Baldwin Insurance Group, Inc.
For the period ended Mar 31, 2025. Filed May 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 6, 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-Q
Period ended 2024-09-30; filed 2024-11-04.
0001781755-24-000093
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0001781755-25-000063
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 139 previous paragraphs and 133 current paragraphs.
63 unchanged; 42 reworded; 28 added; 34 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
In January of 2025, we received final approval and a Certificate of Authority from the Texas Department of Insurance to form a Texas-domiciled reciprocal insurance exchange (the “Reciprocal”), for which we intend to serve as the Attorney-in-Fact (the “AIF”). The third-party led capitalization of the Reciprocal closed and funded in full on May 6, 2025, and we expect to begin writing business into the Reciprocal later in the second quarter or early in the third quarter of 2025. Based on the structure of the Reciprocal, we do not expect to consolidate the Reciprocal’s financial results, and the AIF entity will be treated as an equity method investment in UCTS.
Current report
UCTS includes TBG Assurance Company, LLC, a wholly-owned protected cell captive insurance company (“PCC”) domiciled in Tennessee, which was established to allow Baldwin to further participate in the underwriting results of a small portion of its MGA programs. The PCC allows for the creation of multiple independent cells (series) within a single legal entity, TBG Assurance Company, LLC (the “Core”). The initial series, MSI Multifamily Series Protected Cell (the “MSI Cell” and, collectively with the Core, the “Captive”), was effective January 1, 2025.
Current report
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
Current report
Colleague compensation and benefits expense decreased $3.0 million, or 2%, for the first quarter of 2025 compared to the same period of 2024, primarily related to a decrease in colleague earnout incentives of $6.9 million, offset in part by an increase in colleague compensation of $3.4 million.
Current report
Outside commissions increased $4.8 million, or 8%, for the first quarter of 2025 compared to the same period of 2024, which is in line with the increase in core commissions and fees.
Current report
Other Operating Expense
Current report
Other operating expenses increased $12.2 million for the first quarter of 2025 compared to the same period of 2024 driven by higher incurred losses and LAE of $3.9 million related to our newly-established Captive business, professional fees of $3.6 million due to increased legal spend which includes fees related to the setup of the Reciprocal, technology and software-related costs of $1.6 million, travel and entertainment of $1.1 million, and advertising and marketing of $1.1 million in connection with the continued rollout of our rebranding.
Current report
Amortization Expense
Current report
Amortization expense increased $1.8 million for the first quarter of 2025 compared to the same period of 2024 primarily due to an increase in capitalized software.
Current report
(1) Income and other taxes include the Tax Receivable Agreement expense and other operating tax expense, such as state taxes, under GAAP.
Current report
(1)Income tax expense includes the Tax Receivable Agreement expense.
Current report
IAS commissions and fees increased $4.3 million year over year due primarily to organic growth in core commissions and fees. Growth in our core commissions and fees was driven by 14% sales velocity (new business as a percentage of prior year commissions and fees) compared to 17% in the prior-year period, which was an expected downtick relating to timing differences in net new business. In addition, client retention improved slightly year over year to approximately 92%. New business growth was offset by 800 bps of headwind in underlying rate and exposure change year over year, attributable to both softening insurance rate, particularly in the property line of business, as well as overall lower economic activity. In addition, profit-sharing revenue increased $1.2 million year over year primarily resulting from improvements in loss ratios and the number of policies sold.
Current report
Colleague compensation and benefits expense for IAS decreased $2.3 million year over year primarily due to a decrease in colleague earnout incentives of $6.7 million, partially offset by increases in colleague compensation (fixed compensation plus share-based compensation) and benefits and other of $2.1 million each.
Current report
Other operating expenses for IAS increased $0.9 million year over year due primarily to higher costs for professional fees of $1.2 million.
Current report
Change in fair value of contingent consideration for IAS was a $7.1 million loss for the first quarter of 2025 compared to a $10.1 million loss for the first quarter of 2024. The fair value loss related to contingent consideration for the first quarter of 2025 was impacted by positive changes in revenue growth trends of certain partners, in addition to a $3.1 million loss recognized in connection with a reclassification from colleague earnout incentives.
Current report
UCTS commissions and fees increased $21.1 million year over year due primarily to organic growth in core commissions and fees. Growth in our core commissions and fees of $17.7 million was driven by continued outperformance in MSI (accounting for $17.5 million of the increase in core commissions and fees), building momentum in our Capacity Solutions group (accounting for $1.4 million of the increase in core commissions and fees), and the introduction of the Captive (accounting for $4.3 million of the increase in core commissions and fees), partially offset by a decrease in core commissions and fees of $5.5 million from our Wholesale Business that was sold in the first quarter of 2024 and for which there were no comparable revenues earned in the first quarter of 2025. UCTS profit-sharing and other revenue grew by $3.4 million year over year driven by timing differences. Core commissions and fees growth, excluding revenue related to the Wholesale Business during the first quarter of 2024, was 24%.
Current report
Colleague compensation and benefits expense for UCTS decreased $1.4 million year over year primarily driven by a decrease in colleague compensation and benefits expense related to our Wholesale Business that was sold in the first quarter of 2024 of $1.4 million for which there was no comparable expense in the first quarter of 2025. After excluding colleague compensation and benefits expense related to the Wholesale Business, colleague compensation increased $1.2 million resulting from the growth in UCTS, offset by a decrease in benefits and other expense of $1.1 million.
Current report
Outside commissions for UCTS consist of outside commissions paid to partners that distribute our MGA products. Outside commissions for UCTS increased $8.0 million, or 15%, after excluding outside commissions relating to the Wholesale Business during the first quarter of 2024 of $3.0 million.
