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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 September 30, 2024
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
____________
RyanSpecialty_RGB.jpg
RYAN SPECIALTY 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.)
155 N. Wacker Drive, Suite 4000
Chicago, IL
60606
(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 October 28, 2024, the Registrant had 261,841,819 shares of common stock outstanding, consisting of 125,171,615 shares of Class A common stock,
$0.001 par value, and 136,670,204 shares of Class B common stock, $0.001 par value.
Ryan Specialty Holdings, Inc.
INDEX
i
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, any future dividends, our plans, anticipated amount and timing of cost savings relating to the restructuring plan, 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
that may cause actual results to differ materially from those that we expected, including:
our failure to successfully execute our succession plan for Patrick G. Ryan or other members of our senior
management team or to recruit and retain revenue producers;
the impact of breaches in security that cause significant system or network disruption or business interruption;
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 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;
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;
unsatisfactory evaluation of potential acquisitions, the integration of acquired businesses, and/or introduction of
new products, lines of business, and markets;
our inability to successfully recover upon experiencing a disaster or other interruption in business continuity;
the impact of third parties that perform key functions of our business operations acting in ways that harm our
business;
the cyclicality of, and the economic conditions in, the markets in which we operate and conditions that result in
reduced insurer capacity or a migration of business away from the E&S market and into the Admitted market;
a reduction in insurer capacity to adequately and appropriately underwrite risk and provide coverage;
our international operations expose us to various international risks, including required compliance with legal and
regulatory obligations, that are different, and at times more burdensome, than those set forth in the United States;
changes in interest rates and deterioration of credit quality could reduce the value of our cash balances or interest
income;
failure to maintain the valuable aspects of our Company’s culture;
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;
disintermediation within the insurance industry and shifts away from traditional insurance markets;
changes in the mode of compensation in the insurance industry;
impairment of goodwill and intangibles;
the impact on our operations and financial condition from the effects of a pandemic or the outbreak of a
contagious disease and resulting governmental and societal responses;
ii
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 MGA or MGU programs are terminated or changed;
the inability to achieve the intended results of our previously announced restructuring program;
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;
the unavailability or inaccuracy of our clients’ and third parties’ data for pricing and underwriting insurance
policies;
the competitiveness and cyclicality of the reinsurance industry;
the occurrence of natural or man-made disasters;
the economic and political conditions of the countries and regions in which we operate;
the challenges with properly assessing, and managing the adoption and use of, artificial intelligence technologies;
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;
our international operations expose us to various international risks, including exchange rate fluctuations;
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;
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;
changes in tax laws or regulations;
decreased commission revenues due to proposed tort reform legislation;
the impact of regulations affecting insurance carriers;
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;
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, the Ryan Parties, 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 our
Quarterly Reports 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 and under the Section entitled “Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2023. All written and oral forward-looking
iii
statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary
statements as well as other cautionary statements that are made from time to time in our filings with the SEC and other
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:
“2030 Senior Secured Notes”: The 4.375% senior secured notes due 2030 issued on February 3, 2022.
“2032 Senior Secured Notes”: The 5.875% senior secured notes due 2032 issued on September 19, 2024.
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 Holdings, Inc., and, unless otherwise
stated, all of its subsidiaries, including the LLC, and (ii) prior to the completion of the Organizational Transactions,
including our IPO, to the LLC and, unless otherwise stated, all of its subsidiaries.
Adjusted Term SOFR”: Prior to January 19, 2024, the interest rate per annum based on the Secured Overnight
Financing Rate (“SOFR”) plus a Credit Spread Adjustment of 10 basis points, 15 basis points, or 25 basis points for
the one-month, three-month, or six-month borrowing periods, respectively, subject to a 75 basis point floor. After
January 19, 2024, the interest rate per annum no longer includes the Credit Spread Adjustment. After September 13,
2024, the 75 basis point floor was reduced to 0.
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.
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 the LLC on and prior to September 30, 2021,
and then subsequently of New LLC, 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, LLC and
JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto.
Credit Facility”: The Term Loan and the Revolving Credit Facility.
E&O”: Errors and omissions.
iv
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.
Exchange Act”: Securities Exchange Act of 1934, as amended.
IPO”: Initial public offering.
LLC”: Ryan Specialty, LLC, together with its parent New LLC, and their subsidiaries.
LLC Common Units”: Non-voting common interest units initially of the LLC on and prior to September 30, 2021,
and then subsequently of New LLC or LLC, as the context requires.
LLC Operating Agreement”: The Seventh Amended and Restated Limited Liability Company Agreement of the
LLC.
LLC Units”: Class A common units and Class B common units of the 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 LLC”: New Ryan Specialty, LLC is a Delaware limited liability company and a direct subsidiary of Ryan
Specialty Holdings, Inc.
New LLC Operating Agreement”: The Amended and Restated Limited Liability Company Agreement of New LLC.
Onex”: Onex Corporation and its affiliates, a holder of LLC Units and Class B preferred units of the LLC held 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.
Revolving Credit Facility”: Prior to July 30, 2024, the $600 million revolving credit facility under the Company’s
Credit Agreement. After July 30, 2024, the $1,400 million revolving credit facility under the Company’s Credit
Agreement.
Ryan Parties”: Patrick G. Ryan and certain members of his family and various entities and trusts over which Patrick
G. Ryan and his family exercise control.
SEC”: The Securities and Exchange Commission.
Senior Secured Notes”: The 2030 Senior Secured Notes and the 2032 Senior Secured Notes.
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
shares 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”: Prior to September 13, 2024, the senior secured Term Loan B for $1.65 billion in principal amount
under the Company’s Credit Agreement. After September 13, 2024, the senior secured Term Loan B for $1.70
billion in principal amount under the Company’s 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
v
provided by carriers, quoting, binding and issuing policies on behalf of Ryan Specialty’s carrier trading partners
which retain the insurance underwriting risk.
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.
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ryan Specialty Holdings, Inc.
Consolidated Statements of Income (Loss) (Unaudited)
(In thousands, except share and per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
REVENUE
Net commissions and fees
$588,129
$487,345
$1,806,264
$1,507,878
Fiduciary investment income
16,565
14,593
45,917
36,808
Total revenue
$604,694
$501,938
$1,852,181
$1,544,686
EXPENSES
Compensation and benefits
393,249
329,212
1,180,825
989,294
General and administrative
88,684
69,288
247,518
202,595
Amortization
39,182
29,572
97,711
79,125
Depreciation
2,467
2,201
6,820
6,570
Change in contingent consideration
(365)
1,848
813
4,358
Total operating expenses
$523,217
$432,121
$1,533,687
$1,281,942
OPERATING INCOME
$81,477
$69,817
$318,494
$262,744
Interest expense, net
49,388
31,491
109,916
89,840
(Income) from equity method investment in related
party
(4,182)
(2,271)
(13,510)
(5,882)
Other non-operating loss
16,590
67
18,575
37
INCOME BEFORE INCOME TAXES
$19,681
$40,530
$203,513
$178,749
Income tax expense (benefit)
(8,962)
24,827
16,155
42,772
NET INCOME
$28,643
$15,703
$187,358
$135,977
Net income attributable to non-controlling interests,
net of tax
11,054
20,750
106,447
97,786
NET INCOME (LOSS) ATTRIBUTABLE TO
RYAN SPECIALTY HOLDINGS, INC.
$17,589
$(5,047)
$80,911
$38,191
NET INCOME (LOSS) PER SHARE OF CLASS
A COMMON STOCK:
Basic
$0.15
$(0.04)
$0.67
$0.34
Diluted
$0.09
$(0.04)
$0.59
$0.34
WEIGHTED-AVERAGE SHARES OF CLASS A
COMMON STOCK OUTSTANDING:
Basic
121,915,952
115,872,327
119,383,234
113,291,850
Diluted
272,686,269
115,872,327
271,283,392
124,883,523
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
2
Ryan Specialty Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
NET INCOME
$28,643
$15,703
$187,358
$135,977
Net income attributable to non-controlling interests,
net of tax
11,054
20,750
106,447
97,786
NET INCOME (LOSS) ATTRIBUTABLE TO
RYAN SPECIALTY HOLDINGS, INC.
$17,589
$(5,047)
$80,911
$38,191
Other comprehensive income (loss), net of tax:
Gain (loss) on interest rate cap
(2,891)
2,760
2,853
7,628
(Gain) on interest rate cap reclassified to earnings
(2,441)
(2,215)
(7,011)
(5,518)
Foreign currency translation adjustments
6,658
(567)
7,177
(179)
Change in share of equity method investment in
related party other comprehensive income (loss)
(149)
(267)
985
270
Total other comprehensive income (loss), net of
tax
$1,177
$(289)
$4,004
$2,201
COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO RYAN SPECIALTY
HOLDINGS, INC.
$18,766
$(5,336)
$84,915
$40,392
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
3
Ryan Specialty Holdings, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
September 30, 2024
December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$235,199
$838,790
Commissions and fees receivable – net
334,637
294,195
Fiduciary cash and receivables
3,357,047
3,131,660
Prepaid incentives – net
8,309
8,718
Other current assets
84,165
62,229
Total current assets
$4,019,357
$4,335,592
NON-CURRENT ASSETS
Goodwill
2,341,340
1,646,482
Customer relationships
1,283,489
572,416
Other intangible assets
69,167
38,254
Prepaid incentives – net
15,449
15,103
Equity method investment in related party
62,444
46,099
Property and equipment – net
45,703
42,427
Lease right-of-use assets
122,617
127,708
Deferred tax assets
486,432
383,816
Other non-current assets
32,505
39,312
Total non-current assets
$4,459,146
$2,911,617
TOTAL ASSETS
$8,478,503
$7,247,209
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities
$206,185
$136,340
Accrued compensation
325,120
419,560
Operating lease liabilities
21,489
21,369
Tax Receivable Agreement liabilities
22,721
Short-term debt and current portion of long-term debt
33,316
35,375
Fiduciary liabilities
3,357,047
3,131,660
Total current liabilities
$3,965,878
$3,744,304
NON-CURRENT LIABILITIES
Accrued compensation
52,261
24,917
Operating lease liabilities
148,487
154,457
Long-term debt
2,646,550
1,943,837
Tax Receivable Agreement liabilities
432,406
358,898
Deferred tax liabilities
21,162
55
Other non-current liabilities
110,227
41,097
Total non-current liabilities
$3,411,093
$2,523,261
TOTAL LIABILITIES
$7,376,971
$6,267,565
STOCKHOLDERS’ EQUITY
Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 125,096,524 and 118,593,062
shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively)
125
119
Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 136,724,772 and 141,621,188
shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively)
137
142
Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0
outstanding at September 30, 2024 and December 31, 2023)
Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at
September 30, 2024 and December 31, 2023)
Additional paid-in capital
500,518
441,997
Retained earnings
124,973
114,420
Accumulated other comprehensive income
7,080
3,076
Total stockholders’ equity attributable to Ryan Specialty Holdings, Inc.
$632,833
$559,754
Non-controlling interests
468,699
419,890
Total stockholders’ equity
$1,101,532
$979,644
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$8,478,503
$7,247,209
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
4
Ryan Specialty Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$187,358
$135,977
Adjustments to reconcile net income to cash flows provided by operating activities:
(Income) from equity method investment in related party
(13,510)
(5,882)
Amortization
97,711
79,125
Depreciation
6,820
6,570
Prepaid and deferred compensation expense
25,220
8,882
Non-cash equity-based compensation
61,664
54,136
Amortization of deferred debt issuance costs
21,838
9,125
Amortization of interest rate cap premium
5,216
5,216
Deferred income tax expense (benefit)
(1,959)
11,745
Deferred income tax expense from reorganization
20,679
Loss on Tax Receivable Agreement
646
478
Changes in operating assets and liabilities, net of acquisitions:
Commissions and fees receivable – net
21,514
3,875
Accrued interest liability
2,260
(4,293)
Other current and non-current assets
(12,826)
10,935
Other current and non-current accrued liabilities
(146,724)
(86,233)
Total cash flows provided by operating activities
$255,228
$250,335
CASH FLOWS FROM INVESTING ACTIVITIES
Business combinations – net of cash acquired and cash held in a fiduciary capacity
(1,256,732)
(366,149)
Capital expenditures
(29,705)
(16,013)
Repayments of prepaid incentives
228
Total cash flows used in investing activities
$(1,286,437)
$(381,934)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Senior Secured Notes
595,200
Borrowings on Revolving Credit Facility
850,000
Repayments on Revolving Credit Facility
(850,000)
Debt issuance costs paid
(16,771)
Proceeds from term debt
107,625
Repayment of term debt
(8,250)
(12,375)
Payment of contingent consideration
(4,477)
Tax distributions to non-controlling LLC Unitholders
(65,833)
(52,633)
Receipt of taxes related to net share settlement of equity awards
26,502
7,786
Taxes paid related to net share settlement of equity awards
(18,516)
(7,091)
Dividends paid to Class A common shareholders
(66,507)
Distributions to non-controlling LLC Unitholders
(16,754)
Payment of accrued return on Ryan Re preferred units
(2,047)
Net change in fiduciary liabilities
90,700
36,832
Total cash flows provided by (used in) financing activities
$625,349
$(31,958)
Effect of changes in foreign exchange rates on cash, cash equivalents, and cash and cash equivalents held in a
fiduciary capacity
5,641
(828)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A
FIDUCIARY CAPACITY
$(400,219)
$(164,385)
CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY
CAPACITY—Beginning balance
1,756,332
1,767,385
CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY
CAPACITY—Ending balance
$1,356,113
$1,603,000
Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
Cash and cash equivalents
235,199
754,370
Cash and cash equivalents held in a fiduciary capacity
1,120,914
848,630
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
$1,356,113
$1,603,000
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
5
Ryan Specialty Holdings, Inc.
Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, except share data)
Class A
Common Stock
Class B
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Non-
controlling
Interests
Total
Stockholders’
Equity
Shares
Amount
Shares
Amount
Balance at December 31, 2023
118,593,062
$119
141,621,188
$142
$441,997
$114,420
$3,076
$419,890
$979,644
Net income
16,535
24,142
40,677
Issuance of common stock
9,449
Exchange of LLC equity for common stock
134,959
(134,959)
240
(240)
Class A common stock dividends and Dividend Equivalents
(42,418)
(42,418)
Distributions and Declared Distributions to non-controlling
LLC Unitholders
(5,766)
(5,766)
Tax Receivable Agreement liability and deferred taxes arising
from LLC interest ownership changes
(78)
(78)
Distributions declared for non-controlling interest holders’ tax
(22,177)
(22,177)
Change in share of equity method investment in related party
other comprehensive income
1,510
2,270
3,780
Gain on interest rate cap, net
1,918
2,887
4,805
Foreign currency translation adjustments
(408)
(616)
(1,024)
Equity-based compensation
17,297
13
17,310
Balance at March 31, 2024
118,737,470
$119
141,486,229
$142
$459,456
$88,537
$6,096
$420,403
$974,753
Net income
46,787
71,251
118,038
Issuance of common stock
270,510
8,992
989
1,179
2,168
Exchange of LLC equity for common stock
331,150
(331,150)
598
(598)
Equity awards withheld for settlement of employee tax
obligations
(284)
(284)
Class A common stock dividends and Dividend Equivalents
(13,764)
(13,764)
Distributions and Declared Distributions to non-controlling
LLC Unitholders
(5,758)
(5,758)
Tax Receivable Agreement liability and deferred taxes arising
from LLC interest ownership changes
709
(201)
508
Distributions declared for non-controlling interest holders’ tax
(22,829)
(22,829)
Change in share of equity method investment in related party
other comprehensive income
(376)
(564)
(940)
Loss on interest rate cap, net
(744)
(1,116)
(1,860)
Foreign currency translation adjustments
927
1,382
2,309
Equity-based compensation
16,378
4,517
20,895
Balance at June 30, 2024
119,339,130
$119
141,164,071
$142
$478,130
$121,560
$5,903
$467,382
$1,073,236
6
Class A
Common Stock
Class B
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Non-
controlling
Interests
Total
Stockholders’
Equity
Shares
Amount
Shares
Amount
Balance at June 30, 2024
119,339,130
$119
141,164,071
$142
$478,130
$121,560
$5,903
$467,382
$1,073,236
Net income
17,589
11,054
28,643
Issuance of common stock
1,123,824
1
32,262
3,307
3,670
6,978
Forfeiture of common stock
(1,883)
Exchange of LLC equity for common stock
4,635,453
5
(4,471,561)
(5)
8,005
(8,005)
Class A common stock dividends and Dividend Equivalents
(14,176)
(14,176)
Distributions and Declared Distributions to non-controlling
LLC Unitholders
(5,622)
(5,622)
Tax Receivable Agreement liability and deferred taxes arising
from LLC interest ownership changes
8,131
8,131
Distributions declared for non-controlling interest holders’ tax
(21,952)
(21,952)
Change in share of equity method investment in related party
other comprehensive income
(149)
(204)
(353)
Loss on interest rate cap, net
(5,332)
(7,397)
(12,729)
Foreign currency translation adjustments
6,658
9,259
15,917
Equity-based compensation
2,945
20,514
23,459
Balance at September 30, 2024
125,096,524
$125
136,724,772
$137
$500,518
$124,973
$7,080
$468,699
$1,101,532
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
7
Ryan Specialty Holdings, Inc.
Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, except share data)
Class A
Common Stock
Class B
Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interests
Total
Stockholders’
Equity
Shares
Amount
Shares
Amount
Balance at December 31, 2022
112,437,825
$112
147,214,275
$147
$418,123
$53,988
$6,035
$339,407
$817,812
Net income
13,160
23,297
36,457
Issuance of common stock
3,468
Exchange of LLC equity for common stock
792,358
1
(792,358)
(1)
1,430
(1,430)
Tax Receivable Agreement liability and deferred taxes arising
from LLC interest ownership changes
(395)
(395)
Distributions declared for non-controlling interest holders’ tax
(15,382)
(15,382)
Change in share of equity method investment in related party
other comprehensive income
214
370
584
Loss on interest rate cap, net
(2,251)
(3,889)
(6,140)
Foreign currency translation adjustments
285
498
783
Equity-based compensation
17,740
139
17,879
Balance at March 31, 2023
113,233,651
$113
146,421,917
$146
$436,898
$67,148
$4,283
$343,010
$851,598
Net income
30,078
53,739
83,817
Issuance of common stock
104,196
21,006
Exchange of LLC equity for common stock
1,871,084
2
(1,871,084)
(2)
3,474
(3,474)
Tax Receivable Agreement liability and deferred taxes arising
from LLC interest ownership changes
449
449
Distributions declared for non-controlling interest holders’ tax
(21,992)
(21,992)
Change in share of equity method investment in related party
other comprehensive income
323
545
868
Gain on interest rate cap, net
3,816
6,434
10,250
Foreign currency translation adjustments
103
176
279
Equity-based compensation
12,104
6,545
18,649
Balance at June 30, 2023
115,208,931
$115
144,571,839
$144
$452,925
$97,226
$8,525
$384,983
$943,918
Net income (loss)
(5,047)
20,750
15,703
Issuance of common stock
426,647
41,446
2,694
2,694
Exchange of LLC equity for common stock
2,586,950
3
(2,586,950)
(3)
4,804
(4,804)
Tax Receivable Agreement liability and deferred taxes arising
from LLC interest ownership changes
(32,970)
13,136
(19,834)
Distributions declared for non-controlling interest holders’ tax
(18,104)
(18,104)
Change in share of equity method investment in related party
other comprehensive loss
(267)
(405)
(672)
Gain on interest rate cap, net
545
829
1,374
Foreign currency translation adjustments
(17)
(567)
(862)
(1,446)
Equity-based compensation
14,868
2,740
17,608
Balance at September 30, 2023
118,222,528
$118
142,026,335
$141
$442,304
$92,179
$8,236
$398,263
$941,241
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
8
Ryan Specialty Holdings, Inc.
Notes to the Consolidated Financial Statements (Unaudited)
(Tabular amounts presented in thousands, except share and per share data)
1.      Basis of Presentation
Nature of Operations
Ryan Specialty Holdings, Inc., (the “Company”) is a service provider of specialty products and solutions for insurance
brokers, agents, and carriers. These services encompass distribution, underwriting, product development, administration,
and risk management by acting as a wholesale broker and a managing underwriter or a program administrator with
delegated authority from insurance carriers. The Company’s offerings cover a wide variety of sectors including
commercial, industrial, institutional, governmental, and personal through one operating segment, Ryan Specialty. With the
exception of the Company’s equity method investment, the Company does not take on any underwriting risk.
The Company is headquartered in Chicago, Illinois, and has operations in the United States, Canada, the United Kingdom,
Europe, and Singapore. The Company’s Class A common stock is traded on the New York Stock Exchange under the
ticker symbol “RYAN”.
Organization
Ryan Specialty Holdings, Inc., was formed as a Delaware corporation on March 5, 2021, for the purpose of completing an
IPO and to carry on the business of the LLC. New Ryan Specialty, LLC, or New LLC, was formed as a Delaware limited
liability company on April 20, 2021, for the purpose of becoming, subsequent to our IPO, an intermediate holding
company between Ryan Specialty Holdings, Inc., and the LLC. The Company is the sole managing member of New LLC.
New LLC is a holding company with its sole material asset being a controlling equity interest in the LLC. The Company
operates and controls the business and affairs of the LLC through New LLC and, through the LLC, conducts its business.
Accordingly, the Company consolidates the financial results of New LLC, and therefore the LLC, and reports the non-
controlling interests of New LLC’s Common Units on its consolidated financial statements. As the LLC is substantively
the same as New LLC, for the purpose of this document, we will refer to both New LLC and the LLC as the “LLC”. As of
September 30, 2024, the Company owned 47.8% of the outstanding LLC Common Units.
