Greetings. Welcome to the Ryan Specialty Group Second Quarter 2021 Earnings Call. Please note this conference is being recorded. I will now turn the conference over to your host, Noah Angeletti, Treasurer of Ryan Specialty Group. Thank you. You may begin.

Thank you, operator. Good afternoon, and welcome to Ryan Specialty Group Holdings' Second Quarter 2021 Earnings Call. This afternoon, the company released its financial results for the quarter ended June 30, 2021. The earnings release is available on the Investors section of the company's website. I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. Any statements that refer to projections, forecasts or other characterizations of future plans, events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. I refer you to the company's filings made with the SEC for a more detailed discussion of the risks and factors that could cause actual results, levels of activity, performance or achievements to differ materially from those expressed or implied in any forward-looking statements made today. The company undertakes no duty to update any forward-looking statements that may be made during the course of this call, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call. Our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliation of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP is included in our earnings release, which is available on the Investors section of the company's website.

Thank you. Good afternoon, everyone. Thank you for joining us on our second quarter 2021 earnings conference call and our first as a public company. I appreciate your interest in and support of Ryan Specialty Group. During today's call, I will go over the strengths of our business model and our competitive advantages. Our President, Tim Turner, will provide an update on our three specialties. Our Chief Financial Officer, Jeremiah Bickham, will then delve into the quarter's details, excluding per share data since we were not publicly traded during the second quarter. After that, we’ll open the floor for questions. As we're newly public, I want to take a moment for those of you who may be unfamiliar with Ryan Specialty Group to share some background on why I founded the company, what we have built, and how we offer distinct value to our clients while continuing to excel in the future. As our name indicates, Ryan Specialty Group is focused on specialty insurance solutions and doesn't typically engage in standard insurance placement like auto or homeowners insurance. We manage complex risks that demand specialized expertise. In a standard insurance scenario, consumers typically buy insurance directly from a company or work with a retail broker who communicates directly with the insurer. For more intricate and harder-to-place risks, Ryan Specialty Group acts as a bridge between the retail broker and the insurance provider, aiding both parties in various ways. By 2010, I recognized a growing need for specialty insurance solutions amid a rapidly changing world, where risks were becoming more significant and intricate. At that time, there was no large-scale specialty insurance platform capable of supporting retail brokers and insurers fully while also offering a space for top talent to thrive. As a sports enthusiast, I relate to a quote from Wayne Gretzky: "I skate to where the puck is going to be, not to where it is." This captures my belief in anticipating change, courageously adapting, and staying ahead. This mindset positions us as a first mover and disruptor in our industry. At our outset, we identified four key trends in specialty insurance which continue to evolve: risks growing in complexity and scale, retail brokers gravitating towards fewer wholesalers, consolidation leading to larger retail brokers, and swift adoption of delegated authority as carriers outsource certain functions. This shift makes carriers more agile, reduces their fixed costs, and often draws talented underwriters to entrepreneurial firms like Ryan Specialty for innovation. With these opportunities, Ryan Specialty was established to fill a critical need, allowing both our producers and underwriters the space to innovate and take calculated risks for our clients’ success. I believe we've risen to meet these challenges. Since our inception, Ryan Specialty has witnessed rapid growth both through organic and inorganic routes, becoming the second largest property and casualty insurance wholesale broker in the U.S. and the third largest managing underwriter. I am proud of our nearly 3,400 teammates who have supported us through this journey. We reported 20% organic revenue growth in 2020 and continued to build on that momentum in 2021 with over 28% year-over-year organic revenue growth in the second quarter, all while achieving strong adjusted EBITDAC margins. What sets us apart from our competitors are our diverse specialties, our independence without retail insurance conflict, and our extensive expertise in specialty insurance. Primarily, we focus on the rapidly growing excess and surplus market, which had $55 billion in direct premiums at year-end 2019, centering on complex policies that require specialized knowledge. The rise in complexity is attributed to various factors like climate change, larger catastrophic events, increasing cyber threats, significant jury verdicts referred to as social inflation, public health risks, and more. Moreover, traditional coverage options are declining in response to previous elevated losses, pushing complex coverages into the E&S market. Our independent, full-service model allows us to clearly differentiate ourselves and leverage emerging trends. We deliver tailored, creative solutions for our clients, collaborating with insurance brokers and carriers to provide extensive access, underwriting expertise, and a broad distribution network. This collaboration positions us as a trusted partner for 97 of the top 100 retail insurance brokers in the U.S. As retail brokers expand their needs for specialty services and products, Ryan Specialty stands ready to provide comprehensive solutions without retail conflicts. Our commitment to not competing with retail broker clients is foundational to our success since we attract and retain top talent. We have established a unique environment enabling our producers and underwriters to thrive, driven by innovation and empowerment as core elements of our culture. We encourage calculated risks and entrepreneurial thinking, equipping our professionals with the means to deliver outstanding results. Consequently, in 2020, we retained 97% of our producers who value our supportive culture and the opportunities we create. Looking ahead, we believe we are well-positioned for growth. We will continue investing in our advancement to make Ryan Specialty a preferred destination for top-tier talent. Our focus will remain on innovation to address the evolving market. We'll strengthen relationships with existing clients and pursue new clients while enhancing our organic growth through strategic acquisitions, as we believe today's acquisitions will contribute to tomorrow's organic growth. Since our inception, we have merged with over 40 firms through acquisitions. In closing, I am immensely proud of what we have established at Ryan Specialty over the last decade. We have cultivated a winning culture that highlights the successful outcomes of our expertise and our dedicated work ethic. Our value proposition resonates in the market, powered by our talented team and our trading partners in the insurance industry, made possible by their support. I am genuinely optimistic about our future and our commitment to delivering long-term value to our shareholders. Now, I’ll turn it over to Tim Turner to provide further details. Tim?