Current report
Other operating expenses for UCTS increased $6.0 million year over year driven by higher incurred losses and LAE of $3.9 million related to our newly-established Captive business, professional fees of $1.7 million and licenses and taxes of $1.5 million.
Current report
Total Other Income (Expense), Net
Current report
Colleague compensation and benefits expense for MIS increased $0.8 million year over year due to an increase in inside advisor commissions.
Current report
Other operating expenses for MIS increased $1.5 million year over year driven by higher settlement expense and various other costs.
Current report
Amortization Expense
Current report
MIS amortization expense increased $1.1 million year over year primarily driven by an increase in capitalized software.
Current report
Colleague compensation and benefits expense in Corporate and Other decreased $0.2 million year over year driven by a reduction in severance.
Current report
Outside commissions for Corporate and Other include the elimination of intercompany commissions expense from the operating groups.
Current report
Other operating expenses in Corporate and Other increased $3.8 million year over year due primarily to higher technology and software-related costs of $2.5 million.
Current report
As of March 31, 2025 and December 31, 2024, we have recorded a Tax Receivable Agreement liability of $5.3 million and $4.8 million associated with the payments to be made to current or former Baldwin Holdings’ LLC Members subject to the Tax Receivable Agreement.
Removed paragraphs (34)
Previous report
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Previous report
Commissions and fees increased $121.1 million, or 13%, for the year-to-date period ended September 30, 2024 compared to the same period of 2023 driven by organic growth in core commissions and fees of $150.3 million related to new and renewal business across Client industry sectors and continued outperformance from MSI. This growth was offset in part by commissions and fees of $21.3 million derived from our Wholesale Business between March and September of 2023, for which there were no comparable revenues earned in 2024. In addition, profit-sharing and other revenue decreased $5.4 million for the year-to-date period, which is primarily a function of strong profit sharing revenue in the 2023 period, driven by both historically strong underwriting performance in the 2023 period and timing differences for UCTS, offset in part by improvements in loss ratios and the number of policies sold for MIS.
Previous report
Investment income is earned by investing assets held in trust. Investment income increased $1.7 million and $4.1 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to improvements in our cash management strategy and growing yield on our invested cash.
Previous report
Commissions, employee compensation and benefits expense increased $26.7 million, or 12%, for the quarter ended September 30, 2024 compared to the same period of 2023, primarily as a result of outside commissions, which increased $15.4 million, or 26%, due to growth in UCTS and MIS. In addition, Colleague compensation increased $5.4 million, driven by continued investments in headcount to support the growth of existing and new products, and Colleague earnout incentives increased $4.3 million as a result of contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues.
Previous report
Commissions, employee compensation and benefits expense increased $76.9 million, or 11%, for the year-to-date period ended September 30, 2024 compared to the same period of 2023, primarily related to outside commissions, which increased $47.4 million, or 30%, due to growth in UCTS and MIS. The year-to-date period also included an increase in Colleague earnout incentives of $10.3 million, which relate to contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues. Other increases, driven by continued investments in headcount to support the growth of existing and new products, include benefits and other expense of $8.9 million, variable inside commissions of $5.2 million and Colleague compensation of $5.1 million.
Previous report
Other operating expenses increased $1.7 million for the quarter ended September 30, 2024 compared to the same period of 2023. The increase in other operating expenses for the quarter was driven by higher legal claims and settlements expense of $1.1 million, travel and entertainment expense of $0.9 million to support our growth, and advertising and marketing of $0.9 million connected to our rebranding. These increased expenses were offset in part by lower professional fees and rent expense of $0.5 million each, due in part to certain cost saving measures we have implemented.
Previous report
Other operating expenses were relatively flat for the year-to-date period ended September 30, 2024 compared to the same period of 2023. Several categories of other operating expenses experienced decreases for the year-to-date period due in part to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and post Partnership integration operational efficiencies gained, which included lower professional fees of $4.6 million, Partnership integration and infrastructure-related costs of $3.5 million, and rent expense of $0.8 million. These costs savings were partially offset by higher legal claims and settlements expense of $3.0 million, payment processing fees for our MGA business of $2.0 million, licenses and taxes of $1.5 million, travel and entertainment of $1.4 million to support the growth in IAS, and advertising and marketing of $0.9 million connected to our rebranding.
Previous report
Amortization expense increased $3.7 million and $6.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to the acceleration of trade names amortization in connection with rebranding within IAS and higher amortization of intangible assets recorded in connection with our Westwood Partnership, which are amortized based on a pattern of estimated economic benefit, offset in part by a reduction in amortization related to the write-off of intangible assets in connection with the sale of our Wholesale Business during the first quarter of 2024.
Previous report
Other Income (Expense), Net
Previous report
Other income (expense), net, increased $1.4 million and $0.3 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, driven by losses recognized on interest rate caps during the 2023 periods in connection with an interest rate cap that expired in March 2024.
Previous 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.
Previous report
IAS commissions and fees increased $10.0 million for the quarter ended September 30, 2024 compared to the same period of 2023, due to higher core commissions and fees, which grew organically by 6%. Growth in our core commissions and fees was driven by 22% sales velocity (new business as a percentage of prior year commissions and fees) and resultant new business across Client industry sectors. Sales velocity for the quarter improved 400 bps over the same period of 2023 despite softness in our construction practice. New business growth was offset in part by rate and exposure of (4.7)% resulting from construction project work weakness and headwinds concentrated in our employee benefits practice. In addition, profit-sharing revenue increased $2.4 million for the quarter.
Previous report
IAS commissions and fees increased $42.4 million for the year-to-date period ended September 30, 2024 compared to the same period of 2023, due to organic growth in core commissions and fees of 10%. Growth in our core commissions and fees was driven by 21% sales velocity, which improved 430 bps over the prior-year period, and resultant new business across Client industry sectors. New business growth was offset in part by rate and exposure headwinds of (1.0)% attributable largely to our real estate book, particularly catastrophe-exposed real estate, employee benefits practice, and construction project work weakness. In addition, profit-sharing revenue increased $1.5 million for the year-to-date period.
