TWFG, Inc.

Previous wording

The following discussion contains commentary on the financial results derived from the unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2025 and March 31, 2024 of TWFG, Inc.

Current wording

The following discussion contains commentary on the financial results derived from the unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2025 and June 30, 2024 of TWFG, Inc.

Previous wording

Commission income for Insurance Services grew by$4.4 million, or 11.9%, for the three months ended March 31, 2025 compared to the same period in the prior year. Agency-in-a-Box commission income for the three months ended March 31, 2025 increased by $3.5 million, or 11.6%, compared to the same period in the prior year. This increase was driven by higher written premium volume.

Current wording

Commission income for total Insurance Services grew by$5.9 million, or 14.2%, for the three months ended June 30, 2025 compared to the same period in the prior year. Insurance Services Agency-in-a-Box commission income for the three months ended June 30, 2025 increased by $4.0 million, or 12.4%, compared to the same period in the prior year. This increase was driven by higher written premium volume. Insurance Services Corporate Branches commission income for the three months ended June 30, 2025 increased by $1.9 million, or 20.0%, compared to the same period in the prior year. The increase was primarily driven by the acquisitions completed in 2025.

Previous wording

•TPA fees for the three months ended March 31, 2025 was comparable to the same period in the prior year.

Current wording

TWFG MGA commission income for the three months ended June 30, 2025 was comparable to the same period in the prior year.

Previous wording

Contingent income for the three months ended March 31, 2025 was $1.7 million, reflecting a $0.6 million, or 54.6%, increase compared to the same period in the prior year. The increase in contingent income was primarily due to underlying growth in our business. Contingent income is unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.

Current wording

Contingent income for the three months ended June 30, 2025 was $2.0 million, reflecting a $0.8 million, or 61.6%, increase compared to the same period in the prior year. The increase in contingent income was primarily due to underlying growth in our business. Contingent income is unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.

Previous wording

Fee income for the three months ended March 31, 2025 increased by$0.8 million, or 34.9%, compared to the same period in the prior year. Changes to individual components of fee income are discussed in detail below:

Current wording

Fee income for the three months ended June 30, 2025 increased by$0.6 million, or 23.8%, compared to the same period in the prior year. Changes to individual components of fee income are discussed in detail below:

Previous wording

•Policy fees for the three months ended March 31, 2025 increased by $0.5 million, or 104.9%, compared to the same period in the prior year. The increase in policy fees was primarily due to higher policy count in our TWFG MGA offering. The increase in policy count was driven primarily by new business growth.

Current wording

•Policy fees for the three months ended June 30, 2025 increased by $0.1 million, or 16.0%, compared to the same period in the prior year. The increase in policy fees was primarily due to higher policy count driven by new business growth.

Previous wording

•Branch fees for the three months ended March 31, 2025 increased by $0.1 million, or 11.1%, compared to the same period in the prior year. The increase in branch fees was primarily driven by increased agent growth.

Current wording

•Branch fees for the three months ended June 30, 2025 increased by $0.2 million, or 16.1%, compared to the same period in the prior year. The increase in branch fees was primarily driven by increased agent growth.

Previous wording

•License fees for the three months ended March 31, 2025 increased by $0.1 million, or 18.1%, compared to the same period in the prior year. The increase in license fees was primarily due to the increased fees associated with a licensing agreement for software.

Current wording

•License fees for the three months ended June 30, 2025 increased by $0.1 million, or 25.9%, compared to the same period in the prior year. The increase in license fees was primarily due to the increased fees associated with a licensing agreement for software.

Previous wording

Other income for the three months ended March 31, 2025 was $0.4 million compared to $0.3 million in the same period in the prior year, reflecting an increase of $0.1 million, or 25.5%. Overall, the account balance is deemed comparable to the same period in the prior year.

Current wording

Other income for the three months ended June 30, 2025 was $0.4 million compared to $0.4 million in the same period in the prior year. The account balance is primarily comprised of interest earned on fiduciary funds.

Previous wording

Insurance Services Corporate Branches commission expense for the three months ended March 31, 2025 increased by $0.2 million, or 28.2%, compared to the same period in the prior year. The expenses of our Corporate Branches are mainly salaries and benefits, and are primarily fixed expenses, which are not directly related to commission income. The profitability of our Corporate Branches varies mainly based on changes in commission income. In addition, since the commission expense of our Corporate Branches represents a smaller percentage of their operating expenses, we expect revenue growth, both organic and through future acquisitions, to positively impact our operating income in the future.

