Liberty Mutual reports sharply higher Q4 profit

Liberty Mutual Holdings Co., citing “disciplined underwriting and operational execution,” Thursday posted fourth-quarter net income of $1.2 billion, up 89.4% from $654 million in the year-earlier period.

Revenue totaled $12.2 billion, down 2.8% from $12.5 billion for the fourth quarter of 2023.

The insurer reported $10.5 billion in total net written premiums, down 6.9% from $11.3 billion. Net written premiums for U.S. retail markets of $6.7 billion were down 5.2% from $7 billion.

President and CEO Tim Sweeney said on an earnings call with analysts that Liberty Mutual ended the year “with the strongest balance sheet in our history.”

The insurer said catastrophic losses declined 17% year-over-year in 2024 to $3.89 billion, and that its 91.5% combined ratio for the fourth quarter was its lowest in 20 years.

Liberty Mutual estimates its pretax catastrophe losses from the California wildfires will be $1.2 billion, which will be included in its first-quarter financial statement.

The insurer reported net income of $4.3 billion for 2024, up from $213 million the prior year. Net written premiums totaled $44.9 billion, with $28.3 billion coming from U.S. retail markets, $16.4 billion from global risk solutions and $268 million from corporate and other.

The insurer’s U.S. retail market logged pretax operating income of $1.9 billion for the quarter, a “substantial $1.3 billion increase compared to the same period in 2023,” and its combined ratio was 77.1%, down 15.9 points from the year-earlier period, Hamid Mirza, executive vice president of U.S. retail markets, said during the call.

The insurer’s auto liability line trends continued to moderate in the fourth quarter, with favorable collision frequency and severity trends, Mr. Mirza said. Total loss severity trends were also favorable, but repair costs were unfavorable due to auto repair wages and parts, he said.

Auto bodily injury severity trends in the quarter were elevated because of “attorney involvement in claims and legal system abuse,” Mr. Mirza said.

Property damage severity trends were “roughly flat,” he said.

Property rates decreased throughout 2024, and specialty rates, driven by cyber and directors and officers liability, continued to soften due to continued competition, said Neeti Bhalla Johnson, executive vice president and president of global risk solutions.