Ryan Specialty Holdings, Inc. (NYSE:RYAN) Q1 2025 Earnings Call Transcript

Ryan Specialty Holdings, Inc. (NYSE:RYAN) Q1 2025 Earnings Call Transcript May 2, 2025

Operator: Good afternoon and thank you for joining us today for Ryan Specialty Holdings First Quarter 2025 Earnings Conference Call. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com. On today’s call, management’s prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward-looking statement. These statements are based on management’s current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from these discussed today. Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company’s filings with the SEC.

The company assumes no duty to update such forward-looking statements in the future, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company’s website. With that, I’d now like to turn the call over to the Founder and Executive Chairman of Ryan’s Specialty, Pat Ryan.

Pat Ryan: Good afternoon and thank you for joining us to discuss our first quarter results. With me on today’s call is our CEO, Tim Turner, our President, Jeremiah Bickham, our CFO, Janice Hamilton, our CEO of Underwriting Managers, Miles Wuller, and our Head of Investor Relations, Nick Messick. The first quarter represented a strong start to the year. We grew total revenue 25%, driven by strong organic revenue growth of nearly 13%, and 13 percentage points from M&A. This is our largest contribution from M&A in over three years, partially offset by a slight decline in fiduciary investment income. Adjusted EBITDA grew 27.5% to 201 million. Adjusted EBITDA margin expanded 60 basis points to 29.1%. Adjusted earnings per share grew 11.4% to $0.39, a very good quarter by any measure.

Our growth was driven by strength and casualty across all three of our specialties, and modest growth in property, which is a credit to our ability to deliver value for our clients in a challenging property market. We also had significant top-line contributions from recent acquisitions, including velocity risk underwriters, which closed at the beginning of February. In April, we announced the acquisition of USQ Risk and are very excited to welcome these new teammates into the Ryan Specialty family. Our robust M&A activity over the past two years, and since our founding, has advanced various aspects of our strategy, notably significantly expanded our total addressable market. We added expertise, augmented our capabilities to serve our clients across market segments, and broadened our international footprint.

We added many new programs and unique MGUs, which provide us with greater advantages to extend our lead and delegated underwriting authority now, and over the long term. Stepping back, I want to spend a minute on the current environment. There’s been an increased level of uncertainty around global trade, and the health of the broader economy. A read-through of this uncertainty into the real economy, inflationary pressures, and capital markets, raise elevated risks in the near and medium term. With our diversified set of businesses, and cycle-tested business model, focused on specialized expertise, and industry-leading talent, we believe we’re well-positioned to navigate the challenging near-term environment, and win over the long-term, just as we’ve done for the past 15 years.

Moving ahead, we expect that we will continue to deliver innovative solutions to our clients, generate industry-leading organic growth, execute our M&A strategy, and increase profitability while investing in our platform. All of this will drive significant additional value for our shareholders, and ensure we remain a top specialty insurance services firm in our industry. I’m pleased to turn the call over to our Chief Executive Officer, Tim Turner. Tim?

Tim Turner: Thank you very much, Pat. Before discussing the results, I wanted to expand on Pat’s comments. And highlight the durability of Ryan Specialty’s business model, with three particular points. We operate in the resilient specialty and E&S market. Many of our products are compulsory. And we have built a differentiated platform with top-flight specialized talent. First, insurance premiums have a long track record of growth. It is important to remember that U.S. premium growth turned negative, in aggregate, only once over the past 60-plus years. As the world continues to become riskier and more complex, risks are moving into the specialty and E&S marketplace, which is equipped to offer solutions that would otherwise not be available.

This market is better suited to handle a more uncertain loss environment, as it offers significantly more freedom of rate and form, and the ability for insurers and underwriters to adjust more quickly. This has also led to a secular shift in how capital is positioned in the broader insurance market. Carriers that have historically participated only in the admitted market are making significant commitments to E&S, and new capital is also flowing in. Looking forward, we believe the E&S market will both continue to grow in importance and take share of the overall insurance landscape. Second, our wholesale brokerage and delegated underwriting authority businesses provide largely compulsory insurance products. Many, if not most, businesses must have insurance.

