Adam Klobber, runner insurance practice. For our compliance disclosures please see the website with Baldwin who is one of the more rapidly growing insurance brokers you know not grown as fast today but you know they will re-accelerate probably not that not in the too far distant future but I think more importantly they put together a really interesting franchise in a business that a lot of brokers look like and it's a great business i mean it's fine to look like in this business but baldwin's i think put together one of the more unique franchises which has got you know really good potential whether it's the next year or two or the next five years with that i'll
have trevor tell you about it thanks all right thanks adam and uh thank you all for joining us we appreciate william blair having us here to present uh a little bit about the baldwin group you know we launched this business in 2011 and went public in 2019 at roughly 150 million of pro forma revenue and since then scaled the business by roughly 10x up to a billion five of revenue in 2025 and pro forma for the recent cac merger and transactions with ob and capstone nearly $2 billion of pro forma run rate revenue. We have built a business quite intentionally, and strategically, we have focused on creating a platform that enables us to serve clients across the continuum of scale and complexity, while vertically integrating into the insurance value chain to capture economics for the benefit of our clients and our platform. As we get into this, I'll spend some time talking about the durable moats that we believe we have crafted relative to AI, fashioning a business that will be able to leverage AI to enhance outcomes and enhance client impact, whether it's through our embedded distribution businesses where we meet clients at point of transaction in their times of need, whether it's in our IES advisory business, where we're advising midsize and larger clients with complex risk issues, or in our MGA and capacity business, where we're building proprietary product, sourcing risk capital for the benefit of our clients to build bespoke purpose-built solutions. and the through line of all of that is we have a clear set of internal goals and objectives around our 3v30 framework our objective to build a business that achieves 3 billion of revenue at approximately a 30 percent EBITDA margin by the end of 2029. So we have executed on over a decade of transformative growth from the early years to from starting in 2011 until 2016 completely organically building the platform taking in our first outside capital in 2016 and then taking the company public in october of 2019 at that time we were able to really supercharge the growth trajectory of the business while thoughtfully scaling out each of our three operating segments where we advise mid-size to large businesses on their complex risk issues, where we've established and built the leading embedded insurance provider in the country, where we're the partner for 20 of the top 25 home builders and have a quickly growing franchise in the mortgage origination space, or our MGA product and capacity platform, where we've scaled from one product and 60 million of premium to 22 products over a billion two of premium and driving differentiated distribution through our embedded and owned retail channels going forward with our 3b30 objective and our platform established and built out we feel incredibly well positioned to double down and lean into our core areas of execution where we have real rights to win and a moat around our go-to-market that not only protects our competitive advantage, but will enable us to leverage AI to enhance our impact, drive productivity, and efficiency throughout our enterprise. As you can see here, across all three of our operating segments, we've been able to successfully scale the business over the past five years. Our insurance advisory solutions business, which is our traditional retail insurance broking for midsize to large businesses inclusive of the CAC merger is now nearly 1.1 billion dollars of revenue importantly this part of our business is organized into deep industry and product specialty practices where we we are able to leverage the expertise and the unique solutions that we've crafted to ensure we're delivering the very best impact and insights to our clients driving the outsized organic growth rates relative to peers that you've seen here. In addition, inclusive of CAC, our business skews towards serving clients on the far end of the continuum of scale and complexity. In fact, approximately 80% of the revenue in this segment comes from clients who spend at least $500,000 a year on insurance premiums. Those are clients who I do not believe are going to be buying insurance through a chatbot or online interface anytime soon. Human judgment, trust in relationships matter deeply for the complexity of the risk issues, the bespoke nature of how we're assembling those insurance programs, and ultimately how we help our clients manage and mitigate claims issues. In our underwriting capacity and technology solutions business, we've rapidly scaled this business largely organically through our product development factory or engine. We have developed a methodology for identifying market opportunities to build proprietary insurance product, launch those solutions, and distribute them through sheltered and embedded distribution relationships that enable us to build scale, grow at velocity, and consistently deliver industry-leading underwriting results with an inception-to-date loss ratio across our programs of less than 55%. In addition, we've continued to build out our capacity solutions as a unique value proposition, not only to ensure that we have proprietary access to capacity to stand behind those products, but also to deliver unique and innovative solutions to our clients across the value chain, whether that's through our captive management business, where we manage nearly 100 captives, whether it's through our reinsurance broking business that we de novo launched several years ago or multi-strat or ILS platform where we raised capital direct from the capital markets to put to work behind insurance portfolios and lastly our main street insurance segment where we've built the leading embedded purveyor of personal insurance solutions in the U.S. we have the we have the established leading market share in the embedded builder space where we partner with 20 of the top 25 home builders in the country through our westward platform. We've de novo built and launched our mortgage platform where we're seeing rapid uptake and incredibly exciting growth with 16 partners now live on the platform in less than 18 months and a pipeline of onboardings that goes through the end of the year. We believe that embedded is the way that personal insurance will both be sold and bought well into the future, and we're building that platform.
