Liberty Mutual Group Postpones IPO Due to Poor Market Conditions

Liberty Mutual Group, which had planned to raise $1.17 billion through an initial public offering of its Liberty Mutual Agency Corp., said it's put the IPO on hold.

"The stalled economic recovery, volatile stock market and undervalued property and casualty insurance stock prices create an unfavorable environment for receiving appropriate value for the business," Liberty Mutual said in a statement.

"The delay will not impact our business or our day-to-day operations," said Edmund F. Kelly, Liberty Mutual Group chairman and chief executive officer said in a statement. "While we still believe this transaction is a useful step in giving the group additional capital flexibility, we have more than adequate capital to conduct our business successfully."

Attempts to reach the company for additional comment were not immediately successful.

Earlier this month, Liberty Mutual Agency Corp. said it planned to issue 64.3 million Class A shares of common stock at a price estimated to be between $18 and $20 a share. The company would also have 295.7 million shares of Class B outstanding, all of which will be owned by Liberty Mutual (BestWire, Sept. 14, 2010).

While Class A stock was to get one vote per share, each share of Class B stock was to get 10 votes. "As a result, holders of our Class A stock will have very limited influence over our company," Liberty Mutual said in a filing with the U.S. Securities and Exchange Commission.

Liberty Mutual would have retained 82.1% of the ownership in Liberty Mutual Agency Corp., while new public investors would have received a 17.9% stake in the company, which offers personal and commercial insurance to individuals and small to midsize businesses via independent agents.

Proceeds of the offering were to be used to pay down debt and other corporate purposes.

Earlier this month, the company said it had planned on the new stock trading on the Nasdaq market under the symbol "LMAC." The company first announced plans to issue the IPO in May, and at that time said it planned to list the stock as "LMA" on the New York Stock Exchange. It also said it expected the offer to be completed by the third quarter (BestWire, May 10, 2010).

Liberty Mutual Group is the fourth-largest insurer in the United States at year-end 2009 based on direct premiums written, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.

Liberty Mutual Insurance Cos. currently has a Best's Financial Strength Rating of A (Excellent).

(By Meg Green, senior associate editor, BestWeek: [email protected])