"Overall, results for the quarter were solid, especially given the economic and competitive environments," Edmund F. Kelly, chairman and CEO of Liberty Mutual said in a conference call.

"And of course, Mother Nature had her say and contributed actively to our losses," he added.

He said net written premium grew at 5.5 percent "while maintaining our overall profitability and producing quite strong cash flow from operations. The net investment income continued to benefit from better results and private equity investment."

Net written premiums were $7.3 billion for the quarter.

Mr. Kelly said that bottom line reports were affected by cat losses, particularly hail storms--mostly in the Midwest area--which accounted for about two-thirds of the cat losses for the quarter.

Commercial markets, he said, continued to face another challenging quarter, "although we are seeing some signs of stabilization."

Looking at market conditions, he observed discipline with personal markets and general personal lines, but said the comparison to commercial lines is "schizophrenic behavior to put it mildly."

In commercial lines, he said, "Buyers are shopping for lowest cost and continued reduction and emphasis on service."

He added, however, "People are not pricing rationally...and one large, national peer in particular is very aggressive in all sizes of accounts that come to market."

He also noted that "certain carriers" continue to relax payment terms and offer weaker collateral alternatives when there are credit issues.

In the meantime, "Customers are pushing hard, asking for multi-year deals, lower maximum and reduced minimum deductibles," Mr. Kelly said.