Results
Ryan Specialty Holdings Inc.
10/30/2026 | Press release | Distributed by Public on 10/30/2026 05:33
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis summarizes the significant factors affecting the consolidated operating results,
financial condition, liquidity, and cash flows of the Company as of and for the periods presented below. The following
discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the related notes
included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended
December 31, 2025, which was filed with the SEC on February 13, 2026. The discussion contains forward-looking
statements that are based on the beliefs of management, as well as assumptions made by, and information currently
available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking
statements as a result of various factors, including those discussed below and in our Annual Report on Form 10-K,
particularly in the sections entitled "Risk Factors" and "Information Concerning Forward-Looking Statements."
The following discussion provides commentary on the financial results derived from our unaudited financial statements for
the three and nine months ended September 30, 2026 and 2025, prepared in accordance with U.S. GAAP. In addition, we
regularly review the following Non-GAAP measures when assessing performance: Organic revenue growth rate, Adjusted
compensation and benefits expense, Adjusted compensation and benefits expense ratio, Adjusted general and
administrative expense, Adjusted general and administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC
margin, Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share. See "Non-GAAP
Financial Measures and Key Performance Indicators" for further information.
Overview
Founded by Patrick G. Ryan in 2010, we are a service provider of specialty products and solutions for insurance brokers,
agents, and carriers. We provide distribution, underwriting, product development, administration, and risk management
services by acting predominantly as a wholesale broker and a managing underwriter or a program administrator with
delegated authority from insurance carriers. Our mission is to provide industry-leading innovative specialty insurance
solutions for insurance brokers, agents, and carriers.
For retail insurance agents and brokers, we assist in the placement of complex or otherwise hard-to-place risks. For
insurance and reinsurance carriers, we predominantly work with retail and wholesale insurance brokers to source, onboard,
underwrite, and service these same types of risks. A significant majority of the premiums we place are bound in the E&S
market, which includes Lloyd's of London. There is often significantly more flexibility in terms, conditions, and rates in
the E&S market relative to the Admitted or "standard" insurance market. We believe that the additional freedom to craft
bespoke terms and conditions in the E&S market allows us to best meet the needs of our trading partners, provide unique
solutions, and drive innovation. We believe our success has been achieved by providing best-in-class intellectual capital,
leveraging our trusted and long-standing relationships, and developing differentiated solutions at a scale unmatched by
many of our competitors.
Significant Events and Transactions
Corporate Structure
We are a holding company and our sole material asset is a controlling equity interest in New LLC, which is also a holding
company and its sole material asset is a controlling equity interest in the LLC. The Company operates and controls the
business and affairs of, and consolidates the financial results of, the LLC through New LLC. We conduct our business
through the LLC. As the LLC is substantively the same as New LLC, for the purpose of this discussion we will refer to
both New LLC and the LLC as the "LLC".
The LLC is a limited liability company taxed as a partnership for income tax purposes, and its taxable income or loss is
passed through to its members, including the Company. The LLC is subject to income taxes on its taxable income in certain
foreign countries, in certain state and local jurisdictions that impose income taxes on partnerships, and on the taxable
income of its U.S. corporate subsidiaries. As a result of our ownership of LLC Common Units, we are subject to U.S.
federal, state, and local income taxes with respect to our allocable share of any taxable income of the LLC and are taxed at
the prevailing corporate tax rates. We intend to cause the LLC to make distributions in an amount that is at least sufficient
to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments
due under the Tax Receivable Agreement. See "Liquidity and Capital Resources - Tax Receivable Agreement" for
additional information about the TRA.
Empower Program
In the first quarter of 2026, we initiated a three-year restructuring program (the "Empower Program") that will streamline
our brokerage, binding, and underwriting operations, optimize our scale, accelerate our data and technology strategies, and
enhance efficiencies across all of our Specialties. The program is estimated to result in approximately $160 million of
cumulative one-time charges through 2028, funded through operating cash flow, and is expected to generate annual savings
of approximately $80 million in 2029. Actions taken under the Empower Program are expected to be completed by the end
of 2028. Restructuring costs will primarily be included in General and administrative expense, relating to third-party
professional services, technology and data initiatives, and other expenses. The remaining costs will be incurred through
Compensation and benefits expense, predominately relating to third-party contractor and other workforce-related costs.
We began recognizing costs associated with the restructuring plan in the first quarter of 2026. For the three and nine
months ended September 30, 2026, we incurred restructuring and related costs of $23.9 million and $63.1 million,
respectively, with the $63.1 million recognized over the first nine months of 2026 representing cumulative costs since the
inception of the program. Of the cumulative $63.1 million expense, $29.5 million was incurred in general and
administrative expense with the remaining being workforce-related costs. Restructuring expense within General and
administrative expense includes costs relating to professional services, technology and data initiatives, license fees, and
third-party contractors, as well as non-cash expenses associated with the impairment of internally-developed software.
Compensation and benefits restructuring costs include severance as well as employment costs for services rendered
between the notification and termination dates and other termination payments. While the current results of the Empower
Program are in line with expectations, changes to the total savings estimate and timing of the Empower Program may
evolve as we continue to progress through the program and evaluate other potential opportunities. The actual amounts and
timing may vary significantly based on various factors.
Key Factors Affecting Our Performance
Our historical financial performance has been, and we expect our financial performance in the future to be, driven by our
ability to:
Pursue Strategic Acquisitions
We have successfully integrated businesses complementary to our own to increase both our distribution reach and our
product and service capabilities. We continuously evaluate acquisitions and intend to further pursue targeted acquisitions
that complement our product and service capabilities or provide us access to new markets. We have previously made, and
intend to continue to make, acquisitions with the objective of enhancing our human capital and product and service
capabilities, entering natural adjacencies, and expanding our geographic presence. Our ability to successfully pursue
strategic acquisitions is dependent upon a number of factors, including sustained execution of a disciplined and selective
acquisition strategy which requires acquisition targets to have a cultural and strategic fit, competition for these assets,
purchase price multiples that we deem appropriate and our ability to effectively integrate targeted companies or assets and
grow our business. We do not have agreements or commitments for any material acquisitions at this time.
Deepen and Broaden our Relationships with Retail Broker Trading Partners
We have deep engagement with our retail broker trading partners, and we believe we have the ability to transact in even
greater volume with nearly all of them. For example, in 2025, our revenue derived from the Top 100 firms (as ranked by
Business Insurance) expanded faster than our Organic revenue growth rate of 10.1%. Our ability to deepen and broaden
relationships with our retail broker trading partners and increase sales is dependent upon a number of factors, including
client satisfaction with our distribution reach and our product capabilities, retail brokers continuing to require or desire our
services, competition, pricing, economic conditions, and spending on our product offerings.
Build Our Delegated Authority Business
We believe there is substantial opportunity to continue to grow our Delegated Authority business, which includes both our
Binding Authority Specialty and Underwriting Management Specialty. We believe that both M&A consolidation and panel
consolidation have a long runway. We believe that both M&A consolidation and the use and reliance on scaled delegated
Underwriting Management will continue to grow. Our ability to grow this business is dependent upon a number of factors,
including a continuing ability to secure sufficient capital support from insurers, the quality of our services and product
offerings, marketing and sales efforts to drive new business prospects and execution, new product offerings, the pricing and
quality of our competitors' offerings, and the growth in demand for the insurance products.
Invest in Operations and Growth
We have invested heavily in building a durable business that is able to adapt to the continuously evolving specialty and
E&S markets and intend to continue to do so. We are focused on enhancing the breadth of our product and service
offerings as well as developing and launching new solutions to address the evolving needs of the specialty insurance
industry and markets. Our future success is dependent upon a number of factors, including our ability to successfully
develop, market, and sell existing and new products and services to both new and existing trading partners. We will
continue to prioritize strategic investments that support revenue growth such as investments in talent, de novo formations,
product innovation and solutions, M&A, and technology in order to maximize long-term value creation, which could have
a short-term margin impact.
The Empower Program initiated in the first quarter of 2026 is designed to enhance efficiencies across all of our Specialties.
The efficiencies we gain through the Empower Program are expected to allow us to continue making strategic investments
in growth, top-tier talent, and de novo formations, and address the rapidly evolving needs of our clients.
Generate Commission Regardless of the State of the Specialty and E&S Markets
We earn commissions, which are calculated as a percentage of the total insurance policy premium, and fees. Changes in the
insurance market or specialty lines that are our focus, characterized by a period of increasing (or declining) premium rates,
could positively (or negatively) impact our profitability.
Manage Changing Macroeconomic Conditions
Growth in certain lines of business, such as project-based construction and M&A transactional liability insurance, is
partially dependent on a variety of macroeconomic factors inasmuch as binding the underlying insurance coverage is
subject to the underlying activity occurring. In periods of economic growth, liquid credit markets, and favorable interest
rates, this underlying activity can accelerate and provide tailwinds to our growth. In periods of economic decline, tight
credit markets, and unfavorable interest rates, this underlying activity can slow or be delayed and provide headwinds to our
growth. We believe over the long term these lines of business will continue to grow.
Leverage the Growth of the Specialty and E&S Markets
The growing relevance of the specialty and E&S markets has been driven by the rapid emergence and sustained prevalence
of large, complex, high-hazard, and otherwise hard-to-place risks across many lines of insurance. This trend continued in
2025, with $125 billion of insured catastrophe losses, driven by $52 billion of insured losses related to severe convective
storms ("SCS") with 19 SCS events that caused losses in excess of $1 billion, which together accounted for the third-
highest annual total for insured losses on record for SCS events, and over $41 billion in losses generated from California
wildfires. The year also included floods in central Texas and the Mississippi valley, causing over 135 fatalities and over $3
billion in insured losses. Additionally, these risks include the potential for more severe hurricanes that occur with greater
frequency, more devastating wildfires, more frequent flooding, escalating jury verdicts and social inflation, geographic
shifts in population density, a proliferation of cyber threats, novel health risks, risks associated with large sports and
entertainment venues, building and labor cost inflation relative to insured value, and the transformation of the economy to a
"digital first" mode of doing business. We believe that as the complexity of the specialty and E&S markets continues to
escalate, wholesale brokers and managing underwriters that do not have sufficient scale, or the financial and intellectual
capital to invest in the required specialty capabilities, will struggle to compete effectively. This will further the trend of
market share consolidation among the wholesale firms that do have these capabilities. We will continue to invest in our
intellectual capital to innovate and offer custom solutions and products to better address these evolving market
fundamentals.
