What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-30 · 381 added, 265 removed, 509 unchanged (56% of the section changed)

Financial Statements

TWFG Holding Company, LLC

Condensed Consolidated Statements of Operations

(Amounts in thousands, except unit and per unit data)

(Amounts in thousands, except share and per share data)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Commission income (related party of $ 1,912 and $ 947 for the three months ended and $ 3,021 and $ 1,897 for the six months ended June 30, 2024 and 2023, respectively)

Commission income (related party of $ 3,026 and $ 1,167 for the three months ended and $ 6,047 and $ 3,064 for the nine months ended September 30, 2024 and 2023, respectively)

$ 48,240 $ 43,993 $ 139,447 $ 122,451

Contingent income 1,383 1,035 3,717 3,023

1,258 1,003 2,334 1,988

Fee income (related party of $ 561 and $ 411 for the three months ended and $ 915 and $ 839 for the six months ended June 30, 2024 and 2023, respectively)

2,689 2,208 4,921 4,236

Fee income (related party of $ 884 and $ 419 for the three months ended and $ 1,799 and $ 1,258 for the nine months ended September 30, 2024 and 2023, respectively)

2,890 2,107 7,811 6,343

Other income 2,127 575 3,244 1,125

Total revenues

1 unchanged sentence

Commission expense 30,766 32,461 89,171 90,853

31,962 30,896 58,405 58,392

Salaries and employee benefits 8,331 3,390 21,401 10,096

6,816 3,370 13,070 6,706

Other administrative expenses (related party of $ 382 and $ 99 for the three months ended and $ 783 and $ 92 for the six months ended June 30, 2024 and 2023, respectively)

Other administrative expenses (related party of $ 339 and $ 178 for the three months ended and $ 1,122 and $ 270 for the nine months ended September 30, 2024 and 2023, respectively)

4,813 2,812 11,687 8,043

Depreciation and amortization 2,985 1,145 8,966 3,340

2,968 1,134 5,981 2,195

Total operating expenses

3 unchanged sentences

Interest expense ( 411 ) ( 295 ) ( 2,125 ) ( 553 )

( 872 ) ( 173 ) ( 1,714 ) ( 258 )

Other non-operating income (expense), net ( 4 ) 1 8 ( 10 )

14 — 12 ( 11 )

Income before tax 7,330 7,608 20,877 20,047

Income tax expense 437 — 437 —

Net income from continuing operations

2 unchanged sentences

6,893 7,608 20,440 20,881

Weighted average units used in the computation of net income per unit (see Note 10):

659,439 631,750 659,439 631,750

Net income per unit:

Net income from continuing operations per unit - basic

$ 10.49 $ 11.19 $ 20.54 $ 19.69

Net income from continuing operations per unit - diluted

$ 10.49 $ 11.19 $ 20.54 $ 19.69

Net income from discontinued operation per unit - basic

net income attributable to noncontrolling interests

5,739 — 19,286 —

Net income from discontinued operation per unit - diluted

Net income attributable to TWFG, Inc.

$ 1,154 $ 7,608 $ 1,154 $ 20,881

Net income per unit - basic

Weighted average shares of common stock outstanding (see Note 13):

Basic 14,722,685 14,722,685

Diluted 14,890,382 14,890,382

Earnings per share (see Note 13):

$ 0.08 $ 0.08

Net income per unit - diluted

$ 0.08 $ 0.08

See Notes to the Condensed Consolidated Financial Statements

TWFG Holding Company, LLC

Condensed Consolidated Statements of Comprehensive Income (Loss)

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Other comprehensive income (loss), net of tax:

Unrealized gains on investments of discontinued operation during the period (net of tax expense of $ 0 and $ 0 for the three months ended and $ 0 and $ 44 for the six months ended June 30, 2024 and 2023, respectively)

Unrealized gains on derivative instruments during the period 29 152 145 123

Unrealized gains on investments of discontinued operation during the period (net of tax expense of $ 0 and $ 0 for the three months ended and $ 0 and $ 44 for the nine months ended September 30, 2024 and 2023, respectively)

Unrealized (loss) gains on derivative instruments during the period ( 77 ) 72 68 195

Reclassification of realized gains on derivative instruments included in net income during the period ( 80 ) ( 107 ) ( 258 ) ( 308 )

( 85 ) ( 104 ) ( 178 ) ( 201 )

Total other comprehensive (loss) income, net of tax ( 157 ) ( 35 ) ( 190 ) 52

( 56 ) 48 ( 33 ) 87

Comprehensive income

6,736 7,573 20,250 20,933

comprehensive income attributable to noncontrolling interests 5,615 — 19,129 —

Comprehensive income attributable to TWFG, Inc.

$ 1,121 $ 7,573 $ 1,121 $ 20,933

See Notes to the Condensed Consolidated Financial Statements

TWFG Holding Company, LLC

Condensed Consolidated Statements of Financial Position

(Amounts in thousands, except unit data)

June 30, 2024 December 31, 2023

(Amounts in thousands, except share/unit data)

September 30, 2024 December 31, 2023

Current assets

6 unchanged sentences

Total current assets 234,127 75,108

75,350 75,108

Non-current assets

3 unchanged sentences

Other non-current assets 635 837

$ 157,219 $ 115,437

Liabilities and Members’ Equity

Total assets $ 313,093 $ 115,437

Liabilities and Equity

Current liabilities

6 unchanged sentences

Total current liabilities 38,097 34,912

41,048 34,912

Non-current liabilities

3 unchanged sentences

Total liabilities 44,959 84,386

89,707 84,386

Commitment and contingencies (see Note 15)

Members’ equity

Class A common units ( 27,689 units and 0 units issued and outstanding at June 30, 2024 and December 31, 2023, respectively)

Class B common units ( 110,750 units issued and outstanding at both June 30, 2024 and December 31, 2023)

Class C common units ( 521,000 units issued and outstanding at both June 30, 2024 and December 31, 2023)

Stockholders'/Members' Equity

Members’ Equity ( 631,750 common units issued and outstanding at December 31, 2023)

Class A common stock ($ 0.01 par value per share - 300,000,000 authorized, 14,811,874 shares issued and outstanding at September 30, 2024)

Class B common stock ($ 0.00001 par value per share - 100,000,000 authorized, 7,277,651 shares issued and outstanding at September 30, 2024)

Class C common stock ($ 0.00001 par value per share - 100,000,000 authorized, 33,893,810 shares issued and outstanding at September 30, 2024)

Additional paid-in capital 57,159 25,114

1 unchanged sentence

Accumulated other comprehensive income 82 500

Total members’ equity

Total stockholders' equity attributable to TWFG, Inc.

