Liberty Mutual Sees Shrinking Profits in First Nine Months of 2011

Liberty Mutual Group has announced it lost $111 million during the year’s third quarter, with nearly $1 billion in losses due to weather-related catastrophes and asbestos-related charges canceling gains in other areas.

For the first nine months of the year, the insurer reported $81 million in profit, compared with $1.1 billion for the same period in 2010, including $567 million in net income during the third quarter.

Revenues of nearly $8.8 billion for the quarter were up 4.5 percent compared with the same period last year, and net written premiums of $8.15 billion represented a 5.6 percent boost between years.

But those bright spots were overshadowed by $596 million in catastrophe losses and $339 million in charges resulting from strengthening of asbestos-related reserves.

“We remain committed to disciplined underwriting and will shed business where we cannot write a risk at an adequate return,” David Long, president and chief executive officer, said in a statement.

Liberty Mutual’s consolidated combined ratio before catastrophes, net incurred losses from prior years and re-estimation of accidents for the current year was 97.9 percent. But with those losses factored in, the combined ratio—a measure of profitability that compares performance among multiple companies—was 110.5 percent.

Revenues for the first nine months of 2011 totaled $25.7 billion, a 4.3 percent increase compared to the same period last year. And net written premiums for January through September were up 5.6 percent to $23.46 billion.

The insurer’s total assets of $115.56 billion as of Sept. 30 were up $491 million from the end of last year.

Liberty Mutual’s dismal results put the auto, home and life insurer in the company of other coverage providers to announce deep red ink in the third-quarter. Insurance companies have seen profits plummet this year as tropical storms and other severe weather events forced them to pay damage claims on policies ranging from New Hampshire auto insurance to Texas homeowner coverage.

Last week, Infinity Property and Casualty announced its third-quarter profits fell 80 percent to $6.1 million, with officials blaming increased severity of personal injury protection (PIP) claims in Florida and bodily injury coverage in California.

The Hartford reported its net income had dropped from $666 million for July through September last year to zero for the same time frame this year because of capital markets volatility and large catastrophe claims.

The insurer suffered $134 million in catastrophe losses from July through September, officials said.

Allstate announced earlier this month that its third-quarter profits dropped by more than half, thanks largely to catastrophe losses of $697 million, a 179 percent increase from the previous year.

Progressive reported a 42 percent dip in net income for the quarter.


To read the experiences of current and former Liberty Mutual policyholders, readers can find user-submitted Liberty Mutual auto insurance reviews online.

About Matthew Morisset
Matthew Morisset is a proud alumnus of the University of Redlands, where he obtained a degree in English Literature. Utilizing his passion for analysis and writing, Matthew looks for important trends in the auto insurance industry and their implications for consumers and the market as a whole.

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