Ryan Specialty Holdings, Inc. (RYAN) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company's earnings call presents a mixed picture. Positive factors include sustained organic growth and strategic investments in talent and technology. However, margin pressures due to investments and declining property pricing are concerning. The Q&A reveals uncertainties in growth guidance and macroeconomic pressures affecting segments like construction. While AI and M&A strategies are promising, the lack of specific guidance on margin targets and the impact of AI tempers enthusiasm. Overall, the sentiment is neutral, reflecting balanced positives and negatives.
Key Financial Performance
Organic Growth (Q4 2025) 6.6%, reflecting resilience despite volatile property market conditions, increased competition in select casualty lines, and delays in project-based business.
Full Year Revenue (2025) Surpassed $3 billion, up 21% year-over-year, driven by 10.1% organic growth and contributions from M&A strategy.
Adjusted EBITDAC (2025) $967 million, up 19.2% year-over-year, with a margin of 31.7% compared to 32.2% in the prior year. Margin impacted by investments in talent, operations, and technology.
Adjusted Earnings Per Share (2025) $1.96, up 9.5% year-over-year, reflecting strong financial performance.
Acquisitions (2025) 5 acquisitions completed with trailing revenue of over $125 million, contributing to growth.
Delegated Authority Revenue Doubled over 2 years to $1.4 billion, now 47% of total revenue, up from $700 million and 35% of total revenue 2 years ago, driven by strategic investments and acquisitions.
Q4 2025 Revenue $751 million, up 13% period-over-period, driven by 6.6% organic growth, M&A contributions, and contingent commissions.
Q4 2025 Adjusted EBITDAC $222 million, up 2.9% period-over-period, with a margin of 29.6% compared to 32.6% in the prior year, impacted by investments in talent and operations.
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Operating Highlights
Innovative Solutions: Launched Ryan Re's expanded relationship with Nationwide, RAP Re (a first-of-its-kind collateralized sidecar), and numerous real-time de novo formations.
Delegated Authority Revenue: Doubled over the last 2 years to $1.4 billion, now 47% of total revenue.
New Products: Increased the number of products on the platform by 50% to over 300.
International Expansion: Expanded international presence to 24 offices, up from 6 in 2023.
Panel Consolidation: Secular trend of retail brokers narrowing wholesale broker intermediaries, positioning Ryan Specialty well.
Project Empower: A 3-year restructuring program to improve efficiency, streamline operations, and integrate technology, expected to save $80 million annually by 2029.
AI Integration: AI will be a key enabler in improving efficiency and client relationships.
M&A Activity: Completed 5 acquisitions in 2025 with trailing revenue of over $125 million, investing $2.7 billion in 12 acquisitions over 2 years.
Share Repurchase Program: Announced a $300 million share repurchase program to enhance shareholder returns.
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Risk or Challenges
Volatile Property Market Conditions: The company faced volatile property market conditions, with significant pricing declines in the fourth quarter, particularly in December, where pricing was down 25%-35% on large accounts. This trend is expected to continue into 2026, creating challenges for growth in the property segment.
Increased Competition in Casualty Lines: The company is experiencing increased competition in certain casualty lines, particularly in small commercial and middle market segments, which is leading to a slight moderation of pricing in some areas.
Project-Based Business Delays: Delays in project-based business, particularly in the large construction industry, have been a headwind. While there are early signs of recovery, these delays have impacted the company's performance in this segment.
Complexity from Business Expansion: The company's rapid expansion, including $2.7 billion in acquisitions over the last two years, has introduced greater complexity to its operations, necessitating a 3-year restructuring program (Project Empower) to streamline processes and improve efficiency.
Regulatory and Economic Uncertainty: Broader macroeconomic uncertainty and regulatory challenges are expected to impact the company's operations and financial performance in 2026.
Admitted Carriers Reentering Market: Instances of admitted carriers reentering certain segments, particularly smaller accounts in property, have created additional competition and pricing pressures.
Interest Rate Environment Impact: The heightened interest rate environment has caused delays in construction projects and impacted the builders risk MGU, U.S. Assure, creating near-term pressure in this segment.
