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Liberty International had an excellent year in 2003, ending the year with $2.9 billion in revenue or 16 percent growth, pre-tax operating income of $130 million, superb cash flow, a combined ratio of 101.1 percent and solid market positioning. Established in 1994, Liberty International has two enviable franchises: one in its personal lines and small commercial business in selected countries; the other in its global specialty lines business. To further focus on its core personal, small commercial and global specialty lines, Liberty International exited the health business in Canada in 2003, realizing a significant gain on the sale of its portfolio there.

International’s personal lines and small commercial business consists of ten significant in-country operations in nations with a large or growing middle class.

In Latin America, Liberty International has the largest insurance company in Venezuela, the largest property and casualty insurer in Colombia, and the second-largest workers compensation company in Argentina. In Colombia, Liberty continued to have superb results on all fronts, as it has in the past. In Venezuela, even in the midst of a contracting economy and challenging political circumstances, Liberty’s business continued to grow and supply excess capital to its parent company. In Argentina, where Liberty International has both workers compensation and personal lines companies, Liberty is a profitable, significant player in the market, despite economic and political turmoil over the last three years. And in Brazil, a new management team has rebuilt the company so it can regain its meaningful position in the market.

In Southern Europe, Liberty International added to its business in Spain and, with the acquisition of MetLife’s operations in January 2004, Liberty has quickly become a substantial national player in this mature market with more channels of distribution — direct sales, agents and brokers, and institutions such as banks and auto clubs — than any of its competitors. In Portugal, where Liberty acquired Winterthur’s insurance operations, Liberty is rebuilding the company with a new management team and systems. In both Spain and Portugal, Liberty is among the top ten, having grown its top line in the aggregate by 34 percent in 2003.

In Asia, Liberty International officially opened its office in Chongqing, China, where it sells insurance to foreign and local businesses operating in China, as well as a representative office in Hanoi, Vietnam. Both the Chinese and Vietnamese economies are doing extremely well, as is Thailand, where Liberty completed the integration of a recently acquired second company, making it number five in the market. In Singapore, net written premium increased 39 percent, while Hong Kong and Singapore together nearly doubled their bottom line over 2002.

Liberty International’s global specialty lines business, Liberty International Underwriters (LIU), continued on a track of dramatic growth and very positive bottom-line contributions in 2003. Its gross written premium totaled $2.5 billion, a 36 percent increase over 2002, and its bottom line grew more than 250 percent. Of particular note was LIU’s 32 percent gross written premium growth in the U.S., 46 percent growth in Lloyd’s (Syndicates 190, 282), 27 percent growth in Liberty Mutual Europe, and 31 percent growth in the Asia-Pacific region. LIU’s Lloyd’s operation now ranks as the fourth-largest Managing Agent in Lloyd’s, enhanced by Syndicate 190’s opening of a Paris branch. Additionally, LIU’s London-based Liberty Mutual Europe expanded operations to Cologne and Paris.

Liberty International has excellent momentum going into 2004. Extraordinary change continues to occur in the global insurance industry, including further consolidation. Liberty International, with its established operations, meaningful scale in targeted geographic markets, and its financial strength, is well positioned to continue to grow and further solidify its leadership position across the globe.

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