Liberty Mutual reported that its profits fell more than 70% in 2015. The global insurer—third largest property and casualty insurer in America—was adversely affected by its problematic Venezuelan operations, significant catastrophe losses, and lower investment income.
The Boston Globe reported that the insurer posted profits of $514 million, down from 2014’s $1.8 billion.
Due to its operations in Venezuela, Liberty Mutual took a considerable $909 million loss. The company announced late last year that it would discontinue operations in the country and sell its subsidiary. Liberty exits the Venezuelan market after 20 years due to the country’s hyperinflation induced by plunging crude prices.
Last year, Liberty Mutual lost $163 million on investments related to the energy exploration and production sector. The company’s total investment income dropped from $3.1 billion in 2014 to $2.7 billion in 2015.
Officials in the company have reassured that the losses suffered in Venezuela and through the failed investments will not affect the prices of Liberty Mutual’s policies.
Two days prior to Liberty Mutual posting its reduced profits, the insurer divulged that chief executive David Long received a 13 percent raise in 2015. The raise boosted his compensation to $15.7 million, up from $13.9 million the previous year. The company later explained that the 2015 compensation was based on 2014’s results, when it enjoyed a 16% increase in profits.
When asked whether Long’s compensation would decrease as a result of 2015’s decline, company officials would not predict.
“Compensation is set and approved by the Compensation Committee and is based on company performance and benchmarked against a peer group of companies by an independent nationally recognized compensation consultant,” said company spokesman John Cusolito.
