Prepared remarks
Good afternoon, and thank you for joining us today for Ryan Specialty Holdings Second Quarter 26 Earnings Conference Call. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC. The company assumes no duty to update such forward-looking statements in the future except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website. With that, I would now like to turn the call over to the Founder and Executive Chairman of Ryan Specialty, Patrick G. Ryan.
Good afternoon, and thank you for joining us. With me on today's call is our CEO, Timothy William Turner; our CFO, Janice Hamilton; our CEO of underwriting managers, Miles Wuller; and our head of investor relations, Nicholas J. Mezick. For the quarter, total revenue grew 7.2% to $917 million, primarily driven by organic revenue growth of 6.7%, as well as modest contributions from M&A. Adjusted EBITDAC grew 6% to $327 million. Adjusted EBITDAC margin declined 40 basis points to 35.7%. Adjusted earnings per share grew 12.1% to $0.74. For the first half of 26, we have grown organic revenue by 8.9%, adjusted EBITDAC by 9.8%, and adjusted earnings per share by 16.2%. In the quarter, we repurchased 8.1 million shares for $260 million and increased the authorization of the program by an additional $300 million to deploy opportunistically without a capital allocation framework. We are pleased with these results, especially considering the headwinds the industry continues to face. Our top- and bottom-line results speak to the resiliency of the platform we built. What this quarter demonstrated is that even in a very challenging market, our people delivered, utilizing their differentiated capabilities to execute on behalf of our clients and carrier trading partners. We earn our clients' business, our respect, and trust every day through continuously delivering innovative solutions, expanding into new products, deepening and broadening relationships with our retail broker clients and carrier trading partners, while executing at consistently high levels. I want to make a few comments about our team. We work tirelessly in our efforts to control what we can control. Our brokers are exceptional pipeline builders. We win new business and produce unique solutions that others simply cannot replicate. Some of that production is large and project-based and sits in our pipeline until the right micro or macro conditions push it through. We focus on building the pipeline; we cannot control when projects close. Additionally, our underwriters are disciplined product builders. They assess every risk with carrier profitability front of mind. Our industry-leading underwriting results, discipline, and strong governance structure attract the most sophisticated capital providers to our platform. Whether through an adjacent product or de novo MGU, our speed to market lets us meet evolving client demand, driving strong new business growth and the ability to expand our share of recurring and non-recurring business. Together, these capabilities of pipeline and product building are important characteristics that set us apart. We continue to evolve as the leading specialty insurance services firm, always looking for ways to be broader, more diversified, or strategic while still staying true to our mission statement. Our differentiation is significant and meaningful: a leading platform with scale but much more than that. It is the power of our combined platform and ecosystem where each piece makes the whole more powerful than the sum of its parts, powered by secular tailwinds and industry-best talent. An innovation machine built to expand and win in new markets, complemented by what we believe is a best-in-class M&A engine. The result is industry-leading growth and strong margins, all aligned by a disciplined capital allocation framework and an aligned leadership team. Timothy will expand on these things shortly. But first, I want to unpack the innovation of our delegated underwriting authority strategy, where I believe we were the true first mover. Sixteen years ago, we anticipated the demand for specialty solutions from our retail broker clients and trading partners, and we led the structural changes that followed. Through continuous innovation, investment, and a well-executed M&A strategy, we built a comprehensive, diversified platform offering over 300 specialty insurance products. We continue to extend our lead, growing beyond traditional delegated authority channels by expanding into new specialties like reinsurance underwriting, alternative capital solutions, and broad-based benefit solutions. We continue to skate to where the puck is going, not where it is. Our differentiating capabilities—speed to market in emerging classes, portfolio breadth, and our track record of delivering underwriting profits for our carrier trading partners, all supported by aligned incentives—continue to attract the highest-quality capital for our platform. Relationships are deep and enduring with now more than 25 carriers, each backing 10 or more of our 40 MGUs. A balanced capital base with the majority of our premium syndicated across multiple carriers gives us the capacity to underwrite more products, expanding our reach. Lastly, a platform that is equipped to manage through the ever-evolving specialty insurance market. We built a delegated authority platform that we believe is unique to the industry, creating a significant moat. The combination of wholesale brokerage and delegated underwriting authority creates a distribution engine of unmatched scale and sophistication, which we believe is capable of delivering durable, differentiated growth for years to come. As we look forward, we remain confident in our ability to innovate, invest, and continue to strengthen and diversify our offerings as a leader in the specialty lines insurance services sector for years to come. With that, I am pleased to turn the call over to our chief executive officer, Timothy William Turner.
