Re/insurance holding company Fairfax Financial has reported a $1.2 billion first quarter net loss, driven primarily by COVID-19 related unrealised losses on investments.
Despite significant net investment losses, the total of which stands at $1.5 billion for the quarter, Fairfax’s underwriting performance was strong, with its 96.8% re/insurance operations combined ratio producing an underwriting profit of $103.1 million.
This compares to a combined ratio of 97% and an underwriting profit of $88.4 million in 2019, and primarily reflects growth in net premiums earned and higher net favourable prior year reserve development, partially offset by COVID-19 related losses.
Net premiums written by the insurance and reinsurance operations increased by 10.1% to $3.7 billion from $3.3 billion.
Operating income of the insurance and reinsurance operations decreased modestly to $225.6 million from $246.7 million, primarily reflecting higher share of losses of associates, partially offset by higher underwriting profit.
“Despite these unprecedented turbulent times our insurance companies continued to have strong underwriting performance in the first quarter of 2020 with a consolidated combined ratio of 96.8% (after reflecting $84.3 million of COVID-19 losses), favourable reserve development, strong growth in gross premiums written of 11.8% and strong operating income of $225.6 million,” said Prem Watsa, Chairman and Chief Executive Officer.
“We remain focused on continuing to be soundly financed and have drawn on our credit facility solely to ensure that we maintain high levels of liquid assets during these uncertain times,”
“Fairfax had approximately $2.5 billion in cash and marketable securities in its holding company at March 31, 2020.”