Ryan Specialty Group Aktie

Good afternoon, and thank you for joining us today for Ryan Specialty Holdings Second Quarter 2026 Earnings Conference Call. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com.

On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. The company assumes no duty to update such forward-looking statements in the future, except as required by law.

Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website.

With that, I'd now like to turn the call over to the Founder and Executive Chairman of Ryan Specialty, Pat Ryan.

Good afternoon, and thank you for joining us. With me on today's call is our CEO, Tim Turner; our CFO, Janice Hamilton, our CEO of underwriting managers, Miles Wuller and our Head of Investor Relations, Nick Mezick.

For the quarter, total revenue grew 7.2% and to $917 million, primarily driven by organic revenue growth of 6.7% as well as modest contributions from M&A. Adjusted EBITDAC grew 6% and to $327 million. Adjusted EBITDAC margin declined 40 basis points to 35.7%. Adjusted earnings per share grew 12.1% to $0.74. For the first half of 2026, we grown organic revenue by 8.9%, adjusted EBITDAC by 9.8% and adjusted earnings per share by 16.2%. In the quarter, we repurchased 8.1 million shares for $260 million and increased the authorization of the program by an additional $300 million to deploy opportunistically within our capital allocation framework. We're pleased with these results, especially considering the headwinds our industry continues to face.

Our top and bottom line results speak to the resiliency of the platform we've built. But this quarter demonstrated that even in a very challenging market, our people delivered, utilizing their differentiated capabilities to execute on behalf of our clients and carrier trading partners. We earn our clients' business, our respect and trust every day to continuously delivering innovative solutions, expanding in the new products, deepening and broadening relationships with our retail broker clients and carrier trading partners while executing at consistently high levels.

I want to make a few comments about our team. We worked tirelessly in our efforts to control what we can control. Our brokers are exceptional pipeline builders. We win new business and produce unique solutions that others simply cannot replicate. Some of that production is large and project-based and sits in our pipeline until the right micro or macro conditions pushes through. We focus on building the pipeline. We cannot control when projects close. Additionally, our underwriters are disciplined product builders. They assess every risk with carrier profitability front of mind. Our industry-leading underwriting results, disciplined and strong governance structure, attract the most sophisticated capital providers to our platform, whether through an adjacent product or de novo MGU.

Our speed to market lets us meet an evolving client demand, driving strong new business growth and the ability to expand our share of recurring and nonrecurring business. Together, these capabilities of pipeline and product building are important characteristics that set us apart. We continue to evolve as the leading specialty insurance services firm, always looking for ways to be broader, more diversified, more strategic while still staying true to our mission statement.

Our differentiation is significant and meaningful, a leading platform with scale, but much more than that. It's the power of our combined platform and ecosystem where each piece makes the whole more powerful than the sum of its parts, powered by secular tailwinds and the industry best talent and the innovation chain, built to expand and win in new markets, complemented by what we believe is a best-in-class M&A engine. The result, industry-leading growth and strong margins, all aligned by a disciplined capital allocation framework and an aligned leadership team. Tim will expand on these themes shortly.

But first, I want to unpack the innovation of our delegated underwriting authority strategy, where I believe we were the true first mover. 16 years ago, we anticipated the demand for specialty solutions for our retail broker clients and trading partners, and we led the structural changes that follow. Through continuous innovation, investment and a well-executed M&A strategy, we built a comprehensive, diversified platform offering over 300 specialty insurance products. We continue to extend our lead, growing beyond traditional delegated authority channels by expanding into new specialties like reinsurance underwriting, alternative capital solutions and broad-based benefit solutions.

We continue to skate to where the puck is going, not where it is. Our differentiating capabilities, speed to market and emerging classes, portfolio breadth and our track record of delivering underwriting profits for our carrier trading partners, all supported by London incentives continue to attract the highest quality capital to our platform. Relationships that are deep and enduring with now more than 25 carriers that each back 10 or more of our 40 MGUs, a balanced capital base with the majority of our premiums syndicated across multiple carriers, giving us the capacity to underwrite more products expanding our reach. Lastly, a platform that is equipped to manage through the ever-evolving specialty insurance market.

We built a delegated authority platform that we believe is unique to the industry. Creating a significant moat, the combination of wholesale brokerage and delegated underwriting authority corrects a distribution engine of unmatched scale and sophistication which we believe is capable of delivering durable, differentiated growth for years to come. As we look forward, we remain confident in our ability to innovate, invest and continue to strengthen and diversify our offerings as a leader in the specialty lines insurance services sector for years to come.

With that, I'm pleased to turn the call over to our Chief Executive Officer, Tim Turner. Tim?

Thank you very much, Pat. Ryan Specialty had a great second quarter as we delivered for our clients in a face of a very challenging property pricing environment. Before diving into the quarter and building on Pat's remarks, let me outline the 8 factors that differentiate Ryan Specialty, both now and over the long term.

One, we are an industry leader, delivering innovative solutions at scale. We are uniquely positioned at the top of both specialty distribution and underwriting. This dual vantage point provides the widest view of specialty risk, offering us unique insights that provide us with a competitive advantage. We see the need sooner, innovate faster, hire the talent, build the product and source the capital through deep carrier relationships. Our ability to anticipate and meet client demand deepens our relationships with our clients. This flywheel compounds over time.

Two, we operate in a market with secular tailwinds and have shown a unique ability to win share over time. The world continues to become riskier and more complex, driving flow into the specialty and E&S channels. Our clients, both retail brokers and carrier trading partners are growing while consolidating panels. Delegated underwriting authority continues to take share of the commercial market, from 9% in 2012 to 20% in 2025. And healthy E&S share gains supported by strong flow as well as carriers having made a significant commitment to the E&S market.

Together, these trends compound in our favor, but tailwinds only reward those equipped to capture them, which brings me to number three, our talent. We attract, retain and develop the best talent in the industry. We continue to believe we are the destination of choice for the industry's A players. Last year, we attracted the second largest hiring class in our history. As they ramp up, they become increasingly accretive to our growth. We have one of the industry's highest producer and underwriter retention rates. Our culture, our platform and our broad employee ownership keep our best people here.

Four, our commitment to innovation and expanding our addressable market. Our innovation engine aided by insights across $32 billion of premium constantly identifies niches that require unique solutions, creating new sources of growth for our clients and trading partners. We've deepened our capabilities in niches like hospital and health care liability, public entity, sports and entertainment, and many more. We've launched over a dozen de novo specialty businesses with impressive speed to market. As Pat described, we've expanded delegated underwriting authority outside the traditional MGA, MGU practice vertical.

Through unique strategic relationships, we've built Ryan Re, our reinsurance managing underwriter and are on track to place $2 billion in reinsurance premium this year. We've established in-house alternative capital management solutions. We've built a benefits division with distinguished capabilities and products, which are largely uncorrelated to the P&C cycle. And we've invested significant resources into all aspects of alternative risk including captive management and structured solutions. The market is ripe with these opportunities. We have the scale, talent and speed to market to be early movers and scale rapidly.

Five, we have what we believe is a best-in-class M&A engine that has consistently enhanced our growth profile and remains capable of doing so. We've added new talent and capabilities, new lines of business, and enter new geographies via acquisitions since our founding. We remain disciplined in our approach to M&A, only moving forward when all of our criteria are met. A strong cultural fit, strategic and accretive.

Six, our platform is durable, and we believe built to deliver industry-leading growth and strong margins. Years of deliberate reinvestment back into the business has built this platform. With our Empower Program, we are creating more operational flexibility to keep investing in the future, investment that has the potential to widen our competitive moat and supports our goal of modest margin expansion in most years.

Seven, all of these differentiating factors are supported by our disciplined capital allocation framework. We will prioritize investing in talent, which is the most accretive investment we can make. We will be disciplined acquirers. We will return a modest and sustainable dividend, and we will deploy capital toward share repurchases when we believe it to be the best use of our capital.

Lastly, eight, behind executing, delivering and maintaining these differentiating factors since our seasoned and aligned leadership team, the best team in the business. The team that wakes up early every day to outhustle and outwork our competition and support our producers and underwriters to deliver the best possible solutions to our clients.

Turning to our results by specialty. Our wholesale brokerage specialty continues to deliver in the face of significant cyclical industry challenges and property, the market was every bit as challenging as we indicated last quarter. Pricing in many cat exposed and large accounts declined materially as capacity continued to build. And competition remained tough, including from the admitted market. Yet our brokers fought vigorously, one head-to-head had strong renewal retention and captured new business from the steady flow into the E&S channel.

The net of this is a property book that declined only modestly better than our expectations as our performance improved throughout the quarter, notably in June. In casualty, we had a very strong quarter across the book. Strong construction activity in Q1 continued into Q2 as the pipeline we have been building for some time began binding. We saw a better June than we expected, driven by a handful of large project-based wins, including construction and data center activity. As we have said before, this business is inherently lumpy, and the timing of large project bindings is difficult to predict.

We remain optimistic about our pipeline heading into the balance of the year and are well positioned as the leading wholesale broker in the construction space. Broadly, most casualty lines continue to be impacted by social inflation and challenging litigation trends, which continue to support the need for adequate pricing. At the same time, we are seeing more capital looking to grow in casualty, which introduces additional competition beyond what we've been seeing in small commercial and middle market. This is leading to some moderation of pricing in certain pockets. Our professional lines team once again significantly outperformed the market, despite continued pricing pressure, aiding our growth for the quarter.

Now turning to our delegated authority specialties, which include both binding authority and underwriting management. Our binding authority specialty saw heightened competition in the quarter, yet still grew revenue year-over-year. One competitive dynamic to highlight is the increase in new facilities competing aggressively for small commercial business, particularly at the smaller end of the market. We expect these trends to intensify in the back half of the year. As a reminder, our clients use us when they need us. And we are constantly looking to increase the ways in which we are needed.

We've been expanding our services to improve outcomes for our clients and trading partners, which is enhanced by our independents. We are navigating the competitive pressures the way we always do, relying on our talent, our product breadth and expertise and our industry-leading service. Our underwriting management specialty had an excellent quarter with yet another impressive performance across transactional liability, transportation, international specialty, casualty and reinsurance while exercising appropriate discipline relative to current market conditions.

Transactional liability delivered exceptional results, topping our expectations. Growth continues to be supported by a more constructive global M&A environment and the investments we have made over several years. Within reinsurance, Ryan Re also delivered another excellent quarter with strong renewal retention, especially considering the tough pricing environment and another strong yet smaller quarter with respect to the Markel portion of the book. With that said, not everything was in our favor this quarter. Within our builders risk businesses, results continue to be under pressure, consistent with macro pressures we described over the last few quarters.

We are not standing still. We are bringing more product to the market, competing for every account, and we are winning more than our share. RSUM, also launched its own Lloyd's consortium stamp earlier this month. This consortium was about crafting underwriting capital outcomes at scale, delivering efficiency to clients and further monetizing the platform and exceptional underwriting results. Beginning August 1, it will take a 15% line on RSUM's syndicated business, further accelerating our innovation and speed to market.

Now turning to a quick update on our team. We also announced a planned leadership succession at RT Specialty. Brendan Mulshine will assume the role of CEO of RT Specialty, Ed McCormack will transition into the role of Vice Chairman of RT. I cannot say enough about how important Ed has to the founding and building of not just RT, but Ryan Specialty itself. We are grateful he will continue as Vice Chairman, while Brendan is the perfect choice to lead RT Specialty into its next phase of growth.

Lastly, I'd like to update you on our digital transformation and AI strategy. Our strategy remains anchored in the 3 principles we shared last quarter, our clients, our people and our process. In practice, we invest in redesigning workflows that improve cloud outcomes, make our people more productive and make our processes faster and more reliable. Last quarter, we also told you we were building a platform to deploy AI thoughtfully and responsibly at scale. As an example, for our clients, our reinsurance fact workbench, now turns the submission into a price decision ready file in minutes, not days.

And we are extending that capability into treaty underwriting with a platform in just years of prior submissions and claims at a scale or speed that no person could achieve in a reasonable amount of time. For our people, we're putting more tools in their hands. Thanks to a thoughtful rollout strategy, AI adoption and usage are accelerating across the firm. The capacity we are unlocking is being directed back into what matters most, winning new business, and helping our newest talent ramp up faster than ever.

For our process, we've started rolling out a proprietary engine for deploying AI around the firm, built inside our own guardrails and trained on our own data. We started deploying a Agentic AI towards our property inspection process, sharpening underwriting accuracy and reducing cycle times by removing the need for thousands of manual touch points each month. As AI becomes a commodity that anyone can rent, our advantage is the proprietary data and hard one expertise built into our platform that cannot be easily replicated. We are a clear net beneficiary of this transformation and it shows in how our people work every single day.

In closing, we are very proud of our second quarter performance, particularly in the face of a complex and rapidly evolving insurance, macro and geopolitical environment. Our performance is a testament to the resilience and durability of our people and platform. In the face of this intense competition, our teams continue to innovate, differentiate our services and improve our value proposition to our clients. We retained high levels of existing business, one significant new business, expanded our market share and continue to build our pipeline across the organization, each supported by the many factors that differentiate us. We are doing what we do best, controlling what we can control, adapting, executing and overcoming challenging dynamics.

With that, I will now turn the call over to our CFO, Janice Hamilton. Thank you.

Thanks, Tim. In the second quarter, total revenue grew 7.2% to $917 million, driven by organic revenue growth of 6.7% as well as modest contributions from M&A. As Tim described, it was a great finish to the second quarter, with growth supported by better-than-expected results in property, casualty construction and transactional liability. Adjusted EBITDAC grew 6% to $327 million. Adjusted EBITDAC margin was 35.7% compared to 36.1% in the prior year period.

Margins were supported by stronger-than-expected organic growth, disciplined cost management as well as early progress in the operational efficiencies underway through Empower. Adjusted earnings per share grew 12.1% to $0.74. Our adjusted effective tax rate was approximately 26%, and we expect a similar rate for the remainder of 2026. On capital allocation, we repurchased approximately 8.1 million shares or $260 million of our stock and increased our programs authorization by an additional $300 million. We've also repurchased $42 million of shares thus far in July.

We remain committed to strategically investing for the long term. Beyond our modest and sustainable dividend, we view both M&A and our share repurchase program is key priorities. We will continue to do what we believe is right for our shareholders. Based on the opportunities that we are seeing in the market, we believe it is unlikely that we will close a meaningful acquisition in 2026. Rather, we are looking towards 2027.

With that said, if and when high-quality specialty assets come to market that meet our criteria, we will be the first in line and we'll have the capital to execute. We ended the quarter at 3.3x total net leverage on a credit basis, well within our 3 to 4x comfort corridor. Based on the current interest rate environment, we expect GAAP interest expense net interest income on our operating funds of approximately $226 million in 2026 with $58 million to be expensed in the third quarter.

Turning to guidance. We continue to guide to organic revenue growth in the mid-single digits for 2026 and now expect to be towards the higher end of the range. As Tim said, we are conscious of the complex and rapidly evolving insurance, macro and geopolitical environment as we close out 2026 and look to next year. Our guidance embeds continued property pricing declines and heightened competition, resulting in a moderate decline in our property book for the full year. Casualty competition picking up in certain pockets beyond what we've been seeing in the small partial and middle market, a more normalized level of growth in construction projects in the second half, though the timing remains lumpy and hard to predict.

Continued headwinds and builders risk, consistent with macro pressures, and softer binding authority growth with some business moving into the admitted market and pressure from facilities. As a reminder, while it is our smallest revenue quarter, the third quarter represents our most difficult organic growth comparison of the year. On margins, we are now guiding to a full year adjusted EBITDAC margin that will be down approximately 50 to 100 basis points year-over-year. This reflects current and evolving market conditions.

The continued absorption of our talent investments, lower fiduciary investment income, higher health care and benefits costs, offset by disciplined cost management and some progress from the Empower Program. Looking ahead, we continue to expect modest margin expansion in most years. We have and will continue to innovate and create differentiated opportunities for growth that are entirely unique to the scale and expertise we have built.

In closing, we are in a great position through the first 6 months, and I am very proud of our results. I am pleased with our team's execution, continuing to deliver for our clients advancing our technology and AI investments and driving the Empower Program forward with great collaboration.

With that, we thank you for your time and would like to open up the call for Q&A. Operator?

[Operator Instructions] Our first question will come from Elyse Greenspan with Wells Fargo.

My first question is on margin. You guys had guided to a margin in the low 30s for the quarter. You came in better than that. So I'm just trying to get a sense, is that just -- is that a function of the stronger organic revenue growth than you guys had expected? Is there also a change in the level of investments, talent investments you have pointed to? Maybe it's a combination of the both? Hoping to get a sense there. And then what is the driver, I guess, of the margin? The change in the full year margin guide relative to prior expectations?

Elyse, I can take that. This is Janice, thanks for the question. Maybe I'll just start with the performance for the quarter. So as you noted, the stronger-than-expected organic growth is a significant driver of the margin beat for the quarter. On top of that, last quarter, I mentioned that we were going to be focused on expense discipline and cost management. And that is another driver of the beat this quarter and part of what we're anticipating for the full year, which I'll come back to.

And then also, really starting to work through some of our Empower actions. I mentioned last quarter that we intended on getting ahead on accelerating some of those activities. And so early days still, but some of that also plays in. Maybe just to touch on a reminder for next quarter, it's going to be our toughest comp. But it also is the quarter of the last quarter really where we're lapping a significant talent investment. Those all came in towards the end of the third quarter, beginning of the fourth. So it's our last full quarter from that perspective. The full year guide, we've raised that 50 basis points on both ends. That really reflects, again, the organic growth, but also the anticipation of those cost savings measures and power.

So then my second question is on organic growth. I recognize you said right, the high end of mid-single digits now for the year. You guys had a strong second quarter, right? So being at just under 9% for the first half of the year, does imply, right, a slowdown in the second half. I'm just trying to get a sense of greater sense of just how you guys are thinking about the second half? And then is it fair to assume that maybe the biggest wildcard is just what happens on the construction side? I think, Janice, right, you said that, that's lumpy and you guys are expecting that to slow in the second half of the year?

Yes, Elyse, I think Tim said it best in his opening here that we're still monitoring a number of different uncertainties when we think about the broader macroeconomic uncertainties, when we think about geopolitical but also the broader insurance market. And specifically within our guide, you touched on the expectation and what I noted that from a construction standpoint, we had a very strong quarter. All of the activity really picked up in the month of June. We're expecting that to be more normalized for the remainder of the year. So that's going to be a component of it.

Also on the property front, still expecting to see a lot of the pricing headwinds and the competition. We talked about that last quarter, continue to see it a bit from the admitted market as well. And then in casualty overall, last quarter, I commented on construction -- sorry, I commented on the competition impacting the small and middle market side, what we are anticipating for that to go a bit beyond and that was what Tim said in his remarks just now.

And then we still continue to face pressures within the builder's risk line of business. We've talked about that in past quarters, but the broader macroeconomic uncertainty certainly continues to create a headwind for us there. And then Tim also mentioned the additional competition that we're facing in the small commercial area led by the influx of facilities. So when we think about the second half of the year, there's a number of uncertainties that we're facing that's built within the guide. I just commented on the fact that third quarter for us is going to be a difficult comp over last year.

As a reference point, we grew property last quarter -- sorry, last year in the third quarter. Currently, that's not the expectation for this quarter, this Q3. And then we also had great growth on the underwriting manager side in transactional liability, structured solutions, reinsurance and those really create a tough comp for us. Overall, as we did this quarter, we're going to continue to make sure that we're out working and out-executing competition focusing on what we can control, and that really drives our sentiment in the higher end of the range.

Our next question will come from Andrew Kligerman from TD Cowen.

I'm coming through.

Yes, you are.

Excellent. I just want to follow up on the prior question because the math, having grown about 9% last -- in the first half of the year, you can achieve your higher-end mid-single digit, meaning 6% growth with less than 3% in the second half. And Janice, you outlined about quite a few headwinds. And I think with Tim's commentary around the moderating of pricing, I'm wondering, could you frame where you see pricing going very broadly in E&S casualty? And with that, are you actually thinking that 3% is where you're going to kind of land in the second half of the year to get high single-digit organic growth?

Well, thank you, Andrew. Tim Turner here. I'll take a shot at the first part of that. The casualty market remains generally speaking, firm, although it's bifurcated. There's competition in certain segments that is expanding, others continue to firm, frankly, transportation, habitational, sports and entertainment, certain parts of health care, and of course, public entity and human services continue to firm for us. But there's others that we see some softening. Small and medium hazard risks, as an example. Professional lines, another real positive for us. We outperformed the market and had a stellar quarter. So it's really by specific product line where we have to break it down. But generally speaking, it remains firm, but we expect more competition. Construction is another headliner for us. but we do see competition around the edges.

And so around that 3%, is that where you're framing it? The organic?

Andrew, I think you've done the math to back into what that looks like for the second half of the year. We're trying to provide some of the uncertainties in the context for what contributes to that guide from a different perspective when we think about from a downside perspective, relative to the range, that's where we're talking about some of the property pricing pressures going beyond our expectations. And then also if competition in casualty rapidly intensified. Tim talked about a lot of the drivers of what might drive prices further, from a hardening perspective, but we are seeing competition intensify across casualty and that could lead to further downside risk.

So we have to factor that into our guide. Alternatively, from a property perspective, if pricing moderates, that will be a benefit. And we do continue to have a strong pipeline, both on the construction data center and transactional liability for us. So all of those pieces have to come together when we're thinking about how we put the guidance together for the remainder of the year.

Got it. And then just my follow-up is around -- Tim, your commentary around captive management, employee benefits and other areas that might not be cyclical. What proportion of your delegated and wholesaling businesses are kind of tied to those areas where you might be outside of the kind of cyclical pressures that we're seeing across P&C?

This is Pat. We have reinsurance underwriting, which we have now had been building for the last 5-plus years, working closely with nationwide mutual. That capability of our talented underwriters blended with a nationwide brand has just continued growing market acceptance. So that is a line of business that we have been building as a true differentiator. We consider a true moat because it's very difficult for anybody to get a relationship with a carrier like nationwide with that balance sheet and credit rating. And then get the talent to be able to be a leader in that space.

So that is one alternative risk, which is feeding and fueling the interest of clients who want to put up some of their own capital in order to get more capacity than the market will provide or in some cases, they just don't like the pricing. And so that, again, is reinsurance behind their capital. So these are we think a very differentiated lines of service for our clients that we have.

