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.”

For further information, please contact:

Ian Barrett, Concise PR

M :07949 422257

T:020 7100 3960

E: ian@concisepr.com

Alex Wise, Concise PR

M: 07710 665 615

T: 020 7100 3960

E: alex@concisepr.com

1 The second MGAA Matters survey took during October and November 2014. A total of 30 Full MGAA Members responded.

Full survey responses are below (statistics highlighted in the press release have been rounded up or down to the nearest decimal place):

What are the three main factors that drive your underwriting focus?

Answer Options Response Percent/ Response Count

Securing profitable business: 93.3%/ 28

Appetite of capacity providers: 46.7%/ 14

Niche or difficult to place risks: 30.0%/ 9

The demand for speciality business: 30.0%/ 9

Addressing competition from brokers: 10.0%/ 3

Expertise and experience in chosen markets:90.0%/ 27

Other (please specify)0%/ 2

What do you see as the three key factors currently driving the success of MGAs?

Answer Options Response Percent/ Response Count

Flexible business models: 70.0%/ 21

Entrepreneurial approach: 66.7%/ 20

Increased acceptance and demand from broker: 16.7% / 5

Capacity availability and flexibility: 46.7%/ 14

Cost effective and efficient structures:60.0%/ 18

Level of regulatory pressure on brokers: 6.7%/ 2

Not affected by a cyclical market: 0.0%/ 0

Use of technology to create efficiencies: 23.3%/ 7

Delivering the results: 26.7%/ 8

Which of the following statements best describes your current position on M&A activity?

Answer Options Response Percent/ Response Count

We are currently involved in M&A:20.0%/ 6

We have strategic plans to grow through M&A in the next three years: 20.0%/6

Currently, we have no M&A plans:60.0%/ 18

Do you believe there will be more M&A and consolidation amongst MGA business over the next three years?

Answer Options Response Percent Response Count

Yes, increased levels:80.0%/ 24

It will be static:20.0%/ 6

No, expect to see a decrease in activity:0.0%/ 0

MGAA

The Managing General Agents’ Association (MGAA) is a UK based not for profit organisation dedicated to representing true MGAs.

Formed in 2011, the MGAA also aims to provide a better understanding of what MGAs are and the contribution they make to the insurance industry.

The MGAA currently has 93 full members representing over £3.3bn of underwriting capacity.  They are joined by 36 market practitioner members and 22 supplier members.

A board of directors have been elected to lead the organisation.  In addition, five separate committees deliver benefits for members with a clear aim of shaping the future of delegated underwriting.

www.mgaa.co.uk

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