11/21/2024
Insights on sidecars, fronting and MGA growth
In a candid conversation with Insurance Insider, Paragon CEO Ron Ganiats shared his perspective on everything from sidecars and fronting companies to MGA growth and the evolving role of underwriting talent.
Here are just some of the highlights…
Sidecars in focus
Ganiats described sidecars as “the capital vehicle en vogue,” with a growing number of MGA platforms exploring this strategy. However, he noted that sidecars require “real volume and scale” to be viable, despite their potential to accelerate business launches. Reinsurance capital entities are embracing these strategies, further fueling their popularity.
The fronting space
Paragon has successfully navigated the evolving fronting landscape, with a significant book of business through James River’s Falls Lake operation. Ganiats acknowledged ongoing consolidation efforts in the $10 billion fronting space but cautioned that “winners and losers” will emerge and create drama for the MGAs and reinsurers involved. “Fronting companies are providing a valuable proposition to the MGA space and to the reinsurers that support it, but they’re not all created equally,” he said.
MGA growth and headwinds
Ganiats anticipates continued growth in the MGA space, driven by underwriting talent migrating from carriers. However, he emphasized the importance of scaling, diversifying and leveraging robust technology and analytics to stay competitive. MGAs lacking these capabilities risk losing relevance in an increasingly sophisticated market.
Capacity challenges
Discussing the hot button topic of climate-related risks, Ganiats pointed to capacity shortages in wildfire and personal homeowners’ lines. He called the industry’s response “lacking,” despite efforts to mitigate risks.
As Paragon looks to close 2024 with $1.1 billion in premiums, Ganiats shared his vision for the future, underscoring the need for urgency and adaptability. “I feel like we are all running with a sense of focused urgency to be where we need to be three years from now, knowing that the business is going to be very different by the time we get there,” he said.