Current wording

Insurance Services Corporate Branches commission expense for the three months ended June 30, 2025 increased by $0.3 million, or 24.8%, compared to the same period in the prior year. The expenses of our Corporate Branches are mainly salaries and benefits, and are primarily fixed expenses, which are not directly related to commission income. The profitability of our Corporate Branches varies mainly based on changes in commission income. In addition, since the commission expense of our Corporate Branches represents a smaller percentage of their operating expenses, we expect revenue growth, both organic and through future acquisitions, to positively impact our operating income in the future.

Previous wording

Depreciation and amortization for the three months ended March 31, 2025 was $3.4 million compared to $3.0 million in the same period in the prior year, reflecting an increase of$0.3 million, or 11.5%. The increase was primarily due to the amortization of intangible assets from our recent asset acquisitions.

Current wording

Depreciation and amortization for the three months ended June 30, 2025 was $3.9 million compared to $3.0 million in the same period in the prior year, reflecting an increase of$0.9 million, or 31.4%. The increase was primarily due to the amortization of intangible assets from our recent asset acquisitions.

Previous wording

Interest expense for the three months ended March 31, 2025 was $0.1 million compared to $0.8 million for the same period in the prior year, reflecting adecrease of $0.8 million, or 90.14% due to the repayment of the Revolving Facility (as defined below) during the second half of 2024.

Current wording

Interest expense for the three months ended June 30, 2025 was $0.1 million compared to $0.9 million for the same period in the prior year, reflecting adecrease of $0.8 million, or 92.2%, due to the repayment of the Revolving Facility (defined below) during the second half of 2024.

Previous wording

Income tax expense for the three months ended March 31, 2025 was $0.7 million compared to zero for the same period in the prior year as after consummation of the Reorganization Transactions and IPO, the Company became subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of TWFG Holding assessed at the prevailing corporate tax rates.

Current wording

Income tax expense for the three months ended June 30, 2025 was $0.6 million compared to zero for the same period in the prior year, as after consummation of the Reorganization Transactions and IPO, the Company became subject to U.S. federal, state, and local income taxes with respect to its allocable share of taxable income of TWFG Holding assessed at the prevailing corporate tax rates.

Previous wording

Total revenues for the three months ended March 31, 2025 increased by$7.7 million, or 16.6%, compared to the same period in the prior year. The increase was primarily due to a$6.2 million, or 14.7%, increase in commission income driven primarily by higher premium rates and continued business growth. Also contributing to the increase in total revenues were the $0.8 million, or 34.9%, increase in fee income, $0.6 million, or 54.6%, increase in contingent income, and $0.1 million, or 25.5%, increase in other income compared to the same period in the prior year. See discussions below for additional information about the changes in our revenues.

Current wording

Total revenues for the six months ended June 30, 2025 increased by$15.0 million, or 15.1%, compared to the same period in the prior year. The increase was primarily due to a$12.1 million, or 13.3%, increase in commission income driven primarily by higher premium rates and continued business growth. Also contributing to the increase in total revenues were the $1.4 million, or 28.8%, increase in fee income, $1.4 million, or 58.4%, increase in contingent income, and $0.1 million, or 7.9%, increase in other income compared to the same period in the prior year. See discussions below for additional information about the changes in our revenues.

Previous wording

Insurance Services Corporate Branches commission income for the three months ended March 31, 2025 increased by $1.0 million, or 13.3%, compared to the same period in the prior year. The increase was primarily driven by the continued organic growth of our Book of Business.

Current wording

Commission income for the six months ended June 30, 2025 increased by $12.1 million, or 13.3%, compared to the same period in the prior year due to continued business growth with a slight decrease in commission rates.

Previous wording

TWFG MGA commission income for the three months ended March 31, 2025 increased by $1.8 million, or 33.7%, compared to the same period in the prior year. An increase of $1.7 million was due to continued growth and commission rate increase of The Woodlands Insurance Company business compared to the same period in the prior year. The additional $0.1 million was driven by growth in the Company’s other MGA programs. See “Key Performance Indicators” below for additional information related to our written premiums.

Current wording

TWFG MGA commission income for thesix months ended June 30, 2025 increased by $1.8 million, or 14.7%, compared to the same period in the prior year. Anincrease of $2.2 million was due to continued growth and commission rate increase of The Woodlands Insurance Company business compared to the same period in the prior year. A decrease of $0.4 million was driven by lower premiums in the Company’s other MGA programs. See “Key Performance Indicators” below for additional information related to our written premiums.