Although we believe this growth will continue, we recognize that the growth of the specialty and E&S markets might not
be linear as risks can and do shift between the E&S, including the specialty market, and non-E&S markets as market
factors change and evolve. For example, we benefited from a rapid increase in both the flow of property risks into the
wholesale channel and the premium rate charged for those risks in 2023 and the first half of 2024 as the frequency and
severity of catastrophe losses, attritional losses and secondary perils such as severe convective storms, economic inflation,
concentration of exposures, higher retentions of risk, and higher reinsurance costs applied pressure to insurers and capacity
tightened. Beginning in the second half of 2024 and through the first nine months of 2026, the specialty and E&S markets
experienced a shift in these trends as insurance capacity for these property risks increased, which resulted in a decline in
property premium rates. We believe these factors have created additional opportunities for retailers to place property
coverage directly, and we believe the market dynamics exist for these factors to continue throughout 2026.
Components of Results of Operations
Revenue
Net Commissions and Fees
Net commissions and fees are derived primarily from our three Specialties and are paid for our role as an intermediary in
facilitating the placement of coverage in the insurance distribution chain. Net commissions and policy fees are generally
calculated as a percentage of the total insurance policy premium placed, although fees can often be a fixed amount
irrespective of the premium, and we also receive supplemental commissions based on the volume placed or profitability of
a book of business. We share a portion of these net commissions and policy fees with the retail insurance broker and
recognize revenue on a net basis. Additionally, carriers may also pay us a contingent commission or volume-based
commission, both of which represent forms of contingent or supplemental consideration associated with the placement of
coverage and are based primarily on underwriting results, but may also contain considerations for only volume, growth,
and/or retention. Although we have compensation arrangements called contingent commissions in all three Specialties that
are based in whole or in part on the underwriting performance, we do not take any direct insurance risk other than through
our equity method investments in Geneva Re, Ltd through Ryan Investment Holdings, LLC and VSIC, which we sold
during the third quarter of 2026. We also receive loss mitigation and other fees, some of which are not dependent on the
placement of a risk.
In our Wholesale Brokerage and Binding Authority Specialties, we generally work with retail insurance brokers to secure
insurance coverage for their clients, who are the ultimate insured party. Our Wholesale Brokerage and Binding Authority
Specialties generate revenues through commissions and fees from clients, as well as through supplemental commissions,
which may be contingent commissions or volume-based commissions from carriers. Commission rates and fees vary
depending upon several factors, which may include the amount of premium, the type of insurance coverage provided, the
particular services provided to a client or carrier, and the capacity in which we act. Payment terms are consistent with
current industry practice.
In our Underwriting Management Specialty, we utilize delegated authority granted to us by carriers and we work with retail
insurance brokers or wholesale brokers to secure insurance coverage for the ultimate insured party. Our Underwriting
Management Specialty generates revenues through insurance and reinsurance commissions and fees from clients and
through contingent commissions from carriers. Commission rates and fees vary depending upon several factors including
the premium, the type of coverage, and additional services provided to the client. Payment terms are consistent with current
industry practice.
Fiduciary Investment Income
Fiduciary investment income consists of interest earned on insurance premiums and surplus lines taxes that are held in a
fiduciary capacity, in cash and cash equivalents, until disbursed.
Expenses
Compensation and Benefits
Compensation and benefits is our largest expense. It consists of (i) salary, incentives, and benefits to employees, and
commissions to our producers and (ii) equity-based compensation associated with the grants of awards to employees,
executive officers, and directors. We operate in competitive markets for human capital and we need to maintain
competitive compensation levels in order to maintain and grow our talent base.
General and Administrative
General and administrative expense includes travel and entertainment expenses, information technology, occupancy-related
expenses, foreign exchange, legal, insurance and other professional fees, and other costs associated with our operations. In
particular, our travel and entertainment expenses, information technology expenses, occupancy-related expenses, and
professional services expenses generally increase or decrease in relative proportion to the number of our employees and the
overall size and scale of our business operations.
Amortization
Amortization expense consists primarily of amortization related to intangible assets we acquired in connection with our
acquisitions. Intangible assets consist of customer relationships, trade names, assembled workforce, and internally-
developed software.
Interest Expense, Net
Interest expense, net consists of interest payable on indebtedness, amortization of the Company's interest rate cap in 2025,
imputed interest on contingent consideration, and amortization of deferred debt issuance costs, offset by interest income on
the Company's Cash and cash equivalents balances and payments received in relation to the interest rate cap, which
expired at the end of 2025.
Other Non-Operating Income
For the nine months ended September 30, 2026, Other non-operating income consisted of seller reimbursement of
acquisition-related retention incentives, sublease income, forfeitures of vested equity awards, and proceeds from the sales
of a small non-subscription workers compensation book of business and a small MGU offset by TRA contractual interest
and related charges. For the nine months ended September 30, 2025, Other non-operating income consisted of seller
reimbursement of acquisition-related retention incentives, sublease income, and forfeitures of vested equity awards offset
by TRA contractual interest and related charges.
Income Tax Expense
Income tax expense includes tax on the Company's allocable share of any net taxable income from the LLC, from certain
state and local jurisdictions that impose taxes on partnerships, as well as earnings from our foreign subsidiaries and C-
Corporations subject to entity level taxation, and income tax expense recognized as a result of the Common Control
Reorganization ("CCR") subsequent to the Velocity acquisition in the first quarter of 2025.
Non-Controlling Interests
Net income and Other comprehensive income (loss) are attributed to the non-controlling interests based on the weighted-
average LLC Common Units outstanding during the period and are presented on the Consolidated Statements of Income.
Refer to "Note 8, Stockholders' Equity" of the unaudited quarterly consolidated financial statements for more information.
Results of Operations
Below is a summary table of the financial results and Non-GAAP measures that we find relevant to our business operations:
|
Three Months Ended
September 30,
|
Change
|
Nine Months Ended
September 30,
|
Change
|
|||||||||||||
|
(in thousands, except percentages and per share
data)
|
2026
|
2025
|
$
|
%
|
2026
|
2025
|
$
|
%
|
||||||||
|
Revenue
|
||||||||||||||||
|
Net commissions and fees
|
$775,081
|
$739,552
|
$35,529
|
4.8 %
|
$2,460,712
|
$2,256,537
|
$204,175
|
9.0 %
|
||||||||
|
Fiduciary investment income
|
14,882
|
15,025
|
(143)
|
(1.0)
|
41,127
|
43,376
|
(2,249)
|
(5.2)
|
||||||||
|
Total revenue
|
$789,963
|
$754,577
|
$35,386
|
4.7 %
|
$2,501,839
|
$2,299,913
|
$201,926
|
8.8 %
|
||||||||
|
Expenses
|
||||||||||||||||
|
Compensation and benefits
|
484,208
|
440,434
|
43,774
|
9.9
|
1,511,001
|
1,355,995
|
155,006
|
11.4
|
||||||||
|
General and administrative
|
106,977
|
117,589
|
(10,612)
|
(9.0)
|
334,381
|
330,698
|
3,683
|
1.1
|
||||||||
|
Amortization
|
64,278
|
70,188
|
(5,910)
|
(8.4)
|
194,005
|
204,841
|
(10,836)
|
(5.3)
|
||||||||
|
Depreciation
|
4,330
|
3,607
|
20.0
|
12,525
|
9,134
|
3,391
|
37.1
|
|||||||||
|
Change in contingent consideration
|
(10,658)
|
11,968
|
(22,626)
|
NM
|
34,187
|
(2,833)
|
37,020
|
NM
|
||||||||
|
Total operating expenses
|
$649,135
|
$643,786
|
$5,349
|
0.8 %
|
$2,086,099
|
$1,897,835
|
$188,264
|
9.9 %
|
||||||||
|
Operating income
|
$140,828
|
$110,791
|
$30,037
|
27.1 %
|
$415,740
|
$402,078
|
$13,662
|
3.4 %
|
||||||||
|
Interest expense, net
|
57,264
|
56,344
|
1.6
|
167,646
|
169,186
|
(1,540)
|
(0.9)
|
|||||||||
|
Income from equity method investments
|
(11,840)
|
(4,957)
|
(6,883)
|
NM
|
(24,410)
|
(15,050)
|
(9,360)
|
62.2
|
||||||||
|
Other non-operating income
|
(784)
|
(402)
|
(382)
|
95.0
|
(1,520)
|
(636)
|
(884)
|
NM
|
||||||||
|
Income before income taxes
|
$96,188
|
$59,806
|
$36,382
|
60.8 %
|
$274,024
|
$248,578
|
$25,446
|
10.2 %
|
||||||||
|
Income tax expense (benefit)
|
8,140
|
(2,797)
|
10,937
|
NM
|
36,998
|
65,659
|
(28,661)
|
(43.7)
|
||||||||
|
Net income
|
$88,048
|
$62,603
|
$25,445
|
40.6 %
|
$237,026
|
$182,919
|
$54,107
|
29.6 %
|
||||||||
|
GAAP financial measures
|
||||||||||||||||
|
Total revenue
|
$789,963
|
$754,577
|
$35,386
|
4.7 %
|
$2,501,839
|
$2,299,913
|
$201,926
|
8.8 %
|
||||||||
|
Net commissions and fees
|
775,081
|
739,552
|
35,529
|
4.8
|
2,460,712
|
2,256,537
|
204,175
|
9.0
|
||||||||
|
Compensation and benefits
|
484,208
|
440,434
|
43,774
|
9.9
|
1,511,001
|
1,355,995
|
155,006
|
11.4
|
||||||||
|
General and administrative
|
106,977
|
117,589
|
(10,612)
|
(9.0)
|
334,381
|
330,698
|
3,683
|
1.1
|
||||||||
|
Net income
|
88,048
|
62,603
|
25,445
|
40.6
|
237,026
|
182,919
|
54,107
|
29.6
|
||||||||
|
Compensation and benefits expense ratio (1)
|
61.3 %
|
58.4 %
|
60.4 %
|
59.0 %
|
||||||||||||
|
General and administrative expense ratio (2)
|
13.5 %
|
15.6 %
|
13.4 %
|
14.4 %
|
||||||||||||
|
Net income margin (3)
|
11.1 %
|
8.3 %
|
9.5 %
|
8.0 %
|
||||||||||||
|
Earnings per share (4)
|
$0.30
|
$0.24
|
$0.77
|
$0.44
|
||||||||||||
|
Diluted earnings per share (4)
|
$0.29
|
$0.20
|
$0.74
|
$0.41
|
||||||||||||
|
Non-GAAP financial measures*
|
||||||||||||||||
|
Organic revenue growth rate
|
4.0 %
|
15.0 %
|
7.3 %
|
11.4 %
|
||||||||||||
|
Adjusted compensation and benefits expense
|
$443,373
|
$417,217
|
$26,156
|
6.3%
|
$1,400,151
|
$1,268,059
|
$132,092
|
10.4%
|
||||||||
|
Adjusted compensation and benefits expense
ratio
|
56.1 %
|
55.3 %
|
56.0 %
|
55.1 %
|
||||||||||||
|
Adjusted general and administrative expense
|
$102,144
|
$101,827
|
$317
|
0.3%
|
$298,306
|
$287,414
|
$10,892
|
3.8%
|
||||||||
|
Adjusted general and administrative expense
ratio
|
12.9 %
|
13.5 %
|
11.9 %
|
12.5 %
|
||||||||||||
|
Adjusted EBITDAC
|
$244,446
|
$235,533
|
$8,913
|
3.8%
|
$803,383
|
$744,440
|
$58,943
|
7.9%
|
||||||||
|
Adjusted EBITDAC margin
|
30.9 %
|
31.2 %
|
32.1 %
|
32.4 %
|
||||||||||||
|
Adjusted net income
|
$137,121
|
$131,704
|
$5,417
|
4.1%
|
$466,581
|
$424,225
|
$42,356
|
10.0%
|
||||||||
|
Adjusted net income margin
|
17.4 %
|
17.5 %
|
18.6 %
|
18.4 %
|
||||||||||||
|
Adjusted diluted earnings per share
|
$0.51
|
$0.47
|
$0.04
|
8.5%
|
$1.75
|
$1.52
|
$0.23
|
15.1%
|
||||||||
NM represents "Not Meaningful."
