Liberty Mutual Holding Co. Inc. will continue to push for higher insurance rates after reporting a net loss of $343 million in the second quarter, compared with a net profit of $769 million in the same period last year, as lower investment income and higher claims costs hit the insurer, its top said managers on Thursday.
“Inflation continues to weigh on repair and replacement costs for the auto and real estate industries. As such, we are taking a cautious approach to growth for the rest of the year, and we will continue to push the pace,” said David H. Long, Liberty Mutual’s chairman and CEO, on a conference call with analysts on Thursday. .
Net premium income for the quarter increased 15.5% year-over-year to $12.52 billion. Liberty Mutual’s total expense ratio deteriorated to 105%, compared to 98.1% last year. Catastrophe losses for the quarter were $1.11 billion, compared to $660 million in the prior year period.
Net realized investment losses increased to $671 million from $191 million in losses in last year’s second quarter. Investments in limited partnerships decreased to $469 million from $954 million.
Liberty Mutual’s global retail division, which includes its life insurance business, reported a pretax operating loss of $643 million, compared with a quarterly profit of $274 million in the same period last year.
The insurer’s global risk solutions division, which includes its large account business, reported pretax operating profit of $418 million, up 15.8%. Net income premium for the division increased 10% to $3.71 billion.
Total renewal premium growth during the quarter was 6% overall and 7.1% excluding workers’ compensation, said Timothy M. Sweeney, Liberty Mutual president.
“We continue to see rates above loss trends in most lines, except workers’ compensation and casualty where rates are close even with loss trends,” he said.
Workers’ severity is expected to increase as medical inflation increases and utilization rates increase, said Neeti Bhalla Johnson, president of Global Risk Solutions.