Ryan Specialty has agreed to accumulate managing common underwriter (MGU) Velocity Danger Underwriters, LLC from its present proprietor, funds managed by Oaktree Capital Administration, L.P. for $525 million, whereas insurer FM is about to accumulate the MGU’s extra and surplus (E&S) traces service.
The pending acquisition marks the subsequent stage in Velocity Danger’s possession story, because the catastrophe-exposed property specialist underwriter continues to realize in scale and worth. Worth creation seems to have been important and profitable at Velocity over the previous few years, learn on for extra ideas on that.
Our readers will recall that Velocity Danger was initially established in 2015 and operated by reinsurance, disaster, local weather and climate risk-linked ILS funding supervisor Nephila Capital.
As a catastrophe-focused property and specialty insurance coverage dangers managing common agent, Velocity Danger had completely sourced enterprise for funds underneath the administration of Nephila Capital underneath its first possession.
Velocity was initially constructed by Nephila as an origination pipeline for extra direct entry to main sources of insurance coverage danger, offering a extra environment friendly approach to deploy a few of Nephila’s third-party investor backed reinsurance capital to portfolios Velocity had underwritten.
The subsequent stage within the Velocity Danger story came in 2018, when Markel grew to become the proprietor of Nephila Capital by way of an acquisition.
Then, in late 2021 an acquisition was introduced that in the end saw Velocity Risk being acquired by funds managed by specialised private equity and alternatives investment manager Oaktree Capital Management, L.P.
Now, Velocity Danger is shifting on to its subsequent house, as Ryan Specialty has agreed a deal to accumulate the MGU from Oaktree.
Because of this, as soon as this newest transaction completes, Velocity Danger will grow to be a part of the Ryan Specialty Underwriting Managers division of Ryan Specialty.
As a part of this association and nonetheless topic to regulatory approval, Velocity’s wholly owned E&S service, Velocity Specialty Insurance coverage Firm will likely be acquired by industrial property insurance coverage mutual FM.
That E&S service had initially been an insurer that underwrote danger completely for packages backed by Nephila Capital, nevertheless it was acquired from program specialist State National in 2023 and renamed.
The announcement from Ryan Specialty immediately on the acquisition studies that Velocity generated round $81 million of working income for the 12 months ended December thirty first 2024.
Ryan Specialty additionally revealed that the upfront money consideration for the acquisition of Velocity Danger Underwriters will likely be $525 million, though that determine is topic to customary buy worth changes.
This upfront money consideration is unique of the E&S service and any earnout consideration, Ryan Specialty defined.
The money consideration for the sale is a really notable determine, given it implies a major improve within the worth of the Velocity Danger enterprise over the previous few years.
Why is that this notable? Nicely, readers might recall, we had reported that Markel estimated that the sale of Velocity Risk Underwriters LLC to funds managed by Oaktree Capital Management netted the company around $180 million.
With that sale having accomplished on February 1st 2022, the money consideration Ryan Specialty is now paying for Velocity Danger signifies a major quantity of worth creation by the crew at Velocity Danger over the past just below three years, though exhausting to dimension as Markel solely reported its internet earnings from the sale of the MGU to Oaktree.
However it’s spectacular, to say the least, and it demonstrates that Velocity Danger’s enterprise mannequin, of being skilled underwriters and managers of catastrophe-exposed property dangers after which utilising environment friendly sources of reinsurance capital to assist these portfolios, has resulted in significant worth creation.
This newest change in Velocity Danger possession underscores the continued growth of the Velocity enterprise platform, in addition to its development and enlargement, plus the entire exhausting work that has gone into the franchise since proper again in its earliest days as a part of Nephila.
Miles Wuller, President and CEO of Ryan Specialty Underwriting Managers, commented on the acquisition, “Including Velocity to our property disaster portfolio considerably enhances our skill to serve our wholesale shoppers and additional solidifies Ryan Specialty Underwriting Managers because the preeminent delegated authority platform within the nation. This gifted crew has developed strong know-how, portfolio administration, and knowledge analytics capabilities that increase their progressive underwriting and claims method. We’re wanting ahead to having the Velocity crew as part of the Ryan Specialty household.”
Malcolm Roberts, Chairman and CEO of FM, added, “VSIC’s concentrate on property insurance coverage and experience in understanding the brand new danger panorama that many companies face aligns completely with FM’s mission and will finally enable us to offer our shoppers with an excellent broader suite of merchandise and options to satisfy dangers immediately and sooner or later. We’re excited to welcome VSIC to the FM household and strengthen our strategic relationship with Ryan Specialty.”
Phil Bowie, Government Vice Chairman of Velocity, additionally stated, “We’re thrilled concerning the synergy of our industry-leading property underwriting and claims functionality with the Ryan Specialty group and with FM buying our E&S steadiness sheet. With this strategic transaction, Velocity positive factors expanded entry to markets and extra assets to proceed on its development journey. With our E&S steadiness sheet turning into a part of an extremely well-rated and capitalized entity in FM, it additional enhances the safety and capability we deliver to the wholesale market.”
Jake Rothfuss, CEO of Velocity, additional acknowledged, “By means of this transaction, Velocity will proceed delivering distinctive service to brokers, prospects, and capital sources. Ryan Specialty maintains the identical foundational values and progressive tradition that we now have created and dwell daily at Velocity. The mixture of those unimaginable organizations will enable our teammates to additional their expertise and offers the chance for Velocity to speed up the expansion of our managing common underwriter to even better heights. Becoming a member of Ryan Specialty is the precise house for the way forward for our crew; we’re all wanting ahead to our future collectively.”
“We’re proud to have partnered with Phil, Jake, and your complete Velocity crew and need them success within the subsequent chapter of the Firm’s development,” Greg Share, Managing Director of Oaktree additionally stated.
