Market flattening but opportunities still rich for nimble European MGAs: Van Loon

Fast-growing Brussels-based European MGA Alta Signa expects to benefit from market conditions over the next two years as the financial and economic fallout from Covid-19, rapid inflation, rising interest rates and the war in Ukraine mean that risk managers are likely to face further difficult renewals, according to founding CEO Gerard Van Loon. Alta Signa, which now has operations in Belgium, Germany, Austria, France, Italy, the Netherlands and Spain, was launched in 2019 and focused on the rapidly hardening financial lines and cyber markets. The timing was opportune as European brokers and risk managers struggled to find adequate capacity in these critical lines. Van Loon told Commercial Risk this week, shortly after Alta Signa announced its strategic partnership with ‘A’-rated international capacity provider SiriusPoint, that the geopolitical situation and financial market conditions means there won’t be a rapid end to this challenging market phase, despite some new capacity. But he added that there has been some market flattening this year and that further strong growth will have to come from expansion into new lines of business and territories including Switzerland and, possibly, central and eastern Europe as demand from distressed corporate insurance buyers begins to wane a little after four difficult years. “There is a possibility of a mild softening after a period of strong rate increases in various European jurisdictions. We are now seeing smaller increases or renewing as expiring and so there is less need for the broker and policyholder to re-market their risks, somewhat against the trends in the capital markets,” Van Loon said. “You could argue that we launched just in time as demand for capacity was high. We hit the sweet spot if you like. If we had launched today, it would have been more challenging. I struggle to envisage strong premium reductions because of the bleak situation on the insurers' investment returns, and of course we have to deal with claims inflation too. These are strong reasons for the carriers to focus strongly on the underwriting side of their balance sheet and maintain pricing discipline,” he continued. “But for new players like us, when you see a more stable market with a lesser need to re-market insurance programmes, we have to market ourselves more actively. Now it becomes more push than pull in terms of capacity supply. We will have to be closer to our local brokers and market ourselves actively as a viable alternative to the traditional domestic carriers with our ‘A’-rated capacity, speed of service and fair claims handling approach,” added Van Loon. Despite the vagaries of the cycle, Alta Signa and the MGA concept looks in a strong position. As Van Loon pointed out, the MGA structure enables specialty carriers such as those that back Alta Signa – Axeria IARD, the French insurance company owned by Somers Re, SiriusPoint, Aviva and Aspen at Lloyd's – to put their risk capital to work when and where needed across Europe without having to set up costly operations on the ground. MGAs such as Alta Signa attract experienced and specialist underwriters because they provide the flexibility, decision-making capability and career development that traditional carriers cannot always offer. Alta Signa’s underwriters are supported by outsourced on-demand IT systems. This approach, if built correctly, can be run at a lower cost without compromising the underwriting discipline or data integrity and security. In the past, often-conservative European insurance buyers have been more wary of using such independent underwriting structures and international insurance markets, such as Lloyd’s, than their peers in North America. Brexit will not have helped with a clear push to place risks within the EU. But, the onset of the harsh market in 2017/18 may have convinced many risk managers and brokers across Europe that this is the way ahead in challenging specialty lines. MGAs offer them choice beyond their traditional insurance markets, and we may well see more such innovative players in the mainland European space, and not just London or Zurich, over the coming years.

Market flattening but opportunities still rich for nimble European MGAs: Van Loon

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