Third Quarter 2018 Results November 1, 2018 Cautionary Statement - PowerPoint PPT Presentation

Third Quarter 2018 Results November 1, 2018

Cautionary Statement Regarding Forward Looking Statements This report contains forward looking statements that are intended to enhance the reader’s ability to assess the future financ ial and business performance of Liberty Mutual Holding Company Inc., the parent corporation of the Liberty Mutual Insurance group of entities (the "Company" or "LMHC"). Forward looking statements include, but are not limited to, statements that represent the Company’s beliefs concerni ng future operations, strategies, financial results or other developments, and contain words and phrases such as “may,” “expects,” “sho uld ,” “believes,” “anticipates,” “estimates,” “intends” or similar expressions. Because these forward looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond the Company’s cont rol or are subject to change, actual results could be materially different. Some of the factors that could cause actual results to differ include, but are not limited to the following: the occurrence of catastrophic events (including terrorist acts, hurricanes, hail, tornados, tsunamis, earthquakes, floods, snowfall and winter conditions); inadequacy of loss reserves; adverse developments involving asbestos, environmental or toxic tort claims and litigation; adverse developments in the cost, availability or ability to collect reinsurance; disruptions to the Company’s relationships with its independent agents and brokers; financial disruption or a prolonged economic downturn; the performance of the Company’s investment portfolios; a rise in interest rates; risks inherent in the Company’s alternative investments in private limited partnerships (“LP”), limited liability companies (“LLC”), commercial mortgages and natural resource working interests; difficulty in valuing certain of the Company’s investments; subjectivity in the determination of the amoun t of impairments taken on the Company’s investments; unfavorable outcomes from litigation and other legal proceedings, including the effects of emer ging claim and coverage issues and investigations by state and federal authorities; the Company’s exposure to credit risk in certain of its business operations; the Company’s inability to obtain price increases or maintain market share due to competition or otherwise; inadequacy of the Co mpany’s pricing models; changes to insurance laws and regulations; changes in the amount of statutory capital that the Company must hold to maintain its financial strength and credit ratings; regulatory restrictions on the Company’s ability to change its methods of marketin g and underwriting in certain areas; assessments for guaranty funds and mandatory pooling arrangements; a downgrade in the Company’s claims -paying and financial strength ratings; the ability of the Company’s subsidiaries to pay dividends to the Company; inflation, including i nflation in medical costs and automobile and home repair costs; the cyclicality of the property and casualty insurance industry; political, legal, operational and other risks faced by the Company’s international business; potentially high severity losses involving the Company’s surety pr oducts; loss or significant restriction on the Company’s ability to use credit scoring in the pricing and underwriting of personal lines poli cies; inadequacy of the Company’s controls to ensure compliance with legal and regulatory standards; changes in federal or state tax laws; risks aris ing out of the Company’s securities lending program; the Company’s utilization of information technology systems and its implementation of t echnology innovations; difficulties with technology or data security; insufficiency of the Company’s business continuity plan in the ev ent of a disaster; the Company's ability to successfully integrate operations, personnel and technology from its acquisitions; insufficiency of the Com pany’s enterprise risk management models and modeling techniques; and changing climate conditions. The Company’s forward looking statements spe ak only as of the date of this report or as of the date they are made and should be regarded solely as the Company’s current plans, esti mates and beliefs. For a detailed discussion of these and other cautionary statements, visit the Company’s Investor Relations website at www.libertymutualgroup.com/investors. The Company undertakes no obligation to update these forward looking statements. 2 2

