Baldwin Insurance Group Inc
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
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FY2024 · Filed Feb 25, 2025
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21. Segment Information
- Segment Information
Effective January 1, 2024, the Company’s FounderShield Partner moved from the Underwriting, Capacity & Technology Solutions operating group to the Insurance Advisory Solutions operating group. Prior year segment reporting information within this note has been recast to conform to the current organizational structure.
Baldwin’s business is divided into three operating groups: Insurance Advisory Solutions, Underwriting, Capacity & Technology Solutions and Mainstreet Insurance Solutions.
The Insurance Advisory Solutions (“IAS”) operating group 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.
The Underwriting, Capacity & Technology Solutions (“UCTS”) operating group consists of three distinct businesses—its MGA platform (“MSI”), the reinsurance brokerage business, Juniper Re, and our captive management business. Through MSI, the Company manufactures proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via risk advisors across its other operating groups and externally via select distribution partners, with a focus on sheltered channels where its 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. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in UCTS’ results through February 29, 2024.
The Mainstreet Insurance Solutions (“MIS”) operating group 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. The MIS operating group 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.
In all its operating groups, the Company generates commissions from insurance placement under both agency bill and direct bill arrangements, and profit-sharing income based on either the underlying book of business or performance, such as loss ratios. All operating groups also generate other ancillary income.
In the IAS and UCTS operating groups, the Company generates fees from service fee and consulting arrangements. Service fee arrangements are in place with certain clients for providing insurance placement services.
In the UCTS operating group, the Company generates fees from policy fee and installment fee arrangements. Policy fee revenue is earned for acting in the capacity of an MGA and providing payment processing services and other administrative functions on behalf of insurance company partners.
In the MIS operating group, the Company generates commissions and fees from marketing income, which is earned through co-branded Medicare marketing campaigns with the Company’s insurance company partners.
In addition, the Company generates investment income in all its operating groups and the Corporate and Other non-reportable segment.
The Company’s chief operating decision maker, the chief executive officer, evaluates the performance of its reportable segments based on net income (loss) and net income (loss) before interest, taxes, depreciation, amortization, and one-time transactional-related expenses or non-recurring items. The chief operating decision maker considers actual, actual-to-prior year variances, and budget-to-actual variances on a monthly basis for both profit measures to manage resources and make decisions about the business. However, only segment net income (loss), as the measure of segment profit or loss that is most consistent with GAAP measurement principles, is disclosed below.
Summarized financial information regarding the Company’s operating groups is shown in the following tables. The Corporate and Other non-reportable segment includes any expenses not allocated to the operating groups and corporate-related items, including interest expense. Intersegment revenue and expenses are eliminated through Corporate and Other. Service center expenses and other overhead are allocated to the Company’s operating groups based on either revenue or headcount as applicable to each expense.
The Company changed its measure of operating group profitability during the year ended December 31, 2024. In previous years, commissions, employee compensation and benefits expense relating to the Company’s growth services colleagues was primarily recognized in Corporate and Other. During 2024, the Company began allocating growth services colleague compensation amongst the respective operating groups. This change in measurement resulted in an increase to commissions, employee compensation and benefits expense in each of the operating groups and a decrease in Corporate and Other.
| For the Year Ended December 31, 2024 | |||||
|---|---|---|---|---|---|
| (in thousands) | Insurance Advisory Solutions | Underwriting, Capacity & Technology Solutions | Mainstreet Insurance Solutions | Corporateand Other | Total |
| Revenues: | |||||
| Commission revenue(1)(2) | $569,434 | $388,810 | $250,825 | $(79,166) | $1,129,903 |
| Profit-sharing revenue | 60,935 | 12,464 | 22,133 | — | 95,532 |
| Consulting and service fee revenue | 71,852 | 6,316 | — | — | 78,168 |
| Policy fee and installment fee revenue | — | 60,719 | — | — | 60,719 |
