Canadian insurer Fairfax Financial Holdings has returned to profit in the second quarter of 2014 driven by gains in investments and stronger underwriting performance.
The insurer made a profit of $363.7 million in the quarter, compared with a loss of $157.8 million in the second quarter of 2013.
Its combined ratio was 92.7 percent, producing an underwriting profit of $110 million, compared to a combined ratio and underwriting profit of 94.2 percent and $83.9 million respectively in 2013.
Faifax’s gross written premiums also saw growth as it hit $1.9 billion in the quarter, compared with $1.7 billion in the second quarter of 2013.
Its net premiums written by the insurance and reinsurance operations increased by 4.4 percent to $1.6 billion in the quarter, compared with $1.4 in the same period of the year prior.
Prem Watsa, chairman and chief executive officer of Fairfax, said: “Our companies had excellent underwriting performance in the second quarter and the first half of 2014 with consolidated combined ratios of 92.7 percent and 92.8 percent respectively. All of our major insurance companies again had combined ratios less than 100 percent in the quarter with OdysseyRe at 88.6 percent and Zenith at 89.8 percent. We also realised gains from our equity and equity-related investments of $320 million in the quarter.
"We are maintaining our defensive equity hedges as we remain concerned about the financial markets and the economic outlook. We continue to be soundly financed, with quarter-end cash and marketable securities in the holding company in excess of $1.1 billion."
Fairfax Financial, North America, Second Quarter 2014 Results, Prem Watsa