TWFG, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to TWFG, Inc. Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm 72 Consolidated Statements of Income 73 Consolidated Statements of Comprehensive Income (Loss) 74 Consolidated Balance Sheets 75 Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Stockholders ’ /Members ’ Equity 76 Consolidated Statements of Cash Flows 78 Notes to the Consolidated Financial Statements 80 N ote 1. Organization and Ba sis of Presentation 80 N ote 2. Summary of Significant Accounting Policies 81 N ote 3. R evenues 89 N ote 4. Intangible Assets and Acquisi tions 90 N ote 5. Operating Leases 92 N ote 6. Derivatives 93 N ote 7. Other Current Liab ilities 93 N ote 8. Debt and Deferred Acquisition Payables 94 N ote 9. Fair Value Measurements 95 N ote 10. Stockhold ers ’ Equity 97 N ote 11. Stock-Based Compensation 99 N ote 12. Income Taxes 100 N ote 13. Defined Contribution Plan 103 N ote 14. Related Party Transactions 103 N ote 15. Earnings Per Share 104 N ote 16. Discontinued Operation 105 N ote 17. Litigation and Contingencies 106 N ote 18. Segment 106 N ote 19. Subsequent Events 107 71 Table of contents Report of Independent Registered Public Accounting Firm To the shareholders and the Board of Directors of TWFG, Inc. Opinion on the Financial Statements We have audited the accompanying Consolidated Balance Sheets of TWFG, Inc. and subsidiaries (the "Company") as of December 31, 2025, and 2024, the related Consolidated Statements of Income, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders’/Members’ Equity and Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Houston, Texas March 9, 2026 We have served as the Company's auditor since 2018. 72 Table of contents TWFG, Inc. Consolidated Statements of Income (Amounts in thousands, except share and per share data) Years Ended December 31, 2025 2024 2023 Revenues Commission income (related party: 2025- $ 13,986 , 2024- $ 9,609 and 2023- $ 4,203 ) $ 220,968 $ 183,158 $ 158,679 Contingent income 13,111 8,722 4,085 Fee income (related party: 2025- $ 3,397 , 2024- $ 2,704 and 2023- $ 1,593 ) 12,992 10,562 8,311 Other income 1,441 1,318 968 Total revenues 248,512 203,760 172,043 Expenses Commission expense 133,518 118,086 116,847 Salaries and employee benefits 37,636 29,064 13,970 Other administrative expenses (related party: 2025- $ 3,122 , 2024- $ 1,478 and 2023- $ 415 ) 22,020 16,665 10,973 Depreciation and amortization 18,353 12,020 4,862 Total operating expenses 211,527 175,835 146,652 Operating income 36,985 27,925 25,391 Interest expense ( 287 ) ( 2,223 ) ( 1,003 ) Interest income 6,607 4,376 891 Other non-operating income (expense), net 1,140 9 ( 17 ) Income before tax 44,445 30,087 25,262 Income tax expense 3,279 1,495 — Net income from continuing operations 41,166 28,592 25,262 Net income from discontinued operation, net of tax — — 834 Net income 41,166 28,592 26,096 Less: net income attributable to noncontrolling interests 33,203 25,847 26,096 Net income attributable to TWFG, Inc. $ 7,963 $ 2,745 $ — Weighted average shares of common stock outstanding (see Note 15): Basic 14,914,346 14,772,115 Diluted 15,100,190 14,982,409 Earnings per share (see Note 15): Basic $ 0.53 $ 0.19 Diluted $ 0.53 $ 0.19 See Notes to the Consolidated Financial Statements 73 Table of contents TWFG, Inc. Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands) Years Ended December 31, 2025 2024 2023 Net income $ 41,166 $ 28,592 $ 26,096 Other comprehensive loss, net of tax: Unrealized gain on investments of discontinued operation (net of tax expense 2025- $ 0 , 2024- $ 0 and 2023- $ 44 ) — — 165 Unrealized (loss) gain on derivative instruments ( 15 ) 214 109 Reclassification of realized losses on derivative instruments included in net income ( 181 ) ( 321 ) ( 409 ) Total other comprehensive income, net of tax ( 196 ) ( 107 ) ( 135 ) Comprehensive income 40,970 28,485 25,961 Less: comprehensive income attributable to noncontrolling interests 33,060 25,690 25,961 Comprehensive income attributable to TWFG, Inc. $ 7,910 $ 2,795 $ — See Notes to the Consolidated Financial Statements 74 Table of contents TWFG, Inc. Consolidated Balance Sheets (Amounts in thousands, except share/unit data) December 31, 2025 2024 Assets Current assets Cash and cash equivalents $ 155,926 $ 195,772 Restricted cash 11,974 9,551 Commissions receivable, net 37,322 27,067 Accounts receivable 7,469 7,839 Other current assets, net 12,827 1,619 Total current assets 225,518 241,848 Non-current assets Intangible assets, net 138,632 72,978 Property and equipment, net 3,307 3,499 Lease right-of-use assets, net 4,189 4,493 Other non-current assets 689 610 Total assets $ 372,335 $ 323,428 Liabilities, Redeemable Noncontrolling Interest and Equity Current liabilities Commissions payable $ 15,168 $ 13,848 Carrier liabilities 13,811 12,392 Operating lease liabilities 1,320 1,013 Short-term bank debt 1,972 1,912 Deferred acquisition payables 1,505 601 Other current liabilities 10,308 9,851 Total current liabilities 44,084 39,617 Non-current liabilities Operating lease liabilities 2,897 3,372 Long-term bank debt 2,035 4,007 Deferred acquisition payables 6,669 1,122 Other non-current liabilities — 24 Total liabilities 55,685 48,142 Commitment and contingencies (see Note 17) Redeemable noncontrolling interest 17,901 — Stockholders' Equity Class A common stock ($ 0.01 par value per share - 300,000,000 authorized 15,028,681 and 14,811,874 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively) 150 148 Class B common stock ($ 0.00001 par value per share - 100,000,000 authorized 7,277,651 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively) — — Class C common stock ($ 0.00001 par value per share - 100,000,000 authorized 33,893,810 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively) — — Additional paid-in capital 59,951 58,365 Retained earnings 23,251 15,288 Accumulated other comprehensive income 30 83 Total stockholders' equity attributable to TWFG, Inc. 83,382 73,884 Noncontrolling interests 215,367 201,402 Total stockholders' equity 298,749 275,286 Total liabilities, redeemable noncontrolling interest, and equity $ 372,335 $ 323,428 See Notes to the Consolidated Financial Statements 75 Table of contents TWFG, Inc. Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders’/Members’ Equity (Amounts in thousands, except share/unit data) Class A Common Stock Class B Voting Stock Class C Voting Stock Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Attributable to TWFG, Inc./ Members' Equity Noncontrolling Interests Total Stockholders’ Equity Redeemable Noncontrolling Interest Balance at December 31, 2024 14,811,874 $ 148 7,277,651 $ — 33,893,810 $ — $ 58,365 $ 15,288 $ 83 $ 73,884 $ 201,402 $ 275,286 $ — Net income — — — — — — — 1,338 — 1,338 5,515 6,853 — Cash distributions to members — — — — — — — — — — ( 2,024 ) ( 2,024 ) — Other comprehensive loss — — — — — — — — ( 18 ) ( 18 ) ( 50 ) ( 68 ) — Stock-based compensation — — — — — — 1,204 — — 1,204 — 1,204 — Vesting of restricted stock units 134,018 1 — — — — — — — 1 — 1 — Tax withholding on vesting of equity awards ( 41,809 ) — — — — — ( 1,195 ) — — ( 1,195 ) — ( 1,195 ) — Balance at March 31, 2025 14,904,083 $ 149 7,277,651 $ — 33,893,810 $ — $ 58,374 $ 16,626 $ 65 $ 75,214 $ 204,843 $ 280,057 $ — Net income — — — — — — — 1,957 — 1,957 6,970 8,927 73 Cash distributions to members — — — — — — — — — — ( 11,239 ) ( 11,239 ) — Other comprehensive loss — — — — — — — — ( 13 ) ( 13 ) ( 37 ) ( 50 ) — Acquisition of TWFG MGA FL, LLC — — — — — — — — — — — — 9,688 Stock-based compensation — — — — — — 1,515 — — 1,515 — 1,515 — Vesting of restricted stock units — — — — — — — — — — — — — Balance at June 30, 2025 14,904,083 $ 149 7,277,651 $ — 33,893,810 $ — $ 59,889 $ 18,583 $ 52 $ 78,673 $ 200,537 $ 279,210 $ 9,761 Net income — — — — — — — 1,722 — 1,722 7,033 8,755 865 Cash distributions to members – — — — — — — — — — ( 2,587 ) ( 2,587 ) — Other comprehensive loss – — – — – — — — ( 12 ) ( 12 ) ( 29 ) ( 41 ) — Acquisition of TWFG MGA FL, LLC – — – — – — — — — — — — 801 Stock-based compensation – — – — – — 987 — — 987 — 987 — Vesting of restricted stock units 151,174 1 – — – — — — — 1 — 1 — Tax withholding on vesting of equity awards ( 49,831 ) — – — – — ( 1,562 ) — — ( 1,562 ) — ( 1,562 ) — Shelf registration costs – — – — – — ( 445 ) — — ( 445 ) — ( 445 ) — Balance at September 30, 2025 15,005,426 $ 150 7,277,651 $ — 33,893,810 $ — $ 58,869 $ 20,305 $ 40 $ 79,364 $ 204,954 $ 284,318 $ 11,427 Net income – – – – – – — 2,946 — 2,946 10,452 13,398 2,295 Cash distributions to members – – – – – – — — — — ( 12 ) ( 12 ) — Other comprehensive loss – – – – – – — — ( 10 ) ( 10 ) ( 27 ) ( 37 ) — Acquisition of TWFG MGA FL, LLC – — – — – — — — — — — — 4,179 Stock-based compensation – — – — – — 872 — — 872 — 872 — Vesting of restricted stock units – — – — – — — — — — — — — Tax withholding on vesting of equity awards – — – — – — ( 389 ) — — ( 389 ) — ( 389 ) — Equity issuance per acquisitions 23,255 — – — – — 599 — — 599 — 599 — Balance at December 31, 2025 15,028,681 $ 150 7,277,651 $ — 33,893,810 $ — $ 59,951 $ 23,251 $ 30 $ 83,382 $ 215,367 $ 298,749 $ 17,901 See Notes to the Consolidated Financial Statements 76 Table of contents TWFG, Inc. Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders’/Members’ Equity (Amounts in thousands, except share/unit data) Members’ Equity Class A Common Stock Class B Voting Stock Class C Voting Stock Units Amount Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Attributable to TWFG, Inc./ Members' Equity Noncontrolling Interests Total Stockholders’ Equity Balance at December 31, 2023 631,750 $ 632 — $ — — $ — — $ — $ 25,114 $ 4,805 $ 500 $ 31,051 $ — $ 31,051 Net income — — — — — — — — — 6,629 — 6,629 — 6,629 Shares issued 27,689 28 — — — — — — 30,018 — — 30,046 — 30,046 Cash distributions to members — — — — — — — — — ( 2,420 ) — ( 2,420 ) — ( 2,420 ) Other comprehensive income — — — — — — — — — — 23 23 — 23 Balance at March 31, 2024 659,439 $ 660 — $ — — $ — — $ — $ 55,132 $ 9,014 $ 523 $ 65,329 $ — $ 65,329 Net income — — — — — — — — — 6,918 — 6,918 — 6,918 Cash distributions to members — — — — — — — — — ( 4,679 ) — ( 4,679 ) — ( 4,679 ) Other comprehensive loss — — — — — — — — — — ( 56 ) ( 56 ) — ( 56 ) Balance at June 30, 2024 659,439 $ 660 — $ — — $ — — $ — $ 55,132 $ 11,253 $ 467 $ 67,512 $ — $ 67,512 Net income prior to the Reorganization Transactions and IPO (see Note 1) — — — — — — — — — 1,290 — 1,290 — 1,290 Other comprehensive loss prior to the Reorganization Transactions and IPO — — — — — — — — — — ( 33 ) ( 33 ) — ( 33 ) Balance at Balance Prior to the Reorganization Transactions 659,439 $ 660 — $ — — $ — — $ — $ 55,132 $ 12,543 $ 434 $ 68,769 $ — $ 68,769 Effect of the Reorganization Transactions ( 659,439 ) ( 660 ) 2,161,874 22 7,277,651 — 33,893,810 — ( 191,733 ) — ( 319 ) ( 192,690 ) 192,690 — Issuance of Class A common stock at the IPO, net of underwriting costs — — 12,650,000 126 — — — — 200,548 — — 200,674 — 200,674 Capitalized offering costs — — — — — — — — ( 7,800 ) — — ( 7,800 ) — ( 7,800 ) Net income after the Reorganization Transactions and IPO — — — — — — — — — 1,154 — 1,154 4,449 5,603 Other comprehensive loss after the Reorganization Transactions and IPO — — — — — — — — — — ( 33 ) ( 33 ) ( 91 ) ( 124 ) Stock-based compensation — — — — — — — — 1,012 — — 1,012 — 1,012 Balance at September 30, 2024 — $ — 14,811,874 $ 148 7,277,651 $ — 33,893,810 $ — $ 57,159 $ 13,697 $ 82 $ 71,086 $ 197,048 $ 268,134 Net income — — — — — — — — — 1,591 — 1,591 6,561 8,152 Cash distributions to members — — — — — — — — — — — — ( 2,208 ) ( 2,208 ) Other comprehensive income — — — — — — — — — — 1 1 1 2 Stock-based compensation — — — — — — — — 1,206 — — 1,206 — 1,206 Balance at December 31, 2024 – $ — 14,811,874 $ 148 7,277,651 $ — 33,893,810 $ — $ 58,365 $ 15,288 $ 83 $ 73,884 $ 201,402 $ 275,286 See Notes to the Consolidated Financial Statements 77 Table of contents TWFG, Inc. Consolidated Statements of Cash Flows (Amounts in thousands) Years Ended December 31, 2025 2024 2023 Cash Flows from Operating Activities Net income $ 41,166 $ 28,592 $ 26,096 Less: Net income from discontinued operation, net of tax — — 834 Net income from continuing operations 41,166 28,592 25,262 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization 18,353 12,020 4,862 Net gain on sales of intangible assets and property and equipment ( 1,119 ) — ( 84 ) Stock-based compensation expense 4,578 2,219 — Non-cash lease expense 1,358 1,041 704 Other non-cash items ( 14 ) 9 12 Change in: Commissions receivable, net ( 10,255 ) ( 8,022 ) ( 4,088 ) Accounts receivable 370 ( 1,756 ) ( 383 ) Other current and non-current assets ( 1,480 ) 12 ( 362 ) Commissions payable 1,320 1,360 2,984 Operating lease liabilities ( 1,209 ) ( 1,085 ) ( 755 ) Other current liabilities 433 6,089 1,163 Net cash provided by operating activities from continuing operations 53,501 40,479 29,315 Net cash provided by operating activities from discontinued operation — — 839 Net cash provided by operating activities 53,501 40,479 30,154 Cash Flows from Investing Activities Proceeds from sale of books of business 1,841 — 928 Proceeds from sale of property and equipment 49 — — Purchase of intangible assets ( 61,912 ) ( 21,854 ) ( 15,387 ) Purchase of property and equipment ( 356 ) ( 3,201 ) ( 260 ) Other investment ( 10,000 ) — — Net cash (used in) investing activities from continuing operations ( 70,378 ) ( 25,055 ) ( 14,719 ) Net cash provided by investing activities from discontinued operation — — 64 Net cash (used in) investing activities ( 70,378 ) ( 25,055 ) ( 14,655 ) Cash Flows from Financing Activities Proceeds