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What changed in RYAN SPECIALTY HOLDINGS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RYAN SPECIALTY HOLDINGS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+537 added−520 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-28)

Top changes in RYAN SPECIALTY HOLDINGS, INC.'s 2024 10-K

537 paragraphs added · 520 removed · 424 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

108 edited+27 added−16 removed68 unchanged
Biggest changeOur industry distribution channels include (among others): • General Liability: Manufacturing, Start Ups, Contractors, Liquor, Plowing. • Property: Vacant, Coastal, Distressed, Warehouse, Subsidized Housing, Student Housing. • Other: Workers’ Compensation, Builder’s Risk, Contractor’s Equipment, Motor Truck Cargo, Hole-In-One, Crime. 10 Underwriting Management Our Underwriting Management Specialty operates under multiple brands, which are collectively referred to as “Ryan Specialty Underwriting Managers.” Underwriting Management offers insurance carriers cost-effective, specialty market expertise in distinct and complex market niches underserved in today’s marketplace through MGAs and MGUs, which act on behalf of insurance carriers that have given us relatively broad authority to underwrite and bind coverage, as well as critical product design, administrative and distribution responsibilities, for specific risks, and (often proprietary) National 11 Programs that offer commercial and personal insurance for specific product lines or industry classes.
Biggest changeUnderwriting Management Underwriting Management offers insurance carriers cost-effective, specialty market expertise in distinct and complex market niches underserved in today’s marketplace through MGAs and MGUs, which act on behalf of insurance carriers that have given us relatively broad authority to underwrite and bind coverage, as well as critical product design, administrative and distribution responsibilities, for specific risks, and (often proprietary) National Programs that offer commercial and personal insurance for specific product lines or industry classes.
This carrier consolidation likewise provided more opportunities for a smaller group of well-positioned insurance specialists best equipped to provide the necessary services with the requisite scale and talent. 2 Our core value proposition to retail insurance brokers and carriers is delivering best-in-class intellectual capital. Our people are our source of intellectual capital.
This carrier consolidation likewise provided more opportunities for a smaller group of well-positioned insurance specialists best equipped to provide the necessary services with the requisite scale and talent. Our core value proposition to retail insurance brokers and carriers is delivering best-in-class intellectual capital. Our people are our source of intellectual capital.
Pursue strategic acquisitions and align interests to enhance the network effect : Since our inception, we have a history of successfully executing and integrating acquisitions across a diverse mix of specialties and 8 geographies. Our acquisition strategy is centered on increasing our intellectual capital, distribution reach, and product capabilities, which mutually reinforce one another.
Pursue strategic acquisitions and align interests to enhance the network effect : Since our inception, we have a history of successfully executing and integrating acquisitions across a diverse mix of specialties and geographies. Our acquisition strategy is centered on increasing our intellectual capital, distribution reach, and product capabilities, which mutually reinforce one another.
We have identified the following markets as near-term potential growth opportunities: employee benefits, nursing homes and other long-term care facilities, alternative risk offerings, cyber, transportation, life-sciences, public entities and municipalities, sports and entertainment venues, high net worth property, and New York construction and habitational spaces.
We have identified the following markets as near-term potential growth opportunities: alternative risk offerings, employee benefits, nursing homes and other long-term care facilities, transportation, life-sciences, public entities and municipalities, sports and entertainment venues, high net worth property, and New York construction and habitational spaces.
In order to foster our culture of innovation, we focus on recruiting, retaining, and developing the best-in-class wholesale professionals in the industry. 6 Deep connectivity with retail brokerage firms: While we empower our Producers to develop strong relationships with individual retail insurance brokers, we also engage with retail brokerage firms holistically.
In order to foster our culture of innovation, we focus on recruiting, retaining, and developing the best-in-class wholesale professionals in the industry. Deep connectivity with retail brokerage firms: While we empower our Producers to develop strong relationships with individual retail insurance brokers, we also engage with retail brokerage firms holistically.
Copies of our reports on Forms 10-K, 10-Q, 8-K and all amendments to those reports filed with the SEC, and any reports of beneficial ownership of our Common Stock filed by executive officers, directors and beneficial owners of more than 10% of our outstanding common stock are posted on, and may be obtained through, our investor relations website, ir.ryanspecialty.com, or may be requested in print, at no cost, by email at ir@ryanspecialty.com or by mail at Ryan Specialty Holdings, Inc., 155 North Wacker Drive, Suite 4000, Chicago, Illinois 60606, Attention: Investor Relations. 16
Copies of our reports on Forms 10-K, 10-Q, 8-K and all amendments to those reports filed with the SEC, and any reports of beneficial ownership of our Common Stock filed by executive officers, directors and beneficial owners of more than 10% of our outstanding common stock are posted on, and may be obtained through, our investor relations website, ir.ryanspecialty.com, or may be requested in print, at no cost, by email at ir@ryanspecialty.com or by mail at Ryan Specialty Holdings, Inc., 155 North Wacker Drive, Suite 4000, Chicago, Illinois 60606, Attention: Investor Relations. 16 Table of Contents
Our largest distribution channels include (among others): • Property coverages: Real Estate (Condos, Vacant Property), Catastrophic Exposures (Coastal Wind, Flood, Earthquake, Terrorism), Specialized Coverage (Deductible Buy-Backs, Large Deductible Placements), Builder’s Risk, Distribution / Warehousing, Group Programs, Healthcare Risks. • Casualty coverages: Construction (Project Specific, Residential and Commercial Contractor), Real Estate (Habitational / OL&T / Lessors Risk), Life Sciences, Healthcare, Environmental, Primary and Excess Auto, Political Risks, Liquor Liability. • Professional & Executive Liability coverages: Private Company Management Liability, Public Company Directors and Officers Liability, Financial Institutions Management Liability, Not-For-Profit Organization Management Liability, Crime / Kidnap / Ransom, Privacy Liability and Network Security, Errors and Omissions Liability, Medical Professional Liability. • Transportation coverages: Local and Long Haul Trucking, Haz-Mat Haulers, Contractors Fleets, Home Delivery, Non-Emergency Medical Transport, Waste Haulers, Auto Haulers. • Personal Lines coverages: Homeowners (Condo Unit Owner, Contents In-Storage, High Value Homeowners, Home-Based Business Product, Manufactured Homes), Farm & Ranch, Flood, Recreational (Collector Vehicle, All Terrain, Snowmobile, Watercraft).
Our largest distribution channels include (among others): • Property coverages: Real Estate (Condos, Vacant Property), Catastrophic Exposures (Coastal Wind, Flood, Wildfire, Earthquake, Terrorism), Specialized Coverage (Deductible Buy-Backs, Large Deductible Placements), Builder’s Risk, Distribution / Warehousing, Group Programs, Healthcare Risks. • Casualty coverages: Construction (Project Specific, Residential and Commercial Contractor), Real Estate (Habitational / OL&T / Lessors Risk), Life Sciences, Healthcare, Environmental, Primary and Excess Auto, Political Risks, Product Liability/Manufacturing Risks, Hospitality/Liquor Liability, Public Entities . • Professional & Executive Liability coverages: Private Company Management Liability, Public Company Directors and Officers Liability, Financial Institutions Management Liability, Not-For-Profit Organization Management Liability, Crime / Kidnap / Ransom, Privacy Liability and Network Security, Errors and Omissions Liability, Medical Professional Liability. • Transportation coverages: Local and Long-Haul Trucking, Haz-Mat Haulers, Contractors Fleets, Home Delivery, Non-Emergency Medical Transport, Waste Haulers, Auto Haulers. • Personal Lines coverages: Homeowners (Condo Unit Owner, Contents In-Storage, High Value Homeowners, Home-Based Business Product, Manufactured Homes), Farm & Ranch, Flood, Recreational (Collector Vehicle, All Terrain, Snowmobile, Watercraft).
E&S insurance carriers rely on wholesale insurance distributors for product expertise and distribution capabilities. By leveraging Ryan Specialty as a wholesale distributor, E&S insurance carriers are able to access a national network that includes over 20,000 retail insurance brokerage firms in a highly efficient manner, while simultaneously enhancing the quality of policy submissions by using a knowledgeable counterparty.
E&S insurance carriers rely on wholesale insurance distributors for product expertise and distribution capabilities. By leveraging Ryan Specialty as a wholesale distributor, E&S insurance carriers are able to access a national network that includes over 30,000 retail insurance brokerage firms in a highly efficient manner, while simultaneously enhancing the quality of policy submissions by using a knowledgeable counterparty.
We take a consistent and disciplined 3 approach to deal structuring and integration in order to best ensure that our partners are positioned to succeed after the acquisition.
We take a consistent and disciplined approach to deal structuring and integration in order to best ensure that our partners are positioned to succeed after the acquisition.
Excess and Surplus Compliance The E&S market generally provides insurance for businesses that are unable to obtain coverage from Admitted insurance carriers because of their high or complex risk profile or the unique nature or size of the risk. The surplus lines transaction is facilitated through a licensed and regulated surplus lines broker.
E&S market generally provides insurance for businesses that are unable to obtain coverage from Admitted insurance carriers because of their high or complex risk profile or the unique nature or size of the risk. The surplus lines transaction is facilitated through a licensed and regulated surplus lines broker.
When we acquire Wholesale Brokerage businesses, they gain access to over 20,000 retail insurance brokerage firms, including preferred relationships with substantially all of the top 100 retail insurance brokers and exclusive product capabilities. When we acquire Underwriting Managers, they gain access to our wholesale Producers, deep carrier relationships, and visionary leadership.
When we acquire Wholesale Brokerage businesses, they gain access to over 30,000 retail insurance brokerage firms, including preferred relationships with substantially all of the top 100 retail insurance brokers and exclusive product capabilities. When we acquire Underwriting Managers, they gain access to our wholesale Producers, deep carrier relationships, and visionary leadership.
We are compensated for providing services primarily by commissions and fees. Our business was founded to address the growing need for specialists in the increasingly important E&S market. For the year ended December 31, 2023, 78% of the total premiums we placed were in the E&S market.
We are compensated for providing services primarily by commissions and fees. Our business was founded to address the growing need for specialists in the increasingly important E&S market. For the year ended December 31, 2024, 78 % of the total premiums we placed were in the E&S market.
We have access to over 20,000 retail insurance brokerage firms, including preferred relationships with substantially all of the top 100 retail insurance brokers. We have been highly successful in our recruiting and retention efforts and are a destination of choice for top-tier talent.
We have access to over 30,000 retail insurance brokerage firms, including preferred relationships with substantially all of the top 100 retail insurance brokers. We have been highly successful in our recruiting and retention efforts and are a destination of choice for top-tier talent.
Our comprehensive suite of products and services and our broad geographic footprint allow us to place coverage for nearly any risk brought to us by the over 20,000 retail insurance brokerage firms with which we do business.
Our comprehensive suite of products and services and our broad geographic footprint allow us to place coverage for nearly any risk brought to us by the over 30,000 retail insurance brokerage firms with which we do business.
The Tax Receivable Agreement provides that if (i) certain mergers, asset sales, other forms of business combination or other changes of control were to occur or (ii) we breach any of our material obligations under the Tax Receivable Agreement, then the Tax Receivable Agreement will terminate and our obligations, or our successor’s obligations, to make payments under the Tax Receivable Agreement would accelerate and become immediately due and payable.
The Tax Receivable Agreement provides 13 Table of Contents that if (i) certain mergers, asset sales, other forms of business combination or other changes of control were to occur or (ii) we breach any of our material obligations under the Tax Receivable Agreement, then the Tax Receivable Agreement will terminate and our obligations, or our successor’s obligations, to make payments under the Tax Receivable Agreement would accelerate and become immediately due and payable.
These risks include more severe hurricanes that occur with greater frequency, more devastating wildfires, more frequent flooding and convective storms, escalating jury verdicts and 1 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.
These risks include more severe hurricanes that occur with greater frequency, more devastating wildfires, more 2 Table of Contents frequent flooding and convective storms, 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 are highly selective in our M&A strategy and focus on partners that share our long-term approach, inclusive culture and commitment to integrity and client centricity. We primarily source our acquisitions through proprietary dialogue with potential partners and selectively take part in auction processes in which we believe we have a differentiated approach or value proposition.
We are highly selective in our M&A strategy and focus on partners that share our long-term approach, inclusive 4 Table of Contents culture and commitment to integrity and client centricity. We primarily source our acquisitions through proprietary dialogue with potential partners and selectively take part in auction processes in which we believe we have a differentiated approach or value proposition.
Our Wholesale Brokerage Producers are highly regarded for their ability to procure coverage for the largest, most complex, and high-hazard risks. Our Wholesale Brokers are able to place policies for challenging risks such as coastal properties, power generators, kidnap and ransom exposures, hospitals, trucking fleets and commercial transportation liability, large construction projects, and waste haulers.
Our Wholesale Brokerage Producers are highly regarded for their ability to procure coverage for the largest, most complex, and high-hazard risks. Our Wholesale Brokers are able to place policies for challenging risks such as coastal properties, kidnap and ransom exposures, hospitals, trucking fleets and commercial transportation liability, large construction projects, large apartment schedules, and waste haulers.
The growing relevance of the E&S market has been driven by the continued emergence of large, complex and high-hazard risks across many lines of insurance.
The E&S market has been driven by the continued emergence of large, complex and high-hazard risks across many lines of insurance.
Regulatory authorities in the states or countries in which our operating subsidiaries conduct business may require individual or company licensing to act as producers, brokers, agents, third-party administrators, managing general agents, reinsurance intermediaries, or adjusters.
Regulatory authorities in the jurisdictions in which our operating subsidiaries conduct business may require individual or company licensing to act as producers, brokers, agents, third-party administrators, managing general agents, reinsurance intermediaries, or adjusters.
With a nationally scaled binding authority operation, as well as the capabilities existing within our Underwriting Management Specialty, we expect to be able to comprehensively address the opportunities in the delegated authority market, which represented 32% of E&S premiums in 2022 according to AM Best.
With a nationally scaled binding authority operation, as well as the capabilities existing within our Underwriting Management Specialty, we expect to be able to comprehensively address the opportunities in the delegated authority market, which represented 29% of E&S premiums in 2023 according to AM Best.
This method, also referred to as “open brokerage,” is most similar to our Wholesale Brokerage Specialty and includes a wide range and diversified mix of products. 2. Program manager, MGA/MGU: 18% of 2022 E&S premiums were placed by program managers, including MGUs and MGAs, according to AM Best.
This method, also referred to as “open brokerage,” is most similar to our Wholesale Brokerage Specialty and includes a wide range and diversified mix of products. • Program manager, MGA/MGU : 21% of 2023 E&S premiums were placed by program managers, including MGUs and MGAs, according to AM Best.
Wholesale distributors can also receive fees in addition to commissions for placing certain insurance policies. Wholesale distributors generally utilize one of three methods to place insurance risks into the E&S market: 1. Wholesale brokerage: 42% of 2022 E&S premiums were placed by wholesale insurance brokers without binding authority, according to AM Best.
Wholesale distributors can also receive fees in addition to commissions for placing certain insurance policies. Wholesale distributors generally utilize one of three methods to place insurance risks into the E&S market: • Wholesale brokerage : 49% of 2023 E&S premiums were placed by wholesale insurance brokers without binding authority, according to AM Best.
These concentration statistics reflect both Wholesale Brokerage and Binding Authority Specialties, as many producers utilize both placement strategies. During 2023, we conducted business with thousands of retail brokerage firms, including substantially all of the 100 largest United States retail brokers as identified by Business Insurance in 2022.
These 10 Table of Contents concentration statistics reflect both Wholesale Brokerage and Binding Authority Specialties, as many producers utilize both placement strategies. During 2024, we conducted business with thousands of retail brokerage firms, including substantially all of the 100 largest United States retail brokers as identified by Business Insurance in 2023.
For the years ended December 31, 2023 and 2022, our Binding Authority Specialty generated $276.0 million in net commission and fees, representing 13.6% of our net commission and fees and $231.0 million in revenue, representing 13.5% of our net commission and fees, respectively. • Underwriting Management : Our Underwriting Management Specialty operates under multiple brands, which are collectively referred to as “Ryan Specialty Underwriting Managers.” Our Underwriting Management Specialty offers insurance carriers cost-effective specialty market expertise in distinct and complex market niches underserved in today’s marketplace through 21 MGAs and MGUs, which act on behalf of insurance carriers.
For the years ended December 31, 2024 and 2023 , our Binding Authority Specialty generated $320.4 million in net commission and fees, representing 13.0% of our net commission and fees and $276.0 million in revenue, representing 13.6% of our net commission and fees, respectively. • Underwriting Management : Our Underwriting Management Specialty operates under multiple brands, which are collectively referred to as “Ryan Specialty Underwriting Managers.” Our Underwriting Management Specialty offers insurance carriers cost-effective specialty market expertise in distinct and complex market niches underserved in today’s marketplace through 39 MGAs and MGUs, which act on behalf of insurance carriers.
Insurance carriers also leverage our comprehensive distribution network and deep knowledge to gain timely and cost-efficient access to new risk classes and industries. Wholesale distributors, who are typically compensated through commissions paid by the insurance carrier, share a portion of these commissions with the retail insurance broker and recognize revenue on a net basis.
Insurance carriers also leverage our comprehensive distribution network and deep knowledge to gain timely and cost-efficient access to new risk classes and industries. Wholesale distributors, who are typically compensated through commissions paid on insurance policies placed on behalf of retail insurance brokers, share a portion of these commissions with the retail insurance broker and recognize revenue on a net basis.
We provide our employees with trusted retail broker and insurance carrier relationships, proprietary products and innovative solutions, which enable exceptional career advancement opportunities. We believe our reputation for helping our employees advance their careers has made us a destination of choice for many of the most talented insurance professionals in the industry. Who We Are We are the second-largest U.S.
