Ryan Specialty Holdings, Inc. Class A

Good afternoon and thank you for joining us today for Ryan Specialty Holdings' first quarter 2025 earnings conference call. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryansspecialty.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 are subject to risks and uncertainties that could cause actual results to differ materially from these discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. The company assumes 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 the 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 and executive chairman of Ryan Specialty, Pat Ryan.

Good afternoon, and thank you for joining us to discuss our first quarter results. With me on today's call is our CEO, Tim Turner, our president, Jeremiah Bickham, our CFO, Janice Hamilton, our CEO of Underwriting Managers, Miles Wooler, and our head of investor relations, Nick Messick. The first quarter represented a strong start to the year. We grew total revenue 25%, driven by strong organic revenue growth of nearly 13%, and 13 percentage points from M&A. This is our largest contribution from M&A in over three years, partially offset by a slight decline in fiduciary investment income. Adjusted EBITDA grew 27.5% to 201 million. Adjusted EBITDA margin expanded 60 basis points to 29.1%. Adjusted earnings per share grew 11.4% to 39 cents, a very good quarter by any measure. Our growth was driven by strength and casualty across all three of our specialties, and modest growth in property, which is a credit to our ability to deliver value for our clients in a challenging property market. We also had significant top line contributions from recent acquisitions, including Velocity Risk Underwriters, which closed at the beginning of February. In April, we announced the acquisition of USQ Risk, and are very excited to welcome these new teammates into the Ryan Specialty family. Our robust M&A activity over the past two years and since our founding has advanced various aspects of our strategy, notably significantly expanded our total addressable market. We added expertise, augmented our capabilities to serve our clients across market segments. and broaden our international footprint. We added many new programs and unique MGUs, which provide us with greater advantages to extend our lead in delegated underwriting authority now and over the long term. Stepping back, I want to spend a minute on the current environment. There's been an increased level of uncertainty around global trade and the health of the broader economy. A read-through of this uncertainty into the real economy, inflationary pressures, and capital markets creates elevated risks in the near and medium term. With our diversified set of businesses and cycle-tested business model focused on specialized expertise and industry-leading talent, we believe we are well-positioned to navigate the challenging near-term environment and win over the long term. just as we've done for the past 15 years. Moving ahead, we expect that we will continue to deliver innovative solutions to our clients, generate industry-leading organic growth, execute our M&A strategy, and increase profitability while investing in our platform. All of this will drive significant additional value for our shareholders. and ensure we remain a top specialty insurance services firm in our industry. I'm pleased to turn the call over to our Chief Executive Officer, Tim Turner. Tim?

