Liberty Mutual’s 2012 Profit Jumps 132% to $829M Despite Q4 Net Loss

March 1, 2013

Liberty Mutual and its subsidiaries today reported 2012 fourth-quarter net loss of $234 million, with the results including $576 million Superstorm Sandy losses. In comparison, the Boston-headquartered insurer had $285 million profit during the 2011 fourth quarter.

But the latest fourth-quarter loss didn’t stop the company from posting improved full-year earnings compared to 2011. The company reported $829 million net profit for the full-year 2012, a 131.6 percent increase from the $358 million profit for the full-year 2011.

“No surprise that our fourth-quarter results were impacted by Superstorm Sandy,” CEO David Long said during the earnings conference call.

“But despite this loss, for the full-year we did show a significant improvement in profitability over 2011; $829 million of net income — which is an increase of $471 million over 2011 — primarily due to improved core underwriting results and lower but still significant catastrophe losses.”

He said the fourth-quarter net loss was principally driven by Superstorm Sandy losses. “Sandy losses were $886 million pre-tax, $576 million after-tax. We expect almost 100,000 claims which — just to put it in perspective — is about double what we saw in Katrina. So I’d like to express my gratitude to our claims folks for their extraordinary response to help our policyholders post the event. So, thank you guys,” he said.

CEO Long said the 2012 full-year financial results also included a $125 million loss, after tax, from the refinancing of debt and a $64 million loss associated with the realignment of the insurer’s operating units.

In the 2012 fourth quarter, net written premiums were $8.491 billion, an increase of $783 million or 10.2 percent over the same period in 2011. The combined ratio for the fourth quarter was 112.9 percent (including 10.5 percent attributable to catastrophe losses), compared to 104.2 percent (3.0 percent attributable to catastrophe losses) for the 2011 fourth quarter.

Catastrophe losses for the 2012 fourth quarter were $843 million, compared to $234 million during the fourth quarter of 2011. Revenues for the fourth quarter were $9.628 billion, up $665 million or 7.4 percent over the same period in 2011.

For the full-year 2012, net written premiums were $33.555 billion, an increase of $2.360 billion or 7.6 percent over the full-year 2011. Net investment income for the full-year 2012 was $3.237 billion, down from $3.523 billion recorded for 2011. The combined ratio for the full-year 2012 was 104.7 percent (including 6.0 percent attributable to catastrophe losses), compared to 107.5 percent (including 9.3 percent attributable to catastrophe losses) for 2011.

Catastrophe losses for the full-year 2012 were $1.860 billion, down from $2.681 billion for the full-year 2011. Revenues for the full-year 2012 were $36.944 billion, up $2.273 billion or 6.6 percent over 2011.

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