Ryan Specialty Holdings Inc - Class A

Ryan Specialty Holdings, Inc. reported 11.8% organic revenue growth during the first quarter. However, the company cut its 2026 organic revenue outlook to mid-single-digit growth from its prior outlook of high-single-digit growth. Despite this, we are encouraged to see the continued robust submission growth, and we believe the rate pressure is a short-term phenomenon, not a structural issue. In late May, Ryan increased its share repurchase authorization by an additional $300MM after exhausting its first ever authorization in the first five months of 2026. We added to our position in Ryan early in the quarter when its price to value ratio was more attractive.

Ryan Specialty Holdings, Inc. reported 11.8% organic revenue growth during the first quarter. Although the company cut its 2026 organic revenue outlook to mid-single-digit growth from high-single-digit growth, we are encouraged by the continued robust submission growth in the excess and surplus market. We believe the rate pressure is a short-term phenomenon, not a structural issue. In late May, Ryan increased its share repurchase authorization by an additional $300MM after exhausting its first authorization in the first five months of 2026. We added to our position in Ryan early in the quarter when its price to value ratio was more attractive.

Ryan Specialty is a leading specialist in excess and surplus insurance, which is structurally expanding. The firm is viewed as the most capable navigator in a market that is complex and hard-to-place. While there are fears regarding AI disintermediation, we believe that Ryan Specialty's business model, which relies on human judgment for complex claims, positions it well against these concerns. The market has mispriced Ryan Specialty as an AI casualty, but we see it as a resilient business that can leverage AI to enhance its operations rather than be replaced by it.

The investment case for Ryan Specialty has been pressured by a softening insurance (pricing) cycle. We failed to recognise how quickly operating trends deteriorated. Ryan Specialty’s competitive position remains strong, and management continue to invest countercyclically in talent and technology. We have exited the position, however, and continue to monitor the pricing trends closely with a view to re-investing once the pricing environment stabilises.

Ryan Specialty Holdings (RYAN) is one of three Excess and Surplus brokers dominating the U.S. market, growing at a solid double-digit rate. Despite concerns about AI, RYAN is using AI to enhance efficiency and risk assessment, which we believe will benefit the company. The CEO of a major insurance company confirmed that they would not consider using AI instead of RYAN for complex risks, indicating strong trust in RYAN's capabilities. We have been buying RYAN as we see it as a strong player in a growing market.

The investment case for Ryan Specialty (RYAN) has been tested by a turning insurance cycle, with a weakening pricing environment impacting investor sentiment. Founder Pat Ryan noted the rapid shift in market sentiment, stating, 'What distinguishes this cycle is simple. It was harder for longer on the way up and much faster on the way down, particularly as it relates to property.' Despite Ryan Specialty's strong competitive position and management's countercyclical investments in talent and technology, the continuing weakness in end markets has led us to materially reduce the size of our investment.

During the quarter, Ryan Specialty Holdings reported Q4 results, which showed strong revenue growth of 13% in an insurance market where pricing continues to normalise. We believe this demonstrates the strength of RYAN’s customer proposition (speciality expertise around the most difficult to insure risks). EBITDA grew by 30% which was aided by acquisitions. We expect continued strong performance for 2025.