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    BWIN
    Earnings call· Jun 2026(Q2 FY26)

    Baldwin Insurance Group Q2 FY26 earnings call BWIN

    Jul 30, 2026 Source

    Executive summary

    The Baldwin Group Q2 FY26 — Strong Organic Growth Momentum and AI-Driven Efficiencies

    The Baldwin Group demonstrated strong underlying momentum in Q2 FY26, with significant organic growth when normalized for integration-related adjustments and prior headwinds. Successful integration of recent partnerships, particularly the CAC Group, is driving outperformance, while strategic AI deployments are yielding substantial productivity gains and cost efficiencies. Management remains confident in the business trajectory and its ability to achieve long-term strategic goals, despite current leverage constraints on capital allocation.

    Highlights

    5

    • Normalized organic revenue growth reached 8% in Q2 FY26, adjusting for partnerships and idiosyncratic headwinds.

    • CAC Group delivered exceptional growth of 23% in Q2 FY26 and 34% year-to-date, with over $80 million in booked new business.

    • Adjusted EBITDA grew 37% year-over-year to $117 million, with margin expanding 110 basis points to 23.7%.

    • Adjusted free cash flow increased 437% year-over-year to $46 million.

    • AI initiatives have optimized 27 processes, completed over 47,000 tasks with 98%+ quality, and reduced direct bill processing costs from $3 million to $1 million annually.

    Concerns

    3

    • Legacy IAS business experienced $8 million of annualized revenue attrition due to structural changes, impacting H2 FY26 revenue by $4 million to $5 million.

    • Net leverage reached approximately 4.5x, limiting further share repurchases at the current time.

    • Rate and exposure was a 240 basis point headwind in Q2 FY26, though expected to trough.

    Guidance & targets

    7
    CategoryTargetConfidence
    Q3 FY26 Revenue
    $485 million to $495 million
    high materiality
    High
    Q3 FY26 Organic Revenue Growth
    mid-single digits
    high materiality
    High
    Q3 FY26 Adjusted EBITDA
    $105 million to $110 million
    high materiality
    High
    Q3 FY26 Adjusted Diluted EPS
    $0.42 to $0.46 per share
    high materiality
    High
    Full-Year FY26 Organic Revenue Growth
    mid-single digits
    high materiality
    High
    Q4 FY26 Organic Revenue Growth
    high single digits or greater
    high materiality
    High
    Full-Year FY26 Adjusted Free Cash Flow Growth
    double-digit growth
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Insurance Advisory Solutions (IAS)
    Organic revenue growth was down 2%, impacted by rate and exposure headwinds, a procedural accounting change, and integration-related revenue attrition. However, sales velocity accelerated significantly, especially with the inclusion of CAC and Capstone, indicating strong underlying new business momentum.
    Sales velocity (legacy IAS): 19%Year-to-date sales velocity (legacy IAS): 16%Combined sales velocity (including CAC and Capstone): 30%Year-to-date combined sales velocity (including CAC and Capstone): 27%Rate and exposure headwind: 240 basis pointsProcedural accounting change headwind: 150 basis pointsClient retention headwind (structural changes): 240 basis pointsAnnualized revenue attrition (structural changes): $8 millionH2 FY26 revenue impact (structural changes): $4 million to $5 million
    		—-2%——
    CAC Group (part of IAS)
    CAC Group continued its strong momentum, delivering significant revenue growth and new business. The integration and synergy capture are tracking ahead of schedule, contributing positively to the overall IAS segment.
    Booked new business year-to-date: Over $80 millionBooked new business year-to-date growth: 43%Closed won new business (including future effective dates): Over $100 millionSales velocity (all product lines): 59%Sales velocity (recurring lines of business): 19%Retention: North of 92%Net growth of transaction-related product lines: 44%
    		$94 million23%——
    Underwriting, Capacity and Technology Solutions (UCTS)
    Organic revenue growth was 6%, or 7% including Obie. Strong performance in multifamily, admitted home, and real estate investor products was partially offset by softness in E&S home and lower reinsurance brokerage revenue at Juniper Re due to a softer renewal environment.
    Organic revenue growth (including Obie): 7%Juniper Re revenue reduction: $4 million (year-over-year)Juniper Re expected organic growth (full year): In excess of 20%BRIE licensed states: 13
    		—6%——
    Mainstreet Insurance Solutions (MIS)
    Organic revenue growth improved to 4% from a decline in Q1, benefiting from lapping the QBE commission rate reduction. Normalized for QBE and Medicare impacts, organic growth was approximately 10%, driven by strong momentum in the embedded mortgage business.
    Organic revenue growth (normalized for QBE and Medicare): Approximately 10%Q1 FY26 organic revenue growth: -5%
    		—4%——

    Operational metrics

    14
    Total Revenue
    $493 million
    Q2 FY26

    Total revenue reported for the second quarter.