Thank you very much, Patrick. Ryan Specialty had a great second quarter as we delivered for our clients in the face of a very challenging property pricing environment. Before diving into the quarter and building on Patrick's remarks, let me outline the eight factors that differentiate Ryan Specialty, both now and over the long term. 1) We are an industry leader delivering innovative solutions at scale. We are uniquely positioned at the top of both specialty distribution and underwriting. This dual vantage point provides the widest view of specialty risk, offering us unique insights that provide a competitive advantage. We see the need sooner, innovate faster, hire the talent, build the product, and source the capital through deep carrier relationships. Our ability to anticipate and meet client demand deepens our relationships with our clients; this flywheel compounds over time. 2) We operate in a market with secular tailwinds and have shown a unique ability to win share over time. The world continues to become riskier and more complex, driving flow into the specialty and E&S channels. Our clients, both retail brokers and carrier trading partners, are growing while consolidating panels. Delegated underwriting authority continues to take share of the commercial market, from 9% in 2012 to 20% in 2025, and healthy E&S share gains are supported by strong flow as well as carriers having made a significant commitment to the E&S market. Together, these trends compound in our favor. But tailwinds only reward those equipped to capture them, which brings me to number 3: our talent. We attract, retain, and develop the best talent in the industry and continue to believe we are the destination of choice for the industry's A players. Last year, we attracted the second-largest hiring class in our history; as they ramp up, they become increasingly accretive to our growth. We have one of the industry's highest producer and underwriter retention rates. Our culture, our platform, and our broad employee ownership keep our best people here. 4) Our commitment to innovation and expanding our addressable market. Our innovation engine, aided by insights across $32 billion of premium, constantly identifies niches that require unique solutions, creating new sources of growth for our clients and trading partners. We have deepened our capabilities in niches like hospital and healthcare liability, public entity, sports and entertainment, and many more. We have launched over a dozen de novo specialty businesses with impressive speed to market. As Pat described, we have expanded delegated underwriting authority outside the traditional MGA/MGU vertical. Through unique strategic relationships, we have built Ryan Re, our reinsurance managing underwriter, and are on track to place $2 billion in reinsurance premium this year. We have established in-house alternative capital management solutions, built a benefits division with distinguished capabilities and products largely uncorrelated to the P&C cycle, and invested significant resources into all aspects of alternative risk, including captive management and structured solutions. The market is ripe with these opportunities, and we have the scale, talent, and speed to be early movers and scale rapidly. 5) We have what we believe is a best-in-class M&A engine that has consistently enhanced our growth profile and remains capable of doing so. We have added new talent and capabilities, new lines of business, and entered new geographies via acquisitions since our founding. We remain disciplined in our approach to M&A, only moving forward when all of our criteria are met: a strong cultural fit, strategic, and accretive. 6) Our platform is durable and we believe built to deliver industry-leading growth and strong margins. Years of deliberate reinvestment back into the business have built this platform. With our Empower program, we are creating more operational flexibility to keep investing in the future—investment that has the potential to widen our competitive moat and supports our goal of modest margin expansion in most years. 7) All of these differentiating factors are supported by our disciplined capital allocation framework. We will prioritize investing in talent, which is the most accretive investment we can make. We will be disciplined acquirers. We will return a modest and sustainable dividend. And we will deploy capital towards share repurchases when we believe it to be the best use of our capital. 8) Behind executing, delivering, and maintaining these differentiating factors sits our seasoned and aligned leadership team—the best team in the business, the team that wakes up early every day to out-hustle and out-work our competition and support our producers and underwriters to deliver the best possible solutions to our clients. Turning to our results by specialty, our wholesale brokerage specialty continues to deliver in the face of significant cyclical industry challenges. In property, the market was every bit as challenging as we indicated last quarter. Pricing in many cat-exposed and large accounts declined materially as capacity continued to build and competition remained tough, including from the admitted market. Yet our brokers fought vigorously, won head-to-head, had strong renewal retention, and captured new business from the steady flow into the E&S channel. The net of this is a property