|Liberty Mutual chief Ted Kelly is stepping down this month. He will stay active in civic life.
Kelly leaves bigger, better Liberty
Forgive me for starting with a bit of news that shouldn’t shock anyone: Longtime Liberty Mutual Group chief executive Ted Kelly plans to retire at the end of the month, when company veteran David Long will succeed him at the Boston insurance giant.
Kelly is 65 years old and has been planning his departure for about two years. Long was promoted to president a year ago, becoming Kelly’s clear heir apparent at the time. I didn’t know when it was going to happen, but the executive transition announced yesterday had been telegraphed long ago.
Kelly has led Liberty Mutual for 13 years, a relatively long tenure these days among chief executives at large American companies. Over those years, Liberty Mutual’s business grew dramatically, and Kelly emerged as a real leader in Boston business and civic circles.
Liberty Mutual generated about $8 billion in annual revenue in 1998, when Kelly took over as chief executive. This year, that number will come in somewhere around $34 billion.
How did that happen?
Liberty started to aggressively expand outside the United States shortly after Kelly took over.
The company also grew its domestic property and casualty business with major acquisitions, such as the $6.2 billion purchase of Safeco in 2008.
But Liberty Mutual’s financial growth and geographic expansion around the world also say something about the potential value of management continuity, especially inside a mutually owned company that doesn’t have to worry about public stock market reaction to short-term business results.
“We could take a longer-term view,’’ Kelly said yesterday. “We didn’t feel constrained to do things to make quarterly earnings look particularly good or to follow the pack.
“We could set a course, as long as it was solid and we could make progress. We didn’t have to worry about people sniping.’’
Over time, Kelly also became a highly visible presence in Boston. Liberty Mutual became more involved in the com munity, too, signing up six years ago, for example, to sponsor the annual July 4 Boston Pops concert and fireworks on the Esplanade.
As he gives up an active management role at Liberty Mutual, Kelly is preparing to become chairman of the Boston Symphony’s board of trustees on Sept. 1. “I can’t think of anything potentially more gratifying at this stage in my life,’’ he said.
Long, who is 50, plans to officially take over as Liberty Mutual’s chief executive on June 29. Despite 25 years of management experience at the company, Long is young enough to possibly run Liberty Mutual for many years.
It isn’t any secret where the company — and every other big property and casualty insurer — will look for growth in the years ahead.
“Insurance is a middle-class product,’’ Kelly likes to say, and I’m pretty sure every Liberty Mutual manager could repeat that line on cue. Insurers will go anywhere to find new customers, and the biggest middle-class boom is taking place in the world’s emerging markets.
“If we look out on the next five years, we would expect about 50 percent of new premium dollars to come from emerging markets,’’ Long said. “Our goal would be to be positioned in each one of those markets.’’
Long is taking over at Liberty Mutual after several difficult years for the property and casualty industry. Insurers invest heavily in fixed-income securities, and a prolonged period of very low interest rates has put pressure on their earnings.
Those conditions have led to relatively low stock market valuations for publicly traded property and casualty companies. Liberty Mutual tried to launch an initial public stock offering for a part of its business last year, but withdrew based on tepid demand.
Large companies sometimes take advantage of poor market conditions by scooping up smaller or weaker competitors. Long says Liberty Mutual is looking at acquisition possibilities in several countries but warned that all of them could fail to pan out.
Long also hopes to assume a civic role around Boston, as Kelly has, but thinks of that as a project in development. “There’s an expectation and a desire on my part to be an active member of the community, but you can’t just step into Ted’s shoes on Monday morning,’’ he said.
Not to worry. Kelly’s on the job until the end of the month.
Steven Syre is a Globe columnist. He can be reached at firstname.lastname@example.org.