Could you begin by telling us about the start of your career?
I started my career in 1983 the age of 18. Fresh from school, I decided I wanted to work and not study anymore! My plans however were cut short when the firm I joined, Cooper Gay and Co., insisted I had to take the ACII insurance qualifications in addition to a full day’s work! I managed to complete my studies after 3 years and was glad to have done so as it was a great basis of knowledge for what was to come.
Your career has been rich and varied. Could you tell us about the companies you’ve worked at, and the roles you have had?
My career now spans 38 years although this only my second job. I worked with Cooper Gay which then became CGSC for 33 years. 29 of those years were broking in the London and Lloyd’s market. I was lucky to be part of what was a very dynamic and hungry organization and learnt so much along the way from colleagues, fellow brokers, and underwriters as well as clients. As a Spanish speaker, having lived in my youth in several countries in Latin America, I gravitated towards the Latin American market and was very involved in the creation and establishing of what was then a formidable network of brokers ultimately owned by the CGSC group. My work has thus given me the privilege of traveling extensively and meeting many, many people and experiencing lots of different cultures along the way.
How did the move to Miami, and XS Global, come about?
My role as CEO of CGSC Latam at the time drove me to relocate to Miami. The Miami market had rapidly become an expansive and key hub for the region, much like Singapore is to Asia and Dubai is to the Middle Eastern markets. The Miami hub not only caters to Latam but the Caribbean also. Today all the major brokers have broking centres here and many of the world’s insurers and reinsurers interested in this region are represented. I often say that Brickell Avenue has become like Lime Street in London, the home of Lloyds.
After 4 years with CGSC in Miami, I decided it was time for a change. My good friend and at the time important client, Gabriel Holschneider, founder and CEO of the Rainmaker Group and I discussed the idea of me joining the Rainmaker Group to try my hand at the captive business. I have always been fascinated with all types of self-insurance mechanisms and had previous experience in the design, structure and placement of reinsurance programs for these entities, so the decision was an easy one, despite my many years and loyalty to CGSC.
It was thus hugely important for me to leave on good terms from the CGSC group, which had become more than a workplace and more like a family. Even though it had become a very big family indeed by the time I left!
Although I was thrilled to be immersed in the captive creation and management world, I did soon realize I missed the “daily trade” and cut and thrust of the global Fac market place that had been my world for so long.
With the Rainmaker group having its own reinsurance vehicle and also having acquired a small Miami based MGA, which was formerly a Lloyd’s coverholder, our group set about creating what is now XS Global and thus I was able to put my trading hat on again.
XS Global is an MGA, a type of organization not familiar to many, even in the insurance sector. Can you tell us what an MGA is and the different types of MGAs that exist in the market and their history?
Historically, MGAs came about when insurance companies located in the eastern United States in the late 19th and early 20th century, primarily in New York City, wanted to expand their markets to the western United States, but didn’t have the resources to open a regional or local office. Managing General Agents filled that need by providing local underwriting resources who were able to source and properly underwrite the risks, service the policies and handle claims. MGAs can be called many different things, for instance; MGAs, MGUs, Coverholders, Binder Underwriters, but essentially all do more or less the same thing to the extent they are a deliberate outsourced underwriting platform. There are many different types of MGAs including either capacity provider or broker owned MGAs and in addition, those that are independently owned such as XS Global. Many are highly specialized monoline writers, perhaps focusing on a particular region and then others are multi-line. Many write for just one capacity provider, either on a full binder (full delegated authority to underwrite specific class of risks) or prior acceptance basis. MGAs can write insurance or reinsurance depending on what type of business they are looking to access and the appropriateness of their capacity provider’s license and underwriters’ experience.
Perhaps the most prolific delegator (sometimes termed “giving away the pen”) of capacity is Lloyd’s of London. Lloyd’s currently has nearly 4,000 coverholders (MGAs to which it delegates capacity), either as an individual syndicate or a panel of syndicates. The contract that embodies the outsourced nature of underwriting to a third party is called a Binder or Delegated Authority contract. There is a whole industry that supports the MGA arena including specialist binder brokers, underwriters, administration support and also associations, the largest and best known being the MGAA (UK) and the AAMGA (USA).
Can you give us an overview of the MGA business today, including market share, premiums written? What are the largest MGAs in the world?
