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Home > Car Insurance News > Liberty Mutual Group Announces Results of External Asbestos Review
Liberty Mutual Group Announces Results of External Asbestos Review
BOSTON, Mass. – Liberty Mutual Group (the “Company”) today announced the results of its external asbestos review, which was completed during the fourth quarter of 2005 by one of the two most renowned actuarial consulting firms. The external actuarial firm had complete access to the Company’s legal, claims, and actuarial staff to discuss the nature of the exposure, the data and other information needed to perform a comprehensive analysis of the Company’s asbestos liabilities.
The consulting actuaries noted that the Company’s asbestos exposure will be shorter tailed than many commercial insurers' because the Company mainly wrote primary coverage and also benefited from several manuscript policy provisions that reduced loss limits available to pay asbestos claims. The external review resulted in an indicated reserve that was approximately $60 million above the Company’s carried reserves as of September 30, 2005. The primary area of difference is in the IBNR estimate, which is for policyholders that have no reported claims as of the date of the analysis. The Company is 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, the Company strengthened reserves by $203 million, which was approximately $50 million above the point estimate of the Company’s internal actuaries and reflects management’s best estimate of the reserve requirement.
Total held reserves for asbestos liabilities (including allowance for reinsurance on unpaid losses) were $1.194 billion as of September 30, 2005. Additional information on the Company’s asbestos reserves is available on the Company's Investor Relations web site.
About Liberty Mutual Group
Boston-based Liberty Mutual Holding Company Inc., the parent corporation of the Liberty Mutual Group of entities (“LMG” or the “Company”), is a diversified global insurer and sixth largest property and casualty insurer in the U.S. based on 2004 direct written premium. The Company also ranks 111th on the Fortune 500 list of largest corporations in the United States based on 2004 revenue. As of December 31, 2004, LMG had $72.4 billion in consolidated assets and $19.6 billion in annual consolidated revenue.
LMG, through its subsidiaries and affiliated companies, offers a wide range of property-casualty insurance products and services to individuals and businesses alike. In 2001 and 2002, the Company formed a mutual holding company structure, whereby the three principal mutual insurance companies, LMIC, LMFIC and EICOW, each became separate stock insurance companies under the ownership of Liberty Mutual Holding Company.
Functionally, the Company conducts its business through four strategic business units: Personal Market, Commercial Markets, Agency Markets (formerly Regional Agency Markets) and International. Each business unit operates independently of the others and has dedicated sales, underwriting, claims, actuarial, financial and certain information technology resources. Management believes this structure allows each business unit to execute its business strategy and/or to make acquisitions without impacting or disrupting the operations of the Company’s other business units.
LMG employs over 38,000 people in nearly 900 offices throughout the world.
Forward-Looking Statements
This press release contains “forward-looking statements” concerning the Company’s future financial and business performance. Because these forward-looking statements are based on assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond the Company's control or are subject to change, actual results could be materially different. The Company's forward-looking statements speak only as of the date of this release or as of the date they are made and should be regarded solely as the Company’s current estimates and beliefs. The Company undertakes no obligation to update these forward-looking statements.
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