Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces
net earnings of $1,030.8 million ($42.62 net earnings per diluted
share after payment of preferred share dividends) in the third
quarter of 2024, primarily reflecting increased adjusted operating
income of $1,136.8 million and net gains on investments. Book value
per basic share at September 30, 2024 was $1,033.18 compared
to $939.65 at December 31, 2023 (an increase of 11.7% adjusted
for the $15 per common share dividend paid in the first quarter of
2024).
"In the third quarter of 2024 our property and
casualty insurance and reinsurance operations produced adjusted
operating income of $1,136.8 million up from $967.2 million in the
third quarter of 2023 (or operating income of $1,516.3 million
(2023 - $1,424.4 million) including the benefit of discounting, net
of a risk adjustment on claims), primarily reflecting continued
strong core underwriting performance and increased interest and
dividends. Our underwriting performance in the third quarter of
2024 was outstanding, with our property and casualty insurance and
reinsurance companies reporting a consolidated combined ratio of
93.9% and consolidated underwriting profit of $389.7 million, on an
undiscounted basis, despite higher current period catastrophe
losses of $434.5 million. Gross and net premiums written grew by
13.9% and 10.0%, reflecting the acquisition of Gulf Insurance,
which added $778.4 million in gross premiums written and $420.5
million in net premiums written. Excluding Gulf Insurance, gross
and net premiums written grew by 3.2% and 2.8%.
"Net gains on investments of $1,287.3 million in
the quarter was principally comprised of mark to market gains on
bonds of $828.6 million and mark to market gains on common stocks
of $322.9 million.
"We remain focused on being soundly financed and
ended the quarter with approximately $2.0 billion of cash and
marketable securities and an additional $2.1 billion, at fair
value, of investments in associates and consolidated non-insurance
companies owned by the holding company," said Prem Watsa, Chairman
and Chief Executive Officer.
The table below presents the sources of the
company's net earnings in a segment reporting format which the
company has consistently used as it believes it assists in
understanding Fairfax:
|
|
Third quarter |
|
First nine months |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
($ millions) |
|
Gross premiums written |
8,302.2 |
|
|
7,272.2 |
|
|
25,276.7 |
|
|
22,453.2 |
|
| Net
premiums written |
6,485.0 |
|
|
5,879.1 |
|
|
19,684.4 |
|
|
17,742.1 |
|
| Net
insurance revenue |
6,503.6 |
|
|
5,724.5 |
|
|
18,537.1 |
|
|
16,276.5 |
|
|
|
|
|
|
|
|
|
|
|
Sources of net earnings |
|
|
|
|
|
|
|
|
Operating income - Property and Casualty Insurance and
Reinsurance: |
|
|
|
|
|
|
|
|
Insurance service result: |
|
|
|
|
|
|
|
|
North American Insurers |
216.2 |
|
|
186.4 |
|
|
799.9 |
|
|
711.4 |
|
|
Global Insurers and Reinsurers |
698.2 |
|
|
667.6 |
|
|
2,011.3 |
|
|
2,113.3 |
|
|
International Insurers and Reinsurers |
125.5 |
|
|
78.6 |
|
|
319.5 |
|
|
229.9 |
|
|
Insurance service result |
1,039.9 |
|
|
932.6 |
|
|
3,130.7 |
|
|
3,054.6 |
|
|
Other insurance operating expenses |
(270.7 |
) |
|
(183.8 |
) |
|
(746.0 |
) |
|
(575.3 |
) |
|
Interest and dividends |
544.2 |
|
|
453.7 |
|
|
1,591.8 |
|
|
1,172.6 |
|
|
Share of profit of associates |
202.9 |
|
|
221.9 |
|
|
508.4 |
|
|
608.2 |
|
|
Operating income - Property and Casualty Insurance and
Reinsurance |
1,516.3 |
|
|
1,424.4 |
|
|
4,484.9 |
|
|
4,260.1 |
|
|
Operating income - Life insurance and Run-off |
1.2 |
|
|
33.0 |
|
|
16.7 |
|
|
42.7 |
|
|
Operating income - Non-insurance companies |
48.8 |
|
|
125.9 |
|
|
91.3 |
|
|
162.2 |
|
|
Net finance expense from insurance contracts and reinsurance
contract assets held |
(1,112.6 |
) |
|
(7.9 |
) |
|
(1,483.3 |
) |
|
(595.3 |
) |
| Net
gains on investments |
1,287.3 |
|
|
56.0 |
|
|
1,470.4 |
|
|
485.1 |
|
|
Gain on sale of insurance subsidiary |
— |
|
|
— |
|
|
— |
|
|
259.1 |
|
|
Interest expense |
(164.4 |
) |
|
(124.8 |
) |
|
(476.3 |
) |
|
(379.5 |
) |
|
Corporate overhead and other |
(82.6 |
) |
|
(15.3 |
) |
|
(142.4 |
) |
|
(29.4 |
) |
|
Earnings before income taxes |
1,494.0 |
|
|
1,491.3 |
|
|
3,961.3 |
|
|
4,205.0 |
|
|
Provision for income taxes |
(374.5 |
) |
|
(304.3 |
) |
|
(1,016.3 |
) |
|
(784.9 |
) |
|
Net earnings |
1,119.5 |
|
|
1,187.0 |
|
|
2,945.0 |
|
|
3,420.1 |
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
1,030.8 |
|
|
1,068.9 |
|
|
2,722.7 |
|
|
3,053.3 |
|
|
Non-controlling interests |
88.7 |
|
|
118.1 |
|
|
222.3 |
|
|
366.8 |
|
|
|
1,119.5 |
|
|
1,187.0 |
|
|
2,945.0 |
|
|
3,420.1 |
|
The table below presents the insurance service
result for the property and casualty insurance and reinsurance
operations reconciled to underwriting profit, a key performance
measure used by the company and the property and casualty industry
in which it operates. The reconciling adjustments are (i) other
insurance operating expenses as presented in the consolidated
statement of earnings, (ii) the effects of discounting on losses
and ceded losses on claims incurred in the period, and (iii) the
effects of the risk adjustment and other, which are presented in
insurance service expenses and recoveries of insurance service
expenses.
