Welcome, everyone. Thanks for joining the Ryan Specialty presentation. It should be a great discussion. Those of you who don't know me, Adam Klober, I run our insurance practice here. Lucky enough to have Ryan join us. Tim Turner, CEO, will lead out, and then we'll hear the rest of the team. I'll just say two seconds. One, for compliance, please see disclosures for anything you need to see in disclosures. Ryan is a very unique firm, and it is a leading distribution company. To surface there, a leading specialty distribution, but it's really much, much deeper than that. It's really at the nexus and the center. The insurance industry, which in ways has been stagnant, is anything but stagnant these days. There's a lot of changes, both at a macro level at the industry and more at the customer level also.
In a business that doesn't change real quickly, Ryan is sort of in the middle of everything, really affecting a lot of the change. It's a broad statement, but there's a lot of great stuff going on. With that, Tim, I'll let you lead up.
Thank you, Adam. It is great to see everyone this morning. Thank you for taking the time to join us. Fifteen years ago, I had the good fortune of meeting Pat Ryan and having helped him execute on his vision of building Ryan Specialty into the best specialty insurance services firm in our industry. His founding thesis is to provide innovative insurance solutions to brokers, agents, and carriers. That is exactly what we have done. We have grown wholesale brokerage, binding, and underwriting management businesses into an incredible scale and built a strong moat. We marked our sixth straight year of growing the top line by 20% or more and our 14th straight year of double-digit organic growth.
Position this business to take advantage of secular growth trends in our industry, notably four in particular: retail brokers getting substantially bigger through solid organic growth and M&A, retail broker panel consolidation intensifying still in the early innings, risks are becoming larger and more complex in the United States, impacted by climate change and social inflation, driving the need for specialty and the E&S market, delegated authority is accelerating clearly, which Miles will dive into in more detail. We've thrived through our ability to innovate. Our strategy is aligned around the evolving and growing needs of our clients and our trading partners to continue providing a dynamic value proposition. We see where the industry is heading. We are innovating.
We're making long-term sustainable investments in our business to fortify our competitive position, deepening our industry practice group verticals, adding new products, new segments, new geographies every day, and expanding our TAM into alternative risk and benefits. We've executed on a fantastic M&A strategy. Last year, a record for M&A, and we carried that momentum into 2025. We deployed over $2.4 billion in capital. Integration is going very well. We're pleased with the strong levels of collaboration with our new teammates, and we feel very strongly about our ability to offer productivity improvements through better distribution and additional capital support. Our M&A pipeline remains robust, including small, medium, and large deals. We have the capacity and the capability to continue doing larger deals. We are highly disciplined, and we only do deals if they fit our three criteria, as most of you know.
It must be a cultural fit, a strategic fit, and a creative to our overall model. We're able to deliver such strong value to our clients and trading partners because of our incredible talent. We simply have more A players than the competitors do. We are a destination of choice for top talent. We prove that every day. We're committed to recruiting, training, and the development of talent. The Ryan University this year will have 300 attendees. We'll have over 100 internships this summer. We have a strong culture of innovation and empowerment, resulting in a 98% employee retention of our brokers, top-end in our industry. It is the exceptional quality and quantity of our talent that distinguishes Ryan Specialty from the rest of the industry. We have a relentless focus to deliver value for our clients.
They are the reason why we're generating industry-leading organic that is sustainable over the long term. We have robust employee ownership. We are strongly aligned with the shareholders. In closing, we're positioned for another great year. While we could see some pressure in Q2, which Janice will discuss later, we expect to deliver our 15th consecutive year of double-digit organic growth. Now I'll hand it off to Jeremiah for a deeper dive.
Thank you, Tim.
Thank you.
