Liberty Mutual Plans on Reorganization

Liberty Mutual Insurance Co. plans to reorganize to a mutual holding company in an effort to give itself room to grow and increase access to investment capital. The move is a “definitive statement” that Liberty Mutual intends to keep getting bigger, Edmund F. “Ted” Kelly, president and chief executive told the Boston Herald.

“In the long run, we are intent on growing through acquisitions.” The company’s current structure makes it difficult to acquire other businesses, restricts its ability to access capital and prevents it from selling stock, Kelly told the paper.

The company, made up of Liberty Mutual, Employers Insurance of Wausau and Liberty Mutual Fire Insurance Co., is not looking to demutualize, Kelly said. The new structure will simply make it possible to issue common stock shares to the public, giving it access to Wall Street.

The reorganization would create a three-tiered structure with Liberty Mutual Holding Co. at the top, the Herald reported. Below that would be a holding company that could one day be the vehicle for a public equity offering of up to 49 percent. The three operating insurance companies would make up the third tier directly under the second holding company.

“It sounds like Liberty Mutual is really just trying to create financial flexibility and additional sources of capital,” Keith Buckley, manager of Fitch IBCA, told the Herald.