Previous report
IAS investment income increased $0.5 million and $1.9 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to improvements in our cash management strategy and growing yield on our invested cash.
Previous report
Commissions, employee compensation and benefits expense for IAS increased $15.6 million and $47.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to an increase in Colleague compensation of $10.2 million and $25.1 million, respectively, driven by continued investments in headcount to support our growth, coupled with an increase in Colleague compensation allocated to IAS that was previously recognized in Corporate and Other. The quarter and year-to-date periods also included increases related to Colleague earnout incentives of $4.3 million and $10.3 million, respectively, for contingent earnout liabilities that were reclassified, at the Partner's option, to a bonus payable to Colleagues. In addition, variable inside commissions increased $8.0 million, or 7%, during the year-to-date period, in line with the growth in IAS’ core commissions and fees.
Previous report
Other operating expenses for IAS were relatively flat for each of the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023. Other operating expenses for the year-to-date period included higher costs for legal claims and settlement expense of $1.9 million and travel and entertainment of $1.8 million to support the growth in IAS, which were offset in part by $1.8 million of cost savings from measures we have implemented, including the renegotiation of vendor contracts and post Partnership integration operational efficiencies gained, and a reduction in professional fees of $1.1 million.
Previous report
IAS amortization expense increased $3.0 million and $5.7 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to the acceleration of trade names amortization in connection with rebranding within IAS.
Previous report
Change in fair value of contingent consideration for IAS was a $4.2 million gain for the quarter ended September 30, 2024 compared to a $7.9 million loss for the same period of 2023, and a $9.7 million loss for the year-to-date period ended September 30, 2024 compared to a $36.1 million loss for the same period of 2023. The fair value gain for the quarter ended September 30, 2024 was impacted by Colleague earnout incentives of $4.3 million, which were reclassified, at the Partner's option, from contingent earnout liabilities to a bonus payable to Colleagues, thereby resulting in a gain in the change in fair value of contingent consideration and an increase to commissions, employee compensation and benefits expense. The fair value loss related to contingent consideration for the year-to-date period ended September 30, 2024 was impacted by positive changes in revenue growth trends of certain partners, offset in part by a gain recognized in connection with the reclassification of $10.7 million to Colleague earnout incentives.
Previous 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.
Previous report
UCTS commissions and fees increased $15.4 million and $52.0 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to higher core commissions and fees, which grew organically by 31% and 36% for the comparative periods, respectively. Growth in our core commissions and fees was driven by continued outperformance in our multi-family business (accounting for $10.9 million and $29.3 million of the quarter and year-to-date increases in core commissions and fees, respectively), momentum in our homeowners (accounting for $8.9 million and $27.5 million of the quarter and year-to-date increases in core commissions and fees, respectively) and commercial umbrella products (accounting for $2.2 million and $9.8 million of the of the quarter and year-to-date increases in core commissions and fees, respectively), and growing contribution from our reinsurance brokerage business and commercial property program. These increases were partially offset by reductions in profit-sharing revenue for each of the periods, which is primarily a function of strong profit sharing revenue in the 2023 periods, driven by both historically strong underwriting performance in the 2023 periods and timing differences. In addition, our Wholesale Business, which was sold in the first quarter of 2023, generated $9.3 million of commissions and fees during the third quarter of 2023 and $21.3 million of commissions and fees between March and September of 2023, for which there were no comparable revenues earned in 2024.
Previous report
The initial term for the QBE Program Administrator Agreement expires in May of 2025, but has an extended term through May of 2027 during which MSI is required to assist QBE in arranging adequate reinsurance covering the business to be written between May 2025 and May 2027. The Company is currently working to assist QBE in arranging the reinsurance required to extend the QBE Program Administrator Agreement through May 2027.
Previous report
UCTS investment income increased $0.4 million and $1.5 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to improvements in our cash management strategy and growing yield on our invested cash.
Previous report
Commissions, employee compensation and benefits expense for UCTS includes both outside commissions paid to partners that distribute our MGA products and compensation paid to Colleagues. Commissions, employee compensation and benefits expense for UCTS increased $15.4 million and $47.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily driven by outside commissions, which increased $13.9 million, or 23%, for the quarter, and $40.3 million, or 26%, for the year-to-date period, in line with the growth in UCTS’ core commissions and fees. The year-to-date period also included increases in benefits and other expense of $5.0 million and Colleague compensation of $4.8 million, driven by continued investments in headcount to support the growth of existing and new products, coupled with an increase in Colleague compensation allocated to UCTS that was previously recognized in Corporate and Other.
Previous report
Other operating expenses for UCTS increased $0.8 million and $1.9 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively. The increase in other operating expenses for the year-to-date period was driven by higher costs due to fulfilling certain administrative functions on behalf of Insurance Company Partners (including an increase in payment processing fees) of $2.9 million, generally higher costs to support the growth of the business and the launch of new products of $1.8 million, travel and entertainment of $0.8 million to support our growth, and legal claims and settlement expense of $0.7 million. These increases were offset in part by reductions in Partnership integration expenses of $2.9 million and professional fees of $1.3 million.
Previous report
UCTS amortization expense decreased $0.1 million and $1.2 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to the write-off of intangible assets in connection with the sale of our Wholesale Business during the first quarter of 2024.
Previous report
Total Other Income
Previous report
Commissions, employee compensation and benefits expense for MIS increased $4.8 million and $22.3 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily due to outside commissions, which increased $3.2 million, or 20%, for the quarter, and $12.8 million, or 28%, for the year-to-date period, relating to growth in our Westwood and legacy Mainstreet businesses. The quarter and year-to-date periods also included higher Colleague compensation of $0.7 million and $6.1 million, respectively, driven by continued investments in headcount to support our growth, coupled with an increase in Colleague compensation allocated to MIS that was previously recognized in Corporate and Other.
