Fairfax Financial Holdings: Financial Results for The Third Quarter
October 29 2020 - 4:02PM
Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces
net earnings of $133.7 million ($4.44 net earnings per diluted
share after payment of preferred share dividends) in the third
quarter of 2020 compared to net earnings of $68.6 million ($2.04
net earnings per diluted share after payment of preferred share
dividends) in the third quarter of 2019. Book value per basic share
at September 30, 2020 was $442.17 compared to $486.10 at
December 31, 2019 (a decrease of 6.9% adjusted for the $10 per
common share dividend paid in the first quarter of 2020).
"In the third quarter of 2020, all of our insurance companies
achieved a combined ratio below 100%, except for Brit. Our
consolidated combined ratio of 98.5% in the third quarter of 2020
included catastrophe losses of $218.6 million or 6.1 combined ratio
points and COVID-19 losses of $143.2 million or 4.0 combined ratio
points. Core underwriting performance continues to be very strong
with a combined ratio excluding COVID-19 losses of 94.5%, continued
favourable reserve development and growth in gross premiums written
of 13.9%, and operating income was $254.7 million despite the
catastrophe and COVID-19 losses. We continue to focus on being
soundly financed and ended the quarter with approximately $1.2
billion in cash and investments in the holding company," said Prem
Watsa, Chairman and Chief Executive Officer.
The table below presents the sources of the company's net
earnings (loss) in a format which the company has consistently used
as it believes it assists in understanding Fairfax:
|
Third quarter |
|
First nine months |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
($ millions) |
Gross premiums written |
4,743.2 |
|
|
|
4,211.6 |
|
|
|
14,221.6 |
|
|
|
13,273.6 |
|
|
Net premiums written |
3,735.2 |
|
|
|
3,318.3 |
|
|
|
11,137.1 |
|
|
|
10,614.1 |
|
|
|
|
|
|
|
|
|
|
Underwriting profit |
52.4 |
|
|
|
81.3 |
|
|
|
142.2 |
|
|
|
270.7 |
|
|
Interest and dividends -
insurance and reinsurance |
127.7 |
|
|
|
163.1 |
|
|
|
440.3 |
|
|
|
501.5 |
|
|
Share of profit of associates
- insurance and reinsurance |
74.6 |
|
|
|
35.7 |
|
|
|
18.3 |
|
|
|
84.6 |
|
|
Operating income - insurance
and reinsurance |
254.7 |
|
|
|
280.1 |
|
|
|
600.8 |
|
|
|
856.8 |
|
|
Run-off (excluding net gains
(losses) on investments) |
(9.3 |
) |
|
|
(14.2 |
) |
|
|
(47.6 |
) |
|
|
(45.0 |
) |
|
Non-insurance companies
(excluding net gains (losses) on investments) |
0.6 |
|
|
|
8.2 |
|
|
|
(113.7 |
) |
|
|
163.9 |
|
|
Interest expense |
(120.9 |
) |
|
|
(121.5 |
) |
|
|
(358.8 |
) |
|
|
(355.0 |
) |
|
Corporate overhead and other
income (expense) |
(18.3 |
) |
|
|
14.0 |
|
|
|
(268.2 |
) |
|
|
97.1 |
|
|
Net gains (losses) on
investments |
(27.3 |
) |
|
|
(96.7 |
) |
|
|
(922.7 |
) |
|
|
1,075.8 |
|
|
Gain on deconsolidation of
insurance subsidiary |
— |
|
|
|
— |
|
|
|
117.1 |
|
|
|
— |
|
|
Pre-tax income (loss) |
79.5 |
|
|
|
69.9 |
|
|
|
(993.1 |
) |
|
|
1,793.6 |
|
|
Recovery of (provision for)
income taxes |
(37.7 |
) |
|
|
4.5 |
|
|
|
72.1 |
|
|
|
(325.1 |
) |
|
Non-controlling interests |
91.9 |
|
|
|
(5.8 |
) |
|
|
230.3 |
|
|
|
(136.4 |
) |
|
Net earnings (loss)
attributable to shareholders of Fairfax |
133.7 |
|
|
|
68.6 |
|
|
|
(690.7 |
) |
|
|
1,332.1 |
|
|
Highlights for the third quarter of 2020 (with comparisons to
the third quarter of 2019 except as otherwise noted) include the
following:
- The consolidated combined ratio of the insurance and
reinsurance operations was 98.5%, producing an underwriting profit
of $52.4 million despite COVID-19 losses of $143.2 million and
catastrophe losses of $218.6 million, compared to a combined ratio
of 97.5% and an underwriting profit of $81.3 million in 2019.
