Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ryan Specialty Holdings Inc (NYSE:RYAN) achieved 14 consecutive years of double-digit organic growth, with a 12.8% increase in 2024.
• The company reported a 21% year-over-year revenue increase, surpassing $2.5 billion, driven by organic growth and strategic M&A activities.
• Adjusted EBITDA grew by 30% to $811 million, with a margin expansion of 210 basis points to 32.2%.
• The company completed seven acquisitions in 2024, adding over $265 million in annual revenue and enhancing its international footprint.
• Ryan Specialty Holdings Inc (NYSE:RYAN) is well-positioned for future growth with a strong focus on delegated underwriting authority, which now constitutes nearly 45% of its revenue.

Negative Points

• The company faces challenges from the evolving loss environment, including the impact of California wildfires and other natural disasters.
• Property pricing saw a decline in Q4 2024, which could impact future growth in this segment.
• There is uncertainty in the loss environment, particularly affecting the casualty market, which may lead to higher retention of risks.
• The company anticipates a higher-than-average investment year in 2025, which could impact short-term margins.
• Despite strong growth, the company faces headwinds from fiduciary investment income due to lower interest rates.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with FND.

Q: Can you provide more details on the organic growth guidance for 2025, particularly regarding property growth expectations? A: Janice Hamilton, CFO, explained that the company is guiding for organic revenue growth between 11% and 13% for 2025. This growth is driven by secular trends in the specialty market, including the increasing complexity of risks and the growth of retail brokers. Tim Turner, CEO, added that while property pricing is currently soft, strong flow and market share gains are expected to offset pricing challenges, leading to modest growth in property.

Q: Could you elaborate on the margin guidance for 2025 and the impact of investments on margins? A: Janice Hamilton, CFO, stated that the company expects adjusted EBITDA margins to be between 32.5% and 33.5% in 2025. The margin expansion will be driven by contributions from M&A and underlying margin improvements, despite headwinds from fiduciary investment income. The Accelerate 2025 program provides financial flexibility for larger investments in the platform, which will support long-term growth.

Q: What are the expectations for organic growth across different specialties in 2025? A: Tim Turner, CEO, mentioned that while the company does not guide organic growth by specialty, all specialties have the potential for double-digit growth. The delegated authority platform, bolstered by recent acquisitions, is expected to be a significant growth area. Casualty lines are also anticipated to contribute strongly to growth.

Q: How does the company view the potential for M&A activity given current leverage levels? A: Janice Hamilton, CFO, noted that the company has ample borrowing capacity and a robust pipeline of M&A opportunities. The availability of assets meeting their criteria will dictate the pace of M&A activity, not leverage constraints. The company remains ambitious about pursuing strategic acquisitions.

Q: Can you discuss the company's strategy and outlook for personal lines, particularly in high net worth segments? A: Tim Turner, CEO, highlighted that Ryan Specialty has strong capabilities in personal lines, particularly in high net worth segments. The company has electronic trading platforms and programs across the country. A joint venture with AIG and PCS is expected to provide significant growth opportunities in this area.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.