Thank you very much, Pat, and good afternoon, everyone. As Pat highlighted, at Ryan Specialty Group, we focus on partnering with our retail insurance brokers and agents to assist them with complex policies and hard-to-place risks. These complex risks are often placed in the E&S market, which represents approximately 17% of the U.S. commercial insurance market, where there is significantly more freedom to underwrite bespoke, complex, larger or higher hazard risks. Importantly, our trading partners know they will see no drop-off in quality when they work with us as we act and execute as a seamless extension of their practice group specialties. Notably, the flexibility of the E&S market is perfectly aligned with today's global challenges and offers Ryan Specialty a tremendous opportunity for growth. For example, the COVID-19 pandemic has forced the entire insurance industry to reconsider how it deals with contagious disease and the risk associated with it. Additionally, there is significant opportunity for us to grow our business in newer, emerging sectors, such as the shared economy and livery, renewable energy, health care and cyber risks, where carriers may have less of an appetite given a myriad of legal and regulatory complexities. We have the ability to facilitate coverage in many cases that would otherwise be unattainable. To that end, we believe all great businesses have a clear value proposition to their key constituents, and ours is no exception. For retail brokers, we help them become more efficient and now a force multiplier for seamless execution on behalf of their clients. We also provide access to insurance markets that might not otherwise be available to them because of the insurance companies' chosen distribution model of utilizing a specialist, be it a wholesale broker, binding authority or managing general underwriter. We specialize in the small area of their business to enable them to bring the same level of excellent service for every risk that comes across their desks while maintaining the quality that their clients, the insured, are accustomed to. For our employees, we attract and retain the best talent in the industry, in part by giving them access to over 15,000 retail agent and brokerage firms and their large platforms across the country. This broad reach is an enormous competitive advantage. Talent thrives on having a myriad of opportunities to succeed. Our independence, scale and entrepreneurial culture ensure that we have the most opportunities to prosper. Importantly, carriers rely on us for product expertise as well as distribution and administrative capabilities. We are a source of innovation and a critical filter in the underwriting process. To provide a little more context, we offer retail brokers a comprehensive, full-service solution through our three specialties. At our Wholesale Brokerage specialty, we distribute a wide range of diversified mix of specialty insurance products and solutions from insurance carriers to retail brokerage firms, such as specialty, P&C, professional lines and workers' compensation. These typically involve the retail agents' most challenging risks. These policies are submitted on a brokerage basis and it is up to the insurers to make the underwriting decision. Our Binding Authority specialty provides timely and secure access to our carrier trading partners and has delegated underwriting authority as well as critical administrative and distribution responsibilities to us through our in-house binding agreements. These policies are submitted on a bound basis and are generally more uniform in design, for example, builder's risk and coastal properties. Our Underwriting Management specialty offers insurance carriers variable cost, specialty expertise in distinct and complex market niches underserved in today's marketplace through 21 underwriting managers and 29 national programs. These carriers have provided us with the authority to design, underwrite and bind coverage and administer policies for specific risks. These policies are submitted on a bound basis and generally have a higher level of underwriting complexity, for example, reps and warranties, coverage for M&A, cyber coverage and renewable energy. Looking ahead, we see multiple avenues for sustainable growth. We will continue to innovate and organically grow our top line, driven by broadening and deepening our retail brokerage firm relationships. It's worth highlighting that we have historically grown faster with our largest trading partners. In 2020, our growth with the top 100, the most coveted clients who have the most E&S business as ranked by Business Insurance, exceeded our organic revenue growth of 20% for the same year. Talent development and recruitment is also essential. We will continue to recruit the best talent in the industry as well as onboard new professionals into the industry through our heralded RSG University, our world-class training and development program for the next generation. We also plan to continue our core competency of making select acquisitions where we see clear opportunities to partner with successful specialty firms that are aligned with our goals, our culture and our values. As you know, we have acquired over 40 firms since our founding, most notably last year with All Risks, our largest acquisition to date. With respect to All Risks, the integration is proceeding very smoothly. Producers at both companies are working together as one team out in the field. The acquisition of All Risks, the #4 largest wholesale distributor in the United States at the time of acquisition, gave us further scale in insurance markets where we previously had less reach, provided us a deeper and significant market segmentation, expanded our domestic footprint in a meaningful way and accelerated our vision with respect to the binding authority platform. It is rewarding to see that the combination is already yielding very positive results, and we expect it will be a major contributor to our long-term success. We will also seek to expand into natural adjacencies. We recently hired an industry expert and proven leader, John Zern, who is the former CEO of Global Health Solutions and Aon. He brings to us over 30 years of health and risk strategy experience and will be developing our new employment benefit specialty, which will focus on wholesale benefits, brokerage and managing general underwriting capabilities to serve the needs of our retail brokers. In addition, we see a tremendous opportunity to comprehensively address the fragmented delegated authority market, which represented over 40% of the E&S premiums in 2019 and where both M&A and panel consolidation are in their very early stages. With All Risks, we have the size and capabilities to build the first truly 50-state binding authority operation. We expect to provide updates on these initiatives and our continued progress on our specialties in the quarters ahead. With that, I would now like to turn the call over to our Chief Financial Officer, Jeremiah Bickham, who will give you more detail on our second quarter financials. Thank you.

