Coaction’s Ritz: No timeline on IPO as private ownership has fuelled turnaround

Coaction Specialty’s management has spent recent years overhauling its business and driving organic growth, but according to CEO Jonathan Ritz, it is seeing increasing opportunities to grow inorganically, while saying the firm has no timeline for an IPO.

Ritz spoke to The Insurer TV from WSIA’s Underwriting Summit this week alongside Coaction’s president Tim Ryan.

The duo outlined the success Coaction has had building out its open market brokerage business and re-tooling its programs segment, while also discussing the potential for the company to re-list publicly and its interest in participating in M&A.

Coaction had a little more than $900mn in premium when it was acquired in 2021, non-renewing around $350mn in premium and finishing 2023 with just under $1.2bn.

The company has zeroed in on writing property and excess casualty in the open market brokerage channel, with portfolios growing to around $150mn each in the last two years, totalling $300mn in new premium.

“We've transformed it. It's no longer exclusively a program company,” Ritz said, though he noted that the insurer still maintains a portfolio of programs that it supports.

“We set the company up so that we aligned very well with our distribution partners – so wholesale brokerage, programs, binding. We've done a lot of work. Everything from completely rebuilding the team [to] hiring new teams of people,” he said.

“Full-service specialty writer” ambition

Coaction has also undertaken two legacy deals to wall off exposure to older accident years.

“We did a lot of balance sheet work, which is proving to be a really good decision. We're very, very insulated from the reserve deficiencies that we're starting to see show up in the marketplace coming out of accent years ’15, to ’19,” Ritz commented.

“We've got a relatively clean balance sheet, we've got a great team of people, we've got a really good position in the marketplace, particularly with our distribution partners, and we've got a platform that's incredibly scalable,” Ritz said.

Coaction’s president Tim Ryan said the firm’s aim is to be a “full-service specialty writer” and that while it continues to maintain a presence in programs and “believes” in that segment, it hopes for its portfolio to be more weighted to open market brokerage business.

Ryan also said that Coaction has worked on building out infrastructure for its small business binding authority unit, which he called “a big part of our future”, commenting that that unit is expected to write $50mn in premium this year.

“We've grown the stuff that we wanted to keep and we built a number of businesses that have gotten really good traction in the marketplace,” Ritz said.

Increased M&A opportunities, no timeline on IPO

Coaction’s CEO said the company is seeing an increasing number of “inorganic opportunities” after spending the last several years focused on its organic growth ambitions.

“We're now getting into a place where we can take advantage of some of those inorganic opportunities. I think they're going to come in all different shapes, sizes, [and] forms. There's going to be ones that you can hunt, there's going to be ones that show up ‘broken’. What I would say is we're going to look at probably all of them, to some extent,” Ritz commented.

“Which ones fit? It's going to depend. We're definitely looking for things where we can gain scale, where we can put our platform to work and extract meaningful synergies,” he explained

“To the extent that we see opportunities to pick up capability that's adjacent to some of our expertise in our existing products, particularly if we can get both synergies on the operating side, as well as on the capital side – those are the things that are going to be interesting to us,” he noted.

Ritz said that for anyone looking to deploy capital into the specialty insurance segment, Coaction is “a really interesting vehicle” to do that.

“We don't have a lot of legacy exposure, we’ve got a great team, we've got that operating platform that is scalable, and we got a really good position in the market with both product and distribution today. So, we think we're pretty interesting from that standpoint.”

Ritz said the company has “no timeline” to go public, with the private market being “a really good place to be” at the moment, but that it could set a timeline for a listing somewhere in the future.

“I think as you look at some of the inorganic opportunities that are likely to present themselves in the market, there's a good chance a number of them are going to be ‘broken’ to a certain extent,” he said, adding that being private has helped fuel Coaction’s transformation.

“Transforming this company… in a public environment would have been incredibly difficult, if not nearly impossible,” Ritz explained, saying that the private equity backing it has attracted has given the company flexibility in its turnaround.

“Being private at the moment is actually a good place for us to be. I think we've also seen the IPO market be a little more idiosyncratic than perhaps everybody maybe thought it would be,” he noted, saying investors were not evaluating firms with a “broad brush”.

“There is surprisingly an amazing amount, in my opinion, [of] discernment between some of the firms that have gone public, if you just look at the disparities that exist,” he continued.

“We've shown up, we've had to clean up a big mess, and so, I think our timing has been great,” Ryan added, saying that the “light is at the end of the tunnel” on the work his management team has done, and that positive results are “starting to kick in”.

“Once our track record continues to grow of producing profitable results and stronger reserve position, we're going to be in a way better position in the years ahead,” he said.

Watch the full interview with Coaction CEO Jonathan Ritz and president Tim Ryan to hear more on:

  • How Coaction has transformed itself as a privately-held company
  • The increasing types of M&A Coaction would consider after organic success
  • What makes Coaction “an interesting vehicle” for deploying capital into specialty P&C
  • Why the company has “no timeline” for an IPO and could consider other exits
  • The work Coaction has done to build a durable portfolio that it expects to trade through cycles
  • Whether Coaction would consider raising additional capital
  • Ritz and Ryan’s views on “robust” market conditions and market concerns over reserves