| Other income | 3,936 | 568 | 8,290 | — | 12,794 |
| Investment income | 5,779 | 4,062 | 35 | 2,045 | 11,921 |
| Total revenue | 711,936 | 472,939 | 281,283 | (77,121) | 1,389,037 |
| Expenses: | |||||
| Outside commissions(2) | 11,009 | 260,204 | 77,782 | (79,166) | 269,829 |
| Inside advisor commissions | 167,695 | 1,618 | 29,560 | — | 198,873 |
| Fixed compensation | 206,029 | 53,453 | 38,601 | 4,965 | 303,048 |
| Benefits and other | 82,925 | 32,757 | 22,974 | 8,466 | 147,122 |
| Share-based compensation | 25,511 | 9,326 | 6,719 | 23,947 | 65,503 |
| Severance | 1,895 | 1,757 | 520 | 1,584 | 5,756 |
| Colleague earnout incentives | 39,315 | 2,602 | — | — | 41,917 |
| Commissions, employee compensation and benefits | 534,379 | 361,717 | 176,156 | (40,204) | 1,032,048 |
| Selling expense | 23,098 | 4,414 | 15,754 | 6,866 | 50,132 |
| Operating expense | 54,714 | 36,602 | 19,449 | 28,172 | 138,937 |
| Administrative expense | 63,016 | 15,681 | 27,511 | 144,390 | 250,598 |
| All other expenses, net(3) | (15,403) | (28,888) | 495 | 2,199 | (41,597) |
| Total expense | 659,804 | 389,526 | 239,365 | 141,423 | 1,430,118 |
| Net income (loss) | $52,132 | $83,413 | $41,918 | $(218,544) | $(41,081) |
| Other segment disclosures: | |||||
| Change in fair value of contingent consideration | $(10,458) | $5,085 | $424 | $— | $(4,949) |
| Depreciation and amortization expense | 61,707 | 15,518 | 27,167 | 4,532 | 108,924 |
| Interest (income) expense, net | (4) | (26) | 32 | 123,642 | 123,644 |
| Gain on divestitures | 3,843 | 35,110 | — | — | 38,953 |
| Loss on extinguishment and modification of debt | — | — | — | (15,113) | (15,113) |
| Capital expenditures | 6,110 | 17,626 | 8,897 | 8,416 | 41,049 |
| At December 31, 2024 | |||||
| Total assets | $2,329,152 | $621,407 | $524,576 | $59,596 | $3,534,731 |
(1)During the year ended December 31, 2024, commission revenue for the IAS, UCTS and MIS operating groups included direct bill revenue of $351.3 million, $6.1 million and $248.8 million, respectively, and agency bill revenue of $218.2 million,$382.7 million and$2.0 million, respectively.
(2) During the year ended December 31, 2024, the UCTS operating group recorded commission revenue shared with other operating groups of $77.6 million; and the MIS operating group recorded commission revenue shared within the same operating group of $1.6 million. Commission revenue shared within the same operating group and passed through to other operating groups is eliminated through Corporate and Other.
(3)All other expenses include change in fair value of contingent consideration, gain on divestitures, other income (expense), net, income tax expense.
| For the Year Ended December 31, 2023 | |||||
|---|---|---|---|---|---|
| (in thousands) | Insurance Advisory Solutions | Underwriting, Capacity & Technology Solutions | Mainstreet Insurance Solutions | Corporateand Other | Total |
| Revenues: | |||||
| Commission revenue(1)(2) | $512,211 | $305,752 | $217,300 | $(67,711) | $967,552 |
| Profit-sharing revenue | 56,549 | 21,174 | 15,714 | — | 93,437 |
| Consulting and service fee revenue | 68,481 | 6,156 | — | — | 74,637 |
| Policy fee and installment fee revenue | — | 65,386 | — | — | 65,386 |
| Other income | 5,102 | 4,031 | 1,683 | — | 10,816 |
| Investment income | 3,732 | 2,040 | — | 955 | 6,727 |
| Total revenue | 646,075 | 404,539 | 234,697 | (66,756) | 1,218,555 |
| Expenses: | |||||
| Outside commissions(2) | 7,480 | 209,188 | 62,461 | (67,711) | 211,418 |
| Inside advisor commissions | 153,212 | 4,530 | 26,073 | 2,927 | 186,742 |
| Fixed compensation | 191,929 | 53,220 | 36,359 | 12,920 | 294,428 |
| Benefits and other | 79,500 | 26,974 | 20,808 | 8,729 | 136,011 |
| Share-based compensation | 3,693 | 3,727 | 1,343 | 47,458 | 56,221 |
| Severance | 3,362 | 469 | 1,196 | 13,487 | 18,514 |
| Colleague earnout incentives | 8,020 | — | — | — | 8,020 |
| Commissions, employee compensation and benefits | 447,196 | 298,108 | 148,240 | 17,810 | 911,354 |
| Selling expense | 19,750 | 3,954 | 14,680 | 7,297 | 45,681 |
| Operating expense | 60,011 | 37,441 | 16,523 | 26,419 | 140,394 |
| Administrative expense | 56,962 | 17,124 | 23,821 | 123,879 | 221,786 |
| All other expenses, net(3) | 38,520 | 20,131 | 2,011 | 2,697 | 63,359 |
| Total expense | 622,439 | 376,758 | 205,275 | 178,102 | 1,382,574 |
| Net income (loss) | $23,636 | $27,781 | $29,422 | $(244,858) | $(164,019) |
| Other segment disclosures: | |||||
| Change in fair value of contingent consideration | $38,306 | $20,930 | $1,847 | $— | $61,083 |
| Depreciation and amortization expense | 55,339 | 16,584 | 23,418 | 3,061 | 98,402 |
| Interest (income) expense, net | (157) | — | (30) | 119,652 | 119,465 |
| Capital expenditures | 1,330 | 7,571 | 3,482 | 8,993 | 21,376 |
| At December 31, 2023 | |||||
| Total assets | $2,292,729 | $646,404 | $518,593 | $44,211 | $3,501,937 |
(1)During the year ended December 31, 2023, commission revenue for the IAS, UCTS and MIS operating groups included direct bill revenue of $325.2 million, $44.0 million and $215.6 million, respectively, and agency bill revenue of $187.0 million,$261.8 million and$1.7 million, respectively.