Previous wording

Commission expense for the three months ended March 31, 2025 increased by $5.4 million, or 20.3%, compared to the same period in the prior year. The increase was primarily due to the increased growth in business of$3.9 million consistent with commission income and the one-time favorable adjustment of$1.5 million related to the branch conversion that occurred in 2024. See commission income discussion above for additional information regarding the driver of changes.

Current wording

Commission expense for the six months ended June 30, 2025 increased by $7.6 million, or 12.9%, compared to the same period in the prior year. The increase was primarily due to the increased growth in business of$6.1 million consistent with commission income and the absence of the one-time favorable adjustment of $1.5 million related to the branch conversion that occurred in 2024. See commission income discussion above for additional information regarding the driver of changes.

Previous wording

Insurance Services Agency-in-a-Box commission expense for the three months ended March 31, 2025 increased by $3.9 million, or 17.8%, compared to the same period in the prior year. The increase was primarily due to the increase in business of$2.4 million consistent with commission income and the one-time favorable adjustment of$1.5 million. The expenses of our Branches are primarily commission expense, which is determined as a percentage of commission income. The profitability of our Branches, as determined by the difference between commission income and commission expense, is consistent.

Current wording

Insurance Services Agency-in-a-Box commission expense for thesix months ended June 30, 2025 increased by $6.4 million, or 13.5%, compared to the same period in the prior year. Theincrease was primarily due to the increase in business of$4.9 million consistent with commission income and the absence of the one-time favorable adjustment of $1.5 million in 2024. The expenses of our Branches are primarily commission expense, which is determined as a percentage of commission income. The profitability of our Branches, as determined by the difference between commission income and commission expense, is consistent.

Previous wording

TWFG MGA commission expense for the three months ended March 31, 2025 increased by $1.2 million, or 33.7%, compared to the same period in the prior year. The increase was consistent with commission income.

Current wording

TWFG MGA commission expense for thesix months ended June 30, 2025 increased by $0.6 million, or 6.6%, compared to the same period in the prior year. Theincrease was consistent with the increase in commission income.

Previous wording

Other administrative expenses for the three months ended March 31, 2025 was $4.7 million compared to $3.1 million in the same period in the prior year, reflecting an increase of $1.6 million, or 50.9%. The increase was primarily due to higher expenses of $0.3 million of information technology, $0.3 million of professional fees, $0.3 million of survey, $0.2 million of rent, $0.2 million of insurance and $0.3 million of other administrative expenses, all due primarily to business growth and increased costs as a public company.

Current wording

Other administrative expenses for the six months ended June 30, 2025 was $10.1 million compared to $6.9 million in the same period in the prior year, reflecting an increase of $3.3 million, or 47.3%. The increase was primarily due to higher expenses of $0.7 million of information technology, $0.7 million of professional fees, $0.4 million of rent, $0.3 million of insurance, $0.2 million of directors fees, $0.1 million of survey fees and $0.9 million of other administrative expenses, all due primarily to business growth and increased costs as a public company.

Previous wording

Interest income for thethree months ended March 31, 2025 was $1.9 million, compared to $0.2 million in the same period in the prior year, reflecting an increase of $1.7 million. The increase was attributable to interest income earned on proceeds from the IPO and operating cash funds of $196.4 million.

Current wording

Interest income for thesix months ended June 30, 2025 was $3.6 million, compared to $0.4 million in the same period in the prior year, reflecting anincrease of $3.2 million. The increase was attributable to interest income earned on proceeds from the IPO and operating cash funds of $159.8 million.

Previous wording

For the three months ended March 31, 2025 and 2024, our consolidated written premium retention was 88% and 94%, respectively. The decrease in retention is correlated to the shift in renewal business growth of $31.3 million, or 12.5%, for the three months ended March 31, 2025, compared to growth of $47.3 million, or 23%, in the same period of the prior year. This decrease in retention is a result of carriers moderating rate increases and opening up for new business after a period of restricted capacity and aggressive rate increases, which had the effect in the same period of the prior year of increased retention and slowing new business growth.

Current wording

For the three months ended June 30, 2025 and 2024, our consolidated written premium retention was 89% and 93%, respectively. The decrease in retention is correlated to the shift in renewal business growth of $45.4 million, or 14.9%, for the three months ended June 30, 2025, compared to growth of $45.3 million, or 17.5%, in the same period of the prior year. This decrease in retention is a result of carriers moderating rate increases and opening up for new business after a period of restricted capacity and aggressive rate increases, which had the effect in the same period of the prior year of increased retention and slowing new business growth.