Hi, everyone. Thrilled to be here. Jeremiah Bickham, President of Ryan Specialty. I'll take just a minute to talk about some drivers of our growth. You all are very growth-focused investors, so I think that's an appropriate topic. Basically, since we've been public, I think we've spent more time focusing on the secular and structural growth drivers that have helped us succeed since our founding, and those are all still very much in play. There's actually a really nice slide on those growth drivers. I think it's slide 14 of our investor deck. I want to spend an extra minute today talking about more Ryan-specific growth drivers. What we sometimes refer to as our ecosystem of excellence, which we've attempted to graphically represent on slide 9 of our investor deck, it's essentially the idea that we've blended talent, unique relationships at scale.
With that, we have an ability to innovate, evolve, stay ahead of the market, and beat our competition. Essentially, we see the needs of the market first, and we're in a position to capitalize and win better than our competitors. We've built a brand around solving complex solutions for our clients, and we even have the ability to design solutions beyond traditional insurance products. This ability to innovate and evolve is underpinned by at least three essential pillars. The first is our entrepreneurial and empowering culture. We talk about this a lot. We truly are a destination of choice for individuals, teams, and M&A. One of the reasons is our platform represents growth potential, earnings potential, professional development that's unrivaled in our industry. We are able to attract, develop, and retain technical, growth-minded, competitive practitioners. As importantly, they stay.
As Tim referenced, 97%-98% retention among our producers is industry-leading. The next pillar that fosters this ecosystem of excellence is our unique position of trust. For years now, we've been able to cultivate deep relationships with leading insurance institutions up and down the value chains on the retail broker side, in Miles' business, even relationships with our competitor wholesale brokerage firms, and then up the value chain with carriers. We are a driver of both growth and profitability. We think that our clients view us as a force multiplier for their success. We believe that this unique status, this position of trust that we enjoy, opens doors for us and provides us with unique growth opportunities. Last, you put this all together, it's scale, scale and scope of our expertise.
When you have this unmatched, hard-to-replicate breadth and depth of specialties at Ryan Specialty, it truly is a competitive moat. We are focused on growth areas of the market, capturing secular tailwinds and emerging opportunities. We have led in the fast-growing delegated authority space and delivered consistent profitability to our underwriting partners and deepened that relationship and position of trust that we have. Miles will get into that more in a second. Of course, as Pat often talks about, we are focused on growing and capturing more of an expanding total addressable market. The massive flow of business that comes into our platform, the talented individuals that are there to curate outcomes, and all the connectivity that we have to the world's best risk management institutions really does create an environment that enables and fosters innovation and our ability to evolve and continue winning.
To crystallize all this, we have what we believe is specialized intellectual capital, data, and unique trading relationships at scale that puts us in a unique position. We've built what we think is the best platform in our industry, and it's curated, it's populated by the best talent. We have an incredible relationship of trust and deep relationships with our clients and trading partners, and this provides us unique opportunities and visibility into their needs and the ability to capitalize on these needs. We believe that this is, along with all the secular growth drivers that we've discussed at length, going to be a huge proponent of our ability to win and our continued exceptional growth for years to come. Hopefully this spurs some good questions in Q&A later. With that, I'll turn it over to Miles.
Thank you, Jeremiah. Miles Wuller, I'm going to discuss the delegated authority branch within Ryan Specialty. Without going back too far, I'd want to highlight some of the trends that Pat saw 15 years ago that he was looking to solve for. There was a clear acceleration in the risk in the marketplace approximately 20 years ago. I'd link that back. There were classes of risk related to the new economy, a digitally connected workforce, cyber, renewable energy, rep and warranty, transactional liabilities. New classes that needed solutions. You had an increase in real inflation that was actually compounded by almost a decade of benign cat years, then priced up in a period of increased building inputs. We have increases in social information increases, and the frequency of nuclear verdicts and the severity of those same verdicts are growing exponentially.
Geographic changes in density are a factor in the U.S. as more and more folks are moving to the Southeast wind-exposed areas. Every dollar of insurable value has a higher risk exposure on it now. The outcome was really back to Pat's original thesis of harnessing specialty distribution and specialty underwriting under the same banner to deliver specialty solutions across the retail, wholesale, and carrier environment. That is where the MGUs live, as a fully delegated outsource solution to underwriting capacity. Pat had the foresight to let us invest in this practice 15 years ago. One of RSUM's first employees was actually a Chief Actuary. That actually blossomed to a central underwriting team of over 60 actuaries, pricing actuaries, cap modelers, data scientists, a quality assurance team. Most recently, we've been empowered to hire three colleagues with advanced degrees in AI and process improvement.
