Ryan Specialty : Financial Results Presentation Q1 2025

Published: 2025-05-01 16:21:31 ET RYAN

Published on 05/01/2025 at 16:21

INVESTOR PRESENTATION

May 2025

OUR FOUNDING THESIS

TREND

World is becoming riskier and more complex

Retail brokers are getting substantially bigger

Using too many wholesalers is expensive and inefficient

Delegated underwriting authority has durable value

Broad panel

Fewer strategic trading partners

CARRIERS

Retail broker



Want access to specialized talent on a variable cost basis

UNDERWRITERS

Are drawn to an independent, entrepreneurial model

Elevated risk and complexity drives greater need for specialty

solutions

Retailers need Wholesalers that match their scale and

sophistication

Retail brokers require a more wholistic solution

from fewer trading

partners

Carrier adoption and number of innovative solutions is growing

WHO WE ARE

We are a rapidly growing provider of specialty products and solutions for insurance brokers, agents and carriers.

For retail insurance brokers, we assist in the placement of complex or otherwise hard-to-place risks.

For insurance carriers, we work with retail and wholesale insurance brokers to source, onboard, underwrite and service these same risks on a variable cost basis.

2010

founded

2nd

largest U.S. P&C wholesale broker / managing underwriter1

$2.7bn

3/31/25 LTM

total revenue

25.0%

12.9%

3/31/25 YTD

total revenue growth

1 According to premium volume; Source: Business Insurance, company filings

3/31/25 YTD

organic revenue growth2

2 Non-GAAP measure; Please see the appendix for a reconciliation of organic revenue growth to the most comparable GAAP measure.

DRIVING VALUE BY SECURING COVERAGE FOR COMPLEX SPECIALTY RISKS

Traditional risks

76%

of the commercial market (Admitted market)1

Standard Insurance Carrier

(Risk bearing)

Insureds

Retail Broker

(Commission and fee model)

Bespoke, complex, or larger risks

24%

of the commercial market (E&S market)

Wholesale Broker Underwriting Manager (Commission and fee model)

Specialty Insurance Carrier

(Risk bearing)

Source: SNL, AM Best September 18, 2024 Market Segment Report; 1 ~22% of Ryan Specialty's business was in the admitted market for the year ended 12/31/2024

78% OF OUR PREMIUMS ARE PLACED IN THE ATTRACTIVE E&S MARKET1

WHAT IS THE E&S MARKET? WHAT IS DRIVING THE E&S MARKET?

1 For the year ended 12/31/2024

TOTAL ADDRESSABLE MARKET IS POISED FOR FURTHER GAINS

RYAN Total Addressable Market

E&S PREMIUMS & TOTAL NORTH AMERICA COMMERCIAL P&C PREMIUMS

($bn)

$450

$479

E&S CAGR1

$149

$258

$33 $235

$203

$224

$32

$292

$356

10.5%

Admitted Market CAGR1

4.3%

E&S %

of Total

2000 2005 2010 2015 2020 2022 2023

Extensive Market Opportunity

13%

14%

19%

22%

24%

Source: SNL, AM Best September 18, 2024 Market Segment Report. 1 For the period 2000 to 2023.

A CLEAR VALUE PROPOSITION

Retail Brokers

Employees

Carriers

Wholesalers are a "force multiplier" for retail brokers:

Specialized expertise

More efficient results for their clients

Access to industry-leading talent on a variable cost basis

Retailers have used wholesalers for

~84% of E&S placements over the last 5 years1

Independent, specialty firms like Ryan Specialty are a destination of choice - the most talented professionals want:

To work with all retail brokers, only possible through independence

A platform that provides the highest earnings potential

An entrepreneurial culture

Ryan Specialty had 98% producer retention in 2024

Carriers rely on wholesalers with MGAs / MGUs for product expertise and distribution capabilities:

Ability to quickly enter niche markets on a variable cost basis

Expert talent and a diverse specialty portfolio

Access to >30,000 retail brokers

Underwriting profitability, growth, and agility are paramount to carrier success

1 Per AM Best September 18, 2024 Market Segment Report

BUILT FOR LONG TERM SUCCESS

EcosRyysatenmSpoefcEiaxlcteyl'slence Ecosystem of Excellence

Our Ability to Innovate, Evolve, and Win

is underpinned and perpetuated by our foundational pillars

Entrepreneurial & Empowering Culture

Destination of choice for top talent and M&A opportunities

Attract, retain, and develop technical, growth-minded talent

Industry-leading retention rates

Unique Relationships and Position of Trust

Deep relationships with leading insurance institutions

Drive partner profitability and growth

Valued force multiplier for the success of brokers, agents, and carriers

Scale and Scope of Expertise

Unmatched, hard-to-replicate breadth and depth of specialty capabilities

Focus on growth markets, capturing secular tailwinds, and capitalizing on emerging opportunities