And as they grow, their needs become more and more complex. And third, we’ve built the best platform in the industry, driven by our world-class talent. Our specialized expertise in wholesale and delegated authority, as well as our alignment within it, provide our clients and trading partners with differentiated value and innovative solutions. As a result, we have created incredible trust and significantly deepened our relationships with these same clients and trading partners, which we believe provides us with a tremendous runway for continued growth for years to come. Turning to results, we had an excellent first quarter driven by strong organic growth and significant contributions from our recent acquisitions. Now diving into our specialties, each of which grew their top line by double digits, our wholesale brokerage specialty had another strong quarter.

In property, we again executed well and still delivered modest growth despite a very challenging environment. Property pricing declines continued along the same trend that we experienced in the fourth quarter. However, despite the softer pricing, we overcame these trends. We again took share of the strong flow into the channel, won head-to-head against our competitors, and had another quarter of high renewal retention. This is a testament to our tenacious and ultra-competitive RT brokerage team. We know how to navigate adversity in the marketplace, find new opportunities to grow, and expand our market share, and importantly, find ways to win. It’s in our DNA. As a reminder, the second quarter is our largest property quarter, and the second quarter of 2024 was the last very strong quarter for property before rates began to decelerate, setting up a challenging comp for the second quarter of 2025.

While we expect rates to remain competitive in the near term, we remain very bullish on property as an important contributor to our growth over the long-term. Our casualty practice had another excellent quarter with strong new business and high renewal retention. We saw strong growth for habitational risks, transportation, construction, and healthcare. Our transportation practice saw another quarter of strong flow. Difficult loss trends driven by both economic and severe social inflation are driving carriers to increase rates, pull back appetite, and in some cases, exit markets completely. Risks in each of these classes and many others are continuing to move into the specialty and E&S markets. We see the E&S market responding in a disciplined manner, with carriers tightening distribution lines, re-underwriting, changing appetite, raising prices, and focusing on limit management.

We believe the need for the specialized industry and product-level knowledge that Ryan Specialty offers has never been greater, and our value proposition has never been stronger. We remain confident that casualty will be a strong driver of our growth moving forward, and that we will continue to be a leader in casualty solutions for years to come. Now turning to our delegated authority specialties, which includes both binding and underwriting management. Our binding authority specialty had a very good start in 2025, driven by our top-tier talent and expanding product set for small, tough-to-place commercial P&C risks. We continue to believe panel consolidation in binding authority remains a long-term growth opportunity, and we are well-positioned to capitalize.

Meanwhile, our underwriting management specialty had another excellent quarter. Results were driven by strong organic growth, particularly in casualty and transactional liability. We also had meaningful contributions from recent acquisitions, which added over 50 percentage points of growth to the top line of this specialty. Our strategic positioning allows us to capitalize on both organic and inorganic growth opportunities. We believe this combination, paired with our skill and discipline to manage the business through the insurance cycle, ensures our ability to deliver consistently profitable underwriting results, growth, and scale over the long-term. We have repeatedly noted that in any cycle, as certain lines are perceived to reach pricing adequacy, admitted markets tend to step back in on certain placements.

However, this is still not playing out in any meaningful way, and the standard market has not meaningfully impacted the rate or flow in the aggregate. As we’ve said since our IPO, we continue to expect the flow of business into the specialty and E&S market to be a significant driver of Ryan Specialty’s growth over the long term, more so than rate. Turning to M&A, today we announced the closing of our acquisition of USQ Risk. USQ adds top talent and differentiated intellectual capital to our alternative risk offerings, along with approximately $11 million of incremental annualized revenue to Ryan Specialty. Our new teammates will bolster the capabilities that we bring to our retail broker clients in this highly technical and valued segment of the market.