Basis of Presentation
The accompanying unaudited consolidated interim financial statements and notes thereto have been prepared in accordance
with U.S. GAAP. Certain information and disclosures normally included in the financial statements prepared in accordance
with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC for interim financial information.
These consolidated interim financial statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28,
2024. Interim results are not necessarily indicative of results for the full fiscal year due to seasonality and other factors.
In the opinion of management, the unaudited consolidated interim financial statements include all normal recurring
adjustments necessary to present fairly the Company’s consolidated financial position, results of operations, and cash flows
for all periods presented. Certain prior period amounts in the Consolidated Statements of Cash Flows have been reclassified
to conform to the current year presentation.
Principles of Consolidation
The unaudited consolidated interim financial statements include the accounts of the Company and its subsidiaries that it
controls due to ownership of a majority voting interest or pursuant to variable interest entity (“VIE”) accounting. All
intercompany transactions and balances have been eliminated in consolidation.
The Company, through its intermediate holding company New LLC, owns a minority economic interest in, and operates
and controls the businesses and affairs of, the LLC. The LLC is a VIE of the Company and the Company is the primary
beneficiary of the LLC as the Company has both the power to direct the activities that most significantly impact the LLC’s
economic performance and has the obligation to absorb losses of, and receive benefits from, the LLC, which could be
significant to the Company. Accordingly, the Company has prepared these consolidated financial statements in accordance
with Accounting Standards Codification 810, Consolidation (“ASC 810”). ASC 810 requires that if an entity is the primary
beneficiary of a VIE, the assets, liabilities, and results of operations of the VIE should be included in the consolidated
financial statements of such entity. The Company’s relationship with the LLC results in no recourse to the general credit of
the Company and the Company has no contractual requirement to provide financial support to the LLC. The Company
shares in the income and losses of the LLC in direct proportion to the Company’s ownership percentage.
9
Use of Estimates
The preparation of the unaudited consolidated interim financial statements and notes thereto requires management to make
estimates, judgments, and assumptions that affect the amounts reported in the unaudited consolidated interim financial
statements and in the notes thereto. Such estimates and assumptions could change in the future as circumstances change or
more information becomes available, which could affect the amounts reported and disclosed herein.
Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies from those that were disclosed for
the year ended December 31, 2023, in the Company’s Annual Report on Form 10-K filed with the SEC on February 28,
2024.
Recently Issued Accounting Pronouncements
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280) — Improvements to Reportable
Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This
ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024, with early adoption permitted. The amendments in this ASU should be applied retrospectively to
all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this
ASU on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) — Improvements to Income Tax Disclosures,
which includes amendments that further enhance income tax disclosures, primarily through standardization and
disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for annual
periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the
impact of adopting this ASU on its consolidated financial statements and disclosures.
New Accounting Pronouncements Recently Adopted
In March 2024, the FASB issued ASU 2024-01 Compensation — Stock Compensation (Topic 718) — Scope Application of
Profits Interest and Similar Awards, which provides illustrative examples to demonstrate how an entity should apply the
scope guidance in paragraph 718-10-15-3 to determine whether profits interests and similar awards should be accounted for
in accordance with Topic 718. This ASU is effective for public companies for fiscal years beginning after December 15,
2024, but early adoption is permitted. The Company adopted this standard retrospectively on January 1, 2024, with no
material impact to the consolidated financial statements or disclosures.
In March 2024, the FASB issued ASU 2024-02 Codification Improvements — Amendments to Remove References to the
Concept Statements, which removes references to various FASB Concepts Statements in order to simplify the Codification
and draw a distinction between authoritative and nonauthoritative literature. This ASU is effective for public companies for
fiscal years beginning after December 15, 2024, but early adoption is permitted. The Company adopted this standard
prospectively on January 1, 2024, with no material impact to the consolidated financial statements or disclosures.
2.      Revenue from Contracts with Customers
Disaggregation of Revenue
The following table summarizes revenue from contracts with customers by Specialty:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Wholesale Brokerage
$346,666
$308,872
$1,114,240
$976,338
Binding Authority
76,497
69,245
245,762
208,547
Underwriting Management
164,966
109,228
446,262
322,993
Total Net commissions and fees
$588,129
$487,345
$1,806,264
$1,507,878
10
Contract Balances
Contract assets, which arise primarily from the Company’s supplemental and contingent commission arrangements and
medical stop loss business, are included within Commissions and fees receivable – net on the Consolidated Balance Sheets.
The contract assets balance was $18.5 million and $13.4 million as of September 30, 2024 and December 31, 2023,
respectively. For contract assets, payment is typically due within one year of the completed performance obligation. The
contract liability balance related to deferred revenue, which is included in Accounts payable and accrued liabilities on the
Consolidated Balance Sheets, was $11.2 million and $7.8 million as of September 30, 2024 and December 31, 2023,
respectively. During the three and nine months ended September 30, 2024, $0.5 million and $7.1 million, respectively, of
the contract liabilities outstanding as of December 31, 2023, was recognized in revenue.
3.      Mergers and Acquisitions
2024 Acquisitions
On May 1, 2024, the Company completed the acquisition of Castel Underwriting Agencies Limited (“Castel”), a managing
general underwriting platform headquartered in London, England, for cash consideration of $247.6 million, $2.2 million of
RYAN Class A common stock, and contingently returnable consideration of $4.9 million.
On August 30, 2024, the Company completed the acquisition of US Assure Insurance Services of Florida, Inc. (“US
Assure”), a program specializing in builder’s risk insurance headquartered in Jacksonville, Florida, for cash consideration
of $1,079.8 million and contingent consideration of $103.8 million.
On September 1, 2024, the Company completed the acquisition of certain assets of Greenhill Underwriting Insurance
Services, LLC (“Greenhill”), an MGU focused on the allied health industry headquartered in Houston, Texas, for cash
consideration of $11.7 million.
On September 13, 2024, the Company completed the acquisition of the Property and Casualty (“P&C”) MGUs owned by
Ethos Specialty Insurance, LLC (“Ethos P&C”) for cash consideration of $44.0 million. Ethos P&C is composed of eight
programs which underwrite on behalf of insurance carriers.
The $103.8 million of contingent consideration liabilities and $4.9 million of contingently returnable consideration
established for the acquisitions that occurred during the nine months ended September 30, 2024, were measured at the
estimated acquisition date fair value and were non-cash investing transactions. These arrangements are based on specified
revenue or EBITDA targets over the next three fiscal years.
The following table summarizes the estimated fair value of the aggregate assets and liabilities acquired during the nine
months ended September 30, 2024:
Castel
US Assure
Greenhill
Ethos P&C
Total
Cash and cash equivalents
$10,294
$7,181
$314
$
$17,789
Commissions and fees receivable – net
10,657
50,111
46
60,814
Fiduciary cash and receivables
119,333
122,136
3,222
244,691
Goodwill2
190,602
457,847
7,268
24,246
679,963
Customer relationships1
97,820
670,300
4,158
21,100
793,378
Other intangible assets
875
9,900
10,775
Lease right-of-use assets
1,269
2,256
3,525
Other current and non-current assets
1,277
606
1,883
Total assets acquired
$432,127
$1,320,337
$15,008
$45,346
$1,812,818
Accounts payable and accrued liabilities
1,138
9,284
10,422
Accrued compensation
43,538
3,084
49
1,371
48,042
Fiduciary liabilities
119,433
122,136
3,222
244,791
Operating lease liabilities
1,269
2,256
3,525
Deferred tax liabilities2
21,816
21,816
Total liabilities assumed
$187,194
$136,760
$3,271
$1,371
$328,596
Net assets acquired
$244,933
$1,183,577
$11,737
$43,975
$1,484,222
11
1 The acquired customer relationships have a weighted average amortization period of 13.8 years.
2 Includes a correction of an error to the purchase price allocation for the Castel acquisition, which resulted in an increase
to Deferred tax liabilities and Goodwill of $24.6 million. The table above shows the deferred tax liabilities net of deferred
tax assets of $2.8 million.
Estimated tax deductible goodwill of $545.6 million was generated as a result of the acquisitions above. The Company
recognized acquisition-related expenses, which include advisory, legal, accounting, valuation, and other costs related to
diligence, for the acquisitions above of $5.3 million and $11.4 million during the three and nine months ended
September 30, 2024, respectively, in General and administrative expense on the Consolidated Statements of Income (Loss).
In conjunction with the closing of the Castel acquisition, the deal-contingent foreign currency forward (the “Deal-
Contingent Forward”), as described in Note 11, Derivatives, was settled.
The Company recognized an aggregate $24.5 million and $33.8 million of revenue related to the acquisitions above from
their respective acquisition dates for the three and nine months ended September 30, 2024, respectively.
2023 Acquisitions
On January 3, 2023, the Company completed the acquisition of certain assets of Griffin Underwriting Services (“Griffin”),
a binding authority specialist and wholesale insurance broker headquartered in Bellevue, Washington, for cash
consideration of $115.5 million.
On July 1, 2023, the Company completed the acquisitions of certain assets of ACE Benefit Partners, Inc. (“ACE”), a
medical stop loss general agent headquartered in Eagle, Idaho, and Point6 Healthcare, LLC (“Point6”), a distributor of
medical stop loss insurance on behalf of retail brokers and third-party administrators headquartered in Plano, Texas, for an
aggregate $46.8 million of cash consideration and $2.3 million of contingent consideration. During nine months ended
September 30, 2024, a measurement period adjustment related to the initial valuation of contingent consideration of $0.6
million was recognized in Goodwill on the Consolidated Balance Sheets.
On July 3, 2023, the Company completed the acquisition of Socius Insurance Services (“Socius”), a national wholesale
insurance broker headquartered in Northern California, for $253.5 million of cash consideration, $5.8 million of contingent
consideration, and $2.7 million of RYAN Class A common stock.
On December 1, 2023, the Company completed the acquisition of AccuRisk Holdings, LLC (“AccuRisk”), a medical stop
loss MGU headquartered in Chicago, Illinois, for $98.3 million of cash consideration. During the nine months ended
September 30, 2024, a measurement period adjustment related to the initial valuation of contingent consideration of $0.3
million was recognized in Goodwill on the Consolidated Balance Sheets.
Estimates and assumptions used in the acquisition valuations are subject to change within the measurement period up to
one year from each acquisition date.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the combined results of operations of the Company as if
the 2024 and 2023 acquisitions, excluding Griffin as it is already included in the results of all periods presented, occurred
on January 1, 2023. The unaudited pro forma financial information is presented for informational purposes only and is not
indicative of the results of operations that would have been achieved if the acquisitions had taken place on the date
indicated or of results that may occur in the future. The pre-acquisition Castel and US Assure results included in the pro
forma figures below contain acquisition-related expenses that were not considered pro forma adjustments for the Company.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Total revenue
$630,260
$565,699
$1,949,548
$1,746,130
Net income
8,333
25,225
130,932
27,902
The unaudited pro forma financial information includes adjustments of (i) incremental amortization expense on acquired
intangible assets of $12.5 million and $28.3 million for the three months ended September 30, 2024 and 2023, respectively,
and $61.4 million and $89.5 million for the nine months ended September 30, 2024 and 2023, respectively, (ii) a decrease
in transaction costs, including the loss related to the Deal-Contingent Forward for pro forma purposes, of $5.3 million and
$16.2 million for the three and nine months ended September 30, 2024, respectively, and an increase in such costs of $7.7
12
million for the nine months ended September 30, 2023, (iii) a decrease in financing costs and interest expense resulting
from the debt activity related to the US Assure acquisition of $23.9 million for the three months ended September 30, 2024
and an increase in such costs of $11.0 million and $63.0 million for the three and nine months ended September 30, 2023,
respectively, (iv) a decrease of $20.7 million of income tax expense related to the common control reorganizations as part
of the Socius acquisition for the three months ended September 30, 2023, and (v) incremental tax expenses related to the
pro forma adjustments of $8.9 million and $4.0 million for the three months ended September 30, 2024 and 2023,
respectively, and $3.3 million and $19.7 million for the nine months ended September 30, 2024 and 2023, respectively.
Contingent Consideration
Total consideration for certain acquisitions includes contingent consideration or contingently returnable consideration,
which are generally based on the EBITDA or revenue of the acquired business following a defined period after purchase.
Further information regarding fair value measurements of contingent consideration and contingently returnable
consideration is detailed in Note 13, Fair Value Measurements. The Company recognizes income or loss for the changes in
fair value of estimated contingent consideration and contingently returnable consideration within Change in contingent
consideration, and recognizes accretion of the discount on these assets or liabilities within Interest expense, net, on the
Consolidated Statements of Income (Loss). The table below summarizes the amounts recognized:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Change in contingent consideration
$(365)
$1,848
$813
$4,358
Interest expense, net
1,325
789
3,125
2,230
Total
$960
$2,637
$3,938
$6,588
As of September 30, 2024, the aggregate amounts of maximum consideration related to acquisitions were $483.1 million
related to contingent consideration and $20.1 million related to contingently returnable consideration.
4.      Restructuring
In February 2023, the Company initiated the ACCELERATE 2025 program that will enable continued growth, drive
innovation, and deliver sustainable productivity improvements over the long term. The restructuring plan aims to reduce
costs and increase efficiencies through a focus on optimizing the Company’s operations and technology. In its expanded
form, the restructuring plan is expected to incur total restructuring costs of approximately $110.0 million through
December 31, 2024, and to generate annual savings of approximately $60.0 million in 2025. The total expected costs of the
plan include $55.0 million related to operations and technology optimization, $40.0 million related to employee
compensation and benefits, and $15.0 million related to asset impairment and other termination costs.
The table below presents the restructuring expense for the program incurred:
Three Months Ended
September 30,
Nine Months Ended
September 30,
Inception-to-
Date
2024
2023
2024
2023
As of
September 30,
2024
Operations and technology
optimization
$6,828
$10,824
$17,714
$18,529
$43,709
Compensation and benefits
3,680
5,109
29,800
6,709
41,120
Asset impairment and other
termination costs
318
544
318
11,057
11,375
Total
$10,826
$16,477
$47,832
$36,295
$96,204
For the three months ended September 30, 2024 and 2023, the Company recognized restructuring expenses of $5.7 million
and $11.6 million, respectively, including contractor costs, in Compensation and benefits, and $5.1 million and $4.9
million, respectively, in General and administrative expense on the Consolidated Statements of Income (Loss). For the nine
months ended September 30, 2024 and 2023, the Company recognized restructuring expenses of $35.7 million and $13.4
million, respectively, including contractor costs, in Compensation and benefits, and $12.1 million and $22.9 million,
respectively, in General and administrative expense on the Consolidated Statements of Income (Loss).
13
The table below presents a summary of changes in the restructuring liability:
Operations and
Technology
Optimization
Compensation
and Benefits
Asset Impairment
and Other
Termination Costs
Total
Balance at December 31, 2023
$5,886
$1,080
$
$6,966
Accrued costs
36,140
29,800
318
66,258
Payments
(29,649)
(27,936)
(57,585)
Non-cash adjustments
(318)
(318)
Balance at September 30, 2024
$12,377
$2,944
$
$15,321
Accrued costs in the table above include both costs expensed and capitalized during the period. As of September 30, 2024
and December 31, 2023, $11.1 million and $5.3 million, respectively, of the restructuring liability was included in
Accounts payable and accrued liabilities and $4.2 million and $1.7 million, respectively, was included in Current Accrued
compensation on the Consolidated Balance Sheets. 
5.      Receivables and Other Current Assets
Receivables
The Company had receivables of $334.6 million and $294.2 million outstanding as of September 30, 2024 and
December 31, 2023, respectively, which were recognized within Commissions and fees receivable – net on the
Consolidated Balance Sheets. Commission and fees receivable is net of an allowance for credit losses. The Company’s
allowance for credit losses is based on a combination of factors, including evaluation of historical write-offs, current
economic conditions, aging of balances, and other qualitative and quantitative analyses.
The following table provides a summary of changes in the Company’s allowance for expected credit losses:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Beginning of period
$3,153
$2,089
$2,458
$1,980
Write-offs
(1,225)
(441)
(2,510)
(1,342)
Increase in provision
1,691
869
3,671
1,879
End of period
$3,619
$2,517
$3,619
$2,517
Other Current Assets
Major classes of other current assets consist of the following:
September 30, 2024
December 31, 2023
Prepaid expenses
$45,610
$25,762
Insurance recoverable
20,155
20,562
Other current receivables
18,400
15,905
Total Other current assets
$84,165
$62,229
Other current receivables contain service receivables from Geneva Re, Ltd. See Note 15, Related Parties, for further
information regarding related parties. See Note 14, Commitments and Contingencies, for further information on the
insurance recoverable.
14
6.      Leases
The Company has various non-cancelable operating leases with various terms through September 2038, primarily for office
space and office equipment. The following table provides additional information about the Company’s leases:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Lease costs
Operating lease costs
$7,669
$8,687
$23,408
$26,339
Short-term lease costs
Operating lease costs
228
234
675
635
Sublease income
(112)
(193)
(408)
(439)
Lease costs – net
$7,785
$8,728
$23,675
$26,535
Cash paid for amounts included in the measurement of lease liabilities
 
 
Operating cash flows for operating leases
$22,516
$23,245
Non-cash related activities
 
 
Right-of-use assets obtained in exchange for new
operating lease liabilities
15,236
9,948
Amortization of right-of-use assets for operating
lease activity
16,803
20,197
Weighted average discount rate (percent)
Operating leases
5.3 %
5.1 %
Weighted average remaining lease term (years)
Operating leases
7.8
8.3
15
7.      Debt
Substantially all of the Company’s debt is carried at outstanding principal balance, less debt issuance costs and any
unamortized discount. The following table is a summary of the Company’s outstanding debt:
September 30, 2024
December 31, 2023
Term debt
7-year term loan facility, periodic interest and quarterly principal
payments, Adjusted Term SOFR + 2.25% as of September 30, 2024,
Adjusted Term SOFR + 3.00% as of December 31, 2023, matures
September 13, 2031
$1,677,446
$1,564,718
Senior secured notes
8-year senior secured notes, semi-annual interest payments, 4.38%,
matures February 1, 2030
397,057
400,704
8-year secured notes, semi-annual interest payments, 5.88%, matures
August 1, 2032
591,805
Revolving debt
5-year revolving loan facility, periodic interest payments, Adjusted Term
SOFR + up to 2.50% as of September 30, 2024, Adjusted Term SOFR +
up to 3.00% as of December 31, 2023, plus commitment fees of
0.25%-0.50%, matures July 30, 2029
714
377
Premium financing notes
Commercial notes, periodic interest and principal payments, 6.25%,
expire May 1, 2025
4,642
Commercial notes, periodic interest and principal payments, 6.25%,
expire June 1, 2025
871
Commercial notes, periodic interest and principal payments, 6.25%,
expire June 21, 2025
3,932
Commercial notes, periodic interest and principal payments, 5.75%,
expired May 1, 2024
2,251
Commercial notes, periodic interest and principal payments, 5.75%,
expired June 1, 2024
622
Commercial notes, periodic interest and principal payments, 6.00%,
expired June 19, 2024
2,485
Commercial notes, periodic interest and principal payments, 5.75%,
expired June 21, 2024
2,855
Units subject to mandatory redemption
3,399
5,200
Total debt
$2,679,866
$1,979,212
Less: Short-term debt and current portion of long-term debt
(33,316)
(35,375)
Long-term debt
$2,646,550
$1,943,837
Term Loan
The original principal of the Term Loan was $1,650.0 million. As a result of the Seventh Amendment, as defined and
described below, the principal was increased to $1,700.0 million. As of September 30, 2024, $1,700.0 million of the
principal was outstanding, $6.2 million of interest was accrued, and the related unamortized deferred issuance costs were
$28.8 million. As of December 31, 2023, $1,596.4 million of the principal was outstanding, $1.1 million of interest was
accrued, and the related unamortized deferred issuance costs were $32.8 million.
On January 19, 2024, the Company entered into the fifth amendment (the “Fifth Amendment”) to the Credit Agreement. As
a result of the Fifth Amendment, the applicable interest rate of the Term Loan was reduced from Adjusted Term SOFR +
3.00% to Adjusted Term SOFR + 2.75% and no longer contains a credit spread adjustment. All other material provisions
remain unchanged. The portion of the debt related to the lenders that opted out of the repricing was considered
extinguished and their portion of the legacy debt issuance costs of $0.4 million was written off during the nine months
ended September 30, 2024, which was recognized in Interest expense, net on the Consolidated Statements of Income
(Loss). Additionally, the Company incurred third-party fees related to the repricing of $1.9 million for the nine months
16
ended September 30, 2024, which were recognized in Other non-operating loss on the Consolidated Statements of Income
(Loss).
On September 13, 2024, the Company entered into the seventh amendment (the “Seventh Amendment”) to the Credit
Agreement. As a result of the Seventh Amendment, the principal of the Term Loan was increased to $1,700.0 million, the
applicable interest rate of the Term Loan was reduced from Adjusted Term SOFR + 2.75% to Adjusted Term SOFR +
2.25%, the 0.75% floor on Adjusted Term SOFR was reduced to 0.00%, and the maturity date was extended to
September 13, 2031. Incremental debt issuance costs of $11.1 million were incurred and will be amortized over the
extended term of the loan. The portion of the debt related to the lenders that opted out of the Seventh Amendment was
considered extinguished and their portion of the legacy debt issuance costs of $8.3 million was written off during the three
and nine months ended September 30, 2024, which was recognized in Interest expense, net on the Consolidated Statements
of Income (Loss). Additionally, the Company incurred third-party fees related to the Seventh Amendment of $16.2 million
for the three and nine months ended September 30, 2024, which were recognized in Other non-operating loss on the
Consolidated Statements of Income (Loss).
