To hear about the career trajectory of Don Harrell (pictured), CEO and founder of Montague Risk Partners, is to be offered a whistlestop tour of the multitude of roles, opportunities and moves – both geographic and sectoral - made possible by an insurance career.
Harrell first joined the market in 1991 via a wholesale broker before being offered the opportunity for a three-month internship with Lloyd’s broker Hogg Robinson that ended up lasting “two fabulous years”.
With that move, the starting pistol of his career was well and truly fired and Harrell moved across to AIG where he worked his way up to leading several international business arms under a variety of senior leadership titles. A recent count estimated that he spent time in some 52 countries during his tenure with AIG alone, he said, which is not bad, all things considered, for a boy from Indianapolis.
From there, Harrell went on to join CV Starr and Co as SVP and chief operations officer where he helped build Starr’s agency branch operations across Belgium, Holland, Germany, Italy, the UK, Miami, China, as well as the build-out of Starr Insurance Companies in the US. This, he said, was where he gained both an in-depth understanding and a healthy respect for the managing general agency structure, both of which have stayed with him to this day.
“I felt like I was on the sidelines of an FA Cup Final and not playing,” he said. “You saw the market changing, saw technology really coming into play as COVID drove a real mindset change. And you saw capital constraints and then a lot of new capital coming into the market.”
Initially, Harrell worked with a few private equity firms sourcing them the right opportunities but he quickly questioned why he shouldn’t look to raise his own capital and start building his own insurance practice – and so Montague Risk Partners was born. A year and a half later, the firm is making significant strides across the insurance marketplace, and announced its acquisition with R Capital, a UK-based private equity firm, in two UK companies - UK General Insurance Ltd (UKG) and Precision Partnership Limited (PPL) – in Q4 2022.
“It’s been an evolution,” he said, of the firm’s strategic journey to date. “Like most entrepreneurs, you start big and then you narrow it down into what’s feasible and doable… When I looked at what the market needed, it was with the perspective I have as somebody who has been on all sides of the MGA business model. I’ve worked for MGAs, I’ve given capacity to MGAs, I’ve restructured MGAs, I’ve bought MGAs and I’ve sold MGAs. And I believe that it’s a great model and it’s a model that’s here to stay.”
Now is an expensive time to be an insurance company, he said, so for new entrants to the market with new capital to invest, there’s more of a focus on the niche and specialty marketplace that allows them to be more defined and deliberate about where and how they distribute their capacity.
“MGAs are the perfect model for that,” he said. “When you look at how best to marry capital with risk, having an MGA in the middle is a really efficient way to do that. Also, if you’re going to connect capital with risk, you’re going to need to be really technology-savvy, data-analytically driven and able to work out what the big companies can’t do or need you to do better for them.
“I think the MGA model allows you to be more efficient, more cost-effective, and to invest in different ways. And you don’t have legacy technology. When I started [Montague] I decided to draw a line in the sand and say I don’t want any legacy technology. It might be efficient or very good, but I don’t want it because, in five years, you’ll want [systems and platforms] that are actually next generation because you’ll need to be able to crunch a lot of data. And you’ll never be able to do that with a legacy system.”
From Harrell’s perspective, “right now, the specialty market is one of the best that [he’s] ever seen in [his] career” and he’s seeing first-hand the strong demand for global specialty insurance underwriters able to keep pace with the changing data and technology requirements and expectations of the market. The market has been disrupted for the last six-to-seven years now, he said, with many product lines facing hard market conditions as pricing corrects after years of an underpriced marketplace.
The impact those conditions were having on the industry was being felt all across the market, he said, which is why Lloyd’s went through its Decile-10 initiative. Harrell noted that he had seen an underwriting discipline come back into the market over the last five years, replete with pricing adjustments. And while certain product lines are still being challenged, for the most part across Asia, Europe, the US and the UK, the market is in a better cycle than it was five years ago.
“From a specialty perspective, that’s a good thing,” he said. “I also think many specialty lines aren’t [comparably] big enough, so a lot of companies struggle to get scale. If you struggle to get scale, and you have a couple of big losses, then it’s easy to say, ‘there must be something wrong with this class of business’. But it’s probably more related to not having scale than due to the sector itself.
“I’ve written tough sectors my entire life and made money throughout my career. So, I don’t think it’s about that but rather having access to the right business. And usually that comes with having scale and the relationships required to succeed. I think what’s happened is that many companies have decided to focus on their core ‘knitting’ and stopped writing specialty business within their own business – but they’re willing to look at distribution as a way to still write it.”
That’s been a significant change in the sector over the last few years, he said, and it’s leaving conditions ripe for talented specialty underwriters to make a real impact in the market. Montague is primed to support entrepreneurial underwriters, risk capital providers and technology providers with its turnkey solution that brings together underwriting talent, new technologies and data analytics to support the specialty insurance market.
“What’s interesting is that a lot of capital went in over the last five years to various MGAs,” he said, “but we’re seeing there’s a lot of companies which are doing pretty well but they’re still quite small and are struggling to find their way to the next level of growth. I think you’re going to see more consolidation of businesses coming over the next two-to-three years and that consolidation of MGAs will make a handful of other MGAs stronger.
“We think there’s going to be a real opportunity for Montague to be able to help some of these MGAs and teams to find a safe home and be part of something that ultimately is bigger and less risky as far as execution goes. For us, executing on a handful of these tech and risk-enabled businesses is going to help people realise there is another way to tackle this model – and we will be looking for more to follow in time.”
Montague’s UKG and PPL deal was a great moment for the team, Harrell said, and reflects its ambition to grow in a measured and considerate way in order to maintain its level and quality of support services. As to what’s next, he noted that opportunities come in all different guises and via different routes and the firm is very open to considering different opportunities to acquire businesses and teams that fit its tech, talent and data-first approach to doing business.
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