Massachusetts regulatory officials have approved a plan of reorganizations and mergers for two domestic mutual insurers, Merrimack Mutual Fire Insurance Co. and Cambridge Mutual Fire Insurance Co.
The plan calls for a reorganization of each mutual as a domestic stock insurance company, the acquisition of each by intermediate holding companies owned by mutual holding companies, and the subsequent merger of the resulting entities into The Andover Companies, Inc., a newly-formed Massachusetts mutual holding company.
The approval was signed by Insurance Commissioner Michael T. Caljouw on December 18 after weighing testimony offered during a public hearing that was held by the Massachusetts Division of Insurance (DOI) in October.
Both mutuals are now part of the Andover Companies that are headquartered in Andover, Mass. Bay State Inc. is also part of the group. Members of the group offer personal lines products including homeowners, condo and renters insurance and business insurance products that they distribute through independent agents. They are licensed in the six New England states, Illinois, New Jersey and New York.
Working Group Recommended
DOI retained Attorney J. David Leslie of the law firm of Davis, Malm and D’Agostine to participate in a working group tasked with examining the proposed transactions and preparing recommendations. Leslie’s practice focuses on representing insurance regulators in complex matters.
The working group recommended approval of the plan. Leslie testified that the working group found that the proposed transactions are in the best interests of the Merrimack and Cambridge companies and will enhance their operations. The group also concluded that the proposed transactions are fair and equitable to the mutuals’ policyholders as a class and minimize any potential adverse effects. The reorganizations and mergers will not affect their rights and obligations under their current policies. Also, the transactions will not substantially lessen competition in any line of insurance business, according to the working group. The reorganized companies will continue to compete in their current lines of business, the group agreed.
In explaining how the plan came about at the public hearing, Charles DiGrande, president and chief executive officer, said the directors felt that continuing to operate as mutuals would place them at a competitive disadvantage. They determined that to grow strategically and remain strong and competitive in the industry the companies needed the “structural, financial, and strategic flexibility” to respond quickly and decisively to changing circumstances.
At the same time, they also felt that a full demutualization, without the creation of the new mutual holding company, would have “deprived the policyholders of their ownership interests in the companies, and shifted that ownership to stockholders.”
Capital Raising
DiGrande testified that neither Merrimack nor Cambridge has any current or anticipated need for additional capital. But he pointed out that as mutual insurers they cannot issue stock to raise capital and that their options are more limited than those available to stock insurers or mutual holding companies. In contrast, a mutual holding company has a “broader range of options for pursuing acquisitions that preserve the separate identity, licenses, brands and goodwill of the two insurers.” He said this structure also presents multiple options for raising capital for acquisition purposes that are not now available to the mutuals.
The mergers will allow Andover to operate under a single holding company structure with a unified board and management, enhance its access to capital markets, and improve its capital management, Kevin J. Ouelette, vice-president, secretary and general counsel for the insurers, told state regulators at the October public hearing on the plan.
The corporate governance is not expected to change after the transactions; the policyholders will own the mutual holding company and ultimate governance will shift to the mutual holding company’s boards of directors. The same directors who are now members of the mutuals’ boards will become members of the board of directors of each mutual holding company. In addition, the current officers will continue in their roles with the new mutual holding companies.
Financial Issues
Testifying on the financial impact of the plans on the companies, Amy L. DiPerna, vice president and treasurer, told regulators that as of June 30, 2025, Merrimack had capital and surplus in excess of $1.9 billion while Cambridge had capital and surplus in excess of $927 million. She noted that the Andover Companies are one of the “largest and longest-standing mutual insurance groups in the Northeast” and, since 1940, it has been rated “A” (Excellent) or higher by A.M. Best, with a stable outlook.
DiPerna concluded that the proposed reorganizations and mergers will have a “positive effect on the financial strength” of both Merrimack and Cambridge.
She agreed with DiGrande and Ouelette that the reorganizations and mergers will have no impact on the insurance coverage the companies provide to policyholders, other than the fact that it will be provided by a stock, rather than a mutual, insurer. The insurance and other benefits provided, and the premiums charged, to policyholders will not change, she added.
The Andover Companies reported strong results in 2024. Net written premium rose 16.5% year-over-year to a record $992.9 million. The group reported a net underwriting profit of $50.3 million and a net combined ratio of 91.5%, improving year-over-year by 13.9%. Net investment income grew to $113.7 million, an increase of $14.4 million or 14.5% over 2023. Operating profit surged to $182.7 million, supporting a year-end policyholder surplus of $2.7 billion—an all-time high and a 15.2% increase over 2023. Total assets grew 6.2% to $4.3 billion. The net operating ratio dropped below 80% for the first time since 2016 to 77.8%.
Source: Massachusetts Division of Insurance
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