Ryan Specialty Holdings Inc.

02/13/2026 | Press release | Distributed by Public on 02/13/2026 06:21

Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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 Annual Report on Form 10-K. 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 the sections entitled "Risk Factors" and "Information
Concerning Forward-Looking Statements".
The following discussion provides commentary on the financial results derived from our audited financial
statements for the years ended December 31, 2025, 2024, and 2023, 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.
Empower Program
In the first quarter of 2026 we are initiating a three-year restructuring program (the "Empower Program") that
will streamline our brokerage, binding, and underwriting operations, optimize our scale, accelerate our data and technology
strategies, and enhance efficiencies across all of our specialties. The program is estimated to result in approximately $160
million of cumulative one-time charges through 2028, and we expect it to generate annual savings of approximately $80
million in 2029. Actions taken under the Empower Program are expected to be completed by the end of 2028.
Acquisitions
On February 3, 2025, the Company completed the acquisition of VelocityRisk 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, 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, 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 ("JM
Wilson"), a binding authority and surplus lines broker specializing in transportation insurance, headquartered in Portage,
Michigan.
On December 1, 2025, the Company completed the acquisition of Stewart Specialty Risk Underwriting Ltd., an
MGU specializing in underwriting large-account, high-hazard property and casualty solutions, based in Toronto, Canada.
We believe these acquisitions complement our product capabilities, enhance our human capital, expand our
total addressable market, and provide us access to new markets in new geographies. See "Note 4, Mergers and
Acquisitions" in the footnotes to the consolidated financial statements in this Annual Report for further discussion.
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 10.1%. 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 have a long runway. 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 Operations and Growth
We have invested heavily in building a durable business that is able to adapt to the continuously evolving
specialty and E&S markets 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.
We will continue to prioritize strategic investments that support revenue growth such as investments in talent, de novo
formations, product innovation and solutions, M&A, and technology in order to maximize long-term value creation, which
could have a short-term margin impact.
The Empower Program initiated in the first quarter of 2026 is designed to enhance efficiencies across all of our
specialties. The efficiencies we gain through the Empower Program are expected to allow us to continue making strategic
investments in growth, top-tier talent, de novo formations, and address the rapidly evolving needs of our clients.
Generate Commission Regardless of the State of the Specialty and E&S Markets
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, liquid credit markets, and
favorable interest rates, this underlying activity can accelerate and provide tailwinds to our growth. In periods of economic
decline, tight credit markets, and unfavorable interest rates, 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 Specialty and E&S Markets
The growing relevance of the specialty and E&S markets 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 2025, with $125 billion of insured catastrophe losses, driven by $52 billion of insured losses related to severe
convective storms ("SCS") with 19 SCS events that caused losses in excess of $1 billion, which together accounted for the
third-highest annual total for insured losses on record for SCS events and over $41 billion in losses generated from
California wildfires. The year also included floods in central Texas and the Mississippi valley, causing over 135 fatalities
and over $3 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 specialty and E&S markets continues
to escalate, wholesale brokers and managing underwriters that do not have sufficient scale, or the financial and intellectual
capital to invest in the required specialty capabilities, will struggle to compete effectively. 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 specialty and E&S markets
might not be linear as risks can and do shift between the E&S, including the specialty market, 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 throughout 2025, the specialty and E&S markets 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 additional opportunities for retailers to place property coverage directly, and we believe
the market dynamics exist for these factors to potentially continue into 2026.
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 inGeneva Rethrough Ryan Investment Holdings, LLC and
Velocity Specialty Insurance 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
work with retail insurance brokers or wholesale brokers to secure insurance coverage for the ultimate insured party. Our
Underwriting Management Specialty generates revenues through insurance and reinsurance 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, information technology,
occupancy-related expenses, foreign exchange, legal, insurance and other professional fees, and other costs associated with
our operations. In particular, our travel and entertainment expenses, information technology expenses, occupancy-related
expenses, and professional services expenses 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, assembled workforce, 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 year ended December 31, 2025, Other non-operating loss (income) consisted of seller reimbursement of
acquisition-related retention incentives, sublease income, and forfeitures of vested equity awards offset by TRA contractual
interest and related charges. For the year ended December 31, 2024, Other non-operating loss (income) included expense
related to Term Loan modifications and TRA contractual interest and related charges offset by income related to a decrease
in our blended state tax rates and foreign tax credit impact on the TRA remeasurement and sublease income. For the year
ended December 31, 2023, Other non-operating loss (income) included charges related to the change in the TRA liability
caused by a change in our blended state tax rates.
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.
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 9, Stockholders' Equity" of the audited consolidated financial statements in this Annual Report 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:
Year Ended December 31,
(in thousands, except percentages and per share data)
2025
2024
2023
Revenue
Net commissions and fees
$2,994,582
$2,455,671
$2,026,596
Fiduciary investment income
56,544
60,039
50,953
Total revenue
$3,051,126
$2,515,710
$2,077,549
Expenses
Compensation and benefits
1,803,397
1,591,077
1,321,029
General and administrative
453,452
352,050
276,181
Amortization
274,426
157,845
106,799
Depreciation
13,089
9,785
9,038
Change in contingent consideration
13,122
(22,859)
5,421
Total operating expenses
$2,557,486
$2,087,898
$1,718,468
Operating income
$493,640
$427,812
$359,081
Interest expense, net
222,384
158,448
119,507
Income from equity method investments
(21,236)
(18,231)
(8,731)
Other non-operating loss (income)
(692)
15,041
10,380
Income before income taxes
$293,184
$272,554
$237,925
Income tax expense
79,027
42,641
43,445
Net income
$214,157
$229,913
$194,480
GAAP financial measures
Revenue
$3,051,126
$2,515,710
$2,077,549
Net commissions and fees
2,994,582
2,455,671
2,026,596
Compensation and benefits
1,803,397
1,591,077
1,321,029
General and administrative
453,452
352,050
276,181
Net income
214,157
229,913
194,480
Compensation and benefits expense ratio (1)
59.1%
63.2%
63.6%
General and administrative expense ratio (2)
14.9%
14.0%
13.3%
Net income margin (3)
7.0%
9.1%
9.4%
Earnings per share (4)
$0.50
$0.78
$0.53
Diluted earnings per share (4)
$0.47
$0.71
$0.52
Non-GAAP financial measures*
Organic revenue growth rate
10.1%
12.8%
15.4%
Adjusted compensation and benefits expense
$1,692,000
$1,426,674
$1,222,342
Adjusted compensation and benefits expense ratio
55.5%
56.7%
58.8%
Adjusted general and administrative expense
$392,384
$277,813
$230,467
Adjusted general and administrative expense ratio
12.9%
11.0%
11.1%
Adjusted EBITDAC
$966,742
$811,223
$624,740
Adjusted EBITDAC margin
31.7%
32.2%
30.1%
Adjusted net income
$548,219
$493,521
$375,582
Adjusted net income margin
18.0%
19.6%
18.1%
Adjusted diluted earnings per share
$1.96
$1.79
$1.38
(1)Compensation and benefits expense ratio is defined as Compensation and benefits expense divided by Total revenue.
