Aon Founder Retired at 71, Then Built a $10 Billion Business
(Bloomberg) -- By the time he stepped down from Aon Plc at age 71, Patrick Ryan had earned a retirement fit for a king.
He’d founded the world’s second-largest insurance brokerage nearly from scratch and run it for 41 years as chief executive officer. But once away from the office, he didn’t know what to do with himself.
“I really felt like I needed another career,” Ryan said in an interview.
So he decided to do it all over again.
After leaving Aon in 2008, he started Ryan Specialty Group Holdings Inc. and has pursued acquisitions to build the firm into one of the largest of its kind. Chicago-based Ryan Specialty -- with 3,300 employees and a market value of almost $10 billion -- offers products and services to insurance brokers and agents to help protect against risks, including cybercrime and climate-related hazards.
Now 84, Ryan took the company public this summer and is its largest individual shareholder with a stake of more than 45%. The firm’s shares have risen about 60% since its July initial public offering and now comprise the majority of his $7.1 billion fortune, according to the Bloomberg Billionaires Index.
The son of an auto dealer, Ryan was born in Milwaukee and graduated from Northwestern University with a degree in finance and literature. While working as a life insurance agent in Chicago, he came up with the idea of offering policies to auto dealerships’ customers and persuaded Continental Assurance Co. to back it.
By age 26, he’d started his own firm, Pat Ryan & Associates, according to his Horatio Alger Association profile. The company grew into what would eventually become Aon through a series of acquisitions, including rapid global expansion in the 1980s and 1990s.
Ryan retired as CEO in 2005, although he stayed on as executive chairman. In the months that followed he made his first serious attempt at semi-retirement, when he took charge of Chicago’s unsuccessful campaign to host the 2016 Olympics at the request of the city’s mayor, Richard M. Daley.
“That occupied my mind” for a while, Ryan said. “But that was a very frustrating job because for the first time in my life I wasn’t in control of anything. The Olympics committee was in control of everything. And being an innovator and entrepreneur, that’s very stifling.”
The insurance industry offered more familiar terrain. In 2009 he announced the creation of Ryan Specialty to help cover complex or unusual risks that many traditional firms don’t offer policies for, such as losses tied to various types of severe weather driven by climate change or computer hacks.
Ryan Speciality also helps brokers handle so-called social inflation, or the increasing costs of claims arising from what one insurance company director calls “anti-corporate sentiment.” It refers to everything from expanding definitions of liability to more plaintiff-friendly legal decisions.
“You really need experts who understand how to manage these risks,” Ryan said. The specialty-insurance market “is only about 17% of the commercial market, but it’s a very prominent 17%. And it’s where the growth is.”
Other aspects of his second career are more familiar. Ryan Specialty’s growth strategy is a reprise of his Aon playbook, focused on buying company after company. It’s made about 40 acquisitions, including last year’s purchase of Florida-based insurance specialist All Risks, its largest deal to date.
It’s a strategy driven by Ryan’s focus on what he sees as the industry’s fragmentation. Small and midsize insurance outfits scattered across the country are failing to take advantage of one of the core principles of insurance, which is to broadly distribute risk, he said.
It’s also given him the motivation to keep going.
“I like the fragmentation of the industry,” he said. “That has kept stimulating my entrepreneurial and building motivations.”
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