# Ryan Specialty Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2025 - Company: [Ryan Specialty Holdings, Inc.](/companies/ryan.md) (CIK 1849253) - Form: 10-Q - Filed: 2025-08-01 - Accepted by EDGAR: Aug 1, 2025, 07:26 ET - Period: 2025-06-30 - Accession: 0001628280-25-037141 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1849253/000162828025037141/ryan-20250630.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1849253/000162828025037141/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2025-06-30. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 3 months, 2025-04-01 to 2025-06-30 | $840.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Revenue | 6 months, 2025-01-01 to 2025-06-30 | $1.52bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax | | Operating income | 3 months, 2025-04-01 to 2025-06-30 | $191.1m | us-gaap:OperatingIncomeLoss | | Operating income | 6 months, 2025-01-01 to 2025-06-30 | $291.3m | us-gaap:OperatingIncomeLoss | | Income tax | 3 months, 2025-04-01 to 2025-06-30 | $13.0m | us-gaap:IncomeTaxExpenseBenefit | | Income tax | 6 months, 2025-01-01 to 2025-06-30 | $68.5m | us-gaap:IncomeTaxExpenseBenefit | | Net income | 3 months, 2025-04-01 to 2025-06-30 | $52.0m | us-gaap:NetIncomeLoss | | Net income | 6 months, 2025-01-01 to 2025-06-30 | $24.3m | us-gaap:NetIncomeLoss | | Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $210.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $664.0k | us-gaap:PaymentsToAcquireProductiveAssets | | Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $30.5m | us-gaap:PaymentsOfDividendsCommonStock | | Cash and equivalents | at 2025-06-30 | $172.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2025-06-30 | $5.27bn | us-gaap:AssetsCurrent | | Total assets | at 2025-06-30 | $10.63bn | us-gaap:Assets | | Current liabilities | at 2025-06-30 | $5.23bn | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2025-06-30 | $9.44bn | us-gaap:Liabilities | | Long-term debt | at 2025-06-30 | $3.41bn | us-gaap:LongTermDebtNoncurrent | | Current portion of debt | at 2025-06-30 | $61.7m | us-gaap:DebtCurrent | | Shareholders' equity | at 2025-06-30 | $610.1m | us-gaap:StockholdersEquity | ## Management's discussion and analysis As filed, 89,564 characters. ### OPERATIONS #### The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, #### financial condition, liquidity, and cash flows of the Company as of and for the periods presented below. The following #### discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the related notes #### included elsewhere in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended #### December 31, 2024, which was filed with the SEC on February 21, 2025. The discussion contains forward-looking #### statements that are based on the beliefs of management, as well as assumptions made by, and information currently #### available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking #### statements as a result of various factors, including those discussed below and in our Annual Report on Form 10-K, #### particularly in the sections entitled “Risk Factors” and “Information Concerning Forward-Looking Statements.” #### The following discussion provides commentary on the financial results derived from our unaudited financial statements for #### the three and six months ended June 30, 2025 and 2024, prepared in accordance with U.S. GAAP. In addition, we #### regularly review the following Non-GAAP measures when assessing performance: Organic revenue growth rate, Adjusted #### compensation and benefits expense, Adjusted compensation and benefits expense ratio, Adjusted general and #### administrative expense, Adjusted general and administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC #### margin, Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share. See “Non-GAAP #### Financial Measures and Key Performance Indicators” for further information. ### Overview Founded by Patrick G. Ryan in 2010, we are a service provider of specialty products and solutions for insurance brokers, agents, and carriers. We provide distribution, underwriting, product development, administration, and risk management services by acting predominantly as a wholesale broker and a managing underwriter or a program administrator with delegated authority from insurance carriers. Our mission is to provide industry-leading innovative specialty insurance solutions for insurance brokers, agents, and carriers. For retail insurance agents and brokers, we assist in the placement of complex or otherwise hard-to-place risks. For insurance and reinsurance carriers, we predominantly work with retail and wholesale insurance brokers to source, onboard, underwrite, and service these same types of risks. A significant majority of the premiums we place are bound in the E&S market, which includes Lloyd’s of London. There is often significantly more flexibility in terms, conditions, and rates in the E&S market relative to the Admitted or “standard” insurance market. We believe that 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. We believe 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. ### Significant Events and Transactions ### Corporate Structure We are a holding company and our sole material asset is a controlling equity interest in New LLC, which is also a holding company and its sole material asset is a controlling equity interest in the LLC. The Company operates and controls the business and affairs of, and consolidates the financial results of, the LLC through New LLC. We conduct our business through the LLC. As the LLC is substantively the same as New LLC, for the purpose of this discussion we will refer to both New LLC and the LLC as the “LLC.” The LLC is a limited liability company taxed as a partnership for income tax purposes, and its taxable income or loss is passed through to its members, including the Company. The LLC is subject to income taxes on its taxable income in certain foreign countries, in certain state and local jurisdictions that impose income taxes on partnerships, and on the taxable income of its U.S. corporate subsidiaries. As a result of our ownership of LLC Common Units, we are subject to U.S. federal, state, and local income taxes with respect to our allocable share of any taxable income of the LLC and are taxed at the prevailing corporate tax rates. We intend to cause the LLC to make distributions in an amount that is at least sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments due under the Tax Receivable Agreement. See “Liquidity and Capital Resources - Tax Receivable Agreement” for additional information about the TRA. 34 ### Acquisitions On February 3, 2025, the Company completed the acquisition of Velocity Risk Underwriters, LLC (“Velocity”), an MGU specializing in first-party insurance coverage for catastrophe exposed properties, based in Nashville, Tennessee. On May 1, 2025, the Company completed the acquisition of USQRisk Holdings, LLC (“USQ”), a company that underwrites, structures, prices, and places specialty insurance for corporate clients seeking bespoke, multi-year risk solutions based in New York and London. On May 16, 2025, the Company completed the acquisition of 360° Underwriting (“360”), an MGU specializing in commercial construction, based in Dublin and Galway, Ireland. On July 1, 2025, the Company completed the acquisition of certain assets of J.M. Wilson Corporation, an MGA and surplus lines broker specializing in transportation insurance headquartered in Portage, Michigan. ### Key Factors Affecting Our Performance Our historical financial performance has been, and we expect our financial performance in the future to be, driven by our ability to: ### Pursue Strategic Acquisitions We have successfully integrated businesses complementary to our own to increase both our distribution reach and our product and service capabilities. 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. We have previously made, and intend to continue to make, acquisitions with the objective of enhancing our human capital and product and service capabilities, entering natural adjacencies, and expanding our geographic presence. Our ability to successfully pursue strategic acquisitions is dependent upon a number of factors, including sustained execution of a disciplined and selective acquisition strategy which requires acquisition targets to have a cultural and strategic fit, competition for these assets, purchase price multiples that we deem appropriate and our ability to effectively integrate targeted companies or assets and grow our business. We do not have agreements or commitments for any material acquisitions at this time. ### Deepen and Broaden our Relationships with Retail Broker Trading Partners We have deep engagement with our retail broker trading partners, and we believe we have the ability to transact in even greater volume with nearly all of them. For example, in 2024, our revenue derived from the Top 100 firms (as ranked by Business Insurance) expanded faster than our Organic revenue growth rate of 12.8%. Our ability to deepen and broaden relationships with our retail broker trading partners and increase sales is dependent upon a number of factors, including client satisfaction with our distribution reach and our product capabilities, retail brokers continuing to require or desire our services, competition, pricing, economic conditions, and spending on our product offerings. ### Build Our Delegated Authority Business We believe there is substantial opportunity to continue to grow our Delegated Authority business, which includes both our Binding Authority Specialty and Underwriting Management Specialty. We believe that both M&A consolidation and panel consolidation are in nascent stages for Binding Authority. We believe that both M&A consolidation and the use and reliance on scaled delegated Underwriting Management will continue to grow. Our ability to grow this business is dependent upon a number of factors, including a continuing ability to secure sufficient capital support from insurers, the quality of our services and product offerings, marketing and sales efforts to drive new business prospects and execution, new product offerings, the pricing and quality of our competitors’ offerings, and the growth in demand for the insurance products. ### Invest in Operation and Growth We have invested heavily in building a durable business that is able to adapt to the continuously evolving E&S market and intend to continue to do so. We are focused on enhancing the breadth of our product and service offerings as well as developing and launching new solutions to address the evolving needs of the specialty insurance industry and markets. Our future success is dependent upon a number of factors, including our ability to successfully develop, market, and sell existing and new products and services to both new and existing trading partners. 