Fairfax swings to $1.3bn net loss despite strong underwriting performance
Fairfax Financial Holdings, the property and casualty re/insurance conglomerate which includes OdysseyRe, Allied World and Brit, swung to loss in the first quarter of 2020 due to COVID-19 pandemic, despite recording a strong underwriting performance in the period.
The Toronto-based company posted a net loss of $1.3 billion in the first quarter, compared with net earnings of $769.2 million in Q1 of 2019, primarily reflecting unrealised losses on investments.
The group reported COVID-19 losses of $84.3 million for the quarter.
The gross premiums written for the period was $4.77 billion, while in Q1 2019 it was $4.72 billion.
The consolidated combined ratio of the insurance and reinsurance operations was 96.8 percent, producing an underwriting profit of $103.1 million, compared with a combined ratio of 97.0 percent and an underwriting profit of $88.4 million in 2019, primarily reflecting growth in net premiums earned and higher net favourable prior year reserve development, partially offset by higher current period catastrophe and COVID-19 losses.
Prem Watsa, chairman and chief executive officer of Fairfax, said: "Despite these unprecedented turbulent times our insurance companies continued to have strong underwriting performance in the first quarter of 2020 with a consolidated combined ratio of 96.8% (after reflecting $84.3 million of COVID-19 losses), favourable reserve development, strong growth in gross premiums written of 11.8% and strong operating income of $225.6 million.
He added: "We remain focused on continuing to be soundly financed and have drawn on our credit facility solely to ensure that we maintain high levels of liquid assets during these uncertain times. Fairfax had approximately $2.5 billion in cash and marketable securities in its holding company at March 31, 2020."