Revolving Credit Facility
On July 30, 2024, the Company entered into the sixth amendment (the Sixth Amendment) to the Credit Agreement,
which provided for an increase in the borrowing capacity of the Revolving Credit Facility from $600.0 million to $1,400.0
million. The Sixth Amendment also extended the maturity date of the Revolving Credit Facility to July 30, 2029, and
reduced the applicable interest rate from Adjusted Term SOFR + up to 3.00% to Adjusted Term SOFR + up to 2.50%.
Incremental debt issuance costs of $7.9 million were incurred and will be amortized over the extended term of the facility.
The portion of the debt related to the lender that opted out of the Sixth Amendment was considered extinguished and its
portion of the legacy debt issuance costs of $0.1 million was written off during the three and nine months ended
September 30, 2024, which was recognized in Interest expense, net on the Consolidated Statements of Income (Loss).
The Revolving Credit Facility had a borrowing capacity of $1,400.0 million and $600.0 million as of September 30, 2024
and December 31, 2023, respectively. Due to the nature of the instrument, the deferred issuance costs related to the facility
of $10.1 million and $4.1 million as of September 30, 2024 and December 31, 2023, respectively, were recognized in Other
non-current assets on the Consolidated Balance Sheets. The commitments available to be borrowed under the Revolving
Credit Facility were $1,399.7 million and $599.7 million as of September 30, 2024 and December 31, 2023, respectively,
as the available amount of the facility was reduced by $0.3 million of undrawn letters of credit.
The Company pays a commitment fee on undrawn amounts under the facility of 0.25% - 0.50%. As of September 30, 2024
and December 31, 2023, the Company accrued $0.7 million and $0.4 million, respectively, of unpaid commitment fees
related to the Revolving Credit Facility in Short-term debt and current portion of long-term debt on the Consolidated
Balance Sheets.
Senior Secured Notes due 2030
In February 2022, the LLC issued $400.0 million of Senior Secured Notes. As of September 30, 2024 and December 31,
2023, accrued interest on the notes was $2.9 million and $7.3 million, respectively, and the related unamortized deferred
issuance costs plus discount were $5.9 million and $6.6 million, respectively.
Senior Secured Notes due 2032
On September 19, 2024, the LLC issued $600.0 million of Senior Secured Notes. As of September 30, 2024, accrued
interest on the notes was $1.2 million and the related unamortized deferred issuance costs were $9.4 million.
Bridge Facility
On July 31, 2024, the Company entered into a 364-day unsecured bridge term loan facility (the “Bridge Facility”), which
provided unsecured bridge financing of up to $500.0 million to finance a portion of the US Assure acquisition price. In lieu
of drawing under the Bridge Facility, the Company borrowed under the Revolving Credit Facility. Concurrent with the
completion of the US Assure acquisition on August 30, 2024, the Bridge Facility was terminated, and the Company
recognized $4.1 million of related deferred financing costs in Interest expense, net on the Consolidated Statements of
Income (Loss) during the three and nine months ended September 30, 2024
Subsidiary Units Subject to Mandatory Redemption
Ryan Re Underwriting Managers, LLC (“Ryan Re”) has the obligation to settle its outstanding preferred units owned by
Patrick G. Ryan in the amount of the aggregate unreturned capital and unpaid dividends on June 13, 2034, 15 years from
original issuance. As these units are mandatorily redeemable, they are classified as Long-term debt on the Consolidated
17
Balance Sheets. The historical cost of the units is $3.3 million, which was valued using an implicit rate of 9.8%. Accretion
of the discount using the implicit rate is recognized as Interest expense, net in the Consolidated Statements of Income
(Loss). As of September 30, 2024 and December 31, 2023, interest accrued on these units was $0.1 million and $1.9
million, respectively. $2.0 million of accrued return on the Ryan Re preferred units was paid during the nine months ended
September 30, 2024. See Note 15, Related Parties, for further information on Ryan Re.
8.      Stockholders’ Equity
Ryan Specialty’s amended and restated certificate of incorporation authorizes the issuance of up to 1,000,000,000 shares of
Class A common stock, 1,000,000,000 shares of Class B common stock, 10,000,000 shares of Class X common stock, and
500,000,000 shares of preferred stock, each having a par value of $0.001 per share.
The New LLC Operating Agreement requires that the Company and the LLC at all times maintain a one-to-one ratio
between the number of shares of Class A common stock issued by the Company and the number of LLC Common Units
owned by the Company, except as otherwise determined by the Company.
Class A and Class B Common Stock
Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is initially
entitled to 10 votes per share but, upon the occurrence of certain events as set forth in the Company’s amended and restated
certificate of incorporation, will be entitled to one vote per share in the future. All holders of Class A common stock and
Class B common stock vote together as a single class except as otherwise required by applicable law or our amended and
restated certificate of incorporation. Holders of Class B common stock do not have any right to receive dividends or
distributions upon the liquidation or winding up of the Company.
In accordance with the New LLC Operating Agreement, the LLC Unitholders are entitled to exchange LLC Common Units
for shares of Class A common stock or, at the Company’s election, for cash from a substantially concurrent public offering
or private sale (based on the price of our Class A common stock in such public offering or private sale). The LLC
Unitholders are also required to deliver to the Company an equivalent number of shares of Class B common stock to
effectuate such an exchange. Any shares of Class B common stock so delivered will be canceled. Shares of Class B
common stock are not issued for Class C Incentive Units that are exchanged for LLC Common Units as these LLC
Common Units are immediately exchanged for Class A common stock as discussed in Note 9, Equity-Based
Compensation.
Class X Common Stock
There were no shares of Class X common stock outstanding as of September 30, 2024 or December 31, 2023. Shares of
Class X common stock have no economic, voting, or dividend rights.
Preferred Stock
There were no shares of preferred stock outstanding as of September 30, 2024 or December 31, 2023. Under the terms of
the amended and restated certificate of incorporation, the Board is authorized to direct the Company to issue shares of
preferred stock in one or more series without stockholder approval. The Board has the discretion to determine the rights,
preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges,
and liquidation preferences, of each series of preferred stock.
Dividends
During the three months ended September 30, 2024, the Company’s Board of Directors declared a regular quarterly cash
dividend of $0.11 per share on the Company’s outstanding Class A common stock. During the nine months ended
September 30, 2024, $66.5 million of dividends, consisting of $27.1 million related to the special Q1 2024 dividend and
$39.4 million related to regular quarterly dividends, was paid on Class A common stock.
Non-controlling Interests
The Company is the sole managing member of the LLC. As a result, the Company consolidates the LLC in its consolidated
financial statements, resulting in non-controlling interests related to the LLC Common Units not held by the Company. As
of September 30, 2024 and December 31, 2023, the Company owned 47.8% and 45.6%, respectively, of the economic
interests in the LLC, while the non-controlling interest holders owned the remaining 52.2% and 54.4%, respectively, of the
economic interests in the LLC.
18
Weighted average ownership percentages for the applicable reporting periods are used to attribute net income (loss) and
other comprehensive income (loss) to the Company and the non-controlling interest holders. The non-controlling interest
holders’ weighted average ownership percentage was 57.4% and 56.1% for the three months ended September 30, 2024
and 2023, respectively, and 55.2% and 56.5% for the nine months ended September 30, 2024 and 2023, respectively.
During the three months ended September 30, 2024, the Company declared a regular quarterly cash distribution of $0.04
per unit on the LLC’s outstanding LLC Common Units. During the nine months ended September 30, 2024, $16.8 million
in distributions were paid to the non-controlling interest holders of the LLC Common Units.
9.      Equity-Based Compensation
The Ryan Specialty Holdings, Inc., 2021 Omnibus Incentive Plan (the “Omnibus Plan”) governs, among other things, the
types of awards the Company can grant to employees as equity-based compensation awards. The Omnibus Plan provides
for potential grants of the following awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock awards,
(iv) performance awards, (v) other stock-based awards, (vi) other cash-based awards, and (vii) analogous equity awards
made in equity of the LLC.
IPO-Related Awards
As a result of the Organizational Transactions, pre-IPO holders of LLC Units that were granted as incentive awards, which
had historically been classified as equity and vested pro rata over five years, were required to exchange their LLC Units for
either Restricted Stock or Restricted Common Units. Additionally, Reload Options or Reload Class C Incentive Units were
issued to employees in order to protect against the dilution of their existing awards upon exchange to the new awards.
Separately, certain employees were granted one or more of the following new awards: (i) Restricted Stock Units (“RSUs”),
(ii) Staking Options, (iii) Restricted LLC Units (“RLUs”), or (iv) Staking Class C Incentive Units. The terms of these
awards are described below. All awards granted as part of the Organizational Transactions and the IPO are subject to non-
linear transfer restrictions for at least the five-year period following the IPO.
Incentive Awards
As part of the Company’s annual compensation process, the Company issues certain employees and directors equity-based
compensation awards (“Incentive Awards”). Additionally, the Company offers Incentive Awards to certain new hires.
These Incentive Awards typically take the form of (i) RSUs, (ii) RLUs, (iii) Class C Incentive Units, (iv) Stock Options,
(v) Performance Stock Units (“PSUs”), and (vi) Performance LLC Units (“PLUs”). The terms of these awards are
described below.
Restricted Stock and Restricted Common Units
As part of the Organizational Transactions, certain existing employee unitholders were granted Restricted Stock or
Restricted Common Units in exchange for their LLC Units. The Restricted Stock and Restricted Common Units follow the
vesting schedule of the LLC Units for which they were exchanged. LLC Units historically vested pro rata over 5 years.
Nine Months Ended September 30, 2024
Restricted Stock
Weighted Average
Grant Date
Fair Value
Restricted
Common Units
Weighted Average
Grant Date
Fair Value
Unvested at beginning of period
938,910
$21.15
1,122,564
$23.84
Granted
Vested
(457,906)
21.15
(869,906)
23.84
Forfeited
(1,883)
21.15
Unvested at end of period
479,121
$21.15
252,658
$23.84
Restricted Stock Units (RSUs)
IPO RSUs
Related to the IPO, the Company granted RSUs to certain employees. The IPO RSUs vest either pro rata over 5 years from
the grant date or over 10 years from the grant date, with 10% vesting in each of years 3 through 9 and 30% vesting in year
10.
19
Incentive RSUs
As part of the Company’s compensation process, the Company issues Incentive RSUs to certain employees. The Incentive
RSUs vest either 100% 3 or 5 years from the grant date, pro rata over 3 or 5 years from the grant date, over 5 years from
the grant date, with one-third of the grant vesting in each of years 3, 4 and 5, or over 7 years from the grant date, with 20%
vesting in each of years 3 through 7.
Upon vesting, RSUs automatically convert on a one-for-one basis into Class A common stock.
Nine Months Ended September 30, 2024
IPO RSUs
Incentive RSUs
Restricted
Stock Units
Weighted Average
Grant Date
Fair Value
Restricted
Stock Units
Weighted Average
Grant Date
Fair Value
Unvested at beginning of period
3,359,778
$23.07
1,819,916
$38.02
Granted
794,643
52.72
Vested
(596,879)
22.81
(177,713)
37.73
Forfeited
(40,332)
22.77
(70,305)
40.07
Unvested at end of period
2,722,567
$23.13
2,366,541
$42.92
Stock Options
Reload and Staking Options
As part of the Organizational Transactions and IPO, certain employees were granted Reload Options or Staking Options
that entitle the award holder to future purchases of Class A common stock, on a one-for-one basis, at the IPO price of
$23.50. The Reload Options vest either 100% 3 years from the grant date or over 5 years from the grant date, with one-
third of the grant vesting in each of years 3, 4 and 5. In general, vested Reload Options are exercisable up to the tenth
anniversary of the grant date. The Staking Options vest over 10 years from the grant date, with 10% vesting in each of
years 3 through 9 and 30% vesting in year 10. In general, vested Staking Options are exercisable up to the eleventh
anniversary of the grant date.
Incentive Options
As part of the Company’s compensation process, the Company may issue Incentive Options to certain employees that
entitle the award holder to future purchases of Class A common stock, on a one-for-one basis, at the respective exercise
prices. The Incentive Options vest either over 5 years from the grant date, with one-third of the grant vesting in each of
years 3, 4 and 5 or pro rata over 7 years from the grant date. In general, vested Incentive Options are exercisable up to the
tenth anniversary of the grant date.
Nine Months Ended September 30, 2024
Reload Options1
Staking Options1
Incentive
Options
Incentive Options
Weighted Average
Exercise Price
Outstanding at beginning of period
4,473,388
66,667
165,684
$34.39
Granted
150,000
52.38
Exercised
(508,613)
Forfeited
(17,611)
(11,002)
34.39
Outstanding at end of period
3,947,164
66,667
304,682
$43.25
1As the Reload and Staking Options were one-time grants at the IPO, the weighted average exercise price for any
movements in these awards will perpetually be $23.50. As such, the values are not presented in the table above.
20
The fair value of Incentive Options granted during the nine months ended September 30, 2024, was determined using the
Black-Scholes option pricing model with the following assumptions:
Incentive Options
Volatility
25.0%
Time to maturity (years)
7.0
Risk-free rate
4.2%
Dividend yield
0.8%
Fair value per option
$17.09
The use of a valuation model for the Options requires management to make certain assumptions with respect to selected
model inputs. Expected volatility was calculated based on the observed volatility for comparable companies. The expected
time to maturity was based on the weighted-average vesting term and contractual term of the awards. The risk-free interest
rate was based on U.S. Treasury rates commensurate with the expected life of the award. The dividend yield was based on
the Company’s expected dividend rate.
As of September 30, 2024, there were 1,601,823 and 6,666 exercisable Staking and Reload Options, respectively, and no
exercisable Incentive Options. The aggregate intrinsic values and weighted average remaining contractual terms of Stock
Options outstanding and exercisable as of September 30, 2024, were as follows:
Aggregate intrinsic value ($ in thousands)
Reload Options outstanding
$169,294
Reload Options exercisable
68,702
Staking Options outstanding
2,859
Staking Options exercisable
286
Incentive Options outstanding
7,051
Incentive Options exercisable
Weighted-average remaining contractual term (in years)
Reload Options outstanding
6.6
Reload Options exercisable
6.5
Staking Options outstanding
7.8
Staking Options exercisable
7.8
Incentive Options outstanding
8.4
Incentive Options exercisable
Restricted LLC Units (RLUs)
IPO RLUs
Related to the IPO, the Company granted RLUs to certain employees that vest either pro rata over 5 years from the grant
date or over 10 years from the grant date, with 10% vesting in each of years 3 through 9 and 30% vesting in year 10.
Incentive RLUs
As part of the Company’s compensation process, the Company issues Incentive RLUs to certain employees. The Incentive
RLUs vest either 100% 3 years from the grant date, pro rata over 3 or 5 years from the grant date, or over 7 years from the
grant date, with 20% vesting in each of years 3 through 7.
21
Upon vesting, RLUs convert on a one-for-one basis into either LLC Common Units or Class A common stock at the
election of the Company.
Nine Months Ended September 30, 2024
IPO RLUs
Incentive RLUs
Restricted
LLC Units
Weighted Average
Grant Date
Fair Value
Restricted
LLC Units
Weighted Average
Grant Date
Fair Value
Unvested at beginning of period
1,448,127
$25.09
482,329
$39.80
Granted
249,971
51.33
Vested
(154,589)
25.05
(45,588)
35.60
Forfeited
Unvested at end of period
1,293,538
$25.10
686,712
$44.30
Class C Incentive Units
Reload and Staking Class C Incentive Units
As part of the Organizational Transactions and IPO, certain employees were granted Reload Class C Incentive Units or
Staking Class C Incentive Units, which are profits interests. When the value of Class A common stock exceeds the
participation threshold, vested profits interests may be exchanged for LLC Common Units of equal value. On exchange,
the LLC Common Units are immediately redeemed on a one-for-one basis for Class A common stock. The Reload Class C
Incentive Units vest either 100% 3 years from the grant date or over 5 years from the grant date, with one-third of the grant
vesting in each of years 3, 4 and 5. The Staking Class C Incentive Units vest either pro rata over 5 years from the grant date
or over 10 years from the grant date, with 10% vesting in each of years 3 through 9 and 30% vesting in year 10.
Class C Incentive Units
As part of the Company’s compensation process, the Company issues Class C Incentive Units to certain employees, which
are profits interests. When the value of Class A common stock exceeds the participation threshold, vested profits interests
may be exchanged for LLC Common Units of equal value. On exchange, the LLC Common Units are immediately
redeemed on a one-for-one basis for Class A common stock. The Class C Incentive Units vest over 8 years from the grant
date, with 15% vesting in each of years 3 through 7 and 25% vesting in year 8, or over 7 years from the grant date, with
20% vesting in each of years 3 through 7.
Nine Months Ended September 30, 2024
Reload Class C
Incentive Units
Staking Class C
Incentive Units
Class C
Incentive Units
Class C Incentive
Units Weighted
Average
Participation
Threshold
Unvested at beginning of period
3,911,490
1,876,669
495,822
$36.96
Granted
Vested
(2,958,895)
(271,666)
Forfeited
Unvested at end of period
952,595
1,605,003
495,822
$36.84
As the Reload and Staking Class C Incentive Units were one-time grants at the IPO, the weighted average participation
threshold for these awards will be consistent across any type of movement. The weighted average participation threshold
for Reload and Staking Class C Incentive Units was $23.38 and $23.50 as of September 30, 2024 and December 31, 2023,
respectively. The decrease in the participation thresholds for the various types of Class C Incentive Units was due to the
distributions declared to these awards during the nine months ended September 30, 2024.
22
Performance Based Awards
Performance Stock Units (PSUs) and Performance LLC Units (PLUs)
Certain employees were granted performance-based equity awards, either PSUs or PLUs, subject to the Company’s
achievement of several defined performance metrics including (i) an Adjusted EBITDAC Margin target, (ii) an Organic
Revenue Growth Compound Annual Growth Rate (“CAGR”) target, and (iii) total shareholder return (“TSR”) CAGR
targets. The TSR CAGR targets are measured from the grant date share price to the sum of (i) the average of (a) the volume
weighted average price (“VWAP”) of the Class A common stock for the fourth quarter of 2027 and (b) the VWAP of the
Class A common stock for the first quarter of 2028 and (ii) dividends paid to Class A common shareholders. The Adjusted
EBITDAC Margin and the Organic Revenue Growth CAGR targets as well as a minimum threshold for the TSR CAGR
target must be achieved for the awards to vest. If the Adjusted EBITDAC Margin or the Organic Revenue Growth CAGR
targets are not met, or the TSR CAGR is below the minimum threshold, the awards will be forfeited.
PSUs represent the right to receive Class A common shares and PLUs represent the right to receive LLC Common Units
upon vesting. If the Adjusted EBITDAC Margin and the Organic Revenue Growth CAGR targets are achieved, and the
TSR CAGR meets at least the minimum threshold, the TSR CAGR targets will determine how many Class A common
shares or LLC Common Units, as applicable, the awards vest into. Assuming the minimum threshold is met, the awards
will vest into between 75% and 150% of the applicable stock or units. The payout percentage between the TSR CAGR
range will be determined on a graduated basis. Confirmation of the targets will not occur until after the Company’s fiscal
year 2028 earnings are reported. If the targets are achieved, the awards will vest on April 1, 2029. The probability of
achieving the performance metrics is assessed each reporting period for expense purposes.
Nine Months Ended September 30, 2024
PSUs
PLUs
Performance
Stock Units
Weighted Average
Grant Date
Fair Value
Performance
LLC Units
Weighted Average
Grant Date
Fair Value
Unvested at beginning of period
$
$
Granted
303,721
24.75
487,218
24.40
Vested
Forfeited
Unvested at end of period
303,721
$24.75
487,218
$24.40
The fair value of the performance-based awards granted during the nine months ended September 30, 2024, was
determined using the Monte Carlo simulation valuation model with the following assumptions:
PSUs and PLUs
Volatility
24.7%
Time to maturity (years)
4.1
Risk-free rate
4.2%
Initial RYAN stock price
$52.38
The use of a valuation model for the PSUs and PLUs requires management to make certain assumptions with respect to
selected model inputs. Expected volatility was calculated based on the observed volatility for comparable companies. The
time to maturity was based on the stock price CAGR target through the first quarter of 2028. The risk-free interest rate was
based on U.S. Treasury rates commensurate with the performance period. The initial RYAN stock price is the base for the
stock price CAGR target. The difference in the grant date fair value of the PSUs and PLUs relates to the difference in
Dividend Equivalents and Distributions Declared (as defined below) each award is entitled to accrue.
Non-Employee Director Stock Grants
The Company grants RSUs to non-employee directors serving as members of the Company’s Board of Directors (“Director
Stock Grants”), with the exception of the one director appointed by Onex in accordance with Onex’s nomination rights
who has agreed to forgo any compensation for his service to the Board. The Director Stock Grants are fully vested upon
grant. The Company granted 22,935 Director Stock Grants with a weighted-average grant date fair value of $49.07 and
23
19,698 Director Stock Grants with a weighted-average grant date fair value of $40.86 during the nine months ended
September 30, 2024 and 2023, respectively.
Dividend Equivalents and Declared Distributions
A majority of the Company’s unvested equity-based compensation awards, with the exception of Options and Class C
Incentive Units, are entitled to accrue dividend equivalents if the award vests into Class A common stock (“Dividend
Equivalents”) or declared distributions if the award vests into LLC Common Units (“Declared Distributions”) over the
period the underlying award vests. The Dividend Equivalents and Declared Distributions will be paid in cash to award
holders at the time the underlying award vests. If an award holder forfeits their underlying award, the accrued Dividend
Equivalents or Declared Distributions will also be forfeited. Class C Incentive Units do not accrue cash distributions but
instead have their participation thresholds lowered by each distribution declared. Options do not participate in dividends.
