Liberty Mutual’s CEO left no doubt as to where he believes the blame lies for inadequate Workers’ Compensation rate levels: the states, criticizing New York and Massachusetts in particular for not approving steeper increases.
During a recent conference call to discuss the Boston-based company’s results, President & CEO David H. Long said Workers’ Comp rate increases in the second quarter were in line with increases seen in the first quarter—up about 9 percent.
However, he added, “I’ve said it before, much more is needed for us and the industry to become profitable in that line.”
Long said the growth of Workers’ Comp residual markets across the country is a sign that rates are not where they need to be.
“While I’m happy to receive fees and, in all likelihood, better profits for servicing these pools, it’s just not healthy for the market,” he said.
He directed blame toward regulators, pointing to New York and Massachusetts as examples of states that “continue to be unresponsive to the industry’s rate needs, which is somewhat frustrating.”
Long continued, “I’m hard-pressed to come up with a state where pricing is adequate, off the top of my head.”
As for Liberty Mutual’s overall strategy, Long said, “We have no choice but to continue to push rate until we are comfortable with the pricing in commercial lines—and that is what we intend to do.”
In 2012’s second quarter, Liberty Mutual reports net income of $139 million, compared to a net loss of $179 million in Q2 2011. Revenues for Q2 2012 rose 7 percent, or $597 million, to $9.16 billion.
For the first six months of 2012, net income increased $413 million to $591 million. Revenues rose by 6.5 percent, or $1.1 billion, to $18.04 billion.
The company reported a combined ratio of 105.9 for Q2 2012, down 6.6 points from the same period last year.
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