Ryan Specialty Holdings, Inc. Price & Performance (RYAN)

With that, I'd like to turn the call over to Founder, and Executive Chairman of Ryan Specialty, Pat Ryan. Ryan, please go ahead. Good afternoon. And thank you for joining us to discuss our fourth quarter results. With me on today's call is our CEO, Tim Turner Our President, Jeremiah Bicom, our CFO, Janice Hamilton Our CEO of underwriting managers, Myles Warr, and our Director of Investor Relations Nick Massac, Before we discuss our results, I want to take a moment to comment on the California wildfires. Our thoughts and prayers are with everyone affected clients, and trading partners, The loss of life and destruction is tragic. These events are yet another reminder of the difficult an evolving loss environment in which we operate.

We remain well positioned to assist our trading partners navigate an ever changing insurance landscape. Now turning to our financial performance. 2024 was another outstanding year for Ryan Specialty as we delivered on all of our strategic priorities. Our strong results are a testament to our conviction to put our clients first our focus on specialized expertise our commitment to rewarding top talent and our dedication to excellence in everything we do. For the quarter, we delivered organic revenue growth of 11% on top of our toughest quarterly comparable of 16.5%. I'm very proud of our organic revenue growth considering the volatile property market conditions along with the exceptional performance of our casualty lines of business, all three specialties, all of which Tim will provide more color on shortly. This quarter is a telling example [indiscernible] diverse portfolio can balance out and even overcome difficult market conditions to produce exceptional organic growth at scale. For the full year, surpassed revenues of $2,500,000,000 dollars up 21% year over year. Driven by organic growth of 12.8% on top of the 15.4% in 2023.

And significant contributions We marked our sixth consecutive year growing the top line by 20% or more. And our fourteenth straight year of double digit organic revenue growth. Full year adjusted EBITDA grew 30% to $811,000,000 Adjusted EBITDA margin expanded two ten basis points to 32.2% Adjusted earnings per share grew 30% to 1.79 We successfully executed the largest year of M and A in our history completing seven acquisitions with trailing revenue of over $265,000,000 We carried that momentum into 2025. And are off to a great start. We closed on the Velocity Underwriting Managers transaction are very excited to welcome those new teammates to the Ryan Specialty family. We are pleased with the success we had to bring in these great firms. Expands our total addressable market. We've added multiple specialty leading MGUs and programs technology advantages, like efficient online distribution, have expanded geographically. The evolution of our business mix is consistent with our core mission of offering differentiated specialty insurance services to brokers agents and carriers. Further, it offers clear diversification benefits to our financial performance. Including Velocity, delegated authority now makes up nearly 45% of our revenue. The build out of our delegated authority capabilities and specialty lines As part of the core thesis, Orion Specialties Ryan, and we are proud to have been an early mover.

Investing in this segment We've let structural changes that have fueled growth and increased adoption of delegated underwriting authority across our industry In my founding letter that accompanied our IPO, we set out a strategy To build a delegated underwriting authority business, with a differentiated platform and top flight underwriting talent, This was in response to the growing unmet need among insurance carriers for a trading partner that could assist them in meeting the challenges and opportunities of a rapidly evolving and increasingly complex specialty insurance market. As we move into 2025, we see continued validation of our delegated authority strategy. And confirmation of acceleration in carriers' use of delegated authority. Specifically, I am best recently published a market wide study We've cited scale delegated authority partners as increasingly valuable for a number of factors. Notably, niche specialization portfolio diversity, improved costs and efficiency, speed to market, and access to superior underwriting technology were all cited have been core to our offering since inception. Additionally, of the carriers polled, 70% were expected to grow their use of delegated authority in 2025. With no respondents, planning to shrink. Overall, 52% of respondents commented that delegated authority would take a more significant role in the insurance value chain. [indiscernible] with zero respondents seeing a possibility of decline in relevance.