As of September 30, 2024, the Company accrued $0.8 million and $0.1 million related to Dividend Equivalents and
Declared Distributions, respectively, in Accounts payable and accrued liabilities, and $2.4 million and $0.3 million related
to Dividend Equivalents and Declared Distributions, respectively, in Other non-current liabilities on the Consolidated
Balance Sheets.
Equity-Based Compensation Expense
As of September 30, 2024, the unrecognized equity-based compensation costs related to each type of equity-based
compensation award described above and the related weighted-average remaining expense period were as follows:
Amount
Weighted Average
Remaining Expense
Period (Years)
Restricted Stock
$1,268
0.5
IPO RSUs
29,887
3.4
Incentive RSUs
62,355
2.4
Reload Options
1,216
0.7
Staking Options
253
3.9
Incentive Options
2,650
1.6
PSUs
6,607
4.3
Restricted Common Units
670
0.2
IPO RLUs
18,062
4.7
Incentive RLUs
21,336
2.0
Reload Class C Incentive Units
788
0.9
Staking Class C Incentive Units
9,797
4.2
Class C Incentive Units
5,882
3.8
PLUs
10,448
4.3
Total unrecognized equity-based compensation expense
$171,219
24
The following table includes the equity-based compensation the Company recognized by award type from the view of
expense related to pre-IPO and post-IPO awards. The table also presents the unrecognized equity-based compensation
expense as of September 30, 2024, in the same view.
Recognized
Unrecognized
Three Months Ended
September 30,
Nine Months Ended
September 30,
As of
September 30,
2024
2024
2023
2024
2023
IPO awards
IPO RSUs and Staking Options
$2,720
$3,654
$9,226
$12,599
$30,140
IPO RLUs and Staking Class C
Incentive Units
2,146
2,738
7,277
8,866
27,859
Incremental Restricted Stock and
Reload Options
622
1,156
2,485
3,723
1,850
Incremental Restricted Common
Units and Reload Class C
Incentive Units
586
1,779
3,018
5,779
1,257
Pre-IPO incentive awards
Restricted Stock
498
646
1,333
2,144
634
Restricted Common Units
4,733
308
5,095
1,224
201
Post-IPO incentive awards
Incentive RSUs
8,001
5,237
21,759
13,896
62,355
Incentive RLUs
2,058
1,214
5,671
3,329
21,336
Incentive Options
272
125
823
368
2,650
Class C Incentive Units
521
521
1,551
1,385
5,882
PSUs
391
910
6,607
PLUs
619
1,439
10,448
Other expense
Director Stock Grants
292
230
1,077
823
N/A
Total equity-based compensation
expense
$23,459
$17,608
$61,664
$54,136
$171,219
25
10.     Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to Ryan Specialty Holdings, Inc., by
the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings (loss) per
share is computed giving effect to potentially dilutive shares, including LLC equity awards and the non-controlling
interests’ LLC Common Units that are exchangeable into Class A common stock. As shares of Class B common stock do
not share in earnings and are not participating securities, they are not included in the Company’s calculation. A
reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings (loss) per share of
Class A common stock is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net income
$28,643
$15,703
$187,358
$135,977
Less: Net income attributable to non-controlling
interests
11,054
20,750
106,447
97,786
Net income (loss) attributable to Ryan Specialty
Holdings, Inc.
$17,589
$(5,047)
$80,911
$38,191
Numerator:
Net income (loss) attributable to Class A common
shareholders
$17,589
$(5,047)
$80,911
$38,191
Add (less): Income attributed to substantively
vested RSUs
369
(100)
(1,339)
687
Net income (loss) attributable to Class A common
shareholders – basic
$17,958
$(5,147)
$79,572
$38,878
Add: Income attributed to dilutive shares
7,886
79,624
3,128
Net income (loss) attributable to Class A common
shareholders – diluted
$25,844
$(5,147)
$159,196
$42,006
Denominator:
Weighted-average shares of Class A common
stock outstanding – basic
121,915,952
115,872,327
119,383,234
113,291,850
Add: Dilutive shares
150,770,317
151,900,158
11,591,673
Weighted-average shares of Class A common
stock outstanding – diluted
272,686,269
115,872,327
271,283,392
124,883,523
Earnings (loss) per share
Earnings (loss) per share of Class A common stock
– basic
$0.15
$(0.04)
$0.67
$0.34
Earnings (loss) per share of Class A common stock
– diluted
$0.09
$(0.04)
$0.59
$0.34
26
The following number of shares were excluded from the calculation of diluted earnings (loss) per share because the effect
of including such potentially dilutive shares would have been antidilutive:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Conversion of non-controlling interest LLC Common
Units1
141,689,681
142,974,016
Conversion of vested Class C Incentive Units1
98,699
65,028
Restricted Stock
1,015,761
IPO RSUs
3,229,891
Incentive RSUs
1,776,309
Reload Options
4,548,194
Staking Options
66,667
Incentive Options
150,000
168,099
150,000
168,099
Restricted Common Units
1,239,232
IPO RLUs
1,448,127
Incentive RLUs
482,329
Reload Class C Incentive Units
3,911,490
Staking Class C Incentive Units
1,876,669
Class C Incentive Units
495,822
495,822
1Weighted average units outstanding during the period.
11.     Derivatives
Deal-Contingent Foreign Currency Forward
On December 21, 2023, the Company entered into the Deal-Contingent Forward to manage the risk of appreciation of the
GBP-denominated purchase price of the acquisition of Castel. The Deal-Contingent Forward had a 200.0 million GBP
notional amount and was executed when the Castel acquisition closed on May 1, 2024. As the Deal-Contingent Forward
was an economic hedge and had not been designated as an accounting hedge, losses resulting from the Deal-Contingent
Forward were recognized through earnings in the periods incurred.
Interest Rate Cap
In April 2022, the Company entered into an interest rate cap agreement to manage its exposure to interest rate fluctuations
related to the Company’s Term Loan in the amount of $25.5 million. The interest rate cap has a $1,000.0 million notional
amount, 2.75% strike, and terminates on December 31, 2025. At inception, the Company formally designated the interest
rate cap as a cash flow hedge. As of September 30, 2024, the interest rate cap continued to be an effective hedge.
For the three months ended September 30, 2024 and 2023, the decrease of $16.4 million and $0.2 million, respectively, in
the fair value of the interest rate cap were recognized in Other comprehensive income (loss). For the nine months ended
September 30, 2024 and 2023, the decrease of $16.5 million and increase of $0.9 million, respectively, in the fair value of
the interest rate cap were recognized in Other comprehensive income (loss). As of September 30, 2024, the Company
expects $10.6 million of unrealized gains from the interest rate cap to be reclassified into earnings over the next twelve
months. See Note 16, Income Taxes, for further information on the tax effects on other comprehensive income (“OCI”)
related to the interest rate cap.
27
The location and gains (losses) on derivatives are reported on the Consolidated Statements of Income (Loss) as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
Income Statement
Caption
2024
2023
2024
2023
Change in the fair value of the
Deal-Contingent Forward
General and
administrative
$
$
$(4,532)
$
Total impact of derivatives not designated as
hedging instruments
$
$
$(4,532)
$
Interest rate cap premium
amortization
Interest expense, net
$(1,739)
$(1,739)
$(5,216)
$(5,216)
Amounts reclassified out of
other comprehensive income
related to the interest rate cap
Interest expense, net
6,689
6,317
19,740
16,381
Total impact of derivatives designated as hedging
instruments
$4,950
$4,578
$14,524
$11,165
The location and fair value of derivatives are reported on the Consolidated Balance Sheets as follows:
Balance Sheet
Caption
September 30, 2024
December 31, 2023
Derivatives not designated as hedging instruments
Deal-Contingent Forward
Accounts payable
and accrued
liabilities
$
$852
Derivatives designated as hedging instruments
Interest rate cap
Other non-current
assets
$13,196
$29,667
See Note 13, Fair Value Measurements, for further information on the fair value of derivatives.
12.     Variable Interest Entities
As discussed in Note 1, Basis of Presentation, the Company consolidates the LLC as a VIE under ASC 810. The
Company’s financial position, financial performance, and cash flows effectively represent those of the LLC as of and for
the nine months ended September 30, 2024, with the exception of Cash and cash equivalents of $42.2 million, Other
current assets of $7.8 million, Deferred tax assets of $486.3 million, Accounts payable and accrued liabilities of $0.8
million, Other non-current liabilities of $2.4 million, and the entire balance of the Tax Receivable Agreement liabilities of
$455.1 million on the Consolidated Balance Sheets, which are attributable solely to Ryan Specialty Holdings, Inc. As of
December 31, 2023, Cash and cash equivalents of $58.2 million, Deferred tax assets of $383.3 million, and the entire
balance of the Tax Receivable Agreement liabilities of $358.9 million on the Consolidated Balance Sheet were attributable
solely to Ryan Specialty Holdings, Inc.
13.     Fair Value Measurements
Accounting standards establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair values as
follows:
Level 1: Observable inputs such as quoted prices for identical assets in active markets;
Level 2: Inputs other than quoted prices for identical assets in active markets, that are observable either directly or
indirectly; and
Level 3: Unobservable inputs in which there is little or no market data which requires the use of valuation techniques and
the development of assumptions.
The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the
lowest level of input that is significant to the fair value measure in its entirety.
28
The carrying amount of financial assets and liabilities reported in the Consolidated Balance Sheets for commissions and
fees receivable net, other current assets, accounts payable, short-term debt, and other accrued liabilities as of
September 30, 2024 and December 31, 2023, approximate fair value because of the short-term duration of these
instruments. The fair value of long-term debt, including the Term Loan, Senior Secured Notes, the units subject to
mandatory redemption, and any current portion of such debt, was $2,692.1 million and $1,976.5 million as of
September 30, 2024 and December 31, 2023, respectively. The fair value of the Term Loan and Senior Secured Notes
would be classified as Level 2 in the fair value hierarchy and the units subject to mandatory redemption would be classified
as Level 3. See Note 7, Debt, for the carrying values of the Company’s debt.
Derivative Instruments
Deal-Contingent Foreign Currency Forward
The Company entered into the Deal-Contingent Forward to manage the risk of appreciation of the GBP-denominated
purchase price of the Castel acquisition. The fair value of the Deal-Contingent Forward was determined by comparing the
contractual foreign exchange rates to forward market rates for various future dates, probability weighted for when the
acquisition was anticipated to close, and discounted to the valuation date. The lowest level of inputs used that are
significant in determining the fair value were considered Level 3 inputs. See Note 11, Derivatives, for further information
on the Deal-Contingent Forward.
Interest Rate Cap
The Company uses an interest rate cap to manage its exposure to interest rate fluctuations related to the Company’s Term
Loan. The fair value of the interest rate cap is determined using the market standard methodology of discounting the future
expected cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable interest
rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived
from observable market interest rate curves and volatilities. The inputs used in determining the fair value of the interest rate
cap are considered Level 2 inputs. See Note 11, Derivatives, for further information on the interest rate cap.
Contingent Consideration
The fair values of contingent consideration and contingently returnable consideration are based on the present value of the
future expected payments to be made to the sellers and to be received from the sellers, respectively, of certain acquired
businesses in accordance with the provisions outlined in the respective purchase agreements, which are Level 3 fair value
measurements. In determining fair value, the Company estimates cash payments and receipts based on management’s
financial projections of the performance of each acquired business relative to the formula specified by each purchase
agreement. The Company utilizes Monte Carlo simulations to evaluate financial projections of each acquired business. The
Monte Carlo models consider forecasted revenue and EBITDA and market risk-adjusted revenue and EBITDA, which are
run through a series of simulations. As of September 30, 2024, the models used risk-free rates, expected volatility, and a
credit spread that ranged from 4.0% to 5.4%, 6.9% to 18.7%, and 1.0% to 2.4%, respectively. As of December 31, 2023,
the models used risk-free rates, expected volatility, and a credit spread that ranged from 4.9% to 5.4%, 7.0% to 21.7%, and
3.3% to 4.2%, respectively. The Company discounts the expected payments created by the Monte Carlo model to present
value using a risk-adjusted rate that takes into consideration the market-based rates of return that reflect the ability of the
acquired entity to achieve its targets. The discount rate ranges used to present value the cash payments were 5.2% to 6.8%
and 8.3% to 9.1% as of September 30, 2024 and December 31, 2023, respectively.
Each period, the Company revalues the contingent consideration and contingently returnable consideration associated with
certain prior acquisitions to their fair value and records the related changes of the fair value in Change in contingent
consideration in the Consolidated Statements of Income (Loss). Changes in contingent consideration result from changes in
the assumptions regarding probabilities of successful achievement of related EBITDA and revenue milestones, the
estimated timing in which milestones are achieved, and the discount rate used to estimate the fair value of the liability.
Contingent consideration may change significantly as the Company’s revenue growth rate and EBITDA estimates evolve
and additional data is obtained, impacting the Company’s assumptions. The use of different assumptions and judgments
could result in a different estimate of fair value which may have a material impact on the results from operations and
financial position. See Note 3, Mergers and Acquisitions, for further information on contingent consideration.
29
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring
basis by fair value hierarchy input level:
September 30, 2024
December 31, 2023
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets
Interest rate cap
$
$13,196
$
$
$29,667
$
Contingently returnable
consideration
5,587
Liabilities
Contingent consideration
150,131
41,050
Deal-Contingent Forward
852
Total assets and liabilities
measured at fair value
$
$13,196
$155,718
$
$29,667
$41,902
Contingently returnable consideration of $1.3 million and $4.3 million was recorded in Other current assets and Other non-
current assets, respectively, on the Consolidated Balance Sheets as of September 30, 2024. Contingent consideration of
$44.1 million was recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets as of
September 30, 2024. Contingent consideration of $106.0 million and $41.1 million was recorded in Other non-current
liabilities on the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, respectively.
Level 3 Assets and Liabilities Measured at Fair Value
The following is a reconciliation of the beginning and ending balances of the Level 3 assets and liabilities measured at fair
value:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Assets
Balance at beginning of period
$4,868
$
$
$
Newly established assets due to acquisitions
4,868
Total gains included in earnings
431
431
Total gains included in OCI
288
288
Balance at end of period
$5,587
$
$5,587
$
Liabilities
Balance at beginning of period
$44,971
$25,290
$41,902
$29,251
Newly established liability due to acquisitions
103,769
8,091
103,769
8,091
Total losses included in earnings
1,391
2,637
8,901
6,588
Settlements
(5,384)
(7,912)
Acquisition measurement period adjustments
943
Balance at end of period
$150,131
$36,018
$150,131
$36,018
For the nine months ended September 30, 2024, $5.4 million related to the loss on the settlement of the Deal-Contingent
Forward is presented in the operating section of the Consolidated Statements of Cash Flows. For the nine months ended
September 30, 2023, $3.4 million and $4.5 million settlements of contingent consideration are presented in the operating
and financing sections, respectively, of the Consolidated Statements of Cash Flows.
30
14.     Commitments and Contingencies
Legal – E&O and Other Considerations
As an E&S and Admitted markets intermediary, the Company faces ordinary course of business E&O exposure. The
Company also has potential E&O risk if an insurance carrier with which Ryan Specialty placed coverage denies coverage
for a claim or pays less than the insured believes is the full amount owed. The Company seeks to resolve, through
commercial accommodations, certain matters to limit the economic exposure, including potential legal fees, and
reputational risk created by a disagreement between a carrier and the insured, as well as other E&O matters.
The Company utilizes insurance to provide protection from E&O liabilities that may arise during the ordinary course of
business. Ryan Specialty’s E&O insurance provides aggregate coverage for E&O losses up to $150.0 million in excess of a
per claim retention amount of $5.0 million. The Company’s aggregate coverage for E&O losses increased from $100.0
million to $150.0 million as of June 1, 2024. The Company’s per claim retention amount increased from $2.5 million to
$5.0 million as of June 1, 2023. The Company periodically determines a range of possible outcomes using the best
available information that relies, in part, on projecting historical claim data into the future. Loss contingencies of $5.7
million and $6.4 million were recorded for outstanding matters as of September 30, 2024 and December 31, 2023,
respectively. Loss contingencies exclude the impact of any loss recoveries. The Company recognized the net impact of the
loss contingencies and any loss recoveries of a $0.9 million benefit and $0.8 million expense for the three months ended
September 30, 2024 and 2023, respectively, and $0.8 million and $5.5 million expense for the nine months ended
September 30, 2024 and 2023, respectively, in General and administrative expense on the Consolidated Statements of
Income (Loss). The historical claim and commercial accommodation data used to project the current estimates may not be
indicative of future claim activity. Thus, the estimates could change in the future as more information becomes known,
which could materially impact the amounts reported and disclosed herein.
During 2022, the Company placed certain insurance policies through a trading partner with the understanding that the
policies were underwritten by highly rated insurance capital. The policies were instead underwritten by an insurance carrier
that was not considered satisfactory by the Company or the insureds. The Company committed to securing replacement
coverage, to the extent commercially available, from highly rated insurance companies on terms substantially similar to the
insurance coverage originally agreed upon. As a result of this unusual circumstance, the Company has and may continue to
incur losses (“Replacement Costs”) arising from the original placements. The Company has determined that it is probable
that it will be exposed to the Replacement Costs on policies placed with this trading partner. The Company recognized an
estimated loss contingency of $0.9 million and $0.2 million, respectively, as of September 30, 2024 and December 31,
2023, within Accounts payable and accrued liabilities on the Consolidated Balance Sheets. Relatedly, the Company has
obtained sufficient evidence from its E&O insurance carriers to conclude that a recovery of the claim for the Replacement
Costs, in excess of the $2.5 million retention, is probable. A loss recovery of $20.2 million and $20.6 million was recorded
as of September 30, 2024 and December 31, 2023, respectively, in Other current assets on the Consolidated Balance
Sheets. In the aggregate, the loss contingency and related loss recovery resulted in a $2.5 million expense recognized in
2022 and no further expense related to this matter has been recognized since.
It is at least reasonably possible that the estimate of Replacement Costs will change in the near term as policies are
adjusted. Further, exposure to additional losses may arise from policies that had expired prior to, or shortly after, the
discovery of this unusual circumstance, adjustable premiums arising from the addition or deletion of properties over the
policy term, unpaid covered claims, or other damages for losses incurred by our customers. An estimate of these potential
losses cannot be made at this time but could change in the future as more information becomes known.
15.     Related Parties
Ryan Investment Holdings
Ryan Investment Holdings, LLC (“RIH”) was formed as an investment holding company designed to aggregate the funds
of Ryan Specialty and Geneva Ryan Holdings, LLC (“GRH”) for investment in Geneva Re Partners, LLC (“GRP”). GRH
was formed as an investment holding company designed to aggregate investment funds of Patrick G. Ryan and other
affiliated investors. Two affiliated investors are LLC Unitholders and directors of the Company, and another is an LLC
Unitholder and employee of the Company. Ryan Specialty does not consolidate GRH as the Company does not have a
direct investment in or variable interest in this entity.
The Company holds a 47% interest in RIH and GRH holds the remaining 53% interest. RIH has a 50% non-controlling
interest in GRP and the other 50% is owned by Nationwide Mutual Insurance Company. GRP wholly owns Geneva Re, Ltd
(“Geneva Re”), a Bermuda-regulated reinsurance company, and GR Bermuda SAC Ltd (the “Segregated Account
Company”). The Segregated Account Company has one segregated account, which is beneficially owned by a third-party
insurance company (the “Third-party Insurer”). RIH is considered a related party variable interest entity under common
31
control with the Company. The Company is not most closely associated with the variable interest entity and therefore does
not consolidate RIH. The assets of RIH are restricted to settling obligations of RIH, pursuant to Delaware limited liability
company statutes.
The Company is not required to contribute any additional capital to RIH, and its maximum exposure to loss on the equity
method investment is the total invested capital of $47.0 million. The Company may be exposed to losses arising from the
equity method investment as a result of underwriting losses recognized at Geneva Re or losses on Geneva Re’s investment
portfolio. RIH has committed to contribute additional capital to GRP over the next several years. Patrick G. Ryan, through
a trust of which he is the beneficiary and co-trustee, has committed to personally fund any such additional capital
contributions. Any such additional capital contributions under this commitment will not affect the relative ownership of
RIH’s common equity.
Geneva Re
The Company has a service agreement with Geneva Re to provide both administrative services to, as well as disburse
payments for costs directly incurred by, Geneva Re. These direct costs include compensation expenses incurred by
employees of Geneva Re. The Company had $0.4 million and $0.2 million due from Geneva Re under this agreement as of
September 30, 2024 and December 31, 2023, respectively.
Ryan Re Services Agreements with Geneva Re
Ryan Re, a wholly owned subsidiary of the Company, is party to a services agreement with Geneva Re to provide, among
other services, certain underwriting and administrative services to Geneva Re. Ryan Re receives a service fee equal to
115% of the administrative costs incurred by Ryan Re in providing these services to Geneva Re. Revenue earned from
Geneva Re was $0.3 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, and
$1.1 million for the nine months ended September 30, 2024 and 2023. Receivables due from Geneva Re under this
agreement were $1.1 million and $0.7 million as of September 30, 2024 and December 31, 2023, respectively.
On April 2, 2023, Ryan Re entered into a services agreement with Geneva Re in accordance with which Ryan Re
subcontracted certain services to Geneva Re that Ryan Re is required to provide to the segregated account of the
Segregated Account Company on behalf of the Third-party Insurer. The Company incurred expense of $2.7 million and
$2.2 million during the three months ended September 30, 2024 and 2023, respectively, and $7.9 million and $5.4 million
during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31,
2023, the Company had prepaid expenses of $7.9 million and $5.3 million, respectively, related to this services agreement.
The prepaid expenses are included in Other currents assets on the Consolidated Balance Sheets.
