RYAN SPECIALTY HOLDINGS INC

(Tabular amounts presented in thousands, except share and per share data)

1. Basis of Presentation

Nature of Operations

Ryan Specialty Holdings, Inc., (the “Company”) is a service provider of specialty products and solutions for insurance

brokers, agents, and carriers. These services encompass distribution, underwriting, product development, administration,

and risk management by acting as a wholesale broker and a managing underwriter or a program administrator with

delegated authority from insurance carriers. The Company’s offerings cover a wide variety of sectors including

commercial, industrial, institutional, governmental, and personal throughone operating segment, Ryan Specialty. With the

exception of the Company’s equity method investment, the Company does not take on any underwriting risk.

The Company is headquartered in Chicago, Illinois, and has operations in the United States, Canada, the United Kingdom,

Europe, and Singapore. The Company’s Class A common stock is traded on the New York Stock Exchange under the

ticker symbol “RYAN”.

Organization

Ryan Specialty Holdings, Inc., was formed as a Delaware corporation on March 5, 2021, for the purpose of completing an

IPO and to carry on the business of the LLC. New Ryan Specialty, LLC, or New LLC, was formed as a Delaware limited

liability company on April 20, 2021, for the purpose of becoming, subsequent to our IPO, an intermediate holding

company between Ryan Specialty Holdings, Inc., and the LLC. The Company is the sole managing member of New LLC.

New LLC is a holding company with its sole material asset being a controlling equity interest in the LLC. The Company

operates and controls the business and affairs of the LLC through New LLC and, through the LLC, conducts its business.

Accordingly, the Company consolidates the financial results of New LLC, and therefore the LLC, and reports the non-

controlling interests of New LLC’s Common Units on its consolidated financial statements. As the LLC is substantively

the same as New LLC, for the purpose of this document, we will refer to both New LLC and the LLC as the “LLC”. As of

September 30, 2024, the Company owned 47.8% of the outstanding LLC Common Units.

Basis of Presentation

The accompanying unaudited consolidated interim financial statements and notes thereto have been prepared in accordance

with U.S. GAAP. Certain information and disclosures normally included in the financial statements prepared in accordance

with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC for interim financial information.

These consolidated interim financial statements should be read in conjunction with the audited consolidated financial

statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28,

2024. Interim results are not necessarily indicative of results for the full fiscal year due to seasonality and other factors.

In the opinion of management, the unaudited consolidated interim financial statements include all normal recurring

adjustments necessary to present fairly the Company’s consolidated financial position, results of operations, and cash flows

for all periods presented. Certain prior period amounts in the Consolidated Statements of Cash Flows have been reclassified

to conform to the current year presentation.

Principles of Consolidation

The unaudited consolidated interim financial statements include the accounts of the Company and its subsidiaries that it

controls due to ownership of a majority voting interest or pursuant to variable interest entity (“VIE”) accounting. All

intercompany transactions and balances have been eliminated in consolidation.

The Company, through its intermediate holding company New LLC, owns a minority economic interest in, and operates

and controls the businesses and affairs of, the LLC. The LLC is a VIE of the Company and the Company is the primary

beneficiary of the LLC as the Company has both the power to direct the activities that most significantly impact the LLC’s

economic performance and has the obligation to absorb losses of, and receive benefits from, the LLC, which could be

significant to the Company. Accordingly, the Company has prepared these consolidated financial statements in accordance

with Accounting Standards Codification 810, Consolidation (“ASC 810”). ASC 810 requires that if an entity is the primary

beneficiary of a VIE, the assets, liabilities, and results of operations of the VIE should be included in the consolidated

financial statements of such entity. The Company’s relationship with the LLC results in no recourse to the general credit of

the Company and the Company has no contractual requirement to provide financial support to the LLC. The Company

shares in the income and losses of the LLC in direct proportion to the Company’s ownership percentage.

Use of Estimates

The preparation of the unaudited consolidated interim financial statements and notes thereto requires management to make

estimates, judgments, and assumptions that affect the amounts reported in the unaudited consolidated interim financial

statements and in the notes thereto. Such estimates and assumptions could change in the future as circumstances change or

more information becomes available, which could affect the amounts reported and disclosed herein.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies from those that were disclosed for

the year ended December 31, 2023, in the Company’s Annual Report on Form 10-K filed with the SEC on February 28,

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280) — Improvements to Reportable

Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This

ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024, with early adoption permitted. The amendments in this ASU should be applied retrospectively to

all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this

ASU on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) — Improvements to Income Tax Disclosures,

which includes amendments that further enhance income tax disclosures, primarily through standardization and

disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for annual

periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the

impact of adopting this ASU on its consolidated financial statements and disclosures.

New Accounting Pronouncements Recently Adopted

In March 2024, the FASB issued ASU 2024-01 Compensation — Stock Compensation (Topic 718) — Scope Application of

Profits Interest and Similar Awards, which provides illustrative examples to demonstrate how an entity should apply the

scope guidance in paragraph 718-10-15-3 to determine whether profits interests and similar awards should be accounted for

in accordance with Topic 718. This ASU is effective for public companies for fiscal years beginning after December 15,

2024, but early adoption is permitted. The Company adopted this standard retrospectively on January 1, 2024, with no

material impact to the consolidated financial statements or disclosures.

In March 2024, the FASB issued ASU 2024-02 Codification Improvements — Amendments to Remove References to the

Concept Statements, which removes references to various FASB Concepts Statements in order to simplify the Codification

and draw a distinction between authoritative and nonauthoritative literature. This ASU is effective for public companies for

fiscal years beginning after December 15, 2024, but early adoption is permitted. The Company adopted this standard

prospectively on January 1, 2024, with no material impact to the consolidated financial statements or disclosures.

2. Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers by Specialty:

Contract Balances

Contract assets, which arise primarily from the Company’s supplemental and contingent commission arrangements and

medical stop loss business, are included within Commissions and fees receivable – net on the Consolidated Balance Sheets.

The contract assets balance was$18.5 million and$13.4 million as of September 30, 2024 and December 31, 2023,

respectively. For contract assets, payment is typically due within one year of the completed performance obligation. The

contract liability balance related to deferred revenue, which is included in Accounts payable and accrued liabilities on the

Consolidated Balance Sheets, was$11.2 million and$7.8 million as of September 30, 2024 and December 31, 2023,

respectively. During thethree and nine months ended September 30, 2024,$0.5 million and$7.1 million, respectively, of

the contract liabilities outstanding as of December 31, 2023, was recognized in revenue.

3. Mergers and Acquisitions

2024 Acquisitions

On May 1, 2024, the Company completed the acquisition of Castel Underwriting Agencies Limited (“Castel”), a managing

general underwriting platform headquartered in London, England, for cash consideration of$247.6 million,$2.2 million of

RYAN Class A common stock, and contingently returnable consideration of$4.9 million.

On August 30, 2024, the Company completed the acquisition of US Assure Insurance Services of Florida, Inc. (“US

Assure”), a program specializing in builder’s risk insurance headquartered in Jacksonville, Florida, for cash consideration

of$1,079.8 million and contingent consideration of$103.8 million.

On September 1, 2024, the Company completed the acquisition of certain assets of Greenhill Underwriting Insurance

Services, LLC (“Greenhill”), an MGU focused on the allied health industry headquartered in Houston, Texas, for cash

consideration of$11.7 million.

On September 13, 2024, the Company completed the acquisition of the Property and Casualty (“P&C”)MGUs owned by

Ethos Specialty Insurance, LLC (“Ethos P&C”)for cash consideration of $44.0 million. Ethos P&C is composed ofeight

programs which underwrite on behalf of insurance carriers.

