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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40645

 

img148719256_0.jpg 

RYAN SPECIALTY GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

86-2526344

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

Two Prudential Plaza

 

 

180 N. Stetson Avenue, Suite 4600

 

 

Chicago, IL

 

60601

(Address of principal executive offices)

 

(Zip Code)

 

(312) 784-6001

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Title of each class

 

Trading

symbol

 

Name of each exchange

on which registered

 

Class A Common Stock, $0.001 par value per share

RYAN

The New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

 


 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

On May 11, 2022, the Registrant had 259,196,568 shares of common stock outstanding, consisting of 110,329,843 shares of Class A common stock, $0.001 par value, and 148,866,725 shares of Class B common stock, $0.001 par value.

 

 


 

Ryan Specialty Group Holdings, Inc.

INDEX

 

 

 

 

PART I. FINANCIAL INFORMATION

1

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

 

 

 

Consolidated Statements of Income (Unaudited)

1

 

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited)

2

 

 

 

 

Consolidated Balance Sheets (Unaudited)

3

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

4

 

 

 

 

Consolidated Statements of Mezzanine Equity and Stockholders'/Members’ Equity (Unaudited)

5

 

 

 

 

Notes to the Consolidated Financial Statements (Unaudited)

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

 

 

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

51

 

 

 

Item 4.

Controls and Procedures

51

 

 

PART II OTHER INFORMATION

52

 

 

 

Item 1.

Legal Proceedings

52

 

 

 

Item 1A.

Risk Factors

52

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

52

 

 

 

Item 3.

Defaults Upon Senior Securities

52

 

 

 

Item 4.

Mine Safety Disclosures

52

 

 

 

Item 5.

Other Information

52

 

 

 

Item 6.

Exhibits

53

 

 


 

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated costs, expenditures, cash flows, growth rates and financial results, our plans, intended use of proceeds, anticipated cost savings relating to the Restructuring Plan (as defined below) and the amount and timing of delivery of annual cost savings, and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties (many of which may be amplified on account of the COVID-19 pandemic) that may cause actual results to differ materially from those that we expected, including:

our failure to develop a succession plan for Patrick G. Ryan or other members of our senior management team, to maintain corporate culture or to recruit and retain revenue producers;
the cyclicality of, and the economic conditions, in the markets in which we operate and conditions that result in reduced insurer capacity;
a reduction in insurer capacity;
the potential loss of our relationships with insurance carriers or our clients, failure to maintain good relationships with insurance carriers or clients, becoming dependent upon a limited number of insurance carriers or clients or the failure to develop new insurance carrier and client relationships;
significant competitive pressures in each of our businesses;
decreases in premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions;
decrease in the amount of supplemental or contingent commissions we receive;
our inability to collect our receivables;
errors in or ineffectiveness of our underwriting models and the risks presented to our reputation and relationships with insurance carriers, retail brokers and agents;
failure to maintain, protect and enhance our brand or prevent damage to our reputation;
disintermediation within the insurance industry and shifts away from traditional insurance markets;
changes in the mode of compensation in the insurance industry;
changes in our accounting estimates, assumptions or methodologies, and general changes in accounting guidance;
changes in interest rates that affect our cost of capital and net investment income;
changes in interest rates and deterioration of credit quality that reduce the value of our cash balances;
impairment of goodwill and intangibles;
the impact on our operations and financial condition from the effects of the current COVID-19 pandemic and resulting governmental and societal responses;
any failure to maintain our corporate culture;
the inability to maintain rapid growth and generate sufficient revenue to maintain profitability;
the loss of clients or business as a result of consolidation within the retail insurance brokerage industry;
the impact if our MGU programs are terminated or changed;
unsatisfactory evaluation of potential acquisitions and the integration of acquired businesses as well as introduction of new products, lines of business and markets;
significant investment in our growth strategy and whether expectation of internal efficiencies are realized;
our ability to gain internal efficiencies through the application of technology or effectively apply technology in driving value for our clients or the failure of technology and automated systems to function or perform as expected;