(1)Compensation and benefits expense ratio is defined as Compensation and benefits expense divided by Total revenue.
(2)General and administrative expense ratio is defined as General and administrative expense divided by Total revenue.
(3)Net income margin is defined as Net income divided by Total revenue.
(4)See "Note 10, Earnings Per Share" of the unaudited quarterly consolidated financial statements for further discussion of
how these metrics are calculated.
*These measures are Non-GAAP. Please refer to the section entitled "Non-GAAP Financial Measures and Key Performance
Indicators" below for definitions and reconciliations to the most directly comparable GAAP measure.
Comparison of the Three Months Ended September 30, 2026 and 2025
Revenue
Total Revenue
Total revenue increased by $35.4 million, or 4.7%, from $754.6 million to $790.0 million for the three months ended
September 30, 2026, as compared to the same period in the prior year. The following were the principal drivers of the
increase:
•$28.5 million, or 3.8%, of the period-over-period change in Total revenue was due to organic revenue growth in
Net commissions and fees. Organic revenue growth represents the change in Net commissions and fees revenue,
as compared to the same period for the year prior, adjusted for Net commissions and fees attributable to recent
acquisitions during the first twelve months of Ryan Specialty's ownership, and other adjustments such as the
removal of the impact of contingent commissions and the impact of changes in foreign exchange rates. In
aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships,
in aggregate, within our Wholesale Brokerage and Underwriting Management Specialties offset by a modest
decline in our Binding Authority Specialty. We experienced growth across the majority of our casualty lines
offset by a moderate pullback across our property portfolio driven by a continued decline in rates and retailers
realizing additional opportunities to place coverage directly. This decline was partially offset by strong new
business generation and renewal retention;
•$4.5 million, or 0.6%, of the period-over-period change in Total revenue was due to contingent commissions
driven by the performance of risks placed on eligible business earning profit-based commissions and the impact
of foreign exchange rates on the Company's Net commissions and fees; and
•$2.5 million, or 0.3%, of the period-over-period change in Total revenue was due to acquisitions during their
first twelve months of ownership by the Company. Within acquisition revenue is a $1.1 million offset in
revenue period-over-period relating to the sales of a small non-subscription workers compensation book of
business at the end of 2024 and a small MGU in 2025.
•These increases were offset by a decline of $0.1 million of the period-over-period change in Total revenue due
to a decrease in Fiduciary investment income, caused by a decline in interest rates compared to the prior year
period.
|
Three Months Ended September 30,
|
||||||||||||
|
(in thousands, except percentages)
|
2026
|
% of
total
|
2025
|
% of
total
|
Change
|
|||||||
|
Wholesale Brokerage
|
$394,283
|
50.9 %
|
$376,788
|
50.9 %
|
$17,495
|
4.6 %
|
||||||
|
Binding Authority
|
93,012
|
12.0
|
89,636
|
12.1
|
3,376
|
3.8
|
||||||
|
Underwriting Management
|
287,786
|
37.1
|
273,128
|
37.0
|
14,658
|
5.4
|
||||||
|
Total Net commissions and fees
|
$775,081
|
$739,552
|
$35,529
|
4.8 %
|
||||||||
Wholesale Brokerage Net commissions and fees increased by $17.5 million, or 4.6%, period-over-period, primarily due to
organic growth within the Specialty for the quarter.
Binding Authority Net commissions and fees increased by $3.4 million, or 3.8%, period-over-period, primarily due to
contingent commission growth within the Specialty for the quarter.
Underwriting Management Net commissions and fees increased by $14.7 million, or 5.4%, period-over-period, primarily due
to organic growth within the Specialty for the quarter and contributions from recent acquisitions.
The following table sets forth our revenue by type of commissions and fees:
|
Three Months Ended September 30,
|
||||||||||||
|
(in thousands, except percentages)
|
2026
|
% of
total
|
2025
|
% of
total
|
Change
|
|||||||
|
Net commissions and policy fees
|
$725,761
|
93.6 %
|
$672,942
|
91.0 %
|
$52,819
|
7.8 %
|
||||||
|
Supplemental and contingent
commissions
|
33,781
|
4.4
|
29,782
|
4.0
|
3,999
|
13.4
|
||||||
|
Loss mitigation and other fees
|
15,539
|
2.0
|
36,828
|
5.0
|
(21,289)
|
(57.8)
|
||||||
|
Total Net commissions and fees
|
$775,081
|
$739,552
|
$35,529
|
4.8 %
|
||||||||
Net commissions and policy fees grew 7.8%, in line with the overall net commissions and fees revenue growth of 4.8%, for
the three months ended September 30, 2026, as compared to the same period in the prior year. The main drivers of this
growth continue to be new business wins and expansion of ongoing client relationships in response to the increasing demand
for new, complex specialty and E&S products, the inflow of risks from the Admitted market into the specialty and E&S
markets, and contributions from recent acquisitions. In aggregate, we experienced stable commission rates period-over-
period.
Supplemental and contingent commissions increased 13.4% period-over-period driven by the performance of risks placed on
eligible business earning profit-based or volume-based commissions as well as contributions from recent acquisitions.
Loss mitigation and other fees decreased 57.8% period-over-period primarily due to a decline in transactional business as
well as captive management and other risk management service fees from the placement of alternative risk insurance
solutions partially offset by growth in capital markets activity.
Expenses
Compensation and Benefits
Compensation and benefits expense increased by $43.8 million, or 9.9%, from $440.4 million to $484.2 million for the three
months ended September 30, 2026, compared to the same period in 2025. The following were the principal drivers of this
increase:
•$21.3 million of the increase was driven by (i) the addition of 147 employees compared to the same period in
the prior year, inclusive of acquired employees, and (ii) growth in the business. Overall headcount increased to
6,129 full-time employees as of September 30, 2026, from 5,982 as of September 30, 2025;
•A $19.5 million increase in Restructuring and related expense due to the Empower Program. Compensation and
benefits restructuring costs include severance as well as employment costs for services rendered between the
notification and termination dates and other termination payments; and
•Commissions increased $6.6 million, or 3.6%, period-over-period, driven by the 4.6% increase in Wholesale
Brokerage and 3.8% increase in Binding Authority Net commissions and fees.
•The increases were partially offset by a $3.6 million decrease in Acquisition-related expense and Acquisition
related long-term incentive compensation related to the decline in acquisition activity compared to the prior
period.
The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio increase of
2.9% from 58.4% to 61.3% period-over-period.
In general, we expect to continue experiencing a rise in commissions, salaries, incentives, and benefits expense
commensurate with our expected growth in business volume, revenue, and headcount.
General and Administrative
General and administrative expense decreased by $10.6 million, or 9.0%, from $117.6 million to $107.0 million for the three
months ended September 30, 2026, as compared to the same period in the prior year. The following were the principal drivers
of this decrease:
•$15.3 million decline in Acquisition-related expense associated with lower diligence, transaction-related, and
integration activity in the period.
•The decrease was partially offset by a $4.3 million increase in Restructuring and related expense due to the
Empower Program. Restructuring expense within General and administrative expense includes costs relating to
professional services, technology and data initiatives, license fees, and third-party contractors.
The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio decrease
of 2.1% from 15.6% to 13.5% period-over-period.
Amortization
Amortization expense decreased by $5.9 million from $70.2 million to $64.3 million for the three months ended
September 30, 2026, compared to the same period in the prior year. The main driver of the decrease was that amortization of
customer relationships is recognized on an accelerated basis and declines over time. Our intangible assets decreased by
$167.9 million period-over-period.
Interest Expense, Net
Interest expense, net increased $0.9 million, or 1.6%, from $56.3 million to $57.3 million for the three months ended
September 30, 2026, compared to the same period in the prior year. The main driver of the increase in Interest expense, net
for the three months ended September 30, 2026, was a slight decrease in interest income on operating cash compared to the
prior period.
Other Non-Operating Income
Other non-operating income increased by $0.4 million from $0.4 million to $0.8 million for the three months ended
September 30, 2026. For the three months ended September 30, 2026, Other non-operating income consisted of $1.0 million
of proceeds from the sales of a small non-subscription workers compensation book of business and a small MGU, $0.1
million of sublease income, and $0.1 million of forfeitures of vested equity awards offset by $0.5 million of TRA contractual
interest and related charges. For the three months ended September 30, 2025, Other non-operating income consisted of $0.3
million of forfeitures of vested equity awards, $0.2 million of seller reimbursement of acquisition-related retention incentives,
and $0.2 million of sublease income offset by $0.4 million of TRA contractual interest and related charges.