We provide our employees with trusted retail broker and insurance carrier relationships, proprietary products and innovative solutions, which enable exceptional career advancement opportunities. We believe our reputation for helping our employees advance their careers has made us a destination of choice for many of the most talented insurance professionals in the industry.
Since inception, we have partnered with over 50 firms through acquisition. These firms represent a diverse mix of specialties and geographies, allowing us to better service both existing and prospective trading partners. The targets that we acquired in 2023 had revenues for the unaudited twelve-month period prior to acquisition of over $95 million.
Since inception, we have partnered with over 55 firms through acquisition. These firms represent a diverse mix of specialties and geographies, allowing us to better service both existing and prospective trading partners. The targets that we acquired in 2024 had revenues for the unaudited twelve-month period prior to acquisition of over $268 million.
Importantly, unlike some of our competitors, we have no retail operations, freeing us from potential channel conflicts with our retail brokerage trading partners. • Carriers : Insurance carriers, ranging from Lloyd’s syndicates to multi-line underwriters and E&S specialists, rely on us to provide them with highly efficient, scaled distribution, specialty brokering and underwriting management expertise, and high-quality insurance products.
Importantly, unlike some of our competitors, we have no retail operations, freeing us from potential channel conflicts with our retail brokerage trading partners, which has been a cornerstone of our strategy since our founding. • Carriers : Insurance carriers, ranging from Lloyd’s syndicates to multi-line underwriters and E&S specialists, rely on us to provide them with highly efficient, scaled distribution, specialty brokering and underwriting management expertise, and high-quality insurance products.
Our Binding Authority Producers are renowned for their ability to quickly bind smaller accounts with unique attributes. Our Underwriting Management Specialty offers retail and wholesale brokers a wide assortment of risk solutions for highly specialized needs, such as: renewable energy, construction, cyber, transportation, transactional liability, long-term care facilities, M&A representations and warranties, complex facilities, and catastrophe-exposed properties.
Our Binding Authority Producers are renowned for their ability to quickly bind smaller accounts with unique attributes. Our Underwriting Management Specialty offers retail and wholesale brokers a wide assortment of risk solutions for highly specialized insurance coverage needs, such as: renewable energy, construction, cyber, builder’s risk, transportation, transactional risk, long-term care facilities, complex manufacturing facilities, and catastrophe-exposed properties.
We are able to retain new and tenured employees alike by offering unprecedented market access, supporting Producers in growing their books and providing broad opportunities for rapid career advancement within our organization. For example, in 2023 and 2022, 81% and 83%, respectively, of our Producers grew their book of business.
We are able to retain new and tenured employees alike by offering unprecedented market access, supporting Producers in growing their books and providing broad opportunities for rapid career advancement within our organization. 8 Table of Contents For example, in 2024 and 2023, 78 % and 81%, respectively, of our Producers grew their book of business.
Our Organizational Structure The Company is the sole managing member of New LLC. New LLC was formed as a Delaware limited liability company on April 20, 2021, for the purpose of becoming, subsequent to our IPO, an intermediate holding company between Ryan Specialty Holdings, Inc., and Ryan Specialty, LLC.
New LLC was formed as a Delaware limited liability company on April 20, 2021, for the purpose of becoming, subsequent to our IPO, an intermediate holding company between Ryan Specialty Holdings, Inc., and Ryan Specialty, LLC.
For the year ended December 31, 2023, our Wholesale Brokerage Specialty generated $1,319.1 million in net commission and fees, representing 65.1% of our total net commission and fees. Wholesale Brokerage operates predominantly under the brand “RT Specialty.” 9 Our Wholesale Brokers distribute a wide range and diversified mix of specialty insurance products from insurance carriers to retail insurance brokerage firms.
For the year ended December 31, 2024 , our Wholesale Brokerage Specialty generated $1,489.1 million in net commission and fees, representing 60.6% of our total net commission and fees. Wholesale Brokerage operates predominantly under the brand “RT Specialty.” Our Wholesale Brokers distribute a wide range and diversified mix of specialty insurance products from insurance carriers to retail insurance brokerage firms.
Binding Authority We believe our Binding Authority Specialty to be among the largest binding authority platforms in the nation. For the year ended December 31, 2023, our Binding Authority Specialty generated $276.0 million in net commission and fees, representing 13.6% of our total net commission and fees.
Binding Authority We believe our Binding Authority Specialty to be among the largest binding authority platforms in the nation. For the year ended December 31, 2024 , our Binding Authority Specialty generated $320.4 million in net commission and fees, representing 13.0% of our total net commission and fees.
For the years ended December 31, 2023 and 2022, our Underwriting Management Specialty generated $431.6 million in net commission and fees, representing 21.3% of our net commission and fees and $351.6 million in revenue, representing 20.5% of our net commission and fees, respectively. We have significantly enhanced our human capital, product capabilities and geographic footprint through strategic acquisitions.
For the years ended December 31, 2024 and 2023 , our Underwriting Management Specialty generated $646.2 million in net commission and fees, representing 26.3% of our net commission and fees and $431.6 million in revenue, representing 21.3% of our net commission and fees, respectively. We have significantly enhanced our human capital, product capabilities and geographic footprint through strategic acquisitions.
The primary market for these insurance placements is the E&S market, where retail insurance brokers often must utilize wholesaler distributors who have distinct expertise and execution capabilities with specialized carriers. According to AM Best, over the past five years wholesalers were involved in placing on average 85% of annual E&S premiums.
The primary market for these insurance placements is the E&S market, where retail insurance brokers often must utilize wholesaler distributors who have distinct expertise and execution capabilities with specialized carriers. According to AM Best, from 2019 to 2023 , wholesalers were involved in placing on average 84% of annual E&S premiums.
Item 1. B usiness Overview Founded by Patrick G. Ryan in 2010, Ryan Specialty is 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 as a wholesale broker and a managing underwriter with delegated authority from insurance carriers.
ITEM 1. BUSINESS Overview Founded by Patrick G. Ryan in 2010, Ryan Specialty is an international specialty insurance service firm that provides specialty products and solutions for insurance brokers, agents, and carriers. We provide distribution, underwriting, product development, administration, and risk management services by acting as a wholesale broker and a managing underwriter with delegated authority from insurance carriers.
As of December 31, 2023, we had over 600 employee stockholders, including all of our top 50 Producers. Our management team and employees remain committed to our vision of market leadership by providing differentiated intellectual capital, building trusted relationships and pioneering risk solutions.
Our management team and employees also have significant alignment with stockholders. As of December 31, 2024, we had over 700 employee stockholders, including all of our top 50 Producers. Our management team and employees remain committed to our vision of market leadership by providing differentiated intellectual capital, building trusted relationships, and pioneering risk solutions.
For the years ended December 31, 2023 and 2022, our Wholesale Brokerage Specialty generated $1,319.1 million in net commission and fees, representing 65.1% of our net commission and fees and $1,129.2 million in net commission and fees, representing 66.0% of our net commission and fees, respectively. • Binding Authority: Our Binding Authority Specialty operates under the “RT Specialty” and “RT Binding Authority” brands.
For the years ended December 31, 2024 and 2023 , our Wholesale Brokerage Specialty generated $1,489.1 million in net commission and fees, representing 60.6% of our net commission and fees and $1,319.1 million in net commission and fees, representing 65.1% of our net commission and fees, respectively. • Binding Authority: Our Binding Authority Specialty operates under the “RT Specialty” and “RT Binding Authority” brands.
Each of the cohorts of Producers hired since 2016 generated revenue which exceeded compensation costs by the end their second full year. Ensuring individual Producer book of business growth is critical for our business as it supports our organic growth, motivates our Producers, and fosters retention. In 2023, our Producer retention rate was 97%.
Typically, each cohort of Producers hired since 2016 has generated revenue which exceeded compensation costs by the end of such cohort’s second full year. Ensuring individual Producer book of business growth is critical for our business as it supports our organic growth, motivates our Producers, and fosters retention. In 2024, our Producer retention rate was 98%.
We alleviate our more than 250 carrier trading partners of administrative burdens by offering 21 MGAs/MGUs and our National Programs Platform which together offer commercial insurance for specific product lines or industry classes. The diversity of our offerings enables our carrier trading partners to cost-efficiently access new risk classes in a timely manner, including on a delegated authority basis.
We offer 39 MGAs/MGUs and our National Programs Platform which together offer commercial insurance for specific product lines or industry classes. The diversity 7 Table of Contents of our offerings enables our carrier trading partners to cost-efficiently access new risk classes in a timely manner, including on a delegated authority basis.
E&S market (which comprised $98 billion of direct written premium in 2022) has grown at a CAGR of 9.9%, compared to 4.7% for the U.S. Admitted market, between 2010 and 2022. E&S market share as a percentage of total U.S. commercial insurance premium increased from 13.5% in 2010 to 21.9% in 2022.
E&S market (which comprised $116 billion of direct written premium in 2023) has grown at a CAGR of 10.5%, compared to 4.6 % for the U.S. Admitted market, between 2010 and 2023. E&S market share as a percentage of total U.S. commercial insurance premium increased from 13.5% in 2010 to 24.2% in 2023.
We believe that as risks become more complex, the E&S market will continue to increase, wholesale brokers 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 dynamic will continue the trend of market share consolidation among the wholesale insurance brokers that have these capabilities.
We believe that as risks become more complex, the E&S market will continue to become more material, wholesale brokers that do not have sufficient scale or the financial and intellectual capital to invest in the required specialty capabilities will struggle to compete effectively.
Our Adjusted diluted earnings per share increased from $1.15 in 2022 to $1.38 in 2023. Please see “ Note 12, Earnings (Loss) Per Share ” in the footnotes to the Consolidated Financial Statements in this Annual Report for additional information. Adjusted diluted earnings per share is a non-GAAP metric.
Please see “ Note 12 , Earnings Per Share ” in the footnotes to the Consolidated Financial Statements in this Annual Report for additional information. Adjusted diluted earnings per share is a non-GAAP metric.
For example, many of our 11 de novo MGUs were formed to respond to emerging risks such as life sciences (LifeScienceRisk®), renewable energy (PERse®), excess commercial general liability (Emerald Underwriting Managers), cyber (EmergIn Risk), and professional liability (CorRisk).
For example, many of our 12 de novo MGUs were formed to respond to emerging risks such as life sciences (LifeScienceRisk), renewable energy (PERse®), excess commercial general liability (Emerald Underwriting Managers), builder’s risk (TRU), and personal lines (Verdant).
In addition, the legal standards relating to the validity, enforceability, and scope of protection of intellectual property and proprietary rights are uncertain and still evolving. 13 Companies in the insurance industry may own large numbers of copyrights, trademarks, and other intellectual property and proprietary rights, and these companies and entities have and may in the future request license agreements, threaten litigation or file suit against us based on allegations of infringement, misappropriation or other violations of their intellectual property and proprietary rights.
Companies in the insurance industry may own large numbers of copyrights, trademarks, and other intellectual property and proprietary rights, and these companies and entities have and may in the future request license agreements, threaten litigation or file suit against us based on allegations of infringement, misappropriation or other violations of their intellectual property and proprietary rights.
The operating terms may vary according to the licensing requirements of the particular state or country, which may require that a firm operate in the state or country through a local corporation. Our subsidiaries must comply with laws and regulations of the jurisdictions in which they do business.
The operating terms may vary according to the licensing requirements, which may require that a firm operate in the jurisdiction through a local corporation. Our subsidiaries must comply with laws and regulations of the jurisdictions in which they do business. These laws and regulations are enforced by federal and state agencies in the United States.
These laws and regulations generally require the segregation of these fiduciary funds and limit the types of investments that may be made with them. Broker Compensation Some states permit insurance agents to charge policy fees, while other states limit or prohibit this practice. Many states regulate to some degree the fees that may be charged by brokers.
These laws and regulations , as well as certain contractual arrangements with some of our carrier trading partners, generally require the segregation of these fiduciary funds and limit the types of investments that may be made with them. Broker Compensation Some states permit insurance agents and brokers to charge policy fees, while other states limit or prohibit this practice.
Keystone advances our mission, allowing us to better serve our retail brokers to find innovative solutions for their clients. It also represents a niche growth opportunity in E&S to build and design coverage structures for some of the most complex risks, while allowing insureds greater control over their long-term insurance costs.
It also represents a niche growth opportunity in E&S to build and design coverage structures for some of the most complex risks, while allowing insureds greater control over their long-term insurance costs.
Collaborative relationships with insurance carriers: We align with our carrier trading partners, providing them with access to specialized and often proprietary binding authority and underwriting management capabilities, broad distribution and deep industry expertise.
Collaborative relationships with insurance carriers: We align with our carrier trading partners, providing them with access to specialized and often proprietary binding authority and underwriting management capabilities, broad distribution and deep industry expertise. We provide our carrier trading partners with a durable value proposition with a commitment and ongoing investment in talent, technology, and governance.
This method is most similar to our Underwriting Management Specialty and allows wholesale distributors to underwrite coverage on behalf of an insurance carrier for a 5 specific type of risk, with relatively expansive delegated authority subject to agreed-upon guidelines and limits. 3.
This method is most similar to our Underwriting Management Specialty and allows wholesale distributors to underwrite coverage on behalf of an insurance carrier for a specific type of risk, with relatively expansive delegated authority subject to agreed-upon guidelines and limits. • Wholesale brokerage with binding authority : 9% of 2023 E&S premiums were placed by wholesale insurance brokers with binding authority, according to AM Best.
Under the laws of most states in the United States and most foreign countries, regulatory authorities have relatively broad discretion with respect to granting, renewing, and revoking producers’, brokers’, and agents’ licenses to transact business in such state or country.
Under the laws of most states in the United States, Canadian Provinces, and most foreign countries, regulatory authorities have relatively broad discretion with respect to granting, renewing, and revoking the licenses of producers, brokers, and agents to transact business in such jurisdiction.
The attraction, development, and retention of employees is a critical factor in our success. As a result, we provide training and development programs for our newest teammates, that embed teaching of our core values, along with those essential critical elements of building an inclusive environment.
As a result, we provide training and development programs for our newest teammates, that embed teaching of our core values, along with those essential critical elements of building an inclusive environment. Our training approach is critical for our future growth and ability to recruit and develop the best of the best.
We have previously made, and intend to continue to pursue, acquisitions with the objective of enhancing our human capital, product capabilities, natural adjacencies, and geographic footprint. Our largest acquisition to date is All Risks, which closed in September 2020.
We have previously made, and intend to continue to pursue, acquisitions with the objective of enhancing our human capital, product capabilities, natural adjacencies, and geographic footprint.
The following summarizes the U.S. insurance distribution value chain: How We Win We believe our success is attributable to providing best-in-class intellectual capital, leveraging our trusted and long-standing relationships, and developing differentiated solutions at a scale and level of quality unmatched by most of our competitors.
This method is most similar to our Binding Authority Specialty and utilizes in-house binding agreements, with a relatively limited scope of delegated authority, to facilitate rapid execution. 6 Table of Contents The following summarizes the U.S. insurance distribution value chain: How We Win We believe our success is attributable to providing best-in-class intellectual capital, leveraging our trusted and long-standing relationships, and developing differentiated solutions at a scale and level of quality unmatched by most of our competitors.
Lloyd’s, which represents a market of 87 syndicates, is also a prominent player in the E&S space and approximately 16% of 2022 E&S premiums in the United States was for insurance coverage placed in the Lloyd’s market according to AM Best.
Berkley Corporation, with whom we maintain meaningful relationships. Lloyd’s, which represents a market of 86 syndicates, is also a prominent player in the E&S space and approximately 17% of 2023 E&S premiums in the United States was for insurance coverage placed in the Lloyd’s market according to AM Best.
Even while deliberately making these investments, we have been able to generate substantial cash flow and drive operating leverage. We have historically used our cash flow to invest in the business and fund acquisitions. We expect to continue fortifying our platform to support future expansion and sustain significant organic growth.
We have historically used our cash flow to invest in the business and fund acquisitions. We expect to continue fortifying our platform to support future expansion and sustain significant organic growth.
For a reconciliation of Adjusted diluted earnings per share to its most directly comparable GAAP metric, Diluted earnings (loss) per share, please see “ Management’s Discussion and Analysis of Financial Condition and Results of Operation – Non-GAAP Financial Measures and Key Performance Indicators ” included elsewhere in this Annual Report. 4 Industry Overview As a wholesale distributor, we operate within the broader P&C insurance distribution market, which comprises both wholesale insurance brokers and retail insurance brokers.
For a reconciliation of Adjusted diluted earnings per share to its most directly comparable GAAP metric, Diluted earnings (loss) per share, please see “ Management’s Discussion and Analysis of Financial Condition and Results of Operation – Non-GAAP Financial Measures and Key Performance Indicators ” included elsewhere in this Annual Report.
It can produce multiple bindable quotes sourced from high-quality E&S carriers across several risk classes in minutes. In cases when certain risks do not fit into RT Connector’s highly automated underwriting criteria, the retail insurance broker is automatically directed to our Producers and underwriters for more traditional placement methods.
In cases when certain risks do not fit into RT Connector’s highly automated underwriting criteria, the retail insurance broker is automatically directed to our Producers and underwriters for more traditional placement methods.
We believe in the relentless pursuit of innovation in order to respond to evolving market conditions and to reach underserved specialty markets. Further to this effort, we acquired Keystone Risk Partners at the end of 2022, representing our entrance into the alternative capital market and captive management business.
We believe in the relentless pursuit of innovation in order to respond to evolving market conditions and to reach underserved specialty markets. In 2022, we acquired Keystone Risk Partners, representing our entrance into the alternative capital market and captive management business. Keystone advances our mission, allowing us to better serve our retail brokers to find innovative solutions for their clients.