    Total Organic Revenue Growth (Reported)
    2%
    Q2 FY26

    Reported total organic revenue growth for the quarter.

    Total Organic Revenue Growth (Normalized)
    8%
    Q2 FY26

    Organic revenue growth after adjusting for the impact of January partnerships and idiosyncratic headwinds.

    Adjusted EBITDA
    $117 millionup 37% year-over-year
    Q2 FY26

    Adjusted EBITDA for the second quarter.

    Adjusted EBITDA Margin
    23.7%up 110 basis points year-over-year
    Q2 FY26

    Adjusted EBITDA margin for the second quarter, showing year-over-year improvement.

    Adjusted Diluted EPS
    $0.48
    Q2 FY26

    Adjusted diluted earnings per share for the second quarter.

    Net Leverage
    4.5x
    Q2 FY26 end

    Net leverage ratio at the end of the second quarter, at the top end of the target range.

    CAC Working Capital Impact
    $11 millionreversal of $30 million headwind in Q1
    Q2 FY26

    Working capital tailwind for CAC in Q2, reversing a prior headwind.

    AI Tasks Completed
    47,000
    Past 17 weeks

    Number of tasks completed using AI tools within the Catalyst transformation program.

    AI Optimized Processes
    27
    Q2 FY26

    Number of processes optimized and standardized across commercial and benefit service lines using AI.

    Direct Bill Reconciliation Rate
    98%improved from 90%
    Sustained

    Improved monthly reconciliation rate for direct bill processing due to AI solutions.

    Direct Bill Processing Cost Reduction
    $2 millionfrom $3 million to $1 million
    Annualized

    Annualized cost reduction in direct bill processing due to AI solutions.

    Direct Bill Processing Labor Cost Reduction
    $800,000from $1.2 million to $400,000
    Annualized

    Annualized internal labor cost reduction for direct bill processing due to AI solutions.

    BRIE AIF Fees as % of Premium
    5%
    Ongoing

    AIF fees generated by BRIE, with Baldwin being the majority owner. Not recognized on the top line due to equity method accounting.

    Industry KPIs

    4
    MetricValueDetails
    Capital returns$80 millionUSD
    Catastrophe losses—
    Retention persistencyNorth of 92%%
    Broker specific when present2% (IAS), 6% (UCTS), 4% (MIS)%

    Product announcements

    2
    ProductTypeDetails
    Proprietary Builder Program with Hippo and Spinnakerlaunch
    Co-developed Group Renters Productlaunch

    Deals & partnerships

    3
    AnthropicExpanded enterprise relationship and firm-wide rollout of Claude AI

    Expanded enterprise relationship with Anthropic for the firm-wide rollout of Claude to enhance colleague productivity and streamline workflows.

    Fairway Independent MortgageEmbedded mortgage business partnership

    Partnership with a top 10 independent mortgage originator, tracking ahead of plan in its initial months.

    Hippo and SpinnakerProprietary builder program development

    Collaboration on the second proprietary builder program, expected to launch in select states by year-end.

    Risks & headwinds

    6
    Rate and exposure headwindsQ2 FY26, expected to trough

    240 basis points impact on IAS organic growth in Q2 FY26

    Mitigation: Confidence based on portfolio composition and Q2 renewal cycle for cat-exposed property, which is deeply soft.

    Procedural accounting changeQ2 FY26, fully lapped on 6/30

    150 basis points impact on IAS organic growth in Q2 FY26

    Mitigation: Headwind is now fully lapped, so future impact will abate.

    Integration-related revenue attrition in legacy IASH2 FY26

    $8 million annualized revenue attrition, leading to $4 million to $5 million revenue impact in H2 FY26

    Mitigation: Management views this as a strategic alignment, more than offset by outperformance in CAC. Confident this is the extent of such impacts.

    Softness in E&S home book

    Partially offset strong performance in UCTS

    Lower reinsurance brokerage revenue at Juniper ReQ2 FY26, timing dynamic

    $4 million year-over-year reduction in Q2 FY26

    Mitigation: Tied to softer 6/1 renewal pricing environment; improved commission rates for MSI's E&S homeowners programs will benefit organic revenue in H2 FY26. Juniper's full-year organic growth expected in excess of 20%.

    Net leverage at high end of target rangeQ2 FY26 end

    Approximately 4.5x

    Mitigation: Limits ability to continue share repurchase program at current time; future buyback decisions will balance leverage profile.

    What to watch in Q3 FY26

    5

    IAS Organic Revenue Growth

    H2 FY26
    Current-2% (reported Q2 FY26)
    TargetStep function increase

    Why it matters

    Verifying the anticipated acceleration in IAS organic growth is crucial for the overall company's growth trajectory, especially as idiosyncratic headwinds are expected to abate📎.

    IAS is poised for a step function increase in organic growth in the back half of the year, and we expect continued strength from our newest partners as we leverage our capabilities across the enterprise.

    Q&A highlights

    8

    Asked about the industries CAC Group focuses on, the sustainability of its strong growth, and potential headwinds from tough comps in 2027.

    Trevor Baldwin highlighted CAC's focus on large and complex client markets (natural resources, public companies, transaction liability, private equity, risk management) and its successful integration with Baldwin's distribution network. He attributed growth to underlying pipeline and new business momentum, stating it's repeatable and not due to idiosyncratic factors, but declined to comment on 2027 performance.

    “But more broadly, as we look at the pipeline, as we look at kind of close won future effective date business, we're feeling really confident about the continued momentum heading into the back half of the year. As we look to 2027, I'd say it's early for us to begin commenting on how we think about overall performance and there's lots of factors that come into that. But I'd say, broadly, the success at CAC is not driven because of some kind of outside idiosyncratic factors, it's a result of underlying pipeline and new business momentum, and that is repeatable.”

    asked by Tommy Mcjoynt of KBW · answered by Trevor Baldwin

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Underlying Organic Growth Momentum

    The Baldwin Group reported total organic revenue growth of 2% in Q2 FY26. However, when normalizing for the impact of three January partnerships and idiosyncratic headwinds, the underlying organic revenue growth would have been 8%. This adjusted figure is considered more indicative of the IAS franchise's momentum, which is poised for a step-function increase in organic growth in the second half of the year.

    02

    Exceptional CAC Group Performance and Integration Synergies

    The CAC Group, acquired earlier in the year, demonstrated robust performance with 23% growth in Q2 FY26 and 34% year-to-date. It contributed over $80 million in booked new business year-to-date, up 43% from the prior year, and achieved a sales velocity of 59% across all product lines. Integration efforts are ahead of schedule, with synergy capture tracking well, validating the strategic rationale of the merger.

    03

    AI and Catalyst Program Driving Efficiencies

    The 3B/30 Catalyst program is on track, with AI tools emerging as a significant driver. The company has rolled out Claude firm-wide, leading to measurable results. AI solutions have completed over 47,000 tasks with 98%+ quality, optimized 27 processes, and improved direct bill reconciliation from 90% to 98%, reducing associated costs from $3 million to $1 million annually.

    04

    Segment Performance Highlights

    Insurance Advisory Solutions (IAS) saw sales velocity accelerate to 19% (30% including CAC/Capstone), despite headwinds from rate and exposure (240 bps) and a procedural accounting change (150 bps). Underwriting, Capacity and Technology Solutions (UCTS) grew 6% organically, driven by multifamily and real estate investor products. Mainstreet Insurance Solutions (MIS) organic growth improved to 4%, normalizing to 10% when excluding QBE and Medicare impacts.

    05

    Capital Allocation and Leverage

    The company repurchased approximately 4 million shares for $80 million in Q2 FY26, deploying about half of its $250 million authorization. Net leverage stands at approximately 4.5x, which is at the higher end of the communicated range, temporarily limiting further share repurchases. Management views the intrinsic value of the stock as exceeding its current trading price.

    06

    Rate and Exposure Outlook

    Management expects Q2 FY26 to be at or near the trough for rate and exposure headwinds. While the broader insurance market is softening, particularly in cat-exposed property, the company's portfolio composition and the renewal cycle for its largest cat property reinsurance placements provide confidence in abating headwinds for the second half of the year.

    AI-generated summary of the company’s earnings call. Not investment advice.