35 ### Generate Commission Regardless of the State of the E&S Market We earn commissions, which are calculated as a percentage of the total insurance policy premium, and fees. Changes in the insurance market or specialty lines that are our focus, characterized by a period of increasing (or declining) premium rates, could positively (or negatively) impact our profitability. ### Managing Changing Macroeconomic Conditions Growth in certain lines of business, such as project-based construction and M&A transactional liability insurance, is partially dependent on a variety of macroeconomic factors inasmuch as binding the underlying insurance coverage is subject to the underlying activity occurring. In periods of economic growth and liquid credit markets, this underlying activity can accelerate and provide tailwinds to our growth. In periods of economic decline and tight credit markets, this underlying activity can slow or be delayed and provide headwinds to our growth. We believe over the long term these lines of business will continue to grow. ### Leverage the Growth of the E&S Market The growing relevance of the E&S market has been driven by the rapid emergence and sustained prevalence of large, complex, high-hazard, and otherwise hard-to-place risks across many lines of insurance. This trend continued in 2024, with $110 billion of insured catastrophe losses, driven by over $50 billion of insured losses related to severe convective storms (“SCS”) with 17 SCS events that caused losses in excess of $1 billion, which together accounted for the second-highest annual total for insured losses on record for SCS events. The year also included ice storms across the country and continued wildfire-related losses. In addition to the SCS events, Hurricanes Helene and Milton caused over $35 billion in insured losses. Additionally, these risks include the potential for more severe hurricanes that occur with greater frequency, more devastating wildfires, more frequent flooding, escalating jury verdicts and social inflation, geographic shifts in population density, a proliferation of cyber threats, novel health risks, risks associated with large sports and entertainment venues, building and labor cost inflation relative to insured value, and the transformation of the economy to a “digital first” mode of doing business. We believe that as the complexity of the E&S market 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. This will further the trend of market share consolidation among the wholesale firms that do have these capabilities. We will continue to invest in our intellectual capital to innovate and offer custom solutions and products to better address these evolving market fundamentals. Although we believe this growth will continue, we recognize that the growth of the E&S market might not be linear as risks can and do shift between the E&S and non-E&S markets as market factors change and evolve. For example, we benefited from a rapid increase in both the flow of property risks into the wholesale channel and the premium rate charged for those risks in 2023 and the first half of 2024 as the frequency and severity of catastrophe losses, attritional losses and secondary perils such as severe convective storms, economic inflation, concentration of exposures, higher retentions of risk, and higher reinsurance costs applied pressure to insurers and capacity tightened. In the second half of 2024 and through the first half of 2025, the E&S market experienced a shift in these trends as insurance capacity for these property risks increased, which resulted in a decline in property premium rates. We believe these factors have created opportunities for retailers to place property coverage directly in the E&S market, and we believe the market dynamics exist for these factors to potentially continue through the end of 2025. ### Components of Results of Operations ### Revenue ### Net Commissions and Fees Net commissions and fees are derived primarily from our three Specialties and are paid for our role as an intermediary in facilitating the placement of coverage in the insurance distribution chain. Net commissions and policy fees are generally calculated as a percentage of the total insurance policy premium placed, although fees can often be a fixed amount irrespective of the premium, and we also receive supplemental commissions based on the volume placed or profitability of a book of business. We share a portion of these net commissions and policy fees with the retail insurance broker and recognize revenue on a net basis. Additionally, carriers may also pay us a contingent commission or volume-based commission, both of which represent forms of contingent or supplemental consideration associated with the placement of coverage and are based primarily on underwriting results, but may also contain considerations for only volume, growth, and/or retention. Although we have compensation arrangements called contingent commissions in all three Specialties that are based in whole or in part on the underwriting performance, we do not take any direct insurance risk other than through our equity method investments in Geneva Re through Ryan Investment Holdings, LLC and Velocity Specialty Insurance 36 Company (“VSIC”). We also receive loss mitigation and other fees, some of which are not dependent on the placement of a risk. In our Wholesale Brokerage and Binding Authority Specialties, we generally work with retail insurance brokers to secure insurance coverage for their clients, who are the ultimate insured party. Our Wholesale Brokerage and Binding Authority Specialties generate revenues through commissions and fees from clients, as well as through supplemental commissions, which may be contingent commissions or volume-based commissions from carriers. Commission rates and fees vary depending upon several factors, which may include the amount of premium, the type of insurance coverage provided, the particular services provided to a client or carrier, and the capacity in which we act. Payment terms are consistent with current industry practice. In our Underwriting Management Specialty we utilize delegated authority granted to us by carriers and we generally work with retail insurance brokers and often other wholesale brokers to secure insurance coverage for the ultimate insured party. Our Underwriting Management Specialty generates revenues through commissions and fees from clients and through contingent commissions from carriers. Commission rates and fees vary depending upon several factors including the premium, the type of coverage, and additional services provided to the client. Payment terms are consistent with current industry practice. ### Fiduciary Investment Income Fiduciary investment income consists of interest earned on insurance premiums and surplus lines taxes that are held in a fiduciary capacity, in cash and cash equivalents, until disbursed. ### Expenses ### Compensation and Benefits Compensation and benefits is our largest expense. It consists of (i) salary, incentives and benefits to employees, and commissions to our producers and (ii) equity-based compensation associated with the grants of awards to employees, executive officers, and directors. We operate in competitive markets for human capital and we need to maintain competitive compensation levels in order to maintain and grow our talent base. ### General and Administrative General and administrative expense includes travel and entertainment expenses, office expenses, accounting, foreign exchange, legal, insurance and other professional fees, and other costs associated with our operations. Our occupancy- related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations. ### Amortization Amortization expense consists primarily of amortization related to intangible assets we acquired in connection with our acquisitions. Intangible assets consist of customer relationships, trade names, and internally developed software. ### Interest Expense, Net Interest expense, net consists of interest payable on indebtedness, amortization of the Company’s interest rate cap, imputed interest on contingent consideration, and amortization of deferred debt issuance costs, offset by interest income on the Company’s Cash and cash equivalents balances and payments received in relation to the interest rate cap. ### Other Non-Operating Loss (Income) For the six months ended June 30, 2025, Other non-operating loss (income) consisted of seller reimbursement of acquisition-related retention incentives and sublease income offset by TRA contractual interest and related charges. For the six months ended June 30, 2024, Other non-operating loss (income) consisted of expense related to fees associated with our term loan repricing and TRA contractual interest and related charges offset by sublease income. ### Income Tax Expense Income tax expense includes tax on the Company’s allocable share of any net taxable income from the LLC, from certain state and local jurisdictions that impose taxes on partnerships, as well as earnings from our foreign subsidiaries and C- Corporations subject to entity level taxation and income tax expense recognized as a result of the Common Control Reorganization (“CCR”) subsequent to the Velocity acquisition in the first quarter of 2025. 37 ### Non-Controlling Interests Net income and Other comprehensive income (loss) are attributed to the non-controlling interests based on the weighted- average LLC Common Units outstanding during the period and is presented on the Consolidated Statements of Income. Refer to “Note 7, *Stockholders’ Equity”* of the unaudited quarterly consolidated financial statements for more information. ### Results of Operations Below is a summary table of the financial results and Non-GAAP measures that we find relevant to our business operations: *(in thousands, except percentages and per share data)* | Revenue | Three Months Ended June 30, 2025 | 2024 | Change $% | | Six Months Ended June 30, 2025 | 2024 | Change $% | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net commissions and fees | $840,857 | $680,248 | $160,609 | 23.6 % | $1,516,985 | $1,218,135 | $298,850 | 24.5 % | | Fiduciary investment income | 14,313 | 15,193 | (880) | (5.8) | 28,351 | 29,352 | (1,001) | (3.4) | | **Total revenue** | **$855,170** | **$695,441** | **$159,729** | **23.0 %** | **$1,545,336** | **$1,247,487** | **$297,849** | **23.9 %** | | **Expenses** | | | | | | | | | | Compensation and benefits | 485,272 | 414,049 | 71,223 | 17.2 | 915,561 | 787,576 | 127,985 | 16.3 | | General and administrative | 107,049 | 82,967 | 24,082 | 29.0 | 213,109 | 158,834 | 54,275 | 34.2 | | Amortization | 69,668 | 30,541 | 39,127 | NM | 134,653 | 58,529 | 76,124 | NM | | Depreciation | 2,888 | 2,273 | 615 | 27.1 | 5,527 | 4,353 | 1,174 | 27.0 | | Change in contingent consideration | (759) | 1,243 | (2,002) | NM | (14,801) | 1,178 | (15,979) | NM | | **Total operating expenses** | **$664,118** | **$531,073** | **$133,045** | **25.1 %** | **$1,254,049** | **$1,010,470** | **$243,579** | **24.1 %** | | **Operating income** | **$191,052** | **$164,368** | **$26,684** | **16.2 %** | **$291,287** | **$237,017** | **$54,270** | **22.9 %** | | Interest expense, net | 58,334 | 31,128 | 27,206 | 87.4 | 112,842 | 60,528 | 52,314 | 86.4 | | (Income) from equity method investments | (5,156) | (3,722) | (1,434) | 38.5 | (10,093) | (9,328) | (765) | 8.2 | | Other non-operating loss (income) | 143 | 233 | (90) | (38.6) | (234) | 1,985 | (2,219) | NM | | **Income before income taxes** | **$137,731** | **$136,729** | **$1,002** | **0.7 %** | **$188,772** | **$183,832** | **$4,940** | **2.7 %** | | Income tax expense | 13,026 | 18,691 | (5,665) | (30.3) | 68,456 | 25,117 | 43,339 | NM | | **Net income** | **$124,705** | **$118,038** | **$6,667** | **5.6 %** | **$120,316** | **$158,715** | **$(38,399)** | **(24.2) %** | | **GAAP financial measures** | | | | | | | | | | Total revenue | $855,170 | $695,441 | $159,729 | 23.0 % | $1,545,336 | $1,247,487 | $297,849 | 23.9 % | | Net commissions and fees | 840,857 | 680,248 | 160,609 | 23.6 | 1,516,985 | 1,218,135 | 298,850 | 24.5 | | Compensation and benefits | 485,272 | 414,049 | 71,223 | 17.2 | 915,561 | 787,576 | 127,985 | 16.3 | | General and administrative | 107,049 | 82,967 | 24,082 | 29.0 | 213,109 | 158,834 | 54,275 | 34.2 | | Net income | 124,705 | 118,038 | 6,667 | 5.6 | 120,316 | 158,715 | (38,399) | (24.2) | | Compensation and benefits expense ratio (1) | 56.7 % | 59.5 % | | | 59.2 % | 63.1 % | | | | General and administrative expense ratio (2) | 12.5 % | 11.9 % | | | 13.8 % | 12.7 % | | | | Net income margin (3) | 14.6 % | 17.0 % | | | 7.8 % | 12.7 % | | | | Earnings per share (4) | $0.41 | $0.38 | | | $0.19 | $0.52 | | | | Diluted earnings per share (4) | $0.38 | $0.37 | | | $0.18 | $0.49 | | | | **Non-GAAP financial measures\*** | | | | | | | | | | Organic revenue growth rate | 7.1 % | 14.2 % | | | 9.6 % | 14.0 % | | | | Adjusted compensation and benefits expense | $453,414 | $383,960 | $69,454 | 18.1% | $850,842 | $713,982 | $136,860 | 19.2% | | Adjusted compensation and benefits expense ratio | 53.0 % | 55.2 % | | | 55.1 % | 57.2 % | | | | Adjusted general and administrative expense | $93,350 | $63,790 | $29,560 | 46.3% | $185,587 | $128,592 | $56,995 | 44.3% | | Adjusted general and administrative expense ratio | 10.9 % | 9.2 % | | | 12.0 % | 10.3 % | | | | Adjusted EBITDAC | $308,406 | $247,691 | $60,715 | 24.5% | $508,907 | $404,913 | $103,994 | 25.7% | | Adjusted EBITDAC margin | 36.1 % | 35.6 % | | | 32.9 % | 32.5 % | | | | Adjusted net income | $184,682 | $160,554 | $24,128 | 15.0% | $292,521 | $255,971 | $36,550 | 14.3% | | Adjusted net income margin | 21.6 % | 23.1 % | | | 18.9 % | 20.5 % | | | | Adjusted diluted earnings per share | $0.66 | $0.58 | $0.08 | 13.8% | $1.05 | $0.93 | $0.12 | 12.9% | NM represents “Not Meaningful.” (1) Compensation and benefits expense ratio is defined as Compensation and benefits expense divided by Total revenue. 38 (2) General and administrative expense ratio is defined as General and administrative expense divided by Total revenue. (3) Net income margin is defined as Net income divided by Total revenue. (4) See “Note 9, *Earnings Per Share”* of the unaudited quarterly consolidated financial statements for further discussion of how these metrics are calculated. \* These measures are Non-GAAP. Please refer to the section entitled “*Non-GAAP Financial Measures and Key* *Performance Indicators”* below for definitions and reconciliations to the most directly comparable GAAP measure. ### Comparison of the Three Months Ended June 30, 2025 and 2024 ### Revenue ### Total Revenue Total revenue increased by $159.7 million, or 23.0%, from $695.4 million to $855.2 million for the three months ended June 30, 2025, as compared to the same period in the prior year. The following were the principal drivers of the increase: - $89.0 million, or 12.8%, of the period-over-period change in Total revenue was due to acquisitions during their first twelve months of ownership by the Company. Acquisition revenue was offset by a $0.4 million decline in revenue period-over-period relating to the sale of a small non-subscription workers compensation book of business at the end of 2024; - $48.4 million, or 7.0%, of the period-over-period change in Total revenue was due to organic revenue growth. Organic revenue growth represents the change in Net commissions and fees revenue, as compared to the same period for the year prior, adjusted for Net commissions and fees attributable to recent acquisitions during the first twelve months of Ryan Specialty’s ownership, and other adjustments such as the removal of the impact of contingent commissions and the impact of changes in foreign exchange rates. In aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors. We experienced growth across the majority of our casualty lines, offset by a moderate pullback across our property portfolio. A modest decline in our property portfolio revenue was driven by a continued decline in rates and retailers realizing additional opportunity to place coverage directly in the E&S market. This decline was partially offset by new business generation. Growth in the quarter was balanced across our three Specialties, driven by an increase in the flow of risks into the E&S market; - $23.2 million, or 3.3%, of the period-over-period change in Total revenue was due to changes in contingent commissions and the impact of foreign exchange rates on the Company’s Net commissions and fees; and - A decline of $0.9 million, or 0.1%, of the period-over-period change in Total revenue was due to a decrease in Fiduciary investment income, caused by a decline in interest rates compared to the prior year period. *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | % of total | 2024 | % of total | Change | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Wholesale Brokerage | $477,165 | 56.7 % | $444,129 | 65.3 % | $33,036 | 7.4 % | | Binding Authorities | 94,524 | 11.2 | 80,630 | 11.8 | 13,894 | 17.2 | | Underwriting Management | 269,168 | 32.1 | 155,489 | 22.9 | 113,679 | 73.1 | | **Total Net commissions and fees** | **$840,857** | | **$680,248** | | **$160,609** | **23.6 %** | Wholesale Brokerage net commissions and fees increased by $33.0 million, or 7.4%, period-over-period, primarily due to organic growth within the Specialty for the quarter as well as an increase in contingent commissions. Binding Authority net commissions and fees increased by $13.9 million, or 17.2%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter as well as an increase in contingent commissions. Underwriting Management net commissions and fees increased by $113.7 million, or 73.1%, period-over-period, primarily due to organic growth within the Specialty for the quarter, contributions from the Castel, US Assure, Greenhill, Ethos P&C, EverSports, Geo, Innovisk, Velocity, 360, and USQ acquisitions, and an increase in contingent commissions. 39 The following table sets forth our revenue by type of commission and fees: *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | % of total | 2024 | % of total | Change | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Net commissions and policy fees | $787,074 | 93.6 % | $656,938 | 96.6 % | $130,136 | 19.8 % | | Supplemental and contingent commissions | 35,630 | 4.2 | 8,927 | 1.3 | 26,703 | 299.1 | | Loss mitigation and other fees | 18,153 | 2.2 | 14,383 | 2.1 | 3,770 | 26.2 | | **Total Net commissions and fees** | **$840,857** | | **$680,248** | | **$160,609** | **23.6 %** | Net commissions and policy fees grew 19.8%, in line with the overall net commissions and fee revenue growth of 23.6%, for the three months ended June 30, 2025, as compared to the same period in the prior year. The main drivers of this growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S market and an increase in the premium rate for risks placed, as well as contributions from recent acquisitions. In aggregate, we experienced stable commission rates period-over-period. Supplemental and contingent commissions increased 299.1% period-over-period driven by the performance of risks placed on eligible business earning profit-based or volume-based commissions as well as contributions from recent acquisitions. Loss mitigation and other fees increased 26.2% period-over-period primarily due to increased capital markets activity and captive management and other risk management service fees from the placement of alternative risk insurance solutions as well as contributions from recent acquisitions. ### Expenses ### Compensation and Benefits Compensation and benefits expense increased by $71.2 million, or 17.2%, from $414.0 million to $485.3 million for the three months ended June 30, 2025, compared to the same period in 2024. The following were the principal drivers of this increase: - Commissions increased $19.9 million, or 9.6%, period-over-period, driven by the 7.4% increase in Wholesale Brokerage and 17.2% increase in Binding Authority Net commissions and fees; - An increase of $6.8 million was driven by Acquisition-related expense and Acquisition related long-term incentive compensation related to recently completed acquisitions; and - The remaining increase of $48.3 million was driven by (i) the addition of 1,103 employees compared to the same period in the prior year, inclusive of acquired employees, and (ii) growth in the business. Overall headcount increased to 5,692 full-time employees as of June 30, 2025, from 4,589 as of June 30, 2024. - The increase was partially offset by a $3.8 million decline in Restructuring and related expense due to the completion of the ACCELERATE 2025 program at the end of 2024. The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio decrease of 2.8% from 59.5% to 56.7% period-over-period. In general, we expect to continue experiencing a rise in commissions, salaries, incentives, and benefits expense commensurate with our expected growth in business volume, revenue, and headcount. 40 ### General and Administrative General and administrative expense increased by $24.1 million, or 29.0%, from $83.0 million to $107.0 million for the three months ended June 30, 2025, as compared to the same period in the prior year. The following were the principal drivers of this increase: - $18.0 million of increased professional services and IT charges associated with ongoing technology and data initiatives; and - $10.3 million was driven by growth in the business. Such expenses incurred to accommodate both organic and inorganic revenue growth include travel and entertainment, occupancy, insurance, and foreign exchange. - The increase was partially offset by a $4.2 million decline in Restructuring and related expense due to the completion of the ACCELERATE 2025 program at the end of 2024. The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio increase of 0.6% from 11.9% to 12.5% period-over-period. ### Amortization Amortization expense increased by $39.1 million from $30.5 million to $69.7 million for the three months ended June 30, 2025, compared to the same period in the prior year. The main driver of the increase was the amortization of intangible assets from recent acquisitions. Our intangible assets increased by $962.9 million period-over-period. ### Interest Expense, Net Interest expense, net increased $27.2 million, or 87.4%, from $31.1 million to $58.3 million for the three months ended June 30, 2025, compared to the same period in the prior year. The main driver of the increase in Interest expense, net for the three months ended June 30, 2025, was an increase in debt from recent acquisition activity. For the three months ended June 30, 2025, the reduction to Interest expense, net related to our interest rate cap was $2.2 million. For the three months ended June 30, 2025 and 2024, the reduction to Interest expense, net related to interest income earned on operating cash balances was $1.5 million and $5.3 million, respectively. ### Other Non-Operating Loss (Income) Other non-operating loss (income) decreased by $0.1 million to a loss of $0.1 million for the three months ended June 30, 2025, as compared to a loss of $0.2 million in the same period in the prior year. For the three months ended June 30, 2025, Other non-operating loss (income) consisted of $0.4 million of TRA contractual interest and related charges offset by $0.2 million of sublease income. For the three months ended June 30, 2024, Other non-operating loss (income) consisted of $0.4 million of TRA contractual interest and related charges offset by $0.2 million of sublease income. ### Income Before Income Taxes Income before income taxes increased $1.0 million from $136.7 million to $137.7 million for the three months ended June 30, 2025, compared to the same period in the prior year as a result of the factors described above. ### Income Tax Expense Income tax expense decreased $5.7 million from $18.7 million to $13.0 million for the three months ended June 30, 2025, compared to the same period in the prior year primarily as a result of a $3.6 million increase in the discrete benefit from an increase in vested equity compensation period-over-period as well as a reduction in our foreign source book income. ### Net Income Net income increased $6.7 million from $118.0 million to $124.7 million for the three months ended June 30, 2025, compared to the same period in the prior year as a result of the factors described above. 41 ### Comparison of the Six Months Ended June 30, 2025 and 2024 ### Revenue ### Total Revenue Total revenue increased by $297.8 million, or 23.9%, from $1,247.5 million to $1,545.3 million for the six months ended June 30, 2025, as compared to the same period in the prior year. The following were the principal drivers of the increase: - $155.7 million, or 12.5%, of the period-over-period change in Total revenue was due to acquisitions during their first twelve months of ownership by the Company. Acquisition revenue was offset by a $0.8 million decline in revenue period-over-period relating to the sale of a small non-subscription workers compensation book of business at the end of 2024; - $114.2 million, or 9.2%, of the period-over-period change in Total revenue was due to organic revenue growth. Organic revenue growth represents the change in Net commissions and fees revenue, as compared to the same period for the year prior, adjusted for Net commissions and fees attributable to recent acquisitions during the first twelve months of Ryan Specialty’s ownership, and other adjustments such as the removal of the impact of contingent commissions and the impact of changes in foreign exchange rates. In aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors. We experienced growth across the majority of our casualty lines, offset by a moderate pullback across our property portfolio. A modest decline in our property portfolio revenue was driven by a continued decline in rates and retailers realizing additional opportunity to place coverage directly in the E&S market. This decline was partially offset by new business generation. Growth in the quarter was balanced across our three Specialties, driven by an increase in the flow of risks into the E&S market; - $28.9 million, or 2.3%, of the period-over-period change in Total revenue was due to changes in contingent commissions and the impact of foreign exchange rates on the Company’s Net commissions and fees; and - A decline of $1.0 million, or 0.1%, of the period-over-period change in Total revenue was due to a decrease in Fiduciary investment income, caused by a decline in interest rates compared to the prior-year period. *(in thousands, except percentages)* | | Six Months Ended June 30, 2025 | % of total | 2024 | % of total | Change | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Wholesale Brokerage | $837,953 | 55.2 % | $767,574 | 63.0 % | $70,379 | 9.2 % | | Binding Authorities | 196,474 | 13.0 | 169,265 | 13.9 | 27,209 | 16.1 | | Underwriting Management | 482,558 | 31.8 | 281,296 | 23.1 | 201,262 | 71.5 | | **Total Net commissions and fees** | **$1,516,985** | | **$1,218,135** | | **$298,850** | **24.5 %** | Wholesale Brokerage net commissions and fees increased by $70.4 million, or 9.2%, period-over-period, primarily due to organic growth within the Specialty for the period as well as an increase in contingent commissions. Binding Authority net commissions and fees increased by $27.2 million, or 16.1%, period-over-period, primarily due to strong organic growth within the Specialty for the period as well as an increase in contingent commissions. Underwriting Management net commissions and fees increased by $201.3 million, or 71.5%, period-over-period, primarily due to organic growth within the Specialty for the period, contributions from the Castel, US Assure, Greenhill, Ethos P&C, EverSports, Geo, Innovisk, Velocity, 360, and USQ acquisitions, and an increase in contingent commissions. 42 The following table sets forth our revenue by type of commission and fees: *(in thousands, except percentages)* | | Six Months Ended June 30, 2025 | % of total | 2024 | % of total | Change | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Net commissions and policy fees | $1,411,040 | 93.0 % | $1,151,442 | 94.5 % | $259,598 | 22.5 % | | Supplemental and contingent commissions | 73,403 | 4.8 | 38,200 | 3.1 | 35,203 | 92.2 | | Loss mitigation and other fees | 32,542 | 2.2 | 28,492 | 2.4 | 4,050 | 14.2 | | **Total Net commissions and fees** | **$1,516,985** | | **$1,218,135** | | **$298,850** | **24.5 %** | Net commissions and policy fees grew 22.5%, in line with the overall net commissions and fee revenue growth of 24.5%, for the six months ended June 30, 2025, as compared to the same period in the prior year. The main drivers of this growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S market and an increase in the premium rate for risks placed, as well as contributions from recent acquisitions. In aggregate, we experienced stable commission rates period-over-period. Supplemental and contingent commissions increased 92.2% period-over-period driven by the performance of risks placed on eligible business earning profit-based or volume-based commissions as well as contributions from recent acquisitions. Loss mitigation and other fees increased 14.2% period-over-period primarily due to increased capital markets activity and captive management and other risk management service fees from the placement of alternative risk insurance solutions as well as contributions from recent acquisitions. ### Expenses ### Compensation and Benefits Compensation and benefits expense increased by $128.0 million, or 16.3%, from $787.6 million to $915.6 million for the six months ended June 30, 2025, compared to the same period in 2024. The following were the principal drivers of this increase: - Commissions increased $40.5 million, or 11.0%, period-over-period, driven by the 9.2% increase in Wholesale Brokerage and 16.1% increase in Binding Authority Net commissions and fees; - An increase of $20.0 million was driven by Acquisition-related expense and Acquisition related long-term incentive compensation related to recently completed acquisitions; and - The remaining increase of $97.5 million was driven by (i) the addition of 1,103 employees compared to the same period in the prior year, inclusive of acquired employees, and (ii) growth in the business. Overall headcount increased to 5,692 full-time employees as of June 30, 2025, from 4,589 as of June 30, 2024. - The increase was partially offset by a $30.0 million decline in Restructuring and related expense due to the completion of the ACCELERATE 2025 program at the end of 2024. The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio decrease of 3.9% from 63.1% to 59.2% period-over-period. In general, we expect to continue experiencing a rise in commissions, salaries, incentives, and benefits expense commensurate with our expected growth in business volume, revenue, and headcount. 43 ### General and Administrative General and administrative expense increased by $54.3 million, or 34.2%, from $158.8 million to $213.1 million for the six months ended June 30, 2025, as compared to the same period in the prior year. The following were the principal drivers of this increase: - $33.8 million of increased professional services and IT charges associated with ongoing technology and data initiatives; - $23.2 million was driven by growth in the business. Such expenses incurred to accommodate both organic and inorganic revenue growth include travel and entertainment, occupancy, insurance, and foreign exchange; and - $4.3 million was driven by an increase in Acquisition-related expense associated with one-time diligence, transaction-related, and integration costs. - The increase was partially offset by a $7.0 million decline in Restructuring and related expense due to the completion of the ACCELERATE 2025 program at the end of 2024. The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio increase of 1.1% from 12.7% to 13.8% period-over-period. ### Amortization Amortization expense increased by $76.1 million from $58.5 million to $134.7 million for the six months ended June 30, 2025, compared to the same period in the prior year. The main driver of the increase was the amortization of intangible assets from recent acquisitions. Our intangible assets increased by $962.9 million period-over-period. ### Interest Expense, Net Interest expense, net increased $52.3 million, or 86.4%, from $60.5 million to $112.8 million for the six months ended June 30, 2025, compared to the same period in the prior year. The main driver of the increase in Interest expense, net for the six months ended June 30, 2025, was an increase in debt from recent acquisition activity. For the six months ended June 30, 2025, the reduction to Interest expense, net related to our interest rate cap was $4.5 million. For the six months ended June 30, 2025 and 2024, the reduction to Interest expense, net related to interest income earned on operating cash balances was $4.6 million and $13.4 million, respectively. ### Other Non-Operating Loss (Income) Other non-operating loss (income) increased by $2.2 million to income of $0.2 million for the six months ended June 30, 2025, as compared to a loss of $2.0 million in the same period in the prior year. For the six months ended June 30, 2025, Other non-operating loss (income) consisted of $0.3 million of seller reimbursement of acquisition-related retention incentives and $0.3 million of sublease income offset by $0.4 million of TRA contractual interest and related charges. For the six months ended June 30, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing and $0.4 million of TRA contractual interest and related charges offset by $0.3 million of sublease income. ### Income Before Income Taxes Income before income taxes increased $4.9 million from $183.8 million to $188.8 million for the six months ended June 30, 2025, compared to the same period in the prior year as a result of the factors described above. ### Income Tax Expense Income tax expense increased $43.3 million from $25.1 million to $68.5 million for the six months ended June 30, 2025, compared to the same period in the prior year primarily as a result of $48.0 million of income tax expense recognized as a result of the CCR subsequent to the Velocity acquisition in the first quarter of 2025 as well as an increase in pre-tax book income. ### Net Income Net income decreased $38.4 million from $158.7 million to $120.3 million for the six months ended June 30, 2025, compared to the same period in the prior year as a result of the factors described above. 44 ### Non-GAAP Financial Measures and Key Performance Indicators In assessing the performance of our business, we use non-GAAP financial measures that are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax positions, depreciation, amortization, and certain other items that we believe are not representative of our core business. We use the following non-GAAP measures for business planning purposes, in measuring our performance relative to that of our competitors, to help investors to understand the nature of our growth, and to enable investors to evaluate the run-rate performance of the Company. Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the consolidated financial statements prepared and presented in accordance with GAAP. The footnotes to the reconciliation tables below should be read in conjunction with the unaudited consolidated quarterly financial statements. Industry peers may provide similar supplemental information but may not define similarly named metrics in the same way we do and may not make identical adjustments. ### Organic Revenue Growth Rate Organic Revenue Growth Rate is defined as the percentage change in Net commissions and fees, as compared to the same period for the prior year, adjusted to eliminate revenue attributable to acquisitions for the first twelve months of ownership, revenue attributable to sold businesses for the subsequent twelve months after the sale, and other items such as contingent commissions and the impact of changes in foreign exchange rates. For the avoidance of doubt, prior period references in the tables below represent the same period in the prior year. A reconciliation of Organic revenue growth rate to Net commissions and fees growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages): *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 | | --- | ---: | ---: | ---: | ---: | | Current period Net commissions and fees revenue | $840,857 | $680,248 | $1,516,985 | $1,218,135 | | Less: Current period contingent commissions | (27,392) | (5,396) | (57,854) | (29,899) | | Less: Revenue attributable to sold businesses | (144) | **—** | (290) | **—** | | **Net commissions and fees revenue excluding contingent commissions** | **$813,321** | **$674,852** | **$1,458,841** | **$1,188,236** | | Prior period Net commissions and fees revenue | $680,248 | $573,020 | $1,218,135 | $1,020,533 | | Less: Prior year contingent commissions | (5,396) | (4,502) | (29,899) | (26,136) | | Less: Revenue attributable to sold businesses | (581) | **—** | (1,120) | **—** | | **Prior period Net commissions and fees revenue excluding contingent commissions** | **$674,270** | **$568,518** | **$1,187,116** | **$994,396** | | Change in Net commissions and fees revenue excluding contingent commissions | $139,051 | $106,334 | $271,725 | $193,840 | | Less: Mergers and acquisitions Net commissions and fees revenue excluding contingent commissions | (89,419) | (25,735) | (156,597) | (54,274) | | Impact of change in foreign exchange rates | (1,203) | (64) | (952) | (426) | | **Organic revenue growth (Non-GAAP)** | **$48,429** | **$80,535** | **$114,176** | **$139,140** | | **Net commissions and fees revenue growth rate (GAAP)** | **23.6 %** | **18.7 %** | **24.5 %** | **19.4 %** | | Less: Impact of contingent commissions (1) | (3.0) | 0.0 | (1.6) | 0.1 | | **Net commissions and fees revenue excluding contingent commissions growth rate (2)** | **20.6 %** | **18.7 %** | **22.9 %** | **19.5 %** | | Less: Mergers and acquisitions Net commissions and fees revenue excluding contingent commissions (3) | (13.3) | (4.5) | (13.2) | (5.5) | | Impact of change in foreign exchange rates (4) | (0.2) | 0.0 | (0.1) | 0.0 | | **Organic Revenue Growth Rate (Non-GAAP)** | **7.1 %** | **14.2 %** | **9.6 %** | **14.0 %** | 45 (1) Calculated by subtracting Net commissions and fees revenue growth rate from net commissions and fees revenue excluding contingent commissions growth rate and revenue from sold businesses. (2) Calculated by dividing the change in Total net commissions & fees revenue excluding contingent commissions by prior year net commissions and fees excluding contingent commissions and revenue from sold businesses. (3) Calculated by taking the mergers and acquisitions net commissions and fees revenue excluding contingent commissions, representing the first 12 months of net commissions and fees revenue generated from acquisitions, divided by prior period net commissions and fees revenue excluding contingent commissions and revenue from sold businesses. (4) Calculated by taking the change in foreign exchange rates divided by prior period net commissions and fees revenue excluding contingent commissions and revenue from sold businesses. ### Adjusted Compensation and Benefits Expense and Adjusted Compensation and Benefits Expense Ratio We define Adjusted compensation and benefits expense as Compensation and benefits expense adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition and restructuring related compensation expense, and (iii) other exceptional or non-recurring items, as applicable. The most comparable GAAP financial metric is Compensation and benefits expense. Adjusted compensation and benefits expense ratio is defined as Adjusted compensation and benefits expense as a percentage of Total revenue. The most comparable GAAP financial metric is Compensation and benefits expense ratio. A reconciliation of Adjusted compensation and benefits expense and Adjusted compensation and benefits expense ratio to Compensation and benefits expense and Compensation and benefits expense ratio, the most directly comparable GAAP measures, for each of the periods indicated, is as follows: *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 | | --- | ---: | ---: | ---: | ---: | | **Total revenue** | **$855,170** | **$695,441** | **$1,545,336** | **$1,247,487** | | **Compensation and benefits expense** | **$485,272** | **$414,049** | **$915,561** | **$787,576** | | Acquisition-related expense | (1,484) | (1,160) | (4,963) | (1,386) | | Acquisition related long-term incentive compensation | (9,321) | (2,891) | (17,652) | (1,264) | | Restructuring and related expense | — | (3,799) | — | (29,983) | | Amortization and expense related to discontinued prepaid incentives | (1,128) | (1,344) | (2,306) | (2,756) | | Equity-based compensation | (14,853) | (12,756) | (29,422) | (22,271) | | Initial public offering related expense | (5,072) | (8,139) | (10,376) | (15,934) | | **Adjusted compensation and benefits expense (1)** | **$453,414** | **$383,960** | **$850,842** | **$713,982** | | **Compensation and benefits expense ratio** | **56.7 %** | **59.5 %** | **59.2 %** | **63.1 %** | | **Adjusted compensation and benefits expense ratio** | **53.0 %** | **55.2 %** | **55.1 %** | **57.2 %** | (1) Adjustments to Compensation and benefits expense are described in the definition of Adjusted EBITDAC to Net income in “*Adjusted EBITDAC and Adjusted EBITDAC Margin.”* ### Adjusted General and Administrative Expense and Adjusted General and Administrative Expense Ratio We define Adjusted general and administrative expense as General and administrative expense adjusted to reflect items such as (i) acquisition and restructuring general and administrative related expense and (ii) other exceptional or non- recurring items, as applicable. The most comparable GAAP financial metric is General and administrative expense. Adjusted general and administrative expense ratio is defined as Adjusted general and administrative expense as a percentage of Total revenue. The most comparable GAAP financial metric is General and administrative expense ratio. 46 A reconciliation of Adjusted general and administrative expense and Adjusted general and administrative expense ratio to General and administrative expense and General and administrative expense ratio, the most directly comparable GAAP measures, for each of the periods indicated is as follows: *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 | | --- | ---: | ---: | ---: | ---: | | **Total revenue** | **$855,170** | **$695,441** | **$1,545,336** | **$1,247,487** | | **General and administrative expense** | **$107,049** | **$82,967** | **$213,109** | **$158,834** | | Acquisition-related expense | (13,699) | (15,008) | (27,522) | (23,219) | | Restructuring and related expense | — | (4,169) | — | (7,023) | | **Adjusted general and administrative expense (1)** | **$93,350** | **$63,790** | **$185,587** | **$128,592** | | **General and administrative expense ratio** | **12.5 %** | **11.9 %** | **13.8 %** | **12.7 %** | | **Adjusted general and administrative expense ratio** | **10.9 %** | **9.2 %** | **12.0 %** | **10.3 %** | (1) Adjustments to General and administrative expense are described in the definition of Adjusted EBITDAC to Net income in “*Adjusted EBITDAC and Adjusted EBITDAC Margin.”* ### Adjusted EBITDAC and Adjusted EBITDAC Margin We define Adjusted EBITDAC as Net income before Interest expense, net, Income tax expense, Depreciation, Amortization, and Change in contingent consideration, adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition and restructuring related expenses, and (iii) other exceptional or non-recurring items, as applicable. Acquisition-related expense includes one-time diligence, transaction-related, and integration costs. Acquisition-related expense included a $2.0 million charge for the three months ended June 30, 2024, and a $4.5 million charge for the six months ended June 30, 2024, related to a deal-contingent foreign exchange forward contract associated with the Castel acquisition. The remaining charges in both years represent typical one-time diligence, transaction-related, and integration costs. Acquisition-related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. These plans require service requirements, and in some cases performance targets, to be met in order to be earned. Restructuring and related expense consists of compensation and benefits, occupancy, contractors, professional services, and license fees related to the ACCELERATE 2025 program, which concluded at the end of 2024. The compensation and benefits expense included severance as well as employment costs related to services rendered between the notification and termination dates and other termination payments. Amortization and expense is composed of charges related to discontinued prepaid incentive programs. For the three months ended June 30, 2025, Other non-operating loss (income) consisted of $0.4 million of TRA contractual interest and related charges offset by $0.2 million of sublease income. For the three months ended June 30, 2024, Other non-operating loss (income) consisted of $0.4 million of TRA contractual interest and related charges offset by $0.2 million of sublease income. For the six months ended June 30, 2025, Other non-operating loss (income) consisted of $0.3 million of seller reimbursement of acquisition-related retention incentives and $0.3 million of sublease income offset by $0.4 million of TRA contractual interest and related charges. For the six months ended June 30, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing and $0.4 million of TRA contractual interest and related charges offset by $0.3 million of sublease income. Equity-based compensation reflects non-cash equity-based expense. IPO related expenses include compensation-related expense primarily related to the expense for new awards issued at IPO as well as expense related to the revaluation of existing equity awards at IPO. Total revenue less Adjusted compensation and benefits expense and Adjusted general and administrative expense is equivalent to Adjusted EBITDAC. For a breakout of compensation and general and administrative costs for each addback, refer to the Adjusted compensation and benefits expense and Adjusted general and administrative expense tables above. The most directly comparable GAAP financial metric to Adjusted EBITDAC is Net income. Adjusted EBITDAC margin is defined as Adjusted EBITDAC as a percentage of Total revenue. The most comparable GAAP financial metric is Net income margin. 47 A reconciliation of Adjusted EBITDAC and Adjusted EBITDAC margin to Net income and Net income margin, the most directly comparable GAAP measures, for each of the periods indicated is as follows: *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 | | --- | ---: | ---: | ---: | ---: | | **Total revenue** | **$855,170** | **$695,441** | **$1,545,336** | **$1,247,487** | | **Net income** | **$124,705** | **$118,038** | **$120,316** | **$158,715** | | Interest expense, net | 58,334 | 31,128 | 112,842 | 60,528 | | Income tax expense | 13,026 | 18,691 | 68,456 | 25,117 | | Depreciation | 2,888 | 2,273 | 5,527 | 4,353 | | Amortization | 69,668 | 30,541 | 134,653 | 58,529 | | Change in contingent consideration (1) | (759) | 1,243 | (14,801) | 1,178 | | **EBITDAC** | **$267,862** | **$201,914** | **$426,993** | **$308,420** | | Acquisition-related expense | 15,183 | 16,168 | 32,485 | 24,605 | | Acquisition related long-term incentive compensation | 9,321 | 2,891 | 17,652 | 1,264 | | Restructuring and related expense | — | 7,968 | — | 37,006 | | Amortization and expense related to discontinued prepaid incentives | 1,128 | 1,344 | 2,306 | 2,756 | | Other non-operating loss (income) | 143 | 233 | (234) | 1,985 | | Equity-based compensation | 14,853 | 12,756 | 29,422 | 22,271 | | IPO related expenses | 5,072 | 8,139 | 10,376 | 15,934 | | (Income) from equity method investments | (5,156) | (3,722) | (10,093) | (9,328) | | **Adjusted EBITDAC** | **$308,406** | **$247,691** | **$508,907** | **$404,913** | | **Net income margin** | **14.6 %** | **17.0 %** | **7.8 %** | **12.7 %** | | **Adjusted EBITDAC margin** | **36.1 %** | **35.6 %** | **32.9 %** | **32.5 %** | (1) For the six months ended June 30, 2025, Change in contingent consideration included a $20.3 million decrease in valuation of the US Assure contingent consideration as a result of increased loss ratios impacting projected profit commissions and business performance. ### Adjusted Net Income and Adjusted Net Income Margin We define Adjusted net income as tax-effected earnings before amortization and certain items of income and expense, gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related expenses, costs associated with the IPO, and certain exceptional or non-recurring items. The most comparable GAAP financial metric is Net income. Adjusted net income margin is calculated as Adjusted net income as a percentage of Total revenue. The most comparable GAAP financial metric is Net income margin. Following the IPO, the Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the LLC. For comparability purposes, this calculation incorporates the impact of federal and state statutory tax rates on 100% of our adjusted pre-tax income as if the Company owned 100% of the LLC. 48 A reconciliation of Adjusted net income and Adjusted net income margin to Net income and Net income margin, the most directly comparable GAAP measures, for each of the periods indicated is as follows: *(in thousands, except percentages)* | | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 | | --- | ---: | ---: | ---: | ---: | | **Total revenue** | **$855,170** | **$695,441** | **$1,545,336** | **$1,247,487** | | **Net income** | **$124,705** | **$118,038** | **$120,316** | **$158,715** | | Income tax expense | 13,026 | 18,691 | 68,456 | 25,117 | | Amortization | 69,668 | 30,541 | 134,653 | 58,529 | | Amortization of deferred debt issuance costs (1) | 2,386 | 3,027 | 4,760 | 6,436 | | Change in contingent consideration | (759) | 1,243 | (14,801) | 1,178 | | Acquisition-related expense | 15,183 | 16,168 | 32,485 | 24,605 | | Acquisition related long-term incentive compensation | 9,321 | 2,891 | 17,652 | 1,264 | | Restructuring and related expense | — | 7,968 | — | 37,006 | | Amortization and expense related to discontinued prepaid incentives | 1,128 | 1,344 | 2,306 | 2,756 | | Other non-operating loss (income) | 143 | 233 | (234) | 1,985 | | Equity-based compensation | 14,853 | 12,756 | 29,422 | 22,271 | | IPO related expenses | 5,072 | 8,139 | 10,376 | 15,934 | | (Income) from equity method investments | (5,156) | (3,722) | (10,093) | (9,328) | | **Adjusted income before income taxes (2)** | **$249,570** | **$217,317** | **$395,298** | **$346,468** | | Adjusted income tax expense (3) | (64,888) | (56,763) | (102,777) | (90,497) | | **Adjusted net income** | **$184,682** | **$160,554** | **$292,521** | **$255,971** | | **Net income margin** | **14.6 %** | **17.0 %** | **7.8 %** | **12.7 %** | | **Adjusted net income margin** | **21.6 %** | **23.1 %** | **18.9 %** | **20.5 %** | (1) Interest expense, net includes amortization of deferred debt issuance costs. (2) Adjustments to Net income are described in the definition of Adjusted EBITDAC to Net income in “*Adjusted* #### EBITDAC and Adjusted EBITDAC Margin.” (3) The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the LLC. For the three and six months ended June 30, 2025, this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.00% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC. For the three and six months ended June 30, 2024, this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.12% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC. ### Adjusted Diluted Earnings Per Share We define Adjusted diluted earnings per share as Adjusted net income divided by diluted shares outstanding after adjusting for the effect if 100% of the outstanding LLC Common Units (together with the shares of Class B common stock), vested Class C Incentive Units, and unvested equity awards were exchanged into shares of Class A common stock as if 100% of unvested equity awards were vested. The most directly comparable GAAP financial metric is Diluted earnings per share. 49 A reconciliation of Adjusted diluted earnings per share to Diluted earnings per share, the most directly comparable GAAP measure, for each of the periods indicated is as follows: | | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 | | --- | ---: | ---: | ---: | ---: | | **Earnings per share of Class A common stock – diluted** | **$0.38** | **$0.37** | **$0.18** | **$0.49** | | Less: Net income attributed to dilutive shares and substantively vested RSUs (1) | (0.19) | (0.20) | — | (0.26) | | Plus: Impact of all LLC Common Units exchanged for Class A shares (2) | 0.26 | 0.27 | 0.26 | 0.36 | | Plus: Adjustments to Adjusted net income (3) | 0.22 | 0.15 | 0.63 | 0.36 | | Plus: Dilutive impact of unvested equity awards (4) | (0.01) | (0.01) | (0.02) | (0.02) | | **Adjusted diluted earnings per share** | **$0.66** | **$0.58** | **$1.05** | **$0.93** | | (Share count in ’000) | | | | | | Weighted-average shares of Class A common stock outstanding – diluted | 274,145 | 271,219 | 138,167 | 270,570 | | Plus: Impact of all LLC Common Units exchanged for Class A shares (2) | — | — | 135,804 | — | | Plus: Dilutive impact of unvested equity awards (4) | 5,275 | 4,446 | 5,422 | 4,821 | | **Adjusted diluted earnings per share diluted share count** | **279,420** | **275,665** | **279,393** | **275,391** | (1) Adjustment removes the impact of Net income attributed to dilutive awards and substantively vested RSUs to arrive at Net income attributable to Ryan Specialty Holdings, Inc. For the three months ended June 30, 2025 and 2024, this removes $52.4 million and $52.2 million of Net income, respectively, on 274.1 million and 271.2 million Weighted- average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2025 and 2024, this removes $1.1 million and $69.9 million of Net income, respectively on 138.2 million and 270.6 million Weighted average shares of Class A common stock outstanding - diluted, respectively. See “Note 9, *Earnings Per* *Share”* of the unaudited quarterly consolidated financial statements. (2) For comparability purposes, this calculation incorporates the Net income that would be distributable if all LLC Common Units (together with shares of Class B common stock) were exchanged for shares of Class A common stock. For the three months ended June 30, 2025 and 2024, this includes $72.7 million and $71.3 million of Net income, respectively, on 274.1 million and 271.2 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2025 and 2024, this includes $96.0 million and $95.4 million of Net income, respectively, on 274.0 million and 270.6 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2025, 135.8 million weighted average outstanding LLC Common Units were considered dilutive and included in the 274.0 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. See “Note 9, *Earnings Per Share”* of the unaudited quarterly consolidated financial statements. (3) Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to Net income in “*Adjusted Net Income and Adjusted Net Income Margin”* on 274.1 million and 271.2 million Weighted- average shares of Class A common stock outstanding - diluted for the three months ended June 30, 2025 and 2024, respectively, and 274.0 million and 270.6 million Weighted-average shares of Class A common stock outstanding - diluted for the six months ended June 30, 2025 and 2024, respectively. (4) For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net income, the dilutive effect of unvested equity awards as well as outstanding vested options and vested Class C Incentive Units is calculated using the treasury stock method as if the weighted-average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the Diluted EPS calculation disclosed in “Note 9, *Earnings Per Share”* of the unaudited quarterly consolidated financial statements. For the three months ended June 30, 2025 and 2024, 5.3 million and 4.4 million shares were added to the calculation, respectively. For the six months ended June 30, 2025 and 2024, 5.4 million and 4.8 million shares were added to the calculation, respectively. 50 ### Liquidity and Capital Resources Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations. We believe that the balance sheet and strong cash flow profile of our business provides adequate liquidity. The primary sources of liquidity are Cash and cash equivalents on the Consolidated Balance Sheets, cash flows provided by operations, and debt capacity available under our Revolving Credit Facility, Term Loan, and Senior Secured Notes. The primary uses of liquidity are operating expenses, seasonal working capital needs, business combinations, capital expenditures, obligations under the TRA, taxes, distributions to LLC Unitholders, and dividends to Class A common stockholders. We believe that Cash and cash equivalents, cash flows from operations, and amounts available under our Revolving Credit Facility will be sufficient to meet liquidity needs, including principal and interest payments on debt obligations, capital expenditures, and anticipated working capital requirements, for the next 12 months and beyond. Our future capital requirements will depend on many factors including continuance of historical working capital levels and capital expenditure needs, investment in de novo offerings, and the flow of deals in our merger and acquisition program. On February 20, 2025, our Board declared a regular quarterly dividend of $0.12 per share on our outstanding Class A common stock. $0.07 of the regular quarterly dividend was funded by current and prior tax distributions from the LLC that are in excess of both the corporate income taxes payable by the Company as well as the Company’s obligations pursuant to the Tax Receivable Agreement. The remaining $0.05 of the regular quarterly dividend was funded by free cash flow from the LLC and paid to all holders of the Class A common stock and LLC Common Units. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations, this could reduce our ability to compete successfully and harm the results of our operations. Cash and cash equivalents on the Consolidated Balance Sheets include funds available for general corporate purposes. Fiduciary cash and receivables cannot be used for general corporate purposes. Insurance premiums, claims funds, and surplus lines taxes are held in a fiduciary capacity and the obligation to remit these funds are recorded as Fiduciary liabilities on the Consolidated Balance Sheets. We recognize fiduciary amounts due to others as Fiduciary liabilities and fiduciary amounts collectible and held on behalf of others, including insurance carriers, other insurance intermediaries, surplus lines taxing authorities, clients, and insurance policy holders, as Fiduciary cash and receivables on the Consolidated Balance Sheets. In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission, remit the premiums to the respective insurance markets and carriers. We also collect claims prefunding or refunds from carriers on behalf of insureds, which are then returned to the insureds, and surplus lines taxes, which are then remitted to surplus lines taxing authorities. Insurance premiums, claims funds, and surplus lines taxes are held in a fiduciary capacity. The levels of Fiduciary cash and receivables and Fiduciary liabilities can fluctuate significantly depending on when we collect the premiums, claims prefunding, and refunds, make payments to markets, carriers, surplus lines taxing authorities, and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency movements. Fiduciary cash, because of its nature, is generally invested in very liquid securities with a focus on preservation of principal. To minimize investment risk, we maintain cash holdings pursuant to an investment policy which contemplates all relevant rules established by states with regard to fiduciary cash and is approved by our Board of Directors. The policy requires broad diversification of holdings across a variety of counterparties utilizing limits set by our Board of Directors, primarily based on credit rating and type of investment. Fiduciary cash and receivables included cash of $1,346.2 million and $1,131.7 million as of June 30, 2025 and 2024, respectively, and fiduciary receivables of $3,128.7 million and $2,919.4 million as of June 30, 2025 and 2024, respectively. While we may earn interest income on fiduciary cash held in cash and investments, the fiduciary cash may not be used for general corporate purposes. Of the $172.6 million of Cash and cash equivalents on the Consolidated Balance Sheet as of June 30, 2025, $90.2 million was held in fiduciary accounts representing collected revenue and was available to be transferred to operating accounts and used for general corporate purposes. ### Credit Facilities We expect to have sufficient financial resources to meet our business requirements for the next 12 months. Although cash from operations is expected to be sufficient to service our activities, including servicing our debt and contractual obligations, and financing capital expenditures, we have the ability to borrow under our Revolving Credit Facility to accommodate any timing differences in cash flows. Additionally, under current market conditions, we believe that we could access capital markets to obtain debt financing for longer-term funding, if needed. On February 3, 2022, the LLC issued $400.0 million of 8-year Senior Secured Notes. The notes have a 4.375% interest rate and will mature on February 1, 2030. 51 On January 19, 2024, we entered into the Fifth Amendment to the Credit Agreement, which reduced the applicable interest rate of the Term Loan from Adjusted Term SOFR + 3.00% to Adjusted Term SOFR + 2.75% and no longer contains a credit spread adjustment. All other material provisions remain unchanged. On July 30, 2024, the Company entered into the Sixth Amendment to the Credit Agreement, which provided for an increase in borrowing capacity under the Revolving Credit Facility from $600.0 million to $1,400.0 million. The amendment also extended the maturity date of the Revolving Credit Facility to July 30, 2029, and reduced the applicable interest rate from Adjusted Term SOFR plus a margin of 2.50% to 3.00% to Adjusted Term SOFR plus a margin of 2.00% to 2.50%, based on the first lien net leverage ratio defined in the Credit Agreement. On September 13, 2024, the Company entered into the Seventh Amendment to the Credit Agreement, which refinanced the existing Term Loan in the aggregate principal amount of $1,588.1 million outstanding as of June 30, 2024, and increased the size of the Term Loan by $111.9 million to $1,700.0 million as of September 30, 2024. In addition to increasing the size of the Term Loan, the Seventh Amendment reduced the applicable interest rate of the Term Loan from Adjusted Term SOFR plus a margin of 2.75% to Adjusted Term SOFR plus a margin of 2.25% and lowered the 75 basis point floor on Adjusted Term SOFR to a 0 basis point floor. Upon achievement of a stable (or better) corporate family rating from Moody’s of Ba3 or better, the applicable interest rate of the Term Loan will be revised to Adjusted Term SOFR plus a margin of 2.00%. On September 19, 2024, the LLC issued $600.0 million of 8-year Senior Secured Notes. On December 9, 2024, the LLC issued an additional $600.0 million of its 2032 Senior Secured Notes as “additional notes” under a supplement to the indenture dated as of September 2024. All of the 2032 Senior Secured Notes carry a 5.875% interest rate and will mature on August 1, 2032. As of June 30, 2025, the interest rate on the Term Loan was 2.25% plus Adjusted Term SOFR. As of June 30, 2025, the Company was in compliance with all of the covenants under the Credit Agreement and there were no events of default for the six months ended June 30, 2025. ### Tax Receivable Agreement The Company is party to a TRA with current and certain former LLC Unitholders. The TRA provides for the payment by the Company, to current and certain former LLC Unitholders, of 85% of the net cash savings, if any, in U.S. federal, state, and local income taxes that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i) certain increases in the tax basis of the assets of the LLC resulting from purchases or exchanges of LLC Common Units (“Exchange Tax Attributes”), (ii) certain tax attributes of the LLC that existed prior to the IPO (“Pre-IPO M&A Tax Attributes”), (iii) certain favorable “remedial” partnership tax allocations to which the Company becomes entitled to (if any), and (iv) certain other tax benefits related to the Company entering into the TRA, including tax benefits attributable to payments that the Company makes under the TRA (“TRA Payment Tax Attributes”). The Company recognizes a liability on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA. Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of the LLC Common Unit exchanges and the resulting amounts we are likely to pay out to current and certain former LLC Unitholders pursuant to the TRA; however, we estimate that such tax benefits and the related TRA payments may be substantial. As set forth in the table below, and assuming no changes in the relevant tax law and that we earn sufficient taxable income to realize all cash tax savings that are subject to the TRA, we expect future payments under the TRA as a result of transactions as of June 30, 2025, will be $461.1 million in aggregate. Future payments in respect to subsequent exchanges would be in addition to these amounts and are expected to be substantial. The foregoing amounts are merely estimates and the actual payments could differ materially. In the highly unlikely event of an early termination of the TRA (e.g., a default by the Company or a Change of Control) the Company is required to pay to each holder of the TRA an early termination payment equal to the discounted present value of all unpaid TRA payments. The Company has not made, and is not likely to make, an election for an early termination. We expect to fund future TRA payments with tax distributions from the LLC that come from cash on hand and cash generated from operations. *(in thousands)* | | Exchange Tax Attributes | Pre-IPO M&A Tax Attributes | TRA Payment Tax Attributes | TRA Liabilities | | --- | ---: | ---: | ---: | ---: | | **Balance at December 31, 2024** | **$253,233** | **$83,415** | **$99,648** | **$436,296** | | Exchange of LLC Common Units | 17,861 | 1,176 | 5,423 | 24,460 | | Accrued interest | — | — | 356 | 356 | | **Balance at June 30, 2025** | **$271,094** | **$84,591** | **$105,427** | **$461,112** | 52 Total expected estimated tax savings from each of the tax attributes associated with the TRA as of June 30, 2025, were $542.5 million consisting of (i) Exchange Tax Attributes of $318.9 million, (ii) Pre-IPO M&A Tax Attributes of $99.5 million, and (iii) TRA Payment Tax Attributes of $124.0 million. The Company will retain the benefit of 15% of these cash savings. ### Comparison of Cash Flows for the Six Months Ended June 30, 2025 and 2024 Cash and cash equivalents decreased $439.8 million from $612.4 million at June 30, 2024, to $172.6 million at June 30, 2025\. A summary of the Company’s cash flows provided by and used for continuing operations from operating, investing, and financing activities is as follows: ### Cash Flows From Operating Activities Cash flows provided by operating activities for the six months ended June 30, 2025, were $210.8 million, an increase of $56.5 million compared to the six months ended June 30, 2024. This increase in cash flows provided by operating activities was driven by an increase of $48.0 million in Deferred income tax expense from the CCR associated with the Velocity acquisition, an increase of $76.1 million in Amortization associated with recent acquisitions, and an increase of $17.1 million in Prepaid and deferred compensation expense. These increases in cash flows from operating activities were offset by a decrease in Net income of $38.4 million, and an increase in Commissions and fees receivable - net of $18.8 million. ### Cash Flows From Investing Activities Cash flows used for investing activities during the six months ended June 30, 2025, were $619.0 million, an increase of $382.3 million compared to the $236.7 million of cash flows used for investing activities during the six months ended June 30, 2024. The main driver of the cash flows used for investing activities in the six months ended June 30, 2025, was $565.1 million for Business combinations - net of cash acquired and cash held in a fiduciary capacity, $36.5 million of Capital expenditures, and a $16.6 million Equity method investment in VSIC, compared to $214.1 million for Business combinations - net of cash acquired and cash held in a fiduciary capacity and $22.6 million of Capital expenditures for the six months ended June 30, 2024. ### Cash Flows From Financing Activities Cash flows provided by financing activities during the six months ended June 30, 2025, were $234.4 million, an increase of $162.2 million compared to cash flows provided by financing activities of $72.2 million during the six months ended June 30, 2024. The main drivers of cash flows provided by financing activities during the six months ended June 30, 2025, were Borrowings on Revolving Credit Facility (net of repayments) of $187.7 million and a Net change in fiduciary liabilities of $166.3 million. These increases were offset by Tax distributions to non-controlling LLC Unitholders of $34.8 million, Class A common stock dividends and Dividend Equivalents paid of $30.5 million, Payment of contingent consideration of $29.3 million, Distributions and Declared Distributions paid to non-controlling LLC Unitholders of $13.6 million, Repayment of term debt of $8.5 million, and Debt issuance costs paid of $2.9 million. The main drivers of cash flows provided by financing activities during the six months ended June 30, 2024 were Net change in fiduciary liabilities of $191.4 million offset by Class A common stock dividends and Dividend Equivalents paid of $53.0 million, Tax distributions to non-controlling LLC Unitholders of $44.6 million, Distributions and Declared Distributions paid to non- controlling LLC Unitholders of $11.3 million, Repayment of term debt of $8.3 million, and Payment of accrued return on Ryan Re preferred units of $2.0 million. 53 ### Contractual Obligations and Commitments Our principal commitments consist of contractual obligations in connection with investing and operating activities. These obligations are described within “Note 6, *Debt”* in the notes to our unaudited consolidated financial statements, where we provide further description on provisions that create, increase, or accelerate obligations, or other pertinent data to the extent necessary for an understanding of the timing and amount of the specified contractual obligations. Within Current accrued compensation and Non-current accrued compensation we have various long-term incentive compensation agreements accrued for. These agreements are typically associated with an acquisition. Below we have outlined the liabilities accrued as of June 30, 2025, the projected future expense, and the projected timing of future cash outflows associated with these arrangements. *(in thousands)* | Long-term Incentive Compensation Agreements | June 30, 2025 | | --- | ---: | | Current accrued compensation | $7,049 | | Non-current accrued compensation | 25,319 | | **Total liability** | **$32,368** | | Projected future expense | 35,510 | | **Total projected future cash outflows** | **$67,878** | *(in thousands)* | Projected Future Cash Outflows | | | --- | ---: | | 2025 | $6,126 | | 2026 | 10,301 | | 2027 | 12,979 | | 2028 | 35,591 | | Thereafter | $2,882 | Within “Note 3, *Mergers and Acquisitions”* in the notes to our unaudited consolidated financial statements we discuss various contingent consideration arrangements and their impact. Below we have outlined the liabilities accrued as of June 30, 2025, the projected future expense, and the projected timing of future cash outflows associated with these contingent consideration agreements. *(in thousands)* | Contingent Consideration | June 30, 2025 | | --- | ---: | | Current accounts payable and accrued liabilities | $22,703 | | Other non-current liabilities | 91,924 | | **Total liability** | **$114,627** | | Projected future expense | 13,842 | | **Total projected future cash outflows** | **$128,469** | *(in thousands)* | Projected Future Cash Outflows | | | --- | ---: | | 2025 | $268 | | 2026 | 35,988 | | 2027 | 80,364 | | 2028 | 5,896 | | Thereafter | $5,954 | 54 ### Critical Accounting Policies and Estimates The methods, assumptions, and estimates that we use in applying the accounting policies may require us to apply judgments regarding matters that are inherently uncertain. We consider an accounting policy to be a critical estimate if (i) the Company must make assumptions that were uncertain when the judgment was made and (ii) changes in the estimate assumptions, or selection of a different estimate methodology, could have a significant impact on our financial position and the results that we will report in the consolidated financial statements. While we believe that the estimates, assumptions, and judgments are reasonable, they are based on information available when the estimate was made. The accounting policies that we believe reflect our more significant estimates, judgments, and assumptions that are most critical to understanding and evaluating our reported financial results are: revenue recognition, business combinations, goodwill and intangibles, income taxes, and tax receivable agreement liabilities. Our critical accounting policies are described under the heading “*Management’s Discussion and Analysis of Financial* *Condition and Results of Operations—Critical Accounting Policies”* in the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 21, 2025. Additionally, the changes, if any, to our critical accounting policies and estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, are included in “Note 1, *Basis of Presentation,”* to our unaudited consolidated financial statements. ### Recent Accounting Pronouncements For a description of recently adopted accounting pronouncements and recently issued accounting standards not yet adopted (if any), see “Note 1, *Basis of Presentation”* in the notes to our unaudited consolidated financial statements. ## Market risk As filed, 4,277 characters. We are exposed to various market risks in our day-to-day operations. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest and foreign currency exchange rates. ### Foreign Currency Risk For the six months ended June 30, 2025, approximately 6% of revenues were generated from activities in the United Kingdom, Europe, Canada, India, and Singapore. We are exposed to currency risk from the potential changes between the exchange rates of the US Dollar, British Pound, Euro, Swedish Krona, Danish Krone, Canadian Dollar, Singapore Dollar, and other currencies. The exposure to foreign currency risk from the potential changes between the exchange of USD and other currencies is immaterial. ### Interest Rate Risk and Credit Risk Certain of the Company’s revenues, expenses, assets, and liabilities are exposed to the impact of interest rate changes. Interest rate risk and credit risk to counterparties generated from the Company’s Cash and cash equivalents, and Cash and cash equivalents held in a fiduciary capacity, will fluctuate with the general level of interest rates. As of June 30, 2025, we had $1,691.5 million of outstanding principal on our Term Loan borrowings, which bears interest on a floating rate, subject to a 0.0% floor. We are subject to Adjusted Term SOFR interest rate changes and exposure in excess of the floor. The fair value of the Term Loan approximates the carrying amount as of June 30, 2025 and December 31, 2024, as determined based upon information available. On April 7, 2022, the Company entered into an interest rate cap agreement to manage its exposure to interest rate fluctuations related to the Company’s Term Loan for an upfront cost of $25.5 million. The interest rate cap has a $1,000.0 million notional amount, 2.75% strike, and terminates on December 31, 2025. 55 Based on the below balances as of June 30, 2025, the impact of a hypothetical 100 basis point (BPS) increase or decrease in quarter-end prevailing short-term interest rates for one year would be: *(in thousands)* | | Balance at June 30, 2025 | 100 BPS Increase | 100 BPS Decrease | | --- | ---: | ---: | ---: | | Cash and cash equivalents | $172,589 | $(1,726) | $1,726 | | Term Loan principal outstanding (1) | 1,691,500 | 16,915 | (16,915) | | Interest rate cap notional amount (2) | 1,000,000 | (10,000) | 10,000 | | **Net exposure to Interest expense, net** | | **$5,189** | **$(5,189)** | | Cash and cash equivalents held in a fiduciary capacity | $1,346,173 | $13,462 | $(13,462) | | **Net exposure to Fiduciary investment income** | | **$13,462** | **$(13,462)** | | **Impact to Net income** | | **$8,273** | **$(8,273)** | (1) To the extent SOFR falls below 0.0%, the impact of the change in interest rates is zero. (2) To the extent interest rates fall below 2.75%, the impact of the change in interest rates is zero. In addition to interest rate risk, our cash investments and fiduciary cash holdings are subject to potential loss of value due to counterparty credit risk. To minimize this risk, the Company and its subsidiaries hold funds pursuant to an investment policy approved by our Board. The policy mandates the preservation of principal and liquidity and requires broad diversification with counter-party limits assigned based primarily on credit rating and type of investment. The Company carefully monitors its cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity, and plans to further restrict the portfolio as appropriate with respect to market conditions. The majority of Cash and cash equivalents and Cash and cash equivalents held in a fiduciary capacity are held in demand deposit accounts and short-term investments, consisting principally of AAA-rated money market funds and treasury bills, having original maturities of 90 days or less. Other financial instruments consist of Cash and cash equivalents, Commissions and fees receivable – net, Other current assets, and Accounts payable and accrued liabilities. The carrying amounts of Cash and cash equivalents, Commissions and fees receivable – net, and Accounts payable and accrued liabilities approximate fair value because of the short-term nature of the instruments. ## Controls and procedures As filed, 2,189 characters. ### Evaluation of Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rule 13a–15(e) and Rule 15d–15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of June 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level. ### Changes in Internal Control There have been no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ### Inherent Limitations of Internal Control Over Financial Reporting Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and 56 can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. ## Risk factors As filed, 222 characters. There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 21, 2025. Filed Aug 1, 2025. Source: SEC EDGAR, the filing index for accession 0001628280-25-037141. Last ingested by Listed: Oct 31, 2026, 02:57 ET. No prices; not investment advice.