In an abrupt turn from its preliminary results, Liberty Mutual Insurance has reported a robust third quarter in 2024, showcasing a significant turnaround in its financial performance compared to the same period in 2023. The Boston-based insurer, along with its subsidiaries, achieved a net income of $892 million for the third quarter, a marked increase from the $219 million recorded last year. Over the nine-month period ending September 30, 2024, the company’s net income rose impressively to $3.144 billion, reversing a net loss of $441 million from the previous year.
Comprehensive Financial Overview
This financial upswing is attributed primarily to strong underwriting performance in both its US Retail Markets and Global Risk Solutions sectors, coupled with solid investment results. Tim Sweeney, President and CEO of Liberty Mutual, emphasized the effectiveness of their targeted underwriting strategies, which led to a 4.0-point improvement in the underlying combined ratio, now at 88.1%. The total combined ratio also improved significantly, dropping by 5.9 points to 96.7% for the quarter.
“For the third quarter, we reported net income attributable to LMHC of $892 million, reflecting strong underwriting performance in both our US Retail Markets and Global Risk Solutions businesses as well as solid investment results,” he noted.
Catastrophe losses remained a challenge yet were well-managed, totaling $1.1 billion in pre-tax net losses, with $458 million attributed to Hurricane Helene. Despite these losses, the company’s strategic measures have paid off, particularly in the US Retail Markets, where the combined ratio saw a substantial decrease of 13.8 points, settling at 94.9%.
The company’s investment sector also saw positive movement, with a $1.2 billion pre-tax net investment income for the quarter, driven by higher fixed income yields and favorable valuations in private equity. This financial health has positioned Liberty Mutual well on its path to achieving a target combined ratio of 95% in 2025, which Sweeney cited as foundational for sustained, profitable growth.
Net written premiums for the quarter slightly declined by 1.1% to $12,027 million, influenced by a 5.3% decrease in the US Retail Markets. The Global Risk Solutions segment saw a minimal reduction of 1.8%, while significant changes were observed in the Corporate and Other segment, which moved from negative figures in 2023 to $274 million in 2024.
Liberty Mutual’s operational revenues for the third quarter increased by 1.3% to $12,727 million, and by 3.1% to $38,000 million for the nine-month period. These figures reflect the company’s ongoing adjustments and realignment towards more profitable and sustainable business practices.
Detailed Underwriting Performance
- Net Written Premiums (NWP): For Q3 2024, the US Retail Markets segment reported NWPs of $7,619 million, which is a 5.3% decrease from the $8,043 million reported in Q3 2023. Despite this decrease, the profitability from these premiums has improved due to enhanced underwriting practices.
- Combined Ratio Improvement: The total combined ratio for the US Retail Markets improved significantly by 13.8 points to 94.9% in Q3 2024, compared to a higher ratio previously. This indicates more efficient and profitable underwriting.
- Underlying Loss Ratio Improvement: The underlying loss ratio in the US Retail Markets sector saw a notable improvement by 10.2 points from Q3 2023, which has substantially contributed to the improved overall performance in this sector. This improvement stems from earned rate increases, strategic underwriting actions, and improved frequency trends.
Strategic Developments and Future Outlook
Equity Growth and Strategic Initiatives
Further bolstering its financial base, Liberty Mutual reported a substantial increase in equity, with unassigned equity rising by 10.5% to $33,135 million as of September 30, 2024. This increase, coupled with a significant reduction in accumulated other comprehensive loss, has strengthened the company’s balance sheet, enhancing its capacity to manage future uncertainties and capitalize on investment opportunities.
Significant Transactions
Liberty Mutual’s strategic initiatives include significant external transactions, such as a 30-year facility agreement with a Delaware trust, involving $1.250 billion of precapitalized trust securities. This proactive approach to funding and investment highlights the company’s forward-thinking strategy and commitment to long-term financial stability.