Income Before Income Taxes
Income before income taxes increased $36.4 million from $59.8 million to $96.2 million for the three months ended
September 30, 2026, compared to the same period in the prior year as a result of the factors described above.
Income Tax Expense (Benefit)
Income tax expense (benefit) increased $10.9 million from a benefit of $2.8 million to expense of $8.1 million for the three
months ended September 30, 2026, compared to the same period in the prior year. The increase was primarily a result of a
$6.9 million decrease in the discrete benefit from a decline in the fair value of vested equity compensation period-over-period
as well as an increase in pre-tax book income.
Net Income
Net income increased $25.4 million from $62.6 million to $88.0 million for the three months ended September 30, 2026,
compared to the same period in the prior year as a result of the factors described above.
Comparison of the Nine Months Ended September 30, 2026 and 2025
Revenue
Total Revenue
Total revenue increased by $201.9 million, or 8.8%, from $2,299.9 million to $2,501.8 million for the nine months ended
September 30, 2026, as compared to the same period in the prior year. The following were the principal drivers of the
increase:
•$158.8 million, or 6.9%, of the period-over-period change in Total revenue was due to organic revenue
growth in Net commissions and fees. Organic revenue growth represents the change in Net commissions and
fees revenue, as compared to the same period for the year prior, adjusted for Net commissions and fees
attributable to recent acquisitions during the first twelve months of Ryan Specialty's ownership, and other
adjustments such as the removal of the impact of contingent commissions and the impact of changes in
foreign exchange rates. In aggregate, our net commission rates were consistent period-over-period. Also, we
grew our client relationships, in aggregate, within each of our three Specialties. The growth of these
relationships is due to the combination of the growing specialty and E&S markets and winning new business
from competitors. We experienced growth across the majority of our casualty lines offset by a moderate
pullback across our property portfolio driven by a continued decline in rates and retailers realizing additional
opportunities to place coverage directly. This decline was partially offset by strong new business generation
and renewal retention. Growth in the period was most pronounced in our Underwriting Management
Specialty, with growth across our three Specialties driven by an increase in the flow of risks into the specialty
and E&S markets;
•$28.0 million, or 1.2%, of the period-over-period change in Total revenue was due to acquisitions during their
first twelve months of ownership by the Company. Within acquisition revenue is a $2.2 million offset in
revenue period-over-period relating to the sales of a small non-subscription workers compensation book of
business at the end of 2024 and a small MGU in 2025; and
•$17.3 million, or 0.7%, of the period-over-period change in Total revenue was due to contingent commissions
driven by the performance of risks placed on eligible business earning profit-based commissions and the
impact of foreign exchange rates on the Company's Net commissions and fees.
•These increases were offset by a decline of $2.2 million of the period-over-period change in Total revenue
due to a decrease in Fiduciary investment income, caused by a decline in interest rates compared to the prior
year period.
|
Nine Months Ended September 30,
|
||||||||||||
|
(in thousands, except percentages)
|
2026
|
% of
total
|
2025
|
% of
total
|
Change
|
|||||||
|
Wholesale Brokerage
|
$1,270,881
|
51.7 %
|
$1,214,741
|
53.8 %
|
$56,140
|
4.6 %
|
||||||
|
Binding Authority
|
303,182
|
12.3
|
286,110
|
12.7
|
17,072
|
6.0
|
||||||
|
Underwriting Management
|
886,649
|
36.0
|
755,686
|
33.5
|
130,963
|
17.3
|
||||||
|
Total Net commissions and fees
|
$2,460,712
|
$2,256,537
|
$204,175
|
9.0 %
|
||||||||
Wholesale Brokerage Net commissions and fees increased by $56.1 million, or 4.6%, period-over-period, primarily due to
organic growth within the Specialty for the period and contributions from the J.M. Wilson acquisition.
Binding Authority Net commissions and fees increased by $17.1 million, or 6.0%, period-over-period, primarily due to
organic growth within the Specialty for the period, contingent commission growth, and contributions from the J.M. Wilson
acquisition.
Underwriting Management Net commissions and fees increased by $131.0 million, or 17.3%, period-over-period, primarily
due to organic growth within the Specialty for the period and contributions from recent acquisitions.
The following table sets forth our revenue by type of commissions and fees:
|
Nine Months Ended September 30,
|
||||||||||||
|
(in thousands, except percentages)
|
2026
|
% of
total
|
2025
|
% of
total
|
Change
|
|||||||
|
Net commissions and policy fees
|
$2,295,699
|
93.3 %
|
$2,083,983
|
92.4 %
|
$211,716
|
10.2 %
|
||||||
|
Supplemental and contingent
commissions
|
115,066
|
4.7
|
103,185
|
4.6
|
11,881
|
11.5
|
||||||
|
Loss mitigation and other fees
|
49,947
|
2.0
|
69,369
|
3.0
|
(19,422)
|
(28.0)
|
||||||
|
Total Net commissions and fees
|
$2,460,712
|
$2,256,537
|
$204,175
|
9.0 %
|
||||||||
Net commissions and policy fees grew 10.2%, in line with the overall net commissions and fees revenue growth of 9.0%,
for the nine months ended September 30, 2026, as compared to the same period in the prior year. The main drivers of this
growth continue to be new business wins and expansion of ongoing client relationships in response to the increasing
demand for new, complex specialty and E&S products, the inflow of risks from the Admitted market into the specialty and
E&S markets, and contributions from recent acquisitions. In aggregate, we experienced stable commission rates period-
over-period.
Supplemental and contingent commissions increased 11.5% period-over-period driven by the performance of risks placed
on eligible business earning profit-based or volume-based commissions as well as contributions from recent acquisitions.
Loss mitigation and other fees decreased 28.0% period-over-period primarily due to a decline in transactional business as
well as captive management and other risk management service fees from the placement of alternative risk insurance
solutions partially offset by growth in capital markets activity.
Expenses
Compensation and Benefits
Compensation and benefits expense increased by $155.0 million, or 11.4%, from $1,356.0 million to $1,511.0 million for
the nine months ended September 30, 2026, compared to the same period in 2025. The following were the principal drivers
of this increase:
•$99.2 million of the increase was driven by (i) the addition of 147 employees compared to the same period in
the prior year, inclusive of acquired employees, and (ii) growth in the business. Overall headcount increased
to 6,129 full-time employees as of September 30, 2026, from 5,982 as of September 30, 2025;
•A $33.6 million increase in Restructuring and related expense due to the Empower Program. Compensation
and benefits restructuring costs include severance as well as employment costs for services rendered between
the notification and termination dates and other termination payments; and
•Commissions increased $32.8 million, or 5.5%, period-over-period, driven by the 4.6% increase in Wholesale
Brokerage and 6.0% increase in Binding Authority Net commissions and fees.
•The increases were partially offset by a $10.6 million decline in Acquisition-related expense and Acquisition
related long-term incentive compensation related to the decline in acquisition activity compared to the prior
period.
The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio increase of
1.4% from 59.0% to 60.4% period-over-period.
In general, we expect to continue experiencing a rise in commissions, salaries, incentives, and benefits expense
commensurate with our expected growth in business volume, revenue, and headcount.
General and Administrative
General and administrative expense increased by $3.7 million, or 1.1%, from $330.7 million to $334.4 million for the nine
months ended September 30, 2026, as compared to the same period in the prior year. The following were the principal
drivers of this increase:
•A $29.5 million increase in Restructuring and related expense due to the Empower Program. Restructuring
expense within General and administrative expense includes costs relating to professional services,
technology and data initiatives, license fees, and third-party contractors, as well as non-cash expenses
associated with the impairment of internally-developed software; and
•A $10.9 million increase was driven by growth in the business. Such expenses incurred to accommodate both
organic and inorganic revenue growth include travel and entertainment, information technology, occupancy,
insurance, and foreign exchange.
•The increases were partially offset by a $36.7 million decline in Acquisition-related expense associated with
lower diligence, transaction-related, and integration activity in the period.
The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio
decrease of 1.0% from 14.4% to 13.4% period-over-period.
Amortization
Amortization expense decreased by $10.8 million from $204.8 million to $194.0 million for the nine months ended
September 30, 2026, compared to the same period in the prior year. The main driver of the decrease was that amortization
of customer relationships is recognized on an accelerated basis and declines over time. Our intangible assets decreased by
$167.9 million period-over-period.
Interest Expense, Net
Interest expense, net decreased $1.5 million, or 0.9%, from $169.2 million to $167.6 million for the nine months ended
September 30, 2026, compared to the same period in the prior year. The main driver of the decrease in Interest expense, net
for the nine months ended September 30, 2026, was a decrease in interest rates.
Other Non-Operating Income
Other non-operating income increased by $0.9 million to income of $1.5 million for the nine months ended September 30,
2026, as compared to income of $0.6 million in the same period in the prior year. For the nine months ended September 30,
2026, Other non-operating income consisted of $1.1 million of proceeds from the sales of a small non-subscription workers
compensation book of business and a small MGU, $0.7 million of forfeitures of vested equity awards, $0.4 million of
sublease income, and $0.1 million of seller reimbursement of acquisition-related retention incentives offset by $0.8 million
of TRA contractual interest and related charges. For the nine months ended September 30, 2025, Other non-operating
income consisted of $0.6 million of seller reimbursement of acquisition-related retention incentives, $0.4 million of
sublease income, and $0.3 million of forfeitures of vested equity awards offset by $0.8 million of TRA contractual interest
and related charges.
Income Before Income Taxes
Income before income taxes increased $25.4 million from $248.6 million to $274.0 million for the nine months ended
September 30, 2026, compared to the same period in the prior year as a result of the factors described above.
Income Tax Expense (Benefit)
Income tax expense (benefit) decreased $28.7 million from $65.7 million to $37.0 million for the nine months ended
September 30, 2026, compared to the same period in the prior year primarily as a result of $48.0 million of income tax
expense recognized as a result of the CCR subsequent to the Velocity acquisition in the first quarter of 2025 offset by a
$12.5 million decrease in the discrete benefit from a decline in the fair value of vested equity compensation period-over-
period in the period.
