Greetings. Welcome to the Ryan Specialty Group First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Noah Angeletti. You may begin.

Thank you, Operator. Good afternoon, and welcome to Ryan Specialty Group Holdings' first quarter 2022 earnings call. This afternoon, the company released its financial results for the quarter ended March 31, 2022. The earnings release is available in the Investors section of the company's website at ryansg.com. I would like to remind everyone that certain statements made during this call are not based on historical information and may constitute forward-looking statements. Any statements that refer to projections, forecasts, guidance, outlook, or other characterizations of future plans, including integration expectations, restructuring initiatives, 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 Risk Factors that could cause actual results, timing, levels of activity, performance or achievements to differ materially from those expressed or implied in any forward-looking statements made today. Investors should not place undue reliance on any forward-looking statements. 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, including organic revenue growth rate, adjusted net income, adjusted EBITDAC and adjusted diluted EPS. 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. Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in our earnings release, which is available in the Investors section of the company's website at ryansg.com. With that, I'd now like to turn the call over to the Founder, Chairman and Chief Executive Officer of Ryan Specialty, Pat Ryan.

Good afternoon, everyone. Thank you for joining us on our first quarter 2022 earnings conference call. On today's call, I will provide a brief overview of the quarter and our strategy moving forward. Our President, Tim Turner, will then give an update on each of our three specialties and recent events. And lastly, our CFO, Jeremiah Bickham, will walk you through our financials. We'll then open it up for Q&A. Our first quarter of 2022 picked up seamlessly from our outstanding 2021 performance, as we grew total revenue 24%, led by organic revenue growth of 20%. We also achieved double-digit growth in adjusted EBITDAC and adjusted net income on a year-over-year basis. Our excellent results were driven by strong growth across all three of our specialties. Our strong performance this quarter and in prior quarters continues to demonstrate that our differentiated platform provides considerable value to our clients and enables us to outperform in various environments and against any competition. We are pleased to see that the E&S marketplace remains robust. The market changes we perceived on the periphery, which we flagged on our prior earnings call, have not yet developed. Broadly speaking, rates remain resilient in the majority of our lines of business. While rate increases have moderated, they've been more than offset by the continued expansion of the E&S market. We continue to add to our best-in-class team. We hit the ground running with onboarding new teammates in Q1, particularly in our underwriting management specialty, proving that we are a destination of choice for the top talent in the industry. We believe we offer leading underwriters and brokers a unique value proposition, the ability to build a business by leveraging our industry-leading capabilities, which provides them with strong financial backing and infrastructure support, allowing them to focus on providing innovative solutions for our clients. Further bearing this out is our industry-leading retention for underwriters and producers, which speaks volumes to our winning culture. Moving forward, we expect to stay the course on our growth initiatives. We are on pace to onboard our largest broker class ever in 2022. We remain confident that these investments in the next-generation of teammates will be accretive for Ryan Specialty going forward. We are pushing ahead in our formation of de novos, which you'll hear more from Tim on. Moreover, as we have previously conveyed, we will complete our $25 million 2020 restructuring program by June 30 of this year. Looking ahead, we remain very confident in our ability to maintain steady and profitable growth. The E&S market continues to expand as the complexity of risks increases. And as we have for the last 11 years, we continue to take market share from our competitors. Along with our strong organic growth, we continue to maintain a highly active M&A pipeline as we look for additional opportunities to enhance our platform and capabilities. We have a strong balance sheet and ample capacity that enables us to act when we find the right opportunities. As we've noted before, we will remain disciplined and move forward only when we identify an opportunity that we believe is strategic, a strong cultural fit, and accretive to our shareholder returns. Simply, this was another outstanding quarter for Ryan Specialty due to our incredible team that is unwavering in their dedication to our clients and trading partners, our time-tested business model and our winning culture. We are well positioned to sustainably and profitably grow our business and to continue delivering long-term value for our shareholders. With that, I'll now turn the call over to our President, Tim Turner.

