Liberty Mutual’s Q2 Profit Jumps on Life Unit Sale, Lower Catastrophe Costs

The sale of a life insurance unit and an easing of catastrophe costs boosted Liberty Mutual Holding Co.’s net income for the second quarter to $981 million, well above the $126 million it saw in the same quarter last year.

Net income for first six months of 2018 reached $1.6 billion, versus $477 million for the first half of 2017.

Liberty Mutual Chairman and CEO David Long cited improvements in core underwriting results, investments and an after-tax gain of $464 million connected to the sale of Liberty Life Assurance of Boston as factors contributing to the gain.

The combined ratio was 97.9 for the quarter, a nearly 5-point improvement from the same period in 2017 as global catastrophes returned to more normal historical levels.

Net written premium in Q2 was $10 billion, 7.3 percent, or $685 million higher than the same period in 2017.

Some noteworthy changes for the quarter were:

• Private passenger automobile net written premium increased $131 million. The company said this increase reflects increased rate to keep pace with U.S. industry loss cost trends, organic growth and higher retention in Global Retail Markets’ East and West market segments, and favorable foreign exchange due to the U.S. dollar fluctuating versus multiple currencies as compared to average rates in 2017.
• Homeowners’ net written premium increased $96 million. The increase reflects rate increases within Global Retail Markets’ U.S. market segment.
• Global Risk Solutions specialty insurance increased $235 million. The increase reflects the Ironshore acquisition (completed in May 2017), new business growth and favorable rate increases, and favorable foreign exchange due to the U.S. dollar weakening versus the euro and British pound as compared to the average rates in 2017. These increases were partially offset by additional reinsurance purchased.
• Global Risk Solutions reinsurance NWP increased $168 million. The increase reflects new business growth, favorable rate increases and favorable foreign exchange due to the U.S. dollar weakening versus the euro and British pound as compared to the average rates in 2017.
• Ironshore acquisition costs for the second quarter were $10 million, $16 million less than in the 2017 second quarter.

Source: Liberty Mutual