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Liberty Mutual Insurance Reports Third Quarter 2022 Results

Liberty Mutual Insurance Reports Third Quarter 2022 Results
PR Newswire
BOSTON, Nov. 3, 2022

BOSTON, Nov. 3, 2022 /PRNewswire/ — Liberty Mutual Holding Company Inc. and its subsidiaries (collectively “LMHC” or the “Company”) reported net loss attr…

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Liberty Mutual Insurance Reports Third Quarter 2022 Results

PR Newswire

BOSTON, Nov. 3, 2022 /PRNewswire/ -- Liberty Mutual Holding Company Inc. and its subsidiaries (collectively "LMHC" or the "Company") reported net loss attributable to LMHC of $353 million and net loss attributable to LMHC of $198 million for the three and nine months ended September 30, 2022, versus net income attributable to LMHC of $721 million and $2.346 billion for the same periods in 2021.

"Elevated catastrophe losses and continued investment market volatility drove a net loss attributable to LMHC of $353 million in the quarter," said David H. Long, Liberty Mutual Chairman and Chief Executive Officer. "Pre-tax net catastrophe losses in the quarter were $1.4 billion including $835 million from Hurricane Ian. The devastation left behind is very real reminder of our purpose and we are focused on supporting our impacted policyholders. Our limited partnership portfolio produced a pre-tax net loss of $272 million reflecting broader equity market declines through June, as these results are reported on a one quarter lag. These headwinds were partially offset by $319 million of prior accident year catastrophe and non-catastrophe reserve releases.

"Rising reinvestment yields are encouraging and will be a significant tailwind for investment income over time. Despite this improving outlook for investment income, we remain focused on underwriting profitability. Rate execution in U.S. personal lines continued in the quarter with strong pricing increases in personal auto and property. The quarterly underlying loss ratio in Global Retail Markets improved sequentially from the second quarter and we expect further improvement in future quarters as these price increases continue to earn in. In our commercial businesses, we remain cautious of the uncertainty surrounding loss trends, and continue to push for price increases across our product lines."

The tables below outline highlights of LMHC's consolidated financial results for the three months and nine months ended September 30, 2022.

Net Written Premium ("NWP") by Business:

Consolidated NWP by business was as follows:


Three Months Ended

September 30,

Nine Months Ended

September 30,

$ in Millions

2022

2021

Change

2022

2021

Change

Global Retail Markets

$9,050

$7,757

16.7 %

$25,605

$22,082

16.0 %

Global Risk Solutions

4,002

3,834

4.4

11,670

10,771

8.3

Corporate and Other

(437)

(186)

134.9

(572)

(202)

183.2

   Total NWP

$12,615

$11,405

10.6 %

$36,703

$32,651

12.4 %

     Foreign exchange effect on growth



(1.5)



(1.1)

   NWP growth excluding foreign exchange1



12.1 %



13.5 %

1

Determined by assuming constant foreign exchange rates between periods.

 

Consolidated Results of Operations:


Three Months Ended

September 30,

Nine Months Ended

September 30,

$ in Millions

2022

2021

Change

2022

2021

Change

Revenues

$12,740

$12,370

3.0 %

$36,829

$35,979

2.4 %

Underlying PTOI before limited partnerships income

$928

$827

12.2 %

$2,541

$2,996

(15.2 %)

   Catastrophes

(1,406)

(1,216)

15.6

(3,168)

(2,915)

8.7

   Net incurred losses attributable to prior years:







     - Asbestos and environmental1

-

-

-

-

-

-

     - All other2

319

178

79.2

461

231

99.6

   Current accident year re-estimation3

(143)

-

    NM  

-

-

-

Pre-tax operating (loss) income before limited partnerships income

(302)

(212)

42.5

(166)

312

NM  

Limited partnerships (loss) income4

(272)

1,000

NM  

562

2,792

(79.9)

Pre-tax operating (loss) income

(574)

788

NM  

396

3,104

(87.2)

Net realized gains (losses)

53

20

165.0

(762)

83

NM  

Unit linked life insurance

17

(7)

NM  

137

(95)

NM  

Acquisition & integration costs

(23)

(4)

NM  

(80)

(13)

NM  

Restructuring costs

(5)

(36)

(86.1)

(5)

(147)

(96.6)

Pre-tax (loss) income

(532)

761

NM  

(314)

