Liberty Mutual closes year with strongest balance sheet
Liberty Mutual reported Q4 2024 net income of $1.2 billion and full-year net income of $4.4 billion, a sharp increase from $654 million and $213 million in 2023. Pre-tax operating income for Q4 reached $2.1 billion. “I’m pleased to report we closed the year with the strongest balance sheet in our history and our lowest combined ratio in 20 years, while never losing sight of the needs of our customers and partners.” – Liberty Mutual CEO Tim Sweeney.
The combined ratio improved to 91.5%, the lowest in 20 years. The underlying combined ratio dropped to 81.2%, with better frequency trends in Personal Lines and improved loss experience in Global Risk Solutions.
Net written premium for Q4 declined to $10.6 billion, reflecting strategic efforts to curb new business growth in Private Passenger Auto. However, Liberty is now pivoting to growth in select products, geographies, and distribution channels.
CAT losses fell 17% year-over-year, despite a $1.2 billion impact from the January 2025 California wildfires.
The company has divested from Asia, Western Europe, and Latin America and is now prioritizing organic growth, technology upgrades, and potential future acquisitions over immediate capital deployment. “And so no immediate plans to deploy large pieces of capital on anything inorganic. We will invest in the short term in resuming profitable growth in our organic business. We are looking to modernize our technology stack and deploy new technologies, which will take some capital. But for now, we are comfortable carrying excess capital until we determine the right strategic use for it.”
Liberty stated that it increased marketing spend in Q4 and plans to continue investing, shifting focus from past inflationary challenges to future expansion.
Finally, Liberty Mutual’s CEO acknowledged rising insurance costs and the potential for regulatory pushback but emphasized that pricing reflects actual risk. He pointed to monetary inflation, worsening natural disasters, and exposure growth in high-risk areas as key factors driving rate increases. “Last I checked, the auto and homeowners insurance market in the U.S. was one of the most competitive — just turn your TV on, one of the most competitive marketplaces in the — of any industry. And so this is intense competition. We are pricing for the risk.”
