Massachusetts Greenlights Mergers and Reorganizations for Andover Businesses
Massachusetts regulatory officials have recently approved a significant reorganization and merger plan involving two domestic mutual insurers: Merrimack Mutual Fire Insurance Co. and Cambridge Mutual Fire Insurance Co. This strategic initiative aims to transition each mutual into a domestic stock insurance company, followed by their acquisition by intermediate holding companies owned by mutual holding companies. Ultimately, these entities will merge into The Andover Companies, Inc., a newly-formed mutual holding company based in Massachusetts.
The approval was granted by Insurance Commissioner Michael T. Caljouw on December 18, following a public hearing conducted by the Massachusetts Division of Insurance (DOI) in October, where various testimonies were presented.
Both Merrimack and Cambridge are now part of The Andover Companies, headquartered in Andover, Massachusetts. This group, which also includes Bay State Inc., offers a range of personal lines products such as homeowners, condo, and renters insurance, along with business insurance products distributed through independent agents. They are licensed to operate in six New England states, as well as Illinois, New Jersey, and New York.
Working Group Recommended
To assess the proposed transactions, the DOI engaged Attorney J. David Leslie from the law firm Davis, Malm and D’Agostine. Leslie, who specializes in representing insurance regulators in complex matters, participated in a working group that ultimately recommended approval of the plan. He testified that the group found the proposed transactions beneficial for both Merrimack and Cambridge, enhancing their operational capabilities. Furthermore, the group concluded that these transactions are fair and equitable for the mutuals’ policyholders and will not adversely affect their rights under existing policies. Importantly, the reorganizations and mergers are not expected to diminish competition in any insurance line.
During the public hearing, Charles DiGrande, president and CEO, explained that the directors believed remaining as mutuals would hinder their competitive edge. They recognized the need for “structural, financial, and strategic flexibility” to adapt swiftly to industry changes.
While a full demutualization was considered, the directors felt it would strip policyholders of their ownership interests, transferring that ownership to stockholders instead.
Capital Raising
DiGrande noted that neither Merrimack nor Cambridge currently requires additional capital. However, as mutual insurers, they lack the ability to issue stock for capital raising, limiting their options compared to stock insurers or mutual holding companies. In contrast, a mutual holding company offers a broader range of options for acquisitions while preserving the identity, licenses, brands, and goodwill of the two insurers. This structure also provides multiple avenues for raising capital for acquisitions that are not available to mutuals.
The mergers will enable Andover to function under a unified holding company structure with a cohesive board and management, enhancing access to capital markets and improving capital management, as stated by Kevin J. Ouelette, vice president, secretary, and general counsel for the insurers.
The corporate governance structure is expected to remain stable post-merger, with policyholders retaining ownership of the mutual holding company. The existing directors will transition to the boards of the new mutual holding companies, and current officers will continue in their roles.
Financial Issues
Amy L. DiPerna, vice president and treasurer, testified on the financial implications of the plan. As of June 30, 2025, Merrimack reported capital and surplus exceeding $1.9 billion, while Cambridge had over $927 million. The Andover Companies are recognized as one of the largest and longest-standing mutual insurance groups in the Northeast, consistently rated “A” (Excellent) or higher by A.M. Best since 1940.
DiPerna affirmed that the reorganizations and mergers would positively impact the financial strength of both companies. She echoed the sentiments of DiGrande and Ouelette, stating that the changes would not affect the insurance coverage provided to policyholders, aside from the transition to a stock insurer.
The Andover Companies reported strong financial results in 2024, with net written premiums rising 16.5% year-over-year to a record $992.9 million. The group achieved a net underwriting profit of $50.3 million and a net combined ratio of 91.5%, reflecting a year-over-year improvement of 13.9%. Additionally, net investment income grew to $113.7 million, marking a 14.5% increase over 2023. Operating profit surged to $182.7 million, contributing to a year-end policyholder surplus of $2.7 billion—an all-time high and a 15.2% increase from 2023. Total assets also grew by 6.2% to $4.3 billion, with the net operating ratio dropping below 80% for the first time since 2016, reaching 77.8%.
