Liberty Mutual Holding Company - Company Profile, Information, Business Description, History, Background Information on Liberty Mutual Holding Company

175 Berkeley Street
Boston, Massachusetts 02116-5066

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We are proactive in safeguarding what you cherish most in this world--your family, your home, your business, and most of all, your future.

History of Liberty Mutual Holding Company

Liberty Mutual Holding Company is the holding company formed in 2002 by Liberty Mutual Insurance Company and affiliated companies as a way to better compete against stock-based insurers. The Boston-based company is composed of a diversified international group of insurance companies, ranked 129th on the 2003 Fortune 500 list of the largest U.S. corporations and boasting $56 billion in consolidated assets and $14.5 billion in consolidated revenue. The lion's share of the group's business is workers' compensation insurance, offered under several well-known brand names, such as Liberty Mutual and Wausau. Aside from offering insurance to businesses, Liberty Mutual also provides auto, home, life, and other insurance products to individuals in the United States and Canada. Liberty International offers insurance products around the world, including specialty casualty and casualty; marine, energy, and engineering insurance; and reinsurance. It is in the overseas markets that Liberty Mutual sees its greatest growth potential for the future.

Forming the Company in 1912

The history of Liberty Mutual is tied to the rise of workmen's compensation, now referred to as workers' compensation. According to scholars, the concept dates back as far as the days of Charlemagne, embodied in tribal laws. The first workers' compensation system was introduced in Germany in 1884, followed in 1897 by the first English Workmen's Compensation Act. In the United States some coverage was already being provided by private insurers, such as Lumbermen's Mutual Casualty Company, a Chicago firm devoted to lumberjacks. Early in the 20th century, workers' compensation laws were passed at both the state and federal level, which led to public backing for coverage. Maryland enacted a workers' compensation law as early as 1902, but two years later it was declared unconstitutional. The first law to pass muster in the United States was the Federal Employees Compensation Act of 1908. The first constitutional state law was passed in Wisconsin in 1911. Over the course of the next dozen years most of the states passed workers' compensation laws, although it would take until 1949 before the last state, Mississippi, enacted legislation.

In 1911 the Massachusetts Legislature passed a law mandating that employers provide workers' compensation. To meet this need, the forefather to Liberty Mutual was formed: The Massachusetts Employees Insurance Association (MEIA). It was formed by 15 executives as a mutual company, owned for the benefit of policyholders rather than stockholders, and began operations in Boston on July 1, 1912. From the beginning, the company took steps to provide safety measures for workers, not just provide payments once they were seriously injured or killed on the job. In 1912 some 20,000 U.S. workers lost their lives in accidents. The company advocated, and even helped to design, early machine guards to protect workers from such dangerous equipment as woodworking machinery, power presses, press brakes, milling machines, and drill presses. MEIA opened its first branch office in Springfield, Massachusetts, in 1914 and looked to diversify its offerings but was limited by law to liability coverage. Instead, it forged an alliance with the United Mutual Fire Insurance Company, a mutual fire insurance company chartered by Massachusetts in 1908. It would one day change its name to Liberty Mutual Fire Insurance and eventually become one of the components of Liberty Mutual Holding Company.

The Massachusetts Legislature passed new laws in 1915 that allowed MEIA to write all types of public liability insurance, resulting in the company issuing its first automobile policy. The following year further legislation permitted the company to do business outside of Massachusetts. Because of its growing range of activities, Massachusetts Employees Insurance Association was no longer a suitable name; thus in August 1917 the company changed its name to Liberty Mutual Insurance Company. In 1919 it launched its first advertising campaign. Liberty Mutual moved beyond the boundaries of the United States in 1925 when it began operating in Canada in conjunction with salespeople employed by the Rexall Drug Company, selling and servicing policies referred by the drug salespeople. In 1927 Liberty Mutual set up shop in Ontario, Canada at Rexall's headquarters. In the meantime, Liberty Mutual continued in its efforts to prevent workplace accidents. In 1921, at the height of the silent era of film, the company produced two safety films: The Outlaw and The Hand of Fate. It was estimated that more than 250,000 workers and plant managers viewed these films. On the automobile insurance side, Liberty Mutual in 1930 began distributing safety materials to high school students in drivers' education courses.

Becoming the Top Writer of Workers' Comp in the 1930s

Despite the difficulty of doing business during the Great Depression, Liberty Mutual was able to prosper in the 1930s. In 1936 it became the number one writer of workers' compensation insurance, the same year that it broke ground on a new headquarters in Boston. By the middle of the following year, Liberty Mutual was operating in all 48 states (some 20 years before the addition of Alaska and Hawaii). With the advent of World War II, Liberty Mutual became international in scope. To support the country's war effort, industry ramped up production and Liberty Mutual kept pace, providing workers' compensation coverage to customers' operations in both the United States and overseas, including such remote locations as Somaliland, Greenland, and Guam. Liberty personnel were captured by the Japanese army on Wake Island and in the Philippines and confined in prisoner of war camps for the duration of the war. It was also during World War II, as a response to the large number of seriously wounded soldiers returning home, that Liberty Mutual in 1943 launched an experimental rehabilitation center in Boston, with the goal of helping the injured to lead productive lives. The experiment quickly became a permanent feature of the workers' compensation field, during times of war and peace. Another Liberty Mutual innovation was introduced in 1943: the establishment of its Medical Advisors Network, a group of specialists available to review the cases of the seriously injured to help assure both workers and employers that a proper medical treatment plan was being pursued. Another advance attributed to Liberty Mutual during the 1940s was the development of the first escalator emergency shutoff switch, a device that would become a building code requirement for all U.S. escalators in 1960.

Liberty Mutual's commitment to safety was further reflected by the 1954 founding of a state-of-the-art laboratory, the Liberty Mutual Research Center in Hopkinton, Massachusetts. The Center became involved in a wide range of activities, including developing tests to determine fatigue caused by workplace activities and creating an emergency assistance program for truck drivers. In 1957, at a time when 100 people were killed each day on U.S. highways, Liberty Mutual worked with Cornell University to create prototype "survival cars," featuring seat belts and headrests. These cars toured the country, seen by millions, and even made an appearance on the popular television game show I've Got a Secret. This Liberty Mutual initiative helped convince automakers to introduce a number of safety features that have become standard, such as collapsible steering columns and air bags, as well as headrests and safety belts. In addition, Liberty Mutual in 1964 opened the Skid Control School at Hopkinton to teach driver trainers how to control vehicles during skids and other emergency situations, techniques that they could then teach to commercial vehicle drivers. Liberty Mutual research center also worked with the Massachusetts Institute of Technology in the early 1960s to develop the Boston Elbow, the first battery-powered prosthetic elbow, which was a major improvement over the old harness and cable method that required a person to shrug to make the device operate. The Boston Elbow, now known as the Boston Digital Arm, used muscle signals from the surface of the skin to control the limb and allowed for a greater range of motion and the ability to lift much heavier weights. In addition, in the 1960s Liberty Mutual did pioneering research in the field of ergonomics, which would be influential in the safe-lifting criteria adopted by the National Institute of Occupational Safety and Health.

In 1964 Liberty Life Assurance Company of Boston was created to offer a full range of individual and group life insurance products. Liberty Mutual then became involved in the worldwide insurance market, establishing in 1967 Liberty International Insurance Agency, Inc., a wholly owned brokerage corporation that was able to accommodate the foreign insurance needs of American policyholders doing business in other countries, either by placing foreign insurance or through reinsurance. In 1973 Liberty Mutual opened its first wholly owned international office, located in London, to participate in the international reinsurance market. By now, Liberty Mutual had topped the $2 billion level in written premiums.

Developments in the 1980s included the establishment of The Back School at the company's Boston rehabilitation center. The program helped people learn how to live productive lives in spite of severe lower back pain. In the field of ergonomics, Liberty Mutual completed important cumulative trauma disorder research, simulating in the laboratory that kind of stress caused by such activities as repetitive assembly work, manual screw driving, and the use of pliers and knives. This work was then used to determine desirable wrist postures and grips, as well as establishing the maximum acceptable force for repetitive wrist motion. Of further note during the decade was the 1985 foundation of Liberty Financial Services, allowing the company to offer financial services. In that same year, Liberty Mutual launched a program to establish small local offices throughout the United States and Canada.

The 1990s proved to be a time of expansion and challenge for Liberty Mutual and the insurance industry as a whole. In 1993 the company established Liberty International Holdings, a venture that not only offered its health and safety services to foreign countries but also allowed it to underwrite commercial risks in international markets. In 1995 Liberty Financial was spun off as a public company, the same year that a new London


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