RYAN SPECIALTY HOLDINGS INC

Previous wording

The following discussion provides commentary on the financial results derived from our unaudited financial statements for the three months ended March 31, 2024 and 2023 prepared in accordance with U.S. GAAP. In addition, we regularly review the following Non-GAAP measures when assessing performance: Organic revenue growth rate, Adjusted compensation and benefits expense, Adjusted compensation and benefits expense ratio, Adjusted general and administrative expense, Adjusted general and administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share. See “Non-GAAP Financial Measures and Key Performance Indicators” for further information.

Current wording

The following discussion provides commentary on the financial results derived from our unaudited financial statements for the three and six months ended June 30, 2024 and 2023 prepared in accordance with U.S. GAAP. In addition, we regularly review the following Non-GAAP measures when assessing performance: Organic revenue growth rate, Adjusted compensation and benefits expense, Adjusted compensation and benefits expense ratio, Adjusted general and administrative expense, Adjusted general and administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted net income, Adjusted net income margin and Adjusted diluted earnings per share. See “Non-GAAP Financial Measures and Key Performance Indicators” for further information.

Previous wording

For the three months ended March 31, 2024, we incurred restructuring costs of $29.0 million. Combined with restructuring costs incurred during 2023, we have incurred restructuring costs of $77.4 million since the first quarter of 2023, representing the inception of the plan. Of the cumulative $77.4 million in costs, $28.7 million was general and administrative with the remaining balance being workforce-related. While the current results of the ACCELERATE 2025 program are in line with expectations, changes to the total savings estimate and timing of the ACCELERATE 2025 program may evolve as we continue to progress through the plan and evaluate other potential opportunities. The actual amounts and timing may vary significantly based on various factors.

Current wording

For the six months ended June 30, 2024, we incurred restructuring costs of $37.0 million. Combined with restructuring costs incurred during 2023, we have incurred restructuring costs of $85.4 million since the first quarter of 2023, representing the inception of the plan. Of the cumulative $85.4 million in costs, $32.8 million was general and administrative with the remaining balance being workforce-related. While the current results of the ACCELERATE 2025 program are in line with expectations, changes to the total savings estimate and timing of the ACCELERATE 2025 program may evolve as we continue to progress through the plan and evaluate other potential opportunities. The actual amounts and timing may vary significantly based on various factors.

Previous wording

Although we believe this growth will continue, we recognize that the growth of the E&S market might not be linear as risks can and do shift between the E&S and non-E&S markets as market factors change and evolve. For example, we benefited from a rapid increase in both the rate and flow of public company D&O policies into the wholesale channel in 2020 and 2021. Throughout 2022 and 2023 as the public company D&O insurance markets stabilized, IPO markets have slowed, and new insurance capital that previously entered the market has impacted the public company D&O space, public company D&O rate decreases have accelerated. We believe these factors have also created opportunities for retailers to place some of that coverage directly.

Current wording

Although we believe this growth will continue, we recognize that the growth of the E&S market might not be linear as risks can and do shift between the E&S and non-E&S markets as market factors change and evolve. For example, we benefited from a rapid increase in both the flow of property risks into the wholesale channel and the premium rate charged for those risks in 2023 as the frequency and severity of catastrophe losses, attritional losses and secondary perils such as severe convective storms, economic inflation, concentration of exposures, higher retentions of risk, and higher reinsurance costs applied pressure to insurers and capacity tightened. If industry trends reverse, it may open opportunities for rates to decline or retailers to place some of that coverage directly.

Previous wording

For the three months ended March 31, 2024, Other non-operating loss (income) consisted of expense related to fees associated with our term loan repricing offset by sublease income. For the three months ended March 31, 2023, Other non-operating income included sublease income.

Current wording

For the six months ended June 30, 2024, Other non-operating loss (income) consisted of expense related to our term loan repricing and TRA contractual interest and related charges offset by sublease income. For the six months ended June 30, 2023, Other non-operating income included sublease income offset by TRA contractual interest and related charges.