|
|
Third quarter |
|
First nine months |
|
Property and Casualty Insurance and
Reinsurance |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
($ millions) |
|
Insurance service result |
1,039.9 |
|
|
932.6 |
|
|
3,130.7 |
|
|
3,054.6 |
|
|
Other insurance operating expenses |
(270.7 |
) |
|
(183.8 |
) |
|
(746.0 |
) |
|
(575.3 |
) |
|
Discounting of losses and ceded losses on claims incurred in the
period |
(391.3 |
) |
|
(391.4 |
) |
|
(1,267.9 |
) |
|
(1,419.9 |
) |
|
Changes in the risk adjustment and other |
11.8 |
|
|
(65.8 |
) |
|
16.3 |
|
|
(116.5 |
) |
|
Underwriting profit |
389.7 |
|
|
291.6 |
|
|
1,133.1 |
|
|
942.9 |
|
|
Interest and dividends |
544.2 |
|
|
453.7 |
|
|
1,591.8 |
|
|
1,172.6 |
|
|
Share of profit of associates |
202.9 |
|
|
221.9 |
|
|
508.4 |
|
|
608.2 |
|
|
Adjusted operating income |
1,136.8 |
|
|
967.2 |
|
|
3,233.3 |
|
|
2,723.7 |
|
Highlights for the third quarter of 2024 (with
comparisons to the third quarter of 2023 except as otherwise noted,
and excluding the effects of IFRS 17 when discussing the combined
ratio and adjusted operating income) include the following:
- Net premiums
written by the property and casualty insurance and reinsurance
operations increased by 10.0% to $6,420.4 million from
$5,837.9 million, while gross premiums written increased by
13.9%, primarily reflecting the consolidation of Gulf Insurance on
December 26, 2023 which contributed $420.5 million to net premiums
written and $778.4 million to gross premiums written in 2024, and
continued growth across most operating companies, partially offset
by a decrease at Odyssey Group that reflected the non-renewal of a
significant quota share contract which contributed nominal
underwriting profit.
- Underwriting
profit of the company's property and casualty insurance and
reinsurance operations increased to $389.7 million from
$291.6 million in 2023, and the undiscounted combined ratio
improved to 93.9% from 95.0% in 2023, primarily reflecting growth
in business volumes, partially offset by higher current period
catastrophe losses of $434.5 million compared to $388.7 million in
2023.
- Adjusted
operating income (which excludes the benefit of discounting, net of
a risk adjustment on claims) of the property and casualty insurance
and reinsurance operations increased by 17.5% to $1,136.8 million
from $967.2 million, principally reflecting higher underwriting
profit and interest and dividends.
- The company
recorded a total net expense of $731.8 million from discounting
insurance and reinsurance contracts, which was comprised of net
finance expense from insurance contracts and reinsurance contract
assets held of $1,112.6 million (reflecting interest accretion from
unwinding the effects of discounting associated with net losses on
claim payments made of $347.7 million and the effects of decreases
in discount rates during the period on prior year net losses on
claims of $764.9 million), partially offset by a net benefit of
$380.8 million from discounting losses and ceded losses on claims
incurred in the period, net of changes in risk adjustment and
other. The decreases in discount rates during the period produced
net gains on the company’s bond portfolio of $828.6 million that
exceeded the net finance expense of $764.9 million related to the
effects of decreases in discount rates on prior year net losses on
claims, for a net benefit of $63.7 million (2023 - a net benefit of
$164.8 million).
- Consolidated
interest and dividends increased from $512.7 million in 2023 to
$609.9 million (comprised of interest and dividends of $544.2
million (2023 - $453.7 million) earned by the investment portfolios
of the property and casualty insurance and reinsurance operations,
with the remainder earned by life insurance and run-off,
non-insurance companies and corporate and other). At
September 30, 2024 the company's insurance and reinsurance
companies held portfolio investments of $65.3 billion (excluding
Fairfax India's portfolio of $2.1 billion), of which $8.0 billion
was in cash and short term investments representing 12.3% of those
portfolio investments.
- Consolidated
share of profit of associates of $260.2 million principally
reflected share of profit of $138.3 million from Eurobank and $61.7
million from Poseidon.
