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Company Overview - Ryan Specialty Group (RSG) is a rapidly growing provider of specialty products and solutions for insurance brokers, agents, and carriers[11] - RSG was founded in 2010[12] - As of September 30, 2021, RSG's LTM (Last Twelve Months) revenue was $1.4 billion[12] - RSG is the 2nd largest U S P&C wholesale broker[12] Financial Performance - RSG's organic revenue growth for the period ending September 30, 2021, YTD (Year-to-Date) was 25 6%[12] - RSG's LTM total revenue growth as of September 30, 2021, was 51 6%[12] - The Adjusted EBITDAC for LTM was $442 million[49] - The Adjusted EBITDAC Margin was 32 0%[49] Market Position and Growth Strategy - 71% of RSG's premiums are placed in the attractive E&S (Excess & Surplus) market[19] - The E&S market has experienced a CAGR (Compound Annual Growth Rate) of 6 4% compared to the admitted market's CAGR of 4 0% over the past decade[21] - RSG's revenue growth with the top 100 retail brokerage firms exceeded RSG's organic revenue growth of 20% in 2020[31] - RSG has completed over 40 acquisitions since its founding[31]

Company Overview - Ryan Specialty Group (RSG) was founded in 2010 and has grown to $1 billion in revenue by 2020[12] - RSG is the 2nd largest U S P&C wholesale broker and the largest U S P&C MGU[12] - The company experienced 20% organic revenue growth in 2020[12] - Total revenue growth in 2020 was 33%[12] Market Position and Strategy - 71% of RSG's premiums are placed in the E&S market[20] - The E&S market has a Compound Annual Growth Rate (CAGR) of 6 4% compared to the admitted market's 4 0% over the past decade[23] - RSG's revenue growth with the top 100 retail brokerage firms exceeded RSG's organic revenue growth of 20% in 2020[31] - Approximately $59 million of revenue was acquired in 2019, and $240 million in 2020 through strategic acquisitions[31] Financial Performance - Adjusted EBITDAC increased from $191 million in 2019 to $294 million in 2020[40] - The Adjusted EBITDAC Margin increased from 25% in 2019 to 29% in 2020[40] - The company's revenue increased from $765 million in 2019 to $1 018 billion in 2020[40]

Summary of Ryan Specialty Group (RYAN) FY Conference Call - June 03, 2025 Company Overview - **Company**: Ryan Specialty Group (RYAN) - **Industry**: Insurance, specifically specialty insurance services and distribution Key Points and Arguments 1. **Growth Performance**: Ryan Specialty has achieved six consecutive years of over 20% top-line growth and fourteen years of double-digit organic growth, positioning itself to capitalize on secular growth trends in the insurance industry [5][11] 2. **Market Dynamics**: The insurance industry is experiencing significant changes, driven by factors such as climate change, social inflation, and the consolidation of retail brokers [3][5] 3. **M&A Strategy**: The company has deployed over $2.4 billion in capital for mergers and acquisitions (M&A), with a robust pipeline for future deals, focusing on cultural, strategic, and accretive fits [6][7][8] 4. **Talent Acquisition**: Ryan Specialty emphasizes its strong talent pool, with a 98% retention rate among brokers, and is committed to recruiting and training top talent [9][10] 5. **Ecosystem of Excellence**: The company has developed a unique ecosystem that combines talent, relationships, and innovation, allowing it to stay ahead of market needs and outperform competitors [14][19] 6. **Delegated Authority Growth**: There is a significant trend towards increased utilization of delegated authority in the insurance market, with 70% of carriers anticipating an increase in the next twelve months [27][29] 7. **Market Positioning**: Ryan Specialty is positioned as a leader in the delegated authority space, with a focus on specialty solutions across retail, wholesale, and carrier environments [22][24][30] 8. **Resiliency of E&S Market**: The company highlights the durability of the excess and surplus (E&S) market, which is driven by the compulsory nature of many of its products [33] 9. **Future Guidance**: For 2025, Ryan Specialty expects organic growth of 11% to 13%, despite anticipating challenges in Q2 due to pressures in the property market [34][36] 10. **Capital Allocation**: M&A remains a top priority, with a focus on maximizing shareholder value through strategic capital allocation [36][37] Additional Important Insights - **Weather Impact**: The company is actively addressing the challenges posed by climate change and weather volatility through specialized brokerage and underwriting practices [41][42] - **High Net Worth Segment**: Ryan Specialty has successfully developed a new business vertical focused on high net worth homes, which is rapidly growing into a multibillion-dollar segment [46] - **Long-term Margin Goals**: The company aims to achieve a 35% margin target by 2027 through sustainable growth and margin expansion [39][38] This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting Ryan Specialty Group's robust growth trajectory, innovative practices, and proactive market positioning.

