Saturday, May 26, 2012

McGrory Makes Me Laugh About Liberty Mutual Looting

Maybe I should stop reading the news pages and start reading the columns.

"Soaring greed at Liberty Mutual" April 18, 2012|By Brian McGrory

A couple of callers and e-mailers urged me to see the company’s private airline terminal at Hanscom with my own eyes. I would have poked my head inside but for the 8-foot fence, painted black and topped with razor wire, and the remotely operated gate that glides open only for invited guests.

Fortunately, I learned from Massport that Liberty Mutual doesn’t have one corporate jet parked at Hanscom, or even two. No, it has a fleet of five, including three Gulfstream 450s and two high-end Bombardiers, about $150 million worth of big, powerful, long-range aircraft, all of them housed in a state-of-the art 30,000-square-foot hangar with heated ramps. Basically, your friendly Boston-based insurer, the one that just got $46.5 million in city and state tax breaks, has its own air force. Hopefully they’re not planning an attack on MetLife or Arbella.  

Ha-ha

But why should anyone be surprised? A company that paid its chief executive $50 million a year probably doesn’t expect its management team to fly Delta and US Airways.  

Related: The Liberty Mutual Looter

Suppose some fellow passenger tried asking Kelly about, say, insurance. How traumatic would that have been?  

:-)

I have no doubt that if Liberty Mutual talked to me about its fleet, it would have said that corporate flights are more efficient, allowing its very important executives to hit more stops in a single day and not to squander time tangled in security lines or on connections.

But they didn’t say any of that. After I ticked off my questions to John Cusolito, Liberty Mutual’s vice president for public relations, he paused and said, “Can I ask why you’re writing this?’’

The next time I heard from him was in an e-mail, which read as follows: “Consistent with other Fortune 100 global companies, Liberty Mutual operates leased aircraft to support our operations across the United States and in 26 countries around the world. We cannot comment on your other questions for both business and security reasons.’’

So let’s instead go to an extraordinary online database, WSJ Jet Tracker, compiled by a team of reporters and editors from the Wall Street Journal and detailing most corporate flights over the four-year period that ended Dec. 31, 2010. The newspaper spent months matching so-called tail numbers to owners and obtained flight records through Freedom of Information Act requests to the Federal Aviation Administration. Many companies attempt to block travels of their aircraft from being viewed by the public.

The database shows that after the standard-issue business centers of New York, Chicago, Washington, D.C., and Seattle, that Vero Beach, Fla., was the 10th most popular destination for Liberty Mutual jets, with 22 trips there in those four years, always in cool weather months up north.

I know just enough about Florida to know that Vero Beach isn’t exactly a hotbed of commerce. But wait a minute, local property records show that Kelly and his wife bought an oceanfront house in 2005 in neighboring Indian River Shores for $7.75 million. Bizarre coincidence?

If it is, it’s equally coincidental that Hyannis was another popular destination for Liberty Mutual jets, with a dozen flights over the four years, including six directly from Hanscom, which is just 88 highway miles away. Another check of land records shows that Kelly happens to own a couple of properties in nearby Osterville that are valued by the town at just under $7 million.

One other factoid, courtesy of a US Golf Association handicap website: Kelly belongs to the same Osterville golf course, the Oyster Harbors Club, as Tom May, the $9.2 million a year NStar (now Northeast Utilities) chief executive who sits on the Liberty Mutual board of directors that determined Kelly’s pay. The coincidences keep rolling.  

Ha-ha.

In a later e-mail, Cusolito declined to say whether Kelly was on board those flights to Vero Beach and Hyannis, and if he was, whether he paid out of pocket or if they were another perk of the job.

“Security reasons.’’

Likewise, Cusolito never responded to questions of whether Kelly still gets use of the planes after his retirement last year (he now serves as chairman of the Liberty Mutual board), and whether the other part-time Liberty Mutual directors get access to the fleet along with their $200,000 yearly pay.

Again, “security reasons.’’

I never even got around to asking him about all those cold weather flights to Palm Beach and Naples, Fla., and summer jaunts to Nantucket. But you get the point.

