Carl Bach, Managing Director and John Barrows, Vice President
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Program administrators and managing general agents (PAs/MGAs) appear to be interested in making acquisitions. This year, 72 percent of participants in Guy Carpenter’s Fifth Annual Specialty Insurance Program Issuing Carrier Survey indicated an interest in growing through acquisition, up slightly (though not materially) from 70 percent in 2008. A mature segment of the insurance industry, this remains one of the few ways to accelerate top-line growth and capture market share.

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Fifty-nine percent of respondents to the survey would like to acquire other PAs/MGAs, and 44 percent would prefer to acquire carriers — with both categories up from 2008’s 54 percent and 39 percent, respectively. Interest in wholesalers has waned; 13 percent of respondents are targeting them this year, compared to 23 percent last year. Respondents considering acquiring third-party administrators have increased from zero last year to 5 percent this year.

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The majority of respondents plan to use company funds to make acquisitions (56 percent, compared to 54 percent in 2008’s survey), though company stock is another popular way to finance acquisitions (23 percent). As a result of the worldwide financial crisis, the use of institutions — such as private equity and bank financing — has fallen sharply. Last year, 27 percent of respondents indicated an interest in working with private equity partners, with 8 percent listing banks as a financing source. This year, they garnered only 3 percent and 5 percent, respectively.

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Download the full Guy Carpenter’s Fifth Annual Specialty Insurance Program Issuing Carrier Marketplace Survey, which includes the three articles published last week on the Program Administrators and Managing General Agents (PA/MGA) market.

Click here to download the entire briefing >>

Click here to read Part I: A Steady Marketplace >>

Click here to read Part II: Operations >>

Click here to read Part III: About the Respondents >>

Part I: A Steady Marketplace: The Program Administrators and Managing General Agents (PA/MGA) market has remained remarkably consistent from 2008 to 2009, despite the outbreak of the worst financial crisis in more than 70 years. While the number of respondents perceiving market growth has declined since last year, the outlook remains quite upbeat, especially given the year’s tumultuous market conditions.

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Part II: Operations: Carriers are still flexible with regard to the services that PAs/MGAs provide, including system use and claim handling. Ninety-five percent of respondents expect the PA/MGA to underwrite, rate, quote and bind the business, as well as issue and service policies, up from 80 percent in 2008. Loss control and premium audit services remain important to some carriers, securing 40 percent and 42 percent, respectively — roughly unchanged year-over-year.

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Part III: About the Respondents: This year, the number of traditional multi-line insurance carriers increased from 50 percent to 63 percent, with specialty carriers slipping to 34 percent. The response in 2007 was equivalent to 2008. More than half of all respondents had 2008 GWP of less than USD100 million, and 24 percent were between USD101 million and USD500 million. None wrote more than USD1 billion in 2008.

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Carl Bach, Managing Director and John Barrows, Vice President
Contact

This year, the number of traditional multi-line insurance carriers increased from 50 percent to 63 percent, with specialty carriers slipping to 34 percent. The response in 2007 was equivalent to 2008. More than half of all respondents had 2008 GWP of less than USD100 million, and 24 percent were between USD101 million and USD500 million. None wrote more than USD1 billion in 2008.

Continue reading…

This year, the number of traditional multi-line insurance carriers increased from 50 percent to 63 percent, with specialty carriers slipping to 34 percent. The response in 2007 was equivalent to 2008. More than half of all respondents had 2008 GWP of less than USD100 million, and 24 percent were between USD101 million and USD500 million. None wrote more than USD1 billion in 2008.

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Nearly 70 percent respondents plan to write between one and five new programs in 2009, with 27 percent anticipating six to 10 new programs.

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Carrier interest in industry meetings and conferences continued to increase in 2008. This year, NAPSLO is the most popular with our respondents, as 63 percent claim they benefit from attending, roughly unchanged year-over-year. But, the AAMGA annual meeting, last year’s most popular event, slipped behind NAPSLO. Seventy-one percent replied that they benefited from other conferences such as Peak Performance, PLUS, VCIA, to name a few; this is basically unchanged from 2008. Mid-year meetings are less popular, with only 11 percent of respondents saying they benefit from the AAMGA mid-year meeting and 21 percent for the NAPSLO mid-year event.

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Carl Bach, Managing Director and John Barrows, Vice President
Contact

Operating Platform

Carriers are still flexible with regard to the services that PAs/MGAs provide, including system use and claim handling. Ninety-five percent of respondents expect the PA/MGA to underwrite, rate, quote and bind the business, as well as issue and service policies, up from 80 percent in 2008. Loss control and premium audit services remain important to some carriers, securing 40 percent and 42 percent, respectively — roughly unchanged year-over-year.

Continue reading…