Liberty chief fights back

The head of Liberty Mutual Insurance Group yesterday fended off criticism of his multimillion-dollar pay package, claiming earlier reports had overestimated his actual annual salary and reminding policyholders they have benefited with him in the success of the company.

It wouldnt have happened if the company hadnt done well, and Im not going to apologize for the company doing well, Liberty Mutual Chairman Ted Kelly told the Herald after addressing about 70 students and faculty members at the Massachusetts Institute of Technology, where he earned a doctorate in math.

Kelly said Liberty Mutual had more outstanding liabilities than value 20 years ago when he joined the company as president and chief operating officer, before the Boston business went from near-bankruptcy to becoming an international giant and many of its competitors disappeared.

Theyre all gone, and weve been hiring Massachusetts employees, lots of them, Kelly said.

Reports filed with state regulators indicated Kelly had earned as much as $50 million in each of the past four years, according to published reports. But the Liberty Mutual chief said his actual annual salary was closer to $7 million last year and about $15 million annually over the previous three years. He said he earned $1 million to $2 million in his early years with the mutually owned company.

Kelly attributed the higher figures in the past few years to cashing out long-held investment holdings he had earned and that increased in value during the course of his Liberty Mutual career. He said Liberty Mutual has seen its value rise from about $2 billion with nearly that much in liabilities when he joined the company in 1992 to $16 billion to $17 billion today.

During his speech at MIT, Kelly said he was headed for an academic life in mathematics when he put his background to actuarial use and then moved into management.

Extolling the benefits of ethics in the workplace, Kelly said the stability of any company should be credited to the dedication of its frontline workers.

The best thing that ever happened to me was bad luck because its how we manage bad luck and the 90-degree turns that it creates that gets us where we are, he said.

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Liberty chief fights back