Pat’s way

Pat’s way

When one sits down with an insurance legend like Pat Ryan, you’d best not waste his time. In conversation in his Chicago office, the CEO and founder of Ryan Specialty Group (RSG) expresses his thoughts deliberately, mindfully, his eyes fixed on the listener. A well-respected, disciplined leader and veteran of the Property & Casualty (P&C) insurance business over , he has seen fortunes rise and fall in this industry – and, at 81, he remains one of the sharpest figures in the market.

Ryan’s intensity is not at all surprising. This is an insightful, deeply intelligent man who’s spent his life creating, innovating. Building. Recruiting talented people of like mind and establishing organisations built on common goals, teamwork and empowering his talent to take risks, learn from them and always move the ball forward.

“It starts with establishing a culture,” says Ryan. “I don’t think you can get people to follow you unless you know where you’re going, but why you’re going there, and how you’re going to achieve that.”

Ten years ago, the founder and former Chairman and CEO of Aon stepped aside to allow for a successor. But he was far from finished building. “I had been there 44 years and that seemed like a long enough time,” he says. “But I didn’t want to ‘retire’ retire.” Rather, he was interested in delving further into a segment of the P&C business that had been steadily growing for years, and forged Ryan Specialty Group in 2010. The international holding company specialises in wholesale brokerage, insurance underwriting and other specialty services to brokers, agents and carriers.

In the time since, RSG has grown rapidly, both organically and through acquisitions, and is counted among the top wholesale brokers in the US. Last summer, the company announced a long-term strategic deal with New York-based private equity firm Onex, which invested $150m of preferred equity and $25m of common equity to provide capital to continue RSG’s successful growth strategy and M&A activity.

“I think there really is a lot of pride in the company,” he says. “Not just because of our success – we’re not going to brag about it, but people do talk about the rapid growth that we’ve had. But we’re very committed to each other and to doing the right thing for our clients for our teammates, and for our communities.”

When Ryan talks about his businesses, two common themes emerge: people and responsibility. How his employees have always strived to contribute to the organisation’s success, how insurance is woven into the fabric of society, how lives can be changed through the intervention and mercy of those fortunate enough to be able to lend a hand to others.

“Many of our people really value the empowerment that we give them,” he says of RSG’s personnel. “We’ve attracted a lot of great people, but what I’m proudest about is that we keep them. We have a very low turnover rate, and people are trying to hire our people all the time. We’re blessed in that our people find the satisfaction in staying here.”

 

Maintaining perspective

The accomplishments in Ryan’s career are well known in the P&C insurance industry, and could fill an insurance-industry textbook. After earning his bachelor’s degree in 1959 from Northwestern University’s School of Business (now the Kellogg School of Management), he joined Penn Mutual Life Insurance Co. as an agent; he started Pat Ryan & Associates, a managing general underwriter for Continental Casualty Co., four years later. By 1976, he had built it into a $30m business.

In 1982 he succeeded Combined Insurance founder W. Clement Stone, and Ryan Insurance Group and Combined were merged, with Ryan appointed CEO. A month later, the new entity acquired brokerage Rollins Burdick Hunter Co., and after several more acquisitions, the company was christened Aon in 1987. By the time of Ryan’s departure in 2008, Aon boasted revenues in excess of $7bn, with more than 500 offices in 120 countries.

Today, as it has long been the case throughout Ryan’s career, strategic acquisitions are key to continued growth – but Ryan maintains there’s far more to acquiring an organisation than how it might appear on paper. There are myriad factors that must also be considered that don’t appear on a balance sheet, the company’s culture chief among them. It begs the question: Is it possible to adjust the culture at a company that appears to be a good investment, but culturally might not be an ideal fit?

“We think that’s too risky,” he says. “We’ve walked away from several companies where the culture just wasn’t right. Having done a lot of acquisitions over 40 years, I can tell you that the very limited number of failures were never strategic. There were only a few, but they were cultural. Sometimes people tell you what you want to hear and you have to look beyond that.

“Some people ask, ‘What’s the worst acquisition you’ve ever made?’” he continues. “Well, I won’t identify by name, but I can give you one circumstance where people said they were committed and they wanted to stay and build the business, a larger platform, etc., but really they had no intention of doing that – and within the first six months, five of the top 10 people left. That was a cultural misfit, and as a result, we ended up overpaying for that company. Strategically it was right, but the people weren’t right, so we’re very careful about that. We don’t buy companies where we know we have to replace the management.”