With a focus on non-traditional insurance solutions for risks which the traditional insurance market cannot underwrite efficiently, USQ has carved out a niche in each of the property, casualty, and transportation markets. Further on the M&A front, our pipeline continues to be robust, including small, midsize, and large deals. That said, we will only move forward when all of our criteria for M&A are met, a strong cultural fit, strategic, and accretive. To sum up, it was another strong quarter for Ryan Specialty. I am proud of our entire team for continuing to deliver outstanding results and adding value for our clients, trading partners, and ultimately our shareholders. With that, I will now turn the call over to Jeremiah. Thank you.

Jeremiah Bickham: Thank you, Tim. We’re pleased with our strong first quarter performance. On our last call, I noted our unique position to make even larger long-term investments in our platform this year to support our growing business, while also consistently delivering margin improvement. In the quarter, we made great progress on all these fronts. We continued to recruit, train, and develop top-flight talent, advance our operations and integrate numerous recent acquisitions, and lean into new technologies, all while expanding our margin. We continue to be a growth-minded business and remain committed to balancing investments and margin expansion. We believe that these investments in our business today, in talent, in de novos, acquisitions, operations, and technologies that leverage data and AI, will deliver strong, sustainable growth well into the future.

With that, I will now turn the call over to our Chief Financial Officer, Janice Hamilton, who will give you more details on our financial results. Janice?

Janice Hamilton: Thanks, Jeremiah. In Q1, total revenue grew 25% period-over-period to $690 million. Growth was once again fueled by organic revenue growth of 12.9%, substantial contributions from M&A, which added 13 percentage points, and contingent commissions as we delivered strong underwriting profits for our carrier trading partners and was partially offset by a decline in fiduciary investment income. Adjusted EBITDAC grew 27.5% to $201 million. Adjusted EBITDAC margin expanded 60 basis points to 29.1%, driven by another quarter of strong revenue growth and recent acquisitions, partially offset by headwinds from fiduciary investment income, as well as the timing of certain expenses. Adjusted earnings per share grew 11.4% to $0.39.

We had a GAAP net loss of $4 million in the quarter. Similar to our Associates transaction in the third quarter of 2023, because we reorganized velocity from a C-Corp to an LLC upon closing, we incurred a non-recurring, non-cash, deferred tax expense at the public holding company, creating a GAAP net loss of $0.22 per diluted share. Since we have no plan to sell velocity, we do not expect the tax expense will ever be realized in cash. This reorganization was the right strategy and will result in an excellent outcome for shareholders, particularly with regard to go-forward tax efficiency. As noted previously, we will continue to pursue a similar strategy with respect to any future acquisitions of C-Corps. Our adjusted effective tax rate was 26% for the quarter.

For 2025, we expect our adjusted effective tax rate may move slightly based on geographic mix and tax law changes. Turning to capital allocation, M&A remains our top priority now and for the foreseeable future. We ended the quarter at 3.8x total net leverage on a credit basis, which reflects the acquisition of velocity and seasonal working capital needs in Q1. While this is at the high end of our leveraged comfort corridor of three to four times, we do remain willing to temporarily go above our comfort corridor for M&A that meets our criteria. Our strong free cash flow and the strength of our balance sheet provides flexibility to continue executing on strategic M&A opportunities. Based on the current interest rate environment, we expect to record GAAP interest expense, which is net of interest income on our operating funds of approximately $217 million in 2025, with $59 million to be expensed in the second quarter.

For the full year 2025, we are maintaining our guidance for organic revenue growth of between 11% and 13%, an adjusted EBITDAC margin of between 32.5% and 33.5%. Regarding the recent macro uncertainty, we continue to monitor the environment closely for any potential impact on our business. As Pat and Tim noted, we believe our business model is resilient given we operate in the specialty and E&S market, the largely compulsory nature of our product set and the differentiated platform and unparalleled expertise we offer our clients and trading partners. With that, we thank you for your time and would like to open up the call for Q&A. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions]. Our first question comes from Elyse Greenspan from Wells Fargo.