Product Expertise

MGUs

Provide Lasting Solutions

Industry Expertise

Wholesale Value Proposition

Strength of

Relationships Drive Client Outcomes

Depth & Breadth of Platform

Speed & Efficiency

WHOLESALE BROKERS & MGUS OFFER A UNIQUE VALUE TO OUR CLIENTS

COMPREHENSIVE, FULL SERVICE PRODUCT OFFERING

Wholesale Brokerage 59%

Binding Authority 13%

Underwriting Management 28%

Brand

Operating model

Distributes a wide range of products from insurance carriers to retail brokers

Value proposition

Focused, specialized servicing of retail agent's most challenging risks

Places larger-volume, smaller premium policies efficiently with insurance carriers

Timely and secure access to insurance carriers through in-house binding arrangements

Designs, underwrites, binds and administers policies on behalf of carriers

Provides carriers with effective market expertise in distinct and complex niches

Construction liability Directors and officers Real Estate / Habitational Environmental liability Coastal wind coverage

Manufacturing Start-ups Distressed property Subsidized housing Long-haul trucking

Illustrative coverages

Cyber Renewable energy Professional liability Transactional liability

Product liability

Note: Specialty mix represents 2024 Net Commissions and Fees

PROVEN ABILITY TO ATTRACT, RETAIN AND DEVELOP HUMAN CAPITAL

Our people are the key to our success and we seek the most talented professionals in the industry

PRODUCER HIRING AND RETENTION

Ryan Specialty's platform and

culture make it a destination of choice for top-tier talent

New hire classes typically cover their costs by the end of year two, hitting target margins by the end

of year three

98% Producer retention1

KNOWLEDGE DEVELOPMENT

Cutting-edge sourcing and

development program through Ryan Specialty University

Effectively empowering talent

and fostering the next generation drives future growth

78% of Ryan Specialty's

Producers grew their book of business in 2024

INNOVATION

Innovation is part of our DNA and is leveraged to meet the evolving and growing needs of our clients

and trading partners

Creation of proprietary products

serving novel industries:

Continue to stay ahead of the curve:

12 active de novo MGUs

Digital distribution

Data & Analytics

1 Retention metrics for FY 2024

MULTIPLE AVENUES FOR GROWTH

ORGANIC GROWTH STRATEGIC ACQUISITIONS

Deepen and broaden relationships with retail brokers

Access to >30,000 retail insurance brokerage firms

Ryan Specialty's revenue growth with the top 100 retail brokerage firms exceeded Ryan Specialty's organic revenue growth of 12.8% in 20241

59 acquisitions completed since founding

Approximately $59mm of revenue acquired in 2019, $240mm

in 2020, $34mm in 2021, $98mm in 2023, $268mm in 2024,

$81mm thus far in 2025.

Ability to improve performance at acquired firms

Expanding TAM into new specialties - Ryan Alternative Risk and Ryan Specialty Benefits

1 2  Executing on acquisitions that are a cultural fit, strategic,

and accretive

DELEGATED AUTHORITY OPPORTUNITY

Building durable value proposition by delivering 4

consistently profitable underwriting results, growth, and scale on a variable cost basis

M&A opportunity is ripe, and there is a nascent opportunity

for panel consolidation in Binding Authority

Opportunity to comprehensively address the delegated authority market, which represented 29% of E&S premiums in 20233

DE NOVOS, INTERNAL DEVELOPMENT & NEW HIRES

Capitalizing on market needs to enhance our product capabilities

through the launch of new MGU's and Programs

Typically each producer cohort has a positive contribution margin by their second year2

World class training and development programs through Ryan Specialty University

1 Non-GAAP measure, please see appendix for a reconciliation of Organic Growth to the most comparable GAAP Measure

2 Represents revenue less expenses

3 Per AM Best September 18, 2024 Market Segment Report

FINANCIAL RESULTS DRIVEN BY MARKET FUNDAMENTALS

is pursuing

Secular growth drivers Strategies Ryan Specialty

Double digit organic growth4

4 - 6%

Retail broker

Panel consolidation Faster growth

Products, structure,

Ryan Specialty's

1 2 3

organic growth

inorganic growth

in E&S market

and producers

organic growth

Estimated to be

~3-5%2

which feeds into Ryan Specialty's organic growth

Retail brokers are consolidating wholesale broker panels from

hundreds to 2-5

3 E&S market growth is outpacing admitted market growth by

~4-6%3

(retail brokers have minimal E&S concentration)

