Aon’s Moore: MGAs will continue to succeed in niche areas

The MGA market is a “great opportunity for talented underwriters to take some of the reward,” match great talent with capital, and grow niche and successful businesses, Rupert Moore, UK CEO of Aon Reinsurance Solutions, told The Insurer TV.

Speaking during the reinsurance Rendez-Vous in Monte Carlo, Moore said the MGA space continues to be a “very exciting” area.

“A lot of private equity money is looking to support new startups in that area, and that's a great opportunity for talented underwriters to take some of the reward for their endeavours,” he said.

“You do obviously need paper, but it's also a great chance for reinsurers to grow in niche places, as people are looking for growth opportunities.”

Moore explained that Aon Reinsurance Solutions has a dedicated team built and organised to “support both MGAs and carriers and seek out opportunities”.

A recent report from Conning showed the US MGA market grew 27 percent in 2022, with all-in US business reaching $85.5bn of premium, outpacing growth in the wider P&C market by 10.5 percent.

Moore emphasised that in order for the MGA ecosystem to remain sustainable, a focus on “making profit for your carrier” is key, and is integral to Aon’s approach with clients.

“We're very privileged to represent a number of high-quality businesses,” he said.

“I think one that we're proud of recently was helping an MGA in the US on wildfire move into Lloyd's and get its own paper and really build on that success,” Moore said, referring to Wildfire Defence Systems, the syndicate-in-a-box launched in July.

“That's a fantastic example of bringing together underwriting talent, a unique business model, and being able to bring capital to support that further development to meet climate change-related issues. That's an exciting one,” he added.

While efforts to address climate change are important, Moore acknowledges the complexity of the risks extreme weather presents.

“A lot of it comes back to understanding the risk,” he said.

“With retentions going up, [climate change] has moved away from secondary peril noise in most cases. More work is needed to understand frequency, particularly severe convective storm, hail, flood, but that's something across insurers, reinsurers, and brokers. We need to spend some time understanding what a sustainable product looks like, that gives reasonable expectation of profit,but also manages the volatility transfer.”

Looking ahead at 1.1 renewals – ever the hottest topic at Monte Carlo – Moore thinks the market “is in pretty good shape”.

“If we look back to this time last year, there was a lot of stress and strain in the system around five or six years of poor results on the cat side, which created a stimulus for rhetoric around the need for improvements, particularly in improving the quality of the premium by increasing retention,” Moore explained.

“It largely happened, but it largely happened when [Hurricane] Ian came through and really solidified and galvanised what reinsurers were looking for.

“When we fast forward to today, I think people have realised that the reset has largely done the job,” he concluded.

Watch this 7-minute interview to hear Aon’s Rupert Moore on…

  • The cat markets reset
  • Rising inflation rates moving from a headwind to a tailwind
  • Supply and demand issues around talent in the industry
  • How the industry is reacting to growth in climate change