Elyse Greenspan: So, I’m looking at that amazing revenue growth that you just put up and it’s about, it’s double digit higher than the organic growth. And historically, I was kind of thinking maybe upper single digits, upper mid-single digits. Could you talk a little bit about the pipeline right now and whether, at minimum, upper single digit is sustainable in terms of inorganic revenue growth?

Tim Turner: I’d be happy to. Our flow of business into the channel continues to be double digits, strong double digits validated by the stamping offices. We’re seeing heavy flow in most of the specialty channels led by casualty, but property was surprising. While we saw continued rate deceleration like the fourth quarter, we were able to manage those headwinds, and we had some modest growth. So, our M&A pipeline in particular is very, very robust. We have tremendous opportunities in small, medium-sized acquisitions and some very large ones as well. So, we remain very optimistic on our opportunities going forward. The market itself is very frothy and we’re excited about the opportunities in ’25.

Elyse Greenspan: And maybe following onto that, you mentioned the USQ risk acquisition and it had 11 million in incremental revenue, which sounds very small to me. And I think what impresses me is Ryan’s ability to really scale that up. I mean, is that something that could turn into 50 million or 100 million in revenue and not too long? And how might you do that?

Pat Ryan: Well, this is Pat. I’m not going to touch the growth rate pieces to articulate it, but I would say this. This is very strategic. It’s very strategic. Since day one, our investment strategy has been to build a suite of products and services that can yield exceptional organic growth throughout the cycle and over the long-term. And as you know, we’ve been constantly innovating, launching new products, adding capabilities, all the while expanding our total addressable market. So, this strategy really has positioned us well, we believe to sustain our double-digit organic growth and frankly, overcome the challenges of scale, harder to grow the larger you get, or market shifts, which we’re experiencing now on property. And we’ve done this over the last 15 years.

So, we do this through adding talent, both from within and outside of the industry and very much through acquisitions that we pay. And you put your finger on the key one, the acquisition of USQ risk. Here, we are really deepening our strategic alliance with Nationwide Mutual. I think you all understand this is a very unique alliance and relationship they have with Nationwide Mutual. The great thing about this alliance is, we both understand what we bring to the equation and what the other brings. And we’re very proud, each of us, as to the expertise that we bring. So, we’ve been doing this now on our sixth year and we keep adding top new talent, both from within and outside of the industry. And this Nationwide Mutual alliance demands that we invest in new product development and add key talent.

So, with USQ risk, we brought in 17 highly skilled, sophisticated experts that are underwriters and actuaries. It’s a key talent addition through this acquisition to fulfill the opportunities that Nationwide Mutual and we have together agreed that gives us a long runway of organic growth and margin expansion. Additionally, prior to closing this acquisition today, we had eight other really highly skilled professionals from different walks of life that fit this strategy and bring tremendous intellectual capital differentiation. So, by adding this differentiated talent capabilities, we not only expand our TAM, we add a new cylinder of powerful growth to our growth engine. And we very much advance our core mission. And I just want to remind everybody, we stuck to this mission from founding.

That is to provide innovative services to brokers, agents, and very importantly, insurance carriers. And that’s what we’re doing here with our strategic alliance partner, Nationwide Mutual. So, you can tell from all of this, needless to say, you’re pretty very excited about this acquisition and the overall opportunity that it brings. And you’ll forgive me if I won’t answer the compounding growth rates that you threw out, but we’re very enthusiastic.

Operator: And our next question comes from Alex Scott from Barclays.

Alex Scott: The first one I had is on the technology spend and if you could kind of give us a little more color on some of the things you’re doing and how that’ll contribute to growth and operational efficiency in the future. And just an idea too around whether these will continue or if they were more loaded into the first quarter.

Tim Turner: Yes. So, we are trying to streamline and digitize as much of our workflow processes as possible. We still have system consolidation work to do. There’s a lot of efficiencies through investments in our workbenches that we can do. And we are starting to experiment with AI solutions across various business units. So, there’s nothing individually that moves the needle this year, but what it does in aggregate is continue the trend of reducing cycle time, speeding up answers and insights to clients and processing everything, especially the non-strategic client-facing activities in the swiftest, most cost efficient fashion. So, what that does is equip our producers to be as good and as fast as they can and helps us spend money on talent rather than process. And most importantly, we’re able to balance those investments with exceptional growth and margin improvement along the way.

Alex Scott: Oh, that’s really helpful. Thank you. Next I have is on 2Q and just having more property heavy quarter potentially ahead of cat season. Could you frame for us maybe what a normal portion of premiums kind of property versus a heavier 2Q? And I hate to be short term about it. I just want to make sure we have the right expectations heading into potentially a more difficult comp, just given property is sort of the center of the storm here.

Janice Hamilton: Sure, I’ll take that, Alex. So, as you noted, Q2 is our largest quarter for property. Tim mentioned in his remarks that it will be a tough comp. That was the last quarter before rates started to accelerate. We’ve acknowledged from a number of quarters that property for us is continuing to expect modest growth. We’ve had that the first quarter and we will continue to expect that for the remainder of the year. So, while we expect property to be a large component of our Q2, Q2 is our largest quarter overall. And so, from that, hopefully we can bring the seasonality elements of property, but we are expecting modest growth for the remainder of the year. Tim, is there anything you’d want to add to that?

Tim Turner: No, I think that’s very accurate. We do have headwinds, rate deceleration in property, but we’re winning new business. We’re retaining our renewals. The new business coming into the channel is strong and we’re winning frequently in head-to-head competition. So, we’re confident that we can maintain our growth modest in property and much heavier in casualty.

Operator: Our next question comes from Meyer Shields from KBW.

Meyer Shields: You’ve mentioned, I think maybe this is best for Jeremiah or Janice, some timing-related issues on investments. And I think that probably goes to explain why the G&A ratio went up. Is there anything unusual in the compensation ratio declining on a year-over-year basis, or is that just the typical organic leverage? I’m sorry, the operating leverage that we should expect?

Janice Hamilton: So, Meyer, I’ll take that one. So, you are correct. First of all, I’ll just note that we had our 60 basis points of margin improvement in the quarter, which we were very pleased about. We highlighted within our remarks that there were some timing differences there from an overall full-year margin perspective. Those timing differences actually relate to the timing of certain benefits and other related expenses coming through in the first quarter, as well as some other teaming and professional services. Jeremiah touched on some of the beginnings of the initiatives that we have, but also professional services that are driven by revenue-generating activities. I think what you’re thinking about or what you’re seeing is the G&A ratio worsening effectively relative to last year, but comp benefits expanding significantly.

And that is really coming from where we have U.S. Assure earning in and think about the timing of U.S. Assure continuing to earn in over the next two quarters, well, first quarter, second quarter, and a little bit of the third quarter. That margin expansion is really all dropping to comp. So, there’s a little bit of accelerate 2025 in there from last year continuing to earn through, but really think about that into U.S. Assure. And then on the G&A side, that would continue as we have the investments that Jeremiah alluded to, our ops and technology. So, we would expect G&A to continue on a similar trajectory in comp and benefits, the margin expansion that I highlighted.

Meyer Shields: Okay, perfect. That’s very helpful. Taking a step back, we are hearing sort of generalized grumbling from a lot of carriers about MGAs. And I’m wondering whether the fact that you’ve got the underwriting management business, does that pose any challenges to the relationship you have with carriers in the wholesale specialty?

Tim Turner: No, actually, it’s been well-received by majority, vast majority of our partners. They understand the parallel to the brokerage side of it, the importance of the delegated underwriting authority space, not just in MGUs, but in the program space, the binding authority space. So, it’s very, very much aligned with these carriers. Sure, we hear an occasional question or grumbling about it, but I would say that’s the minority by far. Most of the E&S carriers, 110 of them now that are dedicated to the wholesale distribution channel have a specific delegated underwriting authority department. So, we’re engaging with them, we’re strengthening our trading relationships with them, and they have a lot to gain and a lot to win from the partnership. So, it’s very much positive and well-received today.

Operator: [Operator Instructions]. Our next question will come from Robert Cox from Goldman Sachs.

Robert Cox: Yes. I was hoping you could just give us a sense of what you’ve seen through April and maybe in April from an economic perspective. I know some other brokers have called out construction as an area of some economic pressure. So, I was hoping, wondering if you saw that and if you did, if you could remind us of your exposure there and just broadly what you’re seeing.

Tim Turner: We’re continuing to experience very strong construction results. We’re not seeing any real change, noticeable change in the market thus far this year. The infrastructure roll-up space is strong. Obviously, subs, GCs and artisans are very strong across the country, and even residential construction remains strong. So, we really haven’t seen any indication of a slowdown.

Robert Cox: Awesome. Thanks, Tim. And Tim, I wanted to go back to your comments on the submission flow. Sounds like you guys are taking share of the submission flow. I think you called out property in particular in light of the pricing pressure there. Do you have a sense generally like where you’re taking share of the flow? I assume it’s not primarily from your large wholesale peers, but I was just wondering if you could provide some color.

Tim Turner: Sure. Well, there’s this double-digit increase in flow that’s coming into the channel. So, that’s one of them. But another phenomenon that is nowhere near coming to the end of the line would be the consolidation of the use of brokerage intermediaries. Jeremiah talks about it a lot. We’re really in probably the middle stages on the brokerage side of it in the top 100 retail broker community. Lots more opportunities in tier two and tier three, tens of thousands of retail brokers yet to consolidate brokerage. And in the delegated underwriting authority space, this is the exciting part. That’s the MGU, again, programs and binding authorities. We’re in the early stages of the consolidation. So, tremendous opportunity to really grow exponentially there over just the consolidation of that business.

So, we’re out RFP-ing, we’re out presenting, we’re out using all of our tools, our digital trading platform, our strong deep bench and binding authorities. And we’re very optimistic about growing that with panel consolidation.

Operator: Our next question comes from Mike Zaremski from BMO. Mike, your line is unmuted. Please go ahead. Okay. It seems that we don’t have any audio coming from your side, Mike. So, we’ll move back to Elyse Greenspan.

Elyse Greenspan: So, I guess what I was going to ask upon, I think, I mean, Alex did touch on, but I want to come back just to the seasonality. Is it fair to assume within the guidance, I guess, just from a quarterly perspective, that Q2 and then I guess also Q4, right, would be lower growth quarters because of the higher property concentration? And then I guess I’ll throw in a second part to that question. It sounds like you guys are, in the guidance, you’re assuming, right, some continued growth in property this year. So, are you assuming that rates don’t continue to decelerate from where they are today as we go through the rest of the year?

Janice Hamilton: Okay, Elyse. I’ll take that one. And then if there’s anything, Tim, you want to add to it, please go ahead. So, I mentioned, and I think we’ve said before, we don’t guide by quarter. So, the seasonality point that I made earlier just around property being the largest in Q2 and Q4, those are also our largest quarters. Q2 is a tough comp against last year just because we did have one more quarter of rates being harder in the second quarter last year. That deceleration started in the third and fourth quarter. So I think from a comp perspective, Q2 will certainly be the toughest. I also mentioned that in the first quarter, we continue to see modest growth and we have that expectation in our guidance for the whole year. And that’s really a continuation of the trends that we’ve seen from Q4 through the first quarter.

Tim Turner: So, yes, Elyse, from a comp perspective related to property, things do get better as the year goes on just as a function of math. But our underpinning assumptions for guidance don’t assume like materially improved conditions in property. We’re just expecting to modestly grow through that, just to clarify.

Elyse Greenspan: Thanks. And then on the M&A side, right, I mean, you guys had previously told us, right, you’re coming up towards, the top of your leverage corridor, right? And you’ve obviously said that you would go above, depending upon deals out there. I think you guys said like the pipeline has like small, mid and large size deals. Can you just give us a sense of like the pipeline today relative to transactions where you guys are focusing on, and what we could see, I guess in the near to intermediate term on the M&A side?

Pat Ryan: Well, we have, as Tim outlined, robust opportunity. We’re clearly evaluating those opportunities as to the greatest strategic ability to multiply that acquisition into strong organic growth year after. We are going to maintain our ratio of debt, which was, I think, probably, Janice, you ought to pick up on that part of it. But it is a more of a buyer’s market than we’ve had. Certainly, PEs, you’re all aware of whatever talent they have. We got an aggressive new competitor on M&A with at some point a great new player with CRC. But it’s much more of a buyer’s market today than it has been. That doesn’t mean that multiples will come down dramatically at all. We buy quality firms and quality firms tend to come out of a higher multiple, but we’ve been quite successful in cost synergies, particularly revenue synergies, where if we have to pay a multiple that’s a bit higher than we would like, we’ve been able to buy those down pretty quickly.

Do you want to pick up on the ratios at the top?

Janice Hamilton: Yes, happy to. Elyse, in my prepared remarks, I noted that we ended the quarter at 3.8x our net leverage on a credit basis, and that was consistent with what we had expected. We said that we would end the first quarter at the higher end as a result of velocity in our seasonal working capital trend, which we did see. Absent a significant amount of further M&A, we would expect to significantly lever by the end of the year, almost a full turn. Q1, as a reminder, is still a heavy working capital quarter for us, so we would expect that to kick back down in Q1 of next year. But overall, we have ample capacity to execute on significant M&A opportunities, and we said that we would be willing to go above 4x temporarily for the right field. But in light of the fact of expecting significant leverage based on our strong growth and free cash flow, we have significant amounts of financial flexibility in order to meet the pipeline needs.

Pat Ryan: I think the other point that we’d like to make on that is that this is a repeated past statement, but very much this year’s M&A is next year and the following year’s organic growth, and so we’ve just done velocity. Velocity, underwriters, is performing very well and has a very significant potential to expand our property book. We all believe that the property decline will reverse itself, just because of all the external forces. We don’t know when or how fast it will reverse, but it will, we believe. And so adding that M&A that we added last year in the first part of this year, and now adding USQ, we believe really sets us up for strong organic growth six to 12 months on.

Elyse Greenspan: Thanks. And then I’ll throw one last one in there. We saw a few of the big states provide staffing capacity, and that data did come out today, which showed, I mean, it’s for April, right, a bit of a slowdown. I know, right, it’s only three states. But have you guys, I guess, any color on that or anything that you want to say relative to, you might be willing to say relative to April growth, just for the company, or just in relation to just E&S and just, continued flow, which you seem pretty positive about?

Tim Turner: Yes. We’ve been very, very enthusiastic about the stamping results that we see, just some really sizable increases in the state of California and a few others. We believe that’s a trend. We believe there’s going to be continued dumping and shedding from the admitted markets, loss leaders and trends like transportation, areas that we’ve focused on and have built strong broking teams around the country and built MGUs and made acquisitions to strengthen that practice group vertical is an illustration of how we do it. We knew transportation would continue to drive more dumping and shedding, and we’re prepared for it. High net worth, same thing, capturing a lot of that new business today. And we expect that to grow exponentially.

But lots of other loss leaders that cause the admitted standard markets to non-renew. And we try to be right up in those spaces and, again, have the broking talent, leading broking talent and underwriting platforms to strengthen our value proposition. That strategy is working very well for us.

Operator: Thank you. There are no further questions at this time. I will now hand the call back to management for closing remarks.

Pat Ryan: Okay. Well, thanks for your great questions. As the coach of this team of outstanding professionals, I’d like to reiterate how proud I am, extremely proud of our industry leading nearly 13% organic revenue growth and 25% total revenue growth Q1. We really are proud of that. I’m proud as the coach of this outstanding team. So we appreciate you taking the time to join us today and for your continued support of our firm. And we look forward to updating you on our progress next quarter. Thank you all for your interest in joining us today. Have a nice evening.

Operator: This concludes the call. Thank you.