As we look back at the last fifteen years of investments in our business, we are proud of what we've achieved. Ryan Specialty is stronger than ever We are excited to see the benefits from our recent acquisitions come through. As we've repeatedly noted, this year's M and A is next year's organic growth. As we look to 2025, we expect to deliver another year of double digit organic growth as well as margin expansion. We believe that we will continue to deliver innovative solutions to our clients generate industry leading organic growth execute on our M and A strategy and increase profitability while investing in our platform all of which drives significant additional value for our shareholders. I'm proud of our entire team's dedication and relentless efforts to evolve our brand into the very best specialty insurance services firm in our industry. And I'm very excited for our future. Now I'm pleased to turn the call over to our Chief Executive Officer, Tim Turner. [indiscernible] Thank you very much, Pat. It was another outstanding year for Ryan Specialty. As we delivered our fourteenth consecutive year of double digit organic growth, with very strong new business generation our full year organic growth of 12.8% strong driven by consistent results in casualty.

Property was also solid for much of the year. And our team managed this challenging environment well. Despite rate deterioration which became more pronounced in the fourth quarter, We executed one of our top strategic priorities, completing a record year of M and A with the largest transaction being our acquisition of U. S. Assure, We added over $265,000,000 annual revenue to our platform as well as a myriad of capabilities to our underwriting management specialty. For example, with both Castell and Innovus we significantly enhanced our UK and European footprint and set the stage to accelerate our international expansion. With each, we added key talent new capabilities, and incremental products including a strong environmental MGU which complements our brokerage expertise.

With U. S. Assure, we've added to our sophisticated set of builders' risk products to serve the attractive SME segment, With expertise across all market segments, we're well placed to expand our product offering and cater to this expanding market. Next is Eversports, We were very pleased to be a solution provider for Everest. A great trading partner of ours in acquiring this business. Ryan Specialty underwriting managers as an MGU is working closely with Everest on the re underwriting of this book with an emphasis on E and S solutions. Following integration into our existing MGU, Alive Risk this acquisition has further enhanced by our exceptionally strong brokerage practice within RT Specialty. And most recently is the acquisition of Velocity Risk Underwriters. With $81,000,000 of annual revenue Velocity adds critical property capabilities and an emphasis on middle market and small to medium commercial business. Velocity further rounds out our offering of ground up property shared and layered and Tier one cat all to better serve our retail and wholesale clients. With Velocity, we further position ourselves to capitalize on the long term growth opportunity we see in property, catastrophe risks We are also very excited to partner with and strengthen our strategic relationship with FM Global, an industry leading property carrier.

As part of the transaction, FM Global is expected to acquire a majority of the balance sheet of Velocity specialty insurance company or VISAIC, one of the capital providers that supports the MGU. A component of this pending transaction has Ryan Specialty acquiring a 9.9% or approximately a $16,000,000 stake in BSIC, subject to closing adjustments. We will not consolidate BSIC rather we expect to treat this stake as an equity method investment. Similar to our existing investment in Geneva Re, This is part of our strategic commitment to and alignment with our capital providers. Our successful M and A activity this year cements Ryan Specialty underwriting managers as the preeminent delegated underwriting authority platform, As demonstrated, each of these acquisitions support our strategic vision of aligning specialized underwriting products with our distribution expertise across industries, expanding our capabilities and offering clients diverse innovative solutions. On top of everything else, we believe we can further enhance these already great businesses through our track record of productivity improvements Now let me dive into our specialties. Our wholesale brokerage specialty had a strong year and a solid fourth quarter. In property, we executed well We saw property pricing decline modestly early in the quarter then the decline accelerated significantly in December.

Similar to what we witnessed at the end of Q3, As noted on our last call, December is the largest property month in Q4, Nevertheless, we overcame These trends as we took share of strong flow into the channel one head to head against our competitors, and had high renewal retention. The recent LA wildfires devastating hurricanes, Milton and Helene, and record severe convective storms second only to 2023 are tough examples driving heightened concern for large loss events Add to this, growing exposure in both high value concentration and areas of high catastrophe risk we believe there is further proof of long term durability of and the need for E and S property solutions. With our deep capabilities, we will continue to deliver value and offer solutions to the most complex issues our clients face. Irrespective of the market cycle, given the continued uncertainty in the rate environment we expect more modest growth in property this year. But we strongly believe property will remain an important contributor to our growth particularly over the long term. Our casualty practice had an outstanding year with strong new business and high renewal retention, A persistently challenging loss environment is driving higher or in some lines accelerating loss costs in numerous casualty classes The admitted market continues to react to this trend by dumping and shedding risk with those risks moving into the specialty and E and S markets.