2,932

NM  

Income tax (benefit) expense

(179)

39

NM  

(117)

584

NM  

Consolidated net (loss) income

(353)

722

NM  

(197)

2,348

NM  

Less: Net income attributable to non-controlling interest

-

1

NM  

1

2

(50.0)

Net (loss) income attributable to LMHC

(353)

721

NM  

(198)

2,346

NM  

Net (loss) income attributable to LMHC excluding unrealized impact5

(583)

701

NM  

4

2,146

(99.8)

Cash flow provided by continuing operations

$2,223

$1,814

22.5 %

$4,012

$4,681

(14.3 %)

1

Asbestos and environmental is gross of the related adverse development reinsurance (the "NICO Reinsurance Transaction", which is described further in Reinsurance).

2

Net of earned premium and reinstatement premium attributable to prior years of $107 million and $152 million for the three and nine months ended September 30, 2022, and $101 million and $153 million for the same periods in 2021. 

3

Re-estimation of the current accident year loss reserves for the six months ended June 30, 2022.

4

Limited partnerships income includes LP, LLC and other equity method income within net investment income in the accompanying Consolidated Statement of Operations and revenue and expenses from direct investments in natural resources.

5

Excludes unrealized gains on equity securities, unit linked life insurance, and the corresponding tax impact.


NM = Not Meaningful

 

Combined Ratio:


Three Months Ended

September 30,

Nine Months Ended

September 30,

CONSOLIDATED

2022

2021

Change
(Points)

2022

2021

Change
(Points)

Combined ratio







Claims and claim adjustment expense ratio

67.6 %

65.1 %

2.5

67.1 %

63.4 %

3.7

Underwriting expense ratio

27.6

29.5

(1.9)

28.3

29.3

(1.0)

Underlying combined ratio

95.2

94.6

0.6

95.4

92.7

2.7

Catastrophes

11.7

11.5

0.2

9.2

9.5

(0.3)

Net incurred losses attributable to prior years:







   - Asbestos and environmental

-

-

-

-

-

-

   - All other1

(2.7)

(1.7)

(1.0)

(1.4)

(0.9)

(0.5)

Current accident year  re-estimation2

1.2

-

1.2

-

-

-

Total combined ratio3

105.4 %

104.4 %

1.0

103.2 %

101.3 %

1.9

1

Net of earned premium and reinstatement premium attributable to prior years.

2

Re-estimation of the current accident year loss reserves for the six months ended June 30, 2022.

3

The combined ratio, expressed as a percentage, is a measure of underwriting profitability.  This measure should only be used in conjunction with, and not in lieu of, underwriting income and may not be comparable to other performance measures used by the Company's competitors.  The combined ratio is computed as the sum of the following property and casualty ratios: the ratio of claims and claim adjustment expense less managed care income to earned premium; the ratio of insurance operating costs plus amortization of deferred policy acquisition costs less third-party administration income and fee income (primarily related to the Company's involuntary market servicing carrier operations) and installment charges to earned premium; and the ratio of policyholder dividends to earned premium. Provisions for uncollectible premium and reinsurance are not included in the combined ratio unless related to an asbestos and environmental commutation and certain other run off.  Restructuring and acquisition and integration costs are not included in the combined ratio.

 

Equity:


 

As of September 30,

As of December 31,


$ in Millions

 

2022

 

2021

Change

Unassigned equity

$29,210

$28,776

1.5 %

Accumulated other comprehensive (loss) income

(8,454)

(960)

NM

Non-controlling interest

200

32

   NM   

    Total equity

$20,956

$27,848

(24.7 %)

NM = Not Meaningful




 

Subsequent Events

Management has assessed material subsequent events through November 2, 2022, 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, 2022 are available on the Company's Investor Relations website at www.libertymutualgroup.com/investors.

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 2021 gross written premium. We also rank 78th on the Fortune 100 list of largest corporations in the U.S. based on 2021 revenue. As of December 31, 2021, we had $48.2 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.