from borrowings — — 41,000 Repayment of borrowings ( 1,912 ) ( 43,437 ) ( 2,643 ) Distributions to members ( 15,862 ) ( 9,307 ) ( 33,406 ) Cash derecognized upon distribution of EVO to members — — ( 2,229 ) Net proceeds from IPO, net of underwriting costs — 193,552 — Payment of shelf registration costs ( 445 ) — — Payment of deferred offering costs — — ( 796 ) Payment of equity issuance costs — ( 38 ) — Tax withholding on vesting of equity awards ( 3,146 ) — — Increase in carrier liabilities 2,899 4,754 209 Decrease in carrier liabilities ( 1,480 ) ( 1,093 ) ( 511 ) Payment of deferred acquisition payable ( 600 ) ( 1,000 ) ( 14 ) Net cash (used in) provided by financing activities from continuing operations ( 20,546 ) 143,431 1,610 Net cash (used in) financing activities from discontinued operation — — ( 11,305 ) Net cash (used in) provided by financing activities ( 20,546 ) 143,431 ( 9,695 ) See Notes to the Consolidated Financial Statements 78 Table of contents TWFG, Inc. Consolidated Statements of Cash Flows (continued ) (Amounts in thousands) Years Ended December 31, 2025 2024 2023 Net change in cash, cash equivalents and restricted cash from continuing operations $ ( 37,423 ) $ 158,855 $ 16,206 Net change in cash, cash equivalents and restricted cash from discontinued operation — — ( 10,402 ) Net change in cash, cash equivalents and restricted cash ( 37,423 ) 158,855 5,804 Cash, cash equivalents and restricted cash from continuing operations - beginning balance 205,323 46,468 30,262 Cash, cash equivalents and restricted cash from discontinued operation - beginning balance — — 10,402 Cash, cash equivalents and restricted cash - beginning balance 205,323 46,468 40,664 Cash, cash equivalents and restricted cash - ending balance 167,900 205,323 46,468 Less: Cash, cash equivalents and restricted cash from discontinued operation - ending balance — — — Cash, cash equivalents and restricted cash from continuing operations - ending balance $ 167,900 $ 205,323 $ 46,468 Reconciliation of cash, cash equivalents and restricted cash, end of period: Cash and cash equivalents $ 155,926 $ 195,772 $ 39,297 Restricted cash 11,974 9,551 7,171 Cash, cash equivalents and restricted cash, end of period $ 167,900 $ 205,323 $ 46,468 Net change in cash and cash equivalents $ ( 39,846 ) $ 156,475 $ 6,565 Net change in restricted cash 2,423 2,380 ( 761 ) Net change in cash, cash equivalents and restricted cash $ ( 37,423 ) $ 158,855 $ 5,804 Supplemental disclosures of cash flow information: Cash paid for interest $ 194 $ 2,298 $ 832 Cash paid for taxes $ 3,268 $ — $ — Non-cash investing activities: Additions to intangible assets and offsetting additions to deferred acquisition payable $ 7,052 $ 840 $ 6,420 Additions to intangible assets and offsetting additions to members' equity $ 599 $ 25,560 $ — Additions to intangible assets and offsetting additions to other current liabilities $ — $ 8 $ — Additions to intangible assets and offsetting to redeemable noncontrolling interest $ 14,688 $ — $ — Non-cash financing activities: Settlement of deferred acquisition payable through the issuance of Class A common units $ — $ 4,524 $ — Distribution to members $ — $ — $ 6,260 Unpaid deferred offering costs $ — $ — $ 1,228 See Notes to the Consolidated Financial Statements 79 Table of contents TWFG, Inc. Notes to the Consolidated Financial Statements 1. ORGANIZATION AND BASIS OF PRESENTATION Organization TWFG, Inc. was incorporated as a Delaware corporation on January 8, 2024 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock (“Class A Common Stock”) and other related reorganization transactions (the “Reorganization Transactions,” which are further described below) in order to carry on the business of TWFG Holding Company, LLC (“TWFG Holding”) and its consolidated subsidiaries. On July 19, 2024, TWFG completed an IPO of 11,000,000 shares of its Class A Common Stock at an initial public offering price of $ 17.00 per share. On July 23, 2024, the underwriters purchased an additional 1,650,000 shares of Class A Common Stock at $ 17.00 per share in connection with the underwriters’ full exercise of their option to purchase additional shares. In these notes to the consolidated financial statements, references to the “Company” refer to: (i) TWFG, Inc. and, unless otherwise stated or the context otherwise requires, all of its subsidiaries, including TWFG Holding, for all periods following the consummation of the Reorganization Transactions, including the IPO, and (ii) TWFG Holding and, unless otherwise stated or the context otherwise requires, all of its subsidiaries for periods prior to the completion of the Reorganization Transactions, including the IPO. Following the Reorganization Transactions, the Company is a holding company with its principal asset being a controlling ownership interest in TWFG Holding and its consolidated subsidiaries. Information for any period prior to July 19, 2024 relates to TWFG Holding. TWFG Holding is an independent distribution platform for personal and commercial insurance in the United States. The Company’s corporate headquarters is in The Woodlands, Texas. TWFG Holding is the parent company of the following wholly-owned subsidiaries: TWFG Insurance Services LLC (“TWFG-IS”) is a national retail insurance agency that distributes personal lines, commercial lines, life, annuities, health, and supplemental benefits insurance products. TWFG General Agency LLC (“TWFG-GA”) is a Managing General Agency that distributes personal and commercial lines insurance products to independent agents, in addition to TWFG-IS agents. TWFG Premium Finance LLC (“TWFG-PF”) is an intermediary insurance premium financing company that offers premium financing for commercial insurance policies for Clients of TWFG-GA and TWFG-IS. TWFG CA Premium Finance Company (“TWFG-CA PF”) is an intermediary insurance premium financing company that offers premium financing for personal and commercial insurance Clients that purchase insurance from licensed California insurance agents. TWFG MGA FL, LLC (“TWFG-MGA FL”) is a Managing General Agency that distributes personal lines insurance products to independent agents in the State of Florida. PSN Business Processing Inc. (“PSN”) is a Philippine corporation with its principal office located in the Philippines. PSN is engaged in the business of providing back-office support to TWFG agents and the TWFG corporate office, specifically insurance-related and various administrative services. Prior to the consummation of the Reorganization Transactions and the IPO, substantially all of TWFG Holding’s outstanding ownership interests in the form of limited liability company units (the “LLC Units”), including its Class A common unit interests, Class B common unit interests and Class C common unit interests, were owned beneficially by Bunch Family Holdings, LLC (“Bunch Holdings”), which is owned by Richard F. (“Gordy”) Bunch III, the Chief Executive Officer, Chairman and Director of the Company, RenaissanceRe Ventures U.S. LLC (“RenRe”), and GHC Woodlands Holdings LLC (“GHC” and collectively with Bunch Holdings and RenRe, together with each of their permitted transferees, the “Pre-IPO LLC Members”). Bunch Holdings was the ultimate controlling owner of TWFG Holding prior to the consummation of the Reorganization Transactions and the IPO. On January 1, 2024, TWFG Holding issued a total of 27,689 new Class A common units to separate individuals and entities (collectively, the “New Members”) in connection with separate asset purchase agreements. 80 Table of contents In 2025, 23,255 shares of Class A Commons Stock were issued as part of acquisitions. In addition, 193,552 shares of Class A Common Stock were issued upon vesting of restricted stock units (“RSUs”) in accordance with the Company's 2024 Omnibus Incentive Plan (the “2024 Incentive Plan”) as of December 31, 2025. See Note 11 Stock-Based Compensation. Reorganization Transactions In connection with the Company’s IPO in July 2024, the Company completed a series of Reorganization Transactions that resulted in the establishment of an Up-C organizational structure. As a result of these transactions, TWFG Holding became the predecessor for financial reporting purposes. The Reorganization Transactions were accounted for as a reorganization of entities under common control. Accordingly, the consolidated financial statements reflect the historical carrying amounts of the assets and liabilities of TWFG Holding and its subsidiaries, with no step-up in basis, no recognition of goodwill, and no gain or loss recorded as a result of the transactions. Following the completion of the Reorganization Transactions, TWFG, Inc. became the sole managing member of TWFG Holding and consolidates TWFG Holding for financial reporting purposes. The ownership interests in TWFG Holding not held by the Company are reflected as noncontrolling interests in the consolidated financial statements. Net income is allocated between the Company and the noncontrolling interest holders based on their respective ownership interests. The Reorganization Transactions did not result in any changes to the underlying operations of the business and had no impact on the Company’s consolidated results of operations other than the allocation of net income between controlling and noncontrolling interests. The effects of the Reorganization Transactions are reflected in the consolidated financial statements beginning on the date of completion. Additional details regarding the legal structure and mechanics of the Reorganization Transactions are described in the Company’s Registration Statement on Form S-1 and related filings with the Securities and Exchange Commission. Basis of Presentation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its subsidiaries. TWFG Holding was determined to be a variable interest entity and the Company is considered the primary beneficiary and sole managing member of TWFG Holding and has decision making authority that significantly affects the performance of the entity. The Company consolidates TWFG Holding in its consolidated financial statements and records noncontrolling interests representing the portion of earnings attributable to the economic interest in TWFG Holding held by the Continuing Pre-IPO LLC Members. All intercompany transactions and balances have been eliminated in consolidation. The consolidated financial statements include all normal recurring adjustments necessary to present fairly the Company’s consolidated balance sheets, results of operations, and cash flows for all periods presented. Use of Estimates The preparation of the consolidated financial statements and notes thereto requires management to make estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and in the notes thereto. Such estimates and assumptions could change in the future as circumstances change or more information becomes available, which could affect the amounts reported and disclosed herein. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition The Company applies the following five-step model in order to determine revenue recognition: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the services it transfers to the customer . 81 Table of contents Commission Income The Company derives its revenues primarily from the placement of insurance contracts between insurance carriers and insureds. Revenues are recognized when the performance obligation of placing the policy has been met and the policy is in effect, based on the effective date of the policy. Commission income is an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company does not have any significant financing components. The Company incurs costs to fulfill contracts primarily through sales commissions paid to agents. In circumstances in which the contract is one year or less, the costs incurred to place the contract are expensed as a practical expedient. The Company’s customers are insurance carriers, as the Company acts as an agent to assist the insureds to identify a policy and carrier that best meets the needs of the insured. The Company contracts with various insurance carriers and earns commissions for the initial term of the policy on policies placed with insurance carriers. Contracts with the insurance carriers are non-exclusive and can typically be terminated unilaterally by either party. Additionally, the Company and the insurance carrier can agree to amend pr ovisions in the contracts relating to the prospective commission rates paid to the Company for new policies sold. Revenue from performance obligations is satisfied at the point in time in which the current term of the policy is placed and effective. These contracts are executed by the Company on behalf of the insurance carriers to the policyholder. For performance obligations related to the placement of insurance contracts, control transfers to the policyholder at a point in time at which all performance obliga tions have been fulfilled as evidenced by the binding of a policy. Commissions are established by contract between the Company and the insurance carrier and are calculated as a percentage of the premium for the underlying insurance policy. The Company records revenue when the underlying insurance contracts are bound for the commission expected to be received for the current term of the policy, net of any estimated refunds due to policy cancellations. Commissions related to renewed policies are recognized at the time the policy renews and the new policy becomes effective. The only material promise to be performed by the Company is to sell the policy. While agreements may indicate certain administrative support such as