We see the E and S market responding well with carriers tightening distribution lines. Re underwriting changing appetite, raising prices, and focusing on limit management As a result, we believe the need for specialized industry and product level knowledge Ryan Specialty offers has never been greater and our value proposition has never been stronger. We remain confident that casualty will be a strong driver of our growth [indiscernible] And that we will continue to be a leader in casualty solutions for years to come. Now turning to our delegated authority specialties. Which include both binding and underwriting management. Our binding authority specialty had an excellent year continues to perform very well. Driven by our top tier talent and our expanding product set for small tough to place commercial P and C risks.

And binding authority remains a long term growth opportunity and we are well positioned to capitalize Our underwriting management specialty which includes MGUs, MGAs, and programs had another strong quarter and an outstanding 2024. Results were driven by strong organic growth particularly in casualty and transactional liability We also had meaningful contributions from recent acquisitions including a full quarter from U. S. Assure, and by contingent commission as we continue to deliver strong underwriting profit for our carrier trading partners. Our strategic positioning allows us to capitalize on organic and inorganic growth opportunities We believe this combination paired with our skill to manage the business through the insurance cycle, ensures our ability to deliver consistently profitable underwriting results.

Growth and scale over the long term.

Turning to price. After years of significant price increases, and capacity and appetite increasing, in the second half of the year property pricing was down in Q4. At the same time, casualty pricing accelerated and broadened out across an increasing number of classes. Across both major classes, there remains uncertainty the loss environment.

This continues to drive higher retentions of risk and pushes new risks into the specialty and E and S marketplace. We have consistently noted that in any cycle, as certain lines are perceived to reach pricing, adequacy admitted markets tend to step back in on certain placements. However, this is still not playing out in any measurable way.

And the standard market is not meaningfully impacted the rate or flow of our portfolio in the aggregate. As we've said since our IPO, we continue to expect the flow of business into the specialty and E and S market to be a significant driver of Ryan Specialties growth over the long term. More so than rate, Most importantly, we remain well positioned to assist our trading partners navigate an ever changing insurance As we progress through 2025, there are several things you can continue to expect from Ryan Specialty.

First, we expect to record our fifteenth consecutive year double digit organic growth once again driven by secular growth drivers, such as retail brokers becoming larger, through solid organic growth and ongoing consolidation, panel consolidation, which has created growing recognition among retail brokers of the need to optimize client Outcomes minimize E and O's and invest in long term strategic relationships that help them win The world getting riskier and more complex AI, cyber threats, climate change, social inflation, political unrest, These are all driving more risks into the E and S marketplace. Which offers solutions that would otherwise not be available. We believe E and S will continue to outpace growth in the admitted market. Overshadowing any cyclical shifts This is further supported by the significant commitment to the E and S market made by carriers that historically participated only in the admitted market, and the addition of new capital. Adding to our secular growth drivers, Orion Specialty's own attributes and strategies Our ability to innovate evolve and win is underpinned and perpetuated by specific pillars our entrepreneurial and empowering culture, our unique relationships and position of trust, and our scale and scope of expertise Second, we will thoughtfully invest in our business to optimize our platform and support long term growth.

To that end, we completed our accelerate 2025 program the end of the year. As Jeremiah will speak to shortly, the results and opportunities from Accelerate 2025 provide us more flexibility and we believe have placed us in a unique position to further invest in our growth. We've said it before, but it bears repeating. We will always prioritize investing in our business Onboarding top talent, adding capabilities, and enhancing tools technology and governance will always be the hallmark of our commitment to our employees, clients, and trading partners. These investments across Ryan Specialty along with our commitment to innovation, should continue to enable us to consistently achieve industry leading organic growth for years to come. Finally, we will continue to grow through M and A. While still early in the year, were off to a great start and we see a broad set of strategic M and A opportunities in front of us Our focus is on strategic acquisitions of specialized expertise. Adding new products, capabilities or geographies for our clients and trading partners. While being disciplined That said, we will only move forward all of our criteria for M and A are met. A strong cultural fit strategic To sum up, it was an excellent year for Ryan Specialty.

We are off to a great start in Q1 and are well positioned for 2025 and beyond. The companies that will win have to be the best of the best the A plus players that means keeping the best talent, and we are pleased to end 2024 with another year of best in class retention among our producers. We have built an incredible business over the last fifteen years in terms of our scale, and intellectual capital. One that has earned the trust and respect of our clients One that is recognized as the destination of choice for world class talent and one that is exceedingly difficult to replicate. Providing us with clear competitive advantages for years and years to come.

I am proud of our entire team for delivering another year of out and continuing to add value for our clients trading partners and ultimately our shareholders. With that, I will now turn the call over to Jeremiah. Thank you. Thank you, Tim. We are very pleased with our strong performance in 2024.

Our success continues to be driven by our unparalleled expertise, our unmatched work ethic and our culture of innovation that we built and reinforced over the last fifteen years.

We were also pleased to complete our Accelerate 2025 program at the end of last year, as planned. Accelerate has matured our operating model and made us a more Because of this program, and are in a unique position to be able to make even larger long term investments in our platform while consistently delivering margin improvement. We are making targeted investments in talent, [indiscernible] to support our growing business. This concludes additional underwriters actuaries, risk modelers, data scientists Ryan, along with distribution support, and is consistent with what has made our underwriting platform successful to date. We are also investing in new technology, including AI solutions and digital insights to bring the best of Ryan's specialty to our Ryan. We maintain our focus on our winning culture, remaining a destination of choice for top talent. Enhancing our growth opportunities, and furthering our ability to enrich the experience of our teammates.

Our dynamic and differentiated business model which reinforces our unique ability to generate [indiscernible] outsized organic growth makes us very excited for 2025 and beyond. With that, I'll now turn the call over to our Chief Financial Officer, Jan Hamilton, who will give you more detail on our financial results. [indiscernible] Thanks, Jeremiah. In Q4, total revenue grew 24.5% period over period to $664,000,000 Growth was fueled by organic revenue growth of 11% strong contributions from M and A, which added nearly 11 percentage points to our top line, contingent commissions as we delivered strong underwriting profits for our carrier trading partners. Growth was again driven by our ability to win substantial amounts of new business. High renewal retention and ongoing tailwinds in much of the Adjusted EBITDA grew 36% period over period to $216,000,000 Adjusted EBITDAX margin expanded two eighty basis points to 32.6%, driven by another quarter of strong revenue growth savings from Accelerate twenty twenty five underlying margin improvement in our business, and recent acquisitions.

Adjusted diluted EPS grew 29% to $0.45 per share. Our full year 2024 results were excellent. Total revenue grew 21% to over $2,500,000,000 driven by organic revenue growth of 12.8% and strong contributions from M and A, which added nearly seven percentage points to our top line. Adjusted EBITDA grew 30 percent $811,000,000 Adjusted EBITDAX margin expanded two ten basis points to 32 Adjusted EPS grew 30% to $1.79 per share, Our adjusted effective tax rate was 26% For 2025, expect our adjusted effective tax rate may move slightly based on geographic mix and tax law changes. We completed our Accelerate 2025 program at the end of the year. Will generate approximately $60,000,000 of savings growth of reinvestment in 2025. Turning to capital allocation. M and A remains our top priority now and for the foreseeable future. Supporting our M and A program, we priced a $600,000,000 add on to our 02/1932 notes a private offering at a fixed rate of 5.875%.

We ended the quarter at 3.1 times total net leverage on a credit basis.

This is at the low end of our leverage comfort corridor of three to four times. When adding in Velocity, which closed earlier this month, as we progress through our Q1 seasonal working capital needs, We anticipate we will be near the high end of our corridor at the end of Q1. We remain willing to temporarily go above our comfort corridor for M and A that meets our criteria. With that stated, our strong free cash flow and the strength of our balance sheet provide flexibility to continue Further on capital allocation, as noted in our earnings release, the Board approved a 9% increase to our regular quarterly dividend to our Class A stockholders of $0.12 payable later next month.

