US insurance giant Nationwide and expansive MGA platform Paragon Insurance Holdings are committed to forging a long-term relationship that could broaden into other areas of business following the exclusive underwriting agreement for shared and layered E&S property unveiled last week.
As previously reported, Paragon – which is part of Epic and JenCap parent Galway Holdings LLC – is taking on the portfolio and the team that writes it led by Nationwide’s chief property underwriting officer for brokerage, Mike Denton.
Nationwide’s E&S carrier subsidiary will continue to be the capacity provider for the book under what has been described as a long-term agreement that officially begins on 15 March.
And in an interview with The Insurer, Nationwide’s senior vice president for E&S brokerage Tom Jurgens said that pivoting the business to a program manager model had been straightforward for the insurer.
The carrier is an established player in the segment with a portfolio of $1.3bn of business across close to 50 different programs.
“We understand what the capability of the program management model is compared to doing it in-house, and for this particular segment of business it made more sense for us to do it externally than internally,” Jurgens commented.
“We foresee that we can grow this business more quickly with Paragon than we could internally,” he added.
Paragon’s founding CEO Ron Ganiats said that the MGA would look to add talent to the team underwriting the portfolio in a way that will be attractive to Nationwide and wholesale distribution partners.
It will also use its platform, relationships, systems and technology to lever what the executive said is already “a really strong offering”.
Both sides said they have approached the agreement with a long-term view to the partnership that could extend to other areas of business.
“I’m not a believer in doing one-off placement relationships, I don’t think it’s sustainable. Had we looked at this deal and thought we couldn’t build a longstanding, more diversified relationship with Tom and the team over time we wouldn’t have done it.
“The market will ebb and flow and we’ll be a good steward of their capital, but we see it as a long-term relationship both in this space and hopefully beyond,” Ganiats commented.
He added that the relationship would not be confined to E&S and would contemplate anything that is a good fit for both sides.
“We feel the same way that there are potential opportunities for us and Paragon in other areas,” Jurgens said.
Ganiats explained that the agreement also fits squarely with his firm’s strategy of building out in E&S and looking to deepen its relationships in the wholesale community as it looks to roll out more products.
The MGA’s current book has been largely built in the admitted market, with an estimated $400mn of premium across programs sourced through retail agents.
But last November it hired Christian Phillips from Beazley to enter the fast-hardening contingency market in a move that was expected to be the first of several to add underwriting talent across a number of E&S lines and niche specialty segments.
The transition of the underwriting to Paragon comes at a time of continued hardening in the shared and layered property market, where Nationwide saw increases of 35 percent or more last year.
Jurgens said there had been opportunities in the E&S market on deals that had previously been written in the admitted market on a ground-up basis.
The portfolio is primarily focused on excess layers but will also participate in buffer layers depending on the specifics of an account.
According to marketing material, Nationwide’s brokerage property team currently has capacity of up to $125mn available for best-in-class risks, including cat capacity for Tier 1 wind, high hazard quake and flood.
Its target space is $100mn of total insured value up to a maximum of $7bn. The team will write on an all risk or difference in conditions (DIC) with named perils basis, and will consider multiple layers on programmes, including primary DIC only and excess.
The unit distributes exclusively through the wholesale channel, offering capacity on Nationwide’s A+ AM Best rated paper.
Targeted accounts and classes include amusement and recreation, apartments, casinos, food and beverage, hotels/motels, municipalities, offices, real estate, religious organisations, restaurant chains, retail, school districts, traditional agribusiness and warehouses/light industrial, according to the flyer.