The Baldwin Insurance Group, Inc. (BWIN) Earnings

Management highlights

- Overall Financial Results * Delivered total Q2 2026 revenue of $493 million, adjusted EBITDA of $117 million (up 37% YoY), adjusted EBITDA margin of 23.7% (up 110 bps YoY), and adjusted diluted EPS of $0.48. * Adjusted free cash flow was $46 million, up 437% YoY, with 34% year-to-date growth against the full-year double-digit growth target. * Reported GAAP net loss attributable to Baldwin of $39 million ($0.42 diluted loss per share), driven by non-cash and one-time adjustment items. - Integration & Partnership Updates * Three January 2026 partnerships grew 25% in Q2 2026 and 34% year-to-date, exceeding performance expectations. CAC integration and synergy capture is tracking ahead of schedule. * Structural changes for CAC integration in legacy IAS caused $8 million in annualized revenue attrition, which is fully offset by outperformance in the CAC business. An additional $4-5 million impact to legacy IAS is expected in H2 2026. * Inaugural reciprocal exchange BRII is now licensed in 13 states, with business migration underway outside of Texas. The second proprietary builder program with Hippo and Spinnaker is on track to launch in select states by end of 2026. * Embedded mortgage business with Faraway Independent Mortgage is tracking ahead of plan in its first three months on the platform. - Technology & Strategic Initiatives * The 3D30 Catalyst transformation program remains on track, with early phase one impacts beginning to flow through to results. * Firm-wide rollout of Anthropic's Claude AI is in early innings, with already measurable productivity gains. Management expects AI to be a key driver of the company's 3B30 aspirational growth goal. * Half of the authorized $250 million share repurchase program has been deployed, with $80 million used to repurchase 4 million shares in Q2 2026. Ended Q2 with net leverage of 4.5x.

Guidance

- Third quarter 2026 guidance expects total revenue of $485 to $495 million, mid-single digit organic revenue growth, adjusted EBITDA of $105 to $110 million, and adjusted diluted EPS of $0.42 to $0.46 per share. - Full-year 2026 consolidated guidance is largely unchanged, with a minor downward revision to full-year organic revenue growth to the mid-single digits, driven by the CAC integration-related structural revenue impacts. Q4 2026 organic growth is still expected to reach high single digits or greater. - The full-year 2026 adjusted free cash flow target of double-digit year-over-year growth remains on track. - Management reaffirmed confidence in progress toward the long-term 3B30 aspirational growth goal, stating the company is tracking in line with expectations and AI adoption is increasing confidence in hitting the target.

Segment performance

1. Insurance Advisory Solutions (IAS): Organic revenue growth of -2% year-over-year. CAC, acquired via merger, generated Q2 2026 revenue of $94 million, representing 23% year-over-year growth. Excluding transitory integration and accounting headwinds, underlying organic growth for the segment was 8%. CAC makes up approximately 19% of total company revenue of $493 million. 2. Underwriting Capacity and Technology Solutions (UCTS): Organic revenue growth of 6% year-over-year; 7% on an as-if owned basis for recent acquisitions. Strong performance in multifamily, admitted home, and real estate investor products, partially offset by softness in ENS homebook and lower reinsurance brokerage revenue at Juniper Re. The segment makes up an unstated share of total $493 million Q2 revenue. 3. Main Street Insurance Solution (MIS): Organic revenue growth of 4% year-over-year, improving from a 5% decline in Q1 2026 after lapping the QBE commission rate reduction headwind. Normalizing for QBE and Medicare underperformance, overall organic growth was approximately 10%. The segment makes up an unstated share of total $493 million Q2 revenue.

Risks & headwinds

- Industry-wide insurance rate softening, particularly for catastrophe-exposed property, created 240 bps of headwind in Q2 2026, though management expects Q2 to be the trough for this headwind. - Q2 2026 saw 150 bps of headwind from a procedural accounting change that was fully lapped at the end of the quarter. - Continued softness in the ENS homebook and lower reinsurance brokerage revenue at Juniper Re pressured UCTS results in Q2. - The Medicare business underperformance created a headwind for MIS that is largely expected to be neutral in H2 2026. - Market speculation of a potential leveraged buyout created share price volatility, though management declined to comment on the rumors.

Analyst Q&A

• Q: The analyst asks about CAC's core industry focus, the sustainability of its strong first half growth, and if tough 2026 comparables will create a headwind for CAC in 2027. /

  A: CAC focuses on large/complex clients across natural resources, public companies, transaction liability, and private equity. The merger of CAC with Baldwin's broader distribution and sales network has driven strong, broad-based growth, including 130 new private equity client wins and multiple large IPO mandates in Q2. While quarterly variability from transactional lines is expected, growth is driven by underlying pipeline momentum and market share gains, not idiosyncratic factors, so momentum is expected to continue into H2 2026.

• Q: The analyst asks if the $8 million annualized revenue attrition from CAC integration redundancies is the full extent of dis-synergies, and if the impact will extend into 2027. /

  A: Management confirms this is the full extent of impact from structural alignment. The revenue is not lost overall—instead it shifts from the legacy IAS P&L to the CAC P&L, with aggregate revenue matching original expectations. It is not a true net dis-synergy for the consolidated business.

• Q: The analyst asks why management expects Q2 2026 to be the trough for rate and exposure headwinds, when broader industry trends indicate further softening ahead. /

  A: Management confirms the overall insurance market is softening, but Q2 hosts the renewal for the large majority of the company's catastrophe-exposed property portfolio, which is the softest sector of the current market. The trough expectation reflects this portfolio renewal timing, not a forecast of broader market stabilization, so headwinds are expected to abate in coming quarters.

• Q: The analyst asks how to think about future share repurchases after the $80 million buyback in Q2, given recent share price volatility and the LBO rumors. /

  A: Management notes that the Q2 buyback was opportunistic, responding to what the company saw as share price dislocation, and the company is not an indiscriminate buyer. The company is currently not able to continue buying back shares, as net leverage is now at the upper end of the company's stated 4.0x to 4.5x target range. Future buyback activity will be balanced against the leverage target and share price levels going forward.

• Q: The analyst asks for updated perspective on hitting the 3B30 long-term growth goal, what key initiatives will drive progress, and the current timeline. /

  A: Management confirms it still feels very confident about hitting the 3B30 target. The company will end 2026 at ~$2 billion in revenue, two-thirds of the way to the goal. Early results from AI deployment are very encouraging for productivity and revenue growth, and 2026's new partnerships have put the company on track to hit the target's balance of organic and inorganic growth. AI adoption and Catalyst program execution have increased management's confidence in the goal.