The Massachusetts Division of Insurance has approved a reorganization plan that will convert three Liberty Mutual Insurance Co. affiliates into stock insurers before merging them under the parent company – a move the insurer said would preserve policyholder benefits while improving access to capital.
The plan involves Montgomery Mutual Insurance, Liberty Mutual Mid-Atlantic Insurance and Patrons Mutual Insurance Co., according to the regulator's order and decision.
Each company will convert to a domestic stock insurer, then merge and be acquired by Liberty Mutual Holding Co.
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The three companies bring a combined history spanning nearly two centuries. Montgomery Mutual was incorporated in Maryland in 1848 and affiliated with Liberty Mutual in 1996, while Liberty Mutual Mid-Atlantic was established in 1920.
Patrons Mutual, founded in Connecticut in 1887, joined the group more recently – Liberty Mutual completed its acquisition in February 2022 through its affiliation with State Automobile Mutual Insurance Co.
Liberty Mutual stated during public hearings that the reorganization would allow each company to benefit from the holding company's size and scale.
The company also cited improved risk diversification, including geographic diversity, access to capital and corporate governance improvements as factors supporting the move.
Under the mutual holding company structure – which Liberty Mutual adopted in 2002 – policyholders of the converted companies become members of the mutual holding company, preserving their ownership and membership rights across the organization.
Statutory law requires that 51% of the voting control of downstream stock companies remains with the mutual holding company, where policyholder rights are maintained.
Despite the conversion, each company will retain its name, including the word "mutual," according to the order. The regulator noted there will be no changes to policy terms or existing business operations, and policyholders will retain voting control following the reorganization.
A working group established by the insurance division reviewed the plan and confirmed the stated benefits. The group found the reorganization would benefit policyholders and have no impact on competition in the market.
The working group also determined the transaction meets capitalization requirements, finding each company is "well-capitalized and these transactions will have no negative effect" on that standing.
