Liberty Mutual’s underwriting results across its businesses came in ahead of targets the company set three years ago when the business was unprofitable, the chief executive reported yesterday, also giving a sense of future strategies.
“In 2026, a key focus is shifting from fixing to building—taking what’s working and scaling it, leaning into our target segments and distribution, and growing only where returns meet our thresholds,” Tim Sweeney said on an investor conference call for Liberty Mutual Holding Company.
For the full year, Liberty reported a 55% jump in net income to $6.8 billion, with its combined ratio landing at 88.4—7.5 points lower than 2024’s 95.9 combined ratio. Notably, Sweeney highlighted the fact that both the insurer’s two main businesses—the U.S. Retail Markets operation, consisting of U.S. personal lines and small commercial businesses, and Global Risk Solutions segment, writing commercial and specialty insurance, reinsurance and surety solutions to midsize and large businesses worldwide, saw their combined ratios fall below targeted levels of 95 and 92, respectively.
“We made these commitments with a clear recognition that the profitability we were generating at the time was not acceptable, neither for our business nor for the policyholders who depend upon us to keep our promises,” Sweeney said, reflecting on the company’s situation three years ago.
For the full-year 2025, the U.S. Retail Markets combined ratio fell comfortably below the prescribed target, coming in at 82.2—10 points below the reported combined ratio for 2024. Global Risk Solutions ended 2025 right on target, falling 1.4 points to 91.9.
The reported improvements were largely attributable to favorable prior-year loss development, which executives said occurred mainly in the personal auto liability line. Lower levels of catastrophe losses also drove the better reported results in 2025, moving underlying loss ratios down while expense ratios climbed.
Excluding the impact of catastrophes and prior-year development, Chief Financial Officer Julie Haase reported that underlying pre-tax operating income actually decreased by $711 million to $8.7 billion. “This decrease was primarily driven by higher expenses, including increased commissions and advertising in U.S. Retail Markets to stimulate growth, higher employee-related costs, and a shift in external partnership agreements in Global Risk Solutions.”
Across the businesses, Liberty Mutual’s overall underlying loss ratio—excluding the impact of cat losses and prior-year development—fell 2.7 points in 2025, while the expense ratio rose 2.9 points. The underlying 2025 combined ratio of 85.7 was just about even with the comparable 2024 result (85.5).
The charts below show the impacts of catastrophe losses and prior-year development changes on the combined ratios by segment for the full year and the fourth quarter.