book that declined only modestly, better than our expectations, as our performance improved throughout the quarter, notably in June. In casualty, we had a very strong quarter across the book. Strong construction activity in Q1 continued into Q2 as the pipeline we have been building for some time began binding. We saw a better June than we expected, driven by a handful of large project-based wins, including construction and data center activity. As we have said before, this business is inherently lumpy and the timing of large project bindings is difficult to predict. We remain optimistic about our pipeline heading into the balance of the year and are well positioned as the leading wholesale broker in the construction space. Broadly, most casualty lines continue to be impacted by social inflation and challenging litigation trends, which continue to support the need for adequate pricing. At the same time, we are seeing more capital looking to grow in casualty, which introduces additional competition beyond what we have been seeing in small commercial and middle market. This is leading to some moderation of pricing in certain pockets. Our professional lines team once again significantly outperformed the market despite continued pricing pressure, aiding our growth for the quarter. Now, turning to our delegated authority specialties, which include both binding authority and underwriting management: our binding authority specialty saw heightened competition in the quarter yet still grew revenue year over year. One competitive dynamic to highlight is the increase in new facilities competing aggressively for small commercial business, particularly at the smaller end of the market. We expect these trends to intensify in the back half of the year. As a reminder, our clients use us when they need us, and we are constantly looking to increase the ways in which we are needed. We have been expanding our services to improve outcomes for our clients and trading partners, which is enhanced by our independence. We are navigating the competitive pressures the way we always do, relying on our talent, our product breadth and expertise, and our industry-leading service. Our underwriting management specialty had an excellent quarter with yet another impressive performance across transactional liability, transportation, international specialty, casualty, and reinsurance while exercising appropriate discipline relative to current market conditions. Transactional liability delivered exceptional results, topping our expectations. Growth continues to be supported by a more constructive global M&A environment and the investments we have made over several years. Within reinsurance, Ryan Re also delivered another excellent quarter, with strong renewal retention, especially considering the tough pricing environment, and another strong, albeit smaller, quarter with respect to the Mark portion of the book. With that said, not everything was in our favor this quarter. Within our builders' risk businesses, results continue to be under pressure, consistent with macro pressures we described over the last few quarters. We are not standing still. We are bringing more product to the market, competing for every account, and we are winning more than our share. RSUM also launched its own Lloyd's consortium stamp earlier this month. This consortium is about crafting underwriting capital outcomes at scale, delivering efficiency to clients, and further monetizing the platform and exceptional underwriting results. Beginning August 1, it will take a 15% line on RSUM's syndicated business, further accelerating our innovation and speed to market. Now turning to a quick update on our team: we also announced a planned leadership succession at RT Specialty. Brendan Martin Mulshine will assume the role of CEO of RT Specialty. Ed McCormick will transition into the role of Vice Chairman of RT. I cannot say enough about how important Ed has been to the founding and building of not just RT, but Ryan Specialty itself. We are grateful he will continue as Vice Chairman while Brendan is the perfect choice to lead RT Specialty into its next phase of growth. Lastly, I would like to update you on our digital transformation and AI strategy. Our strategy remains anchored in the three principles we shared last quarter: our clients, our people, and our process. In practice, we invest in redesigning workflows that improve client outcomes, make our people more productive, and make our processes faster and more reliable. Last quarter, we also told you we were building a platform to deploy AI thoughtfully and responsibly at scale. As an example for our clients, our reinsurance FAC Workbench now turns a submission into a priced decision-ready file in minutes, not days, and we are extending that capability into treaty underwriting where the platform ingests years of prior submissions and claims at a scale and speed that no person could achieve in a reasonable amount of time. For our people, we are putting more tools in their hands; thanks to a thoughtful rollout strategy, AI adoption and usage are accelerating across the firm. The capacity we are unlocking is being directed back into what matters most: winning new business and helping our newest talent ramp up faster than ever. For our process, we have started rolling out a proprietary engine for deploying AI around the firm, built inside