Three steps to success
Analysis of the data on the following pages shows that, after stripping out some notable exceptions such as Towergate that skew the data, managing general agents (MGAs) in the London Market are enjoying robust and healthy times.
The overall turnover of the top 60 MGAs has increased by almost 5 percent while the market’s overall profitability (again with Towergate removed from the figures) has increased by almost 18 percent year on year.
This fact will interest but perhaps not surprise many reinsurers, which are committing increasing amounts of capital to this market. It offers them diversification and a toe in the water of lines of business they could never access without MGAs. Indeed, competition to work with the best MGAs has increased exponentially, especially during the soft market when there has been so much excess capital available.
“The market is definitely growing and this survey clearly shows a healthy MGA market with year-on-year growth,” says John Holm, head of MGA investments at Lloyd’s managing agent Asta.
“A lot of successful companies have been formed in recent years and, especially with excess capital in the market we have seen more and more reinsurers willing to move capacity in this area. That said, it is not easy to succeed as an MGA; it requires a lot of entrepreneurial flair and a solid business plan.”
Holm explains that he sees the evolution of a typical MGA in three distinct stages. Very few achieve all three without some trials and tribulations along the way and he reiterates that the key to success is the right people offering the right product, but who also boast that entrepreneurial instinct, and in particular can access the best distribution through constant development of broker relationships.
First stage of success
At the start of an MGA’s lifecycle, he stresses, it is all about the right people with the right knowledge, specialist skills, drive and ambition. They will generally have spent a number of years working in an established carrier learning the market and their trade. They will have been successful in the past, managing a growing but profitable portfolio of business for someone else.
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