Joining Lloyd’s and the evolution of MGAs

Andreas Loucaides, CEO at IGI UK, shines the spotlight on the group’s distribution strategy.

IGI recently announced it had acquired a box within Lloyd’s. Why did you feel it was necessary to make this move?

Only recently has Lloyd's begun to allow London-based businesses to have a presence in its underwriting room. IGI saw the opportunity to access a new distribution channel and discover new business opportunities in carefully selected regions and markets.

Being associated with a globally respected, A+ rated organisation such as Lloyd's has many advantages, including access to special business that comes with being housed in the Lloyd's building and providing a marketplace for in-person negotiations. It also presents an opportunity for brokers to interact directly with our underwriters.

Acquiring a box is often seen as a precursor to starting a syndicate, but you have stated that this is not your intention. Why don’t you want to start a syndicate?

IGI's expansion and diversification strategies have always included involvement in the London and Lloyd's markets. We previously explored entering the Lloyd’s market, but the timing was not ideal – at the time Lloyd’s was actively trying to boost its underwriting performance via its Decile 10 initiative and we agreed to wait for a better opportunity. Now, Lloyd’s has opened its doors to allow smaller, entrepreneurial businesses to be part of the market at a lower cost base.

While we do not currently have any intention of having a syndicate, that does not preclude us from doing so in the future.

You talk about now being the perfect time to be part of Lloyd’s. Can you expand on the reasons why this is the opportune moment for IGI?

Over the past five years, Lloyd’s has been successfully executing its vision to become a market-leading, profitable underwriting platform. The organisation has launched a number of initiatives, such as attracting large underwriting franchises and smaller, entrepreneurial businesses to Lloyd’s, along with housing captives, welcoming new investors and promoting innovation.

As a result, Lloyd's is re-establishing its position as a market leader for large, complicated international risks and has shown greater flexibility in pursuing new business concepts that could attract smaller syndicates.

We are confident that being a part of Lloyd's will greatly help IGI to achieve its growth goals and build its brand. We can now serve clients and brokers even more effectively by utilising the special advantages, resources and knowledge that Lloyd's offers.

What are the latest developments in the MGA space – how have the dynamics evolved?

Over the past five to 10 years, the MGA market has expanded quickly, and several MGAs are now bigger than conventional insurance companies. Reinsurers are looking more and more at creating their own MGAs that function as independent businesses, providing them with capital and seeking third-party funding as well. MGAs used to help with distribution, but these days, access to capacity and expertise is more important.

Are you expecting the momentum of new MGAs to continue?

Yes, particularly as more and more insurance companies and brokers become interested in the MGA space. IGI is watching this space as we continue to expand our presence. We want to create strong relationships with high-calibre MGAs and position ourselves as a source of stability for talented and specialist underwriters.

How will that impact the wider distribution model?

Effectively, the MGA is a link in the chain in the distribution model – the shorter the chain, the better. MGAs are playing an increasingly important and rapidly expanding role in specialist segments of the industry. Niche schemes typically have been the bread and butter for many brokers over the last few years, and an increasing number of brokers are beginning to value MGAs that offer specialist services.

It is not surprising that the market has embraced and welcomed the MGA model, as it gives brokers and consumers more options and enables insurers to tap into specialist segments of the industry. Consequently, MGAs are becoming advocates of the wider underwriting industry and IGI is prepared to assist skilled MGAs with robust underwriting expertise and a deep understanding of the markets in which they operate.

What is IGI’s MGA strategy?

Although IGI has long been involved in this space, we have recently broadened our reach by acquiring a Norway-based energy MGA. We want to be more active in this space, and we see this as an effective way of accessing talent and distribution.

MGAs currently account for a sizeable portion of our business in many of our lines, including financial, professional and cargo. We are actively seeking opportunities to support MGAs that are looking for capital across all our lines, particularly in Europe. We have a strong delegated team ready and prepared to support new partners.