The incoming president of the American Association of Managing General Agents (AAMGA) is no newcomer to insurance. He has some 40 years of experience under his belt.
Frank Mastowsi founded his family-run managing general agency — named after his children James and Coryn — in 1986 with his wife Ellen.
Today, his children James Mastowski and Coryn Thalmann serve as Jimcor’s co-CEOs. Mastowski continues to serve as president of Jimcor, and also serves as president of Citation Re LLC and their affiliates and as chairman of the board of directors.
Mastowski understands what it takes to be a successful wholesale broker. Prior to opening Jimcor, he spent 16 years as a vice president at Western World Insurance Co.
In this interview with Insurance Journal‘s Andrea Wells, Mastowski discusses his insurance beginnings, consolidation in the industry, the marketplace and what he expects to see in the coming year.
What brought you to the wholesale agency side of the business? Why did you leave the company side?
Mastowski: Actually, the president of Western World talked me into it. When I decided it was time for me to move on, he ended up suggesting I go into the wholesale business. He gave me my first contract.
Tell us about the beginning days of Jimcor. What was that like?
Mastowski: I started out as a wholesale surplus lines broker with binding authority contracts. I actually started out with only one, which was Western World, and then I had the Admiral as a brokerage. I had a couple of brokerage facilities. That’s the way we started. By year two, I had five binding contracts. Once everybody realized that I was serious about staying wholesale and not going back to the company, I started getting a lot of contracts.
Did you ever consider specializing?
Mastowski: Pretty much what I knew best was, of course coming from Western World, was the binding authority business, so we capitalized on that end and just continued to grow, and grow, and grow.
Are you seeing continued consolidation in the MGA space?
Mastowski: There are still a lot of larger organizations looking for acquisitions. … It has slowed up a tiny bit, because finally, the wholesale space is starting to grow a little bit again. You can grow organically — a bit — but there are still a lot of people out there looking for acquisitions and purchases. There’s just a lot of capital coming into the industry, both from the company side and from the investment side.
Do you think acquisition activity will continue in the future?
Mastowski: I do believe that it will continue … I think they’re going to be more strategic in this coming year. It has to fit the model. But I still think that definitely you’re going to see mergers and acquisitions continue, especially with the amount of capital that wants to come into the business.
Do you think the rest of this year and into 2014 is going to be better for wholesale firms?
Mastowski: Yes, I actually do. Not only (are we seeing) the single-digit increases in premium, we’re seeing more business come out of the admitted market. I don’t see it being done the way it was done before, which was whole classes of business, or entire books of business or lines of business. It’s more strategic. Admitted markets are getting out of a certain group of risks as opposed to the entire class. It’s creating more opportunities for the wholesaler.
How would you describe regulatory environment for MGAs today?
Mastowski: As an industry we still continue to struggle with regulation and the cost of regulation, probably as much as anything. It seems every state has its own set of rules. They tried to create some national simplicity to doing business and licensing. It hasn’t gotten any simpler, and I don’t think it’s going to for a while yet.
What about the future of distribution? Are wholesalers still going to be a big part of the industry?
Mastowski: I see, quite frankly, a bright future for the wholesaler. Now, that’s a wholesaler who can adapt to change and can react very quickly and do things correctly. I think it’s going to be different for a small startup operation because the cost to enter is very expensive, especially on the automation side. It’s not cheap. It comes at a cost just to open the doors up. Do I think the independent wholesaler has a future? Absolutely. Indicative of that fact is the AAMGA, which just last week, approved nine new members.
What do you hope to accomplish this year as the AAMGA president?
Mastowski: My theme is, “Change is inevitable. Let’s plan for it.”
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