Ryan Specialty Holdings, Inc. Class A

good afternoon and thank you for joining us today for Ryan's Specialty Holdings third 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 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 statements. 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 those discussed today. Listeners are encouraged to review the more detailed discussions 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 to 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 third quarter results. With me on today's call is our CEO, Tim Turner, our CFO, Janice Hamilton, our CEO of Underwriting Managers, Myles Wooler, and our Head of Investor Relations, Nick Messick. We had a strong third quarter and are pleased with our ability to continuously deliver value for our clients across our businesses. For the quarter, We grew total revenue 25%, driven by organic revenue growth of 15%, and M&A, which added nearly 10 percentage points to the top line. Adjusted EBITDA grew 23.8% to $236 million. Adjusted EBITDA margin was 31.2%, compared to 31.5% in the prior year. Adjusted earnings per share grew 14.6% to $0.47. We remained active in M&A this quarter and have a robust pipeline, positioning us well to execute on our disciplined long-term inorganic growth strategy. Our excellent growth was driven by strength and casualty across all three of our specialties and modest growth in property. We generated strong new business and had high renewal retention, even in the face of a complex and evolving insurance and macro environment. This achievement reflects the unmatched expertise, execution, and commitment of our world-class team. Our ability to execute at this level continues to set Ryan's specialty apart and strengthens our position as one of the most formidable forces in specialty lines insurance. Moving to our recently announced initiatives this quarter, we successfully onboarded key talent across Ryan Rhee and alternative risk. and brought innovative products to market through the launch of our flagship collateralized sidecar, Ryan Alternative Capital RE, or ROC RE. Separate from those initiatives, we continue to entrench Ryan's specialty as the destination of choice for top talent. We believe we have entered into a unique and potentially transformative period within the specialty and E&S market. As the industry reacts to a transitioning market, We are attracting more talented professionals that are looking for a platform that not only withstands market cycles, but powers through them. Over the last 15 years, we built a culture and business model that stands apart from our competitors. Throughout the quarter, we saw a significant opportunity to ramp up our recruitment efforts. As a result, we added a significant number of experienced professionals for our world-class team. We expect this momentum to continue in the quarters ahead. Growth and long-term value creation are in our DNA, and we will remain true to that by continuing to prioritize strategic investments, especially as it relates to talent, the noble formations, innovative products and solutions, M&A, and technology. These are all key areas that will further reinforce our commitment to our clients, and our leadership in specialty insurance solutions. We believe these investments will accelerate our ability to relentlessly capture market opportunities, enhance our competitive position, and deliver durable value for our shareholders over the long term. As we've noted repeatedly, our recruitment, training, development, and retaining of talent is the best and most accretive investment we can make, as it will continue to drive our organic growth engine for years to come. These efforts are fundamental to our strategy as a leading high-growth company and will enable our long-term success. Stepping back, our performance through these first nine months reinforces our confidence in delivering yet another year of double-digit organic growth in 2025. marking the 15th consecutive year of achieving this increasingly remarkable accomplishment. Additionally, we are well positioned to sustain similar levels of full-year organic growth into 2026. Looking beyond that, we believe we will continue delivering industry-leading organic growth, a topic Tim will address in more detail shortly. Lastly, before turning to Tim, I want to congratulate both Steve Keough and Brendan Molshein on their promotions to co-presidents of Ryan Specialty. Steve and Brendan will continue in their roles as Chief Operating Officer and Chief Revenue Officer, respectively, while stepping into this expanded leadership position following Jeremiah Beckham's transition to serving as Strategic Advisor through the end of the year. Steve will be focused on driving operational excellence and advancing our technology and innovation efforts, while Brendan will lead across our three specialties to enhance alignment and continue to maximize client impact. This announcement reflects the strength of our roster and the versatility of our leadership team, built for durability and continuity. I also want to thank Jeremiah for his nearly 14 years of distinguished service around specialty and for his support as we transition our leadership team. His dedication has been instrumental to the growth and success of our platform. We wish him the best of luck with his future endeavors. As we wrap up 2025, we remain confident in our ability to innovate and thoughtfully invest in our business. Through relentless execution and winning new business, combined with strategic investments and growth initiatives, transformative acquisitions over the last few years, numerous additions of top talent, and accelerated investments in high growth areas, we've built a foundation that positions us exceptionally well for the future. As the coach of this terrific team, I want to reemphasize how proud I am of the team's ability to deliver exceptional total revenue growth, 25%, driven by 15% organic growth and 10% inorganic growth. I'm even more impressed with our ability to drive adjusted EBITDA growth, 24%, especially considering the unique opportunity to attract top broking and underwriting talent and continued investments in technology throughout the quarter. I'm pleased to turn the call over to our CEO, Tim Turner. Tim.