I would add the next one is benefits. And benefits is kind of cyclical in the pricing cycle to P&C. So it gives good balance. Now I want to be clear that these are all new businesses, essentially, de novo, a little bit of investment in benefits in terms of M&A, but it's modest. But they were all designed to balance our firm against inevitable softening of the E&S, P&C market. And although they're much smaller than wholesale distribution and smaller certainly than our underwriting management businesses under what we call RSUM, discrete MGUs and programs, they're not becoming quite material in terms of contribution of incremental growth, incremental margin, incremental earnings per share -- EBITDAC per share.

Our next question will come from Alex Scott with Barclays.

This should be working. So the first question, I wanted to see if you could talk a bit about the RAC Re and just its contribution to growth this quarter, how we should think about how much it contributed in the first half relative to what you'd expect in the back half and so forth?

Yes. No, thank you for that. This is Miles Wuller. So we don't disclose the exact levels. But what we want to note is we feel structures like RAC Re, our alternative capital practice that has been in operation for about 18 months and investments in our traditional capital management practice, which is we had a headline a few weeks ago, launching our own Lloyd's consortium stamp in that marketplace. All of those are deliberate efforts to monetize this great investment in our platform, our results and our central underwriting structure around that.

So they also -- I want to add there's direct economic result in new revenue, it's converting at a high margin, but perhaps equally or more important is accelerating our speed to market as we can become -- as we have more aligned capital to our outcomes that's familiar with our overall syndicated portfolio. We're able to innovate faster, build faster and respond to market dislocation faster. So I apologize, we can't share an exact number, but it's an exciting and growing part of our business.

Got it. Okay. Follow-up question. I wanted to ask about just general concentration in your business around construction. How do we think about that? I guess in the construction line, are you seeing any impact from potentially higher inflation from some of the things going on in the Middle East? And are you seeing any kind of changes in the recent trends in that business as we think about 3Q?

No, actually, Alex, it continues to be a steady, heavy flow of business, especially in the in the renewable construction book, the general contractors, the subcontractors, the artisan contractors, the renewable annual renewable book is a large part of our construction success. The projects themselves are lumpy. We've mentioned that the data centers, the large infrastructure projects. Our pipeline is very full, very strong. The submit to quote to buying process is moving along very smoothly. They just sit a little bit longer as we await finding instructions.

And so we had some very meaningful success in the second quarter in binding some large projects, and we see that continuing, but we have said before, it's lumpy. It's hard to predict when they'll actually bind. But again, we believe we're industry leading in that specialty practice group. So we're winning a lot of head-to-head battle. We're getting market share. And I think the outlook is very positive for us in construction.

This is Pat. I'll add one thought to that. We consider these construction projects, recurring income. They happen to be different risks, but they recur from the same source. So it's a great differentiator for us. We really believe we have the best talent, the expertise to work with the retail brokers to specialize in construction, and they are the larger brokers. And so we have very strong trading relationships. So it's recurring. It's just projects.

Our next question will come from Brian Meredith with UBS.

So first question, I want to talk a little bit about the durability of the growth you're seeing in the underwriting management business and also narrow in a little bit on what are you seeing with respect to your appetite or demand to commit capital as well as alternative capital of that business? And then the other side, as we're getting the more competitive market and you're looking at the business, what's your appetite to receive more capital in that business?

Thank you for that. This is Miles. So I'll talk about growth and then an appetite. So we're successfully finding growth through all the key levers I've mentioned in the past, and that would be an emphasis on new product launch, product and geographic expansion, certainly more capital under management. Our results and alignment and the scope and scale of our platform has drawn significant interest in partners, both traditional and alternative. We've seen a steady increase over the last 12 to 18 months. Realistically, we've talked about it in the past.

Carriers are seeing record levels of returns. It's driving flush balance sheets that are looking to be deployed in the E&S channel. I mean I think we've done a great job helping validate the E&S marketplace as the environment for carriers to get the risk-adjusted returns that they deserve on the highest hazard monoline risks. We're still finding growth on top of that new product just by core efficiency. And my colleagues mentioned it in the opening, but I want to tack on that certainly our investments in AI and machine learning, which we've been speaking about for 3 or 4 quarters are starting to deliver measurable efficiency outcomes in certain lines, perhaps most notably property.

So there's, without a doubt, rate headwinds, but there's countervailing efficiency headwinds on top of new products and more capital. So the average RSUM property employee, and this is property employees, not just the underwriters achieved 11% more quotes per head in the last 12 months than the prior year. So that certainly includes hustle, but it also represents our investments in automated data extraction, data structuring enrichment and rating prepopulation coming to life. So we're excited about optimizing our core platform as well as new products and certainly new verticals, as Pat touched on.

That's helpful. And then my second question, I'm just curious, thinking about 2026, you've had a couple of nice tailwinds, be it the Markel business coming in, be it RAC Re, that's really helped your organic growth. How do you think about 2027? Or what are you thinking about your ability to overcome some of those, call it, tailwinds you've had this to kind of continue to drive, call it, mid- to high single-digit organic growth in 2027? Is it achievable?

Brian, I'll start that one. And then, Pat, if you want to add to it, feel free. But effectively, when we think about '27, obviously, we're not going to be guiding where we are from that perspective. But I think Pat and Tim really outlined where we see the growth drivers of our business. And when we think about the secular trends that we've talked about on our prior calls, that's effectively the starting point for how we think about our growth. Layering on top of that, the scale that we have, being #2 and #1 in wholesale and delegated respectively, the vantage point that, that gives us to be able to see new and unique risks coming into the channel and develop products through the innovative solutions and expertise that we have within the organization.

All of these factors really lend themselves towards making sure that we can control our destiny and that we can ensure that we're really focused on overcoming some of the headwinds, some of the cyclical headwinds that we've been talking about thus far. So the combination of cyclical -- the secular trends, our talent, the innovation that we have, all of those really lead us towards industry-leading growth, as we've said before, in addition to having strong margins. And we're really proud about how we think about formula and how we look towards 2027 even in light of some of the transitioning and changing market trends that are out there.

And Brian, you mentioned Markel Re?

Brian, any other follow-up?

Yes, I thought Pat was talking about the Markel. It's exactly entailed. And I was also just wondering about...

We are looking for -- as I mentioned, we believe we have really differentiated value prop to bring to our clients in terms of outsourced reinsurance, managing underwriting, a combination I articulated. We're looking for more opportunities like that. We've provided a great service to Markel. It's a wonderful opportunity for nationwide mutual and a great opportunity for us. And we're out scouting other opportunities like that. For us, that's a de novo opportunity. It's -- we take on HR obligations, but that's it. Then it becomes a matter of the talent that we bring to help the reinsurer, the subscale reinsurer solve that problem. And there are people out there that are candidates for the change. So we're on the pro.

Got you. I guess what I was trying to get at for [ 20 ] is all this talent that you've been investing in? And would we see that kind of as a tailwind in 2027?

The talent that we acquired last year, that for us, from a margin perspective, has been a headwind, but it's been accretive to our organic growth from day 1. And you're absolutely right, that is a component of the growth that we anticipate in 2027. I didn't explicitly call it out, but talent is certainly an element of how we think about the building blocks for 2027 and beyond organic growth.

Another part to that is we were able to bring in 42 really solid professional reinsurance underwriters with the Markel Re deal. We took the HR risk but it's been very, very successful, and we're very pleased to have that incremental increase in our talent and reinsurance underwriting. So it was a win-win-win.

Our next question will come from Rob Cox with Goldman Sachs.

Yes, I just want to ask the underwriting management segment. If you could talk a little bit about how the firm is exercising discipline just given some of the property pricing in the market? Are you growing exposure in property there outside of some of these larger RAC Re, Ryan Re deals? And if so, where are you finding opportunity?

Yes, Rob, it's Miles. Thank you for that. So I'll start with discipline and talk a little bit about the environment. So I want to emphasize discipline lives with us daily. So really Ryan's $12 billion delegated platform wins through standard of care, alignment and the material investment in our platform and people. And that spans the front line in our mid-office governance apparatus and throughout the executive team. I've touched on these in the past, but we have multiple prongs of alignment to our partners. So our underwriters and executives have a substantial portion of their bonus related to profit commissions, which is aligned to the carrier profitability.

We have a real-time underwriting governance mechanism monitoring rate, frequency, severity and returns, and that's allowed us, and we've proven that the output is we're proactively shaping the profile of our overall portfolio. And proudly, with both investment and augmentation of AI, we're auditing 5x as many files as we did last year. And we're increasing the probability of getting to the right files within that subset. So I think that is ingrained in our culture.

Further, our staff have an owner mentality and are aligned to protect our investment in Geneva Re, which although modest, is perfectly aligned to the results of our other syndicated capital partners. On the capital deployment. So yes, the reality is we are attracting incremental capital. And -- but what we're doing, Rob, is we're in a constant dialogue to fit to the carriers' appetite and return profile. So the opportunity set is different. But I think I talked about our execution, but within that, our portfolio analytics.

So our cat portfolio tools, we believe our industry leading. We've gotten that feedback from some of the blue-chip capital that supports us. But we have the ability to perform real-time marginal impact analysis across our portfolio. We understand the exposures exceptionally well. We can make informed decisions. We just deploy capital at scale. And so we're looking to arbitrage concentrations and geography and scale. Not all risks are created equal. We think we can sift through the right ones and use them to optimize the balance of our portfolio. So we are still finding select growth in profits, but we are very measured and we're very aligned to the risk return expectations of our capital providers.

Got it. And then I just wanted to ask on submission growth. Submissions still seem pretty strong in the E&S market. So I was just wondering if you could talk about what you're seeing from a submission perspective and really how that's changed since the hard market.

Well, it continues to grow, Rob. The stamping offices are one metric check that we get to see the larger states. There is a little bit of a slowdown on the new flow, but it's still positive, still growing. We're capturing more of it, as we've alluded to. We look at the non-admitted market to be 24% or 25% of the overall commercial market. So it remains very strong.

And one point I'd like to make is we don't expect the market to recede and to soften like it has in cycles gone by because of the structural change in that most large admitted carriers now own a non-admitted surplus lines company. And that business is where it belongs. It's in a place where they have freedom of rate in form. And we don't see a lot of it migrating back into the admitted market.

There's constant niche firming phenomenons going on that continue to create dumping and shedding of new business opportunities. And with our $32 billion lens, we see that change in the market before our competitors do. We can move in quickly with our de novo facility machine, and we can create proprietary product that helps us get an edge on capturing that new business. So we see those phenomenons continuing. And while the flow has slowed a bit, it's still growing.

And then just to put a finer point on that. The flow is slowing largely because of the pricing headwinds. But from an item count perspective, those continue to grow, and that's really where the opportunity is for us, right, to continue to work for those new accounts and buying that new business. And so that's really the distinction between the premium metrics that we're seeing and the real underlying.

Yes. Great point, Janice. The item counts significantly up, Rob.

Our next question will come from Tracy Benguigui from Wolfe Research.

On a seasonality perspective, the second quarter is your largest property quarter. So I thought it's worth unpacking more of Tim's comments that property book declined only modestly better than your expectations throughout the quarter, notably in June. Can you elaborate what is driving that? Is it -- we're hearing about a lot of capacity in the property market. Are you seeing less of that or greater insurance demand? Or is it just simply a change in your business mix? And if you could touch on if you're seeing similar trends in July?

I think what we experienced was our quality and the performance of our property brokers was much stronger than we expected. They were winning head-to-head more frequently, retaining business. Our retention levels were high. And so while the prices on the cat book were down as much as 25% or 35%, we are hanging on to the business and again, winning new business. So we were surprised that the book declined mostly, so much better than expectations, and we applaud the performance of our property brokers. And we remain optimistic that we could be a storm away from a reaffirming. The wildfire season is coming. There's lots of other perils that can drive a change in the marketplace. So we're on the edge of our seats. We're poised and ready to pounce on new opportunities, and we're confident that our team will get market share when that happens.

Great. And on the structural changes discussion, that's very fair that admitted writers have E&S paper as well, so that could limit reverse flow. But what about the fact that there's just so many more E&S players right now? It looks like the start-ups growth has outpaced the incumbents. How does that change your outlook?

The number of new E&S players as noted, and there's more capacity pouring into the non-admitted channel. That's a good point. And so there is competition, and we see it alive and well on property. It's not the business isn't leaving the non-admitted channel. It's ferocious competition from additional surplus and additional capacity. We don't see that in other lines necessarily. There's always competition. There's always new facilities.

However, most of them remain wholesale dedicated. So we have a lot of control over the marketing exercise as we get a lot more opportunities with the new capital, and we use it to win. So we don't see it as detrimental, although it has aided in the softness in property. Again, it's not going to the admitted market. It's inter-E&S competition that's driving the price.

Tracy, I'd like that. It's Miles. We see those new E&S carriers as client opportunities for both underwriting and RT. So RT is obviously delegated distribution for those E&S carriers. But many of those new E&S balance sheets are looking to delegate to shops like Ryan Specialty underwriting manager for access to specialty underwriting. So the capital is real. The rate pressure is real, but it's a net positive opportunity set for -- across Ryan.

Okay. This is Pat. You've been very generous with your time. Excellent questions. Thanks for your support and interest. We're all working hard. We're proud of what we achieved in the quarter. Proud of the team. Tim just summed up that they outperform our expectations, and we have high expectations for them. So thank you, and we'll be seeing you -- many of you over the next 90 days, but see you, hopefully, all of you in 90 days. Thank you.

Thank you for calling. You may now disconnect.

We are lucky enough to have Ryan Specialty, great way for me to kick off the conference. Please see disclosures on our website, I think, for any of the appropriate disclosures. I'll say 2 words, but then hand it over to the team.

Ryan, which I've known for quite a long while, Ryan Specialty, and lucky enough to have Pat Ryan with us. It's a very unique company in a large but commodity industry. Ryan is a specialty distribution company in that itself, you have a lot of companies will call them specialty, but Ryan is very unique. Not only are they the market leader, but in a business that is changing a lot, and when I say changing a lot, the specialty business, insurance is becoming more complex, more risk-oriented. You need more innovative structures. And Ryan is -- and it's tough to understand and hopefully, they'll give you some clue, but it is actually probably one of the most innovative companies within insurance. And so as the business is changing, that innovation really matches where the industry is going.

So with that, I'll turn it over to the team. We have Pat Ryan, Tim Turner, Miles and Janice. And they'll tell you a bit more about Ryan. Thank you, guys.

Thank you, Adam. It's great to be back at the William Blair Conference. Great to see so many familiar faces. Good morning.

16 years ago, I had the good fortune of meeting Pat Ryan and helping him build Ryan Specialty into the largest publicly traded specialty services firm in the world. Pat's founding thesis was simple; provide innovative specialty insurance solutions to brokers, agents and carriers. We've expanded this platform far beyond wholesale broking, as many of you know, and have created a true specialty insurance firm. We built one of the most efficient and effective insurance distribution platforms in the world.

Through RT Specialty, the second largest wholesale broker, we've assembled world-class expertise across industry verticals, serving global retailers as well as the tens of thousands of retail brokers in the U.S. Through Ryan Specialty underwriting managers, we've created the largest delegated underwriting authority platform in the world. RSUM delivers leading underwriting solutions supported by strong alignment, governance and distribution at scale. Together, RT Specialty and RSUM form a distribution engine of unmatched scale, sophistication and breadth in the specialty insurance market.

Today, I want to focus on 3 distinctive points: Our platform, our talent and our innovation. And here's what matters most. We built this platform to thrive through the cycles. As you all know, the insurance business operates in cycles. I've been through 3 full cycles in my career. Pat has been through 6. So we understand the details and the specifics about the cycle in property and casualty in particular. But for many reasons, this cycle is different, harder for longer on the way up and much faster on the way down, particularly in property. As many of you know, we operate in a very narrow niche in the specialty E&S world.

And as we've repeatedly said, given our position in the market, we see trends faster and stronger than most in the broader industry. We're transparent with investors about what we see. At a very high level, not much has changed since our last meeting and our earnings call just over a month ago. Property pricing remains under pressure. We see a bifurcated casualty market with steep increases in high hazard lines with more competition in small and medium hazard accounts. And we're seeing some admitted reentry in small pockets of binding authority, small commercial. But again, we built this platform to thrive through the cycle.

Today, the platform is dramatically larger, more diversified and more durable than it's ever been. We are an industry leader operating with scale, and this gives us a true competitive moat and advantage. We now have 1,200 specialty brokers and 900 specialty underwriters across the firm, dealing with 700-plus carrier trading relationships, including Lloyd's, 35,000-plus retail relationships across the globe. Last year, we placed $32 billion in premium and thousands of daily touch points with our carriers and our broker clients. Through our focus on talent and innovation, both of which I'll dive into next, we've expanded our total addressable market and our offerings. We have added capabilities in new lines of business. We have dramatically increased the breadth and depth of Ryan Re, our reinsurance MGU. We have established in-house alternative capital management solutions. We've built a Benefits division and distinguished capabilities and products, which are largely uncorrelated in the P&C cycle. And we've invested significant resources into all aspects of alternative risk, including captive management and structured solutions. The diversification we've achieved is significant, but it's much more than that. We believe this strategy is true to our founding thesis; serving brokers, agents and carriers.

The result of this strategy is a more resilient business model and the creation of unique assets, unique assets that drive stronger, more durable organic growth over time. None of this would be possible without our people. We are a destination of choice for the industry's A players. Our platform represents an earnings potential for brokers and underwriters that exist almost nowhere else at this level. We are committed to recruiting, training and developing of talent, as you know. And just late last year, we struck while the iron was hot, and we made our second largest talent investment in our history, dozens of experienced hires from across the country. As this talent ramps up, it is accretive to growth in 2026, much more in 2027 to come and will aid margins by year 2 or 3. We have one of the industry's highest producer retention rates. Our culture, our platform, our equity ownership keep our best people here in place.

Turning to innovation. These A players are out there identifying the next niche firming phenomenon that will exist. We just see that much sooner than our competitors. In just the last few years, we have launched or scaled our capabilities in a few areas. Hospital and health care liability was a big one for us. We now have over 100 dedicated professionals in this space alone as the market continues to firm. Public entity on the casualty side, building $100 million towers for municipalities, social and human services and law enforcement. Sports and Entertainment, Division 1 and Division 2 universities now accessing the market through our proprietary products and our expertise. And on June 1, we launched a worldwide energy facility, addressing increasing volatility in the global energy market. We're able to scale up delegated authority, reinsurance benefits and alternative risk much faster in today's environment. As a result of our talent and scale in this platform, our speed to market and execution is unmatched. The market is ripe with these kind of opportunities, and we are constantly expanding into new niches.

Turning to AI, which we discussed at length during our first quarter earnings call, we believe our business will be a net beneficiary of AI. Our data is our advantage and with real-time insights through thousands of daily interactions with hundreds of carriers, we believe there is a lot we can unlock. AI accelerates the development of our brokers and underwriters. What used to take a junior broker 2 years to learn through experience, they will be able to access in months. AI is making submission ingestion dramatically faster. More flow gets touched, more business gets placed. And as a result, our data advantage continues to compound. Like every prior technology cycle, the value migrates up the chain to those who hold the experience, the relationships, the data and the judgment, and we're in that seat.

To summarize and set the stage for Miles, the market is shifting, but our platform is doing exactly what it was designed to do. We built one of the best insurance services platform in the industry, driven by our world-class talent. We have specialized intellectual capital, data and unique trading relationships at scale. We created incredible trust and significantly deepened our relationships with our clients and trading partners. And our specialized expertise in wholesale and delegated authority provides the same clients and trading partners with differentiated value and innovative solutions. We believe this provides us with a tremendous runway for continued growth for years to come. We are delivering strong growth in a tougher market today. We are laser-focused on continuing to innovate with new products and solutions that position us to come out of the cycle even stronger.

With that, I'll hand it to Miles to talk about our delegated authority business. Thank you.

Well, thank you, Tim. And as you mentioned, the build-out of our delegated authority platform and capabilities is part of Ryan's thesis since day 1. Over 16 years, we've led many of the structural changes that have driven the growth and the adoption of delegated authority across the industry. Those changes include, but are certainly not limited to our multibillion-dollar investment in professional talent and our platform as well as our standard of care, alignment and deep understanding of the fiduciary duty that we bring.

Ryan Specialty's underwriting segment is recognized as the largest in scope, scale and capability. And further, we consider ourselves the most diversified platform and the most structurally aligned MGU in operation today. There's been a lot of attention recently on the discipline of the broader MGU market space based on the amount of capital coming into the industry. Inevitably, firms without our level of discipline, investment and control framework may well falter. But I'd like to remind you of how our model and our results have differentiated ourselves and allowed us to expand for 16 years straight. We actually believe that disruption in this space would likely trigger a flight to quality for that capital looking to align itself with our differentiated results over our 16 years.

In key detail, Ryan's specialty underwriting management business is specialty by design, led by industry veterans, operated by underwriters with deep class expertise, aligned with our carrier partners to deliver underwriting profit, growth and scale and most importantly, supported by Ryan's long-term view and substantial platform -- our investment in our platform, pardon me. The world's most sophisticated insurance capital providers are vetting our results and choosing us as their partner. 97% of our capital comes from A or higher-rated carrier partners. Every day, our job is to be a disciplined steward of this capital.

Investors have been increasingly asking us where we draw the line when other capital is chasing the returns. And I'd like to share some of that data with you. We've proactively slowed down in certain lines or even shut down MGUs in the past. Our yacht book, as an example, during COVID, we walked away from a $40 million block of business due to loss environment changes. There was increases in frequency and severity. We were unable to push the level of rate that the market required, and we proactively exited the line. That's not theoretical. That's practice discipline in action. We've walked away from bloodstock. We've massively curtailed our security guards book. We've exited franchise hotels. But turning that into how we look around the corner proactively, we returned to municipal liability, as Tim touched on, due to rapid rate improvements after we exited the underwriting segment 10 years ago. As a result of property cat pricing recently, we lean away from accounts that don't meet our return thresholds, and we lean into areas with better risk-adjusted returns. We're in a perpetual dialogue with our capital providers about their risk tolerances and expected ROEs in this dynamic marketplace. Our governance and central underwriting team give us the confidence to make these decisions.

