Executive Summary / Key Takeaways

• Resilient Growth Amidst Headwinds: Ryan Specialty (NYSE: RYAN) continues to demonstrate robust growth, achieving 23% total revenue growth in Q2 2025, driven by strategic M&A and strong casualty performance, even as property pricing faced significant declines (20-30% reductions in June).
• Strategic M&A as a Growth Engine: The company's aggressive and disciplined acquisition strategy, including recent deals like Velocity Risk Underwriters, USQRisk, and J.M. Wilson, is materially expanding its total addressable market, adding specialized expertise, and bolstering its preeminent Delegated Underwriting Authority (DUA) platform, which now comprises nearly 45% of revenue.
• Technological and Operational Moat: RYAN is actively investing in technology and operational efficiencies, including AI solutions and digital platforms, to streamline workflows, enhance client insights, and drive long-term margin expansion, aiming for a 35% Adjusted EBITDAC margin by 2027.
• Outlook and Investment Thesis: Despite a revised 2025 organic revenue growth guidance of 9-11% (down from 11-13%) due to property market softness, RYAN remains confident in achieving double-digit organic growth, fueled by sustained casualty strength, M&A integration, and strategic investments in talent and technology.
• Competitive Differentiation: RYAN's independence, specialized expertise, and unique relationships with carriers and retail brokers provide a significant competitive advantage, allowing it to gain market share and offer innovative solutions in the increasingly complex Excess & Surplus (E&S) market.

The Unfolding Narrative of Specialty Insurance Leadership

Ryan Specialty Holdings, Inc. has carved out a formidable position as a leading international specialty insurance firm since its founding in 2010 by Patrick G. Ryan. The company's core mission revolves around providing innovative products and solutions for insurance brokers, agents, and carriers, primarily through its roles as a wholesale broker and a managing underwriter with delegated authority. A foundational tenet of its strategy has been unwavering independence, ensuring it never competes with the retail brokers it serves, a philosophy that has become a cornerstone of its client-first approach. This strategic clarity, coupled with a relentless pursuit of specialized expertise, has propelled Ryan Specialty to consistent double-digit organic revenue growth for 14 consecutive years, a testament to its resilient business model.

The insurance landscape is undergoing profound shifts, driven by an escalating array of complex global risks—from the proliferation of cyber threats and the impacts of climate change to the nuances of social inflation. These dynamics are increasingly pushing business into the Excess & Surplus (E&S) market, where Ryan Specialty thrives. The E&S market offers greater flexibility in terms, conditions, and rates, enabling tailored solutions for risks that the admitted market struggles to underwrite efficiently. This secular shift is further amplified by a growing trend of "panel consolidation" among retail brokers, who are optimizing their client outcomes by investing in deeper, more strategic relationships with specialized intermediaries like Ryan Specialty. Carriers, too, are making significant commitments to the E&S space, recognizing the value of delegated underwriting authority (DUA) partners who offer niche specialization, portfolio diversity, and improved cost efficiency. Ryan Specialty has been an early mover in this DUA segment, which now accounts for nearly 45% of its revenue, cementing its position as a preeminent platform in this rapidly expanding area.

Technological Edge and Operational Excellence

Ryan Specialty's competitive moat is significantly reinforced by its continuous investment in technological differentiation and operational excellence. The company is actively engaged in streamlining and digitizing its workflow processes, undertaking system consolidation, and enhancing its "workbenches" to improve efficiency. This includes developing "efficient online distribution" platforms, such as its "Connector" for small commercial digital trading, and leveraging "digital insights" to enhance decision-making.

