Fairfax Financial Holdings (TSE:FFH)Â (FRFHF, Financial)Â released its third quarter earnings on Oct. 30. The firm had earnings of $461.2 million of $20.68 per share after payment of preferred dividends. This reflects an increase in investment gains and improvements in underwriting. Compared to the net loss of $571.7 million in the third quarter of 2013, or $29.02 net loss after payment of preferred dividends. Fairfax's book value increased in the third quarter to $403.76 per share compared to Dec. 2013 of $339.00, a 22.1% adjusted increase for the $10 dividend paid in the first quarter of 2014.
Chairman Of Fairfax Financial Prem Watsa (Trades, Portfolio) said: "Our companies had excellent underwriting performance in the third quarter and the first nine months of 2014, with consolidated combined ratios of 91.2% and 92.3% respectively. All of our major insurance companies again had combined ratios less than 100% in the quarter with OdysseyRe at 88.3% and Zenith at 83.8%. We have also realized gains from our equity and equity-related investments of $720 million over the first nine months of 2014. We are maintaining our defensive equity hedges as we remain concerned about the financial markets and the economic outlook. We continue to be soundly financed, with quarter-end cash and marketable securities in the holding company in excess of $1.4 billion."
Third Quarter Highlights:
- Fairfax Financial's combined ratio of insurance and reinsurance operation for the third quarter was 91.2%. Producing an underwriting profit of $136.2 million, that is compared to an 93% combined ratio and undewriting profit of $104 million in third quarter of 2013.
- The net premiums written by the firm for 2014 was unchanged from the third quarter of 2013.
- The insurance and reinsurance operations produced operating income of $231 million excluding net gains or losses on investments, compared to $160 million in 2013.
- The company had interest and dividends income of $73 million compared to $61 million in 2013
- Net investment gains were $493 million compared to 2013 net investment losses of $826 million.
- The company has total debt to total capital ratio of 25% compared to 26.1% in Dec. 2013.
- In August 2014, the company announced its agreement to acquire 100% of Pethealth Inc for a CAD$100 million.
Third Quarter Report: http://www.fairfax.ca/files/2014-Q3-Interim-Report-FINAL_v001_w6fw94.pdf