- Net gains on investments of
$1,287.3 million consisted of the following:
|
|
|
|
|
|
|
|
|
Third quarter of 2024 |
|
|
($ millions) |
|
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
| Net
gains (losses) on: |
|
|
|
|
|
|
Equity exposures |
(58.5 |
) |
|
381.4 |
|
322.9 |
|
Bonds |
40.9 |
|
|
787.7 |
|
828.6 |
|
Other |
(161.9 |
) |
|
297.7 |
|
135.8 |
|
|
(179.5 |
) |
|
1,466.8 |
|
1,287.3 |
|
|
First nine months of 2024 |
|
|
($ millions) |
|
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
| Net
gains (losses) on: |
|
|
|
|
|
|
Equity exposures |
649.9 |
|
|
325.5 |
|
975.4 |
|
Bonds |
35.8 |
|
|
283.2 |
|
319.0 |
|
Other |
(144.9 |
) |
|
320.9 |
|
176.0 |
|
|
540.8 |
|
|
929.6 |
|
1,470.4 |
Net gains on equity exposures of $322.9 million
principally reflected a net gain of $229.5 million on the company's
continued holdings of 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 $372.96 (Cdn$476.03) per
share and net gains on common stocks of $99.2 million.
Net gains on bonds of $828.6 million principally
reflected net gains of $502.5 million on U.S. treasuries as
interest rates declined during the quarter.
Net gains on other of $135.8 million principally
reflected unrealized gains of $184.0 million on the company's
holdings of Digit compulsory convertible preferred shares.
- The company's
fixed income portfolio continues to be conservatively positioned
with effectively 71% of the fixed income portfolio invested in
government bonds and 19% in high quality corporate bonds, primarily
short-dated.
- At
September 30, 2024 the excess of fair value over carrying
value of investments in non-insurance associates and consolidated
non-insurance subsidiaries was $1,921.4 million.
- The company's
total debt to total capital ratio, excluding non-insurance
companies, increased to 24.2% at September 30, 2024 from 23.1%
at December 31, 2023, reflecting increased total debt
(principally the issuance of $1.0 billion principal amount of
senior notes due 2054), partially offset by increased shareholder's
equity (principally from the net earnings in 2024, partially offset
by purchases of 1,012,906 subordinate voting shares for
cancellation).
- During the first
nine months of 2024 the company purchased 1,012,906 of its
subordinate voting shares for cancellation at an aggregate cost of
$1,127.1 million. On September 30, 2024 the company renewed its
normal course issuer bid.
- Subsequent to
September 30, 2024:
- On September 30,
2024 it was announced the company will, through its insurance and
reinsurance subsidiaries, increase its investment in Peak
Achievement Athletics Inc. ("Peak Achievement") to a controlling
interest by acquiring the 42.6% equity interest owned by Sagard
Holdings Inc. The company currently applies the equity method of
accounting to its investment in Peak Achievement and expects to
consolidate Peak Achievement in its Non-insurance companies
reporting segment upon closing, which is anticipated to occur in
the fourth quarter of 2024, subject to customary closing
conditions. Peak Achievement is engaged in the design, manufacture
and distribution of performance sports equipment and related
apparel and accessories for ice hockey, roller hockey, and
lacrosse, under brands such as Bauer Hockey, Cascade Lacrosse and
Maverik Lacrosse.
- On October 1,
2024 the company, through its insurance and reinsurance
subsidiaries, completed its previously announced acquisition of all
of the issued and outstanding common shares of Sleep Country Canada
Holdings Inc. ("Sleep Country") for purchase consideration of
$880.6 million (Cdn$1.2 billion) or Cdn$35.00 per common
share. The company will commence consolidating Sleep Country in its
Non-insurance companies reporting segment in the fourth quarter of
2024. Sleep Country is a specialty sleep retailer with a national
retail store network and multiple e-commerce platforms.
At September 30, 2024 there were 21,990,603
common shares effectively outstanding.
Consolidated balance sheet, earnings and
comprehensive income information, together with segmented premium
and combined ratio information, follow and form part of this news
release.
As previously announced, Fairfax will hold a
conference call to discuss its third quarter 2024 results at 8:30
a.m. Eastern time on Friday November 1, 2024. The call,
consisting of a presentation by the company followed by a question
period, may be accessed at 1 (888) 390-0867 (Canada or U.S.) or 1
(212) 547-0141 (International) with the passcode “FAIRFAX”. A
replay of the call will be available from shortly after the
termination of the call until 5:00 p.m. Eastern time on
Friday, November 15, 2024. The replay may be accessed at 1 (866)
405-7293 (Canada or U.S.) or 1 (203) 369-0605 (International).
Fairfax Financial Holdings Limited is a holding
company which, through its subsidiaries, is primarily engaged in
property and casualty insurance and reinsurance and the associated
investment management.
