Presentation

LMG Presentation to LMG Presentation to International Insurance SocietyInternational Insurance Society

2

Liberty Mutual’s Current Business MixLiberty Mutual’s Current Business Mix

38%

23%

39%

2005

WC

Other Commercial Lines

Personal Lines

Source: Net Written Premium; 2005 Liberty Mutual MD&A; Personal Lines includes Personal Auto and HomeSource: Net Written Premium; 2005 Liberty Mutual MD&A; Personal Lines includes Personal Auto and Home

3

2005 Property and Casualty Insurance2005 Property and Casualty InsuranceTop 10 U.S. WritersTop 10 U.S. Writers

DWP

($ millions)

1 State Farm $48,762

2 American International Group 35,138

4 Allstate 27,320

5 St. Paul Travelers 21,495

Liberty Mutual Group 16,558

7 Nationwide 15,251

8 Progressive 14,298

9

Hartford Financial Services 12,25910

6

Market

Share

10.2%

7.3%

5.7%

4.5%

3.5%

3.2%

3.0%

2.6%

National Indemnity 13,488 2.8%

3 Zurich Farmers 27,332 5.7%

Personal Lines CompaniesPersonal Lines Companies

Source: OneSourceSource: OneSource

4

Progressive vs. S&P Insurance IndexProgressive vs. S&P Insurance Index5-Year Stock Price Performance5-Year Stock Price Performance

Source: CNBC.comSource: CNBC.com

S&P Insurance Index

Progressive

5

Personal Auto Premium Trend Personal Auto Premium Trend

0%

20%

40%

60%

80%

100%

120%

2000 2005

% D

WP

Gro

wth

Industry (ex Progressive) Progressive

Source: OneSource; 2000 and 2005 Direct Written PremiumSource: OneSource; 2000 and 2005 Direct Written Premium

6

Progressive vs. Industry Progressive vs. Industry Combined Ratio Trend 2000-2005Combined Ratio Trend 2000-2005

80%

85%

90%

95%

100%

105%

110%

2000 2001 2002 2003 2004 2005

P&C Auto

Progressive


7

Monoline Insurance CompanyMonoline Insurance Company5-Year Stock Price Performance5-Year Stock Price Performance

Source: CNBC.comSource: CNBC.com

Commerce Group

S&P Insurance Index

Mercury General

Progressive

Infinity Property & Casualty

8

Personal Lines PremiumPersonal Lines Premium(% of P&C Industry Premium)(% of P&C Industry Premium)

Other Lines54%

Personal Lines46%

2005 DWP, $ Billions

Personal Lines $221

Other Lines 258

Industry Total $479

Source: OneSource; 2005 Direct Written Premium. Personal Lines includes the following: Personal Auto and HomeSource: OneSource; 2005 Direct Written Premium. Personal Lines includes the following: Personal Auto and Home

9

2005 Top 10 Property Writers2005 Top 10 Property Writers

Source: OneSource; 2005 Direct Written Premium. Property includes the following: Fire, Allied, Inland Marine and Boiler & MachinerySource: OneSource; 2005 Direct Written Premium. Property includes the following: Fire, Allied, Inland Marine and Boiler & Machinery

DWP

($ millions)

1 $2,941

2

American International Group

2,7262,726

4

Ace American Ins Co

1,467

5

Zurich Ins Co Group

1,252

Hartford Fire Group

1,134

7

Continental Casualty Group

923

8

Assurant Group

804

9

Liberty Mutual Group

696

10 692

6

Market

Share

9.6%

8.9%8.9%

4.8%

4.1%

3.7%

3.0%

2.6%

2.3%

2.2%

3 St Paul Travelers Companies 2,179 7.1%

FM GlobalFM Global

48.1%

Chubb

10

Property Lines PremiumProperty Lines Premium(% of P&C Industry Premium)(% of P&C Industry Premium)

All Other Lines94%

Property 6%

Property Lines % of P&C Industry

DWP of Leading Property Lines Companies

2005 DWP, $ Billions

Property Lines $31

Other Lines 448

Industry Total $479

Top 10 Property

Cos48%

All Other Cos52%

Source: OneSource; 2005 Direct Written Premium. Property includes the following: Fire, Allied, Inland Marine and Boiler & MachinerySource: OneSource; 2005 Direct Written Premium. Property includes the following: Fire, Allied, Inland Marine and Boiler & Machinery

11

Personal Auto Premium Trend Personal Auto Premium Trend

0%

20%

40%

60%

80%

100%

120%

2000 2005

% D

WP

Gro

wth

Industry (ex Progressive & Geico) Progressive

Geico Liberty Mutual

Source: OneSource; 2000 and 2005 Direct Written PremiumSource: OneSource; 2000 and 2005 Direct Written Premium