Previous wording

Total Written Premium for the three months ended March 31, 2025 increased by $49.7 million, or 15.5%, compared to the same period in the prior year. This increase was a result of growth in new and renewal business of $18.4 million, or 25.8%, and $31.3 million, or 12.5%, respectively. Within our Insurance Services offering, we saw a shift in new and renewal business growth as compared to the same period in the prior year. New business growth increased in the first quarter of 2025 totaling $10.4 million, or 16.7%, as compared to $7.1 million, or 12.9%, in the prior year period. However, there was a decrease in renewal business growth as compared to the prior year period. We saw renewal premium growth for the quarter ended March 31, 2025 totaling$30.4 million, or 14.2%, as compared to$47.9 million, or 28.8%, growth in the prior year period. The higher renewal business growth in the first quarter of 2024 included an influx from the 2023 corporate store acquisitions which were acquired starting in the second quarter of 2023. Within our MGA offering, we saw an uptick in new business growth of$8.0 million, or 89.4%, over the prior year period due mainly to an increase in one of our MGA programs as a result of the market conditions allowing our agents to provide more favorable terms and coverage.

Current wording

Total Written Premium for thesix months ended June 30, 2025 increased by $106.4 million, or 14.9%, compared to the same period in the prior year. This increase was a result of growth in new and renewal business of $29.7 million, or 18.5%, and $76.6 million, or 13.8%, respectively. Within our Insurance Services offering, we saw a shift in new and renewal business growth as compared to the same period in the prior year. New business growth increased in the first half of 2025 totaling $23.6 million, or 17.3%, as compared to $20.4 million, or 17.6%, in the prior year period, respectively. Renewal business growth decreased in the first half of 2025 totaling $72.2 million, or 15.2%, as compared to$93.1 million, or 24.4%, in the prior year period, respectively. Within our MGA offering, we saw an uptick in new business growth of$6.1 million, or 25.1%, over the prior year period due mainly to an increase in one of our MGA programs as a result of the market conditions allowing our agents to provide more favorable terms and coverage.

Previous wording

(2)Revised Organic Revenue for the three months ended March 31, 2024 and 2023, used to calculate Organic Revenue Growth for the three months ended March 31, 2025 and 2024, was $43.1 million and $36.8 million, respectively, which is adjusted to reflect revenues from acquired businesses with over $0.5 million in annualized revenue that reached the twelve-month owned mark during the three months ended March 31, 2025 and 2024, respectively. Organic Revenue Growth Rate represents the period-to-period change in Organic Revenue divided by the total adjusted Organic Revenue in the prior period.

Current wording

(2)Revised Organic Revenue for the three months ended June 30, 2024 and 2023, and for the six months ended June 30, 2024 and 2023 used to calculate Organic Revenue Growth for the three months ended June 30, 2025 and 2024, was $48.9 million, $42.2 million, $92.0 million, and $79.2 million respectively, which is adjusted to reflect revenues from acquired businesses with over $0.5 million in annualized revenue that reached the twelve-month owned mark during the three and six months ended June 30, 2025 and 2024, respectively. Organic Revenue Growth Rate represents the period-to-period change in Organic Revenue divided by the total adjusted Organic Revenue in the prior period.

Previous wording

(2)Organic Revenue for the three months ended March 31, 2024 and 2023, used to calculate Organic Revenue Growth for the three months ended March 31, 2025 and 2024, was $42.5 million and $36.3 million, respectively, which is adjusted to reflect revenues from acquired businesses with over $0.5 million in annualized revenue that reached the twelve-month owned mark during the three months ended March 31, 2025 and 2024, respectively. Organic Revenue Growth Rate represents the period-to-period change in Organic Revenue divided by the total adjusted Organic Revenue in the prior period.

Current wording

(2)Revised Organic Revenue for the three months ended June 30, 2024 and 2023, and for the six months ended June 30, 2024 and 2023 used to calculate Organic Revenue Growth for the three months ended June 30, 2025 and 2024, was $48.0 million, $41.7 million, $90.5 million, and $78.1 million respectively, which is adjusted to reflect revenues from acquired businesses with over $0.5 million in annualized revenue that reached the twelve-month owned mark during the three and six months ended June 30, 2025 and 2024, respectively. Organic Revenue Growth Rate represents the period-to-period change in Organic Revenue divided by the total adjusted Organic Revenue in the prior period.

