Liberty’s Sharis: Flood of capacity into MGA segment “a positive development”

Liberty Mutual’s North America programs head Tracey Sharis has said the surge of capacity into the MGA segment is a welcome development and not a sign of waning discipline, with the market collectively benefiting from more multi-carrier deals.

Speaking to The Insurer TV on the sidelines of the Target Markets Mid-Year Meeting in Tampa, Florida, Sharis also shared an update on Liberty Mutual’s appetite and commented on the “exceptional” growth of the event.

Rather than being a sign of froth, Sharis characterised the proliferation of programs markets as a positive development for the sector, and said the growing willingness to write multi-carrier programs is “an indicator that everyone’s gotten a little smarter about how we do things here”.

“We want to be a consistent and constant presence for those to whom we provide capacity,” she said, both from Liberty’s perspective and the market more generally.

“One of the best ways to do that is to participate in deals that have multiple carriers behind them,” she explained.

Sharis said that the growing presence of alternative capital has in part been a factor in the rise of multi-carrier programs.

“But ultimately, the winner in all of this is going to be both on the buyer and the seller side, [where] the insurance companies are going to be able to balance their portfolios much more easily, and the insureds and the MGAs are going to be able to create solutions that are more stable [and] consistent,” she commented.

“There's less risk of termination, because we're sharing in the wealth and we're sharing in the losses, as they come about,” Sharis added.

“So, I think, it's a welcome turn of events for more capacity to come into this space and we're still being very, very careful to not recreate some of the mistakes that have gone on in the last few years,” she added.

“We handle that with a really careful due diligence process, and so our underwriting of risk almost matches the underwriting of our counterparties to our programs, like the MGAs and MGUs,” she explained.

While Liberty Mutual has historically been known for writing single-carrier programs, Sharis said the mutual giant is now open to being on multi-carrier deals, either as a lead or following market.

“It's a very different position than folks are used to seeing from Liberty,” Sharis explained.

Surge in attendance at mid-year event reflects “exceptional growth” of MGA segment

The executive, who sits on Target Markets’ advisory board, marvelled at the fact that the organisation’s 2024 mid-year event attracted over 1,300 attendees, now outpacing the attendance of its annual event only a few years ago.

“That right there indicates just exceptional growth – growth like we've never seen – [and the] proliferation of MGUs, MGAs, program administrators and others trying to kind of catch the wave here of programs business,” she commented.

“Target Markets itself is fairly careful about who can come to this conference, and how the conference is constructed, so it really still drills down to that core of matching capacity with need for capacity,” Sharis added.

“And what you're seeing here today is all types of distribution partners – be they your traditional wholesalers or your program administrators – are here, and some of the themes we're seeing are still the innovation that, quite honestly, is the lifeblood of the programs business.”

Sharis said that the entrepreneurial spirit of those who want to venture out and start an MGA and address gaps in capacity is the essence of the conference.

“So we're here to meet with the people that are doing new exciting things, but also with folks who have our core business that we see as foundational to our existence and to our future growth,” she said, highlighting the ability to see many people over a short number of days.

More competition for property deals

Sharis said there has been an uptick in competition for property deals, where the cost of capital has gone down and rates have levelled off, while the executive is seeing more opportunity in excess liability, though she added that Liberty remains cautious on primary general liability.

“We're seeing a lot of questions about GL, still a lot of questions about auto liability, things like that, that have always been tougher, and to be honest, they lend themselves to specialty, which is where we play a lot of the time,” she noted.

Sharis said Liberty has aimed to make its portfolio “as cycle-proof as possible” by writing uncorrelated exposures across hard and soft market cycles, as the carrier seeks to balance writing “more vanilla business” with trickier classes.

On the rise of MGA platforms, Sharis said the best operators are those that bring top underwriting talent on board and provide them with infrastructure, but otherwise avoid meddling in the dynamics that made those underwriters successful to begin with.

“We like to partner with those firms. For us, that's a way to outsource underwriting in a way, and control some of our expenses,” Sharis noted.

“We also are able to access the ‘Olympic gold medallists’ or ‘the varsity underwriting team’, without having to go try to hire a B-team or try to find another A-team,” she noted.

Liberty’s US programs team currently writes about $500mn in premium, but the mutual giant’s London operations write an additional $1.1bn of premium out of North America through specialty binders and coverholder agreements.

The program business at Liberty is split between the admitted and non-admitted markets, but with booming growth in the E&S segment, delegated authority premium growth at the mutual leans more toward the non-admitted channel.

According to the Sharis, Liberty’s existing programs book has been re-underwritten in the past five years, to the point where both the specialty and admitted segments are now profitable, with admitted lines growth focused on package business.

In contrast, Sharis said that growth for Liberty in E&S represents “a bit [of a] broader playing field”.

“Things that we're really looking to grow, product lines in that area, include financial lines, some property with some caveats around strategic capacity deployment, and, in general, [we’re] just looking to grow that volume of premium that really makes up our core while also looking at new structures,” she explained.

Watch the full interview with Liberty Mutual’s Tracey Sharis to hear more about:

  • Liberty’s growing programs appetite and how the mutual has expanded its appetite to supporting multi-carrier programs as a lead or following market
  • The “exceptional growth” of Target Markets’ mid-year event and its value in connecting PAs with carriers to bring new programs to market
  • Increased competition for property deals, and cautious optimism around casualty as a class that fits well with the specialty underwriting among MGAs
  • The war for underwriting talent and why Sharis welcomes the migration of talent to MGAs her firm supports
  • The heightened attention on market security after several capacity scandals and how Liberty benefits from being a “blue chip” insurer