We've been investing in this institutional infrastructure for years. [indiscernible] focused on pricing, serving [indiscernible], data science, advanced AI and most importantly, quality assurance. Complementing that is the Ryan infrastructure in legal, compliance, regulatory, finance. The output of these investments is an underwriting platform that speaks the same language as a carrier, proactive views on risk adequacy, real-time insights on frequency and severity, form wording and claims expertise that's almost unparalleled.

And on AI specifically, we're building this platform to mimic great asset managers, quant data scientists, tech advantaged speed to market and rating insights. Our goal is to make our underwriters a multiple faster and make incrementally better risk decisions every day. This work is well underway. And as Tim said earlier, the markets in transition. Traditionally, carriers pull back on delegated authority in hard markets and deploy more capital via MGUs in soft markets. We've been defying gravity in all markets since inception. We attracted substantial new capital to our platform during the last hard market. And as the market is transitioning the other way, balance sheets are lining up for even more help deploying underwriting capital. Our differentiated results and capabilities set continue to attract more capital. We are built for this. We have a robust pipeline of carrier and alternative capital looking to deploy through us, and we'll only deploy in areas that meet or exceed our agreed-upon capital thresholds.

Turning to our growth drivers. The growth drivers for RSUM remain consistent and sustainable, launching new verticals via MGUs and firming niches, building tangential product lines within existing MGUs, geographic expansion and increasing capital under management through our partner network. Carriers continue to want to deploy capital through us, one of the few that can deliver innovative solutions at scale. We're building into the white space, including reinsurance, benefits, alternative risk and alternative capital management, which it's worth reminding are all outside the E&S framework.

Quickly zooming into our reinsurance underwriting business, Ryan Re. We had an excellent 1/1 renewal season and exceeded our internal expectations in the first quarter. The Markel reinsurance renewal book performed exceptionally well, strong client retention and expanded relationships across casualty, specialty reinsurance and London markets. Our core non-Markel book also delivered splendidly, especially given the pricing environment through disciplined account selection and leaning into better risk-adjusted accounts. Ryan Re is now a scaled, diversified reinsurance underwriter with significant runway ahead.

In closing, we believe we're exactly where we need to be, the largest delegated underwriting platform in the world with the infrastructure, expertise and discipline to navigate through a transitioning market. We have the innovation engine and executive management team to keep building into the white space within and beyond the E&S marketplace. Our leadership position and unique market outcomes are supported by an incredible team of talented professionals and durable relationships with brokers, agents and carriers around the world.

Thank you so much for your interest. And I'd now like to hand it over to my colleague, Janice Hamilton.

Thank you, Miles. Tim walked us through our market position and platform. Miles outlined our delegated authority strategy. I want to spend my time drilling down on our key investment highlights.

First, putting a bow around what Tim and Miles described as our growth drivers across the cycle. Then our focus on investing in the business while delivering modest margin expansion in most years. And lastly, capital allocation as we continue to talk about some of the news from last week. I'll then wrap it up with a few comments on our 2026 guidance, which before anyone asks the question, remains unchanged.

To start, I want to cover the drivers of our growth over the medium term. It comes down to 4 pillars that define our platform. First, we are an industry leader with scale, operating where the structural tailwinds are. Many of you should be familiar with these. We are the #2 wholesale broker and the #1 delegated authority platform. The world continues to become riskier and more complex. Carriers have made a significant investment and commitment to the E&S market, both of which have driven the E&S market to take share from 7% to 26% of U.S. commercial insurance over the past 25 years. Additionally, our retail broker partners continue to grow organically and through M&A. Panel consolidation is intensifying, and we believe we are in the early to mid-innings in delegated authority and wholesale broking, respectively. As Miles said, delegated authority continues to take share of the commercial market from low single digits now up to the mid-teens. Together, these trends compound in our favor.

Second, we attract, retain and develop the best talent in the industry. Our people are the business. We have over 2,000 combined brokers and underwriters. We believe we are the destination of choice for the top talent and acquisition targets. We are attracting talent. Our 2025 hiring class was the second largest in the company's history. And we have a great training program, Ryan University, that allows us to manufacture homegrown growth-oriented talent. And we keep our people. Our producer retention is 96%, and we believe that it is industry-leading. Further, broad employee ownership aligns our team with shareholders. And our platform offers producers and underwriters unmatched earnings potential.

Third, we have established an innovation engine that creates new differentiated sources of growth supported by our entrepreneurial and empowering culture. We innovate alongside our clients and trading partners to deliver unique solutions. We have launched more than a dozen de novo specialty businesses with industry-leading speed to market. Within our delegated authority platform, we have built a reinsurance MGU, Ryan Re, as well as an in-house alternative capital management capability. We've expanded our TAM into newer, less cycle correlated areas like benefits and alternative risks. And we have launched strategic alliances that we remain encouraged by the momentum of. And we are accelerating our digital and AI strategy built around 3 principles: Our clients, our people and our processes.

Put all of that together, structural tailwinds, our talent and our innovation engine, and the result is the fourth pillar, a unique set of scaled assets and trusted relationships that compound our competitive advantage. It begins with our proprietary data advantage, $32 billion in premium flowing through our platform last year, with real-time visibility into appetite, terms and pricing across the specialty market. This is amplified by the depth of our relationships. As the #2 wholesale broker and #1 delegated authority provider in the world, we've gained the trust of 700-plus carriers and over 35,000 retail broker clients. These deep relationships are built on our track record of trusted execution and profitable underwriting results. And this opens the door to emerging growth opportunities and delivering solutions where we see the market need, some of which Tim mentioned, and we believe very few others have the scale to deliver on. These growth pillars result in a diversified and resilient business model with strong recurring revenue and client retention that is exceedingly difficult to replicate by any of our competitors.

Turning to margin. With the goal of improving operational efficiencies through our Empower restructuring program, we are creating the operational efficiency and flexibility to continue investing in growth while delivering modest margin expansion in most years. On capital allocation, we have been busy. On our last earnings call in April, Pat made a clear statement. We saw a significant dislocation in our valuation. And when the window opened, we would be significant participants. In the first 14 trading days after that window opened, we repurchased $260 million of Class A common stock following $40 million in the first quarter, exhausting our $300 million repurchase authorization. And last Tuesday, we announced that the Board approved an upsize of the program by an additional $300 million, bringing the total authorization to $600 million, with $300 million remaining available. That is an expression of the conviction we have in our platform, in our people and in our long-term outlook. We remain committed to strategically investing for the long term organically and inorganically while also purchasing our shares when we believe it to be the best use of our capital.

On the balance sheet, we ended the quarter at 3.3x total net leverage on a credit basis. We continue to expect to delever through our earnings growth and free cash flow generation, and our cash flow profile remains strong. The last point I want to hit is our outlook. For the full year of 2026, we are maintaining our guide of mid-single-digit organic growth with adjusted EBITDAC margin contraction of 100 to 150 basis points. For Q2, we continue to expect near 0 organic growth, driven by the external trends impacting a property-heavy business mix with margins in the low 30s. Our outlook remains reflecting the trends that Tim described, which have not changed since our April earnings call. As Tim said, given our position in the market, we tend to see these trends earlier and faster than most of the industry, and we believe that our outlook reflects these trends and what we're seeing. That transparency is extremely important to us, and it's how we've always operated. Importantly, the underlying vital signs of the business remain healthy. Submission activity is strong, new business wins are accelerating and retention remains solid.

To sum it up, we are an industry leader operating at scale. We are supported by our talent, our innovation and the creation of unique assets. These growth pillars result in a resilient, diversified model with strong recurring revenue and client retention. We are committed to investing in growth while delivering modest margin expansion in most years, and we have a capital-light model with a disciplined capital allocation framework.

And with that, Adam, I'll turn it back over to you for any questions.

Great. We have 3 minutes. I'll ask one question. And then if you have any questions in the audience, we'll probably have time. Pat, if I can ask you, I think Tim mentioned that you've seen at least 6 cycles in your time. And I think if I remember correctly, Ryan grew pretty well through the last soft cycle. The market was pretty soft back in, I mean, like '13, '14 through '19, Ryan grew pretty well. Can you talk about why you grew through that cycle and why you think you'll continue to grow through this, when say, soft cycle that we're in today?

Well, I think the big difference is that it grew so rapidly in the hard cycle and then just came down very rapidly. So those comps were difficult. But the key thing is that the risk profile hasn't changed out there. It's very, very risky. Cyber is going to be a much bigger risk now with AI. Certainly, we've had benign wind seasons, but we've had a lot of other catastrophes. So it's a ride through that cycle. But the innovation that we've had in developing new products and new solutions and new markets, new trading relationships. So we've been able to grow through new business and the new business comes from the experts that we have in these verticals, but also new product innovation.

Great. Time for probably one question from the audience, if there's any brave souls out there.

[indiscernible] mentioned that E&S has gone from 7% to probably [indiscernible].

No, I think those numbers are really accurate. In fact, we just saw some stamping office data from the top 5 states just yesterday, and the growth was 7%, I believe, first quarter, and it's come down to about 6%. So it's still growing versus the admitted market that's only growing at about 4%. So our outlook is really that there'll be more E&S business, maybe not at the same rate of growth. But we don't see an impactful amount of non-admitted P&C business going back to the standard market. And we've made our case about the structural change in the market, i.e., when it was 7%, there were less than a dozen wholesale-only dedicated P&C markets. Today, there's over 110.

So big companies like Chubb, AIG, Hartford, Travelers, almost every big brand name has either bought an E&S company or built one. And the relevance of that is that, that gravitational pull in the cycles gone by where they could get rate adequacy and pull the business back, they're not doing that. And we don't believe that's going to happen in a marked way. There'll be some business that goes back when the rate adequacy is there, maybe medium hazard business, but the high hazard business that we specialize in is too volatile. And we believe that most of it will stay in the E&S market.

[indiscernible].

I wouldn't go out and say that it wouldn't come down a point or 2, but I don't think you'll see anything like the cycles we've seen with the volatility and the swing in that business for all the reasons I just stated. So I expect it to stay fairly high as it's been for really the last 4 or 5 years. And again, it's growing. With headwinds in the market. It's continuing to grow. And so again, all the volatility that we go through in these practice group verticals, the business we focus on, the value in our trading relationship is all about accounts that hurt the standard markets. They don't want to write these accounts because they can't get rate adequacy from 50 different state regulators. So they want it to stay in the non-admitted market.

Great. Would like to thank Ryan, a very exciting stock to watch. I would pay a lot of attention in the next couple of quarters. So thank you, guys.

Good afternoon, and thank you for joining us today for Ryan Specialties Holding First Quarter 2026 Earnings Conference Call.

In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at wryanspecialty.com.

On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. The company assumes no duty to update such forward-looking statements in the future, except as required by law.

Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website.

With that, I'd like to turn the call over to the Founder and Executive Chairman of Ryan Specialty, Pat Ryan.

Good afternoon, and thank you for joining us. With me on today's call is our CEO, Tim Turner, our CFO, Janice Hamilton, our CEO of Underwriting managers, Miles Wuller; and our Head of Investor Relations, Nick Mezick.

For the quarter, total revenue grew 15% and driven by organic revenue growth of 11.8% and contributions from M&A. Adjusted EBITDA grew 15.7% to $232 million. Adjusted EBITDAC margin expanded 10 basis points to 29.2%. Adjusted earnings per share grew 20% year-over-year to $0.47. We also repurchased $40 million of our stock. We are very pleased with our strong start to 2026, especially considering the headwinds our industry is facing.

Our first quarter results are both the top line and bottom line. speak to the resiliency of the platform we have built. Our founding thesis was to provide innovative specialty insurance solutions to brokers, agents and carriers. That's exactly what we have done. We created a true specialty insurance services firm, expanding our offerings far beyond wholesale broking. We have built one of the most efficient and effective insurance distribution platforms in the world through RT Specialty, second largest wholesale broker. We've assembled a world-class expertise across industry verticals, serving global retailers as well as the tens of thousands of retail brokers in the U.S. Ryan Specialty is the largest allocated underwriting authority provider.

We deliver leading underwriting solutions supported by strong alignment and governance, distribution at scale and our position at the intersection of the biggest secular tailwinds in insurance, all driving sustainable, profitable growth. Together, RT Specialty and form a distribution as in of unmatched scale, sophistication and breadth in the specialty insurance market. This distribution platform is built to unlock all of the innovative solutions we're capable of building.

For our strategic alliances and executive level relationships with key carriers who holistically changed the conversation. This goes beyond trust and strong returns and has evolved into the development of innovative products and solutions to address the complex needs of our clients. Take one of the largest mutual carriers in the country as an example. Our relationship started many years ago when they were looking for access to specialty risk and has evolved into the creation of a new reinsurance market.

Over the last 6 years, we've created a remarkable business through our reassurance managing underwriter, [ Ryan Reid ], which is strategically positioned to capitalize on expanded opportunities and is quickly approaching $2 billion in premium. We've made acquisitions and brought in top talent across both benefits and alternative risk.

With our support, we're building unique capabilities and structured solutions capital management and funding through group captive or single-cell captives, separately for a leading global property carrier, we expanded their reach into specialty lines they've never participated in before. and are exploring various additional opportunities together.

For our blue ship specialty carrier, we have developed unique solutions throughout our firm, across RT, our SEOM and with new capital management capabilities, allowing us to launch our flagship alternative capital side car, Rock Re. These are not isolated stories -- they are the complex outputs of a distribution platform like a stronger and more strategic with each relationship. Built on the strength of industry-leading underwriting results, we innovate alongside our clients and capital trading partners and deliver unique solutions that we believe cannot be easily replicated by our competitors.

The depth and durability of these strategic alliances. The breadth of products and solutions we deliver to the market. The scale of capital we manage on behalf of our trading partners and the dimensions of value that capture what this platform is truly capable of what will define our story over time. Our strategy is to continue widening our most, leveraging the operational flexibility created by Empower and building into the white space that we believe no one else in our industry can match.

Turning to the market. We continue to operate in one of the most volatile and reactive insurance markets I've ever witnessed. While volatility in market cycles is inevitable. We are feeling the effects of this across our business, particularly in wholesale brokerage. We now expect more tempered growth in 2026. With that said, I'm very proud of our brokers and underwriters as they're delivering impressive growth in the face of significant pricing pressures and broader economic uncertainty.

Turning to AI, which Tim will expand on shortly. I want to say a few words. For automation and AI we believe we are unlocking the capacity of our people to more efficiently and effectively to what our clients and trading partners value most. We saw for complexity for our expert-led advice and advocacy and a culture of execution and innovation. We believe our scale, specialized talent, proprietary data the breadth of trading relationships with brokers and carriers and the significant volume of transactions flowing through our platform, Ryan Specialty, a clear net beneficiary of AI-driven transformation reshaping our industry.

Lastly, on capital allocation beyond our modest and sustainable dividend, review both M&A and our share repurchase program as key priorities. We will continue to do what we believe is right for our shareholders, particularly given the continued spread to in public and private multiples and the dislocation between our current valuation and our confidence in the near- and long-term outlook of our business.

Make no mistake about it, when the right strategic M&A opportunities present themselves ones that fit our M&A criteria, strong cultural fit, strategic and accretive. We will be the first in line for those high-quality assets and we'll have the financial capacity to execute on those opportunities.

As we look forward, we are confident in our ability to innovate, invest and continue to strengthen and diversify our offerings within the specialty insurance market. Our relentless efforts to navigate this transitioning market, all while investing in areas of accelerating growth give a strong conviction that we will generate industry-leading organic growth over time and remain a leader in the specialty lines insurance sector for years to come.

Before I turn the call over to Tim, I'm going to share one more thing with you. We have announced a onetime option grant program in the second quarter, funded entirely by a portion of my own holdings, to make sure the broader team is properly aligned over the long term. It is structured to be neutral to the company's outstanding share count and will function as a direct reinvestment for me into the team that has built this platform.

I believe in this team, I believe in this platform, and I believe the direction Ryan Specialty is adding. As we look forward to the work of the next several years, I want every leader at this company to be aligned to our mission, and I'm offering a meaningful piece of my own capital to support that conviction.

With that, I'm pleased to turn the call over to our Chief Executive Officer, Tim Turner. Tim?

Thank you very much, Pat. I am very proud of how our team performed this quarter. We remain hyper focused on successfully executing what we can control. Diving right into our results by specialty, our wholesale brokerage specialty continues to deliver in a transitioning market. In property, our team navigated a very challenging environment. Rates continue to decline with large and cat exposed accounts down 25% to 35%. And capacity continued to increase across insurance, reinsurance and alternative capital and competition intensified broadly, including in the admitted market.

However, despite these trends, our property book declined only moderately in the quarter, and we are extremely proud of these results. Again, we are controlling what we can control. We are focused on winning head-to-head against our competitors and capturing new business from the steady flow into the E&S channel.

In casualty, the trends remain net favorable for Ryan Specialty, yet the picture is bifurcated. In high-hazard, large account classes like transportation, habitational, health care social and human services and public entity loss trends driven by social inflation, continue to drive meaningful rate increases in many cases, exceeding 10%.

At the same time, there is growing competition for small and medium hazard risks. We saw select carriers looking to deploy new capital adding competitive pressure within the E&S market. Our professional lines team significantly outperformed the market despite continued yet moderating pricing pressure and aided our growth in the quarter. We also had strong construction activity in Q1. We remain optimistic about this pipeline heading into the balance of the year and are well positioned as the leading wholesale broker in the construction space.

We are encouraged by the momentum of data center activity we saw this quarter, further supported by a strong pipeline. As we have noted in the past, this business is inherently lumpy and the timing of large project bindings is difficult to predict. Taking these trends together, we're anticipating more moderate casualty growth in 2026.

Now turning to our delegated authority specialties, which include both binding authority and underwriting management. Our binding authority specialty continue to perform well, though the environment showed signs of heightened competition. We saw pockets of small commercial business move toward the admitted market. consistent with what we described last quarter. Our underwriting management specialty had an excellent quarter with strong results across transactional liability, international specialty, casualty, financial lines and reinsurance.

Zooming in on the transactional liability, our practice once again performed exceptionally well. supported by the investments we've made over the past few years and a more constructive global M&A outlook. Ryan Re delivered an outstanding start to the year with strong renewal retention especially considering the tough pricing environment. We are encouraged by the Markel portion of the book, which also displayed strong client retention and was supported by expanded relationships across casualty, specialty reinsurance and London markets.

As we do across our entire underwriting management specialty, we exercise underwriting discipline leaning away from the property cat business where pricing did not meet our standards and leaning into risks with better risk-adjusted returns. Adding to what Pat said, I'd like to update you on our digital transformation and AI strategy. We are making significant and responsible investments in AI leadership and infrastructure and are partnering with leading AI platforms to accelerate our progress. This is a top priority for our management team, and we've rapidly delivered numerous models to our 6,000-plus employees.

We are moving quickly live in production in certain areas and are actively developing new tools. Our digital transformation and AI strategy is built around 3 principles: our clients, our people and our process. In practice, we invest behind workflows that improve client outcomes, make our people more productive, make our process faster and more reliable.

Let's start with our clients, spanning across brokers, agents and carriers, faster speed to market, deeper risk analysis and even stronger advocacy. We are deploying AI that helps our underwriters triage a submission in minutes instead of hours which benefits the flow in both directions.

Our broker clients see improved turnaround times and the carriers receive better informed higher-quality submissions. That is an improved client outcome. AI is also improving underwriting insights. In parts of Ryan Re, we are running enhanced portfolio-level analytics, like concentration analysis and risk modeling, which gives our carrier trading partners a level of analytical rigor that is extremely challenging to complete manually. Better data leads to better placements, and better placements lead to stronger, longer-lasting trading relationships. This also means more proactive service. As our work bench capabilities mature, we will enable automated coverage gap identification and AI-assisted cross-sell analysis. These maturing capabilities will assist our brokers in delivering more value to their retail trading partners by being increasingly proactive.

The second of our 3 principles is our people. We want our brokers to broker and our underwriters to underwrite. Today, too much of their time is spent on manual processes, ingesting submissions, massaging data chasing subjectivities and formatting proposals. Not only does AI and automation take that work off their plate, but it will enhance their productivity by giving them capabilities at a speed and scale that weren't possible before.

And this goes beyond our brokers and underwriters. We are changing how we train and develop talent. New hires will ramp up faster when our AI tools accelerate institutional knowledge, recommend next steps on unfamiliar risks and provide real-time guidance informed by decades of placement data. What used to take a junior broker 2 years to learn through experience, they will begin accessing in just months, accelerating our return on the most accretive investments we make.

Across the organization, AI and automation are improving how we operate. We are enhancing our internal tools and systems to give our leaders better data to make timely informed decisions. When our people are equipped with tools that improve speed and efficiency, our clients get better outcomes. The last of our 3 principles is our process.

Put simply, this refers to our scale. We manage over $30 billion in premium across hundreds of products. We are thoughtful in how we're turning manual tasks into reimagined end-to-end automated workflows and deployed across our firm. Within our underwriting management specialty, certain projects are beyond the pilot phase. AI-enabled and automated submission processing has reduced turnaround times from approximately 24 hours to under 2 hours and look promising to scale. This digital transformation will assist us in scaling this platform without proportional account growth, maintaining the differentiated specialist expertise that defines us.

Lastly, on process, it means building the right foundation, a unified data and technology architecture for the next decade of growth. Now that we've covered our principles, let's talk about how this all fits together across our 2 disciplines: wholesale brokerage and delegated authority.

On the brokerage side, we are building a submission gateway and broker workbench. These tools allow us to reimagine, redesign and automate the most time-consuming parts of the broker's day. from submission, ingestion and clearance to carrier matching to detailed quote comparison from various carriers.

On the delegated authority side, this is where our platform is most differentiated and where some of our most advanced capabilities are operating today. Within Ryan Reed, we have built an AI-powered underwriting platform for our facultative reinsurance business. We have reduced average processing time per submission from approximately 2 hours to minutes while increasing the number of submissions each underwriter can evaluate by roughly 10x.

Within Velocity, our property catastrophe MGU, we deployed an AI-driven platform that scores every submission on appetite fit and propensity to bind. The result being an 11x uplift and submit to bind ratios for our highest appetite category compared to our lowest. Simultaneously, the speed to quote has improved by 36% on a median basis. These capabilities are changing how our underwriters work every day, and we are preparing to deploy them more broadly across the firm.

