Ryan Specialty, a leading international specialty insurance firm, has consistently demonstrated its ability to navigate the ever-evolving insurance landscape, delivering exceptional financial performance and solidifying its position as a premier provider of specialty insurance solutions.
Company Background and History
Founded in 2010 by industry veteran Patrick G. Ryan, Ryan Specialty has carved out a unique niche in the insurance industry, offering a comprehensive suite of specialty products and services to insurance brokers, agents, and carriers. The company's unwavering commitment to innovation, exceptional talent, and strategic acquisitions has been the driving force behind its remarkable growth trajectory.
Patrick G. Ryan, a widely respected entrepreneur and global insurance leader, established Ryan Specialty after previously founding Aon, one of the largest global retail insurance brokers. The company was created to provide specialty products and solutions for insurance brokers, agents, and carriers, acting as both a wholesale broker and a managing underwriter or program administrator with delegated authority from insurance carriers.
In its early years, Ryan Specialty focused on building its intellectual capital and developing differentiated solutions to meet the evolving needs of the specialty insurance market. The company successfully attracted top talent in the industry and leveraged its trusted relationships to grow its business. This strategy paid off, as Ryan Specialty experienced strong organic growth in its first decade, achieving double-digit revenue growth each year.
A significant milestone for the company was its initial public offering in 2021, which provided additional capital to fund growth initiatives. Following the IPO, Ryan Specialty continued to execute on its strategy, making a series of strategic acquisitions to expand its product capabilities, geographic footprint, and underwriting management expertise. Notable acquisitions included the purchases of Castel Underwriting, US Assure, and Innovisk Capital Partners.
Throughout its history, Ryan Specialty has demonstrated resilience and an ability to adapt to challenges in the dynamic and evolving insurance market. In 2022, the company faced headwinds due to the COVID-19 pandemic, which disrupted business operations and the broader economy. However, Ryan Specialty successfully navigated this period, maintaining strong financial performance and continuing to invest in its business.
Financial Strength and Resilience
Ryan Specialty's financial performance has been nothing short of impressive. In 2024, the company reported total revenue of $2.52 billion, up 21% year-over-year, with organic revenue growth of 12.8%. This marked the company's 14th consecutive year of double-digit organic revenue growth, a testament to its ability to deliver consistent and sustainable growth.
The company's adjusted EBITDAC grew by 30% to $811 million in 2024, with an adjusted EBITDAC margin expansion of 210 basis points to 32.2%. This strong profitability is further reflected in the company's adjusted earnings per share, which grew 30% to $1.79 in 2024.
For the fiscal year ended December 31, 2024, Ryan Specialty reported net income of $229.91 million, operating cash flow of $514.87 million, and free cash flow of $467.87 million. In the most recent quarter (Q4 2024), the company reported revenue of $663.53 million, representing a 24.5% year-over-year increase, and net income of $42.55 million. The strong revenue growth was driven by 11% organic growth as well as contributions from recent acquisitions.
Liquidity and Balance Sheet
Ryan Specialty's balance sheet remains solid, with a net debt position of $2.74 billion as of December 31, 2024, and a total debt to capitalization ratio of 84.7%. The company's healthy financial position provides it with the flexibility to continue executing its strategic growth initiatives, including targeted acquisitions.
As of December 31, 2024, Ryan Specialty had a debt-to-equity ratio of 5.52. The company's liquidity position was strong, with $540.20 million in cash and cash equivalents on its balance sheet and $1.40 billion in available borrowing capacity under its revolving credit facility. Ryan Specialty's current ratio and quick ratio were both 1.05, indicating a solid ability to meet short-term obligations.
Diversified Business Model and Expanding Footprint
Ryan Specialty's business model is built upon three specialized Specialties: Wholesale Brokerage, Binding Authority, and Underwriting Management. This diversified approach has enabled the company to navigate various market conditions and capitalize on emerging opportunities.
The Wholesale Brokerage Specialty, which accounts for 60.6% of the company's net commissions and fees, has demonstrated resilience, delivering 12.9% year-over-year growth in 2024. This segment, operating predominantly under the RT Specialty brand, generated $1.49 billion in revenue in 2024. It distributes a wide range of specialty property, casualty, professional lines, personal lines, and workers' compensation insurance products from insurance carriers to retail brokerage firms across all 50 U.S. states.