 

Lessons learned

The values that are vital to the culture Ryan strives to engender – integrity, teamwork, client service, inclusion, and empowerment, among them – are essential to the businesses he still leads. Conversely, there’s one cultural trap against which he says organisations should remain vigilant.

“Arrogance,” he says. “Arrogant people in our industry fail.” Once again, while he won’t name names, Ryan adds, “Years ago, I think there was an arrogance in certain brokerages’ minds, those who were approaching business as sort of entitlement. But because it’s gotten to be so competitive, I think that’s been knocked out. In fact, I’m sure it’s been knocked out. I don’t know of an arrogant competitor of ours, but that wasn’t always the case.”

Silos, Ryan maintains, are equally insidious in any organisation, as they tend to breed what he calls “hierarchal divisiveness” within an organisation. “Silos keep people from really serving their customer or client effectively,” he explains. At RSG, he adds, “We don’t tolerate silos. I’ve seen large companies where there’s a tribal culture in which all these people are really good, and your people aren’t really good. So we really work hard to keep that from happening.”

Ryan still believes that any insurance policy boils down to a covenant with the insured – the promise that the client will be made whole when a loss is incurred. “People put trust in us,” he says. “They put trust in the industry, and there’s just such a huge responsibility to live up to that trust.”

Part of that relationship requires maintaining an emotional touchpoint with the customer – something that technology, while an essential part of the equation, will never replace.

“We believe passionately that in the commercial insurance business, the role of advisor and advocate in the long term is permanent and only will be eliminated by the failure of the individuals to appropriately provide those services,” says Ryan. “But they will be replaced by somebody else who provides those services, not by a machine.

“The machine and artificial intelligence are equipped to take a lot of costs out, to streamline it, and we’re very committed to that,” he adds. “We’ve committed a lot of capital to building technology, but it’s all designed to work through the agent or broker. Not around them.”

 

The ‘multiplier effect’

Ryan’s list of accolades is among the most enviable in the industry. In 1987 he received the Horatio Alger Award, honouring those dedicated to the principles of integrity, hard work, perseverance and compassion for others. In 2008, was inducted into the American Academy of Arts and Sciences; in the same year he was elected to the International Insurance Society Hall of Fame and received the Ernst and Young Entrepreneur of the Year Lifetime Achievement Award. His additional honours include Brigham Young University’s International Executive of the Year award for corporate integrity.

While Ryan is proud of those honours – as well as his career achievements – it’s his philanthropy that has enriched him the most. One of the Windy City’s favourite sons, this father of three continues, in practice, to perpetuate the idea that giving yields great rewards.

He’s a big believer in the Multiplier Effect, whereby the output achieved far exceeds the input made. Especially when it comes to altruistic pursuits. “Philanthropy is not the quantum of which you give,” he says. “The dictionary definition of ‘philanthropist’ is somebody with something of value who shares it with somebody who has a need. So it can be your time, it could be your treasure. It’s not defined by zeros. Sometimes the poorest of people who share a much higher percentage of their net worth should be viewed as better philanthropists.”

The Ryans have been generous donors to their alma mater of Northwestern for many years, supporting academic programmes, scholarships, the construction of Northwestern’s Nanotechnology Center, Northwestern’s Feinberg School of Medicine, and the renovation of Northwestern’s football and basketball stadiums. The school’s multi-use athletics and recreational facility is named the Ryan Fieldhouse in their honour.

Ryan has been a member of Northwestern’s Board of Trustees for 41 years, 14 years of which he served as Chairman. In 2009, the university awarded him a Doctor of Humane Letters degree and inducted him into the Northwestern Athletic Hall of Fame. Four years later, he received the Northwestern Alumni Association Medal of Honor – the highest award granted by the school’s Alumni Association.

An additional gift by the Ryans created scholarships for low-income students to attend Northwestern without taking on any student loans, and also they provide athletic scholarships for undergraduate students.

“We just look for ways that we can make a larger-than-expected impact, and it’s very much related to education,” Ryan explains. “Just living your life, you see the advantages and disadvantages of getting a good education and not having one. College education improves our financial potential.”

Shirley Ryan served on the National Council on Disability under Presidents George H.W. Bush and Bill Clinton. That work, says Pat, is “all motivated by recognising that there’s a hugely disadvantaged group in a segment of society with people with disabilities; the unemployment rate for people with disabilities is in the 70% range. So we try to work on those kinds of issues.