Previous wording

Total revenue increased by $94.4 million, or 20.6%, from $457.6 million to $552.0 million for the three months ended March 31, 2024 as compared to the same period in the prior year. The following were the principal drivers of the increase:

Current wording

Total revenue increased by $110.3 million, or 18.8%, from $585.1 million to $695.4 million for the three months ended June 30, 2024 as compared to the same period in the prior year. The following were the principal drivers of the increase:

Previous wording

$58.6 million, or 12.8%, of the period-over-period change in Total revenue was due to organic revenue growth. Under our revised calculation methodology, organic revenue growth represents the change in Net commissions and fees revenue, as compared to the same period for the year prior, adjusted for Net commissions and fees attributable to recent acquisitions during the first 12 months of Ryan Specialty’s ownership, and other adjustments such as the removal of the impact of contingent commissions and the impact of changes in foreign exchange rates. See “Non-GAAP Financial Measures and Key Performance Indicators—Organic Revenue Growth Rate” for more information on our revised methodology of calculation organic revenue growth. In aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors. Growth in the quarter was balanced across our property and casualty portfolios within our three Specialties, driven by an increase in the flow of risks into the E&S market. This growth was partially offset by a number of factors, none of which were individually significant, including a decline in Net commissions and fees generated from the placement of public company D&O insurance policies and cyber insurance policies related to a decline in premium rate associated with these types of insurance;

Current wording

$80.5 million, or 13.7%, of the period-over-period change in Total revenue was due to organic revenue growth. Organic revenue growth represents the change in Net commissions and fees revenue, as compared to the same period for the year prior, adjusted for Net commissions and fees attributable to recent acquisitions during the first twelve months of Ryan Specialty’s ownership, and other adjustments such as the removal of the impact of contingent commissions and the impact of changes in foreign exchange rates. In aggregate, our net commission rates were consistent period-over-period. Also, we grew our client relationships, in aggregate, within each of our three Specialties. The growth of these relationships is due to the combination of a growing E&S market and winning new business from competitors. Growth in the quarter was balanced across our property and casualty portfolios within our three Specialties, driven by an increase in the flow of risks into the E&S market.

Previous wording

$28.5 million, or 6.2%, of the period-over-period change in Total revenue was due to the acquisitions of Socius, Point6, ACE, and AccuRisk, all of which were completed within 12 months of March 31, 2024;

Current wording

$25.7 million, or 4.4%, of the period-over-period change in Total revenue was due to the acquisitions of Socius, Point6, ACE, AccuRisk, and Castel, all of which were completed within twelve months of June 30, 2024;

Previous wording

$4.1 million, or 0.9%, of the period-over-period change in Total revenue was due to an increase in Fiduciary investment income, caused by a rise in interest rates and rise in fiduciary balances compared to the prior year; and

Current wording

$3.1 million, or 0.5%, of the period-over-period change in Total revenue was due to an increase in Fiduciary investment income, caused by a rise in interest rates and a rise in fiduciary balances compared to the prior year; and

Previous wording

$3.2 million, or 0.7%, of the period-over-period change in Total revenue was due to changes in contingent commissions and the impact of foreign exchange rates on our Net commissions and fees.

Current wording

$1.0 million, or 0.2%, of the period-over-period change in Total revenue was due to changes in contingent commissions and the impact of foreign exchange rates on our Net commissions and fees.

Previous wording

Wholesale Brokerage net commissions and fees increased by $37.6 million, or 13.2%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter as well as contributions from the Socius acquisition.

Current wording

Wholesale Brokerage net commissions and fees increased by $62.5 million, or 16.4%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter as well as contributions from the Socius acquisition.

Previous wording

Binding Authority net commissions and fees increased by $19.1 million, or 27.5%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter.