Thank you, Tim, and hello, everyone. Let's go right into our second quarter results. For the second quarter, we generated $390 million in total revenue, representing a 58% increase over $246 million in Q2 of last year. This strong revenue growth was due to our acquisition of All Risks, completed in September 2020, and organic growth of 28.5%. The organic growth resulted from new client wins, enhanced relationships with existing clients, and a higher growth rate in our total addressable market as risks transitioned from the admitted market to the E&S market, where we conduct most of our business. Additionally, multiple risk classes saw year-over-year premium rate increases, contributing to commission revenue growth, calculated as a percentage of total premiums. Each of our three specialties experienced robust revenue growth, bolstered by solid organic growth and contributions from the All Risks acquisition. Breaking down the total revenue by specialty, our Wholesale Brokerage business reported impressive results with net commission and fee revenue of $256 million, reflecting a 49% increase from $172 million in the same period last year. Net commissions and fees in Binding Authority also performed well, growing 70% to $54 million compared to $32 million in the previous year. Underwriting Management saw its net commission and fees revenue rise to $80 million this quarter, an 89% increase from $42 million in Q2 last year. Regarding operating expenses, total operating expenses for the second quarter were $298 million, a 58% increase year-over-year. This rise was mainly due to a compensation and benefits expense of $237 million, a 51% increase from the prior year. It's essential to recognize that compensation and benefits expenses closely correlate with revenue growth since many of our producers are paid a percentage of the revenue they generate. We also noticed an increase in acquisition-related long-term compensation due to the All Risks acquisition, and non-cash equity-based compensation rose as well. I am pleased to announce that our compensation and benefits expense ratio improved by 300 basis points year-over-year to 60.7%, while our adjusted ratio improved by 460 basis points to 56.5%. General and administrative expenses rose by $9 million or 40% compared to the previous year, driven by costs to support revenue growth and the All Risks business, alongside an uptick in travel and entertainment expenses as COVID-19 restrictions eased. This increase was partially offset by a decrease in acquisition-related expenses from the previous year. Our G&A expense ratio improved by 100 basis points year-over-year, reaching 7.9%. The adjusted G&A expense ratio was 7.4% in Q2 this year compared to 7.1% in the same quarter last year, affected mainly by increased travel and entertainment spending as the pandemic restrictions lessened. However, we have not yet returned to pre-COVID quarterly T&E spending levels. Amortization expense rose by $18 million compared to the prior year, mainly due to the amortization of acquired intangibles from the All Risks acquisition. Adjusted EBITDAC for the second quarter increased by 79% year-over-year to $140 million compared to $78 million in the prior year. The adjusted EBITDAC margin improved by 420 basis points to 36.0%, up from 31.8% in the same quarter last year. The primary factors driving this included revenue growth leading to increased scale in compensation and benefits expenses and G&A, along with the execution of the restructuring plan we started in 2020. Once this plan concludes, we expect to achieve $25 million in cumulative annualized savings, anticipated to be completed by June 30 of next year. Traditionally, the second and fourth quarters exhibit the highest margins seasonally, while the first and third quarters are generally lower. We are also continuing to invest in the long-term growth of our business, including in our wholesale employee benefit specialty and enhancements to our platform for sustained growth opportunities. We expect T&E costs to normalize to pre-pandemic levels shortly and are also facing new material costs associated with being a public company. Therefore, we aim to maintain margins in the medium term that are consistent with current annual levels. Long-term, we anticipate our exceptional growth will provide operating leverage, although we are not specifying that figure at this time. Net income for the second quarter was $63 million, a 27% increase from $50 million in Q2 of last year. The net income margin stood at 16.3% this quarter compared to 20.3% in the prior year, impacted by certain non-operating charges linked to the IPO, amortization of intangible assets from the All Risks acquisition, and higher interest expenses from debt used for the All Risks acquisition. Looking ahead to the third quarter, we anticipate a notable equity-based compensation expense related to the IPO, which is a one-time event. To provide insight, we are offering a full-year 2021 outlook for organic revenue growth and adjusted EBITDAC margin. The organic revenue growth rate for 2021 is projected to be between 18% and 20%, with All Risks contributing to this calculation starting in September 2021. The adjusted EBITDAC margin for the full year 2021 is expected to range from 30.0% to 30.5%. Thank you for your time, and we would now like to open the call for Q&A.

