Twists and Turns in the Fronting Market – What’s Next?

November 07, 2023

HARTFORD, CT – November 7, 2023 – The fronting market has been on a roller coaster in 2023.  This market was rocked by discovery in July of a massive fraud from Vesttoo-related Letters of Credit.  As a result, M&A activity took a pause as this information was digested.  However, a flurry of M&A news emerged in October suggesting buyers are ready to move on.  Meanwhile, several new front company formations were announced, and the market has continued its rapid growth through the first half 2023.  Commentary on these recent developments as well as analysis of the midyear performance is available in a new report by Conning.

One large front announced a sale, while news reports of sale activity emerged for four others.  The common denominator among all these is private equity buyers.  While many of these were expected, given the owners, prospective valuations will be a critical barometer for investor interest in this space.  If these transactions are consummated it would represent a large share of the market changing hands.  However, it would not result in the consolidation Conning had expected – at least not yet.


The report discusses that the extensive LOC fraud has shined a light on the opaque collateralized reinsurance market and the implications for capital requirements.  These implications could translate into changes to the fronting business model going forward.  “Regardless of how the model may evolve, the fronting market has established itself as a welcome source of needed capacity for its rapidly growing MGA customers,” said Steve Webersen, a Managing Director of Insurance Research at Conning.


The Conning report, “As the Fronting World Turns: Recent Developments and Review of Midyear Results” analyzes the major developments over the past few months and provides implications for the future of this market.   


This report is available for purchase from Conning by calling (888) 707-1177 or by visiting here.


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Conning ( is a leading investment management firm with a long history of serving the insurance industry. Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.

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