Changing market means opportunities
Just some 40 months since the company started accepting business, Ryan Specialty has grown much faster than anticipated. What is more, changes to the structure of the industry mean that opportunities for the company will only increase, says Pat Ryan, the company’s founder, chairman and chief executive.
Ryan founded the company in 2010 after stepping down as chairman and chief executive of Aon Corporation. Ryan Speciality is a group consisting of wholesale brokerage, underwriting managers and other specialty insurance services to agents, brokers and insurance carriers.
“We are now 40 months in and it has gone much better than even I could have expected,” Ryan told Intelligent Insurer. “We were cashflow positive very quickly and looking at our budgets going forward, when you include all the money flowing through the business’s different channels, we will be turning over something approaching $5 billion.”
He attributes this faster-than-expected growth to several things. The excess and surplus lines (E&S) model in the US has undergone dramatic change in recent years, Ryan says, in a way that has benefited Ryan Speciality.
Several of the key brokers operating in that sector decided it was no longer cost-effective to do business with a large number of wholesalers and instead scaled back to using just a handful. “In almost every case, we have remained part of that smaller pool,” says Ryan.
This dynamic has meant that Ryan Specialty has managed to grow its market share in many sectors. “Although the competition between the remaining companies has been tougher, that has also allowed us to grow overall.”
"I have always liked change, especially disruptive change. I believe it is often a force for good in the industry."
In addition, he says, a period of upheaval in the industry generally—triggered in part by the financial crisis and subsequent economic downturn—has meant a lot more movement among executives in the industry. “There have been a lot of people looking for change and we have been able to offer that,” he says.
Finally, he says the financial crisis also forced many companies to look at how to run their businesses more efficiently. This triggered a trend in some areas of these companies turning more to wholesalers, especially as a more efficient way of accessing the E&S lines market.
Further change should mean an ever brighter future for the company, Ryan says. He predicts further consolidation of managing general agents (MGAs) and managing general underwriters as many seek the benefits of being part of a larger platform.
Sometimes this could be driven by the age of their owners and the lack of a succession plan; and sometimes by a desire to gain the benefits of diversification, Ryan says. “Diversification has many benefits and it is better to have several touch points with clients that can make you more indispensable,” he says.
This is a new phenomenon in the industry. “You haven’t seen large MGAs in the market much before. But we believe this is the way the market will develop and it is already happening fast. Consolidation in the market is accelerating and you will see more players look to movebeyond being monoline specialist entities and instead merging into larger groups.”
On this basis, Ryan says his business is well positioned to continue to grow quickly. Despite now being in his mid-70s, he looks set to continue to spearhead this rapid growth personally. “I doubt I will slow down any time soon,” he said. “I am having too much fun. I believe people should do what they enjoy and this is very much what I enjoy. I have a lot of hobbies as well but I seem to mange to find the time for both.”
Part of his vigour comes from his passion for change—something he believes is a driving force in many parts of the industry.
“I have always liked change, especially disruptive change. I believe it is often a force for good in the industry,” Ryan says. “The industry’s success sits in its ability to innovate and provide clients with solutions. It has always created good entrepreneurs and that is happening again at the moment.
“It is partly emerging through the different types of investors we are seeing in the industry. Private equity firms and hedge funds are moving in, especially into the reinsurance space, and that will drive more innovation. I believe ILS is changing the reinsurance industry.”