The insurance and reinsurance operations continued to experience
net favourable prior year reserve development of $74.3 million or a
benefit of 2.1 combined ratio points and growth in net premiums
earned.
- Net premiums written by the insurance and reinsurance
operations increased by 12.6% to $3,735.2 million from
$3,318.1 million.
- Float of our insurance and reinsurance operations increased by
7.2% to $22,120.0 million at September 30, 2020 from $20,631.1
million at December 31, 2019.
- Operating income of the insurance and reinsurance operations
decreased to $254.7 million from $280.1 million, principally
reflecting lower underwriting profit primarily as a result of
COVID-19 losses of $143.2 million and higher catastrophe
losses.
- Operating income of the non-insurance companies of $0.6 million
was comprised of income from the Restaurants and retail segment of
$47.2 million, losses from the Other segment of $24.1 million
(principally losses of $45.4 million at Fairfax Africa, partially
offset by income at Horizon North and AGT), and losses from Thomas
Cook India of $15.7 million and Fairfax India of $6.8 million.
- Total COVID-19 losses in the first nine months of 2020 of
$535.6 million derived primarily from coverages related to business
interruption (approximately 40%, principally from international
business) and event cancellation (approximately 29%). Incurred but
not reported losses comprised approximately 60% of total COVID-19
losses.
- Consolidated interest and dividends of $181.8 million decreased
from $214.9 million, primarily reflecting lower interest income
earned principally on U.S. treasury bonds and cash and short term
investments, partially offset by higher interest income earned on
high quality U.S. corporate bonds.
- Consolidated share of profit of associates of $50.8 million
consisted principally of $30.3 million from Eurobank, $19.4 million
from Atlas Corp. and $13.7 million from Riverstone Barbados,
partially offset by losses from investments in associates at
Fairfax India and Fairfax Africa. Consolidated share of profit of
associates of $149.6 million in 2019 consisted principally of $73.4
million from Eurolife (primarily due to mark-to-market gains on its
long dated Greek bonds) and $62.2 million from IIFL Finance
(primarily related to a spin-off distribution gain of approximately
$56 million).
- Interest expense of $120.9 million (inclusive of $15.2 million
on accretion of lease liabilities) was primarily comprised of $74.5
million incurred on borrowings by the holding company and the
insurance and reinsurance companies and $31.2 million incurred on
borrowings by the non-insurance companies (which are non-recourse
to the holding company).
- At September 30, 2020 the company's insurance and
reinsurance companies held approximately $15.1 billion in cash and
short dated investments representing approximately 37.9% of
portfolio investments, comprised of $11.4 billion of subsidiary
cash and short-term investments and $3.7 billion of short-dated
U.S. treasuries.
- Net losses on investments of $27.3 million consisted of the
following:
|
Third quarter of 2020 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
50.6 |
|
|
|
(38.0 |
) |
|
|
12.6 |
|
|
Short equity exposures |
(79.2 |
) |
|
|
(89.0 |
) |
|
|
(168.2 |
) |
|
Net equity exposures |
(28.6 |
) |
|
|
(127.0 |
) |
|
|
(155.6 |
) |
|
Bonds |
15.5 |
|
|
|
27.1 |
|
|
|
42.6 |
|
|
Other |
(74.0 |
) |
|
|
159.7 |
|
|
|
85.7 |
|
|
|
(87.1 |
) |
|
|
59.8 |
|
|
|
(27.3 |
) |
|
|
First nine months of 2020 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
371.5 |
|
|
|
(1,180.8 |
) |
|
|
(809.3 |
) |
|
Short equity exposures |
(327.3 |
) |
|
|
(63.3 |
) |
|
|
(390.6 |
) |
|
Net equity exposures |
44.2 |
|
|
|
(1,244.1 |
) |
|
|
(1,199.9 |
) |
|
Bonds |
125.9 |
|
|
|
324.5 |
|
|
|
450.4 |
|
|
Other |
(440.0 |
) |
|
|
266.8 |
|
|
|
(173.2 |
) |
|
|
(269.9 |
) |
|
|
(652.8 |
) |
|
|
(922.7 |
) |
|
Net gains on long equity exposures of $12.6 million included an
unrealized loss of $164.0 million from recording Fairfax Africa as
held for sale pursuant to its announced merger with Helios. Net
gains on other of $85.7 million primarily reflected foreign
currency gains on investments denominated in the Canadian dollar
and the euro, as both currencies strengthened relative to the U.S.
dollar.