Currently, 30% of Lloyd’s business globally is accessed via coverholders. That is around USD 15 billion of premium annually! Of that figure, around 27% of UK business comes from coverholders, 40% of North America's and 45% of Australia's.
There are 3,900 coverholders globally, 1,600 of which are in the UK. Despite being viewed as a mature market, this is still seen as an area of growth, which Lloyd’s is actively supporting via initiatives such as “meet the market” events, attended by brokers and capacity providers.
The next generation of tech-savvy, digital-first MGAs has already stormed the gates, bringing VC-backed innovation with them. Some experts have referred to this new crop of MGAs as "insurtech 2.0." MGAs are gaining traction across the insurance distribution ecosystem and often attracting the best of the best underwriters to them.
Further underlining of the relevance and importance of the MGA model can be seen where Fidelis Insurance Holdings Ltd. recently announced its intention to create a new managing general underwriter, which, subject to regulatory approval, will be separated from its existing balance sheet insurance companies. This new structure will allow each entity (Fidelis MGU and Fidelis Balance Sheet Companies) to focus on its core functions and specialisms, and provide clients, brokers and other stakeholders with continued levels of industry-leading service.
The newly created Fidelis MGU/MGA will be one of the largest managing general underwriters globally, with plans to originate and underwrite over $3 billion of gross written premium across a range of specialty insurance and reinsurance classes of business. Where Richard Brindle, founder and CEO of Fidelis leads, quite often others follow.
The MGA global market continues to outpace growth rates of the traditional market place, having grown 7% annually since 2012 and even more rapidly recently.
The two most developed markets for MGAs are the USA and UK. In the USA among the top 100 US P and C insurers, 43%, including 7 of the Top 10, have at least 1 MGA relationship.
It is estimated that there are between 600 and 900 active MGAs in the USA market that handle around 50 to 60 billion of premium, or around 7% of the overall commercial and personal insurance markets. In the UK market, there are around 300 MGAs that account for 10% of the 47 billion market.
Lloyd’s has historically been one of the biggest providers of capacity to MGAs globally and today has around 3,900 coverholders registered. Around 30% of Lloyds business comes from their MGA network.
Many reinsurers today see MGAs as an efficient way to get closer to the ultimate insured. Munich Re, Berkshire Hathaway are prolific in this arena and many fronting companies have been established in recent times to service this need.
Many of the worlds largest MGAs are actually broker owned including:
- Risk Placement Services (RPS), opened by Gallagher. GWPI USD 5.5 billion
- Dual, owned by Howden Group. GWPI USD 3.6 billion
- Victor Insurance Services, owned by Marsh. GWPI USD 3 billion
- AMRISC (owned by McGriff’s and CRC Swett). GWPI USD 2.2 billion
Tell us about XS Global, your footprint and differentiated model.
XS Global is an MGA like many others that exist but there are some key and deliberate differentiators, namely:
- We are a multi-line MGA. Today we are writing casualty, property, energy, aviation, Finpro, engineering, ART (mainly Parametrics) on a facultative basis and several lines on a treaty basis.
- We have the ability to bear risk ourselves and thus align ourselves more strongly with our capacity providers. Our reinsurer is called Eureka re and is domiciled, licensed and regulated in Barbados. From a very modest start, we now write about 60m in premium and secured a BBB+ AM Best rating with a positive outlook.
- We write certain lines on a “direct” basis and others to wholesalers.
- We can write some lines globally such as property and energy and CPE business.
- We work with a diversity of capacity providers, not just one. Currently we have Everest Re, Patria, Liberty Intl, TMK syndicate at Lloyd’s, Apollo Syndicate at Lloyd’s and others on our panels.
- Although Latam focused, privately owned and led, we are beginning a global footprint now with offices in Chile, Argentina, Dubai, London, Barbados, Mexico and Miami.
- Despite being privately held we run ourselves as a publicly traded company. Our CEO, Jorge Luis Cazar was formerly Regional Latam head of Ace Chubb. Our CFO also stems from Ace Chubb.
MGAs do not usually take risk, but you have your own in-house reinsurance vehicle. Can you elaborate on this?
