A Message from Our President & CEO
When we look at Liberty Mutual Insurance Group in 2012, the year stands out for many reasons, among them: the company’s improved profitability despite the impact of Superstorm Sandy and other catastrophes; our continued growth, both organically and through acquisitions; our increased global prominence through the sponsorship of major sporting events; the realignment of our businesses, which better positions the company for the next century; and, of course, our 100th Anniversary celebration.
Responding to the devastation of Superstorm Sandy, we once again demonstrated that, when things are at their worst, we are at our best. Our personal and commercial claims and service professionals responded with compassion to help our affected policyholders resume normal lives and be back in business as quickly as possible.
Even with the $576 million impact of Sandy, net income increased $471 million over the prior year to $829 million, a testament to the solid core earnings within each of our business units and outstanding investment results in a very challenging environment. The underlying strength of our businesses was further demonstrated by a healthy 6.6 percent increase in revenues to $36.9 billion, and a $926 million increase in total equity to $18.5 billion. Total assets increased $3.2 billion over 2011 to $120.1 billion.
Contributing to this performance were: continued, market-leading growth in Personal Insurance; significant underwriting and pricing improvements across Commercial Insurance; strong specialty lines growth in the U.S. and Europe; acquisitions in Russia and Ecuador; regulatory approval for our business in India; and, approval to establish a branch in Shandong Province, China, our fifth branch in that country.
We also announced, in October, that Liberty Mutual Insurance will be an official sponsor of the 2014 and 2016 U.S. Olympic and Paralympic Teams in Sochi, Russia, and Rio de Janeiro, Brazil. Our partnership with Team USA is yet another example of our company’s increasingly prominent position globally.
Our 100th Anniversary celebration was focused on employees and giving back to the communities where we work and live. We took the opportunity to introduce Serve with Liberty, our new global community service initiative. During two days in June, more than 26,000 of our employees from around the world participated in more than 1,400 community projects, from chopping vegetables at a homeless shelter in Boston to entertaining ill children in a Vietnam hospital. In fact, employee and community feedback was so positive that we’ve decided to make Serve with Liberty an annual event.
As we celebrated our past we also looked forward to the future, and during the year we realigned our business structure to better meet our customers’ and distribution partners’ ever-changing needs and preferences.
Our new Commercial Insurance business unit now serves commercial accounts of all sizes and provides our broker and agent partners improved access under the Liberty Mutual Insurance brand, with continued local focus and authority supported by strong national resources and capabilities.
In addition, we combined the Liberty Mutual Insurance and Safeco Insurance personal lines operations into the Personal Insurance business unit, bringing together two strong businesses with incredible momentum. The creation of the Global Specialty business unit brings together three very strong, well-performing businesses — Liberty International Underwriters, Liberty Mutual Surety and Liberty Mutual Reinsurance — and affirms our commitment to being a leader in the specialty lines sector, while the Liberty International business unit can now focus exclusively on its growing network of local insurance companies, now in 18 countries.
Worth noting is the fact that we made these structural changes from a position of strength. We are the fifth-largest property and casualty insurance company in the world; we’re financially strong, with sound reserves and a balance sheet that has never been stronger; and our diversification relative to product, market segment, geography and distribution channel is unparalleled.
We’ll remember 2012 as a year in which we looked back at our company’s rich history and took significant steps to ensure even greater success. In fact, I’m confident our diversified business model, strong market positions and new operating structure will bring tremendous success to our company and its policyholders through our next century.
On a personal note, I’d like to acknowledge Chris Mansfield, our General Counsel since 1985, who retired in early 2013. During a career with Liberty Mutual that spanned 37 years, Chris provided thoughtful and sound leadership, guidance and counsel. We will miss Chris, and we wish him and his wife Laura the very best in retirement.
In closing, I thank our Board of Directors for their guidance and support and, in particular, I want to express my gratitude to retiring director Marian Heard. The public and non-profit sector experience she brought to the Board proved invaluable, and we will miss her.
I also thank our many distribution partners — affinity, independent agents and brokers — for their support, our policyholders and customers for their ongoing confidence in us, and our more than 50,000 employees around the globe whose enthusiasm, dedication and commitment make this all possible.
David H. Long
President and Chief Executive Officer