(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 11, Earnings Per Share" in the footnotes to the consolidated financial statements in this Annual Report 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 Years Ended December 31, 2025and 2024
Revenue
Total Revenue
Total revenue increased by $535.4 million, or 21.3%, from $2,515.7 millionto $3,051.1 million, for the year
ended December 31, 2025, as compared to the prior year. The following were the drivers of the increase:
•$245.4 million, or 9.8%, 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 $1.6 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;
•$240.3 million, or 9.5%, of the period-over-period change in Total revenue was due to organic revenue
growth in Net commissions and fees. 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 growth in specialty and E&S markets 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. The moderate pullback across our property portfolio was driven by a
continued decline in rates and retailers realizing additional opportunities to place coverage directly. This
decline was partially offset by new business generation. Growth in the period was balanced across our three
Specialties, driven by an increase in the flow of risks into the specialty and E&S markets;
•$53.2 million, or 2.1%, of the period-over-period change in Total revenue was due to contingent
commissions and the impact of foreign exchange rates on the Company's Net commissions and fees; and
•$3.5 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.
Year Ended December 31,
Period over Period
(in thousands, except
percentages)
2025
% of
total
2024
% of
total
Change
Wholesale Brokerage
$1,600,427
53.4%
$1,489,077
60.7%
$111,350
7.5%
Binding Authority
370,155
12.4
320,379
13.0
49,776
15.5
Underwriting Management
1,024,000
34.2
646,215
26.3
377,785
58.5
Total Net commissions
and fees
$2,994,582
$2,455,671
$538,911
21.9%
Wholesale Brokerage net commissions and fees increased by $111.4 million, or 7.5%, period-over-period,
primarily due to organic growth within the Specialty for the period as well as an increase in contingent commissions and
contributions from the JM Wilson acquisition.
Binding Authority net commissions and fees increased by $49.8 million, or 15.5%, period-over-period,
primarily due to strong organic growth within the Specialty for the period as well as an increase in contingent commissions
and contributions from the JM Wilson acquisition.
Underwriting Management net commissions and fees increased by $377.8 million, or 58.5%, period-over-
period, primarily due to organic growth within the Specialty for the period, inclusive of an increase in transactional
business, contributions from recent acquisitions, and an increase in contingent commissions.
The following table sets forth our revenue by type of commission and fees:
Year Ended December 31,
Period over Period
(in thousands, except
percentages)
2025
% of
total
2024
% of
total
Change
Net commissions and
policy fees
$2,759,597
92.1%
$2,310,384
94.1%
$449,213
19.4%
Supplemental and
contingent commissions
149,237
5.0
88,842
3.6
60,395
68.0
Loss mitigation and other
fees
85,748
2.9
56,445
2.3
29,303
51.9
Total Net commissions
and fees
$2,994,582
$2,455,671
$538,911
21.9%
Net commissions and policy fees grew $449.2 million, or 19.4%, period-over-period, slightly lower than the
overall net commissions and fee revenue growth of 21.9%for the year ended December 31, 2025, compared to 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 E&S products as well as the inflow of risks from the Admitted
market into the specialty and E&S markets. In aggregate, we experienced stable commission rates period over period.
Supplemental and contingent commissions increased $60.4 million, or 68.0%, period-over-period, driven by the
performance of risks placed on eligible business earning profit-based or volume-based commissions as well as profit
commissions recognized from recent acquisitions.
Loss mitigation and other fees grew $29.3 million, or 51.9%, period-over-period, primarily due to increased
capital markets activity, captive management and other risk management services 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 $212.3 million, or 13.3%, from $1,591.1 millionto
$1,803.4 millionfor the year ended December 31, 2025, compared to the prior year. The following were the drivers of this
increase:
•An increase of $196.0 million was driven by (i) the addition of 815 employees during the period, inclusive
of acquired employees, and (ii) growth in the business. Overall headcount increased to 6,110 full-time
employees as of December 31, 2025, from 5,295 as of December 31, 2024;
•Commissions increased $68.5 million, or 9.6%, period-over-period, driven by the 7.5% increase in
Wholesale Brokerage and 15.5% increase in Binding Authority Net commissions and fees discussed above;
and
•An increase of $1.6 million was driven by Acquisition related long-term incentive compensation expense
associated with recent acquisitions.
•The increases were partially offset by a $39.9 million decline in Restructuring and related expense due to
the completion of the ACCELERATE 2025 program at the end of 2024;
•A decrease of $9.6 million in Equity-based compensation and Initial public offering related expense
associated with the reversal of certain executive performance-based awards' expense in the period as well
as the natural runoff of Initial public offering related expense as awards continue to vest; and
•A decrease of $4.3 million was driven by Acquisition-related expense associated with recent acquisitions.
The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio
decrease of 4.1% from 63.2%to 59.1%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.
General and Administrative
General and administrative expense increased by $101.4 million, or 28.8%, from $352.1 millionto
$453.5 millionfor the year ended December 31, 2025, as compared to 2024. The following were the drivers of this
increase:
•$78.6 million of increased professional services and IT charges associated with ongoing technology and
data initiatives, costs directly linked to organic and inorganic revenue growth in the period, and recruiter
fees;
•$36.0 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
•$6.6 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 $19.8 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 listed above resulted in a General and administrative expense ratio
increase of 0.9%from 14.0%to 14.9%period-over-period.
