Challenge

A private capital solutions firm sought expertise to evaluate a proposed loan arrangement to an MGA. An independent due diligence report highlighted numerous uncertainties. High among the concerns was the accuracy of the MGA’s incurred but not reported (IBNR) reserves, which needed validation to support informed decision-making on the funding requirement.

Approach

Due diligence review and independent calculations: We undertook a comprehensive review of the due diligence report. Drawing on limited but focused data, we performed independent calculations to assess the MGA’s reserving methodology, assumptions and processes.

Evidence-based validation: We engaged in detailed discussions with the MGA to clarify its business model, reserving processes, data limitations and areas of uncertainty. On the available data, we leveraged our specialised expertise in data analytics and actuarial reserving.

This multifaceted analysis enabled us to validate both the methodology and assumptions underpinning the MGA’s reserve estimates. Our findings were benchmarked against both internal and external reference points.

Impact

We delivered rigorous validation of the MGA’s reserves, providing critical insights into key risk factors influencing the MGA’s performance. We equipped senior management with early warning indicators and clear intervention triggers to enable oversight of evolving conditions.

By delivering detailed and actionable insights, we empowered the capital providers to proceed with greater confidence and engage in focused conversations with the MGA, ultimately refining loan terms and negotiating more effective funding structures.