(Note: |
All dollar amounts in this news release are expressed in
U.S. dollars except as otherwise noted. The financial results are
derived from financial statements prepared using the recognition
and measurement requirements of International Financial Reporting
Standards as issued by the International Accounting Standards Board
except as otherwise noted, and are unaudited.) |
Fairfax Financial Holdings Limited (TSX: FFH and
FFH.U) announces net earnings of $1,201.4 million ($43.25 net
earnings per diluted share after payment of preferred share
dividends) in the second quarter of 2021 compared to net earnings
of $434.9 million ($15.26 net earnings per diluted share after
payment of preferred share dividends) in the second quarter of
2020. Book value per basic share at June 30, 2021 was $540.62
compared to $478.33 at December 31, 2020 (an increase of 15.2%
adjusted for the $10 per common share dividend paid in the first
quarter of 2021).
"In the second quarter of 2021, all of our major
insurance companies achieved a combined ratio well below 100%, with
Northbridge and Zenith National leading the way at 84.7% and 92.7%
respectively. Our consolidated combined ratio of 94.3% in the
second quarter of 2021 included catastrophe losses of $138.4
million or 3.5 combined ratio points. Core underwriting performance
continued to be very strong, with growth in gross premiums written
of 27.1% and operating income increasing to $398.3 million,
reflecting greatly reduced COVID-19 losses.
Our investments increased significantly with net
gains on investments of $1,290.2 million, primarily reflecting net
gains on long equity exposures and $425.0 million on Digit
compulsorily convertible preference shares. Mark-to-market
movements on our non-insurance investments in associates and
consolidated investments which are not reflected in our financial
statements also increased in the second quarter of 2021 by
approximately $338 million. As previously reported, upon closing of
the Digit Insurance equity issuance in the third quarter, and upon
final approval by the Indian government of its previously announced
intention to increase foreign ownership limits, we anticipate
recording an additional gain of approximately $1.4 billion or $46
in book value per basic share. We continue to focus on being
soundly financed and ended the quarter with approximately $1.5
billion in cash and investments in the holding company," said Prem
Watsa, Chairman and Chief Executive Officer.
The table below presents the sources of the
company's net earnings in a format which the company has
consistently used as it believes it assists in understanding
Fairfax:
|
Second quarter |
|
First six months |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
($ millions) |
Gross premiums written |
5,977.7 |
|
|
4,702.7 |
|
|
11,405.7 |
|
|
9,478.4 |
|
Net premiums written |
4,529.5 |
|
|
3,555.5 |
|
|
8,675.4 |
|
|
7,401.9 |
|
|
|
|
|
|
|
|
|
Underwriting profit
(loss) |
227.9 |
|
|
(13.3 |
) |
|
376.9 |
|
|
89.8 |
|
Interest and dividends -
insurance and reinsurance |
116.4 |
|
|
153.2 |
|
|
222.2 |
|
|
312.6 |
|
Share of profit (loss) of
associates - insurance and reinsurance |
54.0 |
|
|
(19.4 |
) |
|
97.4 |
|
|
(56.3 |
) |
Operating income - insurance
and reinsurance |
398.3 |
|
|
120.5 |
|
|
696.5 |
|
|
346.1 |
|
Run-off (excluding net gains
(losses) on investments) |
(24.3 |
) |
|
(15.5 |
) |
|
(40.6 |
) |
|
(38.3 |
) |
Non-insurance companies
(excluding net gains (losses) on investments) |
(44.4 |
) |
|
(80.3 |
) |
|
(129.3 |
) |
|
(114.3 |
) |
Interest expense |
(117.8 |
) |
|
(122.2 |
) |
|
(283.9 |
) |
|
(237.9 |
) |
Corporate overhead and other
income (expense) |
20.2 |
|
|
2.2 |
|
|
62.7 |
|
|
(249.9 |
) |
Net gains (losses) on
investments |
1,290.2 |
|
|
644.1 |
|
|
2,132.2 |
|
|
(895.4 |
) |
Gain on consolidation and
deconsolidation of insurance subsidiaries |
45.3 |
|
|
— |
|
|
112.0 |
|
|
117.1 |
|
Pre-tax income (loss) |
1,567.5 |
|
|
548.8 |
|
|
2,549.6 |
|
|
(1,072.6 |
) |
Recovery of (provision for)
income taxes |
(287.3 |
) |
|
(122.5 |
) |
|
(446.8 |
) |
|
109.8 |
|
Non-controlling interests |
(78.8 |
) |
|
8.6 |
|
|
(95.4 |
) |
|
138.4 |
|
Net earnings (loss)
attributable to shareholders of Fairfax |
1,201.4 |
|
|
434.9 |
|
|
2,007.4 |
|
|
(824.4 |
) |
Highlights for the second quarter of 2021 (with
comparisons to the second quarter of 2020 except as otherwise
noted) include the following:
- Gross premiums
written by the insurance and reinsurance operations increased by
27.1% to $5,977.7 million from $4,702.7 million and net
premiums written increased by 27.4% to $4,529.5 million from
$3,555.5 million.