Health Care and Benefit Costs: Higher health care and benefit costs are expected to be a headwind for the company's adjusted EBITDAC margin in 2026.
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Guidance & Outlook
Organic Revenue Growth: Guidance for organic revenue growth in the high single digits for 2026, reflecting current market conditions including property pricing pressures, moderate casualty growth, and macroeconomic uncertainty.
Adjusted EBITDAC Margin: Guidance for adjusted EBITDAC margin to be flat to moderately down in 2026 compared to the prior year, due to lower interest rates, stable contingent commissions, higher healthcare costs, and absorption of talent and technology investments.
Project Empower Savings: Anticipated cumulative special charge of approximately $160 million through 2028, with expected annual savings of $80 million starting in 2029.
Capital Allocation: Board authorized a $300 million share repurchase program, reflecting confidence in near- and long-term business outlook.
Casualty Growth: Anticipating strong yet moderating casualty growth in 2026, with significant price increases in high-hazard lines like transportation and healthcare.
Property Pricing: Expecting continued property pricing declines in 2026, particularly on large accounts, but optimistic about long-term property growth due to demand for E&S solutions and increasing populations in catastrophe-affected areas.
Construction Industry Outlook: Optimistic about recovery in the construction industry in 2026 due to early signs of activity picking up and recent interest rate cuts.
Delegated Authority Business: Continued growth expected in delegated authority business, with a focus on binding authority and underwriting management specialties.
M&A Strategy: Continued focus on disciplined M&A as a top capital allocation priority, with acquisitions supporting strategic vision and growth.
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Shareholder Return Plan
Dividend Increase: The Board of Directors approved an 8% increase to the regular quarterly dividend for Class A stockholders, now at $0.13 per share.
Share Repurchase Program: The Board of Directors authorized a $300 million share repurchase program. This decision reflects the company's view of a meaningful dislocation between its current valuation and its confidence in the near and long-term outlook of the business.
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Key Q&A
Q:What is driving the change in organic growth guidance for 2026 compared to 2025?
A:The change in organic growth guidance for 2026 is driven by the continuation of property pricing declines that intensified in the fourth quarter of 2025, particularly in large accounts with rate decreases of 25% to 35%. Additionally, casualty pricing conditions are expected to moderate growth in 2026. Timing-related factors in construction and transactional liability also contributed to the change.
Q:What are the management's views on the impact of AI on the brokerage sector?
A:Management views AI as an ally that can improve tools for serving clients more effectively and create efficiencies. They believe AI will enhance productivity and speed to market but emphasize that trust, relationships, and specialized skills remain critical and cannot be replaced by AI.
Q:How is the construction segment expected to perform in 2026?
A:The construction segment remains strong, with a large percentage of renewable business. However, macroeconomic pressures and higher interest rates have slowed the timeline for project financing, creating uncertainty for 2026. Management remains optimistic about growth in the segment.
Q:What is the company's approach to share repurchase and M&A in light of current market conditions?
A:The company views share repurchase as an opportunistic investment due to stock valuation compression but remains committed to M&A as the top capital allocation priority. They are disciplined in evaluating M&A opportunities to ensure alignment with criteria and long-term growth.
Q:What is the outlook for client demand and coverage purchasing trends in 2026?
A:Client demand is expected to remain stable, with no measurable trends of buying less coverage. However, there are changes in structure demands, such as higher retention levels and alternative risk solutions, to meet unique client needs.
Q:What is the expected impact of talent investments on organic growth and margins in 2026?
A:Talent investments are expected to contribute to margin pressures in the short and medium term, with 2026 being the first full year of these investments. These hires are anticipated to contribute to organic growth from day one, with full accretion expected in 2-3 years.
Q:What is the long-term outlook for achieving a 35% margin target?
A:The 35% margin target has been deferred beyond 2027. Management expects modest margin expansion in most years, supported by efficiencies from Project Empower, while continuing to invest in growth opportunities.
Q:What are the expectations for property rate decreases in 2026?
A:Management finds it hard to conceive that property rate decreases of 25% to 35% could continue for another full year but is conservatively forecasting this trend. They expect brokers to adapt and find growth opportunities in other areas.
