AM Best Affirms Credit Ratings of Liberty Mutual Holding Company Inc. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of the members of Liberty Mutual Holding Company Inc. (LMHC) (Boston, MA). Concurrently, AM Best has affirmed the Long-Term ICRs of “bbb” (Good) of LMHC and its wholly owned subsidiary, Liberty Mutual Group Inc. (LMGI) (Boston, MA), as well as the Long-Term Issue Credit Ratings (Long-Term IR) of LMHC. The members of LMHC are collectively referred to as Liberty Mutual. Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Nationale Borg Reinsurance N.V. (NB Re) (Willemstad, Curacao.) The outlook of these Credit Ratings (ratings) is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings of Liberty Mutual reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Liberty Mutual’s equity increased significantly in 2024, as underwriting income was positive and investment income increased along with a growing asset base and improving market conditions. Liberty Mutual’s risk-adjusted capitalization is currently assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s balance sheet benefits from membership in the Federal Home Loan Bank, which affords additional liquidity, as well as the financial flexibility via access to public capital markets. Additionally, the group’s balance sheet strength continues to be supported further by a comprehensive reinsurance program with highly rated reinsurers.

AM Best views Liberty Mutual’s operating performance as adequate as its strong level of net investment income has offset underwriting losses over a prolonged period of time, minimizing the impact of those losses on equity. These generally profitable operating results reflect the group’s market position, and the competitive advantages achieved through scale and through multiple distribution channels, as well as the extensive use of technology and value-added services. Liberty Mutual’s reported underwriting performance continues to trail industry benchmarks on a five- and 10-year average basis, reflective of catastrophe and non-catastrophe losses, and over time have tempered growth of equity; however, improvement in its underwriting performance was noted in 2024 due to renewed focus on underwriting criteria and risk selection. Going forward, the group will continue to face weather losses and private passenger auto inflationary pressures as seen throughout the property/casualty (P/C) industry.

Liberty Mutual’s profile is extensive, as one of the largest personal and commercial writers, domestically and globally, and its brand name is recognized widely. Multiple distribution sources and a wide variety of personal and commercial P/C products provide diversity and the capability to work through underwriting cycles.

Liberty Mutual’s risk management practices are appropriately comprehensive and sophisticated given the size and complexity of the organization and fully support the ratings. Managing risk is a core competency of the group and integrated throughout its worldwide operations and efforts to refine risk management capabilities further are continuously underway.

Liberty Mutual’s rating is supported by adjusted and un-adjusted financial leverage that historically has been maintained below 30% at the holding company level. While interest coverage ratios have been variable over time, this measure improved in 2024 due to increased operating profitability. In addition, Liberty Mutual’s access to liquidity has served to offset any concerns.

The ratings of NB Re reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also reflect the explicit and implicit support received from the Liberty Mutual enterprise via infrastructure, management, other operational support and reinsurance coverage.

The assessment of NB Re’s balance sheet strength reflects its risk-adjusted capitalization, which remains at the very strong level, as measured by BCAR, and capital remains sufficient from a regulatory perspective. This is despite declines in equity over the past few years due to net losses. The assessment also considers the quality of its investments as the portfolio is very conservative, utilizing cash and fixed income investments.

NB Re has discontinued the issuance of new policies, and most renewals are being placed on affiliated paper, resulting in the continued adequate operating performance assessment. Based on the historical performance of the company’s business and loss reserves, AM Best anticipates the remaining liabilities will run off adequately over time. However, there may be some variability in year-over-year results as noted in 2022 and 2023, with adverse loss reserve development in one overseas bond program that resulted in significant net losses in each year. This program was settled, resulting in break-even operating performance in 2024. AM Best expects that NB Re will continue to service remaining policies through expiration, including any renewals of multi-year policies.

A complete listing of Liberty Mutual Holding Company Inc.’s and its subsidiaries’ FSRs, Long-Term ICRs and Long-Term IRs is available at the attached rating supplement link.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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