International, Personal Lines Drive Liberty Mutual 3d Quarter

Liberty Mutual Group reported net operating income of $390 million for the three months ended September 30, 2007, an increase of $3
million over the same period in 2006.

Results in the quarter include a 9.6% increase in revenues and a $67 million after-tax ($95 million pre-tax) increase in asbestos reserves related to the completion of the Company’s comprehensive ground-up study. Net operating income for the nine months ended September 30, 2007, was $991 million, an increase of $37 million over the same period in 2006.

“We had a solid quarter despite a more competitive market place for property and casualty insurance. Our core businesses produced good operating results and cash flow, and we had significant growth in investment income,” said Edmund F. Kelly, Liberty Mutual Group Chairman, President and CEO. “Our premium growth was very satisfying and reflects the benefits of our diversification strategy. Traditional domestic commercial lines’ premium growth was lower than recent quarters, reflecting our underwriting discipline in the face of competitive market conditions. This was more than offset by our International business unit, which provided more than half of our consolidated premium growth. Both domestic and international personal lines produced strong unit growth in the quarter, bringing total worldwide insured autos to 8.2 million.”

Duuring ther quarter, Liberty Mutual completed the acquisition of Ohio
Casualty Corp., started its personal auto insurance operation in Poland and signed an agreement to acquire Brazilian insurer Indiana Seguros, S.A.

Third Quarter Highlights

Revenues for the three months ended September 30, 2007 were $6.589 billion, an increase of $575 million over the same period in 2006.

Net written premium for the three months ended September 30, 2007 was $5.795 billion, an increase of $636 million over the same period in 2006.

Net investment income for the three months ended September 30, 2007 was $759 million, an increase of $95 million over the same period in 2006.

Net operating income for the three months ended September 30, 2007 was $390 million, an increase of $3 million over the same period in 2006. Results in the period reflect a $67 million after-tax increase
in asbestos reserves related to the completion of the company’s comprehensive ground-up study.

The combined ratio before catastrophes and net incurred losses attributable to prior years for the three months ended September 30, 2007 was 98.7%, an increase of 3.5 points over the same period in 2006.

Year-to-Date Highlights

Revenues for the nine months ended September 30, 2007 were $19.027 billion, an increase of $1.515 billion over the same period in 2006.

Net written premium for the nine months ended September 30, 2007 was $16.959 billion, an increase of $1.146 billion over the same period in 2006.

Net investment income for the nine months ended September 30, 2007 was $2.142 billion, an increase of $284 million over the same period in 2006.

Net operating income for the nine months ended September 30, 2007 was $991 million, an increase of $37 million over the same period in 2006.

The combined ratio before catastrophes and net incurred losses attributable to prior years for the nine months ended September 30, 2007 was 98.1%, an increase of 2.4 points over the same period in 2006.

Including the impact of catastrophes and net incurred losses attributable to prior years, the company’s combined ratio for the nine months ended September 30, 2007 increased 0.4 points to 100.1%.