our own guardrails and trained on our own data. We started deploying agent-type AI toward our property inspection process, sharpening underwriting accuracy and reducing cycle times by removing the need for thousands of manual touch points each month. As AI becomes a commodity that anyone can rent, our advantage is the proprietary data and hard-won expertise built into our platform that cannot be easily replicated. We are a clear net beneficiary of this transformation, and it shows in how our people work every single day. In closing, we are very proud of our second quarter performance, particularly in the face of a complex and rapidly evolving insurance macro and geopolitical environment. Our performance is a testament to the resilience and durability of our people and platform. In the face of this intense competition, our teams continue to innovate, differentiate our services, and improve our value proposition to our clients. We retained high levels of existing business, won significant new business, expanded our market share, and continued to build our pipeline across the organization, each supported by the many factors that differentiate us. We are doing what we do best: controlling what we can control, adapting, executing, and overcoming challenging dynamics. With that, I will now turn the call over to our CFO, Janice Hamilton.
Thank you. In the second quarter, total revenue grew 7.2% to $917 million, driven by organic revenue growth of 6.7% as well as modest contributions from M&A. As Timothy described, it was a great finish to the second quarter with growth supported by better-than-expected results in property, casualty construction, and transactional liability. Adjusted EBITDAC grew 6% to $327 million. Adjusted EBITDAC margin was 35.7% compared to 36.1% in the prior year period. Margins were supported by stronger-than-expected organic growth, disciplined cost management, as well as early progress in the operational efficiencies underway through Empower. Adjusted earnings per share grew 12.1% to $0.74. Our adjusted effective tax rate was approximately 26% and we expect a similar rate for the remainder of 2026. On capital allocation, we repurchased approximately 8.1 million shares, or $260 million, of our stock and increased our program's authorization by an additional $300 million. We have also repurchased $42 million of shares thus far in July. We remain committed to strategically investing for the long term. Beyond our modest and sustainable dividend, we view both M&A and our share repurchase program as key priorities. We will continue to do what we believe is right for our shareholders. Based on the opportunities that we are seeing in the market, we believe it is unlikely that we will close a meaningful acquisition in 2026; rather, we are looking towards 2027. With that said, if and when high-quality specialty assets come to market that meet our criteria, we will be the first in line and will have the capital to execute. We ended the quarter at 3.3x total net leverage on a credit basis, well within our 3 to 4x comfort corridor. Based on the current interest rate environment, we expect GAAP interest expense, net of interest income on our operating funds, of approximately $226 million in 2026 with $58 million to be expensed in the third quarter. Turning to guidance, we continue to guide to organic revenue growth in the mid-single digits for 2026 and now expect to be toward the higher end of the range. As Tim said, we are conscious of the complex and rapidly evolving insurance, macro, and geopolitical environment as we close out 2026 and look to next year. Our guidance embeds continued property pricing declines and heightened competition, resulting in a moderate decline in our property book for the full year. Casualty competition is picking up in certain pockets beyond what we have been seeing in small commercial and middle market. We expect a more normalized level of growth in construction projects in the second half, though the timing remains lumpy and hard to predict. We expect continued headwinds in builders' risk consistent with macro pressures and softer binding authority growth with some business moving into the admitted market and pressure from new facilities. As a reminder, while it is our smallest revenue quarter, the third quarter represents our most difficult organic growth comparison of the year. On margins, we are now guiding to a full-year adjusted EBITDAC margin that will be down approximately 50 to 100 basis points year over year. This reflects current and evolving market conditions, the continued absorption of our talent investments, lower fiduciary investment income, and higher healthcare and benefits costs, offset by disciplined cost management and recent progress from the Empower program. Looking ahead, we continue to expect modest margin expansion in most years. We will continue to innovate and create differentiated opportunities for growth that are entirely unique to the scale and expertise we have built. In closing, we are in a great position through the first six months and I am very proud of our results. I am pleased with our team's execution: continuing to deliver for our clients, advancing our technology and AI investments, and driving the Empower program forward with great collaboration. With that, we thank you for your time and would like to open up the call for Q&A. Operator?
