7 Jan 2025

Ryan Specialty has agreed to acquire property cat-focused MGA Velocity Risk Underwriters from private equity sponsor Oaktree Capital Management in a $525mn cash deal, with property mutual giant FM acquiring Velocity Specialty Insurance Company (VSIC).
The deal confirms The Insurer’s reporting yesterday evening that a transaction was imminent.

As previously reported, Velocity was founded in 2015 with a focus on US property catastrophe risks, providing coverage for perils such as named storm, earthquake, and tornado and hail, with an emphasis on middle market and small to medium commercial businesses.
Velocity has a national footprint in the US with a particularly strong presence in Florida, Texas and the Southeast.

Ryan Specialty said on Tuesday that Velocity generated full-year operating revenue of $81mn in 2024. It also said that the upfront cash consideration for the deal is exclusive of VSIC and any earn-out consideration.

As part of the transaction, Velocity will join the wholesale giant's Ryan Specialty Underwriting Managers (RSUM) division.

Miles Wuller, the president and CEO of RSUM, hailed the transaction in a statement alongside his firm’s announcement of the deal.

“Adding Velocity to our property catastrophe portfolio significantly enhances our ability to serve our wholesale clients and further solidifies Ryan Specialty Underwriting Managers as the preeminent delegated authority platform in the country,” Wuller commented.

“This talented team has developed robust technology, portfolio management, and data analytics capabilities that augment their innovative underwriting and claims approach,” he continued.

“We are looking forward to having the Velocity team as a part of the Ryan Specialty family,” Wuller concluded.

Phil Bowie, who led Velocity from its inception and has recently served as the MGA’s vice chair, said Velocity is “thrilled about the synergy of our industry-leading property underwriting and claims capability with the Ryan Specialty organisation and with FM acquiring our E&S balance sheet”.

“With this strategic transaction, Velocity gains expanded access to markets and additional resources to continue on its growth journey,” Bowie continued.

“With our E&S balance sheet becoming part of an incredibly well-rated and capitalised entity in FM, it further enhances the security and capacity we bring to the wholesale market.”

Velocity CEO Jake Rothfuss commented: “Through this transaction, Velocity will continue delivering exceptional service to brokers, customers, and capital sources. Ryan Specialty maintains the same foundational values and innovative culture that we have created and live every day at Velocity.

“The combination of these incredible organisations will allow our teammates to further their skills and provides the opportunity for Velocity to accelerate the growth of our managing general underwriter to even greater heights. Joining Ryan Specialty is the right home for the future of our team; we’re all looking forward to our future together.”

FM’s Roberts says VSIC deal could expand product offering

FM CEO Malcolm Roberts said the acquisition of VSIC could open the door to more product offerings from the mutual giant.

“VSIC’s focus on property insurance and expertise in understanding the new risk landscape that many businesses face aligns perfectly with FM’s mission and may eventually allow us to provide our clients with an even broader suite of products and solutions to meet risks today and in the future,” Roberts said.

The deal is expected to close “in early 2025”.

Insurance Advisory Partners and Howden Capital Markets & Advisory served as financial advisors to Velocity and Oaktree, while Debevoise & Plimpton served as legal counsel.

JP Morgan Securities served as exclusive financial advisor to Ryan Specialty and Sidley Austin served as legal counsel. Willkie Farr & Gallagher served as legal counsel to FM.

“We are proud to have partnered with Phil, Jake, and the entire Velocity team and wish them success in the next chapter of the company’s growth,” Greg Share, managing director of Oaktree, said in a statement.

View this article here: https://www.theinsurer.com/program-manager/news/ryan-specialty-confirms-deal-to-acquire-velocity-risk-from-oaktree-fm-to-acquire-2025-01-07/

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