Thank you very much, Pat. As Pat highlighted, we picked up in 2022 right where we left off at the end of 2021, with a strong quarter across our specialties. These results are a testament to the teamwork across the firm, to our producers, our underwriters and their teams who roll up their sleeves and work day in and day out on behalf of our clients. In addition, we made significant strides in the quarter expanding our talent base, broadening our product offerings and continuing to strengthen our value proposition to our broker clients and capital providers. Our wholesale brokerage specialty continued to experience excellent growth across all property and casualty lines of business. In particular, cat property continues to see record submission flow as admitted markets face pressure from reinsurers derisking their portfolios, which pushes more business into the E&S market. Construction is another vertical where we see significant increases in flow, with our industry-leading team seeing solid double-digit increases in submissions for both infrastructure projects and habitational construction. Also, our professional liability, healthcare and cyber lines see an increasing flow of business into the E&S channel, which is driving outsized growth. We're also seeing strong growth in our Transportation Practice as the addition of Crouse and Associates has proved to be essential in winning accounts across our firm. Within our Binding Authority specialty, we continue to see strong growth in our small commercial lines and are experiencing widespread success in our binding carrier contract renewals. We're keeping a close eye on additional opportunities in the delegated authority market to consolidate into Ryan Specialty and continue on the path toward creating the first truly 50-state binding authority operation. Our underwriting management specialty also delivered a strong first quarter, growing revenue by double-digits on a year-over-year basis while continuing to deliver solid profits to our carrier trading partners. As we've noted before, we appreciate the trust these carriers have shown in us, and we are careful to manage our growth with the need to deliver underwriting profit for our trading partners. As a follow-on to our remarks in the last call, I'm very excited about our strategic arrangement with Nationwide, which provides us with limited exclusive access to its Harleysville of New York A+ XV A.M. Best-rated paper, to support our underwriting manager specialty and alternative risk strategy. Through this arrangement with Nationwide and as we mentioned last quarter, we're excited to update you on the progress of two of our de novo MGUs. The first is AXSAL, an excess commercial auto insurance alternative risk group captive program created and managed by our recently acquired Keystone team. The AXSAL Captive will reinsure Nationwide's fronting capacity, with Nationwide retaining a percentage of the risk directly and through our Geneva Re joint venture. The second is Emerald Underwriting Managers, a primary and excess general liability MGU. We expect that Emerald will very soon be writing on Harleysville paper on an exclusive basis. The environment remains full of opportunities within this business line. We are very optimistic about the opportunities created by this new strategic alignment and these two de novo programs. These provide additional tools for Ryan Specialty to service our clients and trading partners. Additionally, our M&A pipeline remains robust, as Pat noted, including potential small and large opportunities and across a number of specialties. In terms of the E&S market, the environment remains very positive. While competition is still entering the market on the fringes, we have yet to see competition accelerate in any meaningful way. Pricing remains firm in nearly all lines of business, and flow was very steady through the first quarter of the year and through April, particularly with additional stress that we have seen in the admitted market. As we said before, we expect the increasing flow business into the non-admitted market to continue to be a significant driver of Ryan Specialty's growth, more so than rate. And with that, I will now turn the call over to our Chief Financial Officer, Jeremiah Bickham, who will give you more detail on the financial results of our first quarter. Thank you.

