TWFG - Earnings Call - Q1 2025
May 14, 2025
Executive Summary
- Q1 2025 delivered double‑digit top-line growth and margin expansion: revenues $53.8M (+16.6% YoY), Adjusted EBITDA $12.2M (+35.3% YoY) with Adjusted EBITDA margin 22.6%.
- TWFG raised full‑year 2025 guidance across all key metrics: organic revenue growth to 12–16% (from 11–16%), Adjusted EBITDA margin to 20–22% (from 19–21%), and total revenues to $240–$255M (from $235–$250M).
- Consensus vs. reported: Q1 Primary EPS beat ($0.16 vs $0.146)* and revenue beat ($53.8M vs $53.16M); EBITDA missed vs SPGI EBITDA consensus ($8.9M actual vs $11.1M), while company Adjusted EBITDA was $12.2M.
- Operating momentum underpinned by broader carrier capacity stabilization, 17 gross branch additions, and expansion into New Hampshire; consolidated retention normalized to 88%.
- Near‑term stock reaction catalysts: guidance raise, sustained organic growth (14.3%), improving contingency economics and carrier loss ratios, and early traction from GEICO distribution expansion in additional states.
What Went Well and What Went Wrong
What Went Well
- Robust growth and margin expansion: revenues +16.6% YoY to $53.8M; Adjusted EBITDA +35.3% YoY to $12.2M; margin expanded to 22.6%.
- Strategic footprint expansion and recruiting momentum: “completed the acquisition of two new corporate locations… expanded into New Hampshire, and added 17 branches across the U.S.”.
- CEO tone confident on market normalization: “Personal lines continues to soften and carrier capacity remains stable… retention rates… normalized to our historic average of 88% this quarter.”.
What Went Wrong
- Commission expense growth outpaced commission income due to business growth and prior-year one‑time benefits rolling off: commission expense +20.3% to $31.8M vs commission income +14.7% to $48.8M.
- Public company cost ramp (audit, consulting, IT) elevated OpEx; other administrative expenses +50.9% YoY to $4.7M; management noted expenses will increase further as compliance infrastructure scales.
- Retention lower YoY on normalization and mix shift: consolidated retention 88% vs 94% prior year; MGA retention 82% (81% prior year); Insurance Services retention 88% (97% prior year).
Transcript
Operator (participant)
Good day, ladies and gentlemen. Welcome to the TWFG First Quarter 2025 Earnings Conference Call. Today's call is being recorded. A replay will be available on our investor relations page following the conclusion of the call. Before we begin, please note that today's remarks may contain forward-looking statements and references to non-GAAP financial measures. Please refer to our press release and SEC filings for a discussion of risk factors and reconciliations to GAAP measures. I'd now like to turn the conference over to Gordy Bunch, Chief Executive Officer. Sir, please begin.
Gordy Bunch (CEO)
Thank you, Operator, and good morning, everyone. I appreciate you taking time to join us today. Joining me is Janice Zwinggi, our Chief Financial Officer. After our remarks, we'll open the call for your questions. First, I want to thank all of our employees, agents, carrier partners, and clients for their ongoing support. Their hard work and loyalty continue to drive our success. TWFG started 2025 with strong momentum. We delivered total revenue growth of 16.6% to $53.8 million, organic revenue growth of 14.3%, and expanded adjusted EBITDA margins to 22.6%. Total written premiums rose 15.5% to $371 million, reflecting sustained strength across both new business and renewal production. Importantly, our business continues to demonstrate the scalability and resilience of our platform. Adjusted EBITDA increased 35.3% year over year to $12.2 million, reinforcing our ability to drive profitable growth even as we invest heavily in expanding our national footprint.
During the quarter, we added 17 new branch locations, expanded into New Hampshire, and completed two new corporate acquisitions in Ohio and Texas. The new locations are in line with our acquisition expectations for both revenue and EBITDA. Our M&A pipeline is stronger than ever, and our branch prospect lists continue to grow. As always, it's important to note that newly onboarded agents typically take two to three years to reach full productivity. We're confident that today's investments will continue to fuel our future growth trajectory. Turning to the broader market environment, personal lines continue to soften, and carrier capacity remains stable in most geographies. The first quarter saw the Palisades and Eaton fires in California further shift the property market in that state.