This increase reflects our strong earnings growth and confidence our outlook. We are pleased to grow the dividend and return capital to share all while executing on a record year of M and A. 2024. Based on our current forecast, we expect to report GAAP interest expense, which is net of interest income on our operating funds and includes the recent debt raise of approximately $225,000,000 in 2025.

With $57,000,000 in the first quarter. Now turning to guidance. As Pat, Tim and Jeremiah mentioned, we continue to be excited about our long term growth opportunities and value proposition. As a result, we are guiding full year 2025 organic revenue growth to be between 1113%. We believe we will continue to see the benefits of our diverse portfolio. Particular strength in casualty across our specialties. And in our underwriting management specialty, which will see the benefits of prior year M and A as we lap [indiscernible] exactly as Pat has signaled in many of our prior calls. We believe our growth will be driven by sustainable secular factors and our unique competitive position. We expect strong flow into the E and S channel that will more than offset rate softness and property. In addition, we are guiding adjusted EBITDA margin for the full year 2025 to be between 32.533.5%. In 2025, we expect margin expansion will be driven by contributions from M and which will be partially offset with a headwind from fiduciary investment income due to lower rates. We will also be taking the opportunity to fund a larger than average investment We will balance delivering for today and investing for the future.

Importantly, looking further out, we believe we are on track to hit a 35% adjusted EBITDA Ryan by the end of twenty twenty seven. With our differentiated business model focused on growth markets, ability to provide innovative solutions to clients, and empowering Ryan entrepreneurial culture unique relationship Gale and Scope, we are positioned for success over the long term.

With that, we thank you for your time and would like to open up the call for Q and A. Operator?

Thank you. We'll now be conducting a question and answer session. Our first question is coming from Elyse Greenspan from Wells Fargo. Your line is now live. Hi, thanks. My first question is just On the organic guide and I guess the outlook for property for this year, I know you guys said modest growth in properties. So I'm just trying to get a sense within the 11% to 13% organic revenue guide, What are What are you assuming for property Hi Elyse, this is Janice. Happy to take the question about the organic growth guide and then I might give it over to Tim to give a little bit more specifics on the 5% We are really pleased with our 12.8% organic growth this year, which Pat noted is our fourteenth consecutive year of double digit organic growth on top of our toughest quarterly comp. Looking ahead to 2025, we're guiding organic revenue growth between 1113%, as you noted. At a high level, we've got our usual drivers of organic growth that are expected to play out both in secular trends and also specialties strategies that are unique to Ryan Specialty. That includes risks increasing and becoming more complex, retail brokers growing organically and inorganically, panel consolidation and of course the E and S market outpacing admitted That coupled with our ecosystem of excellence that supports our ability to innovate, evolve and win due to our empowering and entrepreneurial culture, strategic relationship and position of trust and our scale and scope of expertise.

More specifically, the underlying assumptions in our guidance strong new business opportunities and of course casualty as Tim mentioned in his comments. Will continue to be a strong contributor to our growth across all of our specialties. Continue to see growth from underwriting managers, which will be bolstered by our recent professional lines as our brokers have been resilient and resourceful in identifying new opportunities for which is in our DNA expanding to new opportunities such as healthcare and Ryan and O classes like architects and engineers.

We do expect modest growth in property, but we expect it to be strong over the long term. And together, our diverse portfolio, which is based on differentiated talent and niche specialization enables us to achieve double digit organic growth in any environment. So we will remain positioned to execute and provide value to our clients. Tim, anything you want to say further on the Sure.

Ty Elyse, property pricing is still soft. Near term.

However, Flow remains strong and our ability to win market share of both new and renewal business is more than offsetting the pricing So we continue to grow our property despite these headwinds.