Amortization
Amortization expense increased by $116.6 million, or 73.9%, from $157.8 millionto $274.4 millionfor the
year ended December 31, 2025, compared to the prior year. The main driver of the increase was the amortization of
intangible assets from recent acquisitions. Our Customer relationships and Other intangible assets increased by
$140.8 millionwhen comparing the balance as of December 31, 2025, to the balance as of December 31, 2024, due to
acquisition activity during the year.
Interest Expense, Net
Interest expense, net increased $63.9 million, or 40.4%, from $158.4 millionto $222.4 millionfor the year
ended December 31, 2025, compared to the prior year. The main driver of the increase in Interest expense, net for the year
ended December 31, 2025, was an increase in debt from recent acquisition activity.
Other Non-Operating Loss (Income)
Other non-operating loss (income) increased by $15.7 million from $15.0 millionof a loss in the prior year to
income of $0.7 millionfor the year ended December 31, 2025. For the year ended December 31, 2025, Other non-operating
loss (income) consisted of $0.6 million of seller reimbursement of acquisition-related retention incentives, $0.6 million of
sublease income, and $0.4 million of forfeitures of vested equity awards offset by $1.1 million of TRA contractual interest
and related charges. For the year ended December 31, 2024, Other non-operating loss consisted of $18.1 million of expense
related to Term Loan modifications and $1.3 million of TRA contractual interest and related charges offset by $3.4 million
of income related to a decrease in our blended state tax rates and foreign tax credit impact on the TRA remeasurement and
$0.5 million of sublease income.
Income Before Income Taxes
Due to the factors above, Income before income taxes increased $20.6 million, or 7.6%, from $272.6 millionto
$293.2 millionfor the year ended December 31, 2025, compared to the prior year.
Income Tax Expense
Income tax expense increased $36.4 millionfrom $42.6 millionto $79.0 millionfor the year ended
December 31, 2025, as compared to the prior year primarily as a result of the $39.1 million increase in Deferred income tax
expense recognized as a result of the CCRsubsequent to the Velocity acquisition in the first quarter of 2025 as compared to
the Deferred income tax expense recognized as a result of the CCR subsequent to the Innovisk acquisition in the fourth
quarter of 2024. The CCRs were one-time, non-cash income tax expenses incurred at Ryan Specialty Holdings, Inc., and
our federal and state tax rate, net of federal benefit, is unaffected.
Net Income
Net income decreased $15.8 million, or 6.9%, from $229.9 millionto $214.2 millionfor the year ended
December 31, 2025, compared to the prior year as a result of the factors described above.
Comparison of the Years Ended December 31, 2024 and 2023
Revenue
Total Revenue
Total revenue increased by $438.2 million, or 21.1%, from $2,077.5 million to $2,515.7 million, for the year
ended December 31, 2024, as compared to the prior year. The following were the drivers of the increase:
•$252.2 million, or 12.1%, of the period-over-period change in Total revenue was due to organic revenue
growth in Net commissions and fees. 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 specialty and E&S markets and winning new business
from competitors. Growth for the year was balanced across our property and casualty portfolios within our
three Specialties, driven by an increase in the flow of risks into the specialty and E&S markets. This growth
was partially offset by a number of factors, none of which were individually significant such as (i) a
continued decline throughout the year in Net commissions and fees generated from the placement of public
company D&O insurance policies, related to a slow-down in IPO activity and an associated rapid premium
rate decrease and (ii) in the second half of 2024 a shift in property trends as capacity become more readily
available, which resulted in a decline in property premium rates. We believe these factors have also created
opportunities for retailers to place some of these property risk coverages directly;
•$142.0 million, or 6.8%, of the period-over-period change in Total revenue was due to the 2023 and 2024
acquisitions related to our first twelve months of ownership;
•$34.9 million, or 1.7%, of the period-over-period change in Net commissions and fees was due to changes
in contingent commissions and the impact of foreign exchange rates on our Net commissions and fees; and
•$9.1 million, or 0.5%, of the period-over-period change in Total revenue was due to an increase in
Fiduciary investment income, caused by a rise in fiduciary cash balances compared to the prior year.
Year Ended December 31,
Period over Period
(in thousands, except
percentages)
2024
% of
total
2023
% of
total
Change
Wholesale Brokerage
$1,489,077
60.7%
$1,319,056
65.1%
$170,021
12.9%
Binding Authority
320,379
13.0
275,961
13.6
44,418
16.1
Underwriting Management
646,215
26.3
431,579
21.3
214,636
49.7
Total Net commissions
and fees
$2,455,671
$2,026,596
$429,075
21.2%
Wholesale Brokerage net commissions and fees increased by $170.0 million, or 12.9%, period-over-period,
primarily due to strong organic growth within the Specialty.
Binding Authority net commissions and fees increased by $44.4 million, or 16.1%, period-over-period,
primarily due to strong organic growth within the Specialty.
Underwriting Management net commissions and fees increased by $214.6 million, or 49.7%, period-over-
period, primarily due to strong organic growth within the Specialty as well as contributions from the AccuRisk, Castel, US
Assure, Greenhill, Ethos P&C, EverSports, Geo, and Innovisk acquisitions.
The following table sets forth our revenue by type of commission and fees:
Year Ended December 31,
Period over Period
(in thousands, except
percentages)
2024
% of
total
2023
% of
total
Change
Net commissions and
policy fees
$2,310,384
94.1%
$1,935,851
95.5%
$374,533
19.3%
Supplemental and
contingent commissions
88,842
3.6
56,375
2.8
32,467
57.6
Loss mitigation and other
fees
56,445
2.3
34,370
1.7
22,075
64.2
Total Net commissions
and fees
$2,455,671
$2,026,596
$429,075
21.2%
Net commissions and policy fees grew $374.5 million, or 19.3%, period-over-period, slightly lower than the
overall net commissions and fee revenue growth of 21.2% for the year ended December 31, 2024, compared to 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 E&S products as well as the inflow of risks from the Admitted
market into the specialty and E&S markets. In aggregate, we experienced stable commission rates period over period.
Supplemental and contingent commissions increased $32.5 million, or 57.6%, period-over-period, driven by the
performance of risks placed on eligible business earning profit-based or volume-based commissions as well as profit
commissions recognized from acquisitions completed in 2024.
