Ryan Specialty Holdings, Inc. Class A

Good afternoon and thank you for joining us today for Ryan Specialty's holding first quarter 2026 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 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 like to turn the call over to the founder and executive chairman of Ryan's Specialty, Pat Ryan.

Good afternoon and thank you for joining us. With me on today's call is our CEO, Tim Turner, our CFO, Janice Hamilton, our CEO of Underwriting Managers, Miles Wooler, and our Head of Investor Relations, Nick Messick. For the quarter, total revenue grew 15%. driven by organic revenue growth of 11.8% and contributions from M&A. Adjusted EBITDA grew 15.7% to 232 million. Adjusted EBITDA margin expanded 10 basis points to 29.2%. Adjusted earnings per share grew 20% year over year to 47 cents. We also re-purchased 40 million of our stock, We are very pleased with our strong start to 2026, especially considering the headwinds our industry is facing. Our first quarter results on both the top line and bottom line speak to the resiliency of the platform we have built. Our founding thesis was to provide innovative specialty insurance solutions to brokers, agents, and carriers. That's exactly what we have done. We created a true specialty insurance services firm, expanding our offerings far beyond wholesale broking. We have built one of the most efficient and effective insurance distribution platforms in the world. Through RT Specialty, the second largest wholesale broker, we've assembled world-class expertise across industry verticals, serving global retailers as well as the tens of thousands of retail brokers in the U.S. Ryan Specialty is the largest delegated underwriting authority provider. We deliver leading underwriting solutions supported by strong alignment and governance, distribution at scale, and our position at the intersection of the biggest secular tailwinds in insurance, all driving sustainable, profitable growth. Together, RT Specialty and RSUM form a distribution engine of unmatched scale, sophistication, and breadth in the specialty insurance market. This distribution platform is built to unlock all of the innovative solutions we're capable of building. Through our strategic alliances and executive level relationships with key carriers, we've holistically changed the conversation. This goes beyond trust and strong returns. and has evolved into the development of innovative products and solutions to address the complex needs of our clients. Take one of the largest mutual carriers in the country as an example. Our relationship started many years ago when they were looking for access to specialty risk and has evolved into the creation of a new reinsurance market. Over the last six years, we created a remarkable business through our reinsurance managing underwriter, Ryan Rhee, which is strategically positioned to capitalize on expanded opportunities and is quickly approaching $2 billion in premium. We've made acquisitions and brought in top talent across both benefits and alternative risk. With their support, we're building unique capabilities in structured solutions, capital management, and funding through group captive or single-celled captives. Separately, for a leading global property carrier, we expanded their reach into specialty lines they've never participated in before, and are exploring various additional opportunities together. For a Blue Ship specialty carrier, we have developed unique solutions throughout our firm, across RT, RSEOM, and with new capital management capabilities, allowing us to launch our flagship alternative capital sidecar, Rackery. These are not isolated stories. They are the compounding outputs of a distribution platform that gets stronger and more strategic with each relationship. Built on the strength of industry-leading underwriting results, we innovate alongside our clients and capital trading partners and deliver unique solutions that we believe cannot be easily replicated by our competitors. The depth and durability of these strategic alliances, the breadth of products and solutions we deliver to the market, the scale of capital we manage on behalf of our trading partners are the dimensions of value that capture what this platform is truly capable of and what will define our story over time. Our strategies to continue widening our moat, leveraging the operational flexibility created by Empower and building into the white space that we believe no one else in our industry can match. Turning to the market, we continue to operate in one of the most volatile and reactive insurance markets I've ever witnessed. While volatility in market cycles is inevitable, we are feeling the effects of this across our business, particularly in wholesale brokerage. where we now expect more tempered growth in 2026. With that said, I'm very proud of our brokers and underwriters as they're delivering impressive growth in the face of significant pricing pressures and broader economic uncertainty. Turning to AI, which Tim will expand on shortly, I want to say a few words. Through automation and AI, we believe we are unlocking the capacity of our people to more efficiently and effectively do what our clients and trading partners value most. We solve for complexity through our expert-led advice and advocacy and a culture of execution and innovation. We believe our scale, specialized talent, proprietary data, the breadth of trading relationships with brokers and carriers, and the significant volume of transactions flowing through our platform. Meg Ryan, especially, a clear net beneficiary of the AI-driven transformation reshaping our industry. Lastly, on capital allocation, beyond our modest and sustainable dividend, we view both M&A and our share repurchase program as key priorities. We will continue to do what we believe is right