TWFG has been able to navigate the difficult California property market, utilizing several core admitted carriers, added additional surplus line markets, and placing risks with the California FAIR Plan when necessary. Private passenger auto has normalized across the country, with many national markets looking to accelerate their new business growth. TWFG expanded our private passenger auto portfolio by adding GEICO to additional states. We are seeing early success with the addition of another major national private passenger auto market. We are expecting moderate rate increases in 2025, and all carriers are keeping a close eye on how potential tariffs may increase loss costs. With personal lines returning to a more stable environment, retention rates across our platform have also normalized to our historic average of 88% this quarter.
With markets opening up for growth, our growth will see more new business in the overall mix for growth, as our agents will now have more options on where to place new business and renewals. Now, I'd like to turn it over to Janice for a more in-depth discussion of our results for the quarter.
Janice Zwinggi (CFO)
Thank you, Gordy, and good morning, everyone. Before diving into the quarter results, I want to note a couple of items. One, beginning this quarter, branch conversions are no longer treated as a comparative variance. They were converted in January 2024, so year-over-year comparisons are now apples to apples. Two, interest income was moved from the revenue line down to other income, so we will be comparable to prior and future periods. Starting with our top KPI, written premium, total written premium increased by $50 million, or 15.5%, over the prior year period to $371 million. Within our primary offerings, insurance services grew $40.7 million, or 14.7%, and TWFG MGA grew $9 million, or 20.1%. This increase was a result of growth in both renewals and new business.
During the first quarter of 2025, within both of our product offerings, we saw new business growth of 26%, or $18.4 million, as well as renewal business growth of 12.5%, or $31.3 million over the prior year period. Within our insurance services offering, we saw a shift in renewal and new business growth as compared to Q1 2024. New business growth was 17%, up from 13% in Q1 2024, while renewal premium growth was more modest at 14% compared to 29% in the prior year period. The higher renewal business in the first quarter of 2024 included an initial influx of premium from the 2023 corporate store acquisitions, resulting in an elevated renewal growth rate in that period. In our MGA offering, we saw a healthy uptick in new business growth of 89%, or $8 million, over the prior year period, primarily from the expansion of the key MGA program.
Our consolidated written premium retention was 88% as compared to 94% in the prior year period. This decrease is correlated to the shift in renewal business growth, as previously discussed, and as a result of carriers moderating rate increases and opening up for new business after a period of restricted capacity and aggressive rate increases. Our total revenues increased $7.7 million, or 16.6%, over the prior year period to $53.8 million. The increase of 16.6% was mainly due to commission income, which represented 13.5% of the total growth. The remaining 3.1% included fee income of 1.7%, contingent income 1.3%, and other income of 0.1%. Commission income increased $6.2 million, or 14.7%, over the prior year period to $48.8 million, driven by new business growth and solid retention levels. Insurance services contributed 11.9% growth, or 10.4% of the total, while the MGA delivered 33.7% growth, or 4.3% of the total growth.
Contingent income increased $0.6 million, or 54.6%, over the prior year period to $1.7 million, tracking closely with our written premium growth. Fee income was up $0.8 million, or 34.9%, to $3 million, largely driven by higher policy volume from increased business in the MGA. Organic revenues increased $6.2 million, reaching $49.2 million for an organic growth rate of 14.3% compared to 13% in the prior year period, which depicts our continued success in our core business. Now turning to expenses, commission expense increased $5.4 million, or 20.3%, over the prior year period to $31.8 million. The increase represents $3.9 million, or 13.9% growth, which is consistent with commission income growth, and a one-time favorable adjustment related to the branch conversions of $1.5 million.
