Liberty Mutual tightens Q4 underwriting on long march to health

Liberty Mutual pressed its way back into underwriting profits in the fourth quarter of 2023 despite new reserving, while trimming its US retail exposure and locating growth in its global risk segment.

The group combined ratio came down by 2.3 points year on year in the fourth quarter to 95.1%. That wasn't enough to put the company into underwriting profits for the full year where the combined ratio ended at 102.7%. 

“We continue to make progress toward our 95% combined ratio target by the end of 2025,” CEO Tim Sweeney said. 

"Looking ahead to 2024 and beyond, we will continue to focus on our profit improvement program, working to build upon the solid progress we have made to date.”

The combined ratio decline included a 5 point decline in the straight loss and LAE ratio and a marginally lower nat cat load, offset by a shift to net reserving against prior years.

US retail markets were called out for “particularly strong progress” on a 6.6 point decline in the Q4 combined ratio to 93% as “accelerating earned rate and targeted underwriting actions positively impacted the loss ratio,” Sweeney said. The full-year combined ratio remains a money-loser at 105.5%. 

That came at the cost of growth. Fourth quarter net written premiums in US retail were down 2.0% year on year despite rate gain, putting the segment's FY premiums flat year on year. 

Global risk solutions took up the baton for growth. Net written premiums rose 17% in the fourth quarter to $4.3 billion to put the segment back to full-year growth at 3.3%. 

But the segment lost margin int eh fourth quarter, on a major set of new reserves for prior periods, with the combined ratio up 4.7 points year on year to 93.9%. Full-year combined ratio of 95.3% was still an improvement from the prior year's razor thin margin of 99.0%.

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