Liberty Mutual Third-Quarter Profits Back in Black

Liberty Mutual reported an improved third-quarter performance this year, supported by significant growth in revenues and a huge drop in catastrophe losses for the quarter.

The insurer posted $465 million in profits for the third quarter of 2012. During the same period last year, catastrophe losses dragged the company’s financials down and left it $111 million in the red.

But third-quarter catastrophe losses dropped 92 percent between 2011 and 2012, shrinking from $596 million down to just $45 million. In a statement, Liberty Mutual CEO David H. Long called the most recent quarter’s catastrophe losses “modest.”

Meanwhile, quarterly revenue jumped 5.8 percent, or $511 million, this year compared with the third quarter last year.

Year-to-date revenue similarly increased, rising 6.3 percent to $27.3 billion, which is $1.6 billion more than the revenue figures the insurance carrier reported during the same period last year.
The insurer reported that net written premiums for personal auto insurance are up about 7 percent compared with last year.

Liberty Mutual had planned to host its quarterly conference call with investors on Tuesday but canceled it due to Hurricane Sandy.

With Better Results, Insurers Still Plan to Pump Up Prices in Some Areas

Long said that significant growth occurred in personal lines and international business sectors, which the insurer had targeted, while commercial business sectors shrank.

Meanwhile, the insurance provider will continue inflating prices mostly in workers’ compensation and property sectors “where it is needed most,” Long said.

“This pricing trend will continue given the persistent low-yield environment,” he said.

Insurers seem to be trying to make up for lost ground by staying the course on pricing plans even with their improved quarterly financial showings, meaning the higher profits won’t necessarily mean cheaper insurance prices for the average consumer.

Travelers, which released its financials last week, also performed well for the third quarter and attributed much of its to raised prices and lower catastrophe losses.

CFO Brian MacLean said that price increases were “across the board with our products,” ranging from 6 to 10 percent across all lines of business for the quarter.

“Over time, pricing on the new business we have written has improved,” he said during a conference call with investors. “Given our strategy to improve margins, we are very comfortable with the volume trade-off.”

In its financial release earlier this month, Progressive reported huge year-over-year profit gains of 83 percent, buoyed by strong investments after the insurer liquidated more than $500 million in stocks.

Liberty Mutual Holds Seventh Place in Auto Insurer Rankings

In the latest rankings from the National Association of Insurance Commissioners (NAIC), Liberty Mutual holds 4.5 percent of the U.S. auto insurance market, giving it the seventh-highest place among car insurers. It is virtually tied with USAA, which holds 4.6 percent of the market. Nationwide, which places eighth in the rankings, has about 4.1 percent of the market.

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

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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