Total salary and benefits increased by $1.9 million, or 31.1%, over the prior year period to $8.2 million, reflecting our scale and the IPO transition, which was driven by a $1.2 million increase from the RSUs issued in connection with the IPO and the remaining $0.7 million due to the growth of business and corporate store acquisitions. Other administrative expenses increased $1.6 million, or 50.9%, over the prior year period to $4.7 million, with approximately $0.4 million related to professional and consulting fees associated with being a public company. We also had $0.3 million in increase in IT costs, $0.3 million in underwriting fees, which were due to growth, and the remaining $0.6 million was tied to ongoing growth and acquisition integration. Depreciation and amortization increased $0.3 million, or 11.5%, to $3.4 million, primarily from the branch conversions and prior corporate store acquisitions.
Net income for the quarter was $6.9 million, up 3.4% over the prior year period. Adjusted net income increased 14.3% to $9.2 million, driven by earnings growth and partially offset by higher public company costs and a $2.7 million increase in tax expense. EBITDA was $9.1 million, and adjusted EBITDA was $12.2 million, up 35.3% over the prior year period. Adjusted EBITDA margin expanded to 22.6% compared to 19.5% in Q1 2024, reflecting both top-line growth and operating leverage. While we continue to manage the ramp-up in public company costs, we are confident in our ability to expand margins further as we scale. With that, I'll turn it back over to Gordy.
Gordy Bunch (CEO)
Thanks, Janice. Looking ahead, we remain confident in our ability to deliver on our 2025 guidance. Therefore, we are modestly adjusting upward our 2025 guidance to organic revenue growth 12%-16%, adjusted EBITDA margin between 20%-22%, and total revenues between $240 million-$255 million. We are mindful of the broader macroeconomic uncertainty, including tariff discussions and interest rate sensitivities. Rather than pulling back, we are seeing increased demand for insurance options and workable solutions. Periods of economic complexity highlight the value of a trusted local advisor, and TWFG is well-positioned to support clients through those transitions. Going into the second quarter with a robust M&A pipeline, $196 million in cash on hand, and a fully available credit revolver, we retain significant balance sheet flexibility to invest where opportunities are strongest.
Our focus remains squarely on expanding our national footprint, investing in agent success, maintaining operational efficiency, and executing on our strategic growth priorities. In closing, I want to thank the entire TWFG team for their dedication and our shareholders for their ongoing support. We are energized by the opportunities ahead and confident in our ability to deliver long-term value. With that, Janice and I will be happy to open the line for questions.
Operator (participant)
Ladies and gentlemen, if you have a question or comment at this time, please press Star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press Star one one again. Again, if you have a question or comment at this time, press Star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Pablo Singzon from JPMorgan. Your line is open.
Pablo Singzon (Equity Research Analyst)
Hi, good morning. First question, is the first quarter expense fully loaded for public company costs, or do you think there could be incremental costs from here beyond the usual expenses you incurred to operate the business?
Gordy Bunch (CEO)
I'd say there will be future public company expenses as we move towards complying long-term with internal audit functions and other public-related obligations we pick up over time. The first quarter is not fully loaded with all future public company expenses.
Pablo Singzon (Equity Research Analyst)
Gotcha. Then second question, just on retention, and I know you referenced that you're sort of at the historical level, which makes sense, but what gives you comfort that retention bottoms out here, right? What I have in mind is it's a premium retention number, right? There could be some pressure from price moderation, but then maybe you're getting some offset from better per policy or per customer retention. Just sort of your perspectives on why this retention level is a good number to think about moving forward. Thanks.
Gordy Bunch (CEO)
Yeah, if you go back to last year's analyst day, this was the target we had set for our long-term average. It just took a few quarters longer for us to end up where we expected. That 88% premium retention number was our long-term average, so taking into account previous market cycles of our core personal lines portfolio. To your point, it is a softening market. That does mean rate is a little suppressed, and that gives us the ability to shift clients on their renewals into possibly favorable pricing prior to compared to their expiring term, which would lead to more client retention, but at a lower average premium. Plus, with the markets opening up in the vast majority of geographies, we're able to place more new business risks where previously the market had been constrained. We are fairly confident in that 88% premium retention number.
That's been our long-term average. Right now, that's what we're seeing. If we see anything dipping or improving, we'll make that update in the next quarterly call.
Pablo Singzon (Equity Research Analyst)
Thanks, Gordy.
Gordy Bunch (CEO)
Yep, thank you, Pablo.
