Liberty Mutual Insurance Reports Third Quarter 2023 Results

Three Months Ended

September 30,

Nine Months Ended

September 30,

$ in Millions

2023

2022

Change

2023

2022

Change

US Retail Markets

$8,043

$7,981

0.8 %

$22,790

$22,604

0.8 %

Global Risk Solutions

4,208

4,357

(3.4)

12,506

12,605

(0.8)

Corporate and Other

(91)

(490)

(81.4)

(144)

(594)

(75.8)

   Total NWP

$12,160

$11,848

2.6 %

$35,152

$34,615

1.6 %

   Foreign exchange effect on growth

0.1

(0.3)

   NWP growth excluding foreign exchange¹

2.5 %

1.9 %

Three Months Ended

September 30,

Nine Months Ended

September 30,

$ in Millions

2023

2022

Change

2023

2022

Change

Revenues

$12,564

$12,031

4.4 %

$36,845

$34,828

5.8 %

Underlying PTOI before limited partnerships income

1,456

857

69.9

3,415

2,423

40.9

   Catastrophes

(1,110)

(1,391)

(20.2)

(4,451)

(3,155)

41.1

   Net incurred losses attributable to prior years:

     - Asbestos and environmental¹

-

-

-

-

-

-

     - All other²

56

292

(80.8)

548

410

33.7

    Current accident year re-estimation³

(192)

(143)

34.3

-

-

-

Pre-tax operating income (loss) before limited partnerships income

210

(385)

NM

(488)

(322)

51.6

Limited partnerships income (loss)⁴

62

(272)

NM

85

560

(84.8)

Pre-tax operating income (loss)

272

(657)

NM

(403)

238

NM

Net realized gains (losses)

87

69

26.1

(25)

(604)

(95.9)

Acquisition & integration costs

(33)

(23)

43.5

(58)

(80)

(27.5)

Restructuring costs

(26)

(5)

NM

(66)

(3)

NM

Pre-tax income (loss)

300

(616)

NM

(552)

(449)

22.9

Income tax expense (benefit)

133

(197)

NM

(67)

(148)

(54.7)

Consolidated net income (loss) from continuing operations

167

(419)

NM

(485)

(301)

61.1

Discontinued operations, net of tax

48

66

(27.3)

50

104

(51.9)

Consolidated net income (loss)

215

(353)

NM

(435)

(197)

120.8

Less: Net income attributable to non-controlling interest

(4)

-

NM

6

1

NM

Net income (loss) attributable to LMHC

219

(353)

NM

(441)

(198)

122.7

Net income (loss) attributable to LMHC excluding unrealized impact⁵

132

(439)

NM

(554)

12

NM

Cash flow provided by continuing operations

$1,798

$2,158

(16.7 %)

$2,222

$3,891

(42.9 %)

1

Asbestos and environmental is gross of the related adverse development reinsurance (the "NICO Reinsurance Transaction", which is described further in Reinsurance).

2

Net of earned premium and reinstatement premium attributable to prior years of $8 million and $40 million for the three and nine months ended September 30, 2023, and $107 million and $152 million for the same periods in 2022.

3

Re-estimation of the current accident year loss reserves for the six months ended June 30, 2023.

4

Limited partnerships income includes LP, LLC and other equity method income within net investment income in the accompanying Consolidated Statements of Operations and revenue and expenses from direct investments in natural resources.

5

Excludes unrealized gains on equity securities, unit linked life insurance, and the corresponding tax impact.

NM = Not Meaningful

Three Months Ended

September 30,

Nine Months Ended

September 30,

CONSOLIDATED

2023

2022

Change
(Points)

2023

2022

Change
(Points)

Combined ratio

Claims and claim adjustment expense ratio

65.4 %

66.7 %

(1.3)

66.0 %

66.7 %

(0.7)

Underwriting expense ratio

26.7

28.0

(1.3)

27.9

28.1

(0.2)

Underlying combined ratio

92.1

94.7

(2.6)

93.9

94.8

(0.9)

Catastrophes

9.6

13.2

(3.6)

13.1

10.0

3.1

Net incurred losses attributable to prior years:

   - Asbestos and environmental

-

-

-

-

-

-

   - All other¹

(0.8)

(2.5)

1.7

(1.6)

(1.2)

(0.4)

Current accident year re-estimation²

1.7

1.3

0.4

-

-

-

Total combined ratio³

102.6 %

106.7 %

(4.1)

105.4 %

103.6 %

1.8

1

Net of earned premium and reinstatement premium attributable to prior years.

2

Re-estimation of the current accident year loss reserves for the six months ended June 30, 2023.

3

The combined ratio, expressed as a percentage, is a measure of underwriting profitability.  This measure should only be used in conjunction with, and not in lieu of, underwriting income and may not be comparable to other performance measures used by the Company's competitors.  The combined ratio is computed as the sum of the following property and casualty ratios: the ratio of claims and claim adjustment expense less managed care income to earned premium; the ratio of insurance operating costs plus amortization of deferred policy acquisition costs less third-party administration income and fee income (primarily related to the Company's involuntary market servicing carrier operations) and installment charges to earned premium; and the ratio of policyholder dividends to earned premium. Provisions for uncollectible premium and reinsurance are not included in the combined ratio unless related to an asbestos and environmental commutation and certain other run off.  Restructuring and acquisition and integration costs are not included in the combined ratio.

As of 

September 30,

As of
December 31,

$ in Millions

2023

2022

Change

Unassigned equity

$29,337

$29,822

(1.6 %)

Accumulated other comprehensive loss

(8,218)

(7,830)

4.9

Non-controlling interest

182

216

(15.7)

    Total equity

$21,301

$22,208

(4.1 %)

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