Okay. Thank you. And then, my second question was on the margin. I recognize there's a lot going on this year, right, with just core leverage, right, some M and A coming in and then the the Accelerate program. But then you guys had said you had said I think in the prepared remarks that it was going to be a higher than average investment year. Can you just expand or put some numbers around that? And then I guess my second question related to margin is depending upon where you end '25 relative to the guidance you laid out, you said that you'll be at 35 right in 'twenty seven. Should we expect, I guess, the incremental improvement to be split between '26 and '27 to get to the '35? Okay. Elise, Janice again here. So just to to reiterate, for 2025, our guidance We are really pleased with the over 200 basis point expansion that we had for 2025. 2024 rather and our guide for 32% sorry, our guide for 32.5% to 33.5% for 2025 We see those drivers of growth coming from M and A, underlying scaling and the fit headwinds You acknowledge the fact that Accelerate 2025 is really affording us the financial flexibility to be able to invest in our platform bigger than we have in the past.

Jeremiah would be happy to give you some background on some of the additional investments there. But just stepping back in order for us to deliver industry leading growth and expand our margins over the long term, we have to reinvest in our platform. We've always been focused on making longer term investments sometimes we are opportunistic in doing so. And using Accelerate is the opportunity to do that and providing the flexibility. So we'll be balancing delivering today for investing in the future and we're really pleased with the points at the top end of our range. Jeremiah, anything else you want to say on the investment No, I think, Elyse, you've been following us enough to know that we are always making long term investments in our platform. And sometimes we're even opportunistic like in 2022, we had a chance to make an oversized investment in talent definitely the right long term business decision, but it impacted margins the following year like we are so thrilled right now with what we've achieved in 100 basis points to the bottom line. We think it's a great balance of near term and long term growth but also showing that progression to the 35%.

Then just one last one, just so I'm understanding correctly. Is 35 is the exit run rate for '27, meaning we'll see it in 2028 or is it for full year 2027? The expectation would be for full year 2027. Thank you.

Thank you. Next question today is coming from Ryan Meredith from UBS. Your line is now live. Hi. Yes, a couple of questions here for you. First one, I'm just curious, Tim, can you maybe break out a little bit on the organic growth expectations for 2025 between wholesale binding and underwriting management kind of how should we kind of think about the growth rates there?

Yes, I'll take that one. So as you know, we don't guide organic growth by specialty, but all of our specialties have the properties to be able to achieve double digit organic growth.

Do you expect one to grow faster than others to grow one to grow faster than the other?

You've seen the contributions that we've had from M and A this year. We've done a lot of acquisitions within the delegated authority platform. So certainly that's going to be an area of growth for us that I've mentioned previously. But we do have tailwinds from casualty, modest growth from properties, across the board.

Got you. That's helpful. And then I guess the second question, given where you talked about leverage being at the end of the quarter, do you think M and A is going to slow, call it, last nine months of the year?

Yes. I hope they you noticed that we added an additional metric this quarter to be able to give everyone a better understanding of the borrowing a robust pipeline of M and A opportunities, and we believe we have the capacity to address them.

If it slows at all, it won't be because of leverage availability. Like that's why we added the additional disclosures show that we've got we anticipate ample borrowing capacity through the year. In any given period, we're constrained by the availability of assets that meet our three criteria. So we've got a great pipeline ambitious about it. As you know, we're not going to force any deals. But we think that we still have the appetite and the financial flexibility to execute Terrific. Thank you. Thank Next question today is coming from Meyer Shields from KBW. Your line is now live. Great. Thanks so much. First, I guess probably the question for Janet. What are the interest rates embedded in the future investment income forecast? For 2025. In other words, I basically want to get that to what you're looking for and how that could change if interest rates move in a different direction?

Yes. We're using the forward curve.

Okay. Simple enough. And then I guess last time in 2022, was significant investment going forward, there's a lot of turmoil in the marketplace. Because of, I guess, a sales large broker merger. And I was hoping you could fill in maybe what What's presenting the opportunity for what sounds like maybe above average annual investment. What's Mayor, what's triggering the opportunity for above average investment? Basically, is it something external, internal, Yes. So Investment program that was Accelerate '25 was not the end of our investments in efficiencies and data and AI. In fact, that we think that to win in the future, firms are going to have to make even bigger investments and we're trying to be proactive. So there's not an external force necessarily, but when we have the flexibility to make big investments that we know are going to be important to continue winning and bringing additional value to our clients and still drop about 100 basis points to the bottom line we're going to do that. And I don't think that this will be the last year that we have the capability to walk and chew gum at the same time. Like that's that is the strategy going forward as we march to 35%.

