Fairfax buys $734m more stake in Allied World; swings to loss in Q3

Canada-based property and casualty re/insurer  Fairfax Financial Holdings has increased its ownership stake in Allied World, the Bermudian carrier it  acquired in 2016 for $4.9 billion in cash and stock.

Fairfax has purchased an additional 12% stake in its subsidiary Allied World for total consideration of $733.5 million.

The transaction has increased the Toronto-based group's ownership interest in Allied World to 82.9% from 70.9%.

Fairfax said the consideration is inclusive of the fair value of a call option exercised and an accrued dividend paid, and recorded a loss in retained earnings of $228.1 million.

The transaction took place on September 27, Fairfax revealed in its third quarter earnings statement.

The company booked $75 million net loss in Q3 of 2022, compared with a net profit of $462.4 million in the prior year period.

The carrier's consolidated combined ratio of the property and casualty insurance and reinsurance operations was 100.3%, producing an underwriting loss of $16.9 million, compared with a combined ratio of 101.1% and an underwriting loss of $46.5 million in 2021.

Faifax suffered increased catastrophe losses of $803.3 million during the period, primarily related to losses on Hurricane Ian of $560.6 million, and hailstorms in France of $92.5 million.

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