Company Leasing of Corporate Jets
In the ordinary course of its business, the Company charters executive jets for business purposes from Executive Jet
Management (“EJM”), a third-party service provider. Mr. Ryan indirectly owns aircraft that he leases to EJM for EJM’s
charter operations for which he receives remuneration from EJM. The Company pays market rates for chartering aircraft
through EJM, unless the particular aircraft chartered is Mr. Ryan’s, in which case the Company receives a discount below
market rates. Historically, the Company has been able to charter Mr. Ryan’s aircraft and make use of this discount. The
Company recognized expense related to business usage of aircraft of $0.2 million for the three months ended
September 30, 2024 and 2023, and $1.0 million and $0.9 million for the nine months ended September 30, 2024 and 2023,
respectively.
16.     Income Taxes
The Company is taxed as a corporation for income tax purposes and is subject to federal, state, and local taxes with respect
to its allocable share of any net taxable income from the LLC. The LLC is a limited liability company taxed as a
partnership for income tax purposes, and its taxable income or loss is passed through to its members, including the
Company. The LLC is subject to income taxes on its taxable income in certain foreign countries, in certain state and local
jurisdictions that impose income taxes on partnerships, and on the taxable income of its U.S. corporate subsidiaries.
Effective Tax Rate
The Company’s effective tax rate from continuing operations was (45.50)% and 61.26% for the three months ended
September 30, 2024 and 2023, respectively, and 7.90% and 23.92% for the nine months ended September 30, 2024 and
2023, respectively. The effective tax rates for the three and nine months ended September 30, 2024, were lower than the
21% statutory rate primarily as a result of the vesting of IPO RSUs, exercising of Stock Options, and the income
attributable to the non-controlling interests. The effective tax rates for the three and nine months ended September 30,
32
2023, were higher than the 21% statutory rate primarily as a result of the $20.7 million non-cash deferred income tax
expense from the common control reorganization described below, which was recognized in Income tax expense in the
Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2023.
The Company does not believe it has any significant uncertain tax positions and therefore has no unrecognized tax benefits
as of September 30, 2024, that, if recognized, would affect the annual effective tax rate. The Company does not anticipate
material changes in unrecognized tax benefits within the next twelve-month period. 
Deferred Taxes
The Company reported Deferred tax assets, net of deferred tax liabilities where appropriate, of $486.4 million and $383.8
million as of September 30, 2024 and December 31, 2023, respectively, on the Consolidated Balance Sheets. The increase
in the Deferred tax assets during the nine months ended September 30, 2024, was primarily related to exchanges of LLC
Common Units. As of September 30, 2024, the Company concluded that, based on the weight of all available positive and
negative evidence, the Deferred tax assets with respect to the Company’s basis difference in its investment in the LLC are
more likely than not to be realized. As such, no valuation allowance has been recognized against that basis difference.
Common Control Reorganization (“CCR”)
Subsequent to the acquisition of Socius, which was acquired by a wholly owned subsidiary of Ryan Specialty Holdings,
Inc., the Company converted Socius to an LLC (“Socius LLC”) and transferred Socius LLC to the LLC. This legal entity
reorganization was considered a transaction between entities under common control. The CCR resulted in deferred tax
liabilities of $64.5 million established and non-cash deferred income tax expense of $20.7 million for the three and nine
months ended September 30, 2023. Additionally, the difference between the carrying value and the fair value of the
investment transferred under common control resulted in an increase of $13.1 million to Non-controlling interests on the
Consolidated Statements of Stockholders’ Equity during the three months ended September 30, 2023.
Tax Receivable Agreement (TRA)
The Company is party to a TRA with current and certain former LLC Unitholders. The TRA provides for the payment by
the Company to the current and certain former LLC Unitholders of 85% of the net cash savings, if any, in U.S. federal,
state, and local income taxes that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i)
certain increases in the tax basis of the assets of the LLC resulting from purchases or exchanges of LLC Common Units
(“Exchange Tax Attributes”), (ii) certain tax attributes of the LLC that existed prior to the IPO (“Pre-IPO M&A Tax
Attributes”), (iii) certain favorable “remedial” partnership tax allocations to which the Company becomes entitled (if any),
and (iv) certain other tax benefits related to the Company entering into the TRA, including certain tax benefits attributable
to payments that the Company makes under the TRA (“TRA Payment Tax Attributes”). The Company recognizes a
liability on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA. The
amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing
of the taxable income of the Company in the future.
Based on current projections, the Company anticipates having sufficient taxable income to be able to realize the benefits
and has recorded Tax Receivable Agreement liabilities of $455.1 million related to these benefits on the Consolidated
Balance Sheets as of September 30, 2024. The following summarizes activity related to the Tax Receivable Agreement
liabilities:
Exchange Tax
Attributes
Pre-IPO M&A
Tax Attributes
TRA Payment
Tax Attributes
TRA Liabilities
Balance at December 31, 2023
$194,668
$85,814
$78,416
$358,898
Exchange of LLC Common Units
68,931
5,287
21,365
95,583
Accrued interest
646
646
Balance at September 30, 2024
$263,599
$91,101
$100,427
$455,127
During the nine months ended September 30, 2024 and 2023, increases to the TRA liabilities of $95.6 million and $63.2
million, respectively, due to exchanges of LLC Common Units for Class A common stock were recognized in Additional
paid-in capital on the Consolidated Statements of Stockholders’ Equity. During the nine months ended September 30, 2024
and 2023, increases to the TRA liabilities of $0.6 million and $0.5 million, respectively, due to accrued interest were
recognized in Other non-operating loss on the Consolidated Statements of Income (Loss).
33
Other Comprehensive Income (Loss)
The following table summarizes the tax effects on the components of Other comprehensive income (loss):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
(Gain) loss on interest rate cap
$1,022
$(914)
$(1,009)
$(2,583)
Gain on interest rate cap reclassified to earnings
863
733
2,479
1,866
Foreign currency translation adjustments
(2,357)
188
(2,540)
54
Change in share of equity method investment in
related party
52
88
(348)
(96)
17.     Accumulated Other Comprehensive Income
Changes in the balance of Accumulated other comprehensive income, net of tax, were as follows:
Gain (Loss) on
Interest
Rate Cap
Foreign
Currency
Translation
Adjustments
Change in EMI
Other
Comprehensive
Income (Loss) 1
Total
Balance at December 31, 2023
$4,697
$982
$(2,603)
$3,076
Other comprehensive income (loss)
before reclassifications
10,540
(1,024)
3,780
13,296
Amounts reclassified to earnings
(5,735)
(5,735)
Other comprehensive income (loss)
$4,805
$(1,024)
$3,780
$7,561
Less: Non-controlling interests
2,887
(616)
2,270
4,541
Balance at March 31, 2024
$6,615
$574
$(1,093)
$6,096
Other comprehensive income (loss)
before reclassifications
3,840
2,309
(940)
5,209
Amounts reclassified to earnings
(5,700)
(5,700)
Other comprehensive income (loss)
$(1,860)
$2,309
$(940)
$(491)
Less: Non-controlling interests
(1,116)
1,382
(564)
(298)
Balance at June 30, 2024
$5,871
$1,501
$(1,469)
$5,903
Other comprehensive income (loss)
before reclassifications
(6,902)
15,917
(353)
8,662
Amounts reclassified to earnings
(5,827)
(5,827)
Other comprehensive income (loss)
$(12,729)
$15,917
$(353)
$2,835
Less: Non-controlling interests
(7,397)
9,259
(204)
1,658
Balance at September 30, 2024
$539
$8,159
$(1,618)
$7,080
34
Gain (Loss) on
Interest
Rate Cap
Foreign
Currency
Translation
Adjustments
Change in EMI
Other
Comprehensive
Income (Loss) 1
Total
Balance at December 31, 2022
$8,065
$157
$(2,187)
$6,035
Other comprehensive income (loss)
before reclassifications
(2,218)
783
584
(851)
Amounts reclassified to earnings
(3,922)
(3,922)
Other comprehensive income (loss)
$(6,140)
$783
$584
$(4,773)
Less: Non-controlling interests
(3,889)
498
370
(3,021)
Balance at March 31, 2023
$5,814
$442
$(1,973)
$4,283
Other comprehensive income (loss)
before reclassifications
15,260
279
868
16,407
Amounts reclassified to earnings
(5,010)
(5,010)
Other comprehensive income
$10,250
$279
$868
$11,397
Less: Non-controlling interests
6,434
176
545
7,155
Balance at June 30, 2023
$9,630
$545
$(1,650)
$8,525
Other comprehensive income (loss)
before reclassifications
6,958
(1,429)
(672)
4,857
Amounts reclassified to earnings
(5,584)
(5,584)
Other comprehensive income
$1,374
$(1,429)
$(672)
$(727)
Less: Non-controlling interests
829
(862)
(405)
(438)
Balance at September 30, 2023
$10,175
$(22)
$(1,917)
$8,236
1Change in share of equity method investment in related party other comprehensive income (loss) on the Consolidated
Statements of Comprehensive Income (Loss).
18.     Supplemental Financial Information
Interest Income
The Company earned interest income of $5.6 million and $7.1 million during the three months ended September 30, 2024
and 2023, respectively, and $19.0 million and $23.0 million during the nine months ended September 30, 2024 and 2023,
respectively, on its operating Cash and cash equivalents. Interest income is recognized in Interest expense, net on the
Consolidated Statements of Income (Loss).
Supplemental Cash Flow Information
The following represents the supplemental cash flow information of the Company:
Nine Months Ended September 30,
2024
2023
Cash paid for:
Interest
$119,901
$116,620
Income taxes, net of refunds
24,641
9,812
Non-cash investing and financing activities:
Non-controlling interest holders’ tax distributions declared but unpaid
$1,137
$
Tax Receivable Agreement liabilities
95,583
63,249
Dividend Equivalents and Declared Distributions liabilities
3,586
Contingently returnable consideration
4,868
Contingent consideration liabilities
103,769
8,091
35
19.     Subsequent Events
The Company has evaluated subsequent events through October 31, 2024, and has concluded that no events have occurred
that require disclosure other than the events listed below.
On October 1, 2024, the Company completed the acquisition of certain assets of EverSports & Entertainment Insurance,
Inc., an MGU focused on sports, leisure, and entertainment headquartered in Carmel, Indiana, for approximately $45.0
million cash consideration. This acquisition will include contingent consideration in its final purchase price, however, the
Company has not yet completed the valuation of the contingent consideration or the purchase price allocation to the
acquired assets and liabilities as of the date of this filing.
On October 30, 2024, the Company’s Board of Directors approved a quarterly cash dividend of $0.11 per share of
outstanding Class A common stock. The quarterly dividend will be payable on November 26, 2024, to shareholders of
record of Class A common stock as of the close of business on November 12, 2024. Any future dividends will be subject to
the approval of the Company’s Board of Directors.
36
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results,
financial condition, liquidity, and cash flows of the Company as of and for the periods presented below. The following
discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the related notes
included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended
December 31, 2023, which was filed with the SEC on February 28, 2024. The discussion contains forward-looking
statements that are based on the beliefs of management, as well as assumptions made by, and information currently
available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking
statements as a result of various factors, including those discussed below and in our Annual Report on Form 10-K,
particularly in the sections entitled “Risk Factors” and “Information Concerning Forward-Looking Statements.”
The following discussion provides commentary on the financial results derived from our unaudited financial statements for
the three and nine months ended September 30, 2024 and 2023 prepared in accordance with U.S. GAAP. In addition, we
regularly review the following Non-GAAP measures when assessing performance: Organic revenue growth rate, Adjusted
compensation and benefits expense, Adjusted compensation and benefits expense ratio, Adjusted general and
administrative expense, Adjusted general and administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC
margin, Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share. See “Non-GAAP
Financial Measures and Key Performance Indicators” for further information.
Overview
Founded by Patrick G. Ryan in 2010, we are a service provider of specialty products and solutions for insurance brokers,
agents, and carriers. We provide distribution, underwriting, product development, administration, and risk management
services by acting predominantly as a wholesale broker and a managing underwriter or a program administrator with
delegated authority from insurance carriers. Our mission is to provide industry-leading innovative specialty insurance
solutions for insurance brokers, agents, and carriers.
For retail insurance agents and brokers, we assist in the placement of complex or otherwise hard-to-place risks. For
insurance and reinsurance carriers, we predominantly work with retail and wholesale insurance brokers to source, onboard,
underwrite, and service these same types of risks. A significant majority of the premiums we place are bound in the E&S
market, which includes Lloyd’s of London. There is often significantly more flexibility in terms, conditions, and rates in
the E&S market relative to the Admitted or “standard” insurance market. We believe that the additional freedom to craft
bespoke terms and conditions in the E&S market allows us to best meet the needs of our trading partners, provide unique
solutions, and drive innovation. We believe our success has been achieved by providing best-in-class intellectual capital,
leveraging our trusted and long-standing relationships, and developing differentiated solutions at a scale unmatched by
many of our competitors.
Significant Events and Transactions
Corporate Structure
We are a holding company and our sole material asset is a controlling equity interest in New LLC, which is also a holding
company and its sole material asset is a controlling equity interest in the LLC. The Company operates and controls the
business and affairs of, and consolidates the financial results of, the LLC through New LLC. We conduct our business
through the LLC. As the LLC is substantively the same as New LLC, for the purpose of this discussion we will refer to
both New LLC and the LLC as the “LLC.”
The LLC is a limited liability company taxed as a partnership for income tax purposes, and its taxable income or loss is
passed through to its members, including the Company. The LLC is subject to income taxes on its taxable income in certain
foreign countries, in certain state and local jurisdictions that impose income taxes on partnerships, and on the taxable
income of its U.S. corporate subsidiaries. As a result of our ownership of LLC Common Units, we are subject to U.S.
federal, state, and local income taxes with respect to our allocable share of any taxable income of the LLC and are taxed at
the prevailing corporate tax rates. We intend to cause the LLC to make distributions in an amount that is at least sufficient
to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments
due under the Tax Receivable Agreement. See “Liquidity and Capital Resources - Tax Receivable Agreement” for
additional information about the TRA.
37
ACCELERATE 2025 Program
During the first quarter of 2023 we initiated the ACCELERATE 2025 program that will enable continued growth, drive
innovation, and deliver sustainable productivity improvements over the long term. The program, in its expanded scope, will 
result in approximately $110.0 million of cumulative one-time charges through 2024, funded through operating cash flow.
Restructuring costs are estimated to be approximately evenly split between General and administrative expense, relating to
third-party professional services, lease and contract terminations costs, and other expenses and Compensation and benefits
expense, predominately relating to third-party contractor and other workforce-related costs. We expect the program, in its
expanded scope, to generate annual savings of approximately $60.0 million in 2025. See “Note 4, Restructuring” of the
unaudited quarterly consolidated financial statements for further discussion.
For the nine months ended September 30, 2024, we incurred restructuring costs of $47.8 million. Combined with
restructuring costs incurred during 2023, we have incurred restructuring costs of $96.2 million since the first quarter of
2023, representing the inception of the plan. Of the cumulative $96.2 million in costs, $37.9 million was general and
administrative with the remaining balance being workforce-related. While the current results of the ACCELERATE 2025
program are in line with expectations, changes to the total savings estimate and timing of the ACCELERATE 2025
program may evolve as we continue to progress through the plan and evaluate other potential opportunities. The actual
amounts and timing may vary significantly based on various factors.
Acquisitions
On May 1, 2024, the Company completed the acquisition of Castel Underwriting Agencies Limited (Castel), an MGU
platform. Castel is headquartered in London, England with additional offices in the Netherlands and Belgium and
operations in Singapore.
On August 30, 2024, the Company completed the acquisition of US Assure Insurance Services of Florida, Inc. (“US
Assure”), a program specializing in builder’s risk insurance headquartered in Jacksonville, Florida.
On September 1, 2024, the Company completed the acquisition of certain assets of Greenhill Underwriting Insurance
Services, LLC (“Greenhill”), an MGU focused on the allied health industry headquartered in Houston, Texas.
On September 13, 2024, the Company completed the acquisition of the Property and Casualty (“P&C”) MGUs owned by
Ethos Specialty Insurance, LLC (“Ethos P&C”). Ethos P&C comprises eight programs which underwrite on behalf of
insurance carriers.
On October 1, 2024, the Company completed the acquisition of certain assets of EverSports & Entertainment Insurance,
Inc., an MGU focused on sports, leisure and entertainment risks based in Carmel, Indiana.
On October 2, 2024, the Company completed the acquisition of certain assets of the European managing general agent,
Geo Underwriting Europe BV, a financial lines MGA based in Rotterdam, Netherlands, with operations in Germany.
Key Factors Affecting Our Performance
Our historical financial performance has been, and we expect our financial performance in the future to be, driven by our
ability to:
Pursue Strategic Acquisitions
We have successfully integrated businesses complementary to our own to increase both our distribution reach and our
product and service capabilities. We continuously evaluate acquisitions and intend to further pursue targeted acquisitions
that complement our product and service capabilities or provide us access to new markets. We have previously made, and
intend to continue to make, acquisitions with the objective of enhancing our human capital and product and service
capabilities, entering natural adjacencies, and expanding our geographic presence. Our ability to successfully pursue
strategic acquisitions is dependent upon a number of factors, including sustained execution of a disciplined and selective
acquisition strategy which requires acquisition targets to have a cultural and strategic fit, competition for these assets,
purchase price multiples that we deem appropriate and our ability to effectively integrate targeted companies or assets and
grow our business. We do not have agreements or commitments for any material acquisitions at this time.
Deepen and Broaden our Relationships with Retail Broker Trading Partners
We have deep engagement with our retail broker trading partners, and we believe we have the ability to transact in even
greater volume with nearly all of them. For example, in 2023, our revenue derived from the Top 100 firms (as ranked by
38
Business Insurance) expanded faster than our Organic revenue growth rate of 15.4% (beginning in the first quarter of 2024,
the Company changed its method of calculating Organic revenue growth rate, a non-GAAP measure, see “Non-GAAP
Financial Measures and Key Performance Indicators - Organic Revenue Growth Rate” for more information). Our ability
to deepen and broaden relationships with our retail broker trading partners and increase sales is dependent upon a number
of factors, including client satisfaction with our distribution reach and our product capabilities, retail brokers continuing to
require or desire our services, competition, pricing, economic conditions, and spending on our product offerings.
Build Our National Binding Authority Specialty
We believe there is substantial opportunity to continue to grow our Binding Authority Specialty, as we believe that both
M&A consolidation and panel consolidation are in the early stages in the binding authority market. Our ability to grow our
Binding Authority Specialty is dependent upon a number of factors, including a continuing ability to secure sufficient
capital support from insurers, the quality of our services and product offerings, marketing and sales efforts to drive new
business prospects and execution, new product offerings, the pricing and quality of our competitors’ offerings, and the
growth in demand for the insurance products.
Invest in Operation and Growth
We have invested heavily in building a durable business that is able to adapt to the continuously evolving E&S market and
intend to continue to do so. We are focused on enhancing the breadth of our product and service offerings as well as
developing and launching new solutions to address the evolving needs of the specialty insurance industry and markets. Our
future success is dependent upon a number of factors, including our ability to successfully develop, market, and sell
existing and new products and services to both new and existing trading partners.
Generate Commission Regardless of the State of the E&S Market
We earn commissions, which are calculated as a percentage of the total insurance policy premium, and fees. Changes in the
insurance market or specialty lines that are our focus, characterized by a period of increasing (or declining) premium rates,
could positively (or negatively) impact our profitability.
Managing Changing Macroeconomic Conditions
Growth in certain lines of business, such as project-based construction and M&A transactional liability insurance, is
partially dependent on a variety of macroeconomic factors inasmuch as binding the underlying insurance coverage is
subject to the underlying activity occurring. In periods of economic growth and liquid credit markets, this underlying
activity can accelerate and provide tailwinds to our growth. In periods of economic decline and tight credit markets, this
underlying activity can slow or be delayed and provide headwinds to our growth. We believe over the long term these lines
of business will continue to grow.
Leverage the Growth of the E&S Market
The growing relevance of the E&S market has been driven by the rapid emergence of large, complex, high-hazard, and
otherwise hard-to-place risks across many lines of insurance. This trend continued in 2023, with $80 billion of insured
catastrophe losses, mostly driven by a record setting year, both in frequency and severity, for severe convective storms
(“SCS”) with 21 SCS events above $1 billion in losses, which together accounted for $58 billion in losses. The year also
included hurricane losses on both the East and West coasts of the US, and sizable wildfire losses. Additionally, these risks
include the potential for more severe hurricanes that occur with greater frequency, more devastating wildfires, more
frequent flooding, escalating jury verdicts and social inflation, geographic shifts in population density, a proliferation of
cyber threats, novel health risks, risks associated with large sports and entertainment venues, building and labor cost
inflation relative to insured value, and the transformation of the economy to a “digital first” mode of doing business. We
believe that as the complexity of the E&S market continues to escalate, wholesale brokers and managing underwriters that
do not have sufficient scale, or the financial and intellectual capital to invest in the required specialty capabilities, will
struggle to compete effectively. This will further the trend of market share consolidation among the wholesale firms that do
have these capabilities. We will continue to invest in our intellectual capital to innovate and offer custom solutions and
products to better address these evolving market fundamentals.
Although we believe this growth will continue, we recognize that the growth of the E&S market might not be linear as
risks can and do shift between the E&S and non-E&S markets as market factors change and evolve. For example, we
benefited from a rapid increase in both the flow of property risks into the wholesale channel and the premium rate charged
for those risks in 2023 as the frequency and severity of catastrophe losses, attritional losses and secondary perils such as
severe convective storms, economic inflation, concentration of exposures, higher retentions of risk, and higher reinsurance
39
costs applied pressure to insurers and capacity tightened. If industry trends reverse, it may open opportunities for rates to
decline or retailers to place some of that coverage directly.