I’ll say again what I’ve said before: This is not a screed against the rich. You invent something, you found a business, you excel in sports or the arts, you deserve whatever the world pays you. But when you’re the CEO of a public company, or in this case, a mutual owned by the policy holders, you are a steward, not a lord, and this kind of pay and these kinds of perks are a thumb in the eye of common decency and sense.

This is not even a screed against Kelly, by every measure a brilliant businessman and, according to the downtown crowd, a philanthropic and likable guy.

But $50 million in annual pay to run an insurance company, along with a veritable air force at your beck and call, says everything about absurd values, about profound disproportions, about a level of greed inexplicably and dangerously accepted as normal.

In 2010, Kelly told the Boston Herald residents of middle-class Massachusetts towns “are paying excess taxes to support government workers who get high salaries and very rich benefits.’’

So I leave you with one last thought: The $50 million a year insurance man, lounging in a Liberty Mutual jet for the 20-minute flight from Hanscom to Hyannis, gazing down at so many overpaid firefighters, teachers, and police officers sitting in the traffic jam below.  

I'm laughing but I'm not amused.

--more--"

"Liberty Mutual critics decry pay package; Pay package prompts watchdog group to call for scrutiny of tax breaks" by Todd Wallack  |  Globe Staff, April 20, 2012

Kelly’s pay has become controversial because of its size and because Liberty Mutual is mutually owned by its policy holders so any surplus profits are supposed to go back to customers as dividends or be reinvested in the company.  

Oh.

Like other insurers, Liberty Mutual has raised rates for many customers in recent years.  

Also see: Mass. Auto Insurers Step on Accelerator

Russell Mason, who bought a home and auto policy from Liberty Mutual, said he was already irked that the insurer increased his rates. Mason said his auto premium rose 22 percent and his home insurance premium 18 percent during the past three years. But Mason said he was positively steaming after reading about Kelly’s pay package.

“I was amazed and, quite frankly, I was disappointed,’’ said Mason, an 82-year-old retiree from Lexington, who said he might also look for a new insurer. “Fifty million is a hell of a lot of money. It just seems to be way out line.’’

The pay package also irked some government watchdogs because Liberty Mutual received $46.5 million in state and local tax incentives in 2010 to build an office tower near its Back Bay headquarters and create 600 jobs. The state tax break was also notable because it was larger than state guidelines normally suggest.

“It begs the necessity of the tax break,’’ Deirdre Cummings, legislative director for the Massachusetts Public Interest Research Group in Boston....  

Yeah, they were going to build it anyway.

Greg Bialecki, secretary of housing and economic development, said he and the governor were surprised by reports about Kelly’s compensation. “It is a very large number and the company and its board of directors need to explain to their policyholders how it can be justified,’’ Bialecki said. 

Oh, what scathing criticism.

But Bialecki said the administration decided to give Liberty Mutual the incentives based on the company’s commitment to expand its corporate headquarters and create hundreds of jobs. “That decision was the right one,’’ Bialecki said.  

And that is what is wrong with state government right there.

If Liberty Mutual does not meet its jobs commitment, he noted, the state can revoke the incentives. State economic development officials, however, can not cut off the breaks because of executive pay.

In addition to state aid, the city of Boston chipped in a local property tax break worth as much as $24 million over 20 years. Dot Joyce, spokeswoman for Mayor Thomas M. Menino, said the tax break made sense at the time because the firm was threatening to move the jobs to Dover, N.H., where it already has significant operations.

“In the midst of the deep recession, the city was presented with an opportunity to keep Liberty Mutual in the city of Boston,’’ Joyce said....

Since when has ECONOMIC BLACKMAIL been considered an "opportunity?" 

Great corporate citizen, huh?

--more--"

"Lots more to Liberty Mutual pay story" April 25, 2012|By Brian McGrory

You, like me, have probably never heard of A. Alexander Fontanes, listed on the company website as an executive vice president and chief investment officer, but his banker certainly has. How’s $18.8 million in 2010 sound to you? For comparison, that is $2.6 million more than the compensation package of the chief executive of MetLife, the nation’s largest insurance company, and about twice that of the chief executive of Allstate.