Source: Massachusetts Division of Insurance
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Massachusetts regulatory officials have recently approved a significant reorganization and merger plan involving two domestic mutual insurers: Merrimack Mutual Fire Insurance Co. and Cambridge Mutual Fire Insurance Co. This strategic initiative aims to transition each mutual into a domestic stock insurance company, followed by their acquisition by intermediate holding companies owned by mutual holding companies. Ultimately, these entities will merge into The Andover Companies, Inc., a newly-formed mutual holding company based in Massachusetts.
The approval was granted by Insurance Commissioner Michael T. Caljouw on December 18, following a public hearing conducted by the Massachusetts Division of Insurance (DOI) in October, where various testimonies were presented.
Both Merrimack and Cambridge are now part of The Andover Companies, headquartered in Andover, Massachusetts. This group, which also includes Bay State Inc., offers a range of personal lines products such as homeowners, condo, and renters insurance, along with business insurance products distributed through independent agents. They are licensed to operate in six New England states, as well as Illinois, New Jersey, and New York.
Working Group Recommended
To assess the proposed transactions, the DOI engaged Attorney J. David Leslie from the law firm Davis, Malm and D’Agostine. Leslie, who specializes in representing insurance regulators in complex matters, participated in a working group that ultimately recommended approval of the plan. He testified that the group found the proposed transactions beneficial for both Merrimack and Cambridge, enhancing their operational capabilities. Furthermore, the group concluded that these transactions are fair and equitable for the mutuals’ policyholders and will not adversely affect their rights under existing policies. Importantly, the reorganizations and mergers are not expected to diminish competition in any insurance line.
During the public hearing, Charles DiGrande, president and CEO, explained that the directors believed remaining as mutuals would hinder their competitive edge. They recognized the need for “structural, financial, and strategic flexibility” to adapt swiftly to industry changes.
While a full demutualization was considered, the directors felt it would strip policyholders of their ownership interests, transferring that ownership to stockholders instead.
Capital Raising
DiGrande noted that neither Merrimack nor Cambridge currently requires additional capital. However, as mutual insurers, they lack the ability to issue stock for capital raising, limiting their options compared to stock insurers or mutual holding companies. In contrast, a mutual holding company offers a broader range of options for acquisitions while preserving the identity, licenses, brands, and goodwill of the two insurers. This structure also provides multiple avenues for raising capital for acquisitions that are not available to mutuals.
The mergers will enable Andover to function under a unified holding company structure with a cohesive board and management, enhancing access to capital markets and improving capital management, as stated by Kevin J. Ouelette, vice president, secretary, and general counsel for the insurers.
The corporate governance structure is expected to remain stable post-merger, with policyholders retaining ownership of the mutual holding company. The existing directors will transition to the boards of the new mutual holding companies, and current officers will continue in their roles.
Financial Issues
Amy L. DiPerna, vice president and treasurer, testified on the financial implications of the plan. As of June 30, 2025, Merrimack reported capital and surplus exceeding $1.9 billion, while Cambridge had over $927 million. The Andover Companies are recognized as one of the largest and longest-standing mutual insurance groups in the Northeast, consistently rated “A” (Excellent) or higher by A.M. Best since 1940.
DiPerna affirmed that the reorganizations and mergers would positively impact the financial strength of both companies. She echoed the sentiments of DiGrande and Ouelette, stating that the changes would not affect the insurance coverage provided to policyholders, aside from the transition to a stock insurer.
The Andover Companies reported strong financial results in 2024, with net written premiums rising 16.5% year-over-year to a record $992.9 million. The group achieved a net underwriting profit of $50.3 million and a net combined ratio of 91.5%, reflecting a year-over-year improvement of 13.9%. Additionally, net investment income grew to $113.7 million, marking a 14.5% increase over 2023. Operating profit surged to $182.7 million, contributing to a year-end policyholder surplus of $2.7 billion—an all-time high and a 15.2% increase from 2023. Total assets also grew by 6.2% to $4.3 billion, with the net operating ratio dropping below 80% for the first time since 2016, reaching 77.8%.
Source: Massachusetts Division of Insurance
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