TWFG, Inc. Q4 FY2025 Earnings Call

Good morning. My name is Fran, and I'll be your conference operator today. At this time, I would like to welcome everyone to the TWFG Fourth Quarter 2025 Conference Call. The call is being recorded and will be available for replay on the company's website. Before we begin, let me remind you that today's discussion may contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings. Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. The company has posted reconciliations for the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the Investors section of the company's website at www.twfg.com. It is now my pleasure to introduce Mr. Gordy Bunch, Founder, Chairman and CEO of TWFG.

Thank you, operator, and good morning, everyone. Thank you for joining us today to discuss TWFG's fourth quarter and full year 2025 results. Joining me on the call is Janice Zwinggi, our Chief Financial Officer. After my remarks, Janice will walk through our financial performance in more detail, and then we'll open up the call for questions. For full year 2025 results, I'd like to start by thanking our employees, agents, carrier partners, Board, shareholders and clients. 2025 was a transformational year for TWFG as we successfully embarked on year 2 as a public company, and none of it would have been possible without the dedication and execution of our teams across the country. For full year 2025, total revenue increased 21.3% to $247.1 million, driven by a combination of double-digit organic growth, strong performances across both our retail and MGA platforms and a disciplined execution on accretive acquisitions. Organic revenue for the year was 11.6%, reflecting sustained momentum in new business production, healthy retention and the continued expansion of our distribution footprint that enhance our platform and carrier relationships. Conditions within personal lines remain constructive, supporting continued new business growth and stable retention across our core markets. Throughout 2025, we continued to expand our national footprint through a mix of recruiting, tuck-in transactions and accretive acquisitions. Importantly, we remain disciplined in our approach. Early in 2026, TWFG entered into a definitive agreement to acquire the Lofton Wells Insurance Agency. That will become a corporate location in Memphis, Tennessee on March 1. This new corporate location will add additional scale to our existing Tennessee operations and provides us with strength in a region we intend to continue growing into. TWFG General Agency has also entered into a definitive agreement to acquire Asset Protection Insurance Associates, a Texas-based MGA specializing in providing comprehensive insurance solutions for property owners and real estate investors throughout the United States. The commercial lines national MGA specialty program provides TWFG General Agency with access to additional distribution partners for our existing proprietary programs as well as adds a high-quality management team with which we can create additional proprietary programs. As we evaluate additional M&A opportunities, our focus remains on acquiring high-quality, culturally aligned targets that enhance our platform and carrier relationships. As always, organic growth remains our foundation with M&A serving as a complementary growth lever. Before turning the call over to Janice, I would like to share our perspective on artificial intelligence's impact on our industry and TWFG in particular. AI has been an area we've been investing in for some time as a tool to accelerate agent productivity and their efforts to best serve our clients and their complex insurance needs. The market reacted to a February 2026 launch of AI-powered insurance comparison tools within consumer-facing chatbot platforms, tools designed primarily to quote standardized personal lines products such as monoline auto. This product by nature has been viewed as commoditized, a low-advice transaction that has been subject to direct channel competition for over 20 years. We believe there is an important distinction between monoline, lower limit auto clientele and those needing advice for higher limits, bundling with homeowners and needing umbrella coverages. In contrast to the direct channel, TWFG's independent agent network specializes in providing tailored multiline coverage solutions across personal, commercial and specialty lines — precisely the categories where human expertise, relationship with clients, carrier relationships and professional judgment are most consequential and most difficult to replicate. TWFG agents have relationships with the clients they serve and the communities they live in. Our agents sponsor Little League, coach soccer, attend PTO meetings, are part of faith-based communities, volunteer with numerous charities, serve as elected officials and are physically present for their customers. That physical connection is important when our clients endure significant losses from hurricanes, floods, tornadoes, wildfires, water damage, accidents, litigation, cyberattacks, theft, business interruption and loss of life. Many of these larger catastrophes become a shared experience — being in the community impacted by a hurricane or wildfire means our agents have suffered similar losses and are feeling and dealing with the same issues their customers are experiencing. That shared life experience is not easily disintermediated for those with complex insurance and relationship needs. Our clients own homes, small businesses, large businesses, operate nonprofits and have layers of insurance needs where a trusted adviser is required to navigate the nuances of coverages and their unique exposures. TWFG's exclusive and independent agent models are purpose-built for complexity. The company's agents serve as trusted advisers who navigate multi-carrier markets, customize coverage programs and advocate for clients at the point of sale and during a claim, functions that demand contextual knowledge, professional accountability and carrier relationships developed over decades. Rather than representing a displacement threat, AI tooling is increasingly being deployed by independent agents as a productivity accelerator, enabling faster quoting, enhanced communication and more efficient account management, consistent with TWFG's own technology strategy. TWFG's technology strategy has been one of our competitive advantages. Owning our proprietary technology platforms has positioned TWFG to be able to pivot, create and implement innovative technologies internally as they appear or to quickly integrate with third-party vendors as needed. We recently made a series of senior leadership appointments specifically to accelerate our technology and underwriting platforms. Our new Chief Technology Officer focuses on AI strategy, cloud architecture and core platform modernization. Our new Chief Underwriting Officer has decades of experience in insurance technology and product development. TWFG employs 44 technology-related positions from software engineers, developers, quality assurance, business analysts, database engineers and infrastructure. This workforce is receiving help from AI coding assistant Claude, which makes each software engineer increasingly more productive. AI is a force multiplier for our initiatives. Excluding our corporate sales office employees, our technology teams represent 32% of our corporate employee base. TWFG is much more of a technology company than many may appreciate. We are positioned to be a net beneficiary of AI's continued evolution in insurance distribution, leveraging AI to make our agents more productive, our platforms more capable and our clients better served. While the human expertise, community presence, client relationships and professional judgment that define the TWFG models remain precisely what they are, no algorithm can replicate them. TWFG's competitive moat starts with our proprietary software and deepens with our organization's diversification and business mix, omnichannel distribution models, proprietary programs and 25 years of proprietary data. Our retail distribution is highly preferred, focusing on clients that own homes and businesses as our core clientele. The recent commentary is not the first time the market has questioned the ongoing role of the independent agent. In 2013, McKinsey sparked a similar distribution debate when they published a report on the evolution of property and casualty insurance distribution and more specifically, a chapter titled the end of an era for the local insurance agent. The prediction was the demise of the independent agent with most expected to be out of business within 5 to 10 years if they failed to adopt new technology. Instead, the independent agent channel grew in total numbers of agencies, increased their total P&C market share from 57% to 61.5% since 2013, controlled 87.2% of all U.S. commercial lines premiums in 2025, grew their homeowners market share from 30% to 39% between 2013 and 2025 and also increased their auto market share from 30% to 34% since 2013. Today, all major insurance carriers operate directly to consumers and through independent agent models. AI entering the direct channel is not new, given comparative shopping without the need for human interaction has existed for the past 20 years. Property and Casualty is a $1 trillion addressable market, evenly split between personal and commercial lines, and we see significant runway to grow our share. I want to close with a few final thoughts on the AI opportunity ahead. We are embracing deploying AI across our platform and underwriting, agent tools and back-office workflows, and we will continue to partner with best-in-class third parties while building our own proprietary AI capabilities. With that, I'll turn it over to Janice to walk through the financials in more detail.