Previous report
Other operating expenses for MIS increased $1.4 million and $2.5 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively. The increase in other operating expenses for the quarter and year-to-date periods was driven by higher technology-related costs to support the growth of the business of $0.3 million and $0.9 million, respectively, licenses and taxes of $0.2 million and $0.5 million, respectively, travel and entertainment of $0.2 million and $0.4 million, respectively, and advertising and marketing of $0.4 million and $0.1 million, respectively.
Previous report
MIS amortization expense increased $0.7 million and $1.8 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, primarily driven by higher amortization of intangible assets recorded in connection with our Westwood Partnership, which are amortized based on a pattern of estimated economic benefit.
Previous report
Commissions, employee compensation and benefits expense in Corporate and Other decreased $9.2 million and $41.0 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, driven by a reduction in Colleague compensation of $7.3 million and $30.9 million, respectively, due in part to a decrease in corporate-related headcount, including the retirement of two of our executive officers at the end of 2023, coupled with a decrease in Colleague compensation previously recognized in Corporate and Other that is now allocated to the Operating Groups. In addition, intercompany commissions expense eliminations increased $2.8 million and $8.6 million for the quarter and year-to-date periods, respectively.
Previous report
Other operating expenses in Corporate and Other decreased $0.7 million for the quarter ended September 30, 2024 compared to the same period of 2023 due, in part, to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and operational efficiencies gained from Partnership integration projects by our Operating Groups during 2023, offset in part by higher costs incurred in connection with our rebranding.
Previous report
Other operating expenses in Corporate and Other decreased $4.0 million for the year-to-date period ended September 30, 2024 compared to the same period of 2023 due to reductions in professional fees of $2.2 million, travel and entertainment of $1.6 million, infrastructure-related costs of $1.2 million and rent expense of $0.7 million. These cost savings are due, in part, to certain cost saving measures we have implemented, including the renegotiation of vendor contracts, and operational efficiencies gained from Partnership integration projects by our Operating Groups. These decreases were offset in part by higher licenses and taxes expense of $1.0 million and higher advertising and marketing costs of $0.7 million connected to our rebranding.
Previous report
Other Expense, Net
Previous report
Other expense, net, in Corporate and Other decreased $1.1 million and $0.7 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, driven by losses recognized on interest rate caps during the 2023 periods in connection with an interest rate cap that expired in March 2024.
Reworded paragraphs (42)
Previous wording
Baldwin is an independent insurance distribution firm providing indispensable expertise and insights that strive to give our Clients the confidence to pursue their purpose, passion and dreams. As a team of dedicated entrepreneurs and insurance professionals, we have come together to help protect the possible for our Clients. We do this by delivering bespoke Client solutions, services, and innovation through our comprehensive and tailored approach to risk management, insurance, and employee benefits. We support our Clients, Colleagues, Insurance Company Partners and communities through the deployment of vanguard resources and capital to drive our organic and inorganic growth. When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our fifth stakeholder, our stockholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits. Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our Partnership strategy, and continuing to build out our MGA platform (“MSI”), which delivers proprietary, technology-enabled insurance solutions to our internal Risk Advisors as well as to a growing channel of external distribution partners. We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation.
Current wording
Baldwin is an independent insurance distribution firm providing indispensable expertise and insights that strive to give our clients the confidence to pursue their purpose, passion and dreams. As a team of dedicated entrepreneurs and insurance professionals, we have come together to help protect the possible for our clients. We do this by delivering bespoke client solutions, services, and innovation through our comprehensive and tailored approach to risk management, insurance, and employee benefits. We support our clients, colleagues, insurance company partners and communities through the deployment of vanguard resources and capital to drive our organic and inorganic growth. When we consistently execute for these key stakeholders, we believe that the outcome is an increase in value for our fifth stakeholder, our stockholders. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits. Our growth plan includes continuing to recruit, train and develop industry leading talent, continuing to add geographic representation, insurance product expertise and end-client industry expertise via our partnership strategy, and continuing to expand our product suite and sources of capacity through our MGA platform (“MSI”), which delivers proprietary, technology-enabled insurance solutions to our internal risk advisors as well as to a growing channel of external distribution partners. We are a destination employer supported by an award-winning culture, powered by exceptional people and fueled by industry-leading growth and innovation.
Previous wording
We represent over two million Clients across the United States and internationally. Our 4,000 Colleagues include approximately 700 Risk Advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 110 offices in 24 states, all of which are equipped to provide diversified products and services to empower our Clients at every stage through our three Operating Groups.
Current wording
We represent over three million clients across the United States and internationally. Our 4,000 plus colleagues include approximately 700 risk advisors, who are fiercely independent, relentlessly competitive and “insurance geeks.” We have approximately 110 offices in 23 states, all of which are equipped to provide diversified products and services to empower our clients at every stage through our three operating groups.
Previous wording
•Underwriting, Capacity & Technology Solutions (“UCTS”) consists of two distinct businesses—MSI and our newly launched reinsurance brokerage business, Juniper Re. Through MSI, we manufacture proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our Risk Advisors across our other Operating Groups and externally via select distribution partners, with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is the national embedded renters insurance product sold at point of lease via integrations with property management software providers. As a prominent growth driver for the Company, we have invested heavily in the expansion of our MGA product suite, which is now comprised of more than 20 products across commercial, personal and professional lines, including new product launches in 2023 (high-net-worth homeowners, flood and commercial property products). UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through the end of February 2024.