Lastly, I would like to remind everyone what business we're in. and why we believe this platform will endure. We solve for complexity through expert-led advice and advocacy and a culture of execution and innovation. Every placement we touch requires specialist judgment on unique risks, negotiation across multiple carriers and advocacy when the contract needs to perform. That is not a data processing problem. It is an expertise problem, and expertise is what we deliver. Disintermediation risk rises as complexity falls Ryan Specialties portfolio sits on the other end of that spectrum.

Now turning to a brief update on our talent investments. The recruiting class from late 2025, a is performing very well and contributing to our new business growth. We continue to expect these hires will become margin accretive within 2 to 3 years.

Stepping back, we are very pleased with the first quarter. That said, we are clear-eyed about what lies ahead, and Janice will walk you through how we're thinking about the rest of the year. With that, I will now turn the call over to our CFO, Janice Hamilton.

Thanks, Tim. In Q1, total revenue grew to $795 million, up 15% period-over-period. Growth was driven by organic revenue growth of 11.8% and contributions from M&A, which added over 2 percentage points to our top line and contingent commissions as we continue to deliver strong underwriting profits for our carrier trading partners. As expected, Q1 was aided by Ryan Re, which had a strong start to the year as the Markel portion of the book contributed to our growth. Adjusted EBITDA grew 15.7% to $232 million.

Adjusted EBITDA margin of 29.2% expanded 10 basis points compared to the prior year period. Adjusted earnings per share grew 20% to $0.47, our adjusted effective tax rate was 26%. We expect a similar rate for the remainder of 2026. On capital allocation, we repurchased $40 million of our stock.

As Pat described, our key priorities remain our M&A strategy as well as our repurchase program. When high-quality assets come to market that meet our criteria, we will be first in line and we'll have the capital to execute. We remain willing to temporarily go above our leverage corridor for compelling M&A opportunities that meet our criteria. We ended the quarter at 3.3x total net leverage on a credit basis, well within our 3 to 4x comfort quarter.

Based on the current interest rate environment, we expect GAAP interest expense, net of interest income on our operating funds of approximately $222 million in 2026, with $58 million to be expensed in the second quarter. We are making good progress on our Empower program and are on track for a cumulative charge of approximately $160 million through 2028, delivering approximately $80 million of annual run rate savings in 2029, with savings ramping through 2027 and 2028.

More than the savings themselves -- creating the operational flexibility we need to invest behind the strategic opportunities Pat described. Now turning to our outlook. The platform we have built positions us to navigate this environment with discipline, yet we want to be transparent about the recent trends we are seeing today.

As Tim mentioned, current market conditions in both property and casualty continue to evolve rapidly. And as a result, for the full year, we are now guiding to organic revenue growth in the mid-single digits. Our guidance embeds continued property rate declines of 25% to 35% for the most cat-exposed lines and now incorporates the more recent acceleration in competition more broadly, resulting in a meaningful decline in our property book for the full year.

In casualty, we are assuming more moderate growth across our book. reflecting growing competition for small and medium hazard risks and new capital being deployed, which Tim described. We continue to expect organic growth to fluctuate quarter-to-quarter. As we have discussed, the second quarter is our seasonally largest property quarter. As of today, we are assuming Q2 organic growth to be near 0, with the biggest uncertainty being how property trends play out.

On margins, we are now guiding to a full year adjusted EBITDAC margin that will be down approximately 100 to 150 basis points year-over-year. The pressure will be most pronounced in the second quarter, where we are assuming Q2 margins to be in the low 30s. That said, the year-over-year decline reflects the revenue impact of the current and evolving market conditions beyond what we described last quarter. The continued absorption of our talent investments, lower fiduciary investment income and higher health care and benefits costs.

At the same time, we are taking thoughtful action across our cost structure, advancing the operational efficiencies underway through Empower, accelerating the integration of our recent acquisitions and continuing to leverage our digital transformation and AI strategy. These actions are designed to protect our ability to responsibly invest in the areas driving growth and position the platform to capitalize when the market returns. Looking ahead, we continue to expect modest margin expansion in most years. supported by Empower and the natural operating leverage of our growing platform.

Before I close, I want to make one important point about our guidance. Our mid-single-digit organic guidance for 2026 reflects what we can see and quantify based on the trends in the market that are impacting our near-term growth. We are encouraged by the momentum we've gained in the strategic alliances and executive level relationships that Pat and Tim described and look forward to updating you in future quarters.

Through innovation, we have and will continue to create new differentiated opportunities to aid our growth over time, which is entirely unique to the scale and expertise we have built at Ryan Specialty and something we believe cannot be easily replicated by our wholesale broker peers. This is the framework we want investors to understand. The diversification we have built and the platform we are continuing to expand are not theoretical. They are tangible compounding sources of growth.

I am proud of how our team is executing through this environment, continuing to deliver for our clients, advancing our technology and AI investments and driving the Empower program forward with great collaboration. In closing, our first quarter results are a testament to the dedication of our team and the strength of the platform we built. We are navigating through a transitioning market, and we are doing so with discipline, transparency and a clear focus on the levers within our control.

With that, we thank you for your time and would like to open up the call for Q&A. Operator?

[Operator Instructions]. Our first question will come from Elyse Greenspan at Wells Fargo.

I guess my first question is on the updated organic growth. I know you did guide to the Q2 to be flat. But I guess, how do you define mid-single digits, I guess, is that within the range of 4% or where are you looking, I guess, for the full year? And then within that mid-single-digit guide, I'm assuming you're expecting property to decline for the full year and see like modest growth within casualty. But can you help us think through, I guess, the moving pieces of how you're expecting organic growth to trend over the course of the year bucketing in what mid-single digit means?

Yes. Sure. Elyse, this is Janice. So thank you for the question. All good parts. Hopefully, I can take them all up here. So maybe just starting with your first one on the mid-single digits. So that is a step down from the high single that we had previously guided to. We think about that in kind of either side of 5%. We've historically not -- or we've historically guided with a bit more precision with specific numbers, but we think about that just to help you out somewhere between the 4% to 6% range, effectively.

When we think about how organic growth will play out for the remainder of the year, obviously, we had a really strong start to the year with the 11.8%. The additional help that we gave on the second quarter, we typically don't guide by quarter. So we wanted to make sure that just given the concentration of property within the second quarter being our biggest property quarter and the trends that we're seeing, the intensification of some of that competition that is continuing to interact also with the 25% to 35% rate reductions that we've seen that there is a risk that our property book combined with the rest of the portfolio could be effectively near 0 for the second quarter.

Playing that out for the remainder of the year, third and fourth quarters, obviously, are helped out by business mix. that concentration in property disappears. And then when we think about the full year being at that mid-single digits, we've also got other elements of where we think underwriting managers and other parts of the book will go, but then also the build-in or the buildup of the new talent that we brought on in the second half of last year.

And then my follow-up is on margin, right? Recognizing right, the new guidance obviously factors in like this mid-single-digit growth combined, right? You guys are obviously investing in talent, right, that you started to do towards the end of last year. Can you just help us think through, like I understand it takes a couple of years for the hires to be margin accretive, and then there's also time to benefit revenue. But how do you guys balance, right, just making these investments now right at a time when growth is lower you're going to see lower growth and then even more pressure on your margin as we're going to what you called it was like a transitionary period?

Yes. So Elyse, I would just start with the guide for what we've just updated that includes the impact on the top line pressures from a revenue perspective. So we were expecting to be moderately down, flat to moderately down over where we ended last year. we're now projecting to be 100 to 150 basis points down, and that does reflect the increased pressures on our top line. similar to the conversation that we just had around the organic. We expect that impact to be most pronounced in the second quarter, just given the concentration of property. But we are taking thoughtful actions around our cost structure. And we really think about the timing and the opportunity and the flexibility that Empower affords us to do that. There are a lot of opportunities we have to advance our operational efficiency program. We are going to be focused on accelerating, integrating our platforms in terms of technology and then also just leveraging our AI and digital transformation strategy. So all of those together create additional flexibility to allow us to continue to invest in the platform.

And then one more, if I could. The second quarter organic for the property book to decline meaningfully. How much of that is within your MGU book of business?

Elyse, what I would say that when we think about the concentration of property, obviously, we've talked about wholesale brokerage being where the concentration of that is coming from. We talked about the tempering of growth in that area. But I would also mention, and I think Tim shared this as well that as we continue to face pricing pressures, the importance of exercising discipline in underwriting managers becomes paramount. We want to ensure that we're delivering profitable underwriting results for our carriers, and we will look past certain property risks if they don't meet our return threshold.

Our next question comes from Alex Scott with Barclays.

Could you describe, I guess, thinking more medium term, what kind of spread do you think you can make over sort of the retail brokerage business? And I think the knee jerk would be this feels like growth coming down closer to where some of the reasons have been. But on the other hand, there's some unique pressure price on you guys. So I just wanted to understand, like, we're net new businesses and how you view that just kind of making a broad comparison.

This is Pat. We're anticipating realizing today the same as our founding thesis. Our role is the intermediate as an adviser and an advocate. That role that we're playing, bring specialty insurance solutions to brokerage agents and carriers. That's all expanding, particularly providing services to carriers. However, in the soft market, pricing is a headwind I've been through several soft markets and price does get to be a driver. But it doesn't replace the value proposition that our people bring to our clients.

So we're working our way through. We're fighting through, and we're fighting effectively, and we did have a good first quarter but we don't know the same trajectory that we've had in a hard market. Incidentally, the conditions that cause that hard market are still out there.

But as we all know, there were some benign results in wind and other barrels, and carriers made a lot of money. And so they're buying market share. So we knew we'd be in a soft market, and we built this platform really with that in mind, and we've positioned the firm to really work its way through effectively, and we're confident that we will. And we base that on, we have the largest and most effective distribution capabilities in our niche.

Thousands of relationships with large and small brokers. As we've said many times, they use us when they need us. But we're constantly expanding the services that we provide, so that they need us more. And you're seeing that in our diversification strategy. That diversification strategy was not accidental, that was well thought through planned for a long time, and that allows us to create new and innovative products and bring new solutions to our retail brokers and yes, even some of our wholesale brokerage competitors.

So creating these new innovative products and solutions strengthens us in reinsurance underwriting, and as Chad has mentioned or Tim mentioned on in facultative property. So expanding the reinsurance capabilities, we're growing very nicely in benefits, and that's tied in also to our alternative risk strategy because alternative risk is growing nicely, and bringing solutions to clients who want to put up some of their own capital. So we're applying that same principle on our benefits, where they'd be employers are being put in the group captives.

And so constantly improving our solutions that we bring to our broker clients. So we've got the strong strategic alliances. And I would submit that no one else in our space has those strategic alliances, that allow us to create new solutions allow us to bring more new capital to our clients' needs. And frankly, those training -- special training relationships, really make us enthusiastic about our future, but they also enhance our ability to attract and retain talent.

And all of this is about talent. Talent gets a little more pressure when it's a pricing phenomenon like we're having in the soft market. But we know how to grow in a soft market. But we want to be transparent. We want to make sure that you understand the headwinds we're facing, but also understand the tailwinds that we have. So we're in a cycle here that is putting pressure on. But we're absolutely positioned to take advantage when the market turns, and it will.

And I would say that we still believe that we will be the industry organic leader, having an industry organic revenue growth, translating into profit growth over time. Tim, if you want to add anything to that?

No, I think that covered it, Pat. We're very optimistic that we can grow even in a softening market. And again, our creative innovative culture gives us that confidence. We have the tools, we have the products, we have the talent, and we look forward to this challenge, and we know we can do it.

As a follow-up, I just wanted to ask about the broader macro environment and just some more volatility, a little more uncertainty out there. Is that affecting things whether it's construction here in the U.S. or some of the business you do in Europe?

I'll let Miles talk more about Europe, Alex. But I would say this, that our construction flow is very strong. There's a little bit of pressure from interest rates. We've mentioned it before, the opportunities are as strong as they've ever been in construction, but there's a delay from submit to quote to buy. So our quotes and our winning RFPs are sitting for a little bit longer. But we are binding them. We're getting a lot of traction in the actual data center area and crypto opportunities. So we remain very bullish on our construction pipeline.

I'll touch on transaction liability, which is a global product for -- the space remains quite resilient despite macro uncertainties. The market is working extremely efficiently. There's substantial capital on the sidelines, there's efficient access to debt leverage. And so we're seeing dollar value of deals continue to increase. unit count of deals is down slightly, but we continue to take more than our fair share of those deals in both transactional rep and warranty as well as tax indemnity.

Our next question will come from Bob Huang with Morgan Stanley.

Okay. Perfect. Sorry about that. My first question is about the broader macro environment. Just given there is a likely higher expected inflation, due to the Middle East conflict and inflation into the U.S. Is there any conversation or thoughts on how that might ultimately flow into pricing. When do you think pricing will start to reflect higher inflation through exposure units or through pricing initially? Just curious to review on that.

Well, so Tim spoke about RT's construction practice. And so maybe I'll tackle that through the lens of RSEOM's builders risk practice, which does tend to service more of the small and mid-sized builders risk part of the marketplace. Certainly, we would benefit for more certainty in the space, borrowing rates remain higher, inflation remains high, and the war creates certainty in the smaller part of the U.S. economy. But I think the same outcome, as I said on the -- we've all said in the larger risk and the transactional risk.

We have the products, we have the quotes. We're winning more than our share. And we will all simply benefit from more shovels going in the ground as a result of stability. But yes, we are taking inflation into account as we price risk in real time. It does remain effector and keeping rates firm in certain classes.

Okay. Maybe a follow-up on data center. I just want to untack some of the commentaries you had already -- if we look at the larger brokers, increasing their data center facility size meaningfully versus last quarter. Can you maybe talk about the competitive environment here? It feels like the layer that you're playing with I have a hard time seeing significant competition against you in the data center space. Is that right? And can you maybe give us more commentaries around the pipeline for data centers, a great growth contribution in the next few quarters specifically?

Sure, Bob. For starters, as we've mentioned, we know we're the industry leader in construction in the wholesale market. And we know that our pipeline is full of opportunities for data centers. Having said that, there's quite a difference between property and casualty opportunities with data centers. So we would have to break that down for you. But it all leads to what Pat says frequently the brokers use us when they need us. And right now, there's a real strain on capacity in the valuation of these projects.

And there's a completed operations exposure that long-tail casualty underwriters, [ Aleria ]. So there's a lot of pressure on building towers and limits in the space, and our services are in high demand. So we see this as a great opportunity going forward, all part and parcel of our construction practice group.

Our next question will come from Tracy Benguigui with Wolfe Research.

Sorry about that. Pat, you've been in the industry for many decades and seen many cycles. I was struck by our comments that we're in one of the most volatile and reactive markets you've ever witnessed. So when I look at turning points in prior wholesale market, what is different today? Or if I ask this differently, has the MS market changed so much that what is ahead is less known, like it used to be that E&S was a dirty word, no longer as carriers are well capitalized. Is that part of it?

Well, I would say that the rapid increase in property and casualty rates starting back in '19, second half of '19, that rapid and prolonged rise in rates was I've never seen anything like that. And then we have a very risky world out there, and the risks have not diminished. They've just taken the hits some of them have. And so what talked me is how rapidly property rates have declined. And now certain parts of casualty and it's generally understood that casualty results in '21, '22, '23 are putting pressure on reserves and it's still early.

So some people have said, caustic remarks about what underwriters are doing. We're not going to say that, but we are saying that it surprised how quickly the declines it, have emerged. And so it's that whipsaw volatility. And as you know, when you're coming off large increases and then you get large decreases, that put so much pressure on new business because you're renewing the business that you're renewing at a lot lower rate.

And as you know, we're a straight commission business. And so we rise and fall with how the pricing of our products are being presented to the marketplace. So that's what I mean when I say I've never seen anything like that, particularly because so many hard markets in the past were event-driven. This really wasn't an event.

This was a recognition of how the world has changed with climate issues and litigation issues, all the litigation finance. None of that has subsided. And so it's surprising that people would take their products all their profits and reinvest so aggressively, property movement into casualty because seems to have a better rate environment. All of that is sort of -- that's what's on us to surprise me. And I think it surprised a lot of you.

We're one big storm away from some adjustments. And I can -- I'm not going to comment about people's behavior. It's just surprising that it is so dramatically swing up and swing down as quickly as each have done.

You guys tend to talk about how flow is so much more important than pricing. But if I listen to the commentary today, I think it's been mostly on pricing, particularly wholesale that's informing your outlook on organic. Can you touch on if you're to contemplating any reverse flow or even on the underwriting management business, are you seeing any type of MGA cancellations?

Tracy, I'll start by kind of showing some of the statistics that we've all seen in the marketplace. We know that the non-admitted property and casualty market, the flow into the channel is up 8%, and we're outpacing that as a company. So our opportunities and the flow of business into the channel remains very strong and healthy. And so we -- a lot of our optimism comes from that. We're getting lots of opportunities. It's just the price continues to go down in property and starting to see some headwinds in casualty. But we're confident that the flow will continue. The business has been restructured Pat talked about the cycle has gone by.

But one of the biggest changes has been that we now have, instead of a dozen or so E&S companies. We have over 100. So structural change there. The percentage of non-admitted business was up 4% or 5% pre-second quarter of '19, and now it's up to 24%. So it's a very, very healthy flow into our channel. We believe that it will stay in the channel, most of it. We don't see -- we see some moderation back into the admitted standard market. but not very much. It's moderate. And again, the stamping evidence is strong. So we remain very positive that we'll be able to capture our fair share of that flow.

And I ask also about MGAs. Have any of the carriers? How are those relationships going and anyone cancel a relationship? Is that plating your outlook at all?

This is Miles. Appreciate the question. It's actually quite the contrary where we continue to attract substantial capital for existing and new partners almost on a daily or weekly basis. I'd add to what my colleagues have said that Ryan's $12 billion delegated platform wins through standard of care, alignment and material investment in our people and our platform. And the reality is that the carriers are printing record ROEs, profit combined ratios. None of that is at all coincidental. I think we've had a role in this. We've pushed substantial rate, terms and conditions and innovation, beyond that through the MGs and distribution, we've guided the highest hazard risk into the monoline -- excuse me, the highest -- modeling risk into the E&S market where they -- the balance sheets have the best chance of the proper risk-adjusted returns.

And the outcome isn't that surprising. There's substantial insurance, reinsurance and alternative capital coming to support the channel. So there is a lot of talk in the industry where the world is always, I guess, essentially looking for an enemy who's driving this. But the answer is really pretty simple. It's an abundance of capital is driving price pressure through new facilities, the easing of terms and conditions on existing facilities and even existing balance sheets.

But as it pertains to, I believe, our role in the delegated space, over 40% of E&S premium is delegated today. In delegated space is approximately 20% of the U.S. commercial P&C marketplace. So I'm actually quite proud of RSMs or all of Ryan's delegated underwriting contribution to the exceptional results in the care community and we're convinced that Ryan will continue to contribute to thoughtful underwriting and leading underwriting profit into the future, and that's represented in our forecast.

Our next question will come from Meyer Shields with Keefe, Bruyette, & Woods.

Okay, great. So really a couple of quick questions. First, I just wanted to confirm that the change in the margin guidance for 2026, is there anything in that other than change in expected organic growth?

Meyer, I would say the simplest thing the change from where we were last quarter to now is as a result of the top line change.

Okay. Great. And I'm wondering -- so we're in clearly a weird environment right now in terms of pricing. When you take a 3- to 5-year outlook across the cycle, has your view on RISE organic growth potential in that environment change at all.

Meyer, would you may repeating that one?

Yes. I'm wondering -- I understand that there are particularly surprising and pronounced pricing pressures in 2026. But if you take a step back and say, okay, over the next 3 to 5 years, has your view of the organic growth opportunity changed from that perspective?

My perspective on -- Pat, is that we are much stronger today than we've ever been. We have so much more to offer our brokers and our carriers and these strategic alliances that the opportunity for innovation has never been greater. The data that we're now managing much more effectively as most people are because of the pressure of AI and the opportunity through AI, there's tremendous opportunity to utilize that data to innovate new products. And the way we get organic growth is by bringing innovation and empowering our people to execute on that. And so absolutely remain very, very bullish on being a long-term industry leader in organic growth. And we have not given up on double digit, which is our suffering from these price reductions. But in terms of the quality of our solutions, they just keep improving and the quantity keeps improving dramatically because of the innovation.

And I would add one other thing. And that is that AI, as Tim talked about, is going to allow us or provide the opportunity for us to take people who are doing administrative support and get them into the field. And there's nothing more successful and having more boots on the ground talking to clients. And so AI is opening that opportunity for us, and we are moving towards availing ourselves of that opportunity. We're not making any predictions.

But for one, we'll have more people out dealing with clients in the quite near term because of the streamlining of our back office work and taking very talented people that are now experienced enough to go out and work with clients and be successful. In my past life, I experienced of the value of bringing young talented people into the marketplace and letting a member loose to go out and make calls and develop business. And so our strategy to recruit, train, develop people and bring them in on the industry is going to accelerate the impact. That's my opinion.

Our next question will come from Rob Cox with Goldman Sachs.

Yes, my first question was just on retail brokers. I think there's some industry discussion that retailers are working to keep growth as the environment gets more challenging. Are you seeing retail brokers pushing harder to pivot business into retail or admitted markets? And are you seeing retailers look to internalize wholesale business? And is that embedded in your guidance at all?

Rob, it's Tim. Yes, we are seeing some of that activity, but it's not a lot, and it's not a meaningful amount. There are retailers, global and national, as you know, that have wholesale solutions. For the most part, they're very small and they don't interfere with our flow. But there's pressure and there's pressure to go direct when they can, and we deal with that every day. But there's 100 wholesale-only P&C companies now in the U.S. and the high hazard classes of business that we're in are very technical, and they require expert marketing expertise to achieve the best results for the client.

And I would say majority by far of the retailers in the U.S. know that, and they'll continue to count on us. And again, our flow is as strong as it's ever been. So we see a little bit of activity to your question, but it's not meaningful.

Okay. That's helpful. And just as a follow-up, Yes, I'm curious if you're seeing any insurance product innovation around artificial intelligence and if that's flowing into the E&S market at all?

No. We have not seen any particular product innovation around that. We've seen coverage enhancements. We've seen some coverage tightening, if you will, carriers creating manuscript endorsements around the exposure. So there's a heightened awareness about what the potential losses could be -- so our professional liability brokers are fast at work. And I believe it's inevitable that there'll be new products that emerge from the AI explosion.

