Posted on 28 Apr 2010
Patrick Ryan, CEO of Ryan Specialty Group, during his keynote address at the Business Insurance 2010 Risk Manager of the Year and Risk Management Honor Roll Awards Breakfast in Boston, said that ignoring conventional wisdom resulted in some his most successful business decisions.
"Conventional wisdom is often wrong, and contrarian thinking can in fact make a difference," said Mr. Ryan, who launched his Chicago-based holding company of managing general underwriters and managing general agencies in February.
Mr. Ryan noted that many observers believed it was an unfavorable time to enter the MGA and MGU sector because of the soft market and other factors. “Why would you be looking to set up new lines of business for MGUs and MGAs, when there’s so much competition right now?” he said. “The real answer is, in fact we think there’s tremendous opportunity for a...debt-free company that is very well capitalized and that can attract high-quality talent for the designing and placing of very complex, hazardous risks.”
Mr. Ryan said he thought risk managers would benefit from new products from new wholesale business.
“We think there will be a lot of capital that will become available for new lines of business through the MGU and MGA markets,” he said.
Mr. Ryan, the architect of Aon Corp. and its former CEO, said that contrarian thinking also was behind Aon’s successful expansion in the early and mid-1990s.
At the time, Aon was the only large brokerage making acquisitions, he said. Investors and insurance buyers had little interest in large brokers, Mr. Ryan recalled, noting that a Risk & Insurance Management Society Inc. survey at the time reported that many risk managers anticipated using brokers less in the subsequent five years.
“We thought a contrarian strategy made sense—we thought the value would be there for the role of adviser,” he said. “We seized on a point in time when there really was no competition to make acquisitions. In fact, I think it did work.”
Mr. Ryan also said that Aon’s expansion of its reinsurance brokerage business contravened conventional wisdom. Many observers thought that reinsurance brokers would be replaced by the direct market and the Internet, he said.
“People were looking at the reinsurance brokerage business saying it’s done,” he said. “They were wrong.”
Aon had $10 million in reinsurance brokerage revenue in 1988 and by 1998 was the largest reinsurance broker in the world, he said.
After leaving Aon in August 2008, Mr. Ryan led Chicago’s failed bid to host the 2016 Summer Olympic Games. He said he returned to the insurance industry for several reasons.
“I missed the insurance industry because of the intellectual challenge we all get in risk management, because of the…really socially valuable work that risk managers and those of us involved in risk management provide to our society. And, frankly, I missed the people,” Mr. Ryan said.