Liberty Mutual Group's third-quarter net income plummeted 99% on investment losses and losses related to Hurricane Ike and Hurricane Gustav.
The property/casualty insurer, which bought Safeco Corp. in September, said that its net income fell to $6 million from $404 million a year earlier. The results, announced Monday, included realized investment losses of $162 million and catastrophe-related losses of $697 million.
Revenue increased 4.3%, to $6.87 billion, and net written premiums rose 13%, to $6.55 billion.
Excluding the impact of the catastrophes and net incurred losses attributable to prior years, Liberty Mutual's combined ratio (the percentage of premiums paid out on losses) fell 3.8 percentage points, to 94.9%. Including them, the ratio rose 4.4 points, to 103.4%.
The $6.2 billion Safeco acquisition made Liberty Mutual the country's fifth-largest property/casualty insurer and second-largest surety business.
Standard & Poor's Ratings Services cut its credit rating on Liberty Mutual last month to one notch above junk, saying that, among other things, the Boston company had diminished financial flexibility and an aggressive pricing and growth strategy.
But the rating agency said that it expected Liberty's 2008 net premium growth to be above average despite price deterioration.