- At March 31, 2020 the company had drawn $1,770.0 million on its
credit facility, solely as a precaution, to support its insurance
and reinsurance companies should it be needed if the effects of the
COVID-19 pandemic continued for an extended period. The company
subsequently repaid $1,070.0 million of that borrowing, leaving
$700.0 million borrowed under that facility currently.
- During the third quarter of 2020, the company provided
$105.2 million of cash and marketable securities in capital
support primarily to its insurance and reinsurance operations to
support growth in a favourable pricing environment and to support
fluctuations in their investment portfolios from the economic
effects of COVID-19.
- In connection with Fairfax Africa's announced transaction with
Helios, the assets and liabilities of Fairfax Africa, with the
exception of Atlas Mara, were presented as held for sale on the
company's consolidated balance sheet at September 30, 2020, which
resulted in a non-cash net loss on investments of $164.0 million,
of which $43.8 million was attributable to shareholders of Fairfax
after deferred taxes and non-controlling interests. The company
expects that upon anticipated closing in the fourth quarter it will
deconsolidate Fairfax Africa from the Non-insurance companies
reporting segment, record its interest in the merged entity of
Helios Fairfax Partners ("HFP") at the market traded share price of
HFP and account for that interest as an investment in associate in
its consolidated financial reporting. Helios, an Africa-focused
private investment firm led and predominantly staffed by African
professionals, manages geographically diversified portfolios of
private equity and credit investments in over 30 African
countries.
- On August 28, 2020 the company acquired the minority interest
in Brit for cash consideration of $220.0 million.
- The company held $1,153.0 million of cash and investments at
the holding company level ($1,095.9 million net of short sale and
derivative obligations) at September 30, 2020, compared to
$975.5 million ($975.2 million net of short sale and derivative
obligations) at December 31, 2019.
- The company's total debt to total capital ratio, excluding
non-insurance companies, increased to 31.3% at September 30,
2020 from 24.5% at December 31, 2019, primarily reflecting the
$700.0 million drawn on the credit facility and decreased total
capital due to decreased common shareholders' equity.
- During the third quarter of 2020 the company purchased 42,169
subordinate voting shares for treasury and 67,355 for cancellation
at an aggregate cost of $32.0 million. From the fourth quarter of
2017 up to September 30, 2020, the company has purchased
1,103,334 subordinate voting shares for treasury and 914,242
subordinate voting shares for cancellation at an aggregate cost of
$855.3 million.
- At September 30, 2020, common shareholders' equity was
$11,600.8 million, or $442.17 per basic share, compared to
$13,042.6 million, or $486.10 per basic share, at December 31,
2019. The decrease in common shareholders' equity per basic share
was primarily due to the net loss attributable to shareholders of
Fairfax in the first nine months of 2020 and the payment in the
first quarter of the annual common share dividend of $275.7
million.
There were 26.3 million and 26.9 million weighted average common
shares effectively outstanding during the third quarters of 2020
and 2019 respectively. At September 30, 2020 there were
26,235,991 common shares effectively outstanding.
Unaudited consolidated balance sheet, earnings and comprehensive
income information, together with segmented premium and combined
ratio information, follow and form part of this news release.
In presenting the company’s results in this news release,
management has included operating income (loss), combined ratio and
book value per basic share measures. Operating income (loss) is
used in the company's segment reporting. The combined ratio is
calculated by the company as the sum of claims losses, loss
adjustment expenses, commissions, premium acquisition costs and
other underwriting expenses, expressed as a percentage of net
premiums earned. Book value per basic share is calculated by the
company as common shareholders' equity divided by the number of
common shares effectively outstanding.