to provide the underlying insured with policy information, such pr omises are immaterial in the context of the contract and are not identified as performance obligations. Additionally, the Company has concluded that they are required to “re-sell” the policy on an annual basis. As a result, a single performance obligation exists for each policy term. This coincides with the efforts of placing renewed policies with the insurance carrier. Costs to obtain insurance contracts, including producer commissions and other incremental acquisition costs, are expensed as incurred as the amortization period of the related asset would be one year or less. Commission Income - Assumed Commission income related to insurance policies assumed through takeout programs represents consideration earned for providing ongoing servicing and administrative support for in-force policies. Because the Company did not place the original insurance contract between the carrier and the insured, the Company’s performance obligation relates to the ongoing servicing over the life of the policies. The Company satisfies this performance obligation over time as policyholders simultaneously receive and consume the benefits of servicing. Accordingly, commission income associated with assumed policies is recognized ratably over the remaining policy coverage period, which represents the Company’s measure of progress in transferring services. The transaction price is the total commission the Company expects to receive from the insurance carrier for the current term of the policy. The transaction date is determined by the effective date of the insurance policy. Policies are subject to cancellation at the discretion of the insured, and such a cancellation would result in the Company’s commission being limited to the period that the policy was in force. The Company estimates any expected variable consideration, endorsements, or cancellations, based on historical information and data collected from external sources, at the time revenue is recorded. Contingent Income Contingent income is earned from the insurance carriers to drive incremental policy sales when the Company meets or exceeds certain premium volumes and/or falls below specific loss ratio quotas predetermined by its insurance carriers. The Company utilizes the expected value approach to estimate contingent income that incorporates a combination of historical payment data by insurance carriers and the current-year production forecast data used to estimate the amount of contingent income expected to be received from the insurance carriers. Because of the uncertainty regarding the amount estimated to be received, the Company limits the recognition of contingent income until information from the insurance carrier regarding the amount owed by the insurance carriers to the 82 Table of contents Company is received and is probable to avoid reversal of contingent income in the future period. The uncertainty regarding the estimated contingent income is primarily in the profitability of the insurance policies placed, as determined by the loss ratios maintained by the insurance carriers. The uncertainty is resolved upon receiving notification from the insurance carrier regarding actual profitability results. Contingent income is not refundable. Fee Income Fee income is comprised primarily of policy fees, branch fees, license fees and third-party administrator (“TPA”) fees. The Company receives policy fees as compensation for administrative services performed in connection with the placement and issuance of certain policies that are in addition to and separate from commissions paid by the insurance carriers. Policy fees are recognized at the point in time in which an insurance policy is bound and issued on the effective date of certain policies. Policy fees are not refundable. Branch fees include the monthly recurring fees assessed for the ongoing customer service and back-office support provided to independent branches operating exclusively through the Company pursuant to an exclusive branch agreement and a one-time branch onboarding fee. The Company’s performance obligation related to branch fees is largely satisfied, and the related revenue is recognized ratably over the term when the services are rendered, typically monthly. License fees include fixed and usage-based arrangements, which are typically priced as a monthly fixed fee or specified fee per user, assessed by the Company for the use of its proprietary applications. The Company’s performance obligation related to license fees is largely satisfied, and the related revenue is recognized at a point in time, when the services are rendered, typically monthly. TPA fees a re related to services performed based on service agreements with a few insurance carriers. Revenues associated with TPA fees are recognized at a point in time, when the services are performed, which is typically monthly. Other Income Other income is comprised primarily of income earned for facilitating premium financing arrangements, fees assessed for agent conventions, interest income on fiduciary funds, and other miscellaneous income. Cash and Cash Equivalents Cash and cash equivalents primarily include demand deposits with financial institutions and highly liquid investments with original maturities of three months or less that are not m anaged by external or internal investment advisors . Interest earned on non-fiduciary funds is recognized in Interest income on the Consolidated Statements of Income while interest earned on fiduciary funds is recognized in Other income on the Consolidated Statements of Income. Restricted Cash In certain cases, the Company collects premiums from insureds and, after deducting our commissions and fees, remits the premiums to insurance carriers. The Company also collects surplus line taxes for remittance to state taxing authorities. Additionally, the Company has an agreement with certain insurance carriers whereby it remits claim payments and/or premium refunds to the insured on behalf of the insurance carriers. While the Company is in possession of the premiums, claims payments and surplus line taxes, the Company may invest those funds in interest-bearing demand deposit accounts with banks, in which interest income on these unremitted amounts is included i n Other income in the Consolidated Statements of Income. These unremitted amounts are reported as Restricted cash in the Consolidated Balance Sheets. Restricted cash amounting to $ 12.0 million and $ 9.6 million as of December 31, 2025 and 2024, respectively, is comprised of interest-bearing bank deposits. In its role as an insurance intermediary, the Company collects and remits amounts between the insureds and insurance carriers. Because these amounts are collected on behalf of third parties, they are excluded from the measurement of the transaction price when applying the revenue recognition guidance. Similarly, the Company excludes surplus lines taxes from the measurement of the transaction price, as these are assessed by and remitted to governmental authoritie s. The Company recognizes the amounts to be collected on behalf of others, including insureds and insurance carriers, as Accounts receivable and the associated Carrier liabilities on the Consolidated Balance Sheets. The Company does not have any rights or obligations in connection with these amounts with the exception of segregating these amounts from the Company's operating funds and paying them when they are due. 83 Table of contents As of December 31, 2025 and 2024, the Company reported Carrier liabilities amounting to $ 13.8 million and $ 12.4 million, respectively. Carrier liabilities are recognized based on premiums written, while Restricted cash is recorded based on premiums collected. This basis difference, coupled with the timing of settling the commissions and fees on collected premiums, resulted in differences between the amount reported in Restricted cash and Carrier liabilities. Receivables Commissions receivable represents commissions earned but outstanding along with the estimated contingent commissions. Accounts receivable represents premiums billed by TWFG-GA on behalf of certain insurance carriers. These amounts, less commissions, fees and taxes, are remitted to the insurance carriers upon collection. Commissions receivable from agents are recorded in Other current assets. Allowance for Credit Losses The Company’s receivables are shown net of an allowance for credit losses, which are based on a combination of credit quality indicators, including, but not limited to, payment status, historical charge-offs, and financial strength of the insurance carriers for Commissions receivable, and production performance and age of balances for Receivables from agents. S ee Note 3 Revenues fo r additional information about the Company’s Allowance for Credit Losses. Intangible Assets, net and Acquisitions Intangible assets are stated at cost, less accumulated amortization, and consist of computer software development costs, non-compete agreements, purchased customer lists, and customer relationships. Computer software development costs are amortized on the straight-line method over three or five years . Non-compete agreements are amortized on the straight-line method over the term of the non-compete agreements. Customer lists represent amounts paid by insurance agencies to buy a list of active policies or insureds. As these policies renew, the Company realizes an income stream from commissions. Customer lists are amortized on the straight-line method over eight to ten years . Customer relationships represent the amount paid by the Company to acquire TWFG MGA FL. The Company realizes an income stream from commissions related to the acquired interest. The customer relationship asset is amortized on the straight-line method over six years . The Company acquires intangible assets in connection with acquisition transactions. In each acquisition transaction, the Company assesses whether the transaction should follow accounting guidance applicable to an asset acquisition or a business combination. This assessment requires an evaluation of whether the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, resulting in an asset acquisition or, if not, resulting in a business combination. An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business. The Company accounts for asset acquisitions using the cost accumulation and allocation model, whereby the costs of acquisition are allocated to the assets acquired on a relative fair value basis in accordance with the Company’s accounting policies. The asset is initially recorded in accordance with the cost accumulation method based on the determined purchase price and, is then amortized over its estimated useful life. Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable. If indicators of impairment exist, the Company assesses the recoverability of its intangible assets by reviewing the estimated future undiscounted cash flows generated by the corresponding asset or asset group. If based on the assessment, the Company determines that the intangible assets are impaired, such assets are written down to their fair values with the related impairment losses recognized in the Consolidated Statements of Income. There were no impairments recorded for the years ended December 31, 2025 and 2024. Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Maintenance, minor repairs, and replacements are charged directly to expense as incurred, while major renewals and betterments are capitalized. When property and equipment are sold or otherwise disposed of, the asset accounts and related accumulated depreciation accounts are relieved, and any gain or loss is included in the results of operations. 84 Table of contents Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets as follows: Useful Life Automobiles 5 years Computer equipment 5 years Furniture and fixtures 7 years Leasehold improvements Lesser of the estimated useful life or the underlying lease term Office equipment 5 - 7 years Property and equipment are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable. If indicators of impairment exist, the Company assesses its recoverability by reviewing the estimated future undiscounted cash flows generated by the corresponding asset or asset group. If based on the assessment, the Company determines that the property and equipment are impaired, such assets are written down to their fair values with the related impairment losses recognized in the result of operations. There were no impairments recorded for the years ended December 31, 2025 and 2024. Assets held for sale are reported at the lower of the carrying value or fair value, less costs to sell. Deferred Offering Costs Deferred offering costs, which consisted of direct incremental legal, accounting, consulting, and other fees and expenses related to the IPO were capitalized in Deferred offering costs on the Consolidated Balance Sheets. The deferred offering costs were offset against IPO proceeds upon the consummation of the IPO. Upon closing of the IPO on July 19, 2024, total deferred offering costs of $ 7.8 million were recorded to additional paid-in capital to offset the IPO proceeds. The Company had no deferred offering costs as of December 31, 2025 and 2024. Commissions Payable Commissions payable represents commissions due to agents for services provided for the placement of insurance contracts. The Company records the commission expense and the related commissions payable on the effective date of the policy based on the estimated total premium for the term of the policy adjusted for any expected variable consideration, endorsements or cancellations based on historical information at the time the expense is recorded. Leases The Company evaluates contracts entered into to determine whether the contract involves the use of an identified asset. The Company then evaluates whether it obtains substantially all economic benefits from the use of the asset, and whether it has the right to direct the use of the asset. If these criteria are met and a lease has been identified, the Company accounts for the contract under the requirements of the Accounting Standards Codification (“ASC”) 842, Leases . The Company's leased assets consist primarily of real estate for occupied offices and office equipment. Leases with a lease term of 12 months or less at inception are not recorded on the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term. The Company determines the lease term by assessing the renewal options with the lessor and includes lease extension (or termination) options only when options are reasonably certain of being exercised. All of the Company’s real estate and office equipment leases are recognized as operating leases. The Company has no material financing leases. The Company does not sublease any of its leases. The Company elected the practical expedient to not separate non-lease and lease components and rather account for them as a single lease component of the underlying assets. The Company has no material variable lease payments in any of its leases. The Company recognizes lease right-of-use (“ROU”) assets and operating lease liabilities on the Consolidated Balance Sheets for operating lease agreements. Lease liabilities are measured at the lease commencement date as the present value of the future lease payments. If the interest rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate on the lease commencement date. ROU assets are measured at the lease liability amount plus initial direct costs and prepaid lease payments less lease incentives . 85 Table of contents Derivatives The Company uses derivative financial instruments, primarily interest rate swaps, to manage its interest rate exposure associated with some of its borrowings. The Company does not hold or issue derivative instruments for trading or speculative purposes. Derivative instruments are recognized as assets or liabilities at fair value on the Consolidated Balance Sheets. At the inception of the hedging relationship, the Company formally documents its designation of the hedge as a cash flow hedge and the risk management objective and strategy for undertaking the hedging transaction. The Company identifies how the hedging instrument is expected to hedge the designated risks related to the hedged item and the method that will be used to retrospectively and prospectively assess the hedge effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the hedge accounting relationship. For derivative instruments designated as a cash flow hedge, all changes in the fair value of the hedging derivative are reported within accumulated other comprehensive income and the related gains or losses on the derivative are reclassified into earnings when the cash flows of the hedged item affect earnings. For a derivative not designated as a hedge, changes in the derivative’s fair value and any income received or paid on derivatives at the settlement date are included in earnings. S ee Note 6 Derivatives fo r additional information about the Company’s derivative instruments. The Company discontinues hedge accounting prospectively when: (1) it determines the derivative is no longer highly effective in offsetting changes in the estimated cash flows of a hedged item; (2) the derivative expires, is sold, terminated, or exercised; or (3) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued, the derivative continues to be carried on the Consolidated Balance Sheets at fair value, with changes in fair value recognized in earnings. Contingent Consideration The Company accounts for contingent consideration relating to asset acquisitions as a Deferred Acquisition Payable liability and an increase to the cost of the acquired assets on a relative fair value basis at the date of acquisition. Once recognized, the Deferred Acquisition Payable liability is not derecognized until the contingency is resolved and the consideration is issued or becomes issuable. If the amount initially recognized as a liability exceeds the fair value of the contingent consideration issued or issuable, the entity recognizes that amount as a reduction to the cost of the acquired assets. The Deferred Acquisition Payable is continually remeasured at each balance sheet date by recording changes in the fair value as an adjustment to the acquired asset in the Consolidated Balance Sheets. The ultimate settlement of Deferred Acquisition Payable liabilities relating to asset acquisitions may be for amounts that are materially different from the amounts initially recorded. The Company determines the fair value of contingent consideration liabilities based on future cash flow projections under various potential scenarios and weighs the probability of these outcomes as discussed further in Note 9 Fair Value Measurements . Fair Value Measurements ASC 820, Fair Value Measurement , establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). The three levels of the fair value hierarchy under ASC 820 are as follows: Level I – Observable inputs such as quoted prices for identical assets in active markets; Level II – Inputs other than quoted prices for identical assets in active markets, that are observable either directly or indirectly; and Level III – Unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions. 86 Table of contents Noncontrolling Interests Pursuant to the Reorganization Transactions, as described in Note 1 Organization and Basis of Presentation , the Company is organized in an “Up-C” structure with the Company owning only a portion of its consolidated subsidiaries. Noncontrolling interests represent the economic interests in TWFG Holding held by the Continuing Pre-IPO LLC Members. Income or loss is attributed to the noncontrolling interests based on the weighted average Pre-IPO Members’ LLC Unit interests outstanding during the period. The noncontrolling interests can be exchanged at the election of the Company, for shares of Class A Common Stock on a one -for-one basis or a cash payment equal to the volume weighted average market price of one share of Class A Common Stock for each LLC Unit exchanged. The noncontrolling interests' ownership percentage can fluctuate over time as the Continuing Pre-IPO LLC Members elect to exchange their LLC Units, together with their corresponding shares of Class B and Class C Common Stock, for Class A Common Stock. Because redemption for cash is solely within the control of the Company, noncontrolling interests are presented in permanent equity. Redeemable Noncontrolling Interest ASC Topic 480, Distinguishing Liabilities from Equity , requires noncontrolling interests that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable (i) at a fixed or determinable price on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event that is not solely within the control of the issuer. Redeemable noncontrolling interests are reported at estimated redemption value measured as the greater of estimated fair value at the end of each reporting period or the historical cost basis of the redeemable noncontrolling interest adjusted for cumulative earnings or loss allocati ons. The resulting increases or decreases to redemption value, if applicable, are recognized as adjustments to retained earnings. See Note 10 Stockholders’ Equity for more information relating to the redeemable noncontrolling interest. Stock-Based Compensation The Company has RSUs under its 2024 Omnibus Incentive Plan. The Company measures all RSUs granted to employees, directors and non-employees at fair value at each grant date based on the price of the Company’s common stock at the date of grant. The Company has granted RSUs that are subject to service-based vesting conditions. There are no performance conditions attached to the RSUs granted by the Company. Compensation expense for grants to employees and directors with service-based vesting conditions is recognized using the straight-line method over the requisite service period, which is generally the vesting period of the respective award. Compensation expense for grants to non-employees with service-based vesting conditions is recognized in the same manner as if the Company had paid cash in exchange for the goods or services, which is generally over the vesting period of the award. The Company accounts for forfeitures as they occur. The Company has granted performance and service based awards to certain key employees, in the form of Performance Stock Unit (“PSUs”), which are earned based on the achievement of certain performance targets and continuous service. The PSUs are subject to a two-year measurement period during which the number of Class A Common Stock to be issued in settlement of the PSUs remains uncertain until the end of the measurement period and will cliff vest based on the level of achievement with respect to the applicable performance criteria. The PSUs are divided into two tranches: 50 % EBITDA PSUs and 50 % Revenue PSUs. The EBITDA PSUs performance vest based on the achievement of certain cumulative EBITDA targets over the performance period. The Revenue PSUs performance vest based on the achievement of certain cumulative organic revenue targets over the performance period. In addition, the PSUs granted to certain employees are contingent generally upon the employee’s continuous service with the Company through the third anniversary of the grant date. Subsequent to such measurement period, the vesting of PSUs is subject to certification by the compensation committee of the Company’s board of directors (the “Board”). If the vesting conditions of the PSUs are not met the awards will be forfeited. All stock-based compensation expense is recorded in Salaries and employee benefits in the Consolidated Statements of Income. 87 Table of contents Earnings Per Share The Company’s basic earnings (loss) per share attributable to Class A common stockholders is calculated by dividing the net income (loss) attributable to the Company by the weighted-average number of shares of Class A Common Stock outstanding. The computation of net income (loss) attributable to the Company is computed by deducting net income or loss attributable to noncontrolling interests from the consolidated net income or loss. Shares of non-economic Class B common stock, par value $ 0.00001 per share (“Class B Common Stock” or “Class B Voting Stock”), and non-economic Class C common stock, par value $ 0.00001 per share (“Class C Common Stock” or “Class C Voting Stock”) do not share in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings (loss) per share of Class B and Class C Common Stock under the two-class method has not been presented. Diluted earnings (loss) per share is computed by adjusting the net income (loss) available to the Company and the weighted average shares outstanding to give effect to potentially dilutive securities. Income Taxes The Company is the managing member of TWFG Holding and, as a result, consolidates the financial results of TWFG Holding in the consolidated financial statements. TWFG Holding is a pass-through entity for U.S. federal and most applicable state and local income tax purposes following the Reorganization Transactions effected in connection with the IPO. As an entity classified as a partnership for tax purposes, TWFG Holding is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by TWFG Holding is passed through to and included in the taxable income or loss of its members, including the Company. The Company is taxed on its allocable share of any net taxable income of TWFG Holding as a corporation and pays corporate federal, state and local taxes. The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Under this method, the Company determines deferred tax assets and liabilities on the basis of the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company evaluates the realizability of its deferred tax assets and has recorded a valuation allowance to the extent it has determined that it is more likely than not that such deferred tax assets will not be realized. In making this determination, the Company considers all available positive and negative evidence, including estimates of future taxable income and prudent and feasible tax-planning strategies. Income tax expense was $ 3.3 million for the year ended December 31, 2025. The estimated effective tax rate was 7.4 % for the year ended December 31, 2025, which is different from the 21% statutory rate primarily because prior to the completion of the Reorganization Transactions, the Company was taxed as a partnership and the taxable income was included in the taxable income of its members. As a result, a provision or liability for federal income tax is not reflected in the consolidated financial statements of the Company for the year ended December 31, 2023. Upon completion of the Reorganization Transactions, income tax expense is recognized only on the portion of earnings attributable to the Company in the periods following the consummation of the Reorganization Transactions. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. Tax Receivable Agreement The Company’s purchase of TWFG Holding units in connection with the IPO, as well as the anticipated future redemptions or exchanges of LLC Units by the Pre-IPO LLC Members for shares of our Class A Common Stock or cash, are expected to result in an increase in the Company’s share of the tax basis in the tangible and intangible 88 Table of contents assets of the TWFG Holding. This increase in tax basis is expected to generate additional tax depreciation and amortization deductions that would not have otherwise been available to the Company, thereby reducing the Company’s future cash tax obligations. In connection with these transactions, the Company has entered into a Tax Receivable Agreement, pursuant to which the Company is required to pay the other holders of LLC Units 85 % of the amount of actual cash savings, if any, in U.S. federal, state, and local income taxes that the Company realizes (or, in certain circumstances, is deemed to realize) as a result of the future increases in tax basis, as well as certain other tax benefits associated with payments made under the Tax Receivable Agreement. Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-09, Improvement to Income Tax Disclosures that requires disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, and additional information about federal, state, local and foreign income taxes. The standard also requires annual disclosure of income taxes paid (net of refunds received), disaggregated by jurisdiction. This guidance is effective for fiscal year end December 31, 2025. The standard was applied on a retrospective basis. The Company has adopted this standard as disclosed in Note 12 Income Tax . Recent Accounting Pronouncements Not Yet Adopted Disaggregation of Income Statement Expense On November 4, 2024 the FASB issued ASU 2024-03, Disaggregation of Income Statement Expense (DISE) that requires an entity to disclose in the footnote a tabular format that disaggregates relevant expense captions in to the following natural expense categories: purchase of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion and amortization or other amounts of depletion expense. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application and early adoption is permitted. The Company is currently evaluating the impacts at this time. 3. REVENUES The following table presents the disaggregation of revenues by major source (in thousands): Years Ended December 31, 2025 2024 2023 Commission income $ 220,968 $ 183,158 $ 158,679 Contingent income 13,111 8,722 4,085 Fee income Policy fees 4,392 3,538 2,100 Branch fees 5,276 4,736 2,982 License fees 2,719 1,895 2,695 TPA fees 605 393 534 Other income 1,441 1,318 968 Total revenues $ 248,512 $ 203,760 $ 172,043 89 Table of contents The Company operates through two primary offerings, which are Insurance Services and TWFG MGA. The following table presents the disaggregation of revenues by offerings (in thousands): Years Ended December 31, 2025 2024 2023 Insurance Services Agency-in-a-box $ 152,831 $ 135,166 $ 132,350 Corporate Branches 43,230 33,367 6,873 TWFG MGA 50,763 33,719 31,184 Other 1,688 1,508 1,636 Total revenues $ 248,512 $ 203,760 $ 172,043 As of December 31, 2025 and December 31, 2024, the Commissions receivable reported in the Consolidated Balance Sheets had a balance of $ 37.3 million and $ 27.1 million, respectively, and had an opening balance of $ 19.1 million as of January 1, 2024. The change in the Commission receivable balance was due to increased revenue for the year ended December 31, 2025. The Company has no contract liabilities as of December 31, 2025, December 31, 2024, and January 1, 2024. The following table provides a summary of changes in the Company’s allowance for expected credit losses (in thousands): Years Ended December 31, 2025 2024 Beginning of period $ 415 $ 312 Write-offs — — Increase in provision 473 103 End of period $ 888 $ 415 The Progressive Corporation accounted for 11 % and 13 % of total revenues for the year ended December 31, 2025 and December 31, 2024, respectively. The Travelers Companies, Inc. accounted for 10 % of total revenue for the year ended December 31, 2023. No other customers individually accounted for 10% or more of the Company’s total revenues for the years ended December 31, 2025, 2024, and 2023. 4. INTANGIBLE ASSETS AND ACQUISITIONS Customer Lists and Software Acquisitions During the year ended December 31, 2025, the Company acquired customer lists and computer software totaling to $ 54.8 million, of which $ 52.2 million was paid in cash at closings. The additional $ 2.0 million and $ 0.6 million relates to future contingent cash payments for the acquired customer lists which are recorded in the Deferred Acquisition Payables and additional paid-in capital on the Consolidated Balance Sheets. During the year ended December 31, 2024, the Company acquired customer lists and computer software totaling $ 48.3 million, of which $ 21.9 million was paid in cash at closings. The additional $ 25.6 million and $ 0.8 million relates to equity issuance and acquisition payables for the acquired customer lists which are recorded in the Deferred Acquisition Payables on the Consolidated Balance Sheets. 90 Table of contents Acquisition of TWFG MGA FL, LLC During the second quarter of 2025, the Company acquired a 50.1 % equity interest in TWFG MGA FL for a total cash consideration of $ 9.7 million at closing. The acquisition agreement also provides for a contingent payment of up to $ 5.0 million, payable upon achievement of defined performance metrics within one year of closing, and includes a put option for the remaining 49.9 % interest held by AIH Sub, Inc. The transaction was accounted for as an asset acquisition under the cost accumulation model, with the acquired customer relationship intangible asset identified as the single substantive asset acquired. The Company recognized a customer relationship intangible asset with an acquisition-date fair value of $ 29.4 million , and a redeemable noncontrolling interest of $ 14.7 million , representing the fair value of the ownership interest held by AIH Sub, Inc. The customer relationship intangible asset is being amortized on a straight-line basis over six years . Additionally, the Company acquired 5.7 % equity interest in AIH Sub, Inc., an unconsolidated related party, for $ 0.3 million in cash; as a result of this transaction. See Note 10 Stockholders’ Equity for more information regarding the redeemable noncontrolling interest. As of December 31, 2025, TWFG MGA FL is expected to result in achievement of the full $ 5.0 million earn out. Therefore, the Company recognized the full earn out as a Deferred Acquisition Payable in the Consolidated Balance Sheets for the year ended December 31, 2025. Net Gains on Disposals Occasionally, the Company will sell Books of Business that it believes to be in its best interest to dispose. For the year ended December 31, 2025, t he Company recognized a $ 1.1 million net gain on sales of Books of Business to third parties. The following table presents information about the Company’s intangible assets (in thousands): December 31, 2025 December 31, 2024 Customer Lists Computer Software Non-Compete Agreements Customer Relationship Total Customer Lists Computer Software Non-Compete Agreements Total Cost Balance, beginning of period $ 96,553 $ 8,564 $ 275 $ — $ 105,392 $ 48,997 $ 7,858 $ 275 $ 57,130 Additions (1) 54,185 652 — 29,395 84,232 47,556 706 — 48,262 Disposals (2) ( 1,159 ) — — — ( 1,159 ) — — — — Balance, end of period 149,579 9,216 275 29,395 188,465 96,553 8,564 275 105,392 Accumulated amortization 40,060 7,364 275 2,134 49,833 25,482 6,660 272 32,414 Net carrying amount, end of period $ 109,519 $ 1,852 $ — $ 27,261 $ 138,632 $ 71,071 $ 1,904 $ 3 $ 72,978 2025 2024 Customer Lists Computer Software Non-Compete Agreements Customer Relationship Total Customer Lists Computer Software Non-Compete Agreements Total Years Ended December 31, Amortization expense $ 14,971 $ 704 $ 3 $ 2,134 $ 17,812 $ 10,703 $ 976 $ 42 $ 11,721 (1) Customer list, computer software, and customer relationship intangible assets acquired during the year ended December 31, 2025 have a weighted average amortization period of 7.3 years, 4.3 years, and 5.3 years, respectively. The weighted-average amortization period for all intangible assets acquired in 2025 is 7.0 years. (2) For the year ended December 31, 2025, the Company recognized a net gain of $ 1.1 million on the sale of customer lists. 91 Table of contents The following table presents the future amortization for intangible assets as of December 31, 2025 (in thousands): Customer Lists Computer Software Customer Relationship 2026 $ 17,341 $ 661 $ 4,981 2027 17,294 563 4,981 2028 17,257 376 4,981 2029 17,179 186 4,981 2030 16,789 66 4,981 Thereafter 23,659 — 2,356 Total $ 109,519 $ 1,852 $ 27,261 5. OPERATING LEASES The following table summarizes the Company’s lease costs and supplemental cash flow information related to its operating leases (dollar amounts in thousands): Years Ended December 31, 2025 2024 Operating lease costs reported in Other administrative expenses $ 1,559 $ 1,089 Short-term operating lease costs reported in Other administrative expenses 72 104 Total lease costs $ 1,631 $ 1,193 Weighted average remaining lease term (in years) 5.7 years 5.9 years Weighted average discount rate 4.38 % 4.33 % Supplemental cash flow information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases reported in change in operating lease liabilities $ 1,407 $ 1,131 Operating lease non-cash items: Non-cash right-of-use assets obtained in exchange for new operating lease liabilities, net of terminations $ 1,056 $ 3,158 The estimated future minimum payments of operating leases as of December 31, 2025 (in thousands): 2026 $ 1,534 2027 951 2028 627 2029 417 2030 357 Thereafter 1,135 Total undiscounted future lease payments 5,021 Less: imputed interest ( 803 ) Present value of lease liabilities $ 4,218 None of the Company’s leases impose restrictions or covenants on the ability to enter into debt or equity financing transactions, pay dividends, or enter into future lease agreements. 92 Table of contents 6. DERIVATIVES On July 30, 2019, and December 4, 2020, the Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations related to the Company’s term loans. At inception, the Company designated the interest rate swap agreements as cash flow hedges. The interest rate swap agreement entered on July 30, 2019 with the original notional amount of $ 4.0 million matured on July 30, 2024. The notional amount of the interest rate swaps as of December 31, 2025 and 2024 is $ 13.0 million and $ 13.0 million, respectively. As of December 31, 2025 and 2024, the interest rate swaps continue to be effective hedges. The fair value of the interest rate swaps as of December 31, 2025 and 2024 was $ 0.1 million and $ 0.3 million, respectively, which was included in Other non-current assets , except for the portion that relates to maturities within the next twelve months which are included in Other current assets. The fair value of derivative assets as of December 31, 2025 and 2024 was determined using the Level II inputs described in Note 2 Summary of Significant Accounting Policies . For determining the fair valu e of the interest rate swap we use significant other observable market data or assumptions (Level 2 inputs) that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. Our fair value estimates reflect an income approach based on the terms of the interest rate swap contract and inputs corroborated by observable market data including interest rate curves. The maturity date for the current interest rate swap is December 6, 2027, which correspond with the debt maturity date. As of December 31, 2025, 2024, and 2023, the Company expects $ 0.1 million, $ 0.2 million and $ 0.3 million of unrealized gains from the interest rate swap to be reclassified into earnings over the next twelve months. 