Providence Mutual recently notified state regulators that it is exiting the auto insurance business for both commercial and personal lines in the four states where it currently offers the coverages – Connecticut, Maine, New Hampshire and Rhode Island.
The company also said it will be transferring some of the business to Plymouth Rock Assurance in a deal where Plymouth Rock will provide auto insurance renewal offers to eligible policyholders in Connecticut and New Hampshire. Policies with renewal dates at the end of March 2025, or early April 2025, would be the first to go through this process.
“Exiting auto will give us more resources to invest in and enhance our core products, such as homeowners, dwelling, umbrella and BOP, which are growing,” said Michele Streton, president and CEO of Providence Mutual.
Providence Mutual said it has filed for a homeowner’s discount to be available for the companion homeowners policies impacted by this decision and expects to have it available for use in the first quarter of 2025. After this discount is available, the company will transition homeowner policies that have the multi-policy discount to the new discount as auto policies are non-renewed or moved by its independent agents.
Plymouth Rock confirmed the renewal rights agreement but declined to reveal the amount of business involved. Plymouth Rock writes and manages more than $2 billion in auto, home and umbrella insurance premiums across Connecticut, Massachusetts, New Hampshire, New Jersey, New York and Pennsylvania. It has experience in handling more than 15 renewal rights and replacement carrier transactions. Most recently, in June, Plymouth Rock signed onto a plan to assume the renewal rights of the personal lines business of Electric Insurance.
In June, 2023, AM Best withdrew its ratings of Providence Mutual after the carrier requested to no longer participate in its rating process. At that time, AM Best affirmed Providence Mutual’s Financial Strength Rating of B++ (Good) and Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good). The outlook was stable.
In May 2023, AM Best noted that the company has been challenged by severe weather events, an increased frequency of large losses, pricing shortfalls in its personal auto business and the impact of inflation on loss costs. While management has responded with measures including rate increases, more restrictive underwriting guidelines, and reducing coastal exposures, AM Best commented that “volatility continues to negatively impact the company’s operating performance and its ability to generate organic surplus growth through core operations.” However, AM Best said it expected that the measures taken will bring improved results.
Providence Mutual currently holds a “A-” rating from Kroll Bond Rating Agency (KBRA). Also Demotech rates the company with an “A'” (A Prime).
Topics Auto
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