As previously announced, Fairfax will hold a conference call to
discuss its third quarter 2020 results at 8:30 a.m. Eastern time on
Friday October 30, 2020. The call, consisting of a
presentation by the company followed by a question period, may be
accessed at 1 (888) 390-0867 (Canada or U.S.) or 1 (212) 547-0141
(International) with the passcode “FAIRFAX”. A replay of the call
will be available from shortly after the termination of the call
until 5:00 p.m. Eastern time on Friday, November 13, 2020. The
replay may be accessed at 1 (800) 562-7212 (Canada or U.S.) or 1
(402) 220-6028 (International).
Fairfax Financial Holdings Limited is a holding company which,
through its subsidiaries, is engaged in property and casualty
insurance and reinsurance and the associated investment
management.
For further information, contact: |
John Varnell |
|
Vice President, Corporate
Development |
|
(416) 367-4941 |
Certain statements contained herein may constitute
forward-looking statements and are made pursuant to the “safe
harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors which may cause the actual results, performance
or achievements of Fairfax to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, but
are not limited to: a reduction in net earnings if our loss
reserves are insufficient; underwriting losses on the risks we
insure that are higher or lower than expected; the occurrence of
catastrophic events with a frequency or severity exceeding our
estimates; changes in market variables, including interest rates,
foreign exchange rates, equity prices and credit spreads, which
could negatively affect our investment portfolio; risks associated
with the global pandemic caused by COVID-19, and the related global
reduction in commerce and substantial downturns in stock markets
worldwide; the cycles of the insurance market and general economic
conditions, which can substantially influence our and our
competitors' premium rates and capacity to write new business;
insufficient reserves for asbestos, environmental and other latent
claims; exposure to credit risk in the event our reinsurers fail to
make payments to us under our reinsurance arrangements; exposure to
credit risk in the event our insureds, insurance producers or
reinsurance intermediaries fail to remit premiums that are owed to
us or failure by our insureds to reimburse us for deductibles that
are paid by us on their behalf; our inability to maintain our long
term debt ratings, the inability of our subsidiaries to maintain
financial or claims paying ability ratings and the impact of a
downgrade of such ratings on derivative transactions that we or our
subsidiaries have entered into; risks associated with implementing
our business strategies; the timing of claims payments being sooner
or the receipt of reinsurance recoverables being later than
anticipated by us; risks associated with any use we may make of
derivative instruments; the failure of any hedging methods we may
employ to achieve their desired risk management objective; a
decrease in the level of demand for insurance or reinsurance
products, or increased competition in the insurance industry; the
impact of emerging claim and coverage issues or the failure of any
of the loss limitation methods we employ; our inability to access
cash of our subsidiaries; our inability to obtain required levels
of capital on favourable terms, if at all; the loss of key
employees; our inability to obtain reinsurance coverage in
sufficient amounts, at reasonable prices or on terms that
adequately protect us; the passage of legislation subjecting our
businesses to additional adverse requirements, supervision or
regulation, including additional tax regulation, in the United
States, Canada or other jurisdictions in which we operate; risks
associated with government investigations of, and litigation and
negative publicity related to, insurance industry practice or any
other conduct; risks associated with political and other
developments in foreign jurisdictions in which we operate; risks
associated with legal or regulatory proceedings or significant
litigation; failures or security breaches of our computer and data
processing systems; the influence exercisable by our significant
shareholder; adverse fluctuations in foreign currency exchange
rates; our dependence on independent brokers over whom we exercise
little control; impairment of the carrying value of our goodwill,
indefinite-lived intangible assets or investments in associates;
our failure to realize deferred income tax assets; technological or
other change which adversely impacts demand, or the premiums
payable, for the insurance coverages we offer; disruptions of our
information technology systems; assessments and shared market
mechanisms which may adversely affect our insurance subsidiaries;
and adverse consequences to our business, our investments and our
personnel resulting from or related to the COVID-19 pandemic.
Additional risks and uncertainties are described in our most
recently issued Annual Report which is available at www.fairfax.ca
and in our Base Shelf Prospectus (under “Risk Factors”) filed with
the securities regulatory authorities in Canada, which is available
on SEDAR at www.sedar.com. Fairfax disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable securities law.
