An economy showing mixed signs of recovery would hardly seem theoptimum time to launch a business. Nevertheless, two majorwholesale insurance brokerages were launched this year and thehigh-profile entrepreneurs running them spoke with the optimism andspirit associated with the pre-recession, high-flying years.

Ryan Specialty Group (RSG), the latest creation of Aon-founderPatrick G. Ryan, consists of a handful of specialty-servicesubsidiaries that cater to existing and evolving wholesale markets.Its wholesale brokerage, Ryan-Turner Specialty (R-T Specialty), isled by President Timothy Turner, a former president of CRCInsurance Services.

This year's other major launch,MarketScout Wholesale (MSW), is led by Glenn Hargrove, former CEOof Crump. MSW uses a multitiered distribution model that includesthe retail insurance exchange built by its affiliateMarketScout.

The optimism within these start-ups springs from three factors:their absence of debt, their faith in the efficiency of theirbusiness models, and their confidence in the instincts andextensive experience of their people to maneuver through strong andweak cycles. Both promise something new and different, even as theylean on experienced staff including, in R-T Specialty's case, theaddition of about 120 former CRC employees.

“Why not [launch in a soft cycle] is our feeling,” said Mr.Turner of R-T Specialty. “Retail brokers across the country arealways searching–at any point in the cycle–for the very bestsolutions to their complex property and casualty problems orchallenges.”

Mr. Hargrove of MSW also is “not concerned about a soft or hardmarket. The market has to do with rates,” he said. “I really have apassionate belief in the role of wholesalers,” but we are “underpressure and scrutiny to add value to the equation and justify ourexistence.”

The two men shared their launch strategies in advance of theannual conference of the National Association of ProfessionalSurplus Lines Offices, Ltd. The Kansas City, Mo.-based associationof wholesale brokers and surplus lines offices held its annualmeeting in Atlanta earlier this month.

Mr. Hargrove said he sees MSW as positioned to get the best ofboth worlds. “We're kind of a start-up but are using a lot of what10-year-old Market Scout has to offer,” including the electronicinsurance exchange and the human resources department. “That givesus a huge head start.”

THE ADVANTAGE

As a start-up, MSW is not hampered by debt, nor does it have thedemands of outside private equity ownership. Instead, MSW is aprivately owned corporation whose investors are within the industryor the company.

So there is “no New York banker who holds our debt and nopressure down the road to launch an IPO or to get big for the sakeof getting big,” Mr. Hargrove said.

That means Mr. Hargrove spends all his time on operations ratherthan on finance and can “hire people totally focused on buildingthe vision and strategy of this company.”

That strategy is complicated and diverse, but Mr. Hargrove–everthe cheerleader talking in terms of inspiration and vision–believesthe company “can change the face of the industry.”

Through MarketScout, MSW has access to the 35,000 retail agentswho regularly use the MarketScout exchange to electronicallyunderwrite and place retail business with more than 70 carriers.This is potentially a tremendous source of business for the newcompany.

The access also allows MSW to put purely transactional wholesalebusiness on the exchange, lowering frictional costs and in somecases lowering fees “so carriers can be more aggressive and retailagents can earn a little money off it,” Mr. Hargrove said.

John Kraska, managing partner at Hales & Co, amerger-and-acquisition advisory firm, called MarketScout CEORichard Kerr's creation of MSW “a natural fit” that extends itsability to place some of the more difficult risks through itsinsurance exchange.

MSW also operates as a highlyconsultative wholesale operation with an elite group of businesspartner-agents and a limited group of markets with which it isdeveloping long-term strategic relationships.

Since joining MSW in March, Mr. Hargrove has hired 15 people–atleast one from each of the five biggest wholesalers–to staff MSW'seight different locations. He plans to cover primarily the southernpart of the United States, from Florida to California, althoughboth MarketScout and MSW are licensed in every state.

“We're in the very early stages of building it out,” heexplained.

INTEREST BUILDS

Ryan Specialty also is in its early development stage, but itstone is brasher and its successes and issues are more public.

Mr. Ryan's vision was enough to attract several million dollarsin premium its first month and to grow exponentially in its firstsix months, including three acquisitions and many more in thepipeline, said Mr. Turner.

“Our budgets and forecasts are a moving target, as we areoverwhelmed by the interest from our competitors in joining R-T,”Mr. Turner said.

The view from outside seems to support this.

“Ryan has an exceptionally talented team,” said Kevin Donaghue,managing director of Mystic Capital Advisors Group. “I expect themto be a force.”

Mr. Kraska agrees, having heard Mr. Ryan speak at an industryconference about the strengths of managing general agents, managinggeneral underwriters and wholesale services.

“He's an entrepreneur. Blood and spirit. After retiring fromAon, he still had the itch,” Mr. Kraska said.

Mr. Ryan started MGU Pat Ryan Associates in 1964 and built itinto the retail and wholesale giant Aon through a series of mergersand acquisitions. He stepped down as Aon's CEO in 2005, around thetime Aon sold off its Swett & Crawford wholesale operations,and left his post as Aon's executive chairman in 2008.

In December 2009, he launchedRyan Specialty, thwarting the hard-market pressures on the excessand surplus lines insurance sector by personally financing itwithout private equity partnerships or leveraged debt. The idea of“a wholesale broker and specialty MGA/MGU today that is withoutfinancial stress and distribution conflicts has been incrediblywell received by retail brokers around the country,” said Mr.Turner.

While Mr. Ryan and Mr. Hargrove each waited about two yearsafter leaving their executive jobs before starting their newcompanies, Mr. Turner left CRC shortly before joining Mr. Ryan'sorganization to start its R-T Specialty wholesale subsidiary. The100-plus others who jumped from CRC in early May did the same.

“I joined RSG in part for the opportunity to join Pat Ryan, butmy decision to leave CRC was totally independent of Mr. Ryan,” saidMr. Turner, parsing his words because of pending litigation byCRC.

“As for other CRC brokers choosing to leave CRC and joining R-TSpecialty, I cannot speak to the reasons why each individual madetheir own decision. I can say, however, that I am honored that manyof them chose to join R-T Specialty.”

Last month, an Illinois judge refused CRC's request for apreliminary injunction barring the former CRC employees fromworking for Ryan Specialty, but the litigation still hovers. Mr.Turner said the CRC litigation has been challenging at times, but“it certainly has not gotten in the way of our brokersperforming.”

Mr. Turner, who began his career in law enforcement, creditsthat training with helping him to make quick decisions and toaccurately size people up, something he has applied throughout hisinsurance career to make effective hiring decisions and bring inthe kind of people who help build organizations.

“At the end of the day, we are differentiated by our people. Wehave the very best and hardest-working brokers in the business,”said Mr. Turner. The company is also differentiated by the visionand leadership of Pat Ryan and by the proprietary products andservices for retail broker clients, he added.

Perhaps both companies also are differentiated by thedetermination of their leaders to reinvent themselves. As Mr. Ryansaid shortly after announcing the launch of RSG, “It wasappropriate that I retire from Aon, but not appropriate that Iretire from life.”

Susan R.A. Honeyman is a freelance journalist.She is located in New York City.