0001781755-26-000034
SEC filingRevenue grew 29% to $532.2M, but a $128.8M Tax Receivable Agreement expense drove an operating loss of $101.3M.
For the three months ended March 31, 2026, total revenue increased 29% to $532.2 million from $413.4 million in the prior-year period. The growth was primarily driven by $111.5 million from recently acquired partnerships (CAC Group, Obie, Capstone) and $11.3 million in organic core commissions and fees growth. Profit-sharing and other income was relatively flat at $29.9 million. Despite top-line expansion, operating income swung to a loss of $101.3 million from a profit of $56.0 million, largely due to a $128.8 million increase in other operating expenses attributable to a newly recognized Tax Receivable Agreement liability. Excluding this item, operating expenses rose at a slower rate. Colleague compensation and benefits increased 43% to $283.6 million, with partnership activity accounting for $70.1 million. Amortization expense doubled to $55.0 million due to intangible assets from recent deals. Net income attributable to Baldwin was $2.3 million, compared to $13.9 million in the prior year, while diluted EPS fell from $0.20 to $0.02. Adjusted EBITDA increased to $137.2 million from $113.8 million, but margin contracted 200 bps to 26%, reflecting the impact of lower-margin partnership contributions and elevated costs.
Insurance Advisory Solutions (IAS): Revenue jumped 45% to $331.2 million, with $94.7 million from partnerships (CAC Group and Capstone). Organic growth was driven by 13% sales velocity, though rate softness in commercial property lines created a 70 bps headwind. Operating income dipped 7% to $42.1 million as colleague compensation and other expenses rose disproportionately from partnership integration.
Underwriting, Capacity & Technology Solutions (UCTS): Revenue grew 8% to $134.9 million. Core commissions and fees increased 10% due to $8.8 million from Obie and organic growth from the Captive ($9.9 million) and Capacity Solutions ($1.4 million). However, MSI core commissions fell $5.7 million amid weakness in E&S home programs from the property rate environment. Operating income plunged 91% to $1.6 million as other operating expenses surged 84%, partly from Captive-related costs.
Mainstreet Insurance Solutions (MIS): Revenue rose 5% to $81.7 million. Core commissions and fees grew $4.2 million, led by the acquired Hippo Homebuilder network ($7.6 million) and Mainstreet ($1.0 million), partially offset by declines in Medicare ($3.4 million) and Westwood ($1.0 million). Operating income fell 30% to $10.8 million due to higher colleague compensation and amortization.
Corporate and Other: Reported negative revenue from eliminations (-$16.0 million) and a deep operating loss of $155.7 million, primarily reflecting the $128.8 million Tax Receivable Agreement expense and $7.7 million in transaction-related insurance premiums.
Management highlighted continued focus on partnership integration and organic growth. The Tax Receivable Agreement liability recognition signals improved confidence in future taxable income, with $144.6 million recorded. The company expects interest expense to grow in the near term due to higher borrowings to fund partnerships, partially offset by lower rates. The Reciprocal insurance exchange began operations in late Q2 2025, expected to contribute in 2026. No specific numerical guidance was provided, but the company emphasized its $3B/30 Catalyst Program for automation and AI, and a $250 million share repurchase authorization remains in place. Key risks include partnership integration, property rate headwinds, and elevated health plan costs.
As of March 31, 2026, total assets stood at $5.94 billion, driven by acquisitions of CAC Group, Obie, and Capstone. Cash and cash equivalents were $146.4 million, with fiduciary cash of $309.7 million. Total debt (including current portion and revolving line) was $2.36 billion, up from $1.69 billion at year-end 2025, reflecting the $600 million incremental term loan and increased revolver borrowings. Shareholders' equity rose to $1.55 billion, including a $144.6 million Tax Receivable Agreement liability and $335.4 million in contingent earnout liabilities.
The only material commitment disclosed in the Notes is a $2.5 million charitable pledge to the University of South Florida, to be funded through October 2028. No other purchase commitments, supply agreements, or long-term contractual obligations were reported in the Notes section.
During Q1 2026, the company repurchased 2.19 million shares of Class A common stock for $47.0 million, retiring them immediately. No dividend payments were reported. Capital expenditures totaled $12.7 million (2.4% of revenue), primarily in UCTS ($6.9M) and MIS ($3.8M). Debt activity included $600 million in incremental term loans, $245 million in revolver draws, and $161 million in revolver repayments, resulting in a net debt increase of $674.8 million. The company also incurred $7.4 million in loss on extinguishment and modification of debt.
The Insurance Advisory Solutions segment generated $331.2 million in revenue (62.2% of total) and $42.3 million in net income, a 45.5% YoY revenue increase driven by acquisitions. Underwriting, Capacity & Technology Solutions contributed $134.9 million in revenue and $2.5 million net income, with revenues up 7.8% YoY. Mainstreet Insurance Solutions reported $81.7 million in revenue and $10.8 million net income, a 4.9% revenue increase. Intersegment eliminations totaled $15.6 million, primarily from shared commission revenue between UCTS and IAS. No geographic breakdown was provided in the segment note.