Ryan Specialty's Q3 2025: Contradictions Emerge on Property Pricing, Market Competition, M&A, and Margins

Date of Call: October 30, 2025

Financials Results

• Revenue: $755M, up 25% YOY (driven by 15% organic growth and ~10pp from M&A)
• EPS: $0.47 adjusted EPS, up 14.6% YOY
• Operating Margin: Adjusted EBITDAC margin 31.2%, compared to 31.5% in the prior year; Adjusted EBITDAC $236M, up 23.8% YOY

Guidance:

• Full-year 2025: organic revenue growth expected to be double-digit (>=10%).
• Full-year 2025 adjusted EBITDAC margin expected to be roughly flat to modestly down versus prior year.
• The 2027 timeline for achieving a 35% adjusted EBITDAC margin is deferred.
• Q4 2025: organic growth expected to be lower than Q3 (Janice noted math implies ~6%); headwinds include 20%–30% property rate reductions and increased competition.
• Q4 tax rate ~26%; 2025 GAAP interest expense expected ~ $223M (Q4 ~$54M).

Business Commentary:

* Revenue Growth and M&A Impact: - Ryan Specialty Holdings, Inc. reported a strong third quarter with total revenue growth of 25%, driven by 15% organic revenue growth and the addition of nearly 10 percentage points from M&A. - This growth was supported by strategic acquisitions and investments in areas such as casualty lines, which saw significant new business and high renewal retention.

• Profitability and Investment in Talent:
• Adjusted EBITDAC grew by 23.8% to $236 million, with an adjusted EBITDAC margin of 31.2%.

• The company is prioritizing strategic investments, particularly in talent acquisition and development, even as this creates near- to medium-term margin pressures.

• Strong Performance Across Specialties:

• The casualty practice showed robust results, with growth in areas such as construction, transportation, and habitational risks, driven by an increasing demand for specialized expertise.

• The property segment returned to growth through new business and high renewal retention, though property pricing continues to decline.

• Investment in Technology and AI:

• Ryan Specialty is committed to leveraging advancements in AI and machine learning, which are reshaping the insurance industry, with a focus on investments in technology to maintain a competitive edge.
• The company plans to continue enhancing its technology platforms to capitalize on AI opportunities and stay ahead of the market curve.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized strong results: "total revenue grew 25%" and "Adjusted EBITDAC grew 23.8% to $236 million." They reiterated confidence: "we are confident in our ability to deliver yet another year of double-digit organic growth" while acknowledging near-term margin investment and deferring the 2027 35% margin timeline.

Q&A:

• Question from Elyse Greenspan (Wells Fargo): Can you break down the 15% organic growth between submissions, rates, new initiatives and any one-offs?
  Response: Organic growth was driven primarily by submission/new business flow and high renewal retention—especially in casualty; property growth came from new business and E&S flow, with some lumpy construction/data-center wins and no material one‑offs.

• Question from Elyse Greenspan (Wells Fargo): The revenue split shows wholesale +9%, binding +17%, underwriting management +66%—was construction growth concentrated in binding/underwriting and did that drive the outsized underwriting management growth?
  Response: Construction wins were primarily in the wholesale book; underwriting management growth reflected transactional liability, structured solutions, reinsurance and contributions from recent acquisitions rather than a single construction driver.

• Question from Elyse Greenspan (Wells Fargo): On guidance wording—does 'double digits' now mean a floor of 10% for the full year and should we expect Q4 decel to ~6%?
  Response: Yes—'double digits' implies at least 10% for 2025; management expects Q4 organic growth to be lower than Q3 and acknowledged internal math consistent with ~6% for Q4 given property headwinds and competition.

• Question from Taylor Scott (Barclays): You built teams ahead of revenue (e.g., Nationwide/Markel hires). Will margin improvement return in 2026 or are these investments pushed out further?
  Response: Near-term margin pressure will persist into 2026 due to hiring and build-outs; modest margin improvement is expected over time but 2026 remains an investment year with some continued pressure.