Current wording

Binding Authority net commissions and fees increased by $10.9 million, or 15.6%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter.

Previous wording

Underwriting Management net commissions and fees increased by $33.7 million, or 36.5%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter as well as contributions from the ACE, Point6, and AccuRisk acquisitions.

Current wording

Underwriting Management net commissions and fees increased by $33.9 million, or 27.8%, period-over-period, primarily due to strong organic growth within the Specialty for the quarter as well as contributions from the ACE, Point6, AccuRisk, and Castel acquisitions.

Previous wording

Net commissions and policy fees grew 19.6%, in line with the overall net commissions and fee revenue growth of 20.2%, for the three months ended March 31, 2024 as compared to the same period in the prior year. The main drivers of this growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S market and an increase in the premium rate for risks placed. In aggregate, we experienced stable commission rates period-over-period.

Current wording

Net commissions and policy fees grew 17.8%, in line with the overall net commissions and fee revenue growth of 18.7%, for the three months ended June 30, 2024 as compared to the same period in the prior year. The main drivers of this growth continue to be the acquisition of new business and expansion of ongoing client relationships in response to the increasing demand for new, complex E&S products as well as the inflow of risks from the Admitted market into the E&S market and an increase in the premium rate for risks placed. In aggregate, we experienced stable commission rates period-over-period.

Previous wording

Supplemental and contingent commissions increased 11.1% period-over-period driven by the performance of risks placed on eligible business earning profit-based or volume-based commissions.

Current wording

Supplemental and contingent commissions increased 12.1% period-over-period driven by the performance of risks placed on eligible business earning profit-based or volume-based commissions.

Previous wording

Loss mitigation and other fees increased 86.4% period-over-period primarily due to captive management and other risk management service fees from the placement of alternative risk insurance solutions as well as certain fees related to the ACE, Point6, and AccuRisk acquisitions completed in the second half of 2023.

Current wording

Loss mitigation and other fees increased 94.2% period-over-period primarily due to captive management and other risk management service fees from the placement of alternative risk insurance solutions as well as certain fees related to the ACE, Point6, and AccuRisk acquisitions completed in the second half of 2023.

Previous wording

Compensation and benefits expense increased by $65.8 million, or 21.4%, from $307.7 million to $373.5 million for the three months ended March 31, 2024 compared to the same period in 2023. The following were the principal drivers of this increase:

Current wording

Compensation and benefits expense increased by $61.6 million, or 17.5%, from $352.4 million to $414.0 million for the three months ended June 30, 2024 compared to the same period in 2023. The following were the principal drivers of this increase:

Previous wording

The remaining increase of $14.0 million was driven by (i) the addition of 350 employees compared to the same period in the prior year, and (ii) growth in the business. Overall headcount increased to 4,401 full-time employees as of March 31, 2024 from 4,051 as of March 31, 2023.

Current wording

The remaining increase of $28.5 million was driven by (i) the addition of 467 employees compared to the same period in the prior year, and (ii) growth in the business. Overall headcount increased to 4,589 full-time employees as of June 30, 2024 from 4,122 as of June 30, 2023.

Previous wording

The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio increase of 0.5% from 67.2% to 67.7% period-over-period.

Current wording

The net impact of revenue growth and the factors above resulted in a Compensation and benefits expense ratio decrease of 0.7% from 60.2% to 59.5% period-over-period.

Previous wording

$6.0 million of increased acquisition-related expense associated with recent and prospective acquisitions; and

Current wording

$10.7 million of increased acquisition-related expense associated with recent and prospective acquisitions; and

Previous wording

The remaining increase of $4.8 million was driven by growth in the business. Such expenses incurred to accommodate both organic and inorganic revenue growth include IT, occupancy, and insurance.

Current wording

$2.5 million was driven by growth in the business. Such expenses incurred to accommodate both organic and inorganic revenue growth include IT, occupancy, and insurance.