1


 

the unavailability or inaccuracy of our clients’ and third parties’ data for pricing and underwriting insurance policies;
a variety of risks in our third-party claims administration operations that are distinct from those we face in our insurance intermediary operations;
the higher risk of delinquency or collection inherent in our premium finance business;
the competitiveness and cyclicality of the reinsurance industry;
the occurrence of natural or man-made disasters;
our inability to successfully recover upon experiencing a disaster or other business continuity problem;
the economic and political conditions of the countries and regions in which we operate;
the failure or take-over by the FDIC of one of the financial institutions that we use;
our inability to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices;
the impact of third parties that perform key functions of our business operations acting in ways that harm our business;
our international operations expose us to various international risks, including exchange rate fluctuations;
the impact of adverse economic conditions and geopolitical tensions;
the impact of governmental regulations, legal proceedings and governmental inquiries related to our business;
being subject to E&O claims as well as other contingencies and legal proceedings;
our handling of client funds and surplus lines taxes that exposes us to complex fiduciary regulations;
changes in tax laws or regulations;
decreased commission revenues due to proposed tort reform legislation;
the impact of regulations affecting insurance carriers;
the impact of breaches in security that cause significant system or network disruptions;
the impact of improper disclosure of confidential, personal or proprietary data, misuse of information by employees or counterparties or as a result of cyberattacks;
the impact of infringement, misappropriation or dilution of our intellectual property;
the impact of the failure to protect our intellectual property rights, or allegations that we have infringed on the intellectual property rights of others;
our outstanding debt potentially adversely affecting our financial flexibility and subjecting us to restrictions and limitations that could significantly affect our ability to operate;
not being able to generate sufficient cash flow to service all of our indebtedness and being forced to take other actions to satisfy our obligations under such indebtedness;
the impact of being unable to refinance our indebtedness;
being affected by further changes in the U.S.-based credit markets;
changes in our credit ratings;
risks related to the payments required by our Tax Receivable Agreement;
risks relating to our organizational structure that could result in conflicts of interests between the LLC Unitholders and the holders of our Class A common stock; and
other factors disclosed in the section entitled “Risk Factors” in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q.

We derive many of our forward-looking statements from our operating budgets and forecasts that are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their

2


 

entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

Commonly Used Defined Terms

As used in this Quarterly Report on Form 10-Q, unless the context indicates or otherwise requires, the following terms have the following meanings:

we”, “us”, “our”, the “Company”, “Ryan Specialty”, and similar references refer: (i) following the consummation of the Organizational Transactions, including our IPO, to Ryan Specialty Group Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including RSG LLC, and (ii) prior to the completion of the Organizational Transactions, including our IPO, to RSG LLC and, unless otherwise stated, all of its subsidiaries.
Admitted”: The insurance market comprising insurance carriers licensed to write business on an “admitted” basis by the insurance commissioner of the state in which the risk is located. Insurance rates and forms in this market are highly regulated by each state and coverages are largely uniform.
All Risks” or “ARL”: All Risks Specialty, LLC (f/k/a All Risk, Ltd.), an insurance specialist providing services in wholesale brokerage and delegated underwriting authority.
All Risks Acquisition”: In September 2020, Ryan Specialty acquired All Risks.
Binding Authority”: Our Binding Authority receives submissions for insurance directly from retail brokers, evaluates price and makes underwriting decisions regarding these submissions based on narrowly prescribed guidelines provided by carriers, and binds and issues policies on behalf of insurance carriers who retain the insurance underwriting risk.
Board” or “Board of Directors”: The board of directors of Ryan Specialty.
Class C Incentive Units”: Class C common incentive units, initially of RSG LLC on and prior to September 30, 2021 and then subsequently of New RSG Holdings, that are subject to vesting and will be exchangeable into LLC Common Units.
Credit Agreement”: The credit agreement, as amended, dated September 1, 2020, among Ryan Specialty Group, LLC and JPMorgan Chase Bank, N.A., as administrative agent and the other lenders party thereto.
E&O”: Errors and omissions.
E&S”: Excess and surplus lines. In this insurance market, carriers are licensed on a “non-admitted” basis. The excess and surplus lines market often offers carriers more flexibility in terms, conditions, and rates than does the Admitted market.
Family Group”: (i) In the case of a member of RSG LLC or a RSG LLC Employee who is an individual, such individual’s spouse, parents and descendants (whether natural or adopted) and any trust or estate planning vehicle or entity solely for the benefit of such individual and/or the individual’s spouse, parents, descendants and/or other relatives, and (ii) in the case of a member of RSG LLC or a RSG LLC Employee that is a trust, the beneficiary of such trust.
Founder”: Patrick G. Ryan.
Founder Group”: Founder, members of the Founder’s Family Group and Founder’s affiliates.

