Liberty Mutual Insurance Reports Third Quarter 2017 Results

BOSTON, Nov. 3 -- Liberty Mutual Group issued the following news release:

Liberty Mutual Holding Company Inc. and its subsidiaries (collectively "LMHC" or the "Company") reported net loss attributable to LMHC of $665 million and $188 million for the three and nine months ended September 30, 2017, versus net income attributable to LMHC of $455 million and $863 million for the same periods in 2016, respectively. Including $1 million and $2 million of net income attributable to non-controlling interest, consolidated net loss for the three and nine months ended September 30, 2017 was $664 million and $186 million, respectively.

"Net loss in the quarter of $665 million, was driven by the after tax impact of hurricanes Harvey, Irma, and Maria, which totaled $1.2 billion. The fundamentals of the business though remain healthy, as evidenced by a 1.7 point reduction in the core combined ratio down to 92.5 percent," said David H. Long, President and CEO of Liberty Mutual Insurance.

"While the catastrophe losses are significant, they serve as a very real reminder of why were are here. It is in times of crisis that our customers expect us to respond immediately with care, compassion and restitution. Our employees continue to work tirelessly in the impacted areas to help our customers through the daunting challenge of getting back on their feet as quickly as possible."

Third Quarter Highlights

* Net written premium ("NWP") for the three months ended September 30, 2017 was $10.379 billion, an increase of $1.070 billion or 11.5 percent over the same period in 2016.

* Pre-tax operating loss before partnerships, limited liability companies ("LLC") and other equity method income for the three months ended September 30, 2017 was $1.233 billion, versus pre-tax operating income ("PTOI") before partnerships, LLC and other equity method income of $417 million for the same period in 2016.

* Net operating loss before partnerships, LLC and other equity method income for the three months ended September 30, 2017 was $886 million versus net operating income before partnerships, LLC and other equity method income of $352 million for the same period in 2016.

* Partnerships, LLC and other equity method income, net of tax for the three months ended September 30, 2017 was $137 million, an increase of $95 million over the same period in 2016.

* Net realized gains, net of tax for the three months ended September 30, 2017 were $128 million, an increase of $71 million or 124.6 percent over the same period in 2016.

* Ironshore Inc. ("Ironshore") acquisition and integration costs, net of tax for the three months ended September 30, 2017 were $28 million versus zero for the same period in 2016.

* Restructuring costs, net of tax for the three months ended September 30, 2017 were $15 million versus zero for the same period in 2016.

* Loss on extinguishment of debt, net of tax for the three months ended September 30, 2017 was zero versus $1 million for the same period in 2016.

* Consolidated net loss for the three months ended September 30, 2017 was $664 million versus consolidated net income of $450 million for the same period in 2016.

* Net income (loss) attributable to non-controlling interest for the three months ended September 30, 2017 was $1 million versus ($5) million for the same period in 2016.

* Net loss attributable to LMHC for the three months ended September 30, 2017 was $665 million versus net income attributable to LMHC of $455 million for the same period in 2016.

* Cash flow provided by operations for the three months ended September 30, 2017 was $945 million, a decrease of $325 million or 25.6 percent from the same period in 2016.

* The consolidated combined ratio before catastrophes1, net incurred losses attributable to prior years2 and current accident year re-estimation3 for the three months ended September 30, 2017 was 92.5 percent, a decrease of 1.7 points from the same period in 2016. Including the impact of catastrophes, net incurred losses attributable to prior years and current accident year re-estimation, the Company's combined ratio4 for the three months ended September 30, 2017 increased 18.4 points to 116.2 percent.

Year-to-date Highlights

* NWP for the nine months ended September 30, 2017 was $29.523 billion, an increase of $2.424 billion or 8.9 percent over the same period in 2016.

* Pre-tax operating loss before partnerships, LLC and other equity method income for the nine months ended September 30, 2017 was $979 million, versus pre-tax operating income before partnerships, LLC and other equity method income of $1.204 billion for the same period in 2016.

* Net operating loss before partnerships, LLC and other equity method income for the nine months ended September 30, 2017 was $688 million versus net operating income before partnerships, LLC and other equity method income of $886 million for the same period in 2016.

* Partnerships, LLC and other equity method income, net of tax for the nine months ended September 30, 2017 was $312 million, an increase of $290 million over the same period in 2016.

