Executive Summary / Key Takeaways

• Ryan Specialty is strategically positioned within the growing and increasingly complex Excess and Surplus (E&S) insurance market, leveraging its specialized expertise, differentiated platform, and strong relationships to capture market share from competitors and capitalize on risks shifting from the admitted market.
• Recent financial performance demonstrates robust growth, with Q1 2025 total revenue increasing 25.0% year-over-year, driven by both strategic M&A (12.1% contribution) and solid organic expansion (11.9%), despite headwinds in certain lines like property.
• The company is aggressively building out its higher-margin Delegated Authority business (Binding Authority and Underwriting Management) through significant M&A, which contributed over 50 percentage points to Underwriting Management's top-line growth in Q1 2025 and is expected to drive future organic growth and margin expansion.
• Investments in technology, including streamlining workflows, digitizing processes, and exploring AI, are aimed at enhancing operational efficiency, reducing cycle times, and supporting long-term margin targets, particularly by improving workforce productivity.
• Management maintains a positive outlook, guiding for 11-13% organic revenue growth and 32.5-33.5% Adjusted EBITDAC margin for full-year 2025, with a target of reaching a 35% Adjusted EBITDAC margin by the end of 2027, supported by continued E&S market growth, M&A integration, and operational efficiencies.

The Specialty Insurance Advantage: Ryan Specialty's Growth Engine

Ryan Specialty Holdings, Inc. (RYAN) operates at the intersection of complexity and opportunity within the insurance industry. Founded in 2010 by Patrick G. Ryan, the firm established itself with a clear mission: to deliver innovative specialty insurance solutions for brokers, agents, and carriers. At its core, RYAN functions predominantly as a wholesale broker and a managing underwriter or program administrator, wielding delegated authority from insurance carriers to place complex and hard-to-place risks. This business model thrives within the Excess and Surplus (E&S) market, a segment characterized by greater flexibility in terms, conditions, and rates compared to the standard Admitted market. The E&S market's growing relevance is a direct response to an increasingly risky world, marked by severe weather events, social inflation, cyber threats, and other high-hazard exposures that standard insurers are less equipped to handle efficiently.

RYAN's strategy is built upon several pillars: cultivating deep relationships with retail brokers and carriers, developing specialized expertise across various risk classes, investing in its platform and talent, and executing a disciplined M&A strategy. This approach has allowed RYAN to differentiate itself in a competitive landscape populated by large, diversified players like Arthur J. Gallagher (AJG), Marsh & McLennan (MMC), Aon (AON), and Willis Towers Watson (WTW), as well as smaller, niche competitors and emerging insurtech firms.

While larger peers like MMC and AJG boast broader global networks and greater scale, RYAN carves out its competitive space through a focused approach on specialty products and underwriting. Its strength lies in providing tailored solutions and technical expertise for complex risks, often winning business by taking market share from competitors and maintaining high client retention. The company believes its differentiated platform, driven by specialized talent and a culture of innovation, is difficult for rivals to replicate, providing a competitive moat. This is particularly evident in its growing Delegated Authority segment, where its track record of delivering profitable underwriting results attracts capital providers and enhances its market position.

Central to RYAN's operational effectiveness and future growth is its investment in technology. The company is focused on streamlining and digitizing workflow processes, consolidating systems, and investing in workbenches. These initiatives are designed to reduce cycle times, speed up the delivery of insights to clients, and process non-strategic activities more efficiently. By equipping its producers and underwriters with better tools, RYAN aims to enhance productivity and manage its expense base strategically. Furthermore, the company is actively experimenting with AI solutions, signaling a commitment to leveraging emerging technologies to drive value. While specific quantitative metrics on the performance benefits of these technologies were not detailed, the strategic intent is clear: to support long-term growth, improve operational margins, and make the workforce more efficient, ultimately contributing to the company's ability to achieve its financial targets. This technological focus, combined with its specialized expertise, positions RYAN to potentially offer more efficient and effective solutions in its niche areas compared to competitors relying on more generalized platforms.

Performance Reflecting Strategic Momentum

Ryan Specialty's financial performance in the first quarter of 2025 underscored the effectiveness of its growth strategy. Total revenue surged by 25.0% year-over-year to $690.2 million. This impressive top-line expansion was a result of both strategic inorganic growth and solid organic momentum. Acquisitions completed in 2024 and the Velocity acquisition in early 2025 contributed 12.1 percentage points to the growth, while organic revenue growth accounted for 11.9 percentage points. This organic growth was achieved despite facing a challenging property market where rate deceleration and increased capacity led some retailers to place coverage directly. The company's ability to grow organically in this environment was attributed to winning new business from competitors, maintaining high renewal retention, and benefiting from the overall increase in the flow of risks into the E&S market, particularly in casualty lines.

On the expense side, Compensation and benefits increased by 15.2% to $430.3 million, driven by higher commissions commensurate with revenue growth, acquisition-related expenses and long-term incentives, and the addition of 1,155 employees (including acquired talent). This increase was partially offset by the completion of the ACCELERATE 2025 program, which reduced restructuring-related expenses. General and administrative expenses rose by 39.8% to $106.1 million, primarily due to increased professional services, IT charges related to technology initiatives, higher travel and entertainment, and costs associated with business growth. Amortization expense saw a substantial jump of 132.2% to $65.0 million, a direct consequence of the intangible assets acquired through recent M&A. Interest expense, net increased significantly by 85.4% to $54.5 million, reflecting the higher debt levels incurred to fund acquisitions.

Despite the increase in expenses, the company demonstrated operational leverage. The Adjusted EBITDAC margin expanded by 60 basis points year-over-year to 29.1% in Q1 2025, driven by strong revenue growth and contributions from recent acquisitions, though partially offset by headwinds from lower fiduciary investment income and the timing of certain expenses. The GAAP Net Income, however, showed a loss of $4.4 million in Q1 2025, compared to income of $40.7 million in Q1 2024. This GAAP loss was primarily due to a non-recurring, non-cash deferred tax expense ($48.1 million) related to the reorganization of the recently acquired Velocity business from a C-Corp to an LLC, a strategic move aimed at improving future tax efficiency. Excluding this non-cash item and other adjustments, Adjusted Net Income grew by 13.0% to $107.8 million, resulting in Adjusted Diluted Earnings Per Share of $0.39, an increase of 11.4%.

Looking back at the full year 2024, RYAN reported total revenue exceeding $2.5 billion, a 21% increase year-over-year, with organic growth of 12.8%. Adjusted EBITDAC grew 30% to $811 million, and the Adjusted EBITDAC margin expanded by 210 basis points to 32.2%, demonstrating strong underlying profitability trends driven by revenue growth, ACCELERATE 2025 savings, and underlying business improvement.

Examining the revenue by Specialty, Underwriting Management saw the most significant growth, increasing by 69.6% to $213.4 million, heavily influenced by contributions from recent acquisitions (adding over 50 percentage points). Wholesale Brokerage grew by 11.5% to $360.8 million, and Binding Authority increased by 15.0% to $102.0 million, both driven by strong organic performance. Supplemental and contingent commissions also saw a healthy increase of 29.1%, reflecting favorable underwriting performance on eligible business.

Strategic Expansion and Market Dynamics

Ryan Specialty's growth story is inextricably linked to its strategic M&A program and its ability to navigate dynamic market conditions. The company views M&A as a top priority, focusing on acquiring businesses that bring differentiated talent, expand capabilities, and increase its total addressable market, particularly within the Delegated Authority space. The past year has been notably active, with significant deals like the acquisition of US Assure, a major program in builders risk, which added a highly efficient distribution portal and deepened RYAN's presence in the SME admitted segment. Other key acquisitions like Castel and Innovisk expanded the international footprint and added unique MGU capabilities across various lines. The Velocity acquisition in early 2025 added critical property expertise, while the recent USQ acquisition bolstered alternative risk offerings. These acquisitions not only contribute directly to revenue but are also expected to fuel future organic growth by integrating new capabilities and relationships into RYAN's existing platform.

The Delegated Authority segment, encompassing Binding Authority and Underwriting Management, is a core focus for expansion. Management believes this segment is ripe for consolidation and offers significant long-term growth opportunities. The strategic rationale is validated by industry trends showing increasing carrier reliance on scaled Delegated Authority partners for niche specialization, efficiency, and market access. RYAN's track record of delivering profitable underwriting results is key to attracting and retaining carrier partnerships in this space.

