Authors: Allen Cashin Justin Ward
The MGA market in North America continued to accelerate during 2023, experiencing a 24% growth from $71 billion to $88 billion, representing approximately 11% of the overall Property and Casualty (P&C) market (based on Gallagher's latest projections).
With this growth and the credit developments in 2023, a brighter light is shining on counterparty credit risk for all program carriers. While many reinsurers are requiring at least a 10% retention from the carrier and/or MGA, the minimal underwriting risk many program carriers retained is relatively meaningless when it comes to the amount of credit risk on some balance sheets. Many carriers were forced to find replacement capacity in late 2023 with the significant reductions from key reinsurers who wrote a large amount of MGA quota share reinsurance in 2021 and 2022. Market conditions are favorable for MGAs and their carrier partners with higher primary rates and improving reinsurance terms, however, both parties should remain focused on underwriting profitability, tail risk, reserving risk, and reinsurance credit risk.
This report identifies unaffiliated reinsurance counterparties for a select number of P/C insurers that generate a meaningful amount of their premium through program business, mostly "fronting carriers."
For each P/C insurer included in this analysis, reinsurance counterparties are ranked based on 2023 ceded premium written with a comparison to 2021 and 2022 (obtained from the applicable statutory financial statements). The P/C selected insurance companies included in this analysis are:
- Accelerant
- Accredited
- AF Specialty
- Ag Workers Auto Mutual
- Benchmark
- Clear Blue
- Core Specialty
- Everspan
- Falls Lake
- Fortegra
- Homesite
- Incline
- Knight Insurance
- Obsidian
- Palomar
- ReAlign Capital
- Skyward
- Southlake Financial
- Spinnaker
- Sutton National
- Topa Insurance
- Transverse
- Trisura
*Kestrel (excluded from composite because AmTrust consolidated reporting in annual statement)