Previous wording

The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio increase of 2.4% from 11.3% to 13.7% period-over-period.

Current wording

The net impact of revenue growth and the factors listed above resulted in a General and administrative expense ratio decrease of 2.0% from 13.9% to 11.9% period-over-period.

Previous wording

Amortization expense increased by $2.8 million, or 11.1%, from $25.2 million to $28.0 million for the three months ended March 31, 2024 compared to the same period in the prior year. The main driver for the increase was the amortization of intangible assets from recent acquisitions. Our intangible assets increased by $77.1 million when comparing the balance as of March 31, 2024 to the balance as of March 31, 2023.

Current wording

Amortization expense increased by $6.1 million, or 25.3%, from $24.4 million to $30.5 million for the three months ended June 30, 2024 compared to the same period in the prior year. The main driver of the increase was the amortization of intangible assets from recent acquisitions. Our intangible assets increased by $178.9 million when comparing the balance as of June 30, 2024 to the balance as of June 30, 2023.

Previous wording

Interest expense, net declined $0.1 million, or 0.2%, from $29.5 million to $29.4 million for the three months ended March 31, 2024 compared to the same period in the prior year. The main driver of the change in Interest expense, net for the three months ended March 31, 2024 was a decrease in the principal balance on our Term Loan from contractual amortization payments. For the three months ended March 31, 2024, the reduction to Interest expense, net related to our interest rate cap was $4.8 million. For the three months ended March 31, 2024 and 2023, the reduction to Interest expense, net related to interest income earned on operating cash balances was $8.0 million and $7.3 million, respectively.

Current wording

Interest expense, net increased $2.2 million, or 7.8%, from $28.9 million to $31.1 million for the three months ended June 30, 2024 compared to the same period in the prior year. The main driver of the increase in Interest expense, net for the three months ended June 30, 2024 was a decrease in interest income generated by lower Cash and cash equivalents balances in the current period. Recent acquisition activity was funded by operating cash flow and cash from the balance sheet. For the three months ended June, 2024, the reduction to Interest expense, net related to our interest rate cap was $4.8 million. For the three months ended June 30, 2024 and 2023, the reduction to Interest expense, net related to interest income earned on operating cash balances was $5.3 million and $8.6 million, respectively.

Previous wording

Income tax expense increased $0.1 million from $6.3 million to $6.4 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily as a result of an increase in income allocated to Ryan Specialty Holdings, Inc.

Current wording

Income tax expense increased $7.0 million from $11.7 million to $18.7 million for the three months ended June 30, 2024 compared to the same period in the prior year primarily as a result of an increase in income allocated to Ryan Specialty Holdings, Inc.

Previous wording

An increase of $25.5 million was driven by Restructuring and related expense associated with the ACCELERATE 2025 program; and

Current wording

An increase of $28.2 million was driven by Restructuring and related expense associated with the ACCELERATE 2025 program; and

Previous wording

Other non-operating loss (income) increased by $1.9 million to a loss of $1.8 million for the three months ended March 31, 2024 as compared to income of $0.1 million in the same period in the prior year. For the three months ended March 31, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing offset by $0.1 million of sublease income. For the three months ended March 31, 2023, Other non-operating income included $0.1 million of sublease income.

Current wording

Other non-operating loss (income) increased by $2.0 million to a loss of $2.0 million for the six months ended June 30, 2024 as compared to de minimis income in the same period in the prior year. For the six months ended June 30, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing and $0.4 million of TRA contractual interest and related charges offset by $0.3 million of sublease income. For the six months ended June 30, 2023, Other non-operating income included sublease income offset by TRA contractual interest and related charges.