Thank you, Gordy, and good morning, everyone. I am pleased to report the following fourth quarter results, beginning with our top KPI: written premium. Total written premium increased $82 million or 22.7% to $443.4 million. We saw strong double-digit growth across both of our primary offerings. Insurance services grew $53.6 million or 17.4% to $361.3 million, and TWFG MGA had a spike in growth of $28.5 million or 53.2% to $82.1 million. This was mainly due to the acquisition of TWFG MGA Florida with written premiums of approximately $27.1 million, consisting of renewals of $9.7 million and new business growth of $17.4 million. We saw consolidated growth in both renewals of $58.2 million or 21.3% and new business of $23.8 million or 27.2% over the prior year period while maintaining a 92% retention rate. Overall premium growth was driven by continued expansion of our corporate branch footprint, strong MGA momentum following the acquisition of MGA Florida and improving carrier access across multiple geographies. While a softening rate environment typically translates to increased customer shopping, our retention performance underscores the stability and engagement of our client base. Total revenues increased $17.1 million or 33% to $68.8 million. This was driven by accelerating new business activity, moderating rate increases, expanding MGA contributions and solid economic activity in our core markets. Commission income increased $15.6 million or 35.8% to $59.4 million, reflecting expansion across both insurance services and MGA platforms and supported by strong renewal and new business activity. Organic revenues increased $5.2 million, reaching approximately $50 million, representing an organic growth rate of 11.7%. We continue to demonstrate solid momentum across both our agency and MGA platform. Turning to expenses: commission expense increased $4 million or 13.8% to $32.9 million, reflecting our production growth. This tracks with commission income growth, taking into account the impact of the 2025 acquisitions, programs with no related commission expense and commission rate changes period-over-period. Salaries and employee benefits increased $2.4 million or 30.7% to $10 million, driven by headcount growth associated with acquisitions, corporate functional hires and public company infrastructure. Other administrative expenses increased $1.7 million or approximately 35% to $6.7 million, primarily due to an increase in technology costs, the result of acquisitions and compliance initiatives. Depreciation and amortization increased to $5.8 million, driven by the recent acquisitions. From a profitability perspective, net income was up 76.2% to $14.4 million with a net income margin of 21%. Adjusted net income rose 58.9% to $16.7 million, equating to a margin of 24.3%. Adjusted EBITDA increased 56.9% to $21.7 million for a margin of 31.6% compared to 26.8% in the prior year period. This expansion reflects operating leverage, expense discipline and an increasing mix of higher margins in our corporate branch locations and in the MGA operations. From a liquidity perspective, we ended the year with a very strong balance sheet with unrestricted cash of $155.9 million. We had no borrowings on our $50 million revolving credit facility and had only $4 million of term debt outstanding. This provides us with significant flexibility to invest in growth and continue to pursue strategic opportunities. With that, I will turn it back to Gordy.

