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A Message from Our Chairman, President and CEO


In 2013, Liberty Mutual Insurance Group made enormous strides toward becoming one of the top property and casualty (P&C) insurers in the world.

Executing the strategy set forth to grow selectively and improve underwriting profitability, we produced terrific results and a lot of momentum in 2013. We increased our net income by $914 million to $1.7 billion. We grew net written premium 6.7 percent to $35.2 billion. We drove our combined ratio down five points to 99.8 percent — below 100 for the first time in years — and we built a balance sheet that is stronger today than any time in memory.

We also advanced in our rankings. In 2013, we became the fifth-largest P&C company in the world and the third-largest P&C company domestically. Further, we moved up three positions on the Fortune 100 list to number 81.

Even more satisfying than how fast and how far we've come is how we're getting there. In 2013, we set out — with intention — to harness the power of our people, to identify and fix problems at their source, to leverage our technology and to drive continuous service improvement. Keeping you, our customers and policyholders, at the center of all we do. We held tight to that which anchors us — most notably, our commitment to behave with integrity, to treat everyone with dignity and respect and to do the right thing, always. In this environment, the company and its people are thriving.

Our Strategic Business Units hit the ground running in 2013. Personal Insurance's growth was among the highest in the industry. Committed to delivering the best customer experience in the industry, Personal Insurance advanced its technology, diversified its distribution, built brand awareness and developed innovative products and services. As part of Liberty Mutual's sponsorship of the U.S. Olympic and Paralympic teams, Personal Insurance launched the “Rise” marketing campaign, showcasing the determination within all who face setbacks to rise yet again.

Commercial Insurance began effectively diversifying its book of business by increasing focus on small commercial and multiline accounts and by growing its capabilities to deliver general liability and property insurance. Commercial Insurance also moved to one unified, country-wide brand, Liberty Mutual Insurance. This business unit has made tremendous gains in operational consistency at the local level, improving its ability to support profitable growth with agents and brokers.

In 2013, we decided to sell Summit Insurance, a stand-alone mono-line workers compensation business. Although Summit was a successful part of Liberty for 15 years, it no longer fit with Commercial Insurance's strategic direction. The transaction is subject to regulatory approval, which we expect by April 1, 2014. We thank Summit employees for their excellent work and wish them the very best going forward.

For Liberty International, momentum has meant generating capital in mature operations and strengthening its presence in emerging markets. Fortunately, Liberty International was able to absorb the devaluation of the Venezuelan currency that took place in the first quarter of 2013.

By establishing the Global Best Practices Unit and Regional Data Centers in 2013, Liberty International began to better utilize talent and expertise, improve and expand data, and develop and implement sophisticated analytical and technological improvements across the enterprise.

Global Specialty, our newest Strategic Business Unit, brought together our U.S. surety technical expertise with our global infrastructure and relationships. Despite difficult market conditions, Global Specialty achieved positive financial results and expanded internationally.

Most notably, with the pending acquisition of Mexican surety writer Primero Fianzas, Global Specialty will expand its worldwide reach. With direct writing operations already in the United States and Canada, Liberty Mutual Surety welcomes the Primero acquisition in Mexico, rounding out Liberty's presence in North America.

Ultimately, success for Liberty Mutual always comes back to our people. One of the best ways to capture the character of this company is to understand the exceptional ways our employees respond to the needs of our neighbors.

In just its second year, Serve with Liberty attracted more than 25,000 employees to serve on 2,000 projects on behalf of 900 charities in 21 countries throughout the world. The charities raved about the hard work of Liberty employees. Give with Liberty was equally successful, with a record-breaking 69 percent of our U.S. employees contributing to the social service charities that matter most to them — pledging nearly $11 million to more than 7,000 agencies. These numbers are simply extraordinary. With the company's match, we gave nearly $17 million. Our employee campaigns reflect the heart of Liberty and speak to the honor I feel to serve as CEO.

I'd like to thank our Board of Directors for their invaluable guidance. I am particularly grateful to director Michael Babcock, who is retiring after nearly 30 years of service to Liberty Mutual. His insights, advice and support have been instrumental to Liberty Mutual, and he will be missed. I am also grateful to our network of distribution partners — the independent agents and brokers who bring Liberty Mutual to those who need us most.

Above all, I thank our customers and policyholders. Thank you for placing your faith and confidence in Liberty Mutual and in all our employees, who work so hard to earn it.

David H. Long

Chairman, President and CEO