- The consolidated
combined ratio of the insurance and reinsurance operations was
94.3%, producing an underwriting profit of $227.9 million,
compared to a combined ratio of 100.4% and an underwriting loss of
$13.3 million in 2020, driven by lower COVID-19 losses. The
insurance and reinsurance operations experienced growth in net
premiums earned of 20.4% and net favourable prior year reserve
development of $31.6 million.
- Operating income
of the insurance and reinsurance operations increased to $398.3
million from $120.5 million, principally reflecting higher
underwriting profit, primarily due to increased business volumes
and lower COVID-19 losses ($68.7 million compared to $308.1
million), partially offset by higher catastrophe losses, primarily
due to the U.S. winter storms.
- Float of the
insurance and reinsurance operations increased by 15.3% to
$24,209.6 million at June 30, 2021 from $21,002.3 million at
June 30, 2020.
- Operating loss
of the non-insurance companies of $44.4 million principally
reflected Fairfax India's performance fee accrual of $43.4 million
(which is offset in Corporate overhead and other income (expense))
and operating losses at Thomas Cook India of $17.3 million,
primarily related to the continued effects of COVID-19. Excluding
the impact of Fairfax India’s intercompany performance fees to
Fairfax, operating losses of the non-insurance companies improved
by $79.3 million, principally in the restaurants and retail
segment.
- Consolidated
interest and dividends of $160.8 million decreased from $205.0
million, primarily reflecting lower interest income earned,
principally due to a general decrease in sovereign bond yields,
sales and maturities of U.S. treasury bonds throughout 2020 and net
sales of U.S. corporate bonds in the first half of 2021.
- Consolidated
share of profit of associates of $75.4 million principally
reflected share of profit of $27.1 million from Eurolife, $25.9
million from Resolute, $22.8 million from Eurobank and $18.1
million from Atlas Corp., partially offset by share of loss of
$10.7 million from Bangalore Airport, primarily related to the
continued effects of COVID-19.
- Interest expense
of $117.8 million was comprised of $78.1 million incurred on
borrowings by the holding company and the insurance and reinsurance
companies, $23.5 million incurred on borrowings by the
non-insurance companies (which are non-recourse to the holding
company) and $16.2 million on accretion of lease liabilities.
- At June 30,
2021 the company's insurance and reinsurance companies held
approximately $18.1 billion in cash and short dated investments
representing approximately 39.5% of portfolio investments.
- Net gains on investments of
$1,290.2 million consisted of the following:
|
|
|
|
|
|
|
Second quarter of 2021 |
|
($ millions) |
|
Realizedgains |
|
Unrealizedgains |
|
Net gains |
Net gains on: |
|
|
|
|
|
Long equity exposures |
332.2 |
|
|
551.8 |
|
|
884.0 |
|
Bonds |
27.4 |
|
|
15.6 |
|
|
43.0 |
|
Other |
5.5 |
|
|
357.7 |
|
|
363.2 |
|
|
365.1 |
|
|
925.1 |
|
|
1,290.2 |
|
|
First six months of 2021 |
|
($ millions) |
|
Realizedgains(losses) |
|
Unrealizedgains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
498.1 |
|
|
1,414.4 |
|
|
1,912.5 |
|
Bonds |
173.8 |
|
|
(296.4 |
) |
|
(122.6 |
) |
Other |
(108.8 |
) |
|
451.1 |
|
|
342.3 |
|
|
563.1 |
|
|
1,569.1 |
|
|
2,132.2 |
|
Net gains on long equity exposures of $884.0
million was primarily comprised of realized and unrealized
appreciation of common stocks. Net gains on other of $363.2 million
principally reflected unrealized gains of $425.0 million on Digit
compulsorily convertible preference shares.