Market conditions remain a critical factor. The property market, after a period of rapid rate acceleration, experienced moderation and even deceleration in the latter half of 2024 and early 2025, influenced by increased capacity and the absence of major catastrophe events in some periods. However, management remains bullish on property long-term, citing persistent structural changes like increasing population density in catastrophe-exposed areas, rising property values, and the ongoing impact of climate change driving risks into the E&S market. They expect modest growth in property for 2025, relying on market share gains and retention to offset rate headwinds.

Conversely, the casualty market continues to firm, driven by accelerating loss costs fueled by social inflation (nuclear verdicts, litigation finance) and concerns over reserve adequacy for recent accident years. This environment leads standard markets to shed risks, increasing flow into the E&S channel. RYAN's specialized casualty practices are well-positioned to capitalize on this trend, which is expected to be a strong driver of growth.

Operational efficiency is being enhanced through the ACCELERATE 2025 program, which concluded at the end of 2024. This initiative is expected to generate approximately $60 million in annual savings in 2025 (gross of reinvestment), providing financial flexibility to fund a larger-than-average investment year in talent, operations, and technology. These investments are aimed at supporting long-term growth and contributing to future margin expansion.

Outlook and Risks

Ryan Specialty has provided clear guidance for 2025, reflecting confidence in its strategic direction and market positioning. The company expects full-year organic revenue growth to be between 11% and 13%. This outlook is based on the expectation of continued strong flow into the E&S channel, robust performance in casualty lines, modest growth in property despite rate pressures, and the benefits of integrating recent acquisitions.

From a profitability perspective, RYAN guides for a full-year Adjusted EBITDAC margin between 32.5% and 33.5%. This anticipated margin expansion is expected to be driven by contributions from recent M&A, underlying operational scaling, and the realization of savings from the ACCELERATE 2025 program. These positive factors are partially offset by a projected headwind from lower fiduciary investment income due to the interest rate environment. Looking further ahead, management has set a target of achieving a 35% Adjusted EBITDAC margin by the end of 2027, with incremental improvements expected in 2026 and 2027.

The company's liquidity position is supported by cash on hand, cash flow from operations, and available capacity under its credit facilities. While the Velocity acquisition and seasonal working capital needs placed leverage at the higher end of the 3x to 4x comfort corridor in Q1 2025 (3.8x total net leverage), management is willing to temporarily exceed this for strategic M&A and expects to de-lever significantly by year-end absent further large deals.

The company's debt structure includes a Term Loan and Senior Secured Notes, and it was in compliance with all covenants as of March 31, 2025. Obligations under the Tax Receivable Agreement ($447.4 million liability as of March 31, 2025) are expected to be funded by tax distributions from the LLC.

Key risks to the outlook include potential changes in macroeconomic conditions, which could impact underlying economic activity and demand for certain insurance lines. While the E&S market is resilient, shifts in insurer appetite or capacity could influence flow and pricing. The challenging loss environment, particularly social inflation in casualty, could impact carrier profitability and their willingness to deploy capital. Integration risks associated with numerous recent acquisitions could affect expected synergies and performance. Furthermore, estimates related to contingent consideration and loss contingencies (like the trading partner issue) could change, impacting financial results. The competitive landscape remains intense, requiring continuous investment in talent and technology to maintain differentiation.

Conclusion

Ryan Specialty is executing a clear and effective strategy centered on capitalizing on the increasing complexity of the E&S insurance market and expanding its footprint, particularly within the high-growth Delegated Authority segment. The company's recent financial performance, marked by strong revenue growth fueled by both organic initiatives and strategic M&A, demonstrates its ability to thrive even amidst challenging market dynamics in specific lines. By leveraging its specialized expertise, differentiated platform, and investing in operational efficiency and technology, RYAN is positioning itself to continue capturing market share and delivering profitable growth. While macroeconomic uncertainty and specific market headwinds present risks, the company's focus on talent, innovation, and disciplined capital allocation, supported by a robust M&A pipeline and clear margin expansion targets, provides a compelling investment thesis for navigating the evolving specialty insurance landscape.