Revenue Sources - For the three months ended March 31, 2025, approximately 6% of revenues were generated from international operations in the UK, Europe, Canada, India, and Singapore[268]. Debt and Interest Rates - As of March 31, 2025, the company had $1,695.8 million of outstanding principal on its Term Loan borrowings, which bears interest on a floating rate, subject to a 0.0% floor[272]. - The company entered into an interest rate cap agreement for an upfront cost of $25.5 million, with a notional amount of $1,000.0 million and a strike rate of 2.75%[273]. - A hypothetical 100 basis point increase in short-term interest rates would impact net income by $6,161 thousand, while a decrease would have the same magnitude in the opposite direction[274]. - The fair value of the Term Loan approximates the carrying amount as of March 31, 2025, based on available information[272]. Cash Management - Approximately 1,108.3 million in cash and cash equivalents held in fiduciary capacity would be affected by a 100 basis point change in interest rates, impacting fiduciary investment income by $11,083 thousand[274]. - The majority of cash and cash equivalents are held in demand deposit accounts and short-term investments, primarily consisting of AAA-rated money market funds and treasury bills[276]. Market Risks - The company is exposed to foreign currency risk, but the exposure from potential changes in exchange rates is considered immaterial[269]. - The company is subject to various market risks, including interest rate and foreign currency exchange rate fluctuations[266]. - The company has implemented an investment policy to minimize counterparty credit risk, focusing on the preservation of principal and liquidity[276].

Core Viewpoint - Ryan Specialty Group reported quarterly earnings of $0.39 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.35 per share a year ago [1] - The company posted revenues of $690.17 million for the quarter, exceeding the Zacks Consensus Estimate by 1.16%, and up from $552.05 million year-over-year [2] Earnings Performance - The earnings surprise for the previous quarter was -4.26%, with actual earnings of $0.45 per share compared to an expected $0.47 [1] - Over the last four quarters, the company has surpassed consensus EPS estimates only once [1] Revenue Performance - Ryan Specialty has topped consensus revenue estimates two times over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.68 on revenues of $850.22 million, and for the current fiscal year, it is $2.09 on revenues of $3.08 billion [7] Stock Performance - Ryan Specialty shares have increased by approximately 2.1% since the beginning of the year, contrasting with a -5.3% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Outlook - The Insurance - Brokerage industry is currently ranked in the bottom 14% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the outlook for the industry can materially affect stock performance [5][8]

Financial Data and Key Metrics Changes - Total revenue grew by 25% to $690 million, driven by organic revenue growth of 12.9% and contributions from M&A adding 13 percentage points [23][4][3] - Adjusted EBITDAC increased by 27.5% to $200 million, with the adjusted EBITDAC margin expanding by 60 basis points to 29.1% [24][4] - Adjusted earnings per share rose by 11.4% to $0.39, while there was a GAAP net loss of $4 million due to a nonrecurring deferred tax expense [24][25] Business Line Data and Key Metrics Changes - The casualty specialty experienced strong growth with high renewal retention and new business, particularly in habitational risks, transportation, construction, and healthcare [14][16] - The property specialty showed modest growth despite a challenging environment, with continued pricing declines but high renewal retention [12][13] - The delegated authority specialty had a strong start in 2025, driven by top-tier talent and expanding product offerings [17] Market Data and Key Metrics Changes - The E&S market is expected to grow in importance, with risks moving into this market due to its ability to offer solutions for complex risks [9][10] - The company noted a robust flow of business into the specialty channels, particularly in casualty, indicating strong market demand [31][9] Company Strategy and Development Direction - The company aims to continue delivering innovative solutions, executing its M&A strategy, and increasing profitability while investing in its platform [7][5] - The focus on M&A has significantly expanded the total addressable market and enhanced capabilities