Liberty Mutual Group Reports First Quarter 2008 Results

Business Wire, May 5, 2008

BOSTON -- Liberty Mutual Group ("LMG" or the "Company") today reported net income of $360 million for the three months ended March 31, 2008, an increase of $10 million over the same period in 2007.

"Despite significant competition, higher catastrophe losses and a global credit crisis, our results in the quarter were solid," said Edmund F. Kelly, Chairman, President and CEO of Liberty Mutual. "Domestic premium growth and profitability were strong, enhanced by our acquisition of Ohio Casualty in 2007 and continued growth in our international operations, including the strength of foreign currencies versus the U.S. dollar. Our investment results were also strong, reflecting minimal exposure to sub-prime mortgages."

First Quarter Highlights

* Revenues for the three months ended March 31, 2008 were $6.885 billion, an increase of $742 million or 12.1% over the same period in 2007.

* Net written premium for the three months ended March 31, 2008 was $6.256 billion, an increase of $569 million or 10.0% over the same period in 2007.

* Pre-tax income for the three months ended March 31, 2008 was $480 million, a decrease of $20 million or 4.0% from the same period in 2007.

* Net income for the three months ended March 31, 2008 was $360 million, an increase of $10 million or 2.9% over the same period in 2007.

* Cash flow from operations for the three months ended March 31, 2008 was $613 million, a decrease of $396 million or 39.2% from the same period in 2007.

* The combined ratio before catastrophes1 and net incurred losses attributable to prior years2 for the three months ended March 31, 2008 was 99.1%, unchanged from the same period in 2007. Including the impact of catastrophes and net incurred losses attributable to prior years, the Company's combined ratio for the three months ended March 31, 2008 decreased 0.4 points to 100.7%.

Financial Condition as of March 31, 2008

* Total assets were $97.533 billion as of March 31, 2008, an increase of $2.791 billion over December 31, 2007.

* Policyholders' equity was $12.434 billion as of March 31, 2008, an increase of $68 million over December 31, 2007.

* Statutory surplus as regards policyholders for the combined operations of Liberty Mutual Insurance Company ("LMIC") and its U.S. affiliates was $14.099 billion as of March 31, 2008, a decrease of $56 million from December 31, 2007.

Other 2008 1(st) Quarter Highlights

* On January 9, 2008, the Company through its Brazilian subsidiary, Liberty International Brazil Ltda., acquired Indiana Seguros, S.A., a writer of primarily auto insurance in Brazil.

Subsequent Events

* On April 23, 2008, LMG and Safeco Corporation announced that they entered into a definitive agreement pursuant to which LMG, through its subsidiaries, will acquire all outstanding shares of common stock of Safeco for $68.25 per share or approximately $6.2 billion. The proposed transaction, which has been approved by the Boards of Directors of both companies, is subject to approval by Safeco's shareholders and customary regulatory approvals and conditions. The transaction is targeted to close in the third quarter of 2008.

Consolidated Results of Operations for the Three Months Ended March 31, 2008:

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Financial Information: Liberty Mutual Group's financial results, management's discussion and analysis of operating results and financial condition, accompanying financial statements and other supplemental financial information for the three months ended March 31, 2008 are available on the Company's Investor Relations web site at www.libertymutual.com/investors.>

Conference Call Information: At 10:00 a.m. EST today, Edmund F. Kelly, Liberty Mutual Group Chairman, President and CEO, will host a conference call to discuss the Company's financial results. To listen to the call and participate in the Q&A, please dial 888-713-4541 fifteen minutes before the starting time using conference ID number 3794358. A replay will be available until May 12, 2008 at 888-203-1112 using the reservation number 3794358.

About Liberty Mutual Group

Boston-based Liberty Mutual Holding Company Inc., the parent corporation of the Liberty Mutual Group of entities ("LMG" or the "Company"), is a diversified global insurer and sixth largest property and casualty insurer in the U.S. based on 2006 direct written premium. The Company also ranks 94th on the Fortune 500 list of largest corporations in the United States based on 2007 revenue. As of December 31, 2007, LMG had $94.742 billion in consolidated assets, $82.376 billion in consolidated liabilities, and $25.961 billion in annual consolidated revenue.

LMG, through its subsidiaries and affiliated companies, offers a wide range of property-casualty insurance products and services to individuals and businesses alike. In 2001 and 2002, the Company formed a mutual holding company structure, whereby the three principal mutual insurance companies, LMIC, LMFIC and EICOW, each became separate stock insurance companies under the ownership of Liberty Mutual Holding Company Inc.