The property insurance landscape in the United States is showing signs of improvement in certain areas, opening doors for potential growth, according to Gordy Bunch, Chairman and CEO of The Woodlands Financial Group (TWFG). However, conditions in California remain a significant hurdle, he noted during the company’s recent earnings call.
Bunch highlighted that the California property market is still unstable, pointing to the California FAIR Plan as a key factor contributing to the challenges. He drew comparisons between the state’s residual market and those of Florida and Louisiana during periods of extreme financial stress, citing that the FAIR Plan has assumed a disproportionate amount of risk. He suggested that a rate increase could help stabilize the market.
Developments in California’s property insurance segment are closely linked to wildfire exposure, the reliability of new catastrophe models, and the availability of reinsurance support, Bunch said. He added that filing new programs in the state is difficult, particularly against state-run plans. TWFG may consider a wrap-around product for the FAIR Plan if market conditions continue to tighten.
To overcome current capacity constraints, TWFG has secured access to additional secondary and tertiary property markets, which are now accessible to the company’s agents, according to Bunch.
In Florida, TWFG is pursuing expansion after maintaining a limited presence in what Bunch described as a previously volatile market. Following recent legislative reforms, the company is now collaborating with reciprocal and stock insurers to facilitate take-outs from Citizens Property Insurance Corp. Bunch indicated that TWFG is more open to participating in the Florida market compared to its past approach.
TWFG 2024 Results
The Woodlands Financial Group (TWFG), licensed in all 50 states, operates through a network of 520 retail locations and 14 corporate offices nationwide. The company reported strong financial results for 2024.
Total revenues for the fourth quarter increased by 30.8% to $51.7 million, up from $39.6 million in the same period last year. Net income for the quarter rose to $8.2 million, compared to $5.2 million in the prior year period. Commission income increased by 20.7%, reaching $43.7 million, while contingent income surged by 371.4% to $5.0 million. Total written premium for the quarter grew by 20.0%, amounting to $361.4 million. The organic revenue growth rate for the quarter was 20.5%, and adjusted EBITDA increased by 91.7% to $13.8 million.