As retail insurance brokers continue to grow and consolidate their wholesale panels, we expect that the amount of premiums we place from these existing retail broker relationships will grow. Similarly, there has been meaningful consolidation among P&C insurance carriers over the past decade.
As retail insurance brokers continue to grow and consolidate their wholesale panels, we expect that the amount of premiums we place from these existing retail broker relationships will grow. 3 Table of Contents Similarly, there has been meaningful consolidation among P&C insurance carriers over the past two decades, including significant commitment to the E&S market by predominantly admitted carriers, along with new entrants focused on the specialty and E&S markets.
Our Binding Authority Producers distribute a curated collection of products to our retail insurance broker trading partners.
Our Binding Authority Producers distribute a broad scope of insurance solutions to our retail agent and broker trading partners.
Castel is headquartered in London, England with additional offices in the Netherlands and Belgium and operations in Singapore. Seasonality Our Wholesale Brokerage and Binding Authority Specialties typically experience higher revenues in the second and fourth calendar quarters of each year, primarily due to the timing of policy renewals.
Seasonality Our Wholesale Brokerage and Binding Authority Specialties typically experience higher revenues in the second and fourth calendar quarters of each year, primarily due to the timing of policy renewals. Our Underwriting Management Specialty typically experiences higher revenues in the fourth quarter, primarily due to the timing of policy renewals.
See “ Risk Factors — Risks Related to Legal, Regulatory and Intellectual Property Issues ” included elsewhere in this annual report for a more comprehensive description of risks related to our intellectual property.
See “ Risk Factors — Risks Related to Legal, Regulatory and Intellectual Property Issues ” included elsewhere in this annual report for a more comprehensive description of risks related to our intellectual property. Regulation Licensing Our business activities are subject to licensing requirements and extensive regulation under the laws of the countries, provinces, and states in which we operate.
E&S insurance carriers as ranked by AM Best, numerous Lloyd’s syndicates, U.K. and other international insurance companies. As a reflection of the strength of these relationships, our carrier trading partners will refer acquisition candidates to us, or proactively engage with us to develop new programs.
As a reflection of the strength of these relationships, our carrier trading partners will refer acquisition candidates to us, or proactively engage with us to develop new programs.
All Risks possessed some key attributes we seek in our acquisition partners: a strong track record of organic revenue growth, enhancing our market presence, accretive to our talent base, complementary in products and geography, and possessing a high-quality management team that is aligned with our culture.
The key attributes we seek in our acquisition partners are that they have a strong track record of organic revenue growth, have the ability to enhance our market presence, can be accretive to our business, can enhance our talent base, are geographically diverse, provide complementary product lines, and possess a high-quality management team that is aligned with our culture.
Our Wholesale Brokerage Specialty has extensive relationships with blue-chip insurance carriers and retail insurance brokers. With regard to entities that our Wholesale Brokerage Specialty has a relationship with, there are no material concentrations in retail insurance brokers (top five: 27.6% of 2023 revenue), insurance carriers (top five: 21.9% of 2023 revenue), or internal Producers (top five: 16.1% of 2023 revenue).
With regard to entities that our Wholesale Brokerage Specialty has a relationship with, there are no material concentrations in retail insurance brokers (top five: 26.9 % of 2024 revenue), insurance carriers (top five: 20.9% of 2024 revenue - excluding all Lloyd’s syndicates combined), or internal Producers (top five: 14.8% of 2024 revenue).
In addition, we have amassed a large underlying data set based on the over 2.5 million total policy submissions we receive annually. We expect to leverage this data set to further refine our pricing models, enhance our placement advice, and increase our efficiency.
In addition, we have amassed a large underlying data set based on the over 1.0 million total policies bound annually. We expect to leverage this data set to further refine our pricing models, enhance our placement advice, and increase our efficiency. Even while deliberately making these investments, we have been able to generate substantial cash flow and drive operating leverage.
Professionals in the Underwriting Management Specialty often have a meaningful percentage of their compensation tied to underwriting performance to align interests with those of our carrier trading partners. For the year ended December 31, 2023, our Underwriting Management Specialty generated $431.6 million in net commission and fees, representing 21.3% of our total net commission and fees.
Professionals in the Underwriting Management Specialty often have a meaningful percentage of their compensation tied to underwriting performance to align interests with those of our carrier trading partners.
In addition, we are also subject to laws granting individuals the right to access, amend, or delete their personal data. In the coming year, regulators are expected to take additional action to regulate artificial intelligence and automated decision-making that uses personal information and affects individuals. Regulators are also expected to step up enforcement of existing privacy law.
Regulators and legislators have taken additional action to regulate artificial intelligence and automated decision-making that uses personal information and affects individuals. Regulators are also expected to step up enforcement of existing privacy law.
Approximately 78% of U.S. premiums are generated through the Admitted market, which has highly regulated rates and policy forms. As a result, products in the Admitted market are relatively uniform in price and coverage. According to data from AM Best, the E&S market comprised $98 billion of direct written premium in 2022.
As a result, products in the Admitted market are relatively uniform in price and coverage. According to data from AM Best, the E&S market comprised $116 billion of direct written premium in 2023. In the E&S market, insurance carriers have more flexibility to customize rates and coverage.
For example, Timothy W. Turner began his career in the insurance industry in 1987. Prior to joining Ryan Specialty, he was with CRC Insurance Services, Inc. for 10 years and was its President at the time of his departure. Our management team and employees also have significant alignment with stockholders.
Turner began his career in the insurance industry in 1987 and, prior to joining Ryan Specialty, he was with CRC Insurance Services, Inc. for 10 years and was its President at the time of his departure. Messrs. Ryan and Turner are joined by an experienced leadership team, each member of which has significant experience in the wholesale distribution market.
P&C insurance Wholesale Broker, according to premium volume reported in the 2022 Business Insurance broker rankings Special Report. Our distribution network encompasses over 700 individuals directly responsible for revenue generation in either Wholesale Brokerage or Binding Authority (each, a “Producer” and together, the “Producers”) who provide us access to over 20,000 retail insurance brokerage firms and over 250 insurance carriers.
Our distribution network encompasses over 700 individuals directly responsible for revenue generation in either Wholesale Brokerage or Binding Authority (each, a “Producer” and together, the “Producers”) and Underwriting Managers underwrites over 300 individual products. Combined this provides us access to over 30,000 retail insurance brokerage firms and over 350 insurance carriers.
Lead with innovation in an ever-changing market: We believe that change is inevitable and necessary. Accordingly, our business is built to respond to rapidly shifting market conditions by constantly looking for ways to broaden and enhance our product offerings.
We further believe in the relentless pursuit of innovation in order to respond to evolving market conditions and to reach underserved specialty markets . Accordingly, our business is built to respond to rapidly shifting market conditions by constantly looking for ways to broaden and enhance our product offerings.
This approach, commonly known as “wholesale panel consolidation,” ensures that the retail brokers have quality, clarity, and consistency across their operations and insurance placement. The trend of wholesale panel consolidation started in 2011 among global retail insurance brokers and was subsequently replicated by middle-market retail brokers.
The trend of wholesale panel consolidation started in 2011 among global retail insurance brokers and was subsequently replicated by middle- market retail brokers.
Wholesale and retail insurance brokers facilitate the placement of P&C insurance products in both the E&S and Admitted markets. P&C Insurance Market Insurance carriers sell commercial P&C products in the United States through one of two markets: the Admitted or “standard” market and the E&S market.
P&C Insurance Market Insurance carriers sell commercial P&C products in the United States through one of two markets: the Admitted or “standard” market and the E&S market. Approximately 76% of U.S. premiums are generated through the Admitted market, which has highly regulated rates and policy forms.
Build the largest and most comprehensive national binding authority business: We believe that both M&A consolidation and panel consolidation are in nascent stages in the binding authority market, providing us with meaningful growth opportunities. National scale in E&S distribution, underwriting expertise, and broad access to carrier capacity are key to building a cohesive binding authority platform.
We believe that both M&A consolidation and the use and reliance on scaled delegated Underwriting Management will continue to grow . National scale in E&S distribution, underwriting expertise, and broad access to carrier capacity are key to building a cohesive binding authority platform.
Our employees are our greatest asset, and we strive to foster a productive and empowering work environment that embodies our core values: Integrity, Client Centricity, Teamwork, Inclusion, Empowerment, Innovation, and Courage. Our key differentiators are not only our talent and expertise but also the creativity and execution we deliver on behalf of our clients.
H uman Capital Management Our culture is the foundation of everything we do. Our employees are our greatest asset, and we strive to foster a productive and empowering work environment that embodies our core values: Integrity, Client Centricity, Teamwork, Meritocracy, Inclusion, Empowerment, Innovation, and Courage.
Our training approach is critical 15 for our future growth and ability to recruit and develop the best of the best. We also partner with a number of nonprofit, community, and industry organizations to attract, support, develop, and retain diverse talent. Availability of SEC Filings Our internet address is www.ryanspecialty.com .
We also partner with a number of nonprofit, community, and industry organizations to attract, support, develop, and retain diverse talent. Availability of SEC Filings Our internet address is www.ryanspecialty.com. We are subject to the informational requirements of the Exchange Act and, in accordance therewith, we file annual, quarterly and current reports and other information with the SEC.
Our values set the foundation for what our Company represents, and we are proud to have “Inclusion” as a core value as it creates a culture and environment where people can be their best self and do their best work; but more importantly, we harness our differences and commonalities to better serve our clients, trading partners, workforce, and communities.
Our values set the foundation for a workplace where people can be their best self and do their best work; but more importantly, we harness our differences and similarities to better serve our clients, trading partners, workforce, and communities. The attraction, development, and retention of employees is a critical factor in our success.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRyan or other members of our senior management team or to recruit and retain revenue producers; • the impact of breaches in security that cause significant system or network disruption or business interruption; • the impact of improper disclosure of confidential, personal or proprietary data, misuse of information by employees or counterparties or as a result of cyberattacks; • the potential loss of our relationships with insurance carriers or our clients, failure to maintain good relationships with insurance carriers or clients, becoming dependent upon a limited number of insurance carriers or clients or the failure to develop new insurance carrier and client relationships; • errors in, or ineffectiveness of, our underwriting models and the risks presented to our reputation and relationships with insurance carriers, retail brokers and agents; • failure to maintain, protect, and enhance our brand or prevent damage to our reputation; • unsatisfactory evaluation of potential acquisitions, integration of acquired businesses, and/or introduction of new products, lines of business, and markets; • our inability to successfully recover upon experiencing a disaster or other interruption in business continuity; • the impact of third parties that perform key functions of our business operations acting in ways that harm our business; • the cyclicality of, and the economic conditions in, the markets in which we operate and conditions that result in reduced insurer capacity or a migration of business away from the E&S market and into the Admitted market; • a reduction in insurer capacity to adequately and appropriately underwrite risk and provide coverage; • our international operations expose us to various international risks, including required compliance with legal and regulatory obligations, that are different, and at times more burdensome, than those set forth in the United States; • changes in interest rates and deterioration of credit quality could reduce the value of our cash balances or interest income; • failure to maintain the valuable aspects of our Company’s culture; • significant competitive pressures in each of our businesses; • decreases in premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions; 17 • decrease in the amount of supplemental or contingent commissions we receive; • our inability to collect our receivables; • disintermediation within the insurance industry and shifts away from traditional insurance markets; • changes in the mode of compensation in the insurance industry; • impairment of goodwill and intangibles; • the impact on our operations and financial condition from the effects of a pandemic or the outbreak of a contagious disease and resulting governmental and societal responses; • the inability to maintain rapid growth and generate sufficient revenue to maintain profitability; • the loss of clients or business as a result of consolidation within the retail insurance brokerage industry; • the impact if our MGA or MGU programs are terminated or changed; • the inability to achieve the intended results of our previously announced restructuring program; • significant investment in our growth strategy and whether expectation of internal efficiencies are realized; • our ability to gain internal efficiencies through the application of technology or effectively apply technology in driving value for our clients or the failure of technology and automated systems to function or perform as expected; • the unavailability or inaccuracy of our clients’ and third parties’ data for pricing and underwriting insurance policies; • the competitiveness and cyclicality of the reinsurance industry; • the occurrence of natural or man-made disasters; • the economic and political conditions of the countries and regions in which we operate; • the challenges with properly assessing and managing the adoption and use of artificial intelligence technologies; • the failure or take-over by the FDIC of one of the financial institutions that we use; • our inability to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices; • our international operations expose us to various international risks, including exchange rate fluctuations; Risks Related to Legal, Regulatory and Intellectual Property Issues • the impact of governmental regulations, legal proceedings and governmental inquiries related to our business; • being subject to E&O claims as well as other contingencies and legal proceedings; • our handling of client funds and surplus lines taxes that exposes us to complex fiduciary regulations; • the impact of infringement, misappropriation or dilution of our intellectual property; • the impact of the failure to protect our intellectual property rights, or allegations that we have infringed on the intellectual property rights of others; • changes in tax laws or regulations; • decreased commission revenues due to proposed tort reform legislation; • the impact of regulations affecting insurance carriers; Risks Related to Our Indebtedness 18 • our outstanding debt potentially adversely affecting our financial flexibility and subjecting us to restrictions and limitations that could significantly affect our ability to operate; • not being able to generate sufficient cash flow to service all of our indebtedness and being forced to take other actions to satisfy our obligations under such indebtedness; • being affected by further changes in the U.S. based credit markets; • changes in our credit ratings; Risks Related to Our Organizational Structure and our Class A Common Stock • risks related to the payments required by our Tax Receivable Agreement; and • risks relating to our organizational structure that could result in conflicts of interests between the LLC Unitholders, the Ryan Parties, and the holders of our Class A common stock; These and other risks are more fully described below.
Biggest changeSome of the principal risks related to our business include the following: Risks Related to Our Business and Industry • our failure to successfully recruit and retain our senior management team, revenue producers or other key employees and to successfully plan and prepare for the succession of our senior management team; • the potential loss of our relationships with insurance carriers or our clients, failure to maintain good relationships with insurance carriers or clients, becoming dependent upon a limited number of insurance carriers or clients or the failure to develop new insurance carrier and client relationships; • errors in, or ineffectiveness of, our underwriting models and the risks presented to our reputation and relationships with insurance carriers, retail brokers and agents; • failure to maintain, protect, and enhance our brand or prevent damage to our reputation; • the unsatisfactory evaluation of potential acquisitions or the failure to successfully integrate acquired businesses and/or introduce of new products, lines of business, and/or markets; • our inability to successfully recover upon experiencing a disaster or other interruption in business continuity; • the impact of third parties that perform key functions of our business operations acting in ways that harm our business; • the cyclicality of, and the economic conditions in, the markets in which we operate and conditions that result in reduced insurer capacity or a migration of business away from the E&S market and into the Admitted market; • a reduction in insurer capacity to adequately and appropriately underwrite risk and provide coverage; • our international operations expose us to various international risks, including required compliance with evolving legal and regulatory obligations, that are different, and at times more burdensome, than those set forth in the United States; • changes in interest rates and deterioration of credit quality could reduce the value of our cash balances or interest income; • failure to maintain the valuable aspects of our Company’s culture; • significant competitive pressures in each of our businesses; • decreases in premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions; • decrease in the amount of supplemental or contingent commissions we receive; • our inability to collect our receivables; 17 Table of Contents • disintermediation within the insurance industry and shifts away from traditional insurance markets; • changes in the mode of compensation in the insurance industry; • impairment of goodwill and intangibles; • the impact on our operations and financial condition from the effects of a pandemic or the outbreak of a contagious disease and resulting governmental and societal responses; • the inability to maintain strong growth and generate sufficient revenue to maintain profitability; • the loss of clients or business as a result of consolidation within the retail insurance brokerage industry; • the impact if our MGA or MGU programs are terminated or changed; • significant investment in our growth strategy and whether expectation of internal efficiencies are realized; • the unavailability or inaccuracy of our clients’ and third parties’ data for pricing and underwriting insurance policies; • the competitiveness and cyclicality of the reinsurance industry; • the occurrence of natural or man-made disasters; • the challenges with properly assessing, adapting to, and managing the adoption and use of artificial intelligence and other evolving technologies; • the economic and political conditions of the countries and regions in which we operate; • the failure, or take-over by the FDIC, of one of the financial institutions that we use; • our inability to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices; • our international operations expose us to various international risks, including exchange rate fluctuations; • changing expectations over corporate responsibility and stakeholder interests; Risks Related to Intellectual Property, Data Privacy and Cybersecurity • the impact of breaches in security that cause significant system or network disruption or business interruption; • the impact of improper disclosure of confidential, personal or proprietary data, misuse of information by employees or counterparties or as a result of cyber incidents and c yberattacks ; • our inability to gain internal efficiencies through the application of technology or effectively apply technology in driving value for our clients or the failure of technology and automated systems to function or perform as expected; • the impact of infringement, misappropriation or dilution of our intellectual property; • the impact of the failure to protect our intellectual property rights, or allegations that we have infringed on the intellectual property rights of others; Risks Related to Legal and Regulatory Issues • the impact of evolving governmental regulations, legal proceedings, and governmental inquiries related to our business; • being subject to E&O claims as well as other contingencies and legal proceedings; • our handling of client funds and surplus lines taxes that exposes us to complex fiduciary regulations; 18 Table of Contents • changes in tax laws or regulations; • decreased commission revenues due to proposed tort reform legislation; • the impact of regulations affecting insurance carriers; Risks Related to Our Indebtedness • our outstanding debt potentially adversely affecting our financial flexibility and subjecting us to contractual restrictions and limitations that could significantly affect our ability to operate and manage our business; • not being able to generate sufficient cash flow to service all of our indebtedness and being forced to take other actions to satisfy our obligations under such indebtedness; • being affected by further changes in the U.S. based credit markets; • changes in our credit ratings; Risks Related to Our Organizational Structure and our Class A Common Stock • risks related to the payments required by our Tax Receivable Agreement; and • risks relating to our organizational structure that could result in conflicts of interests between the LLC Unitholders, the Ryan Parties, and the holders of our Class A common stock.