Simply put, over the last six, seven years that we have been public, the peer average organic growth has been in the low threes. We have done between two and five times that on each annual basis, And that's really powered by some of the elements that Trevor just went through. One, a focus on specialization and sales velocity, new business wins in IES where we've outperformed the peers. Two, partnering with really strong entities that then flow into our organic in subsequent periods. Three, our focus on embedded distribution where we're just getting more lead flow and winning more. And four, the specialized product development in the MGA. that continues to be a growth lever for us. Hopefully, if you look at this going forward, our plan is that we would continue to grow at at least two times what our industry peers are growing over the next several years on an organic basis. If you look at us from a margin profile, a couple of things to point out on this slide. One, we report the adjusted EBITDA margin on a gross revenue basis. You can see here 23% LTM Q125, 25. But most of our peers would be reporting on a net revenue basis, which actually would equate to about 28% for us. So we publish both metrics so that folks have visibility from a peer comparability standpoint. So Trevor talked about the 3B30 plan. And of course, the 30% margin is one of the elements of that. To be clear, that is on the gross margin basis. If you look across the three segments you know how do we get there if you look at ias currently operating at a roughly 24 margin the path to getting there is is really already underway that train has left the station we announced our 3b30 catalyst transformation program in q3 we have already eliminated two roles in the organization in on the service side of the organization where we're taking meaningful steps to transform the way work is done across that service organization. Through a combination of automation tools and some offshoring, you know, we've got a clear path already in motion to achieving three to four hundred basis points of margin expansion in that business over that period of time of the 3B30 target. In the UCTS business, quite frankly, it's a matter of scale and it's a matter of continuing to leverage AI and automation tools across a largely fixed comp base where we do benefit substantially from new product launches. So much less variable payroll in the UCTS business. You've got a lot of underwriters, claims folks, software developers, where we'll see the most leverage here in the near term. But there we've got to scale from more immature products
products than mature to more mature products than immature products. And then in Main Street,
it's a little bit of a tale of two stories. We've got the Westwood business that Trevor talked about where we embedded with 20 of the top 25 home builders. In that business, we operate at a 40 plus percent debonable margin already. But we have de novo launched the mortgage channel where we operate at negative margin. But over the last nine months, we've partnered with two of the top 15 mortgage originators in the country each of those partnerships are going incredibly well we're hitting all the metrics we outlined for ourselves and so getting that business to scale uh building a renewal book you know on which we create significant earnings uh will bring that margin up to um that level of of westwood over time and so those are the levers we'll pull over the next four years to achieve that 30% margin side of the equation. Going back to some of the growth and
new business productivity, we've quite simply built a platform that enables the industry's best professionals to deliver a more meaningful impact and build more successful, more rewarding careers. You can see here our track record of onboarding new to industry and also new to Baldwin and industry talent, and over a relatively finite period of time, making them far more productive than the industry's average sales professional. You can see by the fifth year, they're more than three times as productive from a new business generation perspective than the industry average. And that's a result of a combination of our deep industry and product expertise that's broadly accessible across of our platform. That's a result of our proprietary go-to-market process and our score training that enables us to quickly bring new-to-industry professionals up to speed on how we go to market and make them effective. And that's as a result of our tailored client engagement model that ultimately enables us to deliver deep expertise across upmarket and complex risk capabilities to ensure that our clients are getting the best of Baldwin, no matter where they reside and where they come into the platform. Our merger with CAC created a billion-plus-dollar middle market and specialty platform that has real depth of capability across a plethora of both industry and risk product capabilities. And you can see the scale of the clients that we're serving here. These are commission revenue figures, not premium. In a world where there's concern around AI disintermediation, complexity is an offense that enables us to focus on serving clients with real complex business issues and risk issues and delivering comprehensive solutions that are a real mitigation relative to risks and concerns of disintermediation and also enable us to continue to differentiate ourselves in the marketplace and drive meaningful impact for our clients and meaningful careers for our colleagues. And the playbook has already been executed at CAC in a smaller microcosm. If you look at when CAC was founded in 2019 and merged with Cobbs Allen, the middle market agency platform, the ability for that middle market platform to have access to the upmarket skilled expertise around these specialty capabilities enabled them to keep clients longer as they scaled to drive more penetration through an array of solutions and products that typical middle market risk advisor would not have familiarity or expertise with and ultimately move up market relative to the