Net Income
Net income increased $54.1 million from $182.9 million to $237.0 million for the nine months ended September 30, 2026,
compared to the same period in the prior year as a result of the factors described above.
Non-GAAP Financial Measures and Key Performance Indicators
In assessing the performance of our business, we use non-GAAP financial measures that are derived from our consolidated
financial information, but which are not presented in our consolidated financial statements prepared in accordance with
GAAP. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate
operating performance comparisons from period to period by excluding potential differences caused by variations in capital
structures, tax positions, depreciation, amortization, and certain other items that we believe are not representative of our
core business. We use the following non-GAAP measures for business planning purposes, in measuring our performance
relative to that of our competitors, to help investors to understand the nature of our growth, and to enable investors to
evaluate the run-rate performance of the Company. Non-GAAP financial measures should be viewed as supplementing,
and not as an alternative or substitute for, the consolidated financial statements prepared and presented in accordance with
GAAP. The footnotes to the reconciliation tables below should be read in conjunction with the unaudited consolidated
quarterly financial statements. Industry peers may provide similar supplemental information but may not define similarly
named metrics in the same way we do and may not make identical adjustments.
Organic Revenue Growth Rate
Organic revenue growth rate is defined as the percentage change in Net commissions and fees, as compared to the same
period for the prior year, adjusted to eliminate revenue attributable to acquisitions for the first twelve months of ownership,
revenue attributable to sold businesses for the subsequent twelve months after the sale, and other items such as contingent
commissions and the impact of changes in foreign exchange rates.
For the avoidance of doubt, prior period references in the tables below represent the same period in the prior year. A
reconciliation of Organic revenue growth rate to Net commissions and fees growth rate, the most directly comparable
GAAP measure, for each of the periods indicated is as follows (in percentages):
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||
|
(in thousands, except percentages)
|
2026
|
2025
|
2026
|
2025
|
|||
|
Current period Net commissions and fees revenue
|
$775,081
|
$739,552
|
$2,460,712
|
$2,256,537
|
|||
|
Less: Current period contingent commissions
|
(29,107)
|
(24,310)
|
(95,629)
|
(82,164)
|
|||
|
Less: Revenue attributable to sold businesses
|
(55)
|
(65)
|
(147)
|
(354)
|
|||
|
Net commissions and fees revenue excluding contingent
commissions
|
$745,919
|
$715,177
|
$2,364,936
|
$2,174,019
|
|||
|
Prior period Net commissions and fees revenue
|
$739,552
|
$588,129
|
$2,256,537
|
$1,806,264
|
|||
|
Less: Prior year contingent commissions
|
(24,310)
|
(14,842)
|
(82,164)
|
(44,741)
|
|||
|
Less: Revenue attributable to sold businesses
|
(1,161)
|
(427)
|
(2,343)
|
(1,548)
|
|||
|
Prior period Net commissions and fees revenue excluding
contingent commissions
|
$714,081
|
$572,860
|
$2,172,030
|
$1,759,975
|
|||
|
Change in Net commissions and fees revenue excluding
contingent commissions
|
$31,838
|
$142,317
|
$192,906
|
$414,044
|
|||
|
Less: Mergers and acquisitions Net commissions and fees
revenue excluding contingent commissions
|
(3,574)
|
(55,650)
|
(30,249)
|
(212,249)
|
|||
|
Impact of change in foreign exchange rates
|
(923)
|
(3,878)
|
(1,324)
|
||||
|
Organic revenue growth (Non-GAAP)
|
$28,483
|
$85,744
|
$158,779
|
$200,471
|
|||
|
Net commissions and fees revenue growth rate (GAAP)
|
4.8 %
|
25.7 %
|
9.0 %
|
24.9 %
|
|||
|
Less: Impact of contingent commissions (1)
|
(0.3)
|
(0.9)
|
(0.1)
|
(1.4)
|
|||
|
Net commissions and fees revenue excluding contingent
commissions growth rate (2)
|
4.5 %
|
24.8 %
|
8.9 %
|
23.5 %
|
|||
|
Less: Mergers and acquisitions Net commissions and fees
revenue excluding contingent commissions (3)
|
(0.5)
|
(9.7)
|
(1.4)
|
(12.0)
|
|||
|
Impact of change in foreign exchange rates (4)
|
-
|
(0.1)
|
(0.2)
|
(0.1)
|
|||
|
Organic Revenue Growth Rate (Non-GAAP)
|
4.0 %
|
15.0 %
|
7.3 %
|
11.4 %
|
|||
(1)Calculated by subtracting Net commissions and fees revenue growth rate from net commissions and fees revenue
excluding contingent commissions growth rate and revenue from sold businesses.
(2)Calculated by dividing the change in Total net commissions & fees revenue excluding contingent commissions by prior
year net commissions and fees excluding contingent commissions and revenue from sold businesses.
(3)Calculated by taking the mergers and acquisitions net commissions and fees revenue excluding contingent
commissions, representing the first twelve months of net commissions and fees revenue generated from acquisitions,
divided by prior period net commissions and fees revenue excluding contingent commissions and revenue from sold
businesses.
(4)Calculated by taking the change in foreign exchange rates divided by prior period net commissions and fees revenue
excluding contingent commissions and revenue from sold businesses.
Adjusted Compensation and Benefits Expense and Adjusted Compensation and Benefits Expense Ratio
We define Adjusted compensation and benefits expense as Compensation and benefits expense adjusted to reflect items
such as (i) equity-based compensation, (ii) acquisition and restructuring related compensation expense, and (iii) other
exceptional or non-recurring items, as applicable. The most comparable GAAP financial metric is Compensation and
benefits expense. Adjusted compensation and benefits expense ratio is defined as Adjusted compensation and benefits
expense as a percentage of Total revenue. The most comparable GAAP financial metric is Compensation and benefits
expense ratio.
A reconciliation of Adjusted compensation and benefits expense and Adjusted compensation and benefits expense ratio to
Compensation and benefits expense and Compensation and benefits expense ratio, the most directly comparable GAAP
measures, for each of the periods indicated, is as follows:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||
|
(in thousands, except percentages)
|
2026
|
2025
|
2026
|
2025
|
||||
|
Total revenue
|
$789,963
|
$754,577
|
$2,501,839
|
$2,299,913
|
||||
|
Compensation and benefits expense
|
$484,208
|
$440,434
|
$1,511,001
|
$1,355,995
|
||||
|
Acquisition-related expense
|
(625)
|
(3,583)
|
(5,885)
|
(8,546)
|
||||
|
Acquisition related long-term incentive compensation
|
(6,791)
|
(7,463)
|
(17,185)
|
(25,115)
|
||||
|
Restructuring and related expense
|
(19,528)
|
-
|
(33,627)
|
-
|
||||
|
Amortization and expense related to discontinued prepaid
incentives
|
(663)
|
(981)
|
(2,185)
|
(3,287)
|
||||
|
Equity-based compensation (1)
|
(13,105)
|
(7,432)
|
(45,825)
|
(36,854)
|
||||
|
IPO related expenses
|
(123)
|
(3,758)
|
(6,143)
|
(14,134)
|
||||
|
Adjusted compensation and benefits expense (2)
|
$443,373
|
$417,217
|
$1,400,151
|
$1,268,059
|
||||
|
Compensation and benefits expense ratio
|
61.3 %
|
58.4 %
|
60.4 %
|
59.0 %
|
||||
|
Adjusted compensation and benefits expense ratio
|
56.1 %
|
55.3 %
|
56.0 %
|
55.1 %
|
||||
(1)For the three months ended September 30, 2026, $9.2 million of expense was reversed associated with certain
performance-based awards. For the three months ended September 30, 2025, $5.8 million of expense was reversed
associated with certain executive performance-based awards. See "Note 9, Equity-Based Compensation" of the
unaudited quarterly financial statements for additional discussion.
(2)Adjustments to Compensation and benefits expense are described in the definition of Adjusted EBITDAC to Net
income in "Adjusted EBITDAC and Adjusted EBITDAC Margin."
Adjusted General and Administrative Expense and Adjusted General and Administrative Expense Ratio
We define Adjusted general and administrative expense as General and administrative expense adjusted to reflect items
such as (i) acquisition and restructuring general and administrative related expense and (ii) other exceptional or non-
recurring items, as applicable. The most comparable GAAP financial metric is General and administrative expense.
Adjusted general and administrative expense ratio is defined as Adjusted general and administrative expense as a
percentage of Total revenue. The most comparable GAAP financial metric is General and administrative expense ratio.
A reconciliation of Adjusted general and administrative expense and Adjusted general and administrative expense ratio to
General and administrative expense and General and administrative expense ratio, the most directly comparable GAAP
measures, for each of the periods indicated is as follows:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||
|
(in thousands, except percentages)
|
2026
|
2025
|
2026
|
2025
|
||||
|
Total revenue
|
$789,963
|
$754,577
|
$2,501,839
|
$2,299,913
|
||||
|
General and administrative expense
|
$106,977
|
$117,589
|
$334,381
|
$330,698
|
||||
|
Acquisition-related expense
|
(509)
|
(15,762)
|
(6,553)
|
(43,284)
|
||||
|
Restructuring and related expense
|
(4,324)
|
-
|
(29,522)
|
-
|
||||
|
Adjusted general and administrative expense (1)
|
$102,144
|
$101,827
|
$298,306
|
$287,414
|
||||
|
General and administrative expense ratio
|
13.5 %
|
15.6 %
|
13.4 %
|
14.4 %
|
||||
|
Adjusted general and administrative expense ratio
|
12.9 %
|
13.5 %
|
11.9 %
|
12.5 %
|
||||
(1)Adjustments to General and administrative expense are described in the definition of Adjusted EBITDAC to Net
income in "Adjusted EBITDAC and Adjusted EBITDAC Margin."
Adjusted EBITDAC and Adjusted EBITDAC Margin
We define Adjusted EBITDAC as Net income before Interest expense, net, Income tax expense, Depreciation,
Amortization, and Change in contingent consideration, adjusted to reflect items such as (i) equity-based compensation, (ii)
acquisition and restructuring related expenses, and (iii) other exceptional or non-recurring items, as applicable.
