In a wide ranging interview, Clive Nathan chief executive of GRP’s MGA division covers plans for growing the division and why joining GRP is an attractive proposition for potential MGA acquisitions.
Clive says his key focus in terms of acquisition strategy is on quality rather than quantity:
What GRP is looking for are attractive businesses that fit with the group’s culture and values: “That means a business with a strong underwriting approach, that distributes its products in specialist and non-standard areas of the market, and that generates good underwriting results. So, whenever a high quality business with that kind of niche and specialist focus becomes available, we would of course be interested”
Increasing regulation, including most recently the Senior Managers & Certification Regime (SMCR), has become an issue for MGAs, particularly for the smaller to medium sized ones.
Compliance needs focus, which is why one of the things Clive did after he joined GRP in 2018, was to appoint an underwriting governance manager having first appointed a chief underwriting officer to support Group businesses.
“We have put in place a step by step programme of what needs to be done before SMCR comes into effect on the 9th of December. That kind of support is a huge incentive for an MGA to join us.”
There is the opportunity for significant synergies between GRP’s MGAs: “If, for example, a broker is supporting Camberford Underwriting and doesn't know very much about Plum Underwriting, then our regional underwriters will go and talk to the broker about our other MGAs”
But while GRP provides significant help and support, the businesses continue to execute individually agreed strategies. “We help and support them. But our strategy is to keep the brands and the management teams intact.
Our philosophy is to work with the businesses to build on their original identities, their cultures and the strategies which drew clients to them in the first place. That's how we operate, rather than as a one size fits all consolidator of MGA businesses.”
Technology is a massive focus for the MGA division, for example GRP made the decision last year to invest in an insurer hosted pricing (IHP) technology platform for Plum Underwriting. “This is not something many others have done in the household risk space. The use of IHP has become quite prevalent in motor, but not in home, and certainly not in the non-standard market.
That was a big technology investment for a relatively small business. But we now have a more sophisticated way of assessing risk and adjusting pricing and rating relative to the real time risk factors.”
For Clive, this is another example of how being part of a bigger group benefits an MGA in the current market environment.
Clive says the capacity crackdown at Lloyd’s has had less of an impact on GRP than it may have had on other MGA businesses. GRP has strong relationships with Lloyd's syndicates, but it is not dependent on Lloyd's.
“There have been some challenges, as there have been for all MGAs in the current market environment. But we typically take a really strong view on underwriting performance in our businesses. So we did not wait to be told by a Lloyd's syndicate that some part of our business was underperforming. We had already taken action to address those issues because that's what we do as an underwriting business.”
The MGAs in the GRP portfolio currently generate a gross premium income of around £120m. This level of premium puts the division into the upper echelons of MGA businesses in the UK.
Premium income for the division is currently running ahead of last year, he says. “Steady, single digit growth across all our MGAs, is what we would typically target through better penetration of our brokers and distribution networks and by improving products, pricing strategies, and by deepening the existing relationships we have with brokers”
Ideally, we would like to grow the business from where it is today to maybe £200 million over the next few years. But the quality of the businesses we buy is paramount rather than the quantity, and we don't have a target that says we must get to that level at a certain time”
Clive is very focused on supporting the development of the businesses which GRP acquires, by investing in technology and in people.
“It’s about improving at every level, be that in terms of underwriting, in terms of people, in terms of distribution, in terms of risk and compliance and governance, in terms of technology and data. We want to build on and improve our family of distinctive, quality MGAs.”
Read the full interview on the Insurance Day website.