Wall & Main: For Terry Sullivan insurance is all in the family

Terrence Sullivan's roots in the Worcester insurance business go back to his great grandfather.

Now Mr. Sullivan is sitting out a three-year non-compete clause after selling that business to a private equity firm.

The business in question – the predecessor of insurance brokerage Sullivan, Garrity and Donnelly (SGD) -- was started by a man who immigrated from Ireland to Worcester. As Mr. Sullivan explained in a June 11 interview, "My great grandfather Jeremiah Sullivan from County Kerry Ireland, 'Kerry Jerry', started the business in 1922. And it grew to 50 employees at the time we sold it three years ago. There are different measures of size but by actual revenue I believe that we were one of the largest in Central Massachusetts in 2016."

Kerry Jerry came to Worcester for a job making steel. "I'm told that when he arrived in America my great grandfather [heard] there was a big steel mill in Worcester looking for workers. We also had offices on Cape Cod and the South Shore where my sister, brother-in-law and cousin were committed," said Mr. Sullivan.

Terry Sullivan is a Worcester native who lived in Holden and moved back to the city with his wife and four children in 2008. "Holden was great but [I wish] we had moved to Worcester earlier. It is a great city to live in. I went to Hofstra my freshman year because I did not get into Holy Cross, Boston College, or Fairfield when I graduated, and they had a late May deadline for applications. I did well freshman year and was accepted into all three on my second attempt."

An economics major at Holy Cross, he earned his MBA from Babson in 1987.

Mr. Sullivan met his wife at Travelers Insurance in New Hampshire as a commercial line's underwriter. Since Travelers did not allow them to work together there once they got engaged, he joined the family business and she took a job at Hanover Insurance in Worcester.

He learned that contract details and trust are critical for success in insurance. As he said, "It all [comes down] to contracts how they are worded, amended, and rated for cost. The selling side of the industry, getting contacts and relationships, needs to be backed up with full knowledge of the contracts to develop true trust with your clients over time by making sure the promises you make to them are contractually reflected in the insurance policies."

SDG -- was started in November of 1988 at 10 Institute Road where it stayed until the end of August 2016 when Terry Sullivan sold it to a private equity firm.

Mr. Sullivan believes that the company had a huge market opportunity since "a normal household budget for insurance is 5 to 10 percent (not including health cost) and I'd figure that same percentage applies to the total US GDP."

His strategy for winning customers was to tailor each policy to their specific needs. As he said, "I have a technical approach to making sure the policies are tailored as best I can to the specific needs of my commercial clients."

New growth came from providing better client service. "The biggest opportunity for new growth is from clients currently being handled by larger regional agencies. They do not generally provide the level of service and detail one would expect. The flash is there but not the substance. We insured many local institutions, colleges, and religious organizations but I think one of the reasons people chose us was because we were a true family business. Family businesses have their specific issues and that seemed to be a sweet spot," he explained.

One of the challenges of a family business is what to do when the next generation is coming of age. Mr. Sullivan decided it was the right time to sell SGD. As he said, "Basically we were into transferring from third to four generation ownership and it became increasingly clear we were going to have difficulty finalizing transfer from third generation ownership to fifth generation. I worked with my father, uncle, brother, sister, brother-in-law, cousin and cousin's husband. A lot of family."

Mr. Sullivan agreed to stay out of the insurance business for three years after the firm was sold. "My wife and I have been working as real estate agents in Chatham for the last three years and doing some real estate projects. This has been fun. But I keep getting cell calls from new people asking me about insurance. After 35 year in the business it seems evident that it is hard to reinvent yourself if people keep thinking of you as a source of expertise from your prior undertakings. I'm now looking at re-entering the insurance industry at the end of my non-compete covenant and am excited to renew old relationships."

Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy and entrepreneurship at Babson College. His email address is peter@petercohan.com.

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