A Liberty Mutual executive said the insurer is following closely the emerging economic and trade turmoil in Europe, Asia and other emerging markets, but that the impact of those issues is relatively small, at least for now.
“We’re hitting macro-economic headwinds in Europe and Brazil, for instance, in terms of a growth perspective, but we feel pretty good .. from a profitability perspective,” Tim Sweeney, Liberty Mutual’s president, Global Retail Markets, said during the insurer’s Aug 8, 2019 second quarter earnings call.
Sweeney said that the Liberty Mutual continues to grow its Europe business though it is slower “than we would like.”
In China, other issues are in play. The U.S./China trade conflict is impacting Liberty Mutual “a little bit from a macro business,” Sweeny said, but he noted that Liberty Mutual is still growing in China and in other Asian markets, with a goal of keeping all of that momentum within profitable territory.
“In Asia we continue to grow more than 30 percent per year,” he said. “China [is] still growing at about 15 percent a year.”
Still, challenges remain. Sweeney noted that Liberty Mutual has paid close attention to regulators in China, which have focused on “trying to hold all competitors” in an awkward kind of way, trying to push out every competitor to the same growth rate. And so that’s been a little bit of a challenge in terms of reaching our growth aspirations.”
Sweeney added that Liberty Mutual’s global competitors including Allianz, AXA and Zurich are seeing the same emerging market challenges. All, he added, are using some of the same strategies to counter it and still making headway.
It’s “nothing I’m concerned about from a competitive dynamic,” Sweeney said. “It’s more of a macro-economic, and in the case of China, a bit of a regulatory situation. But we feel pretty good about where we’re growing and the ultimate profitability of that business.”
Overall during the 2019 second quarter, Liberty Mutual Holding Company Inc. took a hit due to largely to higher-than-expected non-catastrophe loss activity. The insurer reported just under $400 million in net income for the quarter, a $582 million drop from the same period in the 2018 second quarter.
“We witnessed unusual volatility resulting from $82 million of Typhoon Jebi [loss]development and higher than expected non-catastrophe loss activity, including adverse trends in liability lines consistent with industrywide results,” Liberty Mutual Chairman and CEO David Long said in prepared remarks.
For Q2, net written premium was just over $10 billion, down 3 percent from the same period in 2018.
Liberty Mutual’s consolidated combined ratio, for the 2019 second quarter was 101.2, a figure that includes catastrophes, net incurred losses from prior years and current accident year re-estimation. That’s 3.3 points higher than the same period in 2018.
Source: Liberty Mutual