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Large asset sale boosts Liberty Mutual profit in second quarter

Large asset sale boosts Liberty Mutual profit in second quarter

Liberty Mutual Holding Co. Inc. reported second-quarter net income of $981 million, compared with $126 million during the same period a year ago, the company said in its earnings statement Thursday, with its substantial profit increase bolstered by a large asset sale.

On Jan. 19, Liberty Mutual announced the sale of the Liberty Life Assurance Co., which provides group disability, group life, individual life and annuity products, to Lincoln Financial Group. The transaction closed on May 1, resulting in a gain of about $464 million, according to Liberty’s financial statements.

Net written premium for the three months ended June 30 was $10.07 billion, up 7.3% over the same period last year.

Net investment income for the quarter was $724 million, up 34.8% from $537 million in the same period last year.

The company’s combined ratio for the quarter improved 4.9 percentage points to 97.9% from the same period in 2017, the statement said.

The company’s global risk solutions unit saw growth of 4.7% during the quarter, said David H. Long, Liberty Mutual chairman and CEO, speaking on the earnings call Thursday. Specialty lines saw 5.6% growth while reinsurance grew 4.5%, he added.

“Rates were positive in almost all lines of business, up double digits in commercial auto and property lines and up mid-single digits in all other lines except for workers comp,” Mr. Long said.

Net income for the six months ended June 30 was $1.63 billion compared with $477 million during the year-ago period.

Net written premiums for the six months ended June 30 totaled $19.51 billion, an increase of $1.43 billion or 7.9% over the same period in 2017.

For the six months, investment income totaled $1.34 billion, up 20.7% from $1.11 billion a year ago.

The company’s combined ratio for the six months improved 3.9 percentage points to 98.5%.

The commercial auto business achieved double-digit rate increases in 2017 and is in the same range this year, up 10% to 16%, according to Christopher L. Peirce, executive vice president and chief financial officer.

Despite the gains, Mr. Peirce added, commercial auto will take 18 to 24 months to return to “target profitability.”

“We like the positive momentum indicated in the results for the quarter and the year,” Mr. Long said. “Rates, excluding workers comp, are positive, and we expect these increases to drive top-line growth and improved profitability.”














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