Sands Point’s Kearns: MGA to expand into new lines of business before year-end

The CEO of Sands Point Risk has said the MGA platform plans to expand beyond transactional liability by the end of the year and that M&A could be a key pillar of its strategy, with private equity backer Avesi Partners ready to invest in the business.

Dennis Kearns made those comments in an interview with The Insurer TV on the sidelines of last week’s Target Markets Mid-Year Meeting, where executives from the MGA met with prospective capacity providers for its existing transactional liability product, and potentially others.

Sands Point was launched earlier this year by Kearns and his former Dual transactional liability colleagues Pat Darragh and Dan Simnowitz and has plans to expand beyond its initial core offering.

“Certainly, we want to use transactional liability, which is our current program offering and also our flagship offering as part of our initial launch,” Kearns said.

“But the longer-term vision, particularly when we decided to put Sands Point together, was to really put into the market a full-service MGA that basically is built from the ground up and has an opportunity for us as entrepreneurs to really put our overall input into how that business moves day-to-day,” he explained.

Kearns acknowledged that transactional liability is currently the MGA’s “bread and butter”, with Sands Point already in the market and writing risks with Axis, Vantage and Accelerant paper, with work underway to expand its roster of capacity providers.

“At this point, we are able to engage in the marketplace and really capitalise on the success we've had in the past,” he commented.

“And that's in that small to middle market space, where we've made our home now for close to a decade and where we were able to demonstrate over the years that we do that space really well and that is and will continue to be our sweet spot,” Kearns added.

Areas marked for expansion include construction, media liability, inland marine

The Sands Point founder described current transactional liability market conditions as “competitive” with pricing currently “a little bit of a challenge”.

“I think, though, there's opportunity and certainly for the right team, you still have to go back to two things: you really have to go back to your underwriting integrity, your underwriting metrics, you have to adhere to those metrics, regardless of how the market is evolving,” he explained.

“And you have to make sure that you're committed to your service component. In this space, particularly in a very competitive marketplace, service remains sort of paramount,” Kearns continued.

“That's where I think Sands Point will make its mark, as we've done in the past,” he said, adding that the team spent its time at the Target Markets mid-year event discussing with capacity providers areas where it will look to expand.

“That's part of the reason why we're here is to talk about opportunities for additional programs,” he said.

“Our vision has always been to add opportunities that are driven by leaders in the space [and that] have an opportunity for good quality underwriting and profitable returns for our partners and looking at businesses that will complement the transactional liability offering,” he said.

Areas where Sands Point believes it can provide unique products include construction, media liability, event planning and inland marine.

“But one of the things that we really focus on is, ‘Does it make sense for Sands Point and most importantly, will it produce quality underwriting returns?’ Because as you're building this type of opportunity, we have to be able to show from the onset to our partners that we can deliver quality and profitable underwriting results year over year,” he explained.

Attracting carrier underwriting talent

A big theme in the MGA world in recent years has been the migration of talent from traditional carriers, a strategy Kearns said his company would employ and to give staff an “alternative”.

“I think as underwriters have that entrepreneurial desire, that focus on building a business, and a willingness to start without a lot of defined structure, that type of candidate who has that entrepreneurial spirit will fit in well in this model,” he noted.

“And what we also want to do is to make sure that our carrier partners who are looking at a new space can consider this as an alternative because we have the built-in underwriting expertise,” Kearns continued.

“We can offer them speed to market to an entry into a particular area of business with the faith and understanding that they're partnering with an underwriting group that has the acumen but also has the discipline, again, to focus on quality underwriting, which will return profitable results, year over year for our partners,” he emphasised.

Kearns said that program leaders who join Sands Point would get an opportunity to share in the profits of their programs, as he highlighted the MGA’s “flat” organisational structure and the willingness of its private equity backer to invest in the business.

“So, what that does is that gives us the ability to attract acqui-hires, but it also gives us the ability where it makes sense to consider an acquisition as well,” Kearns explained.

M&A is part of the strategy

He also said that Sands Point is looking for M&A opportunities.

“The good thing for us is we've built an infrastructure that would allow us to do that. So, if we see the right opportunity to acquire a particular business, and we can fold that into the Sands Point umbrella, that's something we'll consider,” he noted.

He said that initial discussions with potential capacity partners “have gone very well”.

“And that starts with having the right message from the start, having a team that has the underwriting track record that can attract potential partners, and also a willingness to work with those partners to meet their expectations,” he said.

Kearns said it is important for the MGA not to take a one-dimensional view on how it can partner with (re)insurers.

“It's more of ‘What's your receptivity to considering Sands Point, and how can we work to get it right?’ and then demonstrating from the onset that we have a full-service business, which gives us the capability of onboarding a partner,” he explained.

Kearns said Sands Point has on-boarded partners in less than a month and in as little as two weeks.

“We've built that infrastructure so that when we do court a partner, we have the ability to immediately provide them with a level of information that will attract them to consider us as a partner,” he said.

“So, the timeline [for expansion], certainly, from my perspective, as the group's leader, I would love to see it as soon as possible,” he elaborated.

“But I think you have to be smart. I think we're going to invest the appropriate level of time; I think I would feel confident that you'll see something from us before the year is out, that's really what we're targeting,” he concluded.

Watch the full interview with Sands Point Risk’s Dennis Kearns to hear more about: