Ryan Specialty Holdings, Inc. (RYAN) Earnings Call Transcript & Summary

Okay, we are going to move along. And for our next session, we've got the senior management team of Ryan Specialty, including to my immediate left, Tim Turner, President; Jeremiah Bickham, CFO; and Miles Wuller, who is the CEO of the Underwriting Managers Component of Ryan Specialty. Tim is going to open up with a few introductory comments, then I will lead off with some questions. As always, I want to make sure that your questions are being answered. So if you have a question, please raise your hand, and we'll be happy to turn over the floor to you. And with that, Tim?

Well, thank you, Meyer. It's great to be here. Good morning, everyone. Thank you for joining us. As you know, we had a great first half of 2023. As expected, the market continues to be very firm in North America, especially on these high-hazard property and casualty segments that we live and breathe in every day. We look for the remainder of the year to be equally as strong. Lots of opportunities out there, as you read about every day, the world and certainly North America continues to be a risky place for casualty business. And certainly, Mother Nature is throwing us lots of curveballs in the property segment. We see no change in that going forward. The flow remains very strong into our channel, the dumping and shedding from standard markets into the non-admitted market remains very robust, and we're capturing our fair share of it. As we look forward, we're very well positioned for M&A, not just companies, but individuals, teams. We're attracting very high caliber talent to organization as we always have – we're developing and recruiting talent every day. All of that's going exceedingly well for us. So thank you.

Okay. With that, to start off the Q&A component, I want to focus on pricing, and I want to make sure that I'm communicating this effectively, the pricing remains broadly positive. And Tim has talked about that both in terms of the actual rates and which typical component of hard markets is that you've got risks moving from the standard to the specialty markets. So we've got that broad overall picture. It is broadly favorable. We do have a couple of exceptions. We've talked about that a little bit today with regard to public company D&O, more recently, maybe to a lesser extent, cyber. And I want to talk about the difference between the two of those because it's an interesting thing. When public company D&O pricing started to soften, a lot of that was attributed to the fact that there were fewer transactions, right. There are fewer IPOs, leasebacks, there was less M&A going on, probably all related to interest rates. And therefore, you had competition on an intrinsically shrinking book of business, maybe amplifying the impact of competition. When we look at cyber, that's not really accurate with cyber, the sort of this underlying – I would imagine underlying premise of growth that there are more – there's more risk, there's more sensitivity to the risk in which case, that aspect of the justification for softness in public company D&O doesn't really work itself out. So I know this is a convoluted question, but I was hoping you could give us some insight into the underwriting mindset of the industry that's leading to these disparate pricing trends by line of business.

Sure, I'd be happy to. You make a distinct point there in that the public D&O and the cyber while they both encountered rate deceleration and a migration back to the standard market to a degree, there were different reasons for that. The only common thread there is that we didn't have a lot of large losses in the space. And so rate adequacy seeps in and standard markets, direct markets start to pull some of that business back. That's been happening there. On the underwriting side, I'll let Miles go a little deeper on that. As you know, we're in both spaces on a delegated underwriting authority.

Yes. No, we appreciate the question, and it's – and thank you for the chance to kind of break away from the parallels of those business, right. So as you both have touched on. So if you think of D&O, that trend started three or four years ago, industry results had been substandard. The market started achieving rate and then that was met with substantial demand in the SPAC and IPO market. D&O in fairness is traditionally an admitted product or more broadly admitted product. We were proud both on the brokerage and underwriting side to be able to step in and meet the needs of both our retail and carrier partners in that space. So there was an exact confluence as firming demand. And then once that pricing adequacy was achieved, demand fell away and it moved faster than most people expected. So that was pricing and demand meeting at the same time and cyber, we're early in that journey. So I'd want to emphasize that there has not been a major headline in a year or two. We have not seen a Home Depot or we have not seen a Target. And part of that is by the great investment of the risk managers of the Fortune 1000 companies and some of the smaller companies. Those – the threat landscape remains real. There are still record numbers of attempts every day. There are still substantial ransomwares under attack every day. And so the losses are happening more attritionally in the small and mid-market space, but they are out there. And so while the threat remains real, we're positioned for it. And structurally, only 20% of the U.S. is currently buying cyber insurance. So we see growth for the next five years that could be 20%. So even though there might be small term movement between admitted and E&S, there is a structural need for continued coverage in this space.

Thanks. I want to follow up and maybe I'm getting ahead of myself here because it's always what have you done for me lately. We've talked – we've seen, I think, very strong submission flows over the past couple of years. And I think it's an inevitable component of a hard market is that business will move to the specialty carriers. This year, one main aspect of it has been catastrophe-exposed property. How should we think of the duration of that flow? Will it all have moved over by the end of this year? Or is this a multiyear process? How does it actually work on a day-to-day basis?

In cat property?

Cat property.

We look at that as a multiyear transition. The number of hurricanes, wildfire events, even the convective storms have put so much pressure on the standard company's balance sheets that the dumping and the shedding in our view, has really just begun. We think that runway is very, very long. The increase in submission flow the rate increases, the structure of these deals changes dramatically. And so the freedom of rate and form in the non-admitted market just becomes an absolute necessity to complete these towers in the commercial market. And so I see that as a continuous dumping and shedding. I don't see global warming changing, unfortunately. You can see the record number of storms that are projected this year. Another one in the hopper as we speak, expected to have landfall by Saturday, could be a Cat 4 on the East Coast. Underwriters are reacting to that. There's more nonrenewal notices flooding the market on the standard side. We get those submissions immediately. But maybe more pointedly here is the risks that we're on. In many cases, we get more opportunities on the layering of those accounts. So we may be on one part of the accounts down low and standard markets, vacate the upper layers. And so we get more opportunities, but the submission count is the same. So you really have to peel back the onion to see what that real flow and opportunity is, but it's immense in cat property. We've never seen a flow like this before. Thank goodness, we are ready for it. We have a lot of depth and breadth in all our broking channels. We have a lot of proprietary product in the delegated underwriting authority space. We're in a very strong position to help our clients.

And then a related question, I think this will apply probably to all three of you is in terms of making sure that you actually have the capacity on the other side for your clients. Can you talk about that capital procurement and I'm going to call it retention, just to make sure that it's there year after year.

Yes. Look, we appreciate it. So I think like a lot of the folks in this room, there is a – we are judged on our performance track record, right. So carriers every day have a decision of do they attempt to underwrite this risk themselves? Or do they trust and delegate that responsibility to us? So carriers are looking for partners that have a like-minded view of risk. They've made substantial investment not only in top talent, but the resources to manage that risk and then ultimately, your track record. And so our hallmark has been high standard of care, like-minded view as our partners. And now we're delivering consistent and sustained outperformance to the broader market. And the outcome, Meyer, is that existing partners often want to come and do the next line of business with us. We have partners that are taking quota share participation across our whole line. And it ultimately compounds on itself where we're able to bring new product to market faster, bring incremental lines of capacity to existing facilities. And look, I think the third one, I'll just touch on it since we talked about Cat, we've benefited. There's been a real flight to quality in the last year. So since Ian struck – when Ian happened, the market was already into three or four years of property pain, a lot of carriers retracted. We had the unique benefit of – we outperformed the expectations of the storm, a lot of competitors, and we've actually been attracting cat aggregate capacity as the market has generally been contracting. So like we're excited to – for that outperformance to kind of play back into our business and allow us to continue to grow and service clients.

Fantastic. And again, I want to look around the room just to make sure that if there are questions here that they're being asked and answered. When you look at the nonstandard markets, I can think of a few companies that are looking for more cat exposed property, either because they want to shift their mix of business and/or because they believe that the expected returns right now are phenomenal. We are seeing dramatic rate increases. Is that representative of the overall specialty market that there is an appetite or property or is it more mixed?