Q:How does the company view the potential for smaller wholesalers using AI to compete?
A:Management believes that smaller wholesalers using AI apps cannot replace the trust, adaptability, and relationships that Ryan Specialty has built. AI is seen as an enabler, not a replacement for expertise and market relationships.
Q:What is the outlook for contingent and supplemental commissions in 2026?
A:Contingent and supplemental commissions are expected to remain relatively stable in 2026. The benign storm season in 2025 contributed to higher commissions, but a normal catastrophe season is anticipated for 2026.
Q:What is the expected growth of the E&S market and Ryan Specialty's position in it?
A:The E&S market is expected to grow at a slower pace but will continue to outpace the admitted market. Ryan Specialty aims to capture market share and maintain industry-leading growth.
Q:What are the trends in casualty business and its impact on growth?
A:Medium-hazard casualty business is becoming more competitive, with some rate cuts and movement back to the admitted market. However, high-hazard niches remain solidly placed in the E&S market, and management is optimistic about capturing more business in 2026.
Q:What is the outlook for the delegated underwriting side of the business?
A:The delegated underwriting side continues to show strong results, with ongoing opportunities in utilization and penetration into new balance sheets. Management remains optimistic about growth in this area.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the specific timeline for achieving the 35% margin target, stating that it remains a realistic goal but without a defined date. Additionally, they did not quantify the efficiencies expected from AI, despite expressing excitement about its potential benefits.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
account pricing
agent insurance
behalf
benefit
brick
broker agent
carrier partner
cat
complexity restructuring
confidence term
construction
de novo
dislocation
distribution
diversification
efficiency people
efficiency specialty
expansion
face
formation need
goal
industry year
insurance carrier
landscape
market cycle
people tool
pocket
pricing cycle
product PC
project delay
repurchase program
resilience
restructuring program
return
share repurchase
solution broker
tool ability
year acquisition
RYAN Transcript
Ryan Specialty Holdings, Inc. (RYAN) Q4 2025 Earnings Call Transcript
Unknown2-13
The company's earnings call presents a mixed picture. Positive factors include sustained organic growth and strategic investments in talent and technology. However, margin pressures due to investments and declining property pricing are concerning. The Q&A reveals uncertainties in growth guidance and macroeconomic pressures affecting segments like construction. While AI and M&A strategies are promising, the lack of specific guidance on margin targets and the impact of AI tempers enthusiasm. Overall, the sentiment is neutral, reflecting balanced positives and negatives.
Ryan Specialty Holdings, Inc. (RYAN) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call presents a mixed outlook. While there is optimism in organic growth, M&A activity, and strategic initiatives, challenges remain with margin pressures, property headwinds, and uncertainties in the construction business. The Q&A highlighted concerns about margin pressures and the slow productivity ramp-up of new hires. However, the company is well-positioned for future opportunities, particularly in casualty growth and reinsurance. Overall, the balanced positives and negatives suggest a neutral sentiment, with limited immediate impact on the stock price.
Ryan Specialty Holdings, Inc. (RYAN) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call summary showed mixed signals: strong strategic positioning, M&A activity, and optimistic guidance were offset by property pricing declines and lack of specific guidance on investments. The Q&A highlighted management's confidence in growth areas but also their evasiveness on certain financial specifics, which may concern investors. The absence of clear financial guidance for key initiatives and the assumption of continued pricing declines suggest a cautious market reaction. Thus, the overall sentiment remains neutral, reflecting both potential growth and existing uncertainties.
Ryan Specialty Holdings, Inc. (RYAN) Q1 2025 Earnings Call Transcript
Positive5-2
The earnings call reflects strong financial performance with a 25% revenue increase and expanded EBITDA margins. Despite a GAAP net loss due to non-cash tax expenses, the adjusted EPS rose by 11.4%. The Q&A highlights robust M&A prospects and strategic acquisitions, suggesting future growth potential. However, management's reluctance to provide precise guidance and the high net leverage may temper enthusiasm. Overall, the strong revenue growth and optimistic M&A outlook suggest a positive stock price movement in the short term.
RYAN Slides
RYAN Report
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