Acquisition-related expense includes one-time diligence, transaction-related, and integration costs. Acquisition related
long-term incentive compensation arises from long-term incentive plans associated with acquisitions. These plans require
service requirements, and in some cases performance targets, to be met in order to be earned. Restructuring and related
expense consists of compensation and benefits, contractors, professional services, and license fees related to the Empower
Program, which was initiated at the beginning of 2026. Restructuring expense within general and administrative expense
includes costs relating to professional services, technology and data initiatives, license fees, and third-party contractors, as
well as non-cash expenses associated with the impairment of internally-developed software. Compensation and benefits
restructuring costs include severance as well as employment costs for services rendered between the notification and
termination dates and other termination payments. Amortization and expense is composed of charges related to
discontinued prepaid incentive programs. For the three months ended September 30, 2026, Other non-operating income
consisted of $1.0 million of proceeds from the sales of a small non-subscription workers compensation book of business
and a small MGU, $0.1 million of sublease income, and $0.1 million of forfeitures of vested equity awards offset by $0.5
million of TRA contractual interest and related charges. For the three months ended September 30, 2025, Other non-
operating income consisted of $0.3 million of forfeitures of vested equity awards, $0.2 million of seller reimbursement of
acquisition-related retention incentives, and $0.2 million of sublease income offset by $0.4 million of TRA contractual
interest and related charges. For the nine months ended September 30, 2026, Other non-operating income consisted of $1.1
million of proceeds from the sales of a small non-subscription workers compensation book of business and a small MGU,
$0.7 million of forfeitures of vested equity awards, $0.4 million of sublease income, and $0.1 million of seller
reimbursement of acquisition-related retention incentives offset by $0.8 million of TRA contractual interest and related
charges. For the nine months ended September 30, 2025, Other non-operating income consisted of $0.6 million of seller
reimbursement of acquisition-related retention incentives, $0.4 million of sublease income, and $0.3 million of forfeitures
of vested equity awards offset by $0.8 million of TRA contractual interest and related charges. Equity-based compensation
reflects non-cash equity-based expense. IPO related expenses consist of compensation-related expense primarily related to
the expense for new awards issued at IPO as well as expense related to the revaluation of existing equity awards at IPO.
Total revenue less Adjusted compensation and benefits expense and Adjusted general and administrative expense is
equivalent to Adjusted EBITDAC. For a breakout of compensation and general and administrative costs for each addback,
refer to the Adjusted compensation and benefits expense and Adjusted general and administrative expense tables above.
The most directly comparable GAAP financial metric to Adjusted EBITDAC is Net income. Adjusted EBITDAC margin is
defined as Adjusted EBITDAC as a percentage of Total revenue. The most comparable GAAP financial metric is Net
income margin.
A reconciliation of Adjusted EBITDAC and Adjusted EBITDAC margin to Net income and Net income margin, the most
directly comparable GAAP measures, for each of the periods indicated is as follows:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||
|
(in thousands, except percentages)
|
2026
|
2025
|
2026
|
2025
|
||||
|
Total revenue
|
$789,963
|
$754,577
|
$2,501,839
|
$2,299,913
|
||||
|
Net income
|
$88,048
|
$62,603
|
$237,026
|
$182,919
|
||||
|
Interest expense, net
|
57,264
|
56,344
|
167,646
|
169,186
|
||||
|
Income tax expense (benefit)
|
8,140
|
(2,797)
|
36,998
|
65,659
|
||||
|
Depreciation
|
4,330
|
3,607
|
12,525
|
9,134
|
||||
|
Amortization
|
64,278
|
70,188
|
194,005
|
204,841
|
||||
|
Change in contingent consideration (1)
|
(10,658)
|
11,968
|
34,187
|
(2,833)
|
||||
|
EBITDAC
|
$211,402
|
$201,913
|
$682,387
|
$628,906
|
||||
|
Acquisition-related expense
|
1,134
|
19,345
|
12,439
|
51,830
|
||||
|
Acquisition related long-term incentive compensation
|
6,791
|
7,463
|
17,185
|
25,115
|
||||
|
Restructuring and related expense
|
23,852
|
-
|
63,149
|
-
|
||||
|
Amortization and expense related to discontinued
prepaid incentives
|
2,185
|
3,287
|
||||||
|
Other non-operating income
|
(784)
|
(402)
|
(1,520)
|
(636)
|
||||
|
Equity-based compensation
|
13,105
|
7,432
|
45,825
|
36,854
|
||||
|
IPO related expenses
|
3,758
|
6,143
|
14,134
|
|||||
|
Income from equity method investments
|
(11,840)
|
(4,957)
|
(24,410)
|
(15,050)
|
||||
|
Adjusted EBITDAC
|
$244,446
|
$235,533
|
$803,383
|
$744,440
|
||||
|
Net income margin
|
11.1 %
|
8.3 %
|
9.5 %
|
8.0 %
|
||||
|
Adjusted EBITDAC margin
|
30.9 %
|
31.2 %
|
32.1 %
|
32.4 %
|
||||
(1)For the three months ended September 30, 2026, and for the nine months ended September 30, 2025, Change in
contingent consideration included a $12.9 million and $14.3 million, respectively, decrease in valuation of the US
Assure contingent consideration as a result of increased loss ratios impacting projected profit commissions.
Adjusted Net Income and Adjusted Net Income Margin
We define Adjusted net income as tax-effected earnings before amortization and certain items of income and expense,
gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related
expenses, costs associated with the IPO, and certain exceptional or non-recurring items. The most comparable GAAP
financial metric is Net income. Adjusted net income margin is calculated as Adjusted net income as a percentage of Total
revenue. The most comparable GAAP financial metric is Net income margin.
Following the IPO, the Company is subject to United States federal income taxes, in addition to state, local, and foreign
taxes, with respect to our allocable share of any net taxable income of the LLC. For comparability purposes, this
calculation incorporates the impact of federal and state statutory tax rates on 100% of our adjusted pre-tax income as if the
Company owned 100% of the LLC.
A reconciliation of Adjusted net income and Adjusted net income margin to Net income and Net income margin, the most
directly comparable GAAP measures, for each of the periods indicated is as follows:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||
|
(in thousands, except percentages)
|
2026
|
2025
|
2026
|
2025
|
||||
|
Total revenue
|
$789,963
|
$754,577
|
$2,501,839
|
$2,299,913
|
||||
|
Net income
|
$88,048
|
$62,603
|
$237,026
|
$182,919
|
||||
|
Income tax expense (benefit)
|
8,140
|
(2,797)
|
36,998
|
65,659
|
||||
|
Amortization
|
64,278
|
70,188
|
194,005
|
204,841
|
||||
|
Amortization of deferred debt issuance costs (1)
|
2,447
|
2,397
|
7,303
|
7,157
|
||||
|
Change in contingent consideration
|
(10,658)
|
11,968
|
34,187
|
(2,833)
|
||||
|
Acquisition-related expense
|
1,134
|
19,345
|
12,439
|
51,830
|
||||
|
Acquisition related long-term incentive compensation
|
6,791
|
7,463
|
17,185
|
25,115
|
||||
|
Restructuring and related expense
|
23,852
|
-
|
63,149
|
-
|
||||
|
Amortization and expense related to discontinued
prepaid incentives
|
2,185
|
3,287
|
||||||
|
Other non-operating income
|
(784)
|
(402)
|
(1,520)
|
(636)
|
||||
|
Equity-based compensation
|
13,105
|
7,432
|
45,825
|
36,854
|
||||
|
IPO related expenses
|
3,758
|
6,143
|
14,134
|
|||||
|
Income from equity method investments
|
(11,840)
|
(4,957)
|
(24,410)
|
(15,050)
|
||||
|
Adjusted income before income taxes (2)
|
$185,299
|
$177,979
|
$630,515
|
$573,277
|
||||
|
Adjusted income tax expense (3)
|
(48,178)
|
(46,275)
|
(163,934)
|
(149,052)
|
||||
|
Adjusted net income
|
$137,121
|
$131,704
|
$466,581
|
$424,225
|
||||
|
Net income margin
|
11.1 %
|
8.3 %
|
9.5 %
|
8.0 %
|
||||
|
Adjusted net income margin
|
17.4 %
|
17.5 %
|
18.6 %
|
18.4 %
|
||||
(1)Interest expense, net includes amortization of deferred debt issuance costs.
(2)Adjustments to Net income are described in the definition of Adjusted EBITDAC to Net income in "Adjusted
EBITDAC and Adjusted EBITDAC Margin."
(3)The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect
to our allocable share of any net taxable income of the LLC. For the three and nine months ended September 30, 2026
and 2025, this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined
state income tax rate net of federal benefits of 5.00% on 100% of our adjusted income before income taxes as if the
Company owned 100% of the LLC.
Adjusted Diluted Earnings Per Share
We define Adjusted diluted earnings per share as Adjusted net income divided by diluted shares outstanding after adjusting
for the effect if 100% of the outstanding LLC Common Units (together with the shares of Class B common stock), vested
Class C Incentive Units, vested but unexercised Options, and unvested equity awards were exchanged into shares of Class
A common stock as if 100% of unvested equity awards were vested. The most directly comparable GAAP financial metric
is Diluted earnings per share.
A reconciliation of Adjusted diluted earnings per share to Diluted earnings per share, the most directly comparable GAAP
measure, for each of the periods indicated is as follows:
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||
|
2026
|
2025
|
2026
|
2025
|
|||||
|
Earnings per share of Class A common stock - diluted
|
$0.29
|
$0.20
|
$0.74
|
$0.41
|
||||
|
Less: Net income attributed to dilutive shares (1)
|
(0.15)
|
(0.09)
|
(0.01)
|
(0.01)
|
||||
|
Plus: Impact of all LLC Common Units exchanged for
Class A shares (2)
|
0.20
|
0.12
|
0.16
|
0.27
|
||||
|
Plus: Adjustments to Adjusted net income (3)
|
0.18
|
0.25
|
0.86
|
0.88
|
||||
|
Plus: Dilutive impact of unvested equity awards (4)
|
(0.01)
|
(0.01)
|
-
|
(0.03)
|
||||
|
Adjusted diluted earnings per share
|
$0.51
|
$0.47
|
$1.75
|
$1.52
|
||||
|
(Share count in '000)
|
||||||||
|
Weighted-average shares of Class A common stock
outstanding - diluted
|
262,162
|
273,462
|
132,485
|
138,090
|
||||
|
Plus: Impact of all LLC Common Units exchanged for
Class A shares (2)
|
-
|
-
|
133,980
|
135,644
|
||||
|
Plus: Dilutive impact of unvested equity awards (4)
|
4,172
|
5,526
|
(393)
|
5,407
|
||||
|
Adjusted diluted earnings per share diluted share
count
|
266,334
|
278,988
|
266,072
|
279,141
|
||||
(1)Adjustment removes the impact of Net income attributed to dilutive awards to arrive at Net income attributable to Ryan
Specialty Holdings, Inc. For the three months ended September 30, 2026 and 2025, this removes $38.0 million and
$23.4 million of Net income, respectively, on 262.2 million and 273.5 million Weighted-average shares of Class A
common stock outstanding - diluted, respectively. For the nine months ended September 30, 2026 and 2025, this
removes $1.0 million and $1.2 million of Net income, respectively, on 132.5 million and 138.1 million Weighted-
average shares of Class A common stock outstanding - diluted, respectively. See "Note 10, Earnings Per Share" of the
unaudited quarterly consolidated financial statements.