Okay. If I could squeeze one more in. I just wanted to ask, did you guys quantify the Rack Re and Ryan Re deal benefit to organic growth in the quarter and maybe how much you expect them to contribute next quarter as well?

Rob, it's Miles here. We do not break those out by line. But I mean I think behind the numbers that we published, we're proud that across the entire underwriting segment extremely attractive, growth despite the property headwinds, new product development, incremental capital under management, taking share from others and compounding that core organic growth to get to total growth. We had continued increase in profit commissions. And then on top of that would be the Markel transactions you highlighted.

Well, going to the Ryan Re part of the question, Rob. We have tremendous, talented team. They seamlessly taken over the Markel Re and growing it really nicely. We can't predict any other subscale reinsurers, but it's some a great solution for Markel. And we just have a very, very strong team of management at Ryan Re. And that reinsurance capability is permeates our entire strategy in that alternative risk is reinsurance. Our benefits is in funding through group captives. That's reinsurance. Facultatcapabilities that just have just launched -- that's another service to other capital providers where they'll be facilitating facultative coverages. So there's a long runway on reinsurance and this is not accidental.

When I retired from -- I said, we will not become a competitor as a retail broker or as a raincoat broker. But I love the reinsurance industry and was wide open or an MGU partner with real solid capital like Nationwide Mutual and get innovated. And that's what's happening, and we're enthusiastic about the future of reinsurance as part of our portfolio.

And Rob, just on the question of organic as well. Ryan Re was something that we called out as a contributor we knew and expected that with the Markel renewal rights deal, that would have an impact on our first quarter organic, which it did. It was a strong contributor, and it exceeded our expectations as well. Going back to what I said earlier on the call with lease around business mix, we do expect Ryan Re and the Markel to book to contribute to organic for the remainder of the year, but the largest renewal is actually in the first quarter. So just from a seasonality perspective, we would expect the most significant impact to have in the first quarter.

Our next question will come from Andrew Kligerman with TD Cowen.

Okay. Great. My first question is around delegated authority, which is now actually more than half of net commissions and it's led by delegate -- I'm sorry, by underwriting management at 37.7%. So I'm wondering in the underwriting management area, what's the deal pipeline looking like? And is there a point when delegated authorities more than 2/3 of net commissions within the next 5 years, say?

Well, that's a really interesting and important question because so much of the -- what we call our diversification strategy in Bob's delegated authority. In fact, most of it does. So just by virtual fast, and the already good growth that we have in existing facilities. It's going to become a larger percentage for sure. That was part of the founding thesis and that's got a lot of runway, Andrew.

So we've got a great distribution business wholesale broking. But as we've said, we're way more than a wholesaler. We love the wholesale broking business. It's been a fantastic growth business and will continue to be. But the diversity around that, these are more than adjacencies. These are really core businesses that integrate very nicely. So, yes, I mean delegates just continue to be a larger percentage.

Andrew, you asked about -- you asked about pipeline. So I just want to chime in -- the focus is on organic build-outs on the platform and launching new products off of the M&A over the last 2 years. And I'd also highlight that the benefit of diversification of the platform is our ability to be an increased solution provider to our capital partners by creating more touch points across the distribution chain, binding programs, MGUs alternative capital, alternative risk benefits, and we're able to offer a much more holistic approach solving the carrier needs as well, create more as stickiness and create more special relationships that had opened within this intro.

Got it. And my follow-up is around just MGAs, MGUs in general. Some of the specialty carriers and maybe it's just talking their own books, but they've been very critical of MGAs and MGUs and how they're pricing in this declining or decelerating environment. Why is the Ryan MGA platform, the underwriting management platform? Why is that different? What kind of distinguishes Ryan from kind of the commentary that we're hearing.

Millions of dollars, hundreds of millions of dollars of investment. Most MGAs are started by capital backing some underwriters who have a following. We never believed that, that was the appropriate strategy. We always believe the appropriate strategy is to find a niche that needs delegated authority and to equip that with the top quality services that any carrier would provide, that's actuarial -- that's data science. That's a cat modeling. And it's great underwriting. And it's an overall culture tells you #1 is we have a duty of care to the capital provider to make an underwriting profit and represent them appropriately in the marketplace.

That's not the way historically MGAs have come and gone in the business. But we don't like being harnessed with that brand because we're totally different. It was part of the founding thesis that this was going to be an evolving -- quickly evolving change in the industry, we seize the opportunity, and we made the investments. And just to put an exclamation point on that, the $2.7 billion that we invested in '23, '24 part of 25 was all delegated authority.

That's how much we believe in it. And so I said hundreds of millions, I should just say billions have been invested in that. So that's the difference between us and the run of the mill, new MGA. But that run of a new MGA is putting a lot of pressure on pricing. But that's not us, but it's putting a lot of pressure on pricing. So a carrier who wants to put capital work doesn't have the talent, know some underwriters that they did business with a company they get together and they form an MGA. The average life cycle of those kinds of MGAs is very short term.

We had MGAs for many, many years, decades now. We have purchased companies that are over 60 years old as MGAs. So we take a totally different approach to...

That was super helpful, Pat. Maybe just real quickly, the Ryan and stock option trust, that's funded entirely by you? Or are there some loans? I read it so quickly. I just wanted to make sure I understood it. Are there loans attached to that?

Yes. You're talking about the option plan?

Yes.

Andrew, would you mind repeating the question?

Yes. I just wanted to understand the dynamic. Is that -- is there some kind of loan that Pat is making and then funding it with the stock? Is that how it works?

No, it's very simple. We have always believed in alignment. We've always believed in the reward system that gives people a long-term interest in their results. So we, I think, been farsighted in sharing equity. We really believe we have a unique opportunity for our employees because of the tremendous pressure on our shares and the reduction of the share price. That is a unique opportunity to bring more of our people further along to align with all of our efforts, but aligned with our clients, aligned with our shareholders.

So it's to align and reward certain employees. We believe it's a unique opportunity because of the dislocation. I consider a direct investment in the platform. I believe in the team. I believe in the platform, I believe in the direction we're going. And I want every leader in the company, to be aligned in our mission there I'm offering a meaningful piece of my own capital behind that conviction, there's no little -- it's a reward and is an alignment. And by the way, it's good business.

Our final question will come from Mike Zaremski with Bank of Montreal.

My first question is just trying to get some additional kind of macro context around the organic growth guide of mid-single digits I guess just in '25, the E&S market grew -- the U.S. E&S market grew about 7%. Ryan's organic was about 10%. Is there a way we could -- since a lot of us think kind of outside looking in, would your mid-single-digit guide imply the U.S. E&S market is still growing, growing a little bit, a lot, maybe 0%? Is there a way to kind of put that in context?

Well, I'll try to explain what we think is happening here with the E&S flow. I mentioned it earlier. We continue to see 8%-plus growth of new E&S business coming into the market. So the flow remains very strong and very healthy, and we're capturing more than that. We're outpacing that. It's just the prices are coming down and the premiums are coming down. But in terms of our market share, we're gaining market share all the time, and we're confident that we'll get even more market share this year. It's just, again, price-effective flow at the moment, especially in property.

Got it. So you, I'm taking market share. Okay. I can we can work with that. Maybe just also sticking with kind of on a macro level. So back to maybe Meyer's question that over time, if the North Star is still kind of getting back to double-digit organic how would you break down that organic between flow versus pricing? Is it kind of 50-50 or lob sided towards flow or pricing?

Well, it fluctuates constantly, not just property and casualty, but there's dozens of product lines within those verticals that have niche firming phenomenas going on. Prices are going up on classes of business like transportation, habitational, public entity lots of health care verticals where, again, the pricing is actually going up, rates are rising, capacity shrinking. So we give you the macro view of property and casualty, but there's so much more within these segments that are opportunistic for us. So it's kind of hard to break out those rates SP-9 On a macro basis.

I think an important point to add to that, when we say we're still aiming for and believe we can get to down the road back to double digit. We've -- we're getting scale in what we call our diversification strategy. We're getting scale. We're getting good scale. And so as that scale rises, it actually has a bigger, obviously, mathematical impact on organic. So the 2 core divisions, each are going to perform well as we believe. But on top of that, we have this diversification with reinsurance with New England duly created, we call them the novel delegated authority opportunities, but also alternative risk new products and, of course, benefits.

Now those were -- normal -- and so you're going through the growth pains, but they're getting scale. So they'll start to contribute more to the overall organic recovery over time.

That's helpful. And just lastly, back to the, I think, $52 million stock grant. Are there any terms and conditions that we should be aware of that the stock needs to hit certain hurdles or over certain time frames? Or is it just a straight stock grant that vests over examine years?

It's the latter. It's 5-year best thing years, 3, 4 or 5.

Thanks. And our final question of today will come from Roland Mayer at RBC Capital Markets.

Yes. I wanted just a clear reminder on the timing of recent M&A. As we move through the year, I assume revenue growth should begin to converge with organic growth.

Yes. So in terms of our M&A, and I think we shared this in our prepared remarks, the expectation is that more of our material opportunities are going to come potentially later in the year. And so we would expect total revenue and organic to converge on that basis, excluding contingents.

And the other part of that is that there are properties coming on the market. But not the quality that we're looking for generally. So there will be activity that we're not choosing not to participate in. We have line of sight all the time on potential really good strategic opportunities. But at the earliest they'd be late in the year and probably '27. But in the meantime, we got a heck of a good investment opportunity in our own shares.

Yes. I did want to follow up on that. The authorization, I think, went in during the middle of the quarter. Is it better to think about the $40 million as for a go-forward basis is like the daily average volume or the $40 million overall?

Well, the $40 million is just limited by time and the rules -- but let's be clear that within the rules, we want to buy stock. And -- that's the plan. I think we got a few data that we have to stay dark, but not much longer.

All right. Thank you so much. Thank you. There are no further questions at this time. I will now turn the call over to management for closing remarks.

Yes. Well, this is Pat. I'm not going to repeat all the challenges, but we know we're in a challenging market, but we're also disciplined. I hope you believe, and I think you do that we're transparent and we have pretty clear focus on the levers we have within our control to bounce back, and we're looking at that. We're looking at doing everything we can to bounce back to improve the growth and the margin, which will drive the share price.

So we're investing in technology in a significant way, talent always and expanding the capabilities that will allow us to emerge from this current cycle that we're in much stronger.

So thanks for your really good questions. Thanks for your support. We look forward to speaking with you next quarter. Thank you.

Good afternoon, and thank you for joining us today for Ryan Specialty Holdings Fourth Quarter 2025 Earnings Conference Call. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com.

On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. The company assumes no duty to update such forward-looking statements in the future, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

A Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website. With that, I'd like to turn the call over to the Founder and Executive Chairman of Ryan Specialty, Pat Ryan.

Good afternoon, and thank you for joining us to discuss our fourth quarter results. With me on today's call is our CEO, Tim Turner, our CFO, Janice Hamilton, our CEO of underwriting managers, Miles Wuller, and our Head of Investor Relations, Nick Music. In many ways, 2025 was a strong year for Ryan specialty, particularly considering the significant headwinds the industry faced. Our results are a testament to our team's ability to outperform in a challenging environment. Our conviction on putting our clients first, our unwavering focus on specialized expertise commitment to attracting and retaining top talent and dedication and excellence in everything we do.

For the quarter, we delivered organic growth of 6.6%. I'm pleased with our performance especially taking into account the volatile property market conditions, increased competition and select casualty lines and continued delays in certain project-based business, all of which Tim will provide more color on shortly.

For the full year, we surpassed revenues of $3 billion, up 21% year-over-year, driven by organic growth of 10.1% and on top of 12.8% in 2024 and significant contributions from our M&A strategy. We marked the seventh consecutive year of growing the top line by 20% or more than our 15th consecutive year of double-digit organic revenue growth.

Adjusted EBITDA grew 19.2% to $967 million. Adjusted EBITDAC margin was 31.7% compared to $32.2 million in the prior year. Adjusted earnings per share grew 9.5% to $1.96. We completed 5 acquisitions with trailing revenue of over $125 million. I'd like to make a few comments on the overall market. Having lived through multiple of insurance pricing cycles, I've seen hard markets come and go. What distinguishes this cycle is simple. It was harder for longer on the way up and much faster on the way down, particularly as it relates to the property. Throughout my career, I've never witnessed market sentiment shifted this rapidly.

We are currently operating one of the most volatile and directive insurance markets, I've seen across my more than 60 years in the industry. Throughout this time, I've learned that volatility and market cycles is inevitable. And what sets us apart that's rooted in the very vision this company was founded on brick by brick.

We carefully constructed an intentionally diversified platform to deliver innovative solutions to brokers, agents and insurance carriers. To deliver for our clients and shareholders, when the times get tough, regardless of the market cycle. We didn't build Ryan Specialty for the easy years. People do for years like this, the power through transitioning markets.

Diversified specialties, diversify products and diversified earnings, all backed by world-class talent, all by design. That's what makes us different. While we could not predict the precise timing or magnitude of this turn in the pricing cycle, we have long understood that the pricing cycle would eventually move from a tailwind to a headwind. From the very beginning, we made a deliberate decision to build more than a wholesale broker. We invested heavily in delegated authority, including both binding authority, and underwriting management.

The benefits of this strategy are clear, deepened specialty presence and enhance the ability to bring products to market quickly, improve geographic balance through our international expansion and a significantly expanded total addressable market. Importantly, these strategies have underscored by alignment with our carrier trading partners and enhance the strength of our relationships with the capital required support.

Our delegated authority business generates meaningful revenue through contingent commissions, which are directly tied to the underwriting performance we deliver on our carriers' behalf. In softer markets, these contingent commissions act as a natural hedge, thus providing further diversification and balance to our total company earnings. Our numbers tell the story. Over the last 2 years, we've doubled our delegated authority revenue to $1.4 billion, now reflecting 47% of our total. A remarkable rise from $700 million and 35% of our total just 2 years ago. We've invested nearly $2.7 billion towards 12 acquisitions. We have drilled a number of products on our platform by 50% to over 300.

We've expanded our international presence now with 24 offices, up from just 6 in 2023. And still believe we're in the early innings. We've increased the size and capabilities of our central underwriting team to help support our efforts to deliver underwriting profits, growth and scale. We have dramatically increased the breadth and depth of Ryan Re, our reinsurance MGU.

We have established in-house holder capital management solutions. We built a benefits division with distinguished capabilities and products, which are largely uncorrelated to the P&C cycle, and we've invested significant resources into all aspects of alternative risk including captive management and structured solutions.

The diversification that we've achieved is significant, more out of the needs of the thousands of retail brokers with whom we trade our enhanced offering has opened the door to additional opportunities across all our specialties and positions us well for a wide range of market outcomes. This evolution is exciting but it also introduces greater complexity to our business. As a result, we are launching Empower, a 3-year restructuring program designed to improve efficiency across the firm. particularly within delegated authority and create header for additional investment despite the success we've achieved in many ways because of it, we are not yet as efficient as we need to be.

And Empower is about more than just efficiency. It's about ending our people to do what they do best, more tools, faster innovation and an even greater ability to deliver for our clients. AI will be a key enabler, allowing all our people to focus less on process and more on deepening client relationships. We're confident that Empower will deliver meaningful benefits for our colleagues, trading partners and shareholders.

Tim and Janice will provide more details in their remarks, but we anticipate a cumulative special charge of approximately $160 million through 2028. We expect the program will deliver approximately $80 million of annual savings in 2029. The efficiencies we gain to Empower will enable us to continue making strategic investments in growth, top-tier talent, the novel formations and address the rapidly evolving needs of our clients, allowing us to maintain industry-leading growth in the years to come. We expect these savings will help contribute to our global margin expansion in most years, while maintaining the flexibility to continue investing in our business. As a result, we believe our industry-leading organic growth and accelerated efficiencies across all of our specialties will lead to enhanced earnings growth.

I also want to provide an update on capital allocation. We are pleased to announce that our Board of Directors has authorized a $300 million share repurchase program. The scale of our platform, combined with our robust free cash flow generation gives us increased flexibility to expand how we deploy capital.

This decision reflects our view that there's a meaningful dislocation between our current valuation and our confidence in the near and long-term outlook of our business. We remain committed to strategically investing for the long term organically and inorganically while also opportunistically purchasing our shares when we believe it to be the best use of our capital. The added option of share repurchases is aligned with our goal of enhanced shareholder returns over the near and long term. As a coach to this terrific team I'm incredibly proud of our ability to deliver exceptional results in a challenging environment. Our performance is a testament to the depth expertise and determination of our people to provide value for our broker, agent and insurance carrier partners in the face of numerous challenges.

All of these efforts will drive significant additional value for our shareholders and ensure we remain the leading specialty insurance services firm in our industry. I'm pleased to turn the call over to our Chief Executive Officer, Tim Turner. Tim?

Thank you very much, Pat. Ryan Specialty delivered our 15th consecutive year of double-digit organic growth, once again, setting the standard for the specialty insurance industry. in a year where there have been significant pressures across the insurance broker landscape, our performance speaks to the resilience and differentiation of our platform. .

I am incredibly proud of how our team navigated what was, without question, the most challenging property environment, the insurance industry has faced in decades. We capitalized on specific areas of accelerated growth as evidenced across many products and lines of business, most notably in high-hazard casualty and transportation. We launched innovative solutions like Ryan Reaves expanded relationship with Nationwide. Rap Re, our first of its kind collateral live sidecar and numerous real-time de novo formations to meet the emerging needs of the market.

As you've seen us do repeatedly, when we see an opportunity, we organize and we move at the speed in which our end trading partners demand. Turning to our results by specialty. Our wholesale brokerage specialty demonstrated remarkable resilience in 2025, led by our exceptional talent and the continuation of secular trends like panel consolidation.

In property, our team executed on behalf of our clients in the face of an exceptionally difficult pricing environment. For the full year, our Property business declined only modestly. The fourth quarter was particularly challenging. We saw a further decline in property pricing as the quarter progressed.

It was most notable in the month of December, particularly on certain large accounts where pricing was down 25% to 35%. Additionally, an albeit in pockets, we saw instances of admitted carriers stepping back into certain segments particularly on smaller accounts. Based on this continued softening in pricing, combined with January 1 reinsurance renewals and the widely held view of rate adequacy and property we expect there could be similar pricing declines in 2026.

We are not standing still. Our team of experts are focused on delivering the best solutions to our clients. winning head-to-head against our wholesale broker competitors. And our goal remains clear: return to growth in property as us the market allows. That said, we remain optimistic about property beyond the near term, the frequency and severity of cat events, increasing populations in cat-affected areas and continued demand for E&S solutions all support our belief that property will remain an important contributor to our growth over the long term.

Meanwhile, our casualty practice had a very strong year. Underlying trends are moving in different directions across lines, but the net result remains favorable for Ryan Specialty. In high hazard lines like transportation, health care, social and human services and habitational, we continue to see significant price increases in many cases, exceeding 10%. Across these difficult lines, we are seeing carriers tightened distribution re-underwrite, change appetites, raise prices and focus on limit management, our professional lines team significantly outperformed the market despite continued pricing pressure aiding our growth for the year as well as social inflation and litigation trends, which continue to support the need for adequate pricing.

At the same time, we are seeing a more constructive tone from carriers looking to grow in Casualty, which introduces additional competition beyond what we've been seeing in small commercial and middle market. This is leading to a slight moderation of pricing in certain pockets. Lastly, parts of the large construction industry remain a headwind as project-based business faces continued delays. But we're seeing early signs that activity may pick back up. And given recent interest rate cuts, we're optimistic heading into 2026.

Taking these trends together, we're anticipating strong yet moderating casualty growth in 2026. On data centers, we're growing increasingly optimistic as the leading wholesale broker in construction, we are in a great position to assist our clients as they navigate this rapidly evolving risk landscape. But it's not just construction as we bring deep expertise across builders risk, environmental architect and engineers and other complementary lines as well as within the energy field, making us a natural partner for these complex placements. With many projects in the planning phases, and demand for insurance capacity only building, we believe we are well positioned to assist our retail broker clients.

While these projects can be lumpy our enthusiasm as well as our pipeline continue to grow. As we've said repeatedly, retail brokers use us when they need us. And here, we're honored to play an important role. Zooming out on wholesale brokerage, we believe the secular trends that have fueled our growth over the years remain intact.

One worth highlighting is panel consolidation. The largest retail brokers continue to narrow the number of wholesale broker intermediaries they work with. We see this playing out in real time in 2026 and 2027 and for years to come.

Our scale, track record and relationships with the top 100 retail brokers positions us well as this trend continues. Now turning to our delegated authority specialties, which include both binding authority and underwriting management. Our binding authority specialty continues to perform well, driven by our top-tier talent and expanding product set for small, tough to place commercial P&C risks. We continue to believe panel consolidation and binding authority remains a long-term growth opportunity. and we are well positioned to capitalize.

Our underwriting management specialty, Ryan Specialty underwriting managers delivered excellent results for the year. with strong performance across transactional liability, casualty and transportation. Our transactional liability practice performed exceptionally well supported by the investments we've made over the past few years and the more constructive global M&A outlook.

Velocity, our Tier 1 property cat MGU continued to expand its distribution through RT and ended the year with impressive year-over-year growth numbers. Conversely, while our builders risk MGU, U.S. Assure faces near-term pressure from project delays due to the heightened interest rate environment, we remain confident in the long-term opportunity as the housing market normalizes and construction activity picks up. Let me spend a moment on Ryan Re. Over the last 6 years, we've created a remarkable business strategically positioning us to capitalize on an expanded opportunity set. We are very proud of our ability to execute on our strategic partnership with Nationwide on the Markel Reinsurance book.

We are driving increased brand awareness, deeper relationships with clients and diversification into niche specialty markets. enabling us to deliver on a very strong January 1 renewal season. Stepping back, our delegated authority strategy is a key differentiator for us.

Our exceptional M&A activity over the last 2-plus years, cements Ryan Specialty underwriting managers as the preeminent delegated underwriting authority platform in the industry. As we've demonstrated, each of these acquisitions support our strategic vision of aligning specialized underwriting products with our distribution expertise across industries expanding our capabilities and offering clients diverse innovative solutions.

