5 August 2016 Insurance

Energy investments and cat losses hit Liberty Mutual’s Q2 profits

Losses from energy investments hit Liberty Mutual’s profits in its second quarter results for 2016.

Furthermore, Liberty Mutual’s combined ratio slipped, due to a combination of catastrophes, net incurred losses and current accident year re-estimation.

Liberty Mutual's net income for the three-month period ending June 30 was $15 million, a decrease of $239 million or 94.1 percent from the same period in 2015.

Similarly, for the six-month period ending June 30 the company made a profit of $408 million, a decrease of 23 percent from the same period in 2015.

Liberty Mutual attributed this loss to energy investments. It reported pre-tax energy losses of $220 million in the second quarter of 2015.

Liberty Mutual reported net written premiums of $9 billion for the three-month period ending June 30, an increase of 1.2 percent over the same period in 2015.

The company's combined ratio for the second quarter of 2016 was 101.4 percent, down 1.2 points from the same period last year.

The combined ratio before catastrophes, net incurred losses attributable to previous years and current accident year re-estimation decreased 1.2 points to 91.4 percent over the same period in 2015.

“Energy investments continue to have a detrimental effect on overall results,” said David Long, Liberty Mutual insurance chairman and chief executive officer.

“Pre-tax losses from energy were $220 million in the quarter, including $110 million in impairments. Total realized investment losses were $95 million versus a gain of $241 million last year, leading to net income of $15 million in the quarter versus $254 million a year ago.

“Investments aside, net operating income was $123 million in the quarter, up 12 percent despite elevated catastrophe losses, combined ratio improved 1.2 points to 101.4 percent, and net written premium increased 1.2 percent after the impact of foreign exchange.”

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