Policyholders Approve Liberty Mutual Conversion
Policyholders of Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company have overwhelmingly approved changing the Liberty Mutual Group to a mutual stock holding company, the firm announced.
Eighty-eight percent of policyholders of Liberty Mutual who cast ballots voted to approve the mutual holding company conversion plan, and 89 percent of Liberty Mutual Fire policyholders voting also approved that company's reorganization, the Boston-based insurer said.
One of the requirements for the plan to become effective is approval by at least two-thirds of voting policyholders.
Liberty Mutual also announced that the Wisconsin insurance commissioner's office approved the application of Employers Insurance of Wausau, a member of the Liberty Mutual Group, to form a mutual holding company. Wausau's policyholders will meet Nov. 20, at which time the company will announce the results of its policyholder voting.
Pending approval from the Massachusetts insurance commissioner, Liberty Mutual anticipates completing its mutual holding company plan and related transactions in the first quarter of 2002.
According to documents released when Liberty first announced the conversion plan in September 2000, the plan, in several reorganization and merger steps, will create a structure consisting of three stock insurers, an intermediate stock holding company and a mutual holding company. Policyholders of the companies belonging to Liberty Mutual Group before the conversion will have policyholder rights in one of the three stock insurers and separate ownership rights in the mutual holding company after the conversion.
The intermediate stock holding company exists so that Liberty can access the capital markets.
At the time the plan was first announced, and in later announcements, Liberty Mutual said that while mutual holding company statutes allow 49 percent of the stock to be sold to the public, the insurer did not expect to make an initial public offering or to go through a subsequent demutualization.
If the plan is ultimately approved by the Massachusetts department, Liberty Mutual will become the first top-ranked property-casualty mutual to take advantage of statutes that allow a mutual holding company structure.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 19, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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