The$103.8 million of contingent consideration liabilities and$4.9 million of contingently returnable consideration

established for the acquisitions that occurred during thenine months ended September 30, 2024, were measured at the

estimated acquisition date fair value and were non-cash investing transactions. These arrangements are based on specified

revenue or EBITDA targets over the next three fiscal years.

The following table summarizes the estimated fair value of the aggregate assets and liabilities acquired during thenine

months ended September 30, 2024:

1 The acquired customer relationships have a weighted average amortization period of 13.8 years.

2 Includes a correction of an error to the purchase price allocation for the Castel acquisition, which resulted in an increase

to Deferred tax liabilities and Goodwill of $24.6 million. The table above shows the deferred tax liabilities net of deferred

tax assets of$2.8 million.

Estimatedtax deductible goodwill of$545.6 million was generated as a result of the acquisitions above. The Company

recognized acquisition-related expenses, which include advisory, legal, accounting, valuation, and other costs related to

diligence, for the acquisitions above of$5.3 million and$11.4 million during the three andnine months ended

September 30, 2024, respectively, in General and administrative expense on the Consolidated Statements of Income (Loss).

In conjunction with the closing of the Castel acquisition, the deal-contingent foreign currency forward (the “Deal-

Contingent Forward”), as described in Note 11, Derivatives, was settled.

The Company recognized an aggregate$24.5 million and$33.8 million of revenue related to the acquisitions above from

their respective acquisition dates for the three andnine months ended September 30, 2024, respectively.

2023 Acquisitions

On January 3, 2023, the Company completed the acquisition of certain assets of Griffin Underwriting Services (“Griffin”),

a binding authority specialist and wholesale insurance broker headquartered in Bellevue, Washington, for cash

consideration of$115.5 million.

On July 1, 2023, the Company completed the acquisitions of certain assets of ACE Benefit Partners, Inc. (“ACE”), a

medical stop loss general agent headquartered in Eagle, Idaho, and Point6 Healthcare, LLC (“Point6”), a distributor of

medical stop loss insurance on behalf of retail brokers and third-party administrators headquartered in Plano, Texas, for an

aggregate$46.8 million of cash consideration and$2.3 million of contingent consideration. During nine months ended

September 30, 2024, a measurement period adjustment related to the initial valuation of contingent consideration of$0.6

million was recognized in Goodwill on the Consolidated Balance Sheets.

On July 3, 2023, the Company completed the acquisition of Socius Insurance Services (“Socius”), a national wholesale

insurance broker headquartered in Northern California, for$253.5 million of cash consideration,$5.8 million of contingent

consideration, and$2.7 million of RYAN Class A common stock.

On December 1, 2023, the Company completed the acquisition of AccuRisk Holdings, LLC (“AccuRisk”), a medical stop

loss MGU headquartered in Chicago, Illinois, for$98.3 million of cash consideration. During thenine months ended

September 30, 2024, a measurement period adjustment related to the initial valuation of contingent consideration of$0.3

million was recognized in Goodwill on the Consolidated Balance Sheets.

Estimates and assumptions used in the acquisition valuations are subject to change within the measurement period up to

one year from each acquisition date.

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations of the Company as if

the 2024 and 2023 acquisitions, excluding Griffin as it is already included in the results of all periods presented, occurred

on January 1, 2023. The unaudited pro forma financial information is presented for informational purposes only and is not

indicative of the results of operations that would have been achieved if the acquisitions had taken place on the date

indicated or of results that may occur in the future. The pre-acquisition Casteland US Assure results included in the pro

forma figures below contain acquisition-related expenses that were not considered pro forma adjustments for the Company.

The unaudited pro forma financial information includes adjustments of(i) incremental amortization expense on acquired

intangible assets of$12.5 million and$28.3 million for the three months ended September 30, 2024 and 2023, respectively,

and$61.4 million and$89.5 million for thenine months ended September 30, 2024 and 2023, respectively, (ii) a decrease

in transaction costs, including the loss related to the Deal-Contingent Forward for pro forma purposes, of$5.3 million and

$16.2 million for thethree and nine months ended September 30, 2024, respectively, and an increase in such costs of$7.7

million for thenine months ended September 30, 2023, (iii) a decrease in financing costs and interest expense resulting

from the debt activity related to the US Assure acquisition of$23.9 million for the three months ended September 30, 2024

and an increase in such costs of$11.0 million and$63.0 million for the three andnine months ended September 30, 2023,

respectively, (iv) a decrease of$20.7 million of income tax expense related to the common control reorganizations as part

of the Socius acquisition for the three months ended September 30, 2023, and (v) incremental tax expenses related to the

pro forma adjustments of$8.9 million and$4.0 million for the three months ended September 30, 2024 and 2023,

respectively, and$3.3 million and$19.7 million for thenine months ended September 30, 2024 and 2023, respectively.

Contingent Consideration

Total consideration for certain acquisitions includes contingent consideration or contingently returnable consideration,

which are generally based on the EBITDA or revenue of the acquired business following a defined period after purchase.

Further information regarding fair value measurements of contingent consideration and contingently returnable

consideration is detailed in Note 13, Fair Value Measurements. The Company recognizes income or loss for the changes in

fair value of estimated contingent consideration and contingently returnable consideration within Change in contingent

consideration, and recognizes accretion of the discount on these assets or liabilities within Interest expense, net, on the

Consolidated Statements of Income (Loss). The table below summarizes the amounts recognized:

As of September 30, 2024, the aggregate amounts of maximum consideration related to acquisitions were$483.1 million

related to contingent consideration and$20.1 million related to contingently returnable consideration.

4. Restructuring

In February 2023, the Company initiated the ACCELERATE 2025 program that will enable continued growth, drive

innovation, and deliver sustainable productivity improvements over the long term. The restructuring plan aims to reduce

costs and increase efficiencies through a focus on optimizing the Company’s operations and technology. In its expanded

form, the restructuring plan is expected to incur total restructuring costs of approximately$110.0 million through

December 31, 2024, and to generate annual savings of approximately$60.0 million in 2025. The total expected costs of the

plan include$55.0 million related to operations and technology optimization,$40.0 million related to employee

compensation and benefits, and$15.0 million related to asset impairment and other termination costs.

The table below presents the restructuring expense for the program incurred:

For the three months ended September 30, 2024 and 2023, the Company recognized restructuring expenses of$5.7 million

and$11.6 million, respectively, including contractor costs, in Compensation and benefits, and$5.1 million and$4.9

million, respectively, in General and administrative expense on the Consolidated Statements of Income (Loss). For thenine

months ended September 30, 2024 and 2023, the Company recognized restructuring expenses of$35.7 million and$13.4

million, respectively, including contractor costs, in Compensation and benefits, and$12.1 million and$22.9 million,

respectively, in General and administrative expense on the Consolidated Statements of Income (Loss).

The table below presents a summary of changes in the restructuring liability:

Accrued costs in the table above include both costs expensed and capitalized during the period. As of September 30, 2024

and December 31, 2023,$11.1 million and$5.3 million, respectively, of the restructuring liability was included in

Accounts payable and accrued liabilities and$4.2 million and$1.7 million, respectively, was included in Current Accrued

compensation on the Consolidated Balance Sheets.

5. Receivables and Other Current Assets

Receivables

The Company had receivables of$334.6 million and$294.2 million outstanding as of September 30, 2024 and

December 31, 2023, respectively, which were recognized within Commissions and fees receivable – net on the

Consolidated Balance Sheets. Commission and fees receivable is net of an allowance for credit losses. The Company’s

allowance for credit losses is based on a combination of factors, including evaluation of historical write-offs, current

economic conditions, aging of balances, and other qualitative and quantitative analyses.