scale and footprint of the clients that they're able to serve. And you can see how that played out not only in average commissions and fees per risk advisor, but also in the average size client that they were able to serve over that time period. As we've combined the CAC platform with Baldwin's middle market capability, we expect to deliver on this same thesis at scale. And we're seeing that play out in real time more quickly than we even anticipated through a real sense of collaboration across our footprint, an active pipeline of holistic and cross-sell opportunities where teams have collaborated together to deliver the best of both our middle market PNC and benefits capabilities, as well as the upmarket specialty capabilities of the CAC team. Our MGA platform continues its track record of rapidly scaling and building differentiated unique bespoke product solutions for discrete and markets where we have unique distribution competitive advantages. This growth story is largely organic where we've gone from a single product in 2019 to 22 products and over 1.2 billion dollars of premium under management. We continue to differentiate the business relative to both our embedded distribution channels, but also a diversity of product mix that gives us both scale and exposure to a broader set of end markets to mitigate volatility tied to any one end market over time. And importantly, with this rapid growth, we've also delivered industry-leading loss ratios, and underwriting results for our capacity providers. We are building the leading embedded personal lines distribution platform in the U.S. We believe that this is the future of how personal insurance will be sold and consumed. Our Westwood platform has rapidly scaled since joining Baldwin from roughly $82 million in revenue to on a pro forma basis nearly 200 million of revenue at the end of last year we've rapidly improved the attachment rate of new policies being sold at point of new home sale from 45 to 55 plus and as we've launched and begun building out our mortgage platform we've begun to see rapid growth and uptick as brad articulated strong fundamental KPIs across all the recent partnerships we've launched with accelerating momentum and a strong pipeline and backlog of new partner implementations that goes in the next year. This positions us to be the winner of a massive market that is rapidly changing the buying habits of how people are consuming insurance. In the U.S. marketplace, there's nearly $500 billion of personal lines insurance premium. And that translates based on roughly 5 million rooftops that turn over on average per year into nearly $10 billion of annual new premium opportunity that we could have access to through our embedded ecosystems across our partner platforms. And at an average commission rate of 11%, that's over $1 billion of new commissionable revenue available to access through these embedded channels, where we have the leading tech, the leading platform, and the leading capability to serve those ecosystems. And lastly, to wrap up before I hand it back to Brad, we have a proven track record of executing on M&A to help scale our platform. Of our $2 billion of revenue, roughly half of that has been acquired, and roughly half has been built organically through our outsized growth rates. Historically, we have not been a prolific acquirer like many of the top 10 aggregators in our industry. We're focused on finding the highest quality platforms with the best talent, where there's strong cultural alignment, obvious strategic fit, and a deal that makes really good financial sense for all parties involved. As a result of that, and our focus on underwriting to growth platforms that we can make even better as a part of Baldwin, you can see on the lower right-hand side here how we have been able to take our entry-level multiples, and over the three-year time period, once the earnouts are settled, buy those multiples down meaningfully through growth, efficiency, and overall productivity gains. This is not an M&A strategy. This is a capital allocation engine that will be able to enable us to fuel growth and shareholder value creation well into the future.
If you look at the financial performance since the IPO, it has been very strong across each of these metrics provided here. 48% revenue CAGR, 51% pro forma adjusted EBITDA CAGR. The margin, you can see we reached a relative low point in 2022. That was a result of significant integration costs associated with heavy partnership activity in that pre-2022 period. But we've been scaling the margin and have had a good developing story since then, as I articulated on the previous slide, certainly have a pathway to peer margins based on the strategy that we've already put into motion. The adjusted deluded EPS CAGR of 33%, and if you were to look out to analyst models, et cetera, over the next couple of years, we intend to continue to deliver meaningful outsized EPS CAGR in relation to peers while, as I said before, hitting that at least two times organic growth measure finally uh you know what has been our priority in terms of capital allocation really number one it's been organic initiatives so investing in resources to drive organic growth and that's a confluence of both talent and technology and on the talent front that's a combination of homegrown talent finding unique niche talent that could come and contribute to our organization from an experience advisor standpoint and meaningful M&A, again, attracting some of the best firms, not just quantity of firms. And as you look at our current strategy, we are deploying a decent amount now to a buyback strategy that is a new strategy for us. Our board authorized a $250 million buyback coming out of year-end. Given the relative landscape for M&A multiples in relation to our own multiple, we have deemed that the best near-term use of capital. It will slightly delay our deleveraging story, but we feel like it's just undeniably the right use of capital at this time. So we've been executing on that strategy through Q1 and throughout Q2 as well.