for our shareholders. particularly given the continued spread between public and private multiples and the dislocation between our current valuation and our confidence in the near and long-term outlook of our business. Make no mistake about it, when the right strategic M&A opportunities present themselves, ones that fit our three M&A criteria, strong cultural fit, strategic and accretive, we will be the first in line for those high quality assets. And we'll have the financial capacity to execute on those opportunities. As we look forward, we are confident in our ability to innovate, invest, and continue to strengthen and diversify our offerings within the specialty insurance market. Our relentless efforts to navigate this transitioning market, all while investing in areas of accelerating growth, give a strong conviction that we will generate industry leading organic growth over time and remain a leader in the specialty lines insurance sector for years to come. Before I turn the call over to Tim, I want to share one more thing with you. We have announced a one-time option grant program in the second quarter funded entirely by a portion of my own holdings to make sure the broader team is properly aligned over the long term. It is structured to be neutral to the company's outstanding share account and will function as a direct reinvestment for me into the team that has built this platform. I believe in this team. I believe in this platform. And I believe in the direction Ryan's specialty is heading. As we look forward to the work of the next several years, I want every leader at this company to be aligned to our mission. And I'm offering a meaningful piece of my own capital to support that conviction. With that, I am pleased to turn the call over for our Chief Executive Officer, Tim Turner. Tim?

Thank you very much, Pat. I am very proud of how our team performed this quarter. We remain hyper-focused on successfully executing what we can control. Diving right into our results by specialty, our wholesale brokerage specialty continues to deliver in a transitioning market. In property, our team navigated a very challenging environment. Rates continued to decline, with large and cat-exposed accounts down 25% to 35%. Capacity continued to increase across insurance, reinsurance, and alternative capital, and competition intensified broadly, including in the admitted market. However, despite these trends, our property book declined only moderately in the quarter, and we are extremely proud of these results. Again, we are controlling what we can control. We are focused on winning head-to-head against our competitors and capturing new business from the steady flow into the ENS channel. In casualty, The trends remain net favorable for Ryan's specialty, yet the picture is bifurcated. In high hazard, large account classes like transportation, habitational, healthcare, social and human services, and public entity, loss trends driven by social inflation continue to drive meaningful rate increases, in many cases exceeding 10%. At the same time, there is growing competition for small and medium hazard risks. We saw select carriers looking to deploy new capital, adding competitive pressure within the ENS market. Our professional lines team significantly outperformed the market despite continued yet moderating pricing pressure and aided our growth in the quarter. We also had strong construction activity in Q1. We remain optimistic about this pipeline heading into the balance of the year and are well positioned as the leading wholesale broker in the construction space. We are encouraged by the momentum of data center activity we saw this quarter, further supported by a strong pipeline. As we have noted in the past, This business is inherently lumpy, and the timing of large project bindings is difficult to predict. Taking these trends together, we're anticipating more moderate casualty growth in 2026. Now, turning to our delegated authority specialties, which include both binding authority and underwriting management. Our binding authority specialty continued to perform well, though the environment showed signs of heightened competition. We saw pockets of small commercial business move toward the admitted market, consistent with what we described last quarter. Our underwriting management specialty had an excellent quarter, with strong results across transactional liability, international specialty, casualty, financial lines, and reinsurance. Zooming in on the transactional liability, our practice once again performed exceptionally well, supported by the investments we've made over the past few years and a more constructive global M&A outlook. Ryan Reed delivered an outstanding start to the year with strong renewal retention, especially considering the tough pricing environment. We are encouraged by the Markel portion of the book, which also displayed strong client retention and was supported by expanded relationships across casualty, specialty reinsurance, and the London markets. As we do across our entire underwriting management specialty, we exercise underwriting discipline, leaning away from the property cat business where pricing did not meet our standards and leaning into risks with better risk adjusted returns. Adding to what Pat said, I'd like to update you on our digital transformation and AI strategy. We are making significant and responsible investments in AI leadership, and infrastructure and are partnering with leading AI platforms to accelerate our progress. This is a top priority for our management team and we've rapidly delivered numerous models to our 6,000 plus employees. We are moving quickly live in production in certain areas and are actively developing new tools. Our digital transformation and AI strategy is built around three principles, our clients, our people, and our process. In