3


 

IPO”: Initial public offering.
IPO Prospectus”: our final prospectus for our IPO dated as of July 21, 2021 and filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act.
LLC Common Units”: non-voting common interest units initially of RSG LLC on and prior to September 30, 2021 and then subsequently of New RSG Holdings.
LLC Operating Agreement”: the Seventh Amended and Restated Limited Liability Company Agreement of RSG LLC
LLC Units”: Class A common units and Class B common units of RSG LLC prior to the Organizational Transactions.
LLC Unitholders”: holders of the LLC Units or the LLC Common Units, as the context requires.
MGA”: Managing general agent.
MGU”: Managing general underwriter.
New RSG Holdings”: New RSG Holdings LLC is a Delaware limited liability company and a direct subsidiary of Ryan Specialty Group Holdings, Inc.
New RSG Holdings LLC Operating Agreement”: The Amended and Restated Limited Liability Company Agreement of New RSG Holdings LLC.
Onex”: Onex Corporation and its affiliates, a holder of LLC Units and Redeemable Preferred Units prior to the Organizational Transactions, and one of our shareholders following the Organizational Transactions.
Organizational Transactions”: The series of organizational transactions completed by the Company in connection with the IPO, as described in the Form 10-K filed with the SEC on March 16, 2022.
Participation”: Collectively, the Mandatory Participation and the Optional Participation.
Redeemable Preferred Units”: Class B preferred units of RSG LLC held by Onex prior to the Organizational Transactions.
Restructuring Plan”: Plan to reduce costs and increase efficiencies, streamline management reporting structures, and centralize functions across the Company to improve operating margins, which is expected to be fully actioned by June 30, 2022.
Revolving Credit Facility”: The $600 million senior secured revolving credit facility under our Credit Agreement.
RSG LLC”: Ryan Specialty Group, LLC, together with its parent New RSG Holdings, and their subsidiaries.
SEC”: The Securities and Exchange Commission.
Securities Act”: Securities Act of 1933, as amended.
Specialty”: One of the three Ryan Specialty primary distribution channels, which includes Wholesale Brokerage, Binding Authority, and Underwriting Management.
Stock Option”: A non-qualified stock option award that gives the grantee the option to buy a specified number of Class A common stock at the grant date price.
Tax Receivable Agreement” or “TRA”: The tax receivable agreement entered into in connection with the IPO.
Term Loan”: The senior secured Term Loan B for $1.65 billion in principal amount under our Credit Agreement
U.S. GAAP”: Accounting principles generally accepted in the United States of America.
Underwriting Management”: Our Underwriting Management Specialty administers a number of MGUs, MGAs and programs that offer commercial and personal insurance for specific product lines or industry classes. Underwriters act with delegated underwriting authority based on varying degrees of prescribed guidelines as provided by carriers, quoting, binding and issuing policies on behalf of Ryan Specialty’s carrier trading partners which retain the insurance underwriting risk.

4


 

Wholesale Brokerage”: Our Wholesale Brokerage Specialty distributes a wide range and diversified mix of specialty property, casualty, professional lines, personal lines and workers’ compensation insurance products, as a broker between the carriers and retail brokerage firms.

 

5


 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

 

Ryan Specialty Group Holdings, Inc.

Consolidated Statements of Income (Unaudited)

All balances presented in thousands, except share and per share amounts

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

REVENUE

 

 

 

 

 

 

Net commissions and fees

 

$

386,681

 

 

$

311,344

 

Fiduciary investment income

 

 

209

 

 

 

114

 

Total revenue

 

$

386,890

 

 

$

311,458

 

EXPENSES

 

 

 

 

 

 

Compensation and benefits

 

 

274,274

 

 

 

214,486

 

General and administrative

 

 

42,361

 

 

 

27,545

 

Amortization

 

 

26,663

 

 

 

27,794

 

Depreciation

 

 

1,211

 

 

 

1,200

 

Change in contingent consideration

 

 

(1,008

)

 

 

590

 

Total operating expenses

 

$

343,501

 

 

$

271,615

 

OPERATING INCOME

 

$

43,389

 

 

$

39,843

 

Interest expense, net

 

 

21,752

 

 

 

20,045

 

(Income) loss from equity method investment in related party

 

 

543

 

 

 

(81

)

Other non-operating loss

 

 

7,521

 

 

 

21,446

 

INCOME (LOSS) BEFORE INCOME TAXES

 

$

13,573

 

 

$

(1,567

)

Income tax expense (benefit)

 

 

(4,503

)

 

 

2,234

 

NET INCOME (LOSS)

 

$

18,076

 

 

$

(3,801

)

Net income attributable to non-controlling
   interests, net of tax

 

 

11,165

 

 

 

2,450

 

NET INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY GROUP HOLDINGS, INC.