/members’ equity

71,086 31,051

Total liabilities and members’ equity

Noncontrolling interests

Total stockholders'/members' equity

268,134 31,051

Total liabilities and equity

$ 313,093 $ 115,437

See Notes to the Condensed Consolidated Financial Statements

TWFG Holding Company, LLC

Condensed Consolidated Statements of Members’ Equity

(Amounts in thousands, except units data)

Class A Common Units Class B Common Units Class C Common Units

Units Amount Units Amount Units Amount Additional Paid-In Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Total Members' Equity

Condensed Consolidated Statements of 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’/Members' 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

Units issued (see Note 1) – — 27,689 28 – — – — 30,018 — — 30,046

Shares issued 27,689 28 – — – — – — 30,018 — — 30,046 — 30,046

Cash distributions to members – — – — – — – — — ( 2,420 ) — ( 2,420 ) — ( 2,420 )

Other comprehensive loss – — – — – — – — — — 23 23

Other comprehensive income – — – — – — – — — — 23 23 — 23

Balance at March 31, 2024 659,439 $ 660 – $ — – $ — – $ — $ 55,132 $ 9,014 $ 523 $ 65,329 $ — $ 65,329

3 unchanged sentences

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 )

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

See Notes to the Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Stockholders’/Members’ Equity (Continued)

(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 Additional Paid-In Capital Retained Earnings

Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Attributable to TWFG, Inc./ Members' Equity

Noncontrolling Interests

Total Stockholders’/Members' Equity

Balance at December 31, 2022 631,750 $ 632 — $ — — $ — — $ — $ 25,114 $ 32,180 $ ( 140 ) $ 57,786 $ — $ 57,786

5 unchanged sentences

Other comprehensive income — — — — — — — — — — 39 39 — 39

Impact of discontinued operation on accumulated other comprehensive income (loss) – — – — – — – — — — 775 775

Impact of discontinued operation on accumulated other comprehensive income — — — — — — — — — — 775 775 — 775

Balance at March 31, 2023 631,750 $ 632 — $ — — $ — — $ — $ 25,114 $ 16,138 $ 674 $ 42,558 $ — $ 42,558

Net income — — — — — — — — — 7,067 — 7,067 — 7,067

Units exchanged (see Note 1) ( 631,750 ) ( 632 ) – — 110,750 111 521,000 521 — — — —

Cash distributions to members — — — — — — — — — ( 5,186 ) — ( 5,186 ) — ( 5,186 )

Other distributions to members — — — — — — — — — ( 3,195 ) — ( 3,195 ) — ( 3,195 )

Other comprehensive income – — – — – — – — — — 48 48

Other comprehensive loss

— — — — — — — — — — 48 48 — 48

Balance at June 30, 2023 631,750 $ 632 — $ — — $ — — $ — $ 25,114 $ 14,824 $ 722 $ 41,292 $ — $ 41,292

Net income — — — — — — — — — 7,608 — 7,608 — 7,608

Cash distributions to members — — — — — — — — — ( 2,599 ) — ( 2,599 ) — ( 2,599 )

Other comprehensive loss — — — — — — — — — — ( 35 ) ( 35 ) — ( 35 )

Balance at September 30, 2023 631,750 $ 632 — $ — — $ — — $ — $ 25,114 $ 19,833 $ 687 $ 46,266 $ — $ 46,266

See Notes to the Condensed Consolidated Financial Statements

TWFG Holding Company, LLC

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash Flows from Operating Activities

4 unchanged sentences

Depreciation and amortization 8,966 3,340

Gain on sale of intangible assets and property and equipment ( 65 ) 13

Allowance for credit losses 69 —

(Gains) losses on sale of intangible assets and property and equipment ( 86 ) 12

Stock-based compensation expense

Non-cash lease expense 756 503

Other non-cash items ( 10 ) 5

Commissions receivable, net ( 3,319 ) ( 2,573 )

Commission receivable ( 3,889 ) ( 4,216 )

Accounts receivable ( 2,800 ) ( 1,667 )

20 unchanged sentences

Distributions to members ( 7,099 ) ( 13,163 )

( 7,099 ) ( 10,565 )

Cash derecognized upon distribution of EVO to members (see Note 2) — ( 2,229 )

Net proceeds from IPO, net of underwriting costs 200,674 —

Payment of deferred offering costs ( 7,122 ) ( 127 )

2 unchanged sentences

Payment of deferred acquisition payable ( 847 ) ( 8 )

( 645 ) ( 3 )

Net cash (used in) provided by financing activities from continuing operations

Net cash provided by (used in) financing activities from continuing operations

147,147 ( 6,086 )

Net cash used in financing activities from discontinued operation — ( 11,305 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

147,147 ( 17,391 )

See Notes to the Condensed Consolidated Financial Statements

TWFG Holding Company, LLC

Condensed Consolidated Statement of Cash Flows (continued)

(Amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

Net change in cash, cash equivalents and restricted cash from continuing operations 154,437 11,172

1 unchanged sentence

Net change in cash, cash equivalents and restricted cash 154,437 770

( 9,955 ) ( 3,207 )

Cash, cash equivalents and restricted cash from continuing operations - beginning balance 46,468 30,262

2 unchanged sentences

Cash, cash equivalents and restricted cash - ending balance 200,905 41,434

36,513 37,457

Cash, cash equivalents and restricted cash from discontinued operation - ending balance — —

18 unchanged sentences

Distribution to members $ — $ 6,260

Unpaid deferred offering costs 1,911 —

See Notes to the Condensed Consolidated Financial Statements

TWFG Holding Company, LLC

Notes to the Condensed Consolidated Financial Statements

ORGANIZATION AND BASIS OF PRESENTATION

On January 8, 2024, TWFG, Inc.

was incorporated as a Delaware corporation for the purpose of completing an initial public offering (“IPO”) and to carry on the business of TWFG Holding Company, LLC and its consolidated subsidiaries (collectively “TWFG Holding” or the “Company”).

The operations of TWFG Holding represent the predecessor to TWFG, Inc.

prior to the IPO, and the consolidated subsidiaries of TWFG Holding are described in more detail below.

was incorporated as a Delaware corporation on January 8, 2024 for the purpose of facilitating an initial public offering (“IPO”) of its 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, Inc.

completed an IPO of 11,000,000 shares of its Class A common stock (“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 condensed 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.

TWFG Holding was incorporated in October 2000 under the name RFB Interests, Inc.

On March 23, 2018, RFB Interest, Inc.

was converted to a limited liability company and its name was changed to TWFG Holding.

Prior to March 2018, TWFG Holding was 100 % owned by Bunch Family Holdings, LLC (“Bunch Holdings”).

In March 2018, TWFG Holding sold a 17.5 % ownership interest to RenaissanceRe Ventures U.S.

LLC (“RenRe”), a Delaware limited liability company.

In August 2021, RenRe sold 4.4 % of its ownership interest in TWFG Holding to GHC Woodlands Holdings LLC (“GHC” and collectively with Bunch Holdings, RenRe and TWFG, together with each of their permitted transferees, the “Pre-IPO LLC Members”).

In May 2023 (the “Effective Date”), the Company amended and restated its limited liability company agreement (“A&R LLC Agreement”) and created three classes of membership interests — Class A common units with one vote per unit, Class B common units with one vote per unit and Class C common units with 10 votes per unit.

As of the Effective Date, the original common units were automatically exchanged as follows:

• The 82.5 % ownership interest of Bunch Holdings was automatically exchanged into 100 % ownership of the Class C common units issued and outstanding, representing 82.5 % ownership interest and 97.9 % voting power.