practice, we invest behind workflows that improve client outcomes, make our people more productive, and make our process faster and more reliable. Let's start with our clients, spanning across brokers, agents, and carriers. Faster speed to market, deeper risk analysis, and even stronger advocacy. We are deploying AI that helps our underwriters triage a submission in minutes instead of hours, which benefits the flow in both directions. Our broker clients see improved turnaround times, and the carriers receive better informed, higher quality submissions. That is an improved client outcome. AI is also improving underwriting insights. In parts of Ryan Rea, we are running enhanced portfolio-level analytics like concentration analysis and risk modeling, which gives our carrier trading partners a level of analytical rigor that is extremely challenging to complete manually. Better data leads to better placements, and better placements lead to stronger, longer-lasting trading relationships. This also means more proactive service. As our broker workbench capabilities mature, we will enable automated coverage gap identification and AI-assisted cross-sell analysis. These maturing capabilities will assist our brokers in delivering more value to their retail trading partners by being increasingly proactive. The second of our three principles is our people. We want our brokers to broker and our underwriters to underwrite. Today, too much of their time is spent on manual processes, ingesting submissions, massaging data, chasing subjectivities, and formatting proposals. Not only does AI and automation take that work off their plate, but it will enhance their productivity by giving them capabilities at a speed and scale that weren't possible before. And this goes beyond our brokers and underwriters. We are changing how we train and develop talent. New hires will ramp up faster when our AI tools accelerate institutional knowledge. recommend next steps on unfamiliar risks, and provide real-time guidance informed by decades of placement data. What used to take a junior broker two years to learn through experience, they will begin accessing in just months, accelerating our return on the most accretive investments we make. Across the organization, AI and automation are improving how we operate. We are enhancing our internal tools and systems to give our leaders better data to make timely informed decisions. When our people are equipped with tools that improve speed and efficiency, our clients get better outcomes. The last of our three principles is our process. Put simply, this refers to our scale. We manage over 30 billion in premium across hundreds of products. We are thoughtful in how we're turning manual tasks into re-imagined end-to-end automated workflows deployed across our firm. Within our underwriting management specialty, certain projects are beyond the pilot phase. AI enabled and automated submission processing has reduced turnaround times from approximately 24 hours to under two hours. and look promising to scale. This digital transformation will assist us in scaling this platform without proportional headcount growth, maintaining the differentiated specialist expertise that defines us. Lastly, on process, it means building the right foundation, a unified data and technology architecture for the next decade of growth. Now that we've covered our principles, let's talk about how this all fits together across our two disciplines, wholesale brokerage and delegated authority. On the brokerage side, we are building a submission gateway and broker workbench. These tools allow us to reimagine, redesign, and automate the most time consuming parts of the broker's day. From submission, ingestion, and clearance, to carrier matching, to detailed quote comparison from various carriers. On the delegated authority side, this is where our platform is most differentiated and where some of our most advanced capabilities are operating today. Within Ryan Reed, we have built an AI-powered underwriting platform for our facultative reinsurance business. We have reduced average processing time per submission from approximately two hours to minutes, while increasing the number of submissions each underwriter can evaluate by roughly 10 times. Within Velocity, our property catastrophe MGU, we deployed an AI-driven platform that scores every submission on appetite, fit, and propensity to bind. The results being an 11 times uplift in submit to bind ratios for our highest appetite category compared to our lowest. Simultaneously, the speed to quote has improved by 36% on a median basis. These capabilities are changing how our underwriters work every day, and we are preparing to deploy them more broadly across the firm. Lastly, I would like to remind everyone what business we're in, and why we believe this platform will endure. We solve for complexity through expert-led advice and advocacy and a culture of execution and innovation. Every placement we touch requires specialist judgment on unique risks, negotiation across multiple carriers, and advocacy when the contract needs to perform. That is not a data processing problem. It is an expertise problem, and expertise is what we deliver. Disintermediation risk rises as complexity falls. Ryan Specialty's portfolio sits on the other end of that spectrum. Now, turning to a brief update on our talent investments. The recruiting class from late 2025 is performing very well and contributing to our new business growth. We continue to expect these hires will become margin accretive within two to three years. Stepping back, we are very pleased with the first quarter. That said, we are clear-eyed about what lies ahead, and Janice will walk you through how we're thinking about the rest of the year. With that, I will now turn the call over to our CFO, Janice Hamilton. Thank you.