Ryan Specialty Holdings, Inc. Class A

Good afternoon, and thank you for joining us today for Ryan Specialty Holdings' third quarter 2026 earnings conference call. In addition to this call, the company filed a press release with SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com. On today's call, management's pre-repaired 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 now like to turn the call over to founder and executive chairman of Ryan Specialty, Pat Ryan.

Good afternoon. 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 Wuller, and our Head of Investor Relations, Mick Mezick. For the quarter, total revenue grew 4.7% to $790 million, driven by organic revenue growth of 4%. Adjusted EBITDA grew 3.8% to $244 million. Adjusted EBITDA margin was 30.9% compared to 31.2% in the prior year period. Adjusted earnings per share grew 8.5% to $0.51. For the first nine months of 2026, we've grown organic revenue by 7.3%. Adjusted EBITDA by 7.9% and Adjusted Earnings per Share by 15.1%. In the quarter, we repurchased 3.5 million shares, or $150 million. We delivered for our clients and shareholders in the face of a very challenging and evolving pricing environment. Market trends continued. and some areas intensified. Property pricing has continued to decline, competition and casualty has broadened, and new capacity entered the market. We produced these results against the toughest comparison of the year, a quarter in which we grew organically 15%. Considering these challenges, I could not be more proud of this team. We know our business is measured first by organic growth We continued investing back into our business, notably with our second-largest hiring class in late 2025, and displayed disciplined expense management, leading to an adjusted EBITDA margin that is down only 30 basis points year-to-date. Our top and bottom line results speak to the resilience of the platform we've built. and a team that is working tirelessly to control what they can control. Providing specialty expertise, expanding our distribution reach by going deeper and broader with our clients, building strong pipelines, leveraging our proprietary data advantage to create innovative and unique solutions, expanding into new specialties to meet evolving client demand, Thank you for joining us. Technology and new capabilities, even in a tougher market. We'll continue to invest in our business, pursue disciplined M&A, and opportunistically repurchase our shares when we believe it is the best use of our capital. When the right strategic opportunities present themselves, ones that are a strong cultural fit, strategic and accretive, we will be first in line. The capacity to execute. Lastly, before I hand it to Tim, I want to take a moment to address a question that's been on a lot of people's minds. Whether AI will disintermediate all or part of insurance distribution. We view AI as a tool. It makes great specialists even better. It does not replace them. Here's why. I've spent more than 60 years in this industry. I firmly believe that the greatest asset globally in commercial insurance is the U.S. distribution system, a distribution system supported by talented, knowledgeable individuals. Within that system, specialty distribution plays a critical role, and that is where we have built a leading position. At Ryan Specialty, We advise our clients on their most complex exposures. We advocate for them when it matters most. We bring together pools of capital from around the world to build solutions for complicated risks, spreading that risk appropriately across the market. And we do this through person-to-person relationships built on trust and a fiduciary responsibility to our clients. Technology will make those relationships even stronger, and we are committed to leaning in across all three of our specialties. With that being said, trust is not something you can simply prompt your way to. Our clients rely on us, and we have to earn their trust every day. We built this company to support our clients, insurance brokers, agents, and carriers alike. Thank you for joining us. Placements that require specialist judgment, negotiation across multiple markets, and real advocacy when a claim needs to be paid. Our specialty expertise is our ultimate differentiator. That is why we continue to attract differentiated talent, many of the best in our industry. Additionally, the need for what we do is structural, and it is growing. Today, the E&S market represents 27% of commercial P&C, and delegated underwriting authority represents 20%. The expansion of these channels didn't happen by accident. It reflects a market that grows more complex every year to meet risks that are larger, newer, and more difficult to place. We believe that we helped lead the growth of delegated authority and today we remain the largest delegated underwriting authority platform in the world. Those structural tailwinds remain firmly in place and so does our position at the center of them. We built this company to perform through the cycle and to emerge from each one stronger. And most importantly, our people are committed to our mission day in and day out. For that, I'm pleased to turn the call over to our Chief Executive Officer, Tim Turner. Tim.