• The 13.1 % ownership interest of RenRe was automatically exchanged into 75 % ownership of the Class B common units issued and outstanding, representing 13.1 % ownership interest and 1.6 % voting power.

• The 4.4 % ownership interest of GHC was automatically exchanged into 25 % ownership of the Class B common units issued and outstanding, representing 4.4 % ownership interest and 0.5 % voting power.

The economic interests of the unitholders before and after the unit exchange remained the same.

Bunch Holdings is the ultimate controlling owner of TWFG Holding.

On January 1, 2024, the Company issued a total of 27,689 new Class A common units to separate individuals and entities (collectively “New Owners”) in connection with separate asset purchase agreements.

See Note 4 for more information about the asset purchases .

Following the issuance of the new units, the ownership and voting power of the Company were as follows:

• Bunch Holdings held 521,000 Class C common units, representing 79.0 % ownership interest and 97.4 % voting power.

• RenRe held 83,050 Class B common units, representing 12.6 % ownership interest and 1.6 % voting power.

• GHC held 27,700 Class B common units, representing 4.2 % ownership interest and 0.5 % voting power.

• New Owners collectively held 27,689 Class A common units, representing 4.2 % ownership interest and 0.5 % voting power.

The Company’s corporate headquarters is in The Woodlands, Texas.

14 unchanged sentences

In 2023, the Company distributed its equity interest in TWICO to the owners of the Company.

TWICO became a related party to the Company post-distribution.

The Company has presented TWICO as a discontinued operation in these condensed consolidated financial statements.

See Note 11 for additional information about the discontinued operation .

See Note 12 for additional information about the related party transactions between the Company and TWICO and Note 14 for additional information about the discontinued operation .

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.

See Note 4 for more information about the asset purchases.

Reorganization Transactions

In connection with the IPO, TWFG Holding completed the following series of transactions to implement an internal reorganization on July 19, 2024, which are collectively referred to as the Reorganization Transactions.

The Pre-IPO LLC Members who retained their equity ownership in the LLC Units, following the consummation of the Reorganization Transactions are referred to as “Continuing Pre-IPO LLC Members”.

• The Company, TWFG Holding and each of the Pre-IPO LLC Members entered into the third amended and restated TWFG Holding LLC agreement (the “TWFG LLC Agreement”), which, among other things, appointed the Company as the sole managing member of TWFG Holding and modified the TWFG Holding capital structure by reclassifying the interests held by the Pre-IPO LLC Members and the New Members into a single new class of non-voting common interest units;

• TWFG, Inc.’s certificate of incorporation authorizes the issuance of three classes of common stock:

Class A Common Stock, non-economic Class B common stock (“Class B Common Stock” or “Class B Voting Stock”) and non-economic Class C common stock (“Class C Common Stock” or “Class C Voting Stock”).

Each share of Class A Common Stock entitles its holder to one vote per share on all matters submitted to a vote of the stockholders, each share of Class B Voting Stock entitles its holder to one vote per share on all matters submitted to a vote of the stockholders and each share of Class C common stock initially entitles its holder to ten votes per share on all matters submitted to a vote of the stockholders.

Each share of non-economic Class C Common Stock is 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;

• 342,362 LLC Units held by Bunch Holdings were exchanged into 342,362 shares of Class A Common Stock of the Company;

• Bunch Holdings was issued 33,893,810 shares of non-economic Class C Common Stock, RenRe was issued 5,457,417 shares of non-economic Class B Common Stock;

GHC was issued 1,820,234 shares of non-economic Class B Common Stock;

and the New Members were issued 1,819,512 shares of Class A Common Stock, each in an amount equal to the number of LLC Units previously held by each such Pre-IPO LLC Member and New Members;

• Under the TWFG LLC Agreement, the Pre-IPO LLC Members have the right, from and after the completion of the IPO, to require TWFG Holding to redeem all or a portion of their LLC Units for, at the Company’s election, newly-issued 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 redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the TWFG LLC Agreement.

Additionally, in the event of a redemption request by a holder of LLC Units, the Company may, at its option, effect a direct exchange of cash or Class A Common Stock for LLC Units in lieu of such a redemption.

Shares of non-economic Class B Common Stock or non-economic Class C Common Stock, as applicable, will be cancelled on a one -for-one basis if the Company, following a redemption request of a holder of LLC Units, redeems or exchanges LLC Units of such holder of LLC Units pursuant to the terms of the TWFG LLC Agreement.

Except for transfers to the Company pursuant to the TWFG LLC Agreement or to certain permitted transferees, the holders of LLC Units are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of non-economic Class B Common Stock or non-economic Class C Common Stock;

• The Company used the net proceeds from the IPO (including the net proceeds received from the underwriters exercising their option to purchase additional shares of Class A Common Stock) to acquire a number of newly-issued LLC Units equal to the number of shares of Class A Common Stock issued in the IPO from TWFG

Holding, at a purchase price per LLC Unit equal to the initial public offering price of Class A Common Stock after underwriting discounts and commissions;

• The Company caused TWFG Holding to use the proceeds it received from the sale of LLC Units to the Company to pay fees and expenses of approximately $ 7.8 million in connection with the IPO and the Reorganization Transactions and to repay in full outstanding debt under the Revolving Credit Agreement in the amount of $ 41.0 million.

As part of the Reorganization Transactions, the Company entered into a tax receivable agreement that obligates the Company to make payments to the Continuing Pre-IPO LLC Members and any future party to the tax receivable agreement generally equal to 85 % of the applicable cash savings that the Company actually realizes as a result of certain tax basis adjustments resulting from the purchase of LLC Units from any of the Continuing Pre-IPO LLC Members using the net proceeds from any future offering, future taxable redemptions or exchanges of LLC Units by the holders of LLC Units and from payments made under the tax receivable agreement, as well as tax benefits related to imputed interest resulting from payments made under the tax receivable agreement.

The Company retains the benefit of the remaining 15 % of these tax savings.

The corporate structure following the completion of the IPO and Reorganization Transactions, as described above, is commonly referred to as an “Up-C” structure, which is used by partnerships and limited liability companies when they undertake an IPO of their business.

The Up-C structure will allow the Continuing Pre-IPO LLC Members to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity, for income tax purposes following the IPO.

On July 19, 2024, in connection with the Reorganization Transactions, immediately prior to the IPO, 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 for consideration of $ 0.00001 per share to Bunch Holdings.

Immediately following the closing of the IPO, TWFG Holding is the predecessor of the Company for financial reporting purposes.

As sole managing member of TWFG Holding, the Company has sole authority to determine the amount and timing of distributions from TWFG Holding.

Because the Company manages and operates the business and controls the strategic decisions and day-to-day operations of TWFG Holding and also has a substantial financial interest in TWFG Holding, the Company consolidates the financial results of TWFG Holding, and a portion of the Company’s net income is allocated to the noncontrolling interests to reflect the entitlement of the Pre-IPO LLC Members to a portion of TWFG Holding’s net income.

In addition, because TWFG Holding is under the control of Bunch Holdings before and after the Reorganization Transactions, the Company accounts for the Reorganization Transactions as a reorganization of entities under common control and initially measured the assets and liabilities of TWFG Holding at their carrying amounts as of the date of the completion of these Reorganization Transactions.