12

Personal Lines Premium TrendPersonal Lines Premium Trend 1996-2005 1996-2005

$0

$30

$60

$90

$120

$150

$180

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Dir

ec

t W

ritt

en

Pre

miu

m (

$B

illi

on

s) Auto

Home

4.4%

8.7%

CAGR1996-05


13

Personal Lines Rate Increase TrendPersonal Lines Rate Increase Trend

0.6%

4.8%

7.5% 7.8%

2.8%

1.5%

4.1%

5.5%

10.6%

7.3%

3.8%

2.6%

0.0%

4.0%

8.0%

12.0%

2000 2001 2002 2003 2004 2005

Auto Home

Source: Insurance Information InstituteSource: Insurance Information Institute

14

Top Ten Personal Auto InsurersTop Ten Personal Auto Insurers1984, 1994, 20041984, 1994, 2004

Source: CSFB 2005 Property-Casualty Insurance Primers; Rankings are based on Personal Auto DWP for each of the years shownSource: CSFB 2005 Property-Casualty Insurance Primers; Rankings are based on Personal Auto DWP for each of the years shown

$ millions

Company DWP Company DWP Company DWP1 State Farm $7,885 1 State Farm $22,093 1 State Farm $29,2822 Allstate 4,574 2 Allstate 11,548 2 Allstate 16,6553 Farmers 2,357 3 Farmers 5,187 3 Progressive 11,6454 Nationwide 1,569 4 Nationwide 3,736 4 GEICO 8,9655 Aetna 1,134 5 USAA 3,334 5 Farmers 7,9916 USAA 1,005 6 GEICO 2,333 6 USAA 5,6187 Travelers 907 7 Progressive 2,131 7 Liberty Mutual 4,6258 Liberty Mutual 827 8 Liberty Mutual 1,626 8 AIG 3,9269 GEICO 814 9 American Family 1,611 9 American Family 3,596

10 Kemper 604 10 Prudential 1,476 10 St Paul Travelers 3,321Total $21,676 Total $55,075 Total $95,624

1984 1994 2004

15

Personal Auto Personal Auto Combined Ratio Trend 2000-2005Combined Ratio Trend 2000-2005

85%

95%

105%

115%

125%

Farmers LMG (PM only)

P&C Industry State Farm Allstate GEICO Progressive

2000 2005

Source: OneSource and Personal Market Finance for LMGSource: OneSource and Personal Market Finance for LMG

16

P&C Insurance Advertising Expense Trend P&C Insurance Advertising Expense Trend 2002-20052002-2005

$0

$50

$100

$150

$200

$250

$300

$350

$400

GEICO Allstate State Farm Progressive

$ M

illi

on

s

2002 2003 2004 2005

Source: 2002-2004 is based on CSFB Property-Casualty Industry Primer 2005; 2005 numbers are based on 2004-05 growth rate of the following: Source: 2002-2004 is based on CSFB Property-Casualty Industry Primer 2005; 2005 numbers are based on 2004-05 growth rate of the following: GEICO 40%, State Farm 27%, Allstate 13%, Progressive 2%GEICO 40%, State Farm 27%, Allstate 13%, Progressive 2%

17

Industry Personal AutoIndustry Personal Auto Combined Ratio Trend 1976-2005 Combined Ratio Trend 1976-2005

90%

95%

100%

105%

110%

115%

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Co

mb

ine

d R

ati

o


18

Insurance Carriers Who Withdrew from Insurance Carriers Who Withdrew from Personal AutoPersonal Auto

Source: CSFB Property Casualty Insurance PrimersSource: CSFB Property Casualty Insurance Primers

Royal & Sun

Continental Foremost USF&G St. PaulW.R.

Berkley

AlliedGeneral Accident

Commercial Union

Guide One Prudential

Cigna CNA Reliance KemperGeneral Electric

19

Liberty Mutual’s Business MixLiberty Mutual’s Business Mix1985, 1995, 20051985, 1995, 2005

25%

35%

40%27%32%

41%

38%

23%

39%

1985 1995

2005

WC

Other Commercial Lines

Personal Lines

Source: Net Written Premium; 1985 Liberty Mutual Annual Report, OneSource, 2005 Liberty Mutual MD&A; Personal Lines includes Personal Source: Net Written Premium; 1985 Liberty Mutual Annual Report, OneSource, 2005 Liberty Mutual MD&A; Personal Lines includes Personal Auto and HomeAuto and Home

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Economy & Finance

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