• Question from Taylor Scott (Barclays): Was the construction strength a one-off lumpy win or the start of reacceleration; how should we think about 4Q comps?
  Response: Flow in construction remains strong but project starts are delayed (lumpy wins); macro headwinds (borrowing costs, input inflation) persist, so improvement is possible but timing is uncertain.

• Question from Brian Meredith (UBS): You noted 30+ percentage points from M&A in underwriting management implying very high organic growth—is double‑digit organic revenue growth in underwriting management sustainable?
  Response: Yes—underwriting management is expected to continue delivering double‑digit organic growth, supported by capital markets activity, structured solutions and recent acquisitions across firming niches.

• Question from Brian Meredith (UBS): Does the pricing environment change your talent investment (e.g., lean away from soft property)?
  Response: Yes—talent investments are calibrated to market signal: they pulled back on ultra‑soft lines (public D&O, cyber) and accelerated hiring in professional liability, healthcare and other strengthening areas.

• Question from Meyer Shields (KBW): Given retailers seeking alternatives, could new hires become productive faster than the typical 2–3 year timeline?
  Response: No—while demand helps, management still expects most new hires to take roughly 2–3 years to become fully accretive despite opportunistic recruiting.

• Question from Meyer Shields (KBW): Does increased competition to hit budgets offer opportunities for higher broker compensation?
  Response: No—broker compensation is largely formulaic and stable; industry practices remain disciplined.

• Question from Andrew Kligerman (TD Cowen): Can you frame organic hires growth (non‑acquired hires) and how you view Q4—north or south of the 10% full‑year floor?
  Response: Recruiting (including internal programs) is the most accretive organic driver; management expects Q4 organic growth around ~6%, supporting a full‑year result at or above 10%.

• Question from Andrew Kligerman (TD Cowen): With the 35% adjusted EBITDAC margin target deferred, when might you expect to reach it?
  Response: 35% remains achievable but timeline is pushed out; margin expansion will be modest annually and the pace slowed by current multi‑year investment in talent and capability.

• Question from Robert Cox (Goldman): Could recent disruptions in the London specialty market be a tailwind and how defensible is your London offering?
  Response: Potentially—management is revisiting its London strategy, sees opportunities to support retailers on difficult placements, but has no immediate structural change; they will adapt to client needs.

• Question from Robert Cox (Goldman): Are you seeing any material migration between admitted and E&S markets?
  Response: No—management has not observed measurable migration back to admitted markets; competition is occurring within the non‑admitted/surplus lines channel.

• Question from Jian Huang (Morgan Stanley): How are you handling data aggregation, governance and AI across multiple M&A systems?
  Response: They centralize many MGUs on a common back‑office and have in‑house data scientists/actuaries; integration is thoughtful and they deploy AI use cases even before full platform consolidation.

• Question from Jian Huang (Morgan Stanley): In casualty, can you split growth between new clients and existing clients?
  Response: Growth is a mix of new‑client wins and expansion with existing clients across three retail tiers; management actively targets different tiers and sees more available share to capture.

• Question from Joshua Shanker (BofA): How has the opportunity set changed over the past 9–12 months to shift focus from margins to growth?
  Response: Availability of high‑caliber talent and changing competitor dynamics materially increased opportunities, prompting a strategic trade‑off to invest in hires over near‑term margin goals.

• Question from Joshua Shanker (BofA): After Markel/Nationwide work, have you seen a swelling pipeline for reinsurance partners?
  Response: Yes—management sees increased partner interest and believes the firm is uniquely positioned (Nationwide relationship, scale, talent) to capture more reinsurance opportunities, though timing/volume remain uncertain.

Contradiction Point 1

Property Pricing and Rate Declines

It involves differing perspectives on the property pricing environment and rate declines, which directly impact revenue expectations and growth strategies.