- At June 30, 2021
the company continued to hold long equity total return swaps on
1,964,155 Fairfax subordinate voting shares with an original
notional amount of $732.5 million (Cdn$935.0 million) or
approximately $372.96 (Cdn$476.03) per share.
- At June 30,
2021 the excess of fair value over adjusted carrying value of
investments in non-insurance associates and consolidated
non-insurance subsidiaries was approximately $754 million, an
improvement of $1.4 billion from the deficiency of $663 million at
December 31, 2020. Details are provided in the MD&A under
the heading "Book Value Per Basic Share" in the company's interim
report for the three and six months ended June 30, 2021.
- Subsequent to
June 30, 2021:
- The company
expects to close its previously announced sale of RiverStone
Barbados to CVC Capital Partners, promptly following the receipt of
final regulatory approval, which is currently expected in August
2021.
- On July 14, 2021
the company increased its interest in Eurolife FFH Insurance Group
Holdings S.A. ("Eurolife") to 80.0% from 50.0% by acquiring the
joint venture interest of OMERS, the pension plan for Ontario’s
municipal employees, for cash consideration of $142.6 million
(€120.7 million). The remaining 20.0% equity interest in Eurolife
continues to be owned by the company's associate Eurobank Ergasias
Services & Holdings S.A. ("Eurobank"). The company will
commence consolidating the assets, liabilities and results of
operations of Eurolife in its consolidated financial reporting in
the third quarter of 2021. Eurolife is a Greek insurer which
distributes its life and non-life insurance products and services
through Eurobank’s network.
- On June 17, 2021
the company increased its ownership interest in Singapore
Reinsurance Corporation Limited ("Singapore Re") from 28.2% to
94.0% for $102.9 million (SGD 138.0 million) through the completion
of a public cash offer and commenced consolidating the assets,
liabilities and results of operations of Singapore Re in the
Fairfax Asia reporting segment. Singapore Re is a general property
and casualty reinsurer that underwrites business primarily in
southeast Asia.
- The company held
$1,480.6 million of cash and investments at the holding company
level ($1,413.4 million net of derivative obligations) at
June 30, 2021, compared to $1,252.2 million ($1,229.4 million
net of derivative obligations) at December 31, 2020.
- On June 29, 2021
the company amended and restated its $2.0 billion unsecured
revolving credit facility with a syndicate of lenders which
extended the term from December 21, 2022 to June 29, 2026.
- The company's
total debt to total capital ratio, excluding non-insurance
companies, decreased to 28.4% at June 30, 2021 from 29.7% at
December 31, 2020, primarily reflecting increased total
capital due principally to increased common shareholders' equity.
The company anticipates that at the close of its RiverStone
Barbados transaction, it will have paid off its credit facility
completely; had this transaction closed prior to June 30, 2021 the
company's total debt to total capital ratio, excluding
non-insurance companies, would have been reduced to 27.0%.
- During the
second quarter of 2021 the company purchased 134,755 subordinate
voting shares for treasury at a cost of $63.2 million. From the
fourth quarter of 2017 up to June 30, 2021, the company has
purchased 1,322,303 subordinate voting shares for treasury and
1,102,998 for cancellation at an aggregate cost of $1,022.9
million.
- At June 30, 2021, common
shareholders' equity was $14,015.1 million or $540.62 per basic
share, compared to $12,521.1 million or $478.33 per basic share at
December 31, 2020. The increase in common shareholders' equity
per basic share was primarily due to the net earnings attributable
to shareholders of Fairfax in the first six months of 2021,
partially offset by the payment of the annual common share dividend
of $272.1 million.