Thank you, Tim. In Q1, we grew total revenue 24% period-over-period to $387 million, which was fueled by strong organic revenue growth of 20.1%, benefiting from the continued tailwinds in the E&S market and the market share gains that Pat and Tim noted earlier. We were once again very pleased with our performance and especially with a very strong finish to the quarter. Net income for the first quarter of 2022 was $18 million or $0.06 per diluted share. Adjusted net income for the quarter, which excludes IPO-related and other unusual items, increased 13% period-over-period to $65 million or $0.24 per diluted share. Adjusted EBITDAC for the first quarter grew 14% period-over-period to $107 million, while adjusted EBITDAC margin declined 260 basis points to 27.7%. Primary drivers of our adjusted EBITDAC increase were our revenue growth, the continued realization of savings from our 2020 restructuring plan, and lighter professional services spend, which we expect will pick back up in Q2. However, our margin was impacted by continued investments in the business, public company costs, as we were private in Q1 of 2021, and travel and entertainment returning to normalized levels, which we flagged in our remarks last quarter. As a reminder, the latter two items will impact the second quarter margin as well. And it's important to note that relative to Q1 of 2020, our margin is up 560 basis points. As we previously noted, the current environment offers us a unique and very exciting opportunity to hire A+ level underwriters and brokers. And we expect to capitalize on this opportunity in future quarters by pursuing and onboarding top talent to our platform. Over the long-term, we expect that our growth will yield additional and sustainable operating leverage in the form of adjusted EBITDAC margin. Furthermore, our balance sheet remains quite healthy. During the quarter, we completed an opportunistic $400 million high-yield offering at a rate of 4.375%. In April, we converted our credit facilities to a term SOFR benchmark and purchased an interest rate cap on $1 billion of SOFR with a strike of 2.75%, capping our rates on that $1 billion through 2025. We would expect to straight line the cost of the cap over the life of the instrument. And further on interest rate exposure, we have a natural hedge with our operating and fiduciary cash balances. And similar to our peers, it earns a modest yield tied to the risk-free rate. In short, we believe that we are very well insulated from steep increases in the Fed funds rate. Given our strong execution, and a resilient E&S environment, we have raised our full-year 2022 outlook for organic revenue growth and adjusted EBITDAC margin as follows. We are now guiding organic revenue growth rate for the full-year 2022 to be between 13.5% and 15.5%. We continue to believe that our guidance is prudent given the prolonged stages of a very hard market and increased flow into the E&S market. We are also taking up the low end of our adjusted EBITDAC margin range for the full-year 2022 and are now guiding to end the year between 28.5% and 30.0%. As we previously noted, we are investing heavily in talent and growth in 2022 in order to continue serving our clients over the long-term, and many of those investments will be made in the second quarter and subsequent quarters. In summary, we are very pleased with our performance during the first quarter of 2022 and remain very excited about the path ahead for Ryan Specialty. With that, we thank you for your time and would like to open up the call for Q&A.

At this time, we will be conducting a question-and-answer session. Our first question comes from Elyse Greenspan with Wells Fargo. Please proceed with your questions.

Thanks, good evening. My first question, so you guys took up your organic guidance, I'm just trying to get a sense. It sounds like you're not really seeing kind of the competition that you said you might have seen on the fringes, right, from last quarter. When you put together this new guide, are you assuming that you start to see that to a greater degree over the balance of the year or how should we think about just that impact on organic as we move through 2022?

I'll start with that. It's Pat. And Jeremiah will pick it up. It's just very hard to predict and we're not seeing much of it now. That's really the story on that. We just think it's prudent to keep those historical facts in mind. Jeremiah, why don't you pick it up?

Yes. So that's the most important piece, out of prudence. And in an effort to be transparent and helpful, we flagged the competition we were seeing and noted that in our forecast there's the presumption that the markets cool off later in the year. The other thing, and that's still a factor in our forecast, just to be clear. Even though, as Pat said, we haven't seen that accelerate. We still think that's prudent to keep into the forecast. We also mentioned in the last quarter, and I'll just reiterate to give some other, some additional context on why the guide moved the way it did. You probably realize that our quarterly estimates are not linear. So the organic that we produce Q1 and how it relates to the full-year guidance was not a total surprise to us. And in addition to what we've observed in the past from the way extended hard markets eventually change, we also want to acknowledge the macro uncertainty out there that Pat noted last call as well, rising interest rates, inflation, general economic uncertainty and war. And remember that we're only four months into the year, and we'd love nothing more than to come give you a positive update in a couple of months. Q2 is actually our biggest quarter of the year. So hopefully, that's the case. But in the meantime, we feel the need to be prudent.