“For the last 40 years, my wife has been working on infant early detection and early intervention for motor, sensory and communication delay through Pathways.org, our paediatric clinic (1985) and very popular videos, website, and social media,” he notes. Infants can learn the ability to walk, to play, and to communicate through therapy and avoid issues. Pathways.org has merged with the former Rehabilitation Institute of Chicago to create the Shirley Ryan Ability Lab, which for 28 years has been acclaimed the number one US rehabilitation institute. Shirley Ryan Ability Lab is the first ever “translational research hospital” producing science driven breakthroughs in Adult Human Ability. In the end, Ryan adds, the Ryans’ philanthropy “is directed to empowering people to become what they’re capable of being.”

 

Looking ahead

Does Ryan ever see a day when he’ll hang up his insurance spurs and devote himself to his philanthropy full time?

“Shirley is my active co-partner. One of the great pleasures and rewards of being an entrepreneur is creating jobs, creating career opportunities. Jobs are really for family needs/employment, because then the family can afford to educate their children.”

The cycle, it would seem, will continue for Pat Ryan for years to come: Work hard, provide more insurance solutions, build upon decades of success, and in so doing, fuel society’s engine by contributing to the greater good. Repeat. “When you’re in this industry, you have an opportunity to do really important things: to help people, and position them to help build their businesses,” he adds. “Position people to self-optimise, to solve social issues, to be a part of solving issues.

“We like to always say that commerce doesn’t exist without the commercial insurance industry. It’s a feeling of satisfaction for what we’re all about, and importantly who we are and what we do.”

 

Darkest days

There perhaps is no better example of how Ryan’s leadership was essential to the well-being of his charges than the 11 September 2001 attacks and their aftermath. At the time, Aon had nearly 1,000 employees working in the South Tower.

That morning, Ryan and his wife, Shirley, were flying back from the Monte Carlo Reinsurance Rendez-vous de Septembre when they were awakened and given the news that a plane had crashed into the Twin Towers. Like most people when they heard the news, they thought the incident must have involved a small aircraft. Upon landing in Deer Lake, Newfoundland, they learned the situation was far worse.

“I knew I had to make contact with our office, and I did,” he recalls. “I told everybody to go home and get everybody out of the Aon Center because that could have been a target, and we set up a command post out in the suburbs near O’Hare Airport. We had to find our people, so this command post set out to contact everybody who worked in the World Trade Center.”

Those employees who managed to get out of the tower were scattered. “As we tracked people down we had leaders on the ground in New York who would be our conduit. I was constantly on the phone. We started to learn more about people that got out of the building, that there were deaths, and then they would identify people who didn’t make it. We didn’t want to put a number out, because the number - about 325 - would have been very frightening to people.”

As it got into the early evening, he says, “it became clear that there was going to be a significant number of people who didn’t get out.” Meanwhile, Ryan was still stuck in Newfoundland. “I wanted to get back to Chicago because that was important, but you couldn’t fly anywhere.”

Aon’s Canadian team, which worked closely with the Canadian government on insurance matters, managed to secure permission for the Ryans to fly to Sault Ste. Marie, Ontario, the twin city and across the border from Sault St. Marie, Michigan, from which they were able to have a car take them to Chicago. “I got in, in the early morning, went home and slept a few hours,” Ryan says, and word came in of the growing number of known losses. A great common reaction among the survivors – especially the families of the missing and the lost – was one of desperation.

“There was a fear that, ‘My God, what will I do?’” he says. “My working spouse is probably gone. What will I do for medical insurance?’ Then the other fear was, ‘I’ve got kids; how am I going to educate them?’”

Ryan decided early to respond with a generous, practical act of mercy. “We solved the medical-benefits problem for them and then we decided to commit that the company would fund – we would raise some outside capital from vendors, friends, insurance markets, and employees if they wanted to – an educational fund for the college education of any born or unborn surviving child,” he says. “That was a big relief to people.”

Aon also set up grieving centres with professional counsellors and communicated to all employees where they could go for grievance counselling anywhere the company had personnel, as Ryan knew that one didn’t need to be at the heart of the tragedy to be affected by it.

Meanwhile, the search continued, and each time it became known that an employee had been lost, teams were set up to attend funerals. A memorial mass was held the following week at St. Patrick’s Cathedral in Manhattan, and another at Holy Name Cathedral in Chicago.

“We invited all Aon people,” he says. “We invited the religious leaders of every organised religion, and that really made people feel good. We instituted the ‘hugging rule’: hug everybody you could find, because people needed that – that physical contact and emotional bonding.”

Although Aon did everything it could in 9/11’s aftermath, Ryan knew some wounds couldn’t be healed. “Some people who survived never went back to work,” he says. “Some people who survived, who by coincidence weren’t in the building when it happened, couldn’t go back to work for a year or two. It hit people differently.”

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