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Liberty Mutual’s Q2 result hit by elevated cats & significant COVID-19 losses

6th August 2020 - Author: Luke Gallin

Liberty Mutual Holding Company Inc. has recorded a net loss of $320 million for the second-quarter of 2020 amid elevated catastrophe losses and significant impacts from the ongoing COVID-19 crisis.

liberty mutualAll in all, Liberty Mutual’s catastrophe losses jumped by a substantial $384 million from the second-quarter of 2019 to $878 million, primarily as a result of a high frequency of severe storm activity and $174 million of losses related to civil unrest in the U.S.

In addition, the firm incurred $529 million of losses related to the COVID-19 pandemic in the quarter, of which around 50% related to event cancellation business.

Combined, the pandemic and catastrophes had an impact of $1.407 billion on Liberty Mutual’s result in the second-quarter, pushing the firm to a net loss of $320 million in Q2 2020, compared with net income of $397 million a year earlier.

“Despite these extraordinary events, our core combined ratio in the quarter improved 4.6 points to 89.1%, and we are encouraged by the continued market firming in commercial lines which should only accelerate as COVID-19 weighs on industry profitability. Within Global Risk Solutions, we achieved renewal rate increases of 16% in the quarter which is in excess of observed loss trend,” said David Long, Liberty Mutual’s Chairman and Chief Executive Officer (CEO).

RMS

Adding: “The market has been receptive to the need for rate in recent quarters as loss trends remain elevated. We expect this will have a meaningful impact on our core underwriting results going forward.”

Staying with Q2, and net written premium (NWP) decreased by 2.6% year-on-year to $9.78 billion, while net realised gains for the quarter jumped by a significant $341 million to end the quarter at $403 million.

For the half-year period, Liberty Mutual has reported net income of $199 million, which is down 81.3% on the $1.066 billion posted in the same period in 2019.

NWP for the first half of the year amounted to $19.819 billion, representing an increase of 0.4% over the same period in 2019. Net realised gains dipped in H1 2020 by 50% to $156 million.

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