5

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: £50- 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 provide 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: £100- 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 mulberryrisk.com