Thank you, Janice. Looking ahead, as we enter 2026, we do so with strong momentum. The investments we've made in people, technology and infrastructure position us to expect to continue delivering double-digit organic growth, expanding margins and generating strong free cash flow. Our conviction in this business is reflected in our recent announced share repurchase program of up to $50 million. We believe current valuations represent a compelling opportunity to create shareholder value, and we are prepared to be aggressive buyers of our own stock at these levels. For 2026 guidance, total revenues are expected to grow 15% to 20%, coming in between $285 million and $300 million. Adjusted EBITDA margin is expected to be in the range of 22% to 25%. Organic revenue growth rate is expected to be in the range of 10% to 15%. The guidance reflects continued platform growth, a competitive soft market environment, investments in new AI tools and executing on our accretive M&A plans. TWFG continues to have a fortress balance sheet, high free cash flows and momentum for continued success in 2026 and beyond. As we continue to execute against our long-term strategy, we are confident in our ability to continue delivering sustainable, profitable growth and long-term value for our shareholders. With that, operator, please open the line for questions.

Your first question comes from Mike Zaremski from BMO.

First question on the organic growth guidance. Maybe you could help parse out the Florida MGA growth kind of versus the underlying book, I guess, versus agency in the box or any kind of parsing out you thought was worth mentioning?

Yes. We don't really do segment reporting at this point. We certainly will benefit briefly from MGA Florida in the second quarter where we pick up renewals that will be coming into the 13th, 14th and 15th month since acquisition. But beyond that, their organic contribution is really going to be coming from the new program, the new homeowners program launch that started really in earnest in the fourth quarter. We don't have a high projection of new business policies driving organic coming from that voluntary writing. As you know, the Florida marketplace is having a repricing and a softening. So I think we're looking at their contribution as going to be more present in the second quarter, less meaningful in the latter half of the year because we have all the written premiums that were inorganic in 2025 that they have to grow above in 2026. So the projection we're giving you is a conservative view of the voluntary writings ramping up alongside our core business pre-2025 of agency in a box and corporate store growth.

That's helpful color for modeling. Maybe switching gears to written premium retention in the MGA — extremely strong. It looks like it jumped from low 80s to low 90s. Any color there?