I have a follow-up question regarding your plans for investment in talent, specifically the addition of more underwriters and brokers starting in the second quarter. It seems that when companies indicate they will be hiring, there's often a delay in seeing the effects. This could lead to an initial increase in expenses, and it may take time for these new hires to contribute to revenue growth. Could you provide some insight into the timing of this? Do you believe this investment in hiring could support organic growth in 2023 as you expand your workforce this year?

I would say that it's a mixture of factors. We have already brought on some exceptional talent, and we expect them to start producing in the second, third, and fourth quarters. Additionally, we've hired people who are currently on garden leaves, which could mean a wait of anywhere from 90 days to six months. However, they are committed, highly talented, and true professionals. The expenses for those deferred due to garden leaves will impact the third and fourth quarters. While it's difficult to predict their productivity in those quarters, these seasoned professionals have strong reputations in their specialized practice areas. Therefore, we are very optimistic about their ability to contribute in the relatively near term.

Our next question comes from the line of Weston Bloomer with UBS. Please proceed with your question.

Hi, thanks for taking my questions. My first one, to follow-up on the organic growth guide. To what extent does your guidance forecast a recessionary environment in the back half of the year? And do you think you can kind of maintain that overall organic growth in a potential recession? Just kind of curious how, I know you weren't necessarily public during the 2020 timeframe, but how did your book hold up over then? How are you positioned now? Thank you.

Jeremiah here. Let me begin by providing some context on how we create our budgets and forecasts. It's not a top-down approach. We gather input from every producer and underwriter in the field, who create detailed projections based on their accounts. We then compile and analyze this information to shape our overall forecast. This year, we consistently assumed a market slowdown, but our team of experienced professionals understands their books and the market well. They’re not making broad assumptions about the macroeconomic climate. The situation has evolved significantly since January and February. Consequently, we’re not forecasting a recession or its timing, as every recession behaves differently. However, I can share that we faced a considerable economic downturn in 2022, yet we achieved record organic growth during that time, especially in 2021. In 2020 and 2021, although we were navigating the pandemic, our financials reflected stability. Looking back at the last two recessions, while we weren’t public then, other brokers showed resilience. So, I can’t precisely predict how our forecast would adjust if we enter a recession. However, as Tim and Pat pointed out, the overall conditions in the insurance market that impact us remain strong, which is encouraging. Additionally, most of our expenses are tied to compensation, with a large portion being performance-based and thus variable. Therefore, we're not overly worried, but we lack detailed precision regarding how our forecast may change in an economic downturn.

There's another point that I would add to that, which is a high percentage of our brokerage in managing underwriting business provides compulsory insurance products. We're not heavily into discretionary. And the compulsory, they have to buy insurance because it's the law on comp or auto or they're borrowing money and the banks require, the lenders require. So it's a matter of what's happening to exposures, what's happening to payroll such as you run into a tougher insurance market, but also a slowdown in the economy. And there's not an ability to predict that balance. But clearly, the world is getting riskier and there's inflation, so that's raising exposures. And that does raise premiums. But there's just no way to calibrate that. It would be inappropriate for us to try to give you a number on that.

Got it. That's all very helpful. My second question is more on the margin outlook, specifically around the compensation. I know you said, you saw a pretty steep pickup in hiring. I think total compensation was up close to 26% in 1Q versus 12% last quarter. Just how much of that increase was from hiring versus general wage inflation trends? And can you help me think about those two metrics as I move through the year? Like is 1Q the high-water mark for the accelerated increase in hiring or should it accelerate further from here? And what are your expectations for wage inflation throughout the year? Thank you.

Why don't you answer the wage inflation and I'll talk about the hiring.

