10-Q: Ryan Specialty Reports Strong Q3 Revenue, Strategic Acquisitions Drive Growth

Ryan Specialty Holdings, Inc. announced a significant increase in third-quarter revenue and net income, driven by robust organic growth and strategic acquisitions, despite a decline in nine-month net income due to non-cash tax expenses.

Summary

• Total revenue increased by 24.8% to $754.6 million for the three months ended September 30, 2025, compared to $604.7 million in the prior year.
• Net income for the three months ended September 30, 2025, rose by 118.6% to $62.6 million, up from $28.6 million in the same period last year.
• Diluted earnings per share for the third quarter increased to $0.20 from $0.09 year-over-year.
• Organic revenue growth rate was 15.0% for the three months ended September 30, 2025, and 11.4% for the nine months ended September 30, 2025.
• For the nine months ended September 30, 2025, total revenue increased by 24.2% to $2,299.9 million, compared to $1,852.2 million in the prior year.
• Nine-month net income decreased by 2.4% to $182.9 million, down from $187.4 million in the prior year, primarily due to a $48.0 million non-cash deferred income tax expense from a Common Control Reorganization related to the Velocity acquisition.
• The company completed several acquisitions in 2025, including Velocity Risk Underwriters, USQRisk Holdings, 360 Underwriting, and J.M. Wilson Corporation, and entered into an agreement to acquire Stewart Specialty Risk Underwriting Ltd. in October 2025.
• Moody's Ratings upgraded the company's credit rating from B1 to Ba3 in August 2025, resulting in a decrease in the Term Loan interest rate from Adjusted Term SOFR + 2.25% to +2.00%.
• The Board of Directors approved a quarterly cash dividend of $0.12 per share of outstanding Class A common stock, payable on November 25, 2025.

Sentiment

Score: 7

Explanation: The company demonstrates strong operational performance with significant revenue and organic growth, particularly in Q3. Strategic acquisitions are actively expanding its market presence, and a credit rating upgrade reflects improved financial standing. While nine-month net income was impacted by a non-cash tax expense, the underlying business trajectory is positive, indicating effective execution of its growth strategy in a dynamic market.

Positives

• Total revenue increased by 24.8% to $754.6 million for the three months ended September 30, 2025, demonstrating strong top-line growth.
• Net income for the third quarter surged by 118.6% to $62.6 million, indicating improved profitability.
• Diluted EPS for the third quarter more than doubled to $0.20, reflecting enhanced shareholder value.
• Organic revenue growth remained robust at 15.0% for Q3 2025 and 11.4% for 9M 2025, showcasing strong underlying business performance.
• Successful execution of strategic acquisitions, including Velocity Risk Underwriters, USQRisk Holdings, 360 Underwriting, and J.M. Wilson Corporation, expanded distribution reach and product capabilities.
• Moody's Ratings upgraded the company's credit rating from B1 to Ba3 in August 2025, leading to a favorable reduction in the Term Loan interest rate.
• Growth was balanced across all three Specialties (Wholesale Brokerage, Binding Authority, Underwriting Management) and across casualty lines, with moderate growth in the property portfolio.
• The ACCELERATE 2025 program was completed at the end of 2024, reducing restructuring and related expenses.

Negatives

• Nine-month net income decreased by 2.4% to $182.9 million, primarily due to a significant non-cash deferred income tax expense.
• Net income attributable to Ryan Specialty Holdings, Inc. for the nine months decreased by 31.5% to $55.4 million.
• Diluted EPS for the nine months decreased by 30.5% to $0.41.
• Income tax expense for the nine months ended September 30, 2025, increased substantially to $65.7 million from $16.2 million, largely due to a $48.0 million non-cash deferred income tax expense from a Common Control Reorganization.
• Amortization expense increased significantly by $31.0 million for Q3 and $107.1 million for 9M, driven by recent acquisitions.
• Interest expense, net, increased by $7.0 million for Q3 and $59.3 million for 9M, reflecting higher debt levels from acquisition activity.
• Fiduciary investment income declined by 9.3% for Q3 and 5.5% for 9M, attributed to a decrease in interest rates.
• The specialty and E&S property markets experienced a decline in premium rates in the second half of 2024 and through the first nine months of 2025 due to increased insurance capacity.

