The challenging investment market and inflation hit hard during the second quarter of 2022 (Q2 2022), resulting in a US$343 million (approx. SG$472.6 million) net loss attributable to Liberty Mutual Holding Company (LMHC).
LMHC reported net income of $155 million for the six months ended June 30, 2022 (H1 2022), a dramatic decline from $1.625 billion for the same period in 2021. Meanwhile the $343 million net loss in Q2 2022 was a tumble from last year’s net income of $769 million.
Focusing on net written premium (NWP), LMHC's total NWP hit US$12,521 million in Q2 2022 (up 15.5% from US$10,845 million in Q2 2021) and US$24,088 million in H1 2022 (up 13.4% from US$21,246 million in H1 2021).
LMHC chairman and CEO David H. Long said the net loss in Q2 2022 was driven by investment market volatility and insurance loss cost inflation.
“Pre-tax net realized investment losses of US$671 million, along with inflation-driven underwriting margin erosion in some lines of business, were the key drivers of Q2 results,” Long said. “While rising interest rates are causing some short-term pressure on investment results, we expect higher net investment income to be a significant tailwind in future periods.
“The underlying combined ratio in the quarter increased 5.0 points to 96.8%, reflecting elevated severity in private passenger auto, though margin improvement continued in commercial markets.”
However, Long said LMHC expects accelerated rate and targeted underwriting actions in personal lines to moderate growth and improve the loss ratio in the second half of 2022 as rate increases earn over time.
Additionally, the company's performance during H2 2022 has been promising so far, with the latest key appointments boosting its leadership team and the acquisition of an insurance company in Malaysia.
