Liberty Mutual and its subsidiaries reported 2012 fourth-quarter net loss of $234 million, with the results including $576 million Superstorm Sandy losses. In comparison, the Boston-headquartered insurer had $285 million profit during the 2011 fourth quarter.
But the latest fourth-quarter loss didn’t stop the company from posting improved full-year earnings compared to 2011. The company reported $829 million net profit for the full-year 2012, a 131.6 percent increase from the $358 million profit for the full-year 2011.
“No surprise that our fourth-quarter results were impacted by Superstorm Sandy,” CEO David Long said during the earnings conference call.
“But despite this loss, for the full-year we did show a significant improvement in profitability over 2011; $829 million of net income—which is an increase of $471 million over 2011—primarily due to improved core underwriting results and lower but still significant catastrophe losses.”
He said the fourth-quarter net loss was principally driven by Superstorm Sandy losses. “Sandy losses were $886 million pre-tax, $576 million after-tax. We expect almost 100,000 claims which—just to put it in perspective—is about double what we saw in Katrina. So I’d like to express my gratitude to our claims folks for their extraordinary response to help our policyholders post the event. So, thank you guys,” he said.
CEO Long said the 2012 full-year financial results also included a $125 million loss, after tax, from the refinancing of debt and a $64 million loss associated with the realignment of the insurer’s operating units.
Liberty Mutual CEO David Long
In the 2012 fourth quarter, net written premiums were $8.5 billion, an increase of $783 million or 10.2 percent over the same period in 2011.
The combined ratio for the fourth quarter was 112.9 percent (including 10.5 percent attributable to catastrophe losses), compared to 104.2 percent (3.0 percent attributable to catastrophe losses) for the 2011 fourth quarter.
Catastrophe losses for the 2012 fourth quarter were $843 million, compared to $234 million during the fourth quarter of 2011.
For the full-year 2012, net written premiums were $33.6 billion, an increase of $2.4 billion or 7.6 percent over the full-year 2011. The full-year 2012 combined ratio was 104.7 percent (including 6.0 percent attributable to catastrophe losses), compared to 107.5 percent (including 9.3 percent attributable to catastrophe losses) for 2011.
Catastrophe losses for the full-year 2012 were $1.9 billion, down from $2.7 billion for the full-year 2011. Net investment income for the full-year 2012 was $3.2 billion, down from $3.5 billion recorded for 2011.
(Reporting by Young Ha, Insurance Journal)