Liberty Mutual profit falls in Q1

Liberty Mutual Holdings Co. reported a net income of $519 million for first-quarter 2020, $150 million less than net income reported in first-quarter 2019, but a rebound from the nearly $300 million net loss the insurer reported in fourth-quarter 2019 due to adverse development for liability losses. 

The Boston-based insurer reported net realized losses of $247 million in first-quarter 2020, compared with $250 million in net realized gains in the year-ago quarter, largely due to a decline in Liberty Mutual’s market value in public equities that were affected by the market volatility surrounding COVID-19.

The potential exposure of COVID-19 on the insurance side “is still evolving and did not materially impact our results through the first quarter,” David Long, Liberty Mutual’s chairman and CEO, said in a statement Thursday. “Looking ahead, we expect the insurance impact to be similar to what we have experienced for a moderately sized catastrophe loss.”

Liberty Mutual reported $10.04 billion in net written premium for the quarter, up 3.5% from the same quarter in 2019. Net written premium increased in the insurer’s global risk solutions casualty and reinsurance lines by $40 million and $171 million, respectively. Commercial auto net written premium declined $41 million and workers compensation decreased $64 million for the quarter. 

The insurer’s combined ratio for the first quarter of 2020 returned to 96.3%, the same as reported in the first quarter of 2019 and an improvement from the combined ratio of 106.7% reported in fourth-quarter 2019. The company reported revenues of $10.5 billion, down 2% from the same quarter in 2019.

While the insurer’s overall investment portfolio was “relatively well positioned” as it entered the pandemic, Mr. Long said, the company does expect COVID-19 to impact insurance with the most exposure in trade credit, general liability, workers compensation and event cancellation.

“With respect to business interruption, we do not expect to have material losses based on the contractual language in our policies,” he said.

Source: Business Insurance