Profits rebound at Liberty driven by investment gains, despite high cat losses

Liberty Mutual enjoyed a big increase in its profits in the third quarter of 2020 largely on the back of a strong bounce back in its investment income. But it was also hit by elevated catastrophe losses.

The insurer reported net income $397 million and $596 million for the three and nine months ended September 30, 2020, versus net income of $272 million and $1.3 billion for the same periods in 2019, respectively.

It also enjoyed strong growth, driven by rate increases. Its net written premium for the three months ended September 30, 2020 was $10.7 billion, an increase of $385 million or 3.7% over the same period in 2019. For the first nine months of the year, premiums reached $30.5 billion, an increase of $466 million or 1.6% over the same period in 2019.

CEO David Long said: “Despite elevated catastrophe losses, net income for the third quarter was $397 million, a 46% increase from the prior year quarter. Results benefited from strong investment income as valuations in our partnership portfolio, booked on a quarter lag, rebounded from March lows.

“Catastrophe losses of nearly $1 billion, which doubled from the prior year quarter, were driven by an increased frequency of events across the US, including Hurricane Laura and the wildfires on the west coast. We are grateful for the efforts of our claims personnel to support our impacted customers, especially during these challenging times, and for the continued resiliency of all our employees globally during the pandemic.

"Net written premium grew 3.7 percent to $10.7 billion in the quarter reflecting a 16% increase in renewal rate within Global Risk Solutions and a higher policy count in Global Retail Markets US Personal Lines. Within Global Risk Solutions, the rate increases continued to flow through to the bottom line as evidenced by a 97.1 percent core combined ratio, which is 1.9 points lower than last year. Going forward, rate increases will continue to be critical as economic conditions pressure returns in our longer tailed business."