Operator (participant)
Thank you. Our next question or comment comes from the line of Tommy McJoynt from KBW. Your line is open.
Tommy McJoynt (Director of Equity Research)
Hey, good morning, guys. Thanks for taking our questions. When we look at the commission rates, that's the commission income as a percentage of written premium. I know there's a lot of moving inputs, like the mix of surplus and mix of insurer of last resort. I guess, how would you characterize the commission rates in the quarter? Does everything sort of balance out in one Q as a good number to use going forward, or is there upside or downside in your head?
Gordy Bunch (CEO)
I would frame it as fairly stabilizing. As far as the commission rate as a percentage of premium, you're correct. When it goes to an E&S marketplace, that's going to have a lower average commission. If it goes into a state-backed insurer, that's going to have a lower average commission percentile as a percentage of premium. The market opening up on private passenger auto, you're seeing now new business incentives. You're going to see some enhanced new business compensation that will skew upward the percentage of commission relative to new business premium. On the homeowner side, you're seeing more stability around the current rates that are out there. I think it's a good indicator the first quarter. Again, as in anything, if we see anything trending differently, we'll make those adjustments in future guidance and on the next call.
Tommy McJoynt (Director of Equity Research)
Great, thanks. Then you called out the 17 branch additions in the quarter. Was that a gross number or a net number? If so, I guess just how does this compare to the outsized growth in branches that you added the last few quarters? I know that was really driven by a single carrier pulling back from operations in certain geographies. Just want to get a sense of how this compares to the prior quarters.
Gordy Bunch (CEO)
Correct. I mean, it's not really comparable to prior quarters. To your point, we had the influx of agents from a singular captive market that was being disruptive. So 2024's onboarding count was significantly above our average year of onboarding new agencies. The 17 agencies were gross, gross added, not net. We will, in any period, have agents that retire or merge into existing locations. As a reminder, the portfolios never leave. They just move into another office or a new principal steps into the position of the exiting principal. 17 was gross. That compared to first quarter of 2024, 17 new offices in the first quarter of 2025 is higher than our pre-singular carrier disruption from 2024.
Tommy McJoynt (Director of Equity Research)
Thanks. And then just last question. When we look at the full-year guidance for 2025, is there a certain amount of dollars of revenue or bottom-line EBITDA that's the inorganic contribution from acquisitions? Is there a number that we can back into from this guidance?
Gordy Bunch (CEO)
I think the guidance that we're using today is still along the lines of what we had in the analyst model as the acquisitions we've made to date follow that trend line. In the first quarter, you'll notice in the details provided, our revenue from the first two acquisitions was slightly under the projected $3 million that would have been acquired at the beginning of the calendar year. Subsequently, we've made additional acquisitions that will plug that run rate hole for the first half of calendar year 2025. What we have in our pipeline and in our queue, we believe, will satisfy the second tranche of the analyst model from July forward, which would then give us the confidence to raise the guidance that we provided in the earnings release. Supplementing that, we could have additional activity that would even take it beyond where we've already guided towards.
Today, what's in the current guidance is still the original analyst model, but with a little bit more of a confidence factor in where achieving and closing and signing transactions that are bringing that modeling into fruition.
Tommy McJoynt (Director of Equity Research)
Great. Thanks, Gordy.
Gordy Bunch (CEO)
Yep.
Operator (participant)
Thank you. Our next question or comment comes from the line of Paul Newsome from Piper Sandler. Mr. Newsome, your line is open.
Paul Newsome (Managing Director and Senior Research Analyst)
Good morning. I was hoping you could go one more time because I get this question a lot about why new additions in terms of agents for TWFG tends to become more productive a little bit slower than what appears some other distribution systems like a Goosehead would do. It is just pure agent-by-agent count. Maybe you could just talk about the model differences and why that is the case.
Gordy Bunch (CEO)
Sure.
Paul Newsome (Managing Director and Senior Research Analyst)
Did I get the question quite a bit?