Basis of Presentation

The condensed 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 TWFG Holding 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 condensed 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.

In the opinion of management, the condensed consolidated financial statements include all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position, results of operations, and cash flows for all periods presented.

The condensed consolidated financial statements reflect all adjustments necessary to present fairly the Company’s condensed consolidated financial position, results of operations, and cash flows for all periods presented.

Such adjustments are normal and recurring in nature.

Certain prior period amounts have been reclassified to conform with the current period presentation.

The Company is an emerging growth company and has elected to avail itself of the extended transition period for complying with new or revised accounting standards.

The Company is an emerging growth company and elects to avail itself of the extended transition period for complying with new or revised accounting standards.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of intangible assets, lease right-of-use assets and operating lease liabilities as of the date of the financial statements and commission income and contingent income during the reporting period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and

liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates and assumptions reflected within these condensed consolidated financial statements include, but are not limited to, revenue recognition, intangible assets, lease right-of-use assets, operating lease liabilities, and acquisitions.

Actual results could differ from those estimates as more information becomes known.

12 unchanged sentences

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 does not have any significant financing components.

Costs incurred to place a contract are expensed as incurred.

21 unchanged sentences

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.

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 constrains the recognition of contingent income until information from the insurance carrier regarding the amount owed by the insurance carriers to the Company is received and is probable to avoid reversal of contingent income in the future period.

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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 in Other income in the Condensed Consolidated Statements of Operations.

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 in Other non-operating income (expense), net in the Condensed Consolidated Statements of Operations.

These unremitted amounts are reported as Restricted cash in the Condensed Consolidated Statements of Financial Position.

Restricted cash amounting to $ 10.8 million and $ 7.2 million as of June 30, 2024 and December 31, 2023, respectively, is comprised of interest-bearing bank deposits.

Restricted cash amounting to $ 9.7 million and $ 7.2 million as of September 30, 2024 and December 31, 2023, 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.

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Similarly, the Company excludes surplus lines taxes from the measurement of the transaction price, as these are assessed by and remitted to governmental authorities.

The Company recognizes the amounts collected on behalf of others, including insureds and insurance carriers, as Accounts receivable and the associated Carrier liabilities on the Condensed Consolidated Statements of Financial Position.

The Company recognizes the amounts collected on behalf of others, including insureds and insurance carriers, as Accounts receivable and the associated Carrier liabilities on the Condensed

Consolidated Statements of Financial Position.

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.

As of June 30, 2024 and December 31, 2023, the Company reported Carrier liabilities amounting to $ 15.2 million and $ 8.7 million, respectively.

As of September 30, 2024 and December 31, 2023, the Company reported Carrier liabilities amounting to $ 13.3 million and $ 8.7 million, respectively.

Carrier liabilities are recognized based on premiums written, while Restricted cash is recorded based on premiums collected.

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The Company adopted the CECL methodology using a modified retrospective method, which requires a cumulative effect adjustment to its opening retained earnings.

Upon adoption of the CECL methodology, the Company recorded a total allowance for credit losses of $ 0.3 million,

which was primarily related to Receivables from agents, included in Other current assets, net, in the Condensed Consolidated Statements of Financial Position, and to a lesser extent, Commissions receivable.

Upon adoption of the CECL methodology, the Company recorded a total allowance for credit losses of $ 0.3 million, which was primarily related to Receivables from agents, included in Other current assets, net, in the Condensed Consolidated Statements of Financial Position, and to a lesser extent, Commissions receivable.

The allowance for credit losses is maintained on Commissions receivable and Receivables from agents, included in Other current assets, net, in the Condensed Consolidated Statements of Financial Position.

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A receivable is considered to have deteriorated in credit quality when, based on current information and events, it is probable that the Company will be unable to collect all amounts due .

As of June 30, 2024 and December 31, 2023, the total allowance for credit losses was $ 0.4 million and $ 0.3 million, respectively.

No allowance for credit losses was required related to Accounts receivable as of June 30, 2024 and December 31, 2023.

As of September 30, 2024 and December 31, 2023, the total allowance for credit losses was $ 0.4 million and $ 0.3 million, respectively.

No allowance for credit losses was required related to Accounts receivable as of September 30, 2024 and December 31, 2023.

Intangible Assets

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The acquired intangible assets are recorded at fair value, which is determined based on multiples of revenue or Adjusted EBITDA, growth rates, and loss ratios of the intangible assets acquired.

The methods and assumptions used to determine the purchase price and the estimated useful lives of intangible assets require significant judgment.

methods and assumptions used to determine the purchase price and the estimated useful lives of intangible assets require significant judgment.

Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable.

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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 Condensed Consolidated Statements of Operations.

There were no impairments recorded for the three and six months ended June 30, 2024 and 2023.

There were no impairments recorded for the three and nine months ended September 30, 2024 and 2023.

Property and Equipment

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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 three and six months ended June 30, 2024 and 2023.

There were no impairments recorded for the three and nine months ended September 30, 2024 and 2023.

Assets for disposal are reported at the lower of the carrying value or fair value, less costs to sell.

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Deferred offering costs, which consist of direct incremental legal, accounting, consulting, and other fees and expenses related to the IPO were capitalized in Deferred offering costs on the Condensed Consolidated Statements of Financial Position.

The deferred offering costs were offset against IPO proceeds upon the consummation of an IPO.

Deferred offering costs were $ 5.9 million and $ 2.0 million as of June 30, 2024 and December 31, 2023, respectively.

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 reclassified to additional paid-in capital to offset the IPO proceeds.

The Company had no deferred offering costs as of September 30, 2024.

Commissions Payable

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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 .

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.

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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.

The carrying amount of financial assets and liabilities reported in the Condensed Consolidated Statements of Financial Position for Cash and cash equivalents, Restricted cash, Commissions receivable, Accounts receivable, Other current assets, Commissions payable, Carrier liabilities, Accounts payable and accrued liabilities, and Other current liabilities at June 30, 2024 and December 31, 2023, approximate fair value because of the short-term duration of these instruments.

The carrying amount of financial assets and liabilities reported in the Condensed Consolidated Statements of Financial Position for Cash and cash equivalents, Restricted cash, Commissions receivable, Accounts receivable, Other current assets, Commissions payable, Carrier liabilities, and Other current liabilities at September 30, 2024 and December 31, 2023, approximate fair value because of the short-term duration of these instruments.

See Notes 6 and 8 for discussions of fair value measurements related to derivative instruments and debt.

Members’ Equity

In May 2023, the Company amended and restated its limited liability company agreement and created three classes of membership interests — Class A common units with one vote per unit, Class B common units with one vote per unit, and Class C common units with 10 votes per unit ( see Note 1 ).

Before the amendment that created the three classes of membership interests, the Company had one class of membership interest, and each unit was entitled to one vote per unit.

In December 2023, the A&R LLC Agreement was amended to provide that, to the extent permitted by applicable law and subject to any restrictions in any credit agreement, to the extent the Company had available cash, the Board of Managers would at least annually make a distribution to its members in an amount sufficient to allow each member to pay all U.S., state and local income taxes on income expected to be allocated to each member.