Thank Our next question is coming from Rob Cox from Goldman Sachs. Your line is now live.

Hey, thanks.

So, yes, just on these investments, I'm just thinking this probably helps [indiscernible] organic growth into the future. So I just wanted to gauge the conviction and sort of the multiyear organic growth 10%. Do you still have that conviction post 2025?

Definitely. Definitely.

We were built for double digit Organic growth from the beginning adding a lot of firepower to our delegated authority, which is as you know [indiscernible] phenomenon of delegated authority. The AM BEST study really opened the doors for a lot of people understand the power of the trend change and delegated authority. So we've anticipated that. And that's why those seven acquisitions were focused on expanding delegated authority And as you know, our founding thesis was based on providing innovative solutions innovative insurance solutions to brokers agents and carriers And the end carriers is very much a part of delegated authority And I am best confirmed that the industry is moving heavily towards delegated authority. In spite of what some people believe, But Ryan long term believers in that. And Appreciate that. Thank you. As a follow-up I wanted to ask about Personal lines, I understand that Ryan Ryan fairly small in personal lines today, but I was hoping you guys could walk us through the opportunity you have there and frame the exposure. Sure, Rob.

We do very well in personal lines. High net worth aside for a minute, we have electronic trading platforms there. We have programs across the country That's always been a very very strong niche for us But this new high net worth opportunity and we moved very quickly We built an MGU, a de novo MGU in London that's been very successful. And we have this joint venture with AIG and PCS that's just getting off the ground. Early stages but a tremendous opportunity for us to grow the business profitably there Our clients need us. There's more and more opportunities lots of non renewal notices going out. Not just California and Florida, across the country. And so tremendous demand for the solutions and we're perfectly aligned and have lots of product and solutions for our clients. We're excited about that specialty.

Thank you. Next question is coming from Mike Zremzky from BMO Capital Markets. Your line is now live.

Hey, good evening.

Back to organic growth and the outlook, just one to Be clear about potential seasonality We know that I believe the highest quarter on property is 2Q followed by 4Q. Just Just curious given that the dynamics you see in the marketplace, and your outlook, Should we expect some seasonality due to property, for example, or anything you want to you want to remind us about as we think through the eleven to thirteen for next year?

Mike, I would say seasonality is consistent with what you've seen before. Q2 will be a tough comp for property for us, but otherwise don't think there's anything new that we would want to point out. Seasonality is similar to what you've seen in the past I think it's important to focus in on a little retrospective Look, In the fourth quarter of twenty twenty three, you'll recall property rates were rapidly accelerating So it was a very, very challenging comp Because by the fourth quarter, particularly the December All of December, particularly the December, decelerating rates, probably driven by what some people viewed as [indiscernible] [indiscernible] Well, we were lucky. It didn't hit Tampa. It went down to Sarasota. [indiscernible] But a different story. So rates were decelerating but the wildfires and just a recognition we believe I think others would support this, that Property is going to be a growing line of business in 2025. Hard to forecast Precisely what that is because of the actions taken by some carriers and decelerating rates But the risks are out there. And they're expanding. You can see the wildfires And that can translate into further damage with spring rains. So property risks are still there And so long range, long term, we're very bullish on our property growth witness terrific investment in Velocity.

Add to that, we were able to bring FM Global [indiscernible] [indiscernible] investment in the E and S market property only obviously, But that's attracting some very sophisticated capital who want to support the future and we're very excited about the talent that we got [indiscernible] We seem to have lost the speaker line there.

Again, I'm here. Sorry.

Yes, Mike, please stand by. No, you're fine. The speakers, can you hear me? We cannot hear you. Hello, speakers. If you could hear me, I'll switch over to the speaker line to the backup line.

We can hear you.

Please go ahead.

Okay. Okay.

I'll ask a follow-up question. Mike, did you get that last response from from Pat on property and velocity and I got the gist I don't know, maybe he was Pat was cut off towards the end on FM Global. And being excited about those capabilities your call if you want to to elaborate more or I can move on.

