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The Insurer in Full: The great migration

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Topics: Market Moves MGAs Strategy Topical Trends

Plenty has been written in recent years about the threat to the wider P&C insurance industry posed by a finite talent pool and a succession void as the ageing demographics of its senior ranks outpace the flow of human capital in the tiers below...

For the programs sector, the case could be made that the need for fresh talent is even greater.

The segment is widely viewed as a centre for innovation and creativity, but anyone going to a Target Markets or WSIA event would be struck by the demographic concentration, at least among senior management of MGAs and other market participants.

Of course, many companies in the sector are actively looking to address the gap, whether through succession plans at smaller independent firms or recruitment drives and development programs at large MGA platforms.

But another dynamic has emerged in the last couple of years that offers much hope for the continued regeneration of the sector and as a driver of momentum that has seen the US programs space transform to become one of the fastest-growing and most vibrant areas of the insurance industry.

Senior underwriting talent continues to be drawn from traditional insurance companies to MGAs and MGUs.

Since its launch, this publication has documented (and revealed) many of these moves as often high-profile executives are attracted to the opportunity to launch MGAs and programs in an environment where they can benefit from the economics of the business they write.

This has coincided with a hard market and favourable conditions to grow in the E&S and wider specialty market and it has also come at a time of record interest in the MGA space from investors – including private equity – as well as wholesale and retail distribution platforms looking to build out their underwriting capabilities.

At the same time, a new wave of MGA platform start-ups has entered the scene providing infrastructure and back-office capabilities to underwriters looking to strike out from carriers without having to build those functions themselves.

Meanwhile, there are a growing number of hybrid MGA-carrier platforms that bring underwriting talent access to stable capacity, and the surge in the number of fronting carriers has provided a conduit to reinsurance capital.

Excellent UW talent

In a recent report on the sector, AM Best – which has started to rate so-called delegated underwriting authority entities – laid out the appeal of the MGA sector to a higher calibre of underwriter.

“The entrepreneurial MGA market has gained traction and proven to be formidable enough to attract underwriters with excellent track records from larger, well-established insurers,” said the firm.

The current situation is a far cry from the “traditional” view of the programs sector held by some as a backwater for marginal underwriting talent.

Instead it adds significant weight to the view that the programs sector has dramatically matured over the last 10-15 years and is now home to underwriting talent that in many cases is a strong match for that seen in the carrier space.

And there is no sign of the “great migration” slowing down.

In this issue, we feature a number of articles that illustrate the phenomenon, including our lead on Paragon continuing the build-out of its E&S and international platform with the hire of Andy Borst from Argo and an exclusive interview with Jamie Sahara of Applied Underwriters, which has attracted a cadre of high-profile underwriting executive talent to its MGA platform over the last two years.

Broker talent war

Earlier this week, our sister publication The Insurer revealed a big coup for Howden RE in the reinsurance broking space as it raided GC Access for the Guy Carpenter unit’s leadership and a growing number of team members.

The Michael Jameson and Matt Beard-led business is a leading player in the programs and MGA space.

The move illustrates the ongoing war for talent in the distribution space which has seen countless team raids over the last few years, and a lucrative period for lawyers as a result of the legal disputes that so often ensue.

The GC Access raid is also testament to the appeal of the programs sector.

The strong growth trajectory and emergence of new ways of accessing reinsurance and alternative capital has presented opportunities for reinsurance brokers to play an ever greater role in the establishment of new programs and renewal of their capacity.

Reinsurance brokers play an increasingly active role at many points in a program’s life cycle, and that means the potential to generate complementary revenue streams to traditional carrier treaty placements.

 

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