Risks

• Failure to successfully recruit and retain senior management, revenue producers, or other key employees, and to plan for succession.
• Potential loss of relationships with insurance carriers or clients, or becoming dependent upon a limited number of them.
• Errors in, or ineffectiveness of, underwriting models and risks to reputation and relationships.
• Failure to maintain, protect, and enhance the brand or prevent damage to reputation.
• Unsatisfactory evaluation of potential acquisitions or failure to successfully integrate acquired businesses.
• Inability to successfully recover upon experiencing a disaster or other interruption in business continuity.
• Impact of third parties performing key functions acting in ways that harm the business.
• Cyclicality of, and economic conditions in, the markets in which the company operates, potentially leading to reduced insurer capacity or migration of business.
• Reduction in insurer capacity to adequately and appropriately underwrite risk and provide coverage.
• International operations expose the company to various international risks, including evolving legal and regulatory obligations and exchange rate fluctuations.
• Changes in interest rates and deterioration of credit quality could reduce the value of cash balances or interest income.
• Failure to maintain the valuable aspects of the company's culture.
• Significant competitive pressures in each of the businesses.
• Decreases in premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions.
• Decrease in the amount of supplemental or contingent commissions received.
• Inability to collect receivables.
• Disintermediation within the insurance industry and shifts away from traditional insurance markets.
• Changes in the mode of compensation in the insurance industry.
• Impairment of goodwill and intangibles.
• The impact on operations and financial condition from the effects of a pandemic or the outbreak of a contagious disease.
• Inability to maintain strong growth and generate sufficient revenue to maintain profitability.
• Loss of clients or business as a result of consolidation within the retail insurance brokerage industry.
• The impact if MGA or MGU programs are terminated or changed.
• Significant investment in growth strategy and whether expectation of internal efficiencies are realized.
• Unavailability or inaccuracy of clients' and third parties' data for pricing and underwriting insurance policies.
• The competitiveness and cyclicality of the reinsurance industry.
• The occurrence of natural or man-made disasters.
• Challenges with properly assessing, adapting to, and managing the adoption and use of artificial intelligence and other evolving technologies.
• The economic and political conditions of the countries and regions in which the company operates.
• The failure, or take-over by the FDIC, of one of the financial institutions used by the company.
• Inability to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among offices.
• The impact of breaches in security that cause significant system or network disruption or business interruption.
• The impact of improper disclosure of confidential, personal or proprietary data, misuse of information by employees or counterparties or as a result of cyber incidents and cyberattacks.
• Inability to gain internal efficiencies through the application of technology or effectively apply technology in driving value for clients.
• The impact of infringement, misappropriation or dilution of intellectual property.
• The impact of the failure to protect intellectual property rights, or allegations of infringement on others' intellectual property rights.
• The impact of evolving governmental regulations, legal proceedings, and governmental inquiries related to the business.
• Being subject to Errors and Omissions (E&O) claims as well as other contingencies and legal proceedings.
• Handling client funds and surplus lines taxes that exposes the company to complex fiduciary regulations.
• Changes in tax laws or regulations.
• Decreased commission revenues due to proposed tort reform legislation.
• The impact of regulations affecting insurance carriers.
• Outstanding debt potentially adversely affecting financial flexibility and subjecting the company to contractual restrictions and limitations.
• Inability to generate sufficient cash flow to service all indebtedness and being forced to take other actions to satisfy obligations.
• Being affected by further changes in the U.S. based credit markets.
• Changes in credit ratings.
• Risks related to the payments required by the Tax Receivable Agreement.
• Risks relating to the organizational structure that could result in conflicts of interests between the LLC Unitholders, the Ryan Parties, and the holders of Class A common stock.

Future Outlook

The company anticipates a continued rise in compensation and benefits expenses, commensurate with expected growth in business volume, revenue, and headcount. Management believes that current cash and cash equivalents, cash flows from operations, and available debt capacity under the Revolving Credit Facility will be sufficient to meet liquidity needs, including debt obligations, capital expenditures, and working capital requirements, for the next 12 months and beyond. The company expects the specialty and E&S markets to continue growing, though not necessarily linearly, and foresees property market dynamics, characterized by increased capacity and declining rates, potentially continuing through the end of 2025.

