# MGA accounting and bookkeeping

Canonical: https://finbryn.com/us/services/insurance-accounting-support/mga-program-administrator-accounting

Finbryn provides accounting support for MGAs and program administrators: it ties each bordereau to premium collected, cancellations and remittances, reconciles the fiduciary accounts and prepares the quarterly account report for the MGA's review before it goes to the carrier. Texas Insurance Code 4053.103 (checked 2026-10-19) sets that report at least once each calendar quarter.

Most of the money moving through an MGA's bank account is somebody else's. Premium collected for a carrier is a liability until it is remitted, and the MGA's own revenue is the commission and fees on top. The NAIC Managing General Agents Act (Model #225, October 2002 edition, checked 2026-10-19) puts the discipline into the contract: accounts rendered and funds remitted to the insurer at least monthly, funds held in a fiduciary capacity, separate records for the insurer's business, and open access for the insurer and the commissioner.

Each month we tie the bordereau to cash, post premium payable, commission and fees to the ledger by program and by carrier, and reconcile the fiduciary accounts. Each quarter we draft the account report. We also keep the schedules a carrier's delegated-authority review asks for and the ones the MGA's independent CPA tests. The sections below show the reconciliation, what the statutes and the model act say, and how premium, ceding commission and fronting fees land in the books.

Reconciliation support for your premium trust account, for your review and sign-off. Finbryn never holds, controls or signs on trust funds. The MGA's officers approve the account report before it goes to the carrier; Finbryn neither signs nor sends it. If Finbryn keeps your books, we refer your audit to an independent CPA practice.

The agency-side counterpart is [premium trust and agency accounting](/services/insurance-accounting-support/insurance-agency-accounting-premium-trust), and the family overview is [insurance accounting support](/services/insurance-accounting-support). If your MGA sets loss reserves, the carrier needs an actuary's opinion on them, and a credentialed actuary signs any such opinion; our data and workpaper support for it is described under [loss reserve studies](/services/actuarial-services/loss-reserve-studies). Fees are on the [pricing](/pricing) page.

What you get: Bordereau tie-out to premium collected, cancellations and remittances, by program; Fiduciary account reconciliations with aged open items; Premium payable, commission and fee postings by program and carrier; Quarterly account report drafted for the MGA's approval; Schedules for a carrier's delegated-authority review and the MGA's independent CPA

Software we work in: QuickBooks Online, Microsoft Excel, Xero

## How do I reconcile a bordereau to premium received and remitted to the carrier?

Start from the bordereau, work down to the net premium owed to the carrier, then compare it with what the bank shows was remitted and what the ledger still holds as premium payable. The month ties when owed equals remitted plus held, with every cancellation and late endorsement explained. Figures are Illustrative, made up, one program and one month.

| Bordereau line | Amount |
| --- | ---: |
| Gross written premium | 500,000.00 |
| Less cancellations and return premium | 20,000.00 |
| Net written premium | 480,000.00 |
| Less MGA commission per the program agreement | 72,000.00 |
| Net premium due to carrier | 408,000.00 |

| Cash check | Amount |
| --- | ---: |
| Net premium due to carrier | 408,000.00 |
| Remitted to carrier in the month, per bank | 396,500.00 |
| Held in the fiduciary account, premium payable per ledger | 11,500.00 |
| Difference | 0.00 |

Remitted 396,500.00 plus held 11,500.00 is 408,000.00, so the month ties. When it doesn't, the usual causes are a late endorsement that changed the bordereau after the cash moved, a policy cancelled flat in the carrier's system but not the MGA's, premium paid straight to the carrier by a producer, and a premium finance payment posted to the wrong policy. We list each break by policy number and age, and the MGA decides what to chase.

## Is trust accounting required for all MGAs?

No single national rule requires it, but the model act and the Texas statute we read both expect fiduciary handling, and the carrier contract usually spells it out. Read your state's MGA law and the program agreement together. The rows below were read on 2026-10-19.

| Source | What it says |
| --- | --- |
| NAIC Model #225, section 4C | Funds collected for the insurer are held in a fiduciary capacity at an institution with FDIC deposit insurance and used for payments on the insurer's behalf. The MGA may retain no more than three months of estimated claim payments and allocated loss adjustment expenses. |
| NAIC Model #225, section 4D | Separate records of the insurer's business. The insurer may copy them, and the commissioner has access to books, bank accounts and records. |
| Tex. Ins. Code 4053.105 | An escrow account at a Federal Reserve member bank with deposits covered by the FDIC. All money collected for each insurer is deposited on receipt. |
| Tex. Ins. Code 4053.106 | The MGA holds money for the insurer or policyholder in a fiduciary capacity and accounts for it as law, department rules and the insurer contract require. Department examiners may audit it. |
| Tex. Ins. Code 4053.108 | Notify the department within 30 days if balances due to an insurer for more than 90 days pass $1 million or 10 percent of the insurer's policyholder surplus. |

NAIC's Fall 2020 state page lists Texas chapter 4053 as related activity, not a model adoption, so other states read differently. Your own state's text controls, and the program agreement may add more.