There were 26.0 million and 26.5 million
weighted average common shares effectively outstanding during the
second quarters of 2021 and 2020 respectively. At June 30,
2021 there were 25,924,303 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, float 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. Float is calculated by the company as the sum
of insurance contract liabilities and insurance contract payables,
less the sum of insurance contract receivables, recoverable from
reinsurers and deferred premium acquisition costs. 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 second quarter 2021 results at 8:30
a.m. Eastern time on Friday July 30, 2021. 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, August 13, 2021. The replay may be accessed at 1 (866)
367-5574 (Canada or U.S.) or 1 (203) 369-0231 (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 VarnellVice 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 and any applicable Canadian
securities regulations. 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 June 30,
2021 and December 31, 2020 (unaudited - US$ millions)
|
|
June 30, 2021 |
|
December 31 2020 |
Assets |
|
|
|
|
|
|
Holding company cash and investments (including assets pledged for
derivative obligations – $176.8; December 31, 2020 –
$79.5) |
|
1,480.6 |
|
|
|
1,252.2 |
|
|
Insurance contract receivables |
|
7,162.9 |
|
|
|
5,816.1 |
|
|
|
|
|
|
|
|
|
Portfolio investments |
|
|
|
|
|
|
Subsidiary cash and short term investments (including restricted
cash and cash equivalents – $637.4; December 31, 2020 –
$751.9) |
|
15,328.4 |
|
|
|
13,197.8 |
|
|
Bonds (cost $14,684.9; December 31, 2020 – $14,916.1) |
|
15,354.3 |
|
|
|
15,734.6 |
|
|
Preferred stocks (cost $547.7; December 31, 2020 – $268.3) |
|
1,314.9 |
|
|
|
605.2 |
|
|
Common stocks (cost $4,654.1; December 31, 2020 – $4,635.5) |
|
5,322.8 |
|
|
|
4,599.1 |
|
|
Investments in associates (fair value $5,601.1; December 31, 2020 –
$4,154.3) |
|
4,720.3 |
|
|
|
4,381.8 |
|
|
Investment in associate held for sale (fair value $729.5; December
31, 2020 – $729.5) |
|
729.5 |
|
|
|
729.5 |
|
|
Derivatives and other invested assets (cost $866.9; December 31,
2020 – $944.4) |
|
911.9 |
|
|
|
812.4 |
|
|
Assets pledged for derivative obligations (cost $226.4; December
31, 2020 – $196.1) |
|
226.5 |
|
|
|
196.4 |
|
|
Fairfax India cash, portfolio investments and associates (fair
value $3,330.6; December 31, 2020 – $2,791.0) |
|
1,962.7 |
|
|
|
1,851.8 |
|
|
|
|
45,871.3 |
|
|
|
42,108.6 |
|
|
|
|
|
|
|
|
|
Assets held for sale |
|
216.3 |
|
|
|
— |
|
|
Deferred premium acquisition costs |
|
1,756.3 |
|
|
|
1,543.7 |
|
|
Recoverable from reinsurers (including recoverables on paid losses
– $886.6; December 31, 2020 – $686.8) |
|
11,637.0 |
|
|
|
10,533.2 |
|
|
Deferred income tax assets |
|
513.5 |
|
|
|
713.9 |
|
|
Goodwill and intangible assets |
|
6,161.5 |
|
|
|
6,229.1 |
|
|
Other assets |
|
5,449.7 |
|
|
|
5,857.2 |
|
|
Total assets |
|
80,249.1 |
|
|
|
74,054.0 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
4,965.6 |
|
|
|
4,996.1 |
|
|