Our first question is from Weston Bloomer of UBS.

My first question is on organic growth. I believe the outlook implies around 13% to 17% in the second half. I was hoping you can kind of expand on how we should think about that in the 3Q versus the 4Q and maybe also expand on how you're thinking about the pricing dynamics in E&S shaping out in the second half of the year and then thoughts around new client wins as well.

Go ahead.

Thank you for your question, Weston. We are not providing guidance by quarter. However, your calculation for the second half of the year is approximately correct. We experienced exceptional organic growth in the second quarter, and we do not anticipate such high growth rates every quarter. Our forecasts and budgeting are cautious and attainable. They do not take into account current market dynamics, such as pricing trends and significant movement into the E&S market. Therefore, we consider our overall guidance for 2021 of 18% to 20% to be very attainable. If opportunities arise, we are capable of exceeding that, as shown in this quarter and previous quarters. Tim, would you like to add anything regarding the pricing dynamics?

Sure. We don't always focus on the rates in our industry. It's more on the flow of business into the channel, the dumping and the shedding of business from the standard market. And that flow is continuing to rise. Our opportunities continue to increase in the E&S space. The percentage in non-admitted business continues to grow, very modest rate deceleration that we see in one or two lines but overall continued growth and rate increases.

That's great. Just one more on pricing. It sounds like you're expecting a slight deceleration in the second half. Is there a way to think about that as we move into 2022? And can you just talk through different avenues for pricing strength as we move through the second half of the year and into next?

There continues to be what we refer to as niche-firming phenomenon, lines of business like cyber and health care and transportation and others that continue to firm and rates continue to increase substantially. So again, this talk about rate deceleration is very modest. We don't have a lot of data on that. Again, we measure the increase in flow and opportunities that come into our channel. That's really the governing factor for us.