The strategic intent behind these technological initiatives is clear: to reduce cycle time, speed up answers and insights for clients, and process non-strategic, client-facing activities with maximum swiftness and cost-efficiency. While specific quantitative performance metrics for these technologies are not publicly detailed, management emphasizes that these efforts "equip our producers to be as good and as fast as they can and helps us spend money on talent rather than process." Furthermore, the company is experimenting with advanced technologies, including "AI solutions," and is making significant progress in its "Alternative Risk business," which involves "new product development" and the integration of "AI-driven risk analytics." These investments are designed to generate "unmatched capabilities to generate new business, organic growth and margin benefits." The successful conclusion of the "ACCELERATE 2025" program by the end of 2024, which is expected to yield approximately $60 million in gross savings in 2025, underscores Ryan Specialty's ability to drive operational efficiencies and provides financial flexibility for further strategic technological investments. This commitment to innovation and efficiency is a core pillar of its strategy to maintain a durable advantage and achieve its long-term margin targets.

Competitive Dynamics and Market Share Gains

In the competitive landscape of insurance brokerage and services, Ryan Specialty stands out as a specialized powerhouse amidst larger, more diversified players such as Arthur J. Gallagher & Co. (AJG), Marsh & McLennan Companies, Inc. (MMC), and Aon plc (AON). While these global giants offer broader portfolios encompassing risk consulting and employee benefits, Ryan Specialty's strategic focus on niche specialization in the E&S market provides a distinct advantage. The company's agility in developing tailored underwriting and product solutions allows for potentially faster processing and more efficient outcomes in specialized segments, fostering stronger customer loyalty. This contrasts with the more generalized or technology-heavy approaches of its larger peers, which, while offering scale, may lack the bespoke touch Ryan Specialty provides.

Financially, Ryan Specialty's TTM Gross Profit Margin of 71.44% is competitive, though it trails AJG's 85% and AON's 47%, and MMC's 43%. Its TTM Operating Profit Margin of 13.49% and Net Profit Margin of 1.98% are generally lower than those of AJG (20% Operating, 13% Net), MMC (24% Operating, 17% Net), and AON (24% Operating, 17% Net). This suggests that while Ryan Specialty's specialized model is highly effective, it may not yet yield the same level of scale efficiencies or pricing power as the largest diversified players. However, its margins are notably stronger than some broader consulting-heavy rivals like Willis Towers Watson (WTW), which reported a TTM Operating Profit Margin of 6% and a Net Profit Margin of -0.99%.

Ryan Specialty's higher Debt/Equity ratio of 5.99 compared to AJG (0.67), MMC (1.64), AON (2.92), and WTW (0.75) indicates a more leveraged financial structure, reflecting its aggressive M&A strategy. Despite this, management has consistently affirmed its comfort within its 3x-4x net leverage corridor, expressing willingness to temporarily exceed it for strategic acquisitions.

Ryan Specialty consistently reports gaining market share and winning "head-to-head" against competitors, even in challenging segments like property. Its emphasis on independence, coupled with its "unparalleled expertise" and "unmatched work ethic," makes its platform "exceedingly difficult to replicate." The company's success in attracting top talent and its "unique relationships and position of trust" with trading partners further solidify its competitive moat. This is exemplified by the expanded strategic alliance with Nationwide Mutual, where Ryan Re (Ryan Specialty's reinsurance underwriting MGU) will become Nationwide's exclusive reinsurance underwriter for the book of business acquired from Markel (MKL). This deal not only expands Ryan Specialty's footprint but also deepens its strategic ties with key industry players, demonstrating its ability to leverage relationships for unique growth opportunities.

Financial Performance and Strategic Initiatives

Ryan Specialty delivered a solid second quarter in 2025, with total revenue growing 23% year-over-year to $855.2 million. This growth was significantly bolstered by M&A, which contributed 13 percentage points to the top line. Organic revenue growth, while still healthy at 7.1%, fell short of initial expectations, primarily due to a "rapid decline in property pricing" in June, with reductions ranging from 20% to 30%. Despite these headwinds, Adjusted EBITDAC grew 24.5% to $308 million, and the Adjusted EBITDAC margin expanded 50 basis points to 36.1%, reflecting the company's ability to manage profitability even in a challenging market. For the first six months of 2025, total revenue reached $1.55 billion, up 23.9%, with organic revenue growth at 9.6%.

