The Massachusetts Commissioner of Insurance has given the go-ahead to the final step of Liberty Mutual Insurance Co.'s mutual holding company conversion.

With this approval the Liberty Mutual Group has completed its reorganization from a group of affiliated mutual insurance companies into a single mutual holding company that is still entirely owned by policyholders. Liberty Mutual Holding Co., in turn, controls several stock insurance subsidiaries — the companies that sell insurance policies — including Liberty Mutual Insurance Co., Liberty Mutual Fire Insurance Co., and Employers Insurance of Wausau.

"The completion of our reorganization to a mutual holding company is a truly momentous occasion in the 90-year history of our company," says Edmund F. Kelly, Liberty Mutual Group chairman, president and chief executive officer. "Operating as a mutual holding company will make us a stronger, more competitive company well positioned to meet our policyholders' needs now and in the future."

Opponents of Liberty Mutual's conversion see it otherwise.

"There are fair ways to become more flexible and to raise capital without ripping people off," says Ben Geman, spokesperson for the Center for Insurance Research (CIR).

The Cambridge, Mass.-based CIR is one of the most vocal critics of Liberty Mutual's conversion plan, and has accused the insurer of trying to cheat consumers of their rights in what the CIR calls a fundamentally flawed plan.

According to the CIR, Liberty Mutual's conversion takes away policyholders' rights to control the company without providing them with any compensation.

"The plan is terrible from a consumer perspective because it provides no compensation for what are very significant changes in the company's structure," says Geman.

The mutual holding company structure allows Liberty Mutual to issue stock in subsidiaries, and Geman worries that the desire for maximum profits to benefit the stockholders — which could include company executives — would eventually collide with the interests of policyholders for low-cost insurance.

John Cusolito, a spokesperson for Liberty Mutual, says that at this time the insurer has no plans to issue stock.