What drove the 15% organic growth, specifically by submissions, pricing, and new initiatives? Were there any one-time factors affecting the 15% growth in this quarter? - Elyse Greenspan (Wells Fargo Securities, LLC, Research Division)

2025Q3: In property, growth was seen due to new business and high renewal retention. - Janice Hamilton(CFO)

Can you discuss the sharp drop in property prices in June and whether this trend will continue for the rest of the year? - Elyse Greenspan (Wells Fargo Securities, LLC)

2025Q2: We saw a rapid decline in property pricing throughout June, culminating in an organic growth of 7.1%, below our expectations. We expect the same trends to continue through the end of the year, resulting in a modest decline in property for the full year of 2025. - Janice Hamilton(CFO)

Contradiction Point 2

Market Competition and Organic Growth Expectations

It involves differing expectations for market competition and organic growth, which are critical for investor expectations regarding future performance.

Is the double-digit guidance for 2025 a low target for the full year or does it mean you expect 10% growth? - Elyse Greenspan(Wells Fargo Securities, LLC, Research Division)

2025Q3: The guidance reflects a lower fourth quarter due to property rate reductions and market competition expectations. The fourth quarter is expected to have lower organic growth than the third quarter. - Janice Hamilton(CFO)

Can you discuss the revenue growth and whether the upper single-digit inorganic growth is sustainable? - Elyse Greenspan(Wells Fargo)

2025Q1: We continue to expect double-digit organic growth for the full year 2025, driven by strong performance across specialty lines, including continued growth in our delegated underwriting authority offerings. - Janice Hamilton(CFO)

Contradiction Point 3

Inorganic Growth Strategy and M&A Opportunities

It involves differing perspectives on the role of inorganic growth and M&A opportunities, which are crucial for the company's growth strategy.

Are there other areas where you need to build teams before revenue? - Alex Scott(Barclays Bank PLC, Research Division)

2025Q3: We have continued to see a strategic opportunity set for acquisitions that align with our growth initiatives and are positioned to drive significant long-term value. Our investment focus remains on strategic acquisitions that add capability, capability, and talent at attractive multiples. - Timothy Turner(CEO)

What is the current status of your M&A pipeline and expected activity? - Elyse Greenspan(Wells Fargo)

2025Q1: We have robust opportunities, focusing on strategic acquisitions that drive organic growth. The market is a buyer's market, and we're optimistic about M&A opportunities for future growth. - Pat Ryan(Founder and Executive Chairman)

Contradiction Point 4

Property Rate Environment and Market Conditions

It involves differing perspectives on the property rate environment and market competition, which directly impacts revenue growth expectations and strategic positioning.

How should we assess wholesale, binding authority, and underwriting management revenue growth this quarter? - Elyse Greenspan(Wells Fargo Securities, LLC, Research Division)

2025Q3: Property pricing is currently soft, but flow is strong. Despite pricing headwinds, we grow in property due to market share gains. - Janice Hamilton(CFO)

Can you elaborate on the 2025 property growth outlook and how it aligns with guidance? - Elyse Greenspan(Wells Fargo Securities, LLC, Research Division)

2024Q4: Property pricing is currently soft, but flow is strong. Despite pricing headwinds, we grow in property due to market share gains. - Janice Hamilton(CFO)

Contradiction Point 5

Margins and Investment Strategies

It involves changes in financial forecasts and strategic investment priorities, which are critical indicators for investors and reflect the company's long-term growth plans.

Does the double-digit 2025 guidance set a low bar for the year or mean you expect 10% growth? - Elyse Greenspan(Wells Fargo Securities, LLC, Research Division)

2025Q3: The guidance reflects a lower fourth quarter due to property rate reductions and market competition expectations. - Janice Hamilton(CFO)

Will M&A activity slow in H2 2025 due to leverage constraints? - Brian Meredith(UBS Investment Bank, Research Division)

2024Q4: ACCELERATE 2025 provides flexibility for larger investments without impacting the bottom line. We expect over 100 basis points margin improvement despite additional investments, aligning with long-term strategies. - Janice Hamilton(CFO)