MERGERS AND ACQUISITIONS
Massachusetts Regulator Approves Acquisition of Hospitality Mutual as Reorganization Finalizes
BOSTON //BestWire// - The Massachusetts Division of Insurance approved the acquisition of Hospitality Mutual Insurance Co. by Mutual Capital Group Inc. and its Mutual Capital Investment Fund LP, helping fulfill one of HMIC’s reorganization goals as it transitioned into a mutual holding company structure.
The reorganization process is now complete, according to HMIC President and Chief Executive Officer Dick Welch, who said the deal was funded and closed on Jan. 10.
As part of the acquisition, Mutual Capital Group will purchase 45% of HMIC’s preferred stock for approximately $5 million from the newly created Hospitality Group Mutual Insurance Holding Co., according to the regulator’s Jan. 9 decision. The deal is part of a previously announced investment from Mutual Capital Investment Fund (BestWire, Sept. 20, 2024).
Capital from the deal will allow HMIC to increase insurance sales and premiums, the decision said. The cash infusion is also projected to reduce the company’s expense ratio, optimize its reinsurance program and enable the creations of more competitive products.
“The infusion of capital is going to keep us in a strong financial position,” Welch said. “It’s going to allow us to grow and expand the company.”
While Mutual Capital Group is picking up a minority stake and seat on HMIC’s board, Welch said no operational changes will take place at the company.
In 2023, HMIC saw big declines in net underwriting income that helped widen the company’s net loss to $2.84 million from $1.48 million in 2022, according to a Best’s Financial Report. Its 2023 policyholder surplus declined to $14.5 million from $16.6 million the prior year.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)