Derivative obligations (including at the holding company – $67.2;
December 31, 2020 – $22.8) |
|
219.7 |
|
|
|
189.4 |
|
|
Liabilities associated with assets held for sale |
|
113.1 |
|
|
|
— |
|
|
Deferred income tax liabilities |
|
410.3 |
|
|
|
356.4 |
|
|
Insurance contract payables |
|
3,905.0 |
|
|
|
2,964.0 |
|
|
Insurance contract liabilities |
|
42,281.6 |
|
|
|
39,206.8 |
|
|
Borrowings – holding company and insurance and reinsurance
companies |
|
6,982.2 |
|
|
|
6,614.0 |
|
|
Borrowings – non-insurance companies |
|
1,834.8 |
|
|
|
2,200.0 |
|
|
Total liabilities |
|
60,712.3 |
|
|
|
56,526.7 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common shareholders’ equity |
|
14,015.1 |
|
|
|
12,521.1 |
|
|
Preferred stock |
|
1,335.5 |
|
|
|
1,335.5 |
|
|
Shareholders’ equity attributable to shareholders of Fairfax |
|
15,350.6 |
|
|
|
13,856.6 |
|
|
Non-controlling interests |
|
4,186.2 |
|
|
|
3,670.7 |
|
|
Total equity |
|
19,536.8 |
|
|
|
17,527.3 |
|
|
|
|
80,249.1 |
|
|
|
74,054.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per basic share |
|
$ |
540.62 |
|
|
|
$ |
478.33 |
|
|
CONSOLIDATED STATEMENTS OF EARNINGSfor the
three and six months ended June 30, 2021 and 2020(unaudited -
US$ millions except per share amounts)
|
|
Second quarter |
|
|
First six months |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Income |
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
5,977.7 |
|
|
|
4,702.7 |
|
|
|
11,405.7 |
|
|
|
9,478.4 |
|
|
Net premiums written |
|
4,529.5 |
|
|
|
3,555.5 |
|
|
|
8,675.4 |
|
|
|
7,401.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums earned |
|
5,218.8 |
|
|
|
4,259.0 |
|
|
|
9,976.0 |
|
|
|
8,475.3 |
|
|
Premiums ceded to reinsurers |
|
(1,204.4 |
) |
|
|
(925.5 |
) |
|
|
(2,231.2 |
) |
|
|
(1,754.0 |
) |
|
Net premiums earned |
|
4,014.4 |
|
|
|
3,333.5 |
|
|
|
7,744.8 |
|
|
|
6,721.3 |
|
|
Interest and dividends |
|
160.8 |
|
|
|
205.0 |
|
|
|
328.7 |
|
|
|
422.9 |
|
|
Share of profit (loss) of associates |
|
75.4 |
|
|
|
(23.1 |
) |
|
|
119.7 |
|
|
|
(228.3 |
) |
|
Net gains (losses) on investments |
|
1,290.2 |
|
|
|
644.1 |
|
|
|
2,132.2 |
|
|
|
(895.4 |
) |
|
Gain on consolidation and deconsolidation of insurance
subsidiaries |
|
45.3 |
|
|
|
— |
|
|
|
112.0 |
|
|
|
117.1 |
|
|
Other revenue |
|
1,244.9 |
|
|
|
905.6 |
|
|
|
2,391.8 |
|
|
|
2,086.6 |
|
|
|
|
6,831.0 |
|
|
|
5,065.1 |
|
|
|
12,829.2 |
|
|
|
8,224.2 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Losses on claims, gross |
|
3,235.8 |
|
|
|
2,968.7 |
|
|
|
6,266.9 |
|
|
|
5,752.5 |
|
|
Losses on claims, ceded to reinsurers |
|
(674.0 |
) |
|
|
(693.7 |
) |
|
|
(1,328.9 |
) |
|
|
(1,299.5 |
) |
|
Losses on claims, net |
|
2,561.8 |
|
|
|
2,275.0 |
|
|
|
4,938.0 |
|
|
|
4,453.0 |
|
|
Operating expenses |
|
680.2 |
|
|
|
621.0 |
|
|
|
1,365.0 |
|
|
|
1,276.5 |
|
|
Commissions, net |
|
664.4 |
|
|
|
559.7 |
|
|
|
1,283.9 |
|
|
|
1,117.7 |
|
|
Interest expense |
|
117.8 |
|
|
|
122.2 |
|
|
|
283.9 |
|
|
|
237.9 |
|
|
Other expenses |
|
1,239.3 |
|
|
|
938.4 |
|
|
|
2,408.8 |
|
|
|
2,211.7 |
|
|
|
|
5,263.5 |
|
|
|
4,516.3 |
|
|
|
10,279.6 |
|
|
|
9,296.8 |
|
|
