Re/insurance holding firm Fairfax Financial Holdings Limited (Fairfax) has announced that it has expanded its investment in Ensign Energy Services Inc (Ensign Energy) by purchasing an additional 271,100 common shares through its insurance subsidiaries.
The shares were acquired at C$2.4238 each, amounting to a total investment of approximately C$657,092.18. The purchase was conducted through the Toronto Stock Exchange.
This advancement follows newly formed and wholly-owned Fairfax subsidiary 16133258 Canada Inc’s acquisition of all outstanding common shares of specialty sleep retailer Sleep Country Canada Holdings for $35 per share, announced last month.
With the latest deal, Fairfax’s total ownership in Ensign Energy – an industry leader in oilfield services in Canada – now stands at 33,406,386 common shares, which constitutes roughly 18.19% of Ensign Energy’s total outstanding shares.
Prior to this transaction, Fairfax – named one of the top underwriters of cyber insurance based on gross direct premiums written in 2023 – held 33,135,286 shares, representing about 18.04% of the company’s shares.
The company said the additional shares were bought for investment purposes. This decision comes after the firm saw its consolidated interest and dividend income increase to $614 million during the second quarter of 2024 (Q2 2024), with $547.1 million earned from the investment portfolios of its insurance and reinsurance operations. As of June 30, 2024, Fairfax’s portfolio investments totalled $61.5 billion, including $7.7 billion in cash and short-term investments.
Fairfax noted that it may engage in discussions with Ensign Energy’s management or board regarding potential strategic options.
Depending on market conditions and Ensign Energy’s business outlook, the re/insurance holding firm may consider further transactions involving the oilfield services provider’s shares.
In compliance with Canadian securities regulations, Fairfax will file an early warning report regarding this transaction. The report will be available on SEDAR+, and interested parties may also obtain it by contacting Fairfax vice president of corporate development John Varnell.
Fairfax’s net earnings for Q2 2024 totalled $915.4 million, which translates to $37.18 per diluted share after preferred share dividends. The earnings were largely driven by an increase in adjusted operating income, which reached $1,119.4 million, alongside net gains from investments.
The company’s book value per basic share increased to $979.63 as of June 30, 2024, compared to $939.65 at the close of 2023. This figure includes a $15 per share dividend paid during the first quarter of the year.
The company also reported an underwriting profit of $370.4 million, an increase from $337.5 million in the same quarter of 2023. The combined ratio held steady at 93.9%. This performance resulted from favourable reserve developments from prior years, although this was balanced by higher underwriting expenses tied to investments in staff and technology.
Adjusted operating income rose by 22.5% to $1.12 billion, driven by increased interest and dividend income, a share of profits from associated companies, and consistent underwriting performance.
Fairfax also recorded a net benefit of $229.5 million under IFRS 17, primarily from discounting losses and ceded losses on claims. This was partially offset by finance expenses related to the accretion of interest on net losses on claims.
The company ended the second quarter with $2.5 billion in cash and marketable securities.
