Net income at Liberty Mutual Insurance fell nearly 51 percent in 2011's fourth quarter and about 78 percent for the year on catastrophe losses and reserve strengthening.

Liberty Mutual profited $284 million during Q4 2011, down from $576 during Q4 2010. The combined ratio for the period was 104.2, up 5 points from 2010.

“Another quarter, another catastrophe,” David H. Long, president and CEO of Liberty Mutual, said during a conference call.

During the last three months of 2011 the company suffered $90 million in losses related to the flooding in Thailand. Most of the loss is attributable to a Lloyd's syndicate. Local companies took about $20 million in losses, Long said during the call.

Liberty Mutual recorded a total of $234 million in cat losses during the fourth quarter, compared to $198 million during the same time the prior year.

The company posted net income of $365 million for 2011, down drastically from $1.68 billion in 2010.

Results included hundreds of millions in reserve strengthening. After a “ground-up reserve study,” Liberty Mutual strengthened asbestos-related reserves $294 million in 2011.

Additionally, a re-estimation of current accident-year loss reserves resulted in a Q4 2011 net-incurred loss of $121 million.

“I'm pretty happy it's no longer 2011,” Long said. “At least, I thought so until last weekend,” when severe storms and tornadoes ravaged a dozen states.

Good news for the Boston-based insurer included increases of 10.6 percent and 6.8 percent in net-written premium during the fourth quarter and year, respectively.

Long said Liberty Mutual continues to see favorable growth trends in domestic personal lines, with rate increases of more than 3 percent in auto and 5.5 percent in homeowners' insurance.

In commercial lines there is also a general trend in rate increases, led by double-digit jumps in workers' comp, he added.

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Catastrophes, Reserves Halve Liberty Mutual&rsquo;s Q4 Earnings

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Catastrophes, Reserves Halve Liberty Mutual’s Q4 Earnings