Today, our delegated authority business manages north of $10 billion in premium across more than 300 products and has been recognized by business insurance as the largest delegated authority platform. What sets us apart is our consultative approach. We create bespoke solutions because our broker, agent and insurance carrier clients and trust us to solve problems alongside them. Our scale allows us to build markets and launch de novo programs with speed and efficiency in response to our clients' individual needs.

We are here to add value and complement our trading partners, filling niches where needed and strengthening their distribution model, not to compete with them. Our skill and discipline to manage these businesses through the insurance cycle bolsters our ability to deliver consistently profitable underwriting results growth and scale over the long term. Now turning to price and flow.

We have repeatedly noted that in any cycle, as certain lines are perceived to reach pricing adequacy admitted markets historically reenter select placements. While we saw small pockets of this dynamic playing out in property during the fourth quarter, particularly on smaller accounts, the standard market has not meaningfully impacted rate or flow in the aggregate across our portfolio.

As we've consistently said, we continue to expect the flow of business into the specialty and E&S market more so than rate to be a significant driver of Ryan Specialty's growth over the long term. Turning to M&A and capital allocation. We completed another exceptional year of acquisitions, closing 5 transactions with trailing revenue of over $125 million, including Velocity, USQ, 360 Underwriting, J.M. Wilson and SSRU to name a few. M&A has been and continues to be a top capital allocation priority for us. We remain disciplined in our approach to M&A, only moving forward when all of our criteria are met, a strong cultural fit, strategic and accretive.

More broadly on capital allocation, we are excited to announce our first share repurchase program, adding another tool to our tool belt. Given the current dislocation that Pat mentioned, combined with our confidence in our near and long-term outlook, we believe now is the right time to act. The addition of this lever gives us more flexibility in how we return value to our shareholders.

To sum up 2025, our colleagues performed exceptionally well, particularly in the face of a complex and rapidly evolving insurance and macro environment, which is a testament to the resilience and durability of our people and this platform. With that being said, we have built an intentionally diversified platform at Ryan Specialty, one that is able to not only withstand the ever-changing landscape but power through it. a platform that provides us with many avenues for expansion designed to deliver industry-leading organic growth. As Pat mentioned, over the last 2 years, we've invested nearly $2.7 billion towards 12 acquisitions, significantly diversifying our platform with new products, geographies and capabilities and businesses. This transformation has been exciting, but with scale comes complexity. As a result, we are focused on further positioning the business to adapt and are excited to discuss Project & Power, our 3-year restructuring program.

Empower is designed to streamline our broking and underwriting operations, optimize our scale accelerate our data and technology strategies and enhance efficiencies across all our specialties. Empower isn't just about efficiency. It's about enabling our people to do what they do best, more tools, faster innovation and an even greater ability to deliver for our broker, agent and insurance carrier partners.

The efficiencies we gain through the Empower program will enable us to continue making strategic investments in growth, top-tier talent, de novo formations and address the rapidly evolving needs of our clients, allowing us to maintain industry-leading growth in the years to come. We will continue to invest in our business, in talent, innovation, technology and AI, investments that will lead to margin expansion over time while maintaining flexibility to capitalize on strategic opportunities like our talent initiative late last year. Our scale, scope and intellectual capital thoughtfully crafted over our 15-year history is unmatched. It is the foundation of our ability to continue winning and expanding our market share over time.

This platform is exceedingly difficult to replicate and the diversification we've achieved is significant. We continue to improve upon our competitive moat and we will continue investing to widen the gap between Ryan Specialty and the rest of the specialty industry. With that, I will now turn the call over to our CFO, Janice. Thank you.

Thanks, Tim. In Q4, total revenue grew 13% period-over-period to $751 million. Growth was comprised of organic revenue growth of 6.6% and contributions from M&A, which added over 5 percentage points to our top line and contingent commissions as we continue to deliver strong underwriting profits for our carrier trading partners. As Tim discussed, the fourth quarter reflected an intensification of the trends we've been navigating throughout the year. Adjusted EBITDA grew 2.9% to $222 million. Adjusted EBITDAC margin was 29.6% compared to 32.6% in the prior year period. Adjusted diluted earnings per share of $0.45 was comparable period-over-period. .

Our full year 2021 results reflect the resilience and diversification of our platform. Total revenue grew 21% to over $3 billion, driven by organic revenue growth of 10.1% and and strong contributions from M&A, which added 10 percentage points to our top line.

Adjusted EBITDA grew 19.2% to $967 million. Adjusted EBITDAC margin was 31.7% compared to 32.2% in the prior year. As we've discussed throughout the year, our margin was impacted by significant investments principally in talent, operations and technology.

Our town investment was broad-based. We added key data and AI-focused resources within our central underwriting teams to support our expanded underwriting businesses. integrated strong talent to support Ryan Re and hired top-tier talent within alternative risk. We recruited at scale in wholesale brokerage, which heavily impacted our fourth quarter results. Adjusted EPS grew 9.5% to $1.96 per share. Our adjusted effective tax rate was 26% for both the quarter and the full year. We expect a similar tax rate in 2026. Based on the current interest rate environment and at current debt levels, we expect to record GAAP interest expense net of interest income on our operating funds of approximately $210 million in 2026 with $55 million in the first quarter.

We ended the quarter at 3.2x total net leverage on a credit basis. We remain well positioned within our strategic framework and willing to temporarily go above our comfort corridor of 3 to 4 times for compelling M&A opportunities that meet our criteria.

More broadly on capital allocation, the Board of Directors approved an 8% increase to our regular quarterly dividend for our Class A stockholders now at $0.13 per share. We are pleased to grow our dividend at a modest and sustainable level.

Additionally, our Board has authorized Ryan Specialty's first share repurchase program of $300 million. We have consistently demonstrated our ability to manage this business with an unwavering focus on strong free cash flow generation. It's 1 of the many great attributes of our firm and the broader insurance brokerage sector as a whole. Our free cash flow affords us the ability to deploy capital strategically, whether in organic investments, acquisitions, dividends and now opportunistic share repurchases.

This repurchase program is a reflection of our confidence in our near- and long-term outlook and an opportunity to create additional value for shareholders. Turning to Project & Power. As Pat and Tim both mentioned, over the last 2 years, we've invested nearly $2.7 billion towards 12 acquisitions, significantly diversifying our platform.

As you would expect, an expansion of this magnitude has increased the complexity of our business. As a result, we are launching the Empower program, designed to: number one, streamline our broking and underwriting operations by standardizing processes, integrating operating platforms, increasing automation and driving efficiency and product innovation; two, optimize our scale by eliminating redundancies to fully leverage and further monetize the investments we've made over the last several years.

Three, accelerate our data and technology strategies by building a single unified ecosystem that harnesses advanced analytics and AI to improve client outcomes and drive operational excellence. Four, enhance efficiencies across all our specialties, leading to more consistent interactions across our 30,000-plus retail and wholesale broker relationships and deepen interactions with our 180-plus delegated authority carrier relationships; and finally, create headroom for additional investment. We anticipate a cumulative special charge of approximately $160 million through 2028.

We expect the program will deliver approximately $80 million of annual savings. We expect the savings to ramp up over time. We expect these savings will help contribute to our goal of modest margin expansion in most years while maintaining the flexibility to continue investing in our business.

Looking forward, we believe our industry-leading organic growth and accelerated efficiencies across all of our specialties will lead to enhanced earnings growth. Turning to guidance. We are guiding to organic revenue growth in the high single digits for 2026.

This reflects our current view of market conditions, including continued property pricing pressures, a more moderate pace of casualty growth and broader macroeconomic uncertainty. From a seasonality perspective, we expect Q1 to be our strongest quarter for organic growth, aided by Ryan Re, as Tim mentioned. As a result of business mix changes and external trends, we expect organic growth to fluctuate quarter-to-quarter, but we remain confident in our full year outlook.

We believe we will consistently deliver industry-leading organic growth on an annual basis moving forward. For the full year 2026, we are guiding to an adjusted EBITDAC margin of flat to moderately down as compared to the prior year. Embedded in this guide are a few headwinds.

Notably, the impact of lower interest rates on fiduciary investment income, stable contingent commissions following an exceptional 2025 and higher health care and benefit costs. More importantly, we are continuing to absorb the significant talent and technology investments we made in the fourth quarter.

As we close out 2025, I'm incredibly proud of the results we've delivered another year of industry-leading growth particularly in the face of a very challenging environment is a testament to the depth, breadth, expertise and determination of our team. Looking ahead to 2026, we are well positioned to further differentiate Ryan Specialty as the destination of choice for the industry's top talent. -- powered by our commitment to innovation, our empowering culture and the scale and scope we've built over the last 15 years. With that, we thank you for your time and would like to open up the call for Q&A. Operator?

[Operator Instructions] Our first question will come from Elyse Greenspan with Wells Fargo ask your question.

I guess my first question, I just want to spend more time on the organic guide, right? So it sounds like for '26, you guys are expecting that the property price declines will be at the same level as in '25. on -- yet the organic guidance is now high single digits versus right this year where the guide or -- sorry, in '25 where the guide had been double digits. So what's the driver of that just in relation to property as well as just the overall change in the guide for 2026?

Elyse, I'll start this, and then Tim might want to add a little bit more on the property color. As you probably picked up on from our remarks, the fourth quarter really marked an intensification of some of these property pricing. Tends, we saw particularly in the large accounts, rate decreases to 25% to 35%, which was higher than what we were seeing earlier in the year.

We're currently expecting that to continue. We did see some small smaller commercial business starting to head back towards the admitted market, but not necessarily in a meaningful way. So I wouldn't necessarily call that out as a significant headwind in any way for 2026, but it's really the continuation of the property pricing declines that we saw intensify within the fourth quarter.

On top of that, Tim mentioned the fact that in casualty, there are a number of different pricing conditions that are going in a lot of different directions. All of that, we expect to be favorable to us. But that strong growth that we experienced in 2025, we expect to moderate within 2026. So those are the 2 things that I would call out. We had -- for the fourth quarter of 2025, we also had timing related to some of the construction business. That for us was stronger within the third quarter.

We also had a stronger third quarter as it related to transactional liability, all headwinds or potential headwinds that we called out in the third quarter as we headed into the fourth. But really, the 2 trends that we're looking at for 26 that are continuing is around property and moderating casualty growth. Tim, anything you'd want to add on either of those?

Sure.,Elyse. I would just add that, obviously, property is the big headwind here. but we have several niche firming phenomenons going on in casualty and professional liability.

So the flow itself up 8% in the stamping offices remains very opportunistic for us. We're capturing a significant amount of new business coming into the channel, and we're winning in head-to-head competition with other wholesale brokers. So we -- we believe there's plenty of new business for us to capture this year, and we continue to look for new innovative ways to broker that business and underwrite it. we can name a few niche firming phenomenon as you can take with you, but sports and entertainment would clearly be one of them, lots of consumer product liability loss leaders in the reinsurance world, tough casualty risk with latency issues, public entity and municipality business really firming up for us and social and human services and transportation. So lots of opportunities with increased flow and demand for our services, and we feel really good about '26 million.

And then my follow-up question. We've seen the broker sector really underperformed this week just on some overall concerns about AI really hitting the group I would just love to get your views just relative to AI impacts on Ryan and just the brokerage sector at large.

This is Pat. We look at AI as an ally, not as an adversary. Lots of opportunities for us to embrace AI improve as we mentioned, the tools are people to serve our clients even more effectively. We also believe that there's going to be some significant efficiencies through AI. We can't quantify them at this time. We're very excited about them. I've had experience over the years or people have always said brokers are going to be disintermediated.

What I want to emphasize is that the brokers and we are leading this in the organic growth, amount that we have, a timeless value of advice and advocacy, and we're going to get efficiencies but specialty skills that our underwriters and our brokers have in these practice group verticals.

They have the trust and relationship with the markets and with the clients in terms of the dynamic changes that are occurring, both in carrier appetite and frankly, in new risks and new ways to design, but also a clear understanding of which are the markets to take those 2.

And that appetite changes fairly quickly. So we've got tremendous tailwinds in improving our productivity, improving our speed to market, speed to market in our space is critical. And we know that when we get a great design product with competitive rates and terms and conditions. And we do that promptly, that accelerates our growth because the brokers are smart, they see the opportunity and they want to serve their clients. So we advocate every day, all day long on behalf of our clients. And so AI is going to help us serve our clients more effectively and faster. So that's how we feel about this intermediation. I've been resisting that term for over 30 years.

Our next question will come from Alex Scott with Barclays. Alex, you unmuted, please go ahead.

Sorry about that. I think you guys probably hear I have view is on the for construction. I know you mentioned there's still a lot of projects that haven't started up yet. But can we think about some of the comparisons when we consider the '25, I think, already began to have maybe a little softness in the growth in construction. Has you lap some of that? Does it become a little bit easier and less drag as we get into '26. I'm just trying to understand that part of your business and also just thinking through the acquisition you did.

Yes. The Construction segment and Practice Group for us remains very, very strong. Keep in mind that a large percentage of our construction business is renewable. So we write artisan subs, GCs, all the New York construction lines, they're renewable.

What you see and what the headwind is all about are these large infrastructure projects, including residential construction projects, there's been a slowdown, not in flow. Our flow is very strong. We believe we're industry-leading.

And we're getting them quoted, we're getting them teed up, but the macroeconomic pressure and the interest rates have slowed down the time line between submit to quote to bind. So these projects are quoted, they're teed up and the financing is just taking a little bit longer.

So you saw a lumpy '25 as a result. We had some unbelievable victories and large construction projects, data centers. And then there was a slowdown. So we're still very bullish on it. We believe it will grow exponentially, and we believe we're the leading intermediary and underwriter in the construction industry in the U.S.

I would just add from an outlook perspective for 2026, just given the continued uncertainty from a macroeconomic perspective, it is still early -- too early to tell, effectively how that will play out in '26. So we have a very strong pipeline, but those macroeconomic headwinds and visibility there. do give us pause in terms of the timing of when some of these might hit.

Absolutely.

Got it. That's helpful. And the share repurchase authorization, can you talk a bit about that and just how you're viewing the M&A environment currently, particularly in light of, I guess, sort of the currency and your own stock valuation and what you're seeing for carbon equity valuations and how that all plays into capital management.

Well, I want to start off by saying the share repurchase is not in any sense, diminish our commitment and enthusiasm for M&A. We're committed to -- that's the #1 priority for our capital allocation. .

We, quite frankly, with the compression of our stock, and we look at the true value as we look at what we're going to how we're going to grow in the near term and the long term -- intermediate term and long term, we consider it to be a great investment for our shareholders and that improve shareholder returns. And so we're easing the opportunity of Blast. .

And then from an M&A perspective as well, you mentioned that it is our top capital allocation priority. Right now with the transitioning market that we face, we need to continue to be very disciplined in evaluating potential M&A criteria, all of our criteria to ensure those are met before we move forward with any acquisitions. .

So it's really about ensuring that we balance and utilize this program opportunistically because we do believe, as Pat said, given the dislocation in our valuation compared to our confidence in our outlook that this is the best use of our capital at this time.

Your next question will come from Brian Meredith with UBS.

Two questions here. The first one, more short term. The second 1 is more longer term. In the underlying growth guidance, I'm just curious if you can kind of give us a little sense of what client demand you're expecting?

I mean are you seeing clients buying additional coverage with some of these price decreases? Or is the fact that you're seeing some economics and certainty, you're not quite sure that's going to happen. I thought that would have been a nice offset.

Brian, I would say this, that most commercial buyers of property and casualty insurance are need to lender agreements and loan covenants. And so those limit requirements are qualified early on in our approach to marketing these accounts. So we don't really see a change so much in the limits that they're buying, but the structure demands are a little bit different.

So higher retention levels and certain accounts, alternative risk, as Pat's mentioned many times, comes into play. On the most difficult risks in the United States. So having the ability to be flexible for us to be able to structure these accounts in such a way that meets the unique needs of these buyers is important.

And so we feel very confident that we can answer the bell on even the most difficult risks that we see in America. So I would say this that we don't see any measurable trends of buying less. It happens, but there's not really a trend that we can put our finger on.

Great. That's helpful. And then from a longer-term perspective, is the, call it, high single-digit organic growth that you're looking for in 2026, [indiscernible] maybe a more normalized environment? And how are you thinking about these talent investments that you talked about last quarter factoring into organic growth, obviously look into the latter part of this year and into 2027.

Yes. And Brian, I thank you for the question because I should have highlighted from our perspective, high single digits, we are pleased with that expectation for '26. We believe that, that will be industry-leading growth. And our expectation, as we outlined last quarter, is the continuation of producing industry-leading growth going forward. .

When we think about talent, I commented last time that we expect that these will -- these new talent hires will contribute to margin pressures in the short and medium term. 2026 will represent effectively the first full year of that investment. We anticipate that they will begin to contribute to our organic growth from effectively day 1. But obviously, we need them to continue to abide by the restrictive covenants.

So we anticipate that our ability to see the accretion from these investments that we've historically seen that are the most accretive investments we can make do take from 2 to 3 years. Tim, anything you'd want to add?

I'd like to add that we are guiding for 1 year forward. And we want to make sure that we're clear that this diversification of our offering to our clients has improved our ability to serve our clients greatly. But it's also -- is adding a lot of balance to our portfolio. .

So for example, we are strongly committed, and we're growing quickly as as you're aware, in reinsurance, reinsurance underwriting. And that's a de novo. That's all just huge capital returns on capital, I should say. And more and more of our business is involving reinsurance underwriting, managing underwriting. We're not a broker on that, managing underwriting. But alternative risk is something that we've been talking about. Those projects got pushed forward and not enacted as anticipated we're positive that there's going to be good growth on alternative risk. And those are reinsurance relationships. Additionally, our benefits start-up has gotten really good leverage. So as we go into '26 and on through '26, the diversification beyond and to help balance the E&S volatility, we're very excited about that.

And so we're guiding high single digit because all brokers are under pressure right now. But as I said, that's for 1 year. We're not giving up. We're built for double digit. And that diversification is going to be a factor and down the road and getting to that, fact to that.

Your next question will come from Meyer Shields with KBW.

Am I coming through?

Yes.

Okay. Sorry about that. I just wanted to make sure because it's anyhow. So up until recently, I guess, at a 35% margin guide for 2027, and you've been very clear about what's postponing that. But I'm wondering how we should think about the longer-term potential as good as the $80 million of savings is by 2027, that's probably, I don't know, less than 200 basis points of margin expansion. I was hoping you could just tie those ideas. Do you?

thank you for the question. This is Janice. So you're absolutely right. Last quarter, we deferred the goal of the 35% margin target beyond 2027.

What we've talked about before is the expectation of modest margin expansion in future years in most years, right, allowing us to continue to invest in the growth of the business. Project Empower is intended to support the efficiencies that we've talked about to contribute to that modest margin expansion in most years. But at this point, we're not putting a time line around it. We continue to focus on ensuring that we're investing in talent de novo formations, new product opportunities and ensuring that we're delivering the right solutions to our clients to we believe that 35% is still a realistic target for us, but we're not putting a date around when that may come to fruition.

Okay. That's fair if I understand that. And I guess the question for Tim. I'm not sure how to answer this. But we've obviously heard a lot about significant rate decreases in during 1/1. And I'm wondering whether the perception of margins that will exist in primary property taking into account to reinsurance, do they really support another full year of 25% to 35% rate decreases, especially in the back half of the year.

Well, hello, Meyer, I would say this that it's hard to even conceive that the market could continue to cut rate at that level. But we're forecasting that. We're looking at it conservatively. There seems to be no let up. It's been a weak storm season, 2 years in a row, and we're not counting at it. But what we are counting on is fighting head-to-head to win new business and capture any new business that comes into the property channel.

As you know, we've made some key acquisitions like Velocity. It strengthened our practice group vertical. So whatever is available, whatever we can capture and property, we'll do that. But like professional, you witnessed it a couple of years ago when cyber and public D&O took a dive our professional liability brokers were resilient, and they found other business, health care business, social and human service business, and now they're in a great double-digit growth trajectory.

So we expect that from our property brokers. We expect them to find convective storm sensitive business and flood sensitive business and to scrap and claw and find a way to grow. So we're very, very proud of the performance in the space of the headwind that they had, and we expect a similar performance in '26.

Your next question will come from Andrew Kligerman with TD Cowen.

I'd like to follow up a little more on the AI question. I've gotten quite a number of investors asking me, why wouldn't it be easy for a smaller wholesaler to create an app, I that's very speedy, and it would enable that smaller broker much smaller than Ryan to reach out to multiple specialty carriers as many as Ryan and they could go toe to toe.

And I have my own thoughts on it, but I'd love to hear why and how there would be barriers that would keep Ryan front and center versus the setup and the smaller players that now have these AI apps to help them along.

Of AI apps, it's one thing. It's the intellectual capital and it's the relationship with the market and the broker, the trust of that relationship, you can't just walk in and say, "Hi, I've got an AI app and I can now compete with the big guys. The AI is an enabler. It's not anything more of an enabler. Can replace the trust, the adaptability, the flexibility, the understanding of what is the best market to place that risk in. We're not worried about the smaller guys coming in and leveling the playing field.

We -- it's all about our delivery are delivering with our AI, and we're confident that we're going to be very effective with it.

My follow-up is around the contingent and supplemental commissions. They were up quite materially year-over-year. They represent about 6% of revenue. How do you -- how are you thinking about -- in this pricing environment, contingent and supplemental commissions. Is it likely to be a headwind as you head into '26. I thought I heard Janice say it was actually a natural hedge in softer markets. But what are your thoughts there?

Yes. I'll let Janice add to this. But I think broadly speaking, these PCs represent years of measurement of profitable underwriting -- and you're certainly seeing it emerge in the publicly reported carriers. We feel we're driving those great results for our partners. You've seen them profit commissions grow steadily with us.

I believe our entire public life cycle. and based on our underwriting performance of the last several years, we do expect continued strong results.

And I think I also noted in my remarks -- sorry. Happy to just fill this 1 touch more. So for 2026, we're expecting profit commissions and supplemental effectively to be relatively stable. the benign storm season that we saw within 2025, obviously produced some opportunities for additional profit commissions. As Miles said, these been a number of different years.

So it is a number of playing at different times. But we're obviously going to start the year with an expectation that we would have a normal cat season effectively and there would be some anticipation of not having that same level of exceptional profit commissioning from '26. So the difference between being a natural hedge and what we're expecting for '26, I think that they will align over time.