Gordy Bunch (CEO)
Yeah. Off the top, the Goosehead business model is around bringing in agents that may not have as much experience as our existing salesforce that's coming into our channel. Our agents we recruit are typically coming out of a captive relationship. Take any of the national brands that have captive distribution. When those agents exit those business models, they're bound by non-compete clauses. They're under a restricted sales agreement with the prior employer. When they start with us, they're not allowed to bring over any of their clientele, which means they're starting from zero. If you go into a Goosehead franchise, many of the folks they're bringing in may not even be from insurance backgrounds as they're willing to bring in less experienced folks, train them up.
They also have their lead gen mortgage referral program that helps their newer agents launch with some referral flow from those initiatives. Our agents tend to be hunters and gatherers, ones that already have centers of influence in the marketplace. They're going to have to reposition and relaunch themselves from zero in force portfolio. It just takes a little bit more time to build up a portfolio of business when you're bound by non-competes and having to reestablish yourself.
Paul Newsome (Managing Director and Senior Research Analyst)
That's fantastic. Could you talk maybe a little bit more about the new additions of GEICO and how is that just trying to size how important adding one more product is to folks? Maybe as a corollary to that, is there potentially more to come? There's a pretty broad range of products already, I think.
Gordy Bunch (CEO)
Yeah, I think GEICO is a significant addition in having an additional market within our portfolio. We're doing commercial auto, personal lines, auto specialty lines launched in Ohio this month. What that is providing is another national branded product to our distribution at favorable pricing to our customers and at favorable commission rates that I think helps stabilize the commission reductions we've all seen over the past decade. I think new competition in the IA channel is going to create more stability around comp and also is going to incentivize other markets to come out with new business incentives, retention incentives in order for them to maintain their market share. As you guys know, GEICO's combined ratio has been excellent the last few quarters. That gives them a pricing position that is favorable.
That also will play into, as we talked to with Pablo, some of our premium retention. We'll now have another market for our customers to consider as they go into their renewals as they're seeing rate increases from other markets. Progressive and GEICO both have some pricing advantages. That gives our customers the ability to be retained, albeit at a lower average premium. I think GEICO is going to be a significant player in the IA channel. So far with us, we're seeing great early success.
Paul Newsome (Managing Director and Senior Research Analyst)
Thank you very much. Appreciate the help as always.
Gordy Bunch (CEO)
Yep.
Operator (participant)
Thank you. Our next question or comment comes from the line of Brian Meredith from UBS. Mr. Meredith, your line is now open.
Brian Meredith (Managing Director)
Hey, thanks. Morning, Gordy. A couple of ones here. First, just wanted to follow up on Pablo's questions. On the margin outlook, when should we expect some of these additional IPO expenses to start to hit? Just because as I look at the guidance, your obviously margins in the first quarter are kind of higher than when your guidance range is.
Gordy Bunch (CEO)
I think the timing is really going to be we're just now getting line of sight to our audit expenses for 2025 and the additional recommended infrastructure around those audit functions. Our future needs for infrastructure that then support compliance requirements that do not really hit us until three or four years down the road. We are working internally on building out those timetables of when are we going to be onboarding some of these additional functions that we are not currently required to have, but we will be in the out years. I think the timing of that for us, I think we want to be thoughtful and probably get to that layer level of compliance and infrastructure well in advance of the actual date we are required to do so.
I think I do not really have a great answer right now, Brian, on what timing those expenses will be incurred. We have them baked into our base forecast. Yes, we are seeing some positive variance from what we had forecasted for the first quarter from those expenses not being incurred. That is not the entire driver of why we had a margin beat. We have improved economics on contingencies that is also driving margin up. That is one of the reasons we raised the lower end of our margin going forward for 2025 guidance is there is more confidence in our ability to attain a higher margin and inclusive of absorbing those public company costs. They probably are not going to be the dragger that we probably have seen in our previous projections, but they are going to be onboarded. They are going to have some impact.
That timing of as when those come in, they will be really dependent upon the outcome of our implementation strategy we're working on with Deloitte and others to make sure we have the infrastructure we need three years from now or sooner.
Brian Meredith (Managing Director)
Gotcha. Gotcha. So there was nothing unusual in the first quarter? Because like I said, you're 2026 and your guidance is for 2020-2022. I don't recall there was any seasonality in margins?
