Fairfax 2015 profits damaged by investment losses
Fairfax Financial Holdings posted a dramatic fall in profits for 2015 as some solid underwriting returns were more than offset by investment losses.
The Toronto-based financial holding company reported profits of $567.7 million last year, compared with a net income of $1.63 billion in 2014.
The firm suffered investment losses of $259.2 million in 2015, compared with net investment gains of $1.74 million in 2014.
Net premiums written by the company’s insurance and reinsurance operations increased by 16.6 percent, however, to $7.14 billion, primarily reflecting the consolidation of Brit in the second quarter of 2015, according to Fairfax.
The combined ratio of the insurance and reinsurance operations was 89.9 percent on a consolidated basis, producing an underwriting profit of $704.5 million, compared with a combined ratio and underwriting profit of 90.8 percent and $552 million respectively in 2014.
"Our underwriting results in 2015 were the best in our 30-year history, with record underwriting profit of $704.5 million and a record low combined ratio of 89.9 percent," said Prem Watsa, chairman and chief executive officer.
"All of our major insurance companies again had combined ratios less than 100 percent for the year, with Zenith at 82.5 percent, OdysseyRe at 84.7 percent and Fairfax Asia at 87.9 percent.
“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 year-end cash and marketable securities in the holding company close to $1.3 billion."
