Boston, MA – Liberty Mutual Holding Company Inc. and its subsidiaries (collectively “LMHC” or the “Company”) recently reported net loss attributable to LMHC of $320 million and net income attributable to LMHC of $199 million for the three and six months ended June 30, 2020, versus net income attributable to LMHC of $397 million and $1.066 billion for the same periods in 2019.
“For the second quarter, we reported a net loss attributable to LMHC of $320 million, reflecting significant impacts from the COVID-19 pandemic and consequent economic downturn as well as above average catastrophe losses,” said David H. Long, Liberty Mutual Chairman and Chief Executive Officer. “Incurred losses for COVID-19 amounted to $529 million in the quarter, with roughly half of these losses related to event cancellation. Based on our size and industry footprint, these losses fall within our expectations for an event of this magnitude. Catastrophe losses of $878 million were up $384 million from the prior year quarter and resulted primarily from a high frequency of severe storm activity and include $147 million of losses related to civil unrest. On the investment side, realized gains from the sale of fixed maturities were more than offset by losses in our partnership portfolio, which are booked on a quarter lag.
“Despite these extraordinary events, our core combined ratio in the quarter improved 4.6 points to 89.1%, and we are encouraged by the continued market firming in commercial lines which should only accelerate as COVID-19 weighs on industry profitability. Within Global Risk Solutions, we achieved renewal rate increases of 16% in the quarter which is in excess of observed loss trend. The market has been receptive to the need for rate in recent quarters as loss trends remain elevated. We expect this will have a meaningful impact on our core underwriting results going forward.”
Second Quarter Highlights
- Net written premium (“NWP”) for the three months ended June 30, 2020 was $9.780 billion, a decrease of $259 million or 2.6% from the same period in 2019.
- Pre-tax operating (loss) income before partnerships, limited liability companies (“LLC”) and other equity method (loss) income for the three months ended June 30, 2020 was ($327) million, versus $208 million for the same period in 2019.
- Partnerships, LLC and other equity method (loss) income for the three months ended June 30, 2020 was ($350) million, versus $311 million for the same period in 2019.
- Net realized gains for the three months ended June 30, 2020 were $403 million, an increase of $341 million over the same period in 2019.
- Unit linked life insurance for the three months ended June 30, 2020 was ($71) million, a decrease of $55 million from the same period in 2019.
- Ironshore Inc. (“Ironshore”) acquisition and integration costs for the three months ended June 30, 2020 were $7 million, an increase of $1 million or 16.7% over the same period in 2019.
- Restructuring costs for the three months ended June 30, 2020 were zero, versus $1 million for the same period in 2019.
- Loss on extinguishment of debt for the three months ended June 30, 2020 was zero, versus $49 million for the same period in 2019.
- Discontinued operations, net of tax, for the three months ended June 30, 2020 were ($13) million, versus zero for the same period in 2019.
- Consolidated net (loss) income for the three months ended June 30, 2020 was ($318) million, versus $397 million for the same period in 2019.
- Net income attributable to non-controlling interest for the three months ended June 30, 2020 was $2 million, versus zero for the same period in 2019.
- Net (loss) income attributable to LMHC for the three months ended June 30, 2020 was ($320) million, versus $397 million for the same period in 2019.
- Net (loss) income attributable to LMHC excluding unrealized impact1 for the three months ended June 30, 2020 was ($511) million, versus $392 million for the same period in 2019.
- Cash flow provided by continuing operations for the three months ended June 30, 2020 was $1.699 billion, an increase of $389 million or 29.7% over the same period in 2019.
- The consolidated combined ratio before catastrophes, COVID-19, net incurred losses attributable to prior years and current accident year re-estimation for the three months ended June 30, 2020 was 89.1%, a decrease of 4.6 from the same period in 2019. Including the impact of catastrophes, COVID-19, net incurred losses attributable to prior years and current accident year re-estimation, the total combined ratio6 for the three months ended June 30, 2020 was 105.2%, an increase of 4.0 points over the same period in 2019.
The complete results release is available here: Liberty Mutual Insurance Reports Second Quarter 2020 Results (PDF)
Source: Liberty Mutual