You're still connected, Mike. It appears speakers are having some technical difficulties in the room there with their lines. I just want to make sure Mike you can hear me correct sir. [indiscernible] Thank you. What's happening in the room there? I do apologize. Everyone just stand by. I'll just go to another room and We do apologize for the inconvenience, please. Do not disconnect everyone. We do still have some further question and answer session to We do thank you for your patience. Hello? Yes. Speakers have rejoined. One moment please. Okay, everyone, you're now live. Rob, this is Pat.

I was answering the property organic growth question. And I referred to rapidly accelerating property rates in the March. And then as we all know, property rates started to decelerate '24, particularly in Q4, but most particularly in December. And that was a very tough comp. So we were really pleased with the the 11% organic growth.

And what I mentioned is that We made a major investment and commitment delegated authority expansion with the seven deals we did, particularly Velocity, And we brought in some outstanding underwriting talent And we brought in new high quality, very sophisticated capital to back velocities [indiscernible] And we were very pleased to bring FM Global in getting them to initially invest and E and S, property that never done that before. So the whole commitment to property underwriting and distribution really indicates how So I hope that disruption of communication to disrupt your understanding of our our feelings on this subject.

Yes, not loud and clear.

I have a quick follow-up?

Moving back to the investments, [indiscernible] And a follow-up to Mayor's question too. So Most of your expenses are compensation, which we think about as people. So and I think back when you in the last kind of higher investment period, it was more people you invested in. So Will this cycle be people or is it more you've kind of mentioned in tech investments and or AI So it's a different flavor this time or is it kind of the same playbook as we've seen in the past?

When we that's a great question. When we talk about an investments in the platform, it's always a mix. But when we think about the path to 35 Where you're going to see the majority of the saves is in comp and that's because the tools that we're giving our people the efficiency of our processes and our systems is going to make them more efficient.

So the majority of the path to 35 will actually go through comp just because of how much more efficient the workforce will become and we'll sort of bend the compensation cost curve even further over time. Thank you.

Thank you. Next question is coming from Wes Carmichael from Autonomous Research. Your line is now live.

Hey, thank you. Good evening. I just wanted to come back to the margin guidance for '25.

I think in the prepared remarks, you talked about kind of three moving pieces of the benefit from M and A, some underlying expansion and then fiduciary income being a headwind. Just hoping you could quantify or help us understand how much underlying improvement you're expecting in 2025?

We are going to break out the individual components of the guidance, but I think it's important to remember that M and A will contribute and will go into our underlying margin expansion from the platform. The next twelve months as well. So to think about them separately would be Potentially And the underlying expansion that accompanies our double digit organic growth is going to contribute to the the remainder of the way to get to 35 as well.

Okay, understood. In terms of the organic [indiscernible] Could you just maybe provide a little bit more color on submissions for new business and rules and what's driving your confidence there?

Our new business flow is very strong double digit flow The stamping offices, I'll validate that for the quarter. As you know, we had a very strong 2024 led by casualty. Surprisingly, including professional liability rebounded very nicely and we're starting to see some real measurable growth there. So that helped us offset the headwinds in property. The overall casualty market continues to be very firm led by long tail, high hazard classes of business, like transportation, habitational, construction, certain product liability, all loss leaders in the reinsurance world and we're clearly leading that casualty segment Again, professional liability making a great comeback for us. It's clear proof of the incredible resiliency and the strength of our industry leading national professional liability team they continue to find new opportunities to grow expand their market share It's kind of common trait of our RT brokers when there's adversity in the marketplace they search for other areas of growth. It's in their DNA. And last, just a quick update on binding and programs. Just an incredible performance there. They had a fabulous year continue to experience industry leading growth including the connector our small commercial digital trading platform having some explosive that we're very excited about Thank you.

We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing comments.

Well, we appreciate everybody's interest and patience. We with this technological disruption. But we certainly appreciate your questions. We're very happy to [indiscernible] quarterly and we look forward to the next quarterly meeting. Thanks for your support and your interest.

Thank you. That does conclude today's teleconference. You may disconnect