Liberty Mutual Group said its 2007 profit dipped nearly 7 percent compared with unusually strong 2006 results, as greater insurance industry competition led to pressure to cut policyholder rates.
The nation’s sixth-largest property and casualty insurer reported full-year net income of $1.52 billion last year, compared with $1.63 billion in 2006. Revenue at the policyholder-owned insurer rose more than 10 percent to $25.96 billion from $23.52 billion in 2006.
Losses from weather-related disasters and other catastophes declined 30 percent from 2006, to $378 million. But the decline was not nearly as sharp as in 2006, when the total $541 million catastrophe loss was less than one-third of the total $1.64 billion in 2005, a year that included hurricanes Katrina and Rita.
However, in 2007, rate-cutting pressure on insurers rose amid more competition, which helped curb profits.
“Everybody is trying to hold onto the good business they have,” Edmund Kelly, Liberty Mutual’s chairman, president and chief executive, told analysts in a conference call.
Pre-tax operating income excluding certain losses declined 20 percent to $2.17 billion from $2.71 billion in 2006.
The company also saw an increase in environmental and asbestos-related claims as well as tax exenses last year, partly offset by a 27 percent increase in net realized investment gains.
In last year’s fourth quarter, net income was $425 million, down nearly 7 percent from $455 million in the same quarter a year earlier. Revenue rose 15 percent to $6.93 billion.
Liberty Mutual is owned by its policyholders. The 40,000-employee, 96-year-old company does not have publicly traded stock, and voluntarily reports earnings.
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