The output of those hires and the platform that Ryan Specialty has built has been a scaled MGU platform that when it sits across from the carrier, it's speaking the exact same language. Rate, changes in frequency, changes in severity. We're actually able to provide data insights and action as faster, ideally faster than the carriers can enact themselves. Those same benefits that we bring, that same investment in the platform that's a benefit to the carrier has actually triggered us to be an employer of choice. Top talent has a world of options, right? A players can always hang up a shingle, go at their own. We have the benefit of offering them introductions to capital, distribution, technology to bring them to market faster with a higher degree of certainty. Those same tools have actually translated to becoming a clear acquirer of choice in the last 18 months.
Extremely proud of our M&A campaign. Helped us round out our capability sets in several key products that we had deep conviction to. Helped us double our international platform and build out our leadership and stewardship to continue to drive innovation and growth and acquisitions abroad. I'd want to transition that we think this investment is replicable and scalable, and it's actually accelerating in penetration and uptake across the industry. AM Best actually publicly released a study about six months ago where they interviewed a panel of carriers globally on their insights on delegated underwriting authority. 70% of them went out, excuse me, the first question is, do you anticipate an increase or decrease in the utilization of delegated authority in the next 12 months? An amazing 70% predicted an increase in the use of delegated authority to intermediaries. Probably what's even more profound, zero projected a decrease.
The next question was, do you see an increase in the relevance of delegated authority? 52% said yes. 0% predicted decline. The last, and this is actually the heart of the sales pitch that we've made for 15 years. The question of carriers is, what kind of utility do you hope to get by using an MGU? And in order, access to niche business, diversification of carrier core business, improved cost efficiency, speed to market, access to tech that carriers might not otherwise invest in themselves, and a swifter solutioning of emerging trends. We are glad that our message is now being played back to us so deeply in the marketplace. The U.S. commercial P&C market, when Ryan was founded, was only serviced about 8% or 9% through the delegated authority channel.
We've seen that at a sustained accelerated rate double in the last 15 years, and we see an increased uptake as we move forward. I appreciate the chance to be here. Part of this advantage before I transition, not only the platform, but we're measured on the results we're driving to these carriers, right? We have a clear fiduciary duty to the underwriting capital we represent. The success that we've delivered in the marketplace over time is actually generating new opportunity and accelerating pace. Carriers that have supported us on one or two lines that have had success are looking to join us on more. We've even seen a new trend where carriers are looking to participate across our entire portfolio, right? We have the benefit of being able to deliver expertise one product at a time.
Additionally, because of the breadth and depth of our 250 lines of business, we've actually created a portfolio that is creating a diversified, non-correlated, market-leading results with less volatility that carriers are actually looking to take on, seeing the transformation of the portfolio is essentially specialty insurance as an asset class now. That commitment of capital on our results is emboldening us and enabling us to continue to accelerate our growth going forward. Thank you for the time. Janice.
All right. Thank you, Miles. Good morning, everyone. I'm Janice Hamilton, and really appreciate everyone's interest today. I'm just going to quickly recap on what we've heard from my colleagues. Tim touched on the secular growth factors that impact our business, and Jeremiah talked about Ryan Specialty's ecosystem of excellence, and Miles outlined the delegated authority strategy. Adding to all of these aspects of our growth is our durable business model, and we see that for three main reasons. One is the resiliency of the E&S in the specialty market. The second is the compulsory nature of so many of our products. The third has been the investment that we've made in building a differentiated platform with specialized talent that Tim and Jeremiah both spoke a lot about. We've laid out a long-term strategy that both invests organically and through the execution of our M&A strategy.
