Ryan Specialty Holdings, Inc. Class A

Greetings. Welcome to the Ryan Specialty Holdings third quarter 2022 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, we'll now turn the conference over to Noah Angeletti, head of investor relations and treasurer of Ryan Specialty Holdings. Noah, you may now begin.

Good afternoon, and thank you for joining us today for Ryan Specialty Holdings' third quarter 2022 earnings conference call. In addition to this call, we filed a press release with the SEC earlier this afternoon, which has been posted to our website at ryanspecialty.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statement. These statements are based on management's current expectations and beliefs and and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. We encourage listeners to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. We assume no duty to update such forward-looking statements in the future, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in our earnings release, which is filed with the SEC and available on the company's website. With that, I'd now like to turn the call over to the founder, chairman, and chief executive officer of Ryan Specialty, Pat Ryan.

Good afternoon, and thank you for joining us to discuss our third quarter results. Joining us on today's call is our president, Tim Turner, and our CFO, Jeremiah Bickham. Also joining us is Miles Wooler, CEO of our underwriting manager specialty, who will be around for the Q&A. It was a solid quarter for Ryan's specialty and our differentiated platform. Total revenue grew 16.8%, led by 13.7% organic growth. In addition, we achieved double-digit growth in adjusted EBITDA and solid growth and adjusted net income. Specific to the third quarter, the hard market for rates largely continued, and we saw additional firming in many of our lines of business. As we noted last quarter, one notable exception was public company D&O, which saw a rapid rate decline in the quarter, beyond what we and the market anticipated, and which Tim will touch upon shortly. Importantly, our ability to generate Another quarter of double-digit organic growth despite this headwind and the exceptional third quarter 2021 comp speaks volumes about the strength of our team, our diverse product and services offering, and the winning culture we have built at Ryan Specialty. As we've noted previously, risks across industries are only becoming more complex. Our products are largely compulsory and our clients value the expertise we bring. Our producers continue to provide our clients and our trading partners with innovative solutions, but we want to acknowledge the increasingly challenging insurance and macroeconomic environment, and specifically three areas where we're seeing headwinds that will likely carry into at least the first half of 23. First, while the E&S marketplace remains a standout within the insurance industry, we began to see a deceleration in the growth rate of inbound flow toward the end of the quarter, which is backed by state stamping reports. Second, a faster than anticipated economic deceleration coupled with significantly higher interest rates are delaying certain project-based construction policies along with M&A transactional liability policies that rely on highly functioning debt markets. Third, Changing market conditions in the public D&O market have had an impact on our professional lines book. After years of rate hardening, new capacity entered the market, leading to additional supply and a decrease in rate at a time when IPO activity is down significantly. This has also led to increased opportunities for retail brokers to play some of this business directly. Our collective experience has allowed us to successfully manage through different economic cycles in the past. And we are confident that our leadership team is well positioned to execute our game plan through the cycle as well. We are also pleased to note that productivity among our brokers continues to improve, a testament to their tireless efforts to be laser focused on client centricity and to match market needs with industry-leading expertise. We are also prudently continuing to onboard top decile talent to add to our industry-leading team and deep bench to take advantage of the resilient ENS flow and continue gaining market share. Additionally, our M&A pipeline remains robust as we look for additional opportunities, both tuck-ins and larger acquisitions, to enhance and differentiate our platform and capabilities. We remain disciplined in our pursuit of acquisitions, particularly in the current environment, as we will only move forward when all our criteria are met. Every acquisition must be a strong cultural fit, strategic and accretive. Our discipline is bolstered by our core results, which have proven throughout this year that we do not require acquisitions to achieve robust growth in any given period. As we begin to turn the page on 22, we believe we remain well positioned to succeed over the long term given our resilient and flexible operating model that enables us to quickly adapt and pivot to an increasingly challenging macroeconomic environment. We nonetheless remain confident that the value we bring to our trading partners particularly in times of uncertainty, remains extremely valuable as we anticipate their needs and work tirelessly to provide the right solutions to protect their insured's risks. As it has in the past, we expect the E&S market will continue to grow as the world becomes riskier and more complex. This, along with other secular growth drivers, should allow us to generate annual double-digit organic growth for years to come. In summary, I remain proud of our entire team at Ryan Specialty as their incredible effort led to another solid quarter and a 2022 that will surpass our expectations from when we started the year. I'll turn it over to Tim. Tim?