Over 350 Years of Combined Experience
The Vermont Department of Financial Regulation has announced its formal approval of the affiliation agreement between Massachusetts’s Norfolk & Dedham Group and Vermont’s Union Mutual Insurance Company. Bringing together a rich heritage, the mutual insurers represent approximately 350 years of combined experience in the property and casualty insurance sector. The companies are still waiting regulatory approval by the Massachusetts Division of Insurance.
The agreement, first announced on Agency Checklists in April of this year will see each company will continue to market products under its existing brand in their respective regions, preserving their local identities and client relationships. According to the terms of the agreement, Joel P. Murray, President and CEO of Norfolk & Dedham, and Lisa L. Keysar, President and CEO of Union Mutual, will continue to lead their respective organizations. Mr. Murray will serve as Board Chair of the combined group.
A look at how the affiliation works
The affiliation between Norfolk & Dedham (N&D) and Union Mutual will result in identical boards for both companies, as well as their subsidiaries, Newbury Corporation and Charles River Insurance Company. At the time of closing, all but four directors from the Union and New England Guaranty (NEG) boards will resign. These remaining four Union directors, who are policyholders, will join the N&D boards, and eight new directors will be appointed to Union and NEG. As a result, the boards of Dorchester Mutual, Fitchburg Mutual, Norfolk & Dedham, Union, and NEG will each consist of 12 directors—eight associated with N&D and four with Union/NEG.
The affiliation does not involve any purchase price, as there is no direct financial consideration. However, the newly constituted boards will grant N&D and its subsidiaries “control” over the domestic insurers. Additionally, N&D and Union Mutual will enter into Pooling and Shared Services Agreements, which will transition to a Management & Services Agreement with Newbury within a year of closing. Union Mutual employees will also transfer to Newbury, and Union will acquire an ownership stake in Newbury.
The companies have committed to maintaining their corporate independence, with no layoffs resulting from the affiliation. N&D will maintain its headquarters in Dedham, MA, as they have since their founding in 1825. Union Mutual, founded in 1847, will maintain its headquarters in Montpelier, VT, for at least 10 years unless significant financial challenges arise, in which case an alternative location nearby will be secured. Both boards have approved the agreement and the overall transaction.
Financial Considerations and Solvency
The financial underpinnings of the affiliation were examined in depth during the approval process. Both Norfolk & Dedham and Union Mutual have long-established track records of solvency, which likely contributed to the Department’s conclusion that the affiliation would not destabilize either entity. According to the decision, both companies met the necessary financial thresholds required under Vermont’s insurance statutes.
The approval is not without conditions, however. The Department’s order specifies that the ongoing solvency of both companies must be maintained, and that they remain compliant with the regulatory standards governing mutual insurers in Vermont. This reflects a broader regulatory focus on ensuring that such affiliations do not compromise the financial integrity of the participants, particularly in a volatile economic environment.
A Regional Powerhouse in the Northeast
While still pending regulatory approval in the Commonwealth, if approved, the newly affiliated group will write a balanced book of personal and commercial lines business across eight states, boasting approximately $596 million in direct written premium and over $580 million in policyholder surplus. This strategic alignment will not only bring together the strengths of both companies, resulting in enhanced offerings and support for policyholders, employees, as well as its independent agent partners.
The group will have a strong presence in the Northeast, with 250 employees and a network of 600 independent agents operating through 1,000 agency offices. This broad footprint allows both companies to maintain close relationships with their policyholders while benefiting from increased operational synergies.
