Underwriting Discipline Pays Off for Insurer
Liberty Mutual Holding Co. reported a sharp rise in quarterly earnings, underscoring the impact of its underwriting discipline and cost-cutting efforts as it seeks to stabilize results following years of industry-wide volatility.
The insurer posted $1.24 billion in net income for the fourth quarter of 2024, nearly doubling its profit from the prior year’s $654 million. Full-year earnings surged to $4.38 billion, a dramatic turnaround from the $213 million recorded in 2023.
CEO Tim Sweeney credited the results to a continued focus on underwriting profitability and expense control, noting that the company achieved a 91.5% combined ratio—a key measure of underwriting performance that tracks claims and expenses as a percentage of premiums. That figure represents the insurer’s best quarterly result in two decades, positioning it to meet its long-term target of a 95% combined ratio in 2025.
“Turning to our 2024 financial performance, I am pleased to report that we achieved net income attributable to Liberty Mutual Holding Company of $1.2 billion in the fourth quarter,” said Mr. Sweeney in prepared remarks. “Our disciplined underwriting and operational execution have driven significant improvements, resulting in a combined ratio of 91.5% for the quarter, our lowest in 20 years. We are making remarkable progress toward our goal of achieving a 95% combined ratio in 2025, driven by underwriting and expense discipline in both US Retail Markets and Global Risk Solutions. This progress sets a solid foundation for future success, and we are committed to maintaining this discipline as we now seek to grow in select segments. We are now in a position to pursue profitable growth in the areas where we have achieved target profitability.”
Premium Growth Slows as Company Prioritizes Profitability
Liberty Mutual saw net written premiums fall 6.9% in the fourth quarter, to $10.55 billion. For the full year, premium volume declined 3.3% to $44.96 billion, reflecting a deliberate effort to limit exposure in underperforming segments.
As for the insurer’s U.S. Retail Markets segment, which includes personal auto and homeowners insurance, it recorded a 5.2% decline in premiums to $6.7 billion in Q4-2024. Global Risk Solutions, which serves commercial clients, posted a 10.5% drop to $3.84 billion.
Despite the pullback in premium growth, profitability improved significantly, driven by disciplined risk selection and better pricing across key business lines.
Claims Environment and Catastrophe Exposure
Liberty Mutual benefited from a more favorable claims environment, with catastrophe losses declining 17% year-over-year to $3.89 billion for 2024.
However, the company remains exposed to extreme weather events. Liberty Mutual estimated $1.2 billion in pre-tax catastrophe losses related to the California wildfires in January 2025, which will be recorded in Q1-2025. The figure includes expected contributions to the California FAIR Plan, a last-resort insurer for high-risk properties.
Strategic Moves and International Divestitures
As part of an ongoing effort to optimize its global footprint, Liberty Mutual announced plans to sell its Thailand and Vietnam operations to Chubb Ltd.. The Thailand transaction is expected to close in the second quarter of 2025, while the Vietnam deal is set to be finalized in 2026, pending regulatory approvals.
The company has been paring back non-core international businesses to focus on more profitable segments, following a broader trend among U.S. insurers looking to streamline operations. In the U.S. the Boston-based insurer announced that it would be sunsetting its Safeco brand, bringing all of its personal lines business under one roof.
Sweeney signaled that Liberty Mutual would continue prioritizing underwriting discipline over premium growth, while selectively expanding in profitable areas.