Previous wording

Revenue growth rate, representing the year-over-year change in total revenues, was 16.6% for the three months ended March 31, 2025 compared to the same period in 2024 and 15.8% for the three months ended March 31, 2024 compared to the same period in 2023. Revenue growth for the periods reflected the growth in our Books of Business and the mix of the new and renewal businesses. Revenue growth for the three months ended March 31, 2025 compared to the same period in 2024 included the continued growth of commission and fee income during the period. See “Consolidated Results of Operations” for additional discussions regarding the changes in our revenues.

Current wording

Revenue growth rate, representing the year-over-year change in total revenues, was 13.8% for the three months ended June 30, 2025 compared to the same period in 2024 and 17.2% for the three months ended June 30, 2024 compared to the same period in 2023. Revenue growth for the periods reflected the growth in our Books of Business and the mix of the new and renewal businesses. Revenue growth for the three months ended June 30, 2025 compared to the same period in 2024 included the continued growth of commission and fee income during the period. See “Consolidated Results of Operations” for additional discussions regarding the changes in our revenues.

Previous wording

Organic Revenue Growth Rate was 14.3% for the three months ended March 31, 2025 compared to the same period in 2024 and 13.0% for the three months ended March 31, 2024 compared to the same period in 2023. Organic Revenue Growth for both periods reflects ongoing, but normalizing rate increases being implemented by carriers, the underlying growth of our business, and healthy economic growth and an increase in commission income in our MGA offering. See “Consolidated Results of Operations—Commission Income” for additional discussions regarding the changes in our commission income.

Current wording

Organic Revenue Growth Rate was 10.6% for the three months ended June 30, 2025 compared to the same period in 2024 and 14.6% for the three months ended June 30, 2024 compared to the same period in 2023. Organic Revenue Growth for both periods reflects ongoing, but normalizing rate increases being implemented by carriers, the underlying growth of our business, and healthy economic growth and an increase in commission income in our MGA offering. See “Consolidated Results of Operations—Commission Income” for additional discussions regarding the changes in our commission income.

Previous wording

(2)Post-IPO, we are subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of TWFG Holding. For the three months ended March 31, 2025, the calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a blended state income tax rate of 1.88% on 100% of our adjusted income before income taxes as if we owned 100% of the TWFG Holding.

Current wording

(2)Post-IPO, we are subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of TWFG Holding. For the six months ended June 30, 2025, the calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a blended state income tax rate of 1.82% on 100% of our adjusted income before income taxes as if we owned 100% of the TWFG Holding.

Previous wording

Prior to the IPO and Reorganization Transactions, TWFG Holding’s equity structure included common units. The Company considered the calculation of earnings per unit for periods prior to the IPO and determined that such presentation would not provide meaningful information to the users of these Condensed Consolidated Financial Statements. Therefore, earnings per share information has not been presented for the three months ended March 31, 2024.

Current wording

Prior to the IPO and Reorganization Transactions, TWFG Holding’s equity structure included common units. The Company considered the calculation of earnings per unit for periods prior to the IPO and determined that such presentation would not provide meaningful information to the users of these Condensed Consolidated Financial

Previous wording

(1) For comparability purposes, this calculation incorporates the net income that would be distributable if all shares of Class B Common Stock and Class C Common Stock, together with the related LLC Units, were exchanged for shares of Class A Common Stock. For the three months ended March 31, 2025, this includes $5.5 million of net income on 56,227,014 weighted-average shares of common stock outstanding - diluted, for the three months ended March 31, 2025. For the three months ended March 31, 2025, 41,260,844 weighted average outstanding Class B Common Stock and Class C Common Stock were considered dilutive and included in the 56,227,014 weighted-average shares of common stock outstanding - diluted within diluted earnings per share calculation. See Note 12. Earnings Per Share to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information about the earnings per share.

Current wording

(1) For comparability purposes, this calculation incorporates the net income that would be distributable if all shares of Class B Common Stock and Class C Common Stock, together with the related LLC Units, were exchanged for shares of Class A Common Stock. For the three and six months ended June 30, 2025, this includes $7.0 million of net income on 56,278,869 weighted-average shares of common stock outstanding - diluted and $12.6 million of net income on 56,255,156 weighted-average shares of common stock outstanding - diluted, respectively. For the three and six months ended June 30, 2025, — weighted average outstanding Class B Common Stock and Class C Common Stock were considered dilutive and included in the 56,278,869 and 56,255,156 weighted-average shares of common stock outstanding - diluted within diluted earnings per share calculation, respectively. See Note 12 Earnings Per Share to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information about the earnings per share.