Components of Results of Operations
Revenue
Net Commissions and Fees
Net commissions and fees are derived primarily from our three Specialties and are paid for our role as an intermediary in
facilitating the placement of coverage in the insurance distribution chain. Net commissions and policy fees are generally
calculated as a percentage of the total insurance policy premium placed, although fees can often be a fixed amount
irrespective of the premium, and we also receive supplemental commissions based on the volume placed or profitability of
a book of business. We share a portion of these net commissions and policy fees with the retail insurance broker and
recognize revenue on a net basis. Additionally, carriers may also pay us a contingent commission or volume-based
commission, both of which represent forms of contingent or supplemental consideration associated with the placement of
coverage and are based primarily on underwriting results, but may also contain considerations for only volume, growth,
and/or retention. Although we have compensation arrangements called contingent commissions in all three Specialties that
are based in whole or in part on the underwriting performance, we do not take any direct insurance risk other than through
our equity method investment in Geneva Re through Ryan Investment Holdings, LLC. We also receive loss mitigation and
other fees, some of which are not dependent on the placement of a risk.
In our Wholesale Brokerage and Binding Authority Specialties, we generally work with retail insurance brokers to secure
insurance coverage for their clients, who are the ultimate insured party. Our Wholesale Brokerage and Binding Authority
Specialties generate revenues through commissions and fees from clients, as well as through supplemental commissions,
which may be contingent commissions or volume-based commissions from carriers. Commission rates and fees vary
depending upon several factors, which may include the amount of premium, the type of insurance coverage provided, the
particular services provided to a client or carrier, and the capacity in which we act. Payment terms are consistent with
current industry practice.
In our Underwriting Management Specialty we utilize delegated authority granted to us by carriers and we generally work
with retail insurance brokers and often other wholesale brokers to secure insurance coverage for the ultimate insured party.
Our Underwriting Management Specialty generates revenues through commissions and fees from clients and through
contingent commissions from carriers. Commission rates and fees vary depending upon several factors including the
premium, the type of coverage, and additional services provided to the client. Payment terms are consistent with current
industry practice.
Fiduciary Investment Income
Fiduciary investment income consists of interest earned on insurance premiums and surplus lines taxes that are held in a
fiduciary capacity, in cash and cash equivalents, until disbursed.
Expenses
Compensation and Benefits
Compensation and benefits is our largest expense. It consists of (i) salary, incentives and benefits to employees, and
commissions to our producers and (ii) equity-based compensation associated with the grants of awards to employees,
executive officers, and directors. We operate in competitive markets for human capital and we need to maintain
competitive compensation levels in order to maintain and grow our talent base.
General and Administrative
General and administrative expense includes travel and entertainment expenses, office expenses, accounting, foreign
exchange, legal, insurance and other professional fees, and other costs associated with our operations. Our occupancy-
related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the
number of our employees and the overall size and scale of our business operations.
Amortization
Amortization expense consists primarily of amortization related to intangible assets we acquired in connection with our
acquisitions. Intangible assets consist of customer relationships, trade names, and internally developed software.
40
Interest Expense, Net
Interest expense, net consists of interest payable on indebtedness, amortization of the Company’s interest rate cap, imputed
interest on contingent consideration, and amortization of deferred debt issuance costs, offset by interest income on the
Company’s Cash and cash equivalents balances and payments received in relation to the interest rate cap.
Other Non-Operating Loss (Income)
For the nine months ended September 30, 2024, Other non-operating loss (income) consisted of expense related to term
loan modifications and TRA contractual interest and related charges offset by sublease income. For the nine months ended
September 30, 2023, Other non-operating income included sublease income offset by TRA contractual interest and related
charges.
Income Tax Expense (Benefit)
Income tax expense (benefit) includes tax on the Company’s allocable share of any net taxable income from the LLC, from
certain state and local jurisdictions that impose taxes on partnerships, as well as earnings from our foreign subsidiaries and
C-Corporations subject to entity level taxation.
Non-Controlling Interests
Net income and Other comprehensive income (loss) are attributed to the non-controlling interests based on the weighted-
average LLC Common Units outstanding during the period and is presented on the Consolidated Statements of Income
(Loss). Refer to “Note 8, Stockholders’ Equity” of the unaudited quarterly consolidated financial statements for more
information.
41
Results of Operations
Below is a summary table of the financial results and Non-GAAP measures that we find relevant to our business
operations:
Three Months Ended
September 30,
Change
Nine Months Ended
September 30,
Change
(in thousands, except percentages and
per share data)
2024
2023
$
%
2024
2023
$
%
Revenue
Net commissions and fees
$588,129
$487,345
$100,784
20.7 %
$1,806,264
$1,507,878
$298,386
19.8 %
Fiduciary investment income
16,565
14,593
1,972
13.5
$45,917
$36,808
9,109
24.7
Total revenue
$604,694
$501,938
$102,756
20.5 %
$1,852,181
$1,544,686
$307,495
19.9 %
Expenses
Compensation and benefits
393,249
329,212
64,037
19.5
1,180,825
989,294
191,531
19.4
General and administrative
88,684
69,288
19,396
28.0
247,518
202,595
44,923
22.2
Amortization
39,182
29,572
9,610
32.5
97,711
79,125
18,586
23.5
Depreciation
2,467
2,201
266
12.1
6,820
6,570
250
3.8
Change in contingent consideration
(365)
1,848
(2,213)
NM
813
4,358
(3,545)
(81.3)
Total operating expenses
$523,217
$432,121
$91,096
21.1 %
$1,533,687
$1,281,942
$251,745
19.6 %
Operating income
$81,477
$69,817
$11,660
16.7 %
$318,494
$262,744
$55,750
21.2 %
Interest expense, net
49,388
31,491
17,897
56.8
109,916
89,840
20,076
22.3
(Income) from equity method
investment in related party
(4,182)
(2,271)
(1,911)
84.1%
(13,510)
(5,882)
(7,628)
NM
Other non-operating loss
16,590
67
16,523
NM
18,575
37
18,538
NM
Income before income taxes
$19,681
$40,530
$(20,849)
(51.4 %)
$203,513
$178,749
$24,764
13.9 %
Income tax expense (benefit)
(8,962)
24,827
(33,789)
NM
16,155
42,772
(26,617)
(62.2)
Net income
$28,643
$15,703
$12,940
82.4 %
$187,358
$135,977
$51,381
37.8 %
GAAP financial measures
Total revenue
$604,694
$501,938
$102,756
20.5 %
$1,852,181
$1,544,686
$307,495
19.9 %
Net commissions and fees
588,129
487,345
100,784
20.7
1,806,264
1,507,878
298,386
19.8
Compensation and benefits
393,249
329,212
64,037
19.5
1,180,825
989,294
191,531
19.4
General and administrative
88,684
69,288
19,396
28.0
247,518
202,595
44,923
22.2
Net income
28,643
15,703
12,940
82.4
187,358
135,977
51,381
37.8
Compensation and benefits expense
ratio (1)
65.0 %
65.6 %
63.8 %
64.0 %
General and administrative expense
ratio (2)
14.7 %
13.8 %
13.4 %
13.1 %
Net income margin (3)
4.7 %
3.1 %
10.1 %
8.8 %
Earnings (loss) per share (4)
$0.15
$(0.04)
$0.67
$0.34
Diluted earnings (loss) per share (4)
$0.09
$(0.04)
$0.59
$0.34
Non-GAAP financial measures*
Organic revenue growth rate
11.8 %
15.0 %
13.3 %
15.0 %
Adjusted compensation and benefits
expense
$343,442
$296,400
$47,042
15.9%
$1,057,424
$911,926
$145,498
16.0 %
Adjusted compensation and benefits
expense ratio
56.8 %
59.1 %
57.1 %
59.0 %
Adjusted general and administrative
expense
$70,991
$58,560
$12,431
21.2%
$199,583
$166,606
$32,977
19.8 %
Adjusted general and administrative
expense ratio
11.7 %
11.7 %
10.8 %
10.8 %
Adjusted EBITDAC
$190,261
$146,978
$43,283
29.4%
$595,174
$466,154
$129,020
27.7 %
Adjusted EBITDAC margin
31.5 %
29.3 %
32.1 %
30.2 %
Adjusted net income
$113,633
$86,631
$27,002
31.2%
$369,604
$282,144
$87,460
31.0 %
Adjusted net income margin
18.8 %
17.3 %
20.0 %
18.3 %
Adjusted diluted earnings per share
$0.41
$0.32
$1.34
$1.04
NM represents “Not Meaningful.”
(1)Compensation and benefits expense ratio is defined as Compensation and benefits expense divided by Total revenue.
(2)General and administrative expense ratio is defined as General and administrative expense divided by Total revenue.
42
(3)Net income margin is defined as Net income divided by Total revenue.
(4)See “Note 10, Earnings (Loss) Per Share” of the unaudited quarterly consolidated financial statements for further
discussion of how these metrics are calculated.
*These measures are Non-GAAP. Please refer to the section entitled “Non-GAAP Financial Measures and Key
Performance Indicators” below for definitions and reconciliations to the most directly comparable GAAP measure.
Comparison of the Three Months Ended September 30, 2024 and 2023
Revenue
Total Revenue
Total revenue increased by $102.8 million, or 20.5 %, from $501.9 million to $604.7 million for the three months ended
September 30, 2024, as compared to the same period in the prior year. The following were the principal drivers of the
increase:
$56.8 million, or 11.3%, of the period-over-period change in Total revenue was due to organic revenue growth.
Organic revenue growth represents the change in Net commissions and fees revenue, as compared to the same
period for the year prior, adjusted for Net commissions and fees attributable to recent acquisitions during the
first twelve months of Ryan Specialty’s ownership, and other adjustments such as the removal of the impact of
contingent commissions and the impact of changes in foreign exchange rates. In aggregate, our net commission
rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of
our three Specialties. The growth of these relationships is due to the combination of a growing E&S market
and winning new business from competitors. Growth in the quarter was balanced across our property and
casualty portfolios within our three Specialties, driven by an increase in the flow of risks into the E&S market;
$33.4 million, or 6.7%, of the period-over-period change in Total revenue was due to the acquisitions of
AccuRisk, Castel, US Assure, Greenhill, and Ethos P&C, all of which were completed within twelve months of
September 30, 2024;
$10.6 million, or 2.1%, of the period-over-period change in Total revenue was due to changes in contingent
commissions and the impact of foreign exchange rates on the Company’s Net commissions and fees; and
$2.0 million, or 0.4%, of the period-over-period change in Total revenue was due to an increase in Fiduciary
investment income, caused by a rise in interest rates and a rise in fiduciary balances compared to the prior year.
Three Months Ended September 30,
(in thousands, except percentages)
2024
% of
total
2023
% of
total
Change
Wholesale Brokerage
$346,666
59.0 %
$308,872
63.4 %
$37,794
12.2 %
Binding Authorities
76,497
13.0
69,245
14.2
7,252
10.5
Underwriting Management
164,966
28.0
109,228
22.4
55,738
51.0
Total net commissions and fees
$588,129
$487,345
$100,784
20.7 %
Wholesale Brokerage net commissions and fees increased by $37.8 million, or 12.2%, period-over-period, primarily due to
strong organic growth within the Specialty for the quarter.
Binding Authority net commissions and fees increased by $7.3 million, or 10.5%, period-over-period, primarily due to
strong organic growth within the Specialty for the quarter.
Underwriting Management net commissions and fees increased by $55.7 million, or 51.0%, period-over-period, primarily
due to strong organic growth within the Specialty for the quarter as well as contributions from the AccuRisk, Castel, US
Assure, Greenhill, and Ethos P&C acquisitions.
43
The following table sets forth our revenue by type of commission and fees:
Three Months Ended September 30,
(in thousands, except percentages)
2024
% of
total
2023
% of
total
Change
Net commissions and policy fees
$555,282
94.4 %
$470,085
96.4 %
$85,197
18.1 %
Supplemental and contingent
commissions
20,455
3.5
8,592
1.8
11,863
138.1
Loss mitigation and other fees
12,392
2.1
8,668
1.8
3,724
43.0
Total net commissions and fees
$588,129
$487,345
$100,784
20.7 %
Net commissions and policy fees grew 18.1%, in line with the overall net commissions and fee revenue growth of 20.7%,
for the three months ended September 30, 2024, as compared to the same period in the prior year. The main drivers of this
growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the
increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S
market and an increase in the premium rate for risks placed. In aggregate, we experienced stable commission rates period-
over-period.
Supplemental and contingent commissions increased 138.1% period-over-period driven by the performance of risks placed
on eligible business earning profit-based or volume-based commissions.
Loss mitigation and other fees increased 43.0% period-over-period primarily due increased capital markets activity, certain
fees related to the ACE, Point6, and AccuRisk acquisitions completed in the second half of 2023, and captive management
and other risk management service fees from the placement of alternative risk insurance solutions.
Expenses
Compensation and Benefits
Compensation and benefits expense increased by $64.0 million, or 19.5%, from $329.2 million to $393.2 million for the
three months ended September 30, 2024, compared to the same period in 2023. The following were the principal drivers of
this increase:
Commissions increased $21.5 million, or 14.9%, period-over-period, driven by the 20.7% increase in Net
commissions and fees;
An increase of $17.5 million was driven by Acquisition-related expense and Acquisition related long-term
incentive compensation related to recently completed acquisitions;
An increase of $9.1 million was driven by Equity-based compensation expense related to both recent grants as
well as modification expense of $4.6 million associated with the removal of equity transfer restrictions for an
executive officer of the Company; and
The remaining increase of $15.9 million was driven by (i) the addition of 623 employees compared to the
same period in the prior year, and (ii) growth in the business. Overall headcount increased to 4,917 full-time
employees as of September 30, 2024, from 4,294 as of September 30, 2023.
The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio decrease of
0.6% from 65.6% to 65.0% period-over-period.
In general, we expect to continue experiencing a rise in commissions, salaries, incentives, and benefits expense
commensurate with our expected growth in business volume, revenue, and headcount.
44
General and Administrative
General and administrative expense increased by $19.4 million, or 28.0%, from $69.3 million to $88.7 million for the three
months ended September 30, 2024, as compared to the same period in the prior year. The following were the principal
drivers of this increase:
$6.8 million of increased Acquisition-related expense associated with recent and prospective acquisitions; and
$12.6 million was driven by growth in the business. Such expenses incurred to accommodate both organic and
inorganic revenue growth include IT, travel and entertainment, occupancy, and insurance.
The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio
increase of 0.9% from 13.8% to 14.7% period-over-period.
Amortization
Amortization expense increased by $9.6 million, or 32.5%, from $29.6 million to $39.2 million for the three months ended
September 30, 2024, compared to the same period in the prior year. The main driver of the increase was the amortization of
intangible assets from recent acquisitions. Our intangible assets increased by $760.8 million when comparing the balance
as of September 30, 2024, to the balance as of September 30, 2023.
Interest Expense, Net
Interest expense, net increased $17.9 million, or 56.8%, from $31.5 million to $49.4 million for the three months ended
September 30, 2024, compared to the same period in the prior year. The main driver of the increase in Interest expense, net
for the three months ended September 30, 2024, was an increase in debt from recent acquisition activity. For the three
months ended September 30, 2024, the reduction to Interest expense, net related to our interest rate cap was $5.0 million.
For the three months ended September 30, 2024 and 2023, the reduction to Interest expense, net related to interest income
earned on operating cash balances of $5.7 million and $7.1 million, respectively.
Other Non-Operating Loss
Other non-operating loss increased by $16.5 million to a loss of $16.6 million for the three months ended September 30,
2024, as compared to a loss of $0.1 million in the same period in the prior year. For the three months ended September 30,
2024, Other non-operating loss consisted of $16.2 million of term loan modification expense and $0.5 million of TRA
contractual interest and related charges offset by $0.1 million of sublease income. For the three months ended
September 30, 2023, Other non-operating income included $0.3 million of TRA contractual interest and related charges
offset by $0.2 million of sublease income.
Income Before Income Taxes
Income before income taxes decreased $20.8 million from $40.5 million to $19.7 million for the three months ended
September 30, 2024, compared to the same period in the prior year as a result of the factors described above.
Income Tax Expense (Benefit)
Income tax expense (benefit) decreased $33.8 million from expense of $24.8 million to a benefit of $9.0 million for the
three months ended September 30, 2024, compared to the same period in the prior year primarily as a result of $20.7
million of income tax expense recognized as a result of the Common Control Reorganization (“CCR”) subsequent to the
Socius acquisition in the third quarter of 2023 and a $10.9 million income tax benefit recognized as a result of Equity-
based compensation awards vesting in the third quarter of 2024.
Net Income
Net income increased $12.9 million from $15.7 million to $28.6 million for the three months ended September 30, 2024,
compared to the same period in the prior year as a result of the factors described above.
45
Comparison of the Nine Months Ended September 30, 2024 and 2023
Revenue
Total Revenue
Total revenue increased by $307.5 million, or 19.9%, from $1,544.7 million to $1,852.2 million for the nine months ended
September 30, 2024, as compared to the same period in the prior year. The following were the principal drivers of the
increase:
$196.1 million, or 12.7%, of the period-over-period change in Total revenue was due to organic revenue
growth. Organic revenue growth represents the change in Net commissions and fees revenue, as compared to
the same period for the year prior, adjusted for Net commissions and fees attributable to recent acquisitions
during the first twelve months of Ryan Specialty’s ownership, and other adjustments such as the removal of the
impact of contingent commissions and the impact of changes in foreign exchange rates. In aggregate, our net
commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate,
within each of our three Specialties. The growth of these relationships is due to the combination of a growing
E&S market and winning new business from competitors. Growth in the quarter was balanced across our
property and casualty portfolios within our three Specialties, driven by an increase in the flow of risks into the
E&S market;
$87.7 million, or 5.7%, of the period-over-period change in Total revenue was due to the acquisitions of
AccuRisk, Castel, US Assure, Greenhill, and Ethos P&C, all of which were completed within twelve months of
September 30, 2024;
$14.6 million, or 0.9%, of the period-over-period change in Total revenue was due to changes in contingent
commissions and the impact of foreign exchange rates on the Company’s Net commissions and fees; and
$9.1 million, or 0.6%, of the period-over-period change in Total revenue was due to an increase in Fiduciary
investment income, caused by a rise in interest rates and a rise in fiduciary balances compared to the prior year.
Nine Months Ended September 30,
(in thousands, except percentages)
2024
% of
total
2023
% of
total
Change
Wholesale Brokerage
$1,114,240
61.7 %
$976,338
64.7 %
$137,902
14.1 %
Binding Authorities
245,762
13.6
$208,547
13.8
37,215
17.8
Underwriting Management
446,262
24.7
$322,993
21.4
123,269
38.2
Total Net commissions and fees
$1,806,264
$1,507,878
$298,386
19.8 %
Wholesale Brokerage net commissions and fees increased by $137.9 million, or 14.1% period-over-period, primarily due to
strong organic growth within the Specialty for the quarter.
Binding Authority net commissions and fees increased by $37.2 million, or 17.8%, period-over-period, primarily due to
strong organic growth within the Specialty for the quarter.
Underwriting Management net commissions and fees increased by $123.3 million, or 38.2%, period-over-period, primarily
due to strong organic growth within the Specialty for the quarter as well as contributions from the AccuRisk, Castel, US
Assure, Greenhill, and Ethos P&C acquisitions.
The following table sets forth our revenue by type of commission and fees:
Nine Months Ended September 30,
(in thousands, except percentages)
2024
% of
total
2023
% of
total
Change
Net commissions and policy fees
$1,706,781
94.5 %
$1,437,239
95.3 %
$269,542
18.8 %
Supplemental and contingent
commissions
58,618
3.2
46,281
3.1
12,337
26.7
Loss mitigation and other fees
40,865
2.3
24,358
1.6
16,507
67.8
Total net commissions and fees
$1,806,264
$1,507,878
$298,386
19.8 %
46
Net commissions and policy fees grew 18.8%, in line with the overall net commissions and fee revenue growth of 19.8%
for the nine months ended September 30, 2024, as compared to the same period in the prior year. The main drivers of this
growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the
increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S
market and an increase in the premium rate for risks placed. In aggregate, we experienced stable commission rates period-
over-period.
Supplemental and contingent commissions increased 26.7% period-over-period driven by the performance of risks placed
on eligible business earning profit-based or volume-based commissions.
Loss mitigation and other fees increased 67.8% period-over-period primarily due increased capital markets activity, certain
fees related to the ACE, Point6, and AccuRisk acquisitions completed in the second half of 2023, and captive management
and other risk management service fees from the placement of alternative risk insurance solutions.
Expenses
Compensation and Benefits
Compensation and benefits expense increased by $191.5 million, or 19.4%, from $989.3 million to $1,180.8 million for the
nine months ended September 30, 2024, compared to the same period in 2023. The following were the principal drivers of
this increase:
Commissions increased $73.3 million, or 15.9%, period-over-period, driven by the 19.8% increase in Net
commissions and fees;
An increase of $22.3 million was driven by Restructuring and related expense associated with the
ACCELERATE 2025 program;
An increase of $17.2 million was driven by Acquisition-related expense and Acquisition related long-term
incentive compensation related to recently completed acquisitions;
An increase of $16.6 million was driven by Equity-based compensation expense related to both recent grants
as well as modification expense of $4.6 million associated with the removal of equity transfer restrictions for
an executive officer of the Company; and
The remaining increase of $62.1 million was driven by (i) the addition of 623 employees compared to the
same period in the prior year, and (ii) growth in the business. Overall headcount increased to 4,917 full-time
employees as of September 30, 2024, from 4,294 as of September 30, 2023.
The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio decrease of
0.2% from 64.0% to 63.8% period-over-period.
In general, we expect to continue experiencing a rise in commissions, salaries, incentives, and benefits expense
commensurate with our expected growth in business volume, revenue, and headcount.