Loss mitigation and other fees grew $22.1 million, or 64.2%, period-over-period, primarily due to increased
capital markets activity, additional captive management and other risk management services fees from the placement of
alternative risk insurance solutions as well as growth in certain fees related to the ACE, Point6, and AccuRisk acquisitions
completed in the second half of 2023.
Expenses
Compensation and Benefits
Compensation and benefits expense increased by $270.0 million, or 20.4%, from $1,321.0 million to $1,591.1
million for the year ended December 31, 2024, compared to the prior year. The following were the drivers of this increase:
•Commissions increased $91.1 million, or 14.7%, period-over-period, driven by the 21.2% increase in total
Net commissions and fees discussed above;
•An increase of $29.3 million was driven by Acquisition related long-term incentive compensation expense
associated with recent acquisitions;
•An increase of $17.3 million was driven by Restructuring and related expense associated with the
ACCELERATE 2025 program;
•An increase of $11.2 million was driven by Acquisition-related expense associated with recent acquisitions;
•A net increase of $9.3 million was driven by equity-based compensation, caused by an increase of $21.0
million in normal course equity-based compensation expense offset by a decrease of $11.7 million of IPO
related expenses; and
•An increase of $111.8 million was driven by (i) the addition of 938 employees compared to the prior year,
inclusive of acquired employees, and (ii) growth in the business. Overall headcount increased to 5,295 full-
time employees as of December 31, 2024, from 4,357 as of December 31, 2023.
The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio
decrease of 0.4% from 63.6% to 63.2% 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.
General and Administrative
General and administrative expense increased by $75.9 million, or 27.5%, from $276.2 million to $352.1
million for the year ended December 31, 2024, as compared to 2023. The following were the drivers of this increase:
•$47.4 million was driven by growth in the business. Expenses incurred to accommodate both organic and
inorganic revenue growth include IT, travel and entertainment, occupancy, and insurance;
•$35.4 million of increased Acquisition-related expense associated with recent and prospective acquisitions;
and
•These increases were partially offset by a $6.9 million decrease compared to the prior year in Restructuring
and related expense associated with the ACCELERATE 2025 program.
The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio
increase of 0.7% from 13.3% to 14.0% period-over-period.
Amortization
Amortization expense increased by $51.0 million, or 47.8%, from $106.8 million to $157.8 million for the year
ended December 31, 2024, compared to the prior year. The main driver of the increase was the amortization of intangible
assets from recent acquisitions. Our Customer relationships and Other intangible assets increased by $865.1 million when
comparing the balance as of December 31, 2024, to the balance as of December 31, 2023, with the largest individual
increase generated by the US Assure acquisition.
Interest Expense, Net
Interest expense, net increased $38.9 million, or 32.6%, from $119.5 million to $158.4 million for the year
ended December 31, 2024, compared to the prior year. The main driver of the increase in Interest expense, net for the year
ended December 31, 2024, was an increase in debt from recent acquisition activity. For the years ended December 31, 2024
and 2023, the reduction to Interest expense, net related to our interest rate cap was $17.8 million and $15.9 million,
respectively. Interest earned on the Company's Cash and cash equivalents balances offsets Interest expense, net. For the
years ended December 31, 2024 and 2023, the Company earned interest income of $21.5 million and $32.0 million,
respectively.
Other Non-Operating Loss
Other non-operating loss increased by $4.6 million from $10.4 million in the prior year to $15.0 million for the
year ended December 31, 2024. For the year ended December 31, 2024, Other non-operating loss consisted of $18.1
million of expense related to Term Loan modifications and $1.3 million of TRA contractual interest and related charges
offset by $3.4 million of income related to a decrease in our blended state tax rates and foreign tax credit impact on the
TRA remeasurement and $0.5 million of sublease income. For the year ended December 31, 2023, Other non-operating
loss included a $10.4 million charge related to the change in the TRA liability caused by a change in our blended state tax
rates.
Income Before Income Taxes
Due to the factors above, Income before income taxes increased $34.6 million, or 14.6%, from $237.9 million
to $272.6 million for the year ended December 31, 2024, compared to the prior year.
Income Tax Expense
Income tax expense decreased $0.8 million from $43.4 million to $42.6 million for the year ended December
31, 2024, as compared to the prior year primarily due to a $13.9 million deferred tax benefit in 2024 from equity-based
compensation and a $8.8 million decrease in Deferred income tax expense recognized as a result of the CCRsubsequent to
the Socius and AccuRisk acquisitions in the second half of 2023 and Innovisk in the fourth quarter of 2024. These CCRs
were discrete, non-cash expenses incurred at Ryan Specialty Holdings, Inc., and the Company's annual effective tax rate is
unaffected. The decrease was partially offset by an increase in pre-tax book income allocated to the Company for the year
ended December 31, 2024, and a decrease in the Company's blended state tax rate during 2024 which resulted in increased
tax expense recognized related to the change in our Deferred tax assets.
Net Income
Net income increased $35.4 million, or 18.2%, from $194.5 million to $229.9 million for the year ended
December 31, 2024, compared to the prior year as a result of the factors described above.
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 audited
consolidated financial statements in this Annual Report. 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 a 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):
Year Ended December 31,
(in thousands, except percentages)
2025
2024
2023
Current period Net commissions and fees revenue
$2,994,582
$2,455,671
$2,026,596
Less: Current period contingent commissions
(121,549)
(73,175)
(39,028)
Less: Revenue attributable to sold businesses
(361)
-
-
Net commissions and fees revenue
excluding contingent commissions
$2,872,672
$2,382,496
$1,987,568
Prior period Net commissions and fees revenue
$2,455,671
$2,026,596
$1,711,861
Less: Prior period contingent commissions
(73,175)
(39,028)
(30,788)
Less: Revenue attributable to sold businesses
(1,941)
-
-
Prior period Net commissions and fees revenue
excluding contingent commissions
$2,380,555
$1,987,568
$1,681,073
Change in Net commissions and fees revenue excluding
contingent commissions
$492,117
$394,928
$306,494
Less: Mergers and acquisitions Net commissions and fees
revenue excluding contingent commissions
(246,914)
(141,972)
(46,496)
Impact of change in foreign exchange rates
(4,863)
(791)
(479)
Organic revenue growth (Non-GAAP)
$240,340
$252,165
$259,519
Net commissions and fees revenue growth rate (GAAP)
21.9 %
21.2 %
18.4 %
Less: Impact of contingent commissions (1)
(1.2)
(1.3)
(0.2)
Net commissions and fees revenue
excluding contingent commissions growth rate (2)
20.7 %
19.9 %
18.2 %
Less: Mergers and acquisitions Net commissions and fees
revenue excluding contingent commissions (3)
(10.4)
(7.1)
(2.8)
Impact of change in foreign exchange rates (4)
(0.2)
0.0
0.0
Organic Revenue Growth Rate (Non-GAAP)
10.1 %
12.8 %
15.4 %
(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.