 

$

6,911

 

 

$

(6,251

)

NET INCOME PER SHARE OF CLASS A COMMON STOCK:

 

 

 

 

 

 

Basic

 

$

0.07

 

 

 

 

Diluted

 

$

0.06

 

 

 

 

WEIGHTED-AVERAGE SHARES OF CLASS A COMMON STOCK OUTSTANDING:

 

 

 

 

 

 

Basic

 

 

106,592,836

 

 

 

 

Diluted

 

 

264,121,066

 

 

 

 

 

See accompanying Notes to the Consolidated Financial Statements (Unaudited)

 

1


 

Ryan Specialty Group Holdings, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

All balances presented in thousands

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

NET INCOME (LOSS)

 

$

18,076

 

 

$

(3,801

)

Net income attributable to non-controlling interests,
   net of tax

 

 

11,165

 

 

 

2,450

 

NET INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY GROUP HOLDINGS, INC.

 

$

6,911

 

 

$

(6,251

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(58

)

 

 

(352

)

Change in share of equity method investment in related
   party other comprehensive loss

 

 

(1,302

)

 

 

(738

)

Total other comprehensive loss, net of tax

 

$

(1,360

)

 

$

(1,090

)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY GROUP HOLDINGS, INC.

 

$

5,551

 

 

$

(7,341

)

 

See accompanying Notes to the Consolidated Financial Statements (Unaudited)

 

2


 

Ryan Specialty Group Holdings, Inc.

Consolidated Balance Sheets (Unaudited)

All balances presented in thousands, except share and per share data

 

 

 

March 31, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

706,370

 

 

$

386,962

 

Commissions and fees receivable – net

 

 

189,709

 

 

 

210,252

 

Fiduciary cash and receivables

 

 

2,123,702

 

 

 

2,390,185

 

Prepaid incentives – net

 

 

7,603

 

 

 

7,726

 

Other current assets

 

 

13,251

 

 

 

15,882

 

Total current assets

 

$

3,040,635

 

 

$

3,011,007

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Goodwill

 

 

1,314,266

 

 

 

1,309,267

 

Other intangible assets

 

 

549,125

 

 

 

573,930

 

Prepaid incentives – net

 

 

24,006

 

 

 

25,382

 

Equity method investment in related party

 

 

41,824

 

 

 

45,417

 

Property and equipment – net

 

 

14,649

 

 

 

15,290

 

Lease right-of-use assets

 

 

99,688

 

 

 

84,874

 

Deferred tax assets

 

 

391,777

 

 

 

382,753

 

Other non-current assets

 

 

9,667

 

 

 

10,788

 

Total non-current assets

 

$

2,445,002

 

 

$

2,447,701

 

TOTAL ASSETS

 

$

5,485,637

 

 

$

5,458,708

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

101,335

 

 

 

99,403

 

Accrued compensation

 

 

231,387

 

 

 

386,301

 

Operating lease liabilities

 

 

18,277

 

 

 

18,783

 

Tax receivable agreement liabilities

 

 

7,968

 

 

 

 

Short-term debt and current portion of long-term debt

 

 

22,640

 

 

 

23,469

 

Fiduciary liabilities

 

 

2,123,702

 

 

 

2,390,185

 

Total current liabilities

 

$

2,505,309

 

 

$

2,918,141

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Accrued compensation

 

 

8,006

 

 

 

4,371

 

Operating lease liabilities

 

 

91,880

 

 

 

74,386

 

Long-term debt

 

 

1,956,631

 

 

 

1,566,627

 

Deferred tax liabilities

 

 

740

 

 

 

631

 

Tax receivable agreement liabilities

 

 

272,730

 

 

 

272,100

 

Other non-current liabilities

 

 

26,302

 

 

 

27,675

 

Total non-current liabilities

 

$

2,356,289

 

 

$

1,945,790

 

TOTAL LIABILITIES

 

$

4,861,598

 

 

$

4,863,931

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 110,063,552 and 109,894,548 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)

 

 

110

 

 

 

110

 

Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 149,084,846 and 149,162,107 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)

 

 

149

 

 

 

149

 

Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0 outstanding at March 31, 2022 and December 31, 2021)

 

 

 

 

 

 

Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2022 and December 31, 2021)

 

 

 

 

 

 

Additional paid-in capital

 

 

371,433

 

 

 

348,865

 

Accumulated deficit

 

 

(153

)

 

 

(7,064

)

Accumulated other comprehensive income

 

 

354

 

 

 

1,714

 

Total stockholders' equity attributable to Ryan Specialty Group Holdings, Inc.

 

$

371,893

 

 

$

343,774

 

Non-controlling interests

 

 

252,146

 

 

 

251,003

 

Total stockholders' equity

 

 

624,039

 

 

 

594,777

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

5,485,637

 

 

$

5,458,708

 

See accompanying Notes to the Consolidated Financial Statements (Unaudited)

 

3


 

Ryan Specialty Group Holdings, Inc.

