A late-in-session bill aimed at helping Johnston-based insurance company FM is prompting new whispers down the State House’s marbled halls: Is Rhode Island at risk of losing another top employer?
Just the opposite, says Rep. Alex Finkelman, a Jamestown Democrat who introduced the House bill May 8 at the request of the Fortune 500 company, which rebranded from FM Global in July 2024. Gov. Dan McKee has also put his name behind the bill.
Finkelman confirmed in an interview that privately held FM, with its 8-acre Johnston corporate campus and 1,500-person state workforce (totaling 5,500 employees worldwide), is considering expanding its local presence.
That’s why FM CEO Malcolm Roberts met with House Speaker K. Joseph Shekarchi in April to ask for legislation lifting restrictions on its investment abilities. Shekarchi said he later received a similar request from executives with Amica Mutual Insurance Co., based in Lincoln.
Shekarchi, typically noncommittal on legislation prior to a committee hearing, did not hesitate to show his support for the bill ahead of its initial hearing scheduled for Thursday, May 15, before the House Committee on Corporations.
“I appreciate dialogue from companies on ways the state can improve the business climate and level the playing field with neighboring states,” Shekarchi said in an emailed statement Tuesday. “I look forward to seeing this bill pass into law before the session concludes in June.”
The focus on keeping up with neighboring states sharpened for lawmakers and business leaders in the last year, after two major private companies, Citizens and Hasbro Inc., threatened to leave Rhode Island for Massachusetts.
Hasbro executives now expect to to provide an update on a potential relocation to Massachusetts this summer, while Citizens appears content to stay put after state lawmakers shepherded through a tax rewrite for its benefit in the 2024 legislative session.
The Citizens Bank bill, rushed through both chambers and signed into law in the final throes of the 2024 session, drew criticism from a small group of progressive lawmakers, who bristled at loss of state tax revenue ($15 million for a full fiscal year) to further boost the bottom line of a major financial services company.
Executives at FM have no plans to leave, despite a state law enacted in 1984 restricting its investments in long-term assets outside of stocks and bonds. Such nontraditional or alternative assets, currently limited to no more than 10% of total assets, could include hedge funds, private equity funds and real estate holdings. Finkelman’s bill would repeal the investment cap, letting local insurers invest as much as they want in what are referred to in federal reporting rules as Schedule BA investments.
“FM welcomes this proposal, which we believe will help support business growth and competitiveness in Rhode Island and enable insurance companies in the state to manage their investments with greater flexibility without compromising policyholder protection,” Rob Julavits, a spokesperson for FM, said in an email.
Julavits remained vague when asked about the company’s expansion plans in Rhode Island.
“FM is one of the largest private employers in Rhode Island,” Julavits said. “The company continues to grow and is currently hiring for a variety of roles. We believe this legislation would give us additional flexibility to support growth in Rhode Island, which has been home to our headquarters for nearly 200 years.”
Finkelman, owner and president of Warwick-based insurance agency The Egis Group, said FM’s cutting-edge research, development and insurance of niche areas like solar panels and renewable energy could lead to new jobs for Rhode Islanders.
Keeping up with neighbors
The bill also puts Rhode Island in line with neighboring states, a selling point for McKee.
“The Governor is committed to creating a level playing field for local companies, which is why he submitted this legislation to lift investment caps placed on Rhode Island-based insurance companies,” Olivia DaRocha, a spokesperson for McKee, said in an email. “Repealing these limits would align our state with Massachusetts and Connecticut, making Rhode Island a more attractive place to do business and ensuring our domestic insurers can compete on equal footing with their regional competitors.”
Massachusetts and Connecticut are among 10 states that do not limit investment in Schedule BA assets, Matt Touchette, a spokesperson for the Rhode Island Department of Business Regulation, said in an email.
Touchette referred questions about past investment limits in Massachusetts and Connecticut to their states’ respective business regulators. Mary Quinn, a spokesperson for the Connecticut Insurance Department, confirmed via email Wednesday that the state does not limit Schedule BA investments. However, a separate clause in Connecticut’s laws for insurers restricts company stock investments in a single institution to 5%, and non-stock investments in a single institution to 25% of assets.
The Massachusetts Office of Consumer Affairs and Business Regulation, which oversees insurance for the Commonwealth, did not respond to multiple inquiries for comment on Wednesday.
Repealing restrictions on local insurance companies’ investments might indirectly help consumers who could see premiums drop if the companies can improve their bottom lines, Finkelman said. By that same logic, if company profits suffer under riskier investment strategies, it might also hurt their policyholders.
However, state business regulators limit how much insurance companies can charge consumers, offering protections against dramatic premium spikes.
FM posted a nearly $3.4 billion profit on $8.1 billion in revenue in 2024, according to its annual report. It does not publicly report the number of policyholders, primarily commercial and industrial customers.
Amica posted an $84 million profit in 2024, according to unaudited financial statements.
Brendan Dowling, a spokesperson for Amica, expressed support for the law change in an emailed statement.
“This change will help us manage our investments more effectively, allowing us to deliver stronger, more reliable support for our policyholders when they need us most,” Dowling said.
Dowling did not specify whether lifting the investment cap could reduce consumer costs for Amica’s 1.2 million policies, which center on individual insurance products like auto, home and life insurance.
Origins of 1984 law a mystery
No one contacted for this story could answer why Rhode Island limited investment caps for insurers in the first place. Finkelman suggested hedge funds might have seemed too risky to lawmakers in the 1980s.
But nontraditional or alternative investments are now commonly accepted across industries, Finkelman said.
“FM and Amica are two of the most financially sound insurance companies,” he said. “I have very little concern about them running into financial trouble by overleveraging themselves.”
FM and Amica are two of the most financially sound insurance companies. I have very little concern about them running into financial trouble by overleveraging themselves.
Insurance companies have been steadily increasing investments in alternative assets since at least 2010, searching for higher returns in a low-interest rate environment. The appeal of alternative asset classes increased further after 2017 regulatory changes adopted by the National Association of Insurance Commissioners (NAIC), which reformed how companies could record exchange-traded funds on their balance sheets.
Julavits declined to answer questions about the timing of the company’s requested state legislation, three months after the Feb. 5 deadline for state lawmakers to submit new bills under standard procedure during the 2025 session.
Even after Shekarchi met with FM in April, it took several weeks before the proposed legislation made its debut on the House floor.
“Nothing in government moves fast,” Finkelman said.
Lawmakers will have to act quickly to advance the bill before the session ends on or before June 30.
A Senate companion bill sponsored by Sen. Andrew Dimitri, a Johnston Democrat, was introduced on Friday. A hearing has not been scheduled yet, Greg Pare, a Senate spokesperson, said.
Senate President Valarie Lawson signaled preliminary support.
“Amica Mutual Insurance and FM Global (sic) are both longstanding, valued corporate citizens in Rhode Island,” Lawson said in an emailed statement. “While the specifics of the proposal to remove the investment cap will be reviewed through the public committee process, I am open to the idea. It appears that this would create a more welcoming, business-friendly environment and improve opportunities for job creation at no cost or risk to the state. I look forward to reviewing the specifics and continuing to work with the business community to help existing Rhode Island companies grow here and to attract new companies to our state.”
This story was originally published by the Rhode Island Current.
