Pro’s Maleary: European MGA growth to accelerate as super cycle expands beyond US

The recent MGA super-cycle – characterised by a rapid expansion due to the capital-light model's appeal in a hard market – is now expanding beyond the US into Europe, according to Danny Maleary, CEO of Pro MGA Global Solutions.

In an interview with The Insurer TV, Maleary said the European MGA market is experiencing significant growth and is likely to continue expanding.

“We've established around 30 MGAs in Europe across various classes of business, operating with many inward distribution partners and substantial risk capital keen to support growth in the European Union,” Maleary explained.

According to Conning Insurance Research, the global MGA market is valued at approximately $110bn, of which around $90bn is concentrated in the US. However the European market has also grown in its own right, with the Dutch market alone valued at $4.62bn last year.

Maleary emphasised that although the European market has been a growth area for some time, it shows no signs of slowing down. In fact, he expects the pace of growth to accelerate despite the complexities of navigating various territories and markets within the region.

"Europe has been a growth area for a while. I can't see that slowing down; in fact, it's increasing. It's quite an exciting time, though it comes with complexities due to the different areas and territories you have to deal with," said Maleary.

MGA’s to expand into deteriorating casualty sector

One of the areas that Maleary also foresees MGAs expanding into is the casualty space.

"We don't see many MGAs in casualty, and I'm not entirely sure why. The casualty market has had a rough few years, and from our perspective, we currently only work with one casualty MGA," Maleary said.

Maleary’s prediction that more casualty MGAs will emerge was predicated on the fact that casualty deterioration calls for a higher degree of specialisation amongst players in the space – a state of affairs well suited to MGA’s due their small size.

“I think that partnership approach and the sharing of vision between reinsurers, insurers, and MGAs — along with the alignment of interests — will allow for a more targeted approach to growth, rates, and product design for MGA’s in the casualty space. We're starting to see some of that now, which is quite exciting,” Maleary concluded.

MGAs attracting talent to the insurance industry

Maleary also sees MGAs as playing a crucial role in attracting much-needed talent to the insurance industry, which has been facing significant talent shortages in recent years.

" Globally you're seeing quite a lot of talent now being attracted into the insurance sector, via the MGA, because it is nimble and effective," Maleary noted.

“The entrepreneurship that these individuals bring is enabling [MGAs] to attract that level of capital that they need.”

One reason for the continued expansion, according to Maleary, is the opportunity MGAs offer to insurance entrepreneurs who wish to retain a higher share of the value they create.

“They want to establish an MGA and to add some value, which may, potentially, mean some form of capital event, at some point in the future,” explained Maleary.

Watch the full interview to hear more about: