Ryan Specialty’s RAC Re: A Game-Changer in Delegated Authority Underwriting and ILS Innovation

Ryan Specialty’s launch of Ryan Alternative Capital Re, Ltd. (RAC Re) marks a pivotal innovation in the insurance-linked securities (ILS) space, redefining strategic capital deployment and market expansion in specialty property and casualty (P&C) insurance. By combining catastrophe (cat) and non-catastrophe (non-cat) risks in a single ILS structure, RAC Re addresses evolving market demands while leveraging third-party capital to scale its delegated authority underwriting platform. This initiative, supported by $400 million in committed capital from Flexpoint Ford and Sixth Street, provides Ryan Specialty Underwriting Managers (RSUM) with up to $900 million in multi-year premium capacity—a 225% leverage ratio that underscores its capital efficiency [1].

Strategic Capital Deployment: A New Paradigm in ILS

Traditional ILS structures, such as catastrophe bonds and sidecars, have long been praised for their ability to secure third-party capital for risk transfer. However, these instruments often operate on fixed terms and event-triggered payouts, limiting flexibility in dynamic markets [2]. RAC Re, by contrast, employs a risk-attaching basis, enabling RSUM to respond swiftly to market volatility and underwriting opportunities. This adaptability is critical in a P&C landscape where rate softening and geopolitical uncertainties have intensified competition [3].

The collaboration with global reinsurer AXIS Capital further enhances RAC Re’s strategic value. By leveraging Lloyd’s of London Syndicate 1686, Ryan Specialty gains access to a seasoned risk management framework, ensuring alignment with global reinsurance standards [1]. This partnership also mitigates liquidity constraints, a common challenge in traditional ILS, where capital deployment is often tied to predefined investment horizons [2].

Market Expansion in Specialty P&C: Targeting High-Growth Niches

RAC Re’s dual focus on cat and non-cat risks positions Ryan Specialty to capitalize on high-growth segments within specialty P&C. Aviation and space insurance, for instance, remains a lucrative niche, with carriers navigating a softening market and rising claims costs [4]. Similarly, construction and crisis management lines are experiencing heightened demand due to inflationary pressures and geopolitical instability [4]. RAC Re’s diversified risk profile allows RSUM to underwrite these specialized lines with greater confidence, supported by a capital base that balances long-term stability with short-term agility.

The middle market, in particular, presents a compelling expansion target. As new entrants and established players vie for market share, RAC Re’s capacity to offer competitive terms and broader coverage options aligns with buyer preferences for tailored risk solutions [4]. This is further reinforced by the broader P&C sector’s resilience, with Deloitte reporting a 3.3% premium growth in advanced markets in 2024 [5].

Comparative Advantages: RAC Re vs. Traditional ILS

RAC Re’s hybrid structure offers distinct advantages over conventional ILS. Traditional catastrophe bonds, for example, are often limited to peak perils and require extensive regulatory approvals, delaying deployment [2]. RAC Re’s multi-class approach streamlines this process, enabling faster capital allocation across a broader risk spectrum. Additionally, its risk-attaching model reduces deployment costs by minimizing the need for bespoke structuring, a key concern for investors seeking scalable returns [2].

The initiative also aligns with broader industry trends. In 2025, ILS managers like Nephila reported a 75% year-over-year increase in catastrophe reinsurance premiums, reflecting growing investor appetite for diversified risk portfolios [1]. RAC Re’s ability to combine cat and non-cat risks in a single vehicle taps into this demand, offering investors a “naturally hedged” solution with strong return profiles [1].

Broader Market Context and Future Outlook

The P&C sector’s 2024-2025 trajectory is shaped by technological innovation, social inflation, and shifting capital flows. While Marsh’s Global Insurance Market Index noted a 4% rate decline in Q2 2025, specialty lines like employment practices liability and directors and officers (D&O) liability remain resilient [3]. RAC Re’s focus on non-cat risks, such as liability and professional lines, complements this trend, addressing gaps in traditional reinsurance offerings.

Moreover, the rise of alternative risk financing—captives, self-insurance, and AI-driven risk modeling—has heightened expectations for flexible capital solutions [3]. RAC Re’s structure, which integrates advanced underwriting analytics with third-party capital, positions Ryan Specialty to lead in this evolving ecosystem.

Conclusion

Ryan Specialty’s RAC Re represents a strategic leap forward in delegated authority underwriting and ILS innovation. By reimagining capital deployment through a hybrid cat/non-cat model, the initiative not only enhances RSUM’s market responsiveness but also sets a new benchmark for efficiency in specialty P&C. As the industry navigates a complex landscape of rate softening, technological disruption, and investor demand for diversification, RAC Re’s agility and scalability offer a compelling blueprint for sustainable growth.

Source:
[1] Ryan Specialty Launches New Collateralized Reinsurance Vehicle to Support Its Delegated Underwriting, [https://www.businesswire.com/news/home/20250905735292/en/Ryan-Specialty-Launches-New-Collateralized-Reinsurance-Vehicle-to-Support-Its-Delegated-Underwriting]
[2] Reinsurance consolidating organically, but ILS & retro partnerships are key, [https://www.artemis.bm/news/reinsurance-consolidating-organically-but-ils-retro-partnerships-are-key-am-best/]
[3] Global Insurance Market Index 2025, [https://www.marsh.com/en/services/international-placement-services/insights/global-insurance-market-index.html]
[4] Insurance Marketplace Realities 2025 Spring Update - WTW, [https://www.wtwco.com/en-us/insights/2025/05/insurance-marketplace-realities-2025-spring-update]
[5] 2025 global insurance outlook | Deloitte Insights, [https://www.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-outlooks/insurance-industry-outlook.html]