That's a substantial hit, indeed - in the order of €90 or so.

On the assumption that your bank would charge you nowhere near such a high fee for receiving the transaction in Euros, I would insist that Ryanair transfer the full amount in Euro -€800.

It's probably better to get the full amount sent to a single bank account - rather than them refunding the €400 separately to both passengers - as in such a case you would pay whatever fees your bank might charge twice.