Liberty Mutual Overview Helping people embrace today and confidently pursue tomorrow P&C Businesses Global Retail Markets (GRM) Global Risk Solutions (GRS) • Liberty Specialty Markets • U.S. - Personal Lines and Business Lines • National Insurance • West - Brazil, Colombia, Chile, Ecuador, Spain, Portugal, and Ireland • North America Specialty • East - Thailand, Singapore, Hong Kong, • Global Surety Vietnam, Malaysia, India, China, and • Other GRS Russia 3 rd largest P&C writer in the U.S. 2 • • Mutual holding company structure 4 th largest commercial lines writer in the U.S. 2 • • $142.5B of assets and $39.4B of revenues in 2017 5 th largest global P&C insurer 3 • • The most diversified P&C insurer 6 th largest personal lines writer in the U.S. 2 • 68 th among Fortune 500 companies 1 • 8 th largest surplus lines carrier in the U.S. 2 • 1 Based on 2017 revenue – as reported. 2 Based on 2017 DWP, includes Ironshore full-year 2017 results. 3 Based on 2017 GWP, excludes state-owned companies. 3 3

Liberty Mutual’s Global Presence Liberty Mutual operates in 30 countries and economies around the globe Europe  France  Germany Asia/  Ireland Pacific  Italy  Luxembourg  Australia  Netherlands  China  Portugal  Hong Kong  Russia  India  Spain  Malaysia Americas 1  Switzerland  Singapore  U.K.  Thailand  United States (HQ)  UAE  Bermuda  Vietnam  Brazil  Canada  Chile  Colombia  Ecuador  Mexico  Peru  Puerto Rico Headquarters GRS GRM GRM & GRS 1 Effective September 30, 2015, the Company deconsolidated its Venezuelan operations. 4 4

Analysis of Consolidated Net Written Premium (“NWP”) NWP by Business 1 NWP by Line of Business GRS Inland Corporate September YTD 2018 Commercial Marine Reinsurance & Property 1% 3 Other 2% 4% Global Risk Surety Solutions General 2% Liability 30% 4% Private Commercial Passenger Auto Auto 36% 5% Workers Comp 5% Commercial Multiple-Peril 6% GRS Global Retail Reinsurance 7% Markets 70% GRS Specialty 2 Insurance Homeowners 11% 17% NWP year-to-date in 2018 totaled $29.7 billion, an increase of 6.3% over the same period 2017 (or an increase of 6.0% 4 excluding FX over the same period in 2017) 1 Excludes “Corporate and Other” of ($314) million. 2 Specialty insurance is reported within GRS and includes marine, energy, construction, aviation, property, casualty, warranty and indemnity, excess casualty, directors and officers, errors and omissions, environmental impairment liability, railroad, trade credit, excess and surplus property, crisis management, contingent lines and other. 3 Corporate Reinsurance is NWP associated with internal reinsurance assumed into corporate, net of corporate external placements. Other primarily includes NWP from allied lines, domestic inland marine, and life and health reported within GRM. 4 Determined by assuming constant foreign exchange rates between periods. 5 5

Consolidated Results Third Quarter Year-to-Date ($ Millions) 2018 2017 Change 2018 2017 Change NWP $10,189 $9,854 3.4% $29,694 $27,928 6.3% Pre-tax operating income (loss) before partnerships, $312 ($1,290) NM $1,176 ($1,170) NM LLC and other equity method income Partnerships, LLC and other equity method income 1 186 205 (9.3) 693 471 47.1 Net realized (losses) gains (104) 177 NM (8) 346 NM Consolidated net income (loss) from continuing 283 (716) NM 1,382 (347) NM operations Discontinued operations, net of tax - 52 (100.0) 530 161 NM Net income (loss) attributable to LMHC $282 ($665) NM $1,911 ($188) NM Cash flow provided by continuing operations before $1,256 $734 71.1% $2,412 $1,867 29.2% pension contributions Pension contributions - (1) (100.0) - (403) (100.0) Cash flow provided by continuing operations $1,256 $733 71.4% $2,412 $1,464 64.8% As of ($ Millions) September 30, 2018 December 31, 2017 Change Total equity $21,014 $20,688 1.6% 1 Partnerships, LLC and other equity method income includes LP, LLC and other equity method income within net investment income in the accompanying Consolidated Statements of Operations and revenue and expenses from the production and sale of oil and gas. NM = Not Meaningful 6 6