Massachusetts Merges Insurance Giants: Merrimack and Cambridge Restructure

Massachusetts insurance regulators have approved a series of reorganizations and mergers between Merrimack Mutual Fire Insurance Co. and Cambridge Mutual Fire Insurance Co., resulting in a strategic realignment. Each mutual insurer will be restructured into a domestic stock insurance entity and acquired by intermediary holding companies linked to mutual holding companies, subsequently consolidating into The Andover Companies, Inc., a newly established Massachusetts mutual holding enterprise.

This approval, signed by Insurance Commissioner Michael T. Caljouw on December 18, followed careful deliberations of testimonies gathered during an October public hearing by the Massachusetts Division of Insurance (DOI). This move is part of ongoing efforts to enhance regulatory compliance requirements while improving operational efficiency in the industry.

Strategic Mergers and Industry Benefits

Under the new arrangement, Merrimack and Cambridge are joining the Andover Companies group, headquartered in Andover, Massachusetts. This group, including Bay State Inc., offers a range of personal lines products such as homeowners, condominium, and renters insurance, as well as business insurance distributed through independent agents. They are licensed to operate in the six New England states, Illinois, New Jersey, and New York.

Attorney J. David Leslie from Davis, Malm and D’Agostine, who was part of a working group advising on these transactions, stated that the plan maintains fairness to policyholders without affecting their rights or obligations. The transactions are also not anticipated to decrease competition in existing insurance markets, allowing for continued competitive presence within the industry.

Operational Flexibility and Capital Management

Charles DiGrande, President and CEO, indicated that the decision was motivated by a need for strategic growth and operational flexibility, which was constrained under the mutual model. Converting to a mutual holding company structure allows for a more agile response to industry changes, enhancing risk management capabilities and preserving policyholders' interests.

While additional capital is not immediately required, the restructuring provides more pathways for capital acquisition and strategic expansion. This operational flexibility supports Andover’s ability to function under a cohesive leadership framework, thereby improving capital market access and overall capital management.

Financial Stability and Future Prospects

Corporate governance is expected to remain stable post-reorganization, with policyholder ownership transferring to a mutual holding company board formed by existing board members. Existing officers will retain their roles within the new structure, ensuring continuity in leadership.

Financially, as of June 30, 2025, Merrimack reported capital and surplus exceeding $1.9 billion while Cambridge posted over $927 million. The Andover Companies have consistently maintained an "A" (Excellent) rating or higher from A.M. Best since 1940, and these reorganizations are projected to reinforce the financial strength of Merrimack and Cambridge without altering policyholder coverage.

In 2024, the Andover Companies saw a 16.5% increase in net written premium, reaching $992.9 million with a net underwriting profit of $50.3 million. Achieving a combined ratio of 91.5% and a notable 77.8% net operating ratio, the company's net investment income and operating profit surged, boosting the policyholder surplus to a record $2.7 billion. These transactions highlight a strategic evolution in the Massachusetts insurance market, aligning with broader industry trends towards structural flexibility and competitive adaptability.