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

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

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

Mr. Hargrove said he sees MSW as positioned to get the best of both worlds. “We're kind of a start-up but are using a lot of what 10-year-old Market Scout has to offer,” including the electronic insurance exchange and the human resources department. “That gives us a huge head start.”

THE ADVANTAGE

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

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

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

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

Through MarketScout, MSW has access to the 35,000 retail agents who regularly use the MarketScout exchange to electronically underwrite and place retail business with more than 70 carriers. This is potentially a tremendous source of business for the new company.

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

John Kraska, managing partner at Hales & Co, a merger-and-acquisition advisory firm, called MarketScout CEO Richard Kerr's creation of MSW “a natural fit” that extends its ability to place some of the more difficult risks through its insurance exchange.

MSW also operates as a highly consultative wholesale operation with an elite group of business partner-agents and a limited group of markets with which it is developing long-term strategic relationships.

Since joining MSW in March, Mr. Hargrove has hired 15 people–at least one from each of the five biggest wholesalers–to staff MSW's eight different locations. He plans to cover primarily the southern part of the United States, from Florida to California, although both MarketScout and MSW are licensed in every state.

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

INTEREST BUILDS

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

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

“Our budgets and forecasts are a moving target, as we are overwhelmed 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 them to be a force.”

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

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

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

In December 2009, he launched Ryan Specialty, thwarting the hard-market pressures on the excess and surplus lines insurance sector by personally financing it without private equity partnerships or leveraged debt. The idea of “a wholesale broker and specialty MGA/MGU today that is without financial stress and distribution conflicts has been incredibly well received by retail brokers around the country,” said Mr. Turner.

While Mr. Ryan and Mr. Hargrove each waited about two years after leaving their executive jobs before starting their new companies, Mr. Turner left CRC shortly before joining Mr. Ryan's organization to start its R-T Specialty wholesale subsidiary. The 100-plus others who jumped from CRC in early May did the same.

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

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

Last month, an Illinois judge refused CRC's request for a preliminary injunction barring the former CRC employees from working 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 brokers performing.”

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

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

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

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