Moreover, there can be no assurances that management will be able independently to detect adverse developments that occur in particular offices. We review the performance of our offices on a monthly basis, maintain frequent contact with all of our offices and work with our offices on an annual basis to prepare a detailed operating budget for revenue production by office.
Moreover, there can be no assurances that management will be able to independently detect adverse developments that occur in particular offices. We review the performance of our offices on a monthly basis, maintain frequent contact with all of our offices and work with our offices on an annual basis to prepare a detailed operating budget for revenue production by office.
Our operating results and the trading price of our Class A common stock may fluctuate in response to various factors, including: • market conditions in our industry or the broader stock market; • actual or anticipated fluctuations in our quarterly financial and operating results; • introduction of new products or services by us or our competitors; • issuance of new or changed securities analysts’ reports or recommendations; • sales, or anticipated sales, of large blocks of our stock; • additions or departures of key personnel; • regulatory or political developments; • litigation and governmental investigations; 50 • changing economic conditions (including inflationary pressures and any related interest rate volatility); • investors’ perception of us; • events beyond our control such as weather, war and health crises; and • any default on our indebtedness.
Our operating results and the trading price of our Class A common stock may fluctuate in response to various factors, including: • market conditions in our industry or the broader stock market; • actual or anticipated fluctuations in our quarterly financial and operating results; • introduction of new products or services by us or our competitors; • issuance of new or changed securities analysts’ reports or recommendations; • sales, or anticipated sales, of large blocks of our stock; • additions or departures of key personnel; • regulatory or political developments; • litigation and governmental investigations; • changing economic conditions (including inflationary pressures and any related interest rate volatility); • investors’ perception of us; • events beyond our control such as weather, war and health crises; and • any default on our indebtedness.
While we manage some of our information technology systems and some are outsourced to third parties, all information technology systems are potentially vulnerable to damage, breakdown or interruption from a variety of sources, including but not limited to cyberattacks, ransomware, malware, security breaches, theft or misuse, 19 unauthorized access or improper actions by insiders or employees, sophisticated nation-state and nation-state-supported actors, natural disasters, terrorism, war, telecommunication, and electrical failures or other compromise.
While we manage some of our information technology systems and some are outsourced to third parties, all information technology systems are potentially vulnerable to damage, breakdown or interruption from a variety of sources, including but not limited to cyberattacks, ransomware, malware, security breaches, theft or misuse, unauthorized access or improper actions by insiders or employees, sophisticated nation-state and nation-state-supported actors, natural disasters, terrorism, war, telecommunication, and electrical failures or other compromise.
These individuals may not report negative developments that occur in their businesses to management on a timely basis because of, among other things, the potential damage to their reputation, the risk that they may lose all or some of their operational control, the risk that it could impair financial earnouts or incentive compensation, or the risk that they may be personally liable to us 33 under the indemnification provisions of the agreements pursuant to which their businesses were acquired.
These individuals may not report negative developments that occur in their businesses to management on a timely basis because of, among other things, the potential damage to their reputation, the risk that they may lose all or some of their operational control, the risk that it could impair financial earnouts or incentive compensation, or the risk that they may be personally liable to us under the indemnification provisions of the agreements pursuant to which their businesses were acquired.
Should we experience a local or regional disaster or other business continuity problem, such as a security incident or attack, a natural disaster, climate event, terrorist attack, civil unrest, pandemic, power loss, telecommunications failure, or other natural or man-made disaster, our continued success will depend, in part, on the availability of our 23 personnel and office facilities, and the proper functioning of computer systems, telecommunications, and other related systems and operations.
Should we experience a local or regional disaster or other business continuity problem, such as a security incident or attack, a natural disaster, climate event, terrorist attack, civil unrest, pandemic, power loss, telecommunications failure, or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel and office facilities, and the proper functioning of computer systems, telecommunications, and other related systems and operations.
Given the current regulatory environment and the number of our subsidiaries operating in local markets throughout the country, it is possible that we will become subject to further governmental inquiries and subpoenas and have lawsuits filed against us. Regulators may raise issues during investigations, 36 examinations or audits that could, if determined adversely, have a material impact on us.
Given the current regulatory environment and the number of our subsidiaries operating in local markets throughout the country, it is possible that we will become subject to further governmental inquiries and subpoenas and have lawsuits filed against us. Regulators may raise issues during investigations, examinations or audits that could, if determined adversely, have a material impact on us.
The continued threat of terrorism and ongoing military actions may 32 cause significant volatility in global financial markets, and a natural or man-made disaster could trigger an economic downturn in the areas directly or indirectly affected by the disaster. These consequences could, among other things, result in a decline in business and increased claims from those areas.
The continued threat of terrorism and ongoing military actions may cause significant volatility in global financial markets, and a natural or man-made disaster could trigger an economic downturn in the areas directly or indirectly affected by the disaster. These consequences could, among other things, result in a decline in business and increased claims from those areas.
In addition, the risk of noncompliance poses significant regulatory risk, including the potential for fines and penalties. Certain jurisdictions have enacted data localization laws and cross-border personal data transfer laws, which could make it more difficult to transfer information across jurisdictions (such as transferring or receiving personal data that originates in the EU).
In addition, the risk of noncompliance poses significant regulatory exposure, including the potential for fines and penalties. Certain jurisdictions have enacted data localization laws and cross-border personal data transfer laws, which could make it more difficult to transfer information across jurisdictions (such as transferring or receiving personal data that originates in the EU).
We may need to expend resources to address questions or concerns regarding our relationships with these insurers, diverting management resources away from operating our business. Risks Related to Our Indebtedness Our substantial indebtedness could adversely affect our financial flexibility and our competitive position and subject us to restrictions and limitations that could significantly affect our ability to operate.
We may need to expend resources to address questions or concerns regarding our relationships with these insurers, diverting management resources away from operating our business. Risks Related to Our Indebtedness Our substantial indebtedness could adversely affect our financial flexibility and our competitive position and subject us to contractual restrictions and limitations that could significantly affect our ability to operate.
We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local and foreign jurisdictions. An unfavorable outcome from any tax audit could 38 result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations.
We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local and foreign jurisdictions. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations.
We expect to use cash flow from operations to meet our current and future financial obligations, including funding our operations, indebtedness service requirements (including payments on the Senior Secured Notes) and capital expenditures. A substantial portion of our indebtedness is floating rate. We have observed significant interest rate increases, variability and volatility.
We expect to use cash flow from operations to meet our current and future financial obligations, including funding our operations, indebtedness service requirements (including payments on the Senior Secured Notes) and capital expenditures. A portion of our indebtedness is floating rate. We have observed significant interest rate increases, variability and volatility.
Moreover, future incidents could occur with respect to our systems or the systems of our third-party service providers, as well as any other data breaches or other misuse or disclosure of our participant or other data, could lead to improper use or disclosure of Company information, including personally identifiable information or protected health information obtained from our participants, and information from employees.
Moreover, incidents could occur with respect to our systems or the systems of our third-party service providers, as well as any other data breaches or other misuse or disclosure of our participant or other data, could lead to improper use or disclosure of Company information, including personally identifiable information or protected health information obtained from our participants, and information from employees.
Our offices are geographically dispersed across the United States, the United Kingdom, Canada, Europe, and Singapore, and we may not be able to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices, which could harm our business and operating results.
Our offices are geographically dispersed across the United States, the United Kingdom, Europe, Canada, India, and Singapore , and we may not be able to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices, which could harm our business and operating results.
Sustained or worsening of these and other global economic conditions and increasing geopolitical tensions may negatively impact our business, financial condition, and results of operations. 25 Changes in interest rates and deterioration of credit quality could reduce the value of our cash balances or interest income and adversely affect our financial condition or results.
Sustained or worsening of these and other global economic conditions and increasing geopolitical tensions may negatively impact our business, financial condition, and results of operations. Changes in interest rates and deterioration of credit quality could reduce the value of our cash balances or interest income and adversely affect our financial condition or results.
We have also entered into the registration rights agreement 49 pursuant to which we have agreed under certain circumstances to file a registration statement to register the resale of shares of our Class A commons stock held by the Ryan Parties, as well as to cooperate in certain public offerings of such shares.
We have also entered into the registration rights agreement pursuant to which we have agreed under certain circumstances to file a registration statement to register the resale of shares of our Class A commons stock held by the Ryan Parties, as well as to cooperate in certain public offerings of such shares.
From time to time, either through acquisitions or internal development, we enter new distribution channels or lines of business or offer new products and services within existing lines of business. These new distribution channels, lines of business, or new products and services present additional risks, particularly in instances where the markets are not fully developed.
From time to time, either through acquisitions or internal development, we enter new distribution channels, geographies or lines of business or offer new products and services within existing lines of business. These new distribution channels, lines of business, or new products and services present additional risks, particularly in instances where the markets are not fully developed.
In addition, it is possible that state regulators may initiate investigations of the Company in connection with the breach, that the Company could be subject to civil penalties, resolution agreements, monitoring or similar agreements, or third-party claims against the Company, including class-action lawsuits.
In addition, it is possible that state regulators may initiate investigations of the Company in connection with a breach, that the Company could be subject to civil penalties, resolution agreements, monitoring or similar agreements, or third-party claims against the Company, including class-action lawsuits.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • price our products effectively so that we are able to attract and retain clients without compromising our profitability; • attract new clients, successfully deploy and implement our products, obtain client renewals and provide our clients with excellent client support; • attract and retain talented Producers, managers, executives and other employees; • increase our network of insurer trading partners; • adequately expand, train, integrate and retain our wholesale brokers and underwriters and other new employees, and maintain or increase our sales force’s productivity; • enhance our information, training and communication systems to ensure that our employees are well coordinated and can effectively communicate with each other and clients; • improve our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; • successfully create new distribution channels; • successfully introduce new products and enhance existing products; • successfully introduce our products to new markets inside and outside of the United States; • successfully compete against larger companies and new market entrants; and • increase awareness of our brand.
We believe our revenue growth depends on a number of factors, including, but not limited to, our ability to: • price our products effectively so that we are able to attract and retain clients without compromising our profitability; • attract new clients, successfully deploy and implement our products, obtain client renewals and provide our clients with excellent client support; • attract and retain talented Producers, managers, executives and other employees; • increase our network of insurer trading partners; • adequately expand, train, integrate and retain our wholesale brokers and underwriters and other new employees, and maintain or increase our sales force’s productivity; • enhance our information, training and communication systems to ensure that our employees are well coordinated and can effectively communicate with each other and clients; • improve our internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of our operational and financial results; • successfully create new distribution channels; • successfully introduce new products and enhance existing products; • successfully introduce our products to new markets inside and outside of the United States; • successfully compete against larger companies and new market entrants; and 27 Table of Contents • increase awareness of our brand.
The termination, 21 amendment or consolidation of our relationships with our insurance carriers could harm our business, financial condition and results of operations. We depend, to a large extent, on our relationships with all of our trading partners and our reputation for high-quality advice and solutions.
The termination, amendment or consolidation of our relationships with our insurance carriers could harm our business, financial condition and results of operations. We depend, to a large extent, on our relationships with all of our trading partners and our reputation for high- quality advice and solutions.
An increase in the number of insolvencies 24 associated with an economic downturn, especially insolvencies in the insurance industry, could adversely affect our business through the loss of clients and insurance markets and by hampering our ability to place insurance business or by exposing us to E&O claims.
An increase in the number of insolvencies associated with an economic downturn, especially insolvencies in the insurance industry, could adversely affect our business through the loss of clients and insurance markets and by hampering our ability to place insurance business or by exposing us to E&O claims.
We may not successfully accomplish any of these objectives and as a result, it is difficult for us to forecast our future results of operations. Our historical growth rate should not be considered indicative of our future performance 29 and may decline in the future.
We may not successfully accomplish any of these objectives and as a result, it is difficult for us to forecast our future results of operations. Our historical growth rate should not be considered indicative of our future performance and may decline in the future.
In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain 44 mergers, asset sales, other forms of business combination, or other changes of control.
In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control.
The carrying value of these intangible assets is periodically reviewed by management to determine if there are events or changes in 28 circumstances that would indicate that the carrying amount may not be recoverable.
The carrying value of these intangible assets is periodically reviewed by management to determine if there are events or changes in circumstances that would indicate that the carrying amount may not be recoverable.
For example, starting each de novo MGU or insurance program takes a certain amount of investment before we are able to secure insurance carriers to support the underwriting, which is a precursor to entering the marketplace.
For example, starting a de novo MGU or insurance program takes a certain amount of investment before we are able to secure insurance carriers to support the underwriting, which is a precursor to entering the marketplace.
Circumstances may arise in the future when the interests of the LLC Unitholders conflict with the interests of our stockholders. As we control the LLC, we have 43 certain obligations to the LLC Unitholders that may conflict with fiduciary duties our officers and directors owe to our stockholders.
Circumstances may arise in the future when the interests of the LLC Unitholders conflict with the interests of our stockholders. As we control the LLC, we have certain obligations to the LLC Unitholders that may conflict with fiduciary duties our officers and directors owe to our stockholders.
Our business strategy includes plans to continue to make acquisitions and we face risks associated with the evaluation of potential acquisitions, the integration of acquired businesses, and the introduction of new products, lines of business, and markets.
Our business strategy includes plans to continue to make acquisitions and we face risks associated with the evaluation of potential acquisitions, the integration of acquired businesses, and the introduction of new products, lines of business, geographies and markets.
Among other things: • our dual-class common stock structure provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval; • these provisions allow us to authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of stockholders; • these provisions provide for a classified board of directors with staggered three-year terms; • these provisions provide that, at any time when the Ryan Parties control, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors, directors may only be removed for cause, and only by the affirmative vote of holders of at least 66 2/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; • these provisions prohibit stockholder action by consent in lieu of a meeting from and after the date on which the Ryan Parties control, in the aggregate, less than 40% of the voting power of our stock entitled to vote generally in the election of directors; • these provisions provide that for as long as the Ryan Parties control, in the aggregate, less than 40% in voting power of all outstanding shares of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws or certain provisions of our certificate of incorporation by our stockholders requires the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; and • these provisions establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings; provided, however, at any time when the Ryan Parties control, in the aggregate, at least 10% ownership of the outstanding Class B common stock, in the aggregate, such advance notice procedure does not apply to the Ryan Parties.
Among other things: • our dual-class common stock structure provides our holders of Class B common stock with the ability to control the outcome of matters requiring stockholder approval; • these provisions allow us to authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of stockholders; • these provisions provide for a classified board of directors with staggered three-year terms; • these provisions provide that, at any time when the Ryan Parties control, in the aggregate, less than 40% in voting power of our stock entitled to vote generally in the election of directors, directors may only be 45 Table of Contents removed for cause, and only by the affirmative vote of holders of at least 66 2/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; • these provisions prohibit stockholder action by consent in lieu of a meeting from and after the date on which the Ryan Parties control, in the aggregate, less than 40% of the voting power of our stock entitled to vote generally in the election of directors; • these provisions provide that for as long as the Ryan Parties control, in the aggregate, less than 40% in voting power of all outstanding shares of our stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our bylaws or certain provisions of our certificate of incorporation by our stockholders requires the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of our stock entitled to vote thereon, voting together as a single class; and • these provisions establish advance notice requirements for nominations for elections to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings; provided, however, at any time when the Ryan Parties control, in the aggregate, at least 10% ownership of the outstanding Class B common stock, in the aggregate, such advance notice procedure does not apply to the Ryan Parties.
We are exposed to currency risk from the potential changes between the exchange rates of the US Dollar, Canadian Dollar, British Pound, Euro, Swedish Krona, Danish Krone, and other currencies. Exchange rate movements may change over time, and they could have an adverse impact on our financial results and cash flows reported in U.S. dollars.
We are exposed to currency risk from the potential changes between the exchange rates of the US Dollar, British Pound, Euro, Swedish Krona, Danish Krone, Canadian Dollar, Singapore Dollar and other currencies. Exchange rate movements may change over time, and could have an adverse impact on our financial results and cash flows reported in U.S. dollars.
As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes, satisfy our obligations under the Tax Receivable Agreement and pay operating expenses or declare and pay dividends, if any, in the future depends on the financial results and cash flows of the LLC and its subsidiaries and distributions we receive from the LLC.
As such, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes, satisfy our obligations under the Tax Receivable Agreement and pay operating expenses or declare and pay dividends in the future depends on the financial results and cash flows of the LLC and its subsidiaries and distributions we receive from the LLC.
Risks Related to Our Class A Common Stock The dual-class structure of our common stock has the effect of concentrating voting control with the Ryan Parties, which includes our founder, chairman and chief executive officer, which limits your ability to influence the outcome of important transactions, including a change in control, and the Ryan Parties interests’ may conflict with ours or yours in the future.
Risks Related to Our Class A Common Stock The dual-class structure of our common stock has the effect of concentrating voting control with the Ryan Parties, which includes our founder and Executive Chairman, which limits your ability to influence the outcome of important transactions, including a change in control, and the Ryan Parties interests’ may conflict with ours or yours in the future.
Such estimates and assumptions could change in the future as more information becomes available, which could impact the amounts reported and disclosed. We completed our most recent evaluation of impairment for goodwill as of October 1, 2023, and determined that the fair value of goodwill is not less than its carrying value.
Such estimates and assumptions could change in the future as more information becomes available, which could impact the amounts reported and disclosed. We completed our most recent evaluation of impairment for goodwill as of October 1, 2024, and determined that the fair value of goodwill is not less than its carrying value .
