Ryan Specialty Holdings, Inc. (NYSE:RYAN) Q3 2023 Earnings Call Transcript

Michael Ward: Thank you so much.

Operator: Our next question comes from the line of Tracy Benguigui with Barclays. Please proceed with your question.

Tracy Dolin-Benguigui: Thank you. I’m wondering how has business mix by product lines changed in the third quarter of 2023 versus the third quarter 2022? That might have played into your strong organic revenue growth of 14.7% this quarter.

Patrick Ryan: I don’t think that’s a factor as much as the momentum. The momentum is strong.

Jeremiah Bickham: Well, yes, and Tracy, if you’ll recall, in Q3 of last year is when we started a rapid deceleration in public D&O. Public D&O is still a headwind for us, but its impact is less compared to a year ago.

Tracy Dolin-Benguigui: Okay. So the public D&O hasn’t fully cycled out yet?

Jeremiah Bickham: Well, we’ve been through 12 months of pain on it, but rates keep going down. It’s just the impact in Q3 of 2023 was lesser of an impact than Q3 of 2022. And this is one example.

Tracy Dolin-Benguigui: Got it. I also want to touch upon your Underwriting Management. You mentioned the profit commissions. I’m just wondering, could that work the other way, like, let’s say, do you have to pay a clawback if the casualty loss ratios are worse than whatever target you mutually set up with the carrier?

Timothy Turner: No, I appreciate the question, but I want to emphasize, we only recognize the profit commissions when they are both collected and fully earned. We never accrue anything that could be – there is no clawback in any of these.

Tracy Dolin-Benguigui: Okay. So then there’ll just be no profit commission if you didn’t hit the loss ratios over time?

Timothy Turner: Exactly. A miss would result in a zero. We only recognize it when it’s earned and never opened a clawback.

Tracy Dolin-Benguigui: Got it. Thank you.

Operator: And it looks like we have reached the end of our question-and-answer session. And therefore, I’ll turn the call back over to Pat Ryan for any closing comments.

Patrick Ryan: Well, it was a very fast discussion. We’re very pleased with how well our team has performed through the first nine months. We’re very proud of the performance. We’re very thankful for your support and interest in your good questions. We’ll be talking to you in another three months. But several of you prior to that, obviously. Have a good evening.

Operator: And this concludes today’s conference call. You may now disconnect your lines. Thank you for your participation.