Management Comments

• Our mission is to provide industry-leading innovative specialty insurance solutions for insurance brokers, agents, and carriers.
• 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.
• 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.
• 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.
• There is substantial opportunity to continue to grow our Delegated Authority business.
• 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.
• 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.

Industry Context

The specialty and Excess & Surplus (E&S) insurance markets are experiencing growing relevance, driven by the rapid emergence and sustained prevalence of large, complex, high-hazard, and otherwise hard-to-place risks. This trend is fueled by factors such as increased catastrophe losses, severe convective storms, hurricanes, wildfires, escalating jury verdicts (social inflation), cyber threats, and the transformation to a digital-first economy. This environment is expected to lead to further market share consolidation among wholesale firms possessing the necessary scale and intellectual capital. However, the property market has seen a shift in trends, with increased insurance capacity leading to a decline in property premium rates in the latter half of 2024 and the first nine months of 2025, creating opportunities for retailers to place coverage directly in the specialty and E&S markets.

Corporate Governance

Legal Proceedings

• Faces ordinary course of business Errors and Omissions (E&O) exposure.
• Has potential E&O risk if an insurance carrier denies coverage or pays less than the insured believes is owed.
• Incurred losses and may incur additional losses arising from original placements and unpaid covered claims due to policies placed through a trading partner with an unsatisfactory insurance carrier, with an estimated loss contingency of $0.2 million as of September 30, 2025.
• Collected $21.1 million from E&O insurance carriers related to the claim for Replacement Costs during the nine months ended September 30, 2025.

Related Party Transactions

• Holds a 47% interest in Ryan Investment Holdings, LLC (RIH), which is considered a related party variable interest entity.
• Patrick G. Ryan, Executive Chairman, indirectly owns aircraft leased to Executive Jet Management (EJM), from which the company charters executive jets at market rates or a discount if Mr. Ryan's aircraft is used. Expense related to business usage of aircraft was $0.3 million for Q3 2025 and $0.5 million for 9M 2025.
• Ryan Re, a wholly owned subsidiary, provides underwriting and administrative services to Geneva Re, Ltd. (a Bermuda-regulated reinsurance company in which RIH has a 50% non-controlling interest). Revenue earned from Geneva Re was $0.4 million for Q3 2025 and $1.2 million for 9M 2025.
• Ryan Re subcontracts certain services to Geneva Re for a segregated account, incurring expense of $2.8 million for Q3 2025 and $8.2 million for 9M 2025.

Stakeholder Impact

• Shareholders benefit from increased Q3 net income and diluted EPS, as well as a declared quarterly cash dividend.
• Employees are impacted by the addition of 1,065 employees, inclusive of acquired employees, and growth in the business, leading to increased compensation and benefits.
• Customers and clients benefit from expanded distribution reach and product capabilities through strategic acquisitions and continued investment in product innovation.
• Creditors benefit from a credit rating upgrade by Moody's, which indicates improved creditworthiness and potentially lower borrowing costs for the company.

Next Steps

• Close the acquisition of Stewart Specialty Risk Underwriting Ltd. during the fourth quarter of 2025.
• Continue to evaluate and pursue targeted acquisitions that complement product and service capabilities or provide access to new markets.
• Deepen and broaden relationships with retail broker trading partners to increase transaction volume.
• Continue to grow the Delegated Authority business, including Binding Authority and Underwriting Management Specialties.
• Prioritize strategic investments in talent, de novo formations, product innovation and solutions, M&A, and technology to maximize long-term value creation.
• Future dividends will be subject to the approval of the Board of Directors.

Key Dates

Recommendation

The company demonstrates robust organic revenue growth and a successful acquisition strategy, significantly boosting Q3 revenue and net income. While nine-month net income was impacted by a non-cash tax expense, the underlying operational performance remains strong. The recent credit rating upgrade and consistent dividend payments reflect financial health and management's confidence. The company is well-positioned to capitalize on the growing specialty and E&S insurance markets, making it an an attractive long-term investment despite increased expenses associated with its growth initiatives.

Keywords

Specialty Insurance, Wholesale Brokerage, Underwriting Management, Binding Authority, SEC Filing, 10-Q, Financial Results, Acquisitions, Organic Growth, Insurance Market, E&S Market, Risk Management, Corporate Governance, RYAN