Risks and Uncertainties

The extent to which the coronavirus impacts our future results will depend on developments which are highly uncertain and cannot be predicted, including litigation developments, legislative or regulatory actions and intervention, the length and severity of the coronavirus (including of second waves), the level of acceptance of the vaccines, and the actions of government actors to contain the coronavirus or treat its impact, among others. Possible effects on our business and operations include:

  • disruptions to business operations resulting from working from home or from closures of our corporate or sales offices and the offices of our agents and brokers and quarantines of employees, customers, agents, brokers and suppliers in areas affected by the outbreak;
  • disruptions to business operations resulting from travel restrictions and reduced consumer spending on new homes or new automobiles which could reduce demand for insurance;
  • disruptions to business operations resulting from our customers having lower payrolls and revenues which could have an impact on insurance revenue;
  • increased claims related to trade credit, general liability, workers compensation, and event cancellation coverage, among others;
  • executive or legislative mandates or court decisions expanding property insurance policy coverage to cover business interruptions resulting from COVID-19 notwithstanding any exclusions set forth in such policies or conditions precedent generally required for liability under such policies; and
  • disruption of the financial markets resulting in reductions in the value of our investment portfolio.

A significant rise in the number of COVID-19 infections, infections in a wide range of countries and regions, or a prolongation of the outbreak, could create an adverse economic effect on the Company.

Cautionary Statement Regarding Forward Looking Statements

This report contains forward looking statements that are intended to enhance the reader's ability to assess the future financial and business performance of the Company. Forward looking statements include, but are not limited to, statements that represent the Company's beliefs concerning future operations, strategies, financial results, investment market fluctuations, or other developments, and contain words and phrases such as "may," "expects," "should," "believes," "anticipates," "estimates," "intends" or similar expressions. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond the Company's control or are subject to change, actual results could be materially different.

Contact:

Investor Relations

Media Relations


Nik Vasilakos

Rich Angevine


857-224-6655

617-833-0926

 

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SOURCE Liberty Mutual Insurance

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Southwest and United Airlines have bad news for passengers

Both airlines are facing the same problem, one that could lead to higher airfares and fewer flight options.

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Airlines operate in a market that's dictated by supply and demand: If more people want to fly a specific route than there are available seats, then tickets on those flights cost more.

That makes scheduling and predicting demand a huge part of maximizing revenue for airlines. There are, however, numerous factors that go into how airlines decide which flights to put on the schedule.

Related: Major airline faces Chapter 11 bankruptcy concerns

Every airport has only a certain number of gates, flight slots and runway capacity, limiting carriers' flexibility. That's why during times of high demand — like flights to Las Vegas during Super Bowl week — do not usually translate to airlines sending more planes to and from that destination.

Airlines generally do try to add capacity every year. That's become challenging as Boeing has struggled to keep up with demand for new airplanes. If you can't add airplanes, you can't grow your business. That's caused problems for the entire industry. 

Every airline retires planes each year. In general, those get replaced by newer, better models that offer more efficiency and, in most cases, better passenger amenities. 

If an airline can't get the planes it had hoped to add to its fleet in a given year, it can face capacity problems. And it's a problem that both Southwest Airlines (LUV) and United Airlines have addressed in a way that's inevitable but bad for passengers. 

Southwest Airlines has not been able to get the airplanes it had hoped to.

Image source: Kevin Dietsch/Getty Images

Southwest slows down its pilot hiring

In 2023, Southwest made a huge push to hire pilots. The airline lost thousands of pilots to retirement during the covid pandemic and it needed to replace them in order to build back to its 2019 capacity.

The airline successfully did that but will not continue that trend in 2024.

"Southwest plans to hire approximately 350 pilots this year, and no new-hire classes are scheduled after this month," Travel Weekly reported. "Last year, Southwest hired 1,916 pilots, according to pilot recruitment advisory firm Future & Active Pilot Advisors. The airline hired 1,140 pilots in 2022." 

The slowdown in hiring directly relates to the airline expecting to grow capacity only in the low-single-digits percent in 2024.

"Moving into 2024, there is continued uncertainty around the timing of expected Boeing deliveries and the certification of the Max 7 aircraft. Our fleet plans remain nimble and currently differs from our contractual order book with Boeing," Southwest Airlines Chief Financial Officer Tammy Romo said during the airline's fourth-quarter-earnings call

"We are planning for 79 aircraft deliveries this year and expect to retire roughly 45 700 and 4 800, resulting in a net expected increase of 30 aircraft this year."

That's very modest growth, which should not be enough of an increase in capacity to lower prices in any significant way.

United Airlines pauses pilot hiring

Boeing's  (BA)  struggles have had wide impact across the industry. United Airlines has also said it was going to pause hiring new pilots through the end of May.

