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Liberty Mutual Posts 2Q Earnings

Source: Wall St. Journal

Posted on 09 Aug 2010

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Second-quarter earnings for Liberty Mutual, one of the largest auto and home insurers in the U.S., fell by 18 percent in the wake of catastrophe losses that increased twofold.

The property-and-casualty insurance industry is coming off a quiet 2009, in which big events causing insurance damages--such as storms--were muted. But that has changed this year between wicked weather and such natural disasters as earthquakes.

In the second quarter, catastrophe losses for Liberty Mutual skrocketed 96% to $497 million. As such, earnings fell to $220 million from $268 million a year earlier. Partially offsetting the catastrophe costs was the company recording $5 million in so-called private-equity income, compared with a prior-year loss of $20 million.

Revenue rose 3% to $8.07 billion as net premiums written increased 5.5% to $7.28 billion.

Excluding catastrophes and net incurred losses attributable to prior years, Liberty Mutual's combined ratio--the percentage of premiums it paid out on losses--decreased 2.3 percentage points to 96.6%. Unadjusted, it rose 4.4 points to 104.7%.

Liberty Mutual doesn't have a publicly traded stock and voluntarily reports its quarterly results. The company is owned by its policyholders.