40% Of UK MGAs To Pursue M&A Opportunities Over Next Three Years According To Poll
27 November 2014
40% of UK MGAs are either currently involved in mergers and acquisitions or planning to pursue M&A opportunities during the next three years in order to grow, according to the second MGAA Matters survey.
MGAA Matters is a research-based partnership between the Managing General Agents’ Association (MGAA) and MGA start-up specialists Castel Underwriting Agencies (Castel). It was launched in 2014 to identify and raise awareness of the issues currently impacting the growth and success of UK MGAs.
In the latest round of these independent surveys1, 80% of MGAs questioned also believed there will be more M&A and consolidation amongst MGA business over the next three years.
In addition to the growth possibilities offered by M&A, when asked to name three key factors currently driving the success of MGAs, the top three reasons cited were their flexible business models (70%), entrepreneurial approach (67%) and cost effective and efficient structures (60%).
Focusing on securing profitable business was also seen as a top three underwriting driver by 93% of those questioned with expertise and experience in chosen markets a close second (90%). The appetite of capacity providers was the third highest priority with 47% of respondents placing this driver in their top three.
Commenting on the MGAA Matters survey results, Mark Birrell, chief executive officer of Castel said: “The move towards M&A by 40% of the respondents clearly shows the UK MGA sector is maturing. While the number of start-ups continues to increase, consolidation among the established players over the next three to five years will both provide opportunities for growth and operating costs reductions.
“As with all sectors of the insurance market, consolidation also often leads to experts leaving the combined business to create new MGAs, which continues the entrepreneurial cycle."
Peter Staddon, managing director of the MGAA said: “It is very encouraging to hear the flexible business models employed by UK MGAs continue to be the most important factor driving their success, with the need for an entrepreneurial approach a close second. The MGA sector has been built on flexible and innovative foundations that set them apart from traditional underwriting businesses. When combined with sectors specific expertise this fast response approach enables our members to both win new business efficiently and quickly take advantage of emerging opportunities.”