CONSOLIDATED BALANCE SHEETSas at
September 30, 2020 and December 31, 2019 (unaudited - US$
millions)
|
|
September 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
|
|
Holding company cash and
investments (including assets pledged for short sale and derivative
obligations – $103.9; December 31, 2019 – $5.5) |
|
1,153.0 |
|
|
|
975.5 |
|
|
Insurance contract
receivables |
|
6,035.9 |
|
|
|
5,435.0 |
|
|
|
|
|
|
|
|
|
Portfolio investments |
|
|
|
|
|
|
Subsidiary cash and short term
investments (including restricted cash and cash equivalents –
$669.8; December 31, 2019 – $664.8) |
|
11,386.6 |
|
|
|
10,021.3 |
|
|
Bonds (cost $15,841.2;
December 31, 2019 – $15,353.9) |
|
16,464.1 |
|
|
|
15,618.1 |
|
|
Preferred stocks (cost $263.6;
December 31, 2019 – $241.3) |
|
582.9 |
|
|
|
578.2 |
|
|
Common stocks (cost $4,510.3;
December 31, 2019 – $4,158.2) |
|
3,910.6 |
|
|
|
4,246.6 |
|
|
Investments in associates
(fair value $3,970.3; December 31, 2019 – $4,521.7) |
|
4,792.5 |
|
|
|
4,360.2 |
|
|
Derivatives and other invested
assets (cost $1,023.9; December 31, 2019 – $1,168.7) |
|
698.7 |
|
|
|
759.1 |
|
|
Assets pledged for short sale
and derivative obligations (cost $194.3; December 31, 2019 –
$146.7) |
|
194.8 |
|
|
|
146.9 |
|
|
Fairfax India cash, portfolio
investments and investments in associates (fair value $2,714.2;
December 31, 2019 – $3,559.6 inclusive of Fairfax Africa) |
|
1,835.3 |
|
|
|
2,504.6 |
|
|
|
|
39,865.5 |
|
|
|
38,235.0 |
|
|
|
|
|
|
|
|
|
Assets held for sale |
|
351.6 |
|
|
|
2,785.6 |
|
|
Deferred premium acquisition costs |
|
1,482.0 |
|
|
|
1,344.3 |
|
|
Recoverable from reinsurers
(including recoverables on paid losses – $683.5; December 31, 2019
– $637.3) |
|
9,930.9 |
|
|
|
9,155.8 |
|
|
Deferred income taxes |
|
612.4 |
|
|
|
375.9 |
|
|
Goodwill and intangible
assets |
|
6,196.6 |
|
|
|
6,194.1 |
|
|
Other assets |
|
5,712.6 |
|
|
|
6,007.3 |
|
|
Total assets |
|
71,340.5 |
|
|
|
70,508.5 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
4,792.2 |
|
|
|
4,814.1 |
|
|
Short sale and derivative
obligations (including at the holding company – $57.1; December 31,
2019 – $0.3) |
|
209.5 |
|
|
|
205.9 |
|
|
Liabilities associated with
assets held for sale |
|
239.6 |
|
|
|
2,035.1 |
|
|
Insurance contract
payables |
|
3,069.6 |
|
|
|
2,591.0 |
|
|
Insurance contract
liabilities |
|
37,993.6 |
|
|
|
35,722.6 |
|
|
Borrowings – holding company
and insurance and reinsurance companies |
|
6,516.7 |
|
|
|
5,156.9 |
|
|
Borrowings – non-insurance
companies |
|
2,132.9 |
|
|
|
2,075.7 |
|
|
Total liabilities |
|
54,954.1 |
|
|
|
52,601.3 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common shareholders’
equity |
|
11,600.8 |
|
|
|
13,042.6 |
|
|
Preferred stock |
|
1,335.5 |
|
|
|
1,335.5 |
|
|
Shareholders’ equity