United  (UAL)  Fight Operations Vice President Marc Champion explained the situation in a memo to the airline's staff.

"As you know, United has hundreds of new planes on order, and while we remain on path to be the fastest-growing airline in the industry, we just won't grow as fast as we thought we would in 2024 due to continued delays at Boeing," he said.

"For example, we had contractual deliveries for 80 Max 10s this year alone, but those aircraft aren't even certified yet, and it's impossible to know when they will arrive." 

That's another blow to consumers hoping that multiple major carriers would grow capacity, putting pressure on fares. Until Boeing can get back on track, it's unlikely that competition between the large airlines will lead to lower fares.  

In fact, it's possible that consumer demand will grow more than airline capacity which could push prices higher.

Related: Veteran fund manager picks favorite stocks for 2024

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Simple blood test could predict risk of long-term COVID-19 lung problems

UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to…

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UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to suffer “long-haul” lung problems. That finding could help doctors better personalize treatments for individual patients.

Credit: UVA Health

UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to suffer “long-haul” lung problems. That finding could help doctors better personalize treatments for individual patients.

UVA’s new research also alleviates concerns that severe COVID-19 could trigger relentless, ongoing lung scarring akin to the chronic lung disease known as idiopathic pulmonary fibrosis, the researchers report. That type of continuing lung damage would mean that patients’ ability to breathe would continue to worsen over time.

“We are excited to find that people with long-haul COVID have an immune system that is totally different from people who have lung scarring that doesn’t stop,” said researcher Catherine A. Bonham, MD, a pulmonary and critical care expert who serves as scientific director of UVA Health’s Interstitial Lung Disease Program. “This offers hope that even patients with the worst COVID do not have progressive scarring of the lung that leads to death.”

Long-Haul COVID-19

Up to 30% of patients hospitalized with severe COVID-19 continue to suffer persistent symptoms months after recovering from the virus. Many of these patients develop lung scarring – some early on in their hospitalization, and others within six months of their initial illness, prior research has found. Bonham and her collaborators wanted to better understand why this scarring occurs, to determine if it is similar to progressive pulmonary fibrosis and to see if there is a way to identify patients at risk.

To do this, the researchers followed 16 UVA Health patients who had survived severe COVID-19. Fourteen had been hospitalized and placed on a ventilator. All continued to have trouble breathing and suffered fatigue and abnormal lung function at their first outpatient checkup.

After six months, the researchers found that the patients could be divided into two groups: One group’s lung health improved, prompting the researchers to label them “early resolvers,” while the other group, dubbed “late resolvers,” continued to suffer lung problems and pulmonary fibrosis. 

Looking at blood samples taken before the patients’ recovery began to diverge, the UVA team found that the late resolvers had significantly fewer immune cells known as monocytes circulating in their blood. These white blood cells play a critical role in our ability to fend off disease, and the cells were abnormally depleted in patients who continued to suffer lung problems compared both to those who recovered and healthy control subjects. 

Further, the decrease in monocytes correlated with the severity of the patients’ ongoing symptoms. That suggests that doctors may be able to use a simple blood test to identify patients likely to become long-haulers — and to improve their care.

“About half of the patients we examined still had lingering, bothersome symptoms and abnormal tests after six months,” Bonham said. “We were able to detect differences in their blood from the first visit, with fewer blood monocytes mapping to lower lung function.”

The researchers also wanted to determine if severe COVID-19 could cause progressive lung scarring as in idiopathic pulmonary fibrosis. They found that the two conditions had very different effects on immune cells, suggesting that even when the symptoms were similar, the underlying causes were very different. This held true even in patients with the most persistent long-haul COVID-19 symptoms. “Idiopathic pulmonary fibrosis is progressive and kills patients within three to five years,” Bonham said. “It was a relief to see that all our COVID patients, even those with long-haul symptoms, were not similar.”

Because of the small numbers of participants in UVA’s study, and because they were mostly male (for easier comparison with IPF, a disease that strikes mostly men), the researchers say larger, multi-center studies are needed to bear out the findings. But they are hopeful that their new discovery will provide doctors a useful tool to identify COVID-19 patients at risk for long-haul lung problems and help guide them to recovery.

“We are only beginning to understand the biology of how the immune system impacts pulmonary fibrosis,” Bonham said. “My team and I were humbled and grateful to work with the outstanding patients who made this study possible.” 

