Commitments and Contingencies |
12 Months Ended |
|---|---|
Dec. 31, 2024 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies |
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 $4.9
million and $6.4 million were recorded for outstanding matters as of December 31, 2024 and 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 $1.8 million, $6.9 million, and $7.5 million of E&O expense for the years ended December 31,
2024, 2023, and 2022, respectively, in General and administrative expense on the Consolidated Statements of Income. 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 $0.3 million and $0.2 million as of December 31, 2024 and 2023, respectively, 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
December 31, 2024 and 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 the year ended December
31, 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.
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