Fairfax Financial Holdings Limited has announced its third quarter results, showing a significant drop in profits, but operating income for the firm’s insurance and reinsurance business increased from last year.
Net earnings in the third quarter of this year were just US$1.3 million, compared to $424.8 million for the same period last year.
The results equate to a $0.42 net loss per share, compared to a $18.16 profit per share for the third quarter last year.
In a release, Toronto-based Fairfax said the results reflect strong operating income offset by net losses on investments, which stood at $199.5 million in the quarter, compared with a gain of $425.6 million a year earlier.
Fairfax chairman and chief executive Prem Watsa said that the firm’s insurance companies have “continued to have excellent underwriting performance in the third quarter and the first nine months of 2016 with a consolidated combined ratio of 91.3% and 93.4% respectively.”
Its insurance and reinsurance operations produced operating income of $284.6 million, compared to $260.6 million in 2015.
“All of our major insurance companies again had combined ratios less than 100%, with Zenith National at 75.6%, Fairfax Asia at 82.9% and OdysseyRe at 89.5%,” Watsa explained.
Watsa said the company’s operating income was “strong”, but that net losses were primarily a result of price fluctuations in stocks and “our CPI-linked derivative contracts.”
He added: “We are maintaining our defensive equity hedges and deflation protection as we remain concerned about the financial markets and the economic outlook in this global deflationary environment. We continue to be soundly financed, with quarter-end cash and marketable securities in the holding company over $1.1 billion.”
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