Questions and answers
At this time, if you would like to ask a question, please click on the Raise Hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your time, you will hear your name called and receive a message on your screen asking you to unmute. Please then unmute and ask your question. We will wait one moment to allow the queue to form. Our first question will come from Elyse Greenspan with Wells Fargo. Please unmute your line and ask your question.
Hi. Thanks. Good evening. My first question is on margin. You had guided to a margin in the low 30s for the quarter, and you came in better than that. I am trying to get a sense: is that just a function of stronger organic revenue growth than you expected, or is there also a change in the level of talent investments you have pointed to? Maybe it is a combination of both. I am hoping to get a sense there, and then what is the driver of the change in the full-year margin guide relative to prior expectations?
Elyse, I can take that. Thanks for the question. Regarding performance for the quarter, the stronger-than-expected organic growth is a significant driver of the margin beat for the quarter. On top of that, last quarter I mentioned we were going to be focused on expense discipline and cost management, and that is another driver of the beat this quarter and part of what we are anticipating for the full year, which I will come back to. We are also starting to work through some of our Empower actions. I mentioned last quarter that we intended on getting ahead on accelerating some of those activities; early days there still, but some of that also plays in. As a reminder for next quarter, it is going to be our toughest comp, and it is the quarter where we are lapping the significant talent investments. Those all came in toward the end of the third quarter and beginning in the fourth. So it is our last full quarter from that perspective. For the full-year guide, we have raised that 50 basis points on both ends. That really reflects the organic growth but also the anticipation of cost savings measures from Empower.
So then my second question is on organic growth. I recognize you said the high end of mid-single digits now for the year. You had a strong second quarter, so being at just under 9% for the first half of the year does imply a slowdown in the second half. I am trying to get a greater sense of how you are thinking about the second half and whether the biggest wildcard is construction. Janice, I think you said that construction is lumpy and you expect it to slow in the second half of the year.
Elyse, Timothy said it best in his opening remarks: we are still monitoring a number of uncertainties when we think about the broader macroeconomic backdrop and geopolitical developments, as well as the broader insurance market. Specifically within our guide, from a construction standpoint, we had a very strong quarter with much of the activity ticking up in June. We are expecting that to normalize for the remainder of the year, and that will be a component of the moderation. On the property front, we still expect continued pricing headwinds and heightened competition, which we discussed last quarter; we are seeing some pressure from the admitted market as well. For casualty, we previously commented that competition had impacted the small and middle market side; we now anticipate that pressure could expand into additional pockets. We continue to face pressures within the builders' risk line consistent with macro trends. Timothy also mentioned additional competition in small commercial led by the influx of new facilities. So when we think about the second half of the year, there are a number of uncertainties built into the guide. As I noted, the third quarter is going to be a difficult comp over last year. As a reference point, we grew property in last year's third quarter; currently, that is not our expectation for this year. We also had strong growth on the underwriting manager side last year in transactional liability, structured solutions, and reinsurance, which creates a tough comp. Overall, we will continue to outwork and outcompete, focusing on what we can control, which drives our sentiment to the higher end of the range.