Current wording
•Underwriting, Capacity & Technology Solutions (“UCTS”) consists of three distinct divisions—MSI, our Capacity Solutions group (which includes our reinsurance brokerage business, Juniper Re, and our captive management business), and the Captive business (as defined further below). Through MSI, we manufacture proprietary, technology-enabled insurance products that are then distributed (in many instances via technology and/or API integrations) internally via our risk advisors across our other operating groups and externally via select distribution partners, with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is the national embedded renters insurance product sold at point of lease via integrations with property management software providers. As a prominent growth driver for the Company, we have invested heavily in the expansion of our MGA product suite, which is now comprised of more than 20 products across commercial, personal and professional lines. In 2024, we made significant investment in the development of new middle-market oriented commercial lines products, which will go live in the first half of 2025. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through the end of February 2024.
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 and the related notes and other financial information included elsewhere in this report.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 and the related notes and other financial information included elsewhere in this report.
Previous wording
The following is a discussion of our consolidated results of operations for the three and nine months ended September 30, 2024 and 2023.
Current wording
The following is a discussion of our consolidated results of operations for the three months ended March 31, 2025 and 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 are usually a percentage of the premium paid by the insured and generally depend on the type of insurance, the particular Insurance Company Partner and the nature of the services provided. Under certain arrangements with Clients, we earn pre-negotiated service fees for insurance placement services. Additionally, we earn policy fees for acting in the capacity of an MGA and fulfilling certain administrative functions on behalf of Insurance Company Partners, including delivery of policy documents, processing payments and other administrative functions. We may also receive profit-sharing commissions, which represent forms of variable consideration paid by Insurance Company Partners associated with the placement of coverage. Profit-sharing commissions are generally based on underwriting results, but may also contain considerations for volume, growth or retention. Other revenue streams include other ancillary income, premium financing income, and marketing income based on negotiated cost reimbursement for fulling specific targeted Medicare marketing campaigns.
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, and the Captive business earns revenue from assumed premium. We may also receive profit-sharing commissions, which represent forms of variable consideration paid by insurance company partners associated with the placement of coverage. Profit-sharing commissions are generally based on underwriting results, but may also contain considerations for volume, growth or retention. Other revenue streams include other ancillary income, premium financing income, and marketing income based on negotiated cost reimbursement for fulling specific targeted Medicare marketing campaigns.
Previous wording
Commissions and fees increased $31.0 million, or 10%, for the quarter ended September 30, 2024 compared to the same period of 2023 driven by organic growth in core commissions and fees of $38.6 million related to new and renewal business across Client industry sectors and continued outperformance from MSI, offset in part by rate and exposure of (4.7)% in IAS. In addition, profit-sharing and other revenue increased $2.1 million for the quarter. This growth was offset in part by commissions and fees of $9.3 million derived from our Wholesale Business for the third quarter of 2023, for which there were no comparable revenues earned in 2024 since this business was sold in the first quarter of 2024.
Current wording
Commissions and fees increased $32.4 million, or 9%, for the first quarter of 2025 compared to the same period of 2024 driven by organic growth in core commissions and fees of $31.7 million related to new and renewal business across client industry sectors, continued outperformance from MSI, and new business growth from the Captive business. In addition, profit-sharing and other revenue grew organically $6.5 million resulting from improvements in loss ratios and the number of policies sold in IAS and MIS, as well as timing differences in UCTS. This growth was offset in part by a decrease in commissions and fees of $5.8 million from our Wholesale Business that was sold in March 2024 and for which there were no comparable revenues earned in the first quarter of 2025.
Previous wording
Commissions, employee compensation and benefits is our largest expense. It consists of (i) base compensation comprising salary, bonuses and benefits paid and payable to Colleagues, commissions paid to Colleagues and outside commissions paid to others; and (ii) equity-based compensation associated with the grants of restricted and unrestricted stock awards to senior management, Colleagues, Risk Advisors and directors. We expect to continue to experience a general rise in commissions, employee compensation and benefits expense commensurate with expected revenue growth as our compensation arrangements with our Colleagues and Risk Advisors contain significant bonus or commission components driven by the results of our operations. In addition, we operate in competitive markets for human capital and need to maintain competitive compensation levels as we expand geographically and create new products and services.
Current wording
Colleague compensation and benefits is our largest expense. It consists of (i) base compensation comprising salary, bonuses and benefits paid and payable to colleagues, and commissions paid to colleagues, and (ii) equity-based compensation associated with the grants of restricted and unrestricted stock awards to senior management, colleagues, risk advisors and directors. We expect to continue to experience a general rise in colleague compensation and benefits expense commensurate with expected revenue growth as our compensation arrangements with our colleagues and risk advisors contain significant bonus or commission components driven by the results of our operations. In addition, we operate in competitive markets for human capital and need to maintain competitive compensation levels as we expand geographically and create new products and services.
Previous wording
Change in fair value of contingent consideration was a $1.0 million gain for the quarter ended September 30, 2024 compared to a $13.9 million loss for the same period of 2023, and a $17.3 million loss for the year-to-date period ended September 30, 2024 compared to a $55.1 million loss for the same period of 2023. The fair value gain for the quarter ended September 30, 2024 was impacted by $4.3 million of Colleague earnout incentives, which were reclassified, at the Partner's option, from contingent earnout liabilities to a bonus payable to Colleagues, thereby resulting in a gain in the change in fair value of contingent consideration and an increase to commissions, employee compensation and benefits expense. The fair value loss related to contingent consideration for the year-to-date period ended September 30, 2024 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates, offset in part by a gain recognized in connection with the reclassification of $10.7 million to Colleague earnout incentives.
Current wording
Change in fair value of contingent consideration was an $8.1 million loss for the first quarter of 2025 compared to a $12.7 million loss for the first quarter of 2024. The fair value loss related to contingent consideration for the first quarter of 2025 was impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates, in addition to a loss recognized in connection with the reclassification of $3.3 million from colleague earnout incentives.