Thank you very much, Pat. Before discussing the results, I wanted to expand on Pat's comments and highlight the durability of Ryan Specialty's business model with three particular points. We operate in the resilient specialty and ENS market. Many of our products are compulsory. And we have built a differentiated platform with top flight specialized talent. First, insurance premiums have a long track record of growth. It is important to remember that U.S. premium growth turned negative in aggregate only once over the past 60 plus years. As the world continues to become riskier, and more complex, risks are moving into the specialty and ENS marketplace, which is equipped to offer solutions that would otherwise not be available. This market is better suited to handle a more uncertain loss environment, as it offers significantly more freedom of rate and form, and the ability for insurers and underwriters to adjust more quickly. This has also led to a secular shift in how capital is positioned in the broader insurance market. Carriers that have historically participated only in the admitted market are making significant commitments to ENS, and new capital is also flowing in. Looking forward, we believe the ENS market will both continue to grow in importance and take share of the overall insurance landscape. Second, Our wholesale brokerage and delegated underwriting authority businesses provide largely compulsory insurance products. Many, if not most, businesses must have insurance. And as they grow, their needs become more and more complex. And third, we've built the best platform in the industry, driven by our world-class talent. Our specialized expertise in wholesale and delegated authority as well as our alignment within it, provide our clients and trading partners with differentiated value and innovative solutions. As a result, we have created incredible trust and significantly deepened our relationships with these same clients and trading partners, which we believe provides us with a tremendous runway for continued growth for years to come. Turning to results, we had an excellent first quarter driven by strong organic growth and significant contributions from our recent acquisitions. Now diving into our specialties, each of which grew their top line by double digits. Our wholesale brokerage specialty had another strong quarter. In property, we again executed well and still delivered modest growth despite a very challenging environment. Property pricing declines continued along the same trend that we experienced in the fourth quarter. However, despite the softer pricing, we overcame these trends. We again took share of the strong flow into the channel, won head to head against our competitors, and had another quarter of high renewal retention. This is a testament to our tenacious and ultra-competitive RT brokerage team. We know how to navigate adversity in the marketplace, find new opportunities to grow, and expand our market share, and importantly, find ways to win. It's in our DNA. As a reminder, the second quarter is our largest property quarter, and the second quarter of 2024 was the last very strong quarter for property before rates began to decelerate, setting up a challenging comp for the second quarter of 2025. While we expect rates to remain competitive in the near term, We remain very bullish on property as an important contributor to our growth over the long term. Our casualty practice had another excellent quarter with strong new business and high renewal retention. We saw strong growth for habitational risks, transportation, construction, and healthcare. Our transportation practice saw another quarter of strong flow Difficult loss trends driven by both economic and severe social inflation are driving carriers to increase rates, pull back appetite, and in some cases exit markets completely. Risks in each of these classes and many others are continuing to move into the specialty and ENS markets. We see the ENS market responding in a disciplined manner with carriers tightening distribution lines re-underwriting, changing appetite, raising prices, and focusing on limit management. We believe the need for the specialized industry and product level knowledge that Ryan Specialty offers has never been greater, and our value proposition has never been stronger. We remain confident that casualty will be a strong driver of our growth moving forward, and that we will continue to be a leader in casualty solutions for years to come. Now turning to our delegated authority specialties, which includes both binding and underwriting management. Our binding authority specialty had a very good start in 2025, driven by our top-tier talent and expanding product set for small, tough-to-place commercial P&C risks. We continue to believe panel consolidation in binding authority remains a long-term growth opportunity, and we are well positioned to capitalize. Meanwhile, our underwriting management specialty had another excellent quarter. Results were driven by strong organic growth, particularly in casualty and transactional liability. We also had meaningful contributions from recent acquisitions, which added over 50 percentage points of growth to the top line of this specialty. Our strategic positioning allows us to capitalize on both organic and inorganic growth opportunities. We believe this combination paired with our skill and discipline to manage the business through the insurance cycle ensures our ability to deliver consistently profitable underwriting results, growth, and scale over the long term. We have repeatedly noted that in any cycle, as certain lines are perceived to reach pricing adequacy, admitted markets tend to step back in on certain placements. However, this is still not playing out in any meaningful way, and the standard market has not meaningfully impacted the rate or flow in the aggregate. As we've said since our IPO, We continue to expect the flow of business into the specialty and ENS market to be a significant driver of Ryan Specialty's growth over the long term, more so than rate. Turning to M&A. Today, we announced the closing of our acquisition of USQ Risk. USQ adds top talent and differentiated intellectual capital to our alternative risk offerings. along with approximately $11 million of incremental annualized revenue to Ryan Specialty. Our new teammates will bolster the capabilities that we bring to our retail broker clients in this highly technical and valued segment of the market. With a focus on non-traditional insurance solutions for risks which the traditional insurance market cannot underwrite efficiently, USQ has carved out a niche in each of the property, casualty, and transportation markets. Further on the M&A front, our pipeline continues to be robust, including small, midsize, and large deals. That said, we will only move forward when all of our criteria for M&A are met, a strong cultural fit, strategic, and accretive. To sum up, it was another strong quarter for Ryan's specialty. I am proud of our entire team for continuing to deliver outstanding results and adding value for our clients, trading partners, and ultimately our shareholders. With that, I will now turn the call over to Jeremiah.