Liberty Mutual Group said yesterday an external review has found the company's exposure to asbestos claims is less than other commercial insurers, and its reserves do not require further strengthening.
Consulting actuaries noted that the company's asbestos exposure will be shorter-tailed than that of many commercial insurers because the Boston-based carrier mainly wrote primary coverage, and also benefited from several manuscript policy provisions that reduced loss limits available to pay asbestos claims, Liberty Mutual reported.
The external review, the company said, resulted in an indicated reserve that was approximately $60 million above Liberty Mutual's carried reserves as of Sept. 30, 2005.
The primary area of difference is in the incurred-but-not-reported loss estimate, which is for policyholders that have not reported claims as of the date of the analysis, the insurer said.
Liberty Mutual proclaimed itself "comfortable with its third quarter best estimate of required asbestos reserves, and therefore will not adjust its asbestos reserves for any difference between the independent actuarial firm's estimate and the company's carried reserves, as both estimates are well within the range of reasonableness."
In the third quarter of 2005, Liberty Mutual strengthened reserves by $203 million, which was approximately $50 million above the point estimate of the company's internal actuaries. It reflects management's best estimate of the reserve requirement, the company said.
Total held reserves for asbestos liabilities (including allowance for reinsurance on unpaid losses) were $1.194 billion as of Sept. 30, 2005.
The company said further information on its asbestos reserves is obtainable on the Web at www.libertymutual.com/investors.
Liberty Mutual Holding Company Inc., the parent corporation of the Liberty Mutual Group of entities, is a diversified global insurer and counts itself the sixth-largest U.S. property-casualty insurer.
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