Under the amended A&R LLC Agreement, other than mandatory tax distributions as described above, distributions to unitholders would be made only in such amounts and at such times as determined by the Company’s Board of Managers in its sole and absolute discretion.

Distributions, if declared by the Company’s Board of Managers, would be made to all common members in proportion to their relative common units.

Upon a liquidation event, certain Class B unitholders would receive preference for any distribution or other payment, which were equivalent to their preferred liquidation amount.

Once the preferred liquidation amount was fully paid, any distribution made to common unit members would be in proportion to their relative common units, provided any such distribution to certain Class B unitholders was net of the preferred liquidation amount.

The A&R LLC Agreement was subsequently amended in connection with the reorganization transactions.

The Company is a limited liability company and has elected to be treated as a partnership for federal tax purposes.

The Company is taxed under Section 701 of the Internal Revenue Code, which provides that items of income, deductions, and credits are “passed through” and taxed at the partner level.

As a result, a provision or liability for federal income tax is not reflected in the condensed consolidated financial statements.

However, TWICO is subject to federal income tax and records a provision or liability for federal income tax purposes, which is reported in the condensed consolidated financial statements as part of the discontinued operation.

See Note 11 for additional information about the discontinued operation .

Noncontrolling Interests

Pursuant to the Reorganization Transactions, as described in Note 1, 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 redemptions for cash is solely within the control of the Company, noncontrolling interests are presented in permanent equity.

Stock-Based Compensation

The Company has granted restricted stock units (“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.

All stock-based compensation expense is recorded in salaries and employee benefits in the Condensed Consolidated Statements of Operations.

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 Class B Common Stock and Class C Common 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.

The Company is the managing member of TWFG Holding and, as a result, consolidates the financial results of TWFG Holding in the unaudited condensed 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 as a corporation and pays corporate federal, state and local taxes

with respect to income allocated from TWFG Holding, based on the Company’s ownership interest in TWFG Holding during each reporting period.

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.

Deferred tax assets and liabilities are determined based on 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.

Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.

Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

Income tax expense was $ 0.4 million for the three and nine months ended September 30, 2024.

The estimated effective tax rate was 5.96 % and 2.09 % for the three and nine months ended September 30, 2024, respectively, 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.

Additionally, 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.

The Company has determined there are no material uncertain tax positions as of September 30, 2024.

The Company operates its business as a single operating and reportable segment, which is consistent with how its chief operating decision maker (“CODM”) reviews financial performance and allocates resources.

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Segment Reporting

In November 2023, the FASB issued an accounting standard that is intended to improve reportable segment disclosure requirements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that is intended to improve reportable segment disclosure requirements.

The standard requires disclosures to include significant segment expenses that are regularly provided to the CODM, a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

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The Company intends to adopt the new standard in its annual consolidated financial statements as of and for the year ending December 31, 2024.

The Company expects the adoption of the standard to have a material impact on its disclosures;

The Company expects the adoption of the standard to have an impact on its disclosures;

however, the standard will not have an impact on its Condensed Consolidated Statements of Financial Position, Operations or Cash Flows.

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The following table presents the disaggregation of revenues by major source (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Commission income $ 48,240 $ 43,993 $ 139,447 $ 122,451

$ 48,662 $ 41,771 $ 91,207 $ 78,458

Contingent income 1,383 1,035 3,717 3,023

1,258 1,003 2,334 1,988

933 521 1,446 1,076

1,220 843 2,351 1,310

444 660 959 1,535

92 184 165 315

657 394 1,117 550

Policy fees 1,064 580 2,510 1,656

Branch fees 1,172 824 3,523 2,134

License fees 495 555 1,454 2,090

TPA fees 159 148 324 463

Other income 2,127 575 3,244 1,125

Total revenues

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The following table presents the disaggregation of revenues by offerings (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Agency-in-a-box $ 34,000 $ 35,895 $ 100,418 $ 102,539

$ 34,589 $ 35,145 $ 66,418 $ 66,644

Corporate Branches 9,234 1,755 25,861 4,259

9,351 1,568 16,627 2,504

8,884 7,953 15,723 14,879

442 710 811 1,205

TWFG MGA 9,490 9,538 25,213 24,417

Other 1,916 522 2,727 1,727

Total revenues

$ 54,640 $ 47,710 $ 154,219 $ 132,942

As of June 30, 2024 and December 31, 2023, the Commissions receivable reported in the Condensed Consolidated Statements of Financial Position had a balance of $ 22.4 million and $ 19.1 million, respectively, and had an opening balance of $ 15.0 million as of January 1, 2023.

As of June 30, 2024, the aging of Commissions receivable is 62.7 % for current, 10.6 % for 31-60 days and the remainder is over 61 days.

As of September 30, 2024 and December 31, 2023, the Commissions receivable reported in the Condensed Consolidated Statements of Financial Position had a balance of $ 22.9 million and $ 19.1 million, respectively, and had an opening balance of $ 15.0 million as of January 1, 2023.

As of September 30, 2024, the aging of Commissions receivable is 61.9 % for current, 6.7 % for 31-60 days and the remainder is over 61 days.

As of December 31, 2023, the aging of commissions receivable is 73.2 % for current, 8.8 % for 31-60 days and the remainder is over 61 days.

The Company has no contract liabilities as of June 30, 2024, December 31, 2023, and January 1, 2023.

Other than The Progressive Corporation, which accounted for 13 % and 12 % of total revenues for the three and six months ended June 30, 2024, respectively, and 14 % and 13 % of total revenues for the three and six months ended June 30, 2023, respectively, no other customers individually accounted for 10% or more of the Company’s total revenues for the three and six months ended June 30, 2024 and 2023.

The Company has no contract liabilities as of September 30, 2024, December 31, 2023, and January 1, 2023.

Other than The Progressive Corporation, which accounted for 11 % and 12 % of total revenues for the three and nine months ended September 30, 2024, respectively, and 10 % and 11 % of total revenues for the three and nine months ended September 30, 2023, respectively, no other customers individually accounted for 10% or more of the Company’s total revenues for the three and nine months ended September 30, 2024 and 2023.

INTANGIBLE ASSETS

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(“Kincaid”), which resulted in the Company recording an increase in customer lists intangible assets of $ 11.8 million.

In December 2023, the Company purchased the assets of Brinson, Inc.

2023, the Company purchased the assets of Brinson, Inc.

(“Brinson”), which resulted in the Company recording an increase in customer lists intangible assets of $ 2.0 million.

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The Company issued equity and paid cash amounting to $ 20.4 million in settlement for the total purchase price.

In addition to the acquisitions described above, the Company purchased customer lists intangible assets totaling $ 0.8 million for the six months ended June 30, 2024 and $ 0.9 million for the year ended December 31, 2023, representing purchases of assets with annualized revenue of less than $ 0.5 million.

In addition to the acquisitions described above, the Company purchased customer lists intangible assets totaling $ 0.9 million for the nine months ended September 30, 2024 and $ 0.9 million for the year ended December 31, 2023, representing purchases of assets with annualized revenue of less than $ 0.5 million.