Yes. So Pat will talk more about this, but the timing, I'll just give you a teaser, the hiring environment, the hiring opportunity, we still consider very rich. Depending on how you want to look at it, whether you're talking about the broker class or others, we're on pace to ahead of schedule there. But the timing of that is a little bit difficult to predict. Wage inflation, we've seen it, we've seen the impact as we look at offer letters, for example, for salaried employees that go out relative to what we had planned. There are some surprises, some increases in there. But again, the majority of our compensation is related to producers. And they're paid on a formula that's tied to revenue. So when their comp is going up, it's because revenue is going up proportionally. And the rest of the salaried or the non-variable comp piece hasn't had a material negative impact on us yet.

And we remain a destination of choice for talent in brokerage, binding and managing under a delegated authority so that we're casting a wide net for exceptional talent. We're not looking to just bring people in that are doing fine. We're looking for people who historically have done really, really well, that they can prosper in our culture and on our platform and our environment. And you can see the benefit of that as the All Risks brokers and managing underwriting; underwriting brokers have really increased their productivity. We can already see that in Crouse. So the idea is to keep bringing in seasoned professionals while, as Tim had referenced, bringing in young people right out of college and university or out of the military who have a lot of talent and no experience and putting them through our training program and our development program. All of those are accelerating.

Our next question comes from the line of Jimmy Bhullar with JPMorgan. Please proceed with your questions.

Hi, I had a couple of questions. First, just on organic growth. If you look at your results in 1Q, you mentioned in the release several drivers of that, including, I think, new clients, expanded relationships with existing clients, pricing. Can you give some dimension on what the contribution of each was or which one was a bigger driver than the other to the extent you're able to quantify the various drivers of the organic growth in 1Q?

We don't break that out, Jimmy. What I will reiterate though is that the, if you're thinking about rate versus exposure, rate versus flow, the latter is much more significant in terms of driving growth opportunities for us. And the flow and Tim can expand on this, but what we're seeing, what we saw in Q1 and what we've seen reflected in the organic growth numbers was a healthy amount of new business, a healthy amount of flow into the E&S market that we were able to take more than our fair share of. And as our existing clients' needs and the risks that were already in E&S grew, we believe that we took more than our fair share of that as well. So it's a very balanced attribution. But Tim is there any more color you want to add?

I would like to mention that the growth in non-admitted property and casualty business through our channel has increased, particularly through the stamping offices and our association that tracks it, WSIA. We can see that the flow is continuing to expand, and as Jeremiah indicated, we are capturing a larger portion of that.

Okay. And then, can you talk about fiduciary income? And what do you expect for that? Like how sensitive is it to the move in rates? And to the extent you're able to quantify what your expectations are?

I'm glad you mentioned that because inflation and rising rates are concerns for many. We have fixed rate debt and interest rate caps, but our main protection comes from the significant capital we have on our balance sheet, specifically the premium in transit that we can invest. However, it’s important to note that this capital isn't ours, so prioritizing preservation of it is essential. Each state has different regulations regarding how we can handle this capital, with some restrictions requiring it to be kept in a bank savings account. Consequently, our yield opportunity doesn’t perfectly align with the Fed funds rate or SOFR. Conservatively, and depending on various factors, I would suggest modeling a yield this year at one-month term SOFR minus 50 basis points. This projection is feasible for us this year, and in a more stable environment, we might improve on that in the medium term.

Okay. And then just lastly, if I could ask on your comments around talent and hiring. I think you mentioned it's a good environment for hiring. I would have thought it would be a bad environment for hiring given just wage inflation, competition for talent, low unemployment. But can you just expand on that a little bit? Are you talking about people from other brokers? Are you talking about people from outside the industry?

