Underwriting Self-discipline Pays Off for Insurer
Liberty Mutual Holding Co. reported a pointy rise in quarterly earnings, underscoring the affect of its underwriting self-discipline and cost-cutting efforts because it seeks to stabilize outcomes following years of industry-wide volatility.
The insurer posted $1.24 billion in web revenue for the fourth quarter of 2024, almost doubling its revenue from the prior yr’s $654 million. Full-year earnings surged to $4.38 billion, a dramatic turnaround from the $213 million recorded in 2023.
CEO Tim Sweeney credited the outcomes to a continued give attention to underwriting profitability and expense management, noting that the corporate achieved a 91.5% mixed ratio—a key measure of underwriting efficiency that tracks claims and bills as a share of premiums. That determine represents the insurer’s greatest quarterly end in twenty years, positioning it to fulfill its long-term goal of a 95% mixed ratio in 2025.
“Turning to our 2024 monetary efficiency, I’m happy to report that we achieved web revenue attributable to Liberty Mutual Holding Firm of $1.2 billion within the fourth quarter,” stated Mr. Sweeney in ready remarks. “Our disciplined underwriting and operational execution have pushed important enhancements, leading to a mixed ratio of 91.5% for the quarter, our lowest in 20 years. We’re making exceptional progress towards our objective of reaching a 95% mixed ratio in 2025, pushed by underwriting and expense self-discipline in each US Retail Markets and International Threat Options. This progress units a strong basis for future success, and we’re dedicated to sustaining this self-discipline as we now search to develop in choose segments. We are actually able to pursue worthwhile development within the areas the place we’ve got achieved goal profitability.”
Premium Development Slows as Firm Prioritizes Profitability
Liberty Mutual noticed web written premiums fall 6.9% within the fourth quarter, to $10.55 billion. For the total yr, premium quantity declined 3.3% to $44.96 billion, reflecting a deliberate effort to restrict publicity in underperforming segments.
As for the insurer’s U.S. Retail Markets phase, which incorporates private auto and owners insurance coverage, it recorded a 5.2% decline in premiums to $6.7 billion in This fall-2024. International Threat Options, which serves business shoppers, posted a ten.5% drop to $3.84 billion.
Regardless of the pullback in premium development, profitability improved considerably, pushed by disciplined threat choice and higher pricing throughout key enterprise strains.
Claims Setting and Disaster Publicity
Liberty Mutual benefited from a extra favorable claims setting, with disaster losses declining 17% year-over-year to $3.89 billion for 2024.
Nevertheless, the corporate stays uncovered to excessive climate occasions. Liberty Mutual estimated $1.2 billion in pre-tax disaster losses associated to the California wildfires in January 2025, which will likely be recorded in Q1-2025. The determine contains anticipated contributions to the California FAIR Plan, a last-resort insurer for high-risk properties.
Strategic Strikes and Worldwide Divestitures
As a part of an ongoing effort to optimize its world footprint, Liberty Mutual introduced plans to promote its Thailand and Vietnam operations to Chubb Ltd.. The Thailand transaction is anticipated to shut within the second quarter of 2025, whereas the Vietnam deal is about to be finalized in 2026, pending regulatory approvals.
The corporate has been paring again non-core worldwide companies to give attention to extra worthwhile segments, following a broader pattern amongst U.S. insurers trying to streamline operations. Within the U.S. the Boston-based insurer introduced that it might be sunsetting its Safeco model, bringing all of its private strains enterprise below one roof.
Sweeney signaled that Liberty Mutual would proceed prioritizing underwriting self-discipline over premium development, whereas selectively increasing in worthwhile areas.