General and Administrative
General and administrative expense increased by $44.9 million, or 22.2%, from $202.6 million to $247.5 million for the
nine months ended September 30, 2024, as compared to the same period in the prior year. The following were the principal
drivers of this increase:
$32.9 million was driven by growth in the business. Such expenses incurred to accommodate both organic and
inorganic revenue growth include IT, travel and entertainment, occupancy, and insurance;
$23.6 million of increased acquisition-related expense associated with recent and prospective acquisitions; and
These increases were partially offset by an $11.6 million decline in Restructuring and related expense
associated with ACCELERATE 2025.
The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio
increase of 0.3% from 13.1% to 13.4% period-over-period.
47
Amortization
Amortization expense increased by $18.6 million, or 23.5%, from $79.1 million to $97.7 million for the nine months ended
September 30, 2024, compared to the same period in the prior year. The main driver of the increase was the amortization of
intangible assets from recent acquisitions. Our intangible assets increased by $760.8 million when comparing the balance
as of September 30, 2024, to the balance as of September 30, 2023.
Interest Expense, Net
Interest expense, net increased $20.1 million, or 22.3%, from $89.8 million to $109.9 million for the nine months ended
September 30, 2024, compared to the same period in the prior year. The main driver of the increase in Interest expense, net
for the three months ended September 30, 2024, was an increase in debt from recent acquisition activity. For the nine
months ended September 30, 2024, the reduction to Interest expense, net related to our interest rate cap was $14.5 million.
For the nine months ended September 30, 2024, and 2023, the reduction to Interest expense, net related to interest income
earned on operating cash balances was $19.0 million and $23.0 million, respectively.
Other Non-Operating Loss
Other non-operating loss increased by $18.5 million to a loss of $18.6 million for the nine months ended September 30,
2024, as compared to a de minimis loss in the same period in the prior year. For the nine months ended September 30,
2024, Other non-operating loss consisted of $18.1 million of expense related to term loan modifications and $0.8 million of
TRA contractual interest and related charges offset by $0.4 million of sublease income. For the nine months ended
September 30, 2023, Other non-operating loss included $0.5 million of TRA contractual interest and related charges offset
by $0.4 million of sublease income.
Income Before Income Taxes
Income before income taxes increased $24.8 million from $178.7 million to $203.5 million for the nine months ended
September 30, 2024, compared to the same period in the prior year as a result of the factors described above.
Income Tax Expense (Benefit)
Income tax expense (benefit) decreased $26.6 million from $42.8 million to $16.2 million for the nine months ended
September 30, 2024, compared to the same period in the prior year primarily as a result of $20.7 million of income tax
expense recognized as a result of the CCR subsequent to the Socius acquisition in the third quarter of 2023 and $10.9
million of income tax benefit recognized as a result of Equity-based compensation awards vesting in the third quarter of
2024.
Net Income
Net income increased $51.4 million from $136.0 million to $187.4 million for the nine months ended September 30, 2024,
compared to the same period in the prior year as a result of the factors described above.
Non-GAAP Financial Measures and Key Performance Indicators
In assessing the performance of our business, we use non-GAAP financial measures that are derived from our consolidated
financial information, but which are not presented in our consolidated financial statements prepared in accordance with
GAAP. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate
operating performance comparisons from period to period by excluding potential differences caused by variations in capital
structures, tax positions, depreciation, amortization, and certain other items that we believe are not representative of our
core business. We use the following non-GAAP measures for business planning purposes, in measuring our performance
relative to that of our competitors, to help investors to understand the nature of our growth, and to enable investors to
evaluate the run-rate performance of the Company. Non-GAAP financial measures should be viewed as supplementing,
and not as an alternative or substitute for, the consolidated financial statements prepared and presented in accordance with
GAAP. The footnotes to the reconciliation tables below should be read in conjunction with the unaudited consolidated
quarterly financial statements. Industry peers may provide similar supplemental information but may not define similarly
named metrics in the same way we do and may not make identical adjustments.
Organic Revenue Growth Rate
Organic Revenue Growth Rate is defined as the percentage change in Net commissions and fees, as compared to the same
period for the prior year, adjusted to eliminate revenue attributable to acquisitions for the first twelve months of ownership,
and other items such as contingent commissions and the impact of changes in foreign exchange rates.
48
For the avoidance of doubt, prior period references in the tables below represent the same period in the prior year. A
reconciliation of Organic revenue growth rate to Net commissions and fees growth rate, the most directly comparable
GAAP measure, for each of the periods indicated is as follows (in percentages):
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except percentages)
2024
2023
2024
2023
Current period Net commissions and fees revenue
$588,129
$487,345
$1,806,264
$1,507,878
Less: Current period contingent commissions
(14,842)
(4,487)
(44,741)
(30,624)
Net Commissions and fees revenue
excluding contingent commissions
$573,287
$482,858
$1,761,523
$1,477,254
Prior period Net commissions and fees revenue
$487,345
$407,551
$1,507,878
$1,284,459
Less: Prior year contingent commissions
(4,487)
(3,039)
(30,624)
(24,978)
Prior period Net commissions and fees revenue
excluding contingent commissions
$482,858
$404,512
$1,477,254
$1,259,481
Change in Net commissions and fees revenue excluding
contingent commissions
$90,429
$78,346
$284,269
$217,773
Less: Mergers and acquisitions Net commissions and fees
revenue excluding contingent commissions
(33,416)
(16,980)
(87,690)
(28,563)
Impact of change in foreign exchange rates
(196)
(739)
(521)
350
Organic revenue growth (Non-GAAP)
$56,817
$60,628
$196,058
$189,560
Net commissions and fees revenue growth rate (GAAP)
20.7 %
19.6 %
19.8 %
17.4 %
Less: Impact of contingent commissions (1)
(2.0)
(0.2)
(0.6)
(0.1)
Net commissions and fees revenue
excluding contingent commissions growth rate (2)
18.7 %
19.4 %
19.2 %
17.3 %
Less: Mergers and acquisitions Net commissions and fees
revenue excluding contingent commissions (3)
(6.9)
(4.2)
(5.9)
(2.3)
Impact of change in foreign exchange rates (4)
0.0
(0.2)
0.0
0.0
Organic Revenue Growth Rate (Non-GAAP)
11.8 %
15.0 %
13.3 %
15.0 %
(1)Calculated by subtracting Net commissions and fees revenue growth rate from net commissions and fees revenue
excluding contingent commissions growth rate.
(2)Calculated by dividing the change in Total net commissions & fees revenue excluding contingent commissions by prior
year net commissions and fees excluding contingent commissions.
(3)Calculated by taking the mergers and acquisitions net commissions and fees revenue excluding contingent
commissions, representing the first 12 months of net commissions and fees revenue generated from acquisitions,
divided by prior period net commissions and fees revenue excluding contingent commissions.
(4)Calculated by taking the change in foreign exchange rates divided by prior period net commissions and fees revenue
excluding contingent commissions.
Adjusted Compensation and Benefits Expense and Adjusted Compensation and Benefits Expense Ratio
We define Adjusted compensation and benefits expense as Compensation and benefits expense adjusted to reflect items
such as (i) equity-based compensation, (ii) acquisition and restructuring related compensation expense, and (iii) other
exceptional or non-recurring items, as applicable. The most comparable GAAP financial metric is Compensation and
benefits expense. Adjusted compensation and benefits expense ratio is defined as Adjusted compensation and benefits
expense as a percentage of Total revenue. The most comparable GAAP financial metric is Compensation and benefits
expense ratio.
49
A reconciliation of Adjusted compensation and benefits expense and Adjusted compensation and benefits expense ratio to
Compensation and benefits expense and Compensation and benefits expense ratio, the most directly comparable GAAP
measures, for each of the periods indicated, is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$604,694
$501,938
$1,852,181
$1,544,686
Compensation and benefits expense
$393,249
$329,212
$1,180,825
$989,294
Acquisition-related expense
(3,785)
(1,546)
(5,171)
(3,331)
Acquisition related long-term incentive compensation
(15,775)
(550)
(17,039)
(1,702)
Restructuring and related expense
(5,693)
(11,538)
(35,676)
(13,407)
Amortization and expense related to discontinued prepaid
incentives
(1,095)
(1,571)
(3,851)
(4,793)
Equity-based compensation
(17,385)
(8,280)
(39,656)
(23,106)
Initial public offering related expense
(6,074)
(9,327)
(22,008)
(31,029)
Adjusted compensation and benefits expense (1)
$343,442
$296,400
$1,057,424
$911,926
Compensation and benefits expense ratio
65.0 %
65.6 %
63.8 %
64.0 %
Adjusted compensation and benefits expense ratio
56.8 %
59.1 %
57.1 %
59.0 %
(1)Adjustments to Compensation and benefits expense are described in the definition of Adjusted EBITDAC to Net
income in “Adjusted EBITDAC and Adjusted EBITDAC Margin.”
Adjusted General and Administrative Expense and Adjusted General and Administrative Expense Ratio
We define Adjusted general and administrative expense as General and administrative expense adjusted to reflect items
such as (i) acquisition and restructuring general and administrative related expense and (ii) other exceptional or non-
recurring items, as applicable. The most comparable GAAP financial metric is General and administrative expense.
Adjusted general and administrative expense ratio is defined as Adjusted general and administrative expense as a
percentage of Total revenue. The most comparable GAAP financial metric is General and administrative expense ratio.
A reconciliation of Adjusted general and administrative expense and Adjusted general and administrative expense ratio to
General and administrative expense and General and administrative expense ratio, the most directly comparable GAAP
measures, for each of the periods indicated is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$604,694
$501,938
$1,852,181
$1,544,686
General and administrative expense
$88,684
$69,288
$247,518
$202,595
Acquisition-related expense
(12,560)
(5,790)
(35,779)
(12,196)
Restructuring and related expense
(5,133)
(4,938)
(12,156)
(23,793)
Adjusted general and administrative expense (1)
$70,991
$58,560
$199,583
$166,606
General and administrative expense ratio
14.7 %
13.8 %
13.4 %
13.1 %
Adjusted general and administrative expense ratio
11.7 %
11.7 %
10.8 %
10.8 %
(1)Adjustments to General and administrative expense are described in the definition of Adjusted EBITDAC to Net
income in “Adjusted EBITDAC and Adjusted EBITDAC Margin.”
Adjusted EBITDAC and Adjusted EBITDAC Margin
We define Adjusted EBITDAC as Net income before Interest expense, net, Income tax expense (benefit), Depreciation,
Amortization, and Change in contingent consideration, adjusted to reflect items such as (i) equity-based compensation, (ii)
acquisition and restructuring related expenses, and (iii) other exceptional or non-recurring items, as applicable.
Acquisition-related expense includes one-time diligence, transaction-related, and integration costs. In 2024, Acquisition-
related expense includes a $4.5 million charge for the nine months ended September 30, 2024, related to a deal-contingent
50
foreign exchange forward contract associated with the Castel acquisition. The remaining charges in both years represent
typical one-time diligence, transaction-related, and integration costs. Acquisition-related long-term incentive compensation
arises from changes to long-term incentive plans associated with acquisitions. Restructuring and related expense consists of
compensation and benefits, occupancy, contractors, professional services, and license fees related to the ACCELERATE
2025 program. The compensation and benefits expense included severance as well as employment costs related to services
rendered between the notification and termination dates and other termination payments. See “Note 4, Restructuring” of the
unaudited quarterly consolidated financial statements for further discussion of ACCELERATE 2025. The remaining costs
that preceded the restructuring plan were associated with professional services costs related to program design and
licensing costs. Amortization and expense is composed of charges related to discontinued prepaid incentive programs. For
the three months ended September 30, 2024, Other non-operating loss was composed of $16.2 million of expense related to
a term loan modification and $0.5 million of TRA contractual interest and related charges offset by $0.1 million of sublease
income. For the three months ended September 30, 2023, Other non-operating loss included $0.3 million of TRA
contractual interest and related charges offset by $0.2 million of sublease income. For the nine months ended
September 30, 2024, Other non-operating loss consisted of $18.1 million of expense related to term loan modifications and
$0.8 million of TRA contractual interest and related charges offset by $0.4 million of sublease income. For the nine months
ended September 30, 2023, Other non-operating loss included $0.5 million of TRA contractual interest and related charges
offset by $0.4 million of sublease income. Equity-based compensation reflects non-cash equity-based expense. For the
three months ended September 30, 2024, Equity-based compensation included $4.6 million of expense associated with the
removal of equity transfer restrictions for an executive officer of the Company. IPO related expenses include
compensation-related expense primarily related to the expense for new awards issued at IPO as well as expense related to
the revaluation of existing equity awards at IPO.
Total revenue less Adjusted compensation and benefits expense and Adjusted general and administrative expense is
equivalent to Adjusted EBITDAC. For a breakout of compensation and general and administrative costs for each addback,
refer to the Adjusted compensation and benefits expense and Adjusted general and administrative expense tables above.
The most directly comparable GAAP financial metric to Adjusted EBITDAC is Net income. Adjusted EBITDAC margin is
defined as Adjusted EBITDAC as a percentage of Total revenue. The most comparable GAAP financial metric is Net
income margin.
A reconciliation of Adjusted EBITDAC and Adjusted EBITDAC margin to Net income and Net income margin, the most
directly comparable GAAP measures, for each of the periods indicated is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$604,694
$501,938
$1,852,181
$1,544,686
Net income
$28,643
$15,703
$187,358
$135,977
Interest expense, net
49,388
31,491
109,916
89,840
Income tax expense (benefit)
(8,962)
24,827
16,155
42,772
Depreciation
2,467
2,201
6,820
6,570
Amortization
39,182
29,572
97,711
79,125
Change in contingent consideration
(365)
1,848
813
4,358
EBITDAC
$110,353
$105,642
$418,773
$358,642
Acquisition-related expense
16,345
7,336
40,950
15,527
Acquisition related long-term incentive compensation
15,775
550
17,039
1,702
Restructuring and related expense
10,826
16,476
47,832
37,200
Amortization and expense related to discontinued prepaid
incentives
1,095
1,571
3,851
4,793
Other non-operating loss
16,590
67
18,575
37
Equity-based compensation
17,385
8,280
39,656
23,106
IPO related expenses
6,074
9,327
22,008
31,029
(Income) from equity method investments in related party
(4,182)
(2,271)
(13,510)
(5,882)
Adjusted EBITDAC
$190,261
$146,978
$595,174
$466,154
Net income margin
4.7 %
3.1 %
10.1 %
8.8 %
Adjusted EBITDAC margin
31.5 %
29.3 %
32.1 %
30.2 %
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Adjusted Net Income and Adjusted Net Income Margin
We define Adjusted net income as tax-effected earnings before amortization and certain items of income and expense,
gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related
expenses, costs associated with the IPO, and certain exceptional or non-recurring items. The most comparable GAAP
financial metric is Net income. Adjusted net income margin is calculated as Adjusted net income as a percentage of Total
revenue. The most comparable GAAP financial metric is Net income margin.
Following the IPO, the Company is subject to United States federal income taxes, in addition to state, local, and foreign
taxes, with respect to our allocable share of any net taxable income of the LLC. For comparability purposes, this
calculation incorporates the impact of federal and state statutory tax rates on 100% of our adjusted pre-tax income as if the
Company owned 100% of the LLC.
A reconciliation of Adjusted net income and Adjusted net income margin to Net income and Net income margin, the most
directly comparable GAAP measures, for each of the periods indicated is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$604,694
$501,938
$1,852,181
$1,544,686
Net income
$28,643
$15,703
$187,358
$135,977
Income tax expense (benefit)
(8,962)
24,827
16,155
42,772
Amortization
39,182
29,572
97,711
79,125
Amortization of deferred debt issuance costs (1)
15,402
3,045
21,838
9,125
Change in contingent consideration
(365)
1,848
813
4,358
Acquisition-related expense
16,345
7,336
40,950
15,527
Acquisition related long-term incentive compensation
15,775
550
17,039
1,702
Restructuring and related expense
10,826
16,476
47,832
37,200
Amortization and expense related to discontinued prepaid
incentives
1,095
1,571
3,851
4,793
Other non-operating loss
16,590
67
18,575
37
Equity-based compensation
17,385
8,280
39,656
23,106
IPO related expenses
6,074
9,327
22,008
31,029
(Income) from equity method investments in related
party
(4,182)
(2,271)
(13,510)
(5,882)
Adjusted income before income taxes (2)
$153,808
$116,331
$500,276
$378,869
Adjusted income tax expense (3)
(40,175)
(29,700)
(130,672)
(96,725)
Adjusted net income
$113,633
$86,631
$369,604
$282,144
Net income margin
4.7 %
3.1 %
10.1 %
8.8 %
Adjusted net income margin
18.8 %
17.3 %
20.0 %
18.3 %
(1)Interest expense, net includes amortization of deferred debt issuance costs.
(2)Adjustments to Net income are described in the definition of Adjusted EBITDAC to Net income in “Adjusted
EBITDAC and Adjusted EBITDAC Margin.”
(3)The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect
to our allocable share of any net taxable income of the LLC. For the three and nine months ended September 30, 2024,
this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined state income
tax rate net of federal benefits of 5.12% on 100% of our adjusted income before income taxes as if the Company owned
100% of the LLC. For the three and nine months ended September 30, 2023, this calculation of adjusted income tax
expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of
4.53% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC.
Adjusted Diluted Earnings Per Share
We define Adjusted diluted earnings per share as Adjusted net income divided by diluted shares outstanding after adjusting
for the effect if 100% of the outstanding LLC Common Units (together with the shares of Class B common stock), vested
52
Class C Incentive Units, and unvested equity awards were exchanged into shares of Class A common stock as if 100% of
unvested equity awards were vested. The most directly comparable GAAP financial metric is Diluted earnings per share.
A reconciliation of Adjusted diluted earnings per share to Diluted earnings per share, the most directly comparable GAAP
measure, for each of the periods indicated is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Earnings (loss) per share of Class A common stock –
diluted
$0.09
$(0.04)
$0.59
$0.34
Less: Net income attributed to dilutive shares and
substantively vested RSUs (1)
(0.03)
(0.29)
(0.03)
Plus: Impact of all LLC Common Units exchanged for
Class A shares (2)
0.05
0.10
0.39
0.20
Plus: Adjustments to Adjusted net income (3)
0.31
0.28
0.67
0.54
Plus: Dilutive impact of unvested equity awards (4)
(0.01)
(0.02)
(0.02)
(0.01)
Adjusted diluted earnings per share
$0.41
$0.32
$1.34
$1.04
(Share count in '000)
Weighted-average shares of Class A common stock
outstanding – diluted
272,686
115,872
271,283
124,884
Plus: Impact of all LLC Common Units exchanged for
Class A shares (2)
141,690
142,974
Plus: Dilutive impact of unvested equity awards (4)
3,467
15,115
4,445
4,390
Adjusted diluted earnings per share diluted share count
276,153
272,677
275,728
272,248
(1)Adjustment removes the impact of Net income attributed to dilutive awards and substantively vested RSUs to arrive at
Net income attributable to Ryan Specialty Holdings, Inc. For the three months ended September 30, 2024 and 2023, this
removes $8.3 million and $(0.1) million of Net income (loss), respectively, on 272.7 million and 115.9 million
Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the nine months ended
September 30, 2024 and 2023, this removes $78.3 million and $3.8 million of Net income, respectively, on 271.3
million and 124.9 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. See
Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.
(2)For comparability purposes, this calculation incorporates the Net income that would be distributable if all LLC
Common Units (together with shares of Class B common stock) and vested Class C Incentive units were exchanged for
shares of Class A common stock. For the three months ended September 30, 2024 and 2023, this includes $11.1 million
and $20.8 million of Net income, respectively, on 272.7 million and 257.6 million Weighted-average shares of Class A
common stock outstanding - diluted, respectively. For the nine months ended September 30, 2024 and 2023, this
includes $106.4 million and $97.8 million of Net income, respectively, on 271.3 million and 267.9 million Weighted-
average shares of Class A common stock outstanding - diluted, respectively. For the three months ended September 30,
2023, 141.7 million weighted average outstanding LLC Common Units were considered dilutive and included in the
257.6 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. For the
nine months ended September 30, 2023, 143.0 million weighted average outstanding LLC Common Units were
considered dilutive and included in the 267.9 million Weighted-average shares of Class A common stock outstanding -
diluted within Diluted EPS. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial
statements.
(3)Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to Net
income in “Adjusted Net Income and Adjusted Net Income Margin” on 272.7 million and 257.6 million Weighted-
average shares of Class A common stock outstanding - diluted for the three months ended September 30, 2024 and
2023, respectively, and on 271.3 million and 267.9 million Weighted-average shares of Class A common stock
outstanding- diluted for the nine months ended September 30, 2024 and 2023, respectively.
(4)For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net income,
the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted-average
unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be
dilutive within the Diluted EPS calculation disclosed in “Note 10, Earnings Per Share” of the unaudited quarterly
53
consolidated financial statements. For the three months ended September 30, 2024 and 2023, 3.5 million and 15.1
million shares were added to the calculation, respectively. For the nine months ended September 30, 2024 and 2023, 4.4
million were added to the calculation.
Liquidity and Capital Resources
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business
operations. We believe that the balance sheet and strong cash flow profile of our business provides adequate liquidity. The
primary sources of liquidity are Cash and cash equivalents on the Consolidated Balance Sheets, cash flows provided by
operations, and debt capacity available under our Revolving Credit Facility, Term Loan, and Senior Secured Notes. The
primary uses of liquidity are operating expenses, seasonal working capital needs, business combinations, capital
expenditures, obligations under the TRA, taxes, distributions to LLC Unitholders, and dividends to Class A common
stockholders. We believe that Cash and cash equivalents, cash flows from operations, and amounts available under our
Revolving Credit Facility will be sufficient to meet liquidity needs, including principal and interest payments on debt
obligations, capital expenditures, and anticipated working capital requirements, for the next 12 months and beyond. Our
future capital requirements will depend on many factors including continuance of historical working capital levels and
capital expenditure needs, investment in de novo offerings, and the flow of deals in our merger and acquisition program.