Thank you very much, Pat. Ryan Specialty had an outstanding third quarter as we once again delivered industry-leading results for our clients in the face of a very challenging property rate environment. As I mentioned on our prior call, we remain hyper-focused on successfully executing on what we can control and delivering an organic revenue growth rate of 15% for the quarter is clear validation that our strategy is working. Further, while the strong secular conditions have endured, it is our Ryan specific growth drivers that are resonating. Most notably, our specialized intellectual capital, unique trading relationships at scale, and an ability to innovate, evolve and stay ahead of the market. Ryan's specialty was built on a simple philosophy, to skate where the puck is going. This is the opportunity Pat and I saw back in 2010. And in every instance where we have invested ahead of the curve, we have been rewarded. To that extent, as Pat highlighted, we are currently operating in the early stages of a unique and potentially transformative period within the specialty and ENS environment. We made substantial progress on this opportunity towards the end of the third quarter, capitalizing on the influx of world-class specialty talent. This type of strategic hiring provides us with an unmatched ability to position ourselves as the clear leader in the specialty lines industry over the long term. A trend we anticipate continuing in the quarters ahead as the industry's top talent continues to knock on our door. Additionally, as it relates to technology, the pace of change has been remarkable, driven primarily by advancements in AI and machine learning. These developments are reshaping our industry and the world around us, and we are committed to staying ahead of the curve. Of course, leveraging these opportunities requires meaningful investment. And as a result, we now expect full year 2025 margins to be roughly flat to modestly down when compared to the prior year. However, these are without a doubt the most impactful and most accretive investments we can make to ensure the long-term success and durability of the Ryan Specialty Platform. Looking ahead, we remain committed to margin expansion over time while preserving the flexibility to prioritize strategic investments and capitalize on the opportunities when they arise, such as the current talent environment and also de novo formations, innovative products and solutions, M&A and technology. We believe this is the right approach to ensure continued industry leading growth In light of everything I've outlined, we are deferring the 2027 timeline for our previously communicated 35% adjusted EBITDA margin target. This reflects our commitment to capitalizing our growth opportunities, like the ones we're seeing today, and prioritizing long-term value creation over short-term benchmarks. As we've noted in the past, our strategy is designed to anticipate and address the evolving needs of our clients and trading partners. And we remain diligent on expanding our talent base and capabilities to satisfy these growing needs. We believe this is the best way to ensure that our value proposition remains dynamic, differentiated, and most importantly, indispensable. We also understand the importance of the commitment we make to our teammates. Equipping them with the most advanced tools to ensure innovation and top tier service to our clients and trading partners has been and will remain an area of heightened focus going forward. These investments are fundamental to our strategy as a leading high growth company and service sustainable fuel to our growth engine. Turning to growth, as Pat mentioned, we are increasingly confident in our ability to deliver yet another year of double digit organic growth in 2025 and are in a great position to sustain a similar level of organic growth into 2026. Beyond that, we believe we can consistently deliver industry leading organic growth on an annual basis in the years to come. Important drivers of our growth going forward are our expectation to continue capitalizing on the unique opportunity to recruit and onboard top tier talent in the quarters ahead, while also training, developing, and retaining the exceptional team we've built over the past 15 years. Continued growth in our casualty business, driven by solid flow into the ENS channel and our expertise in high hazard classes. Our ability to offset another year of soft property pricing, as was evident this year. Through Ryan Reed, our reinsurance underwriting MGU, for which we've thoughtfully staffed in anticipation of one-one renewals following the nationwide and Markel renewal rights deal. Ongoing innovation through new product launches and investments in geographic expansion, broadly across the underwriting platform, which includes Alternative Risk, Ryan Re, as well as our newly announced sidecar, Rack Re. Contributions from recent M&A, as well as the continued pursuit of future transactions, as this year's M&A is next year's organic growth. And lastly, our confidence and continued growth across all three of our specialties. It is a very exciting time at Ryan Specialty, and we are taking advantage of the multiple pathways to strengthen our position as the global leader in specialty lines, while staying focused on creating long-term sustainable value for our shareholders. Turning to our results by specialty, our wholesale brokerage specialty had a great quarter. In property, we returned to growth through our relentless execution, winning a high percentage of new business in head-to-head competition, supported by high renewal retention, continued steady flow into the ENS channel, partially offset by the rapid decline in property pricing in Q3. We expect the fourth quarter to face continued deterioration of property pricing given what looks like another benign hurricane season. However, our longer term outlook remains optimistic given the frequency and severity of cat events, not withstanding recent experience and the increasing population in cat affected areas, creating an increased demand for E&S property solutions. With our deep capabilities, we will continue to deliver value for our trading partners and offer innovative products and solutions for the most complex issues our clients face irrespective of the market cycle. We continue to expect property to be an important contributor to our growth over the long term. Meanwhile, our casualty practice continues to deliver very strong results driven by excellent new business and high renewal retention. We were particularly pleased to see pockets of growth in our construction segment in the quarter, aided by an increasing demand for the build out of data centers. Further, we also saw strength in a number of other lines, most notably transportation, habitational risks, public entities, sports and entertainment, healthcare, social and human services, and consumer product liability. Our professional lines brokers remain resilient and resourceful in identifying new opportunities. And despite ongoing pricing pressure, they too have seen solid growth this quarter. More broadly in casualty, loss trends driven by both economic and social inflation continue to influence carriers to increase rates, refine their appetite, and in some cases, step back from certain products. As many of these risks move into the specialty and ENS markets, we continue to see the ENS market respond in a disciplined manner. We believe that the need for the specialized industry and product level expertise that Ryan's specialty offers has never been greater. And our value proposition has never been stronger. With typical loss trends likely to continue, we see a long runway for sustained casualty pricing in the non-admitted market. We remain confident that casualty will continue to be a strong driver of our growth moving forward. and believe we will remain a leader in casualty solutions for years to come. Now turning to our delegated authority specialties, which include both binding and underwriting management. Our binding authority specialty continues to perform well, driven by our top tier talent and expanding product set for small, tough to place commercial P&C risks. We continue to believe that panel consolidation and binding authority remains a long-term growth opportunity, and we are well positioned to serve our clients as this trend persists. Our underwriting management specialty also had a great quarter, driven by excellent results in transactional liability, reinsurance, and casualty. We had significant contributions from recent acquisitions, which added over 30 percentage points to the top line growth of underwriting management. Our recent cohort of acquisitions continues to deliver meaningful contributions to our long-term delegated authority strategy, reinforcing the value of our broader strategic approach. Further within RSUM, We recently launched Rack Re, our flagship collateralized sidecar that adds meaningful, diversified capacity to our underwriting platform. This innovative structure brings a large amount of committed capital, which we will deploy over a two-year period. RAC RE strengthens our ability to accelerate growth, enhance flexibility through increased diversification of capital, and respond swiftly to market opportunities, further demonstrating our ability to adapt to the ever-changing needs of the industry. Stepping back, our skill and discipline to manage these businesses through the current insurance cycle bolsters our ability to deliver consistently profitable underwriting results, growth and scale over the long term. We remain well positioned to capitalize on both organic and inorganic delegated authority growth opportunities. Now turning to price and flow, we have repeatedly noted that in any cycle, as certain lines are perceived to reach pricing adequacy, admitted markets have historically reentered select placements. In this cycle, however, that dynamic has not materialized in any meaningful way. And the standard market has had little impact on overall rate or flow. As we've consistently said, We continue to expect the flow of business into the specialty and ENS market, more so than rate, to be a significant driver of Ryan Specialty's growth over the long term. This was once again demonstrated in Q3 as the flow of business into the ENS channel remained steady across all lines, helping us deliver industry-leading organic growth, notwithstanding continued property pricing headwinds. Turning to M&A, this quarter, we close on the acquisition of JM Wilson, which is an excellent addition to our binding authority and transportation offering. Earlier this week, we announced the acquisition of Stewart Specialty Risk Underwriting, or SSRU. With approximately 13 million annual revenue, SSRU enhances our Canadian capabilities in key sectors, including construction, transportation, and natural resources. Further on the M&A front, our near-term pipeline remains robust, including both tuck-ins as well as large deals. That said, we will only move forward when all of our criteria for M&A are met, most notably a strong cultural fit, strategic and accretive to the overall platform. To sum it all up, this was an outstanding quarter for Ryan Specialty, which is a testament to our day one philosophy, our enduring value proposition, and the overall durability of this platform. When we first started, we had the vision to align RT Specialty with the deep product expertise and skillset at Ryan Specialty Underwriting Managers. Today, as we continue building out our business through strategic investments and world-class talent, that vision is translating into meaningful results. As the destination of choice for the best talent in the industry, our winning and empowering culture and nonstop focus on innovation continues to attract the best of the best and helps ensure our long-term success. Our scale, scope, and intellectual capital built over the past 15 years remains the foundation of our ability to continue winning and expanding our market share over time. Our platform is exceedingly difficult to replicate as we built a competitive moat and we will continue to invest further in our platform to widen the gap in our long-term competitive advantages that clearly set us apart from the rest of the specialty industry. With that, I will now turn the call over to our CFO, Janice Hamilton. Thank you.