(2)During the year ended December 31, 2023, the UCTS operating group recorded commission revenue shared with other operating groups of $65.9 million; and the MIS operating group recorded commission revenue shared within the same operating group of $1.8 million. Commission revenue shared within the same operating group and passed through to other operating groups is eliminated through Corporate and Other.
(3)All other expenses include change in fair value of contingent consideration, other income (expense), net, income tax expense.
| For the Year Ended December 31, 2022 | |||||
|---|---|---|---|---|---|
| (in thousands) | Insurance Advisory Solutions | Underwriting, Capacity & Technology Solutions | Mainstreet Insurance Solutions | Corporateand Other | Total |
| Revenues: | |||||
| Commission revenue(1)(2) | $464,672 | $218,983 | $145,981 | $(42,842) | $786,794 |
| Profit-sharing revenue | 47,075 | 9,757 | 9,259 | — | 66,091 |
| Consulting and service fee revenue | 56,686 | 4,558 | — | — | 61,244 |
| Policy fee and installment fee revenue | — | 55,362 | — | — | 55,362 |
| Other income | 5,309 | 4,122 | 1,798 | — | 11,229 |
| Total revenue | 573,742 | 292,782 | 157,038 | (42,842) | 980,720 |
| Expenses: | |||||
| Outside commissions(2) | 8,428 | 153,502 | 37,891 | (42,842) | 156,979 |
| Inside advisor commissions | 140,759 | 4,985 | 19,522 | (10,309) | 154,957 |
| Fixed compensation | 172,135 | 33,982 | 26,799 | 13,990 | 246,906 |
| Benefits and other | 74,785 | 15,189 | 13,322 | 9,852 | 113,148 |
| Share-based compensation | — | — | — | 46,201 | 46,201 |
| Severance | 431 | 155 | 198 | 470 | 1,254 |
| Commissions, employee compensation and benefits | 396,538 | 207,813 | 97,732 | 17,362 | 719,445 |
| Selling expense | 15,642 | 2,976 | 9,021 | 8,217 | 35,856 |
| Operating expense | 56,993 | 23,507 | 15,247 | 31,216 | 126,963 |
| Administrative expense | 57,537 | 17,048 | 16,203 | 77,167 | 167,955 |
| All other expenses, net(3) | 25,114 | 7,037 | 583 | (25,485) | 7,249 |
| Total expense | 551,824 | 258,381 | 138,786 | 108,477 | 1,057,468 |
| Net income (loss) | $21,918 | $34,401 | $18,252 | $(151,319) | $(76,748) |
| Other segment disclosures: | |||||
| Change in fair value of contingent consideration | $25,156 | $6,627 | $524 | $— | $32,307 |
| Depreciation and amortization expense | 53,222 | 16,024 | 14,856 | 2,256 | 86,358 |
| Interest (income) expense, net | (232) | — | (30) | 71,334 | 71,072 |
| Capital expenditures | 1,738 | 5,655 | 3,018 | 11,568 | 21,979 |
(1)During the year ended December 31, 2022, commission revenue for the IAS, UCTS and MIS operating groups included direct bill revenue of $300.1 million, $40.6 million and $143.9 million, respectively, and agency bill revenue of $164.6 million,$178.4 million and $2.1 million, respectively.
(2)During the year ended December 31, 2022, the IAS operating group recorded commission revenue shared with other operating groups of $1.7 million; the UCTS operating group recorded commission revenue shared with other operating groups of $39.2 million; and the MIS operating group recorded commission revenue shared within the same operating group of $1.9 million. Commission revenue shared within the same operating group is eliminated through Corporate and Other.
(3)All other expenses include change in fair value of contingent consideration, other income (expense), net, income tax expense.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.