The following table provides a summary of changes in the Company’s allowance for expected credit losses:

Other Current Assets

Major classes of other current assets consist of the following:

Other current receivables contain service receivables from Geneva Re, Ltd. See Note 15, Related Parties, for further

information regarding related parties. See Note 14, Commitments and Contingencies, for further information on the

insurance recoverable.

6. Leases

The Company has various non-cancelable operating leases with various terms through September 2038, primarily for office

space and office equipment. The following table provides additional information about the Company’s leases:

7. Debt

Substantially all of the Company’s debt is carried at outstanding principal balance, less debt issuance costs and any

unamortized discount. The following table is a summary of the Company’s outstanding debt:

Term Loan

The original principal of the Term Loan was$1,650.0 million. As a result of the Seventh Amendment, as defined and

described below, the principal was increased to$1,700.0 million. As of September 30, 2024,$1,700.0 million of the

principal was outstanding,$6.2 million of interest was accrued, and the related unamortized deferred issuance costs were

$28.8 million. As of December 31, 2023,$1,596.4 million of the principal was outstanding,$1.1 million of interest was

accrued, and the related unamortized deferred issuance costs were$32.8 million.

On January 19, 2024, the Company entered into the fifth amendment (the “Fifth Amendment”) to the Credit Agreement. As

a result of the Fifth Amendment, the applicable interest rate of the Term Loan was reduced from Adjusted Term SOFR +

3.00% to Adjusted Term SOFR +2.75% and no longer contains a credit spread adjustment. All other material provisions

remain unchanged. The portion of the debt related to the lenders that opted out of the repricing was considered

extinguished and their portion of the legacy debt issuance costs of$0.4 million was written off during thenine months

ended September 30, 2024, which was recognized in Interest expense, net on the Consolidated Statements of Income

(Loss). Additionally, the Company incurred third-party fees related to the repricing of$1.9 million for thenine months

ended September 30, 2024, which were recognized in Other non-operating loss on the Consolidated Statements of Income

(Loss).

On September 13, 2024, the Company entered into the seventh amendment (the “Seventh Amendment”) to the Credit

Agreement. As a result of the Seventh Amendment, the principal of the Term Loan was increased to$1,700.0 million, the

applicable interest rate of the Term Loan was reduced from Adjusted Term SOFR +2.75% to Adjusted Term SOFR +

2.25%, the 0.75% floor on Adjusted Term SOFR was reduced to 0.00%, and the maturity date was extended to

September 13, 2031. Incremental debt issuance costs of$11.1 million were incurred and will be amortized over the

extended term of the loan. The portion of the debt related to the lenders that opted out ofthe Seventh Amendment was

considered extinguished and their portion of the legacy debt issuance costs of$8.3 million was written off during the three

andnine months ended September 30, 2024, which was recognized in Interest expense, net on the Consolidated Statements

of Income (Loss). Additionally, the Company incurred third-party fees related to the Seventh Amendment of$16.2 million

for the three andnine months ended September 30, 2024, which were recognized in Other non-operating loss on the

Consolidated Statements of Income (Loss).

Revolving Credit Facility

On July 30, 2024, the Company entered into the sixth amendment (the“Sixth Amendment”) to the Credit Agreement,

which provided for an increase in the borrowing capacity of the Revolving Credit Facility from$600.0 million to$1,400.0

million. The Sixth Amendment also extended the maturity date of the Revolving Credit Facility to July 30, 2029, and

reduced the applicable interest rate from Adjusted Term SOFR + up to 3.00% to Adjusted Term SOFR + up to 2.50%.

Incremental debt issuance costs of$7.9 million were incurred andwill be amortized over the extended term of the facility.

The portion of the debt related to the lender that opted out of the Sixth Amendment was considered extinguished and its

portion of the legacy debt issuance costs of$0.1 million was written off during the three andnine months ended

September 30, 2024, which was recognized in Interest expense, net on the Consolidated Statements of Income (Loss).

The Revolving Credit Facility had a borrowing capacity of$1,400.0 million and$600.0 million as of September 30, 2024

and December 31, 2023, respectively. Due to the nature of the instrument, the deferred issuance costs related to the facility

of$10.1 million and$4.1 million as of September 30, 2024 and December 31, 2023, respectively, were recognized in Other

non-current assets on the Consolidated Balance Sheets. The commitments available to be borrowed under the Revolving

Credit Facility were$1,399.7 million and$599.7 million as of September 30, 2024 and December 31, 2023, respectively,

as the available amount of the facility was reducedby$0.3 million of undrawn letters of credit.

The Company pays acommitment fee on undrawn amounts under the facility of 0.25% -0.50%. As of September 30, 2024

and December 31, 2023, the Company accrued$0.7 million and$0.4 million, respectively, of unpaid commitment fees

related to the Revolving Credit Facility in Short-term debt and current portion of long-term debt on the Consolidated

Senior Secured Notes due 2030

In February 2022, the LLC issued$400.0 million of Senior Secured Notes. As of September 30, 2024 and December 31,

2023, accrued interest on the notes was$2.9 million and$7.3 million, respectively, and the related unamortized deferred

issuance costs plus discount were$5.9 million and$6.6 million, respectively.

Senior Secured Notes due 2032

On September 19, 2024, the LLC issued$600.0 million of Senior Secured Notes. As of September 30, 2024, accrued

interest on the notes was$1.2 million and the related unamortized deferred issuance costs were$9.4 million.

Bridge Facility

On July 31, 2024, the Company entered into a 364-day unsecured bridge term loan facility (the “Bridge Facility”), which

provided unsecured bridge financing of up to$500.0 million to finance a portion of the US Assure acquisition price. In lieu

of drawing under the Bridge Facility, the Company borrowed under the Revolving Credit Facility. Concurrent with the

completion of the US Assure acquisition on August 30, 2024, the Bridge Facility was terminated, and the Company

recognized $4.1 million of related deferred financing costs in Interest expense, net on the Consolidated Statements of

Income (Loss) duringthe three andnine months ended September 30, 2024.

Subsidiary Units Subject to Mandatory Redemption

Ryan Re Underwriting Managers, LLC (“Ryan Re”) has the obligation to settle its outstanding preferred units owned by

Patrick G. Ryan in the amount of the aggregate unreturned capital and unpaid dividends on June 13, 2034,15 years from

original issuance. As these units are mandatorily redeemable, they are classified as Long-term debt on the Consolidated

Balance Sheets. The historical cost of the units is$3.3 million, which was valued using an implicit rate of 9.8%. Accretion

of the discount using the implicit rate is recognized as Interest expense, net in the Consolidated Statements of Income

(Loss). As of September 30, 2024 and December 31, 2023, interest accrued on these units was$0.1 million and$1.9

million, respectively.$2.0 million of accrued return on the Ryan Re preferred units was paid during thenine months ended

September 30, 2024. See Note 15, Related Parties, for further information on Ryan Re.

8. Stockholders’ Equity

Ryan Specialty’s amended and restated certificate of incorporation authorizes the issuance of up to 1,000,000,000 shares of

Class A common stock,1,000,000,000 shares of Class B common stock,10,000,000 shares of Class X common stock, and

500,000,000 shares of preferred stock, each having a par value of$0.001 per share.

The New LLC Operating Agreement requires that the Company and the LLC at all times maintain aone-to-one ratio

between the number of shares of Class A common stock issued by the Company and the number of LLC Common Units

owned by the Company, except as otherwise determined by the Company.

