Ryan Group Denies Any Wrongdoing by Former AmWINS Employee

September 7, 2010

North Carolina-based wholesale insurance broker AmWINS has won a court order against a former employee it believes is using confidential client information to target AmWINS business accounts and win them over to his new employer.

The former employee, David Austin, and his new employer, R-T Specialty, a division of new brokerage Ryan Specialty Group, have not acknowledged that they have or are using any confidential information. However they have agreed to the court order barring their use of records on about 266 AmWINS clients for one year. According to court documents, the accounts represent more than $10 million in premiums and $1 million in revenue for AmWINS, generated from about 15 to 20 retail agents.

The order bars Austin from soliciting the named accounts but allows R-T Specialty to accept business from them as long as Austin is not involved.

U.S. District Judge Judge Mark R. Kravitz signed the order on Aug. 27 in federal court in New Haven.

The injunction comes following AmWINS filing suit in June against Austin and R-T Specialty, a lawsuit that is still in process. That complaint charges them with misappropriating trade secrets under the Connecticut Uniform Trade Secrets Act, computer-related offense, breach of contract, breach of duty of loyalty, tortious interference with contractual and business relationships, and unjust enrichment.

Austin and R-T Specialty have denied all the allegations in the suit.

Tim Turner, chairman and CEO of Ryan Specialty Group, told Insurance Journal there is no merit to the AmWINS lawsuit and that Austin has not violated any employee agreements. He said his firm “absolutely” stands by Austin.

“We want people to understand R-T Specialty has a lot of respect for employment agreements,” Turner said.

Austin, a Connecticut resident, joined AmWINS in 2005, when AmWINS bought his then-employer, Stewart Smith, from Willis. According to the complaint, he had signed an agreement that he would not disclose or use any confidential information he had access to as a result of his employment at AmWINS or Stewart Smith.

Austin was an executive vice president and broker with AmWINS Brokerage of New England in the Farmington, Conn. branch when he – along with his sister and assistant, Rebecca Dwyer– resigned on May 4, 2010. They both went to work at R-T Specialty, the complaint says.

R-T Specialty is a new venture, part of Ryan Specialty Group, founded by former Aon founder and CEO Pat Ryan in December, 2009.

The complaint alleges that within weeks of Austin’s resignation, AmWINS received emails on renewal accounts that Austin serviced changing the broker of record from AmWINS to R-T Specialty. On one, the name of Dwyer was used.

The complaint provides background on how R-T Specialty and its founders have shaken up the wholesale brokerage industry. It claims that they are hiring away competitors’ employees and disregarding employee agreements, taking their chances with damages, rather than investing time and resources in building their own staff and customer relationships.

Ryan hired Turner, president of large wholesaler CRC, to be chairman and CEO of Ryan Specialty Group, on Jan. 22, 2010. Three days later, Ryan and Turner filed suit in California against CRC to void the non-competition and non-solicitation agreements Turner had signed when he was with CRC, according to the complaint.

The complaint says Ryan also hired away CRC’s outside general counsel.

On or around May 4, 2010, more than 100 additional employees of CRC resigned en masse to join R-T (Ryan-Turner) Specialty. Citing R-T Specialty’s plans to expand into other states, the AmWINS complaint claims industry members are “understandably concerned that it is open season on their employees and customers.”

Turner said CRC and AmWINS “are making a big deal” out of losing employees to a new competitor. “It goes on all the time,” he said.

Turner said the employees who have joined Ryan Group had their reasons for doing so and those reasons would come out in court. He said AmWINS cannot prove any of the allegations in its suit.

AmWINS declined to comment because the litigation is ongoing.

The case is AmWINS Group, Inc. and AmWINS Brokerage of New York, Inc., d/b/a AmWINS Brokerage of New England v. David B. Austin and R-T Specialty, LLC filed in the United States District Court for the District of Connecticut.

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