Liberty Mutual in the midst of strategic transition
Liberty Mutual hosted its Q2’23 earnings call on Aug 10, 2023. Select highlights:
- Liberty Mutual is refining its focus to provide more value to customers and partners, aiming for target profitability.
- The company will focus on the US market and select global markets with potential long-term value.
- Liberty Mutual has chosen to divest certain businesses in Europe and Latin America.
- GRM (Global Retail Markets) West personal and small commercial businesses, as well as some GRS direct insurance businesses in Brazil, Chile, and Colombia, will be divested.
- GRM US business will become a stand-alone unit named US Retail Markets (USRM) led by Hamid Mirza. USRM will concentrate on US personal and small commercial lines.
- Asia is identified as a significant growth region for the company.
- The company’s GRM East operations will be renamed Asia Retail Markets, streamlining their focus on Asia.
- Jim MacPhee, formerly the President of GRM, will now be the Chief Operating Officer of Liberty Mutual, focusing on operationalizing scale advantages and improving expenses and data capabilities.
- For Q2, the company reported a net loss of $585 million, a greater loss than the $343 million in 2022, due to challenging market conditions in the personal lines industry.
- The combined ratio for the quarter was 109.4%, an increase of 3.8 points compared to the second quarter of 2022.
- Catastrophe losses, mainly from wind and hail events, added 20 points to the combined ratio.
- Underlying loss ratio improved by 3.4 points due to rate actions in both business segments.
- GRS business’s underlying loss ratio has seen improvement over the past 2 quarters.
- Q2 net written premium stood at $11.8 billion, roughly the same as 2022.
- Increases from State Auto and AmGen acquisitions were offset by reductions in GRM and GRS.
- The company maintains a disciplined underwriting approach to meet profitability targets.
- Investment portfolio yielded $797 million, down from $938 million in 2022. Lower returns from limited partnership investments in private capital are the main cause.
- Net written premium for the first half was $23.0 billion, a 1.0% increase from 2022.
- Growth was due to robust rate increases across various lines.
- Actions to reduce new business growth and decrease exposure were taken to address unprofitability. These actions were especially significant in U.S. personal lines due to persistently high loss trends.
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