| For further
information, contact: |
John
Varnell |
| |
Vice President, Corporate Development |
| |
(416) 367-4941 |
| |
|
CONSOLIDATED BALANCE SHEETSas at
September 30, 2024 and December 31, 2023(US$ millions
except per share amounts)
|
|
|
September 30, 2024 |
|
December 31, 2023 |
|
Assets |
|
|
|
|
|
|
|
|
Holding company cash and investments (including assets pledged for
derivative obligations – $200.7; December 31, 2023 – $197.7) |
|
|
2,046.4 |
|
|
|
|
1,781.6 |
|
|
Insurance contract receivables |
|
|
786.0 |
|
|
|
|
926.1 |
|
|
|
|
|
|
|
|
|
|
|
Portfolio investments |
|
|
|
|
|
|
|
|
Subsidiary cash and short term investments (including restricted
cash and cash equivalents – $1,142.7; December 31, 2023 –
$637.0) |
|
|
8,017.3 |
|
|
|
|
7,165.6 |
|
|
Bonds (cost $38,884.1; December 31, 2023 – $36,511.9) |
|
|
39,406.2 |
|
|
|
|
36,850.8 |
|
|
Preferred stocks (cost $900.0; December 31, 2023 – $898.3) |
|
|
2,760.9 |
|
|
|
|
2,447.4 |
|
|
Common stocks (cost $6,568.6; December 31, 2023 – $6,577.2) |
|
|
6,995.8 |
|
|
|
|
6,903.4 |
|
|
Investments in associates (fair value $9,070.4; December 31, 2023 –
$7,553.2) |
|
|
7,512.5 |
|
|
|
|
6,607.6 |
|
|
Derivatives and other invested assets (cost $784.0; December 31,
2023 – $952.0) |
|
|
847.3 |
|
|
|
|
1,025.3 |
|
|
Assets pledged for derivative obligations (cost $112.5; December
31, 2023 – $137.7) |
|
|
114.8 |
|
|
|
|
139.3 |
|
|
Fairfax India cash, portfolio investments and associates (fair
value $3,376.9; December 31, 2023 – $3,507.6) |
|
|
2,052.3 |
|
|
|
|
2,282.7 |
|
|
|
|
|
67,707.1 |
|
|
|
|
63,422.1 |
|
|
|
|
|
|
|
|
|
|
|
Reinsurance contract assets held |
|
|
11,290.4 |
|
|
|
|
10,887.7 |
|
|
Deferred income tax assets |
|
|
274.4 |
|
|
|
|
301.1 |
|
|
Goodwill and intangible assets |
|
|
6,239.2 |
|
|
|
|
6,376.3 |
|
|
Other assets |
|
|
8,272.8 |
|
|
|
|
8,290.2 |
|
|
Total assets |
|
|
96,616.3 |
|
|
|
|
91,985.1 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
4,953.3 |
|
|
|
|
5,487.2 |
|
|
Derivative obligations |
|
|
322.9 |
|
|
|
|
444.9 |
|
|
Deferred income tax liabilities |
|
|
1,502.7 |
|
|
|
|
1,250.3 |
|
|
Insurance contract payables |
|
|
1,060.7 |
|
|
|
|
1,206.9 |
|
|
Insurance contract liabilities |
|
|
49,254.2 |
|
|
|
|
46,171.4 |
|
|
Borrowings – holding company and insurance and reinsurance
companies |
|
|
8,712.4 |
|
|
|
|
7,824.5 |
|
|
Borrowings – non-insurance companies |
|
|
1,998.5 |
|
|
|
|
1,899.0 |
|
|
Total liabilities |
|
|
67,804.7 |
|
|
|
|
64,284.2 |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Common shareholders’ equity |
|
|
22,720.3 |
|
|
|
|
21,615.0 |
|
|
Preferred stock |
|
|
1,335.5 |
|
|
|
|
1,335.5 |
|
|
Shareholders’ equity attributable to shareholders of Fairfax |
|
|
24,055.8 |
|
|
|
|
22,950.5 |
|
|
Non-controlling interests |
|
|
4,755.8 |
|
|
|
|
4,750.4 |
|
|
Total equity |
|
|
28,811.6 |
|
|
|
|
27,700.9 |
|
|
|
|
|
96,616.3 |
|
|
|
|
91,985.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per basic share |
|
$ |
1,033.18 |
|
|
|
$ |
939.65 |
|
CONSOLIDATED STATEMENTS OF EARNINGSfor the
three and nine months ended September 30, 2024 and 2023(US$
millions except per share amounts)
|
|
|
Third quarter |
|
First nine months |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
Insurance |
|
|
|
|
|
|
|
|
|
Insurance revenue |
|
|
8,139.6 |
|
|
|
7,098.9 |
|
|
|
23,319.9 |
|
|
|
20,033.0 |
|
|
Insurance service expenses |
|
|
(6,633.4 |
) |
|
|
(5,704.5 |
) |
|
|
(19,032.5 |
) |
|
|
(15,921.4 |
) |
|
Net insurance result |
|
|
1,506.2 |
|
|
|
1,394.4 |
|
|
|
4,287.4 |
|
|
|
4,111.6 |
|
|
Cost of reinsurance |
|
|
(1,636.0 |
) |
|
|
(1,374.4 |
) |
|
|
(4,782.8 |
) |
|
|
(3,756.5 |
) |
|
Recoveries of insurance service expenses |
|
|
1,178.8 |
|
|
|
922.5 |
|
|
|
3,605.2 |
|
|
|
2,685.7 |
|
|
Net reinsurance result |
|
|
(457.2 |
) |
|
|
(451.9 |
) |
|
|
(1,177.6 |
) |
|
|
(1,070.8 |
) |
|
Insurance service result |
|
|
1,049.0 |
|
|
|
942.5 |
|
|
|
3,109.8 |
|
|
|
3,040.8 |
|
|
Other insurance operating expenses |
|
|
(325.8 |
) |
|
|
(207.3 |
) |
|
|
(853.7 |
) |
|
|
(658.8 |
) |
|
Net finance expense from insurance contracts |
|
|
(1,449.2 |
) |
|
|
(22.7 |
) |
|
|
(2,015.9 |
) |
|
|
(833.8 |
) |
|
