And so the fightback starts

Is this the resurgence of MGAs? It’s certainly a fight back, apparently led by Fortis. Perhaps critics were too quick to sound the death knell of the business model when AXA and NU turned on it. Certainly, there will be MGAs of one form or another operating in the market for the foreseeable future, though the main carriers have changed.

Mark Cliff joined Fortis as managing director last year, from AXA, where he was a strong proponent of the MGA model. He had a strong relationship with Primary, which was then underwritten by AXA. This arrangement came to an end early this year, following Cliff’s departure. He has now taken the relationship with him to Fortis.

This latest deal with Kerry London is a further sign both of Fortis’ appetite for MGAs; and brokers’ eagerness to launch into what many though was a dying market.

Last week, Oval confirmed its intention to launch an MGA, underwritten by Zurich, Brit and Allianz. Meanwhile, Giles announced its intentions to expand and rebrand the retail arm of its underwriting agency, Ink, earlier this year. Clearly, these brokers would not be pushing ahead with MGA ambitions unless there were ample carriers willing to support them.

But the developments at Primary Group may offer a clue to the future shape of MGAs. PBS Holdings and Longhawk are merging to achieve “economies of scale”. There may even be job losses. Clearly, if MGAs are going to survive, they need to be lean, mean and capable of wringing value out of the persisting soft market even in a recession. This means low costs, few overheads and genuine specialized knowledge. Fortis clearly believes that it can make money where AXA and NU didn’t. Now it has to prove it.