Liberty Mutual Holding Company Inc. and its subsidiaries reported net income attributable to LMHC of $397 million and $596 million for the three and nine months ended September 30, 2020, versus net income attributable to LMHC of $272 million and $1.338 billion for the same periods in 2019, respectively.

"Despite elevated catastrophe losses, net income for the third quarter was $397 million, a 46% increase from the prior year quarter," said Liberty Mutual Chairman and Chief Executive Officer David H. Long. "Results benefited from strong investment income as valuations in our partnership portfolio, booked on a quarter lag, rebounded from March lows. Catastrophe losses of nearly $1 billion, which doubled from the prior year quarter, were driven by an increased frequency of events across the U.S., including Hurricane Laura and the wildfires on the west coast. We are grateful for the efforts of our claims personnel to support our impacted customers, especially during these challenging times, and for the continued resiliency of all our employees globally during the pandemic.

"Net written premium grew 3.7% to $10.7 billion in the quarter reflecting a 16% increase in renewal rate within Global Risk Solutions and a higher policy count in Global Retail Markets U.S. Personal Lines. Within Global Risk Solutions, the rate increases continued to flow through to the bottom line as evidenced by a 97.1% core combined ratio, which is 1.9 points lower than last year. Going forward, rate increases will continue to be critical as economic conditions pressure returns in our longer tailed business."

Third Quarter Highlights

• Net written premium ("NWP") for the three months ended September 30, 2020 was $10.710 billion, an increase of $385 million or 3.7% over the same period in 2019.
• Pre-tax operating (loss) income before partnerships, limited liability companies ("LLC") and other equity method income for the three months ended September 30, 2020 was ($158) million, versus $123 million for the same period in 2019.
• Partnerships, LLC and other equity method income for the three months ended September 30, 2020 was $467 million, an increase of $305 million or 188.3% over the same period in 2019.
• Net realized gains for the three months ended September 30, 2020 were $219 million, an increase of $138 million or 170.4% over the same period in 2019.
• Unit linked life insurance for the three months ended September 30, 2020 was ($22) million, a decrease of $10 million or 83.3% from the same period in 2019.
• Ironshore Inc. ("Ironshore") acquisition and integration costs for the three months ended September 30, 2020 were $5 million, an increase of $1 million or 25.0% over the same period in 2019.
• Restructuring costs for the three months ended September 30, 2020 were $28 million, an increase of $25 million over the same period in 2019.
• Loss on extinguishment of debt for the three months ended September 30, 2020 was zero, no change from the same period in 2019.
• Discontinued operations, net of tax, for the three months ended September 30, 2020 were ($6) million, versus zero for the same period in 2019.
• Consolidated net income for the three months ended September 30, 2020 was $397 million, an increase of $125 million or 46.0% over the same period in 2019.
• Net income attributable to non-controlling interest for the three months ended September 30, 2020 was zero, no change from the same period in 2019.
• Net income attributable to LMHC for the three months ended September 30, 2020 was $397 million, an increase of $125 million or 46.0% over the same period in 2019.
• Net income attributable to LMHC excluding unrealized impact1 for the three months ended September 30, 2020 was $356 million, an increase of $68 million or 23.6% over the same period in 2019.
• Cash flow provided by continuing operations for the three months ended September 30, 2020 was $2.788 billion, an increase of $1.294 billion or 86.6% over the same period in 2019.
• The consolidated combined ratio before catastrophes2, COVID-193, net incurred losses attributable to prior years4 and current accident year re-estimation5 for the three months ended September 30, 2020 was 93.6%, a decrease of 1.3 points from the same period in 2019. Including the impact of catastrophes, COVID-19, net incurred losses attributable to prior years and current accident year re-estimation, the total combined ratio6 for the three months ended September 30, 2020 was 104.0%, an increase of 1.5 points over the same period in 2019.

Year-to-date Highlights

• NWP for the nine months ended September 30, 2020 was $30.529 billion, an increase of $466 million or 1.6% over the same period in 2019.
• Pre-tax operating income before partnerships, LLC and other equity method income for the nine months ended September 30, 2020 was $220 million, a decrease of $771 million or 77.8% from the same period in 2019.
• Partnerships, LLC and other equity method income for the nine months ended September 30, 2020 was $217 million, a decrease of $339 million or 61.0% from the same period in 2019.
• Net realized gains for the nine months ended September 30, 2020 were $375 million, a decrease of $18 million or 4.6% from the same period in 2019.
• Unit linked life insurance for the nine months ended September 30, 2020 was $21 million, versus ($89) million for the same period in 2019.
• Ironshore acquisition and integration costs for the nine months ended September 30, 2020 were $16 million, no change from the same period in 2019.
• Restructuring costs for the nine months ended September 30, 2020 were $30 million, an increase of $24 million over the same period in 2019.
• Loss on extinguishment of debt for the nine months ended September 30, 2020 was zero, versus $49 million for the same period in 2019.
• Discontinued operations, net of tax, for the nine months ended September 30, 2020 were ($19) million, a decrease of $31 million or 62.0% from the same period in 2019.
• Consolidated net income for the nine months ended September 30, 2020 was $598 million, a decrease of $740 million or 55.3% from the same period in 2019.
• Net income attributable to non-controlling interest for the nine months ended September 30, 2020 was $2 million, versus zero for the same period in 2019.
• Net income attributable to LMHC for the nine months ended September 30, 2020 was $596 million, a decrease of $742 million or 55.5% from the same period in 2019.
• Net income attributable to LMHC excluding unrealized impact for the nine months ended September 30, 2020 was $648 million, a decrease of $497 million or 43.4% from the same period in 2019.
• Cash flow provided by continuing operations for the nine months ended September 30, 2020 was $4.906 billion, an increase of $1.867 billion or 61.4% over the same period in 2019.
• The consolidated combined ratio before catastrophes, COVID-19, and net incurred losses attributable to prior years for the nine months ended September 30, 2020 was 91.8%, a decrease of 2.6 points from the same period in 2019. Including the impact of catastrophes, COVID-19, and net incurred losses attributable to prior years, the total combined ratio for the nine months ended September 30, 2020 was 101.8%, an increase of 1.8 points over the same period in 2019.

Financial Condition as of September 30, 2020

• Total debt excluding unamortized discount and debt issuance costs was $9.258 billion as of September 30, 2020, an increase of $587 million or 6.8% over December 31, 2019.
• Total equity was $25.129 billion as of September 30, 2020, an increase of $1.510 billion or 6.4% over December 31, 2019.

Subsequent Events

The Company has offered eligible employees an early retirement option. The Company estimates the cost of irrevocable acceptances of this special termination benefit to be approximately $570 million, which will be recognized in the fourth quarter.

Management has assessed material subsequent events through November 4, 2020, the date the financial statements were available to be issued.

About Liberty Mutual Insurance

At Liberty Mutual, we believe progress happens when people feel secure. By providing protection for the unexpected and delivering it with care, we help people embrace today and confidently pursue tomorrow.

In business since 1912, and headquartered in Boston, today we are the sixth largest global property and casualty insurer based on 2019 gross written premium. We also rank 77th on the Fortune 100 list of largest corporations in the U.S. based on 2019 revenue. As of December 31, 2019, we had $43.2 billion in annual consolidated revenue.

We employ over 45,000 people in 29 countries and economies around the world. We offer a wide range of insurance products and services, including personal automobile, homeowners, specialty lines, reinsurance, commercial multiple-peril, workers compensation, commercial automobile, general liability, surety, and commercial property.

For more information, visit www.libertymutualinsurance.com.