Thank you.
Our next question will come from Andrew Kligerman from TD Cowen. Please unmute your line and ask your question.
Great. I am coming through. Yes. I just want to follow up on the prior question because the math, having grown about 9% in the first half, you could achieve mid-single-digit growth with less than 3% in the second half. Janice, you outlined quite a few headwinds, and with Timothy's commentary around moderating pricing, where do you see pricing going broadly in E&S casualty? And are you thinking that around 3% is where you'll land in the second half to get to high-single-digit organic growth?
Thanks, Andrew. I will take the first part. The casualty market remains generally firm, although it is bifurcated; competition is expanding in certain segments while others continue to firm. Transportation, habitational, sports and entertainment, certain parts of healthcare, and public entity and human services continue to firm for us. But we see some softening in other areas—small and medium hazard risks, for example. Professional lines remain a real positive for us; we outperformed the market and had a stellar quarter. So you need to break it down by specific product line. Generally speaking, casualty remains firm, but we expect more competition. Construction is another headliner for us, and we do see competition around the edges.
And so around that 3%, is that what you are framing for organic growth in the second half?
Andrew, you have done the math to back into what that looks like for the second half. We are trying to provide the uncertainties in context for what contributes to that guide. From a downside perspective relative to the range, that would be where property pricing pressures go beyond our expectations and competition in casualty rapidly intensifies. Timothy noted many drivers that could cause pricing to harden, but we are also seeing competition intensify across casualty, which could lead to downside risk. From an upside perspective, if property pricing moderates, that would be a benefit, and we do continue to have strong pipeline in construction, data centers, and transactional liability. All of those pieces have to come together in how we put the guide together for the remainder of the year.
Got it. And then just a follow-up: Timothy, your commentary around captive management, employee benefits, and other areas that might not be cyclically tied to P&C—what proportion of your delegated and wholesaling businesses are tied to those areas where you might be outside the cyclical pressures we are seeing across P&C?
We have reinsurance underwriting that we have been building for more than five years, working closely with a partner like Nationwide Mutual. That capability—our talented underwriters blended with a strong carrier brand—has grown market acceptance and is a true differentiator and moat because it is very difficult to replicate those relationships. Alternative risk is another area feeding client interest where clients want to put up some of their own capital to get more capacity or to obtain different pricing outcomes; reinsurance backs that capital. Benefits is countercyclical to the P&C pricing cycle and gives good balance. To be clear, these are newer, smaller businesses relative to our wholesale distribution and underwriting management operations, but they were designed to balance our firm against inevitable softening of the E&S and P&C markets. While they are smaller today, they are becoming material contributors to incremental growth, margin, and earnings per share.
Our next question will come from Alex Scott with Barclays. Please unmute your line and ask your question.
This should be working. First question: could you talk a bit about RAC Re and its contribution to growth this quarter? How should we think about how much it contributed in the first half relative to what you expect in the back half?
Thanks. This is Miles. We do not disclose exact levels, but structures like RAC Re and our alternative capital practice, which has been in operation about 18 months, along with investments in our traditional capital management practice, are deliberate efforts to monetize our platform and our central underwriting structure. There is direct economic benefit and new revenue, and these initiatives are converting at high margins. Perhaps equally or more important, having aligned capital accelerates our speed to market. With more aligned capital familiar with our overall syndicated portfolio, we can innovate faster, build faster, and respond to market dislocation more quickly. I apologize we cannot share an exact number, but it is an exciting and growing part of our business.
Got it. Follow-up: general concentration around construction—do you see any impact from potentially higher inflation or geopolitical events on construction? Are you seeing changes in recent trends for that business as we think about Q3?
