Liberty Mutual

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Liberty Mutual Group

Type	Mutual
Industry	Insurance
Founded	1912
Headquarters	175 Berkeley Street, Boston, Massachusetts, United States
Area served	Worldwide
Key people	David H. Long (CEO)
Services	Property and Casualty Insurance
Revenue	$36.9 billion[1]
Employees	Over 50,000 (2013)[2]
Website	libertymutualgroup.com

Liberty Mutual Group, more commonly known by the name of its primary line of business, Liberty Mutual Insurance, is an American diversified global insurer and the third largest property and casualty insurer in the United States based on 2011 Property and Casualty direct written premium. It ranks 81st on the Fortune 100 list of largest corporations in the U.S. based on 2012 revenue.^[3] Based in Boston, Massachusetts, it employs over 50,000 people in more than 900 locations throughout the world. As of December 31, 2012, Liberty Mutual Insurance had $120.1 billion in consolidated assets, $101.5 billion in consolidated liabilities, and $36.9 billion in annual consolidated revenue.^[4][5] The company, founded in 1912, offers a wide range of insurance products and services, including personal automobile, homeowners, workers compensation, commercial multiple peril, commercial automobile, general liability, global specialty, group disability, fire and surety.^[6][7]

Liberty Mutual Insurance corporate headquarters

Liberty Mutual Group owns, wholly or in part, local insurance companies in Argentina, Brazil, Chile, China (including Hong Kong), Colombia, Ecuador, India, Ireland, Poland, Portugal, Singapore, Spain, Thailand, Turkey, Venezuela, Vietnam, and Russia.

In The US, Liberty Mutual remains a Mutual Company where policyholders holding contracts for insurance are considered shareholders in the company. However, Liberty Mutual's brand usually operates as a separate entity outside the US. In other countries, subsidiaries are often created in countries where legally-recognized Mutual Company benefits can't be enjoyed.

The current CEO is David H. Long. He succeeded his predecessor Edmund (Ted) F. Kelly on June 29, 2011. ^[8][9] Ted Kelly was appointed CEO in 1998.^[10] In April 2013, Ted Kelly stepped down from the Board of Directors, as Chairman. ^[11]

History[edit]

Liberty Mutual was founded in 1912 as the Massachusetts Employees’ Insurance Association (MEIA), following passage of a Massachusetts state law requiring employers to protect their employees with workers’ compensation insurance in 1911.^[12] The first branch office was opened in 1914. Later that year, they wrote their first auto policy. The company was founded as a Massachusetts Mutual Company, where its insured has ownership in the company.

The name was changed in 1917 to the Liberty Mutual Insurance Company, and through partnerships they began offering full coverage auto policies. In 1964 Liberty Mutual began offering life insurance through its Liberty Life Assurance Branch. In 2002 the company converted into its current mutual holding company structure. The conversion was controversial – it proposed to give policyholders an interest in the mutual insurance company, which some policyholders believed would dilute their interest in the overall company and limit their dividends.^[13] A lawsuit was filed alleging that information provided to policyholders was misleading; Liberty Mutual settled the lawsuit in December 2001 which required additional disclosure and limited certain compensation to company officers and directors.^[14] Despite these concerns, the plan was approved by voting policyholders around November 2001.^[15]

Using this greater flexibility, Liberty Mutual ceased to be a basically mono-line, super-regional insurer and became one of the world's leading Property and Casualty companies. The growth was both organic and through acquisition. Early on the acquisitions were small, but Liberty Mutual has made several large acquisitions over the past several years, including the most recent acquisition of Safeco Corporation in 2008. Liberty Mutual agreed to acquire all outstanding shares of Safeco for $68.25 per share, for a total transaction price of approximately $6.2 billion. The result of this activity was an increase in revenue from $6 billion to over $30 billion in twelve years.

In 2006, Liberty Mutual created a television commercial about people doing things for strangers. They claim that the "overwhelming" positive response they received for the ad led to their decision to create the website, The Responsibility Project. ^[16]

Liberty Mutual is also the sole corporate sponsor of PBS' long-running documentary series, American Experience, and has produced special commercial messages for airing during American Experience broadcasts. In 2011, as part of the company's "Real America" campaign, the company introduced two new commercials featuring Sacagawea and Paul Revere, which are available for viewing on YouTube.

