Hospitality Mutual Insurance Co (HMIC) is seeking approval to reorganize as a stock company that would be controlled by a mutual insurance holding company.
The proposed reorganization is aimed at providing HMIC with greater flexibility and enhancing its competitiveness, according to a letter the company sent to policyholders.
As per a report from AM Best, the reorganized company would operate as Hospitality Group Mutual Insurance Holding Co, which would wholly own Hospitality Holdings Inc. Current members of HMIC would automatically become members of the new mutual holding company, and all existing policies would remain unchanged.
HMIC said that the mutual holding company structure would better address the challenges it faces compared to alternatives like demutualization. It believes the reorganization would enable the company to capitalize on emerging opportunities and adapt more effectively to the evolving market.
As part of the reorganization, Mutual Capital Investment Fund and its affiliates will invest $5.5 million in HMIC. This investment is intended to support the company’s growth and stability following the structural changes.
The plan has already received unanimous approval from HMIC’s board of directors. The company has submitted the reorganization plan to the Massachusetts Division of Insurance for approval, and a hearing on the matter is scheduled for November 12.
Policyholders will also need to approve the reorganization. HMIC has scheduled a vote for December 13 at its headquarters in Southborough, Massachusetts. During the meeting, policyholders will also vote on board directors.
HMIC specializes in providing insurance coverage for the restaurant, brewing, and bar industries. However, the company has faced financial challenges.
In 2023, HMIC’s net loss increased to $2.84 million, up from $1.48 million in the previous year. The company’s combined ratio also worsened, rising to 123.9 from 116.5, driven by declines in net underwriting income.
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