loss for the year ended December 31, 2024 compared to a $20.9 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.
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 $77.7 million, or 49%, year over year to $234.7 million. MIS core commissions and fees grew organically by $30.8 million driven by our legacy Mainstreet business (accounting for $8.6 million of the year-over-year increase in core commissions and fees), the national mortgage and real estate channel (accounting for $6.3 million of the year-over-year increase in core commissions and fees), and our Westwood Partner (accounting for $15.9 million of the year-over-year increase in core commissions and fees subsequent to reaching the twelve-month owned mark). MIS commissions and fees also grew $42.2 million from the impact of 2022 Partnerships for which there were no comparable revenues in the same period of 2022. In addition, MIS profit-sharing and other revenue increased by $4.8 million primarily resulting from improvements in loss ratios and the number of policies sold.
Current wording
MIS commissions and fees increased $46.6 million, or 20%, year over year to $281.2 million, due to organic growth in core commissions and fees. Key drivers of the organic growth in MIS core commissions and fees included our Westwood Partner (accounting for $15.7 million of the year-over-year increase in core commissions and fees), our legacy Mainstreet business (accounting for $13.9 million of the year-over-year increase in core commissions and fees), and the national mortgage and real estate channel (accounting for $4.1 million of the year-over-year increase in core commissions and fees). In addition, MIS profit-sharing and other income increased $13.0 million primarily resulting from improvements in MIS loss ratios and the number of policies sold.
Previous wording
Amortization expense in MIS increased $8.3 million year over year, primarily driven by the amortization of intangible assets recorded in connection with our Westwood Partnership.
Current wording
MIS amortization expense increased $3.6 million year over year, primarily driven by the amortization of intangible assets recorded in connection with our Westwood Partnership, which are amortized based on a pattern of estimated economic benefit.
Previous wording
The substantial increase in intercompany commissions and fees year over year is related to the QBE Program Administrator Agreement, which was effective May 1, 2022. 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
A substantial portion of the intercompany commissions revenue recorded during 2024 is related to the QBE Program Administrator Agreement. We expect intercompany commissions revenue to continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
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 the MIS.
Current wording
A significant portion of the year-over-year increase in intercompany commissions expense eliminated through Corporate and Other is related to the QBE Program Administrator Agreement. We expect intercompany commissions expense to continue to increase as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
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 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 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 the sponsorship of, and a minority, non-controlling interest in, an investment fund, 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 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 MSI business.
Previous wording
We have historically financed our operations and funded our debt service through the sale of our insurance products and services, and we have financed significant cash needs to fund growth through the acquisition of Partners through debt and equity financing.
Current wording
We have historically financed our operations and funded our debt service through the sale of our insurance products and services, and we have financed significant cash needs to fund growth via the acquisition of partners through debt and equity financing.
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. During 2023, we increased our borrowings under the Term Loan B by $170.0 million and we used $165.0 million of the proceeds to partially repay outstanding amounts under the Revolving Facility, which increased our available borrowing capacity to pay our future earnout obligations. 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 issuance of the Senior Secured Notes and the 2024 Term Loan, cash flow from operations and available borrowings under the 2024 Revolving Facility. 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 December 31, 2023, our cash and cash equivalents were $116.2 million and we had $259.0 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 December 31, 2024, our cash and cash equivalents were $148.1 million and we had $588.0 million of available borrowing capacity on the Revolving Facility under the 2024 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.
Previous wording
(1)Represents noncancelable operating leases for our facilities, including operating leases classified as held for sale on the consolidated balance sheet at December 31, 2023. Operating lease expense was $23.2 million and $19.9 million for the years ended December 31, 2023 and 2022, respectively.
Current wording
(1)Represents noncancelable operating leases for our facilities. Operating lease expense was $21.5 million and $23.2 million for the years ended December 31, 2024 and 2023, respectively.
Showing the first 40 of 58 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report — wording carried from elsewhere
Refer to the Non-GAAP Financial Measures section below for reconciliations of adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted diluted EPS, organic revenue and organic revenue growth to the most directly comparable GAAP financial measures.
Current report — wording carried from elsewhere
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Other income consists of other ancillary income, premium financing income and marketing income that is based on agreed upon cost reimbursement for fulfilling specific targeted Medicare marketing campaigns. Other income was relatively flat year over year.