As already mentioned above, our group has the benefit of our own inhouse capacity provider. The name of our reinsurer is Eureka Re and it was established as far back as 2009 and has a type II license for third party business granted by the Financial Services Commission of Barbados. Although its roots were humble, it has grown rapidly in the last 5 years. Today it has a BBB+ rating from AM Best and writes about USD 70,000,000 of premium annually. Eureka Re outsources all its underwriting activities to XS Global across the various lines it has appetite, capacity and license to write. Our idea for Eureka Re is to continue growing her and ultimately achieving an A rating (we hope this will be forthcoming in 2023). Eureka Re will continue to grow and strengthen but not to compete with our capacity providers but to continue to demonstrate true alignment of interests with them for every underwriting decision we make on their behalf.
You have been involved with Brokerslink almost from the beginning. Can you give us any insight into your relationship both with Brokerslink and MDS?
Although our group has the privilege of trading with all the major broking groups of the world, we more than most, I suggest, totally support the need for choice, both for ultimate insureds and the global insurance and reinsurance market place. It cannot just be about 2 or 3 providers, as much as they would like it to be! We want the independent broker to not only survive but thrive and the work that BL has done in this arena has made sure of that and I know this community will continue to grow from strength to strength. Having been proudly involved with BL from the very early days and had the opportunity to serve on the board and introduced several members, it’s great to see its presence continue to increase and become what it is today. I will always have a strong affinity to this group and am lucky to count quite a few members not just as colleagues, but as friends.
Given current challenges (post-pandemic, Ukraine war, climate change) how do you see the future of the insurance sector?
Everything that is happening in the world today underlines that it’s a risky world out there. My motto in this business is “expect the unexpected”. That’s why insurance was invented and exists and its future is assured in my opinion. The need for it is ever more evident and right now we have a curious dynamic in our business driving the current hard market cycle, with the demand side of the equation heavily up (riskier world, inflation driving values up, global warming, etc.), whilst the supply side is down. It’s been a long time since the total capital of the reinsurance market has reduced and reinsurers have felt certain classes, like Cat risk, are too volatile to commit to. We are on an interesting ride for the next two years for sure!
Do you have any hobbies? How do you like to spend your free time?
Free time these days is a precious commodity, especially with a busy family and work life but when I do have some spare time I like to keep active. I ride bikes (I have one for every occasion including a Mountain bike and there are no mountains in Florida!). I also play tennis and golf and am taking full advantage, whilst here, of the warm waters of Miami by engaging in many different water sports, including my latest passion, fliteboarding.
Steve Jackson is Chief Commercial Officer XS Global. With more than 38 years of experience in the global insurance and reinsurance industry as a Spanish speaker, Steve's experience lies in the Latin American markets. He played a pivotal role in creating one of the leading networks of reinsurance brokering offices in the region. Steve primarily works in the property, energy, and casualty areas, and has earned a reputation for his expertise in designing, structuring, placing, and underwriting large complex facultative reinsurance programs for corporates, especially those involving captives.
Steve is also one of the co-founders of XS Global and XS Latam, an MGA headquartered in Miami, with offices in Mexico, Chile, Argentina London, Dubai, and Barbados. In his role as Chief Commercial Officer, Steve is an integral member of the property and energy underwriting team.
Jorge Luis Cazar, CEO of XS Global shares with FULLCOVER his experience and leadership approach, that were instrumental in the process of building the company.
"Joining XS Global has been a refreshing managerial exercise and intellectual challenge: Building a business requires a specific set of skills for every aspect of an operation. It also requires — as a leader — not only "showing the way" but making things happen.
Strategy without strong execution ethos means nothing. Leaders who can dream but don’t know how to deliver, quickly turn into preachers. Freedom without control in a company always leads to disaster.
In my time at Chubb, I was lucky enough to be part of a fantastic team that built a business from the ground up. I learned a culture where the tone of accountability, teamwork, respect for diversity, and a balance between future vision and immediate results exposed me to situations that required attention to detail, application of lessons learned, management of successful executives, and a variety of "points of view" in every single aspect of the insurance industry.
Now, all those experiences are paying off in the process of building XS Global. Being a builder requires attitude but also resources and expertise. A reputation made when you develop your career helps you be credible when attracting the best talent as a mature leader. The good thing is, growing a business to be bigger and better is part of the job I enjoy the most. That's the essence. The rest is only perfume. But eventually, we will get there."