Liberty's Long Faults States on Workers' Comp Rates; Q2 Profit Positive.
NU Online News Service, July 26, 12:35 p.m. EDT
Liberty Mutual's chief executive left no doubt on where he believes the blame lies for inadequate workers' compensation rate levels, criticizing states--New York and Massachusetts in particular--for not approving steeper increases.
During a conference call to discuss the Boston-based company's results yesterday, David H. Long, president and chief executive officer of Liberty Mutual said workers' comp rate increases in the second quarter were in line with increases seen in the first quarter--up about 9 percent.
However, he added, "I've said it before, much more is needed for us and the industry to become profitable in that line."
He said the growth of workers' comp residual markets across the country is a sign that rates are not where they need to be.
"While I'm happy to receive fees and, in all likelihood, better profits for servicing these pools, it's just not healthy for the market," said Long.
He directed blame toward regulators, pointing to New York and Massachusetts as examples of states that "continue to be unresponsive to the industry rate needs, which is somewhat frustrating."
He continued, "I'm hard pressed to come up with a state where pricing is adequate, off the top of my head."
As for Liberty Mutual's strategy, Long said, "We have no choice but to continue to push rate until we are comfortable with the pricing in commercial lines, and that is what we intend to do."
In the second quarter, Liberty Mutual reports net income of $139 million, compared to a net loss of $179 million in 2011's second quarter. Revenues rose 7 percent, or $597 million, to $9.16 billion in the quarter.
For the six months of 2012, net income increased $403 million to $591 million. Revenues rose by 6.5 percent, or $1.1 billion to $18.04 billion.
The company reported a combined ratio of 105.9 for the second quarter of this year, down 6.6 points from the same period last year.
"Overall, I would say we're well balanced; we're expanding, and profitability is improving and this is the trajectory that we aim to maintain for the rest of the year," Long said.
He said the company experienced premium growth of 8 percent and significant improvement in profitability despite catastrophe losses running at "an elevated level," although well below 2011.
He noted that the personal lines and international business were strong, but international business was hurt by the strong dollar.
Pricing, he says, continued to increase along all lines of business, which he called encouraging.
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|Publication:||Property and Casualty 360|
|Article Type:||Financial report|
|Date:||Jul 26, 2012|
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