When Tim Quayle (pictured) stepped into his new role as CEO of OneAdvent after its “landmark” MBO in September 2023, he underscored his ambition to accelerate the business’s growth agenda. Catching up with Insurance Business some 18 months on, he highlighted some of the milestones achieved by the business – and offered his insights into the market conditions impacting MGAs and brokers today.
The momentum generated by the MGO has continued, having delivered just under 40% organic growth, grown its headcount by circa 45% and launched eight MGAs last year, the business is in strong shape. This growth is occurring against an interesting backdrop, he said, with some industry sources suggesting that the market is moving into a softer phase.
“MGAs are still really hot,” Quayle said. “We go through these phases – our industry has a quiet summer then in the run-up to Christmas, we start seeing business plans. Then everything goes quiet over Christmas and when we come back, we see a whole host of business plans.
“So, inevitably, every year in the run-up to Christmas, there’s that question of whether the market is still valid and whether we’re going to see all the opportunities we’ve seen before. What I would say is that we’re now seeing more MGA opportunities than we’ve ever seen, and we’re seeing much bigger opportunities at the moment. It’s unclear to me whether that’s a market dynamic or whether as a brand and proposition, we’re getting better known and more credible.”
Quayle highlighted that opportunities often take the form of MGA platforms, with multi-class and multi-territory teams. These cross-class teams have secured funding and they’re looking to go out and build something, he said, as opposed to specific-class underwriters who are looking to spin out and re-create what they’ve done in capacity providers on their own.
The amount of money looking to deploy into this industry at the moment is “unreal. There is so much cash floating around looking for business plans to support,” he said. “So, it's about identifying those credible individuals that can pull together a bigger play.”
Quayle said there is a renewed appetite for genuine entrepreneurialism, particularly on the underwriting side, but less so in the broker space. There has been a lot of movement on the broker side in recent months, he said, while on the underwriting side, private equity is proving that it loves the MGA model. “They deliver strong EBITDA numbers, which means you can service debt and service capital, and they continue to prove that if you can get to the right scale, the multiples are there.”
Examples in the market show that the right scale can see MGAs hit 15-to-20 times EBITDA exit multiples, he said. Those private equity firms which closed out those funds are sitting on huge blocks of capital that they need to deploy. “I think MGAs continue to deliver strong results, so it’s no surprise that we're seeing so much activity from big private equity firms, looking for teams, looking for opportunities and looking to deploy capital. It’s definitely a hot space to be in right now.”
Turning his attention to some of the pain points facing brokers operating today, Quayle noted that OneAdvent’s broker partners are having to respond to softening market conditions. The business is now having more conversations with some of the larger brokers that perhaps don’t have an in-house MGA around how to better utilise all the premium and contracts they have within their business.
The likes of Aon have been on the front foot of doing so, he said, as its Aon Client Treaty in-house facilities essentially mean it’s the largest MGA on the planet. “We are having increasing conversations with broking houses who control distribution, have significant volumes of premium, and are looking at how they could better utilize that premium within their structures,” he said.
“Where they don't have those capabilities and experience internally, they’re looking at how they can use a third party like ourselves to build those out? I think that's a general feature of a softening market - that you see an increase in broker facilities and brokers looking to get closer to capacity as part of the overall solution they offer to their clients.”