The following table presents information about the Company’s intangible assets (in thousands):

June 30, 2024 December 31, 2023

Customer Lists

Computer Software

Non-Compete Agreements

Customer Lists Computer Software Non-Compete Agreements Total

September 30, 2024 December 31, 2023

Customer Lists Computer Software Non-Compete Agreements Total Customer Lists Computer Software Non-Compete Agreements Total

Balance, beginning of period $ 48,997 $ 7,858 $ 275 $ 57,130 $ 29,177 $ 8,472 $ 275 $ 37,924

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Accumulated amortization 22,765 6,432 268 29,465 14,779 5,684 231 20,694

20,090 6,191 264 26,545 14,779 5,684 231 20,694

Net carrying amount, end of period

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Customer Lists Computer Software Non-Compete Agreements Total Customer Lists Computer Software Non-Compete Agreements Total

Three Months Ended June 30,

Three Months Ended September 30,

Amortization expense $ 2,675 $ 240 $ 5 $ 2,920 $ 796 $ 253 $ 29 $ 1,078

$ 2,648 $ 252 $ 4 $ 2,904 $ 756 $ 285 $ 29 $ 1,070

Six Months Ended June 30,

Nine Months Ended September 30,

Amortization expense $ 7,986 $ 747 $ 38 $ 8,771 $ 2,162 $ 894 $ 87 $ 3,143

$ 5,311 $ 507 $ 33 $ 5,851 $ 1,366 $ 641 $ 58 $ 2,065

(1) The acquired customer lists in 2024 and 2023 have a weighted average amortization period of 8 years.

(2) For both the three and six months ended June 30, 2024, $ 0.06 million gain on sale of customer lists was recognized by the Company.

For both the three and six months ended June 30, 2023, $ 0.01 million loss on sale of customer lists was recognized by the Company.

The following table presents the future amortization for intangible assets as of June 30, 2024 (in thousands):

(2) For the three and nine months ended September 30, 2024, the Company recognized $ 0.02 million and $ 0.08 million gain on sale of customer lists, respectively.

For both the three and nine months ended September 30, 2023, $ 0.01 million loss on sale of customer lists was recognized by the Company.

The following table presents the future amortization for intangible assets as of September 30, 2024 (in thousands):

Customer Lists Computer Software Non-Compete Agreements

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The following table summarizes the Company’s lease costs and supplemental cash flow information related to its operating leases (dollar amounts in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Total lease costs $ 286 $ 188 $ 885 $ 528

Weighted average remaining lease term (in years) 3.2 3.8

Weighted average remaining lease term (in years) 3.0 years 3.5 years

Weighted average discount rate 3.49 % 2.69 %

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Operating lease non-cash items:

Non-cash right-of-use assets obtained in exchange for new operating lease liabilities $ 41 $ 504 $ 808 $ 526

The estimated future minimum payments of operating leases as of June 30, 2024 (in thousands):

Non-cash right-of-use assets obtained in exchange for new operating lease liabilities, net of terminations $ 116 $ ( 89 ) $ 924 $ 459

The estimated future minimum payments of operating leases as of September 30, 2024 (in thousands):

Remainder of 2024 $ 291

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At inception, the Company designated the interest rate swap agreements as cash flow hedges.

As of June 30, 2024 and December 31, 2023, the interest rate swaps continue to be effective hedges.

The original notional amount of the interest rate swaps as of both June 30, 2024 and December 31, 2023 was $ 17.0 million.

The current notional amount of the interest rate swaps as of June 30, 2024 and December 31, 2023 was $ 7.0 million and $ 8.4 million, respectively.

The fair value of the interest rate swaps as of both June 30, 2024 and December 31, 2023 was $ 0.5 million, which was included in Other non-current assets, except for the portion that relates to maturities within the next twelve months.

The derivative assets fair value as of June 30, 2024 and December 31, 2023 was determined using the Level II inputs described in Note 2.

The maturity dates for the interest rate swaps are July 30, 2024 and December 6, 2027, which correspond with the debt maturity dates.

As of June 30, 2024, the Company expects $ 0.3 million of unrealized gains from the interest rate swaps to be reclassified into earnings over the next twelve months.

The interest rate swap agreement entered on July 30, 2019 with the original notional amount of $ 4.0 million matured on July 30, 2024.

As of September 30, 2024 and December 31, 2023, the interest rate swaps continue to be effective hedges.

The original notional amount of the interest rate swaps as of September 30, 2024 and December 31, 2023 was $ 13.0 million and $ 17.0 million, respectively.

The current notional amount of the interest rate swaps as of September 30, 2024 and December 31, 2023 was $ 6.4 million and $ 8.4 million, respectively.

The fair value of the interest rate swaps as of September 30, 2024 and December 31, 2023 was $ 0.3 million and $ 0.5 million, respectively, which was included in Other non-current assets, except for the portion that relates to maturities within the next twelve months.

The derivative assets fair value as of September 30, 2024 and December 31, 2023 was determined using the Level II inputs described in Note 2.

The maturity date for the current interest rate swap is December 6, 2027, which correspond with the debt maturity date.

As of September 30, 2024, the Company expects $ 0.2 million of unrealized gains from the interest rate swap to be reclassified into earnings over the next twelve months.

OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following as of the dates indicated (in thousands):

September 30, 2024 December 31, 2023

Accrued salaries and bonus expenses $ 2,264 $ 522

Accrued professional fees 914 605

Accounts payable 768 1,566

Income tax payable 437 —

Other current liabilities

$ 6,908 $ 5,006

The following is a summary of the Company’s outstanding debt (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

5 -year term loan, periodic interest and monthly principal payments, Daily Simple SOFR + 0.11448 % SOFR adjustment, matures July 30, 2024

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5 -year revolving credit facility, periodic interest payments, Term SOFR + 0.10 % SOFR adjustment + 2 % up to 2.75 % applicable margin based on the consolidated leverage ratio, plus commitment fees of 0.20 % up to 0.35 % based on the consolidated leverage ratio, matures May 23, 2028

41,000 41,000

Deferred acquisition payable 1,430 1,381

49,633 50,737

Current maturities

2 unchanged sentences

$ 5,414 $ 47,956

Future maturities of the Company’s outstanding debt as of June 30, 2024, were as follows (in thousands):

Future maturities of the Company’s outstanding debt as of September 30, 2024, were as follows (in thousands):

Remainder of 2024

For the three and six months ended June 30, 2024, the Company incurred interest expense of $ 0.9 million and $ 1.7 million, respectively.

For the three and six months ended June 30, 2023, the Company incurred interest expense of $ 0.2 million and $ 0.3 million, respectively.

The 5-year term loan was entered into on July 30, 2019, with the original principal of $ 4.0 million, while the 7-year term loan was entered into on December 4, 2020, with the original principal of $ 13.0 million.

Thereafter 60

For the three and nine months ended September 30, 2024, the Company incurred interest expense of $ 0.4 million and $ 2.1 million, respectively.

For the three and nine months ended September 30, 2023, the Company incurred interest expense of $ 0.3 million and $ 0.6 million, respectively.