Related: Metlife to pay $478m related to nonpayment of benefits

Then we go to Gary Greg, listed as an executive vice president. He was good for $10.6 million in 2010. J. Paul Condrin, another executive vice president, comes in at $8.2 million. David Long, then the president, now the chief executive, made $5.6 million in 2010.

It keeps going. Christopher Mansfield, a senior vice president and general counsel, made $4.9 million in 2010. Dennis Langwell, another senior vice president, was paid $4.4 million. Helen Sayles, a senior vice president, got $4.3 million. Timothy Sweeney, an executive vice president, got only $4 million, providing a good case for a raise. Company treasurer Laurance Yahia, rounded out the list at $2.2 million.

Pay dropped some in 2011 for reasons that aren’t clear, but the damage was already done. By my calculation, that’s $63 million in compensation for Kelly’s executive team in 2010, $108 million when you factor in Kelly’s pay. It’s enough to understand why the company hiked its auto premiums in Massachusetts more than all but one other insurer, and why it demanded the $46.5 million in tax breaks from the city and state. Nobody ever said it was cheap running an insurance company.

That last sentence brought an out-loud laugh.

The Boston Red Sox, by the way, pays the starting lineup less per year than Liberty Mutual’s favorite nine - even with the surly $17 million-a-year Josh Beckett on the mound. I did the calculation and let it be said, the Red Sox are not the most overpaid team in town 

Related: Globe Reporter Scored Sox Tickets

Liberty Mutual spokesman John Cusolito responded to the question of why the executives were paid so well with the following quote: “The individuals in our filing are members of the executive team that run either major business units or corporate departments.’’

Thank you, John. That explains everything.  

:-)

I figured the members of the Liberty Mutual board of directors might be ready to apologize for this bacchanal and vow closer scrutiny in the future, so I called each one of them over the past couple of days to see what they had to say.

Ends up, it’s nothing. Silence. Well, one board member, Charles Clough, the chairman and chief executive of Clough Capital Partners in Boston, left me a voicemail saying, “I’m not really in a position to comment on anything.’’

Compared with the reaction from everyone else, I feel like Charles and I just drained a fifth of Jack talking about lost love.

Ha-ha-ha-ha-ha

A nice-sounding assistant from director Frank Doyle’s Boston office called and said, “Evidently, all questions about Liberty Mutual are being handled by Liberty Mutual.’’ A spokeswoman at Molex Inc. in Illinois, where director Martin Slark is the chief executive, rang to say, “Any questions regarding Liberty Mutual should be directed to Liberty Mutual.’’ A spokeswoman for Northeast Utilities, where Tom May is the chief executive, told me, “Tom is not going to be available. We would refer you to the Liberty Mutual spokesman.’’ Ellen Rudnick, an academic at the University of Chicago Booth School of Business, sent an e-mail saying, “I suggest you contact John Cusolito.’’ I’m starting to sense a theme here.

But at least they acknowledged the calls, which is more than can be said for director John Manning, head of Boston Capital; Michael Babcock, private investor in Vero Beach; William Van Faasen, chairman of Blue Cross Blue Shield of Massachusetts; and Marian Heard, former head of the United Way of Massachusetts Bay.

The $200,000 a year they all make in director’s pay apparently doesn’t cover the responsibility of explaining grotesque executive compensation at a company that is a mutual - owned by the policyholders, who in this case foot the bill for the executive salaries.

But here’s where the game is really rigged. Does anyone truly believe that Bill Van Faasen, to use just one example from Liberty Mutual’s board, is going to put his foot down on corporate excess? He may be great with health insurance, but please remember his $16.4 million retirement package when he stepped down as chief executive of Blue Cross in 2006, even though there was that small technicality that he didn’t actually retire. No, he continued to be paid handsomely as the Blue Cross chairman.

Does anyone really expect Marian Heard to speak up? She was making $48,444 a year to be on the Blue Cross board when the insurer was tossing buckets of retirement money at its departing CEOs. She makes at least $260,000 a year to serve on the CVS Caremark board in Rhode Island, the same one that allowed its chief executive to collect $125 million on his way out the door in 2010. She’s a respected member of the Boston business community, but also an overpaid chief executive’s best friend.

Liberty Mutual director Martin Slark made $9.1 million in 2010 as CEO of Molex Inc., a publicly traded manufacturer of electronic components. Liberty Mutual director Tom May - forgive me if I’ve mentioned him before - made $9.2 million last year as chief executive of NStar, the state-regulated utility whose customers have no other options. A former Liberty Mutual chief executive, Gary Countryman, served on May’s board at NStar.

On it goes, a system contrived and protected by a moneyed few, to nobody’s advantage but their own.  

He's got that right.

--more--"

"Liberty Mutual says profits up 26% in first quarter" by Todd Wallack  |   April 26, 2012

Liberty Mutual Holding Co. earned $459 million for the first quarter, up 26 percent from a year earlier.

The Boston company said Thursday that it benefited from fewer international disasters, the mild winter in the Northeast, increased prices for insurance policies, and stronger sales in targeted areas....  

They paid out less yet still increased prices. I think we all know why, hmmm.

Chief executive David Long said in a conference call with analysts the insurer, like others, is seeking significant rate increases in home insurance rates, particularly in the Midwest.  

Un-flipping-real!

Liberty Mutual, which has been under fire for its executive compensation, did not take questions from investors or analysts during the call, citing its pending offer to purchase up to $700 million in outstanding bonds as the reason.  

Now you know what the rate increases are for, and what is with the shifty bond buyback?

The company did not address the topic of executive compensation during the call.

The Globe recently reported that Edmund F. Kelly earned an average of $50 million over the past four years when he was chief executive, significantly more than his peers.

That has sparked complaints from some policyholders.

Liberty Mutual is mutually owned by policyholders, rather than by shareholders.

--more--"

Ted will explain it all:

"Liberty Mutual’s Kelly explains pay; Chairman cites ‘accounting issue’" by Todd Wallack Globe Staff / April 28, 2012

Liberty Mutual chairman Edmund F. “Ted’’ Kelly, under fire for receiving nearly $50 million a year from the Boston insurance giant, said Friday that an “accounting issue’’ made his compensation appear larger than it is.

Kelly, who retired as chief executive last June after 13 years, but still serves as chairman, estimated his annual compensation package between 2008 and 2010 was closer to $13 million to $15 million, but was inflated by performance incentives, collected over the years and only recently cashed in.

Yeah, that justifies it!

“It’s an accounting issue,’’ Kelly, 66, told the Globe, shortly before he spoke to students at MIT about growing up in Ireland and his business career in the United States. “It’s as if I got stock options over the years. If the company does well, the stock options do well.’’  

AS IF????

Kelly’s defense was echoed by chief executive David Long, who said in an interview with the Globe Friday that the compensation numbers were misleading because they included tens of millions of dollars in performance incentives, called phantom stock and options, that Kelly accumulated over nearly two decades with the firm. Long added that Liberty’s board tries to set executive pay in line with what similar companies offer. 

Excuse me? 

PHANTOM STOCK?!?!

“I am not going to apologize’’ for Kelly’s pay, Long said. “I think Ted Kelly built a hell of a company, and I was pleased to work with him and I don’t think he has anything to apologize for either. I think a lot of people who worked for him would say thank you to him.’’

The out-of-touch arrogance is really distasteful.

Reports of Kelly’s recent pay, however, have angered some policyholders. The company has received about 250 complaints, Long said. Liberty Mutual is mutually owned by its policyholders, so any surplus profits are supposed to go back to customers as dividends or be reinvested in the company.

Although Liberty Mutual has no stock to be traded, the company created a phantom stock program designed to mirror the stock incentives used to reward executives by publicly traded companies. Stock options give executives the right to purchase stock at a set price in the future: If the stock appreciates, the executives make money; if it falls below the set price, the options become essentially worthless.

Liberty Mutual created a similar program to tie some of its executives’ earnings to increases in the company’s value. The value of its phantom stock and stock options skyrocketed over the years because of the company’s rapid growth and improving finances, Liberty Mutual executives said.

Kelly said the company was near bankruptcy when he first joined the company in 1992 as president. It is now a solidly profitable Fortune 100 company with about $35 billion in annual sales. That pushed the value of the phantom stock from less than $18 in 1993 to nearly $100 last year.

Kelly earns about $400,000 a year as chairman, Long said.

The controversy over Kelly’s pay erupted earlier this month after the Globe reported that Kelly earned nearly $50 million a year from 2008 to 2010, which would have made Kelly one of the highest-paid top executives in the country - earning more than the leaders of corporate icons like Bank of America Corp., IBM, and Walmart Stores. Kelly later said he received a similar amount last year.

The issue also comes at a time of heightened concern about executive pay packages. Two weeks ago in a nonbinding vote, shareholders of Citigroup Inc. rejected the company’s decision to boost chief executive Vikram Pandit’s pay to $14.9 million last year.

Long said Liberty Mutual will try to avoid questions about its executive compensation by publicly disclosing top executives’ annual pay packages, starting early next year, in a format similar to what the Securities and Exchange Commission requires for public companies. That will make it easier for people to compare the pay to that of other companies.

As a mutual company, Liberty Mutual only has to report basic pay information to the state insurance commissioner.

“Unfortunately, in today’s environment, I think people think you’re not doing something above board if you don’t [disclose it],’’ Long said. “I don’t want people to assume the worst with us.’’  

Way too late!

Long also defended the company’s fleet of five corporate jets, which he said are used to ferry customers and executives to meetings and corporate events, including a company-sponsored golf tournament in Georgia. Next month, the company plans to fly board members and spouses to China for meetings.

“We’re a pretty big company, so we do business in a lot of places,’’ Long said.

The only person allowed to use the jet for personal use is the CEO, which is necessary for security reasons, Long said. “We make sure that the planes are fully utilized and used above board,’’ he said.

Liberty Mutual spokesman John Cusolito said the company also provides the CEO and board members with extra money to cover income taxes they might face related to the trips.  

That's a good use of premiums when the board is making millions, 'eh?

Long also dismissed complaints by local government watchdog groups about the $46.5 million in state and local tax breaks the company received to help build a $300 million office tower in Boston near its headquarters. In return, the company promised to add 600 jobs, plus another 500 construction jobs. The project is halfway through construction and Long expects to add the jobs even faster than pledged.

Liberty Mutual employs 4,700 in Massachusetts, including 2,900 in Boston.

“We view this as a commitment,’’ Long said. “If the building isn’t a symbol of us being committed to the city of Boston and the state for the foreseeable future, I am not sure what is.’’

After threatening to move jobs away he says that?

--more--"

"Liberty Mutual isn’t alone in using phantom stock" May 01, 2012|By Todd Wallack

The so-called phantom stock programs that allowed former Liberty Mutual Holding Co. chief Edmund F. “Ted’’ Kelly to collect nearly $50 million a year are used by many large private companies to recruit and retain talented executives, industry executives say.

Compensation Resources Inc., a New Jersey compensation consultancy, found that one-third of 230 private companies it surveyed used some sort of phantom stock program designed to mimic stock and option incentive programs used by publicly traded companies.

At least one other major Massachusetts insurer, MassMutual Financial Group, also created a phantom stock program to attract executives and encourage them to help the company grow. Since Liberty Mutual and MassMutual are mutually owned by policyholders, rather than by shareholders, they do not issue shares traded on stock exchanges.

So they created phantom stock programs as a way to tie executive compensation to the value of the company. If the value of the company goes up, the phantom stock is worth more....

Private companies typically don’t release detailed compensation information to the public, so the pay packages usually fly under the radar.

But the Globe obtained Kelly’s pay from filings with state insurance regulators, showing he earned nearly $50 million a year from 2008 to 2010, which would make him one of the highest-paid chief executives in the country. Kelly later said he earned a similar amount last year.

Both Kelly and the company argued the figures were skewed because they included phantom stock and stock options earned over nearly two decades and only recently cashed in.  

$15 million, $50 million, it really makes no difference, money junkie.

Liberty Mutual estimated he cashed in roughly 80 percent of the phantom stock during the past four years.

Kelly joined the company as president in 1992 and became chief executive in 1998, before stepping down in June 2011. He remains chairman of the board, for which he is paid $400,000 annually.

David Long, who succeeded Kelly as chief executive, said other Liberty Mutual executives have also received phantom stock.  

Just passing around the premium money, 'eh?

For instance, Liberty Mutual estimated Long will earn receive phantom stock awards this year with an estimated value of $4 million. But the amount of money he ultimately receives for the phantom stock will depend on the value of the company when he cashes it in.

Liberty Mutual issues both phantom stock and phantom stock options. In publicly traded companies, stock options give executives the right to purchase stock at a set price. The options become valuable only if the stock rises above that price. Similarly, phantom stock options - also called stock appreciation rights - can be traded in for cash only if the stock rises above the option price.

But valuing phantom stock is tricky, because the values are just estimates of what the shares might be worth on the open market, not actual values, said Paul R. Dorf, managing director of Compensation Resources.  

Translation: You are BEING ROBBED! 

Some companies use formulas to set the phantom stock value, including factors such as earnings, Dorf said. Others use independent appraisals.

Liberty Mutual’s formula utilizes several factors, including annual profits and the value of its assets....

Phantom stock can be a bigger financial hit for private companies, because they must give executives cash for their stock and options, draining their reserves. Executives at public companies typically sell the stock and options to investors on the open market.

Liberty Mutual said it tries to base its executive compensation on the median of its peer companies, many of which are publicly traded and offer stock or stock options....  

Except for Ted?

--more--"

"At Liberty Mutual, accounting to no one" May 02, 2012|By Brian McGrory

Before we get to the news today, and there is news today, I’d like to offer some unsolicited advice to Ted Kelly: Fire the advisers who coined the phrase “accounting issues’’ to justify your $50 million a year compensation package.

Seriously, off with their heads.

Accounting issues? Phantom stock? Make believe stock options? As Kelly explained this to the Globe’s Todd Wallack on Friday afternoon, he nonchalantly waved his hand around like he was trying to remember the name of his favorite new cheese at a gourmet shop in Osterville. What’s the big deal?

Here’s his problem, though: Phantom stock and phony options still add up to nearly $200 million in very real United States currency, all of which he took out of Liberty Mutual in his last four years as chief executive. Those “accounting issues’’ are also known as “bank deposits,’’ and nothing Kelly says, nothing he does, will change that.

The only phantom anything are the dividends that never got paid to the policyholders that actually own Liberty Mutual. What these owners got were rate hikes, while Boston and Massachusetts residents gave the company $46.5 million in tax breaks, all to help fund an utterly grotesque level of executive pay.

Which is why Kelly and the new chief executive, David Long, sounded a little north of ridiculous when they told Wallack (for the record, nobody over there calls me back) that Kelly’s absurd compensation payout was warranted by his performance.  

(Chuckle)

When exactly did we lose the concept that chief executives are expected to do well, and when they meet high expectations, they’re not supposed to be paid more in a day than 95 percent of their employees earn in a year?

Friday’s performance revealed that these guys are so out of touch that they truly, honestly believe they’re worth that million a week, or $192,000 a day, or $24,000 an hour - and can’t for the life of them imagine that you don’t. They actually believe the system is fair, the one they stacked with interlocking boards of directors of like-minded people paid a couple of hundred thousand dollars a year to approve each other’s pay.

Speaking of like-minded people, it was nice to hear Deval Patrick launch his postgovernment job search on Jim Braude’s and Margery Eagan’s radio show last week, when he described Kelly as a friend and offered no objections to his $50 million-a-year because the governor is not, in his words, the “pundit in chief’’ who goes “popping off.’’

You really need to be the pundit in chief to be concerned that pay inequity is playing havoc with the American economy, that a privileged few are accumulating obscene amounts of wealth while the desperate masses are stuck in place or worse? That’s not punditry, governor; it’s leadership.  

And he works for them, as do all government official$.

So to the news: Long, the current Liberty Mutual chief executive, confirmed that the chief executive is allowed personal use of the company’s air force, its fleet of five long-range corporate jets housed in a state-of-the-art hangar at Hanscom Field. The reason, and I’ll warn everyone to immediately put down all carbonated beverages so you don’t risk snorting them through your nose, is the chief executive’s personal security.   

:-)

That’s right, these guys actually believe an executive at an insurance mutual is a high value target for Al Qaeda - or maybe that’s Allstate, having no appreciation for the irony that the only reason anyone knows who they are is the ridiculous amount of money they make.

(Ha-ha-ha-ha-ha-ha-ha-ha)

I heard from people telling me to probe deeper on the destinations of these company planes....

So I logged back into the Wall Street Journal’s Jet Tracker, which monitored all corporate flights over a four-year period, and found something I’m deeply embarrassed I didn’t catch before: three round trips from Hanscom to the Hawaiian Islands in 2010, all at an estimated cost of about $90,000 apiece.

There were another three trips back in 2007 and possibly more. For anyone without a calculator, that’s well over half a million dollars in Hawaiian travel. Liberty Mutual executives must slay their underlings with a synchronized hula routine at the company holiday party.

The deeper I got, the more the itineraries read like the table of contents of Travel + Leisure. There was a 2010 trip to Venice, Italy. There were multiple trips to Palm Springs, as well as to Santa Barbara, Monterey, and Napa Valley, Calif., none of which are bustling commercial centers.

There was a trip to Barbados in 2008, Barcelona in 2009, and Jamaica in 2010. There was a pair of flights to Augusta, Ga. I wonder what’s there.  

Golf tournament.

This is in addition to the multiple trips to West Palm Beach, Fort Myers, Nantucket, and Orlando.

Let’s hear from John Cusolito, Liberty Mutual’s spokesman. “The purpose for all these flights was business - sales force incentives, major customer meetings, pursuit of additional business opportunities, meetings with international and regional management teams and aircraft maintenance,’’ he wrote in an e-mail.

Thank you, John. And please allow me to add that policyholders across the nation undoubtedly feel deep gratitude to the Liberty Mutual executives who have spared nothing in “pursuit of additional business opportunities’’ in Hawaii. 

Ha-ha-ha-ha-ha

At least Cusolito responds to questions. For the record, I still haven’t heard from any of the $200,000-a-year part-time Liberty Mutual directors who I rang up in the last two weeks, including some who wouldn’t even acknowledge the call: John Manning of Boston Capital; Michael Babcock, a private investor; William Van Faasen, chairman of Blue Cross Blue Shield of Massachusetts; and Marian Heard, former head of the United Way of Massachusetts Bay.

Maybe they made phantom return calls.  

Ha-ha-ha-ha-ha-ha!

Or maybe they’re busy helping with Kelly’s “accounting issues.’’ More likely, they feel no need whatsoever to address the absolute absurdity of what occurred at a mutual insurance company on their watch.

Which may be the worst part of a reprehensible situation. The game is rigged. The stakes are high. And the people on top are clueless, callous, or probably both as to what it all means for everyone else. Greed and arrogance are a toxic mix.

Leads to revolution and the lopping off of heads.

--more--"

"The benefits of political friendship" May 23, 2012|Brian McGrory

Try as I might to leave this Liberty Mutual lunacy behind - the $50 million annual pay packages, the fleet of five corporate jets, the rampant conflicts on the board of directors, the $4.5 million renovation to the chief executive’s suite - someone keeps drawing me back, and that someone is Deval Patrick.

I can’t get a remark of the governor’s out of my head:

“Ted Kelly is a friend of mine.’’

****************************************

Patrick and Kelly aren’t just friends, but friends with (political) benefits.

The Deval Patrick I know is much better than the Deval Patrick we’re seeing here. Seems like the future he’s most concerned with is his own.

Meantime, into this leadership void, a trio of state senators have finally stepped in....

They have filed three amendments to the state budget.... 

Related:    

"It’s not clear whether the legislation will be adopted. Most budget amendments fail, though some later become law either as standalone bills or part of broader legislation." 

I doubt it this time.

They are modest proposals that make endless sense, meaning an army of lobbyists will do everything in its power to kill them.  

And they will die.

--more--"

"Was insurer near bankruptcy? Records suggest not" May 04, 2012|Todd Wallack, Globe Staff

Liberty Mutual’s retired chief executive, Edmund F. “Ted’’ Kelly, recently recalled that the Boston insurance giant was fighting for its life when he first joined as president, in 1992. His successor, David Long, said the mutual was “practically bankrupt’’ at that time.

Liberty Mutual’s rebound from those dark days to become a Fortune 100 company is among the reasons company executives give to justify the nearly $50 million a year that Kelly received in his last four years as chief executive. A review of financial reports, press releases, and news articles from the early 1990s shows executives may have engaged in hyperbole in describing the company as close to bankrupt, but it was clearly facing significant challenges.  

Meaning the exaggerated or lied.

Though the company remained profitable in 1991 and 1992, it cut 1,600 jobs, and a bond rating agency twice downgraded its credit.

Meanwhile, Liberty Mutual and other insurers with large workers’ compensation businesses faced skyrocketing medical costs that threatened to swamp earnings, even as many states balked at approving rate increases.

“It was a very tough time,’’ said David Schiff, who wrote an insurance newsletter at the time, Schiff’s Insurance Observer.

Kelly, who became chief executive in 1998, stepped down in June after 13 years. He continues as chairman of the insurer’s board of directors.

Kelly recalled his early years at Liberty Mutual in a speech to Massachusetts Institute of Technology students last week. When he interviewed for the president’s job, he said, then-CEO Gary Countryman told him: “We are in deep trouble. If we don’t do something, the last man out is going to have to turn out the lights.’’ Countryman could not be reached for comment.

Kelly said he decided to take the job because he liked Countryman and relished the challenge of turning the company around. The same week Liberty hired Kelly in March 1992, the company announced it had laid off 420 US workers. About 1,200 workers had previously agreed to retire early.
A month later, the company reported it earned $149 million in 1991, down 9 percent from 1990, and issued a bleak statement about its core worker’s compensation business.

“There is no question that workers compensation is in crisis,’’ Countryman said in a press release. “State regulators have disregarded the underlying data and have refused to allow prices to keep pace with costs.’’

Several other insurers also announced job cuts at the time, pulled out of the workers’ compensation business in some states, or shut down altogether.

In January 1993, Liberty Mutual laid off another 400 workers....

Liberty Mutual spokesman John Cusolito said the company later learned it faced some $3 billion in legal liability from asbestos and pollution cases, which could have potentially wiped out the company’s net assets. Liberty Mutual gradually set aside enough profits to handle those claims in subsequent years.

Kelly said in his MIT speech that he and other executives quickly turned the situation around. The company began to expand into new lines of insurance and foreign markets, reducing its reliance on the US workers compensation business.

By April 1993, Countryman was more upbeat, saying the company ended 1992 “stronger than ever financially’’ as profits rose by almost half to $217 million and its diversification strategy took flight. Several states also made changes in their workers’ compensation programs that helped insurers.

Today, executives say the company is on a solid footing, with quadruple the annual revenues it generated in 1992, five times the equity, and operations in 27 countries. It now ranks 82d on the Fortune 100 list of largest US companies and is celebrating its 100th anniversary this month.  

Yes, what a $ucce$$ story.

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Not only are they looters, they are liars, too!!!

"I was driving over the Leonard P. Zakim Bunker Hill Memorial Bridge one recent night, ruing the fact that my parents never urged me toward a career in insurance, when I noticed something missing."

Always leave 'em laughing.