The Binding Authority Specialty, contributing 13% of net commissions and fees, also experienced strong growth of 16.1% during the same period. Operating under the RT Specialty and RT Binding Authority brands, this segment generated $320.4 million in revenue in 2024. It provides timely and secure access to carrier trading partners that have delegated underwriting authority to Ryan Specialty through in-house binding agreements.
The Underwriting Management Specialty, which generated 26.3% of net commissions and fees, saw an impressive 49.7% year-over-year increase, bolstered by recent acquisitions and organic growth. This segment, operating under multiple brands collectively referred to as Ryan Specialty Underwriting Managers, generated $646.2 million in revenue in 2024. It offers insurance carriers cost-effective specialty market expertise in distinct and complex market niches through 39 MGAs and MGUs.
In 2024, Ryan Specialty completed a record seven acquisitions, adding over $265 million in annual revenue and expanding its capabilities in key areas such as international operations, specialty programs, and delegated underwriting authority. These strategic investments have strengthened the company's position as a leading specialty insurance provider, enhancing its product offerings and geographic reach.
While Ryan Specialty does not break out performance by geographic markets, the company noted that approximately 5% of its 2024 revenue was generated outside of the United States, primarily in the United Kingdom, Europe, Canada, India, and Singapore.
Embracing Technological Innovation
Ryan Specialty has consistently demonstrated its commitment to technological innovation, which has been a key driver of its success. The company's proprietary digital platform, RT Connector, has revolutionized the way it serves its retail broker and wholesale clients, enabling efficient placement of smaller-premium accounts, rapid evaluation of submissions, and cost-effective policy binding.
Furthermore, Ryan Specialty has been at the forefront of embracing artificial intelligence and data analytics to enhance its underwriting capabilities, improve decision-making, and provide more innovative solutions to its clients. These technological advancements have not only improved the company's operational efficiency but have also solidified its position as a trusted partner for its trading partners.
Navigating Challenges and Emerging Opportunities
The specialty insurance industry has faced its fair share of challenges, including the ongoing impact of the COVID-19 pandemic, supply chain disruptions, and the increasing frequency and severity of natural disasters. However, Ryan Specialty has proven its resilience and adaptability, leveraging its diversified business model and specialized expertise to navigate these obstacles.
The company's strategic focus on the growing Excess and Surplus (E&S) market has positioned it well to capitalize on the rising demand for specialty insurance solutions. The E&S market has been expanding at a rapid pace, driven by the increasing complexity and volatility of risks across various industries. According to industry data, the E&S market has grown at a CAGR of 10.5% between 2010 and 2023, outpacing the 4.6% CAGR of the admitted insurance market over the same period. The E&S market share as a percentage of total U.S. commercial insurance premium increased from 13.5% in 2010 to 24.2% in 2023. Ryan Specialty's deep understanding of these evolving risk profiles and its ability to provide customized solutions have been instrumental in its success.
Furthermore, the company's commitment to talent development and retention has been a key competitive advantage. Ryan Specialty has consistently attracted and retained industry-leading professionals, who have been instrumental in driving the company's innovation and exceptional client service.
Looking Ahead
As Ryan Specialty moves forward, the company is well-positioned to continue its impressive growth trajectory. The company's guidance for 2025 reflects its confidence in its business model, with an expected organic revenue growth between 11% and 13% and an adjusted EBITDAC margin expansion to a range of 32.5% to 33.5%. Looking further out, Ryan Specialty believes it is on track to hit a 35% adjusted EBITDAC margin by the end of 2027.
The company's strategic investments in technology, talent, and acquisitions are expected to further strengthen its competitive position and enable it to capitalize on the growing demand for specialty insurance solutions. Additionally, Ryan Specialty's commitment to sustainable practices and its focus on environmental, social, and governance (ESG) initiatives have positioned the company as a responsible corporate citizen, enhancing its appeal to various stakeholders.
In conclusion, Ryan Specialty's resilience, innovative spirit, and unwavering focus on delivering exceptional value to its clients have solidified its status as a leading player in the specialty insurance industry. As the company continues to navigate the evolving market landscape, investors can expect Ryan Specialty to remain a compelling investment opportunity, poised for continued growth and value creation.