Andover Companies Transition to Mutual Holding Company Structure

The Andover Companies has successfully transitioned to a mutual holding company (MHC) structure as of January 1, 2026. This significant transformation was greenlit by the Massachusetts Division of Insurance, alongside the policyholders from Merrimack Mutual Fire Insurance Company and Cambridge Mutual Fire Insurance Company, aligning with current industry trends in regulatory compliance requirements and capital management.

Merrimack and Cambridge Evolution

The restructuring has redefined both Merrimack Mutual and Cambridge Mutual as stock insurance companies, now called Merrimack Insurance Company and Cambridge Insurance Company, respectively. These entities are wholly owned by the newly created Merrimack Insurance Intermediate Holding Company, reflecting the evolving landscape of the property-casualty insurance market and regulatory obligations.

Strategic Industry Position

Charles DiGrande, President and CEO, highlighted that this decision emerged from a strategic reassessment of their position in the competitive insurance industry. Innovations in underwriting processes, data analysis, risk management technologies, and changes in distribution channels were pivotal drivers. Though there is no immediate demand for additional capital, DiGrande emphasized the constraints mutual insurers face in capital-raising ventures, impacting their potential in mergers, acquisitions, or investments.

Comparative Industry Insights

This restructuring mirrors a broader industry movement toward greater capital flexibility, essential for competitive differentiation. A Morningstar DBRS report underscores how access to diverse capital sources is central to the financial resilience and competitive strength of U.S. insurers, with figures showing $217 billion in funding agreement-backed notes and $161 billion in Federal Home Loan Bank financing as of the end of 2024.

Kevin J. Ouelette, vice president, secretary, and general counsel, pointed out that Merrimack, Cambridge, and Bay State Insurance Company have traditionally operated under a managerial pooling arrangement. While functional, this arrangement was identified as less optimal for structural efficiency and tax planning. Ouelette reassured stakeholders that the reorganization would not alter existing legal proceedings, rights, or liabilities, maintaining policyholder continuity in the new MHC.