A former Liberty Mutual executive and three other investors have been given the green light by Rhode Island officials to pick up the pieces left behind by Pawtucket Mutual Insurance Company and Narragansett Bay Insurance Company, which have been under state control since May 2003.
The Rhode Island Superior Court must still approve the plan by Providence Insurance Managers LLC to acquire the defunct insurers’ licenses. There are no active policies left in the companies. There are 29 employees remaining out of a former workforce of 172.
Providence Insurance Managers was founded for the purpose of acquiring and recapitalizing the insurers. According to officials, PIM shareholders are insurance and investment professionals with experience in the insurance and investment businesses. Its investors have reportedly agreed to pour $5 million into the effort to rebuild the companies.
Stewart H. Steffey is president, chief executive and founder of PIM. Steffey has 35 years of insurance experience, including the start-up and building of Liberty International Holdings, Inc. (a subsidiary of the Liberty Mutual Group), where he served as president and chief executive officer from 1993-1998.
PIM plans to be a Rhode Island based specialty underwriter of property and casualty business, including homeowners, to be distributed though key agents.
Pawtucket Mutual, established in 1848, is licensed in 11 states. Its wholly owned subsidiary, Narragansett Bay, founded in 1981, is licensed in four states.
The companies’ business prior to the rehabilitation was sold through 415 independent agents and was comprised of 85 percent personal lines and 15 percent small commercial lines. The companies’ combined direct written premium reached its peak of $95 million in 2002, with policyholder surplus reaching its peak level of $49 million in 1998.
According to Joseph Torti III, superintendent of insurance and special deputy rehabilitator, the companies’ diminished surplus prior to the rehabilitation was due primarily to poor underwriting and significant investment losses. Officials have been attempting to sell the companies ever since.
In an unusual move early in the process, the Rhode Island Superior Court gave advance approval that enabled the company to be marketed as a stock company.
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