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New Ryan Specialty Group to Offer Products in Fragmented Segment

Source: AM Best

Posted on 15 Feb 2010

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Patrick G. Ryan, fresh off the establishment of managing general underwriter ThinkRisk Underwriting Agency, said he's started a new parent company, Ryan Specialty Group. It will control a second new subsidiary: Ryan Specialty (Europe) Ltd., which will specialize in financial lines products.

Ryan, the founder of Aon Corp., will act as chairman and chief executive officer of Chicago-based RSG, an operation designed to develop MGUs and managing general agents, wholesale brokers and a service platform to be utilized by agents and brokers. "The strategy is to provide products and services to insurance brokers, agents and carriers," Ryan told BestWire. "It's a segment of the business that we know well." He added that it's a "quite fragmented" segment that "allows for the ability to be quite creative."

"We think that creating a new wholesale brokerage can bring real value to brokers, agents and carriers," he said. "It's really all about the quality of people and the execution."

The new wholly owned European subsidiary will be based in London and will also be an MGU, but its focus will be on such financial lines as directors and officers, financial institution and professional liability products. According to the announcement, Ryan Specialty (Europe) Ltd. will be run by Malcolm Nightingale and Adam Barker, who Ryan described as "two outstanding leaders."

RSG's other subsidiary -- Kansas City-based ThinkRisk -- was announced in December and was conceived as a "niche business" specializing in underwriting and claims management for the converging areas of media, technology, advertising, privacy and network security. The company policies are to be backed by Great American Insurance Group and will focus on professional liability. Three industry veterans ? Leib Dodell, Chad Milton, and Debra McClenahan ? were chosen to run the day-to-day operations (BestWire, Dec. 29, 2009). Ryan said the company will begin issuing policies April 1 and that it has already received "indications of interest" from the market.

Ryan had retired in 2008 as chairman and CEO of Aon, which is the world's largest insurance and reinsurance broker, according to Best's Review. RSG will not include retail brokerage, reinsurance brokerage or consulting on human resources, according to the announcement. "It's probably relatively unusual to say what you are going to do and what you are not going to do," Ryan said. "We didn't want people misunderstanding. Obviously, we're not going to compete with Aon."

"In today's world, it's important to have wholesale brokers be independent of retail brokers," he said, noting "obviously not everybody agrees with that."

As for the timing of launching the company in what is widely considered a difficult period, Ryan said a market this soft is "very competitive, but competitive markets are much more the norm than hard markets." In recent decades, he said, "the soft markets are getting longer, and when the market hardens, it's for a much shorter period of time. So, I don't really worry about starting in a soft market. We've existed in soft markets through the majority of my professional career."

He said he's counting on a good strategy, and in the end, "I would rather be early than late."

In total, Ryan spent about 15 months out of the insurance business after leaving Aon. Ultimately, though, "that's what I know best," he said.

Will Ryan Specialty Group one day go public? Ryan said it's "premature" to consider at this stage. "That's not a goal, but certainly we think that there's a lot of opportunity around the world. At this point, I'm committing the appropriate amount of capital personally to build a very serious business." In the future, he said, investors may be sought out "if and when that would be appropriate for our growth." If multiple investors got involved, it's possible that a potential exit strategy could result in the company going public, he said.