Liberty Mutual results hit by ‘unusual volatility’ and adverse liability trends

Liberty Mutual reported significantly reduced net profit and slightly lower net written premium volumes in the second quarter of 2019 compared with last year, despite generally improving commercial insurance underwriting conditions. The US-based international insurance group said that unusual volatility had to led to negative developments in both catastrophic and non-catastrophic loss activity, including the adverse trends in liability lines that many of its leading rival insurers have also reported in recent weeks. David Long, Liberty Mutual chairman and chief executive officer, said the company has “committed” to take advantage of improving market conditions in commercial lines and “further improve” underwriting performance in the second half of this year. The insurer reported net income of $399m and just over $1bn for the three and six months so far this year, decreases of $582m and $559m from the same periods in 2018. “We witnessed unusual volatility resulting from $82m of Typhoon Jebi development and higher than expected non-catastrophe loss activity, including adverse trends in liability lines consistent with industry-wide results,” explained Mr Long. “Results for the first six months were more in line with expectations as consolidated net income from continuing operations was $1.1bn, up $21m from 2018, with revenues up 4.1%. Key drivers include a combined ratio of 98.7%, investment income up 2%, and a one point reduction in the expense ratio,” he continued. “While year-to-date results are in line with 2018, we remain committed to further improving underwriting performance, specifically in commercial lines, and feel confident that market conditions will allow us to do so,” added Mr Long. Net written premium for the second quarter 2019 was just over $10bn, a fall of $32m (0.3%) from the same period in 2018. Pre-tax operating income for the three months was $211m, a decrease of $260m (55.2%) from the same period in 2018. The consolidated combined ratio before catastrophes, net incurred losses attributable to prior years and current accident year re-estimation for the three months ended 30 June 2019 was 93.9%, an increase of 1.6 points over the same period in 2018. Including the impact of catastrophes, net incurred losses attributable to prior years and current accident year re-estimation, the total combined ratio for the three months ended 30 June 2019 was 101.2%, an increase of 3.3 points over the same period in 2018. Net written premium for the six months ended 30 June 2019 was $19.74bn, an increase of $233m (1.2%) over the same period in 2018. Pre-tax operating income before partnerships, LLC and other equity method income for the six months ended 30 June 2019 was $873 million, an increase of $9 million (1.0%) over the same period in 2018. Consolidated net income for the six months ended 30 June 2019 was just over $1bn, a decrease of $559m (34.3%) from the same period in 2018. The consolidated combined ratio before catastrophes and net incurred losses attributable to prior years for the six months was 93.5%, a decrease of 0.2 points from the same period in 2018. Including the impact of catastrophes and net incurred losses attributable to prior years, the total combined ratio for the six months was 98.7%, an increase of 0.2 points over the same period in 2018.

Liberty Mutual results hit by ‘unusual volatility’ and adverse liability trends

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