Thank you very much, Pat. I'm very proud of how our team performed this quarter. Market trends continued and in some areas intensified. We stayed focused on what we can control, building pipelines, winning new business, and retaining existing business. As we've long said, we've built this firm to support our clients. And our clients noticed. Earlier this month at an industry conference, our teams met with the leaders of many of our retail broker clients and carrier trading partners. The feedback we received was the most positive I can remember. That's the clearest validation of what Pat described. Differentiated talent, deep specialty expertise, and independence. These are what our clients value most. Turning to our results by specialty, our wholesale brokerage specialty continues to deliver in the face of ongoing and significant industry challenges. As we signaled last quarter, the property market was every bit as challenging as we indicated. Pricing on many CAT-exposed and large accounts continued to decline. Incremental capacity entered the market. That said, our brokers battled intensely, won head-to-head against our competitors, displayed strong renewal retention, and captured new business from the steady flow into the ENS channel. Thank you for watching. particularly on large infrastructure projects. We were encouraged by activity tied to data centers, which improved each quarter in 2026. As we have said before, this business is inherently lumpy and the timing of large project bindings is difficult to predict. We remain optimistic about the pipeline and we are well positioned as the leading wholesale broker in the construction space. Broadly, most casualty lines continue to be impacted by social inflation and challenging litigation trends, which support the need for adequate pricing. Rates remain positive in the toughest classes, but we have seen some moderation in casualty pricing as competition has broadened beyond small commercial and middle market and into pockets of high hazard classes. Despite ongoing pricing pressure, our professional lines team once again outperformed the market, expanding market share. Now, turning to our delegated authority specialties, which include both binding authority and underwriting management. As we signaled last quarter, our Binding Authority specialty saw intensified competition, driven by new facilities and the admitted market competing aggressively for small commercial business. To partially offset these pressures, we're broadening our customer base, deepening relationships with regional and independent retail agencies. We are also developing proprietary products within core high-hazard ENS classes, given our clients differentiated solutions to help provide successful outcomes on challenging classes of business. Binding is a business we know well, and we are navigating these pressures the way we always do, leaning on our talent, our product breadth, depth, and expertise, and our exceptional service. Our underwriting management specialty had a solid quarter, led by reinsurance and transactional liability, while consistently exercising appropriate discipline relative to market conditions. Ryan Rhee delivered another great quarter, with strong renewal retention in the face of a challenging pricing environment, and another strong quarter from the Markell portion of the book. Transactional liability growth was strong, despite global M&A activity that faded throughout the quarter amid broader macroeconomic uncertainty. Partially offsetting this was the continued softness in our builders' risk businesses, also driven by ongoing macro pressures. We are not standing still. We are bringing more product to the market, competing for every account, and winning more than our share. Now, a few words on our people. As we've noted repeatedly, talent is our most important asset and remains the most accretive investment we can make. Our late 2025 hiring class continues to perform well, contributing to new business growth. Our producer retention remains in the mid-90s, among the highest in the broader financial services industry. We continue to be a net attractor of differentiated talent with a very high success rate of retaining producers that we want to retain. Moreover, our teams are highly competitive with an impressive history of retaining books of business. Our culture, our platform, our broad employee ownership and the only truly liquid equity of any pure play specialty intermediary keep our best people here. And many of the best specialists in our industry continue to choose Ryan's specialty. Lastly, I want to update you on our AI initiatives throughout the firm. We invest in solutions and workflows that improve client outcomes. Make our people more productive and make our processes faster and more reliable. For our clients, we launched Terra Underwriters in August, a new MGU built to serve the emerging AI economy. Terra offers up to $625 million of capacity for computing hardware like GPUs deployed in data centers and crypto mining facilities. It's in its early days, but Terra is exactly the kind of innovative solution our clients count on us to bring to the market, and we've already built on it. Terra combined its expertise with Trident, our marine and energy MGU, to create a solution for GPUs and related AI infrastructure while in transit, increasing limits from $10 million to $100 million per shipment. As AI creates risks that are larger, newer, and more complex than any single carrier may be able to take on alone, our model is built for exactly that, specialist expertise, purpose-built underwriting, and the ability to bring together pools of capital from across the market. Thank you for joining us today. Thank you for joining us today. Thank you for watching. Through our AI Enablement Center, they can design, test, and implement those ideas in a controlled environment, governed for security, supported by broader access to data, and the latest AI technology. This initiative speaks to our culture of innovation. Adoption throughout the firm is accelerating, with demand for AI training growing across every business unit. For our processes, we're putting AI to work to generate capacity so our teams can spend more of their time transacting deals and winning new business. In Ryan Re, we've built a common set of AI capabilities from ingesting and organizing data all the way to enrichment, pricing, and decision support that we combine into purpose-built underwriting workbenches for each line of business. Our Casually Thacked Workbench is the first to roll off that assembly line. For commercial auto liability submissions, we have cut processing time per submission from as much as two hours to under three minutes. Workbenches help Ryan Reed drive better risk selection, sharper portfolio analytics, stronger reporting for our capital partners, and higher production per underwriter. We plan to develop more workbenches across other lines of business within Ryan Re and across the firm. In RT Specialty, our teams now have an LLM-driven tool that automatically files policy documents, freeing them to focus on client-centric work. This tool filed tens of thousands of documents last quarter, with adoption accelerating sharply through September. In Ryan Specialty Benefits, AI-enabled RFP intake has allowed certain teams to review roughly 30% more submissions each week. These solutions are building blocks. We pilot, refine, and scale each solution as it proves its value. And they are laying the foundation for larger integrated solutions. All of this runs inside an enterprise governance framework built for agentic AI with human review at every decision point. Across the enterprise, through HR, legal, marketing, finance, and certainly IT, we've adopted new technology and accelerated the use of internal software development. We're encouraged by the early results we're seeing across many use cases, Our advantage remains our proprietary data and hard-won expertise, and we continue to believe we will be a clear net beneficiary of this transformation. In closing, we are proud of our third quarter. We retained high levels of existing business, won significant new business, and built our pipeline across the firm in one of the most challenging markets we have ever seen. We are doing what we do best, controlling what we can control, adapting, and executing. With that, I will now turn the call over to our CFO, Janice Hamilton. Thank you.