"Earnings for the quarter and year-to-date were in line with the prior year as we reported consolidated net income from continuing operations of $274 million and $1.4 billion, respectively," said David H. Long, Liberty Mutual Chairman and Chief Executive Officer. "The results reflect favorable investment performance offset by increased current accident year loss ratios from the elevated liability loss trends facing the industry. Regarding liability trends, we believe that the current level of rate increases are in excess of loss trends and, subsequent to the quarter, we entered into an adverse development cover to protect against potential future development across several casualty lines."
Third Quarter Highlights
- Net written premium ("NWP") for the three months ended September 30, 2019 was $10.325 billion, an increase of $136 million or 1.3% over the same period in 2018.
- Pre-tax operating income ("PTOI") before partnerships, limited liability companies ("LLC") and other equity method income for the three months ended September 30, 2019 was $125 million, a decrease of $187 million or 59.9% from the same period in 2018.
- Partnerships, LLC and other equity method income for the three months ended September 30, 2019 was $162 million, a decrease of $24 million or 12.9% from the same period in 2018.
- Net realized gains (losses) for the three months ended September 30, 2019 were $81 million versus ($104) million for the same period in 2018.
- Unit linked life insurance for the three months ended September 30, 2019 was ($12) million versus zero for the same period in 2018.
- Ironshore Inc. ("Ironshore") acquisition and integration costs for the three months ended September 30, 2019 were $4 million, a decrease of $3 million or 42.9% from the same period in 2018.
- Restructuring costs for the three months ended September 30, 2019 were $3 million, a decrease of $23 million or 88.5% from the same period in 2018.
- Loss on extinguishment of debt for the three months ended September 30, 2019 was zero versus $5 million for the same period in 2018.
- Consolidated net income for the three months ended September 30, 2019 was $274 million, a decrease of $9 million or 3.2% from the same period in 2018.
- Net income attributable to non-controlling interest for the three months ended September 30, 2019 was zero versus $1 million for the same period in 2018.
- Net income attributable to LMHC for the three months ended September 30, 2019 was $274 million, a decrease of $8 million or 2.8% from the same period in 2018.
- Net income attributable to LMHC excluding unrealized impact1 for the three months ended September 30, 2019 was $291 million, an increase of $9 million or 3.2% over the same period in 2018.
- Cash flow provided by continuing operations for the three months ended September 30, 2019 was $1.494 billion, an increase of $238 million or 18.9% over the same period in 2018.
The consolidated combined ratio before catastrophes, net incurred losses attributable to prior years and current accident year re-estimation4 for the three months ended September 30, 2019 was 95.6%, an increase of 0.9 points over the same period in 2018. Including the impact of catastrophes, net incurred losses attributable to prior years and current accident year re-estimation, the total combined ratio5 for the three months ended September 30, 2019 was 102.5%, an increase of 3.0 points over the same period in 2018.