Previous wording

(2) Adjustments to Adjusted Net Income are described in the footnotes of the reconciliation of Adjusted Net Income to Net Income in “Adjusted Net Income and Adjusted Net Income Margin”, which represent the difference between Net Income of$6.9 millionand Adjusted Net Income of $9.2 million for the three months ended March 31, 2025. For the three months ended March 31, 2025, Adjusted Diluted Earnings Per Share include adjustments of$2.4 million to Adjusted Net Income on 56,227,014 weighted-average shares of common stock outstanding - diluted for the period presented.

Current wording

(2) Adjustments to Adjusted Net Income are described in the footnotes of the reconciliation of Adjusted Net Income to net income in “Adjusted Net Income and Adjusted Net Income Margin”, which represent the difference between net income of $9.0 million and Adjusted Net Income of $11.5 million and net income of $15.9 million and Adjusted Net Income of $20.7 million for the three and six months ended June 30, 2025, respectively. For the three and six months ended June 30, 2025, Adjusted Diluted Earnings Per Share include adjustments of $2.5 million to Adjusted Net Income on 56,278,869 weighted-average shares of common stock outstanding - diluted and $4.9 million to Adjusted Net Income on 56,255,156 weighted-average shares of common stock outstanding - diluted for the period presented, respectively.

Previous wording

We have managed our historical liquidity and capital requirements primarily through cash generated from our operations. Prior to the IPO, our primary cash flow activities involved: (1) generating cash flow from our operations; (2) making strategic acquisitions; (3) making distributions to Bunch Family Holdings, LLC, RenaissanceRe Ventures U.S. LLC and GHC Woodlands Holdings LLC; and (4) making borrowings, interest payments and repayments under our Credit Agreements (as defined below). On July 19, 2024, we completed the IPO of 11,000,000 shares of Class A Common Stock at an IPO price of$17.00 per share. On July 23, 2024, the underwriters purchased an additional 1,650,000 shares of Class A Common Stock in connection with the underwriters’ full exercise of their option to purchase additional shares. We received approximately$192.9 million of net proceeds from the IPO, including from the full exercise of the underwriters’ option, after deducting underwriting discounts and commissions and related offering expenses. As of March 31, 2025 and December 31, 2024, our cash and cash equivalents were$196.4 million and$195.8 million, respectively. We have used cash flow from operations primarily to pay compensation and related expenses, general, administrative and other expenses, debt service and distributions to our owners.

Current wording

We have managed our historical liquidity and capital requirements primarily through cash generated from our operations. Prior to the IPO, our primary cash flow activities involved: (1) generating cash flow from our operations; (2) making strategic acquisitions; (3) making distributions to Bunch Family Holdings, LLC, RenaissanceRe Ventures U.S. LLC and GHC Woodlands Holdings LLC; and (4) making borrowings, interest payments and repayments under our Credit Agreements (as defined below). On July 19, 2024, we completed the IPO of 11,000,000 shares of Class A Common Stock at an IPO price of$17.00 per share. On July 23, 2024, the underwriters purchased an additional 1,650,000 shares of Class A Common Stock in connection with the underwriters’ full exercise of their option to purchase additional shares. We received approximately$192.9 million of net proceeds from the IPO, including from the full exercise of the underwriters’ option, after deducting underwriting discounts and commissions and related offering expenses. As of June 30, 2025 and December 31, 2024, our cash and cash equivalents were $159.8 million and $195.8 million, respectively. We have used cash flow from operations primarily to pay compensation and related expenses, general, administrative and other expenses, debt service and distributions to our owners.

Previous wording

On June 5, 2017, TWFG Holding, as borrower, entered into a credit agreement (as subsequently amended, the “Term Loan Credit Agreement”) with PNC Bank, National Association, as lender. On July 30, 2019, TWFG Holding entered into a third amendment to the Term Loan Credit Agreement pursuant to which it borrowed $4.0 million pursuant to a Term Loan B and used these proceeds for permitted acquisitions. On December 4, 2020, TWFG Holding entered into a fifth amendment to the Term Loan Credit Agreement pursuant to which it borrowed an additional $13.0 million pursuant to a Term Loan C and used these proceeds for permitted acquisitions (such amount, together with the amount borrowed on July 30, 2019, the “Term Loans”). On May 23, 2023, TWFG Holding entered into a ninth amendment to the Term Loan Credit Agreement to, among other things, provide additional flexibility under the covenants contained therein. The Term Loan B was fully repaid by its maturity on July 30, 2024. The aggregate principal amounts of the Term Loan C as of March 31, 2025 is $5.4 million asfollows (in thousands):

