While national insurers have backed away from writing policies in coastal areas, fearing crippling losses from hurricane and storm damage, a new local company is swimming against the tide.

It’s appropriately named Narragansett Bay Insurance Co., and its business plan includes writing 30 percent to 40 percent of its policies for properties along the coast.

That’s not the only reason Narragansett Bay is unusual.

The company has attracted $200 million in capital from three private out-of-state firms, including one controlled by George Soros, the billionaire investor.

And its executives work from an old building in downtown Pawtucket, where they plan to add 100 good-paying, financial-services jobs.

How’s that for a unique Rhode Island story — and it couldn’t come at a better time as job growth has flattened, investment has shrunk and the state is in or on the edge of a recession.

Narragansett Bay has been resurrected from the remains of Pawtucket Mutual, the 157-year-old insurer that suffered five years of losses from bad business decisions, poor investments and risky policies. State regulators took over the insurer in 2003. But rather than start a liquidation, Joseph Torti III, insurance superintendent for the state Department of Business Regulation, supervised a cleanup of the company to prepare it for sale. The Superior Court monitored the rehabilitation and approved its conversion from a mutual insurance company to a private stock-owned company, making a sale easier.

In December 2005, a group of investors, led by Stewart H. “Nick” Steffey Jr., an insurance veteran with 35 years experience, outbid other groups to win the company. The new owners agreed to invest $5.5 million. In return they got the name, some real estate, a computer system, the relationships with the independent agents who sell the policies, and perhaps most valuable, the licenses to sell homeowners’ insurance in 12 states.

Steffey, founder and former chief executive officer of Liberty International Holdings, said in an interview last week that the business plan is to write homeowners’ polices in the $6-billion market that covers Rhode Island, Massachusetts and Long Island. Later, he wants to expand and write policies along the rest of the East Coast, increasing the company’s employment to 100 from 27.

Steffey, chairman and CEO, said the company plans to write 50,000 policies in the next three or four years, up from the current 3,000. He predicts about one-third of the policies will be written in coastal areas, which many national insurers abandoned after losses from Hurricane Katrina and other natural disasters.

The company has created a specialized underwriting model to write policies on houses within two miles of the coast and in the middle market of $150,000 to $750,000 valuation. Steffey says the company can assess risk by inspecting each house it insures and evaluating the electrical system, roof, heating system and other parts of the structure. Inspectors also determine how high the property is above sea level and storm surges, and uses all that data to calculate the policy premium.

Because each policy will be written for a specific house, Steffey says the premiums could end up being lower — or higher — than those of other insurance companies.

Steffey says Narragansett Bay’s focus on homeowners’ insurance will give it the expertise to better assess risk than other insurance companies. He also said houses in New England tend to be better built and better maintained than in other parts of the country. And he thinks there’s money to be made.

Others apparently agree.

Narragansett Bay announced last month that it had attracted $200 million in investment from three private groups: Pine Brook Partners LLC, a New York private equity firm cofounded in 2006 by Michael McMahon, a former executive director of the Rhode Island Economic Development Corporation; Soros Strategic Partners, which invests on behalf of Soros and his family; and RenaissanceRe Holdings, a provider of insurance for insurance companies to cover the risk of natural and man-made catastrophes.

The new investors joined Steffey’s original partners: Geoffrey E. Hunt; Ruffed Grouse LLC, made up of several members of the Wilmerding family and led by Patrick S. Wilmerding; and Treiber Acquisition Co. LLC, which includes several members of the Treiber family and is led by H. Craig Treiber.

McMahon said Pine Brook invested in Narragansett Bay because, “As an investor, we focus on areas where capital is being withdrawn and we feel there is an opportunity…We invested after extensive due diligence.”

Steffey declined to break down the ownership of the company.

But a DBR filing shows that for its $80-million investment, Pine Brook owns 22.5 percent of Narragansett Bay’s umbrella company, Blackstone Financial Group Holdings Inc. Soros is also a 22.5-percent equity owner for its $80-million investment. And RenaissanceRe owns 11.3 percent for its $40-million investment. According to the DBR filing, the other equity stakes are held by Blackstone Financial Group Investors (24.7 percent) and Management (19 percent.)

Narragansett Bay will be regulated by Torti, the state insurance superintendent, and his boss, A. Michael Marques, the DBR director.

Asked whether he’s nervous that the company is writing policies in coastal areas that other national companies have shunned, Torti chuckled, “Yes.”

But he added, “We monitor them closely quarterly, and meet with them frequently. They have demonstrated that they are able to service a major piece of the market and have found ways to mitigate the risk.”

Marques said the out-of-state investment in Narragansett Bay sends a message that Rhode Island can be a good place to locate a financial service company. “And they’re creating jobs, the number-one issue,” he said.

So far, so good for Steffey and his team. Still, a lot of wind will blow up the coast and a lot of waves will crash on the shore before skeptics are convinced he’s figured out a way to write coastal insurance, and make money.

For now, however, Narragansett Bay provides a fresh breeze at a time when not much else seems to be moving in Rhode Island.

jkostrze@projo.com