Ryan Specialty to acquire Velocity Risk for $525m. FM to acquire Velocity E&S carrier

Ryan Specialty has agreed to acquire managing general underwriter (MGU) Velocity Risk Underwriters, LLC from its current owner, funds managed by Oaktree Capital Management, L.P. for $525 million, while insurer FM is set to acquire the MGU’s excess and surplus (E&S) lines carrier.

The pending acquisition marks the next stage in Velocity Risk’s ownership story, as the catastrophe-exposed property specialist underwriter continues to gain in scale and value. Value creation appears to have been significant and successful at Velocity over the last few years, read on for more thoughts on that.

Our readers will recall that Velocity Risk was originally established in 2015 and operated by reinsurance, catastrophe, climate and weather risk-linked ILS investment manager Nephila Capital.

As a catastrophe-focused property and specialty insurance risks managing general agent, Velocity Risk had exclusively sourced business for funds under the management of Nephila Capital under its first ownership.

Velocity was originally constructed by Nephila as an origination pipeline for more direct access to primary sources of insurance risk, providing a more efficient way to deploy some of Nephila’s third-party investor backed reinsurance capital to portfolios Velocity had underwritten.

The next stage in the Velocity Risk story came in 2018, when Markel became the owner of Nephila Capital through an acquisition.

Then, in late 2021 an acquisition was announced that ultimately saw Velocity Risk being acquired by funds managed by specialised private equity and alternatives investment manager Oaktree Capital Management, L.P.

Now, Velocity Risk is moving on to its next home, as Ryan Specialty has agreed a deal to acquire the MGU from Oaktree.

As a result, once this latest transaction completes, Velocity Risk will become part of the Ryan Specialty Underwriting Managers division of Ryan Specialty.

As part of this arrangement and still subject to regulatory approval, Velocity’s wholly owned E&S carrier, Velocity Specialty Insurance Company will be acquired by commercial property insurance mutual FM.

That E&S carrier had originally been an insurer that underwrote risk exclusively for programs backed by Nephila Capital, but it was acquired from program specialist State National in 2023 and renamed.

The announcement from Ryan Specialty today on the acquisition reports that Velocity generated around $81 million of operating revenue for the 12 months ended December 31st 2024.

Ryan Specialty also revealed that the upfront cash consideration for the acquisition of Velocity Risk Underwriters will be $525 million, although that figure is subject to customary purchase price adjustments.

This upfront cash consideration is exclusive of the E&S carrier and any earnout consideration, Ryan Specialty explained.

The cash consideration for the sale is a very notable figure, given it implies a significant increase in the value of the Velocity Risk business over the last few years.

Why is this notable? Well, readers may recall, we had reported that Markel estimated that the sale of Velocity Risk Underwriters LLC to funds managed by Oaktree Capital Management netted the company around $180 million.

With that sale having completed on February 1st 2022, the cash consideration Ryan Specialty is now paying for Velocity Risk indicates a significant amount of value creation by the team at Velocity Risk over the last just under three years, although hard to size as Markel only reported its net earnings from the sale of the MGU to Oaktree.

But it is impressive, to say the least, and it demonstrates that Velocity Risk’s business model, of being expert underwriters and managers of catastrophe-exposed property risks and then utilising efficient sources of reinsurance capital to support those portfolios, has resulted in meaningful value creation.

This latest change in Velocity Risk ownership underscores the continued development of the Velocity business platform, as well as its growth and expansion, plus all of the hard work that has gone into the franchise since right back in its earliest days as part of Nephila.

Miles Wuller, President and CEO of Ryan Specialty Underwriting Managers, commented on the acquisition, “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. This talented team has developed robust technology, portfolio management, and data analytics capabilities that augment their innovative underwriting and claims approach. We are looking forward to having the Velocity team as a part of the Ryan Specialty family.”

Malcolm Roberts, Chairman and CEO of FM, added, “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. We are excited to welcome VSIC to the FM family and strengthen our strategic relationship with Ryan Specialty.”

Phil Bowie, Executive Vice Chairman of Velocity, also said, “We are thrilled about the synergy of our industry-leading property underwriting and claims capability with the Ryan Specialty organization 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. With our E&S balance sheet becoming part of an incredibly well-rated and capitalized entity in FM, it further enhances the security and capacity we bring to the wholesale market.”

Jake Rothfuss, CEO of Velocity, further stated, “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 organizations 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.”

“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 also said.