Alternative risk and reinsurance capital sources are playing a growing role in helping US managing general agents (MGA) grow their businesses, while also being present in their underwriting specialties and a new report from Conning says 51% of MGAs saw ILS funds providing capacity in their markets.
The US MGA market continued to expand in 2024, as direct premiums written rose by 16% year-over-year to an estimated $114.1 billion, according to the study.
Some of the key drivers include, the continued migration of underwriting talent from carriers and brokers to MGAs, the increasing use of AI and automation by MGAs, what Conning calls sustained premium flow into the E&S market, and also innovation in risk sharing and risk capital strategies.
The role of fronting companies continues to increase in importance, with Conning estimating that fronting premiums grew to more than $18 billion in 2024, which was a growth rate of 26%.
Conning explained, “Four fronting companies—Accelerant, Sutton, Transverse, and State National—each posted exceptional growth in 2024, with the first three expanding by over 80%. While State National’s percentage growth was lower, its premium increase of more than $700 million earns it a place among the top performers. Notably, all four companies wrote more than $1 billion in premium while still achieving outsized growth, collectively accounting for 43% of the fronting market.”
These fronting companies also help MGAs in accessing alternative capital providers, such as ILS funds, so remain an important conduit in the market chain for the insurance-linked securities (ILS) players and for MGA’s accessing alternative capacity sources.
Conning conducted its tenth annual independent survey of MGAs, MGUs, and program administrators in the spring of 2025, finding a continued evolution in capital diversification, growing use of innovation and increasing specialism as well.
Capacity constraint concerns have eased slightly, Conning said, with 62% of MGAs saying it is increasingly difficult to find capacity for new programs, down from 71% in 2024.
The key data points for the ILS market come in Conning’s findings on risk sharing and capital innovation, where the company notes that alternative capital is “playing a larger role”.
In fact, Conning said this is evidenced by, “51% of MGAs seeing ILS funds provide capacity in their markets,” which shows just how intertwined, or closely related, the interaction between MGAs and ILS capacity is becoming.
The question asked of MGAs was, are you seeing alternative capital sources, such as ILS funds, providing capacity to MGAs in your markets, to which 51% answered yes.
Interestingly though, 53% had said yes to this question in the prior year study, but the number of MGAs polled has likely increased since then which might explain that.
Partnerships also seem to be increasingly prevalent in the space, with MGAs augmenting their program capital with ILS investors.
Asked whether ILS investors are supporting their programs, 25% of MGAs said yes and 11% were unsure, while 64% of MGAs said no.
In the previous year’s study that same question resulted in only 18% of MGAs saying yes, that ILS investors are supporting some of the programs. So there has clearly been some growth in the partnership between MGAs in the US and ILS investors over the course of 2024.
The blurring of lines between traditional and alternative sources of capital is perhaps accelerated with the growth of fronting companies as well, which might explain to a degree the MGA answers of unsure.
Partnering with MGAs, or deploying capital to support program business, is a way ILS investors and funds can access some diversifying sources of risk, as well as partner with specialist underwriting firms.
It’s been an area where casualty risk has increasingly been sourced and matched with third-party investors, for example, with many of the foundations of the casualty ILS market built through MGA and program business avenues.
“Powered by talent, tech, and smart capital, MGAs continued to outpace the market in 2024—showing once again that agility wins in today’s insurance landscape,” concluded Lauryn Kothavale, a vice president for Insurance Research at Conning.