Class A and Class B Common Stock

Each share of Class A common stock is entitled toone vote per share. Each share of Class B common stock is initially

entitled to 10 votes per share but, upon the occurrence of certain events as set forth in the Company’s amended and restated

certificate of incorporation, will be entitled toone vote per share in the future. All holders of Class A common stock and

Class B common stock vote together as a single class except as otherwise required by applicable law or our amended and

restated certificate of incorporation. Holders of Class B common stock do not have any right to receive dividends or

distributions upon the liquidation or winding up of the Company.

In accordance with the New LLC Operating Agreement, the LLC Unitholders are entitled to exchange LLC Common Units

for shares of Class A common stock or, at the Company’s election, for cash from a substantially concurrent public offering

or private sale (based on the price of our Class A common stock in such public offering or private sale). The LLC

Unitholders are also required to deliver to the Company an equivalent number of shares of Class B common stock to

effectuate such an exchange. Any shares of Class B common stock so delivered will be canceled. Shares of Class B

common stock are not issued for Class C Incentive Units that are exchanged for LLC Common Units as these LLC

Common Units are immediately exchanged for Class A common stock as discussed in Note 9, Equity-Based

Compensation.

Class X Common Stock

There wereno shares of Class X common stock outstanding as of September 30, 2024 or December 31, 2023. Shares of

Class X common stock have no economic, voting, or dividend rights.

Preferred Stock

There wereno shares of preferred stock outstanding as of September 30, 2024 or December 31, 2023. Under the terms of

the amended and restated certificate of incorporation, the Board is authorized to direct the Company to issue shares of

preferred stock in one or more series without stockholder approval. The Board has the discretion to determine the rights,

preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges,

and liquidation preferences, of each series of preferred stock.

Dividends

During the three months ended September 30, 2024, the Company’s Board of Directors declared a regular quarterly cash

dividend of$0.11 per share on the Company’s outstanding Class A common stock. During thenine months ended

September 30, 2024,$66.5 million of dividends, consisting of$27.1 million related to the special Q1 2024 dividend and

$39.4 million related to regular quarterly dividends, was paid on Class A common stock.

Non-controlling Interests

The Company is the sole managing member of the LLC. As a result, the Company consolidates the LLC in its consolidated

financial statements, resulting in non-controlling interests related to the LLC Common Units not held by the Company. As

of September 30, 2024 and December 31, 2023, the Company owned 47.8% and 45.6%, respectively, of the economic

interests in the LLC, while the non-controlling interest holders owned the remaining 52.2% and 54.4%, respectively, of the

economic interests in the LLC.

Weighted average ownership percentages for the applicable reporting periods are used to attribute net income (loss) and

other comprehensive income (loss) to the Company and the non-controlling interest holders. The non-controlling interest

holders’ weighted average ownership percentage was 57.4% and 56.1% for the three months ended September 30, 2024

and 2023, respectively, and 55.2% and 56.5% for thenine months ended September 30, 2024 and 2023, respectively.

During the three months ended September 30, 2024, the Company declared a regular quarterly cash distribution of$0.04

per unit on the LLC’s outstanding LLC Common Units. During thenine months ended September 30, 2024,$16.8 million

in distributions were paid to the non-controlling interest holders of the LLC Common Units.

9. Equity-Based Compensation

The Ryan Specialty Holdings, Inc., 2021 Omnibus Incentive Plan (the “Omnibus Plan”) governs, among other things, the

types of awards the Company can grant to employees as equity-based compensation awards. The Omnibus Plan provides

for potential grants of the following awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock awards,

(iv) performance awards, (v) other stock-based awards, (vi) other cash-based awards, and (vii) analogous equity awards

made in equity of the LLC.

IPO-Related Awards

As a result of the Organizational Transactions, pre-IPO holders of LLC Units that were granted as incentive awards, which

had historically been classified as equity and vested pro rata over five years, were required to exchange their LLC Units for

either Restricted Stock or Restricted Common Units. Additionally, Reload Options or Reload Class C Incentive Units were

issued to employees in order to protect against the dilution of their existing awards upon exchange to the new awards.

Separately, certain employees were granted one or more of the following new awards: (i) Restricted Stock Units (“RSUs”),

(ii) Staking Options, (iii) Restricted LLC Units (“RLUs”), or (iv) Staking Class C Incentive Units. The terms of these

awards are described below. All awards granted as part of the Organizational Transactions and the IPO are subject to non-

linear transfer restrictions for at least the five-year period following the IPO.

Incentive Awards

As part of the Company’s annual compensation process, the Company issues certain employees and directors equity-based

compensation awards (“Incentive Awards”). Additionally, the Company offers Incentive Awards to certain new hires.

These Incentive Awards typically take the form of (i) RSUs, (ii) RLUs, (iii) Class C Incentive Units, (iv) Stock Options,

(v) Performance Stock Units (“PSUs”), and (vi) Performance LLC Units (“PLUs”). The terms of these awards are

described below.

Restricted Stock and Restricted Common Units

As part of the Organizational Transactions, certain existing employee unitholders were granted Restricted Stock or

Restricted Common Units in exchange for their LLC Units. The Restricted Stock and Restricted Common Units follow the

vesting schedule of the LLC Units for which they were exchanged. LLC Units historically vested pro rata over 5 years.

Restricted Stock Units (RSUs)

IPO RSUs

Related to the IPO, the Company granted RSUs to certain employees. The IPORSUs vest either pro rata over 5 years from

the grant date or over 10 years from the grant date, with 10% vesting in each of years 3 through 9 and 30% vesting in year

Incentive RSUs

As part of the Company’s compensation process, the Company issues Incentive RSUs to certain employees. The Incentive

RSUs vest either 100% 3 or 5 years from the grant date, pro rata over 3 or 5 years from the grant date, over 5 years from

the grant date, with one-third of the grant vesting in each of years 3,4 and 5, or over 7 years from the grant date, with 20%

vesting in each of years 3 through 7.

Upon vesting, RSUs automatically convert on aone-for-one basis into Class A common stock.

Stock Options

Reload and Staking Options

As part of the Organizational Transactions and IPO, certain employees were granted Reload Options or Staking Options

that entitle the award holder to future purchases of Class A common stock, on aone-for-one basis, at the IPO price of

$23.50. The Reload Options vest either 100% 3 years from the grant date or over 5 years from the grant date, with one-

third of the grant vesting in each of years 3,4 and 5. In general, vested Reload Options are exercisable up to the tenth

anniversary of the grant date. The Staking Options vest over 10 years from the grant date, with 10% vesting in each of

years 3 through 9 and 30% vesting in year 10. In general, vested Staking Options are exercisable up to the eleventh

anniversary of the grant date.

Incentive Options

As part of the Company’s compensation process, the Company may issue Incentive Options to certain employees that

entitle the award holder to future purchases of Class A common stock, on a one-for-one basis, at the respective exercise

prices. The Incentive Options vest either over 5 years from the grant date, with one-third of the grant vesting in each of

years 3,4 and 5 or pro rata over 7 years from the grant date. In general, vested Incentive Options are exercisable up to the

tenth anniversary of the grant date.

1 As the Reload and Staking Options were one-time grants at the IPO, the weighted average exercise price for any

movements in these awards will perpetually be$23.50. As such, the values are not presented in the table above.

The fair value of Incentive Options granted during thenine months ended September 30, 2024, was determined using the

Black-Scholes option pricing model with the following assumptions:

The use of a valuation model for the Options requires management to make certain assumptions with respect to selected

model inputs. Expected volatility was calculated based on the observed volatility for comparable companies. The expected

time to maturity was based on the weighted-average vesting term and contractual term of the awards. The risk-free interest

rate was based on U.S. Treasury rates commensurate with the expected life of the award. The dividend yield was based on

the Company’s expected dividend rate.

