Kuhn: Westfield Specialty binding business in four lines already

Westfield Specialty has quickly got up and running since launching in July, already putting business on the books in four of the five lines it has entered, with president Jack Kuhn telling this publication that the new venture is expected to be a “significant piece” of its 173-year-old parent’s portfolio.

Westfield In July announced its entry into specialty insurance, with the hire of industry veteran Kuhn.

The Ohio-based super-regional property casualty insurer explained that the new endeavour will create additional opportunities to profitably grow new customers and strengthen relationships with existing customers.

Kuhn’s appointment was announced a few weeks after this publication revealed he had left his role as global insurance CEO at Bermuda-based start-up Vantage Risk after only eight months, a position in which he was also tasked with building up a specialty insurance business.

“We are now writing business, taking submissions and binding coverage. It was a significant accomplishment that Westfield stood up this new company within 45 days”

Jack Kuhn, president of Westfield Specialty

Over his career Kuhn has been responsible for US and global insurance portfolios of more than $6bn in premiums. He was CEO of insurance for Sompo International and predecessor company Endurance from 2012 to 2019, and has also held roles at Axis, Kemper and Chubb.

In an interview with The Insurer, Kuhn said Westfield Specialty already has business on its books.

“We are now writing business, taking submissions and binding coverage. It was a significant accomplishment that Westfield stood up this new company within 45 days,” he said.

A hiring spree

As this publication has reported, Kuhn has been busy making hires, including from former employers Vantage and Sompo International (see box).

Westfield Specialty has set up in five lines of business so far: E&S excess casualty; financial institutions; commercial management liability; professional lines (including cyber and professional liability); and E&S property. It is already taking submissions and binding business in all but E&S property.

“We’re looking to enter and start writing business in the E&S property on December 1, after wind season,” Kuhn said. “We don’t really want to lead with our chin so we’re taking the time to make sure that we have everything stood up and ready to go on E&S property from December 1.”

Kuhn anticipates the business being fairly evenly split among the lines, while adding that the E&S business “could easily be 50 percent” of the portfolio. He stated there are no entries into other lines imminent, but he would not rule out any if the opportunity arose.

“Right now, we’re getting our legs underneath us with the initial groups,” he said. “But if a great opportunity comes along, we are opportunistic in the marketplace and are always looking to add additional lines of coverage to the portfolio if they make sense. But there is nothing on the immediate horizon.”

Kuhn describes the market conditions as “robust,” as a result of the impact of the compounding rate increases since 2018 as well as the restrictions in coverage.

The industry veteran noted that property and cyber lines are two areas in particular that continue to have pressure on rates.

In cyber, Kuhn said there has been a significant pullback on the limits usage and also a big push on looking at higher deductibles.

“I would expect that will continue as people are dealing with and understanding what this new loss environment really means,” he said. “These ransomware claims are not limited to the large account space where you had the data breaches. They are hitting the SME and the middle market accounts just as hard as the large accounts.”

Kuhn said Westfield Specialty is open to writing cyber in all account size segments.

In the property market, the Texas winter storm and Hurricane Ida will add pressure for a continuation of rate increases, Kuhn said, which come on top of increases since 2017.

“You have a compounding impact on programs with those rate changes, and I think we’ll see into 2022 that you’ll still have people looking at the coverage and really making sure that they’re not providing something broader than what they were anticipating,” he said.

A new business in an old company

When announcing the launch of the new business, Westfield cited the current market conditions coupled with the insurer’s “A” AM Best financial strength and well-established brand.

“Westfield had been looking into this specialty marketplace for a number of years but didn’t find the right opportunity until now,” Kuhn said. “The recent hard market was a compelling reason for the organization to look to diversify and enter into the specialty insurance segment.”

The launch of Westfield Specialty follows a number of new entrants entering the space in the past two years, including Vantage.

While he is building a new business, Kuhn is doing it within a very well-established company. This brings advantages over starting completely from scratch, such as providing access to its independent agent platform.

“Westfield has been around since 1848 so the company is very well established, has a solid brand and a very strong rating from AM Best,” Kuhn said.

He added: “We’re also able to leverage some of the existing infrastructure to get up and running and set up the company. That’s one of the reasons why we were able to be in the market in 45 days, rather than six or nine months.”

Broker reports suggest that the new entrants to the market are starting to have a moderating impact on rates.

But Kuhn said: “The ones that I’ve seen have been very careful in the sense of not trying to derail the hardening process.”

He added that the realignment of limits usage within the marketplace has created opportunities for new capacity.

“I don’t think the new entrants have gone into this as the wild, wild west just running and gunning,” Kuhn said. “They are trying to be thoughtful and making sure that they are understanding where they are being positioned on the programs and in the market.”

Westfield reported $1.79bn of net written premium in 2020, a combined ratio of 99.6 percent and after-tax net income of $238.3mn.

Kuhn said there is not a specific premium target for the new specialty business.

“I think the expectation is that we will be a significant piece of the portfolio,” he said. “At the same time, there are other pieces of the organization experiencing better market conditions and are growing as well.”

He added: “I don’t think that the expectation is that the specialty business is going to be the sole growth engine for the company. We are looking for a balance and a steady portfolio that will produce an annual profit.”