The 5-year term loan was entered into on July 30, 2019, with the original principal of $ 4.0 million, which was fully repaid by its maturity on July 30, 2024, while the 7-year term loan was entered into on December 4, 2020, with the original principal of $ 13.0 million.

The Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations related to its term loans.

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Revolving Credit Agreement

On May 23, 2023, the Company entered into a Revolving Credit Agreement with PNC Bank National Association (“Lender”) which provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $ 50.0 million (as amended on June 20, 2024, the “Revolving Facility”).

On May 23, 2023, the Company entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank National Association (“Lender”) which provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $ 50.0 million (as amended on June 20, 2024, the “Revolving Facility”).

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.

As of both June 30, 2024 and December 31, 2023, the unused capacity under the Revolving Facility was $ 9.0 million.

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).

As of September 30, 2024 and December 31, 2023, the unused capacity under the Revolving Facility was $ 50.0 million and $ 9.0 million, respectively.

Borrowings under the term loans and the Revolving Facility are secured by substantially all assets constituting personal property of TWFG, Inc.

and its subsidiaries, including receivables, inventory, equipment, and intellectual property, subject to certain exceptions.

In addition, the term loan agreement 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 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 requires the Company to maintain certain financial ratios.

As of June 30, 2024 and December 31, 2023, the Company was in compliance with these covenants.

Because the Company’s term loans and borrowings under the Revolving Facility have variable interest rates, the outstanding debt as of June 30, 2024 and December 31, 2023 approximates fair value.

As of September 30, 2024 and December 31, 2023, the Company was in compliance with these covenants.

Because the Company’s term loans and borrowings under the Revolving Facility have variable interest rates, the outstanding debt as of September 30, 2024 and December 31, 2023 approximates fair value.

Acquisition-Related Notes

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See Notes 4 and 12 for more information regarding the purchase of the customer list intangible assets.

STOCKHOLDERS’ EQUITY

The Company’s board of directors (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, non-economic Class B Common Stock and non-economic Class C Common Stock, and preferred stock.

As described in Note 1, 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.

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 September 30, 2024:

Authorized Par Value Issued & Outstanding Votes per share Economic Rights

Preferred Stock 50,000,000 $ 0.01 None

Common stock:

300,000,000 $ 0.01 14,811,874 1 Yes

100,000,000 $ 0.00001 7,277,651 1 No

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 September 30, 2024, 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 September 30, 2024:

Ownership percentage

14,811,874 26.5 %

Noncontrolling interests

41,171,461 73.5 %

55,983,335 100.0 %

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 does not incur significant federal, state or local income taxes, as these taxes are primarily the obligations of its members.

Under the TWFG 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 TWFG Holding’s taxable earnings.

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.

Prior to the IPO, TWFG Holding made tax distributions to its members totaling approximately zero and $ 6.1 million for the three and nine months ended September 30, 2024, respectively.

STOCK-BASED COMPENSATION

2024 Omnibus Incentive Plan

On July 17, 2024, the Company adopted the 2024 Omnibus Incentive Plan (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, subject to annual increases pursuant to the terms of the 2024 Incentive Plan.

During the nine months ended September 30, 2024, the Company granted 429,190 RSUs under the 2024 Incentive Plan, and 3,917,477 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.

Stock-Based Compensation Expense

Stock-based compensation expense recorded in salaries and employee benefits for the three and nine months ended September 30, 2024 was $ 1.0 million.

There was no equity or equity-based compensation plan maintained by the Company prior to its IPO on July 19, 2024.

See Note 1 for more information about the IPO.

Stock-Based Awards

Stock-based awards granted in the period include RSUs with service-based vesting conditions.

Outstanding RSUs and related activity for the nine months ended September 30, 2024 were as follows:

Number of Awards Weighted-Average Grant Date

Unvested balance - December 31, 2023 — $ —

Granted 429,190 17.00

Converted to shares of Class A Common Stock upon vesting

Forfeited ( 1,938 ) 17.00

Unvested balance - September 30, 2024

427,252 $ 17.00

As of September 30, 2024, the Company had $ 6.2 million of unrecognized stock-based compensation costs related to unvested RSUs, which is expected to be recognized over a weighted-average period of 1.8 years.

DEFINED CONTRIBUTION PLAN

TWFG Holding sponsors a Safe Harbor defined contribution pension plan (“the 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.

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The Plan provides a Company matching of 100 % on the first 4 % of eligible compensation that a participant contributes to the Plan.

For the three and six months ended June 30, 2024, the Company recognized expenses related to the Plan of $ 0.2 million and $ 0.3 million, respectively.

For the three and six months ended June 30, 2023, the Company recognized expenses related to the Plan of $ 0.1 million and $ 0.2 million, respectively.

For the three and nine months ended September 30, 2024, the Company recognized expenses related to the Plan of $ 0.2 million and $ 0.4 million, respectively.

For the three and nine months ended September 30, 2023, the Company recognized expenses related to the Plan of $ 0.1 million and $ 0.2 million, respectively.

The Company at its election may make discretionary profit share contributions.

Contributions are subject to certain limitations.

For the three and six months ended June 30, 2024 and 2023, the Company elected not to make any additional discretionary contributions.

For the three and nine months ended September 30, 2024 and 2023, the Company elected not to make any additional discretionary contributions.

RELATED PARTY TRANSACTIONS

TWFG provides administration services to and pays expenses on behalf of its subsidiaries as part of its management agreement with its subsidiaries.

The Company provides administration services to and pays expenses on behalf of its subsidiaries as part of its management agreement with its subsidiaries.

These expenses are allocated to the subsidiaries based on the time expended by employees in each subsidiary.

For the three and six months ended June 30, 2024, the Company allocated general and administrative expenses related to the continuing operations totaling $ 1.2 million and $ 2.2 million, respectively.

For the three and six months ended June 30, 2023, the Company allocated general and administrative expenses related to the continuing operations totaling $ 1.0 million and $ 2.0 million, respectively.

For the three and nine months ended September 30, 2024, the Company allocated general and administrative expenses related to the continuing operations totaling $ 1.7 million and $ 3.9 million, respectively.

For the three and nine months ended September 30, 2023, the Company allocated general and administrative expenses related to the continuing operations totaling $ 0.9 million and $ 2.9 million, respectively.

These amounts are eliminated in the Condensed Consolidated Statements of Operations.

TWICO pays TWFG-GA commissions and fee income, i.e., policy fees and TPA fees, for business written through TWFG-GA.

For the three and six months ended June 30, 2024, TWFG-GA earned $ 1.9 million and $ 3.0 million in commissions, respectively, and $ 0.5 million and $ 0.9 million in fee income, respectively, from TWICO.

For the three and six months ended June 30, 2023, TWFG-GA earned $ 0.9 million and $ 1.9 million in commissions, respectively and $ 0.4 million and $ 0.8 million in fee income, respectively, from TWICO.

On September 1, 2024, 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 18 % to 20 % 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 Board pursuant to the Company’s Related Party Transaction Approval Policy and approved by Texas Department of Insurance.

For the three and nine months ended September 30, 2024, TWFG-GA earned $ 3.0 million and $ 6.0 million in commissions, respectively, and $ 0.9 million and $ 1.8 million in fee income, respectively, from TWICO.