(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.
(4)Calculated by taking the change in foreign exchange rates divided by prior period net commissions and fees revenue
excluding contingent commissions.
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:
Year Ended December 31,
(in thousands, except percentages)
2025
2024
2023
Total Revenue
$3,051,126
$2,515,710
$2,077,549
Compensation and Benefits Expense
$1,803,397
$1,591,077
$1,321,029
Acquisition-related expense
(11,033)
(15,373)
(4,186)
Acquisition related long-term incentive compensation (1)
(26,581)
(24,946)
4,334
Restructuring and related expense
-
(39,929)
(22,651)
Amortization and expense related to discontinued prepaid
incentives
(4,332)
(5,160)
(6,441)
Equity-based compensation (2)
(49,664)
(52,038)
(31,047)
IPO related expenses
(19,787)
(26,957)
(38,696)
Adjusted Compensation and Benefits Expense (3)
$1,692,000
$1,426,674
$1,222,342
Compensation and Benefits Expense Ratio
59.1%
63.2%
63.6%
Adjusted Compensation and Benefits Expense Ratio
55.5%
56.7%
58.8%
(1)In 2023, Acquisition related long-term incentive compensation includes a $6.8 million expense reversal related to the
clawback of an All Risks LTIP payment from a terminated employee.
(2)In 2025, Equity-based compensation expense included $5.8 million of expense reversal associated with certain
executive performance-based awards on account of it becoming unlikely the performance targets would be achieved.
In 2024, Equity-based compensation included $4.6 million of expense associated with the removal of equity transfer
restrictions for an executive officer of the Company. See "Note 10, Equity-Based Compensation" of the audited
financial statements in this Annual Report for additional discussion on equity-based compensation.
(3)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.
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:
Year Ended December 31,
(in thousands, except percentages)
2025
2024
2023
Total Revenue
$3,051,126
$2,515,710
$2,077,549
General and Administrative Expense
$453,452
$352,050
$276,181
Acquisition-related expense
(61,068)
(54,469)
(19,088)
Restructuring and related expense
-
(19,768)
(26,626)
Adjusted General and Administrative Expense (1)
$392,384
$277,813
$230,467
General and Administrative Expense Ratio
14.9%
14.0%
13.3%
Adjusted General and Administrative Expense Ratio
12.9%
11.0%
11.1%
(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. For the year
ended December 31, 2024, Acquisition-related expense included a $4.5 millioncharge related to a deal-contingent foreign
exchange forward contract associated with the Castel acquisition. The remaining charges in the three years presented
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 achieved in order to be earned. Restructuring and related expense for the years
ended December 31, 2024 and 2023, consisted 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 year ended December 31, 2025, Other non-operating loss (income)
consisted of $0.6 million of seller reimbursement of acquisition-related retention incentives, $0.6 million of sublease
income, and $0.4 million of forfeitures of vested equity awards offset by $1.1 million of TRA contractual interest and
related charges. For the year ended December 31, 2024, Other non-operating loss (income) consisted of $18.1 million of
expense related to Term Loan modifications and $1.3 million of TRA contractual interest and related charges offset by $3.4
million of income related to a decrease in our blended state tax rates and foreign tax credit impact on the TRA
remeasurement and $0.5 million of sublease income. For the year ended December 31, 2023, Other non-operating loss
(income) included a $10.4 millioncharge related to the change in the TRA liability caused by a change in our blended state
tax rates. 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.
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:
Year Ended December 31,
(in thousands, except percentages)
2025
2024
2023
Total Revenue
$3,051,126
$2,515,710
$2,077,549
Net Income
$214,157
$229,913
$194,480
Interest expense, net
222,384
158,448
119,507
Income tax expense
79,027
42,641
43,445
Depreciation
13,089
9,785
9,038
Amortization
274,426
157,845
106,799
Change in contingent consideration (1)
13,122
(22,859)
5,421
EBITDAC
$816,205
$575,773
$478,690
Acquisition-related expense
72,101
69,842
23,274
Acquisition related long-term incentive compensation (2)
26,581
24,946
(4,334)
Restructuring and related expense
-
59,697
49,277
Amortization and expense related to discontinued prepaid incentives
4,332
5,160
6,441
Other non-operating loss (income)
(692)
15,041
10,380
Equity-based compensation
49,664
52,038
31,047
IPO related expenses
19,787
26,957
38,696
Income from equity method investments
(21,236)
(18,231)
(8,731)
Adjusted EBITDAC
$966,742
$811,223
$624,740
Net Income Margin
7.0%
9.1%
9.4%
Adjusted EBITDAC Margin
31.7%
32.2%
30.1%
(1)For the year ended December 31, 2024, Change in contingent consideration included a $25.5 million decrease in
valuation of the US Assure contingent consideration as a result of increased loss ratios impacting projected profit
commissions.
(2)For the year ended December 31, 2023, Acquisition related long-term incentive compensation includes a $6.8 million
expense reversal related to the clawback of an All Risks LTIP payment from a terminated employee.
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.
