Lexington’s Western World to launch new small commercial brokerage offering

Lexington Insurance’s SME division, Western World, is launching a new small commercial brokerage product underwritten by a team led by former Nationwide E&S executive Penny Herron, The Insurer can reveal.

The new offering will initially focus on various casualty lines but will be built out into property over time.

It has been designed to bridge the gap between the ceiling of account size currently written by contract binding specialist Western World and the floor of account size in the small to middle market space written by AIG’s Lexington.

Casualty-focused Herron joined AIG and Lexington unit Western World earlier this year from Nationwide E&S, where she had spent almost 19 years, most recently as senior director of the carrier’s Northeast region for contract underwriting, based out of Scottsdale Arizona.

Sources said the new offering, which has been soft launched at the WSIA annual marketplace in San Diego, is an example of the carrier working with its parent Lexington to create a new insurance vertical that broadens its offering to wholesale brokers.

They explained that AIG is targeting new business that fills the gap between Troy Santora-led Western World and Lexington as it looks to broaden its offering to brokers.

Western World’s existing SME offerings are thought to top out at account sizes with around $10,000 of premium, but Lexington account sizes in the space don’t start until around the $25,000 mark.

Details on exact lines of business are not known at this stage but it is expected that the new offering will target business that currently gets bumped out of the contract binding space and could include a broad set of classes ranging from retailers to contractors.

The new offering will leverage Western World’s WWIP platform, which allows brokers to rate, quote, bind and issue online.

Lexington and Western World are likely to have identified a significant opportunity to expand in the SME space by leveraging their combined offerings to provide a solution across the entire range “from Main Street to Wall Street”, said sources.

The new Western World team are already able to write business ahead of a full launch at the start of November.

As previously reported, Western World was realigned to become part of AIG’s E&S platform Lexington in April this year.

The unit was bought by AIG as part of its acquisition of Validus last year in a $5.5bn deal.

Lexington – now led by CEO Lou Levinson – has been undergoing a significant repositioning in the E&S market.

In April this year it went wholesale only on its core P&C businesses and has also decentralized its underwriting from Boston to nine other field offices including Scottsdale, Arizona, where Western World is now housed.

Sources said the strategy has driven more business to the insurer, with submission activity nearly doubling year-over-year as a result of its new field operations structure.

It has also transitioned from a focus on large complex risks with low attaching large limits and broad terms to a dramatic shortening of limits, higher attachment points and an aggressive pursuit of rate increases.

The portfolio that has emerged is much more middle market focused, with a majority of 2019 policy count representing premiums of $100,000 or less – a significant increase on the level of accounts that size written in the prior year.

AIG, Lexington and Western World declined to comment on this article.