to serve clients [5][19] - The company is committed to balancing investments in talent and technology with margin expansion [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased uncertainty around global trade and economic health, but expressed confidence in navigating challenges due to a diversified business model [6][7] - The company expects to maintain strong organic growth and profitability despite potential headwinds in the property market [7][24] Other Important Information - The acquisition of USQ Risk is expected to add approximately $11 million in annualized revenue and enhance capabilities in alternative risk offerings [19][24] - The company plans to continue monitoring macroeconomic conditions closely for any potential impacts on business [27] Q&A Session Summary Question: Can you discuss the sustainability of upper single-digit inorganic revenue growth? - Management indicated a robust M&A pipeline with strong double-digit flow in specialty channels, remaining optimistic about future opportunities [31] Question: How might the USQ Risk acquisition scale up in revenue? - Management emphasized the strategic nature of the acquisition and the potential for significant organic growth through new talent and capabilities [34][36] Question: What are the technology investments contributing to growth? - Management highlighted efforts to streamline workflows and experiment with AI solutions to enhance operational efficiency [42] Question: What are the expectations for property growth in Q2? - Management acknowledged Q2 as a challenging comp but expects modest growth in property despite rate deceleration [46][73] Question: How is the M&A pipeline looking? - Management confirmed a robust pipeline with opportunities across small, medium, and large deals, maintaining a focus on strategic fit [75][78] Question: What is the outlook for construction and economic pressures? - Management reported strong construction results with no noticeable changes in the market, indicating continued strength in this area [59] Question: How is the company taking share in the submission flow? - Management noted a double-digit increase in submission flow and opportunities for growth through brokerage consolidation [62]

Financial Data and Key Metrics Changes - Total revenue grew by 25% to $690 million, driven by organic revenue growth of 12.9% and contributions from M&A adding 13 percentage points [22][4] - Adjusted EBITDAC increased by 27.5% to $200 million, with an adjusted EBITDAC margin expanding by 60 basis points to 29.1% [22][4] - Adjusted earnings per share rose by 11.4% to $0.39, while a GAAP net loss of $4 million was reported due to a nonrecurring tax expense [22][23] Business Line Data and Key Metrics Changes - The casualty specialty experienced strong growth with high renewal retention and new business, particularly in habitational risks, transportation, construction, and healthcare [14][15] - The property specialty showed modest growth despite pricing declines, with expectations for continued competitive rates in the near term [12][13] - The delegated authority specialties, including binding and underwriting management, reported strong organic growth, particularly in casualty and transactional liability, with significant contributions from recent acquisitions [16][17] Market Data and Key Metrics Changes - The E&S market is expected to grow in importance, with risks moving into this market due to its ability to offer solutions for complex risks [9][10] - The company noted a robust flow of business into the specialty channels, particularly in casualty, with property also showing surprising strength [30][31] Company Strategy and Development Direction - The company aims to continue delivering innovative solutions, executing its M&A strategy, and increasing profitability while investing in its platform [7][5] - The focus remains on expanding the total addressable market through acquisitions and enhancing capabilities to serve clients [5][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased uncertainty around global trade and economic health, but expressed confidence in navigating challenges due to a diversified business model [6][7] - The company expects to maintain strong organic growth and profitability, driven by its strategic positioning in the specialty insurance market [7][19] Other Important Information - The acquisition of USQ Risk is expected to add approximately $11 million in annualized revenue and enhance the company's capabilities in alternative risk offerings [18] - The company plans to continue