Liberty Mutual Reports Q4 Gains Despite Jump in Catastrophes

By | March 6, 2015

Liberty Mutual Holding Co. finished out 2014 with gains in net written premium, net income and an improved combined ratio. But catastrophe losses jumped substantially due to costs from a number of severe storms.

David Long, the company’s chairman and CEO, framed Liberty Mutual’s 2014 results as showing an insurer that remains on the upswing, driven by “deliberate underwriting actions and solid investment results.”

The Boston, Mass.-based property/casualty insurer booked more than $8.85 billion in consolidated net written premium for the quarter ending Dec. 31, up $95 million (1.1 percent) over the same period in 2013.

Catastrophe losses for the 2014 fourth quarter were up 53.5 percent to $155 million, or $54 million higher than the 2013 fourth quarter. They’re also higher for the year – at $1.6 billion, versus $1.26 billion in 2013. Liberty Mutual said the numbers stem from “severe storms” in the U.S., U.K., floods in Ireland, Central Europe and Canada, and a German hailstorm, among other catastrophe events.

Net income, at nearly $560 million for the quarter, reflects a $63 million increase versus the 2013 fourth quarter. Put another way, that’s a 12.7 percent jump.

The consolidated combined ratio for Q4 came in at 92.9, a 3.1 point improvement compared to the 2013 fourth quarter, without catastrophes, net incurred losses attributable to prior years, and current accident year re-estimation factored in. With all three elements included in the equation, the combined ratio was 93.5, a 6.6 point improvement over 2013’s Q4 number.

As well, Liberty Mutual said it produced more than $9.4 billion in revenues for the quarter ending Dec. 31, down $7 million from the same period in 2013. Considering that is a 0.1 percent downtick, year-by-year comparisons are essentially static.

For 2014 as a whole, Liberty Mutual generated $36.6 billion in revenue, 3.2 percent higher than in 2013. Net written premium landed at approximately $36.3 billion, a 3.3 percent jump over the previous year. Net income reached $1.8 billion, which was 5.2 percent higher than in 2013.

Liberty Mutual’s consolidated combined ratio, minus catastrophes and net incurred losses from prior years, came in at 92.8 for the year, 2.4 points better than in 2013. With catastrophes and net incurred losses factored in the number comes in at 97.5, a 2.2-point improvement versus 2013.

Liberty Mutual Holding Co. includes Liberty Mutual Insurance Co., Liberty Mutual Fire Insurance Co. and Employers Insurance Company of Wausau.

Source: Liberty Mutual Holding Company

About Mark Hollmer

Hollmer is a veteran business journalist and editor of CarrierManagement.com's daily e-newsletter for the property/casualty insurance industry C-suite. He may be reached at mhollmer@carriermanagement.com. More from Mark Hollmer

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