attributable to shareholders of Fairfax |
|
12,936.3 |
|
|
|
14,378.1 |
|
|
Non-controlling interests |
|
3,450.1 |
|
|
|
3,529.1 |
|
|
Total equity |
|
16,386.4 |
|
|
|
17,907.2 |
|
|
|
|
71,340.5 |
|
|
|
70,508.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per basic share |
|
$ |
442.17 |
|
|
|
$ |
486.10 |
|
|
CONSOLIDATED STATEMENTS OF EARNINGSfor the
three and nine months ended September 30, 2020 and 2019(unaudited -
US$ millions except per share amounts)
|
|
Third quarter |
|
|
First nine months |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Income |
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
4,743.2 |
|
|
|
|
4,211.6 |
|
|
|
|
14,221.6 |
|
|
|
|
13,273.6 |
|
|
|
Net premiums
written |
|
3,735.2 |
|
|
|
|
3,318.3 |
|
|
|
|
11,137.1 |
|
|
|
|
10,614.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums earned |
|
4,632.4 |
|
|
|
|
4,159.1 |
|
|
|
|
13,107.7 |
|
|
|
|
12,341.3 |
|
|
|
Premiums ceded to
reinsurers |
|
(1,060.6 |
) |
|
|
|
(893.6 |
) |
|
|
|
(2,814.6 |
) |
|
|
|
(2,394.0 |
) |
|
|
Net premiums
earned |
|
3,571.8 |
|
|
|
|
3,265.5 |
|
|
|
|
10,293.1 |
|
|
|
|
9,947.3 |
|
|
|
Interest and
dividends |
|
181.8 |
|
|
|
|
214.9 |
|
|
|
|
604.7 |
|
|
|
|
672.4 |
|
|
|
Share of profit (loss) of
associates |
|
50.8 |
|
|
|
|
149.6 |
|
|
|
|
(177.5 |
) |
|
|
|
415.1 |
|
|
|
Net gains (losses) on
investments |
|
(27.3 |
) |
|
|
|
(96.7 |
) |
|
|
|
(922.7 |
) |
|
|
|
1,075.8 |
|
|
|
Gain on deconsolidation of insurance
subsidiary |
|
— |
|
|
|
|
— |
|
|
|
|
117.1 |
|
|
|
|
— |
|
|
|
Other revenue |
|
1,215.5 |
|
|
|
|
1,392.6 |
|
|
|
|
3,302.1 |
|
|
|
|
3,889.2 |
|
|
|
|
|
4,992.6 |
|
|
|
|
4,925.9 |
|
|
|
|
13,216.8 |
|
|
|
|
15,999.8 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Losses on claims, gross |
|
2,961.2 |
|
|
|
|
2,600.1 |
|
|
|
|
8,713.7 |
|
|
|
|
8,283.3 |
|
|
|
Losses on claims, ceded to reinsurers |
|
(594.9 |
) |
|
|
|
(488.5 |
) |
|
|
|
(1,894.4 |
) |
|
|
|
(1,759.0 |
) |
|
|
Losses on claims,
net |
|
2,366.3 |
|
|
|
|
2,111.6 |
|
|
|
|
6,819.3 |
|
|
|
|
6,524.3 |
|
|
|
Operating
expenses |
|
617.2 |
|
|
|
|
609.3 |
|
|
|
|
1,893.7 |
|
|
|
|
1,821.6 |
|
|
|
Commissions,
net |
|
616.6 |
|
|
|
|
560.8 |
|
|
|
|
1,734.3 |
|
|
|
|
1,624.8 |
|
|
|
Interest expense |
|
120.9 |
|
|
|
|
121.5 |
|
|
|
|
358.8 |
|
|
|
|
355.0 |
|
|
|
Other expenses |
|
1,192.1 |
|
|
|
|
1,452.8 |
|
|
|
|
3,403.8 |
|
|
|
|
3,880.5 |
|
|
|
|
|
4,913.1 |
|
|
|
|
4,856.0 |
|
|
|
|
14,209.9 |
|
|
|
|
14,206.2 |
|
|
|
Earnings (loss) before
income taxes |
|
79.5 |
|
|
|
|
69.9 |
|
|
|
|
(993.1 |
) |
|
|
|
1,793.6 |
|
|
|
Provision for (recovery of)
income
taxes |
|
37.7 |
|
|
|
|
(4.5 |
) |
|
|
|
(72.1 |
) |
|
|
|
325.1 |
|
|
|
Net earnings
(loss) |
|
41.8 |
|
|
|
|
74.4 |
|
|
|
|
(921.0 |
) |
|
|
|
1,468.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of
