Liberty Mutual Blows Their Brains Out

Liberty Mutual Group announced Q2 results and gives readers the impression that results are slightly worse than last year but not too bad. This company is a mutual company. The owners are frequently it’s owner customers. This is how they hid the bad news.

The headlines in their press release focuses on this line “Pre-tax operating income before private equity (loss) income for the three months ended June 30, 2009 was $427 million, an increase of $78 million or 22.3% over the same period in 2008”

When you start reading the income statement you realize that they are blowing their brains out in private equity transactions. In the first six months they lost $$393 million. This is a negative variance of $516 million from last year. They claim this is not meaningful.

The intellectual dishonesty is appalling. Given that bad news from financial markets and private equity investments is not new, the fact they are attempting to hide this in the bushes leads one to wonder about management’s and the boards mindset. Are they in denial about the results or do they need to hide because of other issues?

In any event the governance and transparency is inadequate.