The rapid expansion of the US fronting and program management sector over the past 12-18 months has been a positive feature of the P&C industry at a time of Covid gloom.

Alan Quilter – Accredited

And market insiders are confident the momentum will continue as both positive sector and cyclical trends combine.

This includes Alan Quilter, the CEO of Randall & Quilter (R&Q) and the man who has overseen the group’s march into the fronting and program markets over the past four years.

A recent filing from the London-listed company evidences a year of stellar expansion.

As of 30 June 2020, Accredited had 36 separate programs on its books. A year on and the total is 60. Another strong month in July took the total to 67, the company revealed recently. Contracted premiums – the business R&Q’s operating subsidiaries expect to underwrite on behalf of its MGA counterparties – climbed 74 percent to $1.6bn at H1 2021.

The last 12 month’s numbers are clearly impressive. We begin by asking what is creating this accelerating momentum?

“As ever, it’s a combination of factors,” replies Quilter. First, there are the sector trends of MGAs being a fast-growing and innovative part of the insurance market. However, to grow they require a program partner to provide the licensed capacity. Then there is the fact that reinsurers increasingly see MGAs as the best way to access insurance directly from the source and prevent disintermediation from insurers. The two groups need each other but require a program partner to connect and conduct business.

Quilter continues: “MGAs have also long been a home for entrepreneurs and they need reliable capacity and reliable program partners. But then we also have the cyclical trends. Capacity is generally tightened, rates and terms are generally higher. In these cases entrepreneurial MGAs need paper providers they can rely upon. The independent program companies do not go in and out of the market like insurance companies that offer paper as an accommodation. Rather, offering capacity is our core business and we are therefore steady partners for the MGAs and reinsurers.  

“What is important to note, however, is that while Accredited has enjoyed a strong 12-18 months, this recent success is actually built on years of patience and prudence in building out our platform.”

Significant growth of independent MGA premium in the US

Accredited is the brand name for R&Q’s program arm, which operates fronting operations for MGAs in both the US and Europe (EU as well as the UK). 

Quilter points out that R&Q first made the strategic decision to enter the space in 2017, using its already established A- rated capacity and back-office resources at a time when many existing providers were exiting.

“Our shareholders have been patient in our roll-out, supporting a number of fundraises as we invest in our capacity to service a sector which has been poorly served in recent years. It is not a quick success story. Accredited turned cash flow positive in 2020 – but it has taken us four years to get to this position. It is the reward for patience and long-term investing.”

And behind every transaction, points out Quilter, is a large back office of audit, compliance, claims and underwriting support.

R&Q co-founder Alan Quilter heads program division

“At a group level we have 20+ actuaries, for example, who can model the underwriting assumption of every proposal that an MGA or their brokers bring to us. For every 10 proposals, we typically accept two to three. Most are discarded either because we do not agree with their assumptions or are uncomfortable with other aspects of the business.” 

Is he confident that some of the newer entrants to the market in recent years have the same exacting standards?

“No, I’m not. There are of course competitors we have the utmost respect for and who are helping what has become an essential market develop but when you see an MGA that we have rejected then pop up with a new fronting facility supported by a newly arrived, private equity-backed fronter, one can’t help but wonder whether sufficient due diligence has been conducted.”

Quilter caveats his comments, however. “Please don’t misconstrue. Overall, the sector is professional and is doing a necessary job. ”It’s also natural to be sceptical of competitor behaviour – I’ve been in the industry for 50 years and it is always been marked by fierce competition, whether it’s program management, legacy [R&Q’s other arm], broking or open market underwriting.”

What does Quilter mean by a “necessary job”?

“It is why R&Q entered the space in 2017-18 in the first place,” he replies.

“What we saw was a market in dislocation. On the one hand, companies such as AmTrust, AIG and QBE – the then giants of program management in the US – were scaling back after poor underwriting while in Europe there had been a series of embarrassing business failures, focused around Gibraltar and Denmark.


“The upshot is that this left a number of decent, well-run MGAs struggling with fronting capacity but it also coincided with a new trend – namely the insurtech revolution. We could see that innovation and entrepreneurship was attracting new MGAs and also reinsurance capacity but there was a lack of program capacity support that could bridge the two and provide licensed paper, claims and underwriting support. ”We could see the market need but crucially, we also had what the market needed – namely strong rating capacity, good relationships with regulators and decades of experience in dealing with underwriting and claims,” Quilter continues.

“What we must avoid is the sector enduring another wave of disorderly exits – which is why it is so important Accredited and its competitors maintain the highest standards of corporate governance.”

The sector is also continuing to grow. R&Q points to research produced by Conning which shows gross premiums written by “independent” US MGAs have grown by 10 percent per annum on average over the past five years – twice as fast as the underlying P&C sector.

At the same time, reinsurers are continuing to show a hunger for supporting MGAs, enabling them to access business without (directly, at least) competing with their potential customers.

“We calculate that the global MGA market is $100bn when calculated on premiums, with more than half – say $60bn – in the US. However, only 10 percent or so is probably genuinely independent, with the remainder controlled in some form by a primary carrier. It is the independents, however, where the innovation and entrepreneurship is taking place and it is they who we aim to support.”

Quilter concludes by pointing to the new MGAs that Accredited has signed terms with this year.

Disclosed H1 2021 R&Q Accredited program partners

“They represent admitted and non-admitted markets in the US providing a wide range of coverages and they represent a number of diverse regions in Europe as well as the UK. Their reinsurers, clients and markets are all very different but one thing they have in common is a need to partner with a reliable partner with high-quality capacity and strong relationships with regulators.”