NU Online News Service, July 28, 3:45 p.m. EDT

Liberty Mutual Group reported net income dropped 9 percent in the second quarter of this year, which the company’s chief executive said was acceptable under present market conditions.

“It is a remarkable result given the economic and competitive environment,” said Edmund F. “Ted” Kelly, the Boston-based company’s chairman, president and chief executive officer.

He said underwriters remain disciplined and are “walking away from inadequately priced business.”

Second-quarter net income was off 9 percent, or $26 million, at $274 million compared to the same period last year. Revenues increased 13 percent, or $882 million, to $7.83 billion. Net written premium stood at $6.9 billion, an increase of $625 million, or 10 percent over the same period last year.

The company’s total combined ratio was reported as 100.2, an improvement of 1.7 points compared to the same period last year.

Among some of the factors negatively impacting the company’s performance in the quarter was private equity loss of $20 million, foreign exchange translation negatively impacting earnings by $22 million and realized investment losses at $27 million.

For the first six months of the year, net income dropped 54 percent compared to last year, or $358 million, to $302 million. Revenues increased 10 percent, or $1.4 billion, to $15.24 billion. Net written premium stood at $13.93 billion, an increase of 11 percent or $1.4 billion. The six-month total combined ratio dropped 1.5 points to 99.8.

On the personal lines side, Mr. Kelly said the company continues to seek rate increases for auto risks and suffered significant weather-related homeowners losses in the Midwest. He said the industry needs to obtain rate increases in this part of the country due to those losses.

Commercial lines remain competitive, he noted, with brokers pushing for more decreases and one insurer “that remains extremely aggressive on price.” However, that price competition is primarily focused on keeping business and new business opportunities remain difficult to obtain.

In the face of an anticipated hard market, Mr. Kelly said the company is seeing more requests for multiyear deals.

Property prices are beginning to bottom out, he noted, and catastrophe property exposures are getting increases of 10-to-20 percent.

“Pricing is firming up a little bit, except maybe in middle market; personal lines is doing very well,” said Mr. Kelly. “We will continue to plan and hold tight on underwriting standards and pricing for a long time since we have generally a conservative view, if not negative view of the economy.”