Previous wording
Interest expense, net, increased $0.7 million and $6.6 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, resulting from higher average borrowings, offset in part by lower average interest rates resulting from the May 2024 debt refinancing. We expect interest expense to remain relatively flat or increase slightly in the near-term on a year-over-year basis.
Current wording
Interest expense, net, decreased $1.6 million for the first quarter of 2025 compared to the same period of 2024 from lower average interest rates resulting from the January 2025 refinancing, offset in part by higher average borrowings. We expect interest expense to remain relatively flat in the near term on a year-over-year basis due to an anticipated increase in borrowings under our Revolving Facility to fund the settlement of contingent earnout liabilities, offset by lower expected average interest rates.
Previous wording
Gain on divestitures for the year-to-date period ended September 30, 2024 was driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current wording
Gain on divestitures decreased $35.1 million for the first quarter of 2025 compared to the same period of 2024 driven by a $36.4 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Previous wording
Loss on extinguishment and modification of debt of $15.1 million for the year-to-date period ended September 30, 2024 relates to the May 2024 debt refinancing.
Current wording
Loss on extinguishment and modification of debt of $2.4 million for the first quarter of 2025 relates to the January 2025 refinancing.
Previous wording
The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net loss, which we consider to be the most directly comparable GAAP financial measure:
Current wording
The following table reconciles adjusted EBITDA and adjusted EBITDA margin to net income, which we consider to be the most directly comparable GAAP financial measure:
Previous wording
(1) Other addbacks to adjusted EBITDA include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses.
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 three and nine months ended September 30, 2023 used to calculate organic revenue growth for the three and nine months ended September 30, 2024 was $294.5 million and $905.6 million, respectively, which is adjusted to exclude commissions and fees from divestitures that occurred during 2024.
Current wording
(2)Organic revenue for the three months ended March 31, 2024 used to calculate organic revenue growth for the three months ended March 31, 2025 was $372.3 million, which is adjusted to exclude commissions and fees from divestitures that occurred during 2024 and 2025.
Previous 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:
Current wording
The following table reconciles adjusted net income to net income attributable to Baldwin and reconciles adjusted diluted EPS to diluted earnings 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 expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses.
Current wording
(2)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
UCTS consists of two distinct businesses—MSI and our newly launched reinsurance brokerage business, Juniper Re. Through MSI, we manufacture proprietary, technology-enabled insurance products with a focus on sheltered channels where our products deliver speed, ease of use and certainty of execution, an example of which is our national embedded renters insurance product sold at point of lease via integrations with property management software providers. Our MGA product suite is now comprised of more than 20 products across personal, commercial and professional lines. UCTS’ Wholesale Business was sold in the first quarter of 2024 and its operations are included in our results through February 29, 2024.
Current wording
UCTS consists of three distinct divisions—MSI, our Capacity Solutions group (which includes our reinsurance brokerage business, Juniper Re, and our captive management business), and the Captive 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 (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.
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; (iv) fees from service fee arrangements, which are in place with certain customers for a negotiated fee; and (v) assumed premium earned in the Captive business.
Previous wording
Change in fair value of contingent consideration for UCTS was a $3.0 million loss for the quarter ended September 30, 2024 compared to a $5.5 million loss for the same period of 2023, and a $7.4 million loss for the year-to-date period ended September 30, 2024 compared to a $17.7 million loss for the same period of 2023. The fair value losses related to contingent consideration for 2024 were impacted by positive changes in revenue growth trends of certain partners and accretion of the contingent earnout obligations approaching their respective measurement dates.
Current wording
Change in fair value of contingent consideration for UCTS was a $0.7 million loss for the first quarter of 2025 compared to a $2.8 million loss for the first quarter of 2024. The fair value loss related to contingent consideration for 2025 was primarily impacted by positive changes in revenue growth trends of certain partners and accretion as the remaining contingent earnout obligations approach their respective measurement dates.
Previous wording
Total other income for UCTS of $34.1 million for the year-to-date period ended September 30, 2024 was driven by a $35.1 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Current wording
Total other income (expense), net for UCTS decreased $35.6 million year over year driven by a $36.4 million gain recorded in connection with the sale of our Wholesale Business during the first quarter of 2024.
Previous wording
MIS commissions and fees increased $8.4 million and $35.3 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, due to higher core commissions and fees, which grew organically by $6.2 million, or 11%, for the quarter, and $31.4 million, or 20%, for the year-to-date period. Key drivers of the organic growth in MIS core commissions and fees included our Westwood Partner (accounting for $3.2 million and $15.8 million of the quarter and year-to-date increases in core commissions and fees, respectively), our legacy Mainstreet business (accounting for $2.5 million and $12.0 million of the quarter and year-to-date increases in core commissions and fees, respectively), and the national mortgage and real estate channel (accounting for $0.5 million and $3.6 million of the quarter and year-to-date increases in core commissions and fees, respectively). In addition, MIS profit-sharing and other revenue increased $2.2 million and $4.1 million for the quarter and year-to-date periods, respectively, primarily resulting from improvements in loss ratios and the number of policies sold.
Current wording
MIS commissions and fees increased $6.1 million year over year primarily due to organic growth in core commissions and fees. Key drivers of the organic growth in MIS core commissions and fees included our Westwood business (accounting for $2.8 million of the year over year increase in core commissions and fees) and our legacy Mainstreet business (accounting for $2.6 million of the year over year increase in core commissions and fees). In addition, MIS profit-sharing and other revenue increased $1.6 million year over year primarily resulting from improvements in loss ratios and the number of policies sold.