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our current and future indebtedness, including the Senior Secured Notes and the indebtedness governed by our Credit Agreement; • increase our vulnerability to adverse changes in prevailing economic, industry and competitive conditions, including recessions and periods of significant inflation, rising interest rate environments and financial market volatility; 39 • require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, the execution of our business strategy and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • increase our cost of borrowing; • restrict us from exploiting business opportunities; • place us at a disadvantage compared to our competitors that have fewer indebtedness obligations; and • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, indebtedness service requirements, execution of our business strategy and other general corporate purposes.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our current and future indebtedness, including the Senior Secured Notes and the indebtedness governed by our Credit Agreement; • increase our vulnerability to adverse changes in prevailing economic, industry and competitive conditions, including recessions and periods of significant inflation, rising interest rate environments and financial market volatility; • require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, the execution of our business strategy and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • increase our cost of borrowing; • restrict us from capitalizing on business opportunities; • place us at a disadvantage compared to our competitors that have less indebtedness; and • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, indebtedness service requirements, execution of our business strategy and other general corporate purposes.
In connection with the consummation of the IPO, we entered into a Tax Receivable Agreement with the current and certain former LLC Unitholders.
In connection with the consummation of our IPO, we entered into a Tax Receivable Agreement with the current and certain former LLC Unitholders.
As of December 31, 2023, a significant number of Class A common stock (or LLC Common Units exchangeable for Class A common stock) were held by certain of our pre-IPO equity holders which are not otherwise, or are no longer, subject to either vesting or other sales restrictions imposed by the Company.
As of December 31, 2024, a significant number of Class A common stock (or LLC Common Units exchangeable for Class A common stock) were held by certain of our pre-IPO equity holders which are not otherwise, or are no longer, subject to either vesting or other sales restrictions imposed by the Company.
All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may divert resources from other initiatives and projects, and could restrict the way services involving data are offered, all of which may adversely affect our results of operations.
All of these evolving compliance and operational requirements impose significant costs and other burdens that are likely to increase over time, might divert resources from other initiatives and projects, and could restrict the way services involving data are offered, all of which may adversely affect our results of operations.
Item 1A. Risk F actors Our operating and financial results are subject to various risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us.
ITEM 1A. RISK FACTORS Our operating and financial results are subject to various risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us.
On June 28, 2021, the European Commission announced a decision of “adequacy” concluding that the U.K. ensures an equivalent level of data protection to the EU GDPR, which provides some relief regarding the legality of continued personal data flows from the European Economic Area (the “EEA”) to the U.K.
On June 28, 2021, the European Commission announced a decision of adequacy concluding that the U.K. ensures an equivalent level of data protection to the EU GDPR, which provides some relief regarding the legality of continued personal data flows from the European Economic Area (the “EEA”) to the U.K.
We will also consider qualitative and quantitative developments between the date of the goodwill impairment review, October 1 and December 31 to determine if an impairment may be present. No impairments were recorded for the years ended December 31, 2023 and 2022.
We will also consider qualitative and quantitative developments between the date of the goodwill impairment review, October 1 and December 31 to determine if an impairment may be present. No impairments were recorded for the years ended December 31, 2024 and 2023.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability. We have experienced significant revenue growth in recent years. In future periods, we may not be able to sustain revenue growth consistent with recent history, or at all.
As our costs increase, we may not be able to generate sufficient revenue to achieve and, if achieved, maintain profitability. We have experienced strong revenue growth in recent years. In future periods, we may not be able to sustain revenue growth consistent with recent history, or at all.
Risks Related to Legal, Regulatory and Intellectual Property Issues Our businesses are subject to governmental regulation, which could reduce our profitability, limit our growth, or increase competition. Our businesses are subject to legal and regulatory oversight throughout the world, including by U.S. state regulators, under the U.K.
Risks Related to Legal and Regulatory Issues Our businesses are subject to governmental regulation, which could reduce our profitability, limit our growth, or increase competition. Our businesses are subject to legal and regulatory oversight throughout the world, including by U.S. state regulators, under the U.K.
Our business and operating results may be harmed if our management does not become aware, on a timely basis, of negative business developments, such as the possible loss of an important client, threatened litigation or regulatory action, or other developments. In addition, our ability to grow organically will require the cooperation of the individuals who manage our offices.
Our business and operating results may be harmed if our management does not become aware, on a timely basis, of negative business developments, such as the possible loss of an important client, threatened litigation or regulatory action, or other developments. 30 Table of Contents In addition, our ability to grow organically will require the cooperation of the individuals who manage our offices.
Any impairment identified through this assessment may require that the carrying value of related amortizable intangible assets be adjusted; however, no impairments were recorded for the years ended December 31, 2023 and 2022.
Any impairment identified through this assessment may require that the carrying value of related amortizable intangible assets be adjusted; however, no impairments were recorded for the years ended December 31, 2024 and 2023.
In addition, we face risks as we transition from in-house functions to third-party support functions and providers that there may be disruptions in service or other unintended results that may adversely affect our business operations.
In addition, we face risks when we transition from in-house functions to third-party support functions and providers that there may be disruptions in service or other unintended results that may adversely affect our business operations.
Enactment of these or similar provisions by Congress, or by states in which we sell insurance, could reduce the demand for casualty insurance policies or lead to a decrease in policy limits of such policies sold, thereby reducing our commission revenues. Regulations affecting insurance carriers with whom we place business affect how we conduct our operations.
Enactment of these or similar provisions by Congress, or by states in which we sell insurance, could reduce the demand for casualty insurance policies or lead to a decrease in policy limits of such policies sold, thereby reducing our commission revenues. 37 Table of Contents Regulations affecting insurance carriers with whom we place business affect how we conduct our operations.
In future periods, our revenue could grow more slowly than in recent years or decline for any number of reasons, including those outlined above. We also expect our operating expenses to increase in future periods, particularly as we continue to operate as a public company, continue to invest in research and development and technology infrastructure, and expand our operations internationally.
In future periods, our revenue could grow more slowly than in recent years or decline for any number of reasons, including those outlined above. We also expect our operating expenses to increase in future periods, particularly as we continue to operate as a public company, continue to invest in talent and technology infrastructure, and expand our operations internationally.
The LLC is obligated to make tax distributions quarterly to the LLC Unitholders (including us), in each case on a pro rata basis based on the LLC’s net taxable income and without regard to any applicable basis adjustment under Section 743(b) of the Code and based on an assumed tax rate.
The LLC is obligated to make tax distributions quarterly to the LLC Unitholders (including us), in each case on a pro rata basis based on the LLC’s net taxable income and 43 Table of Contents without regard to any applicable basis adjustment under Section 743(b) of the Code and based on an assumed tax rate.
Successful challenges against us could require us to modify or discontinue our use of technology or business processes where such use is found to infringe or violate the rights of others, or require us to purchase licenses from third parties, any of which could adversely affect our business, financial condition and operating results.
Successful challenges against us could require us to modify or discontinue our use of technology or business processes where such use is found to 33 Table of Contents infringe or violate the rights of others, or require us to purchase licenses from third parties, any of which could adversely affect our business, financial condition and operating results.
We have invested substantial time and resources in building our team and we expect to continue to hire aggressively as we expand in both the United States and internationally. As we grow and mature as a public company and grow internationally, we may find it difficult to maintain the valuable aspects of our Company’s culture.
We have invested substantial time and resources in building our team and we expect to continue to hire aggressively and increase our employee population as we expand in both the United States and internationally. As we grow and mature as a public company and internationally, we may find it difficult to maintain valuable aspects of our Company’s culture.
A failure by third parties to comply with service-level agreements or regulatory or legal requirements in a high-quality and timely manner, particularly during periods of our peak demand for their services, could result in economic and reputational harm to us.
A failure by third parties to comply with service-level agreements or regulatory or legal requirements in a high-quality and timely manner, particularly during 22 Table of Contents periods of our peak demand for their services, could result in economic and reputational harm to us.
We believe that our Company’s culture, including our management philosophy, has been a critical component to our success and that our culture creates an environment that drives and perpetuates our overall business strategy.
We believe that our Company’s culture, including our management philosophy, has been a critical component of our success and that our culture creates an environment that drives and perpetuates our overall business strategy.
The cost of investing in new offices, brokers and underwriters may affect our results of operations and cash flows in a particular period. Moreover, we cannot assure you that we will be able to recover our investment in new offices, brokers or underwriters or that these offices, brokers and underwriters will achieve profitability.
The cost of investing in new offices, brokers and underwriters may affect our results of operations and cash flows in a particular period. Moreover, we cannot assure you 28 Table of Contents that we will be able to recover our investment in new offices, brokers or underwriters or that these offices, brokers and underwriters will achieve profitability.
In particular, for so long as the Ryan Parties continue to own a significant percentage of our common stock, the Ryan Parties will be able to cause or prevent a change of control of us or a change in the composition of our Board and could preclude any unsolicited acquisition of us.
In particular, for so long as the Ryan Parties continue to own a significant percentage of our common stock, the Ryan Parties will be able to cause or prevent a change of control of us or a change in the composition of our Board and could preclude any unsolicited attempt to acquire us.
They could also result in reduced underwriting capacity of our insurance carriers, making it more difficult for our agents to place business. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.
They could also result in reduced underwriting capacity of our insurance carriers, 29 Table of Contents making it more difficult for our agents to place business. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.
Additionally, we are an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in an acquisition targets’ information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack.
Additionally, we are an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in an acquisition targets’ information systems, which has in the past and could in the future expose us to costs and/or unexpected liabilities or make our own systems more vulnerable to attack.
As of December 31, 2023, we had $1.6 billion of goodwill recorded on our Consolidated Balance Sheets. We perform a goodwill impairment test on an annual basis and whenever events or changes in circumstances indicate that the carrying value of our goodwill may not be recoverable from estimated future cash flows.
As of December 31, 2024, we had $2.6 billion of goodwill recorded on our Consolidated Balance Sheets. We perform a goodwill impairment test on an annual basis and whenever events or changes in circumstances indicate that the carrying value of our goodwill may not be recoverable from estimated future cash flows.
Our success depends, in part, on our ability to develop and implement technology-based solutions that anticipate or keep pace with rapid and continuing changes in technology, operational needs, industry standards, and client preferences. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis.
Our success depends, in part, on our ability to develop and implement technology-based solutions that anticipate or keep pace with rapid and continuing changes in technology, operational needs, industry standards, and client preferences. We may not be successful in anticipating or responding to these developments on a timely and cost-effective 32 Table of Contents basis.
Even if the Ryan Parties own significantly less than a majority of the shares of our outstanding Class A and Class B common stock, they will still have the ability to control the outcome of matters requiring the approval of our stockholders.
Even if the Ryan Parties own significantly less than a majority of the shares of 41 Table of Contents our outstanding Class A and Class B common stock, they will still have the ability to control the outcome of matters requiring the approval of our stockholders.
The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of Class A common stock as part of a sale of the Company and ultimately might affect the market price of our Class A common stock. 46 In addition, we entered into a Director Nomination Agreement with the Ryan Parties and Onex that provides the Ryan Parties the right to designate (in each instance, rounded up to the nearest whole number if necessary): (i) all of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, 50% or more of the total number of shares of our common stock beneficially owned by the Ryan Parties upon completion of our IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization (the “ Original Amount ”); (ii) 50% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 40%, but less than 50% of the Original Amount; (iii) 40% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 30%, but less than 40% of the Original Amount; (iv) 30% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 20%, but less than 30% of the Original Amount; and (v) 20% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 10%, but less than 20% of the Original Amount, which could result in representation on our Board that is disproportionate to the Ryan Parties’ beneficial ownership.
The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of Class A common stock as part of a sale of the Company and ultimately might affect the market price of our Class A common stock. 44 Table of Contents In addition, we entered into a Director Nomination Agreement with the Ryan Parties and one of our pre-IPO significant equity holders that provides the Ryan Parties the right to designate (in each instance, rounded up to the nearest whole number if necessary): (i) all of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, 50% or more of the total number of shares of our common stock beneficially owned by the Ryan Parties upon completion of our IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization (the “ Original Amount ”); (ii) 50% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 40%, but less than 50% of the Original Amount; (iii) 40% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 30%, but less than 40% of the Original Amount; (iv) 30% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 20%, but less than 30% of the Original Amount; and (v) 20% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 10%, but less than 20% of the Original Amount, which could result in representation on our Board that is disproportionate to the Ryan Parties’ beneficial ownership.
As of December 31, 2023, the Ryan Parties owned 79% of the shares of our outstanding Class B common stock, thereby giving the Ryan Parties the ability to control the outcome of matters requiring the approval of our stockholders, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets.
As of December 31, 2024, the Ryan Parties owned 82% of the shares of our outstanding Class B common stock, thereby giving the Ryan Parties the ability to control the outcome of matters requiring the approval of our stockholders, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets.
Future pandemics and other outbreaks of contagious diseases may also have the effect of exacerbating several of the other risk we face discussed in this Annual Report on Form 10-K. We have experienced rapid growth in recent years, and our recent growth rates may not be indicative of our future growth.
Future pandemics and other outbreaks of contagious diseases may also have the effect of exacerbating several of the other risks we face discussed in this Annual Report on Form 10-K. We have experienced strong growth in recent years, and our recent growth rates may not be indicative of our future growth.
We cannot assure you that these individuals will cooperate with our efforts to improve the operating results in offices for which they are not directly responsible. Our dispersed operations may impede our integration efforts and organic growth, which could harm our business and operating results.
We cannot provide assurance that these individuals will cooperate with our efforts to improve the operating results in offices for which they are not directly responsible. Our dispersed operations may impede our integration efforts and organic growth, which could harm our business and operating results.
The amount due and payable in that circumstance is based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.
The amount due and payable in that circumstance is based on certain assumptions, including an assumption that 42 Table of Contents we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.
We face significant competitive pressures in our business. Wholesale brokerage, binding authority, underwriting management and other intermediary and underwriting and claims administration specialties are highly competitive. We believe that our ability to compete is dependent on the quality of our people, service, product features, price, commission structure, financial strength, and the ability to access certain insurance markets.
Wholesale brokerage, binding authority, underwriting management and other intermediary and underwriting and claims administration specialties are highly competitive. We believe that our ability to compete is dependent on the quality of our people, service, product features, price, commission structure, financial strength, and the ability to access certain insurance markets.
Any loss, theft or misappropriation of these funds, caused by employee or third-party fraud, execution of unauthorized transactions, errors relating to transaction processing, or other events could subject us, in addition to claims brought forth by insureds, insurers and insurance intermediaries, to fines, penalties and reputational risk as a result of fiduciary breach and adversely affect our results of operations.
Any loss, theft or misappropriation of these funds, caused by employee or third-party fraud, execution of unauthorized transactions, errors relating to transaction processing, or other events could subject us to claims brought by insureds, insurers and insurance intermediaries, as well as to fines, penalties and reputational risk as a result of an alleged fiduciary breach and adversely affect our results of operations.
We cannot assure you that we will be granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us or at all.
We cannot assure you that we will be 40 Table of Contents granted waivers or amendments to these agreements if for any reason we are unable to comply with these agreements or that we will be able to refinance our debt on terms acceptable to us or at all.
The indenture that governs the Senior Secured Notes and the Credit Agreement that governs our Term Loan and Revolving Credit Agreement impose, and future financing agreements, may impose, operating and financial restrictions on our activities.
The indentures that govern the Senior Secured Notes and the Credit Agreement that governs our Term Loan and Revolving Credit Agreement impose, and future financing agreements may impose, operating and financial restrictions on our activities.
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 the current or certain former LLC Unitholders, collectively, pursuant to the Tax Receivable Agreement; however, as of December 31, 2023, the Company has recorded Tax Receivable Agreement liabilities in the Consolidated Balance Sheets for the amount of $358.9 million associated with the payments to be made to current and certain former LLC Unit holders subject to 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 the current or certain former LLC Unitholders, collectively, pursuant to the Tax Receivable Agreement; however, as of December 31, 2024, the Company has recorded Tax Receivable Agreement liabilities on the Consolidated Balance Sheets for the amount of $436.3 million associated with the payments to be made to current and certain former LLC Unit holders subject to the TRA.
There is a risk to our business that insurance carriers will accommodate the retail broker’s preference to place business directly with the E&S insurer as opposed to through a wholesale broker or other wholesale distributor.
There is a risk to our business that insurance carriers will accommodate the retail broker’s preference to place business directly with the E&S insurer rather than through a wholesale broker or other wholesale distributor.
Our non-U.S. operations expose us to exchange rate fluctuations and various risks that could impact our business. Approximately three percent of our revenues for each of the years ended December 31, 2023 and 2022 were generated outside of the United States.
Our non-U.S. operations expose us to exchange rate fluctuations and various risks that could impact our business. Approximately five percent and three percent of our revenues for the years ended December 31, 2024 and 2023, respectively, were generated outside of the United States.
For instance, the Credit Agreement and the indenture which governs the Senior Secured Notes restricts certain of our subsidiaries’ ability to pay dividends to us, subject to certain exceptions, including if such distributions meet certain requirements such as caps on amounts, pro forma leverage ratios and absence of defaults applicable to certain types of distributions, among others.
For instance, the Credit Agreement and the indentures which govern the Senior Secured Notes restrict certain of our subsidiaries’ ability to pay dividends to us, subject to certain exceptions, including if such distributions meet certain requirements such as caps on amounts, pro forma leverage ratios and absence of defaults applicable to certain types of distributions, among others.
If, due to the current economic environment or for any other reason, we are unable to meet insurance carriers’ profitability, volume or growth thresholds, or insurance carriers increase their estimate of loss reserves (over which we have no control), actual supplemental and contingent commissions we receive could be less than anticipated, which could adversely affect our business, financial condition and results of operations.