## How often should trust accounts be reconciled?

Reconcile at every month-end, because the monthly accounts and remittance the model act describes can't tie unless the account does. Model #225 section 4B has the MGA render accounts to the insurer detailing all transactions and remit funds due at least monthly. Texas 4053.103 adds an account report to each insurer at least once each calendar quarter, covering written, earned and unearned premiums, losses and loss expenses paid and outstanding, losses incurred but not reported, and management fees, as applicable. Neither text, as we read it, names a reconciliation date, so our monthly run follows the carrier's cycle.

The timeline shows the sequence: bank statements and the bordereau arrive after month-end, we tie the bordereau to premium, we reconcile the fiduciary accounts, the MGA reviews and approves, the MGA remits and reports, and each quarter-end the account report is drafted for the MGA's sign-off.

Diagram: From month-end to the carrier's quarterly report. Six stages: statements and bordereau arrive, the bordereau is tied to premium, fiduciary accounts are reconciled, the MGA approves, the MGA remits, and the quarterly report is drafted.

## What happens if trust account reconciliation is done improperly?

The consequences run from a carrier's finding to regulatory discipline, and they start with the account, not with intent. Under Texas Insurance Code 4053.105(c), an MGA may not use, offset or convert money that is or should be in the escrow account, except as the carrier contract allows. A violation of chapter 4053 exposes the MGA to disciplinary action (4053.151), and if a court finds that a violation contributed materially to an insurer's insolvency, the MGA reimburses the guaranty fund (4053.152).

Model #225 section 7 lets a commissioner order penalties, suspend or revoke the producer license, and bring a civil action for the insurer and its policyholders and creditors. Carriers look earlier: section 5C has the insurer review the MGA's underwriting and claims operations on site at least semi-annually. Finbryn's part is to make breaks visible while they are small. Each month's schedule lists open items by age. We don't give legal advice; counsel advises on any disclosure.

## Do carriers require audited financial statements from their MGAs?

Often, because the model act points that way: the insurer keeps independent audited annual financial statements for the MGA's two most recent fiscal years on file, showing positive net worth. An MGA that has existed for less than two fiscal years instead provides GAAP statements certified by an officer of the MGA for each completed year and month (Model #225 section 5A). Your program agreement may ask for more or less.

If the MGA establishes loss reserves, section 5B has the insurer obtain an actuary's opinion on their adequacy each year. A credentialed actuary signs that opinion; we prepare the loss data and workpapers behind it, as described under [loss reserve studies](/services/actuarial-services/loss-reserve-studies).

Finbryn prepares the books and the schedules your independent CPA tests. We have not audited or reviewed them and give no assurance. If Finbryn keeps your books, we refer your audit to an independent CPA practice.

## What financials do capacity providers and investors ask an insurtech MGA for?

There is no standard list: your program agreement and each capacity provider's diligence request set it. The model act shows what a carrier is entitled to see, and an insurtech MGA should be able to produce each item on request. Checked 2026-10-19.

| Item | Source | What Finbryn prepares |
| --- | --- | --- |
| Accounts of all transactions, with remittance | Model #225 4B | Monthly bordereau tie-out and remittance schedule |
| Audited statements for two years, or officer-certified GAAP statements | Model #225 5A | Trial balance, schedules and tie-outs for your CPA or officers |
| Fiduciary account statements and reconciliations | Model #225 4C; Tex. Ins. Code 4053.105 | Monthly reconciliation for your review |
| Surety bond of at least $100,000 or 10 percent of the MGA's prior-year written premium for the insurer, but never more than $500,000 | Model #225 4G | Premium produced for each insurer in the prior calendar year |
| Quarterly account report | Tex. Ins. Code 4053.103 | The draft report for your approval |
| Errors and omissions cover where the insurer requires it | Model #225 4H | Nothing; your broker arranges it |

Ask each capacity provider for its list in writing, and we map every line to a schedule in the same ledger, so you keep one set of books.

