The Massachusetts Division of Insurance has approved the acquisition of Hospitality Mutual Insurance Co (HMIC) by Mutual Capital Group Inc. and its Mutual Capital Investment Fund LP.
The approval marks the completion of HMIC’s transition to a mutual holding company structure, which the company said was a key objective of its reorganization.
HMIC president and CEO Dick Welch confirmed that the acquisition was funded and finalized on Jan. 10. Under the terms of the deal, Mutual Capital Group will acquire 45% of HMIC’s preferred stock for approximately $5 million from the newly formed Hospitality Group Mutual Insurance Holding Co., according to a decision from the Division of Insurance.
The transaction is part of an earlier investment plan announced by Mutual Capital Investment Fund in September 2024.
As part of the reorganization, Mutual Capital Investment Fund and its affiliates invested $5.5 million in HMIC. This investment is intended to support the company’s growth and stability following the structural changes.
According to a report by AM Best, regulatory documents indicate that the capital from the transaction will support HMIC’s efforts to grow insurance sales and premiums. The funding is also expected to lower the company’s expense ratio, enhance its reinsurance strategy, and aid in the development of more competitive insurance 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.”
Despite Mutual Capital Group acquiring a minority stake and a seat on HMIC’s board, Welch noted that the company does not plan to implement operational changes.
HMIC specializes in providing insurance coverage for the restaurant, brewing, and bar industries. However, the company has faced financial challenges.
In 2023, HMIC reported a significant decline in net underwriting income, contributing to a net loss of $2.84 million, up from a $1.48 million loss in 2022. The company’s policyholder surplus also dropped to $14.5 million in 2023 from $16.6 million the previous year.
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