* Net realized gains (losses), net of tax for the nine months ended September 30, 2017 were $257 million versus ($39) million for the same period in 2016.

* Ironshore acquisition and integration costs, net of tax for the nine months ended September 30, 2017 were $51 million versus zero for the same period in 2016.

* Restructuring costs, net of tax for the nine months ended September 30, 2017 were $15 million versus zero for the same period in 2016.

* Loss on extinguishment of debt, net of tax for the nine months ended September 30, 2017 was $1 million, a decrease of $5 million or 83.3 percent from the same period in 2016.

* Consolidated net loss for the nine months ended September 30, 2017 was $186 million versus consolidated net income of $863 million for the same period in 2016.

* Net income attributable to non-controlling interest for the nine months ended September 30, 2017 was $2 million versus zero for the same period in 2016.

* Net loss attributable to LMHC for the nine months ended September 30, 2017 was $188 million versus net income attributable to LMHC of $863 million for the same period in 2016.

* Cash flow provided by operations for the nine months ended September 30, 2017 was $2.059 billion, an increase of $144 million or 7.5 percent over the same period in 2016.

* The consolidated combined ratio before catastrophes and net incurred losses attributable to prior years for the nine months ended September 30, 2017 was 93.4 percent, an increase of 0.2 points over the same period in 2016. Including the impact of catastrophes and net incurred losses attributable to prior years, the Company's combined ratio for the nine months ended September 30, 2017 increased 8.6 points to 107.1 percent.

Financial Condition as of September 30, 2017

* Total debt was $8.290 billion as of September 30, 2017, an increase of $687 million or 9.0 percent over December 31, 2016.

* Total equity was $20.928 billion as of September 30, 2017, an increase of $541 million or 2.7 percent over December 31, 2016.

Subsequent Events

Management has assessed material subsequent events through November 2, 2017, the date the financial statements were available to be issued.

Financial Information: The Company's financial results, management's discussion and analysis of operating results and financial condition, accompanying financial statements and other supplemental financial information for the three and nine months ended September 30, 2017 are available on the Company's Investor Relations web site at www.libertymutualgroup.com/investors.

Conference Call Information: On November 3, 2017, at 9:00 a.m. Eastern Time, David Long, Liberty Mutual Insurance Chairman and CEO, will host a conference call to discuss the Company's third quarter 2017 financial results. To participate in the event via telephone and to ask a question, please dial 866-491-9244, referencing the Confirmation Code 2790535. You can view the slides by accessing https://attglobal.webcasts.com/starthere.jsp?ei=1168064&tp_key=8a44453e01. To listen to the call online via PC and view a presentation on financial performance, please log into https://attglobal.webcasts.com/starthere.jsp?ei=1168064&tp_key=8a44453e01. You must select the option "Listen by Computer" on the left panel. Following the call, a recording of the event will be available on the Investor Relations section of Liberty Mutual's website, www.libertymutualgroup.com/investors.

About Liberty Mutual Insurance

Boston-based LMHC, the parent corporation of the Liberty Mutual Insurance group of entities, is a diversified global insurer and fourth largest property and casualty insurer in the U.S. based on 2016 direct written premium. The Company also ranks 75th on the Fortune 100 list of largest corporations in the U.S. based on 2016 revenue. As of December 31, 2016, LMHC had $125.592 billion in consolidated assets, $105.205 billion in consolidated liabilities, and $38.308 billion in annual consolidated revenue.

LMHC, through its subsidiaries and affiliated companies, offers a wide range of property and casualty insurance products and services to individuals and businesses alike. In 2001 and 2002, the Company formed a mutual holding company structure, whereby the three principal mutual insurance companies, Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company and Employers Insurance Company of Wausau, each became separate stock insurance companies under the ownership of LMHC.

Functionally, the Company conducts substantially all of its business through the SBUs, with each operating independently of the others with dedicated sales, underwriting, claims, actuarial, financial and certain information technology resources. Management believes this structure allows each business unit to execute its business strategy and/or to make acquisitions without impacting or disrupting the operations of the Company's other business units.

LMHC employs more than 50,000 people in over 800 offices throughout the world. For a full description of the Company's business operations, products and distribution channels, please visit Liberty Mutual's Investor Relations web site at www.libertymutualgroup.com/investors.

See table here (https://www.libertymutualgroup.com/about-liberty-mutual-site/news-site/Documents/Q3_2017_Press_Release percent20FINAL.pdf)