Previous wording

In the first quarter of 2024 the Company revised its calculation methodology for the non-GAAP metric of Organic Revenue Growth Rate. Organic Revenue Growth Rate, which is now defined as the percentage change in Net commissions and fees, as compared to the same period for the prior year, adjusted to eliminate revenue attributable to acquisitions for the first twelve months of ownership, and other items such as contingent commissions and the impact of changes in foreign exchange rates. The revised calculation methodology starts from a net commissions and fees growth rate rather than total revenues and excludes contingent commissions, thereby fully removing the impact of Fiduciary investment income and contingent commissions from both the current period and base period. The legacy calculation methodology started from a total revenue growth rate and adjusted for the change in Fiduciary investment income and contingent commissions thereby leaving Fiduciary investment income and contingent commissions in the base period. We believe the revised calculation methodology is a more robust disclosure, a more widely used calculation methodology, and provides investors with a metric that is better representative of our core business performance. Organic Revenue Growth Rate is a key metric used by management and our Board to assess our financial performance and allows management and investors to evaluate business growth from existing clients.

Current wording

Organic Revenue Growth Rate is defined as the percentage change in Net commissions and fees, as compared to the same period for the prior year, adjusted to eliminate revenue attributable to acquisitions for the first twelve months of ownership, and other items such as contingent commissions and the impact of changes in foreign exchange rates.

Previous wording

A reconciliation of the revised methodology for calculating Organic revenue growth rate to Net commissions and fees growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages):

Current wording

For the avoidance of doubt, prior period references in the tables below represent the same period in the prior year. A reconciliation of Organic revenue growth rate to Net commissions and fees growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages):

Previous wording

Acquisition-related expense includes one-time diligence, transaction-related, and integration costs. In 2024, Acquisition-related expense includes a $2.5 million charge related to a deal-contingent foreign exchange forward contract associated with the Castel acquisition. The remaining charges in both years represent typical one-time diligence, transaction-related, and integration costs. Acquisition-related long-term incentive compensation arises from changes to long-term incentive plans associated with acquisitions. Restructuring and related expense consists of compensation and benefits, occupancy, contractors, professional services, and license fees related to the ACCELERATE 2025 program. The compensation and benefits expense included severance as well as employment costs related to services rendered between the notification and termination dates and other termination payments. See “Note 4, Restructuring” of the unaudited quarterly consolidated financial statements for further discussion of ACCELERATE 2025. The remaining costs that preceded the restructuring plan were associated with professional services costs related to program design and licensing costs. Amortization and expense consists of charges related to discontinued prepaid incentive programs. For the three months ended March 31, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing offset by $0.1 million of sublease income. For the three months ended March 31, 2023, Other non-operating income included $0.1 million of sublease income. Equity-based compensation reflects non-cash equity-based expense. IPO related expenses include compensation-related expense primarily related to the expense for new awards issued at IPO as well as expense related to the revaluation of existing equity awards at IPO.

Current wording

Acquisition-related expense includes one-time diligence, transaction-related, and integration costs. In 2024, Acquisition-related expense includes a $2.0 million charge for the three months ended June 30, 2024 and a $4.5 million charge for the six months ended June 30, 2024 related to a deal-contingent foreign exchange forward contract associated with the Castel acquisition. The remaining charges in both years represent typical one-time diligence, transaction-related, and integration costs. Acquisition-related long-term incentive compensation arises from changes to long-term incentive plans associated with acquisitions. Restructuring and related expense consists of compensation and benefits, occupancy, contractors, professional services, and license fees related to the ACCELERATE 2025 program. The compensation and benefits expense included severance as well as employment costs related to services rendered between the notification and termination dates and other termination payments. See “Note 4, Restructuring” of the unaudited quarterly consolidated financial statements for further discussion of ACCELERATE 2025. The remaining costs that preceded the restructuring plan were associated with professional services costs related to program design and licensing costs. Amortization and expense consists of charges related to discontinued prepaid incentive programs. For the three months ended June 30, 2024, Other non-operating loss (income) consisted of $0.4 million of TRA contractual interest and related charges offset by $0.2 million of sublease income. For the three months ended June 30, 2023, Other non-operating income included $0.2 million of TRA contractual interest and related charges offset by $0.1 million of sublease income. For the six months ended June 30, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing and $0.4 million of TRA contractual interest and related charges offset by $0.3 million of sublease income. For the six months ended June 30, 2023, Other non-operating income included sublease income offset by TRA contractual interest and related charges. Equity-based compensation reflects non-cash equity-based expense. IPO related expenses include compensation-related expense primarily related to the expense for new awards issued at IPO as well as expense related to the revaluation of existing equity awards at IPO.

Previous wording

We define Adjusted net income as tax-effected earnings before amortization and certain items of income and expense, gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related expenses, costs associated with the IPO, and certain exceptional or non-recurring items. The most comparable GAAP financial metric is Net income.

Current wording

We define Adjusted net income as tax-effected earnings before amortization and certain items of income and expense, gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related expenses, costs associated with the IPO, and certain exceptional or non-recurring items. The most comparable GAAP financial metric is Net income. Adjusted net income margin is calculated as Adjusted net income as a percentage of Total revenue. The most comparable GAAP financial metric is Net income margin.

Previous wording

(3) The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the LLC. For the three months ended March 31, 2024, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.12% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC. For the three months ended March 31, 2023, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 4.53% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC.

Current wording

(3) The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the LLC. For the three and six months ended June 30, 2024, this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.12% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC. For the three and six months ended June 30, 2023, this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 4.53% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC.

Previous wording

(1) Adjustment removes the impact of Net income attributed to dilutive awards and substantively vested RSUs to arrive at Net income attributable to Ryan Specialty Holdings, Inc. For the three months ended March 31, 2024 and 2023, this removes $17.7 million and $17.4 million of Net income, respectively, on 269.9 million and 267.0 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

Current wording

(1) Adjustment removes the impact of Net income attributed to dilutive awards and substantively vested RSUs to arrive at Net income attributable to Ryan Specialty Holdings, Inc. For the three months ended June 30, 2024 and 2023, this removes $52.2 million and $2.0 million of Net income, respectively, on 271.2 million and 123.8 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2024 and 2023, this removes $69.9 million and $3.0 million of Net income, respectively, on 270.6 million and 123.7 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

Previous wording

(2) For comparability purposes, this calculation incorporates the Net income that would be distributable if all LLC Common Units (together with shares of Class B common stock) and vested Class C Incentive units were exchanged for shares of Class A common stock. For the three months ended March 31, 2024 and 2023, this includes $24.1 million and $23.3 million of Net income, respectively, on 269.9 million and 267.0 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the three months ended March 31, 2024, 140.4 million weighted average outstanding LLC Common Units were considered dilutive and included in the 269.9 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. For the three months ended March 31, 2023, 143.4 million weighted-average outstanding LLC Common Units were considered dilutive and included in the 267.0 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS.See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

Current wording

(2) For comparability purposes, this calculation incorporates the Net income that would be distributable if all LLC Common Units (together with shares of Class B common stock) and vested Class C Incentive units were exchanged for shares of Class A common stock. For the three months ended June 30, 2024 and 2023, this includes $71.3 million and $53.7 million of Net income, respectively, on 271.2 million and 267.7 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2024 and 2023, this includes $95.4 million and $77.0 million of Net income, respectively, on 270.6 million and 267.3 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the three months ended June 30, 2023, 143.8 million weighted average outstanding LLC Common Units were considered dilutive and included in the 267.7 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. For the six months ended June 30, 2023, 143.6 million weighted average outstanding LLC Common Units were considered dilutive and included in the 267.3 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

Previous wording

(3) Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to Net income in“Adjusted Net Income and Adjusted Net Income Margin”on 269.9 million and 267.0 million Weighted-average shares of Class A common stock outstanding - diluted for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(3) Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to Net income in“Adjusted Net Income and Adjusted Net Income Margin”on 271.2 million and 267.7 million Weighted-average shares of Class A common stock outstanding - diluted for the three months ended June 30, 2024 and 2023, respectively, and on 270.6 million and 267.3 million Weighted-average shares of Class A common stock outstanding- diluted for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

(4) For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted-average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the Diluted EPS calculation disclosed in “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements. For the three months ended March 31, 2024 and 2023, 4.9 million and 4.7 million shares were added to the calculation, respectively.

Current wording

(4) For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted-average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the Diluted EPS calculation disclosed in “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements. For the three months ended June 30, 2024 and 2023, 4.4 million and 4.3 million shares were added to the calculation, respectively. For the six months ended June 30, 2024 and 2023, 4.8 million and 4.5 million shares were added to the calculation, respectively.

Previous wording

In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission, remit the premiums to the respective insurance markets and carriers. We also collect claims prefunding or refunds from carriers on behalf of insureds, which are then returned to the insureds, and surplus lines taxes, which are then remitted to surplus lines taxing authorities. Insurance premiums, claims funds, and surplus lines taxes are held in a fiduciary capacity. The levels of Fiduciary cash and receivables and Fiduciary liabilities can fluctuate significantly depending on when we collect the premiums, claims prefunding, and refunds, make payments to markets, carriers, surplus lines taxing authorities, and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency movements. Fiduciary cash, because of its nature, is generally invested in very liquid securities with a focus on preservation of principal. To minimize investment risk, we maintain cash holdings pursuant to an investment policy which contemplates all relevant rules established by states with regard to fiduciary cash and is approved by our Board of Directors. The policy requires broad diversification of holdings across a variety of counterparties utilizing limits set by our Board of Directors, primarily based on credit rating and type of investment. Fiduciary cash and receivables included cash of $955.9 million and $769.0 million as of March 31, 2024 and 2023, respectively, and fiduciary receivables of $2,225.5 million and $1,706.1 million as of March 31, 2024 and 2023, respectively. While we may earn interest income on fiduciary cash held in cash and investments, the fiduciary cash may not be used for general corporate purposes. Of the $665.4 million of Cash and cash equivalents on the Consolidated Balance Sheet as of March 31, 2024, $116.7 million was held in fiduciary accounts representing collected revenue and was available to be transferred to operating accounts and used for general corporate purposes.

Current wording

In our capacity as an insurance broker or agent, we collect premiums from insureds and, after deducting our commission, remit the premiums to the respective insurance markets and carriers. We also collect claims prefunding or refunds from carriers on behalf of insureds, which are then returned to the insureds, and surplus lines taxes, which are then remitted to surplus lines taxing authorities. Insurance premiums, claims funds, and surplus lines taxes are held in a fiduciary capacity. The levels of Fiduciary cash and receivables and Fiduciary liabilities can fluctuate significantly depending on when we collect the premiums, claims prefunding, and refunds, make payments to markets, carriers, surplus lines taxing authorities, and insureds, and collect funds from clients and make payments on their behalf, and upon the impact of foreign currency movements. Fiduciary cash, because of its nature, is generally invested in very liquid securities with a focus on preservation of principal. To minimize investment risk, we maintain cash holdings pursuant to an investment policy which contemplates all relevant rules established by states with regard to fiduciary cash and is approved by our Board of Directors. The policy requires broad diversification of holdings across a variety of counterparties utilizing limits set by our Board of Directors, primarily based on credit rating and type of investment. Fiduciary cash and receivables included cash of $1,131.7 million and $987.1 million as of June 30, 2024 and 2023, respectively, and fiduciary receivables of $2,919.4 million and $2,340.6 million as of June 30, 2024 and 2023, respectively. While we may earn interest income on fiduciary cash held in cash and investments, the fiduciary cash may not be used for general corporate purposes. Of the $612.4 million of Cash and cash equivalents on the Consolidated Balance Sheet as of June 30, 2024, $128.6 million was held in fiduciary accounts representing collected revenue and was available to be transferred to operating accounts and used for general corporate purposes.

Previous wording

On July 26, 2021, we entered into an amendment to our Credit Agreement, which provided for an increase in the size of our Revolving Credit Facility from $300.0 million to $600.0 million. Interest on the upsized Revolving Credit Facility bore interest at the Eurocurrency Rate (LIBOR) plus a margin that ranged from 2.50% to 3.00%, based on the first lien net leverage ratio defined in our Credit Agreement. No other significant terms under our agreement governing the Revolving Credit Facility were changed in connection with such amendment.

Current wording

Eurocurrency Rate (LIBOR) plus a margin that ranged from 2.50% to 3.00%, based on the first lien net leverage ratio defined in our Credit Agreement. No other significant terms under our agreement governing the Revolving Credit Facility were changed in connection with such amendment.

Previous wording

As of March 31, 2024, we were in compliance with all of the covenants under our Credit Agreement and there were no events of default for the three months ended March 31, 2024.

Current wording

As of June 30, 2024, we were in compliance with all of the covenants under our Credit Agreement and there were no events of default for the six months ended June 30, 2024.

Previous wording

Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of the LLC Common Unit exchanges and the resulting amounts we are likely to pay out to current and certain former LLC Unitholders pursuant to the TRA; however, we estimate that such tax benefits and the related TRA payments may be substantial. As set forth in the table below, and assuming no changes in the relevant tax law and that we earn sufficient taxable income to realize all cash tax savings that are subject to the TRA, we expect future payments under the TRA as a result of transactions as of March 31, 2024 will be $361.0 million in aggregate. Future payments in respect to subsequent exchanges would be in addition to these amounts and are expected to be substantial. The foregoing amounts are merely estimates and the actual payments could differ materially. In the highly unlikely event of an early termination of the TRA (e.g., a default by the Company or a Change of Control) the Company is required to pay to each holder of the TRA an early termination payment equal to the discounted present value of all unpaid TRA payments. The Company has not made, and is not likely to make, an election for an early termination. We expect to fund future TRA payments with tax distributions from the LLC that come from cash on hand and cash generated from operations.

Current wording

Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of the LLC Common Unit exchanges and the resulting amounts we are likely to pay out to current and certain former LLC Unitholders pursuant to the TRA; however, we estimate that such tax benefits and the related TRA payments may be substantial. As set forth in the table below, and assuming no changes in the relevant tax law and that we earn sufficient taxable income to realize all cash tax savings that are subject to the TRA, we expect future payments under the TRA as a result of transactions as of June 30, 2024 will be $366.9 million in aggregate. Future payments in respect to subsequent exchanges would be in addition to these amounts and are expected to be substantial. The foregoing amounts are merely estimates and the actual payments could differ materially. In the highly unlikely event of an early termination of the TRA (e.g., a default by the Company or a Change of Control) the Company is required to pay to each holder of the TRA an early termination payment equal to the discounted present value of all unpaid TRA payments. The Company has not made, and is not likely to make, an election for an early termination. We expect to fund future TRA payments with tax distributions from the LLC that come from cash on hand and cash generated from operations.

Previous wording

Total expected estimated tax savings from each of the tax attributes associated with the TRA as of March 31, 2023 were $424.7 million consisting of (i) Exchange Tax Attributes of $230.8 million, (ii) Pre-IPO M&A Tax Attributes of $101.1 million, and (iii) TRA Payment Tax Attributes of $92.8 million. The Company will retain the benefit of 15% of these cash savings.

Current wording

Total expected estimated tax savings from each of the tax attributes associated with the TRA as of June 30, 2024 were $431.6 million consisting of (i) Exchange Tax Attributes of $235.4 million, (ii) Pre-IPO M&A Tax Attributes of $101.6 million, and (iii) TRA Payment Tax Attributes of $94.7 million. The Company will retain the benefit of 15% of these cash savings.