1. Definition: The MGA, an Authorized Underwriting Agent
A Managing General Agent (MGA) is a specialized entity that acts as an authorized underwriting agent on behalf of one or more reinsurance companies (the risk carriers).

The MGA is often called a “mini-reinsurance company” because, thanks to the Delegated Underwriting Authority (Binding Authority) granted to it, it performs the central functions of the reinsurer:

Underwriting: Risk assessment, pricing, and acceptance.
Policy Issuance: Creation and management of insurance contracts.
Claims Management (Often): Handling of claims within the limits of the delegated authority. Distribution: Utilization of its own network of brokers or agents.

Key Point: The MGA does not bear the financial risk. It uses the capacity (capital) of the reinsurer that mandated it. The MGA is primarily compensated by a commission on the premiums it generates (and often by a profit commission based on the profitability of the portfolio).

The MGA: A Strategic Lever for Local African Insurers
In the context of the African market, the MGA is a growth accelerator, particularly for local insurance companies.
A. Access to Sophisticated Products without Heavy Investment
African insurers face a dual challenge: the need to offer modern products and the scarcity of local technical expertise (actuarial science, complex risk modeling). The MGA solves this problem:

Imported Expertise: The MGA is built around a specialized technical skill set. It brings international underwriting expertise directly to the local market.

Examples of Specialized Lines:
Cyber Insurance: Pricing based on global network risk models, which are inaccessible to most local insurers.

Directors & Officers (D&O) Liability: Knowledge of international case law and sophisticated governance clauses.
Construction and Engineering Risks (CAR/EAR): Technical underwriting of complex construction projects.

No Fixed Costs: The local insurer does not need to hire a team of specialized actuaries or invest in expensive modeling systems. It simply outsources this function to the MGA, paying only a commission on the premiums generated.

B. Maintenance of Regulatory Compliance (CIMA)
The MGA is a partner that enables the local insurer to remain in full compliance with the requirements of the CIMA zone:

Underwriting under Local License: The MGA uses the local insurance company’s license. This ensures the policy is issued by a CIMA-approved entity and complies with national laws (e.g., minimum premium requirements and taxes).

Adherence to Mandatory Cessions: The MGA ensures that mandatory cession requirements (local retention and transfers to regional reinsurers like CICA-RE and Africa Re) are respected before placing the excess capacity with its international reinsurance partner.
Capacity Transfer: The MGA allows local insurers to diversify into lucrative lines of business (improving their portfolio mix) while leveraging the solid financial capacity (often rated A or A+) of their reinsurance backer, thereby strengthening the stability of the local offering.

In short, for the African market, the MGA is the fastest and most cost-effective solution for injecting international technical expertise and major underwriting capacity into the local distribution channel.