Gordy Bunch (CEO)
No, we had an uptick in contingencies that was significant. Contingencies are directly dropped to the bottom line. I think that's indicative of the improved combined ratios we're seeing across the industry. Our profitability projections are up and we're recognizing those in the current quarter too.
Brian Meredith (Managing Director)
Great. That makes a lot of sense. Second question, Gordy, I'm just curious, as the homeowners market and maybe some of the other markets at least opens up and auto softens, should we expect the wholesale business to start MGA wholesale to start moderating the growth rates there? Is that your expectation?
Gordy Bunch (CEO)
No, I would expect that our program side will actually expand. Even as the auto market might be stabilizing, the homeowners market is still highly fragmented, especially in CAT-prone geographies. I would be looking at us leaning into those opportunities where rate and competition provide advantageous deployment of those programs.
Brian Meredith (Managing Director)
Makes sense. Thank you.
Gordy Bunch (CEO)
No problem. Thanks, Brian.
Operator (participant)
Thank you. Our next question or comment comes from the line of Mike Zaremski from BMO. Mr. Zaremski, your line is open.
Mike Zaremski (Research Analyst)
Hey, good morning. Thanks. Question on organic growth and maybe tell me why my question is maybe naive, but if I look at the branch count growth over the past year plus, last year, 27%, I think. I know this might be a gross basis, not a net, so that might be part of the answer. In one Q, if I annualize the numbers, also tracking in the low doubles. I know the folks from American National probably need to ramp up. Just on branch count growth, you get to a significant double-digit number, pricing softening, but still well into the high singles, I'm assuming. I guess why would we not plug in a higher organic growth number on a go-forward basis? What am I missing? High level.
Gordy Bunch (CEO)
Yeah. I'll just expand on the agents that came from the market that you mentioned. They're still in a straddled contracting position. They still have active agreements with the prior market. They have some restrictions in what they currently can produce. Right now, for all states except for California, those agents are restricted to personal lines only. The product that's being non-renewed out of their portfolio is their homeowners product. In some of the geographies, their private passenger auto rate and the incumbent carrier is substantially below market, which is making it more difficult for them to rewrite those policies as their property is non-renewing. They're able to replace the home elsewhere within our portfolio, but the auto may still be retaining with the incumbent marketplace. They're not the same type of agency as one that comes to us less encumbered by ongoing covenants and agreements.
As they get past certain time periods, some of those restrictions may lift. That is why we put them into the out years of being more meaningfully contributing. We have talked about this before. Using store account metrics is not a great way to model our business. We can have an existing one of these new agents come to us, and in the next two months, we can buy another agency with them and fold that into their agency in a box branch. That would skew all cohort analysis because that inbounded portfolio was not organically produced. It was acquired. We try to steer away from trying to use number of stores, number of agents. If you take our wholesale brokerage side, we may add significant numbers of wholesale brokerage agents in any kind of period. They do not produce all their business through our markets.
It is not a good metric to use agent counts or agency counts because they are not all equally yoked. They are also not all producing the same lines of business. We have some branches that are commercially oriented and only do commercial lines. We have multi-line agencies. We have personal lines-only agencies. We have some that have a financial services flair. It is not a good metric would be one reason, Mike. Really, the reason you do not take the gross numbers from last year and try to come up with a higher organic is the vast majority of those onboarded last year still have a foot in another company's camp, and they are restricted from writing all lines at the moment.
Mike Zaremski (Research Analyst)
Okay. Yeah. You gave me, okay, you gave me a lot of reasons to, I guess, walk back my comment. That's helpful. It's more of a question we get also from investors too, so it's not just coming from me. Just switching gears really quick, I know you gave a lot of color on kind of the market opening up and softening. Just Texas specific, we can see kind of a year-end loss ratio data for home. It felt like it was in kind of spitting distance of back to kind of as long as everyone gets right this year and there's not significant catastrophes, it feels like the loss ratios will get back to normal. Is that a fair comment, or are there nuances about the Texas market we should be thinking about?