(2)For comparability purposes, this calculation incorporates the Net income that would be distributable if all LLC
Common Units (together with shares of Class B common stock) were exchanged for shares of Class A common stock.
For the three months ended September 30, 2026 and 2025, this includes $51.4 million and $31.5 million of Net income,
respectively, on 262.2 million and 273.5 million Weighted-average shares of Class A common stock outstanding -
diluted, respectively. For the nine months ended September 30, 2026 and 2025, this includes $140.4 million and $127.5
million of Net income, respectively, on 266.5 million and 273.7 million Weighted-average shares of Class A common
stock outstanding - diluted, respectively. For the three months ended September 30, 2026, 133.3 million weighted-
average outstanding LLC Common Units were considered dilutive and included in the 262.2 million Weighted-average
shares of Class A common stock outstanding - diluted. For the three months ended September 30, 2025, 135.5 million
weighted-average outstanding LLC Common Units were considered dilutive and included in the 273.5 million
Weighted-average shares of Class A common stock outstanding - diluted. See "Note 10, Earnings Per Share" of the
unaudited quarterly consolidated financial statements.
(3)Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to Net
income in "Adjusted Net Income and Adjusted Net Income Margin" on 262.2 million and 273.5 million Weighted-
average shares of Class A common stock outstanding - diluted for the three months ended September 30, 2026 and
2025, respectively, and 266.5 million and 273.7 million Weighted-average shares of Class A common stock outstanding
- diluted for the nine months ended September 30, 2026 and 2025, respectively.
(4)For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net income,
the dilutive effect of 100% of the outstanding LLC Common Units (together with shares of Class B common stock) at
the end of each period, vested Class C Incentive Units, vested but unexercised options, and unvested equity awards is
calculated using the treasury stock method as if the weighted-average unrecognized cost associated with the awards was
$0 over the period, less any unvested equity awards determined to be dilutive within the Diluted EPS calculation
disclosed in "Note 10, Earnings Per Share" of the unaudited quarterly consolidated financial statements. For the three
months ended September 30, 2026 and 2025, 4.2 million and 5.5 million shares were added to the calculation,
respectively. For the nine months ended September 30, 2026 and 2025, (0.4) million and 5.4 million shares were added
to the calculation, respectively.
Liquidity and Capital Resources
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business
operations. We believe that the balance sheet and strong cash flow profile of our business provide adequate liquidity. The
primary sources of liquidity are Cash and cash equivalents on the Consolidated Balance Sheets, cash flows provided by
operations, and debt capacity available under our Revolving Credit Facility, Term Loan, and Senior Secured Notes. The
primary uses of liquidity are operating expenses, seasonal working capital needs, business combinations, capital
expenditures, obligations under the TRA, taxes, distributions to LLC Unitholders, share repurchases, and dividends to
Class A common stockholders. We believe that Cash and cash equivalents, cash flows from operations, and amounts
available under our Revolving Credit Facility will be sufficient to meet liquidity needs, including principal and interest
payments on debt obligations, capital expenditures, and anticipated working capital requirements, for the next 12 months
and beyond. Our future capital requirements will depend on many factors including continuance of historical working
capital levels and capital expenditure needs, investment in de novo offerings, and the flow of deals in our merger and
acquisition program.
On February 12, 2026, our Board declared a regular quarterly dividend of $0.13 per share on our outstanding Class A
common stock. $0.07 of the regular quarterly dividend was funded by current and prior tax distributions from the LLC that
are in excess of both the corporate income taxes payable by the Company as well as the Company's obligations pursuant to
the Tax Receivable Agreement. The remaining $0.06 of the regular quarterly dividend was funded by free cash flow from
the LLC and paid to all holders of the Class A common stock and LLC Common Units.
On May 21, 2026, our Board approved an increase of $300 million to the share repurchase program that authorizes the
Company to repurchase up to $600 million of its outstanding Class A common stock. Share repurchases may be made from
time to time on the open market, in privately negotiated transactions, using Rule 10b5-1 trading plans, as accelerated share
repurchases, or in any other manner that complies with the applicable securities law. The timing of repurchases and the
number of shares repurchased under the program will depend upon a variety of factors including the Company's stock
price, trading volume, working capital or other liquidity requirements, and market conditions. The Company is not
obligated to repurchase any shares under the program and the program may be suspended or discontinued at any time
without notice.
We may be required to seek additional equity or debt financing. In the event that additional financing is required from
outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital
or generate cash flows necessary to expand our operations, this could reduce our ability to compete successfully and harm
the results of our operations.
Cash and cash equivalents on the Consolidated Balance Sheets include funds available for general corporate purposes.
Fiduciary cash and receivables cannot be used for general corporate purposes. Insurance premiums, claims funds, and
surplus lines taxes are held in a fiduciary capacity and the obligation to remit these funds are recorded as Fiduciary
liabilities on the Consolidated Balance Sheets. We recognize fiduciary amounts due to others as Fiduciary liabilities and
fiduciary amounts collectible and held on behalf of others, including insurance carriers, other insurance intermediaries,
surplus lines taxing authorities, clients, and insurance policy holders, as Fiduciary cash and receivables on the Consolidated
Balance Sheets.
In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission,
remit the premiums to the respective insurance markets and carriers. We also collect claims prefunding or refunds from
carriers on behalf of insureds, which are then returned to the insureds, and surplus lines taxes, which are then remitted to
surplus lines taxing authorities. Insurance premiums, claims funds, and surplus lines taxes are held in a fiduciary capacity.
The levels of Fiduciary cash and receivables and Fiduciary liabilities can fluctuate significantly depending on when we
collect the premiums, claims prefunding, and refunds, make payments to markets, carriers, surplus lines taxing authorities,
and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency
movements. Fiduciary cash, because of its nature, is held in very liquid securities with a focus on preservation of principal.
To minimize counterparty investment risk, we maintain cash holdings pursuant to a fiduciary holdings policy which
contemplates all relevant rules established by states with regard to fiduciary cash and is approved by our Board of
Directors. The policy requires broad diversification of holdings across a variety of counterparties utilizing limits set by our
Board of Directors, primarily based on credit rating and type of investment. Fiduciary cash and receivables included cash
of $1,605.5 million and $1,220.4 million as of September 30, 2026 and 2025, respectively, and fiduciary receivables of
$3,329.9 million and $2,526.7 million as of September 30, 2026 and 2025, respectively. While we may earn interest
income on fiduciary cash held in cash and investments, the fiduciary cash may not be used for general corporate purposes.
Of the $168.8 million of Cash and cash equivalents on the Consolidated Balance Sheet as of September 30, 2026, $57.8
million was held in fiduciary accounts representing collected revenue and was available to be transferred to operating
accounts and used for general corporate purposes.
Credit Facilities
We expect to have sufficient financial resources to meet our business requirements for the next 12 months. Although cash
from operations is expected to be sufficient to service our activities, including servicing our debt and contractual
obligations, and financing capital expenditures, we have the ability to borrow under our Revolving Credit Facility to
accommodate any timing differences in cash flows. Additionally, under current market conditions, we believe that we
could access capital markets to obtain debt financing for longer-term funding, if needed.
On February 3, 2022, the LLC issued $400.0 million of 8-year Senior Secured Notes. The notes have a 4.375% interest rate
and will mature on February 1, 2030.
On January 19, 2024, we entered into the Fifth Amendment to the Credit Agreement, which reduced the applicable interest
rate of the Term Loan from Adjusted Term SOFR + 3.00% to Adjusted Term SOFR + 2.75% and no longer contains a
credit spread adjustment. All other material provisions remain unchanged.
On July 30, 2024, the Company entered into the Sixth Amendment to the Credit Agreement, which provided for an
increase in borrowing capacity under the Revolving Credit Facility from $600.0 million to $1,400.0 million. The
amendment also extended the maturity date of the Revolving Credit Facility to July 30, 2029, and reduced the applicable
interest rate from Adjusted Term SOFR plus a margin of 2.50% to 3.00% to Adjusted Term SOFR plus a margin of 2.00%
to 2.50%, based on the first lien net leverage ratio defined in the Credit Agreement.
On September 13, 2024, the Company entered into the Seventh Amendment to the Credit Agreement, which refinanced the
existing Term Loan in the aggregate principal amount of $1,588.1 million outstanding as of June 30, 2024, and increased
the size of the Term Loan by $111.9 million to $1,700.0 million as of September 30, 2024. In addition to increasing the
size of the Term Loan, the Seventh Amendment reduced the applicable interest rate of the Term Loan from Adjusted Term
SOFR plus a margin of 2.75% to Adjusted Term SOFR plus a margin of 2.25% and lowered the 75 basis point floor on
Adjusted Term SOFR to a 0 basis point floor. In August 2025, Moody's Ratings upgraded the Company's credit rating
from B1 to Ba3. As a result, the applicable interest rate on the Company's Term Loan decreased from Adjusted Term
SOFR + 2.25% to Adjusted Term SOFR + 2.00%.
On September 19, 2024, the LLC issued $600.0 million of 8-year Senior Secured Notes. On December 9, 2024, the LLC
issued an additional $600.0 million of its 2032 Senior Secured Notes as "additional notes" under a supplement to the
indenture dated as of September 2024. All of the 2032 Senior Secured Notes carry a 5.875% interest rate and will mature
on August 1, 2032.