We expect to deliver annual double-digit organic growth for the foreseeable future. For the full year, our annual guidance is 11%-13% organic growth, which we feel good about. We do think that Q2 is going to be a tough quarter for everyone. From the beginning of our planning process, we anticipated that Q2 would be the slowest growth quarter and is likely to fall outside of our annual guide range. We would not be surprised if you see that come next quarter. I referred to this in my remarks on our call last quarter, primarily because of the pressures that we have seen in the property market and the timing when rates began to decelerate last year in the third quarter. As we have said for a few years, one quarter does not make a trend.
Importantly, the vital signs of our business, like submission growth, new business wins, and retention still remain very strong. We feel good about our annual guidance range. We believe that the 11%-13% really provides an outstanding year for 2025. Turning to capital allocation, right now, M&A continues to be our top priority. Tim mentioned that we have a robust pipeline for M&A opportunities. We're pleased to have recently grown our dividend at a modest and sustainable level, and we're constantly assessing opportunities to maximize shareholder value through evaluating capital allocation. We have a strong free cash flow profile. We have high levels of recurring revenue, low CapEx needs, and low working capital needs. We also have had the advantage of a heavy variable pay-for-performance culture.
Jeremiah touched on the talent and the compensation that we have there, which insulates us but does not make us immune from recession. From a leverage perspective, our comfort corridor has historically and continues to be three to four times net leverage on a credit basis. We are willing to go temporarily above that range for an acquisition that meets all of our criteria, but we always deliver quickly. Historically, expecting the annual earnings growth that we have in the free cash flow generation, we expect to deliver a full-time full turn by the end of this year with the expectation of no additional M&A, which, as Tim said, there is a robust pipeline. Lastly, in terms of margin, we're very pleased to have another year or expect another year of further margin expansion, upwards of 130 basis points at the top end of our range.
This is in excess of the 210 basis points of margin expansion that we experienced in 2024, and we're off to a great start in the first quarter. For the full year, we expect margin expansion to continue to be driven by contributions from M&A underlying margin expansion, partially offset by some headwinds from fiduciary investment income due to lower rates, and also our larger-than-average investment year, which has been funded by the restructuring program of Accelerate 2025 that we completed in 2024. We're always focused on making long-term investments in the platform, and it's all about balancing today with that long-term investment in the future. Beyond 2025, we're on track to hit our 35% margin target in 2027, and we will get there by sustainable annual organic double-digit organic growth and steady margin expansion. With that, I'll turn it back over to Adam.
Great. I'll ask one or two questions, and we may have time for one or two. The weather is causing havoc in and around insurance. Could you talk about, maybe Tim will lead off with you, one or two ways that Ryan is responding, helping clients, helping provide really a safety net through insurance, given all the weather volatility?
Sure. As we all know, global warming is clearly a global issue. In the United States, it's really affecting these high concentrations of wealth on the coast in the California wildfire region. Lots of hotspots around the country, including convective storm centers. What we've done is a clear illustration of what Pat's original thesis was. We're building brokerage specialty practice group verticals, hundreds of brokers that specialize in catastrophic property, brokering these accounts, and then symmetrically building underwriting MGUs, programs, and facilities inside those verticals. We have the ability to broker the solutions and weave in our own underwriting solutions and strengthen our value proposition with our clients. One way or another, or a combination thereof, brokering it and underwriting it, we can bring stronger, more viable solutions to our clients on their catastrophic property risks.
Today, our market share continues to grow while rate deceleration in property is certainly measurable. We see that the actual percentage of non-admitted property business is growing. It is not going back into the standard market. Very important note. We are competing on price. We are competing on rate. We are getting our margins on the underwriting side of it as well. Our performance in property, despite some headwinds, is still very strong.
Take high-net-worth home t hat historically, that was a standard non-E&S market. Today, it's becoming more. You essentially created a new business around high-net-worth homes. How quick, how many people were in that business vertical for you maybe three, four years ago? How many people today? Just give us some idea of how that business has grown, just for an example.