monitoring macroeconomic conditions closely for potential impacts on its business [26] Q&A Session Summary Question: Can you discuss the sustainability of upper single-digit inorganic revenue growth? - Management indicated a robust M&A pipeline with strong double-digit business flow, particularly in specialty channels, and expressed optimism for future opportunities [30][31] Question: How might the USQ Risk acquisition scale up in revenue? - Management emphasized the strategic nature of the acquisition and the potential for significant organic growth through new talent and capabilities [32][34] Question: What technology investments are being made to enhance growth and efficiency? - The company is focused on streamlining workflows and experimenting with AI solutions to improve operational efficiency and reduce cycle times [40][41] Question: What are the expectations for property growth in the upcoming quarters? - Management expects modest growth in property despite headwinds, with Q2 being a challenging comp due to previous strong performance [45][70] Question: How is the M&A pipeline looking currently? - The company has a robust pipeline of small, medium, and large deals, with a willingness to temporarily exceed leverage comfort for the right opportunities [73][76] Question: What is the outlook for construction and economic pressures? - Management reported strong construction results with no noticeable changes in the market, indicating continued strength in infrastructure and residential construction [59] Question: How is the company taking share in the submission flow? - Management noted a double-digit increase in submission flow and highlighted opportunities in the consolidation of brokerage intermediaries [61][62]

Financial Data and Key Metrics Changes - Total revenue grew by 25% to $690 million, driven by organic revenue growth of 12.9% and contributions from M&A adding 13 percentage points [3][23] - Adjusted EBITDAC increased by 27.5% to $200 million, with an adjusted EBITDAC margin expanding by 60 basis points to 29.1% [4][23] - Adjusted earnings per share rose by 11.4% to $0.39, while there was a GAAP net loss of $4 million due to a nonrecurring deferred tax expense [23][24] Business Line Data and Key Metrics Changes - The casualty specialty experienced strong growth with high renewal retention and new business, particularly in habitational risks, transportation, construction, and healthcare [14] - The property specialty showed modest growth despite a challenging environment, with continued pricing declines but high renewal retention [12][13] - The delegated authority specialties, including binding authority and underwriting management, had strong organic growth, particularly in casualty and transactional liability [15][16] Market Data and Key Metrics Changes - The E&S market is expected to grow in importance, with risks moving into this market due to its ability to handle complex and uncertain loss environments [9][10] - The company noted a robust flow of business into the specialty channels, particularly in casualty, indicating strong market demand [31] Company Strategy and Development Direction - The company aims to continue delivering innovative solutions, executing its M&A strategy, and increasing profitability while investing in its platform [6][20] - The focus on M&A has significantly expanded the total addressable market and enhanced capabilities to serve clients [5][19] - The company is committed to balancing investments in talent and technology with margin expansion to ensure sustainable growth [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current uncertain economic environment, citing a diversified business model and specialized expertise [6][24] - The company anticipates continued organic growth and profitability, despite challenges in the property market [27][73] Other Important Information - The acquisition of USQ Risk is expected to add approximately $11 million in annualized revenue and enhance the company's capabilities in alternative risk offerings [19] - The company maintains a robust M&A pipeline, focusing on strategic and accretive opportunities [20][76] Q&A Session Summary Question: Can you discuss the sustainability of upper single-digit inorganic revenue growth? - Management indicated a strong double-digit flow of business into the channel, with a robust M&A pipeline, suggesting optimism for future growth [31] Question: What is the potential for scaling the USQ Risk acquisition? - Management emphasized the strategic nature of the acquisition and the potential