Current wording

On June 5, 2017, TWFG Holding, as borrower, entered into a credit agreement (as subsequently amended, the “Term Loan Credit Agreement”) with PNC Bank, National Association, as lender. On July 30, 2019, TWFG Holding entered into a third amendment to the Term Loan Credit Agreement pursuant to which it borrowed $4.0 million pursuant to a Term Loan B and used these proceeds for permitted acquisitions. On December 4, 2020, TWFG Holding entered into a fifth amendment to the Term Loan Credit Agreement pursuant to which it borrowed an additional $13.0 million pursuant to a Term Loan C and used these proceeds for permitted acquisitions (such amount, together with the amount borrowed on July 30, 2019, the “Term Loans”). On May 23, 2023, TWFG Holding entered into a ninth amendment to the Term Loan Credit Agreement to, among other things, provide additional flexibility under the covenants contained therein. The Term Loan B was fully repaid by its maturity on July 30, 2024. The aggregate principal amounts of the Term Loan C as of June 30, 2025 is $5.0 million asfollows (in thousands):

Previous wording

On May 23, 2023, TWFG Holding, the guarantors party thereto, the lenders party thereto, PNC Bank, National Association and PNC Capital Markets LLC entered into a credit agreement that provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $50.0 million (as amended on June 20, 2024, the “Revolving Facility,” and together with the Term Loan Credit Agreement, the “Credit Agreements”).

Current wording

The Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank National Association provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $50.0 million (as amended on June 20, 2024, the “Revolving Facility,” and together with the Term Loan Credit Agreement, the “Credit Agreements”). Borrowings constituting revolving loans under the Revolving Credit Agreement incur interest at the Term SOFR Rate (as defined therein) for the applicable interest period plus a margin based on the consolidated leverage ratio of the Company between 2% and 2.75%, and a 0.10% adjustment. The borrowings under the Revolving Facility may be used by the Company for permitted acquisitions, working capital and general corporate purposes. The Company pays a commitment fee on unutilized amounts under the Revolving Facility of 0.20% up to 0.35% based on the consolidated leverage ratio. For the period ended June 30, 2025 and December 31, 2024, the Revolving Facility has an unutilized capacity of $50.0 million and $50.0 million, respectively.

Previous wording

Interest on Term Loan B and Term Loan C accrue at Daily Simple Secured Overnight Financing Rate (“SOFR”) plus the Benchmark Replacement Adjustment of 0.11448%, 0.26161%, or 0.42826% for the one-month, three-month, or six-month borrowing periods, respectively. At our option, the revolving credit facility under the Revolving Facility accrues interest on amounts drawn at the Term SOFR Rate or Daily SOFR plus the SOFR Adjustment of 0.10% and Applicable Margin of 2.00% to 2.75%, each as defined in the Revolving Facility. The Term Loans and the Revolving Facility are collateralized by substantially all the Company’s assets, which includes rights to future commissions.

Current wording

Interest on Term Loan B and Term Loan C accrue at Daily Simple Secured Overnight Financing Rate (“SOFR”) plus the Benchmark Replacement Adjustment of 0.11448%, 0.26161%, or 0.42826% for the one-month, three-month, or six-month borrowing periods, respectively. At our option, the revolving credit facility under the Revolving Facility accrues interest on amounts drawn at the Term SOFR Rate or Daily SOFR plus the SOFR Adjustment of 0.10% and

Previous wording

Operating activities from continuing operations provided$15.6 million and $9.8 million of cash for the three months ended March 31, 2025 and 2024, respectively. The increase in net cash provided by operating activities is driven by $4.1 million inflow from the change in working capital between periods, which was primarily attributable to the increased collections on contingent income and $1.6 million in net change of non-cash adjustments in the period which include amortization, non-cash lease expense and stock-based compensation. See “Consolidated Results of Operations” above for additional information regarding the results of our operations.

Current wording

Operating activities from continuing operations provided $25.3 million and $17.2 million of cash for the six months ended June 30, 2025 and 2024, respectively. The increase in net cash provided by operating activities is driven by a $2.3 million increase in net income, $2.2 million inflow from the change in working capital between periods, which was primarily attributable to the increased collections on contingent income, and $3.6 million in net change of non-cash adjustments in the period which include amortization, non-cash lease expense and stock-based compensation. See “Consolidated Results of Operations” above for additional information regarding the results of our operations.