The company's strategic M&A program has been a cornerstone of its expansion. 2024 was a record year for acquisitions, adding over $265 million in trailing revenue. This momentum continued into 2025 with several key acquisitions:

• Velocity Risk Underwriters, LLC (February 2025): An MGU specializing in catastrophe-exposed properties, adding $81 million in annual revenue and strengthening Ryan Specialty's property capabilities. This acquisition also led to a strategic investment in Velocity Specialty Insurance Company (VSIC) by FM Global, aligning Ryan Specialty with a sophisticated capital provider.
• USQRisk Holdings, LLC (May 2025): Added $11 million in annualized revenue, bolstering Ryan Specialty's Alternative Risk offerings with expertise in bespoke, multi-year risk solutions.
• 360 Underwriting (May 2025): An Irish MGU focused on commercial construction, further expanding the company's international footprint.
• J.M. Wilson Corporation (July 2025): An MGA and surplus lines broker specializing in transportation insurance, contributing $19 million in annual revenue and enhancing the Binding Authority segment.

These acquisitions are not merely about scale; they are strategic moves to expand the total addressable market, add specialized expertise, and broaden Ryan Specialty's international presence, directly contributing to future organic growth.

Outlook, Guidance, and Risks

For the full year 2025, Ryan Specialty has revised its organic revenue growth guidance to 9% to 11%, down from the initial 11% to 13%. This adjustment primarily reflects the expectation that the "significantly soft pricing environment" in property, characterized by 20-30% reductions seen in June, will continue for the remainder of the year, leading to a "modest decline" in the property book. The revised outlook also factors in broader macroeconomic uncertainty, including elevated borrowing costs and the ongoing impact of trade wars on construction activity. Despite this, management remains "relentless" in its pursuit of double-digit organic growth, confident in its ability to offset property headwinds with robust casualty performance and new business generation.

The Adjusted EBITDAC margin guidance for 2025 has also been narrowed to 32.5% to 33%. This reflects the impact of lower property revenue expectations, partially offset by variable compensation structures, and increased investments in strategic initiatives. Notably, the company is undertaking "heavy staffing" for its Ryan Re and Alternative Risk businesses, which are expected to generate significant new business, organic growth, and margin benefits starting in 2026. This commitment to long-term investment underpins the company's confidence in achieving its ambitious target of a 35% Adjusted EBITDAC margin by the end of 2027.

Key risks to monitor include the persistence and severity of property pricing declines, which could further impact revenue. Macroeconomic factors, particularly those affecting construction starts, could prolong the "increased time between quoting and inception of coverage." While Ryan Specialty asserts its alignment with capital providers, broader industry concerns about "misalignment of incentives in the MGA model" could, if not carefully managed, create reputational or operational challenges for the sector. However, the company's consistent track record of delivering strong underwriting profits for its carrier partners and its disciplined approach to delegated authority mitigate this risk for Ryan Specialty.

Conclusion

Ryan Specialty stands as a compelling investment proposition, rooted in its specialized expertise, strategic growth through M&A, and a forward-looking commitment to technological and operational excellence. Despite recent property market headwinds that led to a revised 2025 organic growth outlook, the company's diversified portfolio, particularly its robust casualty business and expanding Delegated Underwriting Authority platform, provides a strong foundation for continued double-digit organic growth. The strategic acquisitions of Velocity, USQRisk, and J.M. Wilson, coupled with the expanded alliance with Nationwide Mutual, underscore a disciplined approach to market expansion and talent acquisition, effectively fueling future organic growth.

The company's ongoing investments in technology and operational efficiencies, exemplified by the "ACCELERATE 2025" program and the pursuit of AI solutions, are critical to enhancing its competitive moat and driving long-term margin expansion towards the 35% Adjusted EBITDAC target by 2027. Ryan Specialty's unique position of independence and trust within the E&S market, combined with its ability to consistently gain market share, positions it favorably against larger, more generalized competitors. For discerning investors, Ryan Specialty represents a resilient and strategically agile firm, poised to capitalize on the increasing complexity of global risks and the secular shift towards specialized insurance solutions, making it a compelling long-term play in the evolving financial services landscape.