BAY WATCH: Sean F. Murphy, chief financial officer at Narragansett Bay Insurance Co., speaks with senior accountant Donna Rizardini. He leads compliance efforts for state regulations in Rhode Island, Massachusetts, New Jersey and New York.
Narragansett Bay Insurance Co., based in downtown Pawtucket, is a privately held firm that focuses solely and uniquely on homeowner insurance. CEO Nick Steffey gives much of the credit for the company’s dramatic growth to Chief Financial Officer Sean Murphy.
“Sean has served as the financial steward of a company that has increased its annual gross revenue from $6.1 million in 2007 to $60.3 million in 2010,” Steffey said. “I credit him with helping build a financial infrastructure that has more than tripled its number of employees, from 15 in 2007 to 55 in 2010.”
In 2007, Murphy was working in Connecticut when he was invited by Steffey to join him and Geoff Hunt, now executive vice president of Narragansett Bay, to embark on a new venture: refocusing the company to provide homeowner insurance exclusively. “I had met them through various contacts,” Murphy explained, “and Nick was looking to put a team together.”
Murphy’s critical role: to handle the financial analysis and propositions to private-equity firms in New York, which ultimately secured $200 million in capital commitments in 2008. “Three of us raised the money,” he said. “We sold the business idea.
“I had always wanted to work in an entrepreneurial environment,” Murphy recalled. “Since the start of my career, I had worked for big companies. It’s more rewarding if you can succeed or fail on your own initiative. So I left my job in Connecticut, and for a year the three of us raised money from private-equity firms in New York.”
Backed by Murphy’s financial projections, Steffey said, “We convinced three private-equity firms that homeowner’s insurance represented an area of tremendous growth. While most insurance carriers in the Northeast have high exposure in this field, we did not. Nonetheless, the company was able to demonstrate its potential for market share growth to its investors.”
From 2008 to 2010, dramatic growth ensued, credited in large measure by Steffey to Murphy’s analysis and projections, showcasing advanced predicative modeling and preventative-loss measures. With a responsibility to external shareholders, the company adopted a higher level of financial discipline instituted by Murphy, whose duties include presenting specific business plans for capital draws to fund expansion plans.
He is also responsible, on an ongoing basis, for providing financial reports and nonfinancial operational processes to the company’s board of directors. “Hundreds of millions of dollars in private equity require the establishment of a system of safeguards and regular reporting,” Steffey said, “which Sean has successfully engineered.” This development has led to increased funding for the company, which has directly resulted in increased revenue and market share.
Narragansett Bay’s growth can also be directly attributed to two major acquisitions; in both instances, Murphy oversaw the financial projections and strategic plans. In 2008, the company acquired renewal rights to insurance policies from Adirondack Insurance, a transaction valued at $8 million that provided coverage to thousands of homeowners on Long Island, New York. The following year, the company expanded operations into New Jersey, with its $4 million purchase of renewal insurance rights from Palisades Insurance.