Vermont 100: Vermont Mutual Insurance Group

by Kevin Kelley Vermont Business MagazineBased on State Street in Montpelier for the past 184 years, the Vermont Mutual Insurance Group is ‘part of the fabric’ of the state, says its president and CEO, Thomas Tierney.
And in keeping with what he describes as ‘the Vermont culture,’ the company ‘goes above and beyond in meeting the needs of neighbors,’ Tierney suggests. He offers the example of Vermont Mutual's response to the damage that Tropical Storm Irene inflicted on many of the company's policyholders.
‘We've tried to put Vermonters back to where they were before their losses. A lot of the losses our clients suffered were not covered because they were victims of flooding,’ Tierney notes. ‘But even though we didn't pay them, we did help them throughout the recovery by putting them in touch with FEMA and others who could assist.’
Vermont Mutual continues to do well as it does good.
The company racked up more than $305 million in 2011 direct written premiums through independent agents in seven states, Tierney reports. That works out to about a 6 percent growth rate for 2011, on top of the 8 percent achieved the previous year.
The firm ranked as the 11th largest Vermont-based company in Vermont Business Magazine’s annual list, which was published in January 2012. SEELIST HERE
‘We anticipate 2012 to be another growth year for us,’ Tierney says.
This performance qualifies Vermont Mutual as ‘one of the top property and casualty insurers in the US,’ he declares.
It recently purchased a 12,000-square-foot office building in Berlin, where the company's claims unit will be situated. Altogether, Vermont Mutual has a 210-member workforce and serves about a quarter of a million policyholders through a network of 400 independent agents.
The company grew by contracting, Tierney recounts. He recalls that in 1990, the same year he became the boss, Vermont Mutual decided to pull back from operations up and down the East Coast and to concentrate on its core area: the six New England states and upstate New York. The move appears to have paid off, since Vermont Mutual was writing only $80 million in premiums in 1990’about one-quarter of today's sum.
‘We wanted to be closer to our distribution network,’ Tierney says in explaining the decision to consolidate. The independent agents based in New England account in large part for the strength of the company, he points out. The company also insures some of Vermont's flagship institutions: Middle bury College and Norwich University, for example, along with several towns.
Success doesn't come without struggle, however.
‘You manage your fixed costs as best you can,’ Tierney says, referring to business expenses as well as the insurer's loss ratio.
Revenues meanwhile come in two forms: from underwriting and from investments. The latter has behaved ‘like a roller coaster’ in the past few years as the equity markets soared and then plunged, he notes. ‘What we need is consistency,’ Tierney says. And a ‘creative and diverse portfolio’ has enabled Vermont Mutual to smooth out its ride, he reports.