Gordy Bunch (CEO)
Yeah. My expectation is Texas should be in a favorable position on property on a going forward basis as reinsurance renewals clear for 6/1 and 7/1. There probably will be some more capacity within existing markets. I still think you're going to have PML aggregate management initiatives from the major national markets. They may not come in full throttle trying to do growth on the property side. The regionals, which we have access to and one that is our own program, should have expanded capacity in the state given the improving economic conditions.
Mike Zaremski (Research Analyst)
Got it. A follow-up on Texas. There is one major national saying that they are implementing meaningfully higher deductibles on all Texas businesses. Is that a phenomenon you are seeing in your portfolio? If it is, how is it impacting kind of the, I guess, your revenues?
Gordy Bunch (CEO)
Yeah. So essentially, most of our carriers on the property side have been at 2% wind, hurricane, hail deductibles for the last several years. That's pretty much baked into the average homeowner premium across the state at this point. It started off probably a decade ago more coastally. And then as severe convective storm frequency continued to hit the outer coastal bands, that 2% wind, hurricane, hail deductible started to expand inland. It's now essentially everywhere. You have very few markets that will write a 1% wind deductible anywhere in the state. There are a few companies that will do it. But as far as our current average premium, that's pretty much baking in with a 2% wind, hurricane, hail deductible. If you're talking about a market that's trying to go in above a 2% wind, hurricane, hail deductible, probably not going to be sellable.
There's plenty of capacity at a 2% wind, hurricane, hail deductible. I would think that would be a market that would be stressed by loss of clientele given the fact that there is an open marketplace that would write that business at a lower deductible.
Mike Zaremski (Research Analyst)
Got it. That's helpful. Just lastly, a follow-up to your insights on GEICO. Thanks for those comments. I think it's surprising to some to hear kind of you feel GEICO will be a strong force within the IA channel because they're kind of a monoline carrier. It's thought that agents usually try to sell a bundle. Just curious, is there something, is it more specific to TWFG, The Woodlands, where you all just are more willing to do business with a monoline writer, or maybe you guys just work harder to find solutions than others? Or is your comment kind of a broad comment? Do you think the IA channel will embrace GEICO?
Gordy Bunch (CEO)
Yeah. So I think if you look at the IA channel in whole, bundling for an independent agency is having the client's home and auto with our agency, not necessarily a specific market that's combined. We have long been packaging Progressive auto with another homeowner's product or even Travelers' auto with another homeowner's product, especially when you get into CAT geography where most carriers do not have open capacity in CAT-prone geography. As a channel, we have always been packaging auto with a disparate home and vice versa. The programs that we have for TWFG, where we are underwriting and issuing from our MGA, have companion discounts built into that property product. We can actually bundle our TWICO program with any of our auto markets within our agency distribution.
We do have a competitive advantage there in that we can give our customers a discount on that homeowner's product with GEICO, with Progressive, with Travelers, with Allstate, with any of the markets that are in our portfolio.
Mike Zaremski (Research Analyst)
Interesting. Thank you.
Operator (participant)
Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press Star one one on your telephone keypad. We have a follow-up question from Mr. Pablo Singzon from JPMorgan. Your line is open.
Pablo Singzon (Equity Research Analyst)
Hi. Thanks for taking my follow-up. First, I just wanted to get some perspective on how much incremental expense is needed as you expand from here, just putting aside public company costs, right? Just to give a simple example, if you get 20% gross commissions from a new cohort of 100 agents, how much of that 20% would you need to spend on OpEx or CapEx or maybe even marketing to support these agents, recognizing that they're unlikely to be fully productive in day one for the reasons you've cited, Gordy? I guess what I'm really trying to get to is, is there a way to think about incremental margin you can generate for each new agent or cohort you onboard versus the all-in, I guess at this point, 20%-22%, given the number you've provided?
Gordy Bunch (CEO)
Yeah, Pablo, I'll try to answer that best as I can. For us, the onboarding of a new agency is not a profit center. We do have the internal infrastructure that is designed for ongoing adding of new locations, agents, and ongoing training of the same. Those same resources are utilized to support the existing over 500 locations and 2,000 independent agencies. It is kind of like a sunk cost on the agent onboarding activities because we are utilizing personnel across channels in order to be efficient with our resources. There is not a lot of CapEx related to onboarding of new agents. Last year, we had, or yeah, last year, we had a lot of CapEx in creating the facilities that we have now that is supportive of those initiatives.