Findings Published

The researchers have published their findings in the scientific journal Frontiers in Immunology. The research team consisted of Grace C. Bingham, Lyndsey M. Muehling, Chaofan Li, Yong Huang, Shwu-Fan Ma, Daniel Abebayehu, Imre Noth, Jie Sun, Judith A. Woodfolk, Thomas H. Barker and Bonham. Noth disclosed that he has received personal fees from Boehringer Ingelheim, Genentech and Confo unrelated to the research project. In addition, he has a patent pending related to idiopathic pulmonary fibrosis. Bonham and all other members of the research team had no financial conflicts to disclose.

The UVA research was supported by the National Institutes of Health, grants R21 AI160334 and U01 AI125056; NIH’s National Heart, Lung and Blood Institute, grants 5K23HL143135-04 and UG3HL145266; UVA’s Engineering in Medicine Seed Fund; the UVA Global Infectious Diseases Institute’s COVID-19 Rapid Response; a UVA Robert R. Wagner Fellowship; and a Sture G. Olsson Fellowship in Engineering.

  

To keep up with the latest medical research news from UVA, subscribe to the Making of Medicine blog at http://makingofmedicine.virginia.edu.


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The hostility Black women face in higher education carries dire consequences

9 Black women who were working on or recently earned their PhDs told a researcher they felt isolated and shut out.

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Isolation can make opportunities elusive. fotostorm via Getty Images

Isolated. Abused. Overworked.

These are the themes that emerged when I invited nine Black women to chronicle their professional experiences and relationships with colleagues as they earned their Ph.D.s at a public university in the Midwest. I featured their writings in the dissertation I wrote to get my Ph.D. in curriculum and instruction.

The women spoke of being silenced.

“It’s not just the beating me down that is hard,” one participant told me about constantly having her intelligence questioned. “It is the fact that it feels like I’m villainized and made out to be the problem for trying to advocate for myself.”

The women told me they did not feel like they belonged. They spoke of routinely being isolated by peers and potential mentors.

One participant told me she felt that peer community, faculty mentorship and cultural affinity spaces were lacking.

Because of the isolation, participants often felt that they were missing out on various opportunities, such as funding and opportunities to get their work published.

Participants also discussed the ways they felt they were duped into taking on more than their fair share of work.

“I realized I had been tricked into handling a two- to four-person job entirely by myself,” one participant said of her paid graduate position. “This happened just about a month before the pandemic occurred so it very quickly got swept under the rug.”

Why it matters

The hostility that Black women face in higher education can be hazardous to their health. The women in my study told me they were struggling with depression, had thought about suicide and felt physically ill when they had to go to campus.

Other studies have found similar outcomes. For instance, a 2020 study of 220 U.S. Black college women ages 18-48 found that even though being seen as a strong Black woman came with its benefits – such as being thought of as resilient, hardworking, independent and nurturing – it also came at a cost to their mental and physical health.

These kinds of experiences can take a toll on women’s bodies and can result in poor maternal health, cancer, shorter life expectancy and other symptoms that impair their ability to be well.

I believe my research takes on greater urgency in light of the recent death of Antoinette “Bonnie” Candia-Bailey, who was vice president of student affairs at Lincoln University. Before she died by suicide, she reportedly wrote that she felt she was suffering abuse and that the university wasn’t taking her mental health concerns seriously.

What other research is being done

Several anthologies examine the negative experiences that Black women experience in academia. They include education scholars Venus Evans-Winters and Bettina Love’s edited volume, “Black Feminism in Education,” which examines how Black women navigate what it means to be a scholar in a “white supremacist patriarchal society.” Gender and sexuality studies scholar Stephanie Evans analyzes the barriers that Black women faced in accessing higher education from 1850 to 1954. In “Black Women, Ivory Tower,” African American studies professor Jasmine Harris recounts her own traumatic experiences in the world of higher education.

What’s next

In addition to publishing the findings of my research study, I plan to continue exploring the depths of Black women’s experiences in academia, expanding my research to include undergraduate students, as well as faculty and staff.

I believe this research will strengthen this field of study and enable people who work in higher education to develop and implement more comprehensive solutions.

The Research Brief is a short take on interesting academic work.

Ebony Aya received funding from the Black Collective Foundation in 2022 to support the work of the Aya Collective.

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