Capital is targeting a summer of spending

On both sides of the Atlantic, brokers and MGAs have been gathering for their major annual conferences this month and while the talk will be of how to keep market share and grow business there will be a distinct undercurrent.

The market has been tough in recent months. A lack of major losses saw prices under pressure and the insurers both in the UK and US markets looking to attack new niches which have long been the domain of the specialist regional brokers and MGAs.

While the first four months of the year have seen some sizable losses the underwriters have been able to replenish their capital and are hunting for ways in which it can be best deployed.

In the UK regional brokers are seen as attractive investments for some of the leading underwriters and the major intermediary groups and there is clear evidence that there are some sizable war chests already committed to the acquisition of brokers whose management need to be convinced they no longer wish to continue in a challenging market.

There clearly a view that there is value to be had in the UK regional market but the major brokers are also willing and able to acquire businesses as has been witnessed in recent weeks with the acquisition by Marsh of the New England broking firm Bostonian Group.

The same is true of The MGAs while Amlin’s acquisition of Charles Manchester may have slipped under the radar as it was quickly followed by the launch of its European reinsurance operation, the attraction of accessing niche markets in a effective and efficient way is now a increasing for many underwriters who are looking to spread their capacity and with it their exposures.

The coming months will see an renewed push by the underwriters and big brokers to target intermediaries and MGAs and persuade them now is the time to cash in on the years of hard work building the business as the market is in a state of flux.

The after effects of the financial crisis are still being felt in terms of lower business levels and the hefty losses in specialist markets since the start of the year will create a dynamic of disciplined underwriting despite the relative calm of 2009.

The coming months may well be a decisive summer for intermediaries as their resolve is tested time and time again.