Earnings (loss) before income taxes |
|
1,567.5 |
|
|
|
548.8 |
|
|
|
2,549.6 |
|
|
|
(1,072.6 |
) |
|
Provision for (recovery of) income taxes |
|
287.3 |
|
|
|
122.5 |
|
|
|
446.8 |
|
|
|
(109.8 |
) |
|
Net earnings (loss) |
|
1,280.2 |
|
|
|
426.3 |
|
|
|
2,102.8 |
|
|
|
(962.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
1,201.4 |
|
|
|
434.9 |
|
|
|
2,007.4 |
|
|
|
(824.4 |
) |
|
Non-controlling interests |
|
78.8 |
|
|
|
(8.6 |
) |
|
|
95.4 |
|
|
|
(138.4 |
) |
|
|
|
1,280.2 |
|
|
|
426.3 |
|
|
|
2,102.8 |
|
|
|
(962.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share |
|
$ |
45.79 |
|
|
|
$ |
16.00 |
|
|
|
$ |
76.18 |
|
|
|
$ |
(31.76 |
) |
|
Net earnings (loss) per diluted share |
|
$ |
43.25 |
|
|
|
$ |
15.26 |
|
|
|
$ |
72.16 |
|
|
|
$ |
(31.76 |
) |
|
Cash dividends paid per share |
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
10.00 |
|
|
|
$ |
10.00 |
|
|
Shares outstanding (000) (weighted average) |
|
25,986 |
|
|
|
26,487 |
|
|
|
26,054 |
|
|
|
26,645 |
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three and six months ended June 30, 2021 and
2020(unaudited - US$ millions)
|
|
Second quarter |
|
|
First six months |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
1,280.2 |
|
|
|
426.3 |
|
|
|
2,102.8 |
|
|
|
(962.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
21.1 |
|
|
|
124.8 |
|
|
|
20.1 |
|
|
|
(459.4 |
) |
|
Gains (losses) on hedge of net investment in Canadian
subsidiaries |
|
(33.1 |
) |
|
|
(88.1 |
) |
|
|
(60.9 |
) |
|
|
103.3 |
|
|
Gains (losses) on hedge of net investment in European
operations |
|
(7.8 |
) |
|
|
(19.1 |
) |
|
|
27.9 |
|
|
|
(1.6 |
) |
|
Share of other comprehensive income (loss) of associates, excluding
net gains on defined benefit plans |
|
5.5 |
|
|
|
(19.0 |
) |
|
|
(58.3 |
) |
|
|
(88.9 |
) |
|
|
|
(14.3 |
) |
|
|
(1.4 |
) |
|
|
(71.2 |
) |
|
|
(446.6 |
) |
|
Net unrealized foreign currency translation (gains) losses
reclassified to net earnings (loss) |
|
— |
|
|
|
— |
|
|
|
(0.3 |
) |
|
|
161.9 |
|
|
|
|
(14.3 |
) |
|
|
(1.4 |
) |
|
|
(71.5 |
) |
|
|
(284.7 |
) |
|
Items that will not be reclassified to net earnings
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net losses on defined benefit plans |
|
(2.7 |
) |
|
|
(27.1 |
) |
|
|
(2.7 |
) |
|
|
(27.1 |
) |
|
Share of net gains on defined benefit plans of associates |
|
6.9 |
|
|
|
1.9 |
|
|
|
8.9 |
|
|
|
11.2 |
|
|
Other |
|
— |
|
|
|
— |
|
|
|
13.8 |
|
|
|
— |
|
|
|
|
4.2 |
|
|
|
(25.2 |
) |
|
|
20.0 |
|
|
|
(15.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
|
(10.1 |
) |
|
|
(26.6 |
) |
|
|
(51.5 |
) |
|
|
(300.6 |
) |
|
Comprehensive income (loss) |
|
1,270.1 |
|
|
|
399.7 |
|
|
|
2,051.3 |
|
|
|
(1,263.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
1,207.7 |
|
|
|
399.7 |
|
|
|
1,981.5 |
|
|
|
(995.6 |
) |
|
Non-controlling interests |
|
62.4 |
|
|
|
— |
|
|
|
69.8 |
|
|
|
(267.8 |
) |
|
|
|
1,270.1 |
|
|
|
399.7 |
|
|
|
2,051.3 |
|
|
|
(1,263.4 |
) |
|
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 second quarters and first six months ended June 30, 2021
and 2020 were as follows:
Gross Premiums Written
|
|
Second quarter |
|
First six months |
|
% change year-over-year |
|
|
2021 |
|
|
2020 |
|
2021 |
|
2020 |
|
Secondquarter |
|
First sixmonths |
Northbridge |
|
586.8 |
|
|
|
430.2 |
|
|
996.5 |
|
|
|
774.3 |
|
|
36.4 |
% |
|
28.7 |
% |
Odyssey Group |
|
1,380.2 |
|
|
|
1,102.4 |
|
|
2,537.4 |
|
|
|
2,033.3 |
|
|
25.2 |
% |
|
24.8 |
% |
Crum & Forster |
|
928.3 |
|
|
|
712.5 |
|
|
1,729.2 |
|
|
|
1,481.3 |
|
|
30.3 |
% |
|
16.7 |
% |
Zenith National |
|
149.2 |
|
|
|
120.0 |
|
|
420.9 |
|
|
|
377.9 |
|
|
24.3 |
% |
|
11.4 |
% |
Brit |
|
777.2 |
|
|
|
659.7 |
|
|
1,455.8 |
|
|
|
1,274.1 |
|
|
17.8 |
% |
|
14.3 |
% |
Allied World |
|
1,579.1 |
|
|
|
1,224.6 |
|
|
2,987.3 |
|
|
|
2,328.4 |
|
|
28.9 |
% |
|
28.3 |
% |
Fairfax Asia |
|
89.5 |
|
|
|
88.9 |
|
|
217.7 |
|
|
|
211.3 |
|
|
0.7 |
% |
|
3.0 |
% |
Insurance and Reinsurance - Other |
|
487.4 |
|
|
|
364.4 |
|
|
1,060.9 |
|
|
|
851.3 |
|
|
33.8 |
% |
|
24.6 |
% |
Insurance and reinsurance
operations |
|
5,977.7 |
|
|
|
4,702.7 |
|
|
11,405.7 |
|
|
|
9,331.9 |
|
|
27.1 |
% |
|
22.2 |
% |
Net Premiums Written
|
|
Second quarter |
|
First six months |
|
% change year-over-year |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Secondquarter |
|
First sixmonths |
Northbridge |
|
550.8 |
|
|
|
403.2 |
|
|
925.2 |
|
|
|
712.2 |
|
|
36.6 |
% |
|
29.9 |
|
% |
Odyssey Group |
|
1,149.8 |
|
|
|
935.4 |
|
|
2,181.7 |
|
|
|
1,799.7 |
|
|
22.9 |
% |
|
21.2 |
|
% |
Crum & Forster |
|
766.5 |
|
|
|
580.0 |
|
|
1,432.5 |
|
|
|
1,230.5 |
|
|
32.2 |
% |
|
16.4 |
|
% |
Zenith National |
|
143.8 |
|
|
|
115.8 |
|
|
409.1 |
|
|
|
370.0 |
|
|
24.2 |
% |
|
10.6 |
|
% |
Brit(1) |
|
478.9 |
|
|
|
418.4 |
|
|
864.4 |
|
|
|
866.2 |
|
|
14.5 |
% |
|
(0.2 |
) |
% |
Allied World |
|
1,049.8 |
|
|
|
790.7 |
|
|
2,077.0 |
|
|
|
1,592.1 |
|
|
32.8 |
% |
|
30.5 |
|
% |
Fairfax Asia |
|
45.2 |
|
|
|
44.4 |
|
|
105.8 |
|
|
|
105.1 |
|
|
1.8 |
% |
|
0.7 |
|
% |
Insurance and Reinsurance - Other |
|
344.7 |
|
|
|
267.6 |
|
|
679.7 |
|
|
|
579.6 |
|
|
28.8 |
% |
|
17.3 |
|
% |
Insurance and reinsurance
operations |
|
4,529.5 |
|
|
|
3,555.5 |
|
|
8,675.4 |
|
|
|
7,255.4 |
|
|
27.4 |
% |
|
19.6 |
|
% |
(1) A year-over-year increase of 10.5% in the first six months
excluding the effects of a multi-year reinsurance protection
purchase.
Combined Ratios
|
|
Second quarter |
|
First six months |
|
|
2021 |
|
|
2020 |
|
2021 |
|
2020 |
Northbridge |
|
84.7 |
% |
|
94.3 |
% |
|
85.8 |
% |
|
|
95.4 |
% |
Odyssey Group |
|
94.9 |
% |
|
|
99.8 |
% |
|
96.8 |
% |
|
|
99.2 |
% |
Crum & Forster |
|
96.8 |
% |
|
|
98.9 |
% |
|
98.0 |
% |
|
|
98.1 |
% |
Zenith National |
|
92.7 |
% |
|
|
94.6 |
% |
|
90.4 |
% |
|
|
91.0 |
% |
Brit |
|
97.1 |
% |
|
|
114.9 |
% |
|
97.8 |
% |
|
|
107.3 |
% |
Allied World |
|
94.8 |
% |
|
|
98.0 |
% |
|
94.5 |
% |
|
|
96.3 |
% |
Fairfax Asia |
|
94.9 |
% |
|
|
99.4 |
% |
|
94.4 |
% |
|
|
101.0 |
% |
Insurance and Reinsurance - Other |
|
96.3 |
% |
|
|
99.3 |
% |
|
97.1 |
% |
|
|
98.3 |
% |
Insurance and reinsurance
operations |
|
94.3 |
% |
|
|
100.4 |
% |
|
95.1 |
% |
|
|
98.6 |
% |
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