Consolidated Statements of Cash Flows (Unaudited)

All balances presented in thousands

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

18,076

 

 

$

(3,801

)

Adjustments to reconcile net income to cash flows from (used for) operating activities:

 

 

 

 

 

 

Loss (gain) from equity method investment

 

 

543

 

 

 

(81

)

Amortization

 

 

26,663

 

 

 

27,794

 

Depreciation

 

 

1,211

 

 

 

1,200

 

Prepaid and deferred compensation expense

 

 

9,684

 

 

 

8,158

 

Non-cash equity-based compensation

 

 

23,248

 

 

 

4,430

 

Amortization of deferred debt issuance costs

 

 

2,811

 

 

 

2,517

 

Deferred income taxes

 

 

(8,251

)

 

 

(80

)

Loss on Tax Receivable Agreement

 

 

7,718

 

 

 

 

Change (net of acquisitions and divestitures) in:

 

 

 

 

 

 

Commissions and fees receivable - net

 

 

20,543

 

 

 

19,187

 

Accrued interest

 

 

2,877

 

 

 

248

 

Other current assets and accrued liabilities

 

 

(164,924

)

 

 

(139,401

)

Other non-current assets and accrued liabilities

 

 

(5,669

)

 

 

5,024

 

Total cash flows used for operating activities

 

$

(65,470

)

 

$

(74,805

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Prepaid incentives issued – net of repayments

 

 

(497

)

 

 

 

Capital expenditures

 

 

(2,224

)

 

 

(2,208

)

Total cash flows used for investing activities

 

$

(2,721

)

 

$

(2,208

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Purchase of remaining interest in Ryan Re

 

 

 

 

 

(47,517

)

Deferred offering costs paid

 

 

 

 

 

(4,049

)

Receipt of taxes related to net share settlement of equity awards

 

 

105

 

 

 

 

Taxes paid related to net share settlement of equity awards

 

 

(105

)

 

 

 

Cash distribution to LLC Unitholders

 

 

(187

)

 

 

(23,246

)

Repayment of term debt

 

 

(4,125

)

 

 

 

Finance lease and other costs paid

 

 

(6

)

 

 

(47

)

Debt issuance costs paid

 

 

(1,803

)

 

 

(1,289

)

Proceeds from senior secured notes

 

 

394,000

 

 

 

 

Net change in fiduciary liabilities

 

 

(79,148

)

 

 

(62,018

)

Total cash flows provided by (used for) financing activities

 

$

308,731

 

 

$

(138,166

)

Effect of changes in foreign exchange rates on cash, cash equivalents, and cash held in a fiduciary
   capacity

 

 

816

 

 

 

(784

)

NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH HELD IN A FIDUCIARY CAPACITY

 

$

241,356

 

 

$

(215,963

)

CASH, CASH EQUIVALENTS, AND CASH HELD IN A FIDUCIARY CAPACITY—Beginning balance

 

$

1,139,661

 

 

$

895,704

 

CASH, CASH EQUIVALENTS, AND CASH HELD IN A FIDUCIARY CAPACITY—Ending balance

 

$

1,381,017

 

 

$

679,741

 

Reconciliation of cash, cash equivalents, and cash held in a fiduciary capacity

 

 

 

 

 

 

Cash and cash equivalents

 

$

706,370

 

 

$

159,176

 

Cash held in a fiduciary capacity

 

 

674,647

 

 

 

520,565

 

Total cash, cash equivalents, and cash held in a fiduciary capacity

 

$

1,381,017

 

 

$

679,741

 

 

See accompanying Notes to the Consolidated Financial Statements (Unaudited)

4


 

Ryan Specialty Group Holdings, Inc.

Consolidated Statements of Mezzanine Equity and Stockholders'/ Members’ Equity (Unaudited)

All balances presented in thousands

 

 

 

 

 

 

 

 

Class A Common Stock

 

Class B Common Stock

 

Class X Common Stock

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Mezzanine Equity

 

 

 

Members' Interest

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Additional Paid-in Capital

 

Accumulated Deficit

 

Other Comprehensive Income (Loss)

 

Non-controlling Interest

 

Stockholders'/ Members' Equity

 

Balance at January 1, 2021

$

239,635

 

 

 

$

67,088

 

 

 

$

 

 

 

$

 

 

 

$

 

$

 

$

 

$

2,702

 

$

1,300

 

$

71,090

 

Net income (loss)

 

 

 

 

 

(6,251

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,450

 

 

(3,801

)

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(352

)

 

 

 

(352

)

Change in share of equity method investment in related party other comprehensive income