Previous wording

Investing activities from continuing operations used $11.2 million and $21.0 million of cash for the three months ended March 31, 2025 and 2024, respectively. Our net investing outflows decreased primarily due to the lower level of intangible asset acquisitions in the current period of $11.2 million compared to $21.0 million in the prior period. See Note 4. “Intangible Assets and Acquisitions” to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our asset acquisitions.

Current wording

Investing activities from continuing operations used $46.7 million and $21.2 million of cash for thesix months ended June 30, 2025 and 2024, respectively. Our net investing outflows increased primarily due to the higher level of intangible asset acquisitions in the current period of $47.2 million compared to $21.2 million in the prior period partially offset by $0.6 million inflow from proceeds on the sale of intangible assets and other net increases in investing outflows of $0.1 million. See Note 4 Intangible Assets and Acquisitions toour Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our asset acquisitions.

Previous wording

Financing activities from continuing operations used $1.5 million and$3.8 million of cash for the three months ended March 31, 2025 and 2024. Our net financing outflows decreased primarily due to the $1.9 million decrease in deferred offering costs, $0.6 million increase in carrier liabilities, $0.4 million decrease in distributions to members, and other decreases in financing outflows of $0.6 million. The decrease in net financing outflows was partially offset by the payment related to tax withholding on vesting of equity awards of $1.2 million for the three months ended March 31, 2025.

Current wording

Fina ncing activities from continuing operations used $12.9 million and $5.9 million of cash for the six months ended June 30, 2025 and 2024. Our net financing outflows increased primarily due to the $3.6 million net decrease in carrier liabilities and $6.2 million increase in distributions to members, and the payment related to tax withholding on vesting of equity awards of $1.2 million. The increase in net financing outflows was partially offset by the $3.2 million decrease in deferred offering costs, $0.3 million decr ease in deferred acquisition payable, and other decreases in financing outflows of $0.5 million for the six months ended June 30, 2025.

Previous wording

We have certain obligations related to debt maturities and operating leases. As of March 31, 2025, we had $1.1 million of non-cancelable operating lease obligations for the next 12 months. For the periods following the next 12 months, we have an additional $3.1 million of non-cancelable operating lease obligations. In addition, as of March 31, 2025, we had$2.5 million of debt maturities for the next 12 months comprised of $1.9 million of the remaining balance under the Term Loan C, and $0.6 millionin acquisition-related notes. For the periods following the next 12 months, we have an additional $4.5 million of debt maturities representing $3.5 million under the Term Loan C, and $1.0 million in acquisition-related notes. As of March 31, 2025, there was no outstanding balances under our Revolving Facility. Any outstanding balances under our Revolving Facility, if any, will become due and payable during 2028. Annual interest rates on the acquisition-related notes are 3.75% and 5.0%, and our effective interest rates on the Term Loan C for the three months ended March 31, 2025 was 3.06%. As of March 31, 2025, we have an interest rate swap agreement associated with the Term Loan C, which converted the floating interest rates on these loans to fixed interest rates. See Note 6. Debt to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Current wording

We have certain obligations related to debt maturities and operating leases. As of June 30, 2025, we had $1.4 million of non-cancelable operating lease obligations for the next 12 months. For the periods following the next 12 months, we have an additional $3.0 million of non-cancelable operating lease obligations. In addition, as of June 30, 2025, we have$3.9 million of debt maturities for the next 12 months comprised of $1.9 million of the remaining balance under the Term Loan C, $0.6 million in acquisition-related notes, and$1.4 million of acquisition-related payables. For the periods following the next 12 months, we have an additional $5.5 million of debt maturities representing $3.0 million under the Term Loan C, and $0.9 million in acquisition-related notes, and $1.6 million of acquisition-related payables. As of June 30, 2025, there was no outstan ding balance under our Revolving Facility. Any outstanding balances under our Revolving Facility, if any, will become due and payable during 2028. Annual interest rates on the acquisition-related notes are 3.75% and 5.0%, and our effective interest rates on the Term Loan C for the three and six months ended June 30, 2025 was 3.06%. As of June 30, 2025, we have an interest rate swap agreement associated with the Term Loan C, which converted the floating interest rates on these loans to fixed interest rates. See Note 6 Debt to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.

Previous wording

There have been no material changes in our critical accounting policies during the three months ended March 31, 2025 as compared to those disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates” of our Annual Report.

Current wording

There have been no material changes in our critical accounting policies during the three months ended June 30, 2025 as compared to those disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates” of our Annual Report other than above.