3. Growing Value. MGA Zen – The art of building a well-run intermediary
Updated: Aug 27
By David Plummer, Group CEO, Bluefriars Group
3. Growing Value
In our previous article, [MGA Zen – The art of building a well-run intermediary #2 – Funding], I talked about the importance of growing value. Whilst this need not necessarily be the only goal of the stakeholders in an intermediary firm, I think it is quite important to explore, why planning for growth is a key factor in getting your big idea off the ground.
Later in this series, I will explore other routes to market for the managing general agents (MGAs), including risk sharing and alternative risk transfer. However, more traditionally, the successful MGA must find an insurer (or insurers) that finds your distribution model and growth strategy complements their own to partner with.
So, what are the needs of your ideal insurance partner? Firms typically fall into two categories:
1. Flat, lean firms that are often run or owned by entrepreneurs, seeking growth to add capital value; and
2. More complex firms, with more diverse goals seeking return on capital employed (ROCE), often expressed as aggressive GWP growth goals, balanced by loss ratio targets.
What quickly becomes apparent is that the best returns for both firm types are best served by business plans that promise and then deliver year-on-year growth. This is driven by the underwriter’s:
1. Acquisition costs
2. Onboarding costs
3. Competing schemes on offer
4. Stakeholder value concerns
At Bluefriars, we can help risk assess, plan, and challenge your assumptions. Contact us at principal@bluefriars.co.uk for business planning assistance and our free risk assessment of your big idea.
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