$8.36
$44.63
bear $8.36
base $24.56
bull $44.63
margin of safety $14.00
market price* $40.75
WHAT THE BUSINESS IS. Ryan Specialty is a middleman for hard-to-place insurance. Retail brokers bring it risks that standard insurers will not write, such as large or high-hazard property, complex casualty and professional liability. It earns commissions and fees in three ways: as a wholesale broker placing those risks with specialty and excess-and-surplus (E&S) insurers, through binding authority (writing small policies on insurers' behalf), and as a managing underwriter running programs with insurers' capital. It takes no underwriting risk itself. About 94% of revenue is earned in the United States. Revenue went from $1.43 billion in 2021 to $3.05 billion in 2025. A little over half of that growth was organic (10.1% in 2025, 12.7% in 2024, 15.4% in 2023). The rest came from acquisitions paid for mostly with debt, above all US Assure and Innovisk in 2024 and Velocity Risk, J.M. Wilson and Stewart Specialty in 2025. HOW WE MEASURED EARNINGS. We started from operating cash flow and removed working-capital swings. We then charged three things as real costs even though the accounts add them back: stock compensation ($69M in 2025), amortization of cash incentives paid up front to producers ($39M), and the cash the company sends to its founder-era partnership holders to cover their taxes ($64M). The last one matters because the shares here are counted as if every partnership unit had been exchanged for common stock, and those units are only taxed in their holders' hands. Most of the $274M of intangible amortization is sunk acquisition cost and is not charged. We deal with the fact that acquired client books wear out through modest growth assumptions instead. On this basis owner earnings per fully exchanged share were $0.52 (2021), $0.95 (2022), $0.97 (2023), $1.14 (2024) and $1.64 (2025). Before interest, the business produced about $644M of cash in 2025. THE STARTING LEVEL. The 2024 and 2025 acquisitions changed the size of the business, and the debt that paid for them is on today's balance sheet. So earlier years understate what today's company earns, and we measure from 2025, the first full year after that transformation. We start at about $620M of cash before interest, a little below 2025's $644M. The trim is because profit-based contingent commissions jumped 68% to $122M in 2025 (4% of revenue, against 2% in 2023), and we don't treat a good loss year for insurers as the new normal. GROWTH. Last year per-share cash earnings grew about 43%, almost all from acquisitions. Our base case assumes 3% in year one. We credit only growth that is in the bag. Commissions are a percentage of premiums, and premiums rise with insured values and payrolls. Ryan has grown organically every year since it was founded in 2010, including the soft insurance market of the mid-2010s and 2020, so that exposure-driven growth qualifies. We give no credit for future acquisitions, because they are large, debt-funded bets rather than small repeatable steps. We also give none for continued share gains or further expansion of the E&S market, because those depend on things that have not happened yet. THE CASES.
Base: cash before interest grows 3% a year for ten years, then holds flat through year 30. The wholesale specialty channel is a long-standing structural part of US insurance distribution, and Ryan's relationships with the largest retail brokers are well established, but we assign nothing beyond 30 years. The business is worth about $10.6 billion, it owes about $4.1 billion, and the difference is about $24.56 per share.
Bear: the 2025 annual report already describes rates falling on property business and retail brokers placing more property risk directly. In the bear case that spreads, contingent commissions fall back to 2023 levels, and interest earned on client premiums held in trust falls with rates. Cash before interest drops about 15% over two years to roughly $525M, stays flat for years, and fades to nothing after year 20. That business is worth about $6.3 billion, less $4.1 billion owed, leaving about $8.36 per share.
Bull: organic growth keeps running near half its recent pace, 6% a year for five years and 4.5% for the next five, then 3% to year 20 and flat to year 40. Worth about $16.0 billion, less $4.1 billion, or about $44.63 per share. Every case is discounted at 6%. WHAT IT OWES. As of June 30, 2026: $3.63 billion of borrowings. That includes a $1.68 billion term loan at SOFR plus 2.00%, $400M of 4.375% notes due February 2030, $1.2 billion of 5.875% notes due August 2032, and revolver borrowings that rose after about $300M of share buybacks in the first half of 2026. On top of that we count about $350M, the present value of the $459M owed to former partnership holders under the tax receivable agreement, and $153M of estimated acquisition earn-outs. We take off about $20M because the 2030 notes are cheap money. The $140M of operating cash and the client premiums held in trust are not counted as cash available to owners. Borrowings are about 5.8 times cash earnings before interest, so the value left for shareholders moves sharply with the business value. Even in the bear case, cash earnings cover interest about 2.5 times. Moody's upgraded the company to Ba3 in August 2025, and no maturity comes due before 2030. WHAT WE COULD NOT RECONCILE. Operating cash flow in the first half of 2026 was $126M, against $211M a year earlier. About $210M of receivables built up, which is seasonal and partly timing, and restructuring charges were $51M. Even after allowing for those, the first half came in lighter than the income statement suggests, and the full quarterly cash-flow statement was not available to us. One half-year does not move our starting level, but if it repeats in the second half, the base case is too high. WHAT WOULD MAKE THIS WRONG. On the downside: a long soft market in specialty property and casualty, insurers pulling capacity from Ryan's underwriting programs (those agreements can be cancelled), or more large debt-funded acquisitions that don't pay off. On the upside: organic growth staying near 10%, as it has every year since 2021, would put the value toward the bull case.