State pension fund investment on LI makes money

In its best performance ever on Long Island, the state pension fund made $7 million on its investment in a local insurer after that company was sold.

The Common Retirement Fund invested $5 million in The Wright Insurance Group in 2011. When Wright was purchased by Brown & Brown Inc., a Florida-based insurance company, for $602.5 million, the pension fund reaped nearly $12 million.

"Our overriding priority is making money for the fund," said state Comptroller Thomas DiNapoli, sole trustee of the $181 billion pension fund. "But in this case we also had the opportunity to help a company to expand and add jobs here in New York State."

The Uniondale-based insurer has created 325 jobs since 2008, bringing its total payroll to about 500, including 235 in Nassau County and in Albany, according to a DiNapoli spokeswoman.

Wright is one of four investments in Long Island businesses that the pension fund has exited. The results have been mixed; one other produced a gain while two produced losses, according to a Newsday analysis of investment data.

Referring to the Wright deal, DiNapoli said, "A strong return like this validates that looking for great investment opportunities right here in our own state is a smart investment strategy."

More than 1 million current and former state and local government workers count on the pension fund for their retirement.

DiNapoli, a Democrat from Great Neck Plaza, has championed the fund's In-State Private Equity Investment Program.

The program has boosted its activity in Nassau and Suffolk counties, going from three investments totaling $8.8 million to nine investments and $38.3 million. The largest investment, $13 million, has been in mattress retailer Sleepy's.

Statewide, $760 million has been invested in 292 businesses in 14 years. Upstate got 45 percent of the money; New York City, 41 percent; and Long Island, 5 percent.

Wright officials said the company wanted the In-State program to be among its investors because of Wright's history of managing insurance programs for public schools and local governments in New York State.

The pension money was combined with other money in an established investment fund run by professional managers. That fund made the Wright investment.

"We wanted to bring in the Common Retirement Fund because Wright was very much a New York company . . . It felt like good karma," said Jason Rotman, a partner at Aquiline Capital Partners, the Manhattan-based private equity firm that purchased a controlling interest in Wright in 2008. Aquiline sold Wright to Brown & Brown earlier this year.

Wright's annual sales increased from $30 million per year to about $200 million under Aquiline, the DiNapoli spokeswoman said.

Brown & Brown has said it has no plans to move Wright's New York operation. A spokesman did not return a telephone call seeking comment last week.

William Malloy, an Aquiline partner who served as Wright's president for a time, said New York State officials were diligent, even though the investment was passive and they played no role in running Wright.

"They really cared . . . They had some very thoughtful questions," Malloy said, referring to quarterly conference calls that Wright held with the board of directors and investors to discuss the company's earnings.