3 May 2023Analysis

BMS Re releases new fronting carrier report

BMS Pathlight Analytics in collaboration with BMS Re’s Programs team has released its Fronting Carrier Composite Report.

The report highlights key metrics and their influence on decision-making in the MGA space. According to BMS the rise of the insurance industry’s MGA program sector over the past decade has been extraordinary.

There has been exponential growth in top line business, and the opportunity and demand continue to grow. As a result, BMS has seen the formation of many new carriers dedicated to this space as well as traditional insurance carriers starting or expanding paper offerings to attract fronting business.

BMS said that amongst the key findings of the report were that the carrier composite gross premium has grown from $3.9 billion in 2011 to $22 billion at year end 2022. This equals a 144% CAGR. 2021 had the largest year-over-year gross premium growth at 48.8%.

Net premiums continue to rise; however, the pace has been slower. CAGR for net premium is 114%. 2021 had the highest year-over-year net premium growth.

Although 2022 continued its growth, the growth pace of both 2022 gross and net premiums has slowed versus 2023. Yet, year-over-year it is still the second largest in the past eleven years.

Surplus has grown at a CAGR of 114% over the past eleven years, which has supported steady net premium to surplus leverage metrics below 1.0x.

Finally gross premium to surplus has grown to over 3.0x in 2022.