7. OTHER CURRENT LIABILITIES Other current liabilities consisted of the following as of the dates indicated (in thousands): December 31, 2025 2024 Accrued salaries and bonus expenses $ 2,529 $ 1,574 Accrued professional fees 842 1,256 Accounts payable 1,571 3,233 Income tax payable 1,051 1,495 Other current liabilities 4,315 2,293 $ 10,308 $ 9,851 93 Table of contents 8. DEBT AND DEFERRED ACQUISITION PAYABLES The following is a summary of the Company’s outstanding debt and Deferred Acquisition Payables (in thousands): December 31, 2025 2024 Bank Debt: Term Loan 7 -year term loan, periodic interest and monthly principal payments, Daily Simple SOFR + 0.11448 % SOFR adjustment, matures December 6, 2027 $ 4,007 $ 5,919 Total bank debt 4,007 5,919 Less: current bank debt ( 1,972 ) ( 1,912 ) Total long-term bank debt $ 2,035 $ 4,007 Deferred Acquisition Payables (1) : Acquisition notes payables $ 1,122 $ 1,723 Contingent considerations 7,052 — Total Deferred Acquisition Payables 8,174 1,723 Less: current acquisition notes payables ( 593 ) ( 601 ) Less: current contingent considerations ( 912 ) — Total long-term Deferred Acquisition Payables (2) $ 6,669 $ 1,122 Less: long-term contingent considerations ( 6,140 ) — Total long-term Deferred Acquisition Payables- notes $ 529 $ 1,122 (1) See Note 4 Intangible Assets and Acquisitions and Note 9 Fair Value Measurements. (2) Total long-term Deferred Acquisition Payables consists of long-term acquisition notes and long-term contingent considerations. Future maturities of the Company’s total outstanding bank debt and Deferred Acquisition Payables- notes as of December 31, 2025, were as follows (in thousands): 2026 $ 2,565 2027 2,298 2028 147 2029 119 Total $ 5,129 For the years ended December 31, 2025 and 2024, the Company incurred interest expense of $ 0.3 million and $ 2.2 million, respectively. Term Loans The 7-yea r term loan was entered into on December 4, 2020 , with the original principal of $ 13.0 million , which matures on December 6, 2027 . The Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations related to its term loans. See Note 6 Derivatives for more information relating to the interest rate swaps associated with these loans. Revolving Credit Agreement On May 23, 2023, TWFG Holding, the guarantors party thereto, the lenders party thereto, PNC Bank, National Association (the “Agent”) and PNC Capital Markets LLC entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) which provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $ 50.0 million, which was amended on June 20, 2024 (as so amended, the “Revolving Facility”). Borrowings constituting revolving loans under the Revolving Credit Agreement incur interest at the Term SOFR Rate (as defined therein) for the applicable interest period plus a margin based on the consolidated leverage ratio of the Company between 2 % and 2.75 % , and a 0.10 % adjustment. On August 6, 2024, in accordance with the Revolving Facility, we became a guarantor of, and granted security interest to secure, 94 Table of contents the Revolving Facility. TWFG Holding and the guarantors to the Revolving Credit Agreement entered into a letter agreement, dated October 3, 2024, with the Agent and the lenders party thereto to make changes relating to the debt covenant calculation. The borrowings under the Revolving Facility will be used by the Company for permitted acquisitions, working capital and general corporate purposes. The Company pays a commitment fee on undrawn amounts under the Revolving Facility of 0.20 % to up to 0.35 % based on the consolidated leverage ratio. On August 5, 2024, the Company repaid the outstanding balance of its Revolving Facility amounting to $ 41.0 million using a portion of the net proceeds from the IPO ( see Note 1 Organization and Basis of Presentation ). As of December 31, 2025 and 2024, the unused capacity under the Revolving Facility was $ 50.0 million and $ 50.0 million, respectively. Borrowings under the term loans and the Revolving Facility are secured by substantially all assets constituting personal property of TWFG and its subsidiaries, including receivables, equipment, and intellectual property, subject to certain exceptions. In addition, the term loan agreement and Revolving Facility contains covenants that restrict the Company’s ability to make certain distributions or dividend payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change the Company’s business or make investments. In addition, the term loan agreement and Revolving require the Company to maintain certain financial ratios. As of December 31, 2025 and 2024, the Company was in compliance with these covenants. The carrying amount of the Company’s variable rate debt as of December 31, 2025 and December 31, 2024 approximates fair value due to the short-term reset of the interest rate based on SOFR and the absence of a credit spread. Deferred Acquisition Payables- Notes In April 2023, the Company acquired customer list intangible assets for a total consideration of $ 4.3 million, of which $ 3.0 million was paid in cash at closing. The remaining balance was settled through the issuance of a note payable monthly over three years beginning in April 2024 and bears an annual interest of 3.75 %. In March 2024, the Company acquired customer list intangible assets, of which approximately $ 0.4 million of the purchase price was settled through the issuance of a non-interest bearing note and was recorded as a Deferred Acquisition Payable. The note is payable monthly over a period of 70 months. The Deferred Acquisition Payable was recorded at fair value with an annual imputed interest rate of 5.00 %. In October 2024, the Company acquired customer list intangible assets, of which approximately $ 0.4 million of the purchase price was settled through the issuance of a non-interest bearing note and was recorded as a Deferred Acquisition Payable. The note is payable monthly over a period of 60 months. The Deferred Acquisition Payable was recorded at fair value with an annual imputed interest rate of 4.69 %. The portion of the Company’s acquisition-related notes due within 12 months or less from the financial statement date is reported in the Consolidated Balance Sheets as Deferred Acquisition Payables, current, while the amount due after 12 months from the financial statement date is included in Deferred Acquisition Payables, non-current. See Notes 4 Intangible Assets and Acquisitions for more information regarding the purchase of the customer list intangible assets. 9. FAIR VALUE MEASUREMENTS ASC Topic 820, Fair Value Measurement (“Topic 820”) established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy under Topic 820 are described below: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2: Inputs to the valuation methodology are quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. 95 Table of contents The fair value measurement level for assets and liabilities within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The carrying value of cash and cash equivalents, accrued interest, all current receivable and all payable accounts approximate their fair values because of the short maturity or duration of these instruments. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis within each level of the fair value hierarchy (in thousands): Fair Value Hierarchy Level 1 Level 2 Level 3 Years Ended December 31, Years Ended December 31, Years Ended December 31, 2025 2024 2025 2024 2025 2024 Assets: Interest rate swap (1) $ — $ — $ 116 $ 312 $ — $ — Total assets measured at fair value $ — $ — $ 116 $ 312 $ — $ — Liabilities: Contingent Considerations (2) $ — $ — $ — $ — $ 7,052 $ — Total liabilities measured at fair value $ — $ — $ — $ — $ 7,052 $ — (1) See Note 6 Derivatives for additional information related to the interest rate swap. (2) The future contingent considerations are recorded in the current and non-current Deferred Acquisition Payables accounts of the Consolidated Balance Sheet. Contingent Considerations Level 3 fair value measurements rely on limited unobservable inputs, which may not reflect net realizable value or future fair values. Although the Company believes its valuation methods align with market practices, different assumptions or methodologies could lead to varying fair value results at the reporting date. The fair value of contingent consideration liabilities is based on projected performance of the acquired entities, which are reassessed each reporting period. Based on the Company’s ongoing assessment of the fair value of its contingent consideration, the Company recorded a net increase in the estimated fair value of liabilities of $ 7.1 million and none for the years ended December 31, 2025 and 2024, respectively. The Company has assessed the most likely exposure to the contingent consideration to be $ 7.1 million at December 31, 2025. The following table sets forth a summary of the changes in the fair value of the Company’s future contingent considerations, which are measured at fair value on a recurring basis utilizing Level 3 assumptions in their valuation (in thousands): Year Ended December 31, 2025 Carrying Value Fair Value Balance at beginning of year — — Change in fair value of contingent consideration — — Fair value of current contingent consideration issuances 1,912 1,912 Fair value of long-term contingent consideration issuances 6,140 5,910 Less: settlement of contingent considerations ( 1,000 ) ( 1,000 ) Balance at end of year $ 7,052 $ 6,822 There were no transfers in or out of the Level 3 hierarchy. 96 Table of contents Fair value information about financial instruments not measured at fair value The following table presents the Company’s debt that is not measured at fair value on a recurring basis: Year Ended December 31, 2025 2024 Fair Value Hierarchy Carrying Value Fair Value Carrying Value Fair Value Bank debt: Current bank debt Level 2 $ 1,972 $ 1,972 $ 1,912 $ 1,912 Long-term bank debt (1) Level 2 $ 2,035 $ 2,035 $ 4,007 $ 4,007 Deferred Acquisition Payables- notes (2) : Current Deferred Acquisition Payables- notes Level 2 $ 593 $ 593 $ 601 $ 601 Long-term Deferred Acquisition Payables- notes Level 2 $ 529 $ 529 $ 1,122 $ 1,068 (1) The carrying value of the Company’s borrowings under various credit agreements approximates its fair value due to the variable interest rate based upon adjusted SOFR. (2) The Deferred Acquisition Payables- notes are cash payments that are due to the seller paid out over a future period. The fair value of Deferred Acquisition Payables- notes are based on current market rates for similar types of financing arrangements . 10. STOCKHOLDERS’ EQUITY The Board approved an amended and restated certificate of incorporation (the “Restated Certificate of Incorporation”), which became effective on July 17, 2024 in connection with the IPO. The Restated Certificate of Incorporation authorizes the issuance of three classes of common stock: Class A Common Stock, Class B Common Stock, Class C Common Stock, and preferred stock. As described in Note 1 Organization and Basis of Presentation , in connection with the IPO on July 19, 2024, the Company issued 11,000,000 shares of Class A Common Stock, at a price of $ 17.00 per share. On July 23, 2024, the underwriters purchased an additional 1,650,000 shares of Class A Common Stock in connection with the underwriters’ full exercise of their option to purchase additional shares, at a price of $ 17.00 per share. The Company received approximately $ 192.9 million of net proceeds, including from the full exercise of the underwriters’ option, after deducting underwriting discounts and commissions of approximately $ 14.4 million and related offering expenses of approximately $ 7.8 million. In connection with the Reorganization Transactions, the Company issued (i) 2,161,874 shares of Class A Common Stock in exchange for 342,362 LLC Units held by Bunch Holdings and 1,819,512 LLC Units held by the New Members, (ii) 7,277,651 shares of Class B Common Stock to RenRe and GHC for consideration of $ 0.00001 per share and (iii) 33,893,810 shares of Class C Common Stock to Bunch Holdings for consideration of $ 0.00001 per share. Immediately after the IPO and the Reorganization Transactions, 14,811,874 shares of Class A Common Stock were outstanding, including 12,650,000 shares issued in the IPO plus 342,362 shares issued to Bunch Holdings and 1,819,512 shares issued to New Members, and 7,277,651 shares of Class B Common Stock and 33,893,810 shares of Class C Common Stock were outstanding. In 2025 , 23,255 shares of Class A Commons Stock were issued as part of acquisitions. In addition, 193,552 shares of Class A Common Stock were issued upon vesting of RSUs in accordance with the 2024 Incentive Plan as of December 31, 2025 . See Note 11 Stock-Based Compensation. 97 Table of contents The following table summarizes the capitalization and voting rights of the Company’s classes of stock after the completion of the IPO and the Reorganization Transactions and as of December 31, 2025: Authorized Par Value Issued & Outstanding Votes per share Economic Rights Preferred Stock 50,000,000 $ 0.01 None Common stock: Class A (1) 300,000,000 $ 0.01 15,028,681 1 Yes Class B (1) 100,000,000 $ 0.00001 7,277,651 1 No Class C (2) 100,000,000 $ 0.00001 33,893,810 10 No (1) Each share of Class A Common Stock and non-economic Class B Common Stock entitles its holder to one vote per share on all matters submitted to a vote of the stockholders. (2) Each share of non-economic Class C Common Stock entitles its holders to ten votes per share on all matters presented to the stockholders and on which the holders of the Class C Common Stock are entitled to vote; provided, that each share of Class C Common Stock will be entitled to one vote per share automatically (i) 12 months following the death or disability of Richard F. (“Gordy”) Bunch III or (ii) upon the first trading day on or after such date that the outstanding shares of non-economic Class C Common Stock represent less than 10 % of the then-outstanding Class A Common Stock, non-economic Class B Common Stock and non-economic Class C Common Stock, which, in either instance, may be extended to 18 months upon affirmative approval of a majority of the independent directors. The Board is authorized to direct the Company to issue shares of preferred stock in one or more series and has the discretion to determine the number and designation of such series and the powers, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Through December 31, 2025, no shares of preferred stock have been issued. Holders of Class A Common Stock are entitled to receive dividends when and if declared by the Board out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Upon liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A Common Stock will be entitled to receive pro rata our remaining assets available for distribution. Holders of the Company’s non-economic Class B and non-economic Class C Common Stock do not have any right to receive dividends or to receive a distribution upon a liquidation or winding up of the Company. Noncontrolling interests Noncontrolling interests represent the economic interests of TWFG Holding held by the Continuing Pre-IPO LLC Members. The following table summarizes the ownership of TWFG Holding as of December 31, 2025: Owner Unit Owned Ownership percentage TWFG, Inc. 15,028,681 26.7 % Noncontrolling interests 41,171,461 73.3 % Total 56,200,142 100.0 % Redeemable noncontrolling interest In the second quarter of 2025, the Company completed the acquisition of a 50.1 % controlling interest in TWFG MGA FL. The remaining interest is held by an AIH Sub, Inc. with a right to put its interest to the Company beginning in 2030 and ending in 2033. The put right consideration to be paid is based on operational performance of TWFG MGA FL as determined at the time the right is exercised. See Note 4 Intangible Assets and Acquisitions for additional information. 