Prior to the sale, Onex owned 11% of Ryan Specialty’s Class A shares. Founder and CEO Ryan owns 13.4% of Class A shares. Ryan also controls more than three-quarters of the Class B shares, which gives him voting control on the board.
The sale, which closed today, was priced at $43.45 per share, just below the $44.21 closing price on May 22, when the sales plan was disclosed, according to a Securities & Exchange Commission filing.
Onex invested $306 million in Ryan Specialty in 2018. The chunk Onex just sold fetched about $361 million before underwriting costs. Its remaining stake is worth about $169 million at the share price at the close of trading today.
In addition to Onex, Ryan Specialty President Timothy Turner sold 689,909 shares in the offering, about 14% of his Class B shares. Those brought in over $28 million before underwriting costs.
Investors in Ryan Specialty responded negatively to the news of big holders cashing out large stakes. The stock, which closed at $40.83 today, is off 7.6% since the news, announced late Monday.
Overall, though, Ryan Specialty’s stock price has climbed nearly 43% since its July 2021 initial public offering.
With Onex sharply reducing its stake in Ryan Specialty, a broader array of institutional investors will have a piece of the company once Barclays finds buyers for the 9 million shares it’s now warehousing.
Ryan Specialty is a second act for Ryan, 85, who previously founded and ran Aon, the second-largest commercial insurance brokerage in the world.
Aon’s board eased Ryan out as CEO in 2005. His successor, Greg Case, moved the company headquarters to London from Chicago for tax reasons in 2012.
Ryan launched Ryan Specialty in 2010 along with Turner. Unlike Aon, which handles the broad insurance needs of corporations and smaller businesses, Ryan Specialty focuses on a narrower corner of the business. It works for larger brokerages like Aon, finding coverage for businesses or business lines whose insurance needs are complex and require specialized treatment.
The firm has grown largely through acquisitions. Just yesterday, it announced a wholesale brokerage deal for Socius Insurance Services, which is based in northern California and generated about $40 million in revenue in the year that ended April 30.
Ryan Specialty’s revenue in 2022 was $1.73 billion. It posted net income of $163 million on that, for a profit margin of less than 10%, low for the insurance brokerage business. The company launched a restructuring program in the first quarter aimed at generating $35 million in annual savings by 2025.
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