Both. Other brokers and other managing underwriters. We're not having a real problem with that because we're a very performance-based comp plan. And so we can pay nice rewards for good and exceptional performance. So as people look to join us, they're not looking at what is their salary as much as they're looking at, what is the growth opportunity and my short-term incentive plan and this platform that I'm joining. And then, frankly, we do have our equity program that's well disciplined. So that's attractive to people as well. So as we said in the past, one of the benefits of our going public, in spite of what's happened in the market in the last short period of time for everybody, almost everybody, the liquid stock that the New York Stock Exchange listed, the security is very attractive to people. And so the combination of all of that is giving us an opportunity to be quite competitive in terms of hiring without reaching in terms of fixed costs.

And our next question comes from the line of Alex Scott with Goldman Sachs. Please proceed with your question.

Hi, thanks for taking it. First one I had is just on the M&A pipeline. Any comments you have on what that looks like and how the current environment and potential changes in cost of capital and so forth would impact your M&A plans?

That's a question we appreciate because we've been actively working on our pipeline. As we've mentioned, it's strong. We're quite intentional in our approach, starting with cultural fit followed by strategic alignment. We avoid opportunistic deals and focus on strategic partnerships. We are currently engaging in discussions with potential partners who demonstrate a cultural match and meet our strategic goals. We're evaluating terms, including pricing, to ensure they benefit our shareholders. Sometimes, it may take longer for these parties to demonstrate potential gains. We often have lengthy discussions about what we can achieve independently versus what we can accomplish together. Finding common ground isn't always straightforward, but since we are a preferred partner, we can continue these negotiations until we are confident that the partnership will be beneficial, allowing us to proceed.

That's helpful. Thank you. Second one I had is around inflationary impacts on the top-line. I guess some of the primaries talked about how exposure can also be impacted by the changing value of the underlying products, property, et cetera, that's being insured. I'd be interested, what's sort of embedded in your plans around that? I would think since maybe you laid out your full-year inflation's picked up and is that something that would help a bit just on the exposure unit side in terms of revenue growth?

It certainly could. We are hearing from carriers that as loss costs increase, they need to adjust accordingly. High inflation usually leads to a hard market as well. There are several factors that could create favorable conditions for us. However, we have not made any significant changes for the latter part of the year regarding the current inflationary environment, which is providing a substantial boost. There is certainly potential for that.

Well, the other part of that answer is that this is where brokers really earn their distinction. Because with inflation and of course, with interest rates moving up, coverages that were written a year ago, 18 months ago, two years ago are going to be paying out higher claims because of inflation, including social inflation. I think a lot of people are saying that inflation is not transitory now. It's a matter of how far and how fast it goes. So the good brokers, and that generally defines our team and our underwriters, are very careful because they have a responsibility to make sure that they're guiding the clients to protecting this exposure increase. Less experienced and less qualified brokers can take the easy way out and assume lower exposure increases. But I think our people are really professionally oriented to deal with that. So that does drive exposure increase. Very hard to quantify, but it's real.

Our next question comes from the line of Tracy Benguigui from Barclays. Please proceed with your question.

Thank you. On the seasonality perspective, you previously mentioned that the first and third quarters you see lower organic revenue growth and in the second and fourth quarter, the opposite. I'm wondering if there are any pull forward in the first quarter that could affect second quarter organic revenue prospects or do you expect the same quarterly cadence of organic growth?

So Tracy, I'm pleased you raised this because the first and third quarters don't necessarily have to show the lowest organic growth; they just happen to be the smallest. The second and fourth quarters are typically the largest. Occasionally, this aligns with organic growth, but not always. For example, last year, the third quarter had our highest organic growth percentage. We anticipate the usual pattern of seasonality to continue, with the first and third quarters being the smallest and the second and fourth quarters being the largest. However, we don't believe that what we achieved in the first quarter is significantly impacted by any timing issues between the first and second quarters or between the first and fourth quarters.

Got it. That's helpful. And then, just a follow-up on your comment that you're actually seeing very steady flows in the E&S market through April. I'm just wondering what about the next wave. When risks are really hard to place, it goes from admitted to non-admitted to eventually Bermuda. And you mentioned your Geneva Re joint venture earlier. Can you remind us your Bermuda capability and over time if you could see meaningful growth in that market?