On February 27, 2024, our Board declared a one-time special cash dividend of $0.23 per share on our outstanding Class A
common stock. In addition, the Board initiated a regular quarterly dividend of $0.11 per share on our outstanding Class A
common stock. The special dividend of $0.23 and $0.07 of the regular quarterly dividend were funded by current and prior
tax distributions from the LLC that are in excess of both the corporate income taxes payable by the Company as well as the
Company’s obligations pursuant to the Tax Receivable Agreement. The remaining $0.04 of the regular quarterly dividend
was funded by free cash flow from the LLC and paid to all holders of the Class A common stock and LLC Common Units.
We may be required to seek additional equity or debt financing. In the event that additional financing is required from
outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital
or generate cash flows necessary to expand our operations, this could reduce our ability to compete successfully and harm
the results of our operations.
Cash and cash equivalents on the Consolidated Balance Sheets include funds available for general corporate purposes.
Fiduciary cash and receivables cannot be used for general corporate purposes. Insurance premiums, claims funds, and
surplus lines taxes are held in a fiduciary capacity and the obligation to remit these funds are recorded as Fiduciary
liabilities on the Consolidated Balance Sheets. We recognize fiduciary amounts due to others as Fiduciary liabilities and
fiduciary amounts collectible and held on behalf of others, including insurance carriers, other insurance intermediaries,
surplus lines taxing authorities, clients, and insurance policy holders, as Fiduciary cash and receivables on the Consolidated
Balance Sheets.
In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission,
remit the premiums to the respective insurance markets and carriers. We also collect claims prefunding or refunds from
carriers on behalf of insureds, which are then returned to the insureds, and surplus lines taxes, which are then remitted to
surplus lines taxing authorities. Insurance premiums, claims funds, and surplus lines taxes are held in a fiduciary capacity.
The levels of Fiduciary cash and receivables and Fiduciary liabilities can fluctuate significantly depending on when we
collect the premiums, claims prefunding, and refunds, make payments to markets, carriers, surplus lines taxing authorities,
and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency
movements. Fiduciary cash, because of its nature, is generally invested in very liquid securities with a focus on
preservation of principal. To minimize investment risk, we maintain cash holdings pursuant to an investment policy which
contemplates all relevant rules established by states with regard to fiduciary cash and is approved by our Board of
Directors. The policy requires broad diversification of holdings across a variety of counterparties utilizing limits set by our
Board of Directors, primarily based on credit rating and type of investment. Fiduciary cash and receivables included cash
of $1,120.9 million and $848.6 million as of September 30, 2024 and 2023, respectively, and fiduciary receivables of
$2,236.1 million and $1,672.4 million as of September 30, 2024 and 2023, respectively. While we may earn interest
income on fiduciary cash held in cash and investments, the fiduciary cash may not be used for general corporate purposes.
Of the $235.2 million of Cash and cash equivalents on the Consolidated Balance Sheet as of September 30, 2024, $74.7
million was held in fiduciary accounts representing collected revenue and was available to be transferred to operating
accounts and used for general corporate purposes.
Credit Facilities
We expect to have sufficient financial resources to meet our business requirements for the next 12 months. Although cash
from operations is expected to be sufficient to service our activities, including servicing our debt and contractual
obligations, and financing capital expenditures, we have the ability to borrow under our Revolving Credit Facility to
54
accommodate any timing differences in cash flows. Additionally, under current market conditions, we believe that we
could access capital markets to obtain debt financing for longer-term funding, if needed.
On September 1, 2020, we entered into the Credit Agreement with leading institutions, including JPMorgan Chase Bank,
N.A., the Administrative Agent, for Term Loan borrowings totaling $1,650.0 million and a Revolving Credit Facility
totaling $300.0 million, in connection with financing the acquisition of All Risks, Ltd. Borrowings under our Revolving
Credit Facility are permitted to be drawn for our working capital and other general corporate financing purposes and those
of certain of our subsidiaries. Borrowings under our Credit Agreement are unconditionally guaranteed by various
subsidiaries and are secured by a lien and security interest in substantially all of our assets.
On July 26, 2021, we entered into an amendment to our Credit Agreement, which provided for an increase in the size of
our Revolving Credit Facility from $300.0 million to $600.0 million. Interest on the upsized Revolving Credit Facility bore
interest at the Eurocurrency Rate (LIBOR) plus a margin that ranged from 2.50% to 3.00%, based on the first lien net
leverage ratio defined in our Credit Agreement. No other significant terms under our agreement governing the Revolving
Credit Facility were changed in connection with such amendment.
On February 3, 2022, the LLC issued $400.0 million of 8-year Senior Secured Notes. The notes have a 4.375% interest rate
and will mature on February 1, 2030.
On April 29, 2022, we entered into the Fourth Amendment to the Credit Agreement on our Term Loan and Revolving
Credit Facility to transition its LIBOR rate to a Benchmark Replacement of Adjusted Term SOFR plus a Credit Spread
Adjustment of 10 basis points, 15 basis points, or 25 basis points for the one-month, three-month, or six-month borrowing
periods, respectively.
On January 19, 2024, we entered into the Fifth Amendment (the “Repricing Amendment”) to the Term Loan’s Credit
Agreement. As a result of the Repricing Amendment, the applicable interest rate of the Term Loan was reduced from
Adjusted Term SOFR + 3.00% to Adjusted Term SOFR + 2.25% and no longer contains a credit spread adjustment. All
other material provisions remain unchanged.
On July 30, 2024, the Company entered into the Sixth Amendment to the Credit Agreement, which provided for an
increase in borrowing capacity under the Revolving Credit Facility from $600.0 million to $1,400.0 million. The
amendment also extended the maturity date of the Revolving Credit Facility to July 30, 2029, and reduced the applicable
interest rate from Adjusted Term SOFR plus a margin of 2.50% to 3.00% to Adjusted Term SOFR plus a margin of 2.00%
to 2.50%, based on the first lien net leverage ratio defined in the Credit Agreement.
On September 13, 2024, the Company entered into the Seventh Amendment to the Credit Agreement, which refinanced the
existing Term Loan in the aggregate principal amount of $1,588.1 million outstanding as of June 30, 2024, and increased
the size of the Term Loan by $111.9 million to $1,700.0 million as of September 30, 2024. In addition to increasing the
size of the Term Loan, the Seventh Amendment reduced the applicable interest rate of the Term Loan from Adjusted Term
SOFR plus a margin of 2.75% to Adjusted Term SOFR plus a margin of 2.25% and lowered the 75 basis point floor on
Adjusted Term SOFR to a 0 basis point floor. Upon achievement of a stable (or better) corporate family rating from
Moody’s of Ba3 or better, the applicable interest rate of the Term Loan will be revised to Adjusted Term SOFR plus a
margin of 2.00%.
On September 19, 2024, the LLC issued $600.0 million of 8-year Senior Secured Notes. These notes carry a 5.875%
interest rate and will mature on August 1, 2032.
As of September 30, 2024, the interest rate on the Term Loan was 2.25% plus Adjusted Term SOFR.
As of September 30, 2024, the Company was in compliance with all of the covenants under the Credit Agreement and there
were no events of default for the nine months ended September 30, 2024.
Tax Receivable Agreement
The Company is party to a TRA with current and certain former LLC Unitholders. The TRA provides for the payment by
the Company, to current and certain former LLC Unitholders, of 85% of the net cash savings, if any, in U.S. federal, state,
and local income taxes that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i) certain
increases in the tax basis of the assets of the LLC resulting from purchases or exchanges of LLC Common Units
(“Exchange Tax Attributes”), (ii) certain tax attributes of the LLC that existed prior to the IPO (“Pre-IPO M&A Tax
Attributes”), (iii) certain favorable “remedial” partnership tax allocations to which the Company becomes entitled to (if
any), and (iv) certain other tax benefits related to the Company entering into the TRA, including tax benefits attributable to
55
payments that the Company makes under the TRA (“TRA Payment Tax Attributes”). The Company recognizes a liability
on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA.
Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of
the LLC Common Unit exchanges and the resulting amounts we are likely to pay out to current and certain former LLC
Unitholders pursuant to the TRA; however, we estimate that such tax benefits and the related TRA payments may be
substantial. As set forth in the table below, and assuming no changes in the relevant tax law and that we earn sufficient
taxable income to realize all cash tax savings that are subject to the TRA, we expect future payments under the TRA as a
result of transactions as of September 30, 2024 will be $455.1 million in aggregate. Future payments in respect to
subsequent exchanges would be in addition to these amounts and are expected to be substantial. The foregoing amounts are
merely estimates and the actual payments could differ materially. In the highly unlikely event of an early termination of the
TRA (e.g., a default by the Company or a Change of Control) the Company is required to pay to each holder of the TRA an
early termination payment equal to the discounted present value of all unpaid TRA payments. The Company has not made,
and is not likely to make, an election for an early termination. We expect to fund future TRA payments with tax
distributions from the LLC that come from cash on hand and cash generated from operations.
(in thousands)
Exchange Tax
Attributes
Pre-IPO M&A
Tax Attributes
TRA Payment
Tax Attributes
TRA
Liabilities
Balance at December 31, 2023
$194,668
$85,814
$78,416
$358,898
Exchange of LLC Common Units
68,931
5,287
21,365
95,583
Accrued interest
646
646
Balance at September 30, 2024
$263,599
$91,101
$100,427
$455,127
Total expected estimated tax savings from each of the tax attributes associated with the TRA as of September 30, 2024,
were $535.4 million consisting of (i) Exchange Tax Attributes of $310.1 million, (ii) Pre-IPO M&A Tax Attributes of
$107.2 million, and (iii) TRA Payment Tax Attributes of $118.1 million. The Company will retain the benefit of 15% of
these cash savings.
Comparison of Cash Flows for the Nine Months Ended September 30, 2024 and 2023
Cash and cash equivalents decreased $519.2 million from $754.4 million at September 30, 2023, to $235.2 million at
September 30, 2024. A summary of the Company’s cash flows provided by and used for continuing operations from
operating, investing, and financing activities is as follows:
Cash Flows From Operating Activities
Cash flows provided by operating activities for the nine months ended September 30, 2024, were $255.2 million, an
increase of $4.9 million compared to the nine months ended September 30, 2023. This increase in cash flows provided by
operating activities was driven by an increase in Net income of $51.4 million, an increase of $18.6 million in Amortization,
and an increase of $16.3 million in Prepaid and deferred compensation expense offset by the change in Other current and
non-current assets and Other current and non-current accrued liabilities of $84.3 million and Deferred income tax expense
(benefit) decline of $34.4 million. The change in Other current and non-current accrued liabilities was primarily driven by
an increase in acquisition contingent consideration payments. The change in Deferred income tax expense (benefit) was
driven by $20.7 million of Deferred income tax expense from reorganization related to the CCR subsequent to the Socius
acquisition in the third quarter of 2023 and $10.9 million of Deferred income tax benefit recognized as a result of Equity-
based compensation award vesting recognized in the third quarter of 2024.
Cash Flows From Investing Activities
Cash flows used for investing activities during the nine months ended September 30, 2024, were $1,286.4 million, an
increase of $904.5 million compared to the $381.9 million of cash flows used for investing activities during the nine
months ended September 30, 2023. The main driver of the cash flows used for investing activities in the nine months ended
September 30, 2024 was $1,256.7 million for Business combinations - net of cash acquired and cash held in a fiduciary
capacity and $29.7 million of Capital expenditures, compared to $366.1 million for Business combinations - net of cash
acquired and cash held in a fiduciary capacity and $16.0 million of Capital expenditures for the nine months ended
September 30, 2023.
56
Cash Flows From Financing Activities
Cash flows provided by financing activities during the nine months ended September 30, 2024, were $625.3 million, an
increase of $657.3 million compared to cash flows used in financing activities of $32.0 million during the nine months
ended September 30, 2023. The main drivers of cash flows provided by financing activities during the nine months ended
September 30, 2024 were Proceeds from Senior Secured Notes of $595.2 million, Proceeds from term debt of $107.6
million, and Net change in fiduciary liabilities of $90.7 million offset by Dividends paid to Class A common shareholders
of $66.5 million, Tax distributions to non-controlling LLC Unitholders of $65.8 million, Debt issuance costs paid of $16.8
million, Distributions to non-controlling LLC Unitholders of $16.8 million, Repayment of term debt of $8.3 million, and
Payment of accrued return on Ryan Re preferred units of $2.0 million. The main drivers of cash flows used in by financing
activities during the nine months ended September 30, 2023, were Tax distributions to non-controlling LLC Unitholders of
$52.6 million, Repayment of term debt of $12.4 million, and the Payment of contingent consideration of $4.5 million offset
by the Net change in fiduciary liabilities of $36.8 million.
Contractual Obligations and Commitments
Our principal commitments consist of contractual obligations in connection with investing and operating activities. These
obligations are described within “Note 7, Debt” in the notes to our unaudited consolidated financial statements, where we
provide further description on provisions that create, increase, or accelerate obligations, or other pertinent data to the extent
necessary for an understanding of the timing and amount of the specified contractual obligations.
Within Current accrued compensation and Non-current accrued compensation we have various long-term incentive
compensation agreements accrued for. These agreements are typically associated with an acquisition. Below we have
outlined the liabilities accrued as of September 30, 2024, the projected future expense, and the projected timing of future
cash outflows associated with these arrangements.
Long-term Incentive Compensation Agreements
(in thousands)
September 30,
2024
Current accrued compensation
$6,452
Non-current accrued compensation
15,649
Total liability
$22,101
Projected future expense
22,660
Total projected future cash outflows
$44,761
Projected Future Cash Outflows
(in thousands)
2024
$
2025
9,701
2026
2,715
2027
18,390
Thereafter
$13,955
Within “Note 3, Mergers and Acquisitions” in the notes to our unaudited consolidated financial statements we discuss
various contingent consideration arrangements and their impact. Below we have outlined the liabilities accrued as of
September 30, 2024, the projected future expense, and the projected timing of future cash outflows associated with these
contingent consideration agreements.
Contingent Consideration
(in thousands)
September 30,
2024
Current accounts payable and accrued liabilities
$44,161
Other non-current liabilities
105,970
Total liability
$150,131
Projected future expense
19,383
Total projected future cash outflows
$169,514
57
Projected Future Cash Outflows
(in thousands)
2024
$
2025
45,635
2026
1,826
2027
122,053
Thereafter
$
Critical Accounting Policies and Estimates
The methods, assumptions, and estimates that we use in applying the accounting policies may require us to apply
judgments regarding matters that are inherently uncertain. We consider an accounting policy to be a critical estimate if (i)
the Company must make assumptions that were uncertain when the judgment was made and (ii) changes in the estimate
assumptions, or selection of a different estimate methodology, could have a significant impact on our financial position and
the results that we will report in the consolidated financial statements. While we believe that the estimates, assumptions,
and judgments are reasonable, they are based on information available when the estimate was made. The accounting
policies that we believe reflect our more significant estimates, judgments, and assumptions that are most critical to
understanding and evaluating our reported financial results are: revenue recognition, business combinations, goodwill and
intangibles, income taxes, and tax receivable agreement liabilities.
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Critical Accounting Policies” in the Annual Report on Form 10-K for the year
ended December 31, 2023, filed with the SEC on February 28, 2024. Additionally, the changes, if any, to our critical
accounting policies and estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023, are
included in “Note 1, Basis of Presentation,” to our unaudited consolidated financial statements.
Recent Accounting Pronouncements
For a description of recently adopted accounting pronouncements and recently issued accounting standards not yet adopted
(if any), see “Note 1, Basis of Presentation” in the notes to our unaudited consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are exposed to various market risks in our day-to-day operations. Market risk is the potential loss arising from adverse
changes in market rates and prices, such as interest and foreign currency exchange rates.
Foreign Currency Risk
For the nine months ended September 30, 2024, approximately 4% of revenues were generated from activities in the
United Kingdom, Europe, and Canada. We are exposed to currency risk from the potential changes between the exchange
rates of the US Dollar, Canadian Dollar, British Pound, Euro, Swedish Krona, Danish Krone, and other European
currencies. The exposure to foreign currency risk from the potential changes between the exchange of USD and other
currencies is immaterial.
Interest Rate Risk and Credit Risk
Certain of the Company’s revenues, expenses, assets, and liabilities are exposed to the impact of interest rate changes.
Interest rate risk and credit risk to counterparties generated from the Company’s Cash and cash equivalents, and Cash and
cash equivalents held in a fiduciary capacity, will fluctuate with the general level of interest rates.
As of September 30, 2024, we had $1,700.0 million of outstanding principal on our Term Loan borrowings, which bears
interest on a floating rate, subject to a 0.0% floor. We are subject to Adjusted Term SOFR interest rate changes and
exposure in excess of the floor. The fair value of the Term Loan approximates the carrying amount as of September 30,
2024 and December 31, 2023, as determined based upon information available.
On April 7, 2022, the Company entered into an interest rate cap agreement to manage its exposure to interest rate
fluctuations related to the Company’s Term Loan for an upfront cost of $25.5 million. The interest rate cap has a $1,000.0
million notional amount, 2.75% strike, and terminates on December 31, 2025.
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Based on the below balances as of September 30, 2024, the impact of a hypothetical 100 basis point (BPS) increase or
decrease in quarter-end prevailing short-term interest rates for one year would be:
(in thousands)
Balance at
September 30, 2024
100 BPS
Increase
100 BPS
Decrease
Cash and cash equivalents
$235,199
$(2,352)
$2,352
Term Loan principal outstanding (1)
1,700,000
17,000
(17,000)
Interest rate cap notional amount (2)
1,000,000
(10,000)
10,000
Net exposure to Interest expense, net
$4,648
$(4,648)
Cash and cash equivalents held in a fiduciary capacity
1,120,900
11,209
$(11,209)
Net exposure to Fiduciary investment income
$11,209
$(11,209)
Impact to Net income
$6,561
$(6,561)
(1)To the extent SOFR falls below 0.0%, the impact of the change in interest rates is zero.
(2)To the extent interest rates fall below 2.75%, the impact of the change in interest rates is zero.
In addition to interest rate risk, our cash investments and fiduciary cash holdings are subject to potential loss of value due
to counterparty credit risk. To minimize this risk, the Company and its subsidiaries hold funds pursuant to an investment
policy approved by our Board. The policy mandates the preservation of principal and liquidity and requires broad
diversification with counter-party limits assigned based primarily on credit rating and type of investment. The Company
carefully monitors its cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity, and plans to
further restrict the portfolio as appropriate with respect to market conditions. The majority of Cash and cash equivalents
and Cash and cash equivalents held in a fiduciary capacity are held in demand deposit accounts and short-term investments,
consisting principally of AAA-rated money market funds and treasury bills, having original maturities of 90 days or less.
Other financial instruments consist of Cash and cash equivalents, Commissions and fees receivable – net, Other current
assets, and Accounts payable and accrued liabilities. The carrying amounts of Cash and cash equivalents, Commissions and
fees receivable – net, and Accounts payable and accrued liabilities approximate fair value because of the short-term nature
of the instruments.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a–15(e) and Rule 15d–15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that
information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that
information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is
accumulated and communicated to our management, including our principal executive and principal financial officers, as
appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive
officer and principal financial officer have concluded that as of September 30, 2024, our disclosure controls and procedures
were effective at the reasonable assurance level.
Changes in Internal Control
There have been no changes in internal control over financial reporting during the quarter ended September 30, 2024, that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of Internal Control Over Financial Reporting
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as
specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect
all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and
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can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of
fraud, if any, within the Company have been detected.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course
of business. Although the results of litigation and claims are inherently unpredictable and uncertain, we are not presently a
party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken
together have a material adverse effect on our business, operating results, cash flows or financial condition.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our annual report on
Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 28, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER
PURCHASES OF EQUITY SECURITIES
In connection with the acquisition of minority interests held in subsidiaries of Ryan Specialty Underwriting Managers
International Limited (f/k/a Castel Underwriting Agencies Limited), the Company issued (1) 98,553 shares of the
Company’s Class A common stock on September 13, 2024, to certain of the minority interest holders at a volume weighted
average price of $64.46 per share and (2) 10,403 shares of the Company’s Class A common stock on September 20, 2024,
to certain of the minority interest holders at a volume weighted average price of $63.73 per share. The issuance was made
in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”) set forth in Regulation D promulgated under the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Insider Trading Arrangements and Policies
During the quarter ended September 30, 2024, (i) Mark Katz, Executive Vice President, General Counsel and Corporate
Secretary, adopted a “Rule 10b5-1 trading arrangement” (as such term is defined in Item 408(a) of Regulation S-K) 
intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (a “10b5-1 Plan”) on
September 14, 2024 to sell up to 30,000 shares of the Company’s Class A common stock that are either held directly or
issuable upon conversion of LLC common units, between the first potential sale date on December 13, 2024 and the
expiration of his 10b5-1 Plan on March 31, 2025 and (ii) Nicholas Cortezi, a Director, adopted a 10b5-1 Plan on September
14, 2024 to sell up to 500,000 shares of the Company’s Class A common stock issuable upon conversion of LLC common
units between the first potential sale date on December 13, 2024 and the expiration of his 10b5-1 Plan on August 15, 2025.
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Item 6. Exhibits
The following is a list of all exhibits filed or furnished as part of this report:
Exhibit
Number
Description
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
61
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
31.1
31.2
32.1*
32.2*
97.1
101.INS
Inline XBRL (Extensible Business Reporting Language) Instance Document – the instance document does
not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL
document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on
Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, except to the extent that the registrant specifically incorporates it by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
RYAN SPECIALTY HOLDINGS, INC. (Registrant)
Date: October 30, 2024
By:
/s/ Janice M. Hamilton
Janice M. Hamilton
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer)