NU Online News Service, Nov. 7, 2:51 p.m. EDT
Liberty Mutual Group reported a third-quarter loss of more than $100 million on the combination of catastrophe losses and reserve increases related to asbestos liabilities.
The Boston-based company's third-quarter net loss of $111 million compares to net income of $567 million for the same period last year. Revenues rose 5 percent, or $380 million, to $8.8 billion.
Third-quarter catastrophes amount to $596 million, increasing the combined ratio 11.4 points to 110.5.
For the first nine months of this year, net income dropped 93 percent, or $1.02 billion, to $81 million. Revenues increased slightly more than 4 percent, or $1.07 billion, to $26 billion.
Catastrophes for the nine months stood in excess of $2.44 billion, raising the combined ratio 6.6 points to 108.6.
"Severe weather and an increase in our asbestos-related reserves overshadowed strong and improving core performance and resulted in a loss for the quarter," says David H. Long, president and chief executive officer of Liberty Mutual in a statement on Friday. "Our domestic personal-lines operations grew at a faster rate than the industry with solid core profitability; our international companies grew at a double digit rate with improved profitability, and our domestic commercial lines businesses achieve price increases higher than the prior quarter. We remain committed to disciplined underwriting and will shed business where we cannot writer a risk at an adequate return."
During a conference call with financial analysts, Long says the increase in asbestos reserves of $295 million was due primarily to increased legal-cost analysis. Hurricane Irene was responsible for $325 million of the catastrophe losses.
He says the company is seeing premium growth across the board and is getting rate increases for both personal and commercial lines. The exception is workers' compensation where the company has seen reduction it business because it is willing to walk away from accounts where it is not getting rate.
Long notes that despite the rate increases, competition remains intense as the premium size of the account increases.
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