I would say, it's more mixed and you do have some acceleration into the market, but it's a much, much shorter line. So as an example, an average risk that we were on last year. Our participation on a few layers may have taken 10 or 15 carriers to satisfy the needs of our clients. This year on that very same risk, it could take twice as many carriers. Derisking is a big part of this transition in a firming market. Even the largest players on the risk-bearing side are shrinking their lines on cat business. So it really takes an expert to put together full coverage cat annuity in these very large towers. And that's really an attraction. And part of the value add that we bring. So we're brokering these accounts. We're marketing them to over 100 wholesale-only distribution companies. And then we're weaving in our proprietary product on the delegated underwriting authority side.

That would sound like something that smaller wholesalers just don't have the ability to do it.

There's very few of us that can do that simultaneously on a cat-driven account.

Okay. Go ahead.

How do you get compensated for in I mean double the work that you've done in the past with some of your markets, I mean, does the change recompensation dynamic at all? Or are you just working place is higher for – it seems like you should be compensated for a lot of it.

Yes. We certainly wouldn't complain about that, Dick. We're – there are reduced commissions in certain places. Carriers will lower the commission on these higher hazard riskier lines – it's full disclosure. We work that out with our clients, and we're fairly compensated for it. But yes, as premiums go up, occasionally, we'll get more. But it's very closely watched and monitored by the bigger retailers and really full transparency in the industry, more so than I've seen in my career.

Okay. I want to ask a broader question, you give a bit of an introduction that it was when Ryan was going through the IPO process, one source of growth that was emphasized was that retail brokers are consolidating their wholesale panels. And obviously, if you're on the right side of that, if you have size and scale and capabilities, then when the retail brokers are using fewer wholesalers, you're going to win that in that process much more than you're going to lose. And I think we've seen that work out ever since the IPO. More recently, we've had higher interest rates and maybe a relatively abrupt slowdown to M&A, and I attribute that to the fact that the buyers recognize the impact of higher interest rates in a way that may be less sophisticated sellers don't relative to describing the value. So I wanted to ask, with regard to slower broker M&A, I guess, there are two questions. One, how are you seeing that in terms of the retail brokers that are your clients bringing in new smaller acquisitions whose wholesale panels can be consolidated. And then second, you're also an acquirer, how are interest rates impacting the competition for assets?

So I'll start and Tim, you can just jump in. Two parts to that one, the client side and then our side, so I'll take them in that order. We think that retail broker consolidation is a strategy that's going to persist. And of course, the financing markets have an impact on it. And if any of our clients that are really, really highly acquisitive need to slow down or pull back and say, divert their attention to, like you mentioned, maybe more optimizing their panel strategy. We think we stand to disproportionately benefit from that. So potential upside in that scenario. In terms of our own consolidation, we have heard from sellers more recently that certainty of close is more top of mind. So I think when we're competing with sponsors, that gives us a little bit of an edge. But I think more often than not, our closest competition are going to be other strategics and probably other strategics that like us, are funding most of their M&A from cash from operations, cash on their balance sheet. And so I don't see any slowdown in flexibility or competition for those properties. Because remember, like we're competing for, call it, the top 10% in terms of quality and growthiness. And what we or any other competitor can afford to pay more than anything is a function of growth. And so that's a good thing. That means that there's plenty of value to go around if you're targeting the right businesses and for us, that takes a long-term view of not what the market is doing or what the financing market looks like, but what we can do together. There definitely is plenty of value to still go around. And what a sneaky opportunity that I think might be going on right now and that we've got evidence of from one of our recent deal is because there's so much talk about interest rates and the availability of capital and its impact on valuation, I do think some sellers are thinking maybe let's wait it out. And so there's businesses that are taking their time or hesitant to go to market. The opportunity for us is that we love buying things that are not for sale, and we're quite good at it. And an example of that is Socius, the fabulous wholesale business we closed on in July. That business was not for sale. So we approach them. We've known them for years. We've been following them, been interested in them strategically for a long time. We were able to convince them that we're a destination of choice and that they could get a valuation. Again, that reflects the long-term growth potential of them as a part of us, and we were able to win. So we're actually – even in the interest rate environment and the financing markets being what they are, we see a lot of opportunities like that for us.

Okay. And then one follow-up question just in terms of the mechanics, we talk about retail. I want to make sure I got it right, retail brokers, wholesale panel consolidation. Is that a one-year process for each of these brokers? Does it extend over time? Because it could be that we're just – there is enough continuation of activity from a couple of years ago that even if there's no M&A going on in the retail brokerage world, there's still upside to Ryan on day-to-day operations.

We think there's a tremendous upside to this, Meyer. And really, when you look back, it's a short history in terms of the consolidation of the use of intermediaries on the brokerage side with top 100 retailers. That really started in the advent of data analytics in 2008, 2009 when something that every big retailer knew using too many intermediaries was very costly in regulatory compliance and you know. But now they had data around it and they had definitive inefficiency costs they can identify. So they moved very quickly as often happens, the global brokers led the charge, the nationals quickly followed. And in the last 10 years, most top 100, even the regional retail brokers have consolidated their use of brokerage intermediaries, real important point here. And there's further iterations of that. They were – many of them were using 400 or 500, 600 intermediaries. And they've cut that back in brokerage down to a handful, but there's constant requalifications. In practice group verticals, this is a real important takeaway here. You don't just qualify as a firm. You really have to prove you're the best construction broker. You're the best professional lines broker. You have the best life science practice group and so forth. That's a very specific interaction with most big retailers. Now keep that mind in the big picture, roughly up 40%, 50% of the business involves delegated underwriting authority in some form or fashion, whether it's the big leagues of MGU, MGAs program business, which is a layer of delegated underwriting authority and of course, binding authorities that you're very familiar with, identified really a small commercial P&C. That remains completely unconsolidated. Retailer brokers haven't been able to get to that, mostly because the industry wasn't in a position to respond to it. Believe it or not, most of the product in those channels is proprietary. You can't take it on a broker record letter like you could brokerage, then you just move it with the letter and delegated underwriting authority. In most cases, you have to replicate, duplicate the product, very expensive. It's part of our moat, very, very difficult to build a bench strong enough with delegated underwriting authorities in all three bands and have enough product. To move the business, you literally have to replace it. And in a hard market, even more challenging but we're there. We're in a very strong position there to qualify for that. There's definite movement in the consolidation and the use of delegated underwriting authority intermediaries and a huge opportunity for us going forward.

All right, fantastic. And again, I want to look around to see if there are questions. I want to focus on talent and recruitment and maybe expand that a little bit. We are blessed as an industry to have a number of journals that will publish articles whenever any broker moves from company A to company B. And I don’t – honestly don’t know how accurately that reflects the level of available talent and the mobility of talent. I do think that it probably escalated during the Aon, Willis Towers Watson courtship, if you will. But I know the current state of it. In other words, how easy or difficult – what’s the opportunity for recruitment now? How expensive is good underwriting talent, whether it’s on the wholesale side, on the underwriting management side, and something you could update us on those details of the market.

I can give you a general overview Meyer and then my colleagues can pick it up from there. Generally speaking, we look at recruiting and developing talent in a myriad of fashions. One is direct individual and team recruiting. Existing professionals, many times competitors or they’re in a different segment of the business where they want to make a transition to wholesaling or delegated underwriting authority. So that’s one form of it. But training and developing and recruiting your own talent and kind of a manufacturing your own talent is kind of how we look at it. That was part of the foundation and the commitment that Ryan Specialty made right from the beginning. So we formed a university, we formed a very formal training program, and when we made the acquisition of All Risks, they were very good at that as well. We merged those programs together. And today we can grind out at least 100 kids a year through the intern program in the Ryan University. And those kids can become very accretive on these mega teams that are now part of wholesaling. Today, it takes very large teams to handle the flow that come from the retail community and the record breaking percentage of non-admitted business that we have in the commercial market. So these kids get a faster education, we can accelerate their level of being accretive and contributing to the team. So it’s a combination of all those efforts that really can create a champion effort in terms of putting talent out on the field quicker than your competitors. And we pride ourselves in that. So it’s a continuous effort across every segment that we’re in. One, segments like Cat Property, we saw this coming several years ago and we accelerated our traction of talent, training of talent, and we’re in very good shape. But maybe a little bit more on that in your space.