All right. Happy to take some questions if, Adam, you want to kick things off.
Let's talk about CAC, you know, from what I understand is very, very, and, you know, what you showed us, but we don't understand a certain part. Again, more cover-up, why did CAC go different?
Yeah, CAC built a franchise that had real depth of industry expertise and product expertise that enables us to serve clients in that kind of upmarket complex risk areas in a manner that's frankly kind of novelly effective and meaningfully effective. We have a capability built around our transaction liability team there that has enabled us to deliver really unique and bespoke solutions was a nice driver of the 27% growth you saw from CAC in the first quarter as we're taking share in that M&A marketplace and the tax marketplace as well as contingent risk and partnering up those product specialists with our advisors who have strong client and prospect relationships enables us to deliver meaningful value through a combined kind of relationship orientation and real depth of specialty expertise
um so again really nice franchise good specialty some you know deep deep experts with the transactions how do you ensure those experts stay with the stay with baldwin
a few things one uh all of the you know the cc shareholder base was widely distributed and so Most all of the meaningful revenue drivers were also meaningful shareholders, and as a result, they are now meaningful shareholders in Baldwin. There's a five-year lockup that they committed to as a part of that transaction to showcase their belief in the value creation that we can drive together. In addition, there's two one-year earnouts that create meaningful intermediate-term incentives both to drive results and to stick around. But most importantly, it's around creating a platform that people feel like they can have an impact at and drive better results for their clients. The reason all of these professionals left to join CAC is they didn't feel like they had that opportunity and that capability at their prior firms. And what we're committed to building here at Baldwin is really around leveraging what CAC built, how they go to market, how they work with clients, and just investing behind that to expand it and continue to accelerate the momentum that that team has experienced over the past five years.
Yeah, I think the ticket becomes the slide Trevor showed about the increase in production, the increase in organic, post-partnership folks joining the Baldwin platform. and um you know i think people are excited about that historical story and hoping to uh even surpass that story if you look at the baldwin cac combination and and it certainly has the potential to because you have you know arguably the most synergistic deal we've ever done in terms of taking a business that's 80 middle market 20 specialty combining it with business that's 80 especially 20 middle market and you know that that prospect across town that you just haven't had the capabilities to serve but you've known and played golf with or etc years uh year after year um this now opens that opportunity in a way that was not open before so we were extremely bullish on the holistic selling opportunity associated with with this transaction and it being able to at least repeat the success we've had previously post-partnership with these firms.
And we've seen that play out already. And you saw their growth accelerate in the first quarter from mid-single digits last year to 27%. Now, that's, I wouldn't consider 27% a run rate figure, but that's that alchemy playing out in real time. And as we look at the revenue synergies that are occurring and the holistic selling, our nomenclature for cross-sell that's occurring, it's about 50-50 going both ways, which is meaning everybody's gaining value here. It's not just a push and a pull in one direction. It's the middle market franchise at Baldwin bringing capabilities and PNC solutions to round out some of these specialty clients that CAC wasn't able to fully serve before. And vice versa, the Baldwin middle market risk advisors being able to bring in some of these specialty capabilities to ensure that we can serve the full breadth of needs of our clients. um and so it's really exciting to see the momentum that we've experienced has certainly exceeded my expectations so far uh and and both the pace at which it's occurred um and the scale and how do
you incent producers because if i'm a producer bringing in someone from cac why isn't that why
is there not like a struggle for the commission we've been very intentional from the beginning about building a culture that orients around team-based selling and so we have a document called the azimuth that is our cultural constitution and one of the very important themes or terms you'll see in there is best team wins and best team wins means that you go assemble the best team to serve the client and then you're going to win the client's going to win and the economics will take care of themselves now with that all said so it's culturally ingrained you show me an incentive and i'll show you an outcome uh and so we've very intentionally structured the compensation incentives to drive that team-based selling and that collaboration
right and with that i think this is the end of presentation thank you very much Trevor and Brad, and we will do a breakout upstairs. Thank you for having us.