Organizational Structure[edit]

Functionally, the Company conducts substantially all of its business through four strategic business units: Personal Insurance, Commercial Insurance, Liberty International, and Global Specialty.^[17]

Liberty Mutual Research Institute for Safety[edit]

Founded in 1954, the Liberty Mutual Research Institute for Safety has studied occupational safety and health of workers. Its scientific contributions include machine safeguarding guidelines, the Cornell-Liberty Survival Car, and ergonomic guidelines that have informed the basis for national and international safety standards. More recently, the Institute developed the Workplace Safety Index, an annual ranking of the leading causes of the most disabling occupational injuries in the US.

The Institute's scientists conduct field and laboratory experiments on the major causes of work-related injury and disability, publishing their results in peer-reviewed scientific literature. Institute findings are the basis for safety programs, recommendations, and software, used by Liberty Mutual loss control consultants to help policyholders enhance worker safety. The Institute’s work is non-proprietary and available to the public.^{[18][19][20][21][22][23][24]}

Subsidiaries[edit]

• Helmsman Management Services
• Liberty International Underwriters
• Liberty Mutual Agency Corporation
  • America First Insurance
  • Colorado Casualty
  • Golden Eagle Insurance
  • Indiana Insurance
  • Liberty Mutual Surety
  • Liberty Northwest
  • Liberty SuretyFirst
  • Peerless Insurance
  • Safeco
• Peerless Insurance
• Liberty Information Technology^[25]

Controversy[edit]

In 2006, Liberty Mutual Claims Employees in the Los Angeles area desired overtime pay for work accomplished and tasks related to claims work. The situation escalated, and Liberty Mutual accepted a legal question which was originally in the form of four Class Action lawsuits filed by its own claims representatives, and employees. Some questions started in 2006 in North Carolina^[26] Questions of the suit delegated serviceability to a claim. It provided the company with legal precedent to claims, and ability to process claims based on values from third party information outside of claims that repair or replace property.

In late 2012, the company won an appeal granting it the ability to not pay employees for work performed on an overtime basis. Pursuit was considered an award for the insurance industry as a whole. ^[27] In this specific case, Liberty Mutual failed to appear. Instead, they relied on an Amicus Brief filed on behalf of the US Department of Labor.^[28] The Court decided, based on the Amicus Brief that Claims Personnel are exempt "Administrative Employees" and not subject to overtime pay, further supporting the Mutual Company Goals. In late 2012, The California Supreme Court also redacted court documents.^[29]

Through 2012 and 2013, a series of investigative articles were published in Liberty Mutual's hometown newspaper, The Boston Globe related to excessive compensation, weekend questionable trips using the fleet of four long-range corporate jets, by now-editor of The Boston Globe newspaper, Brian McGrory. In the investigative reporting series, a number of related to the company were discovered.

"The benefits of political friendship" A report on Liberty Mutual's political ties, including ties to Deval Patrick, the current Governor of Massachusetts. This friendship likely resulted in Liberty Mutual receipt of tax breaks in the amount of $41M. ^[30]

"Perspectives Can Change at Liberty Mutual" A look at Liberty Mutual Claims Process; where Liberty Mutual sued its own insured for filing a claim; and forced an award against Liberty Mutual. The article also discloses that Liberty Mutual Legal Team that represented the case usually paid less than half of the judgements. ^[31]

"Liberty Mutual: Your premiums, his premium office" CEO David H Long redecorates his 1,000sq foot office at a price of $4.5M. The article also discusses the need of the insurance company to have four corporate jets. ^[32]

"An Untimely Award" A review of Corporate Governance at Liberty Mutual. ^[33]

"View from the top at Liberty Mutual" Boston Globe Editor, Brian McGrory is invited to the recently renovated CEO suite at Liberty Mutual. ^[34]

"Lots more to Liberty Mutual pay story" A Comparative analysis of other executives pay in Boston. ^[35]

"At Liberty Mutual, Accounting To No One For Executive Privileges" A review of itineraries of the fleet of corporate jets, and executive compensation which includes "Make believe stock options". By virtue of a Mutual-Company setup, its customers own stock in the company. ^[36]

References[edit]

External Links[edit]

• LibertyMutual.com
• LibertyMutualGroup.com
• www.connexuscu.org
• www.liberty24.ru