Previous wording
Corporate and Other records the elimination of intercompany commissions revenue from the Operating Groups. During the quarter and year-to-date periods ended September 30, 2024, UCTS recorded commissions revenue shared within the same Operating Group of $3.6 million and $10.3 million, respectively; UCTS recorded commissions revenue passed through to other Operating Groups of $17.9 million and $46.3 million, respectively; and MIS recorded commissions revenue shared within the same Operating Group of $0.2 million and $1.2 million, respectively.
Current wording
Corporate and Other records the elimination of intercompany commissions revenue from the operating groups. During the first quarter of 2025, UCTS recorded commissions revenue shared with other operating groups of $18.1 million.
Previous wording
A substantial portion of the intercompany commissions revenue recorded during the year-to-date period 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.
Current wording
The year-over-year increase in intercompany commission is related to the QBE Program Administrator Agreement. We expect revenue recognized from this agreement to continue to grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
Previous 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 grow as we serve as the MGA on more intersegment revenue such as homeowners insurance sold through MIS.
Current wording
A significant portion of the 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
Interest expense, net, in Corporate and Other increased $0.8 million and $6.4 million for the quarter and year-to-date periods ended September 30, 2024 compared to the same periods of 2023, respectively, resulting from higher average borrowings, offset in part by lower average interest rates resulting from the May 2024 debt refinancing. We expect interest expense to remain relatively flat or increase slightly in the near-term on a year-over-year basis.
Current wording
Interest expense, net, in Corporate and Other decreased $1.7 million year over year from lower average interest rates resulting from the January 2025 refinancing, offset in part by higher average borrowings. We expect interest expense to remain relatively flat in the near term on a year-over-year basis due to an anticipated increase in borrowings under our Revolving Facility to fund the settlement of contingent earnout liabilities, offset by lower expected average interest rates.
Previous wording
Loss on extinguishment and modification of debt in Corporate and Other of $15.1 million for the year-to-date period ended September 30, 2024 relates to the May 2024 debt refinancing.
Current wording
Loss on extinguishment and modification of debt in Corporate and Other of $2.4 million for the first quarter of 2025 relates to the January 2025 refinancing.
Previous wording
On May 24, 2024, we repaid in full our then-outstanding debt with proceeds from an offering of $600 million in aggregate principal amount of 7.125% senior secured notes due May 15, 2031 (the “Senior Secured Notes”) and borrowings under a new $840 million senior secured first lien term loan facility maturing May 24, 2031 (the “2024 Term Loan”). In connection with the refinancing, we also established a new senior secured first lien revolving facility with commitments in an aggregate principal amount of $600 million maturing May 24, 2029 (the “2024 Revolving Facility” and, together with the 2024 Term Loan, the “2024 Credit Facility”). Proceeds from the issuance of the Senior Secured Notes and the 2024 Term Loan were also used to pay related fees, costs, expenses and accrued interest. Refer to Note 8 to our condensed consolidated financial statements included in Part I, Item 1. Financial Statements of this report for more information relating to the terms of the Senior Secured Notes and 2024 Credit Facility.
Current wording
As of March 31, 2025, the 2024 Credit Facility provided for senior secured credit facilities in an aggregate principal amount of $1.54 billion, which consisted of (i) a term loan facility in the principal amount of $935.8 million, bearing interest at a rate of term SOFR, plus an applicable margin of 300 bps, with a margin step-down to 275 bps at a first lien net leverage ratio of 4.00x or below, maturing in May 24, 2031 (the “2025 Term Loan Facility”) and (ii) a revolving credit facility with commitments in an aggregate principal amount of $600 million, bearing interest at SOFR plus 210 bps to SOFR plus 310 bps based on total net leverage ratio maturing in May 24, 2029 (the “Revolving Facility”). As of March 31, 2025, Baldwin Holdings also had outstanding $600 million aggregate principal amount of 7.125% senior secured notes due May 15, 2031 (the “Senior Secured Notes”). Refer to Note 8 to our consolidated financial statements included in Part I, Item 1. Financial Statements of this report for more information relating to the terms of the Senior Secured Notes and 2024 Credit Facility.
Previous 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.
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 2025 Term Loans, cash flow from operations and available borrowings under the 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 September 30, 2024, our cash and cash equivalents were $181.8 million and we had $600.0 million of available borrowing capacity on the 2024 Revolving Facility. We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next twelve months and beyond.
Current wording
As of March 31, 2025, our cash and cash equivalents were $81.8 million and we had $586 million of available borrowing capacity on the Revolving Facility. We believe that our cash and cash equivalents, cash flow from operations and available borrowings will be sufficient to fund our working capital and meet our commitments for the next twelve months and beyond.
Previous wording
(1)Represents noncancelable operating leases for our facilities. Operating lease expense was $16.2 million and $16.8 million for the nine months ended September 30, 2024 and 2023, respectively.
Current wording
(1)Represents noncancelable operating leases for our facilities. Operating lease expense was $5.3 million and $5.4 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
(2)Represents scheduled debt obligations and estimated interest payments for our Senior Secured Notes and 2024 Term Loan.
Current wording
(2)Represents scheduled debt obligations and estimated interest payments for our Senior Secured Notes and 2025 Term Loans.
Previous wording
(3)Represents the total expected future payments to be made to Partners at September 30, 2024.
Current wording
(3)Represents the total expected future payments to be made to partners and colleagues for earnout-related obligations at March 31, 2025.
Previous wording
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the Senior Secured Notes and the 2024 Term Loan, estimated payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
Current wording
Our contractual obligations and commitments are comprised of operating lease obligations, principal and interest payments on our borrowings under the Senior Secured Notes and the 2025 Term Loans, estimated payments of contingent earnout liabilities and our commitment to the University of South Florida (“USF”).
