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Liberty Mutual’s net income rises by 65% despite $1bn of catastrophe losses

7th May 2021 - Author: Luke Gallin

Liberty Mutual Holding Company Inc. and its subsidiaries has reported an almost 65% rise in net income, year-on-year, to $856 million for the first quarter of the year, despite elevated catastrophe losses.

liberty mutualDuring Q1, the firm’s partnership, LLC and other equity method investment portfolio generated $838 million in pre-tax operating income, driven by higher equity valuations, primarily within private capital investments.

At the same time, the company booked net realized gains of $254 million in Q1 2021 against net realized losses of $247 million in Q1 2020.

Somewhat offsetting the strong investment result in the quarter, Liberty Mutual has announced catastrophe losses of just over $1 billion, compared with losses of $306 million a year earlier.

Of the more than $1 billion total, a significant $690 million related to the February winter storms in Texas and other states in the U.S.

RMS

The claim and claim adjustment expense ratio came in at 62.1% for Q1 2021 compared with 61.9% a year earlier, while the underwriting expense ratio moved from 30.5% to 29.5%.

All in all, Liberty Mutual has reported a combined ratio of 101.5% for the first quarter of 2021, compared with 96.3% for the prior year period.

However, the combined ratio before catastrophes, COVID-19 and net incurred losses attributable to prior years improved, year-on-year, by 0.8 percentage points to 91.6%.

Liberty Mutual Chairman and Chief Executive Officer (CEO), David H. Long, commented: “For the first quarter, net income attributable to LMHC was $856 million, up 64.9% over the same period in 2020, as strong investment results more than offset elevated catastrophe losses. 

“Our partnership, LLC and other equity method investment portfolio produced $838 million in pre-tax operating income as a result of higher equity valuations, primarily within private capital investments. Catastrophe losses in the quarter were $1 billion, up $734 million from the prior year quarter including $690 million from the February winter storms, which impacted Texas and other states.

“Net written premium was up 3.6% to $10.4 billion driven by U.S. Personal Lines where we continue to achieve strong PIF growth, over 7% in both personal auto and homeowners. Sustained pricing momentum in commercial lines resulted in a 12% renewal rate increase within Global Risk Solutions. Diligent expense management combined with strong premium growth drove a 1 point reduction in the expense ratio to 29.5%. Overall, it was a strong quarter despite an elevated level of catastrophe losses, and we are pleased with the progress we’re making toward key business objectives.”

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