Liberty Mutual Insurance Co.’s plan to demutualize came under political fire Wednesday, marking the second time politicians have taken issue with the restructuring plan.
The Boston City Council voted Wednesday to schedule a public hearing on Liberty’s ownership proposal, just seven days after the Democratic State Committee condemned the plan in a public statement. No hearing date was set by the city council, but according to a Knight Ridder News Service report, Liberty executives would be invited to testify, along with Massachusetts Insurance Commissioner Linda Ruthardt, the mayor’s office, and “other interested parties.”
The controversy apparently stems from Liberty’s ability under the restructuring to sell up to 49 percent of the company to the public, but without directly compensating policyholders. Liberty has said it does not plan to sell stock after the reorganization.
But critics believe the matter should not even be an option, saying it would amount to an end-run around regulations that require the company to pay its entire $5.7 billion surplus to policyholders if it converts entirely to a stockholder-owned operation.
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