for significant organic growth through new talent and capabilities [34][37] Question: Can you provide insights on technology investments and their impact on growth? - The company is streamlining workflows and experimenting with AI solutions to enhance operational efficiency and client service [44] Question: How do you expect property growth to trend in the upcoming quarters? - Management acknowledged the challenges in property but expressed confidence in maintaining modest growth through strong new business and retention [72][73] Question: What is the current state of the M&A pipeline? - The company has a robust pipeline of small, medium, and large deals, with a willingness to temporarily exceed leverage comfort for the right opportunities [76][78]

Revenue Performance - Total revenue for Q1 2025 increased by 25.0% year-over-year to $690.2 million, compared to $552.0 million in the prior-year period[1] - Total revenue for the three months ended March 31, 2025, was $690,166,000, a 25% increase from $552,046,000 in the same period of 2024[56] - For the twelve months ended March 31, 2025, total revenue reached $2,653,830,000, with a net income of $184,847,000[63] Organic Revenue Growth - Organic revenue growth rate was 12.9% for the quarter, down from 13.7% in the prior-year period[4] - Organic revenue growth rate for the three months ended March 31, 2025, was 12.9%, compared to 13.7% in the same period of 2024[45] - Full year 2025 outlook for organic revenue growth rate is between 11.0% – 13.0%[22] Income and Earnings - Net income decreased to a loss of $(4.4) million, compared to a profit of $40.7 million in the prior-year period[9] - Net income (loss) for the three months ended March 31, 2025, was $(4,389,000), compared to a net income of $40,677,000 in 2024, resulting in a net income margin of (0.6)%[58] - Adjusted net income increased by 13.0% to $107.8 million, with an adjusted net income margin of 15.6%[11] - Adjusted net income for the three months ended March 31, 2025, was $107,839,000, representing a margin of 15.6%[58] Earnings Per Share - Adjusted diluted earnings per share rose by 11.4% to $0.39, compared to $0.35 in the prior-year period[11] - Adjusted diluted earnings per share for the three months ended March 31, 2025, was $0.39, compared to $0.35 in the same period of 2024[45] Operating Expenses - Total operating expenses increased by 23.1% to $589.9 million, primarily due to higher compensation and benefits expenses[7] - Compensation and benefits expense ratio for the three months ended March 31, 2025, was 62.3%, down from 67.7% in the same period of 2024[44] - General and administrative expense ratio for the three months ended March 31, 2025, was 15.4%, up from 13.7% in the same period of 2024[44] EBITDAC Performance - Adjusted EBITDAC grew by 27.5% to $200.5 million, with an adjusted EBITDAC margin of 29.1%[10] - Adjusted EBITDAC for the three months ended March 31, 2025, was $200,501,000, up from $157,222,000 in 2024, with an adjusted EBITDAC margin of 29.1%[57] - Full year 2025 adjusted EBITDAC margin guidance is between 32.5% – 33.5%[22] Cash Flow and Assets - The company incurred cash flows used in operating activities of $142,825 thousand in Q1 2025, compared to $116,539 thousand in Q1 2024[47] - Cash and cash equivalents decreased from $540,203 thousand as of December 31, 2024, to $203,549 thousand as of March 31, 2025, a decline of approximately 62.3%[46] - Total current assets decreased from $4,788,858 thousand as of December 31, 2024, to $4,609,110 thousand as of March 31, 2025, a decline of approximately 3.8%[46] Liabilities and Equity - Total liabilities increased from $8,551,633 thousand as of December 31, 2024, to $8,832,726 thousand as of March 31, 2025, representing a rise of approximately 3.3%[46] - Total stockholders' equity attributable to Ryan Specialty Holdings, Inc. decreased from $627,662 thousand as of December 31, 2024, to $542,518 thousand as of March 31, 2025, a decline of approximately 13.6%[46] Interest Expense - Interest expense for the three months ended March 31, 2025, was $54.508 million, compared to $29.400 million in the same period of 2024[44] - Interest expense, net for the three months ended March 31, 2025, was $54,508,000, compared to $29,400,000 in 2024[56] Acquisition-Related Expenses - The company incurred acquisition-related expenses of $17,302,000 for the three months ended March 31, 2025, compared to $8,437,000 in 2024[58] Dividend Declaration - The company declared a regular quarterly dividend of $0.12 per share, payable on May 27, 2025[16]