“Until there is some common sense in commercial pricing, we don't think insurance stocks will be fairly valued,” Mr. Kelly said.

Consistent with his criticism of the market's pricing of commercial insurance—once calling it “patent nonsense”—Mr. Kelly said any optimism he has in the industry conveying positive signs in exposure is “tempered by competitors' pricing behavior.”

He said, “If you sell more exposure at bad rates, you just lose money. Liberty Mutual is “much more concerned about price levels,” he added.

Customers are asking for policies to last longer than the typical one year, which may mean “they expect rates to begin moving upwards,” Mr. Kelly said.

Liberty Mutual would go back to the stock offering if it was appropriate, but that is “highly unlikely” in the near term, Mr. Kelly said.

The mutual reported net income of $576 million for the 2010 fourth quarter and $1.68 billion for the year. Results are increases of 21.8 percent and 64 percent, respectively, compared with the same periods the prior year.

Compensating for the difficulties in the commercial market, Liberty Mutual's international operations and U.S. personal lines businesses picked up the slack.

International net written premiums increased 2.3 percent in 2010 compared to 2009. Total net written premiums for the fourth quarter and full-year increased 5.3 percent and 6.8 percent, respectively.

Mr. Kelly said the “most significant area of growth” will be in international operations. Late last year he said any company with operations solely in North America would become irrelevant.