Liberty Mutual Q1 profits slip due to COVID-19 market volatility

Liberty Mutual Holding Company saw a decline in its profitability in the first quarter of 2020 as its investment portfolio was impacted by the market volatility surrounding the COVID-19 pandemic.

The company recognised losses of $247 million from a decline in market value in public equities. Its balance sheet was further impacted by unrealized investment losses of $576 million from the fixed income portfolio.

Liberty Mutual reported a net income attributable of $519 million for Q1 2020, a decrease of $150 million from the same period in 2019 ($669 million).

Net written premium for the quarter was $10.04 billion, an increase of $340 million over the same period in 2019.

The total combined ratio remained unchanged at 96.3 percent.

David Long, Liberty Mutual chairman and chief executive officer, said: "Despite the challenges and uncertainties posed by COVID-19, we are confident in our ability to withstand this crisis and to continue to support our customers when they need us most.

"The overall investment portfolio was relatively well positioned as we entered the pandemic with a very high quality fixed income portfolio and de-risked equity positioning. This has enabled us to selectively take advantage of the opportunities, both defense and offense, offered by market dislocations. On the insurance side, the situation is still evolving and did not materially impact our results through the first quarter."

Long added: "Looking ahead we expect the insurance impact to be similar to what we have experienced for a moderately sized catastrophe loss. The lines of business we expect to be the most exposed to losses related to the pandemic include trade credit, general liability, workers compensation, and event cancellation, among others. With respect to business interruption, we do not expect to have material losses based on the contractual language in our policies."