RYAN Shareholder/Stockholder Letter Transcript:
2023 Annual Report
Our Values
Integrity:
We adhere to the highest standards of honesty,
dependability and professionalism in dealing with
our clients, trading partners and co-workers.
Client-Centricity:
We put the interests of our clients and trading
partners first.
Teamwork:
We achieve more working collaboratively than
individually.
Meritocracy:
Our people are given the opportunity to grow,
achieve and rise based on their merits, their skill and
their imagination.
Inclusion:
We are committed to building, growing and
sustaining a diverse workforce reflective of society
throughout the entirety of the organization and
insurance industry. We strive to harness our
differences and commonalities to better serve our
clients, trading partners, workforce and
communities.
Empowerment:
Our organizational structure allows our people to
take appropriate risks, be decisive and succeed on
the basis of their initiative and hard work, enabling
them to self-optimize.
Innovation:
Courage:
We encourage our people to be creative and
discover new and better ways to achieve optimal
results for our clients and trading partners.
We don t shy away from difficult challenges, rather,
we embrace them knowing we have the drive and
expertise to find ideal solutions.
Chairman s Letter
It is my privilege to present Ryan Specialty's 2023 Annual Report.
2023 was another outstanding year for Ryan Specialty. We again
delivered an enviable financial performance, achieved double-digit
top line growth in each of our three Specialties (Wholesale Brokerage,
Binding Authority, and Underwriting Management), and added to our
outstanding team of brokers and underwriters through excellent
recruiting and M&A. To highlight just a few of our many notable
achievements, we produced organic revenue growth1 of 15%, another
year of total revenue growth of over 20%, adjusted EBITDAC growth1
of 21%, and adjusted EPS growth1 of 20%. These financial results are
the manifestation of an incredibly dedicated team of employees throughout the Company focused on
serving clients needs as all three of our Specialties once again performed brilliantly.
Our Wholesale Brokerage Specialty generated 17% growth, led primarily by property insurance
placements and sustained strength in the casualty insurance sector. Our delegated authority
Specialties Binding Authority and Underwriting Management also delivered another year of
excellent results, fueled by new proprietary capabilities, geographic expansion of several of our
managing general underwriters (MGUs), and strong contributions from our unparalleled talent, all
delivering unmatched value to our clients and trading partners.
We also had our second-largest year for M&A transactions based on acquired revenue. We completed
five acquisitions that added scope and talent to our already industry-leading wholesale brokerage,
binding authority, and managed underwriting platforms and contributed to our developing benefits
and alternative risks verticals, about which we remain very excited.
In particular, Socius Insurance Services deepened our scale in key urban centers while adding top
talent to our professional lines and cyber teams. We added foundational capabilities for our new
employee benefits distribution and underwriting platform through the acquisitions of ACE Benefit
Partners, Point6 Healthcare, and AccuRisk. These acquisitions have accelerated our development of
new products and service offerings to help our clients with integrated health solutions.
Just prior to the end of the year, we announced a highly strategic agreement to acquire Castel
Underwriting Agencies, which is pending regulatory approval and is expected to close in the first half
of 2024. Castel s geographic focus in the UK and Europe will significantly expand our international
footprint, and we expect Castel s management and operations teams to be catalysts for new delegated
underwriting authority start-ups and further international expansion.
Pursuing opportunities through our robust M&A pipeline remains a top priority, and we have an
ambitious outlook for 2024. We believe there is substantial additional M&A opportunity, particularly
with respect to delegated authority businesses looking for a new platform, and we remain well
positioned to take advantage of expanding within our Specialties through both organic growth and
strategic M&A transactions. The right acquisitions will expand our total addressable market within
specialty insurance and further strengthen our already considerable moat through enhanced scale,
scope, and intellectual capital. As always, we will remain disciplined in our pursuit of potential
acquisitions that are a strong cultural fit, strategic, and accretive to our returns.
Side by side with all of the effort put forth toward adding to and growing our business, we made
excellent progress with respect to our ACCELERATE 2025 restructuring program. We are making
certain that we are well prepared for our anticipated future growth and scaling by investing in
technology, streamlining operations, and creating efficiencies in all facets of our business. We believe
that these investments will drive continued growth and innovation, deliver sustainable productivity
improvements over the long-term, and accelerate our margin improvement. We remain on track to
complete the program by the end of 2024.
Some of our most notable achievements in 2023 include:
Revenue increase of $352.4 million, or 20.4%, driven by annual organic revenue growth1 of
15.0%.
Adjusted EBITDAC1 increase of $107.3 million, or 20.7%, to $624.7 million, from $517.4
million in the prior year.
Adjusted EBITDAC margin1 of 30.1%, up 10 basis points from 30.0% in 2022.
Adjusted EPS Growth1 of 20.0%.
We were also very pleased to announce in February 2024 that we initiated a quarterly cash dividend
program, which will return capital and create additional value for our stockholders. The decision by
Ryan Specialty s board of directors to initiate this program reflects the confidence that the board and
management have in our ability to continue to drive sustainable, profitable growth, generate strong
cash flow over the long term and at the same time seamlessly execute on our M&A program which
is a top priority for years to come. It is also a testament to our ability to be excellent stewards of
capital for our investors, as we continue to maintain a sturdy balance sheet.
We remain optimistic for 2024 and believe we are well positioned for another strong year. Ryan
Specialty was founded nearly 15 years ago on the thesis that the then-modest Excess & Surplus (E&S)
component of the insurance market would become more significant as the world continues to increase
in complexity and risk. That anticipated increase, along with the other secular growth factors we
identified at that time, have very much come to fruition. Moreover, retail brokers are becoming larger
through organic growth and industry consolidation. These retail brokers are pursuing panel
consolidation for both transactional wholesale and delegated authority distribution in order to have
fewer and more sophisticated trading partners that have the proper scope and scale to meet their
needs. The continued increase in risk and complexity throughout the globe continues to drive
exposures into the E&S market, a hallmark of which is significantly more freedom of rate and form for
specialized brokers and underwriters to develop insurance solutions for the increasing number of hardto-place risks. We expect the E&S market to continue to grow in both size and importance.
Finally, I want to express my enduring appreciation to all of our Ryan Specialty teammates for their
relentless efforts throughout the year. Their commitment to excellence and innovation, paced by what
I firmly believe is among the deepest and most talented senior management teams in the insurance
industry, continues to drive our incredible success.
Thank you for your continued support.
Respectfully yours,
Patrick G. Ryan
Founder, Chairman & CEO
1
Non-GAAP Measures. For a definition (other than Adjusted EBITDAC Growth and Adjusted EPS Growth) and a reconciliation
of Organic Revenue Growth, Adjusted EBITDAC, Adjusted EBITDAC Margin, Adjusted EBITDAC Growth and Adjusted EPS
Growth to the most directly comparable GAAP measure, see Management s Discussion and Analysis of Financial
Condition and Results of Operation Non-GAAP Financial Measures and Key Performance Indicators in the Company s
10-K included within this Annual Report. For a definition of Adjusted EBITDAC Growth and Adjusted EPS Growth, see
Appendix A to our 2024 Proxy Statement filed with the Securities and Exchange Commission. The most directly
comparable GAAP measure for Adjusted EBITDAC Margin and Adjusted EPS Growth is Net Income Margin (9.4%) and
Diluted EPS Growth (0.0%), respectively.
3/18/2024 Letter Continued (Full PDF)