Five-point plan: Amica Mutual shares its success with policyholders, giving them dividends for more than 90 consecutive years.

Amica Mutual Insurance Co. has a customer-centric financial strategy that has paid off in loyalty measured in a customer retention rate that surpasses 95%.

For nearly a century, the Providence, R.I.-based company has prided itself on customer service, something it says it would never sacrifice at any cost. "We don't worry about the bottom line as much as keeping our customers satisfied and our balance sheet strong," said Robert DiMuccio, executive vice president.

In addition to maintaining a stable balance sheet and pursuing long-term investments, the company's successful financial track record has contributed to its being one of only 15 companies to be tanked A+ or higher by A.M. Best Co. for the past half-century. Another measure of financial strength is the consistent payment of policyholder dividends for more than 90 consecutive years. Last year, the company returned $26 million in dividends to policyholders.

Customer service has been key since the company started in 1907 as the Automobile Mutual Insurance Company of America. Founders believed the principle of preferred risk, a common practice used by other insurers for factories, could be applied to insuring automobiles. The approach proved successful, so in 1921 the company expanded to form Factory Mutual Liability Insurance Company of America, which was created to underwrite auto liability insurance on a well-tested preferred risk basis. In 1972, the two companies consolidated and formed Arnica Mutual Insurance Co. Today, Amica writes auto and homeowners policies in 49 states.

"We stuck to our core competencies all these years, and while it's sometimes been tempting to get into other lines, we attribute a lot of our success to the fact that we write personal lines only," said Thomas Taylor, president and chief executive officer.

However, success comes with some sacrifices. Taylor believes the company had to forgo some major growth and some profits over the years in order to maintain its financial stronghold. In 2002, Amica experienced its largest growth year ever in terms of new policies and new customers. The company had more than $1.1 billion in net premiums written last year, according to A.M. Best Co. data.

Amica underwent several changes over the past decade to strengthen its reputation. In the mid-'90s, Amica began a heavily committed advertising campaign, said Taylor. At the same time, it aggregated business with some carriers to spread risk nationwide and partnered with several other insurers, such as Church Mutual and Federated Mutual Insurance Co., to acquire additional books of business. The company recently introduced online sales.

Taylor also believes much of Amica's financial success is a result of "sticking with the strategic plan" it established in 1992.The plan calls for , five initiatives: increase profitable growth, bolster the financial management of the company, energize customer service, improve efficiency and strengthen corporate culture.

Amica Mutual
Insurance Co.

Ratio Comparison

        Combined Ratio    Operating Ratio

1998         105.6              93.3
1999         114.0             101.8
2000         106.4              94.0
2001         112.6             100.9
2002         113.7             103.7

Note: Table made from line graph.

Then and Now

                       1953           2002

Assets         $7.5 million   $2.8 billion
Net Premium    $7.0 million   $1.1 billion

Source: A.M. Best Co. Executive Summary
Report; A.M. Best Company Report