Baldwin won’t comment on market rumors
The Baldwin Group held its second-quarter 2026 earnings call on July 30. Here are the key takeaways.
Baldwin won’t comment on market rumors
Reports have suggested that Baldwin is exploring capital-structure alternatives, including a potential leveraged buyout. The company acknowledged the reports at the beginning of its earnings call but declined to confirm, deny or discuss them.
“Before I turn it over to Brad, I want to acknowledge the rumors in the marketplace around our potential exploration of capital structure alternatives. Consistent with how we’ve operated in the past, we do not comment on market rumors or speculation and will not be addressing related questions today.”
Baldwin believes its shares are undervalued
While declining to discuss a potential transaction, Baldwin said its intrinsic value exceeds its current market value. The company repurchased approximately 4 million shares for $80 million during the second quarter, bringing its use of the $250 million authorization to approximately 50%.
“To be very clear, we view intrinsic value to be in excess of where the shares trade today.”
Further buybacks are constrained by leverage
Baldwin ended the quarter with net leverage of approximately 4.5 times, the top of its communicated range. Management said the company is not currently able to continue repurchasing shares and will weigh any future activity against its leverage position.
“At the current time, we’re not in a position to continue that repurchase program.”
Reported organic growth doesn’t tell Baldwin’s preferred story
Baldwin reported organic revenue growth of 2%, but management said growth would have been 8% after including its three January partnerships on a comparable basis and excluding accounting and integration-related headwinds.
“Taking a step back to look at the underlying momentum in the IAS business, including the contribution from our new partnerships, and excluding the idiosyncratic noise associated with the revenue recognition accounting change and integration-related revenue impacts, organic revenue growth would have been 8% in the second quarter.”
The CAC combination is producing faster growth than expected
CAC generated $94 million in second-quarter revenue, up 23% from the prior-year period. It booked more than $80 million in new business during the first half, including wins across private equity, financial lines and complex public-company accounts.
“The thesis supporting the CAC merger is playing out in a faster and more meaningful way than we anticipated.”
The CAC integration also caused some revenue attrition
Aligning practice leadership, compensation and go-to-market responsibilities resulted in a small group of employees leaving Baldwin. The company tied approximately $8 million in annualized revenue attrition to those departures and expects a $4 million to $5 million impact during the second half.
“When you do that, certain people aren’t going to necessarily get the same opportunity that they want, and that’s normal.”
Commercial property is “deeply soft”
Rate and exposure reduced Insurance Advisory Solutions’ organic growth by 240 basis points during the quarter. Baldwin expects that pressure to ease after the second quarter, largely because the period contained a greater concentration of catastrophe-exposed property renewals.
“While casualty rates on an absolute basis are positive, they are ebbing. Property is very deeply soft.”
BRIE is beginning to produce new economics
Baldwin’s reciprocal insurance exchange, BRIE, is licensed in 13 states and has begun migrating business outside Texas. Its attorney-in-fact fees equal approximately 5% of earned premium, with Baldwin entitled to roughly two-thirds based on its ownership interest.
Baldwin sees mortgage and builder insurance as winner-takes-most markets
The company said its embedded mortgage business with Fairway Independent Mortgage is tracking ahead of plan. It is also integrating Hippo’s homebuilder distribution operation into Westwood and expects to launch a second proprietary builder program with Hippo and Spinnaker by year-end.
“We continue to think that it’s a winner takes most type opportunity in both the mortgage and the builder space.”
Baldwin says its AI is operating beyond the pilot stage
Baldwin has processed more than 47,000 tasks through its AI-supported operating model over 17 weeks, initially achieving quality above 98% and more recently exceeding 99%. It has also standardized 27 processes across commercial insurance and employee benefits.
“The model is running at production scale, not pilot scale.”
AI reduced the cost of direct-bill reconciliation
Baldwin said its AI deployment increased monthly direct-bill reconciliation from approximately 90% to 98%. Annual run-rate costs fell from $3 million to $1 million, while internal labor costs declined from $1.2 million to approximately $400,000.
“We’ve been able to reduce run rate costs from $3 million to $1 million a year to execute on that and cut our own internal labor costs on the process from $1.2 million to roughly $400,000.”
Baldwin remains committed to its 3B/30 target
The 3B/30 program targets $3 billion in revenue and a 30% adjusted EBITDA margin. Baldwin expects to finish 2026 with approximately $2 billion in revenue and believes acquisitions, organic growth and AI-enabled productivity will provide the path toward its goal.
“We continue to feel really good about the path to 3B/30.”
