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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3. Business Divestitures
- Business Divestitures
Since its launch in January 2020, the Company's specialty wholesale broker business (the “Wholesale Business”), operating within the Underwriting, Capacity & Technology Solutions operating group, had not benefited from the same degree of capital allocation, focus and prioritization as the retail and MGA businesses. After assessing the various paths forward for the Wholesale Business, near the end of 2023, management concluded that a plan to sell the Wholesale Business created the greatest opportunity for both the Company and the Wholesale Business.
As of December 31, 2023, the Wholesale Business met the criteria to be classified as held for sale. The assets and liabilities were recorded as held for sale at their carrying value, which was determined to be lower than the fair value of the net assets less costs to sell and, as a result, no loss was recorded relating to the reclassification. The divestiture did not meet the criteria to be reported as discontinued operations and the Company continued to report the operating results for its Wholesale Business as continuing operations in the consolidated statements of comprehensive loss through February 29, 2024.
On March 1, 2024, the Company closed on the sale of its Wholesale Business for proceeds of approximately $58.9 million, subject to certain customary purchase price adjustments. The Company derecognized assets of $61.8 million, which included $9.5 million of goodwill, and liabilities of $39.9 million. The Company recognized a pre-tax gain on the sale of $35.1 million (after post-closing adjustments), which is included as a component of gain on divestitures in the consolidated statements of comprehensive loss for the year ended December 31, 2024.
The table below provides a summary of the major classes of assets and liabilities that were classified as held for sale on the consolidated balance sheets as of December 31, 2023:
| (in thousands) | December 31, 2023 |
|---|---|
| Restricted cash | $5,930 |
| Premiums, commissions and fees receivable, net | 36,470 |
| Property and equipment, net | 50 |
| Right-of-use assets | 310 |
| Other assets | 395 |
| Intangible assets, net | 11,716 |
| Goodwill | 9,480 |
| Assets held for sale | $64,351 |
| Premiums payable to insurance companies | $42,289 |
| Producer commissions payable | 955 |
| Accrued expenses and other current liabilities(1) | 589 |
| Operating lease liabilities, less current portion | 98 |
| Liabilities held for sale | $43,931 |
(1)Includes the current portion of operating lease liabilities.
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