For the three and nine months ended September 30, 2023, TWFG-GA earned $ 1.2 million and $ 3.1 million in commissions, respectively, and $ 0.4 million and $ 1.3 million in fee income, respectively, from TWICO.

These amounts are not eliminated and are included in commission income and fee income in the Condensed Consolidated Statements of Operations.

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 three and six months ended June 30, 2024 and 2023, the Company

allocated general and administrative expenses related to TWICO, which were immaterial.

For the three and nine months ended September 30, 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 Condensed Consolidated Statements of Operations.

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Prior to the deconsolidation of EVO, charges between the Company and EVO were eliminated upon consolidation.

For the three and six months ended June 30, 2024, the Company incurred $ 0.4 million and $ 0.9 million in license fees, respectively, and allocated general and administrative expenses related to EVO, totaling $ 0.08 million and $ 0.1 million, respectively.

For both the three and six months ended June 30, 2023, the Company incurred $ 0.2 million in license fees, and allocated general and administrative expenses related to EVO, totaling $ 0.08 million.

For the three and nine months ended September 30, 2024, the Company incurred $ 0.5 million and $ 1.4 million in license fees, respectively, and allocated general and administrative expenses related to EVO, totaling $ 0.1 million and $ 0.2 million, respectively.

For the three and nine months ended September 30, 2023, the Company incurred $ 0.3 million and $ 0.5 million, respectively, in license fees, and allocated general and administrative expenses related to EVO,

totaling $ 0.09 million and $ 0.2 million, respectively.

These amounts are not eliminated and are included in Other administrative expenses in the Condensed Consolidated Statements of Operations.

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Griffin Highline Capital, LLC, through its wholly-owned subsidiary, GHC Woodlands Holdings LLC, has been an investor in the Company since 2021, and is represented on the Company’s Board of Managers.

NET INCOME PER UNIT

As discussed in Note 1, in May 2023, the Company amended and restated its limited liability company agreement, which resulted in the automatic exchange of all outstanding membership interests into three classes of membership interests.

The economic interests of the unitholders before and after the unit exchange remained the same.

As a result, to calculate the net income per unit, the Company retrospectively reflected the impact of the unit exchanges effective January 1, 2023.

See Notes 1 and 2 for additional discussions regarding the unit exchange and the rights under each class.

The following table illustrates the computation of basic and diluted net income per unit (amounts in thousands, except units and per unit data):

Three Months Ended June 30, 2024

Basic Diluted

Class A Class B Class C Class A Class B Class C

$ 291 $ 1,162 $ 5,465 $ 291 $ 1,162 $ 5,465

Weighted average units used in the computation of net income per unit

27,689 110,750 521,000 27,689 110,750 521,000

Net income per unit

$ 10.49 $ 10.49 $ 10.49 $ 10.49 $ 10.49 $ 10.49

Three Months Ended June 30, 2023

Basic Diluted

Class A Class B Class C Class A Class B Class C

$ — $ 1,239 $ 5,828 $ — $ 1,239 $ 5,828

Weighted average units used in the computation of net income per unit

0 110,750 521,000 0 110,750 521,000

Net income per unit $ — $ 11.19 $ 11.19 $ — $ 11.19 $ 11.19

Six Months Ended June 30, 2024

Basic Diluted

Class A Class B Class C Class A Class B Class C

$ 569 $ 2,275 $ 10,703 $ 569 $ 2,275 $ 10,703

Weighted average units used in the computation of net income per unit

27,689 110,750 521,000 27,689 110,750 521,000

Net income per unit $ 20.54 $ 20.54 $ 20.54 $ 20.54 $ 20.54 $ 20.54

Six Months Ended June 30, 2023

Basic Diluted

Class A Class B Class C Class A Class B Class C

Net income from continuing operations

$ — $ 2,181 $ 10,258 $ — $ 2,181 $ 10,258

Weighted average units used in the computation of net income per unit

— 110,750 521,000 — 110,750 521,000

Net income from continuing operations per unit

$ — $ 19.69 $ 19.69 $ — $ 19.69 $ 19.69

Net loss from discontinued operation, net of tax

$ — $ 146 $ 688 $ — $ 146 $ 688

Weighted average units used in the computation of net income per unit

— 110,750 521,000 — 110,750 521,000

Net loss from discontinued operation per unit

$ — $ 1.32 $ 1.32 $ — $ 1.32 $ 1.32

$ — $ 2,327 $ 10,946 $ — $ 2,327 $ 10,946

Weighted average units used in the computation of net income per unit

EARNINGS PER SHARE

For the three and nine months ended September 30, 2024, 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, 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 this 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.

The following tables set forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2024 (in thousands, except share and per share amounts):

Three Months Ended

September 30, Nine Months Ended

September 30,

Net income attributable to TWFG, Inc.

(basic and diluted) $ 1,154 $ 1,154

Weighted average common stock outstanding (basic) 14,722,685 14,722,685

Effect of potentially dilutive securities:

167,697 167,697

Net income per unit

Weighted average common stock outstanding (diluted) 14,890,382 14,890,382

Earnings per share

Basic $ 0.08 $ 0.08

Diluted $ 0.08 $ 0.08

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) are determined based on the treasury stock method.

The Company excluded the following potential shares, presented based on amounts outstanding at each period end, from the computation of diluted weighted average shares outstanding for the periods indicated because including them would have had an antidilutive effect:

Three Months Ended

September 30, Nine Months Ended

September 30,

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

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The following is a reconciliation of the amounts of major classes of income from operations classified as discontinued operation in the Consolidated Statement of Operations (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Revenue $ — $ — $ — $ 1,240

Operating expenses — — — 450

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SUBSEQUENT EVENTS

We have evaluated subsequent events through August 30, 2024, the issuance date and determined that no events have occurred that require disclosure other than the events listed below.

Initial Public Offering

On July 19, 2024, TWFG, Inc.

completed its IPO of 11,000,000 shares of 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 in connection with the underwriters’ full exercise of their option to purchase additional shares.

received approximately $ 194.1 million of net proceeds from the IPO, including from the full exercise of the underwriters’ option, after deducting underwriting discounts and commissions and estimated offering expenses.

Immediately following the completion of the IPO and related reorganization transactions, TWFG, Inc.

held an approximately 26.5 % interest in the Company.

Also on July 19, 2024, in connection with the reorganization transactions immediately prior to the IPO, TWFG, Inc.

issued (i) 2,161,874 shares of its Class A common stock in exchange for units in TWFG Holding, (ii) 7,277,651 shares of its Class B common stock for consideration of $ 0.00001 per share and (iii) 33,893,810 shares of its Class C common stock for consideration of $ 0.00001 per share to members of TWFG Holding.

Revolving Credit Facility Repayment

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.

We have evaluated subsequent events through November 13, 2024, the issuance date and determined that no events have occurred that require disclosure other than the events listed below.

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 is anticipated to commence 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.

The total future minimum lease payments related to the Lease are approximately $ 2.6 million.

In addition, the Lease provides for additional rent for operating expenses under the terms of the Lease.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements