Liberty Mutual Enhances Letter of Credit Alternative

Liberty Mutual announced enhancements to one of its alternative collateral products that let risk managers reduce their traditional letters of credit and potentially earn investment income while more efficiently securing collateral obligations for large, loss-sensitive casualty insurance programs with a minimum collateral requirement of $1,000,000. All income accrues solely for the benefit of the customer and may be disbursed any time at the customer's request.

Liberty Mutual added three new funds from BNY Mellon to The Liberty Mutual Collateral Funds Account, giving risk managers the ability to select from income oriented investment opportunities approved by the National Association of Insurance Commissioners.

"As the cost of traditional letters of credit has soared and their availability has fallen, large companies have become eager to explore alternatives to tying up their letters of credit as insurance collateral," notes J. Paul Condrin, President of Liberty Mutual Commercial Markets. "Such alternatives eliminate the significant cost of letters of credit and allow companies to be strategic about when and how to use these instruments."

According to Don Pickens, Chief Underwriting Officer for the area of Liberty Mutual that serves large companies, the enhancements respond to this trend. "The Liberty Mutual Collateral Funds Account provides a more efficient way to secure individual insurance programs," notes Pickens. "And the new funds we've added give policyholders the opportunity to shift from merely protecting the capital they set aside to cover future insurance obligations, to potentially generating income from that capital."

Robert L. Griffin, managing director and head of the Government and Specialty Services Group within BNY Mellon Corporate Trust, notes the bank was pleased to collaborate with Liberty Mutual to create this customized solution. "The additional funds give Liberty Mutual customers the potential to earn investment income while at the same time meeting the strict investment guidelines required for insurance collateral," said Griffin.

The Liberty Mutual Collateral Funds Account is available to qualified customers for their workers compensation, general liability and commercial automobile insurance programs. More information on the Account is available by calling Richard Gorman, Financial Products Manager, Liberty Mutual, at 617-574-5564, or e-mailing to [email protected]. About Liberty Mutual Group Boston-based Liberty Mutual Group is a diversified global insurer and fifth largest property and casualty insurer in the U.S. based on 2008 direct written premium. The Company also ranks 86th on the Fortune 500 list of largest corporations in the U.S. based on 2008 revenue. As of December 31, 2009, Liberty Mutual Group had $109.5 billion in consolidated assets, $95.0 billion in consolidated liabilities, and $31.1 billion in annual consolidated revenue.

Liberty Mutual Group 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, assumed reinsurance, fire, and surety. Liberty Mutual Group (http://www.libertymutualgroup.com) employs over 45,000 people in more than 900 offices throughout the world.