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:
Year Ended December 31,
(in thousands, except percentages)
2025
2024
2023
Total Revenue
$3,051,126
$2,515,710
$2,077,549
Net Income
$214,157
$229,913
$194,480
Income tax expense
79,027
42,641
43,445
Amortization
274,426
157,845
106,799
Amortization of deferred debt issuance costs (1)
9,567
23,930
12,172
Change in contingent consideration
13,122
(22,859)
5,421
Acquisition-related expense
72,101
69,842
23,274
Acquisition related long-term incentive compensation
26,581
24,946
(4,334)
Restructuring and related expense
-
59,697
49,277
Amortization and expense related to discontinued prepaid incentives
4,332
5,160
6,441
Other non-operating loss (income)
(692)
15,041
10,380
Equity-based compensation
49,664
52,038
31,047
IPO related expenses
19,787
26,957
38,696
Income from equity method investments
(21,236)
(18,231)
(8,731)
Adjusted Income before Income Taxes (2)
$740,836
$666,920
$508,367
Adjusted tax expense (3)
(192,617)
(173,399)
(132,785)
Adjusted Net Income
$548,219
$493,521
$375,582
Net Income Margin
7.0%
9.1%
9.4%
Adjusted Net Income Margin
18.0%
19.6%
18.1%
(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 years ended December 31, 2025and 2024,
this calculation of adjusted 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 year ended December 31, 2023, this calculation of adjusted 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, vested but unexercised Options, 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.
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:
Year Ended December 31,
2025
2024
2023
Earnings per share of Class A common stock - diluted
$0.47
$0.71
$0.52
Less: Net income attributed to dilutive shares and substantively vested
RSUs (1)
(0.01)
-
(0.03)
Plus: Impact of all LLC Common Units exchanged for Class A shares
(2)
0.32
0.14
0.24
Plus: Adjustments to Adjusted net income (3)
1.22
0.97
0.67
Plus: Dilutive impact of unvested equity awards (4)
(0.04)
(0.03)
(0.02)
Adjusted diluted earnings per share
$1.96
$1.79
$1.38
(Share count in '000s)
Weighted-average shares of Class A common stock outstanding -
diluted
138,246
132,891
125,745
Plus: Impact of all LLC Common Units exchanged for Class A shares
(2)
135,429
138,980
142,384
Plus: Dilutive impact of unvested equity awards (4)
5,354
4,417
4,137
Adjusted diluted earnings per share diluted share count
279,029
276,288
272,266
(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 years ended December 31, 2025, 2024, and 2023, this
removes $0.9 million, $0.3 million, and $4.2 millionof Net income, respectively, on 138.2 million, 132.9 million, and
125.7 millionWeighted-average shares of Class A common stock outstanding - diluted, respectively. See "Note 11,
Earnings Per Share" in the footnotes to the consolidated financial statements in this Annual Report.
(2)For comparability purposes, this calculation incorporates the Net income that would be outstanding if all LLC
Common Units (together with shares of Class B common stock) were exchanged for shares of Class A common stock.
For the years ended December 31, 2025, 2024, and 2023, this includes $150.8 million, $135.2 million, and
$133.4 millionof Net income, respectively, on 273.7 million, 271.9 million, and 268.1 millionWeighted-average
shares of Class A common stock outstanding - diluted, respectively. See "Note 11, Earnings Per Share" in the
footnotes to the consolidated financial statements in this Annual Report.
(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 273.7 million, 271.9 million, and 268.1 million
Weighted-average shares of Class A common stock outstanding - diluted years ended December 31, 2025, 2024, and
2023, 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 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 11, Earnings Per Share" of the audited consolidated financial statements. For the years ended
December 31, 2025, 2024, and 2023, 5.4 million, 4.4 million, and 4.1 millionshares were added to the calculation,
respectively.
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, share repurchases, 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 12, 2026, our Board declared and increased the Company's regular quarterly dividend by 8.3% to
$0.13per share on the outstanding Class A common stock. With respect to this regular quarterly dividend, $0.07 of the
regular quarterly dividend is to be 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 $0.06of the regular quarterly dividend is to be funded by free cash flow from the LLC and paid
to all holders of the Class A common stock and LLC Common Units.
On February 12, 2026, our Board approved a share repurchase program that authorizes the Company to
repurchase up to $300 million of its outstanding Class A common stock. Share repurchases may be made from time to time
on the open market, in privately negotiated transactions, using Rule 10b5-1 trading plans, as accelerated share repurchases,
or in any other manner that complies with the applicable securities law. The timing of purchases and number of shares
repurchased under the program will depend upon a variety of factors including the Company's stock price, trading volume,
working capital or other liquidity requirements, and market conditions. The Company is not obligated to purchase any
shares under the program and the program may be suspended or discontinued at any time without notice.
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 held in very liquid securities with a focus
on preservation of principal. To minimize counterparty investment risk, we maintain cash holdings pursuant to an fiduciary
holdings 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 $1,426.1 millionand $1,140.6 millionas of December 31, 2025and 2024, respectively, and fiduciary
receivables of $2,872.8 millionand $2,599.1 millionas of December 31, 2025and 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 $158.3 millionof Cash and cash equivalents on the Consolidated Balance Sheet as of December 31, 2025,
$91.9 millionwas 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.
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. In August 2025, Moody's Ratings upgraded the Company's
credit rating from B1 to Ba3. As a result, the applicable interest rate on the Company's Term Loan decreased from
Adjusted Term SOFR + 2.25% to Adjusted Term SOFR + 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 December 31, 2025, the interest rate on the Term Loan was 2.00%plus Adjusted Term SOFR.
As of December 31, 2025, we were in compliance with all of the covenants under our debt facilities and there
were no events of default for the year ended December 31, 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 to be $459.0 millionin aggregate as of December 31, 2025. 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
34,813
2,466
9,479
46,758
Interest expense
-
-
1,112
1,112
Payments
(16,067)
(8,532)
(570)
(25,169)
Balance at December 31, 2025
$271,979
$77,349
$109,669
$458,997
Total expected estimated tax savings from each of the tax attributes associated with the TRA as of
December 31, 2025were $540.0 millionconsisting of (i) Exchange Tax Attributes of $320.0 million, (ii) Pre-IPO M&A
Tax Attributes of $91.0 million, and (iii) TRA Payment Tax Attributes of $129.0 million. The Company will retain the
benefit of 15% of these cash savings.
