Vermont’s regulator is weighing Norfolk & Dedham’s acquisition of Union Mutual

Vermont’s insurance regulator has scheduled a public hearing for Sept. 9 to consider the proposed acquisition of Union Mutual Fire Insurance Co. by Massachusetts mutual insurer Norfolk & Dedham Group.

Under the proposal that was filed in April, Norfolk & Dedham Group (N&D) will acquire Union Mutual and its wholly-owned subsidiary, New England Guaranty Insurance Co., Inc., both based in Montpelier.

If approved by the Vermont Department of Financial Regulation (DFR), the Vermont property/casualty insurers would join Norfolk & Dedham Mutual Fire Insurance Co., Fitchburg Mutual Insurance Co. and Dorchester Mutual Insurance Co., current members of the N&D Group.

The merger would result in a new board, with eight directors associated with N&D and four with Union Mutual. Joel Murray will remain president and CEO of N&D, and Lisa Keysar will remain president and CEO of Union Mutual. Murray will serve as chairman of the board of the combined group.

The combined group will record personal and commercial lines business in eight states, with approximately $596 million in direct written premiums and more than $580 million in insured excess. The group will have approximately 250 employees and 600 independent agents with 1,000 agency offices across the North East.

After the acquisition, the property/casualty insurers will participate in an intercompany pooling agreement effective January 1, 2025, under which premiums, losses and expenses will be combined and prorated, with participation percentages based on the individual insured’s surplus of to the members.

Each company will continue to market products under its existing brands in their respective markets. After closing, the parties will also decide on a new group name for the affiliated organization.

Community Mutual Insurance Co., a commercial arm of Union Mutual based in Latham, New York, is not part of the restructuring. According to the Vermont DFR, Community Mutual currently cedes 100% of its net premiums to Union Mutual through a reinsurance contract, and that contract is not expected to change.

Members of the N&D Group share underwriting and claims operations and own Newbury Corp., a subsidiary that provides management services. As part of the merger, Union Mutual will acquire a stake in Newbury and all employees will become Newbury employees.

N&D said it will maintain its headquarters in Dedham, Massachusetts, while Union Mutual will retain its headquarters in Montpelier, Vermont.

According to the proposal, there are no plans for layoffs or layoffs, and the companies promise to “make every effort to maintain compensation and benefits for all employees and staff, subject to changes in rate, availability and general market conditions.”

N&D Group’s direct written premium reached an all-time high of $368 million in 2023. Its policyholder surplus stands at $459 million, also a record high. N&D sells private passenger automobiles, homeowners, commercial automobiles, commercial multi-risk and workers’ compensation policies in Massachusetts, New Jersey and New Hampshire, currently most of its business in Massachusetts

Union Mutual companies write approximately $228 million in direct premiums annually. Union Mutual is licensed in Vermont, New Hampshire, Maine, Connecticut, Massachusetts, Rhode Island and New York. Its subsidiary New England Guaranty Insurance Co. is licensed in Vermont, New Hampshire, Maine, Connecticut, Massachusetts, Rhode Island and New York.

The companies are rated A (Excellent) with a stable outlook by AM Best.

According to the proposal, “all parties believe that combining their strengths will provide substantial benefits to the members of both organizations and will materially improve the product offerings and services available to all members.”

As this is a mutual affiliation of the underwriters, there is no purchase price or consideration payable to the underwriters.

September 9 is the last day for public comment on the deal.

TOPICS
Mergers and Acquisitions Vermont