Fairfax |
|
133.7 |
|
|
|
|
68.6 |
|
|
|
|
(690.7 |
) |
|
|
|
1,332.1 |
|
|
|
Non-controlling
interests |
|
(91.9 |
) |
|
|
|
5.8 |
|
|
|
|
(230.3 |
) |
|
|
|
136.4 |
|
|
|
|
|
41.8 |
|
|
|
|
74.4 |
|
|
|
|
(921.0 |
) |
|
|
|
1,468.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
share |
|
$ |
4.66 |
|
|
|
|
$ |
2.13 |
|
|
|
|
$ |
(27.27 |
) |
|
|
|
$ |
48.20 |
|
|
|
Net earnings (loss)
per diluted share |
|
$ |
4.44 |
|
|
|
|
$ |
2.04 |
|
|
|
|
$ |
(27.27 |
) |
|
|
|
$ |
46.23 |
|
|
|
Cash dividends paid
per
share |
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
10.00 |
|
|
|
|
$ |
10.00 |
|
|
|
Shares outstanding
(000) (weighted average) |
|
26,306 |
|
|
|
|
26,851 |
|
|
|
|
26,532 |
|
|
|
|
26,926 |
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three and nine months ended September 30, 2020 and
2019(unaudited - US$ millions)
|
|
Third quarter |
|
|
First nine months |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) |
|
41.8 |
|
|
|
|
74.4 |
|
|
|
|
(921.0 |
) |
|
|
|
1,468.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to net earnings
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized foreign currency translation gains (losses) on
foreign operations |
|
88.5 |
|
|
|
|
(182.2 |
) |
|
|
|
(370.9 |
) |
|
|
|
(31.8 |
) |
|
|
Gains (losses) on hedge of net investment in Canadian
subsidiaries |
|
(40.2 |
) |
|
|
|
27.9 |
|
|
|
|
63.1 |
|
|
|
|
(61.2 |
) |
|
|
Gains (losses) on hedge of net investment in European
operations |
|
(36.6 |
) |
|
|
|
13.5 |
|
|
|
|
(38.2 |
) |
|
|
|
(26.3 |
) |
|
|
Share of other comprehensive income (loss) of associates, excluding
net gains on defined benefit plans |
|
89.9 |
|
|
|
|
(50.9 |
) |
|
|
|
1.0 |
|
|
|
|
(61.9 |
) |
|
|
Net unrealized foreign currency translation losses reclassified to
net earnings
(loss) |
|
— |
|
|
|
|
— |
|
|
|
|
161.9 |
|
|
|
|
— |
|
|
|
|
|
101.6 |
|
|
|
|
(191.7 |
) |
|
|
|
(183.1 |
) |
|
|
|
(181.2 |
) |
|
|
Items that will not be reclassified to net earnings
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net losses on defined benefit plans |
|
(1.3 |
) |
|
|
|
— |
|
|
|
|
(28.4 |
) |
|
|
|
— |
|
|
|
Share of net gains on defined benefit plans of
associates |
|
3.1 |
|
|
|
|
6.7 |
|
|
|
|
14.3 |
|
|
|
|
25.2 |
|
|
|
|
|
1.8 |
|
|
|
|
6.7 |
|
|
|
|
(14.1 |
) |
|
|
|
25.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of income taxes |
|
103.4 |
|
|
|
|
(185.0 |
) |
|
|
|
(197.2 |
) |
|
|
|
(156.0 |
) |
|
|
Comprehensive income
(loss) |
|
145.2 |
|
|
|
|
(110.6 |
) |
|
|
|
(1,118.2 |
) |
|
|
|
1,312.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of
Fairfax |
|
198.3 |
|
|
|
|
(49.7 |
) |
|
|
|
(797.3 |
) |
|
|
|
1,219.4 |
|
|
|
Non-controlling
interests |
|
(53.1 |
) |
|
|
|
(60.9 |
) |
|
|
|
(320.9 |
) |
|
|
|
93.1 |
|
|
|
|
|
145.2 |
|
|
|
|
(110.6 |