If, due to the current economic environment or for any other reason, we are unable to meet insurance carriers’ profitability, volume or growth thresholds, or insurance carriers increase their estimate of loss reserves (over which we have no control), actual supplemental and contingent commissions we receive could be less than anticipated, which could adversely affect our business, financial condition and results of operations. 25 Table of Contents If we are unable to collect our receivables, our results of operations and cash flows could be adversely affected.
Our Underwriting Management Specialty generated 21.3% and 20.5% of our consolidated total net commissions and fees for the years ended December 31, 2023 and 2022, respectively. Our MGA and MGU programs are governed by contracts between us and the insurance carriers.
Our Underwriting Management Specialty generated 26.3% and 21.3% of our consolidated total net commissions and fees for the years ended December 31, 2024 and 2023, respectively. Our MGA and MGU programs are governed by contracts between us and the insurance carriers.
Our international operations expose us to various international risks that could adversely affect our business. Our operations are conducted in numerous countries including the United States, the United Kingdom, Canada, Europe, and Singapore.
Our international operations expose us to various international risks that could adversely affect our business. Our operations are conducted in numerous locations and geographies including the United States, the United Kingdom, Europe, Canada, India, and Singapore .
This provision would not apply to any action or proceeding asserting a claim under the Securities Act or the Exchange Act for which the federal courts have exclusive jurisdiction or any other claim for which the federal courts have exclusive jurisdiction.
This provision would not apply to any action or proceeding asserting a claim under 46 Table of Contents the Securities Act or the Exchange Act for which the federal courts have exclusive jurisdiction or any other claim for which the federal courts have exclusive jurisdiction.
Additionally, if we cannot offer new technologies as quickly as our competitors, if our competitors develop more cost-effective technologies, or if our ideas are not accepted in the marketplace, it could have a material adverse effect on our ability to obtain and complete client engagements. For example, we have invested significantly in RT Connector.
Additionally, if we cannot offer new technologies as quickly as our competitors, if our competitors develop more cost-effective technologies, or if our ideas are not accepted in the marketplace, it could have a material adverse effect on our ability to obtain and complete client engagements.
If we are unsuccessful in recruiting, hiring, training, managing and integrating new employees, or retaining our existing employees, or if we fail to preserve the valuable aspects of our Company’s culture, it could materially impair our ability to service and attract new clients, all of which would materially and adversely affect our business, financial condition and results of operations.
If we are unsuccessful in recruiting, hiring, training, managing and integrating new employees, or retaining our existing employees, or if we fail to preserve the valuable aspects of our Company’s culture, it could materially impair our ability to service and attract new clients, all of which would materially and adversely affect our business, financial condition and results of operations. 24 Table of Contents We face significant competitive pressures in our business.
Supplemental and contingent commissions we receive from insurance carriers are less predictable than standard commissions, and any decrease in the amount of these kinds of commissions we receive could adversely affect our results of operations. Approximately three percent of our revenues consists of supplemental and contingent commissions we receive from insurance carriers.
Supplemental and contingent commissions we receive from insurance carriers are less predictable than standard commissions, and any decrease in the amount of these kinds of commissions we receive could adversely affect our results of operations. Approximately four percent of our Net commissions and fees consists of supplemental and contingent commissions we receive from insurance carriers.
If such statements were to be materially different, the tangible and intangible assets we acquire may be more susceptible to impairment charges, which could have a material adverse effect on us. In addition, many of the businesses that we acquire and develop will likely have smaller scales of operations prior to the implementation of our growth strategy.
If such statements were to be materially different, the tangible and intangible assets we acquire may be more susceptible to impairment charges, which could have a material adverse effect on us. In addition, many of the businesses that we acquire and develop will likely have smaller scales of operations prior to integration into the Company.
We have commitments available to be borrowed under the Revolving Credit Facility of $599.3 million (not including $0.7 million of undrawn letters of credit), subject to customary conditions, all of which would be secured on a first-priority basis if borrowed. Our substantial indebtedness could have significant effects on our business.
We have commitments available to be borrowed under the Revolving Credit Facility of $1,399.7 million (not including $0.3 million of undrawn letters of credit), subject to customary conditions, all of which would be secured on a first-priority basis if borrowed. Our substantial indebtedness could have significant effects on our business and consequences to holders of our debt.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeMonitoring and Incident Response Plan Information Security risks are monitored by our security operations center team along with managed services providing 24x7x365 monitoring and response. Ryan Specialty retains third-party resources with a leading cybersecurity company for incident response when needed, including remediation. We apply lessons learned from our defense and monitoring efforts to help manage and prevent future incidents.
Biggest changeRyan Specialty retains third-party resources with a leading cybersecurity company for incident response when needed, including remediation. We apply lessons learned from our defense and monitoring efforts to help manage and prevent future incidents. We have established a comprehensive incident response plan that is regularly tested and evaluated to confirm its effectiveness.
Any significant system or network disruption due to a breach in the security of our information technology systems could have a negative impact on our reputation, regulatory compliance status, operations, sales, and operating results ” included elsewhere in this Annual Report Risk Management and Strategy Ryan Specialty’s processes for assessing, identifying, and managing material risks from cybersecurity threats is integrated into our overall enterprise risk management program, which is overseen by our Audit Committee and the Board.
Any significant system or network disruption due to a breach in the security of our information technology systems could have a negative impact on our reputation, regulatory compliance status, operations, sales, and operating results ” included elsewhere in this Annual Report Risk Management and Strategy Ryan Specialty’s processes for assessing, identifying, and managing material risks from cybersecurity threats is integrated into our overall enterprise risk management program, which is overseen by the Audit Committee of the Board (the “Audit Committee”).
The Security Committee responsible for managing and implementing the Company’s 53 cybersecurity programs has many years of valuable business experience managing risks and developing and implementing cybersecurity policies and procedures.
The Security Committee responsible for managing and implementing the Company’s cybersecurity programs has many years of valuable business experience managing risks and developing and implementing cybersecurity policies and procedures.
We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding legal and regulatory compliance, public disclosure, and reporting of such incidents can be made by management and presented to the Audit Committee of the Board (the “Audit Committee”) and the Board, as necessary, in a timely manner.
We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding legal and regulatory compliance, public disclosure, and reporting of such incidents can be made by management and presented to the Audit Committee and the Board, as necessary, in a timely manner.
The results of the assessment are used to drive alignment on, and prioritization of, initiatives to enhance our preventive and detective security controls, make recommendations to improve processes, and inform a broader enterprise-level risk assessment that is presented to members of management, the Audit Committee, which 52 is comprised solely of independent directors, and the Board.
The results of the assessment are used to drive alignment on, and prioritization of, initiatives to enhance our preventive and detective security controls, make recommendations to improve processes, and inform a broader enterprise-level risk assessment that is presented to members of management, the Audit Committee, which is comprised solely of independent directors, and the Board, when necessary.
In addition, if warranted based on our response plan, cyber security incidents will be escalated to the attention of the Audit Committee while such incidents are ongoing. Management’s Role Primary responsibility for assessing and managing our cybersecurity risks rests with our CISO, who reports to our Chief Risk Officer (“CRO”).
In addition, if warranted based on our response plan, cyber security incidents will be escalated to the attention of the Audit Committee while such incidents are ongoing. Management’s Role Primary responsibility for assessing and managing our cybersecurity risks rests with our CISO , who reports to our Executive Vice President, Operations, Technology & Data Analytics (“EVP OP”).
Throughout the year we do vulnerability testing. We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on industry best practices, vulnerability assessments, cybersecurity threat intelligence, input from consultants, and incident response experience.
Throughout the year we do vulnerability testing. We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats.
Removed
We have established a comprehensive incident response plan that is regularly tested and evaluated to confirm its effectiveness.
Added
The Audit Committee is charged with reviewing our cybersecurity processes for assessing key strategic, operational and compliance risks. The Audit Committee then provides updates on significant cybersecurity matters to the Board periodically.
Removed
Our CRO has spent his entire career in the area of Enterprise Risk Management, including serving as CRO of multiple financial services companies, as well as in the public sector as a regulator in improving safety and soundness of financial institutions during the 2008 financial crisis.
Added
Such safeguards are regularly evaluated and improved based on industry best practices, vulnerability assessments, cybersecurity threat intelligence, input from consultants, and incident response experience. 49 Table of Contents Monitoring and Incident Response Plan Information Security risks are monitored by our security operations center team along with managed services providing 24x7x365 monitoring and response.
Removed
He holds an undergraduate degree in finance and is commissioned by the Federal Reserve as a regulatory examiner.
Added
Our EVP OP has extensive enterprise risk management experience, developed over more than 25 years while holding senior leadership positions, including group 50 Table of Contents CIO and divisional COO roles, at global brokerage and risk management firms, and serving clients as a management consultant. He holds an undergraduate degree in accounting.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe have additional office locations in 32 U.S. states as well as in Canada, the United Kingdom, Europe, and Singapore where, as of December 31, 2023, we lease a total of approximately 985,000 square feet. We believe that our facilities are adequate for our current needs.
Biggest changeWe have additional office locations in 32 U.S. states as well as in the United Kingdom, Europe, Canada, India, and Singapore where, as of December 31, 2024, we lease a total of approximately1,050,000 square feet. We believe that our facilities are adequate for our current needs.
Item 2. Pro perties Our corporate headquarters are in Chicago, Illinois, where we currently lease just over 40,000 square feet of office space under a newly leased space that incorporates our remote work flexibility into our post-pandemic operating model and we will continue to look at all of our offices to maximize size and efficiency.
ITEM 2. PROPERTIES Our corporate headquarters are in Chicago, Illinois, where we currently lease just under 50,000 square feet of office space under a leased space that incorporates our remote work flexibility into our post-pandemic operating model and we will continue to look at all of our offices to maximize size and efficiency.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor further information, please see “ Note 16, Commitments and Contingencies ” in the footnotes to the consolidated financial statements in this Annual Report. Item 4. Mine S afety Disclosure Not applicable. 54 PA RT II
Biggest changeFor further information, please see “ Note 16, Commitments and Contingencies ” in the footnotes to the consolidated financial statements in this Annual Report. ITEM 4. MINE SAFETY DISCLOSURE Not applicable. 51 Table of Contents PART II
Item 3. Leg al Proceedings From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business.
ITEM 3. LEGAL PROCEEDINGS From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Performance Graph The following graph illustrates the total return from July 22, 2021, the first trading date of our Class A common stock after our IPO, through December 31, 2023 for (i) our Class A common stock, (ii) the Standard and Poor's 500 55 Index, and (iii) the Standard and Poor’s 500 Financials Sector Index, assuming an investment of $100 on July 22, 2021, including the reinvestment of dividends: Ite m 6. [Reserved] 56
Biggest changeInformation relating to the compensation plans under which equity securities of Ryan Specialty are authorized for issuance is set forth under Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report and is incorporated herein by reference. 52 Table of Contents Stock Performance Graph The following graph illustrates the total return from July 22, 2021, the first trading date of our Class A common stock after our IPO, through December 31, 2024 for (i) our Class A common stock, (ii) the Standard and Poor’s 500 Index, and (iii) the Standard and Poor’s 500 Financials Sector Index, assuming an investment of $100 on July 22, 2021, including the reinvestment of dividends: ITEM 6. [RESERVED] 53 Table of Contents
Under the terms of the LLC Operating Agreement, the LLC is obligated to make tax distributions to current and future unitholders, including us, with such distributions to be made on a pro rata basis among the LLC Unitholders based on the LLC’s net taxable income and without regard to any applicable basis adjustment under Section 743(b) of the Code.
Under the terms of the LLC Operating Agreement, the LLC is obligated to make tax distributions to current and future LLC Unitholders, including us, with such distributions to be made on a pro rata basis among the LLC Unitholders based on the LLC’s net taxable income and without regard to any applicable basis adjustment under Section 743(b) of the Code.
Item 5. Market for Registrant’s Comm on Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our shares of Class A common stock, $0.001 par value per share, are traded on the New York Stock Exchange under the trading symbol RYAN. Our Class B common stock is not listed nor traded on any stock exchange.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares of Class A common stock, $0.001 par value per share, are traded on the New York Stock Exchange under the trading symbol RYAN. Our Class B common stock is not listed nor traded on any stock exchange.
While the Board has chosen to initiate a regular $0.11 cash dividend per share of Class A common stock in the first quarter of 2024, it is not required to do so and may in the future, in its sole discretion, choose to use such excess cash for any other purpose depending upon the facts and circumstances at the time of determination.
While the Board has chosen to initiate a regular $0.12 cash dividend per share of Class A common stock in the first quarter of 2025, it is not required to do so and may in the future, in its sole discretion, choose to use such excess cash for any other purpose depending upon the facts and circumstances at the time of determination.
On February 27, 2024, our Board declared a one-time special cash dividend of $0.23 per share on our outstanding Class A common stock. In addition, the Board initiated a regular quarterly dividend of $0.11 per share on our outstanding Class A common stock.
On February 27, 2024, our Board declared a one-time special cash dividend of $0.23 per share on our outstanding Class A common stock. In addition, the Board initiated a regular quarterly dividend of $0.11 per share on our outstanding Class A common stock. Both the special and regular quarterly dividend were paid on March 27, 2024.
On February 26, 2024 we had approximately 170 stockholders of record of our Class A common stock and 77 stockholders of record of our Class B common stock. Dividend Policy Prior to 2024, we had never declared or paid any cash dividend on our Class A common stock.
On February 17, 2025 we had approximately 149 stockholders of record of our Class A common stock and 76 stockholders of record of our Class B common stock. Dividend Policy Prior to 2024, we had never declared or paid any cash dividend on our Class A common stock.
Both the special and regular quarterly dividend will be payable on March 27, 2024 to stockholders of record as of the close of business on March 13, 2024. We intend to pay the regular $0.11 cash dividend per share of Class A common stock on a quarterly basis going forward.
We intend to pay the regular quarterly dividend of $0.12 per share of Class A common stock going forward.
Removed
Information relating to the compensation plans under which equity securities of Ryan Specialty are authorized for issuance is set forth under Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report and is incorporated herein by reference.
Added
The Board declared and we paid a regular dividend of $0.11 in each subsequent quarter during 2024. On February 20, 2025 , the Board declared a regular dividend of $0.12 to be paid on March 18, 2025 to shareholders of record on March 4, 2025 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA reconciliation of Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages): Year Ended December 31, 2023 2022 2021 Total revenue growth rate (GAAP) (1) 20.4 % 20.4 % 40.7 % Less: Mergers and acquisitions (2) (2.8 ) (2.8 ) (18.3 ) Change in other (3) (2.6 ) (1.2 ) 0.0 Organic revenue growth rate (Non-GAAP) 15.0 % 16.4 % 22.4 % (1) December 31, 2023 revenue of $2,077.5 million less December 31, 2022 revenue of $1,725.2 million is a $352.3 million year-over-year change.
Biggest changeA 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) 2024 2023 2022 Current period Net commissions and fees revenue $ 2,455,671 $ 2,026,596 $ 1,711,861 Less: Current period contingent commissions (73,175) (39,028) (30,788) Net Commissions and fees revenue excluding contingent commissions $ 2,382,496 $ 1,987,568 $ 1,681,073 Prior period Net commissions and fees revenue $ 2,026,596 $ 1,711,861 $ 1,432,179 Less: Prior period contingent commissions (39,028) (30,788) (22,995) Prior period Net commissions and fees revenue excluding contingent commissions $ 1,987,568 $ 1,681,073 $ 1,409,184 Change in Net commissions and fees revenue excluding contingent commissions $ 394,928 $ 306,494 $ 271,890 Less: Mergers and acquisitions Net commissions and fees revenue excluding contingent commissions (141,972) (46,496) (39,992) Impact of change in foreign exchange rates (791) (479) 4,561 Organic revenue growth (Non-GAAP) $ 252,165 $ 259,519 $ 236,459 Net commissions and fees revenue growth rate (GAAP) 21.2 % 18.4 % 19.5 % Less: Impact of contingent commissions (1) (1.3) (0.2) (0.2) Net commissions and fees revenue excluding contingent commissions growth rate (2) 19.9 % 18.2 % 19.3 % Less: Mergers and acquisitions Net commissions and fees revenue excluding contingent commissions (3) (7.1) (2.8) (2.8) Impact of change in foreign exchange rates (4) 0.0 0.0 0.3 Organic Revenue Growth Rate (Non-GAAP) 12.8 % 15.4 % 16.8 % (1) Calculated by subtracting Net commissions and fees revenue growth rate from net commissions and fees revenue excluding contingent commissions growth rate.
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.
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.
Adjusted Diluted Earnings Per Share We define Adjusted diluted earnings per share as Adjusted net income divided by diluted shares outstanding after adjusting for the effect if 100% of the outstanding LLC Common Units (together with the shares of Class B common stock), vested Class C Incentive Units, and unvested equity awards were exchanged into shares of Class A common stock.
Adjusted Diluted Earnings Per Share We define Adjusted diluted earnings per share as Adjusted net income divided by diluted shares outstanding after adjusting for the effect if 100% of the outstanding LLC Common Units (together with the shares of Class B common stock), vested Class C Incentive Units, and unvested equity awards were exchanged into shares of Class A common stock as if 100% of unvested equity awards were vested.
Amounts payable under the TRA are contingent upon, among other things: (i) generation of future taxable income over the term of the TRA and (ii) future changes in tax laws, including tax rate changes.
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.
Our ability to successfully pursue strategic acquisitions is dependent upon a number of factors, including sustained execution of a 58 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.
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.
The main drivers of this growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S market. In aggregate, we experienced stable commission rates period over period.
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 E&S market. In aggregate, we experienced stable commission rates period over period.
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.
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.
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, but we also receive supplemental commissions based on the volume placed or profitability of a book of business.
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.