1 Represents 2019-2024 public commercial insurance brokerage median organic growth

2 Represents approximated inorganic growth

3 Represents approximate E&S market outperformance relative to the admitted market over the last thirteen years

4 Non-GAAP measure, please see the appendix for a reconciliation of Organic Growth to the most comparable GAAP measure

Source: SNL, AM Best, company filings; Public insurance commercial brokerage median includes AJG, AON, BRO, BRP, MMC, and WLTW

PROVEN HISTORY OF DOUBLE-DIGIT ORGANIC GROWTH AND STRONG MARGINS

REVENUE ($MM) ADJUSTED EBITDAC2 ($MM)

Organic growth2

$2,516 $2,654

$2,078

$1,725

$1,1871

$1,433

2020

(closed 9/1/20)

2021

2022

2023

2024 3/31/25

LTM

21%

$1,018

17%

15%

13%

13%3

23%

Adjusted EBITDAC

Margin2

$811

$855

$625

$3521

$460

$517

2020

(closed 9/1/20)

2021

2022

2023

2024 3/31/25

LTM

29%

$294

32%

30%

32%

1 Only Revenue of $1,187MM and Adjusted EBITDAC of $352MM include the pro forma effect of All Risks, transaction closed 9/1/20

2 Non-GAAP measure, please see the appendix for a reconciliation of Organic Growth, Adjusted EBITDAC, and Adjusted EBITDAC Margin to the most comparable GAAP measure

3 Represents the period YTD March 31, 2025

FINANCIAL PROFILE

OPERATING CASH FLOW

Ryan Specialty's operating cash flow and conversion of EBITDAC to Free Cash Flow remains strong

Operating cash flow is largely used to service existing debt, finance accretive acquisitions, invest in systems and operations, and invest in initiatives fueling future growth

Strong EBITDAC-to-cash flow conversion driven by:

Limited capex needs

Limited working capital needs

Ryan Specialty maintains sufficient liquidity to fund operations and continue investing in growth with cash on hand and ~$1bn of capacity on our revolving credit facility

In September 2024:

LIQUIDITY

STRONG BALANCE SHEET

Unrestricted cash and cash equivalents $204

($mm) March 31, 2025

$1.4 billion Revolving credit facility 424

S+225 Term Loan due 2031 1,696

4.375% Senior Secured Notes due 2030 400

5.875% Senior Secured Notes due 2032 1,200

Other debt2 2

Ryan Specialty's stated leverage corridor of 3 - 4x is on a credit basis1

As of March 31, 2025, our net leverage on a credit basis1 was 3.8x

LEVERAGE

Raised $600mm of 8yr Senior Secured Notes at 5.875%

Amended and extended Term Loan, alongside increasing the size of the term loan facility to $1.7 billion and reducing interest rate by 50bps

In December 2024, raised $600mm add on to 8yr Senior Secured Notes

In February 2025, increased regular quarterly dividend 9% to $0.12/share on outstanding Class A common stock

Credit adjustments

$78

Credit Statistics

Total debt / Credit Adjusted EBITDAC14.0x

Net debt3/ Credit Adjusted EBITDAC13.8x

Interest Expense Coverage55.1x

1 Represents Adjusted EBITDAC as further adjusted without duplication for: acquired EBITDAC from the beginning of the applicable 12-month reference period, certain run rate expected cost savings and initiatives, and certain other adjustments as permitted in calculating leverage ratios under our debt agreements.

2 Represents other outstanding principal and excludes units subject to mandatory redemption as of 3/31/2025. Refer to FN 6 in the 10-Q for more information

3 Defined as "Total senior debt" less cash attributable to the LLC. Refer to FN 11 in the form 10-Q for further reference

