Investment returns mask poor combined ratio at Liberty Mutual in Q2

Liberty Mutual enjoyed strong growth and a big increase in profits in the second quarter boosted by its acquisition of Ironshore and better investment returns. But these masked an underlying deterioration in its underwriting performance.

The company made a net profit of $126 million and $477 million for the three and six months ended June 30, 2017, increases of $111 million and $69 million over the same periods in 2016, respectively.

Its net operating income for the three months ended June 30, 2017 was $54 million, a decrease of $64 million or 54.2 percent from the same period in 2016.

Net realized gains (losses) for the three months ended June 30, 2017 were $30 million versus a loss of $95 million for the same period in 2016.

Acquisition and integration costs associated with Ironshore for the three months ended June 30, 2017 were $26 million versus zero for the same period in 2016.

The company's combined ratio for the three months ended June 30, 2017 increased by 1.3 points to 102.7 percent.

Ironshore boosted its growth. The company’s net written premium for the three months ended June 30, 2017 was $9.910 billion, an increase of $892 million or 9.9 percent over the same period in 2016, partly boosted by its acquisition of Ironshore, which was completed in May.

"Net income for the quarter was $126 million, up $111 million from last year, as improved investment returns offset a 1.3 point deterioration of the combined ratio," said David Long, CEO of Liberty Mutual. "Net premiums written in the quarter grew 9.9 percent including the impact of the Ironshore acquisition which was completed in May."

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