As of September 30, 2024, there were 1,601,823 and 6,666 exercisable Staking and Reload Options, respectively, andno

exercisable Incentive Options. The aggregate intrinsic values and weighted average remaining contractual terms of Stock

Options outstanding and exercisable as of September 30, 2024, were as follows:

Restricted LLC Units (RLUs)

IPO RLUs

Related to the IPO, the Company granted RLUs to certain employees that vest either pro rata over 5 years from the grant

date or over 10 years from the grant date, with 10% vesting in each of years 3 through 9 and 30% vesting in year 10.

Incentive RLUs

As part of the Company’s compensation process, the Company issues Incentive RLUs to certain employees. The Incentive

RLUs vest either 100% 3 years from the grant date, pro rata over 3 or 5 years from the grant date, or over 7 years from the

grant date, with 20% vesting in each of years 3 through 7.

Upon vesting, RLUs convert on aone-for-one basis into either LLC Common Units or Class A common stock at the

election of the Company.

Class C Incentive Units

Reload and Staking Class C Incentive Units

As part of the Organizational Transactions and IPO, certain employees were granted Reload Class C Incentive Units or

Staking Class C Incentive Units, which are profits interests. When the value of Class A common stock exceeds the

participation threshold, vested profits interests may be exchanged for LLC Common Units of equal value. On exchange,

the LLC Common Units are immediately redeemed on aone-for-one basis for Class A common stock. The Reload Class C

Incentive Units vest either 100% 3 years from the grant date or over 5 years from the grant date, with one-third of the grant

vesting in each of years 3,4 and 5. The Staking Class C Incentive Units vest either pro rata over 5 years from the grant date

or over 10 years from the grant date, with 10% vesting in each of years 3 through 9 and 30% vesting in year 10.

Class C Incentive Units

As part of the Company’s compensation process, the Company issues Class C Incentive Units to certain employees, which

are profits interests. When the value of Class A common stock exceeds the participation threshold, vested profits interests

may be exchanged for LLC Common Units of equal value. On exchange, the LLC Common Units are immediately

redeemed on aone-for-one basis for Class A common stock. The Class C Incentive Units vest over 8 years from the grant

date, with 15% vesting in each of years 3 through 7 and 25% vesting in year 8, or over 7 years from the grant date, with

20% vesting in each of years 3 through 7.

As the Reload and Staking Class C Incentive Units were one-time grants at the IPO, the weighted average participation

threshold for these awards will be consistent across any type of movement. The weighted average participation threshold

for Reload and Staking Class C Incentive Units was$23.38 and$23.50 as of September 30, 2024 and December 31, 2023,

respectively. The decrease in the participation thresholds for the various types of Class C Incentive Units was due to the

distributions declared to these awards during thenine months ended September 30, 2024.

Performance Based Awards

Performance Stock Units (PSUs) and Performance LLC Units (PLUs)

Certain employees were granted performance-based equity awards, either PSUs or PLUs, subject to the Company’s

achievement of several defined performance metrics including(i) an Adjusted EBITDAC Margin target, (ii) an Organic

Revenue Growth Compound Annual Growth Rate (“CAGR”) target, and (iii) total shareholder return (“TSR”) CAGR

targets. The TSR CAGR targets are measured from the grant date share price to the sum of (i) the average of (a) the volume

weighted average price (“VWAP”) of the Class A common stock for the fourth quarter of 2027 and (b) the VWAP of the

Class A common stock for the first quarter of 2028 and (ii) dividends paid to Class A common shareholders. The Adjusted

EBITDAC Margin and the Organic Revenue Growth CAGR targets as well as a minimum threshold for the TSR CAGR

target must be achieved for the awards to vest. If the Adjusted EBITDAC Margin or the Organic Revenue Growth CAGR

targets are not met, or the TSR CAGR is below the minimum threshold, the awards will be forfeited.

PSUs represent the right to receive Class A common shares and PLUs represent the right to receive LLC Common Units

upon vesting. If the Adjusted EBITDAC Margin and the Organic Revenue Growth CAGR targets are achieved, and the

TSR CAGR meets at least the minimum threshold, the TSR CAGR targets will determine how many Class A common

shares or LLC Common Units, as applicable, the awards vest into. Assuming the minimum threshold is met, the awards

will vest into between 75% and 150% of the applicable stock or units. The payout percentage between the TSR CAGR

range will be determined on a graduated basis. Confirmation of the targets will not occur until after the Company’s fiscal

year 2028 earnings are reported. If the targets are achieved, the awards will vest on April 1, 2029. The probability of

achieving the performance metrics is assessed each reporting period for expense purposes.

The fair value of the performance-based awards granted during thenine months ended September 30, 2024, was

determined using the Monte Carlo simulation valuation model with the following assumptions:

The use of a valuation model for the PSUs and PLUs requires management to make certain assumptions with respect to

selected model inputs. Expected volatility was calculated based on the observed volatility for comparable companies. The

time to maturity was based on the stock price CAGR target through the first quarter of 2028. The risk-free interest rate was

based on U.S. Treasury rates commensurate with the performance period. The initial RYAN stock price is the base for the

stock price CAGR target. The difference in the grant date fair value of the PSUs and PLUs relates to the difference in

Dividend Equivalents and Distributions Declared (as defined below) each award is entitled to accrue.

Non-Employee Director Stock Grants

The Company grants RSUs to non-employee directors serving as members of the Company’s Board of Directors (“Director

Stock Grants”), with the exception of the one director appointed by Onex in accordance with Onex’s nomination rights

who has agreed to forgo any compensation for his service to the Board. The Director Stock Grants are fully vested upon

grant. The Company granted 22,935 Director Stock Grants with a weighted-average grant date fair value of$49.07 and

19,698 Director Stock Grants with a weighted-average grant date fair value of$40.86 during thenine months ended

September 30, 2024 and 2023, respectively.

Dividend Equivalents and Declared Distributions

A majority of the Company’s unvested equity-based compensation awards, with the exception of Options and Class C

Incentive Units, are entitled to accrue dividend equivalents if the award vests into Class A common stock (“Dividend

Equivalents”) or declared distributions if the award vests into LLC Common Units (“Declared Distributions”) over the

period the underlying award vests. The Dividend Equivalents and Declared Distributions will be paid in cash to award

holders at the time the underlying award vests. If an award holder forfeits their underlying award, the accrued Dividend

Equivalents or Declared Distributions will also be forfeited. Class C Incentive Units do not accrue cash distributions but

instead have their participation thresholds lowered by each distribution declared. Options do not participate in dividends.

As of September 30, 2024, the Company accrued$0.8 million and$0.1 million related to Dividend Equivalents and

Declared Distributions, respectively, in Accounts payable and accrued liabilities, and$2.4 million and$0.3 million related

to Dividend Equivalents and Declared Distributions, respectively, in Other non-current liabilities on the Consolidated

Equity-Based Compensation Expense

As of September 30, 2024, the unrecognized equity-based compensation costs related to each type of equity-based

compensation award described above and the related weighted-average remaining expense period were as follows:

The following table includes the equity-based compensation the Company recognized by award type from the view of

expense related to pre-IPO and post-IPO awards. The table also presents the unrecognized equity-based compensation

expense as of September 30, 2024, in the same view.

10. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to Ryan Specialty Holdings, Inc., by

the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings (loss) per

share is computed giving effect to potentially dilutive shares, including LLC equity awards and the non-controlling

interests’ LLC Common Units that are exchangeable into Class A common stock. As shares of Class B common stock do

not share in earnings and are not participating securities, they are not included in the Company’s calculation. A

reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings (loss) per share of

Class A common stock is as follows:

The following number of shares were excluded from the calculation of diluted earnings (loss) per share because the effect

of including such potentially dilutive shares would have been antidilutive:

1 Weighted average units outstanding during the period.

11. Derivatives

Deal-Contingent Foreign Currency Forward

On December 21, 2023, the Company entered into the Deal-Contingent Forward to manage the risk of appreciation of the

GBP-denominated purchase price of the acquisition of Castel. The Deal-Contingent Forward had a 200.0 million GBP

notional amount and was executed when the Castel acquisition closed on May 1, 2024. As the Deal-Contingent Forward

was an economic hedge and had not been designated as an accounting hedge, losses resulting from the Deal-Contingent

Forward were recognized through earnings in the periods incurred.

Interest Rate Cap

In April 2022, the Company entered into an interest rate cap agreement to manage its exposure to interest rate fluctuations

related to the Company’s Term Loan in the amount of$25.5 million. The interest rate cap has a$1,000.0 million notional

amount,2.75% strike, and terminates on December 31, 2025. At inception, the Company formally designated the interest

rate cap as a cash flow hedge. As of September 30, 2024, the interest rate cap continued to be an effective hedge.

For the three months ended September 30, 2024 and 2023, the decrease of$16.4 million and$0.2 million, respectively, in

the fair value of the interest rate cap were recognized in Other comprehensive income (loss). For thenine months ended

September 30, 2024 and 2023, the decrease of$16.5 million and increase of$0.9 million, respectively, in the fair value of

the interest rate cap were recognized in Other comprehensive income (loss). As of September 30, 2024, the Company

expects$10.6 million of unrealized gains from the interest rate cap to be reclassified into earnings over the next twelve

months. See Note 16, Income Taxes, for further information on the tax effects on other comprehensive income (“OCI”)

related to the interest rate cap.

The location and gains (losses) on derivatives are reported on the Consolidated Statements of Income (Loss) as follows:

The location and fair value of derivatives are reported on the Consolidated Balance Sheets as follows:

See Note 13, Fair Value Measurements, for further information on the fair value of derivatives.

12. Variable Interest Entities

As discussed in Note 1, Basis of Presentation, the Company consolidates the LLC as a VIE under ASC 810. The

Company’s financial position, financial performance, and cash flows effectively represent those of the LLC as of and for

thenine months ended September 30, 2024, with the exception of Cash and cash equivalents of$42.2 million, Other

current assets of$7.8 million, Deferred tax assets of$486.3 million, Accounts payable and accrued liabilities of$0.8

million, Other non-current liabilities of$2.4 million, and the entire balance of the Tax Receivable Agreement liabilities of

$455.1 million on the Consolidated Balance Sheets, which are attributable solely to Ryan Specialty Holdings, Inc. As of

December 31, 2023, Cash and cash equivalents of$58.2 million, Deferred tax assets of$383.3 million, and the entire

balance of the Tax Receivable Agreement liabilities of$358.9 million on the Consolidated Balance Sheet were attributable

solely to Ryan Specialty Holdings, Inc.

13. Fair Value Measurements

Accounting standards establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair values as

follows:

Level 1: Observable inputs such as quoted prices for identical assets in active markets;

Level 2: Inputs other than quoted prices for identical assets in active markets, that are observable either directly or

indirectly; and

Level 3: Unobservable inputs in which there is little or no market data which requires the use of valuation techniques and

the development of assumptions.

The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the

lowest level of input that is significant to the fair value measure in its entirety.

The carrying amount of financial assets and liabilities reported in the Consolidated Balance Sheets for commissions and

fees receivable–net, other current assets, accounts payable, short-term debt, and other accrued liabilities as of

September 30, 2024 and December 31, 2023, approximate fair value because of the short-term duration of these

instruments. The fair value of long-term debt, including the Term Loan, Senior Secured Notes, the units subject to

mandatory redemption, and any current portion of such debt, was$2,692.1 million and$1,976.5 million as of

September 30, 2024 and December 31, 2023, respectively. The fair value of the Term Loan and Senior Secured Notes

would be classified as Level 2 in the fair value hierarchy and the units subject to mandatory redemption would be classified

as Level 3. See Note 7, Debt, for the carrying values of the Company’s debt.

Derivative Instruments

Deal-Contingent Foreign Currency Forward

The Company entered into the Deal-Contingent Forward to manage the risk of appreciation of the GBP-denominated

purchase price of the Castel acquisition. The fair value of the Deal-Contingent Forward was determined by comparing the

contractual foreign exchange rates to forward market rates for various future dates, probability weighted for when the

acquisition was anticipated to close, and discounted to the valuation date. The lowest level of inputs used that are

significant in determining the fair value were considered Level 3 inputs. See Note 11, Derivatives, for further information

on the Deal-Contingent Forward.

Interest Rate Cap

The Company uses an interest rate cap to manage its exposure to interest rate fluctuations related to the Company’s Term

Loan. The fair value of the interest rate cap is determined using the market standard methodology of discounting the future

expected cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable interest

rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived

from observable market interest rate curves and volatilities. The inputs used in determining the fair value of the interest rate

cap are considered Level 2 inputs. See Note 11, Derivatives, for further information on the interest rate cap.

Contingent Consideration

The fair values of contingent consideration and contingently returnable consideration are based on the present value of the

future expected payments to be made to the sellers and to be received from the sellers, respectively, of certain acquired

businesses in accordance with the provisions outlined in the respective purchase agreements, which are Level 3 fair value

measurements. In determining fair value, the Company estimates cash payments and receipts based on management’s

financial projections of the performance of each acquired business relative to the formula specified by each purchase

agreement. The Company utilizes Monte Carlo simulations to evaluate financial projections of each acquired business. The

Monte Carlo models consider forecasted revenue and EBITDA and market risk-adjusted revenue and EBITDA, which are

run through a series of simulations. As of September 30, 2024, the models used risk-free rates, expected volatility, and a

credit spread that ranged from 4.0% to 5.4%,6.9% to 18.7%, and 1.0% to 2.4%, respectively. As of December 31, 2023,

the models used risk-free rates, expected volatility, and a credit spread that ranged from 4.9% to 5.4%,7.0% to 21.7%, and

3.3% to 4.2%, respectively. The Company discounts the expected payments created by the Monte Carlo model to present

value using a risk-adjusted rate that takes into consideration the market-based rates of return that reflect the ability of the

acquired entity to achieve its targets. The discount rate ranges used to present value the cash payments were 5.2% to 6.8%

and 8.3% to 9.1% as of September 30, 2024 and December 31, 2023, respectively.

Each period, the Company revalues the contingent consideration and contingently returnable consideration associated with

certain prior acquisitions to their fair value and records the related changes of the fair value in Change in contingent

consideration in the Consolidated Statements of Income (Loss). Changes in contingent consideration result from changes in

the assumptions regarding probabilities of successful achievement of related EBITDA and revenue milestones, the

estimated timing in which milestones are achieved, and the discount rate used to estimate the fair value of the liability.

Contingent consideration may change significantly as the Company’s revenue growth rate and EBITDA estimates evolve

and additional data is obtained, impacting the Company’s assumptions. The use of different assumptions and judgments

could result in a different estimate of fair value which may have a material impact on the results from operations and

financial position. See Note 3, Mergers and Acquisitions, for further information on contingent consideration.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring

basis by fair value hierarchy input level:

Contingently returnable consideration of$1.3 million and$4.3 million was recorded in Other current assets and Other non-

current assets, respectively, on the Consolidated Balance Sheets as of September 30, 2024. Contingent consideration of

$44.1 million was recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets as of

September 30, 2024. Contingent consideration of$106.0 million and$41.1 million was recorded in Other non-current

liabilities on the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, respectively.

Level 3 Assets and Liabilities Measured at Fair Value

The following is a reconciliation of the beginning and ending balances of the Level 3 assets and liabilities measured at fair

value:

For thenine months ended September 30, 2024,$5.4 million related to the loss on the settlement of the Deal-Contingent

Forward is presented in the operating section of the Consolidated Statements of Cash Flows. For thenine months ended

September 30, 2023,$3.4 million and$4.5 million settlements of contingent consideration are presented in the operating

and financing sections, respectively, of the Consolidated Statements of Cash Flows.

14. Commitments and Contingencies

Legal – E&O and Other Considerations

As an E&S and Admitted markets intermediary, the Company faces ordinary course of business E&O exposure. The

Company also has potential E&O risk if an insurance carrier with which Ryan Specialty placed coverage denies coverage

for a claim or pays less than the insured believes is the full amount owed. The Company seeks to resolve, through

commercial accommodations, certain matters to limit the economic exposure, including potential legal fees, and

reputational risk created by a disagreement between a carrier and the insured, as well as other E&O matters.

The Company utilizes insurance to provide protection from E&O liabilities that may arise during the ordinary course of

business. Ryan Specialty’s E&O insurance provides aggregate coverage for E&O losses up to$150.0 million in excess of a

per claim retention amount of$5.0 million. The Company’s aggregate coverage for E&O losses increased from$100.0

million to$150.0 million as of June 1, 2024. The Company’s per claim retention amount increased from$2.5 million to

$5.0 million as of June 1, 2023. The Company periodically determines a range of possible outcomes using the best

available information that relies, in part, on projecting historical claim data into the future. Loss contingencies of$5.7

million and$6.4 million were recorded for outstanding matters as of September 30, 2024 and December 31, 2023,

respectively. Loss contingencies exclude the impact of any loss recoveries. The Company recognized the net impact of the

loss contingencies and any loss recoveries of a$0.9 million benefit and$0.8 million expense for the three months ended

September 30, 2024 and 2023, respectively, and$0.8 million and$5.5 million expense for thenine months ended

September 30, 2024 and 2023, respectively, in General and administrative expense on the Consolidated Statements of

Income (Loss). The historical claim and commercial accommodation data used to project the current estimates may not be

indicative of future claim activity. Thus, the estimates could change in the future as more information becomes known,

which could materially impact the amounts reported and disclosed herein.

During 2022, the Company placed certain insurance policies through a trading partner with the understanding that the

policies were underwritten by highly rated insurance capital. The policies were instead underwritten by an insurance carrier

that was not considered satisfactory by the Company or the insureds. The Company committed to securing replacement

coverage, to the extent commercially available, from highly rated insurance companies on terms substantially similar to the

insurance coverage originally agreed upon. As a result of this unusual circumstance, the Company has and may continue to

incur losses (“Replacement Costs”) arising from the original placements. The Company has determined that it is probable

that it will be exposed to the Replacement Costs on policies placed with this trading partner. The Company recognized an

estimated loss contingency of$0.9 million and$0.2 million, respectively, as of September 30, 2024 and December 31,

2023, within Accounts payable and accrued liabilities on the Consolidated Balance Sheets. Relatedly, the Company has

obtained sufficient evidence from its E&O insurance carriers to conclude that a recovery of the claim for the Replacement

Costs, in excess of the$2.5 million retention, is probable. A loss recovery of$20.2 million and$20.6 million was recorded

as of September 30, 2024 and December 31, 2023, respectively, in Other current assets on the Consolidated Balance

Sheets. In the aggregate, the loss contingency and related loss recovery resulted in a$2.5 million expense recognized in

2022 andno further expense related to this matter has been recognized since.

It is at least reasonably possible that the estimate of Replacement Costs will change in the near term as policies are

adjusted. Further, exposure to additional losses may arise from policies that had expired prior to, or shortly after, the

discovery of this unusual circumstance, adjustable premiums arising from the addition or deletion of properties over the

policy term, unpaid covered claims, or other damages for losses incurred by our customers. An estimate of these potential

losses cannot be made at this time but could change in the future as more information becomes known.

15. Related Parties

Ryan Investment Holdings

Ryan Investment Holdings, LLC (“RIH”) was formed as an investment holding company designed to aggregate the funds

of Ryan Specialty and Geneva Ryan Holdings, LLC (“GRH”) for investment in Geneva Re Partners, LLC (“GRP”). GRH

was formed as an investment holding company designed to aggregate investment funds of Patrick G. Ryan and other

affiliated investors. Two affiliated investors are LLC Unitholders and directors of the Company, and another is an LLC

Unitholder and employee of the Company. Ryan Specialty does not consolidate GRH as the Company does not have a

direct investment in or variable interest in this entity.

The Company holds a 47% interest in RIH and GRH holds the remaining 53% interest. RIH has a 50% non-controlling

interest in GRP and the other 50% is owned by Nationwide Mutual Insurance Company. GRP wholly owns Geneva Re, Ltd

(“Geneva Re”), a Bermuda-regulated reinsurance company, and GR Bermuda SAC Ltd (the “Segregated Account

Company”). The Segregated Account Company hasone segregated account, which is beneficially owned by a third-party

insurance company (the “Third-party Insurer”). RIH is considered a related party variable interest entity under common

control with the Company. The Company is not most closely associated with the variable interest entity and therefore does

not consolidate RIH. The assets of RIH are restricted to settling obligations of RIH, pursuant to Delaware limited liability

company statutes.

The Company is not required to contribute any additional capital to RIH, and its maximum exposure to loss on the equity

method investment is the total invested capital of$47.0 million. The Company may be exposed to losses arising from the

equity method investment as a result of underwriting losses recognized at Geneva Re or losses on Geneva Re’s investment

portfolio. RIH has committed to contribute additional capital to GRP over the next several years. Patrick G. Ryan, through

a trust of which he is the beneficiary and co-trustee, has committed to personally fund any such additional capital

contributions. Any such additional capital contributions under this commitment will not affect the relative ownership of

RIH’s common equity.

Geneva Re

The Company has a service agreement with Geneva Re to provide both administrative services to, as well as disburse

payments for costs directly incurred by, Geneva Re. These direct costs include compensation expenses incurred by

employees of Geneva Re. The Company had $0.4 million and$0.2 million due from Geneva Re under this agreement as of

September 30, 2024 and December 31, 2023, respectively.

Ryan Re Services Agreements with Geneva Re

Ryan Re, a wholly owned subsidiary of the Company, is party to a services agreement with Geneva Re to provide, among

other services, certain underwriting and administrative services to Geneva Re. Ryan Re receives a service fee equal to

115% of the administrative costs incurred by Ryan Re in providing these services to Geneva Re. Revenue earned from

Geneva Re was$0.3 million and$0.4 million for the three months ended September 30, 2024 and 2023, respectively, and

$1.1 million for thenine months ended September 30, 2024 and 2023. Receivables due from Geneva Re under this

agreement were$1.1 million and$0.7 million as of September 30, 2024 and December 31, 2023, respectively.

On April 2, 2023, Ryan Re entered into a services agreement with Geneva Re in accordance with which Ryan Re

subcontracted certain services to Geneva Re that Ryan Re is required to provide to the segregated account of the

Segregated Account Company on behalf of the Third-party Insurer. The Company incurred expense of$2.7 million and

$2.2 million during the three months ended September 30, 2024 and 2023, respectively, and$7.9 million and$5.4 million

during thenine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31,

2023, the Company hadprepaid expenses of$7.9 million and$5.3 million, respectively, related to this services agreement.

The prepaid expenses are included in Other currents assets on the Consolidated Balance Sheets.

Company Leasing of Corporate Jets

In the ordinary course of its business, the Company charters executive jets for business purposes from Executive Jet

Management (“EJM”), a third-party service provider. Mr. Ryan indirectly owns aircraft that he leases to EJM for EJM’s

charter operations for which he receives remuneration from EJM. The Company pays market rates for chartering aircraft

through EJM, unless the particular aircraft chartered is Mr. Ryan’s, in which case the Company receives a discount below

market rates. Historically, the Company has been able to charter Mr. Ryan’s aircraft and make use of this discount. The

Company recognized expense related to business usage of aircraft of$0.2 million for the three months ended

September 30, 2024 and 2023, and$1.0 million and$0.9 million for thenine months ended September 30, 2024 and 2023,

respectively.

16. Income Taxes

The Company is taxed as a corporation for income tax purposes and is subject to federal, state, and local taxes with respect

to its allocable share of any net taxable income from the LLC. The LLC is a limited liability company taxed as a

partnership for income tax purposes, and its taxable income or loss is passed through to its members, including the

Company. The LLC is subject to income taxes on its taxable income in certain foreign countries, in certain state and local

jurisdictions that impose income taxes on partnerships, and on the taxable income of its U.S. corporate subsidiaries.

Effective Tax Rate

The Company’s effective tax rate from continuing operationswas(45.50)% and 61.26% for the three months ended

September 30, 2024 and 2023, respectively, and 7.90% and 23.92% for thenine months ended September 30, 2024 and

2023, respectively. The effective tax rates for the three andnine months ended September 30, 2024, were lower than the

21% statutory rate primarily as a result of the vesting of IPO RSUs, exercising of Stock Options, and the income

attributable to the non-controlling interests. The effective tax rates for the three andnine months ended September 30,

2023, were higher than the 21% statutory rate primarily as a result of the$20.7 million non-cash deferred income tax

expense from the common control reorganization described below, which was recognized in Income tax expense in the

Consolidated Statements of Income (Loss) for the three andnine months ended September 30, 2023.

The Company does not believe it has any significant uncertain tax positions and therefore hasno unrecognized tax benefits

as of September 30, 2024, that, if recognized, would affect the annual effective tax rate. The Company does not anticipate

material changes in unrecognized tax benefits within the next twelve-month period.

Deferred Taxes

The Company reported Deferred tax assets, net of deferred tax liabilities where appropriate, of$486.4 million and$383.8

million as of September 30, 2024 and December 31, 2023, respectively, on the Consolidated Balance Sheets. The increase

in the Deferred tax assets during thenine months ended September 30, 2024, was primarily related to exchanges of LLC

Common Units. As of September 30, 2024, the Company concluded that, based on the weight of all available positive and

negative evidence, the Deferred tax assets with respect to the Company’s basis difference in its investment in the LLC are

more likely than not to be realized. As such, no valuation allowance has been recognized against that basis difference.

Common Control Reorganization(“CCR”)

Subsequent to the acquisition of Socius, which was acquired by a wholly owned subsidiary of Ryan Specialty Holdings,

Inc., the Company converted Socius to an LLC (“Socius LLC”) and transferred Socius LLC to the LLC. This legal entity

reorganization was considered a transaction between entities under common control. The CCR resulted in deferred tax

liabilities of$64.5 million established andnon-cash deferred income tax expense of$20.7 million for the three andnine

months ended September 30, 2023. Additionally, the difference between the carrying value and the fair value of the

investment transferred under common control resulted in an increase of$13.1 million to Non-controlling interests on the

Consolidated Statements of Stockholders’ Equity during the three months ended September 30, 2023.

Tax Receivable Agreement (TRA)

The Company is party to a TRA with current and certain former LLC Unitholders. The TRA provides for the payment by

the Company to the current and certain former LLC Unitholders of 85% of the net cash savings, if any, in U.S. federal,

state, and local income taxes that the Company realizes (or is deemed to realize in certain circumstances) as a result of (i)

certain increases in the tax basis of the assets of the LLC resulting from purchases or exchanges of LLC Common Units

(“Exchange Tax Attributes”), (ii) certain tax attributes of the LLC that existed prior to the IPO (“Pre-IPO M&A Tax

Attributes”), (iii) certain favorable “remedial” partnership tax allocations to which the Company becomes entitled (if any),

and (iv) certain other tax benefits related to the Company entering into the TRA, including certain tax benefits attributable

to payments that the Company makes under the TRA (“TRA Payment Tax Attributes”). The Company recognizes a

liability on the Consolidated Balance Sheets based on the undiscounted estimated future payments under the TRA. The

amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing

of the taxable income of the Company in the future.

Based on current projections, the Company anticipates having sufficient taxable income to be able to realize the benefits

and has recorded Tax Receivable Agreement liabilities of$455.1 million related to these benefits on the Consolidated

Balance Sheets as of September 30, 2024. The following summarizes activity related to the Tax Receivable Agreement

liabilities:

During thenine months ended September 30, 2024 and 2023, increases to the TRA liabilities of$95.6 million and$63.2

million, respectively, due to exchanges of LLC Common Units for Class A common stock were recognized in Additional

paid-in capital on the Consolidated Statements of Stockholders’ Equity. During thenine months ended September 30, 2024

and 2023, increases to the TRA liabilities of$0.6 million and$0.5 million, respectively, due to accrued interest were

recognized in Other non-operating loss on the Consolidated Statements of Income (Loss).

Other Comprehensive Income (Loss)

The following table summarizes the tax effects on the components of Other comprehensive income (loss):

17. Accumulated Other Comprehensive Income

Changes in the balance of Accumulated other comprehensive income, net of tax, were as follows:

1 Change in share of equity method investment in related party other comprehensive income (loss) on the Consolidated

Statements of Comprehensive Income (Loss).

18. Supplemental Financial Information

Interest Income

The Company earned interest income of$5.6 million and$7.1 million during the three months ended September 30, 2024

and 2023, respectively, and$19.0 million and$23.0 million during thenine months ended September 30, 2024 and 2023,

respectively, on its operating Cash and cash equivalents. Interest income is recognized in Interest expense, net on the

Consolidated Statements of Income (Loss).

Supplemental Cash Flow Information

The following represents the supplemental cash flow information of the Company:

19. Subsequent Events

The Company has evaluated subsequent events through October 31, 2024, and has concluded that no events have occurred

that require disclosure other than the events listed below.

On October 1, 2024, the Company completed the acquisition of certain assets of EverSports & Entertainment Insurance,

Inc., an MGU focused on sports, leisure, and entertainment headquartered in Carmel, Indiana, for approximately$45.0

million cash consideration. This acquisition will include contingent consideration in its final purchase price, however, the

Company has not yet completed the valuation of the contingent consideration or the purchase price allocation to the

acquired assets and liabilities as of the date of this filing.

On October 30, 2024, the Company’s Board of Directors approved a quarterly cash dividend of$0.11 per share of

outstanding Class A common stock. The quarterly dividend will be payable on November 26, 2024, to shareholders of

record of Class A common stock as of the close of business on November 12, 2024. Any future dividends will be subject to

the approval of the Company’s Board of Directors.