Liberty Net Down 27% In Quarter

Boston-based Liberty Mutual Group said today that third-quarter net income dropped by 27 percent and its combined ratio had deteriorated one point to 99 as the insurer was impacted by the market's price slump.

Net income was $404 million compared with $556 million for the period last year. For nine months the decline was 6.7 percent, dropping from $1.17 billion to $1.09 billion.

The company said international premiums provided more than half of the total, with 9.6 percent growth in revenues for the quarter, compared with the period last year. Another highlight was strong growth in both domestic and international personal lines businesses, bringing total worldwide insured autos for the company to 8.2 million.

But traditional domestic commercial lines' premium growth was lower than in recent quarters, Liberty Mutual said, "reflecting our underwriting discipline in the face of competitive market conditions."

Liberty Mutual said net operating income was $390 million, up $3 million for the period in 2006. The company noted that results for the period reflected a $67 million after-tax and $95 million pretax addition to asbestos reserves.

"The increase in asbestos reserves was related to completion of the company's comprehensive ground-up study," the company said.

Net operating income for the nine months ended September 30, 2007 was $991 million, an increase of $37 million over the same period in 2006.

"We had a solid quarter despite a more competitive market place for property and casualty insurance," said Edmund F. Kelly, Liberty Mutual Group chairman, president and chief executive officer. "Our core businesses produced good operating results and cash flow, and we had significant growth in investment income," he said.

"Our premium growth was very satisfying and reflects the benefits of our diversification strategy," he added.