Comparison of Cash Flows for the Year Ended December 31, 2025and 2024
Cash and cash equivalents decreased $381.9 millionfrom $540.2 millionat December 31, 2024, to $158.3
millionat December 31, 2025. A summary of our cash flows provided by and used for ongoing operations from operating,
investing, and financing activities is as follows:
Cash Flows From Operating Activities
Net cash provided by operating activities during the year ended December 31, 2025, increased $128.8 million
from the year ended December 31, 2024, to $643.7 million. This increase in cash flows provided by operating activities
was driven by increases of $116.6 millionin Amortization, $39.1 millionin Deferred income tax expense from common
control reorganizations, and $38.6 millionrelated to Other current and non-current assets and Other current and non-
current liabilities. These increases were partially offset by the change in Commissions and fees receivable - net of $35.6
million, a decline in Net income of $15.8 million, and a decrease of Amortization of deferred debt issuance costs of $14.4
million.
Cash Flows From Investing Activities
Cash flows used in investing activities during the year ended December 31, 2025, were $834.0 million, a
decreaseof $921.7 millioncompared to the $1,755.7 millionof cash flows used for investing activities during the year
ended December 31, 2024. The main drivers of the cash flows used for investing activities for the year ended December 31,
2025, were $746.5 millionof Business combinations - net of cash acquired and cash held in a fiduciary capacity, Capital
expenditures of $68.0 million, $16.6 million of an Equity method investment in VSIC, and $3.0 millionrelated to Asset
acquisitions. The main drivers of the cash flows used for investing activities for the year ended December 31, 2024, were
$1,708.7 millionof Business combinations - net of cash acquired and cash held in a fiduciary capacity and $47.0 millionof
capital expenditures.
Cash Flows From Financing Activities
Cash flows provided by financing activities during the year ended December 31, 2025, were $78.1 million, a
decrease of $1,088.7 millioncompared to cash flows provided by financing activities of $1,166.9 millionduring the year
ended December 31, 2024. The main drivers of cash flows provided by financing activities during the year ended
December 31, 2025, were $237.6 millionNet change in fiduciary liabilities, net Borrowings on Revolving Credit Facility
of $71.4 million, and $35.9 million of Receipt of taxes related to net share settlement of equity awards offset by $64.1
millionof Tax distributions to non-controlling LLC Unitholders, $62.3 millionof Class A common stock dividends and
Dividend Equivalents paid, $37.0 million of Taxes paid related to net share settlement of equity awards, $29.3 million of
Payment of contingent consideration, $27.2 millionof Distributions and Declared Distributions paid to non-controlling
LLC Unitholders, $25.2 millionof Payment of Tax Receivable Agreement liabilities during the year, and $17.0 million of
Repayment of term debt. The main drivers of cash flows provided by financing activities during the year ended December
31, 2024, were $1,187.4 million of Proceeds from Senior Secured Notes, $114.0 million Net change in fiduciary liabilities,
and $107.6 million of Proceeds from term debt offset by $82.7 million of Tax distributions to non-controlling LLC
Unitholders, $80.2 million of Class A common stock dividends and Dividend Equivalents paid, $25.5 million of Debt
issuance costs paid, $22.2 million of Distributions and Declared Distributions paid to non-controlling LLC Unitholders,
and $21.6 million of Payment of Tax Receivable Agreement liabilities during the year.
Contractual Obligations and Commitments
Our principal commitments consist of contractual obligations in connection with investing and operating
activities. These obligations are described within "Note 8, Debt" in the notes to our audited consolidated financial
statements in this Annual Report, 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.
The Company recognized a liability for employee deferrals, inclusive of changes in the value of deferred
amounts held, of $8.0 millionand $50.8 millionin Current accrued compensation and Non-current accrued compensation,
respectively, on the Consolidated Balance Sheets as of December 31, 2025, and $5.2 millionand $36.5 millionin Current
accrued compensation and Non-current accrued compensation, respectively, on the Consolidated Balance Sheets as of
December 31, 2024. The timing of when employees elect to make withdrawals from the deferred compensation plan is
uncertain, however employees are not allowed to make a withdrawal for three years from the deferral date and must
withdraw all deferred compensation balances within ten years of the deferral date.
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 December 31, 2025, the projected future expense, and the projected timing of
future cash outflows associated with these arrangements.
Long-term Incentive Compensation Agreements
(in thousands)
December 31, 2025
Current accrued compensation
$10,752
Non-current accrued compensation
19,212
Total liability
$29,963
Projected future expense
44,880
Total projected future cash outflows
$74,843
Projected Future Cash Outflows
(in thousands)
2026
$14,632
2027
9,274
2028
32,257
2029
11,048
Thereafter
$7,632
Within "Note 4, Mergers and Acquisitions" in the notes to our audited consolidated financial statements in this
Annual Report we outline various contingent consideration arrangements and their impact. Below we have outlined the
liabilities accrued as of December 31, 2025, the projected future expense, and the projected timing of future cash outflows
associated with these contingent consideration agreements.
Contingent Consideration
(in thousands)
December 31, 2025
Current accounts payable and accrued liabilities
$55,880
Other non-current liabilities
92,508
Total liability
$148,388
Projected future expense
10,429
Total projected future cash outflows
$158,817
Projected Future Cash Outflows
(in thousands)
2026
$57,255
2027
89,016
2028
6,262
2029
4,662
Thereafter
$1,622
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 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. Refer to
"Note 2, Summary of Significant Accounting Policies" in the consolidated financial statements in this Annual Report for
further information on the critical accounting estimates and policies.
Business Combinations
The Company accounts for transactions that represent business combinations under the acquisition method of
accounting, which requires us to allocate the total consideration transferred for each acquisition to the assets we acquire
and liabilities we assume based on their fair values as of the date of acquisition, including identifiable intangible assets.
The allocation of the consideration utilizes significant estimates in determining the fair values of identifiable assets
acquired, which mainly consist of customer relationship intangible assets. The significant assumptions used in determining
the fair value of customer relationships include estimated revenue growth, attrition rates, operating margins, and weighted-
average cost of capital. These estimates directly impact the amount of identified intangible assets recognized and the
related amortization expense in future periods. As of December 31, 2025and 2024, an aggregate of $1,496.9 millionand
$1,392.0 million, respectively, of Customer relationships was recorded on the Consolidated Balance Sheets.
The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as
goodwill. We may refine our estimates and make adjustments to the assets acquired and liabilities assumed over a
measurement period, not to exceed one year from the date of acquisition.
Acquired Customer Relationships
We review acquired intangible assets that are being amortized for impairment whenever events or changes in
circumstance indicate that their carrying amount may not be recoverable. We have not made any material changes in the
accounting methodology used to evaluate the impairment of goodwill or amortizable intangible assets during the last three
fiscal years. Qualitative factors considered include any adverse developments in regulation, unfavorable market conditions,
or the extent to which an asset will be utilized. As we continue to experience revenue growth driven by the increase in
complexity and inflow of risks into the specialty and E&S markets, we do not believe there is a reasonable likelihood there
will be a material change in the estimates or assumptions used to calculate impairments or useful lives of amortizable
intangible assets. However, if actual results are not consistent with our estimates and assumptions, we may be exposed to
an acceleration of amortization or impairment losses that could be material.
Contingent Consideration
The Company recognizes contingent consideration liabilities and contingently returnable consideration resulting
from certain business combinations. We estimate the fair value of these contingent consideration arrangements using Level
3 inputs that require the use of numerous assumptions and Monte Carlo simulations, which may change based on the
occurrence of future events and lead to increased or decreased operating income in future periods. Estimating the fair value
at the acquisition date and in subsequent periods involves significant judgments, including projecting the future financial
performance of the acquired businesses. The Company updates its assumptions each reporting period based on new
developments and records such amounts at fair value based on the revised assumptions. For significant acquisitions we
may use independent third-party valuation specialists to assist us in determining the fair value of assets acquired and
liabilities assumed. Refer to "Note 14, Fair Value Measurements" in the consolidated financial statements in this Annual
Report for further information on the assumptions used in the fair value of contingent consideration.
As of December 31, 2025, the Company had ninecontingent consideration liability arrangements outstanding,
with an aggregate fair value of $148.4 million. If remaining targets were to be met for these contingent consideration
arrangements, the maximum amount of the liability would be $597.4 millionas of December 31, 2025, and the additional
expense would be recorded over the next 4.3 yearsin Change in contingent consideration within the Consolidated
Statements of Income. As of December 31, 2025, the Company had onecontingently returnable consideration arrangement
outstanding for $6.6 million. The maximum amount of the asset would be $13.5 millionas of December 31, 2025, if certain
targets were not achieved, and the additional income would be recorded over the next 1.3 yearsin Change in contingent
consideration within the Consolidated Statements of Income. Refer to "Note 4, Mergers and Acquisitions" in the
consolidated financial statements in this Annual Report for further information on business combinations and contingent
consideration.
Income Taxes
As of December 31, 2025and 2024, $310.1 millionand $448.3 million, respectively, of Deferred tax assets
were recorded on the Consolidated Balance Sheets. Deferred income taxes are recognized for the expected future tax
consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities
and their respective tax basis. The primary item giving rise to temporary differences is the Company's investment in the
LLC. As of December 31, 2025and 2024, the Company's deferred tax asset in the Company's investment in the LLC was
$288.0 millionand $429.9 million, respectively.
In determining the provision for income taxes, we make estimates and judgments which affect our evaluation of
the carrying value of our deferred tax assets as well as our calculation of certain tax liabilities. We evaluate these assets on
a quarterly basis to conclude whether they are more likely than not to be realized. In completing this evaluation related to
the Company's deferred tax asset in the investment in the LLC, we consider all available positive and negative evidence,
including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning
strategies, carryback potential if permitted under the applicable tax law, and results of recent operations. Projected future
taxable income is based on Board-approved budgets and long-term assumptions, which include revenue growth and
operating margins, among other factors. Estimating future taxable income is inherently uncertain and requires judgment.
We exclude any projected M&A activity from this evaluation.
To the extent we do not generate sufficient federal taxable income to realize a deferred tax asset in any given
year, it would result in a federal net operating loss ("NOL") that is available to us to utilize over an indefinite carryforward
period to fully realize the deferred tax assets. Given our historical ability to generate federal taxable income and our
projected future taxable income, and the indefinite carryforward period available for federal NOLs, we consider it more
likely than not that we will realize this deferred tax asset. If we determine in the future that we will not be able to fully
utilize all or part of this deferred tax asset, we would record a valuation allowance through earnings in the period the
determination was made, which would have an adverse effect on our results of operations and earnings in those future
periods.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Other
than those potential impacts, we do not believe there is a reasonable likelihood there will be a material change in our tax
related balances or valuation allowances. However, due to the complexity of some of these uncertainties, the ultimate
resolution may result in a payment that is materially different from the current estimate of the tax liabilities.
Tax Receivable Agreement Liabilities
In connection with the Organizational Transactions and IPO, the Company entered into a TRA with current and
certain former LLC Unitholders. Amounts payable under the TRA are contingent upon, among other things, (i) the
generation of future taxable income over the term of the TRA and (ii) future changes in tax laws, including tax rate
changes. If we do not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax
benefits, then we would not be required to make the related TRA payments. Therefore, we only recognize a liability for
TRA payments if we determine it is probable that we will generate sufficient future taxable income over the term of the
TRA to utilize the related tax benefits. Projecting future taxable income is inherently uncertain and requires judgment. In
projecting future taxable income, we consider our historical results and incorporate assumptions from our Board-approved
budgets and longer-term assumptions, which include revenue growth and operating margins, among other factors. We
exclude any projected M&A activity from this evaluation.
As of December 31, 2025and 2024, we recognized $459.0 millionand $436.3 million, respectively, of
liabilities relating to our obligations under the TRA, after concluding that it was probable that we would have sufficient
future taxable income to utilize the related tax benefits. There were no transactions subject to the TRA for which we did not
recognize the related liability, as we concluded that we would have sufficient future taxable income to utilize all of the
related tax benefits that have been generated since the IPO. If a valuation allowance is recorded against the deferred tax
assets subject to the TRA in a future period, the corresponding TRA liability may not be considered probable, resulting in
the liability being removed from the Consolidated Balance Sheets and recorded in Other non-operating loss (income) on
the Consolidated Statements of Income. Refer to "Note 17, Income Taxes"in the consolidated financial statements in this
Annual Report for further information on the estimates involved in income taxes and the TRA liability.
Recent Accounting Pronouncements
For a description of recently issued accounting pronouncements see "Note 2, Summary of Significant
Accounting Policies" in the footnotes to the consolidated financial statements in this Annual Report.
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