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Liberty Mutual’s quarterly net income rises


Liberty Mutual Holding Co. Inc. said Tuesday that net income for the fourth quarter of 2017 was $205 million, up 43.4% over the same period in 2016.

Net written premium for the quarter was $8.86 billion, up 8.8% over a year ago. The combined ratio for the quarter was 100.5%, up 3.5 points from the prior-year quarter.

“Profitability increased, despite higher catastrophe losses and a Tax Cuts and Jobs Act-related charge, due to improved investment results,” David H. Long Chairman and CEO, said in a statement.

For the year, the mutual insurer said that its 2017 net income totaled $17 million, a staggering drop from $1.01 billion a year ago, as record catastrophes, commercial automobile setbacks and a charge spurred by the tax law change cut into the mutual insurer’s bottom line.

During a conference call with analysts, Mr. Long said that “in commercial insurance, we continue to see pressure on margins, particularly within commercial auto.”

Liberty Mutual also said in January it will realign its property/casualty operations following the announcement it would sell its life and disability insurance unit to Lincoln Financial Group for about $3.3 billion.

“In particular here in the U.S.,” Mr. Long said during the conference call, “I think we have a huge opportunity to bring something to the market that there’s very little of, which is a full scale of commercial products … I was a little concerned that it looked like a fire sale. You have a bad year and all of a sudden, you’re selling stuff, but this was all proactive on our part.”

During the call Chris Peirce, executive vice president and CFO, said “our results were significantly affected by catastrophe losses totaling $3.6 billion pretax in 2017 compared with $1.7 billion in 2016, making 2017 one of the worst years for catastrophe losses on record.”

Net written premium for 2017 was up 8.7% year on year to $36.79 billion. The company’s combined ratio increased 7.3 points year on year to 105.6 % in 2017.

The acquisition and integration costs associated with Hamilton, Bermuda-based specialty insurer Ironshore Inc. for the fourth quarter were $5 million compared with none a year ago. Liberty Mutual had announced in December 2016 that it was buying Ironshore from Chinese conglomerate Fosun International Ltd. for $2.93 billion.

“While our profitability in 2017 fell well short of our expectations, I’m optimistic heading into 2018,” Mr. Long said on the call. “The operational actions discussed today will position the company to take full advantage of our scaled products and capabilities globally and enable us to face the market in a simpler, more unified fashion and will allows us to deliver better outcomes to our customers.”