Dearth of grade A MGAs to keep valuations of best performers high

By Chris Munro

May 30 - (The Insurer) - The high multiples that MGAs have been able to attract in M&A transactions will remain for at least the next five years with a shortage of “grade A” performers keeping valuations high, said Euclid Insurance Services CEO John Colis.

Speaking on a panel at the Program Manager Conference 2025 on Thursday, Colis said that “grade B” MGAs “may be getting a turn or two less” when it comes to valuations, but they can still secure what the executive described as a “pretty good multiple”.

“Certainly for a grade A player, multiples are as robust as they've ever been. We don't see a real change in the future for that.”

As Colis noted, “there's a shortage of good properties out there for purchase, so that alone is keeping the pricing up”.

The Euclid chief said while those high multiples will not last forever, he does not believe those elevated valuations will come down in the next five years.

Michael Jameson, managing director of global programs at Howden Re, said the multiples that private equity is willing to pay for an MGA have “dipped a little bit”, although the best performers will still garner plenty of interest.

“I know for a fact that you have an MGA with over $10 million in Ebitda, there's going to be a significant number of buyers sitting around that table,” he said.

Jameson said one of the issues facing the market is there are more buyers than sellers of companies that people have significant interest in to acquire.

And Jameson believes the interest to buy into the market will remain for some time, especially from private equity.

“It's a fee-based model, which agrees well with the private equity markets. They don't want to have their capital trapped into a large balance sheet company.

“So this industry, in the insurance sector and the MGA side, makes more sense than I think most others, and so I think that trend will continue,” said Jameson.

Also speaking on the panel was Rekha Skantharaja, CEO of Tangram Insurance Services, which is being spun out of Heffernan as the foundational MGA on a newly created platform called Balavant Insurance Group which she will helm.

She observed that the MGA space has in recent years “become more sophisticated and more legitimized”.

As such, she said “there’s well organized capital coming in”.

“Previously, they couldn’t figure us out. I think for folks on the VC and PE side, getting into the insurance sector, retail brokers were the gateway drug because they could figure out the economics of that.

“I do think now they’re getting a better idea of what are the risks associated with MGAs, the single carrier, what happens if you lose your paper, and they’re getting better at responding to that, and they’re understanding the value drivers more as well,” she added.