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The MGA Executive Role: Lifecycle

This is the fifth in a series of blogs containing excerpts from my forthcoming publication, 'The MGA Book'.

The Executive Role: The MGA Lifecycle

1. Idea: You have a plan (0–20+ years)

You have an idea and incentive to create an MGA:

  • To get paid more for doing what you already do

  • To take control of your future

  • To create a better work life balance

  • To build a solution to meet your insureds needs

  • You’ve identified a customer need and want to fulfil it

  • You’ve created a great bit of technology and want to use insurance to deploy it/commercialise it

  • You’ve seen other people become wealthy from creating an MGA

  • Because you were made redundant and need income

2. Start up: The journey begins (3 years)

Seed investment to get going, often regulated under an umbrella arrangement from a regulated entity (broker, underwriter or MGA). The focus is on getting the following set up:

  • Business plan

  • Capacity

  • Systems

  • Underwriters

  • Distribution

  • Claims handling

  • Cash

Target Annual GWP: £5m

3. Creating lifestyle (3 – 7 years)

Your business is running well, and now you can grow your income with a view to reaching a healthy amount to give you a good income by:

  • Securing more than one capacity provider

  • Leveraging your data

  • Increasing distribution

  • Developing a brand

  • Developing claims expertise in house

  • Refining underwriting and pricing to improve loss ratios

Target Annual GWP: £10-£25m

4. Building an empire (5-10 years)

You’ve been enjoying the lifestyle business. And many MGA owners stop there. But some want to drive forward. Building a bigger operation by adding new classes, some complementary to current product lines, others opportunistic. Activities include:

  • Adding new product lines

  • Expanding distribution to other channels

  • Small scale acquisition

  • Developing actuarial and analytical capabilities in house

Target Annual GWP: £50m-£100m

5. Global domination (10 years+)

Looking to take your business international, you make the leap few other MGAs do. Either with the help of investors, a partnership or from retained earnings:

  • Expansion into international territories.

  • Acquisition of MGAs.

  • Investors or partnerships often providing growth funds.

  • Aggressive GWP growth.

  • Multiple capacity providers with complex reporting needs.

  • Significant back office functions such as finance, reporting, systems etc.

  • Professional CEO recruited to take lead on expansion, with you becoming chairman or non–exec.

Target Annual GWP: £100m - £750m

MGA Magic: The MGA Lifecycle

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The author, David Hughes, is founder and CEO of the Insurance Data & Analytics consulting business

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