Well, Geneva Re has partnered with Nationwide on specialty and then Ryan-related investors are very conscious of the underwriting discretion required to in effect do this appropriately. And so there's a conservative attitude on that. We have really high-quality underwriters. And I would add that we're dealing with really high-quality retail brokers. And so we're partnering together with those retail brokers to make sure that as the business that they're bringing comes to the E&S market, it's properly placed and it's placed with high-quality carriers. And so the partnership with Nationwide with A+ XV does attract quality business. So that's all working out quite well.

Can you also just remind me you account for that stake in Geneva Re under the equity method. So could we see that category growing over time as maybe another source of income?

No. No, it's a capital growth strategy. The benefits of it, Tracy, though, there's our capital investment, which you're correct to remember; it's on the balance sheet as an equity method investment. But related to Geneva Re is our reinsurance MGU, Ryan Re, which we wholly own as of, I believe, it was the end of Q1 2021. And you will see the impact of that relationship and the growth in that MGU flow through our P&L like the rest of our MGUs.

That's a really good point. I probably misunderstood the thought of that question. But we were able to attract unusually capable reinsurance underwriting talent. And then partnering with Nationwide and their A+ XV balance sheet, they're carving out a very nice market position with high-quality ceding companies. And as a result of that, we've expanded our total addressable market significantly because we're now working with insurance carriers on providing them services that really are in our mission statement. So that is an added dimension to the joint venture relationship that we've described. When you have exceptional talent as we have and you have A+ XV quality balance sheet, you attract very high-quality business. And that's what's happening.

Our next question comes from Meyer Shields with KBW. Please proceed with your questions.

Thanks and good afternoon all. One of the issues that you talk about on, I guess, early on was that when retail brokers consolidate, then the fact that those retail brokers have consolidated their wholesale panel also inures to your benefit. And I was hoping you could talk about what exposure maybe the growth trajectory has if higher interest rates slow down the retail brokers acquisitions?

That's a very good question. The impact of this is certainly not measurable yet. However, we are hearing from the M&A landscape that some private equity investors might be considering a pause or delay, possibly taking a wait-and-see approach regarding their M&A strategies in response to interest rates. If this influences the strategic outlook of the major retail brokers, who act as our trading partners and help consolidate customers for us, it could potentially have an effect. Nevertheless, I believe these strategics will maintain a more solid strategy on roll-ups and consolidation compared to others because of their nature. Importantly, we have not yet seen any impact from this situation.

Okay. That's helpful. Do you have an idea of the timing of it? In other words, I'm assuming catastrophic scenarios, but if M&A goes away in the retail market, does it show up immediately in terms of slower growth or is there any sort of lag?

That's probably a question for Tim.

Sure. I'd be happy to. Hi, Meyer. No, we can't see any slowdown in growth related to M&A. I mean, most of these clients that are involved in it are our clients, the acquiring agency and the ones being rolled up in the private equity roll-ups and even the publicly traded broker clients. We just don't see that really affecting the business that's coming our way right now.

The other part of the M&A is that, as you know, we've established a third vertical in benefits, which is going to be mostly managing underwriting with some consulting attached to it and then the fourth vertical being alternative risk. And so there are opportunities in each one of those sectors that are quite interesting with some fairly abundant opportunities. It's really up to us to select the right ones for us. But both of those strategies and those verticals are in sectors that M&A activity is picking up in.

And we have reached the end of the question-and-answer session. And I'll now turn the call back over to Pat Ryan for closing remarks.

Thank you, Operator. And thank you, ladies and gentlemen, for your continued interest and support of Ryan Specialty. We always enjoy these discussions and the good give and take and the dialogue. We look forward to speaking with you again when we discuss our second quarter 2022 results. Thanks for your interest in our company and have a good evening.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.