Alex, it continues to be a steady, heavy flow of business in our construction book, including renewable projects, general contractors, subcontractors, and artisan contractors. The projects themselves are lumpy—we have significant renewable and infrastructure projects and large data center work. Our pipeline is very full and strong; the submit-to-quote-to-buy process is moving smoothly but sometimes takes longer as we await binding instructions. We had meaningful success in Q2 binding some large projects and see that continuing. It is lumpy and hard to predict when they will actually bind, but we believe we are industry-leading in this specialty practice group. We are winning many head-to-head contests, gaining market share, and the outlook is very positive.
I will add that we consider these construction projects to be recurring income. They are different risks but they recur from the same sources. We have strong relationships with retail brokers who specialize in construction—they are large brokers—and we have very strong trading relationships. So while the projects are lumpy, the underlying flow is recurring.
Got it. Thank you.
Our next question will come from Brian Meredith with UBS. Please unmute your line and ask your question.
Thank you. A question about the durability of the growth in the underwriting management business. Are you seeing carrier appetite to commit capital, including alternative capital, in that business? And given the more competitive market, what is your appetite to receive more capital in that business?
Thank you, Brian. We are successfully finding growth through new product launches, product and geographic expansion, and more capital under management. Our results and the scope and scale of our platform have drawn significant interest from both traditional and alternative partners. Over the last 12 to 18 months we have seen steady increase in interest. Carriers are seeing strong returns and have balance sheets looking to be deployed in the E&S channel. We have validated the E&S marketplace as an environment for carriers to achieve attractive risk-adjusted returns. On top of that, we are also driving core efficiency improvements via AI and machine learning, which have begun delivering measurable outcomes in certain lines, most notably property. For example, the average RSUM property employee achieved 11% more quotes per head in the last 12 months than the prior year. That reflects both hustle and investments in automated data extraction, data structuring and enrichment, and rating prepopulation coming to life. So we are excited about optimizing our core platform as well as new products and verticals.
That is helpful. Second question: thinking about 2026, you have had tailwinds like the Mark business and RAC Re that helped organic growth. How do you think about 2027 and your ability to sustain mid- to high-single-digit organic growth when some of those tailwinds may not be as strong next year?
Brian, I'll start. While we are not providing guidance for 2027, the starting point for how we think about growth is the secular trends Timothy and Patrick outlined. Layering on the scale we have as a top wholesale and delegated platform gives us vantage points to see new and unique risks entering the channel and to develop products through our innovative solutions and expertise. All of these factors help us control our destiny and overcome cyclical headwinds. Our talent, innovation, and platform components lend themselves toward industry-leading growth and strong margins, which supports our posture heading into 2027 and beyond.
We are looking for more opportunities like the Mark engagement, where we provide outsourced reinsurance managing underwriting services. That was a great opportunity with a strong partner and we are scouting other, similar opportunities or de novo relationships where we take on the underwriting obligations and the talent helps solve the problem. There are people in the market who are candidates for such changes, so we are actively looking.
Gotcha. I guess I was trying to ask if the talent you invested in would be a tailwind into 2027.
The talent we acquired last year has been accretive to our organic growth from day one but has been a margin headwind due to the timing of investments. Talent is certainly a component of the growth we anticipate in 2027 and is one of the building blocks for our expected organic growth beyond 2026.
I will add that with the Mark deal we were able to add roughly 42 experienced reinsurance underwriters. Taking the HR risk was the right decision and has been successful. We are pleased to have that incremental talent in reinsurance underwriting.
Right. Thank you.
Our next question will come from Robert Cox with Goldman Sachs. Please unmute your line and ask your question.
Hey, thanks for taking my question. Regarding the underwriting management segment, can you talk a little about how the firm is exercising discipline given property pricing in the market? Are you growing exposure in property there outside of large deals like Mark? If so, where are you finding opportunity?