As of September 30, 2026, the interest rate on the Term Loan was 2.00% plus Adjusted Term SOFR.
As of September 30, 2026, the Company was in compliance with all of the covenants under the Credit Agreement and there
were no events of default for the nine months ended September 30, 2026.
Tax Receivable Agreement
The Company is party to a TRA with current and certain former LLC Unitholders. The TRA provides for the payment by
the Company, to current and certain former LLC Unitholders, of 85% of the net cash savings, if any, in U.S. federal, state,
and local income taxes that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i) certain
increases in the tax basis of the assets of the LLC resulting from purchases or exchanges of LLC Common Units
("Exchange Tax Attributes"), (ii) certain tax attributes of the LLC that existed prior to the IPO ("Pre-IPO M&A Tax
Attributes"), (iii) certain favorable "remedial" partnership tax allocations to which the Company becomes entitled to (if
any), and (iv) certain other tax benefits related to the Company entering into the TRA, including tax benefits attributable to
payments that the Company makes under the TRA ("TRA Payment Tax Attributes"). The Company recognizes a liability
on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA.
Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of
the LLC Common Unit exchanges and the resulting amounts we are likely to pay out to current and certain former LLC
Unitholders pursuant to the TRA; however, we estimate that such tax benefits and the related TRA payments may be
substantial. As set forth in the table below, and assuming no changes in the relevant tax law and that we earn sufficient
taxable income to realize all cash tax savings that are subject to the TRA, we expect future payments under the TRA as a
result of transactions as of September 30, 2026, will be $485.1 million in aggregate. Future payments in respect to
subsequent exchanges would be in addition to these amounts and are expected to be substantial. The foregoing amounts are
merely estimates and the actual payments could differ materially. In the highly unlikely event of an early termination of the
TRA (e.g., a default by the Company or a Change of Control) the Company is required to pay to each holder of the TRA an
early termination payment equal to the discounted present value of all unpaid TRA payments. The Company has not made,
and is not likely to make, an election for an early termination. We expect to fund future TRA payments with tax
distributions from the LLC that come from cash on hand and cash generated from operations.
|
(in thousands)
|
Exchange Tax
Attributes
|
Pre-IPO M&A
Tax Attributes
|
TRA Payment
Tax Attributes
|
TRA Liabilities
|
||||
|
Balance at December 31, 2025
|
$271,979
|
$77,349
|
$109,669
|
$458,997
|
||||
|
Exchange of LLC Common Units
|
17,825
|
1,810
|
5,622
|
25,257
|
||||
|
Accrued interest
|
-
|
-
|
||||||
|
Balance at September 30, 2026
|
$289,804
|
$79,159
|
$116,125
|
$485,088
|
Total expected estimated tax savings from each of the tax attributes associated with the TRA as of September 30, 2026,
were $570.7 million consisting of (i) Exchange Tax Attributes of $340.9 million, (ii) Pre-IPO M&A Tax Attributes of
$93.1 million, and (iii) TRA Payment Tax Attributes of $136.6 million. The Company will retain the benefit of 15% of
these cash savings.
Comparison of Cash Flows for the Nine Months Ended September 30, 2026 and 2025
Cash and cash equivalents increased $15.3 million from $153.5 million at September 30, 2025, to $168.8 million at
September 30, 2026. A summary of the Company's cash flows provided by and used for continuing operations from
operating, investing, and financing activities is as follows:
Cash Flows From Operating Activities
Cash flows provided by operating activities during the nine months ended September 30, 2026, were $306.9 million, a
decrease of $73.5 million compared to the nine months ended September 30, 2025. The primary drivers behind the
decrease in cash flows provided by operating activities were an increase in Commissions and fees receivable - net of $82.7
million, a decrease in Deferred income tax expense from common control reorganizations of $48.0 million related to the
Velocity acquisition in the first quarter of 2025, and a decrease of $8.7 million in Accrued interest liability. These
decreases in operating cash flows were offset by an increase of $54.1 million in Net income, an increase of $11.7 million in
Impairment of internally-developed software, and an increase in Other current and non-current assets and liabilities of $9.1
million.
Cash Flows From Investing Activities
Cash flows used for investing activities during the nine months ended September 30, 2026, were $30.4 million, a decrease
of $676.7 million compared to the $707.2 million of cash flows used for investing activities during the nine months ended
September 30, 2025. The main driver of the cash flows used for investing activities during the nine months ended
September 30, 2026, was $52.2 million of Capital expenditures offset by $23.3 million of Proceeds from sale of equity
method investment in VSIC, compared to $636.9 million for Business combinations - net of cash acquired and cash held in
a fiduciary capacity, $50.7 million of Capital expenditures, and $16.6 million for the Equity method investment in VSIC
for the nine months ended September 30, 2025.
Cash Flows From Financing Activities
Cash flows used in financing activities during the nine months ended September 30, 2026, were $80.8 million, a decrease
of $86.1 million compared to cash flows provided by financing activities of $5.3 million during the nine months ended
September 30, 2025. The main drivers of cash flows used in financing activities during the nine months ended
September 30, 2026, were Repurchases of Class A common stock of $450.3 million, Class A common stock dividends and
Dividend Equivalents paid of $50.2 million, Tax distributions to non-controlling LLC Unitholders of $43.1 million,
Payment of contingent consideration of $37.4 million, Distributions and Declared Distributions paid to non-controlling
LLC Unitholders of $24.2 million, and $12.8 million of Repayment of term debt. These uses of cash were partially offset
by Borrowings on Revolving Credit Facility (net of repayments) of $350.3 million and a Net change in fiduciary liabilities
of $183.5 million. The main drivers of cash flows provided by financing activities during the nine months ended
September 30, 2025, were Borrowings on Revolving Credit Facility (net of repayments) of $124.0 million and a Net
change in fiduciary liabilities of $38.3 million offset by Class A common stock dividends and Dividend Equivalents paid of
$46.8 million, Tax distributions to non-controlling LLC Unitholders of $45.7 million, Payment of contingent consideration
of $29.3 million, Distributions and Declared Distributions paid to non-controlling LLC Unitholders of $20.4 million,
Repayment of term debt of $12.8 million, and Debt issuance costs paid of $2.9 million.
Contractual Obligations and Commitments
Our principal commitments consist of contractual obligations in connection with investing and operating activities. These
obligations are described within "Note 7, Debt" in the notes to our unaudited consolidated financial statements, where we
provide further description on provisions that create, increase, or accelerate obligations, or other pertinent data to the extent
necessary for an understanding of the timing and amount of the specified contractual obligations.
The Company recognized a liability for employee deferrals, inclusive of changes in the value of deferred amounts held, of
$9.2 million and $63.6 million in Current accrued compensation and Non-current accrued compensation, respectively, on
the Consolidated Balance Sheets as of September 30, 2026, and $7.8 million and $49.3 million in Current accrued
compensation and Non-current accrued compensation, respectively, on the Consolidated Balance Sheets as of
September 30, 2025. The timing of when employees elect to make withdrawals from the deferred compensation plan is
uncertain. However, employees are not allowed to make a withdrawal for three years from the deferral date and must
withdraw all deferred compensation balances within ten years of the deferral date.
Within Current accrued compensation and Non-current accrued compensation we have various long-term incentive
compensation agreements accrued for. These agreements are typically associated with an acquisition. Below we have
outlined the liabilities accrued as of September 30, 2026, the projected future expense, and the projected timing of future
cash outflows associated with these arrangements.
|
Long-term Incentive Compensation Agreements
|
||
|
(in thousands)
|
September 30, 2026
|
|
|
Current accrued compensation
|
$8,982
|
|
|
Non-current accrued compensation
|
21,476
|
|
|
Total liability
|
$30,458
|
|
|
Projected future expense
|
26,697
|
|
|
Total projected future cash outflows
|
$57,155
|
|
|
Projected Future Cash Outflows
|
||
|
(in thousands)
|
||
|
2026
|
$10,124
|
|
|
2027
|
8,747
|
|
|
2028
|
28,812
|
|
|
2029
|
1,801
|
|
|
Thereafter
|
$7,671
|
|
Within "Note 3, Mergers and Acquisitions" in the notes to our unaudited consolidated financial statements we discuss
various contingent consideration arrangements and their impact. Below we have outlined the liabilities accrued as of
September 30, 2026, the projected future expense, and the projected timing of future cash outflows associated with these
contingent consideration agreements.
|
Contingent Consideration
|
||
|
(in thousands)
|
September 30, 2026
|
|
|
Current accounts payable and accrued liabilities
|
$88,525
|
|
|
Other non-current liabilities
|
10,931
|
|
|
Total liability
|
$99,456
|
|
|
Projected future expense
|
4,096
|
|
|
Total projected future cash outflows
|
$103,552
|
|
|
Projected Future Cash Outflows
|
||
|
(in thousands)
|
||
|
2026
|
$808
|
|
|
2027
|
93,290
|
|
|
2028
|
6,013
|
|
|
2029
|
3,049
|
|
|
Thereafter
|
$392
|
|
Critical Accounting Policies and Estimates
The methods, assumptions, and estimates that we use in applying the accounting policies may require us to apply
judgments regarding matters that are inherently uncertain. We consider an accounting policy to be a critical estimate if (i)
the Company must make assumptions that were uncertain when the judgment was made and (ii) changes in the estimate
assumptions, or selection of a different estimate methodology, could have a significant impact on our financial position and
the results that we will report in the consolidated financial statements. While we believe that the estimates, assumptions,
and judgments are reasonable, they are based on information available when the estimate was made. The accounting
policies that we believe reflect our more significant estimates, judgments, and assumptions that are most critical to
understanding and evaluating our reported financial results are: revenue recognition, business combinations, goodwill and
intangibles, income taxes, and tax receivable agreement liabilities.
Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Critical Accounting Policies" in the Annual Report on Form 10-K for the year
ended December 31, 2025, filed with the SEC on February 13, 2026. Additionally, the changes, if any, to our critical
accounting policies and estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025, are
included in "Note 1, Basis of Presentation," to our unaudited consolidated financial statements.
Recent Accounting Pronouncements
For a description of recently adopted accounting pronouncements and recently issued accounting standards not yet adopted,
if any, see "Note 1, Basis of Presentation" in the notes to our unaudited consolidated financial statements.
Ryan Specialty Holdings Inc. published this content on October 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 30, 2026 at 11:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]