Yeah. Sure. Well, look, we like to pride ourselves still as a destination of choice for underwriting talent as well. And I think there’s a couple big levers there. First, so underwriters know if they join us that they’re joining a robust framework of resource to support them, right? So for someone to make the jump, they want to know that we can surround them with tools that are going to bring them back to market as fast as possible, right? So introductions to capital, introductions to distribution, internal IT actuarial support so they know that they’re – from the time they jump to the time they’re live again we can shorten that more than most folks out there. I think another part of our model, and this is subtle, but by design, we’ve maintained 22 MGU brands within the marketplace as well as our national specialty program unit. So there is an extreme value in kind of promoting our entrepreneurial spirit all the way down to that individual MGU level, right? And whether you call it esprit de corps or pride of place, those senior underwriters aspire to build their own brands alongside those MGU brands. And that’s truly invaluable and has gone a long way. And we continue to promote that. And they have direct alignment to those cells. There’s obviously key culture elements we push down and are common, but they’re allowed to have their own culture over time, right? The underwriters supporting rep and warranty, their – example, their former lawyers, their former accountants, they’re going to have a much different culture than the marine or cat property team, right? And that’s – it seems subtle, but it’s gone a long way. And we offer that dynamicism to our employees.

So I’m going to pose a follow-up question to Jeremiah, and I’m going to frame it numerically, but that’s not necessarily I need to answer it. How should we think about the rate of inflation for employee compensation costs, especially since talent is – I mean, I think you’re capitalizing on great opportunity, but it does seem like insurance brokerage talent is more expensive. It’s seeing more inflation than maybe other elements of an already tight labor market?

No, that’s accurate. Competition in our space, especially in underwriting and brokerage quite fierce as these gentlemen laid out, we feel very good about being able to compete for that talent. But what is the cost of them if you’re able to convince them to join? Like, every part of the labor market it’s up. But fortunately on like the wholesale brokerage side, for example, 100% of the brokers pay is variable. So it’s not affected by inflation the same way. On the underwriting management side or the parts of our business that have salary and bonus. It’s still a large component of that comp is highly variable. It’s a very pay for performance model that we have. So like every business we are affected by wage inflation. That’s by far the part of inflation that’s hitting us the hardest. Because the biggest expense item on our P&L is comp, and because most of our comp is variable, we’ve been able to manage it.

Okay. And then if we can follow up on that, in terms of other sources of inflation and the Ryan strategy for managing that as you see just financial inflation work its way through the P&L?

Well, one impact of inflation that we’ve talked about is the correlation with premium rates rising. We’re largely paid, almost entirely paid on commission. So to the extent that inflation drives premium rates up, that does have an upward trajectory on our revenue. On the cost side, since we’ve already talked about labor, there’s a bunch of other expense items that are getting more expensive. But one of the benefits of ACCELERATE 2025 is that we are making even our non-compensation costs more variable. So as we’re able to buy services or buy capacity for certain, like call it back office functions, our new model post ACCELERATE will actually make those more variable too, so will give us even more levers to pull. But quite frankly, we feel – actually feel very good about our ability to manage costs. Like when I think back to the pandemic era 2022 and no one knew what was going to happen to us and a lot of the brokers showed an ability to react quickly and manage costs. So I think over the next few years post-ACCELERATE, we’ll have even more tools and more levels to react.

Okay. Fantastic. And again, if there are questions in the room. Yeah, Steve.

How do you balance…

We’re just bringing you the mic. I’m sorry.