Sure. A great illustration of a new vertical that popped up. We were in personal lines. We were writing homes, single-family homes, and trailer parks in challenging neighborhoods around America. That was a several hundred million-dollar premium vertical for us. What happened is global warming with wildfires and the hurricane frequency and severity in Florida drove high-net-worth into the E&S market. Carriers in California were pulling out of the state left and right, and that business was pouring into the channel. We brokered it at first, got our arms around it, and we built one facility in London, an MGU platform, almost immediately a couple of years ago, and then formed another joint venture here with a big A-plus-15 carrier, and we're executing on that strategy. Ideally, we have two strong MGUs in high-net-worth, and we have dozens of brokers that are dedicated to that.
Same customer base, global brokers, national retail brokers, top 100 regional brokers controlling most of the high-net-worth business in their personal lines divisions. We're plugged in there. We're a known quantity. We're a big wholesale trading partner with them already. Now we're in their high-net-worth division, and it's now quickly becoming a multi-billion-dollar segment for us.
Great. Great. Jeremiah, you hit on growth drivers. In a market, the E&S market that potentially grows 6%, 7%, 8%, 9%, could you identify the two or three areas that's going to push you up to that low teens, that 11%, 12%, 13% over a long, long time period? You talked about it, but what are the two, three areas? You don't have to give exact percentages, but maybe like, this is the highest, this is the mid-low, some context.
Yeah. It's important to remember that a lot of the factors that got us here, X rate, X explosive growth in E&S, are still very much alive and well, and we think that there's waves of acceleration. For example, 15 years ago, retailers decided through a lot of data and analytics that managing a huge tail of dozens or in some cases hundreds of wholesale counterparties was expensive, led to E&Os, and did not help them leverage their scale in the market. They made the decision to go to 15 to 10 to 5, and now some of them have as few as two or three preferred wholesalers. If you think about the firms that started this trend, they were the largest global retailers. If you think about their needs, they've got the most intense, the biggest and the most intense, complicated risks that need a solution.
To manage that flow, to be on that short list of preferred, you have to have the scale and scope that I referenced earlier. There are really only two other firms in the market that have the scale and scope to be on that short list. We think that that desire to work with fewer, bigger, better partners is just going to keep working its way down the top 100, and that there could be catalysts like a slowing rate environment or a slowing macro environment that causes the top of the house to focus on driving that strategy deeper in the organization because it is more efficient. It is a better economic outcome for the retail broker. We think that there is a long runway on that. Furthermore, that phenomenon started with just transactional wholesale broking.
When we send a policy to the carrier, they make the decision to bind or not bind. Tim and Miles both talked about cases where we have delegated authority. Binding authority programs and MGUs, retailers have not made their short lists for counterparties with delegated authority. That's just beginning. That's a significant portion of our business. We are in a unique spot, even among the big three, to benefit from that panel consolidation.
Can I stop you there?
Yeah.
I think that's a huge point that you guys are leading the charge there, right?
Yes, sir.
There is only one or two others that could probably do it, but you guys are far ahead. If you could give some scope that you deal with 20,000 brokers, 20, I am giving you the data, but give some what scope that could be because that is a pretty fundamental change to how the business works, right?
Yeah. I mean, again, I think it'll start at the top, like the wholesale broker panel consolidation did. Yeah, we've got over 20,000 retail relationships. For the smallest one, it'll take a while for that strategy to make its way all the way down. As the top 20, 30, and 50 are utilizing this, we think we saw this opportunity and were investing in it earlier. This goes back to what I'm talking about or what I mentioned in my prepared remarks, where we have this unique position, this unique scale. We have visibility into where the market's going and what the needs of our clients are. We started investing heavily in binding authority acquisitions in 2015, 2016. We think our competitors have since figured it out and are trying to catch up.
Because of that position that we're in, we had the opportunity to invest and put ourselves in the position to have a huge head start when those market trends occur. We think that we're at the dawn of that right now.
Great. With that, I'd like to thank the team. Appreciate it.