Previous wording
Our debt obligations at September 30, 2024 include borrowings outstanding under the Senior Secured Notes of $600 million and the 2024 Term Loan of $837.9 million. Estimated interest payments for outstanding borrowings on the Senior Secured Notes and 2024 Term Loan in the table above were calculated based on the applicable interest rates at September 30, 2024 of 7.125% and 8.10%, respectively, through their respective due dates of May 15, 2031 and May 24, 2031.
Current wording
Our debt obligations at March 31, 2025 include borrowings outstanding under the Senior Secured Notes of $600 million and under the 2025 Term Loans of $933.5 million. Estimated interest payments for outstanding borrowings under the Senior Secured Notes and 2025 Term Loans in the table above were calculated based on the applicable interest rates at March 31, 2025 of 7.125% and 7.32%, respectively, through their respective due dates of May 15, 2031 and May 24, 2031.
Previous wording
Substantially all of our Partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contractual earnout provisions. We record an estimation of the fair value of the contingent earnout obligations at the Partnership date as a component of the consideration paid. Our contingent earnout obligations are measured at fair value each reporting period based on the present value of the expected future payments to be made to Partners in accordance with the provisions outlined in the respective purchase agreements. The recorded obligations are based on estimates of the Partners’ future performance using financial projections for the earnout period. The aggregate estimated contingent earnout liabilities included on our condensed consolidated balance sheet at September 30, 2024 was $203.8 million, of which $4.5 million must be settled in cash and the remaining $199.3 million can be settled in cash or stock at our option. The undiscounted estimated contingent earnout obligation presented in the table above represents the total expected future payments to be made to the Partners. The undiscounted estimated contingent earnout obligation at September 30, 2024 was $205.2 million, of which $5.0 million must be settled in cash and the remaining $200.2 million can be settled in cash or stock at our option. The maximum estimated exposure to the contingent earnout liabilities was $329.2 million at September 30, 2024.
Current wording
Substantially all of our partnerships and certain acquisitions of select books of business that do not constitute a complete business enterprise include contractual earnout provisions. We record an estimation of the fair value of the contingent earnout obligations at the partnership date as a component of the consideration paid. Our contingent earnout obligations are measured at fair value each reporting period based on the present value of the expected future payments to be made to partners in accordance with the provisions outlined in the respective purchase agreements. The recorded obligations are based on estimates of the partners’ future performance using financial projections for the earnout period. The aggregate estimated contingent earnout liabilities included on our condensed consolidated balance sheet at March 31, 2025 was $48.2 million, of which $4.9 million must be settled in cash and the remaining $43.3 million can be settled in cash or stock at our option. The undiscounted estimated contingent earnout obligation presented in the table above represents the total expected future payments to be made to the partners. The undiscounted estimated contingent earnout obligation at March 31, 2025 was $67.0 million, of which $5.0 million must be settled in cash and the remaining $62.0 million can be settled in cash or stock at our option. The maximum estimated exposure to the contingent earnout liabilities was $102.9 million at March 31, 2025.
Previous wording
As of September 30, 2024, we have a remaining commitment to USF to donate $4.2 million through October 2028. The gift will provide support for the School of Risk Management and Insurance in the USF Muma College of Business. It is currently anticipated that Lowry Baldwin, our Chairman, will fund half of this commitment.
Current wording
As of March 31, 2025, we have a remaining commitment to USF to donate $3.4 million through October 2028. The gift will provide support for the School of Risk Management and Insurance in the USF Muma College of Business. It is currently anticipated that Lowry Baldwin, our Chairman, will fund half of this commitment.
Previous wording
During the nine months ended September 30, 2024, we redeemed 2,408,931 LLC Units of Baldwin Holdings on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock. We receive an increase in our share of the tax basis in the net assets of Baldwin Holdings due to the interests being redeemed. We have assessed the realizability of the net deferred tax assets and in that analysis have considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We have recorded a full valuation allowance against the deferred tax assets at Baldwin as of September 30, 2024, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
Current wording
During the three months ended March 31, 2025, we redeemed 1,260,092 LLC Units of Baldwin Holdings on a one-for-one basis for shares of Class A common stock and cancelled the corresponding shares of Class B common stock. We receive an increase in our share of the tax basis in the net assets of Baldwin Holdings due to the interests being redeemed. We have assessed the realizability of the net deferred tax assets and in that analysis have considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We have recorded a full valuation allowance against the deferred tax assets at Baldwin as of March 31, 2025, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances.
Previous wording
The primary sources and uses of cash for operating activities are net income (loss) adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration. Net cash provided by operating activities increased $62.9 million year over year, driven by an increase in cash related to the change in premiums, commissions and fees receivable, net of accounts payable, accrued expenses and other current liabilities of $38.2 million relating to holding fiduciary cash on behalf of our insurance company partners, and better operating leverage year over year.
Current wording
The primary sources and uses of cash for operating activities are net income (loss) adjusted for non-cash items and changes in assets and liabilities, or operating working capital, and payment of contingent earnout consideration. Net cash used in operating activities increased $67.0 million year over year, primarily as a result of a $61.9 million increase in payments of contingent earnout consideration in excess of purchase price accrual.
Previous wording
The primary sources and uses of cash for investing activities relate to cash consideration paid to fund Partnerships and other investments to grow our business. Net cash provided by investing activities increased $42.6 million year over year driven by cash proceeds from divestitures, net of cash transferred of $57.0 million, relating primarily to the sale of our Wholesale Business during 2024, offset in part by a decrease in cash relating to higher capital expenditures of $14.7 million due to software development projects.
Current wording
The primary sources and uses of cash for investing activities relate to cash consideration paid to fund partnerships, proceeds from divested assets, and other investments to grow our business. Net cash used in investing activities increased $53.2 million year over year driven by a decrease in cash proceeds from divestitures, net of cash transferred of $53.0 million, relating primarily to the sale of our Wholesale Business during 2024.
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