Liberty Mutual to sell division; big layoff not expected

Jan. 19--DOVER -- Lincoln Financial Group is set to acquire a division of Liberty Mutual for $3.3 billion, an acquisition that will reportedly involve about 1,000 employees within Liberty Mutual's Dover office, according to local officials.

Lincoln Financial announced Friday morning it had "entered into a definitive agreement to acquire" Liberty Mutual's Liberty Life Assurance Company, the division that handles Liberty Mutual's group employer and disability insurance business.

Representatives of Liberty Mutual, Dover's largest employer, weren't immediately available for comment. However, according to state Sen. David Watters, D-Dover, Liberty Mutual has informed Watters and city officials that the acquisition isn't expected to result in sweeping layoffs because Liberty Mutual's "feeling is that Lincoln (Financial) is buying the people, not just the business."

"There's hope there will be a good transition," Watters told Foster's Daily Democrat Friday morning. "One hopes given the quality of Lincoln (Financial) and its commitment to New Hampshire this will be a smooth transition."

Watters' statements are similar to comments Lincoln Financial included in its official release about the acquisition.

"Liberty is a respected and high-quality carrier, one with talented Group Benefits employees who will soon join our own impressive team in order to drive even greater benefit for all customers," Dennis R. Glass, the president and CEO of Lincoln Financial Group, said in his company's statement. "The acquisition also aligns with our strategic priority of diversifying our sources of earnings and effectively deploying capital."

Lincoln Financial representatives couldn't immediately be reached for additional comment.

Watters said his understanding is that a significant portion of the Liberty Life Assurance Company is located in Liberty Mutual's Dover offices. Watters said he had no knowledge of any connections involving Liberty Mutual's offices in Portsmouth.

According to Liberty Mutual's website, Liberty Life Assurance Company was established in 1964 with a mission "to enable a national network of Liberty Mutual Insurance sales representatives to fully service the personal insurance needs of families across the country."

Lincoln Financial's acquisition is expected to be finalized in the second quarter, pending regulatory approvals, according to a company press release. Upon completion of the transaction, Lincoln Financial will retain Life Assurance Company's group benefits business and reinsure its individual life and annuity business to Protective Life Insurance Company, according to the release.

According to Lincoln Financial's press release, the $3.3 billion purchase consists of $1.446 billion in total net investment for the group benefits business, including a purchase price of $1.021 billion and $425 million in required capital. The release indicates the remaining components of the payment to Liberty Mutual include $410 million of individual life and annuity value paid by Protective Life, $1.202 billion associated with excess capital in Life Assurance Company, and $211 million in the form of tax items.

The acquisition will reportedly give Lincoln Financial the No. 1 share of the combined fully-insured disability sales market, at 14 percent.

David H. Long, Liberty Mutual's chairman and CEO, said in a statement that the acquisition uniquely positions each company to expand on their core strengths, profitability and market presence.

"For Liberty, the transaction is an integral part of our overall strategy to focus on our property and casualty business," Long wrote in his statement. "Lincoln Financial and Protective will each benefit from Liberty's profitable book of business and its momentum in the Group, Individual Life and Annuity businesses, as well as from the addition of our many talented and committed employees."

Late last fall, Liberty Mutual announced it would eliminate 1,000 across the company, including up to 620 positions in New Hampshire, as part of a major restructuring of its entire IT unit. Some of the projected New Hampshire layoffs include jobs based at the company's Dover campus off Sixth Street, though it is still unclear how many Dover employees will lose their jobs.

The company has said many affected workers would be retrained or transferred to other departments rather than laid off. Workers who are not retained will be offered severance packages, the company has said.

Liberty Mutual employs approximately 50,000 people worldwide. Exact employment numbers for the New Hampshire offices haven't been available, although Dover officials have previously estimated to Foster's Daily Democrat that there are fewer than 3,000 people in the company's Garrison City offices.

When asked if he was aware of any potential connection between the IT layoffs and the decision to sell Liberty Life Assurance Company, Watters replied that he's "not sure how much this is really connected to that."

"Liberty had been trying to grow (Liberty Life Assurance Company) internally," Watters continued. "It's a good business, but it got the point where probably it made more sense to sell it to Lincoln."

While Watters said his hope is that Dover's Liberty Life Assurance Company employees "will be secured" through the transition, he said it is "something we've got to monitor."

"We have to make sure people are treated fairly and they're getting the services they deserve," he said.

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