98 Table of contents Cash Distributions to Members Related to Their Income Tax Liabilities As a limited liability company treated as a partnership for income tax purposes, TWFG Holding is not subject to any entity level U.S. federal income taxes, as these taxes are primarily the obligations of its members. Under the third amended and restated TWFG Holding LLC Agreement, TWFG Holding is required to distribute cash, to the extent that TWFG Holding has cash available, on a pro rata basis to its members to the extent necessary to cover the members’ tax liabilities, if any, with respect to each member’s share of net taxable income of TWFG Holding. TWFG Holding makes such tax distributions to its members quarterly, based on an estimated tax rate and projected year-to-date taxable income, with a final accounting once actual taxable income or loss has been determined. TWFG Holding made tax distributions to its members totaling approximately $ 15.5 million and n on-tax distributions in the amounts of $ 6.1 million were made for the year ended December 31, 2025. Prior to the IPO, TWFG Holding made tax distributions to its members totaling approximatel y $ 6.1 million. Following the completion of the IPO, TWFG Holding made tax and non-tax distributions to its members totaling approximately $ 3.0 million and $ 1.0 million, respectively, for the year ended December 31, 2024. 11. STOCK-BASED COMPENSATION 2024 Omnibus Incentive Plan On July 17, 2024, the Company adopted the 2024 Incentive Plan for its directors, officers, employees, consultants and advisors. The 2024 Incentive Plan authorizes the granting of stock options, restricted stock, RSUs, stock appreciation rights, and other stock-based awards. The Company has reserved 4,346,667 shares of Class A Common Stock for issuance under the 2024 Incentive Plan, with an option to increase the reserve annually pursuant to the terms of the 2024 Incentive Plan. During the year ended December 31, 2025, the Company granted 52,079 RSUs under the 2024 Incentive Plan and 39,143 PSUs under the 2024 Incentive Plan , and 3,928,788 shares of Class A Common Stock remain available for future grant. No other award types have been issued under the 2024 Incentive Plan to date. The fair value of the restricted stock units under the 2024 Incentive Plan for awards granted at the time of the Company’s IPO were granted at the IPO price of $ 17.00 per share. Stock-Based Compensation Expense Stock-based compensation expense recorded in Salaries and employee benefits for the years ended December 31, 2025 and 2024 was $ 4.6 million and $ 2.2 million, respectively. There was no equity or equity-based compensation plan maintained by the Company prior to its IPO on July 19, 2024. See Note 1 Organization and Basis of Presentation for more information about the IPO. Stock-Based Awards RSUs The Company withholds and sells shares of Class A Common Stock associated with net settlements to cover tax withholding obligations upon the vesting of RSUs for certain employees under its 2024 Incentive Plan. During the year ended December 31, 2025, 285,192 RSUs vested and the Company withheld 91,640 RSUs for $ 3.1 million, resulting in the net issuance of 193,552 shares of Class A Common Stock. The vesting of RSUs is shown net of this withholding on the Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders’/Members’ Equity and Consolidated Statements of Cash Flows. Stock-based awards granted in the period include RSUs with service-based vesting conditions. Outstanding RSUs and related activity for the years ended December 31, 2025 and 2024 were as follows: 99 Table of contents Number of Awards Weighted-Average Grant Date Fair Value Unvested balance - December 31, 2023 — $ — Granted 429,190 $ 17.00 Forfeited ( 9,255 ) $ 17.00 Unvested balance - December 31, 2024 419,935 $ 17.00 Granted 52,079 $ 30.88 Vested ( 285,192 ) $ 17.00 Forfeited ( 1,638 ) $ 17.00 Unvested balance - December 31, 2025 185,184 $ 20.90 PSUs Outstanding PSUs and related activity for the year ended December 31, 2025 were as follows: Number of Awards Weighted-Average Grant Date Fair Value Unvested balance - December 31, 2024 — $ — Granted 39,143 $ 30.87 Unvested balance - December 31, 2025 39,143 $ 30.87 Summary of Unamortized Compensation Expense For the year December 31, 2025, the Company estimated there to be $ 3.1 million of unamortized compensation expense related to all non-vested stock-based compensation arrangements granted under the Company’s stock-based compensation plans, based upon current projections of grants measu red against performance criteria. This expense is expected to be recognized over a weighted-average period of 1.5 years . 12. INCOME TAXES Prior to the Reorganization Transactions, we were organized as Delaware limited liability companies and Delaware limited partnerships and were treated as flow-through entities for U.S. federal income tax purposes. Subsequent to the Reorganization Transactions, we are subject to U.S. federal income and state tax on our allocable share of any taxable income of TWFG Holding’s income (loss) before provision for income taxes consisted of the following (in thousands): Years Ended December 31, 2025 2024 Domestic $ 44,406 $ 29,970 Foreign 39 117 Income before provision for income tax $ 44,445 $ 30,087 The components of the provision for income taxes is as follows (in thousands): 100 Table of contents Years Ended December 31, 2025 2024 Current expense (benefit): Federal $ 2,538 $ 1,090 State 749 382 Foreign ( 8 ) 23 Total current expense (benefit): $ 3,279 $ 1,495 Deferred expense (benefit): Federal — — State — — Foreign — — Total deferred expense (benefit): $ — $ — Total income tax expense: $ 3,279 $ 1,495 The reconciliation of the Company’s statutory tax rate and effective tax rate is as follows (in thousands): Years Ended December 31, 2025 2024 Amount Percent Amount Percent Pretax income $ 44,445 $ 30,087 U.S. federal statutory tax rate 9,333 21.0 % 6,318 21.0 % State and local income taxes, net of federal benefit 713 1.6 % 354 1.1 % Foreign tax effects: Foreign activity ( 16 ) — % ( 1 ) — % Tax credits: Change in valuation allowance 270 0.6 % 273 1.0 % Nontaxable or nondeductible items: Partnership income ( 7,031 ) ( 15.8 ) % ( 5,450 ) ( 18.1 ) % Other 10 — % 1 — % Total $ 3,279 7.4 % $ 1,495 5.0 % The Company’s effective tax rate includes the effects of state and local income taxes, net of the federal income tax benefit, which is primarily attributable to Texas and California, where the Company has significant business activities. Texas and California have higher effective tax rates compared to other jurisdictions where the Company operates, and together, account for more than half of the Company’s total state tax expense. The components of the Company’s deferred tax assets and liabilities are as follows (in thousands): Years Ended December 31, 2025 2024 Deferred tax assets: Outside Basis in TWFG Holding $ 32,136 $ 31,481 Total deferred tax assets before valuation allowance 32,136 31,481 Valuation allowance ( 32,136 ) ( 31,481 ) Net deferred tax assets (liability) $ — $ — The future realization of the tax benefits from existing temporary differences and tax attributes ultimately depends on the existence of sufficient taxable income. The Company assesses the realizability of its deferred tax assets at each balance sheet date. In assessing the realization of its deferred tax assets, the Company considers whether it is 101 Table of contents more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the projected future taxable income, expected reversal of existing deferred tax liabilities, and tax planning strategies in making this assessment. After consideration of all available evidence, both positive and negative, the Company determined that it is not more likely than not that its net deferred tax assets will be realized in the foreseeable future. As a result, the Company has recorded a full valuation allowance as of December 31, 2025 and December 31, 2024. The Company does not provide for U.S. Federal, state, and applicable foreign income and withholding taxes on the financial reporting basis over the tax basis of its foreign subsidiary investment because the Company has the intention and ability to indefinitely reinvest the undistributed earnings of its foreign subsidiary. As a result, deferred taxes have not been recorded for the outside basis differences in its foreign subsidiary as of December 31, 2025 to the extent such differences are expected to result in future taxable income upon repatriation. The Company reviews its ability and intentions to indefinitely reinvest its foreign earnings at each balance sheet. The Company records uncertain tax positions as liabilities in accordance with ASC 740-10 and adjusts these liabilities when judgment changes as a result of the evaluation of new information not previously available. Since there is complexity in some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. The calculation and assessment of the Company's income tax exposures generally involves the uncertainties in the application of complex tax laws and regulations for federal, state, and foreign jurisdictions. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon local tax examination including resolutions of any related appeals or litigation on the basis of the technical merits. The Company files income tax returns in the U.S. and Philippines which are the Company's major jurisdictions where it is subject to tax examination by local tax authorities. The Company is not currently under examination for income taxes, and is not aware of any issues under review that could result in significant payments, accruals or material deviation from its tax positions. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by local tax authorities to the extent utilized in a future period. The statute of limitations for the Company has expired for tax years prior to December 31, 2022. As of December 31, 2025 and 2024, we did not have any uncertain tax positions. The following summarizes the Company’s income taxes paid (net of refunds received) for the years presented below (in thousands): Years Ended December 31, 2025 2024 Federal $ 2,777 $ — State 489 — Foreign 2 $ — Total $ 3,268 $ — The following summarizes the jurisdictions that exceed 5% of the Company’s total income taxes paid (net of refunds) for the years presented below (in thousands): Years Ended December 31, 2025 2024 State California $ 227 * Texas $ 218 * *Jurisdiction below the threshold for the period presented 102 Table of contents 13. DEFINED CONTRIBUTION PLAN TWFG Holding sponsors a Safe Harbor defined contribution plan (“the Plan”). The sponsor is part of a controlled group that includes both TWFG-IS and TWFG-GA. The Plan allows employees who are age 21 or older and have completed 3 months of service to participate. Each year, participants may defer between 1 % and 100 % of eligible compensation, not to exceed the maximum dollar amount as allowed under Section 402(g) of the Internal Revenue Code. Effective January 1, 2008, the Plan was amended to allow the Company to meet the provisions of the regulations. The Plan provides a Company matching of 100 % on the first 4 % of eligible compensation that a participant contributes to the Plan. For the years ended December 31, 2025, 2024 and 2023, the Company recognized expenses related to the Plan of $ 0.7 million, $ 0.6 million, and $ 0.3 million, respectively. The Company at its election may make discretionary profit share contributions. Contributions are subject to certain limitations. For the years ended December 31, 2025, 2024 and 2023, the Company elected not to make any additional discretionary contributions. 