2022: Managing General Agents - Firing on All Cylinders
MGAs saw very strong growth in 2021, well in excess of broader property-casualty insurance market growth. Premium was buoyed by the continuing hardening of the property-casualty market and the strong recovery in sectors of the economy such as travel and entertainment, but there were additional drivers of growth.
1. Introduction
2. Executive Summary
3. Firing on All Cylinders
² Talent
² Technology
² Capital
² Lloyd's Expands Cautiously
² Pricing Continues to Harden
² Outlook for 2022—Continuing Growth but at Slower Rate
4. 2021 MGA Market Landscape
² Program Business Continues to Be a Sizable Market
² Mix of Premium by Affiliation Type
² Premium Mix by Line of Business
² Growing MGA Market Premium
² MGA Count Growth
5. Program Market Insurer Trends
² Significant Insurer Interest
² MGA Premium Concentration
² Insurers Using Nonaffiliated MGAs
² Insurers Using Affiliated MGAs
² Market Movement
6. MGA Premium Trends
² Nonaffiliated MGAs
² Affiliated MGAs
² Crop
² Authorities Granted to MGAs from Insurers
7. Conning’s 2021 MGA and Program Market Survey
² Detailed Survey Findings
8. M&A in the Program Markets
² Program Business Acquisitions
² Private Equity Investors Not Deterred
² Outlook for M&A in 2022 & Beyond
9. The Fronting Model—Still on a Tear
² The Market Is Expanding
² Fronting Scorecard—An Updated Look at the Players
Appendix
A. Methodology and Definition of MGA Premium Analysis
B. Overview of the MGA Market
C. Conning MGA Dataset
Introduction
This is Conning’s ninth annual study on the property-casualty program business market. Conning includes the following in its property-casualty program business universe: (1) MGAs (managing general agents), (2) MGUs (managing general underwriters), and (3) PAs (program administrators, also known as program managers). Throughout this study, the term “MGA” is used both as a specific distribution channel and as a generic term encompassing all types of program business distributors. We analyze 2021 reported results for this group as well as related M&A (merger and acquisition) activity in 2022 through April.
As in past Conning MGA market studies, this study is based on three research avenues:
- Detailed analysis of the 2021 data reported in statutory filings
- Conning’s annual proprietary MGA market survey
- Interviews with industry experts in the MGA world, including MGA principals and program insurers
Conning’s estimate of MGA annual premium volume represents the most consistent and verifiable baseline for program premium levels in this difficult-to-quantify market. However, the reader should be aware that public MGA and program data are limited by current industry reporting requirements. The NAIC (National Association of Insurance Commissioners) reporting regulations require that insurers report individual MGA premium only for those MGAs constituting 5% or more of an insurer’s surplus. MGAs backed by larger insurers are thus more likely to fall beneath the reporting radar than MGAs backed by smaller insurers. Our analysis of premium should be considered a floor or lower-end estimate of MGA-produced premium, because it does not include premium numbers for many smaller MGAs and individual programs whose business volume does not meet the 5% surplus threshold.
The program market is a diverse mixture of property-casualty lines of business, industry sectors, and geographies. Often at the forefront of product development, the underwriting expertise and entrepreneurial spirit of MGA owners, underwriters, and program administrators continue to deliver above-market growth and innovation to the insurance market. The MGA has become a relied-upon distribution channel for insurers of all types: large nationals, reinsurers, fronting insurers, international markets, and smaller specialty insurers.