On the MGA, I think it's relatively the market opening up allows our agents in that channel to be in a better position to defend customers shopping from the hard market price increases to now a softening market. So as those markets reopened and repositioned their own rates, that allowed better retention or rewriting of those customers to another market within our platform that offered the customer a better renewal rate. There were periods of time where carriers were constraining new business production, taking a lot of rate, and then we went through, really in the second quarter of 2025, the start of that accelerated softening market cycle. Not every carrier was on the same timeline for when they started filing rate reductions. So as we got to the end of the year, a lot of that started to catch up. Think about market leaders that file rates more frequently being ahead of the curve, taking market from our GA agents earlier in 2025, and toward the latter part of 2025 the markets we represent inside the MGA model had their pricing adjusted to be more competitive in that current softening market environment, allowing better retention and also opening up for new business growth, allowing those agents to rewrite accounts and add new business as well.

Okay. Got it. That's helpful. So I'll think through kind of whether that dynamic will persist. I guess just lastly, thanks for your thoughtful comments on technology and how you guys are accelerating your technology initiatives by hiring folks, et cetera. Gordy, as a founder and a builder of products, including technology products, I was curious if you felt there was any rationale — rational behavior behind the stock market kind of really negatively impacting a lot of stocks due to these new exciting technologies that allow folks to build things more efficiently than in the past. I appreciate that you probably don't think that TWFG stock should have been impacted nearly as much as it was. But curious if you do think there is some truth to what the market is implying based on these last few months of technology and innovation.

Sure. Great question, Mike. I think that the reaction wasn't just isolated to the insurance sector. There were other sectors that had sell-offs that related to AI innovations. In my prepared comments I hit on all the high notes: insurance is a highly complex transaction for most. And for those that have growing assets, growing liability exposures, they may use AI just like they use Google today to do research. But when making a final buying decision, many transition back over to the adviser to go through what they've discovered on their own through research. When it comes down to purchasing, they want to run that past somebody who actually can consult them, understand nuances between all their different exposures. I do think that AI is going to create more efficiencies within our channel, allowing our agents to sell more product and our servicing side to service more product. Over time, it will take fewer full-time employees to support a growing base of customers because the AI agentic tools that are coming will replace some of the manual tasks that exist today in our industry. That's been more prominently discussed with claims and underwriting; we do have claims and underwriting within our business model, and we'll be benefiting from that as well. Through the whole cycle, consistent connection with customers, automation of communications, elimination of repetitive keystroking across workflows will create productivity benefits and eventually we should see margin benefit, although we don't want to overstate that yet because we don't have a full handle on long-term costs of AI or long-term pricing models. Efficiency gains are coming for sure. The market is not always rational; a significant price drop across all of insurance kind of ignores a fundamental that isn't present in every industry. Insurance is required by law, is regulated in 50 different states, and the complexity across different lines requires context and cognitive communication to evaluate how policies relate to someone's overall portfolio. It's going to be more difficult for multiline customers to get all of that out of an algorithm. We will benefit from efficiencies, but long term I don't think we're going anywhere. Everyone on this call has insurance, likely more than one insurance policy. When you think about TWFG's product mix — personal lines, commercial lines, specialty lines, life, annuities — we have many places to pivot, insulate and cross-sell and provide the advisory role for insureds with complex decision-making. So I think we're here for the long haul.

Your next question comes from Paul Newsome from Piper Sandler.

I was hoping just in a very broad brush way, you could focus in on the components of your organic growth guidance. Just kind of what's getting better and what's getting worse? Because it looks like you're looking for a little bit of an improvement in organic growth prospectively, but you also have other things like the soft market, I would imagine pushing against that. But maybe as you just step back, what are the pieces when you thought about the potential for improving organic growth that moved you in that direction?

Sure. That's a good question, Paul. I'll give you a basic overview, and this also will probably be a little more responsive to Mike's question on the same subject. When we're looking at our 10% to 15% guidance, if you're looking at our agency in a box and corporate store contribution, it is still a double-digit projection for our core business. When you look to the top of the range towards 15%, that's probably coming more from new product development and deployment through our MGA products. Excluding the MGA, we would still have a double-digit organic guide. The MGA creates upside as we deploy new product development or expand capacity; that net new production will be an organic contribution. We also have business that will be rolling in that was inorganic in 2025 that will become organic in 2026. That's present in our corporate stores and in our MGA. As we model the assumed retention rate and new business growth rate of those previously acquired businesses that were part of inorganic growth in the past, there will be net contributors to organic in 2026 as they roll through their 12-month ownership horizon.

That's great. And maybe as a follow-up, could you give us your view on the outlook for M&A prospectively? Is it getting easier or harder to find transactions that would fit with your firm?

Our M&A pipeline is still very robust. I think on what I would call transformational-sized transactions, we've had three in our pipeline. Those will be much longer discussions and will take time to work through. I don't think those larger transactions were helped by the recent market reaction; that puts everybody in a position of saying let's make sure we understand how agencies will be valued long term. But on regular day M&A, we have a lot of opportunity. We're highly selective. We are looking at the quality of the portfolio coming into the company and the cultural fit of the target. Qualitative fit is one measure, but there's also strategic considerations, such as geographic expansion and the strength we gain through acquisition, and then what we can do post-close to enhance both the acquired business and our existing businesses. With that framing, we have quite a bit of opportunity. In our guide, we've maintained a similar cadence of acquired revenue and acquired EBITDA. I know some expected a higher top-line revenue pick; that can occur if we acquire more than we have in our baseline assumed M&A.

Your next question comes from Bob Huang from Morgan Stanley.

I just have one question really. First of all, thank you for providing some grounded thoughts and context on technology and impact on the broker business. But if we want to maybe unpack that a little bit, is there a scenario where, if AI and technology make broking more efficient, you could potentially see more competitors coming into your space? For example, maybe a broker that's in the ultra-high-net-worth space that is not really in your market today, but as AI makes things more efficient, they could potentially come into your space. Can you help us think about how you're thinking about the competitive dynamics? Is that changing? And how should we think about the impact to TWFG financials?

Sure. We ended 2025 with $1.7 billion of premium between the two channels. There's a $1 trillion addressable market. I think even if competitors expand into other areas of the business, there is still a wide market for us to gain. I looked back to 2013 — TWFG was substantially smaller when that McKinsey report came out — and private equity wasn't really in personal lines or agency brokering at scale then. Since then, private equity has been acquiring and consolidating distribution for the last decade-plus, but the net number of agencies grew in spite of that consolidation. If others start to get into personal lines, we have $498 billion of personal lines that currently don't reside with TWFG. As our technology improves and our platform becomes better known as an option for agents to join or launch with, I think we'll be a net beneficiary. There are 40-plus thousand independent agencies across the U.S.; about 38,000 of them are subscale. As technology changes, independent agents that are small without scale won't have the resources to adopt and adapt. They're going to either get acquired or affiliate. We have the business model to help them bridge what they can't do naturally on their own. We become a home for those agencies, help scale them up, bring them to today's technology and tomorrow's technology, and provide them an opportunity to remain relevant long term. So I do think we'll be a net beneficiary from existing operations, recruiting and development standpoint, and again there is large market share out there for us to grow into.

Got it. Really appreciate that. So not just a net beneficiary of change, but also not your first rodeo in change. Is that a fair statement?

100%. If I had read the headlines from McKinsey in 2013, I should have backed up my truck and closed.

Your next question comes from Tommy McJoynt from KBW.

I first wanted to ask if you could provide some color on the softening rate environment and the increased carrier capacity you're seeing and the tailwinds you're seeing from that. I know you mentioned last quarter that California is an exception because of its hard market, and I was wondering if that's still the case.

