| The Massachusetts Commissioner of Insurance has
given the go-ahead to the final step of Liberty Mutual Insurance Co.'s
mutual holding company conversion.
| "Operating as a mutual holding company will make us a stronger, more competitive company." |
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.
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