Got it. If I could ask one more question about mergers and acquisitions, I'm curious about what's happening in your pipeline and whether it has changed since you became a public company. Has that attracted more targets? Also, what are you observing regarding deal sizes and multiples in your current pipeline?

This is Pat. I'll answer the first part. There's been a strong flow across the board and transactional wholesale finding opportunities, program opportunities and benefits. There are lots of different reasons why people are selling. Some of them are probably tax-motivated. But there's a lot of consolidation going on in the industry. So we had to hold back, obviously, doing the IPO, but we've had discussions with people, and we're very confident that the pipeline is strong, high quality. And we're expecting to be on our planner, as we've outlined in the S-1.

Our next question is from Elyse Greenspan of Wells Fargo.

My first question is about the organic side. While I understand you prefer not to provide quarterly guidance, considering that the first half was 24% and you anticipate a slowdown in the second half, could you discuss the factors involved? Are you expecting less business in the E&S market or a decrease in new business? I'm trying to grasp what might contribute to that slowdown. Additionally, looking back at last year's quarters, Q3 should represent your easiest comparison. Is there a level of conservatism reflected in this organic growth guidance?

We wouldn't describe it as conservatism, but rather as prudence. We don't want to incorporate overly optimistic market conditions into our forecasts. You're right that Q3 is traditionally our smallest quarter, and while it presents the easiest comparison of the four, Q4 will be the most challenging. I'm glad you brought this up because our outlook for the second half isn't intended to indicate any significant market changes, such as a reversal in the E&S market or drastic price fluctuations. It reflects our forecasting approach.

Have you noticed any slowdown in revenue growth during the third quarter so far, considering we are two months into it?

No. We are tracking to our plan. I want to stop short of giving color on the quarter or going past Q2, but we are on track for Q3.

Could you provide some insight into your margins? Specifically, you've mentioned the costs associated with being a public company, along with normalizing travel and expenses and internal investments. What are the main factors affecting your margins in the second half of the year? It's expected that there will be a slowdown in margins compared to the first half.

Yes, Elyse, you correctly identified the key factors. The transition from our first half margin to our year-end guidance involves three main elements: seasonality, travel and entertainment costs, and public company costs. As a reminder, the first and third quarters are typically our lowest in terms of revenue, and our margins are closely tied to the stronger performances of the second and fourth quarters. In fact, the second quarter often yields our highest margin. In normal conditions, we would anticipate the second quarter to exceed our projected annual margin, and this year is no different, boosted by significant revenue growth. Therefore, seasonality indicates that the second quarter is likely to be our highest margin quarter, but this is countered by the third quarter, which tends to fall well below our annual margin, while the fourth quarter usually aligns closer to our annual figure. Additionally, while COVID restrictions began to ease in the second quarter, we expect ongoing improvements but do not anticipate reaching full spending levels by year-end, perhaps coming closer to pre-COVID spending by November or December. This will negatively impact our margins. Furthermore, since we went public in July, there were no public company costs reflected in our P&L through the second quarter, and this will significantly affect our margins in the second half of the year. Looking ahead to next year, we will need to account for a full year of public costs and travel and entertainment expenses, so please consider this as you adjust your models.

Our next question is from Tracy Benguigui of Barclays.

Not to rehash it too much, but is it fair to say in your outlook expectation that you're basically neutralizing any rate increases or agnostic to where rate is in those figures?

No. We believe rates will continue to increase in most lines and specialty segments that we're in. Again, we really measure flow into the channel, the dumping and the shedding of business in the standard market, and that continues to increase measurably based on the surplus lines' stamping offices that flow through our national organization, WSIA. So we see no slowdown in that at all.

Okay. So the variability is on slowdown basically?

It's a stronger metric measurement for us than rate. And again, we see no slowdown in flow into our channel whatsoever.

But Tracy...

Okay. Go ahead.

Go ahead.

No, no. Go ahead. We're fine.

Okay. Out of your three segments, which ones would you say have the largest potential for organic revenue growth and margin?

We manage the business as a single operating segment and that's how we budget. We assess organic growth on a consolidated blended basis and report accordingly. Revenue disaggregation by specialty is provided in the financials. It's important to note that all three specialties have the potential for double-digit organic growth. They all benefit from the foundational elements of our organic growth engine, which enables them to achieve this growth regardless of pricing cycles. Currently, all specialties are performing exceptionally well and are benefiting from favorable market conditions.

Our next question is from Meyer Shields of KBW.