## How do insurtechs account for premium, ceding commission and fronting fees?

Treat premium collected for a carrier as a liability, treat the MGA's commission and fees as its revenue, and put ceding commission and fronting fees where the contracts put them. That is an accounting policy your CPA confirms; we apply it and don't set it.

Premium collected and not yet remitted sits as premium payable, matching the fiduciary account. Revenue is commission and fees under ASC 606. A public brokerage's 2023 Form 10-K (Goosehead Insurance, filed 2024) says commissions are earned at a point in time on the policy effective date and contingent commissions are estimated and constrained. Ceding commission is what a reinsurer pays the ceding carrier, so it reaches an MGA only if the program agreement shares it, for example as a profit commission or a fee. Fronting fees run from the program to the fronting carrier, and the agreement says who bears them.

Each of those terms gets its own ledger account, so the carrier's report and the general ledger agree line by line. That also matches the management fees line in the Texas account report.

## The process

1. **Map programs, carriers and accounts**: List each program, its carrier contract, its fiduciary account and the terms that govern commission, fees and remittance.

2. **Collect the month's files**: Bordereaux, bank statements, carrier statements and producer premium reports, sent after cut-off.

3. **Tie the bordereau to cash**: Gross to net premium due, then remitted plus held, with cancellations and endorsements explained.

4. **Reconcile the fiduciary accounts**: Bank to ledger, and ledger to premium payable by insurer, with open items aged.

5. **Draft the quarterly account report**: Premium, losses, incurred but not reported and management fees as your carrier's template requires.

6. **MGA reviews and approves**: Your officers approve before anything goes to the carrier; schedules also go to your independent CPA.

## Common problems we fix

| The problem | How we fix it |
| --- | --- |
| The bordereau changes after the cash has moved | We re-run the tie-out on the revised file and show the change by policy. |
| Premium for several carriers sits in one account | We keep a sub-ledger by insurer so each carrier's balance is visible, which supports separate records by insurer. |
| A policy is cancelled flat in the carrier's system but not the MGA's | We compare the cancellation list with return premium and flag the gap by policy number. |
| Management fees are mixed with commission | Fees and commission get separate accounts so the quarterly report can show each. |
| A new capacity provider wants a different report | We map its template to the same ledger instead of keeping a second set of books. |

## By the numbers

| Figure | What it means | Source |
| --- | --- | --- |
| Monthly | minimum cadence for rendering accounts and remitting funds to the insurer under NAIC Model #225 section 4B | [content.naic.org/sites/default/files/model-law-225.pdf](https://content.naic.org/sites/default/files/model-law-225.pdf) (2026-10-19) |
| Quarterly | minimum frequency of the MGA account report to each insurer under Tex. Ins. Code 4053.103 | [tcss.legis.texas.gov/resources/IN/htm/IN.4053.htm](https://tcss.legis.texas.gov/resources/IN/htm/IN.4053.htm) (2026-10-19) |
| 2 years | of independent audited annual statements an insurer keeps on file for its MGA under NAIC Model #225 section 5A | [content.naic.org/sites/default/files/model-law-225.pdf](https://content.naic.org/sites/default/files/model-law-225.pdf) (2026-10-19) |

Pricing: Quoted per engagement, based on the programs, carriers and fiduciary accounts involved. ([See pricing](https://finbryn.com/us/pricing))

## Glossary

- **MGA**: A managing general agent: under the NAIC model act, an agent that manages all or part of an insurer's business, underwrites premium at or above a set share of the insurer's surplus, and also adjusts claims above a set amount or negotiates reinsurance.

- **Program administrator**: An MGA-style intermediary that runs a specific insurance program for a carrier or capacity provider.

- **Bordereau**: A periodic report of policies, premium and cancellations the MGA sends the carrier, usually monthly.

- **Fiduciary account**: The bank account where the MGA holds money collected for the insurer until it is remitted.

- **Account report**: The quarterly statement of premium, losses and fees an MGA gives each insurer under Texas Insurance Code 4053.103.

- **Premium payable**: The liability for premium collected and not yet remitted to the carrier.

- **Ceding commission**: Commission a reinsurer pays the ceding carrier on reinsured business.

- **Fronting fee**: A fee paid to the carrier that issues the policies and cedes the risk to reinsurers or capacity providers.

- **Delegated authority**: The underwriting or claims power a carrier hands to an MGA by contract.

## Frequently asked questions: MGA and program administrator accounting

**Q: mga accounting and bookkeeping**

A: MGA accounting and bookkeeping means keeping the MGA's own revenue apart from the carrier money it handles, then proving that separation every month. Finbryn keeps the ledger, ties bordereaux to cash, reconciles the fiduciary accounts and drafts the quarterly account report for the MGA to approve. Model #225 (October 2002 edition, checked 2026-10-19) has the MGA render accounts and remit at least monthly.

