(GuruFocus, May 1, 2009) Fairfax Financial Holdings Limited (FFH, Financial), the Canadian insurance company reported first quarter of 2009 results. Quarterly:
Commenting on the quarterly result, Chairman and CEO Prem Watsa said:
For a company whose book value was $278 per share as of December 31, 2008, a decline of $23 downwards and a consecutive $30 upwards swing are quite bumpy.
One of the stocks contributing to FFH’s equity portfolio turn around is USG Corp. GuruFocus reported that Prem Watsa and Warren Buffett were getting more shares of USG back in February. Then back in March, we reportedPrem Watsa bought 200,000 shares from the open market, bring the total holding to 7.31 million shares.
USG stock was at $7.61 per share as of March 31, 2009. On April 24, it closed at $13.68. The holding in USG alone contributed about $44 million in the Fairfax Holding’s book value, no small change for a company that has only less than 17 million shares outstanding.
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Company had a net loss of $60.4 million in the first quarter of 2009 ($3.55 per share and per diluted share) compared to net earnings of $631.8 million in the first quarter of 2008 ($34.72 per share, $33.78 per diluted share). The company's insurance and reinsurance operations generated increased underwriting profit and interest and dividend income in the first quarter of 2009 compared to the first quarter of 2008. The year-over-year decline in earnings primarily arose due to the significant net investment gains ($1,072.5 million) earned in the first quarter of 2008 compared to net losses on investments in the first quarter of 2009 (net losses of $153.0 million, principally due to the inclusion of $213.0 million of other than temporary impairments recorded on certain common stock and bond investments).
Commenting on the quarterly result, Chairman and CEO Prem Watsa said:
"We are pleased that, in a difficult environment, we have maintained our disciplined underwriting standards, and our insurance and reinsurance operations have produced a consolidated combined ratio of 98.7% in the first quarter," "As to our investments, our increased focus on high quality common stocks reflects our view that these should provide excellent returns over the long term, though the volatility of the markets may result in lumpy quarters and even years. Principally as a result of the lower market value of our investments at March 31, our book value declined by $23 per share during the first quarter. Yet if our investments were valued as of the end of last week (at April 24), then our book value, based on that factor alone, would have increased since March 31 in excess of $30 per share."
For a company whose book value was $278 per share as of December 31, 2008, a decline of $23 downwards and a consecutive $30 upwards swing are quite bumpy.
One of the stocks contributing to FFH’s equity portfolio turn around is USG Corp. GuruFocus reported that Prem Watsa and Warren Buffett were getting more shares of USG back in February. Then back in March, we reportedPrem Watsa bought 200,000 shares from the open market, bring the total holding to 7.31 million shares.
USG stock was at $7.61 per share as of March 31, 2009. On April 24, it closed at $13.68. The holding in USG alone contributed about $44 million in the Fairfax Holding’s book value, no small change for a company that has only less than 17 million shares outstanding.
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