Net finance income from reinsurance contract assets held |
|
|
336.6 |
|
|
|
14.8 |
|
|
|
532.6 |
|
|
|
238.5 |
|
|
|
|
|
(389.4 |
) |
|
|
727.3 |
|
|
|
772.8 |
|
|
|
1,786.7 |
|
|
Investment income |
|
|
|
|
|
|
|
|
|
Interest and dividends |
|
|
609.9 |
|
|
|
512.7 |
|
|
|
1,813.7 |
|
|
|
1,359.6 |
|
|
Share of profit of associates |
|
|
260.2 |
|
|
|
291.5 |
|
|
|
609.3 |
|
|
|
894.5 |
|
|
Net gains on investments |
|
|
1,287.3 |
|
|
|
56.0 |
|
|
|
1,470.4 |
|
|
|
485.1 |
|
|
|
|
|
2,157.4 |
|
|
|
860.2 |
|
|
|
3,893.4 |
|
|
|
2,739.2 |
|
|
Other revenue and expenses |
|
|
|
|
|
|
|
|
|
Non-insurance revenue |
|
|
1,620.4 |
|
|
|
1,744.5 |
|
|
|
4,672.7 |
|
|
|
4,862.5 |
|
|
Non-insurance expenses |
|
|
(1,582.4 |
) |
|
|
(1,640.4 |
) |
|
|
(4,567.3 |
) |
|
|
(4,791.0 |
) |
|
Gain on sale of insurance subsidiary |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
259.1 |
|
|
Interest expense |
|
|
(164.4 |
) |
|
|
(124.8 |
) |
|
|
(476.3 |
) |
|
|
(379.5 |
) |
|
Corporate and other expenses |
|
|
(147.6 |
) |
|
|
(75.5 |
) |
|
|
(334.0 |
) |
|
|
(272.0 |
) |
|
|
|
|
(274.0 |
) |
|
|
(96.2 |
) |
|
|
(704.9 |
) |
|
|
(320.9 |
) |
|
Earnings before income taxes |
|
|
1,494.0 |
|
|
|
1,491.3 |
|
|
|
3,961.3 |
|
|
|
4,205.0 |
|
|
Provision for income taxes |
|
|
(374.5 |
) |
|
|
(304.3 |
) |
|
|
(1,016.3 |
) |
|
|
(784.9 |
) |
|
Net earnings |
|
|
1,119.5 |
|
|
|
1,187.0 |
|
|
|
2,945.0 |
|
|
|
3,420.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
|
1,030.8 |
|
|
|
1,068.9 |
|
|
|
2,722.7 |
|
|
|
3,053.3 |
|
|
Non-controlling interests |
|
|
88.7 |
|
|
|
118.1 |
|
|
|
222.3 |
|
|
|
366.8 |
|
|
|
|
|
1,119.5 |
|
|
|
1,187.0 |
|
|
|
2,945.0 |
|
|
|
3,420.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share |
|
$ |
46.04 |
|
|
$ |
45.62 |
|
|
$ |
119.24 |
|
|
$ |
129.91 |
|
|
Net earnings per diluted share |
|
$ |
42.62 |
|
|
$ |
42.26 |
|
|
$ |
110.41 |
|
|
$ |
120.43 |
|
|
Cash dividends paid per share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
15.00 |
|
|
$ |
10.00 |
|
|
Shares outstanding (000) (weighted average) |
|
|
22,118 |
|
|
|
23,163 |
|
|
|
22,522 |
|
|
|
23,219 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOMEfor the three and nine months ended
September 30, 2024 and 2023(US$ millions)
|
|
|
Third quarter |
|
First nine months |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
1,119.5 |
|
|
1,187.0 |
|
|
2,945.0 |
|
|
3,420.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be subsequently reclassified to net
earnings |
|
|
|
|
|
|
|
|
|
Net unrealized foreign currency translation gains (losses) on
foreign subsidiaries |
|
166.2 |
|
|
(174.3 |
) |
|
(152.1 |
) |
|
(162.6 |
) |
|
Gains (losses) on hedge of net investment in Canadian
subsidiaries |
|
(22.9 |
) |
|
44.8 |
|
|
50.6 |
|
|
(4.5 |
) |
|
Gains (losses) on hedge of net investment in European
operations |
|
(33.0 |
) |
|
24.0 |
|
|
(8.5 |
) |
|
6.4 |
|
|
Share of other comprehensive income (loss) of associates, excluding
net gains (losses) on defined benefit plans |
|
110.9 |
|
|
(63.4 |
) |
|
67.1 |
|
|
(66.8 |
) |
|
Other |
|
(4.8 |
) |
|
2.7 |
|
|
(5.2 |
) |
|
7.5 |
|
|
|
|
216.4 |
|
|
(166.2 |
) |
|
(48.1 |
) |
|
(220.0 |
) |
|
Net unrealized foreign currency translation losses on foreign
subsidiaries reclassified to net earnings |
|
— |
|
|
— |
|
|
— |
|
|
1.9 |
|
|
Net unrealized foreign currency translation (gains) losses on
associates reclassified to net earnings |
|
(0.1 |
) |
|
3.2 |
|
|
0.2 |
|
|
(1.6 |
) |
|
|
|
216.3 |
|
|
(163.0 |
) |
|
(47.9 |
) |
|
(219.7 |
) |
|
Items that will not be subsequently reclassified to net
earnings |
|
|
|
|
|
|
|
|
|
Net gains (losses) on defined benefit plans |
|
(9.9 |
) |
|
22.8 |
|
|
27.3 |
|
|
13.9 |
|
|
Share of net gains (losses) on defined benefit plans of
associates |
|
0.2 |
|
|
(2.1 |
) |
|
(1.1 |
) |
|
(4.0 |
) |
|
Other |
|
(1.2 |
) |
|
18.2 |
|
|
11.5 |
|
|
21.0 |
|
|
|
|
(10.9 |
) |
|
38.9 |
|
|
37.7 |
|
|
30.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
|
205.4 |
|
|
(124.1 |
) |
|
(10.2 |
) |
|
(188.8 |
) |
|
Comprehensive income |
|
1,324.9 |
|
|
1,062.9 |
|
|
2,934.8 |
|
|
3,231.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
1,225.2 |
|
|
976.8 |
|
|
2,730.9 |
|
|
2,917.1 |
