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06.06.2018

What is a Managing General Underwriting Agency?

Steve Horton - Chief Executive Officer at Iron-Starr Excess Agency Ltd.

Ironshore’s Managing General Underwriting Agency (“MGU”) business model was developed at a time when commercial clients faced significant counterparty risk in the aftermath of the 2008 financial crisis.   During the period of uncertainty within the insurance sector, management saw the opportunity to create a vehicle for efficient delivery of reliable capacity through a syndicated partnership platform.  Ironshore’s MGU model was a deliberate strategy to offer benefits afforded by large insurance carriers aligned with the nimbleness of a Managing General Agency (MGA). 

To provide historical context, the credit crisis in 2008 fueled liquidity constraints and financial market turmoil not seen since the 1929 crash.  The ongoing viability of several insurance carriers that offered sizeable coverage limits across many insurance lines for Fortune 1000 companies was brought into question.  Clients faced unprecedented counterparty risk and the broker community was under pressure to secure alternative coverage solutions.

Ironshore responded to market demand by creating the Iron-Starr Excess Agency, which would serve as a hybrid insurance platform with dedicated underwriting and claims management.  Launched in 2009, Iron-Starr offered clients significant and diversified capacity through a single access point in the Bermuda market.  Iron-Starr leverages the syndication model by partnering with Ironshore and other highly-rated specialty lines insurance carriers to provide capacity to meet clients’ required limits on a long term basis. Further, the MGU vehicle can speed product innovation to the marketplace and most importantly, in the event of a claim, manage the process on behalf of its partners through the Iron-Starr claims team.

Iron-Starr has the authority to underwrite and manage claims on behalf of its subscribing insurance partners on a fully delegated basis.  This is a key differentiator to a traditional MGA, which normally has limited authority on claims management and, critically, claims payments. The approach allows for scaling of limits through our partnerships for complex risk to meet the needs of our global client base.  Clients benefit from the financial strength of partners’ balance sheets to secure capacity for multifaceted global risks, including healthcare, financial lines, excess casualty, and property.  As a result of Iron-Starr’s success in Bermuda in both underwriting and claims service, the MGU platform is being replicated with the recent launch of Iron-Excess Casualty created to cover excess risks. The launch within the Casualty space will be followed up with several other lines of business offered by Ironshore and the wider Liberty group.

The Managing General Underwriting Agency reflects the value inherent with the MGA model; yet solves the lack of ‘skin in the game’ that hurts the traditional MGA structure.  Ironshore will always have equal to or the largest participation on every risk underwritten by Iron-Starr or Iron-Excess, ensuring that client relationships remain front and center in both the underwriting and claims discussion.  

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