Yes. Good question. The market is broadly softening on auto insurance. We see that across the country, including California, which is moderating on auto rates. Where you still have some persistency on pricing is in more cat-exposed geographies and, more specifically, wildfire-exposed areas compared to historically hurricane exposures. California with its wildfire exposures and Colorado with wildfire exposures still seem to have pricing in property and capacity constraints that we expect to be persistent throughout the year. You still see a fragmented market between admitted and non-admitted and a blending in of the California FAIR plan. So long as you have that blending, that indicates a continuously harder market. California may have some easing in the back half of the year if auto writing companies decide to open back up property in order to help them sell bundled package policies, but that hasn't become prominent as of yet. In our core state of Texas, you have had some price deceleration on the property side. Hurricane catastrophe reinsurance pricing is coming down, not just in Florida but across Gulf Coast states. Auto rates have moderated and there has been price deceleration. Most carriers we work with today are in growth mode. With that comes a little more relaxed underwriting guidelines, enhanced new business incentive commissions to drive volume, and opening up of some property capacity to get to the bundling that most carriers that write multiline prefer to have. I see that playing out throughout the calendar year.

Great. That's really helpful. And then if I could just ask another question. I know you touched on this briefly earlier, but I wanted a follow-up about your M&A pipeline. Given the decline in multiples in the public brokers, if that is leading to a decline in the price of the private brokers that you're looking at in your pipeline, how significant do you think that decline will be?

I don't think the private markets have caught up to how quickly the public market can turn. When you look at the sell-off in February, that was very acute. Most LOIs and purchase agreements being negotiated extend over months. So sellers in LOIs or in process when a public market price correction hits may pause to see where the market normalizes. It could impact larger-sized transaction multiples. When you bifurcate private transaction valuations, organizations selling with less than $1 million of revenue really don't price correlate to public markets, and that's the vast majority of smaller targets. They've always been at a lower metric. When you get into over $20 million or $50 million revenue organizations, those are the ones that try to peg pricing to public markets. Depending on business mix, you might see some softening in valuations for those private transactions. But the smaller, normal-course acquisitions probably won't see much of a shift downward as they already trade at significantly lower valuations than larger, more scaled operations.

Your next question comes from Rowland Mayor from RBC Capital Markets.

I appreciate the AI comments. I wanted to ask just one more on it. Do you think it accelerates the migration out of captive agents? Is that a growth tailwind to agency or M&A? How are you thinking about that?

I think it can, especially when a captive agent is considering a career transition to independent agencies. If someone leaves a captive carrier, they're dependent on that carrier for technology, training and support. Going into a new environment with technology evolving in real time and decisions to reestablish themselves is challenging. An organization like ours is best positioned to capture that migration because we have the infrastructure, technology, future technology, training and support markets agents need to be competitive. I do think we will be a net beneficiary of additional migration, and that's not isolated to captive agents. As I mentioned earlier, 38,000 independent agencies are subscale — many with less than $1 million of revenue. Those smaller agencies likely have significantly less market access than our agents. As they operate independently, many will consider how to get to the next inflection point of insurance distribution, and that's where our agency-in-a-box model fits: immediate scale, improved technology and the support they don't get operating as a truly independent agency.

That's super helpful. I wanted to ask on the margin projection. It's down year-over-year. How much of that is growth investments, and how much is just difficult contingent comps? Do the growth investments continue through 2027?

It's a blend. Part is our second year as a public company; we have multi-year compliance and reporting investments. We're onboarding and creating internal audit infrastructure teams that are not required today but will be tomorrow. Some of the expense is public-company related. Some is investment in technology and infrastructure. On contingencies, we are hedging in our projections to ensure a conservative view given 2025's favorable environment at the tail of an increased rate environment and a relatively benign catastrophe experience excluding California wildfires. It would be imprudent to project the same outcome in 2026. In a rate-declining environment, with everyone signaling growth, there should probably be some loss ratio degradation in 2026 that could lower contingent payouts that factor into profitability.

I appreciate that. One more: the agency-in-a-box margin is kind of capped around 20% based on revenue recognition, but what is the margin profile of the corporate and MGA business? As you mix towards those, is there an opportunity to expand long term?

Correct. Corporate stores run between 30% and 40% margins, averaging around 35% including contingent. MGA margins depend on the program: early-stage programs may not produce margin because of development costs, but as they mature they can run anywhere between 35% to 50% margins. So as we grow corporate locations and MGA, we expect consolidated margin expansion. Agency-in-a-box growth contributes to the contingent side and can help push margins up as they continue to scale. We announced two transactions closing and coming on board next week; one is an MGA specialty which will be beneficial as we expand new product and distribution in that platform. The guide we gave reflects our view with some conservatism around contingencies given filings for rate reductions that could hit combined ratios and loss ratios used in profit-sharing calculations.

Your next question comes from Pablo Singzon from JPMorgan.

There are many angles to the AI question for personal lines. If you put aside the debate on consumer adoption and the replaceability of advice provided by agents, which I take from your comments you think will swing in favor of agents ultimately, I'd be interested to hear your views on why insurers may or may not want to participate in something like a price comparison platform that AI can scrape and optimize. It seems to me that's what people have in mind when they think about the AI threat. There have been instances historically where insurers in the U.S. have shown a lack of willingness to join such platforms. Do you think that changes even if the platform is more intelligent now because it's AI?

Great question, Pablo. Pre-February's announcement, everyone knew direct-to-consumer channels existed, largely derived through SEO and comparative rating sites. That comparative experience had mixed outcomes: many SEO-driven comparers were lead-generation businesses that sold data to multiple carriers and agents. Those digital customers had higher acquisition costs, lower retention — about 50% less — and loss ratios roughly 20% higher than customers produced through relationships and centers of influence. There are qualitative reasons we're not chasing the digital customer aggressively. Going forward, GEO is the new search and underpins many AI engines like ChatGPT. We're working on our digital footprint to optimize connection points, collateral, and local retail store presence to be present in both SEO and GEO search. While we don't derive a significant amount of business from those activities now, you must be present because consumers will research online and then often seek a local adviser to finish the transaction and get advice before binding. On the carrier side, consider that if loss ratios derived from digitally sourced customers are significantly higher, carriers need customer economics that make sense to provide capacity on that channel. Companies like Progressive and GEICO have invested in dual channels. Progressive long had a dual-channel approach; GEICO historically hadn't leaned on independent agents but has been expanding independent agency distribution recently. They understand that as customers move through life inflection points — marriage, buying homes, growing assets — their insurance needs become more complex and they prefer local advice. Also, there's the practical issue of data: to get accurate bindable quotes you often need credit-scored or insurance-scored data, which requires consumers to provide very personal information. Many are not prepared to do that at scale. One of our agents tried one of the recently announced sites; the experience asked a lot of questions and created fatigue even for an insurance professional. Property underwriting and enterprise risk considerations post large catastrophes remain complex and fragmented; no single carrier can take all property risk for a wide funnel. So even if AI and comparison platforms improve, property fragmentation and underwriting constraints will limit how far carriers will commit capacity through a pure price-comparison channel. We'll embrace and integrate these changes where appropriate, but we believe independent agents and the multiline advisory model remain highly relevant.

It was more about whether insurers like Progressive or GEICO would participate in those platforms since in theory they could. Any quick color on that?

Progressive and GEICO have significant investment in independent agency distribution. Progressive has long used a dual channel approach; GEICO historically had been more direct but in recent years has leaned into independent agencies. They understand direct-to-consumer is effective for certain customer segments, but customers' needs evolve and many seek local advice over time. Also, direct-to-consumer customers often require bundling that necessitates property capacity carriers beyond what a single direct carrier can supply. So even those large direct writers will participate where it makes sense, but property fragmentation and the economics of digitally sourced customers will limit universal carrier participation on pure comparison platforms.

There are no further questions at this time. I will now turn the call back over to Mr. Gordy Bunch for closing remarks.

Thank you, operator, and thank you to everyone who attended today's call. I appreciate all your thoughtful questions. I want to reiterate that we have a fortress balance sheet. We are not levered. We have cash on hand, undrawn credit facilities, a disciplined M&A pipeline and are looking to transact on accretive, quality sub-acquisitions. Our core business outside of recent acquisitions is still projecting low double-digit organic growth; we see decades of opportunity to grow into the $497 billion of personal lines market that we don't currently possess and the $0.5 trillion in commercial lines where we can continue to expand. We see tailwinds coming out of 2025 going into 2026. We appreciate all your thoughtful questions, and we look forward to delivering for our shareholders throughout the year. Thank you.