The 10 largest managing general agents are adopting a variety of strategies as they attempt to grow their operations in the face of flat rates for many lines of business.

Some of the MGAs only underwrite a few specialty niche programs in limited geographic regions of the United States where they have amassed expertise.

Others say they depend on continually diversifying their operations, by expanding into new product areas and hunting nationwide for new opportunities.

And outside of the soft market strategies, the various strategies of the top MGAs are often shaped by their structure.

Some MGAs are units of larger retail or wholesale brokers while others are independently owned, second- or third-generation family businesses.

Many MGAs also own wholesale brokerage services to diversify their revenue stream if they are not a business unit of a broker. But some of the agencies making it onto Business Insurance's 2006 list of top 10 MGAs (see chart, page 24) got there by sticking to underwriting specialty risks without expanding into wholesale brokerage.

Some larger MGAs handle claims for the programs they underwrite. For others, the insurers that the MGAs represent designate a third party claims administrator.

Despite the differences among MGAs, several of the top 10 say that current flat rate conditions demand that they retain their existing customers by providing the best service possible.

Without great service, disciplined underwriting and superior policy issuance processes, they cannot earn a profit for themselves and the insurers they represent, several MGAs said. And if they can't earn a profit for the insurers they represent, they lose those markets.

Competitive moves

To counter increased competition from standard insurers, some MGAs say they recently have had to concentrate more on underwriting traditional excess and specialty business from which standard insurers shy away.

They have to write more of the small, hard-to-place risks as the standard markets are mainly interested in the larger accounts. Or, MGAs say, they are tackling specialty risks that are somewhat easier to underwrite, but still are risks that standard insurers would shy away from under harder market conditions.

In the Northeast, for example, standard markets have targeted the restaurant business in which Program Brokerage Corp., an MGA unit of Hub International Ltd., has specialized, said Marc Cohen, PBC president and chief executive officer. That has put downward pressure on pricing, he said.

But with lead paint and mold exposures a concern for some Northeast real estate, standard insurers are less interested in underwriting the business and rates are holding flat, Mr. Cohen added.

Regardless of current market conditions, some of the top 10 MGAs profiled below have seen their premium volume increase, while others have seen theirs hold flat.

Still others have experienced a decline in the premium volume they manage.