NU Online News Service, April 27, 11:20 a.m.EDT

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Liberty Mutual has restructured its reinsurance program to bebetter prepared for storms, says its president and chief executiveofficer.

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During a conference call to discuss first-quarter earnings,Chief Executive David H. Long says the insurer believes there is a“distinct possibility” of continuing or even an increase, in stormevents.

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Therefore Liberty Mutual has restructured its reinsurance tocover lower-severity non-modeled events while also providingprotection for high-severity when needed.

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In addition, Liberty Mutual will “insist on receiving sufficientprices to cover the risk or we will not write it.”

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The insurer filed for rate increases in 40 states, mostsignificantly in the Midwest, during the first quarter, Longreports.

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First-quarter net income at Boston-based Liberty Mutual HoldingCompany Inc. was up about 26 percent to $459 million, compared tothe same period last year.

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Long credits improvements in U.S. commercial pricing, a welcomeddevelopment, “in light of the chronic underpricing in many of theselines, particularly workers' compensation,” he says.

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Fewer international catastrophes and improving non-catastrophepersonal-lines results also contributed to overall profitability,says Long.

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Catastrophe losses in the U.S. personal-lines segmentimproved slightly to $116 million compared to $121 million during2011's first quarter.

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Net-written premiums were up 10.2 percent to about $1.85billion, reflecting more policies-in-force as well as rateincreases.

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The segment's underlying first-quarter combined ratio decreased1.7 points to 86.1—the lowest it has been in 10 years, according toLong.

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Including losses from catastrophes and prior years, the combinedratio in personal lines was 93.2. The consolidated combined ratioat Liberty Mutual was 100.9, a decrease of 1.5 points from theprior year first quarter.

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In commercial lines during the first quarter, net premiums weredown 2.8 percent to $1.54 billion but net premiums earned were up$50 million to $1.33 billion.

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The increase “reflects higher rates across all property andcasualty lines of business, and growth in property and LibertyMutual Reinsurance,” Liberty Mutual says.

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