14. RELATED PARTY TRANSACTIONS The Company enters into transactions with affiliated entities in the ordinary course of business, including technology and administrative service arrangements. These transactions are conducted pursuant to agreements approved by management and are intended to approximate terms that would be obtained in arm’s-length transactions. In 2023, the Company distributed its equity interest in The Woodlands Insurance Company (“TWICO”), then a wholly-owned subsidiary of the Company, to the owners of the Company. As a result, the Company deconsolidated TWICO in January 2023. The Company earned $ 14.0 million, $ 9.6 million, and $ 4.2 million i n commissions, respectively, and $ 3.4 million, $ 2.7 million, and $ 1.6 million in fee income, respectively, from TWICO during the years ended December 31, 2025, 2024, and 2023 . These amounts are included in commission income and fee income in the Consolidated Statements of Income. In addition, TWFG Holding provides administration services to and pays expenses on behalf of TWICO as part of its management agreement with TWICO. For the years ended December 31, 2025, 2024, and 2023, the Company allocated general and administrative expenses related to TWICO, which were immaterial. The offsetting expenses recognized by TWICO for one month in 2023 related to these commissions, policy, TPA fees and allocated general and administrative expenses are included in the net income from discontinued operation in the Consolidated Statements of Income. See Note 16 for the Discontinued Operation. TWICO pays TWFG-GA commissions and fee income, i.e., policy fees and TPA fees, for business written through TWFG-GA. On September 1, 2025, TWICO and TWFG-GA amended their managing general agency and claims administration agreement, which reflects an increase in the percentage of commissions paid to TWFG-GA from 20 % to 25 %, a profit sharing arrangement, and requires TWICO to reimburse TWFG-GA for actual expenses incurred or allocated by TWFG-GA for licensing, statistical accounting and management services performed by TWFG-GA. The transaction was approved by the Audit Committee of the Board pursuant to the Company’s Related Party Transaction Approval Policy and approved by the Texas Department of Insurance. In May 2023, the Company distributed its equity interest in Evolution Agency Management LLC (“EVO”), then a wholly-owned subsidiary of the Company, to the owners of the Company. As a result, the Company deconsolidated EVO effective on the distribution date. TWFG-IS and TWFG-GA have software licensing agreements with EVO, which allow TWFG-IS and TWFG-GA to use EVO’s proprietary agency management system in exchange for a fixed annual fee. In addition, TWFG Holding provides administration services and pays expenses on behalf of EVO as part of its management agreement with EVO. Prior to the deconsolidation of EVO, charges between the Company and EVO were eliminated upon consolidation. For the year ended December 31, 2025, the Company incurred $ 3.1 million in license fees net of allocated general and administrative expenses related to EVO. For the years ended December 31, 2024, and 2023 the Company incurred $ 1.9 million and $ 0.7 million in license fees respectively, and allocated general and administrative expenses related to EVO, totaling $ 0.4 million and $ 0.4 million, respectively. These amounts are not eliminated and are included in Other administrative expenses in the Consolidated Statements of Income. Effective January 1, 2026, TWFG-IS and TWFG-GA entered into amended software licensing agreements with EVO. The amended agreements are effective January 1, 2026 to January 1, 2028 and require monthly payments of $ 0.3 million collectively, over the term of the agreements. 103 Table of contents On November 12, 2024, the Company entered into a lease agreement with Parkwood 2, LLC (the “Lease”), a related party, for additional office space located in The Woodlands, Texas. Parkwood 2, LLC is owned by the Continuing Pre-IPO LLC Members. The Lease commenced on December 1, 2024, with an initial term of 120 months with an option to renew. The Company has the right to extend the term of the Lease for an additional 120 months at the then-prevailing market rate. As of December 31, 2024 , the Company has accrued rent expense and tenant improvements of approximately $ 2.5 million. See Note 5 Operating Leases for additional information. On December 15, 2025, the Company entered into an amended lease agreement with Parkwood 2, LLC for additional office space located in the The Woodlands, Texas. The lease term is expected to commence in the first quarter of 2026 with an initial term of 106 months with an option to renew. The Company has the right to extend the term for an additional 120 months. As of December 31, 2025, the Company has not recognized a right-of-use asset, lease liability, rent expense, or tenant improvement assets or obligations related to this lease. RenaissanceRe Holdings Ltd., through its wholly-owned subsidiary RenaissanceRe Ventures U.S. LLC, has been an investor in the Company since 2018. Jonathan Anderson is one of our directors and the Senior Vice President, Global Head - Strategic Investments of RenaissanceRe Holdings Ltd. Griffin Highline Capital, LLC, through its wholly-owned subsidiary, GHC Woodlands Holdings LLC, has been an investor in the Company since 2022. Michael Doak is one of our directors and is the Chief Executive Officer and Managing Partner of Griffin Highline Capital. 15. EARNINGS PER SHARE For the year ended December 31, 2025, basic earnings per share has been calculated by dividing net earnings attributable to Class A common stockholders for the period subsequent to the Reorganization Transactions as described in Note 1 Organization and Basis of Presentation , by the weighted average number of shares of Class A Common Stock outstanding for the same period. All earnings prior to July 19, 2024, the date of the Reorganization Transactions, were entirely allocable to the noncontrolling interests and, as a result, earnings per share information is not applicable for reporting periods prior to that date. Shares of Class A Common Stock are weighted for the portion of the period in which the shares were outstanding. Diluted earnings per share has been calculated in a manner consistent with that of basic earnings per share while considering all potentially dilutive shares of Class A Common Stock outstanding during the periods. Prior to the IPO and Reorganization Transactions, TWFG Holding’s equity structure included common units. The Company considered the calculation of earnings per unit for periods prior to the IPO and determined that it would not be meaningful to the users of these consolidated financial statements. Therefore, earnings per share information has not been presented for the year ended December 31, 2023. The following tables set forth the computation of basic and diluted earnings per share for the years ended December 31, 2025 and 2024 (in thousands, except share and per share amounts): 104 Table of contents Years Ended December 31, 2025 2024 Numerator: Net income attributable to TWFG, Inc. (basic) $ 7,963 $ 2,745 Plus: Income attributed to dilutive shares 59 32 Net income attributable to common stockholders (diluted) $ 8,022 $ 2,777 Denominator: Weighted average common stock outstanding (basic) 14,914,346 14,772,115 Effect of potentially dilutive securities: RSUs 182,242 210,294 PSUs 3,602 — Weighted average common stock outstanding (diluted) 15,100,190 14,982,409 Earnings per share Basic $ 0.53 $ 0.19 Diluted $ 0.53 $ 0.19 Diluted earnings per share attributable to common stockholders adjusts the basic earnings per share attributable to common stockholders and the weighted average number of shares of common stock outstanding for the potential dilutive impact of potential common stock. Pursuant to the Reorganization Transactions, Class B Voting Stock and Class C Voting Stock are considered in the calculation of dilutive earnings per share on an if-converted basis as these classes of stock, together with the related LLC Units, have exchange rights into Class A Common Stock that could result in additional Class A Common Stock being issued. Net income attributable to the noncontrolling interests would be added back to net income in the fully dilutive computation and adjusted for income taxes which would have been expensed had the income been recognized by the Company, a taxable entity. All other potentially dilutive securities (such as unvested RSUs and PSUs) are determined based on the treasury stock method. The Company excluded the following potential shares, presented based on amounts outstanding at period end, from the computation of diluted weighted average shares outstanding for the periods indicated because including them would have had an antidilutive effect: Years Ended December 31, 2025 2024 Class B Voting Stock 7,277,651 7,277,651 Class C Voting Stock 33,893,810 33,893,810 41,171,461 41,171,461 16. DISCONTINUED OPERATION Prior to February 2023, TWICO was a wholly-owned subsidiary of the Company. In July 2022, the Company entered into a Master Transaction Agreement (“MTA”) in which the Company’s equity interests in TWICO were distributed to the owners of the Company (“TWICO Distribution”). In 2022, as part of the MTA , the Company contributed $ 5.0 million to TWICO. This contribution was reported in the Consolidated Statements of Cash Flows as an investing outflow from continuing operations and as a financing inflow from discontinued operations. The TWICO Distribution was effective in February 2023 after approval from the Texas Department of Insurance. The TWICO Distribution is a common control transaction and recorded at book value as a capital transaction with no gain or loss recorded. TWICO, as a subsidiary of the Company, was determined to be a component of the Company and disposed of by other-than-sale. The TWICO Distribution represents a significant strategic shift in the operations of the Company and has met all criteria for discontinued operations reporting on the distribution date, i.e., February 2023. After the TWICO Distribution, the Company retains significant continuing involvement in the operation of TWICO through TWICO’s existing agency agreement with TWFG-GA and the management agreement with the Company. There was no income or loss applicable per this discontinued operation for the years ended 105 Table of contents December 31, 2025 and 2024. See Note 14 Related Party Transactions for more information about the transactions between the Company, TWFG-GA and TWICO. The following is a reconciliation of the amounts of major classes of income from operations classified as discontinued operation in the Consolidated Statements of Income (in thousands): Year Ended December 31, 2023 Revenue $ 1,240 Less: Operating expenses 450 Operating income 790 Less: Income tax benefit ( 44 ) Net income from discontinued operation, net of tax $ 834 17. LITIGATION AND CONTINGENCIES The Company is a party to various legal actions and claims, brought by or threatened against it, in the ordinary course of business. The Company records liabilities for loss contingencies when it is probable that a liability has been incurred and the amount is reasonably estimable. The Company does not discount such contingent liabilities and recognizes incremental costs related to the contingencies when incurred. In the opinion of management, the ultimate resolution of legal actions and pending claims will not materially affect the consolidated financial statements of the Company. 18. SEGMENT The Company operates as a single operating and reportable segment, which reflects its business as an independent distribution platform for personal and commercial insurance in the U.S. All business activities and operations are reported in the one reportable segment, which applies accounting policies consistent with the consolidated entity. The Company’s Chief Executive Office (“CEO”) is the chief operating decision maker (“CODM”) and, manages the business on a consolidated basis for purposes of evaluating financial performance and allocating resources. Revenues are generated primarily from the placement of insurance contracts between insurance carriers and insureds. The CODM evaluates performance and allocates resources based on consolidated net income, which is also the measure used in the Company’s annual operating budget, strategic planning, and management incentive compensation process. Total segment assets are represented by total consolidated assets as reported on the Consolidated Balance Sheets. See Note 3, Revenues, for entity-wide disclosures related to products and major customers, and Note 4 Intangibles Assets and Acquisitions, for information on capital expenditures on an entity wide basis. 106 Table of contents The following table provides a summary of the segment revenue, segment profit or loss, and significant segment expenses (in thousands): Years Ended December 31, 2025 2024 2023 Total revenues $ 248,512 $ 203,760 $ 172,043 Less: Commission expense 133,518 118,086 116,847 Salaries and employee benefits 37,636 29,064 13,970 Technology expense 5,985 4,246 2,483 Consultant and other professional fees 3,783 3,527 1,497 Depreciation and amortization 18,353 12,020 4,862 Other segment items (1) 12,252 8,892 6,993 Interest expense 287 2,223 1,003 Interest income ( 6,607 ) ( 4,376 ) ( 891 ) Other non-operating (income) expense, net ( 1,140 ) ( 9 ) 17 Income tax expense 3,279 1,495 — Net income from continuing operations 41,166 28,592 25,262 Net Income from discontinued operation, net of tax — — 834 Segment and consolidated net income $ 41,166 $ 28,592 $ 26,096 (1) Other segment items included in segment net income include marketing expenses, survey expenses, office expenses, and certain administrative expenses. 19. SUBSEQUENT EVENTS Subsequent to the year ended December 31, 2025, the Company completed acquisitions and business partnerships in support of its ongoing growth strategy. On February 23, 2026, our Board approved a share repurchase program that authorizes the Company to repurchase up to $ 50 million of its outstanding Class A common stock. Share repurchases may be made from time to time on the open market, in privately negotiated transactions, using Rule 10b5-1 trading plans, or in any other manner that complies with the applicable securities law. The timing of purchases and number of shares repurchased under the program will depend upon a variety of factors including the Company’s stock price, trading volume, working capital or other liquidity requirements, and market conditions. The Company is not obligated to purchase any shares under the program and the program may be suspended or discontinued at any time without notice. Subsequent to December 31, 2025, the Company received additional information from certain insurance carrier partners related to contingent commission arrangements associated with 2025 underwriting performance. Based on this information, the Company recorded an adjustment of approximately $ 1.4 million to increase commission revenue for the year ended December 31, 2025. 107 Table of contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.