Thanks. How do you balance the top line with margins and do you consciously yield one for the other?

Fortunately, our exceptional top line, and sort of we’ve talked about double digits as being the floor that is – that gives you the ability to expand margin. And think back to 2019, we had a 25% margin. So we scale most years, even on a reported basis. There’s been a lot of noise in everyone’s sort of cost basis the last couple years because of inflation under investment on T&E and things like that. But what we’ve said is that because of our exceptional growth and just our business model, and the fact that we’re not capped out on margin is that most years on a reported basis, you’ll see operating leverage fall to the bottom line. And our expectation as of right now is that that actually resumes next year. Now, one of the benefits going back to ACCELERATE 2025 is because it’s not a defensive cost cutting program, it’s actually investment in a lot of efficiencies, getting better tools, more services cheaper and faster to our teams, that’s actually going to accelerate our annual margin scaling. And so in 2025, for example, when that $35-plus million of savings most of which should fall to the bottom line shows up, you’ll actually see a step change in margin. And because of the processes and systems and tools and capabilities we’ve put in place, our annual basis points of margin is going to take a step up as well. So I guess to answer your question, we feel like we’re in a position to harness and capitalize both top line and margin.

Okay. And I don’t know if there’s anything else in the room. Yeah, John.

Yeah. Earlier you spoke about standard lines moving to the E&S market. Is there like a rule of thumb like 5% each year? Or is it fluctuates for property? Maybe it probably varies by line. Can you frame it out in any way or is it not possible? Thanks.

It fluctuates by line, by segment, by class of business. It’s very defined into a particular product or class. And overall, I mean, you can look back at the cycles that we’ve been through, they were general P&C classes, but today the data analytics are so much stronger and so much more accurate that carriers – standard carriers, admitted markets can shed business and then pull it back in. And sometimes that’s done on a very narrow basis in the field. Sometimes it can be a delegated underwriting authority and into brokerage. There’s really no pattern or forecast in that realm.

But you have enough notice to make sure that you’re adequately staffed for the inflows and maybe the outflows.

Yeah. Definitely, on the upside we saw the market starting to turn. By the second quarter of 2019, we could see the damage being done on the standard admitted markets balance sheets, loss leaders like transportation, construction, residential construction and several other classes of business doing so much damage and poor results being reported by the admitted market. We knew the dumping and the shedding and the flow of business coming into the channel was on the verge of increasing significantly. So we staffed up, disproportionately really in anticipation of that. And we’ve done that consistently because the market didn’t turn on a dime on one, the entire market. It was really segmentized, niche firming phenomenons that we were really tracking. And we do that to this day. There’s several more that we feel are coming. Hospital professional liability will be an example of that in healthcare. So you prepare for that, you build product, you recruit experts, you build teams and you anticipate a huge increase in flow. And then it’s really the challenge of absorbing it efficiently and delivering this high level of service while you’ve got this big increase in demand. So we’ve got a lot of experience in that.

I want to follow-up on that, because you triggered a question that I’ve been curious about. I’ve been asking about this for years and years in terms of why the standard industry can’t get its arms around commercial auto. So let me ask from your perspective, can the wholesale, can the non-admitted markets get their arms around commercial auto?

