Liberty Mutual is offering select eligible employees an early retirement package, the Massachusetts-based insurer said Wednesday, even as profits rose and operating costs fell during the third quarter despite the global COVID-19 pandemic.
The insurer said it expects the cost of the early retirements to be approximately $570 million, which will be recognized in its fourth-quarter results.
Liberty Mutual spokesperson Glenn Greenberg said voluntary early retirement is being offered to employees in the U.S. who are at least 55 or 60 years old, depending on what part of the organization they work in, and have at least 10 years total working for the company. Retirements are expected to take place throughout 2021.
Greenberg told New Hampshire-based newspaper Foster’s Daily Democrat last month that the retirement packages — the first offering of its kind for Liberty Mutual in several years — are meant to help manage costs across the company and remain competitive while benefiting employees.
Operating costs and expenses for the insurer were $1.66 billion in the third quarter, a 3.8% decline year over year.
Liberty Mutual made $397 million in the third quarter, up 46% year over year, bringing the insurer’s income so far this year to $596 million. In the first nine months of 2019, Liberty Mutual made $1.34 billion.
Total debt, excluding unamortized discount and debt issuance costs, was $9.26 billion as of Sept. 30, a 6.8% increase since Dec. 31, and total equity was $25.13 billion, up 6.4%.
CEO David Long said the company benefited from strong investment income as valuations in the partnership portfolio, which lag by a quarter, rebounded from the low points of March.
Net written premiums grew 3.7% year over year to $10.7 billion in the quarter, reflecting a 16% increase in renewals within the global risk solutions division and a higher number of policies in U.S. personal lines.
Across the insurance industry, analysts expected profit margins to grow in the third quarter, especially with health, life and multiline insurance as the COVID-19 pandemic spurred both losses and fewer claims in some areas. Automotive insurance in particular has been a bright spot during the pandemic, with vehicle miles down 64% at the height of the COVID-19 lockdowns.
Property and casualty insurance, however, was expected to report results similar to those seen in the second quarter — large catastrophe losses, interruption losses, contingency losses and other coronavirus-related losses — because of wildfires across the U.S. West Coast and the record hurricane season.
Liberty Mutual saw nearly $1 billion of catastrophe losses in the third quarter, double the losses seen over the same period last year. In the second quarter, Liberty Mutual reported $878 million of catastrophe losses.
In the first nine months of 2020, Liberty Mutual recorded $565 million of losses related to COVID-19; total catastrophe losses so far this year are $2.16 billion, up 80.2% compared to the first nine months of 2019.
“We are grateful for the efforts of our claims personnel to support our impacted customers, especially during these challenging times, and for the continued resiliency of all our employees globally during the pandemic,” Long said.