Our next question will come from Rob Cox with Goldman Sachs.

I just wanted to follow up on the organic growth guidance, high single digits for 2026. I'm curious what you think the E&S market as a whole will grow embedded in that organic guidance? And if you expect as we -- if we get into the outer years, would Ryan Specialty still be growing in excess of the E&S market as you look to deliver on the industry-leading organic growth.

Well, we just received the stamping results and they're 8%. And so we try to outpace the growth and the flow of that business, the new business coming in, by capturing existing E&S business. So it's always a combination of that. And -- but we don't see the flow of E&S business subsiding much more. We believe there will always be loss leaders in the reinsurance world and dumping and shutting in these high-hazard specialty areas and property and casualty [indiscernible].

So a big advantage we have is this lens, this optic that we have when something creates problems for the standard markets, we see it very quickly, early on, and we can formulate these underwriting solutions and broking expertise is very quickly in the verticals and capture the businesses that's being dumped.

So we're certain that '26, '27 will bring more of those kind of incidents in situations where there's more dumping and shedding. We see it right now in public entity and municipalities, higher education, just tremendous losses in the reinsurance world that cause the dumping and the shedding. So we're counting on that.

It's never let us down and we're faster, nimbler and quicker to create these solutions than we've ever been. So we welcome it. .

And Tim, I might just add, the E&S market may not grow in the teens or 20s every year, but we believe it will continue to outpace the growth of the admitted market over the long term. And ability take market share from our wholesale competitors.

Yes, indeed. That's helpful. And I just wanted to follow up on some of the casualty business, it seems like in spots is getting incrementally a bit more competitive. I was just curious on what you would chalk that up to? Is it just carriers incrementally less optimistic on property giving rate decreases? Is it trend has been behaving better in recent years. Just curious your thoughts.

Well, Rob, I would kind of carve it up like this. You've got low to medium hazard casualty business and then medium to high casualty business, the softer part of the casualty market is medium hazard -- so some of that is getting rate cuts, some of that's going back into the admitted market. Not a lot, not hardly measurable, much more in small commercial. We're seeing some movement there. But the main practice group verticals that we're known for and where we're needed the most, that would be construction, that would be transportation sports and entertainment.

I've mentioned a number of them. Those high-hazard niches that, again, are loss leaders in the reinsurance world and have a latency to the IBNR part of the risk they're continuing to stay solidly placed in the E&S market. And so we're very bullish that we'll capture more and more of that business in '26.

I would add one other point. The profitability that carriers have realized in property because of the benign storm seasons have driven them to get more competitive on casualty risk. So some of that capital is being shifted in the casualty market and making that more competitive. But we have time for one more question we've drawn over a little bit.

Your final question will come from Matthew Heimermann with Citi.

A couple of questions. One was, it was noticeable to me that the wholesale growth you accelerated a lot. And I think accelerated more than some of the aggregate statistics would suggest for what's happening in the E&S market. So I wasn't sure if that was disproportionately the property were talking about or flow or just unexpected volatility within just how the numbers sort there.

I would attribute most of that Matthew to the property market. that's really slowed those numbers down. But again, we believe there's professional liability. There's a casualty business that I've mentioned that continues to firm and hence the 8% increase in stamping fees in the fourth quarter.

So we're watching those niches carefully. And we -- as we said, we can move faster than our competitors to capture that business when these situations occur.

I was curious with respect to the change in the outlook and the uncertainty and given that it looked like it was traditional wholesale brokers that was kind of a softer piece of the quarter and I think the focal point of most of your discussion on the call, is there any change to how you're thinking about the delegated underwriting side of the house or the binding authority side of the house?

Or is it disproportionately the wholesale brokerage business and where that macro uncertainty piece and the property is not vested.

Matt, it's Miles. Thank you for the question. I'll open the response. So we were proud of the results of the quarter and the year. I think Pat and Tim and Janice have been clear that over the last 18 months, we see an ongoing opportunity set and delegated both in utilization, but also a bit of a penetration into balance sheets that have not previously delegated. And I want to emphasize some comments Pat made earlier about the diversity of our underwriting portfolio. So when you see that specialty in our financials. That really represents 2,000 colleagues dedicated to P&C insurance, treaty and facultative reinsurance, health and benefits, alternative risk and alternative capital.

And we have been recognized by the industry press as one of the largest -- or the largest provider, and we think the feedback is sustained from our partners that we are a leader in capability and sophistication and results. And -- the reality is we have really parlayed those advantages, the investment in the platform and the results to continue to develop new products, meet the needs of the wholesale community wherever possible. and manage incremental carrier capital. So we continue to have an exciting outlook for our delegated practice.

Okay. Well, thank you for excellent questions. your support. Apologies for going over time, but there were a lot of great questions. Look forward to talking to you again from the new to our future. Thank you.

Good afternoon, and thank you for joining us today for Ryan Specialty Holdings Third Quarter 2025 Earnings Conference Call.

In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today.

Listeners are encouraged to review the more detailed discussions of these risk factors contained in the company's filings with the SEC. The company assumes no duty to update such forward-looking statements in the future, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute to the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website.

With that, I'd now like to turn the call over to the Founder and Executive Chairman of Ryan Specialty, Pat Ryan.

Good afternoon, and thank you for joining us to discuss our third quarter results. With me on today's call is our CEO, Tim Turner; our CFO, Janice Hamilton; our CEO of Underwriting Managers, Miles Wuller; and our Head of Investor Relations, Nick Mezick.

We had a strong third quarter and are pleased with our ability to continuously deliver value for our clients across our businesses. For the quarter, we grew total revenue 25%, driven by organic revenue growth of 15% and M&A, which added nearly 10 percentage points to the top line. Adjusted EBITDAC grew 23.8% to $236 million. Adjusted EBITDAC margin was 31.2% compared to 31.5% in the prior year. Adjusted earnings per share grew 14.6% to $0.47. We remained active in M&A this quarter and have a robust pipeline, positioning us well to execute on our disciplined long-term inorganic growth strategy. Our excellent growth was driven by strength in casualty across all 3 of our specialties and modest growth in property. We generated strong new business and had high renewal retention even in the face of a complex and evolving insurance and macro environment.

This achievement reflects the unmatched expertise, execution and commitment of our world-class team. Our ability to execute at this level continues to set Ryan Specialty apart and strengthens our position as one of the most formidable forces in specialty lines insurance.

Moving to our recently announced initiatives this quarter. We successfully onboarded key talent across Ryan Re and alternative risk and brought innovative products to market through the launch of our flagship collateralized sidecar, Ryan Alternative Capital Re or RAC Re. Separate from those initiatives, we continue to entrench Ryan Specialty as the destination of choice for top talent. We believe we have entered into a unique and potentially transformative period within the specialty and E&S market.

As the industry reacts to a transitioning market, we are attracting more talented professionals that are looking for a platform that not only withstands market cycles, but powers through them. Over the last 15 years, we built a culture and business model that stands apart from our competitors. Throughout the quarter, we saw a significant opportunity to ramp up our recruitment efforts. As a result, we added a significant number of experienced professionals to our world-class team.

We expect this momentum to continue in the quarters ahead. Growth and long-term value creation are in our DNA, and we will remain true to that by continuing to prioritize strategic investments, especially as it relates to talent, de novo formations, innovative products and solutions, M&A and technology. These are all key areas that will further reinforce our commitment to our clients and our leadership in specialty insurance solutions. We believe these investments will accelerate our ability to relentlessly capture market opportunities, enhance our competitive position and deliver durable value for our shareholders over the long term.

As we've noted repeatedly, our recruitment, training, development and retaining of talent is the best and most accretive investment we can make as it will continue to drive our organic growth engine for years to come. These efforts are fundamental to our strategy as a leading high-growth company and will enable our long-term success. Stepping back, our performance through these first 9 months reinforces our confidence in delivering yet another year of double-digit organic growth in 2025, marking the 15th consecutive year of achieving this increasingly remarkable accomplishment. Additionally, we are well positioned to sustain similar levels of full year organic growth into 2026. Looking beyond that, we believe we will continue delivering industry-leading organic growth, a topic Tim will address in more detail shortly.

Lastly, before turning to Tim, I want to congratulate both Steve Keogh and Brendan Mulshine on their promotions to Co-Presidents of Ryan Specialty. Steve and Brendan will continue in their roles as Chief Operating Officer and Chief Revenue Officer, respectively. While stepping into this expanded leadership position following Jeremiah Bickham's transition to serving as strategic adviser through the end of the year. Steve will be focused on driving operational excellence and advancing our technology and innovation efforts, while Brendan will lead across our 3 specialties to enhance alignment and continue to maximize client impact. This announcement reflects the strength of our roster and the versatility of our leadership team built for durability and continuity.

I also want to thank Jeremiah for his nearly 14 years of distinguished service to Ryan Specialty and for his support as we transition our leadership team. His dedication has been instrumental to the growth and success of our platform, and we wish him the best of luck with his future endeavors.

As we wrap up 2025, we remain confident in our ability to innovate and thoughtfully invest in our business. Through relentless execution and winning new business, combined with strategic investments in growth initiatives, transformative acquisitions over the last few years, numerous additions of top talent and accelerated investments in the high-growth areas, we have built a foundation that positions us exceptionally well for the future. As the culture of this terrific team, I want to reemphasize how proud I am of the team's ability to deliver exceptional total revenue growth of 25%, driven by 15% organic growth and 10% inorganic growth.

I'm even more impressed with our ability to drive adjusted EBITDAC growth of 24%, especially considering the unique opportunity to attract top broking and underwriting talent and continued investments in technology throughout the quarter.

Now I'm pleased to turn the call over to our CEO, Tim Turner. Tim?

Thank you very much, Pat. Ryan Specialty had an outstanding third quarter as we once again delivered industry-leading results for our clients in the face of a very challenging property rate environment. As I mentioned on our prior call, we remain hyper-focused on successfully executing on what we can control and delivering an organic revenue growth rate of 15% for the quarter is clear validation that our strategy is working. Further, while the strong secular conditions have endured, it is our Ryan-specific growth drivers that are resonating.

Most notably, our specialized intellectual capital, unique trading relationships at scale and an ability to innovate, evolve and stay ahead of the market. Ryan Specialty was built on a simple philosophy to skate where the puck is going. This is the opportunity Pat and I saw back in 2010. And in every instance where we have invested ahead of the curve, we have been rewarded. To that extent, as Pat highlighted, we are currently operating in the early stages of a unique and potentially transformative period within the specialty and E&S environment. We made substantial progress on this opportunity towards the end of the third quarter, capitalizing on the influx of world-class specialty talent.

This type of strategic hiring provides us with an unmatched ability to position ourselves as the clear leader in the specialty lines industry over the long term, a trend we anticipate continuing in the quarters ahead as the industry's top talent continues to knock on our door.

Additionally, as it relates to technology, the pace of change has been remarkable, driven primarily by advancements in AI and machine learning. These developments are reshaping our industry and the world around us, and we are committed to staying ahead of the curve. Of course, leveraging these opportunities requires meaningful investment. And as a result, we now expect full year 2025 margins to be roughly flat to modestly down when compared to the prior year. However, these are without a doubt the most impactful and most accretive investments we can make to ensure the long-term success and durability of the Ryan Specialty platform.

Looking ahead, we remain committed to margin expansion over time while preserving the flexibility to prioritize strategic investments and capitalize on the opportunities when they arise. such as the current talent environment and also de novo formations, innovative products and solutions, M&A and technology. We believe this is the right approach to ensure continued industry-leading growth. In light of everything I've outlined, we are deferring the 2027 time line for our previously communicated 35% adjusted EBITDAC margin target. This reflects our commitment to capitalizing our growth opportunities like the ones we're seeing today and prioritizing long-term value creation over short-term benchmarks.

As we've noted in the past, our strategy is designed to anticipate and address the evolving needs of our clients and trading partners. And we remain diligent on expanding our talent base and capabilities to satisfy these growing needs. We believe this is the best way to ensure that our value proposition remains dynamic, differentiated and most importantly, indispensable. We also understand the importance of the commitment we make to our teammates, equipping them with the most advanced tools to ensure innovation and top-tier service to our clients and trading partners has been and will remain an area of heightened focus going forward. These investments are fundamental to our strategy as a leading high-growth company and serve as sustainable fuel to our growth engine.

Turning to growth. As Pat mentioned, we are increasingly confident in our ability to deliver yet another year of double-digit organic growth in 2025 and are in a great position to sustain a similar level of organic growth into 2026. Beyond that, we believe we can consistently deliver industry-leading organic growth on an annual basis in the years to come. Important drivers of our growth going forward are our expectation to continue capitalizing on the unique opportunity to recruit and onboard top-tier talent in the quarters ahead, while also training, developing and retaining the exceptional team we've built over the past 15 years.

Continued growth in our casualty business, driven by solid flow into the E&S channel and our expertise in high hazard classes, our ability to offset another year of soft property pricing as was evident this year. Through Ryan Re, our reinsurance underwriting MGU for which we've thoughtfully staffed in anticipation of 1/1 renewals following the nationwide and Markel renewal rights deal. ongoing innovation through new product launches and investments in geographic expansion broadly across the underwriting platform, which includes alternative risk, Ryan Re as well as our newly announced sidecar, RAC Re. Contributions from recent M&A as well as the continued pursuit of future transactions as this year's M&A is next year's organic growth. And lastly, our confidence in continued growth across all 3 of our specialties.

It is a very exciting time at Ryan Specialty, and we are taking advantage of the multiple pathways to strengthen our position as the global leader in specialty lines, while staying focused on creating long-term sustainable value for our shareholders.

Turning to our results by specialty. Our wholesale brokerage specialty had a great quarter. In property, we returned to growth through our relentless execution, winning a high percentage of new business and head-to-head competition, supported by high renewal retention, continued steady flow into the E&S channel, partially offset by the rapid decline in property pricing in Q3. We expect the fourth quarter to face continued deterioration of property pricing given what looks like another benign hurricane season.

However, our longer-term outlook remains optimistic given the frequency and severity of cat events, notwithstanding recent experience and the increasing population in cat-affected areas, creating an increased demand for E&S property solutions. With our deep capabilities, we will continue to deliver value for our trading partners and offer innovative products and solutions for the most complex issues our clients face, irrespective of the market cycle. We continue to expect property to be an important contributor to our growth over the long term. Meanwhile, our casualty practice continues to deliver very strong results, driven by excellent new business and high renewal retention.

We were particularly pleased to see pockets of growth in our Construction segment in the quarter, aided by an increasing demand for the build-out of data centers. Further, we also saw strength in a number of other lines, most notably transportation, habitational risks, public entities, sports and entertainment, healthcare, social and human services and consumer product liability. Our professional lines brokers remain resilient and resourceful in identifying new opportunities. And despite ongoing pricing pressure, they too have seen solid growth this quarter.

More broadly in casualty, loss trends driven by both economic and social inflation continue to influence carriers to increase rates, refine their appetite and in some cases, step back from certain products. As many of these risks move into the specialty and E&S markets, we continue to see the E&S market respond in a disciplined manner. We believe that the need for the specialized industry and product level expertise that Ryan Specialty offers has never been greater, and our value proposition has never been stronger. With typical loss trends likely to continue, we see a long runway for sustained casualty pricing in the non-admitted market. We remain confident that casualty will continue to be a strong driver of our growth moving forward and believe we will remain a leader in casualty solutions for years to come.

Now turning to our delegated authority specialties, which include both binding and underwriting management. Our binding authority specialty continues to perform well, driven by our top-tier talent and expanding product set for small, tough-to-place commercial P&C risks. We continue to believe that panel consolidation and binding authority remains a long-term growth opportunity, and we are well positioned to serve our clients as this trend persists.

Our underwriting management specialty also had a great quarter, driven by excellent results in transactional liability, reinsurance and casualty. We had significant contributions from recent acquisitions, which added over 30 percentage points to the top line growth of underwriting management. Our recent cohort of acquisitions continues to deliver meaningful contributions to our long-term delegated authority strategy, reinforcing the value of our broader strategic approach. Further within RSUM, we recently launched RAC Re, our flagship collateralized sidecar that adds meaningful diversified capacity to our underwriting platform. This innovative structure brings a large amount of committed capital, which we will deploy over a 2-year period. RAC Re strengthens our ability to accelerate growth, enhance flexibility through increased diversification of capital and respond swiftly to market opportunities, further demonstrating our ability to adapt to the ever-changing needs of the industry.

Stepping back, our skill and discipline to manage these businesses through the current insurance cycle bolsters our ability to deliver consistently profitable underwriting results, growth and scale over the long term. We remain well positioned to capitalize on both organic and inorganic delegated authority growth opportunities.

Now turning to price and flow. We have repeatedly noted that in any cycle, as certain lines are perceived to reach pricing adequacy, admitted markets have historically reentered select placements. In this cycle, however, that dynamic has not materialized in any meaningful way and the standard market has had little impact on overall rate or flow. As we've consistently said, we continue to expect the flow of business into the specialty and E&S market more so than rate to be a significant driver of Ryan Specialty's growth over the long term. This was once again demonstrated in Q3 as the flow of business into the E&S channel remains steady across all lines, helping us deliver industry-leading organic growth, notwithstanding continued property pricing headwinds.

Turning to M&A. This quarter, we closed on the acquisition of JM Wilson, which is an excellent addition to our binding authority and transportation offering. Earlier this week, we announced the acquisition of Stewart Specialty Risk Underwriting, or SSRU. With approximately $13 million annual revenue, SSRU enhances our Canadian capabilities in key sectors, including construction, transportation and natural resources. Further on the M&A front, our near-term pipeline remains robust, including both tuck-ins as well as large deals. That said, we will only move forward when all of our criteria for M&A are met, most notably a strong cultural fit, strategic and accretive to the overall platform.

To sum it all up, this was an outstanding quarter for Ryan Specialty, which is a testament to our day 1 philosophy, our enduring value proposition and the overall durability of this platform. When we first started, we had the vision to align RT Specialty with the deep product expertise and skill set at Ryan Specialty underwriting managers. Today, as we continue building out our business through strategic investments in world-class talent, that vision is translating into meaningful results. As the destination of choice for the best talent in the industry, our winning and empowering culture and nonstop focus on innovation continues to attract the best of the best and helps ensure our long-term success.

Our scale, scope and intellectual capital built over the past 15 years remains the foundation of our ability to continue winning and expanding our market share over time. Our platform is exceedingly difficult to replicate as we built a competitive moat, and we will continue to invest further in our platform to widen the gap in our long-term competitive advantages that clearly set us apart from the rest of the specialty industry.

With that, I will now turn the call over to our CFO, Janice Hamilton. Thank you.

Thanks, Tim. In Q3, total revenue grew 25% period-over-period to $755 million. This strong performance was driven by organic revenue growth of 15% and substantial contributions from M&A, which added nearly 10 percentage points to our top line. Adjusted EBITDAC grew 23.8% to $236 million. Adjusted EBITDAC margin was 31.2% compared to 31.5% in the prior year period. Our strong revenue growth was more than offset by the significant investments made in talent, including the colleagues that recently joined Ryan Re as a result of our expanded strategic relationship with Nationwide. In addition, we continue to execute on thoughtful strategic investments in recruiting at scale and in technology, further positioning us for sustained strong growth going forward.

Adjusted earnings per share grew 14.6% to $0.47. Our adjusted effective tax rate was 26% for the quarter. Based on the current environment, we expect a similar tax rate for the fourth quarter of 2025.

Turning to our capital allocation. M&A remains our top priority now and for the foreseeable future. We ended the quarter at 3.4x total net leverage on a credit basis and remain well positioned within our strategic framework. We remain willing to temporarily go above our comfort corridor of 3 to 4x for compelling M&A opportunities that meet our criteria that Tim outlined earlier. Our robust free cash flow generation and strong balance sheet provide us with the flexibility to continue executing on strategic M&A opportunities.

Based on the current interest rate environment, we expect to record GAAP interest expense net of interest income on our operating funds of approximately $223 million in 2025, with $54 million to be expensed in the fourth quarter. As a reminder, the interest rate cap, which helped generate significant savings over the last few years, expires at the end of the year. Based on the current view of rates and at current debt levels, we'd expect interest expense to be roughly flat in 2026, more driven by the declining rate environment and the pace of M&A.

Turning to guidance. As we mature as a public company, we want to provide clarity on 2 key elements of our medium-term financial guidance. On organic growth, we are confident in our ability to deliver yet again another year of double-digit organic growth for the full year 2025. As Tim outlined, we are in a great position to sustain this level of full year organic growth into 2026, and we believe we will consistently deliver industry-leading organic growth on an annual basis moving forward.

On adjusted EBITDAC margin for the full year 2025, we are now guiding to an adjusted EBITDAC margin that could be flat to modestly down as compared to the prior year, which reflects our recent execution to capitalize on the unique opportunities Pat and Tim outlined earlier. With that said, this could move modestly based on our recruiting efforts over the next few months. While these initiatives will continue to create near- to medium-term margin pressure, we want to emphasize that recruiting, training, developing and retaining talent is the most impactful and most accretive investment we can make.

As a result of our progress in Q3 and in light of the significant opportunities outlined by Tim, we are deferring the 2027 time line for our previously communicated 35% adjusted EBITDAC margin target. This exemplifies our commitment to long-term value creation over adherence to short-term benchmarks. However, looking ahead, we anticipate modest margin expansion in most years while maintaining the flexibility to prioritize strategic investments, particularly those in talent, de novo formations, innovative products and solutions, M&A and technology. Our overarching focus moving forward is on continuing to swiftly grow our business to enhance our position as a global leader in specialty lines.

We believe this is the best way to ultimately drive and create additional long-term value for our shareholders. As we close out 2025, we expect to see a continued decline in property pricing, coupled with the potential for heightened competition during the fourth quarter, our second largest property quarter. Yet in the face of these challenging market conditions, we are extremely proud of the resilience of our team as we pursue our 15th consecutive year of double-digit organic growth.

Looking ahead, we see significant opportunity to continue establishing ourselves as the destination of choice for the industry's best talent, further differentiating ourselves as a preeminent firm in the specialty lines insurance sector for decades to come.

With that, we thank you for your time and would like to open up the call for Q&A. Operator?

[Operator Instructions]

Our first question will come from Elyse Greenspan from Wells Fargo.