I'm going to take advantage of the fact that it's September also. How is the Delta variant impacting clients' assessment of exposure units?

We've seen a direct impact on small commercial and our binding authorities, but that has recovered now. There hasn't been any significant impact from the Delta variant surge. It has affected some meetings and led to cancellations of industry gatherings. However, we are actually more efficient and productive, and we're converting more opportunities. Although it’s a distraction and a minor setback at the moment, we are adapting well to remote work. We are witnessing recovery in small commercial, with more small businesses opening and increased construction activity in the area. Overall, operations in the E&S channel are continuing without interruption.

Okay. Perfect. That's helpful. And I know we've talked about this a lot on the call. I apologize for bringing it up again. But is the implicit organic growth guidance for the second half of the year, is that assuming no rate changes, no changes in the pace of rate increases? How should we think about that?

There is very little impact from additional rate increases. We want to differentiate that from the trends we're observing in the market. We do not incorporate the effects of current market dynamics into our budgets. These dynamics are difficult to predict and can change suddenly, but this is not intended to indicate our market observations. As Tim mentioned, the essential indicators of the E&S market remain quite strong.

Our next question is from Mike Zaremski of Wolfe Research.

Maybe we can shift focus to the M&A environment for a moment. I'm curious about the types of transactions you are considering. Are you mostly looking at smaller tuck-in acquisitions, or is there a mix of larger transactions and tuck-ins? Any insights would be appreciated.

We consistently evaluate acquisitions to enhance our offerings for clients while also considering the interests of our shareholders. Typically, these have been smaller tuck-ins, but in response to your question about the current landscape, there is an uptick in interest for larger tuck-ins across various specialty lines. There's a strong demand for delegated authority growth, which has drawn in buyers and sellers alike. Currently, I would say that the size of the deals we are encountering is generally larger than usual.

Okay. That's helpful, Pat. Maybe moving back to organic growth. I want to focus on this quarter rather than looking ahead as in previous questions. Is there any context regarding the acceleration in growth that we should consider? Were there some larger account placements that contributed to this? Is there something more indicative of a near-term trend, or is it just that all the segments are performing well?

It's more of the latter. There's a tangible increase in flow into the channel, and we're capturing a significant share of it. It’s challenging to distinguish between new and renewal rates. It’s more accurate for us to assess the percentage of non-admitted business overall, how much flows into our realm, and how much we can capture. This varies by discipline. For instance, construction is picking up again, which we see reported daily. Infrastructure projects, residential construction, and similar areas are all starting to gain momentum, and that's one of our key specialties. Additionally, there are many other sectors where we can observe this increase in flow.

Okay. Got it. And maybe I'll sneak one last one in. Is there going to be a potential difference between the cash tax rate and the GAAP tax rate going forward, especially considering the Class A shareholders?

So Mike, the best guidance I can give you is that I won't detail how taxes at an LLC appear or do not appear on the P&L compared to a C-corp since I know you understand that. The most comparable view of taxes for us will be in our adjusted net income walk, where we present what's called adjusted tax expense. This effectively assumes that the C-corp owns all of Ryan Specialty Group LLC. Consequently, you will see a consistent tax rate for the entire company, even though currently, the public company, the C-corp, only owns 42% to 43% of the LLC. As this ownership changes over time, and in assessing us against other C-corps, I believe that the adjusted income tax expense, which is essentially a pro forma 25%, is the most appropriate calculation to use for your model. The actual cash taxes that the C-corp, the public company holding company, pays to the government will be one component, while the cash taxes paid to the government on behalf of the C-corps owned by the LLC will constitute a smaller part. Additionally, there are tax distributions that go to all holders of the LLC, including the public company C-corp. Therefore, the simplest and most comparable view is that adjusted income tax expense in the adjusted net income walk.

There are no more questions at this time. We have reached the end of the question-and-answer session. I will now turn the call back over to Pat Ryan for closing remarks.

Thank you, operator, and thank you, ladies and gentlemen. In closing, I'd like to thank our entire team here at Ryan Specialty for their tremendous work and dedication to get us to this point and for always delivering the highest quality service to our clients. I really believe that our exceptional talent has us in a position to continue delivering well into the future. Thanks, everyone, for joining our inaugural quarterly earnings call, and we look forward to speaking with you all next quarter. Thanks very much. Have a good evening.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.