|
|
Non-controlling interests |
|
99.7 |
|
|
86.1 |
|
|
203.9 |
|
|
314.2 |
|
|
|
|
1,324.9 |
|
|
1,062.9 |
|
|
2,934.8 |
|
|
3,231.3 |
|
SEGMENTED INFORMATION(US$ millions)
Third party gross premiums written, net premiums
written and combined ratios (on an undiscounted and discounted
basis) for the property and casualty insurance and reinsurance
operations (excluding Life insurance and Run-off) in the third
quarters and first nine months ended September 30, 2024 and
2023 were as follows:
|
Gross Premiums Written |
|
Third quarter |
|
First nine months |
|
% change year-over-year |
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Third quarter |
|
First nine months |
|
Northbridge |
|
644.5 |
|
613.2 |
|
1,897.8 |
|
1,818.5 |
|
5.1 |
% |
|
4.4 |
% |
|
Crum & Forster |
|
1,626.5 |
|
1,442.6 |
|
4,343.3 |
|
3,921.4 |
|
12.7 |
% |
|
10.8 |
% |
|
Zenith National |
|
155.3 |
|
157.1 |
|
575.0 |
|
589.2 |
|
(1.1 |
)% |
|
(2.4 |
)% |
|
North American Insurers |
|
2,426.3 |
|
2,212.9 |
|
6,816.1 |
|
6,329.1 |
|
9.6 |
% |
|
7.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
|
1,671.8 |
|
1,623.2 |
|
5,697.4 |
|
5,379.0 |
|
3.0 |
% |
|
5.9 |
% |
|
Odyssey Group |
|
1,546.2 |
|
1,621.9 |
|
4,683.4 |
|
5,018.0 |
|
(4.7 |
)% |
|
(6.7 |
)% |
|
Brit(1) |
|
888.8 |
|
923.5 |
|
2,843.8 |
|
2,932.4 |
|
(3.8 |
)% |
|
(3.0 |
)% |
|
Global Insurers and Reinsurers |
|
4,106.8 |
|
4,168.6 |
|
13,224.6 |
|
13,329.4 |
|
(1.5 |
)% |
|
(0.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Insurers and Reinsurers(2) |
|
1,704.8 |
|
848.1 |
|
5,046.8 |
|
2,652.5 |
|
101.0 |
% |
|
90.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty insurance and
reinsurance(2) |
|
8,237.9 |
|
7,229.6 |
|
25,087.5 |
|
22,311.0 |
|
13.9 |
% |
|
12.4 |
% |
|
Net Premiums Written |
|
Third quarter |
|
First nine months |
|
% change year-over-year |
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Third quarter |
|
First nine months |
|
Northbridge |
|
541.2 |
|
519.8 |
|
1,673.8 |
|
1,588.4 |
|
4.1 |
% |
|
5.4 |
% |
|
Crum & Forster |
|
1,254.1 |
|
1,124.7 |
|
3,289.6 |
|
2,965.0 |
|
11.5 |
% |
|
10.9 |
% |
|
Zenith National |
|
159.8 |
|
162.8 |
|
582.9 |
|
601.6 |
|
(1.8 |
)% |
|
(3.1 |
)% |
|
North American Insurers |
|
1,955.1 |
|
1,807.3 |
|
5,546.3 |
|
5,155.0 |
|
8.2 |
% |
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
|
1,127.9 |
|
1,105.0 |
|
4,119.8 |
|
3,878.7 |
|
2.1 |
% |
|
6.2 |
% |
|
Odyssey Group |
|
1,512.8 |
|
1,566.2 |
|
4,434.8 |
|
4,578.1 |
|
(3.4 |
)% |
|
(3.1 |
)% |
|
Brit(1) |
|
802.9 |
|
780.6 |
|
2,369.1 |
|
2,296.0 |
|
2.9 |
% |
|
3.2 |
% |
|
Global Insurers and Reinsurers |
|
3,443.6 |
|
3,451.8 |
|
10,923.7 |
|
10,752.8 |
|
(0.2 |
)% |
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Insurers and Reinsurers(2) |
|
1,021.7 |
|
578.8 |
|
3,041.3 |
|
1,683.9 |
|
76.5 |
% |
|
80.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty insurance and
reinsurance(2) |
|
6,420.4 |
|
5,837.9 |
|
19,511.3 |
|
17,591.7 |
|
10.0 |
% |
|
10.9 |
% |
|
Combined Ratios |
|
Undiscounted |
|
Discounted |
|
|
|
Third quarter |
|
First nine months |
|
Third quarter |
|
First nine months |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Northbridge |
|
94.0 |
% |
|
88.7 |
% |
|
91.2 |
% |
|
90.9 |
% |
|
87.5 |
% |
|
79.1 |
% |
|
82.4 |
% |
|
80.3 |
% |
|
Crum & Forster |
|
95.7 |
% |
|
104.8 |
% |
|
95.8 |
% |
|
98.3 |
% |
|
89.8 |
% |
|
95.9 |
% |
|
87.0 |
% |
|
88.7 |
% |
|
Zenith National |
|
96.6 |
% |
|
92.8 |
% |
|
98.2 |
% |
|
96.2 |
% |
|
88.3 |
% |
|
84.0 |
% |
|
88.2 |
% |
|
86.6 |
% |
|
North American Insurers |
|
95.3 |
% |
|
98.3 |
% |
|
94.6 |
% |
|
95.8 |
% |
|
88.9 |
% |
|
89.4 |
% |
|
85.7 |
% |
|
85.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
|
88.5 |
% |
|
89.3 |
% |
|
91.0 |
% |
|
90.6 |
% |
|
79.0 |
% |
|
76.7 |
% |
|
79.2 |
% |
|
74.1 |
% |
|
Odyssey Group |
|
93.8 |
% |
|
94.7 |
% |
|
93.2 |
% |
|
95.1 |
% |
|
81.8 |
% |
|
82.2 |
% |
|
81.9 |
% |
|
82.3 |
% |
|
Brit(1) |
|
94.2 |
% |
|
94.0 |
% |
|
92.3 |
% |
|
93.2 |
% |
|
77.5 |
% |
|
81.4 |
% |
|
73.0 |
% |
|
75.3 |
% |
|
Global Insurers and Reinsurers |
|
92.0 |
% |
|
92.7 |
% |
|
92.2 |
% |
|
93.2 |
% |
|
79.8 |
% |
|
80.0 |
% |
|
79.0 |
% |
|