I was hoping to spend more time unpacking the 15% organic growth, especially like you guys had revised down guidance last quarter. So it seems like the 15% was probably above what you guys had expected when you connected a few months ago. So can you just like help me break it down between how much came on that 15% from submissions versus rates versus new initiatives? And anything that you can -- was there anything one-off relative to the 15% that you guys printed in the quarter?

Elyse, this is Janice. So -- thanks for the question. We had a great quarter, as everyone has said, already, top line growth of 25%, the adjusted EBITDA growth of 24%. We think that, that really does reflect the investment that we've made in the platform that we've set ourselves up to perform exceptionally well going forward. And you could really see the evidence of that this quarter. You alluded to the fact that last quarter, I mentioned that we anticipated that between the third and fourth quarters, fourth quarter would be lower effectively than our guide range and Q3 would be higher, largely just based on the business mix that we experienced.

And that was part of the reason we also don't guide by quarter. If you look to what happened in the first half of the year when Q1 relative to Q2, we anticipated a similar dynamic in the third and fourth quarters this year. Overall, though, we grew significantly from a casualty perspective across all of our specialties. Tim can talk a little bit about what the drivers of that were, but largely submission growth and new business as well as high renewal retention across the board.

Property, Tim also mentioned in the discussion that we actually grew this quarter, and that was driven by new business and high renewal retention as well as continued steady flow into the E&S channel. We also saw pockets of growth within construction, largely based on the build-outs of data centers. Those can be large and lumpy. So to your point earlier, that's an area that we do expect to continue the opportunity for growth, but it may not always be consistent.

We've also seen significant and great underwriting results across transactional liability, driven by increased capital markets activity, structured solutions, reinsurance as well as from all of our acquisitions. we believe we're really well placed to continue to win across the board, and that was evident this quarter.

Tim, is there anything you'd want to add on casualty or property?

No, I think that says it all. Thank you.

And then I guess just to expand on that, like I'm looking at the revenue breakdown, right? And I know that, that's an all-in basis. But wholesale -- it looks like wholesale grew by 9%, and there was pretty 17% in binding authority, but underwriting management, right, grew 66%. So I'm just trying -- was some of that construction stuff that you're pointing to, was that more on the binding and underwriting side that that's what drove the outside revenue growth in those 2 businesses in the quarter?

Yes, Elyse, I'd say underwriting growth in the third quarter actually isn't drastically different than what we've seen in prior quarters there. We continue to see really strong underwriting growth just based on continued investment there. I called out structured solutions, reinsurance and our acquisitions, but largely transactional-based business such as transactional liability, where we had the influx from all of the capital markets activity this quarter. Construction from the build-outs, that's primarily within the wholesale book of business. But again, I mentioned that casualty was strong also across the board, across all 3.

And Elyse, it's Miles here. We appreciate -- sorry. I mean just to decompose those numbers are obviously total. And so they are representing the annualization of a very successful and material M&A campaign in the last 18 months. But they also below that, they do represent sustained increases in PC collection representative of our profitable underwriting across the cycle. And then as Janice said, strong organic growth that we remain really proud of.

And then my last question, you guys changed -- it looks like you might have changed how you're talking about guidance. Like is it double digits for this year? Is that to mean that you think you will come in at 10%, right? So the fourth quarter will be a decent decel from like the 11% year-to-date? Or is that just setting like kind of a low bar for the full year?

Elyse, you're absolutely right. We are adjusting the way in which we're talking about guidance going forward to align more with the common industry practice. So the double digits from where we were guiding last quarter, 9% to 11%. Obviously, the reference to double digits brings the floor up to 10%. When we think about the fourth quarter, as I mentioned earlier, we anticipated that the property headwinds and the business mix that we're expecting to see in the fourth quarter would drive relatively lower organic growth compared to Q3. Some of the headwinds that I mentioned, so property, we're continuing to expect 20% to 30% rate reductions as well as increased market competition just as we get closer to the end of the fourth quarter, a phenomenon that we saw last year, and we expect will still prevail this quarter this year.

We also expect just based on what we've seen to date in construction or how much the additional interest rate cut that was announced yesterday will do to get more shovels in the ground on that business. So it could be a headwind, but there's also the potential for additional of the data center build-outs that I called out earlier. In addition to that, just broader economic uncertainty around the government shutdown, transactional liability for us could be a headwind. But you're absolutely right that thinking about the double digits and the 10% effectively is the 4 is what we're calling out. But just overall, we would expect the fourth quarter to have lower organic growth than the third.

Our next question will come from Alex Scott from Barclays.

First one I had for you is on the margins. And just thinking through the back part of the year, it totally makes sense that there will be some pressure related to building out a team for the nationwide transaction in particular because you don't have revenue yet, but you got the expenses. I get that. Are there things like that where you have to build out sort of maybe ahead of when you actually begin getting revenue with other types of business as we kind of go into next year? And the reason I ask is if you don't have like a similar setup, then would you still expect to get some margin improvement in '26? Or is it something that's just going to get pushed out here further?

Yes. So I'll start that one. And then, Tim, I think you can maybe talk a little bit about how the investment in the teams work that we've been talking about on the call. So Alex, you certainly called out the reference to the fact that building out from the Markel renewal rights deal that Nationwide did that we've been appointed to underwrite for. We brought on a number of teammates from Markel over the last quarter that is part of the margin headwind. We've talked about that in the last quarter and then in this quarter. The other call out was just starting to build out more from an alternative risks perspective. That is an area where we are anticipating revenue growth in the future, but we are seeing those employees starting to build out new products and solutions. So that's why we mentioned that on the call.

And then as it relates to other talent, Tim mentioned this in his prepared remarks, that we have had a significant opportunity to invest in and under, which at this point, as they begin to come online, we often see that they're not accretive until the second or third year. And so that is where a lot of the near- to medium-term margin pressures are coming from that we called out.

Tim, do you want to talk a little bit more about that opportunity?

Sure. From the very beginning, we built the business by investing strategically, whether in talent, de novos, acquisitions or technology. You've seen us do this in many different aspects over the last few years. We've constantly anticipated where the market is going, and we benefited immensely from those investments. We're also focused on operational excellence. We can always become more efficient. We know that. Very excited about the business alignment and operational alignment that we have with our new co-Presidents. They'll be working across the business throughout the system in a collaborative way. We're happy to make that trade off on margins over the near term or when the balance shifts in favor of larger growth opportunities. So we're very focused on margin, and we're optimistic through '26 in the future.

Yes. I would just clarify, for 2026, because of the timing of when a lot of these new hires will be coming on, 2026 will again, for us, be a significant or a big investment year. So we would still anticipate those margin pressures going into 2026. I mentioned the 2- to 3-year kind of 2 to 3 years to start to become margin accretive. So 2026 -- and will depend also on how successful we are on the continuation of our recruitment efforts for the remainder of the year. But I just want to make sure that it's clear, going forward, absent a significant investment year like we've talked about this year that will continue to play through into '26 and early 2027, we would expect to see modest margin improvement, but we want to make sure that we're still giving ourselves the flexibility to prioritize these strategic investments.

Got it. That's all clear. Second one I had for you is on the construction part of your business. I mean it sounds like this quarter was good because you had some lumpy win or wins there. But I guess when I think about it more broadly, is that going from being a headwind to beginning to open up? Was that just a one-off? I'm just trying to understand how to think about construction, particularly with the newly acquired business coming online, what that looks like in 4Q in terms of year-over-year comps and so forth.

Absolutely. Well, Miles, I'll start with the underwriting side, which is predominantly property side of construction, and I'll hand it over to Tim. But I think my message is going to be relatively consistent from the prior quarter. So there are headwinds persisting that we want to acknowledge. So borrowing costs remain elevated. The tariffs are real, high inflationary costs remain around building inputs. And there is an emerging labor shortage likely emanating from a more robust stance on immigration.

All that said, though, we're seeing great flow in the space still. We have exceptional products set to win, both large, mid and small. I'd want to emphasize, I think we highlighted on the last call, U.S. Assure was our acquisition into the SME specialty space. Technical risk underwriting was a long-standing de novo in the large and complex. We utilize the best components of both those practices to launch a mid-market solution that's been effective for about a month that's accelerating growth. And so as Jan has touched on, we absolutely feel we're winning. There's just not enough groundbreaking going on right now. So the average time between quote and groundbreaking is protracted.

That said, we're deeply committed to the space. The 5 million-plus structural shortfall in available housing units in the U.S. persists. And we do believe that the 2 rate cuts so far this year are going to help flow into end of the year.

And I would just add that we know from several metrics that we receive from our clients and the markets that we're industry-leading in construction in both property and casualty. And so what new projects come into the pipeline, we're getting a high percentage of the opportunities. They're quoted, they're waiting for the trigger, and we're optimistic that we'll be finding more of those. But again, that uncertainty is lurking.

It's important to know that a big part of our construction practice group is renewable property and casualty. We have a very significant book of general contractors, subcontractors and artisan contractors at every level, some of the largest in the country, middle market and of course, our small commercial is loaded with construction business. So we keep a very close eye on it, and we believe this environment could very well improve, and we look forward to finding some of these larger projects.

Our next question will come from Brian Meredith from UBS.

A couple of them here. First one, Tim, I think I heard you correctly about 30 percentage-plus points in your underwriting management business of M&A. That would kind of imply like a 35% organic revenue growth rate in that business. Is that right? And how sustainable is that type of organic revenue growth in that business?

So I think what we've said before, Brian, and I'll start this one if Miles wants to add on as well. But I think we've always said that each of our specialties was built for double-digit organic growth. We certainly saw the opportunities within underwriting managers this quarter. There were a number of areas that were fueled by capital markets activity and other -- the construction piece and some of the items that Tim talked about. I mentioned structured solutions and reinsurance. So we're continuing to expect that underwriting managers will continue to contribute double-digit organic growth. But I would also call out that there are other reconciling items between the comments that Tim made about M&A and also organic growth, just being that around profit commissions.

And I would add, we have some tremendous growth in areas like transportation, social and human services, renewable construction, as I mentioned, habitational, sports and entertainment, public entity and municipalities, classes of business that are firming by the day, loss leaders in the reinsurance world and segments of the business where our strategy has been highly effective. We believe we have the best brokers, and we've built facilities behind it to strengthen our value proposition with the client. So there's a lot of movement in that business and great growth opportunities.

Makes sense. And then second question, I'm just curious, does the market environment, meaning the pricing environment at all influence your, call it, talent investment decisions like if we're in a softening kind of property market, are you less likely to lean into that area?

Yes, it certainly influences our decisions in those areas. And obviously, things that are ultrasoft like public D&O and cyber, we backed off that build-out over the last couple of years, but accelerated in professional liability in health care, social and human services. We've mentioned our professional liability brokers who are industry-leading, pivoted and went deep into health care and social services, and that's paid off for us in a big way.

Our next question will come from Meyer Shields from KBW.

Great. Hopefully, I'm coming through. Janice, you mentioned a couple of times the typical 2- to 3-year time horizon for full productivity. And I'm wondering whether -- or maybe differently why the current situation that I think is underpinning the investment approach, wouldn't that translate into faster productivity basically if retailers are looking for an alternative wholesale broker?

Tim, do you want to talk a little bit about the dynamics of bringing on this additional talent? I've mentioned before that it takes sometimes 2 to 3 years for them to become fully accretive.

It does. And Meyer, we're always recruiting. We're always training and developing opportunistic on hiring competitors and other talented professionals around the industry, but it does take a couple of years for them to be accretive. So there's a little bit of a hangover. We pointed that out. But again, we're very much opportunistic on that. The timing of that isn't always perfect, but it's all about A-rated talent, the highest caliber talent. We're constantly looking for it. We know it's differentiating. And when it's available and they're knocking on our door, we seize the moment.

Okay. I think I get it. Second question, I'm just curious of industry operations. We've heard a number of people, including you folks talk about maybe increasing competition for business to hit full year 2025 budgets. Does that offer any opportunity for higher broker compensation?

No, I would say not. It's -- most of it is formulaic and very predictable.

Yes. We're quite disciplined as an industry, Meyer, when -- regardless of rate drifting up or down. It's -- we've -- if you look back over our published history, our net retains in both underwriting and brokerage have remained pretty consistent.

Our next question will come from Andrew Kligerman from TD Cowen.

I wanted to build out a little bit on some of the prior questions, notably the recruitment and hiring of talent because that seems like the only constant to help gauge one of the drivers of growth. So I'm kind of hoping that, a, you can kind of help frame what was the growth in organic hires, not acquired hires, but the growth in organic hires over the last couple of years. Could you kind of help frame that?

And the part B of it is looking into the fourth quarter and looking at your double-digit guidance, the math would be that you could do 5% or 6% organic growth and still hit the 10% for the year. So the part B of the question is, are you feeling like you'll be on the north side of the 10% in the fourth quarter or the lower side? I mean we're a month into the fourth quarter. How are you thinking about that?

Well, I'll take part A, Andrew. We know historically, the most accretive thing we can do is to recruit talent and to train and develop our own. And so you know about the Ryan University, our internship program. We're putting several hundred kids through that a year, and we've been doing that for several years now. We can see the clear pathway to the most accretive profitable thing we can do is weave that into recruiting existing talent and building out these teams so that we can have the industry-leading breadth and depth in niches of business that get firm. We follow these niche firming phenomenons and can accelerate with deep bench strength. And that's really the key to capturing this business when the flow increases significantly.

And then I'll take Part B from that, Andrew. So yes, you mentioned the fourth quarter. I said earlier, we always anticipated that the fourth quarter would have lower relative organic growth. The math checks out for that to be around 6%. I mentioned that there were a number of different potential headwinds the macroeconomic uncertainty associated with construction and also capital markets activity for transactional liabilities. So there's an opportunity there for lumpy good guys, lumpy bad guys effectively that we want to make sure that we've had a range around internally. Also, property, we always anticipated that assuming a benign hurricane season, which looks to be the case that we would continue to see that 20 to 30 basis points -- sorry, 20% to 30% rate reduction continue. And it's hard for us to put a number on the impact specifically for what that's going to look like in the fourth quarter when we've got additional market competition.

So we're comfortable with the increasing certainty around double digits, but I'm not going to put any more specifics around where we might sit at the top or bottom end of what that could look like.

That's a fair response. And I'll just end it with another tough question. Hopefully, you can give me some direction on it. So previously, the way I was thinking about EBITDAC margin was it was 32% in 2024 and the likelihood would be that it kind of came to 35% in 2027. And again, very valid reasons for not getting there in '27. But any way to kind of share your views on where it might go in '27 or when you might get to 35%?

It's a fair question, Andrew. When we think about the 35%, the target is achievable. But as we've stated, the fact that this unbelievable opportunity from a talent perspective is something that we want to make sure that we have the opportunity and the capacity to capitalize on, which is going to put us in a position to have margin pressures for '26, some of that continuing into '27. But we believe going forward, a modest amount of margin expansion is still reasonable to anticipate. And so the walk to the 35% will certainly be slower, and we'll take advantage of these opportunities when they come up, whether that's in talent or technology. Right now, the balance is shifting towards the investment as opposed to the margin expansion. But over time, I think it's fair to anticipate margin expansion -- modest margin expansion on an annual basis.

Our next question will come from Rob Cox from Goldman Sachs.

Question on the London operations. Recently, we've been hearing some market commentary around disruptions surrounding the London specialty marketplace and at least one large retail broker discussing starting some operations there. Could those disruptions be a tailwind to your business? And can you talk about how Ryan's offering stands out there and the defensibility of that business?

Sure, Bob. I'll try to answer that. First and foremost, we always do what's in the best interest of our client when it comes to approaching London. In wholesale, we're there to support the retailers in their most difficult placements, which oftentimes encompasses a full-blown marketing exercise, including London. And we have a 15-year history of finding the best independent broker in London. And as you know, they use us when they need us, and we use them when we need them. And that need continues to grow. But what's happened is there's been a little bit of shifting in London, as we know. And we're revisiting our strategy in London, and we're constantly looking at how we can improve our offerings to our clients. Looking and being sensitive to things like conflicts, channel conflicts and distribution friction. So we're very sensitive to it. We are, again, revisiting our strategy there, and we will keep everyone posted.

That's helpful. And then I just wanted to follow up on shifts from the E&S market to admitted or vice versa. It sounds like it's not happening on a broad basis still. Are there pockets where you are seeing that? And could you share any information on that by product or geography?

We're really not. We haven't seen any measurable migration back into the admitted standard market. It's been mostly competition within the non-admitted surplus lines world that are driving rates down in property as an example. So it's the secular and structural changes that we've seen over the last 20 years that have developed over 100 non-admitted surplus lines platforms, including MGUs. And many of the large standard admitted big brand companies have either bought or developed non-admitted companies. So the business is tending to stay in that channel. There's no real reason to pull it back into admitted that we can see. So again, the competition is really within the non-admitted market.

Our next question will come from Bob Huang from Morgan Stanley.

So maybe my first question is really a question on your commentary around AI, machine learning. So one of the major issues when we look at M&A roll-ups is that over time, you will end up with multiple redundant systems from the IT side and then data ends up getting siloed and then there are multiple systems, multiple passwords. As you're implementing AI projects, obviously, one of the problem is how to have connected data and also have data governance regulating that. Just curious how you're thinking about aggregating data and as you continue to do more M&As in the market and then how you're thinking about that tech implementation as you're moving towards a more AI-centric platform.

Bob, I'm happy to start, Miles, if you want to add anything to that. Yes, Bob, I think we've always -- we've been a very acquisitive company. Technology is an area that sometimes acquisitions come with a very strong platform. Sometimes acquisitions come with the expectation that they're going to move on to the RT Specialty platform. We're very thoughtful about how we approach that integration and the timing of it. We're always continuing to enhance our own technology platforms to be able to utilize data and AI. Obviously, with the transformation that has occurred in the AI industry over the last couple of years, the opportunities continue to evolve very significantly. And so it's always making sure that we're able to identify what the best opportunities are for consolidating our platforms, our data and be able to put AI on top of it.

But even in the absence of consolidating all the platforms, there are solutions out there that today utilize AI to get to submissions faster, to be able to clear faster, to be able to elevate the role of the underwriter. And we're very much focused on all of those different use cases today, irrespective of the current technology landscape.

Okay. Well, I'm just going to chime in, Bob, that everything you said is real and astute and spot on. But I want to highlight a couple of kind of competitive advantages of Ryan Specialty underwriting managers that we've had over the years. So -- over the last 10 years, we've made great strides in putting all of our MGUs onto centralized back-office system, that's policy issuance, that's sub-ledger. And although certainly, these new large acquisitions are currently operating in separate environments. We've got the great benefit of data scientists already on staff, actuaries on staff. That data has been a big part of our ongoing success. We use it to raise new capital. We use it to drive better results to the carriers. So I do -- your comments are spot on, but I do want to highlight some of the investments and structural advantage we have as a firm to manage those integrations.

Okay. The MGU point is very helpful. My second question is around the organic growth. I know a lot of people have talked about that already. So apologies if we went over this. But if we were to think about new client growth and existing client growth, right, is there a way for us to kind of split out within casualty, how much of that growth is new clients and how much of that is existing clients? Is there a way for us to think about that from a casualty perspective?

Well, I would say that the customer base and the client base has been consistent. There's the top 100 Tier 1 retailers, global, national, regional, the 40-plus private equity roll-ups and then regional brokers. Then there's Tier 2, Tier 3, tens of thousands of retail brokers. So we have marketing approaches and production approaches to all 3 layers of customers, and we target them in different ways. So we're constantly rotating new marketing approaches and solutions to them based on their need profile. And we get measured every year. We're RFP-ing constantly in Tier 1 in the top 100. And they give us data on where we stand with them and like our markets do. So we know where we stand in terms of market share with them. We know much more is available for us to capture.

So it's a constant challenge for us to rotate talent in different disciplines in different regions based on most of it driven by niche firming phenomenon. We shift talent into those areas very quickly. So it's a day-to-day, very active approach to the business with our retail customers.

And our final question today will come from Josh Shanker from Bank of America.

A year ago, I can imagine you were a kid in the candy store looking at the market opportunity. And you said, you know what, by 2027, we can focus on margins over growth. And here we are a year later. I think you're still that kid in the candy store, but you realize how much opportunity there is. How has the opportunity set changed over the past 9 or 12 months that you're reining in and saying, now is not the time to focus on margins, now is the time to focus on growth.

Well, the availability of talent is a big driver of that. And there's lots of factors that create those opportunities, changing situations with competitors, professional brokers and underwriters that want to change in their career path. We've been a destination of choice, and we've been very, very fortunate that they knock on our door, and we get opportunities with them. But the timing of that and the opportunities are never consistent. They're lumpy. And when we get those opportunities, we have to move quickly and swiftly. And again, it's the #1 most accretive thing we can do. It's...

But what you're seeing is there's just more opportunities now than there were a year ago. It's even better than it was a year ago.

Absolutely, definitely.

And it's also the attraction of our platform. So it's the investment we've made in tools, capabilities, products, access to distribution. So we -- I think in past calls, we spent a lot of time highlighting those investments as creating a destination of choice for organic talent as well as it's played into destination of choice as an acquirer.

Sorry. I was just going to add a little bit more on we mentioned earlier thoughts question with regard to AI. But just with the changing landscape from a technology and AI perspective, there are certainly more opportunities today to be investing in technology than where we were sitting a year ago.

And when partners see what you've done for Markel and what you're going to be doing for AXIS, have you seen a big swelling of the pipeline opportunity for you in reinsurance going forward from new partners?

We think that there is. This is Pat, that there are going to be additional opportunities. There are some discussions being held. There are a lot of -- quite a few subscale reinsurers. A lot of people are looking at should they be more focused on their core business. And that was the Markel decision there. We certainly believe that we have a unique ability to fill that need because we have the very strong credit rating and brand value of Nationwide Mutual. And we have an outstanding leadership team, outstanding teammates, underwriters behind that leadership team.

So the industry is recognizing that. Reinsurance is becoming a much more important functional contribution to the capacity that needs to be brought into the E&S market. So yes, there's just a lot more focus on reinsurance. We uniquely are positioned with this brand exclusive with Nationwide Mutual fund reinsurance and our talent to seize those opportunities as they unfold. We can't predict when or how many, but clearly, there's interest.

Thank you. That concludes the Q&A session. I will now turn the call over to management for closing remarks.

Well, thank you very much for your good questions, your continued support, and we look forward to talking to you again a quarter from now. Thank you.