8-K: Ryan Specialty to Acquire US Assure in $1.075 Billion Deal, Expanding Underwriting Capabilities

Ryan Specialty has signed a definitive agreement to acquire US Assure, a leading program specializing in builders risk insurance, for $1.075 billion in cash, plus up to $400 million in performance-based contingent consideration.

Summary

• Ryan Specialty has agreed to acquire US Assure Insurance Services of Florida, Inc. for $1.075 billion in cash, with a potential additional $400 million based on performance over three years.
• US Assure, a specialist in builders risk insurance, will become part of Ryan Specialty's Underwriting Managers Specialty.
• The acquisition is expected to close in the third quarter of 2024, pending customary closing conditions.
• US Assure has a diversified portfolio of residential, commercial, and remodeling projects and relationships with over 20,000 active agents.
• US Assure's underwriting is supported by a proprietary technology platform that streamlines the underwriting and policy issuance process.
• The transaction is expected to be immediately accretive to Ryan Specialty's earnings per share.
• The acquisition will be funded through a combination of cash on hand, an upsized revolving credit facility of $1.4 billion, and a $500 million bridge loan, which is intended to be replaced with proceeds from one or more syndicated market transactions in Q3.
• US Assure has a long-term, exclusive underwriting agreement with Zurich American Insurance Company, which will continue post-acquisition.

Sentiment

Score: 8

Explanation: The document is very positive, highlighting the strategic benefits of the acquisition, the strong performance of US Assure, and the expected financial returns. The language used is optimistic and forward-looking, indicating a high level of confidence in the transaction.

Positives

• The acquisition expands Ryan Specialty's presence in the programs segment of delegated underwriting authority.
• It deepens Ryan Specialty's capabilities in the attractive SME segment of the builders risk and construction market.
• US Assure's online distribution portal provides an efficient and cost-effective tool for brokers and agents.
• US Assure has a track record of delivering exceptional underwriting results.
• The acquisition is expected to be immediately accretive to Ryan Specialty's earnings per share.
• The transaction will enhance Ryan Specialty's relationship with Zurich.

Risks

• There are potential risks related to integrating US Assure's assets and operations.
• The anticipated benefits of the acquisition may not be realized when expected or at all.
• The transaction could disrupt management time from ongoing business operations.
• There is a risk related to the ability to obtain debt financing on terms satisfactory to Ryan Specialty or at all.
• There are potential adverse reactions or competitive responses to the acquisition.

Future Outlook

The acquisition is expected to close during the third quarter of 2024 and is expected to be immediately accretive to Ryan Specialty's earnings per share. Ryan Specialty sees long-term secular growth opportunities for residential construction, as well as renovation and small commercial projects, that will fuel an expanded need for builders risk insurance.

Management Comments

• Patrick G. Ryan, Founder, Chairman and CEO of Ryan Specialty, stated, 'US Assure is one of our industrys oldest and highest quality programs, and has developed an outstanding business in a difficult class.'
• Miles Wuller, President and CEO of Ryan Specialty Underwriting Managers, said, 'The underwriting talent and the proprietary technology that US Assure has developed is second to none.'
• Ty Petway, CEO of US Assure, stated, 'Ryan Specialty, with its very talented team and trading partner-centric, employee-centric culture is the right fit for US Assure.'

Industry Context

This acquisition aligns with the trend of consolidation in the insurance brokerage and underwriting space, as companies seek to expand their capabilities and market reach. The focus on the SME segment of the builders risk market reflects the growing demand for specialized insurance solutions in the construction industry.

Comparison to Industry Standards

• The acquisition of US Assure by Ryan Specialty is comparable to other recent acquisitions in the insurance brokerage and underwriting space, where companies are seeking to expand their capabilities and market reach.
• US Assure's focus on the SME segment of the builders risk market is similar to other specialized programs that cater to niche markets within the insurance industry.
• The use of a proprietary technology platform by US Assure is consistent with the trend of digital transformation in the insurance industry, where companies are leveraging technology to improve efficiency and customer experience.
• The long-term, exclusive underwriting agreement between US Assure and Zurich is similar to other capacity arrangements between program managers and insurance carriers.

Stakeholder Impact

• Shareholders of Ryan Specialty are expected to benefit from the accretive nature of the acquisition.
• Employees of US Assure will become part of the Ryan Specialty team.
• Brokers and agents will have access to a broader range of products and services through the combined platform.
• Zurich will continue to be the builders risk carrier, maintaining the existing program capacity and underwriting guidelines.

Next Steps

• The acquisition is expected to close during the third quarter of 2024, subject to customary closing conditions.
• Ryan Specialty will integrate US Assure into its Underwriting Managers Specialty division.
• Ryan Specialty will work to realize the expected synergies and growth opportunities from the acquisition.

Key Dates

Keywords

Ryan Specialty, US Assure, acquisition, builders risk insurance, underwriting, insurance, program, delegated authority, Zurich, M&A