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. 60 Expenses Compensation and Benefits Compensation and benefits is our largest expense.
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.
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 Net income attributed to the non-controlling interests is presented on the Consolidated Statements of Income.
Non-Controlling Interest 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.
Additionally, these risks include 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.
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.
Refer to “ Note 18, 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.
Refer to “ Note 18 , 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.
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 15, 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.
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 15 , 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.
Changes in tax laws and rates could 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 the tax related balances or valuation allowances.
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.
The following were the principal drivers of this increase: • Commissions increased $90.5 million, or 17.1%, period-over-period, driven by the 18.4% increase in total Net commissions and fees discussed above; • An increase of $21.9 million was driven by Restructuring and related expense associated with the ACCELERATE 2025 program; • An increase of $121.4 million was driven by (i) the addition of 507 employees compared to the prior year, inclusive of acquired employees, and (ii) growth in the business.
The following were the principal drivers of this increase: • Commissions increased $90.5 million, or 17.1%, period-over-period, driven by the 18.4% increase in total Net commissions and fees discussed above; 64 Table of Contents • An increase of $21.9 million was driven by Restructuring and related expense associated with the ACCELERATE 2025 program; • An increase of $121.4 million was driven by (i) the addition of 507 employees compared to the prior year, inclusive of acquired employees, and (ii) growth in the business.
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, 2023, the projected future expense, and the projected timing of future cash outflows associated with these arrangements.
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, 2024 , the projected future expense, and the projected timing of future cash outflows associated with these arrangements.
(3) 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) and vested Class C Incentive units were exchanged for shares of Class A common stock.
(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) and vested Class C Incentive units were exchanged for shares of Class A common stock.
(5) 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 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 12, Earnings 74 (Loss) Per Share ” of the audited consolidated financial statements.
(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 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 12 , Earnings Per Share ” of the audited consolidated financial statements.
The following discussion provides commentary on the financial results derived from our audited financial statements for the years ended December 31, 2023, 2022, and 2021 prepared in accordance with U.S. GAAP.
The following discussion provides commentary on the financial results derived from our audited financial statements for the years ended December 31, 2024 , 2023 , and 2022 , prepared in accordance with U.S. GAAP.
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.
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 72 Table of Contents provided by operations, and debt capacity available under our Revolving Credit Facility, Term Loan, and Senior Secured Notes.
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.
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 r evenue growth , attrition rates, operating margins, and weighted average cost of capital.
As we continue to experience revenue growth driven by the increase in complexity and inflow of risks into the E&S market, we do not believe there is a 79 reasonable likelihood there will be a material change in the estimates or assumptions used to calculate impairments or useful lives of amortizable intangible assets.
As we continue to experience revenue growth driven by the increase in complexity and inflow of risks into the E&S market, we do not believe there is a reasonable likelihood there will be a 77 Table of Contents material change in the estimates or assumptions used to calculate impairments or useful lives of amortizable intangible assets.
Our ability to grow our Binding Authority Specialty 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.
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.
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. 80 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.
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 78 Table of Contents 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.
(4) See “Note 12, Earnings (Loss) 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.
(4) See “ Note 12 , 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.
Interest earned on the Company’s Cash and cash equivalents balances offsets Interest expense, net. For the years ended December 31, 2023 and 2022 the Company earned interest income of $32.0 million and $10.6 million, respectively.
Interest earned on the Company’s Cash and cash equivalents balances offsets Interest expense, net. For the years ended December 31, 2023 and 65 Table of Contents 2022 the Company earned interest income of $32.0 million and $10.6 million, respectively.
As of December 31, 2023 and 2022, we recognized $358.9 million and $295.3 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.
As of December 31, 2024 and 2023 , we recognized $436.3 million and $358.9 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.
Item 7. Manageme nt’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.
ITEM 7. 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.
For the years ended December 31, 2023, 2022, and 2021, 4.1 million, 4.7 million, and 19.3 million shares 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.
For the years ended December 31, 2024 , 2023 , and 2022 , 4.4 million , 4.1 million , and 4.7 million shares 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.
If we determine in the future that we will not be able to fully utilize all or part of these deferred tax assets, 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 future periods.
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.
Below we have outlined the liabilities accrued as of December 31, 2023, the 78 projected future expense, and the projected timing of future cash outflows associated with these contingent consideration agreements.
Below we have outlined the liabilities accrued as of December 31, 2024 , the projected future expense, and the projected timing of future cash outflows associated with these contingent consideration agreements.
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.
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 for our retail and wholesale broker clients in the insurance distribution chain.
These estimates directly impact the amount of identified intangible assets recognized and the related amortization expense in future periods. As of December 31, 2023 and 2022, an aggregate of $572.4 million and $457.1 million, respectively, of Customer relationships was recorded on the Consolidated Balance Sheets.
These estimates directly impact the amount of identified intangible assets recognized and the related amortization expense in future periods. As of December 31, 2024 and 2023 , an aggregate of $1,392.0 million and $572.4 million , respectively, of Customer relationships was recorded on the Consolidated Balance Sheets.
In periods of economic growth and liquid credit markets, this underlying activity can accelerate and provide tailwinds to our growth. In periods of economic decline and tight credit markets, this underlying activity can slow or be delayed and provide headwinds to our growth.
In periods of economic decline and tight credit markets, this underlying activity can slow or be delayed and provide headwinds to our growth.
For the year ended December 31, 2022, 144.0 million weighted average outstanding LLC Common Units were considered dilutive and included in the 265.8 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. See “Note 12, Earnings (Loss) Per Share” in the footnotes to the consolidated financial statements in this Annual Report.
For the year ended December 31, 2022, 144.0 million weighted average outstanding LLC Common Units were considered dilutive and included in the 265.8 million Weighted- average shares of Class A common stock outstanding - diluted within Diluted EPS. See “ Note 12 , Earnings Per Share ” in the footnotes to the consolidated financial statements in this Annual Report.
The Company recognized a liability for employee deferrals, inclusive of changes in the value of deferred amounts held, of $3.5 million and $22.4 million in Current Accrued compensation and Non-current Accrued compensation, respectively, on the Consolidated Balance Sheets as of December 31, 2023, and $2.2 million and $10.0 million in Current Accrued compensation and Non-current Accrued compensation, respectively, on the Consolidated Balance Sheets as of December 31, 2022.
The Company recognized a liability for employee deferrals, inclusive of changes in the value of deferred amounts held, of $5.2 million and $36.5 million in Current accrued compensation and Non-current accrued compensation, respectively, on the Consolidated Balance Sheets as of December 31, 2024 , and $3.5 million and $22.4 million in Current accrued compensation and Non-current accrued compensation, respectively, on the Consolidated Balance Sheets as of December 31, 2023 .
Loss mitigation and other fees grew $5.8 million, or 20.5%, period-over-period primarily due to captive management and other risk management services fees from the placement of alternative risk insurance solutions as well as certain fees related to the ACE, Point6, and AccuRisk acquisitions completed in the second half of 2023.
Loss mitigation and other fees grew $5.8 million, or 20.5%, period-over-period primarily due to captive management and other risk management services fees from the placement of alternative risk insurance solutions, and certain fees related to the acquisitions completed in the second half of 2023.
For the years ended December 31, 2023, 2022, and 2021, this removes $4.2 million, $76.3 million, and $0.0 million of Net income, respectively, on 125.7 million, 265.8 million, and 105.7 million Weighted-average shares of Class A common stock outstanding - diluted, respectively.
For the years ended December 31, 2024 , 2023 , and 2022 , this removes $0.3 million , $4.2 million , and $76.3 million of Net income, respectively, on 132.9 million , 125.7 million , and 265.8 million Weighted-average shares of Class A common stock outstanding - diluted, respectively.
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. 81
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. 79 Table of Contents
The main drivers of the cash flows used for investing activities for the year ended December 31, 2023 were $446.7 million of acquisition payments made for the Griffin, Socius, ACE, Point6, and AccuRisk acquisitions as well as $29.8 million of Capital expenditures.
The main drivers of the cash flows used for investing activities for the year ended December 31, 2023, were $446.7 million of acquisition payments related to the Griffin, ACE, Point6, Socius, and AccuRisk acquisitions and $29.8 million of capital expenditures.
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 financial liabilities resulting from our business combinations, namely contingent consideration arrangements.
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.
To the extent we do not generate sufficient taxable income to take the full deduction in any given year, it would result in a net operating loss (“NOL”) that is available for us to utilize over an indefinite carryforward period to fully realize the deferred tax assets.
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.
For the years ended December 31, 2023, 2022, and 2021, this includes $133.4 million, $102.2 million, and $(9.2) million of Net income (loss), respectively, on 268.1 million, 265.8 million, and 248.7 million Weighted-average shares of Class A common stock outstanding - diluted, respectively.
For the years ended December 31, 2024 , 2023 , and 2022 , this includes $135.2 million , $133.4 million , and $102.2 million of Net income (loss), respectively, on 271.9 million , 268.1 million , and 265.8 million Weighted-average shares of Class A common stock outstanding - diluted, respectively.
If remaining targets were to be met for these contingent consideration arrangements, the maximum amount of the liability would be $106.2 million as of December 31, 2023, and the additional expense would be recorded over the next 2.3 years in Change in contingent consideration within the Consolidated Statements of Income.
If remaining targets were to be met for these contingent consideration arrangements, the maximum amount of the liability would be $563.1 million as of December 31, 2024 , and the additional expense would be recorded over the next 3.3 years in Change in contingent consideration within the Consolidated Statements of Income.
Given our historical ability to generate taxable income, our projected future taxable income, and the indefinite carryforward period available for NOLs, we consider it more likely than not that we will realize these 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.
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, 2023 and 2022, $383.8 million and $396.8 million, respectively, of Deferred tax assets were recorded on the Consolidated Balance Sheets.
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, 2024 and 2023 , $448.3 million and $383.8 million , respectively, of Deferred tax assets were recorded on the Consolidated Balance Sheets.
For years ended December 31, 2023 and 2022, Other non-operating loss included a $10.4 million and $5.6 million charge, respectively, related to the change in the TRA liability caused by a change in our blended state tax rates.
Other non- operating loss included a $10.4 million and $5.6 million charge for the years ended December 31, 2023 and 2022, respectively, 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.
For the year ended December 31, 2021, 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 4.12% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC.
For the year ended December 31, 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.
The remaining $0.04 of the regular quarterly dividend will be funded by free cash flow from the LLC and will be payable to all holders of the Class A common stock and LLC Common Units. We may be required to seek additional equity or debt financing.
The remaining $0.05 of the regular quarterly dividend was funded by free cash flow from the LLC and paid to all holders of the Class A common stock and LLC Common Units. We may be required to seek additional equity or debt financing.
See “ Liquidity and Capital Resources - Tax Receivable Agreement ” for additional information about the TRA. 57 ACCELERATE 2025 Program During the first quarter of 2023 we initiated the ACCELERATE 2025 program that will enable continued growth, drive innovation, and deliver sustainable productivity improvements over the long term.
See “ Liquidity and Capital Resources - Tax Receivable Agreement ” for additional information about the TRA. 54 Table of Contents ACCELERATE 2025 Program During the first quarter of 2023, we initiated the ACCELERATE 2025 program to enable continued growth, drive innovation, and deliver sustainable productivity improvements over the long term.
The primary uses of liquidity are operating expenses, seasonal working capital needs, business combinations, capital expenditures, obligations under the TRA, taxes, and distributions to LLC Unitholders.
The primary uses of liquidity are operating expenses, seasonal working capital needs, business combinations, capital expenditures, obligations under the TRA, taxes, distributions to LLC Unitholders, and dividends to Class A common stockholders.
(4) 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 268.1 million, 265.8 million, and 248.7 million Weighted-average shares of Class A common stock outstanding - diluted years ended December 31, 2023, 2022, and 2021, respectively.
(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 271.9 million , 268.1 million , and 265.8 million Weighted-average shares of Class A common stock outstanding - diluted years ended December 31, 2024 , 2023 , and 2022 , respectively.
Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors.
In aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors.
In completing this evaluation, 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 tax law, and results of recent operations.
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.
(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.
(2) General and administrative expense ratio is defined as General and administrative expense divided by Total revenue. 59 Table of Contents (3) Net income margin is defined as Net income divided by Total revenue.
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, 2023 increased $141.7 million from the year ended December 31, 2022 to $477.2 million.
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, 2024 , increased $37.7 million from the year ended December 31, 2023 , to $514.9 million .
Underwriting Management net commissions and fees increased by $80.0 million, or 22.8%, period-over-period, primarily due to strong organic growth within the Specialty as well as contributions from the ACE and Point6 acquisitions. 63 The following table sets forth our revenue by type of commission and fees: Year Ended December 31, Period over Period (in thousands, except percentages) 2023 % of total 2022 % of total Change Net commissions and policy fees $ 1,935,851 95.5 % $ 1,633,325 95.4 % $ 302,526 18.5 % Supplemental and contingent commissions 56,375 2.8 % 50,005 2.9 % 6,370 12.7 Loss mitigation and other fees 34,370 1.7 % 28,531 1.7 % 5,839 20.5 Total Net commissions and fees $ 2,026,596 $ 1,711,861 $ 314,735 18.4 % Net commissions and policy fees grew $302.5 million, or 18.5%, period-over-period, slightly higher than the overall net commissions and fee revenue growth of 18.4% for the year ended December 31, 2023 compared to the prior year.
The following table sets forth our revenue by type of commission and fees: Year Ended December 31, Period over Period (in thousands, except percentages) 2023 % of total 2022 % of total Change Net commissions and policy fees $ 1,935,851 95.5 % $ 1,633,325 95.4 % $ 302,526 18.5 % Supplemental and contingent commissions 56,375 2.8 50,005 2.9 6,370 12.7 Loss mitigation and other fees 34,370 1.7 28,531 1.7 5,839 20.5 Total Net commissions and fees $ 2,026,596 $ 1,711,861 $ 314,735 18.4 % Net commissions and policy fees grew $302.5 million, or 18.5%, period-over-period, slightly higher than the overall net commissions and fee revenue growth of 18.4% for the year ended December 31, 2023 compared to the prior year.
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.
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.
For example, in 2023, our revenue derived from the Top 100 firms (as ranked by Business Insurance) expanded faster than our Organic revenue growth rate of 15.0%.
For example, in 2024, our revenue derived from the Top 100 firms (as ranked by Business Insurance) expanded faster than our Organic revenue growth rate of 12.8%.
As set forth in the table below, and assuming no changes in the relevant tax law and that we earn sufficient taxable income to realize all cash tax savings that are subject to the TRA, we expect future payments under the TRA as a result of transactions as of December 31, 2023 will be $358.9 million in aggregate.
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 $436.3 million in aggregate as of December 31, 2024 .
Of the $838.8 million of Cash and cash equivalents on the Consolidated Balance Sheet as of December 31, 2023, $106.4 million was held in fiduciary 75 accounts representing collected revenue and was available to be transferred to operating accounts and used for general corporate purposes.
Of the $540.2 million of Cash and cash equivalents on the Consolidated Balance Sheet as of December 31, 2024 , $100.8 million was held in fiduciary accounts representing collected revenue and was available to be transferred to operating accounts and used for general corporate purposes.
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) 2023 2022 2021 Total Revenue $ 2,077,549 $ 1,725,193 $ 1,432,771 General and Administrative Expense $ 276,181 $ 196,971 $ 138,955 Acquisition-related expense (19,088 ) (4,477 ) (4,275 ) Restructuring and related expense (26,626 ) (4,993 ) (4,727 ) Other non-recurring expense — — (351 ) IPO related expenses — (1,545 ) (3,625 ) Adjusted General and Administrative Expense (1) $ 230,467 $ 185,956 $ 125,977 General and Administrative Expense Ratio 13.3 % 11.4 % 9.7 % Adjusted General and Administrative Expense Ratio 11.1 % 10.8 % 8.8 % (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 ”. 70 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.
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) 2024 2023 2022 Total Revenue $ 2,515,710 $ 2,077,549 $ 1,725,193 General and Administrative Expense $ 352,050 $ 276,181 $ 196,971 Acquisition-related expense (54,469) (19,088) (4,477) Restructuring and related expense (19,768) (26,626) (4,993) IPO related expenses — — (1,545) Adjusted General and Administrative Expense (1) $ 277,813 $ 230,467 $ 185,956 General and Administrative Expense Ratio 14.0% 13.3% 11.4% Adjusted General and Administrative Expense Ratio 11.0% 11.1% 10.8% (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 ”. 68 Table of Contents 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.
The following were the principal drivers of the increase: • $236.4 million, or 16.4%, of the period-over-period change in Total revenue was due to organic revenue growth in Net commissions and fees.
The following were the principal 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.
The Company recognizes a liability on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA. 76 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.
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.
Income Before Income Taxes Due to the factors above, Income before income taxes increased $58.7 million, or 32.8%, from $179.2 million to $237.9 million for the year ended December 31, 2023 compared to the prior year. 65 Income Tax Expense Income tax expense increased $27.5 million from $15.9 million to $43.4 million for the year ended December 31, 2023 as compared to the prior year primarily due to $18.4 million of Deferred income tax expense recognized as a result of the Common Control Reorganizations (“CCRs”) subsequent to the Socius and AccuRisk acquisitions in the second half of 2023.
Income Tax Expense Income tax expense increased $27.5 million from $15.9 million to $43.4 million for the year ended December 31, 2023 as compared to the prior year primarily due to $18.4 million of Deferred income tax expense recognized as a result of the Common Control Reorganizations (“CCRs”) subsequent to the Socius and AccuRisk acquisitions in the second half of 2023.
Other Non-Operating Loss For years ended December 31, 2023 and 2022, Other non-operating loss included charges related to the change in the TRA liability caused by a change in our blended state tax rates. In 2021, Other non-operating loss included the change in fair value of the embedded derivatives on the Redeemable Preferred Units.
