Liberty Mutual Holding Company has reported a 55% jump in net income to $6.8bn for 2025, with underwriting results across its businesses exceeding targets set three years ago when the company was unprofitable. The insurer also outlined a strategic shift for 2026, focusing on scaling profitable operations rather than fixing underperforming ones.
“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,” said Tim Sweeney, CEO, during the company’s investor conference call.
Liberty Mutual’s combined ratio for the year fell to 88.4, down 7.5 points from 2024’s 95.9. Both the U.S. Retail Markets operation covering personal lines and small commercial businesses and the Global Risk Solutions segment, which writes commercial and specialty insurance, reinsurance, and surety solutions, came in below their respective targets of 95 and 92.
Sweeney reflected on the turnaround: “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.”
The full-year combined ratio improvements were largely driven by favourable prior-year loss development in personal auto liability and lower catastrophe losses. Underlying pre-tax operating income, excluding these factors, declined by $711m to $8.7bn due to higher commissions, advertising spend, and employee-related costs.
In the U.S. Retail Markets, the combined ratio dropped to 82.2, 10 points below 2024, supported by 6.1 points of favourable prior-year development and 3 points from lower catastrophe losses. The underlying combined ratio remained steady at 79.9, with a 4.5-point improvement in loss ratios offset by a 3.5-point rise in expenses.
Hamid Mirza, President of U.S. Retail Markets, said the business achieved sequential growth in policies in force, driven by record advertising and renewed agency partnerships. “Proven and sustainable profit has positioned us to continue momentum and pivot even further into profitable growth heading into 2026,” he noted.
Leadership changes were also announced. Matthew Moore, previously President of Underwriting for Global Risk Solutions, will replace Neeti Bhalla Johnson as President of the division. Moore highlighted a 10-point improvement in combined ratio since 2021 as a result of disciplined underwriting, portfolio management, and expense control.
Sweeney emphasised Liberty Mutual’s technology investments, particularly in AI, noting internal tools like Liberty GPT are designed to enhance underwriting, claims, and customer service workflows. “Our rollout is deliberate, broad enablement that lifts everyday productivity and decision support alongside targeted scale deployments… enhancing underwriting insight and workflow speed,” he said.
On capital deployment, Sweeney added: “We view ourselves as having a lot of degrees of freedom to invest what we need to invest in [AI] to make sure that we’re a winner in that space.”
