New structure aims to attract investment
Hospitality Mutual Insurance Co. (HMIC) is seeking clearance to reorganise as a stock corporation managed by a mutual insurance holding company.
According to a letter addressed to policyholders, the planned reorganisation seeks to increase HMIC’s flexibility and competitiveness.
According to AM Best, the reorganised corporation will be known as Hospitality Group Mutual Insurance Holding Co., and it will hold 100% of Hospitality Holdings Inc. Current HMIC members would automatically become members of the new mutual holding company, and all previous policies would be maintained.
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 strategy has previously been unanimously approved by the HMIC board of directors. The company has filed its reorganisation plan to the Massachusetts Division of Insurance for approval, with a hearing scheduled for November 12.
Policyholders will also have to approve the reorganisation. HMIC has scheduled a vote on December 13 at its offices in Southborough, Massachusetts. During the meeting, policyholders will vote on board directors.
HMIC specialises in providing insurance to the restaurant, brewing, and bar businesses. However, the corporation has experienced financial difficulties.
HMIC’s net loss for 2023 climbed to $2.84 million, up from $1.48 million the previous year. The company’s combined ratio also worsened, rising to 123.9 from 116.5, owing to lower net underwriting income.
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