MGA has a billion-dollar ambition
Ambitious targets: MGA Managing Director Paul George
In South Australia, where MGA Insurance Brokers was founded just shy of 50 years ago, regional towns such as Clare feature TV and radio commercials and sporting oval branding that make the broking network a household name in the state.
But MGA is far from being a predominantly SA firm. The homebase state now makes up a little under half its business, and Managing Director Paul George expects that to shrink to a quarter as organic growth and acquisitions in other states and territories show no sign of abating.
“Our eventual target is to be a billion-dollar business,” he tells Insurance News.
“That would be a really nice milestone for us, considering we started in 1975.
“We’ll grow in the areas we should be growing and can double in the next seven or eight years. A billion-dollar business by 2030 – I’d like to think we can do that.”
As MGA prepares to celebrate its half-century, Mr George isn’t looking back. He has big plans in store for the business his father John founded – ambitions in evidence at this year’s MGA Group annual broker conference and its “Driving the Future” theme.
There are now 38 MGA offices across Australia after the first interstate border-crossing foray into western Victoria. Queensland has grown to now represent 14% of MGA’s business, New South Wales 13%, Victoria 12%, the Northern Territory 7.5% and the ACT 4%.
The next target state is Western Australia, where MGA is determined to set up its first operation.
Mr George says he counts heavyweights Elders and WFI as MGA’s main competitors in regional areas – not other brokers.
“We’re the blue brand, Elders is the red brand and WFI is the green brand – that’s the way it’s kind of seen in SA regional. We’re well known and quite large, but the plan was always to see if we could effectively build half of our business outside of the state and we’ve successfully done that.”
After founding JR George Insurance Services in the mid 1970s, MGA came into being when John George formed a partnership business with fellow brokers Brian McInerney and Allan Amber in the 1980s. Mr McInerney is today Director, while Mr Amber is Deputy Executive Chairman and Mr George Chairman.
In a sliding-doors moment, Dulwich, Adelaide-based MGA was just a whisper from being called GMA Insurance Brokers.
“They tried to register that name but General Motors didn’t like it very much, and so the G got switched around and it’s been MGA ever since,” Paul George says.
Headcount currently stands at 375, with another 20 at its Trinity Gardens, Adelaide-based underwriting agency Millennium, and around 100 more at subsidiary company Whittles Body Corporate Group, located in the same building as MGA and where Mr Amber’s son Matthew is the Managing Director and John’s daughter Cathy is non-executive director.
Another founder son, Steven McInerney, is MGA Marketing Director, based in Clare, while Allan Amber’s other son Heath Amber is the Chief Executive of AUB-owned Austplacements, after spending over 12 years as Millennium managing director. He is also Chairman of the Underwriting Agencies Council.
MGA’s growing national presence and access to farm pack specialist underwriter Millennium eases its brokers’ ability to place business.
“We’re just getting to the point where we’re probably seasoned enough to be getting the right sort of attention, which we really like,” Mr George, a father of three, says. “Quite a long time ago in Melbourne… they just didn’t know who we were. I explained we were quite big in South Australia, and we still couldn’t get an agency with them.
“We’ve got a few insurers – particularly the larger ones – that now recognise us as more of a national business these days. It does really help and it’s part of our value proposition.”
Headlines were made in February 2020 when MGA’s leading shareholder AUB Group – it owns just under half of the brokerage – announced it would take full ownership of MGA Whittles in a $140 million cash and scrip deal. The plan was scrapped when covid struck weeks later.
“The circumstances which initially gave rise to the sale are no longer a factor, so the sale is no longer on the table and there are no plans to revisit it,” Mr George says.
AUB still owns just under half of MGA, which is estimated to be the largest single source contributing to the Austbrokers bottom line.
“We’re one of the bigger Austbrokers members, and yet we sort of fly under the radar a little bit at the same time,” Mr George says. “Our relationship remains strong. It’s a big investment and it’s been very good to have Austbrokers recognise that our model is a good fit for some of the offices they’ve had around the country.”
Around half MGA’s acquisitions have been AUB-recommended. The arrangement helps MGA find suitable businesses to add to its corporate authorised representative network model. AUB vets potential acquisitions and has recently formed partnerships in Mildura, Bega and Tamworth.
“Austbrokers can recognise what would suit us rather than another of their large members,” Mr George says. “We need a combination of organic and acquisition growth. We’re always really interested in what’s out there and always trying to identify the right businesses.”
MGA’s ARs manage their portfolios while the team in Adelaide provides services and offices and “everything down to the pens and pencils in those branches”. Mr George says the ARs “effectively employ the staff and we serve as the office – that’s still largely the model that we’ve got in place today”.
“That’s quite a different model to the usual AR network model. I’ve got no desire to have a two-speed business; we just want to get really good at one thing. We either own the business ourselves, or with our representatives.
“We’re pretty happy with our proposition, which is actually quite different. We’ve got a model developed over many years, and we really want to stick with it and not take our eye off that.”
Businesses with annual income over $600,000 are particularly well placed to achieve cost savings under the MGA contractor model, he says.
“The whole idea is to get better efficiencies and better growth. Claims go centrally to one person who will process them and submit them and follow them up. We’ve got a fair bit of control of the front end of the business.
“It works well, and it feels like more of a partnership to us.”
Passing on knowledge: founder John George and, below, his book.
Work hard, don’t be afraid to follow your instincts and never ever give up.
That’s the advice MGA Insurance Brokers co-founder and Chairman John George gives in his autobiography, and at the age of 76 and an active participant in the business, he still practices what he preaches.
MGA’s 2014 move into the Cambodian insurance market – and later Myanmar – surprised many in the Australian market. But Mr George – born and raised in the well-heeled end of Adelaide – explains in his book how high school brought him into close contact with “the sons of immigrants”.
“The life experience of associating with this socio-economic mix proved to be of great benefit to me,” Mr George writes. “Many did not like me much at first. By the end of the year and a couple of fights, I was accepted as one of the mob.”
Awarded a Medal of the Order of Australia for service to the welfare of children in Cambodia, Mr George says he’s confident the succession plan for MGA, subsidiary Whittles and underwriting agency Millennium is assured.
“The companies will remain exactly as they are now – the younger members will take over,” he says. “We’ve got Paul running MGA now, and my grandson Tom Miller is now in the business. If they weren’t there, we would have to sell.”
As Chairman, the years of dealing with clients and insurers mean “you tend to be able to spot something that’s good or bad and assess it pretty quickly. You can pass those experiences on to the younger guys, so they don’t make the same mistakes you perhaps made.”
And how will the Georges celebrate MGA’s 50-year anniversary in 2025?
“I want to get around to see all the operatives that make us successful,” Mr George told Insurance News. “They’re the ones that put the rubber on the road – the people at the coalface of the business.”