4 Non-GAAP measure, please see the appendix for a reconciliation of Adjusted EBITDAC to the most comparable GAAP measure

5 Defined as Credit Adjusted EBITDAC divided by Interest expense, net

SEASONED AND ALIGNED LEADERSHIP TEAM

Pat Ryan

Executive Chairman

Timothy Turner

CEO, Ryan Specialty Chairman, RT Specialty

Jeremiah Bickham

President

Janice Hamilton

Chief Financial Officer

Miles Wuller

CEO, Underwriting Managers

Ed McCormack

CEO, RT Specialty

Kieran Dempsey Chief Underwriting Officer CEO Ryan Alternative Risk

Lana Jankovic

Chief Audit and Risk Officer

Brendan Mulshine

Chief Revenue Officer

John Zern

President and CEO, Ryan Specialty Benefits

Brenda Austenfeld

Co-President, RT Specialty CEO, RT National Property

Michael Blackshear

Chief Compliance and Privacy Officer, Head of Diversity, Equity & Inclusion

Michael VanAcker Co-President, RT Specialty

Andy Gorman SVP, Strategy and M&A

Michael Conklin

Chief Human Resources Officer

Alice Topping

Chief Marketing and Communications Officer

Mark Katz

General Counsel

Noah Angeletti

Treasurer

KEY INVESTMENT HIGHLIGHTS

Proven Ability to Attract, Retain and Develop Human Capital

Deep Connectivity with Retail Brokers, Free of Channel Conflict

Comprehensive Product Offering and Collaborative Relationships with Carriers

Fragmented Industry and Benefits of Scale Perpetuate M&A

Seasoned and Aligned Leadership Team

MARKET LANDSCAPE OF WHOLESALE BROKERS AND DELEGATED AUTHORITY

LARGEST SPECIALTY INTERMEDIARIES

Rank

Company

2023 P&C

Premiums

($mm)

TOP DELEGATED UNDERWRITING AUTHORITIES1

Rank

Company

2023 P&C

Premiums

($mm)

23,600

18,600

7,100

8,300

…and delegated authority specialists

Only publicly traded "pure play" wholesale broker…

9 1,000

700

Source: Business Insurance September 2024

Source: Business Insurance September 2024, includes Intermediary and MGA rankings.

1 Delegated Authority Premium is a subset of the Specialty Intermediary Premium

APPENDIX

ADJUSTED EBITDAC & ADJUSTED EBITDAC MARGIN RECONCILIATIONS

LTM

($MM) 2020 2021 2022 2023 2024 3/31/25

Total Revenue $1,018.3 $1,432.8 $1,725.2 $2,077.5 $2,515.7 $2,653.8

Net Income $70.5 $56.6 $163.3 $194.5 $229.9 $186.0 Interest expense $47.2 $79.4 $104.8 $119.5 $158.4 $183.6 Income tax expense 9.0 4.9 15.9 43.4 42.6 90.5

Depreciation 3.9 4.8 5.7 9.0 9.8 10.3

Amortization 63.6 107.9 103.6 106.8 157.8 194.8

COMMENTARY

Change in contingent consideration

(1.3 )

2.9

0.4

5.4

(22.9) (36.8)

Acquisition-related expense

Acquisition-related long-term incentive compensation

$18.3

13.1

$4.3

38.4

$4.6

22.1

$23.3 $69.8 $78.7

(4.3) 24.9 34.9

Related to changes in valuation of projected earn-outs

Related to Acquisitions and integration, and non-controlling interest buyouts

Related to All Risks and ACCELERATE 2025

Adjustment related to the extinguishment of the Onex Preferred instrument, changes in state tax rates on the TRA liability, and term loan modification

IPO adjustment related to:

one-time payments made at the IPO

expense related to revaluation of pre-IPO equity awards

expense related to new, one-time IPO awards

Discontinued incentive plan

EBITDAC $192.9 $256.5 $393.8 $478.7 $575.8 $628.4

Restructuring and related expense

13.1

14.7

5.7

49.3

59.7

30.7

Amortization and expense related to discontinued prepaid incentives

14.2

7.2

6.7

6.4

5.2

4.9

Other non-operating loss (income)

32.3

44.9

5.1

10.4

15.0

12.9

Equity based compensation 10.8 13.6 23.4 31.0 52.0 57.1

Discontinued programs expense (0.8 ) - - - - -

IPO-related expenses - 79.5 55.6 38.7 27.0 24.5

Other non-recurring items 0.3 0.4 - - - -

(Income) / loss from equity method investments in related party (0.4 ) 0.8 0.4 (8.7) (18.2) (17.6)

Adjusted EBITDAC $293.5 $460.2 $517.4 $624.7 $811.2 $854.5

Net Income Margin 6.9% 4.0% 9.5% 9.4% 9.1% 7.0%

Adjusted EBITDAC Margin 28.8% 32.1% 30.0% 30.1% 32.2% 32.2%

Pro Forma Impact of All Risks $58.4 - - - - -

Pro Forma Adjusted EBITDAC $351.9 - - - - -

Note: Numbers may not sum due to rounding

CREDIT ADJUSTED EBITDAC TO NET INCOME RECONCILIATION

($MM)

Twelve Months Ended

March 31, 2025

Total Revenue

$2,653.8

Net Income

$184.8

Interest expense, net

183.6

Income tax expense

91.6

Depreciation

10.3

Amortization

194.8

Change in contingent consideration1

(36.8)

EBITDAC

$628.4

Acquisition-related expense

$78.7

Acquisition related long-term incentive compensation

34.9

Restructuring and related expense

30.7

Amortization and expense related to discontinued prepaid incentives

4.9

Other non-operating loss

12.9

Equity-based compensation

57.1

IPO related expenses

24.5

(Income) loss from equity method investments in related party

(17.6)

Adjusted EBITDAC2

$854.5

Credit adjustments3

77.9

Credit Adjusted EBITDAC

$932.4

1 For the twelve months ended March 31, 2025, Change in contingent consideration included a $37.9 million decrease in valuation of the US Assure contingent consideration as a result of increased loss ratios impacting projected profit commissions.

2 Adjustments made to Net income are described in the definition of Adjusted EBITDAC in "Non-GAAP Financial Measures and Key Performance

Indicators" as filed in the company's more recent earnings release on form 8-K on May 1, 2025

3 Adjustments made to Adjusted EBITDAC represent (without duplication) additional adjustments permitted under our debt agreements.

SUMMARY FINANCIALS AND ORGANIC GROWTH RECONCILIATION

INCOME STATEMENT ($MM) ORGANIC GROWTH RECONCILIATION

3/31/25

2020 2021 2022 2023 2024

LTM

2020 2021 2022 2023 2024 YTD

Revenues:

Net Commissions and Fees Revenue Growth Rate1

34.0% 40.9% 19.5% 18.4% 21.2% 25.7%

Net commissions and fees $1,016.7 $1,432.2 $1,711.9 $2,026.6 $2,455.7 $2,593.9 Fiduciary investment income 1.6 0.6 13.3 51.0 60.0 59.9

Less: Impact of Contingent Commissions 0.3% 0.5% (0.2%) (0.2%) (1.3%) 0.2%

Net Commissions and Fees Revenue

Excluding Contingent Commissions Growth 34.3% 41.4% 19.3% 18.2% 19.9% 25.9% Rate

Total Revenue

$1,018.3

$1,432.8

$1,725.2

$2,077.5

$2,515.7 $2,653.8

Expenses:

Compensation and benefits

$686.2

$991.6

$1,129.0

$1,321.0

$1,591.1 $1,647.8

Less: Mergers and Acquisitions Net Commissions and Fees Revenue Excluding Contingent Commissions

(12.9%) (18.4%) (2.8%) (2.8%) (7.1%) (13.1%)

General and administrative

107.4

139.0

197.0

276.2

352.1

382.2

Impact of Change in Foreign Exchange Rates

(0.3%)

(0.1%)

0.3%

0.1%

Amortization

63.6

107.9

103.6

106.8

157.8

194.8

Organic Revenue Growth Rate

21.1%

22.9%

16.8%

15.4%

12.8%

12.9%

Depreciation

3.9

4.8

5.7

9.0

9.8

10.3

Change in contingent consideration

(1.3)

2.9

0.4

5.4

(22.9)

(36.8)

Total operating expenses

$859.7

$1,246.1

$1,435.7

$1,718.5

$2,087.9

$2,198.4

Operating Income

$158.5

$186.6

$289.5

$359.1

$427.8

$455.4

Operating Income Margin

15.6%

13.0%

16.8%

17.3%

17.0%

17.2%

Interest expense, net

($47.2)

($79.4)

($104.8)

($119.5)

($158.4)

($183.6)

Income (Loss) from equity method investments in related party

0.4

(0.8)

(0.4)

8.7

18.2

17.6

Other non-operating income (loss)

(32.3)

(44.9)

(5.1)

(10.4)

(15.0)

(12.9)

Income (loss) before income taxes

$79.5

$61.6

$179.2

$237.9

$272.6

$276.5

Income tax expense

($9.0)

($4.9)

($15.9)

($43.4)

($42.6)

($90.5)

Net Income

$70.5

$56.6

$163.3

$194.5

$229.9

$186.0

Note: Beginning in the first quarter of 2024, the Company changed its method of calculating Organic revenue growth rate, a non-GAAP measure. For more information on the revised calculation methodology, see "Organic Revenue Growth Rate Calculation Methodology" referenced in our first quarter 2024 earnings release.

1 Excludes revenue attributable to sold businesses

Disclaimer

Ryan Specialty Holdings Inc. published this content on May 01, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 01, 2025 at 20:19 UTC.