Robert, discipline lives with us daily. Our $12 billion delegated platform wins through standards of care, alignments, and material investment in our platform and people. That spans the frontline, our mid-office governance apparatus, and the executive team. We have multiple prongs of alignment to our partners: our underwriters and executives have a substantial portion of their bonus related to profit commissions aligned to carrier profitability. We maintain real-time underwriting governance monitoring rate, frequency, severity, and returns, which allows us to shape the profile of our overall portfolio. With investment and augmentation from AI, we are auditing five times as many files as we did last year and increasing the probability of finding the right files within that subset. We have an owner mentality and are aligned to protect our investments. On capital deployment, we are attracting incremental capital, but we continuously fit opportunities to carriers' appetite and return profiles. Our portfolio analytics and cat tools are strong; we can perform real-time marginal impact analysis across our portfolio and make informed decisions to deploy capital at scale. So we are still finding select growth in property but are very measured and aligned to the risk-return expectations of our capital providers.
Got it. Thank you, Miles. One more: submissions still seem pretty strong in the E&S market. What are you seeing from a submission perspective and how has that changed since the hard market?
It continues to grow. Stamping office data in larger states shows a little slowdown in new flow, but it is still positive. We are capturing more of that flow. We view the non-admitted market as an increasing share of the overall commercial market; it remains very strong. One point is that we do not expect the market to recede and soften the way it has in past cycles because many large admitted carriers now own non-admitted surplus lines companies, and that business is where it belongs with freedom of rate and form. We do not see much migrating back into the admitted market. There are constant niche firming phenomena that continue to create new business opportunities, and with our $32 billion lens we see changes in the market earlier than competitors. We can move quickly with our de novo facility capability and create proprietary products that give us an edge in capturing new business. So while flow has slowed a bit, it is still growing.
To put a finer point on it: the flow slowdown is largely because of pricing headwinds, but from an item count perspective those continue to grow, and that is where the opportunity is for us to win new accounts and buy that new business. That distinction between premium metrics and underlying item counts is important.
Thanks, that is helpful.
Our next question will come from Tracy Benguigui from Wolfe Research. Please unmute your line and ask your question.
Thank you. On seasonality: the second quarter is your largest property quarter, so I wanted to unpack Timothy's comments that the property book declined only modestly, better than expectations, notably in June. Can you elaborate what drove that? Are you seeing less capacity coming in, greater insurance demand, or simply a change in business mix? Also, could you touch on trends in July?
What we experienced was our quality and the performance of our property brokers were much stronger than we expected. They were winning head-to-head more frequently and retaining business; retention levels were high. While prices on the cat book were down materially, we hung on to business and won new accounts, so the decline was modest and better than expectations. We applaud the performance of our property brokers and remain optimistic that a significant event could trigger refirming—wildfire season and other perils could change the marketplace. We are poised to act and confident our team will gain market share when that happens.
Great. On structural changes: admitted writers now have E&S paper, which could limit reverse flow back to admitted markets, but there are many more E&S players growing faster than incumbents. How does that change your outlook?
The influx of new E&S players and additional capacity is real and increases competition, especially in property. That competition has aided softness in property, but it is largely inter-E&S competition rather than migration back to the admitted market. We do not see that as detrimental overall. In many cases these new E&S balance sheets are clients for our underwriting and RT distribution—many are looking to delegate underwriting to managers like Ryan Specialty. So while rate pressure is real, the capital is also an opportunity for us across Ryan.
Tracy, I'd add that we view new E&S carriers as client opportunities for both underwriting and RT distribution. Many of those new balance sheets are looking to delegate to shops like Ryan's underwriting managers for access to specialty underwriting. The capital and rate dynamics present a net positive opportunity set for us.
You have been very generous with your time and excellent questions. Thank you for your support and interest. We are proud of what we achieved in the quarter and proud of the team; Timothy summed up that they outperformed our expectations, and we have high expectations for them. Thank you, and we look forward to seeing many of you over the next 90 days.
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