Gallagher Re targets MGA space with new global programs practice

Gallagher Re is combining its existing capabilities into a dedicated global programs practice with plans to invest further in talent and technology to provide a one-stop shop for the MGA space, with an initial focus on the fast-growing North American market, The Insurer can reveal.

The new division will be led by Andrew Moss as global head of the programs practice and will bring together a range of resources from the legacy Gallagher Re and Willis Re operations, which both had a meaningful presence in the space before the merger that closed late last year.

The global practice will incorporate Gallagher Re’s international division as well as its UK and North America divisions and will initially have 45 brokers dedicated full time to the programs space, with the overall team 120 strong. Each region will have a dedicated head of programs.

The firm aims to double headcount in the practice to also drive a doubling in commission revenues over the next five years.

The new initiative was detailed in an internal memo by Gallagher Re’s global CEO James Kent last month, along with a four-man committee tasked with establishing the combined business brand, driving strategic direction and being accountable for that process.

London-based Moss is joined on the committee by Matt FitzGerald, UK chair of products and programs at Gallagher Re, along with US-based former Willis Re executives Allen Cashin and Simon David.

Cashin is executive vice president of alternative distribution at Gallagher Re, while David is vice chairman of the reinsurance broker’s North American operations.

In an interview with this publication, Moss said: “What we’re trying to do here is create a one-stop shop for all forms of capacity and capital around the MGA.”

He highlighted the significant delegated authority business that parent Gallagher has built, as well as Gallagher Re’s portfolio of MGA, hybrid and delegated authority clients, while Willis Re had a significant book of program business in the US under Cashin and his team.

Moss said the combined practice has teams that can cover the full spectrum of MGA needs from capital raising to tribunalisation, as well as full access to the global reinsurance market through the fast-growing fronted programs space.

It also has access to captive capabilities in the wider Gallagher group through the former Horseshoe Re business, which recently rebranded as Artex, to help MGAs when they are looking to retain risk.

$70bn+ US MGA market

FitzGerald highlighted the significant opportunity to deliver capital and capacity in all of its forms along with a range of other services to MGA clients with a more “joined-up” approach to the booming programs sector.

As previously reported, Conning estimates the US MGA market to have written $70bn in direct premiums last year.

That total is likely to have grown by a healthy rate this year of at least the mid-teens and is predicted by multiple sources to soon be closing in on the $100bn mark.

“The programs sector, particularly the US, is a huge, growing space, and we see a huge opportunity there.

“We see an opportunity for a reinsurance broker to bring together all the capabilities that MGAs need from us in terms of analytics and the overall approach to programs in a joined up way. We think that operating in our new world of Gallagher we can make real headway and put our stamp on the market,” FitzGerald said.

Investment from Gallagher will see funding to support headcount growth and technology development in the next couple of years.

“Our growth aspirations are to be twice as big as we are today in five years and while the macro underlying growth story of the sector will support that, we also have to hold ourselves out there as differentiators,” FitzGerald continued.

Part of that would be achieved by creating a “really wide estate” where the firm can bring all of its product and placement expertise under one roof.

Data and analytics

A core part of the offering will be data and analytics, the executives said.

Moss revealed that the firm is currently working on a binder management system in addition to the traditional bordereaux approach.

“An MGU knows his business intimately and the markets typically understand that, but they need to elevate that to the next level. There hasn’t been the reinsurance technology overlaid on top of that previously. But with the market intelligence that’s available between Gallagher and legacy Willis Re, if we get that right, we will have a very, very powerful tool to work for the clients and the market,” he commented.

The new programs practice will also look to provide servicing functions to MGUs.

Cashin said that Gallagher Re has “excellent” technology, and across the wider Gallagher group has the products behind it so that if an MGA wants to enter a new line of business or a new territory, or hire a team, it has access to all that connected across the organisation.

“I probably talk to more Gallagher retail and RPS (wholesale) people on a weekly basis sometimes than I do within Gallagher Re,” he said, highlighting the joined-up approach across the group.

“Beyond the people and the technology, a lot of times these MGAs need the actuarial, they need the modelling, they need the capital raises, they need new products, and to enter new territories, and they need market intelligence.

“We had a lot of that at Willis Re, but now it’s combined with a great team in London, and the former team in Gallagher Re North America, and you know, it’s just a great product offering for MGAs in North America,” he concluded.