) |
|
|
|
(1,118.2 |
) |
|
|
|
1,312.5 |
|
|
|
SEGMENTED INFORMATION (unaudited - US$
millions)
Gross premiums written, net premiums written, and combined
ratios for the insurance and reinsurance operations (excluding
Run-off) in the third quarters and first nine months ended
September 30, 2020 and 2019 were as follows:
Gross Premiums Written
|
|
Third quarter |
|
|
First nine months |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
Northbridge |
|
457.3 |
|
|
|
415.7 |
|
|
|
1,235.5 |
|
|
|
1,112.0 |
|
Odyssey Group |
|
1,095.8 |
|
|
|
929.8 |
|
|
|
3,176.6 |
|
|
|
2,793.4 |
|
Crum & Forster |
|
799.6 |
|
|
|
732.1 |
|
|
|
2,292.9 |
|
|
|
2,100.8 |
|
Zenith National |
|
150.3 |
|
|
|
155.1 |
|
|
|
528.2 |
|
|
|
588.6 |
|
Brit |
|
602.4 |
|
|
|
530.5 |
|
|
|
1,884.9 |
|
|
|
1,741.0 |
|
Allied World |
|
1,168.2 |
|
|
|
948.7 |
|
|
|
3,524.3 |
|
|
|
2,944.9 |
|
Fairfax Asia |
|
119.6 |
|
|
|
116.9 |
|
|
|
330.9 |
|
|
|
329.0 |
|
Insurance and Reinsurance - Other |
|
482.3 |
|
|
|
450.0 |
|
|
|
1,391.3 |
|
|
|
1,292.1 |
|
Insurance and reinsurance
operations |
|
4,875.5 |
|
|
|
4,278.8 |
|
|
|
14,364.6 |
|
|
|
12,901.8 |
|
Net Premiums Written
|
|
Third quarter |
|
|
First nine months |
|
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
Northbridge |
|
379.0 |
|
|
|
335.3 |
|
|
|
1,091.2 |
|
|
|
975.1 |
|
Odyssey Group |
|
969.3 |
|
|
|
855.2 |
|
|
|
2,769.0 |
|
|
|
2,510.1 |
|
Crum & Forster |
|
657.9 |
|
|
|
598.3 |
|
|
|
1,888.4 |
|
|
|
1,738.3 |
|
Zenith National |
|
146.3 |
|
|
|
152.4 |
|
|
|
516.3 |
|
|
|
579.5 |
|
Brit |
|
487.2 |
|
|
|
413.9 |
|
|
|
1,353.4 |
|
|
|
1,239.1 |
|
Allied World |
|
726.6 |
|
|
|
613.3 |
|
|
|
2,318.7 |
|
|
|
1,997.5 |
|
Fairfax Asia |
|
59.4 |
|
|
|
55.9 |
|
|
|
164.5 |
|
|
|
161.2 |
|
Insurance and Reinsurance - Other |
|
309.5 |
|
|
|
293.8 |
|
|
|
889.1 |
|
|
|
850.0 |
|
Insurance and reinsurance
operations |
|
3,735.2 |
|
|
|
3,318.1 |
|
|
|
10,990.6 |
|
|
|
10,050.8 |
|
Combined Ratios
|
|
Third quarter |
|
|
First nine months |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
Northbridge
|
|
89.9 |
% |
|
97.5 |
% |
|
|
93.4 |
% |
|
|
98.7 |
% |
Odyssey Group |
|
99.4 |
% |
|
|
97.6 |
% |
|
|
99.2 |
% |
|
|
96.3 |
% |
Crum & Forster |
|
99.3 |
% |
|
|
97.9 |
% |
|
|
98.6 |
% |
|
|
97.7 |
% |
Zenith National |
|
92.7 |
% |
|
|
87.1 |
% |
|
|
91.6 |
% |
|
|
83.3 |
% |
Brit |
|
114.0 |
% |
|
|
104.1 |
% |
|
|
109.6 |
% |
|
|
98.9 |
% |
Allied World |
|
93.1 |
% |
|
|
96.2 |
% |
|
|
95.2 |
% |
|
|
98.7 |
% |
Fairfax Asia |
|
96.0 |
% |
|
|
96.9 |
% |
|
|
99.4 |
% |
|
|
97.8 |
% |
Insurance and Reinsurance - Other |
|
99.8 |
% |
|
|
97.1 |
% |
|
|
98.8 |
% |
|
|
99.5 |
% |
Insurance and reinsurance
operations |
|
98.5 |
% |
|
|
97.5 |
% |
|
|
98.6 |
% |
|
|
97.1 |
% |
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