(Bloomberg) -- Liberty Mutual Holding Co., the second-largestU.S. property-casualty insurer, posted its worst loss in at least adecade on costs tied to scaling back operations in Venezuela andthe declining value of some energy-related investments.

The loss of $427 million compares with a profit of $605million in the same period last year, Boston-based Liberty Mutual said in a statement on its websiteWednesday. The insurer took a $690 million impairment charge onits Venezuelan operations and plans to classify them asdiscontinued and held for sale, according to the statement.

Losses in Venezuela have been driven by the nation’s soaringinflation and devaluation of the currency, company management saidin an August earnings call. Liberty Mutual Chairman and ChiefExecutive Officer David H. Long said he estimated annual inflationof 140% in June. Venezuela hasn’t published inflation statistics ina year.

“Our continuing strong operating performance was masked in thethird quarter by a nonrecurring loss of approximately $700 millionfrom the deconsolidation of our Venezuelan subsidiary and energyinvestment-related losses,” Long said in Wednesday’s statement.

Bolivar’s decline

The bolivar has tumbled 80% on the black market this year, andis valued at about 16 U.S. cents. While Liberty Mutual books itsholdings in Venezuela at the so-called sicad rate of 13.5 perdollar, the company has become increasingly wary of its ability todo so going forward, it said in a separate statement onWednesday.

Marking to the so-called simadi rate, which has been adopted bysome other international companies, would imply a devaluation of93%. These conditions, which the company says are unlikely tochange soon, have made it difficult for Liberty Mutual to retaincontrol over its local operations, it said in the statement.

The outlook for local units of international companies inVenezuela has dimmed amid plunging prices for crude oil. Energyassets accounted for about 4.1% of Liberty Mutual’s portfolio as ofSept. 30, including bond and natural-resources partnerships. Theinsurer also has direct investments in oil and gas wells.

Oil resumed its slide on Wednesday as Brent crude traded for$39.97 a barrel on the London-based ICE Futures Europe exchange,down from more than $60 a year earlier.

Liberty Mutual’s third-quarter loss was the deepest since atleast 2004. It compares with a $234 million loss in the fourthquarter of 2012, which was driven by Superstorm Sandy. Data before2004 wasn’t immediately available.

Liberty Mutual and larger rival State Farm Mutual AutomobileInsurance Co. are each owned by policyholders.

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