When Lou Levinson became president and CEO of Lexington Insurance in late 2018, he knew the company needed a change. He believed that Lexington should be a wholesale focused distribution channel and that the company should remain focused and disciplined in risk selection. That meant making changes to Lexington’s foundation, and those changes have worked.
Those changes included focusing exclusively on wholesale distribution, as well as having “the underwriting courage and discipline to walk away” from premium when “we don’t think we can make a fair profit,” Levinson told Insurance Journal back in 2019.
New CEO Levinson on Rebuilding Lexington Insurance
“It made a difference,” he said last week. “It really had an impact on our company and our trading relationships. It mattered,” Levinson told Insurance Journal. Those changes allowed the company to pivot quickly to profitability by rebuilding its portfolio with significantly less volatility and a much better mix and balance of business, he said.
In today’s growing E&S market that change mattered. “It meant we could generate a consistent underwriting profit regardless of market cycle and that we could grow thoughtfully, expanding our platform by adding more horizontal risk and more product,” he told Insurance Journal last week. “But you couldn’t do it unless you got the foundation, right? So, we spent some time making sure that we got it right.”
Now as the surplus lines sector continues to grow Lexington’s is in a good place. “We got the foundation, right, and now we’re building on it,” he said.
The E&S market is playing a more important role than ever before today, according to Levinson, citing the significant premium and policy count growth in the sector. In 2020, the total P&C industry grew by 2%, while the surplus line segment grew by 17%. He said he personally expects that double-digit growth again as 2021 comes to a close.
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New business submissions in the E&S sector continue at unprecedented rates fueled by cyber risks, increases in property exposures, catastrophe frequencies and severity of those.
Levinson doesn’t think the E&S business will slow down in 2022. “There’s so much more complexity today than there was just a few years ago in our world, and I think that complexity continues to drive risk into the E&S space,” he said. “There’s nothing that suggests to me that it’s going to slow down next year.”
His advice for wholesale brokers heading into 2022: “Wholesalers need to continue to provide value to their customers and markets through expertise and service. Selling the cheapest price or the illusory coverage is a fool’s errand and will end badly,” he said. After all, no one ever remembers saving in premium. “But they will certainly remember whether or not a claim got paid.”
Topics Excess Surplus
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