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

Liberty Mutual has restructured its reinsurance program to be better prepared for storms, says its president and chief executive officer.

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 storm events.

Therefore Liberty Mutual has restructured its reinsurance to cover lower-severity non-modeled events while also providing protection for high-severity when needed.

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

The insurer filed for rate increases in 40 states, most significantly in the Midwest, during the first quarter, Long reports.

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

Long credits improvements in U.S. commercial pricing, a welcomed development, “in light of the chronic underpricing in many of these lines, particularly workers’ compensation,” he says.

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

 Catastrophe losses in the U.S. personal-lines segment improved slightly to $116 million compared to $121 million during 2011’s first quarter. 

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

The segment’s underlying first-quarter combined ratio decreased 1.7 points to 86.1—the lowest it has been in 10 years, according to Long.

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

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

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