Guy Carpenter Briefing Offers Tips for Success in Soft Market

Publication Focuses on Five Strategies Specific to MGAs and MGUs

New York, March 12, 2008 – Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, today announced the publication of Optimize in a Soft Market, Succeed in Any Market � Five Strategies for MGAs and MGUs. The briefing paper provides wholesalers, managing general agents (MGAs) and Managing General Underwriters (MGUs) with five core strategies for maximizing opportunities and positioning themselves for success in the current soft insurance market and beyond.

�Soft markets present a number of challenges for MGAs and MGUs, but they can also yield significant opportunities if firms focus on optimizing operations for long-term sustainable growth, rather than short-term profits,� said Carl Bach, Managing Director and Head of Guy Carpenter�s Program Manager Solutions Specialty Practice. �Rather than relaxing underwriting standards and chasing the business cycle, companies would be well-served to use the soft market to fine-tune the business for profitability and future returns, regardless of market conditions.�

The briefing outlines five key �high-gain� strategies for business improvement in a soft market:

  • Business Analysis � By re-examining the products and services they offer, how they are distributed, their value-added proposition and the carriers to whom they are marketed, MGAs and MGUs can make better informed decisions that will position their firms to outperform when conditions harden. A combination of introspection and third-party counsel from trusted advisors can provide a richer context from which to source and execute a growth plan.
  • Operational Assessment and Enhancement � When profits are squeezed, streamlining processing and instituting new efficiency measures can significantly bolster MGA and MGU profitability. These initiatives can range from new technology systems to streamlining underwriting, claim management and premium audit practices to less costly improvements in the areas of billing, collections and accounting. Managed effectively, these operational enhancements can lead to improved cash flow and profitability.
  • Business Expansion and Diversification � Expanding the business, even in a soft market, can help increase revenues while blocking out competition, especially from new market entrants. Developing new revenue sources by growing existing business lines, adding new lines and classes of business, finding new sources of business, or even a well-planned and timely acquisition can insulate firms in a difficult operating environment and provide a substantial platform for growth.
  • Positioning and Preparation � MGAs and MGUs should use the current market to position themselves for rapid growth when conditions become more favorable. By searching for and developing new partners in new markets, firms can protect themselves through relationship diversification and benefit from greater alternatives in a hard market. Likewise, the soft market represents an excellent
    opportunity for companies to analyze data, both to find soft market expansion opportunities and to plot a trajectory for growth when the market hardens.
  • Capitalization and Investment � Investing in company growth in a soft market � either through self-financing or the use of outside capital � can have a profound impact on long-term competitive advantage, enabling the acquisition of new systems, distribution, companies and talent and growing the business without putting undue pressure on margins.

�While each of these strategies can lead to competitive advantage, attempting too much at one time�especially in a soft market�can be costly and unproductive,� added Mr. Bach. �Rather than implement all of these initiatives at once, it makes more sense to select only the few that are most likely to yield the largest return. In the long run, the most successful MGAs and MGUs will be those that take advantage of the soft market to retool now, concentrating on efficiency and taking advantage of new opportunities for growth.�

The full briefing, Optimize in a Soft Market, Succeed in Any Market � Five Strategies for MGAs and MGUs, is available for download at www.guycarp.com. For printed copies, please contact Guy Carpenter at marketing@guycarp.com.

About Guy Carpenter

Guy Carpenter & Company, LLC is the world�s leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies. Guy Carpenter creates and executes reinsurance solutions and makes available capital market solutions* for clients worldwide through 2,600 professionals across the globe. The firm�s full breadth of services includes 16 centers of excellence in Accident & Health, Agriculture, Alternative Risk Transfer, Environmental, General Casualty, Investment Banking*, Life & Annuity, Marine & Energy, Professional Liability, Program Manager Solutions, Property, Retrocessional, Structured Risk, Surety, Terror Risk, and Workers Compensation. In addition, Guy Carpenter�s Instrat® unit utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance decision-making process and help make the firm�s clients more successful. Guy Carpenter�s website address is www.guycarp.com.