Ryan Specialty Holdings (RYAN) Slid on the Cyclical Nature of the Industry

Investment management company Vulcan Value Partners recently released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The firm focuses on improving long-term returns and lowering risk, rather than short-term results. In the quarter, the Large Cap Composite (Net) returned -14.1%, the Small Cap Composite (Net) returned -6.8%, the Focus Composite (Net) returned -19.1%, the Focus Plus Composite (Net) returned -19.1% as well as the All-Cap Composite (Net) returned -13.5%. Throughout 2025 and escalating to the first quarter of 2026, the market is experiencing heightened volatility related to AI’s potential, leading to mispricing of some strong companies. The current market turbulence presents opportunities for long-term investors willing to accept short-term volatility in stable-valued companies and improve the margin of safety. The letter identified businesses into three groups with perceived /real AI disruption risk: Software, Alternative Asset Managers, and indirectly impacted businesses. The firm highlights that its investment strategy aims to leverage this volatility to reduce risk and increase returns in the long term. In addition, please check the Firm’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Vulcan Value Partners mentioned stocks such as Ryan Specialty Holdings, Inc. (NYSE:RYAN). Ryan Specialty Holdings, Inc. (NYSE:RYAN) is a specialty insurance services company that provides distribution, underwriting, product development, administration, and risk management services. On April 22, 2026, Ryan Specialty Holdings, Inc. (NYSE:RYAN) closed at $36.29 per share. One-month return of Ryan Specialty Holdings, Inc. (NYSE:RYAN) was 9.84%, and its shares lost 47.84% over the past 52 weeks. Ryan Specialty Holdings, Inc. (NYSE:RYAN) has a market capitalization of $9.59 billion.

Vulcan Value Partners stated the following regarding Ryan Specialty Holdings, Inc. (NYSE:RYAN) in its Q1 2026 investor letter:

“Ryan Specialty Holdings, Inc. (NYSE:RYAN) was founded by Pat Ryan, who also founded AON and turned it into the second largest insurance broker in the world. RYAN is one of three Excess and Surplus or E&S brokers that dominate the U.S. market. E&S is more complicated, specialized insurance that is sold to manage risks not adequately covered by the highly regulated admitted or standard insurance market. The E&S market is growing much faster than the admitted market and RYAN is gaining market share, so it has been growing at a solid double digit rate for many years. E&S and RYAN continue to gain market share, but the insurance market is inherently cyclical with regard to price. We are entering a soft market with price declines for certain segments, especially property. As a result, RYAN’s growth is slowing in the short run and its stock price declined meaningfully in 2025.

More recently, RYAN’s stock price has declined meaningfully again on AI related fears. During the first quarter OpenAI announced a partnership with Insurify, a privately held company using an app to sell auto insurance to consumers. They are adding AI functionality to the app. Most auto insurance is sold through the admitted market. RYAN does not sell any consumer auto insurance. RYAN mostly sells very complex E&S insurance for its clients, who include very large insurance companies. They trust RYAN to help them manage risks that can be as much as several hundred million dollars. We asked the CEO of one of these large insurance companies if they would consider using AI instead of an E&S broker such as RYAN to place these large, complex risks. The answer was an emphatic, “No.” On the other hand, RYAN is using AI to lower costs and provide faster, better risk assessment by making its brokers more efficient. We believe that RYAN will benefit from AI as opposed to being harmed by it. We have been buying RYAN.”