77.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Insurers and Reinsurers |
|
98.5 |
% |
|
98.5 |
% |
|
97.9 |
% |
|
96.8 |
% |
|
88.0 |
% |
|
86.9 |
% |
|
90.1 |
% |
|
85.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty insurance and
reinsurance |
|
93.9 |
% |
|
95.0 |
% |
|
93.8 |
% |
|
94.3 |
% |
|
83.9 |
% |
|
83.6 |
% |
|
83.0 |
% |
|
81.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excluding Ki Insurance, gross premiums
written increased by 0.6% and 0.2% in the third quarter and first
nine months of 2024 and net premiums written increased by 4.0% and
increased by 2.0% in the third quarter and first nine months of
2024. Excluding Ki Insurance, the undiscounted combined ratios were
91.8% and 91.6% in the third quarter and first nine months of 2024
and 92.4% and 93.1% in the third quarter and first nine months of
2023 (discounted combined ratios of 75.1% and 70.3% in the third
quarter and first nine months of 2024 and 76.6% and 73.6% in the
third quarter and first nine months of 2023).(2) Excluding
Gulf Insurance's gross premiums written of $778.4 million and
$2,243.8 million in the third quarter and first nine months of 2024
and net premiums written of $420.5 million and $1,278.3 million in
the third quarter and first nine months of 2024, gross premiums
written in the International Insurers and Reinsurers reporting
segment increased by 9.2% and 5.7% in the third quarter and first
nine months of 2024 and net premiums written increased by 3.9% and
4.7% in the third quarter and first nine months of 2024, while
gross premiums written for the property and casualty insurance and
reinsurance operations increased by 3.2% and 2.4% in the third
quarter and first nine months of 2024 and net premiums written
increased by 2.8% and 3.6% in the third quarter and first nine
months of 2024.
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: our ability to complete acquisitions and other
strategic transactions on the terms and timeframes contemplated,
and to achieve the anticipated benefits therefrom; a reduction in
net earnings if our loss reserves are insufficient; underwriting
losses on the risks we insure that are higher than expected; the
occurrence of catastrophic events with a frequency or severity
exceeding our estimates; changes in market variables, including
unfavourable changes in interest rates, foreign exchange rates,
equity prices and credit spreads, which could negatively affect our
operating results and investment portfolio; 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; an
increase in the amount of capital that we and our subsidiaries are
required to maintain and 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, Bermuda, Canada or
other jurisdictions in which we operate; risks associated with
applicable laws and regulations relating to sanctions and corrupt
practices in foreign 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; operational, financial reporting and other risks
associated with IFRS 17; financial reporting risks relating to
deferred taxes associated with amendments to IAS 12; 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; risks associated
with the conflicts in Ukraine and Israel and the development of
other geopolitical events and economic disruptions worldwide; and
risks associated with recent events in the banking sector which
have elevated concerns among market participants about the
liquidity, default, and non-performance risk associated with banks,
other financial institutions and the financial services industry
generally. 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.sedarplus.ca. 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.
GLOSSARY OF NON-GAAP AND OTHER FINANCIAL
MEASURES
Management analyzes and assesses the underlying
insurance and reinsurance operations, and the financial position of
the consolidated company, through various measures and ratios.
Certain of the measures and ratios provided in this news release,
which have been used consistently and disclosed regularly in the
company's Annual Reports and interim financial reporting, do not
have a prescribed meaning under IFRS Accounting Standards and may
not be comparable to similar measures presented by other companies.