It’s a great question. And you see that every day in this market. The damage that auto, which is all encompassing everything from 18 wheelers to livery to shared economy, everything in between. And today, first ever, at least in my career, private passengers just really doing a lot of damage and that’s social and economic inflation, these runaway nuclear verdicts really zeroing in on transportation for some reason. And so how do we address that? That dumping and shedding much of it is on an admitted basis, and it’s unique in that trucking, any interstate trucking has filings, federal filings. And so you have to be on an admitted form. So the only way around that is to – is for these insurers to make adjustments and split their fleets up so that we can take as much of it non-admitted as possible so that we can get rate adequacy, right? So that’s all we invested. It’s a great illustration of anticipation of a niche firming phenomenon. We saw this happening for the last two years at accelerated and auto today the worst it’s ever been. And so we made a lot of acquisitions like Krause and Associates who were experts in not just underwriting, delegated underwriting authority and transportation, they had a big brokerage team, and we were short a little bit of brokerage talent and transportation on the West Coast. It was perfect timing, and we picked up an MGU in the process. And on miles side of the house, we’ve been manufacturing product and building facilities in transportation. But the admitted part of it is really a delegated underwriting authority part of it that’s in the binding authorities. That’s where it lives. And that’s taken some bumps even on our side of the business. It’s very difficult in delegated underwriting of really commercial transportation to get rate. Those big companies like Nationwide and some others are fighting to get rate adequacy and they can’t get it. So there are alternatives to non-renew, other large companies doing the same thing. That channel is flooded with opportunities today.

Okay. Again, I want to make sure I’m not overlooking any questions here. One question I get and everything that you’ve been saying suggests that this hypothetical is becoming more and more remote. But what does Ryan Specialty look like in an actual soft market?

I’m happy to take a crack at that. Well, Pat Ryan’s been through five cycles. I’ve been through three, and we often have a coffee together and talk about that. And we don’t ever remember not being able to get double digit growth. So it’s a market you live in. Soft markets are more prolonged and you certainly live in that state and you understand how that works. Our needs or our client’s needs and the services we can provide, far outreach a cycle. And as we’ve talked about many times, the changes in the last four years have been structural, just huge changes. The number of risk bearing insurance companies that are in the non-admitted space have gone up record breaking. There’s over 100 companies that serve wholesale and the distribution line. So that’s a dramatic change. The product that’s in the space is deep. And then on the distribution side, because of data analytics and retailers really consolidating their use of intermediaries, that’s driven a lot more business into the channel. But the big driving force is the environment that we live in, in North America, a riskier society in casualty and liability. We don’t see that changing. Classes like habitational business just get harder by the day. And the losses are very damaging to the balance sheets. On the property side, we all read about it every day. No real light at the end of the tunnel. Unfortunately, global warming is doing tremendous damage and so big shift, a structural shift in capacity into the non-admitted space. We don’t see that going away. We see a long runway ahead for our needs. But some softening, in my opinion, will be more niche oriented, like you see in cyber and public D&O. But the losses are quick to return and carriers get – they get damaged when that happens. And then the shedding and the dumping starts all over again. So I think you’re going to see much more narrow changes in the marketplace. Not broad base like we’ve seen in the past.

If I could tack on though, Meyer. Every day, Ryan Specialty is looking to actually broaden its addressable marketplace, right? So 18 months ago, we entered the alternative risk marketplace and been growing attractively. We made two foundational investments in health and benefits a few months ago. And on the delegated underwriting side, that is still early in its penetration, right? When we started Ryan, only 4% of the commercial P&C market was serviced through delegated underwriting authority. That’s up to 14% with substantial runway left. And that’s just – that 14% penetration does not include personal lines, it does not include reinsurance, it does not include addressable risks. So we’re all always looking for new products outside of our current set, including launching new facilities, adding capacity, new facilities. So those are the many tools that we’re trying to bring to bear to always keep double digit growth.

And two silver linings to sort of add to that, because some softening is inevitable. It is when not if don’t know how deep, how long, any of that. But I think from the perspective of our relationship with investors, in some ways we’re looking forward to that because there’s been market conditions that have just favoured everyone. Everyone’s put up exceptional growth. We get questions all the time, like how much of this is just related to pricing or flow. I think when things normalize a little bit more, it’s an opportunity for us to stand out and for our growth to look that much more distinctive and we’re confident that we can rise to that occasion. And then the other potential silver lining or opportunity is that if a softening market is a catalyst for our retail clients to focus harder on executing the panel consolidation strategy that is a huge potential opportunity for us to benefit.

Okay. Fantastic. I’m going to look around the room one last time, but I do think we’re at the end of our session. So please join me in thanking the Ryan Specialty team for a phenomenal session.