Liberty Mutual Net Income Fell in 2017 Due to Catastrophes, Commercial Auto, Taxes

February 28, 2018

“While the results in 2017 did not meet our expectations, we are encouraged by signs of market firming across each of our businesses,” Liberty Mutual Chairman and CEO David Long said in prepared remarks.

Net written premium and income for the fourth quarter increased even with catastrophe loss and tax cut charge challenges. Better investment results helped, Long said.

Net income for the 2017 fourth quarter landed at $205 million, up $62 million from the same period a year ago. Net written premium for Q4 was up eight percent, close to $8.9 billion, compared to $716 million over the same period in 2016. Consolidated net income for the quarter and year were $205 million and $19 million, respectively, with non-controlling interest factored in.

Other results:

  • Liberty Mutual’s combined ratio for 2017 was 105.6, up 7.3 points from the previous year. The combined ratio for the three months ended December 31, 2017 increased 3.5 points to 100.5.
  • For the full year 2017 net operating loss was $746 million versus income of $1.124 billion for 2016. For the fourth quarter, net operating income was $65 million, a decrease of $270 million or 80.6 percent from the same period in 2016.
  • Acquisition and integration costs relating to Liberty Mutual’s $3 billion acquisition of specialty lines insurer Ironshore from Fosun International were $56 million for 2017, including $5 million for the quarter.

In January, Liberty Mutual said it is selling its life insurance division—Liberty Assurance Company of Boston—to Lincoln Financial Group for about $3.3 billion, and the deal will close in the 2018 second quarter. Those results are presented in Liberty Mutual’s financials as discontinued operations. For 2017, discontinued operations were $213 million, up $95 million from 2016.

“These actions will allow the organization to focus on property and casualty insurance, and to take full advantage of our scale, products, and capabilities globally,” Long stated.

Liberty Mutual is also restructuring its P/C operations. It realigned its consumer and commercial insurance businesses into two P/C divisions: Global Risk Solutions and Global Retail Markets.

On January 22, the company’s Spanish subsidiary, Liberty Seguros Compania de Seguros y Reaseguros S.A., agreed to sell its entire 99.44 percent interest in its Turkish insurance affiliate, Liberty Sigorta A.S., to Talanx International. Completion of the transaction is subject to regulatory approval in Turkey.

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