It’s one thing to talk theoretically about how to foster a powerful culture within a business, or how to avoid making the mistakes other business leaders have made, or how to set out a strategic agenda that offers something markedly different to your competitors’ offerings. It’s quite another to be given the opportunity to turn those discussions into actions.
But that was the opportunity afforded to David Carson (pictured above left), head underwriter, K2 CAT, and Richard Coello (pictured above right) MD of K2 Financial, when they set about establishing K2 International - the London market operation of San Diego-based K2 Insurance Services. Discussing how the venture came about, Coello noted that he and Carson were part of Pioneer Underwriting – which entered into a period of difficulty that saw any business units that had not closed down essentially being put up for sale.
“We met with a number of businesses who were interested in taking us on and one of those was K2,” he said. “And they seemed a really natural fit when we met up with them, we just clicked. At that point, they were an entirely US-based MGA platform, though some of their units in the US have London capacity already, and they were really interested in putting together a London platform.”
Those early discussions gave him and Carson a real sense of the opportunity that lay ahead to build something different. From the outset, the wider K2 group offered K2 International’s team a huge amount of independence, he said, and offered them the exciting counterbalance of feeling like a start-up again while also being backed by a highly respected $1.5 billion international brand.
“We took about 30 people out of Pioneer and formed K2 International,” Carson said. “So, on the one hand, the only thing that changed for everyone was the name but actually [our] whole culture has been completely flipped. We had the chance to start again and to create a great place to work. And I think the first success of our business was that we actually did the deal with K2 at all, given that it took place during lockdown and it wasn’t easy to do a deal [in those conditions].”
It was an exciting leap to move across into the management sphere, Coello said, and while leading through the early days of the pandemic was quite daunting, two years later he is very proud of where the business stands today. The business has seen its profit margin spike from 4-5% to almost 30% driven by the reshaping of the business to a form that works for its team, without sacrificing service quality and now boasts a platform not just fit for purpose but primed for expansion.
It’s not about standing still for K2 International, however, he said, as its platform is ripe for the development opportunities offered by new teams and partnerships. K2 International is actively exploring new opportunities to go out and acquire businesses and teams in the UK and more broadly across Europe on a talent-first basis. The team is fundamentally agnostic about what class of business it’s looking to invest in, he said, but rather is looking to bring on board the right talent and then bolster them with a broad range of support services.
“We’ve taken the opportunity to completely rebuild our infrastructure, to install a new underwriting system and to reconstruct our data warehouse,” Carson said. “Because I think, one of the key USPs for K2 International is that we have best-in-class management of information. Our carriers keep on telling us that of all the MGAs with which they deal, K2 International is up there with the best.”
Having K2 International described as the “Swiss watch” of their portfolio of MGAs was a high point, Coello said, as it reflects the work that has been done by the entire team who have worked tirelessly to get its platform to where it is today. The whole team should be very proud of the work it has done, he said, as the platform is a joy to work on – and he wants to see new business units benefit from that.
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“What we would like to do now that we’ve got the infrastructure in place is to expand the number of underwriting teams we’ve got,” Carson said. “Of course, we were a bit stymied by COVID and the lockdowns but now it’s just a question of getting our brand out there – that brand of ‘underwriting with a view’… We are an underwriting company in the true sense of the word. Lots of companies claim to be underwriting companies but aren’t. We’re underwriting first – and second, third and fourth. That’s the key for us.”
The way a lot of MGAs are currently set up is that they are essentially just distributors, selling as much product as they can for their market, Coello said. And that is one way of building out an MGA but he and the team at K2 International firmly believe that MGAs should provide out-performance against the index of the class of business that they’re writing.
“What is the point of an MGA unless it is delivering a better result than those carriers could get for themselves? That, to me, is and should be the main purpose of an MGA,” he said. “And so for us, underwriting with a view encapsulates our fundamental core belief that we’re here to underwrite, risk select and building profitability for our carriers and everything else – the benefits to us and the income that flows successful underwriting and producing high-quality results for our carriers - everything else comes second to that.”
It’s quite an unusual offering across the MGA community, Coello said, but he and Carson have seen first-hand how this philosophy is resonating with entrepreneurial underwriters frustrated with the current norms of doing business in the market. There’s a strong ownership element to being part of K2, he added, as you own your business unit and therefore, you own your results.
“Not all MGAs are structured that way,” he said. “So you have to be pretty confident in joining a platform like K2 that you back yourself to be successful. Because if you don’t, you’re not going to get rewarded. You are in charge of your destiny.
“Some people will not be comfortable with that and won’t want to be part of something like that. But for us, that’s the way we’re structured. I think that’s what makes us attractive, to those underwriters who aspire to build their own businesses within a robust infrastructure. That’s our differentiator and one that we believe will be right for certain types of underwriters. And we want to talk to those types of underwriters.”
