A Message from Our Chairman, President and CEO

2014 was a very good year for Liberty Mutual Insurance Group. We achieved strong financial results; improved underwriting profitability; increased our net income by five percent to $1.83 billion; grew net written premium selectively by three percent, to $36.3 billion; and decreased our combined ratio more than two points, to 97.5 percent.

We strengthened our balance sheet through capital-related transactions and disciplined operational execution, and, consequently, Standard & Poor’s upgraded our rating from “A-” to “A.” In addition, we advanced our ranking in the Fortune 100 by five positions, to 76.

With the operating principles guiding our work, the leveraging of our strong talent and our disciplined business operations, 2014 was a good year for Liberty Mutual.

Most important, we achieved these results by staying focused on our customers and policyholders; disciplined in our business operations; and strategic in leveraging our talent, technology, analytics and best practices around the world.

With a commitment to continuous improvement and innovation, each of our Strategic Business Units made significant progress in 2014:

  • Personal Insurance, after years of outperforming the industry in growth and profit, achieved its long-standing goal of becoming a top-five personal lines carrier in the U.S. The business launched several customer-focused initiatives, including broadening its product suite with a countrywide expansion of telematics capabilities and launching a new Customer Advocacy organization.
  • Commercial Insurance reduced its combined ratio below 100 percent and generated $1.04 billion of pre-tax operating income, a 38 percent increase over last year’s results. The business launched closed-loop feedback processes in some critical operations and expanded its agent and broker advisory council programs — both of which enabled productive two-way dialogue with key stakeholders. Commercial Insurance also merged Group Benefits and Individual Life to form Liberty Mutual Benefits, allowing it to better meet changing market needs.
  • Liberty International positioned itself for improved profitability by reorganizing its operations by business characteristics and geography, and by creating Centers of Excellence to drive best practices in all functional areas. It expanded its global footprint by acquiring Uni.Asia General Insurance, the 14th-largest non-life insurer in Malaysia, and Hughes Insurance, an independent broker in Northern Ireland.
  • Global Specialty finalized the acquisition of Mexican surety writer Primero Fianzas, positioning Liberty Mutual Surety — already the second-largest surety writer in the U.S. — for continued international growth. Global Specialty’s strong financial performance was driven by growth and profits within Liberty Specialty Markets.

While striving to achieve our goals, we also helped some hardworking athletes achieve theirs through our sponsorship of the 2014 U.S. Olympic and Paralympic teams and the 2014 FIFA World Cup™. And, along the way, we raised our global profile.

The following pages highlight Liberty Mutual’s principles and offer examples of how Our Principles inform our work. Two compelling examples are found in how we give back to our communities through employee-led community programs. Through our Give with Liberty program, a remarkable 72 percent of Liberty employees pledged $11.7 million to 7,500 local human service charities; including the company’s match, we reached $17.5 million in charitable contributions. Serve with Liberty was equally inspiring, with more than 26,000 employees completing 2,400 projects on behalf of 900 charities in 20 countries around the world. These efforts illustrate the character of Liberty employees and remind me of the goodness that makes this company great.

In closing, I thank the members of our Board of Directors for their invaluable guidance, especially director Chuck Clough, who is retiring after 14 years of service to Liberty Mutual. His insights and expertise have been instrumental to our company, and he will be missed. As always, I remain deeply grateful to our talented employees and distribution partners for delivering on our promise to our customers.

Most of all, I thank our customers and policyholders, who trust us to take care of them when they need us most. In a business built on this kind of trust, we know principles matter.

David H. Long
Chairman, President and CEO

Integrity, Dignity + Respect

Our Principles: We behave with integrity. We treat people with dignity and respect.

A Message from Our Chairman, President and CEO

2014 was a very good year for Liberty Mutual Insurance Group. We achieved strong financial results; improved underwriting profitability; increased our net income by five percent to $1.83 billion; grew net written premium selectively by three percent, to $36.3 billion; and decreased our combined ratio more than two points, to 97.5 percent.

We strengthened our balance sheet through capital-related transactions and disciplined operational execution, and, consequently, Standard & Poor’s upgraded our rating from “A-” to “A.” In addition, we advanced our ranking in the Fortune 100 by five positions, to 76.

Read full message from CEO David Long

Customer Focused

Our Principle: We deliver an exceptional customer experience.

By incorporating the voice of the customer into every business decision, Personal Insurance and Commercial Insurance consistently meet and exceed customer expectations.

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A Customer-Centric Culture

Personal Insurance has had great success with profitably growing — currently at a pace that’s more than twice the industry — and gaining market share, in large part because of its deep commitment to anticipating and meeting customer needs. By consistently putting the customer experience at the core of everything it does, the business unit is building a strong foundation and market leadership position for the years ahead.

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Delivering the Best Possible Experience

Helping customers is a two-way street for Commercial Insurance, which interacts with its customers by soliciting their feedback and then acting on what they say. Whether through technology, forums or employee training, incorporating the voice of its customers is key to delivering the best possible experience.

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Innovation

Our Principle: We continuously improve and innovate.

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Innovation Across the Globe

Innovative product development is critical to Global Specialty’s success in a highly competitive global market. To that end, Global Specialty is breaking new ground in the agriculture industry by developing market-leading reinsurance products for farmers and through its involvement in the African Risk Capacity, a consortium of insurance carriers that uses early-warning drought models to predict food insecurity response costs.

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Talent

Our Principle: We attract, develop and engage talent.

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Promises and People

At Liberty Mutual Insurance Group, we are in the business of promises — to protect people and the things they build, own and cherish. It is our people who fuel those promises. To deliver on our culture of continuous improvement and steadfast integrity, we foster an environment of support, empowerment and collaboration that enables our employees to succeed both inside and outside of work.

Excellence

Our Principle: We execute thoroughly and seek excellence.

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Everyday Excellence

Over 15 years, Liberty International has grown from a collection of small local companies into a $6 billion, multinational organization with operations in 18 countries. Its success in this short time has come, in part, from local ownership and knowledge — teams that track the nuances of their markets and move quickly to bring about change. By seeking excellence in its strategy and everyday activities, Liberty International will achieve continued growth in an increasingly competitive global marketplace.

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