**Q: What does a carrier expect in an MGA's quarterly account report and bordereau?**

A: Texas Insurance Code 4053.103 lists, as applicable, written, earned and unearned premiums, losses and loss expenses paid and outstanding, losses incurred but not reported, and management fees, sent to each insurer at least once each calendar quarter (checked 2026-10-19). The bordereau layout comes from the program agreement. We match your carrier's template and tie it to the ledger.

**Q: What trust-fund commingling risks do carriers audit for in an MGA?**

A: The sources we read point at carrier money used for the MGA's own costs, which Texas 4053.105(c) bars, balances left in the account beyond the contract, where Model #225 section 4C caps retained estimated claim payments at three months, and missing separate records for each insurer (Tex. 4053.104). Checked 2026-10-19. Your contract may be stricter.

**Q: Can a program administrator outsource accounting and still meet carrier delegated-authority audits?**

A: Yes, if the MGA keeps control and can answer the reviewer. Model #225 section 5C has the insurer review the MGA's underwriting and claims operations on site at least semi-annually, and section 4D gives the insurer the right to copy the MGA's records (checked 2026-10-19). The ledgers and schedules we keep for you are those records, and they stay yours. Your management signs and answers the carrier.

**Q: Who controls the fiduciary accounts, the MGA or Finbryn?**

A: The MGA does. Reconciliation support for your premium trust account, for your review and sign-off. Finbryn never holds, controls or signs on trust funds. Texas 4053.105 and Model #225 section 4C assume the MGA itself maintains the account (checked 2026-10-19), and that is where it stays.

**Q: Do I need a surety bond or errors and omissions cover as an MGA?**

A: The model act has the insurer require a surety bond and allows it to require errors and omissions cover (sections 4G and 4H, checked 2026-10-19), and your program agreement says what applies. We don't arrange insurance or bonds. We supply the premium produced for each insurer in the prior calendar year, which bond sizing uses.

**Q: What does MGA accounting and bookkeeping cost?**

A: Finbryn quotes per engagement, because there is no list price for this line yet. The drivers are the number of programs, carriers and fiduciary accounts, the bordereau volume and whether a quarterly account report is required (checked 2026-10-19). Scope and terms are set in writing before work starts. See [pricing](/pricing).

Related services:
- [Insurance agency accounting and premium trust reconciliation](https://finbryn.com/us/services/insurance-accounting-support/insurance-agency-accounting-premium-trust)
- [Statutory accounting and annual statement support for small insurers](https://finbryn.com/us/services/insurance-accounting-support/statutory-accounting-annual-statement-support)
- [Loss reserve studies for workers' compensation and liability self-insurance](https://finbryn.com/us/services/actuarial-services/loss-reserve-studies)
- [Insurance rate making and pricing support](https://finbryn.com/us/services/actuarial-services/insurance-rate-making-pricing-support)

Industries:
- [Insurance agencies](https://finbryn.com/us/industries/insurance-agencies)
- [Fintech and payments companies](https://finbryn.com/us/industries/fintech-payments)

Related guides:
- [Statutory Accounting vs GAAP for Small Insurers](https://finbryn.com/us/guides/statutory-accounting-vs-gaap-for-insurers)
- [Accounting for Fintech and Payments Companies](https://finbryn.com/us/guides/fintech-accounting-guide)

## Sources

1. [NAIC Model Laws: Managing General Agents Act (#225), October 2002 edition](https://content.naic.org/sites/default/files/model-law-225.pdf) (2026-10-19)
2. [NAIC Model #225 state page, Fall 2020 edition (Texas listed as related activity)](https://content.naic.org/sites/default/files/model-law-state-page-225.pdf) (2026-10-19)
3. [Texas Insurance Code chapter 4053, Managing General Agents (Texas Legislature)](https://tcss.legis.texas.gov/resources/IN/htm/IN.4053.htm) (2026-10-19)
4. [Goosehead Insurance, Form 10-K for the fiscal year ended December 31, 2023, revenue recognition](https://www.sec.gov/Archives/edgar/data/1726978/000172697824000018/gshd-20231231.htm) (2026-10-19)

Reviewed October 2026

[All services in Insurance accounting support](https://finbryn.com/us/services/insurance-accounting-support)

## Contact
- Phone: +1 (312) 313-7376
- Email: hello@finbryn.com
- Booking page: https://finbryn.com/us/book