As far as infrastructure, adding some additional business development managers that could help grow our recruiting pipeline and maybe increase the average size of our quarterly onboarding of agents, that would be more of a P&L direct expense. That would be a margin hit, but not significant in order to get the growth and additional productive units. I think the second part of your question was related to trying to get to how are we going to sustain this now, higher level EBITDA margin? Is that the gist of the question?
Pablo Singzon (Equity Research Analyst)
No. So the business model just strikes me as pretty high margin, right? To your point, you can basically, you have absorbent capacity, right? You do not necessarily have to hire one for one as you bring in 100 agents. You do not have to hire 100 more people, right? That tells me that the incremental margin for each new 100 is higher than your all-in margin was 20%-22% today. I just wanted to get some, and maybe it is a number we can talk about at this point, but just some perspective. I do think that you sort of got that, Gordy, so that was helpful. The other question, and you might have already touched on it in your answer, but I will just ask it anyway.
From a new agent perspective, right, you haven't had to do much active recruiting, in my opinion, because your profile was much more visible post-IPO, and then there's this disruption of another captive market, which is good, right? Do you think at some point Woodlands will need to spend more money and resources to onboard down? By this, what I mean, maybe you used to have business development managers, right? Maybe you need 20 more people to be located across the U.S. and be just actively recruiting. Again, is the answer that just given your infrastructure now, you think you'll be able to achieve your organic growth plans just based on what you already have?
Gordy Bunch (CEO)
I would say yes. I think it would be smart for us to expend more resources expanding our recruiting activities, especially as we've opened new geography. How impactful those expenditures would be to margin, I don't think it's going to be ultimately that margin-dilutive for the upside of adding more productive locations across a broader geography. I do think that's a smart initiative that we have in our plan down the road is to, yes, add more resources related to recruiting and developing more agencies. That goes for both wholesale brokerage, MGA operations, and agency in a box. We will be leaning into those opportunistic programs that help drive both initiatives.
We can add independent agents into our MGA brokerage channel that would actually give us line of sight to folks that may want to convert into our retail business model, as well as create a pool of potential downstream acquisitions as those independent agencies look to exit at retirement. I think you'll see investment along all those areas that should help us grow distribution continuously. That is part of our plan. I don't think it's 20 recruiters, though. I think that would be a little bit overshooting. I think it'll be more measured as we build out processes around that expanding into other geography. We did actually bring in additional recruiting resources last year. We have a position that's called a field manager.
When we talk about all those agencies that came from the carrier that we've been discussing, they had regional territorial managers that were also displaced. Those are the managers that hired, recruited, and developed the agents that we ended up onboarding last year. We have several field managers now in different geography that came in to TWFG with those agents. They're also going through that transitioning of portfolio for the personal lines market, supporting their agents and learning the new environment that we bring to the table.
I think as they get past that near-term distraction of having to rewrite and help their agents rewrite their entire property portfolios, those field manager resources can then be activated for, "Okay, now that we've stabilized your team, let's turn around now and start building additional agencies like you have for the last 10, 20, 30 years." We have added field managers in the last 12 months. They're tied to those agencies we brought in en masse. We expect some of those to turn around and start recruiting for us in those new geographies.
Pablo Singzon (Equity Research Analyst)
Great. Thanks, Gordy.
Gordy Bunch (CEO)
No problem.
Operator (participant)
Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Gordy Bunch for any closing remarks.
Gordy Bunch (CEO)
I just like to end with thank you for everybody who attended today. Thank you for all the thoughtful questions. We really are in a great position today as we head into the second quarter, well capitalized, looking at a lot of unique opportunities to help grow our organization across a broader geography. Look forward to updating everybody in our second quarter call as that comes to fruition. I just want to say thank you again to all of our analysts, carriers, clients, and TWFG family for being with us throughout the last 24.5 years. We are looking forward to a great 2025, and thank you all for being here today.
Operator (participant)
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.