For the years ended December 31, 2023 and 2022, Other non-operating loss included charges related to the change in the TRA liability caused by a change in our blended state tax rates.
The remaining costs that preceded the restructuring plan were associated with professional services costs related to program design and licensing costs. In 2021 and 2022, Restructuring and related expense represented costs associated with the 2020 restructuring plan. Amortization and expense consisted of charges related to discontinued prepaid incentive programs.
The remaining costs that preceded the restructuring plan were associated with professional services costs related to program design and licensing costs. For the year ended December 31, 2022, Restructuring and related expense represented costs associated with the 2020 restructuring plan. Amortization and expense is composed of charges related to discontinued prepaid incentive programs.
The Company will retain the benefit of 15% of these cash savings. Comparison of Cash Flows for the Year Ended December 31, 2023 and 2022 Cash and cash equivalents decreased $153.9 million from $992.7 million at December 31, 2022 to $838.8 million at December 31, 2023.
The Company will retain the benefit of 15% of these cash savings. Comparison of Cash Flows for the Year Ended December 31, 2024 and 2023 Cash and cash equivalents decreased $298.6 million from $838.8 million at December 31, 2023 , to $540.2 million at December 31, 2024 .
Organic Revenue Growth Rate Organic revenue growth rate represents the percentage change in Total revenue, as compared to the prior year, adjusted for revenue attributable to recent acquisitions during the first 12 months of Ryan Specialty’s ownership, and other adjustments such as contingent commissions, fiduciary investment income, and the impact of changes in foreign exchange rates.
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.
For the year ended December 31, 2022, Other non-operating loss included a $5.6 million change in the TRA liability caused by a change in our blended state tax rates.
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.
Comparison of the Year Ended December 31, 2022 and 2021 Revenue Total revenue Total revenue increased by $292.4 million, or 20.4%, from $1,432.8 million to $1,725.2 million for the year ended December 31, 2021 as compared to the prior year.
Comparison of the Years Ended December 31, 2023 and 2022 Revenue Total Revenue Total revenue increased by 352.3 million, or 20.4%, from $1,725.2 million to $2,077.5 million, for the year ended December 31, 2023 as compared to the prior year.
Underwriting Management net commissions and fees increased by $61.0 million, or 21.0%, period-over-period, primarily due to strong organic growth within the Specialty as well as contributions from the Keystone acquisition.
Underwriting Management net commissions and fees increased by $80.0 million, or 22.8%, period-over-period, primarily due to strong organic growth within the Specialty as well as contributions from the ACE and Point6 acquisitions.
The compensation and benefits expense included severance as well as employment costs related to services rendered between the notification and termination dates. See “Note 5, Restructuring” in the footnotes to the consolidated financial statements in this Annual Report for further discussion of ACCELERATE 2025.
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. See “ Note 5 , Restructuring ” of the annual audited consolidated financial statements for further discussion of ACCELERATE 2025.
As of December 31, 2023, the Company had six contingent consideration arrangements outstanding, with an aggregate fair value of $41.1 million.
As of December 31, 2024 , the Company had eight contingent consideration liability arrangements outstanding, with an aggregate fair value of $129.1 million .
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) 2023 2022 2021 Total Revenue $ 2,077,549 $ 1,725,193 $ 1,432,771 Compensation and Benefits Expense $ 1,321,029 $ 1,128,981 $ 991,618 Acquisition-related expense (4,186 ) (122 ) — Acquisition related long-term incentive compensation (1) 4,334 (22,093 ) (38,405 ) Restructuring and related expense (22,651 ) (724 ) (9,934 ) Amortization and expense related to discontinued prepaid incentives (6,441 ) (6,738 ) (7,209 ) Equity-based compensation (31,047 ) (23,390 ) (13,639 ) IPO related expenses (38,696 ) (54,091 ) (75,868 ) Adjusted Compensation and Benefits Expense (2) $ 1,222,342 $ 1,021,823 $ 846,563 Compensation and Benefits Expense Ratio 63.6 % 65.4 % 69.2 % Adjusted Compensation and Benefits Expense Ratio 58.8 % 59.2 % 59.1 % (1) In 2023, Acquisition related long-term incentive compensation includes a $6.8 million expense reversal related to the claw back of an All Risks LTIP payment from a terminated employee.
The most comparable GAAP financial metric is Compensation and benefits expense ratio. 67 Table of Contents 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) 2024 2023 2022 Total Revenue $ 2,515,710 $ 2,077,549 $ 1,725,193 Compensation and Benefits Expense $ 1,591,077 $ 1,321,029 $ 1,128,981 Acquisition-related expense (15,373) (4,186) (122) Acquisition related long-term incentive compensation (1) (24,946) 4,334 (22,093) Restructuring and related expense (39,929) (22,651) (724) Amortization and expense related to discontinued prepaid incentives (5,160) (6,441) (6,738) Equity-based compensation (52,038) (31,047) (23,390) IPO related expenses (26,957) (38,696) (54,091) Adjusted Compensation and Benefits Expense (2) $ 1,426,674 $ 1,222,342 $ 1,021,823 Compensation and Benefits Expense Ratio 63.2% 63.6% 65.4% Adjusted Compensation and Benefits Expense Ratio 56.7% 58.8% 59.2% (1) In 2023, Acquisition related long-term incentive compensation includes a $6.8 million expense reversal related to the claw back of an All Risks LTIP payment from a terminated employee.
We evaluate these assets on a quarterly basis to conclude whether they are more likely than not to be realized. We make estimates and judgments which affect our valuation of the carrying value of our deferred tax assets.
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.
The main drivers of cash flows provided by financing activities during the year ended December 31, 2023 were $71.7 million of Tax distributions to LLC unitholders, the Repayment of term debt of $16.5 million, and the Payment of Tax Receivable Agreement liabilities of $16.2 million, offset by $97.2 million Net change in fiduciary liabilities.
The main drivers of cash flows used in financing activities during the year ended December 31, 2023, were $71.7 million of Tax distributions to non-controlling LLC Unitholders, the Repayment of term debt of $16.5 million, and the Payment of Tax Receivable Agreement liabilities of $16.2 million, offset by $97.2 million Net change in fiduciary liabilities. 75 Table of Contents Contractual Obligations and Commitments Our principal commitments consist of contractual obligations in connection with investing and operating activities.
Refer to “Note 10, Stockholders’ Equity” of the audited consolidated financial statements in this Annual Report for more information. 61 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) 2023 2022 2021 Revenue Net commissions and fees $ 2,026,596 $ 1,711,861 $ 1,432,179 Fiduciary investment income 50,953 13,332 592 Total revenue $ 2,077,549 $ 1,725,193 $ 1,432,771 Expenses Compensation and benefits 1,321,029 1,128,981 991,618 General and administrative 276,181 196,971 138,955 Amortization 106,799 103,601 107,877 Depreciation 9,038 5,690 4,806 Change in contingent consideration 5,421 442 2,891 Total operating expenses $ 1,718,468 $ 1,435,685 $ 1,246,147 Operating income $ 359,081 $ 289,508 $ 186,624 Interest expense, net 119,507 104,829 79,354 Loss (income) from equity method investment in related party (8,731 ) 414 759 Other non-operating loss 10,380 5,073 44,947 Income before income taxes $ 237,925 $ 179,192 $ 61,564 Income tax expense 43,445 15,935 4,932 Net income $ 194,480 $ 163,257 $ 56,632 GAAP financial measures Revenue $ 2,077,549 $ 1,725,193 $ 1,432,771 Compensation and benefits 1,321,029 1,128,981 991,618 General and administrative 276,181 196,971 138,955 Net income $ 194,480 $ 163,257 $ 56,632 Total revenue growth rate 20.4 % 20.4 % 40.7 % Compensation and benefits expense ratio (1) 63.6 % 65.4 % 69.2 % General and administrative expense ratio (2) 13.3 % 11.4 % 9.7 % Net income margin (3) 9.4 % 9.5 % 4.0 % Earnings (loss) per share (4) $ 0.53 $ 0.57 $ (0.07 ) Diluted earnings (loss) per share (4) $ 0.52 $ 0.52 $ (0.07 ) Non-GAAP financial measures* Organic revenue growth rate 15.0 % 16.4 % 22.4 % Adjusted compensation and benefits expense $ 1,222,342 $ 1,021,823 $ 846,563 Adjusted compensation and benefits expense ratio 58.8 % 59.2 % 59.1 % Adjusted general and administrative expense $ 230,467 $ 185,956 $ 125,977 Adjusted general and administrative expense ratio 11.1 % 10.8 % 8.8 % Adjusted EBITDAC $ 624,740 $ 517,414 $ 460,231 Adjusted EBITDAC margin 30.1 % 30.0 % 32.1 % Adjusted net income $ 375,582 $ 311,991 $ 290,117 Adjusted net income margin 18.1 % 18.1 % 20.2 % Adjusted diluted earnings per share $ 1.38 $ 1.15 $ 1.08 (1) Compensation and benefits expense ratio is defined as Compensation and benefits expense divided by Total revenue.
Refer to “ Note 10 , Stockholders’ Equity ” of the audited consolidated financial statements in this Annual Report for more information. 58 Table of Contents 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) 2024 2023 2022 Revenue Net commissions and fees $ 2,455,671 $ 2,026,596 $ 1,711,861 Fiduciary investment income 60,039 50,953 13,332 Total revenue $ 2,515,710 $ 2,077,549 $ 1,725,193 Expenses Compensation and benefits 1,591,077 1,321,029 1,128,981 General and administrative 352,050 276,181 196,971 Amortization 157,845 106,799 103,601 Depreciation 9,785 9,038 5,690 Change in contingent consideration (22,859) 5,421 442 Total operating expenses $ 2,087,898 $ 1,718,468 $ 1,435,685 Operating income $ 427,812 $ 359,081 $ 289,508 Interest expense, net 158,448 119,507 104,829 Loss (income) from equity method investment in related party (18,231) (8,731) 414 Other non-operating loss 15,041 10,380 5,073 Income before income taxes $ 272,554 $ 237,925 $ 179,192 Income tax expense 42,641 43,445 15,935 Net income $ 229,913 $ 194,480 $ 163,257 GAAP financial measures Revenue $ 2,515,710 $ 2,077,549 $ 1,725,193 Compensation and benefits 1,591,077 1,321,029 1,128,981 General and administrative 352,050 276,181 196,971 Net income 229,913 194,480 163,257 Total revenue growth rate 21.1 % 20.4 % 20.4 % Compensation and benefits expense ratio (1) 63.2 % 63.6 % 65.4 % General and administrative expense ratio (2) 14.0 % 13.3 % 11.4 % Net income margin (3) 9.1 % 9.4 % 9.5 % Earnings per share (4) $ 0.78 $ 0.53 $ 0.57 Diluted earnings per share (4) $ 0.71 $ 0.52 $ 0.52 Non-GAAP financial measures* Organic revenue growth rate 12.8 % 15.4 % 16.8 % Adjusted compensation and benefits expense $ 1,426,674 $ 1,222,342 $ 1,021,823 Adjusted compensation and benefits expense ratio 56.7 % 58.8 % 59.2 % Adjusted general and administrative expense $ 277,813 $ 230,467 $ 185,956 Adjusted general and administrative expense ratio 11.0 % 11.1 % 10.8 % Adjusted EBITDAC $ 811,223 $ 624,740 $ 517,414 Adjusted EBITDAC margin 32.2 % 30.1 % 30.0 % Adjusted net income $ 493,521 $ 375,582 $ 311,991 Adjusted net income margin 19.6 % 18.1 % 18.1 % Adjusted diluted earnings per share $ 1.79 $ 1.38 $ 1.15 (1) Compensation and benefits expense ratio is defined as Compensation and benefits expense divided by Total revenue.
Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors. We experienced growth across the majority of our property and casualty lines.
In aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors.
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 generated by all transactions that occurred during the years ended December 31, 2023 and 2022.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−1 removed4 unchanged
Biggest changeForeign Currency Risk For the year ended December 31, 2023, approximately 3% of revenues were generated from activities in the United Kingdom, Europe, Canada, and Singapore. We are exposed to currency risk from the potential changes between the exchange rates of the US Dollar, Canadian Dollar, British Pound, Euro, Swedish Krona, Danish Krone, and other currencies.
Biggest changeWe are exposed to currency risk from the potential changes between the exchange rates of the US Dollar, British Pound, Euro, Swedish Krona, Danish Krone, Canadian Dollar, Singapore Dollar and other currencies. The exposure to foreign currency risk from the potential changes between the exchange rates between the USD and other currencies is immaterial.
The fair value of the Term Loan approximates the carrying amount as of December 31, 2023, as determined based upon information available. On April 7, 2022, the Company entered into an interest rate cap agreement to manage its exposure to interest rate fluctuations related to the Company’s Term Loan for an upfront cost of $25.5 million.
The fair value of the Term Loan approximates the carrying amount as of December 31, 2024 , as determined based upon information available. On April 7, 2022 , the Company entered into an interest rate cap agreement to manage its exposure to interest rate fluctuations related to the Company’s Term Loan for an upfront cost of $25.5 million .
To minimize this risk, the Company and its subsidiaries hold funds pursuant to a Board approved investment policy. The policy mandates the preservation of principal and liquidity and requires broad diversification with counter-party limits assigned based primarily on credit rating and type of investment.
To minimize this risk, the Company and its subsidiaries hold funds pursuant to an investment policy approved by our Board. The policy mandates the preservation of principal and liquidity and requires broad diversification with counter-party limits assigned based primarily on credit rating and type of investment.
As of December 31, 2023, we had $1,596.4 million of outstanding principal on our Term Loan borrowings, which bears interest on a floating rate, subject to a 0.75% floor. We are subject to Adjusted Term SOFR interest rate changes and exposure in excess of the floor.
As of December 31, 2024 , we had $1,700.0 million of outstanding principal on our Term Loan borrowings, which bears interest on a floating rate, subject to a 0.00% floor. We are subject to Adjusted Term SOFR interest rate changes and exposure in excess of the floor.
Interest rate risk and credit risk to counterparties generated from the Company’s Cash and cash equivalents, and Cash and cash equivalents held in a fiduciary capacity will fluctuate with the general level of interest rates.
Interest Rate Risk and Credit Risk Certain of the Company’s revenues, expenses, assets and liabilities are exposed to the impact of interest rate changes. Interest rate risk and credit risk to counterparties generated from the Company’s Cash and cash equivalents, and Cash and cash equivalents held in a fiduciary capacity will fluctuate with the general level of interest rates.
Other financial instruments consist of Cash and cash equivalents, Commissions and fees receivable – net, Other current assets, and Accounts payable and accrued liabilities. The carrying amounts of Cash and cash equivalents, Commissions and fees receivable – net, and Accounts payable and accrued liabilities approximate fair value because of the short-term nature of the instruments. 83
The carrying amounts of Cash and cash equivalents, Commissions and fees receivable – net, and Accounts payable and accrued liabilities approximate fair value because of the short-term nature of the instruments. 81 Table of Contents
Based on the below balances as of December 31, 2023, the impact of a hypothetical 100 basis point (BPS) increase or decrease in year-end prevailing short-term interest rates for one year would be: (in thousands) Balance at December 31, 2023 100 BPS Increase 100 BPS Decrease Cash and cash equivalents $ 838,790 $ (8,388 ) $ 8,388 Term Loan principal outstanding (1) 1,596,375 15,964 $ (15,964 ) Interest rate cap notional amount (2) 1,000,000 (10,000 ) $ 10,000 Net exposure to Interest expense, net (2,424 ) 2,424 Cash and cash equivalents held in a fiduciary capacity 917,542 9,175 $ (9,175 ) Net exposure to Fiduciary investment income $ 9,175 $ (9,175 ) Impact to Net income 11,600 (11,600 ) (1) To the extent SOFR falls below 0.75%, the impact of a change in interest rates is zero.
Based on the below balances as of December 31, 2024 , the impact of a hypothetical 100 basis point (BPS) increase or decrease in year-end prevailing short-term interest rates for one year would be: (in thousands) Balance at December 31, 2024 100 BPS Increase 100 BPS Decrease Cash and cash equivalents $ 540,203 $ (5,402) $ 5,402 Term Loan principal outstanding (1) 1,700,000 17,000 $ (17,000) Interest rate cap notional amount (2) 1,000,000 (10,000) $ 10,000 Net exposure to Interest expense, net 1,598 (1,598) Cash and cash equivalents held in a fiduciary capacity 1,140,602 11,406 $ (11,406) Net exposure to Fiduciary investment income $ 11,406 $ (11,406) Impact to Net income $ 9,808 $ (9,808) (1) To the extent SOFR falls below 0.00% , the impact of a change in interest rates is zero.
The majority of Cash and cash equivalents and Cash and cash equivalents held in a fiduciary capacity are held in demand deposit accounts and 82 short-term investments, consisting principally of AAA-rated money market funds and treasury bills, having original maturities of 90 days or less.
The majority of Cash and cash equivalents and Cash and cash equivalents held in a fiduciary capacity are held in demand deposit accounts and short-term investments, consisting principally of AAA-rated money market funds and treasury bills, having original maturities of 90 days or less. 80 Table of Contents Other financial instruments consist of Cash and cash equivalents, Commissions and fees receivable – net, Other current assets, and Accounts payable and accrued liabilities.
Removed
The exposure to foreign currency risk from the potential changes between the exchange rates between the USD and other currencies is immaterial. Interest Rate Risk and Credit Risk Certain of the Company’s revenues, expenses, assets and liabilities are exposed to the impact of interest rate changes.
Added
Foreign Currency Risk For the year ended December 31, 2024 , approximately 5% of revenues were generated from activities in the United Kingdom, Europe, Canada, India, and Singapore .

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