There's a new kid on the block in Bermuda's casualty and property insurance arena — Lexington Insurance.

The company, part of the giant American International Group, has already proven it can step into an established market and carve a sizeable niche for itself.

That's the aim of chairman and CEO Kevin Kelley, who is excited at the possibilities Lexington now has to tap into the Bermuda insurance market, one of the largest in the world, and meet clients face-to-face on a daily basis.

That close contact is a key reason for Lexington opening its first office on the Island, based at the AIG offices in Richmond Road.

Initially there will be only one manager, but over time it is anticipated the operation will grow.

Mr. Kelley points out that is what happened in the 1970s when Lexington showed up as a one-man operation in London, to the bewilderment of brokers in the city.

"We take a long-term view of every market that we are in. We opened in London in the 1970s and brokers would ask why we were there in London when we were a US company writing US business. The answer was there was business there that we were interested in," said Mr. Kelley.

"Today we have $750m premium income from London." Could a similar story unfold in Bermuda today? Despite the Island being home to around 1,500 insurers Mr. Kelley believes there is room for a new player.

"We view the market (here) very positively, although in some lines of business rates may have peaked. We continue to look at access points to the overall casualty/property insurance market. There is between $2 billion and $3 billion of business here that is of interest to us," he said.

Property insurance opportunities will be an initial focus for Lexington as it establishes its on-Island presence, but it will also be on the look out for business lines.

"We'll grow depending on what we find in the market place. We don't go into the market with a lot of preconceived notions. Business comes to Bermuda and we want to be part of that."

Boston-headquartered Lexington will have a rolling start in Bermuda on account of being part of AIG and its close association with the parent company's Starr Excess unit, of which Mr. Kelley is also chairman.

Starr Excess provides excess liability coverage to Fortune 2000 companies.

Mr. Kelley said: "Starr Excess has between 500 and 600 clients and we would like to sell those clients additional products. Being here we can do that."

A cocktail reception to mark the opening of the Lexington office was attended by many brokers who, according to Mr. Kelley, were excited by the new arrival. He added: "A company entering a market like this gives brokers extra assurance that there is viability to this market."

Lexington offers property and casualty insurance, including coverage for biological and chemical terrorist attacks.

Mr. Kelley said the terrorism insurance coverage market had grown from virtually nothing pre-9/11 to a $250m business line for Lexington today.

As Lexington sets up shop in Bermuda it is the ability to do business face-to-face with clients that is rated highly by the CEO. He said risk managers come to the Island to deal face-to-face, "We like that. That is how it was in London. We feel that's important, it allows our underwriters the opportunity to explain products to clients directly."

Market analysts believe Lexington is now positioned to compete with the Island's two biggest operators Ace and XL Capital, and many of the small operators.

"It may create some worries, particularly for the smaller carriers," said Morningstar analyst Bill Bergman.

Lexington aiming for slice of Bermuda market