Managing General Agents (MGAs) are navigating a landscape marked by tightening markets, reduced capacity and rapidly evolving client expectations and needs. Yet within these pressures lies a unique opportunity to reimagine how risk and capital are aligned. One increasingly popular solution is the strategic use of captives—a model that provides enhanced control, flexibility, and resilience in today’s complex market, serving as a sophisticated risk retention vehicle for better alignment with program risk partners
Captives are often seen as niche vehicles, but when deployed strategically they can become a powerful capital management tool, one that can create flexibility, unlock capacity, and enable profitable growth in uncertain conditions.
While MGAs have traditionally excelled in underwriting and client relationships, today’s tighter reinsurance markets and heightened volatility demands a more proactive capital strategy. This is where the strength of captives can make a transformational impact.
By structuring captives effectively and accessing the right capacity partners, MGAs can improve existing client relationships and attract new business by offering bespoke risk solutions. In doing so, they not only strengthen their position but build scalable resilient platforms for long term growth and profitability.
With the ability to isolate risk, tailor coverage, and access alternative capacity captives are reshaping how MGAs operate. MGAs with $2M or more in dedicated premium are well positioned to consider this approach, across a wide range of business lines.
Leading MGAs are already leveraging captives to:
- Retain more underwriting margin where risk management is strong
- Enhance Capital Efficiency and Profit Retention
- Access broader reinsurance markets and build operational resilience
- Strengthen client relationships through tailored risk transfer solutions
- Increase liquidity and capital flexibility both defensively and offensively
Crucially, captives don’t need to displace issuing carriers. A well-structured captive can sit alongside fronted capacity, enabling a hybrid strategy to optimise capital deployment, preserving key partnerships.
Part of a Broader Capital Strategy
Captives should not be viewed in isolation but as an integrated component of a broader capital and risk strategy. As MGA’s assess their reinsurance needs and confront trapped capital, captives present a valuable opportunity to unlock internal value if designed with purpose and clear strategic intent.
The most effective captive structures are not one-time solutions, they are part of a dynamic framework, working alongside traditional reinsurance, investment management, and risk management strategies to create a more resilient, scalable platform.
We are helping clients build precisely these frameworks, designing captives that align with their growth ambitions, risk appetite, and capital objectives, while ensuring flexibility to evolve with changing market dynamics.
A Long-Term Capital Mindset
When approached with discipline and long-term intent, a captive becomes much more than a financial tool, it becomes a strategic engine. Over time, its impact compounds, driving capital efficiency, underwriting autonomy, and client differentiation.
However, success hinges on more than formation. It requires thoughtful alignment with the MGA’s risk appetite, business model, and growth plans. Captives must be built to evolve, adapting to market conditions, supporting capital deployment, and enabling sustained expansion through a retained account that captures underwriting profits and creates capital accretion to the Captive through investing the resultant insurance float.
Ultimately captives offer MGAs a path toward greater capital independence, vertical integration and long-term value creation. In a world where agility and scale defines the successful, a well-executed captive can be the foundation of the next generation MGA.
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