Capacity may be plentiful in aviation and property catastrophe, but that does not mean carriers will keep offering it on any terms.
Speaking to Insurance Business following SiriusPoint’s third-quarter results and announcement of a RiverStone run-off deal, chief executive Scott Egan (pictured) said the company secured double-digit rate increases on its aviation book last year and expects the same this year. If it cannot secure the increases it needs, it will pull back.
“We’re not frightened to do that where the return doesn’t match the risk,” he said.
For brokers placing business through MGAs, that discipline raises a question beyond the financial strength of the insurer providing the paper: how likely is that backing to stay?
Egan sometimes questions why aviation has as much capacity as it does. Liability claims and the frequency of accidents point to the need for further significant rate increases. Those increases are starting to come through in the major airline market, with renewals under way, although it is too early to judge the outcome.
Property catastrophe, now around 4% of the company’s book, is softening. Following quiet Atlantic hurricane activity so far this season, he expects that softening to accelerate.
If rates fall too far, Egan expects carriers to pull back, as SiriusPoint already has in property catastrophe this year. That would reduce available capacity, a response he described as normal behaviour in a cycle. Until then, plentiful capacity makes rate harder to hold.
Elsewhere, conditions vary. “It’s too generalistic just to say the markets are soft,” he said.
Casualty segments are behaving differently, while employer stop-loss is showing very early signs of hardening after some capacity left the market this year.
MGAs also have more options for funding their businesses. By Egan’s estimate, they now account for about a third of distribution in both the US and Europe.
A carrier does not need to own an MGA to have a distribution relationship with it. SiriusPoint has sold some MGA stakes, including one to a private equity buyer, while retaining others, such as IMG. Carriers remain a source of investment capital, alongside private equity and other investors.
“If you’re a good MGA, you’re not going to have a problem finding capital to back your business,” Egan said.
Investment in the business and the provision of underwriting capacity are separate decisions. On capacity, Egan said good MGAs are as selective about their carriers as carriers are about the MGAs they support. Performance will rise and fall over a long relationship, and the partnership needs room for challenge.
“We’re not always there to have a love-in,” he said, adding that a little friction on both sides drives better outcomes.
A broker’s first question should be who the carrier is. Balance sheet strength and ratings are essential checks, but Egan regards them as a starting point.
Before moving a client, brokers should also ask how long the MGA has worked with its capacity provider, because when MGAs switch providers, “products can change, prices can change, and as a broker, you don’t really want that variability”.
The service model matters too, particularly how claims are handled, which Egan called the moment of truth. That question is gaining weight, with the FCA’s review of MGA governance centred on claims handling and Consumer Duty outcomes, and findings due in early 2027.
A long relationship cannot guarantee that capacity will remain. But alongside the carrier’s rating, its history with the MGA gives brokers another way to assess the backing their clients depend on.
