Ryan Specialty Holdings, Inc. 2026 Q3 Earnings Call

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, Nick Mezick. For the quarter, total revenue grew 4.7% to $790 million, driven by organic revenue growth of 4%. Adjusted EBITDAC grew 3.8% to $244 million. Adjusted EBITDAC 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 EBITDAC by 7.9%, and adjusted earnings per share by 15.1%. In the quarter, we repurchased 3.5 million shares for $150 million. We delivered for our clients and shareholders in the face of a very challenging and evolving pricing environment. Market trends continued and in some areas intensified.

Property pricing has continued to decline, competition in casualty has broadened, and new capacity entered the market. We produced these results against our 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, but we thought it important to highlight our margin performance. 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 EBITDAC 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, keeping carrier profitability front of mind. These are just some of the ways we've been able to drive strong new business growth and the ability to expand our share of recurring and non-recurring opportunities with our clients. This quarter is a great example of that. Additionally, our Empower program is delivering operational flexibility, allowing us to continue investing in talent, 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 with 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 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. 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. That takes differentiated talent, deep specialty expertise, and independence. Our independence gives us a full market perspective. From that position, we've developed expertise that is highly valued by our clients and carrier trading partners. The ability to handle risks that are too complex, too hazardous, or too new for the standard market. 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. Most importantly, our people are committed to our mission day in and day out. With 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 E&S channel. Given the relatively benign property loss experience and the heightened level of capacity in the market, we expect continued deterioration of property pricing in the fourth quarter and into 2027. In casualty, we had another solid quarter. As we anticipated, after a strong first half, construction saw more normalized growth in the third quarter, 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 are broadening our customer base, deepening relationships with regional and independent retail agencies. We are also developing proprietary products within core high-hazard E&S classes, giving 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.