Investment gains drive robust 2019 profits at Fairfax

Fairfax Financial Holdings reported a big hike in earnings for 2019, primarily reflecting net gains on investments.

It made a net profit in 2019 of $2 billion, compared with $376 million a year earlier. Much of this increase was generated by a $1.7 billion gain on its investment portfolio compared with only $252.9 million a year earlier.

Its gross written premiums also increased for 2019 and the company reported an improved combined ratio, reflecting growth in net premiums earned and lower current period catastrophe losses, partially offset by lower net favourable prior year reserve development.

Gross premiums written were $17.5 billion, up from $15.5 billion in 2018. The consolidated combined ratio of the insurance and reinsurance operations was 96.9 percent, producing an underwriting profit of $394.5 million, compared to a combined ratio of 97.3 percent and an underwriting profit of $318.3 million in 2018.

"2019 was a record year for Fairfax with $2 billion in net earnings, resulting in book value per share growth of 14.8 percent,” said Prem Watsa, chairman and chief executive officer. “Our insurance companies continued to have strong underwriting performance during 2019 with a consolidated combined ratio of 96.9 percent, with Zenith National at 85.2 percent and all of our other major companies between 96.2 percent and 97.6 percent, and our operating income was excellent at $1.1 billion.

“We continue to be soundly financed, with over $1 billion in cash and investments at the holding company and no significant holding company debt maturities until 2022."

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