Those measures and ratios are described below.
Underwriting profit (loss) – A
measure of underwriting performance calculated as insurance service
result with the effects of discounting for net claims incurred in
the current period, changes in the risk adjustment and other, and
other insurance operating expenses all removed as shown in the
table on page 2 of this news release.
Operating income (loss) – This
measure is used by the company as a pre-tax performance measure of
operations that excludes net finance income (expense) from
insurance contracts and reinsurance contract assets held, net gains
(losses) on investments, interest expense and corporate overhead
and other, and that includes interest and dividends and share of
profit (loss) of associates, which the company consider to be more
predictable sources of investment income. Operating income (loss)
includes the insurance service result and other insurance operating
expenses of the insurance and reinsurance operations and the
revenue and expenses of the non-insurance companies. A
reconciliation of operating income (loss) to earnings before income
taxes, the most directly comparable IFRS measure, is presented in
the table on page 2 of this news release.
Adjusted operating income
(loss) – Calculated as the sum of underwriting profit
(loss), interest and dividends and share of profit of associates,
this measure is used in a similar manner to operating income
(loss).
Undiscounted combined ratio – A
traditional performance measure of underwriting results of property
and casualty companies, it is calculated by the company as
underwriting expense (comprised of losses on claims, commissions
and other underwriting expenses) expressed as a percentage of net
premiums earned. Net premiums earned is calculated as insurance
revenue less cost of reinsurance, adjusted for net commission
expense on assumed business and other. Underwriting expense is
calculated as insurance service expenses less recoveries of
insurance service expenses and other insurance operating expenses,
adjusted for the effects of discounting, risk adjustment and other.
The combined ratio is used by the company for comparisons to
historical underwriting results, to the underwriting results of
competitors and to the broader property and casualty industry, as
well as for evaluating the performance of individual operating
companies. The company may also refer to combined ratio
points, which expresses, on an undiscounted basis, a loss
that is a component of losses on claims, net, such as a catastrophe
loss or prior year reserve development, as a percentage of net
premiums earned during the same period.
Discounted combined ratio – A
performance measure of underwriting results under IFRS 17, it is
calculated by the company as insurance service expenses less
recoveries of insurance service expenses, expressed as a percentage
of net insurance revenue. Net insurance revenue is calculated as
insurance revenue less cost of reinsurance, both as presented in
the company's consolidated statements of earnings.
Book value per basic share –
The company considers book value per basic share a key performance
measure as one of the company’s stated objectives is to build long
term shareholder value by compounding book value per basic share by
15% annually over the long term. This measure is calculated by the
company as common shareholders' equity divided by the number of
common shares effectively outstanding.
Total debt to total capital ratio,
excluding non-insurance companies – The company uses this
ratio to assess the amount of leverage employed in its operations.
As the borrowings of the non-insurance companies are non-recourse
to the Fairfax holding company, this ratio excludes the borrowings
and non-controlling interests of the non-insurance companies in
calculating total debt and total capital, respectively.
|
|
September 30, 2024 |
|
December 31, 2023 |
|
|
As presented in the consolidated balance
sheet |
|
Adjust for consolidatednon-insurance
companies |
|
Excluding consolidatednon-insurance
companies |
|
As presented in the consolidated balance sheet |
|
Adjust for consolidatednon-insurance companies |
|
Excluding consolidatednon-insurance companies |
|
Total debt |
10,710.9 |
|
|
1,998.5 |
|
8,712.4 |
|
|
9,723.5 |
|
|
1,899.0 |
|
7,824.5 |
|
|
Total equity |
28,811.6 |
|
|
1,586.0 |
|
27,225.6 |
|
|
27,700.9 |
|
|
1,634.6 |
|
26,066.3 |
|
|
Total capital |
39,522.5 |
|
|
|
|
35,938.0 |
|
|
37,424.4 |
|
|
|
|
33,890.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt to total capital ratio |
27.1 |
% |
|
|
|
24.2 |
% |
|
26.0 |
% |
|
|
|
23.1 |
% |
Excess (deficiency) of fair value over
carrying value – These pre-tax amounts, while not included
in the calculation of book value per basic share, are regularly
reviewed by management as an indicator of investment performance
for the company's non-insurance associates and market traded
consolidated non-insurance subsidiaries that are considered to be
portfolio investments, which are Fairfax India, Thomas Cook India,
Dexterra Group, Boat Rocker and Farmers Edge (privatized in
2024).
In the determination of this non-GAAP
performance measure the fair value and carrying value of
non-insurance associates at September 30, 2024 were $8,302.4
and $7,030.8 (December 31, 2023 - $6,825.9 and $6,221.7),
which are the IFRS fair values and carrying values included in the
company's consolidated balance sheets as at September 30, 2024
and December 31, 2023. Excluded from this performance measure
are (i) insurance and reinsurance associates and (ii) associates
held by market traded consolidated non-insurance companies that are
already included in the carrying values of those companies.
The fair values of market traded consolidated
non-insurance companies are calculated as the company's pro rata
ownership share of each subsidiary's market capitalization as
determined by traded share prices at the financial statement date.
The carrying value of each subsidiary represents Fairfax's share of
that subsidiary's net assets, calculated as the subsidiary's total
assets less total liabilities and non-controlling interests. All
balances used in the calculation of carrying value are those
included in the company's consolidated balance sheets as at
September 30, 2024 and December 31, 2023.
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