Canadian property & casualty re/insurance group Fairfax Financial fell to a $13.3 million underwriting loss in the second quarter, due in part to COVID-19 losses of $308.1 million.
In addition, Fairfax’s Q2 was dented by its subsidiary Brit registering a combined ratio of 114.9%, up from 96% in the prior year quarter.
The consolidated combined ratio of the insurance and reinsurance operations was 100.4%, compared to a combined ratio of 96.8% and an underwriting profit of $101.0 million in 2019.
The company attributed this to COVID-19 and higher current period catastrophe losses, partially offset by growth in net premiums earned and higher net favourable prior year reserve development.
Net premiums written by the re/insurance operations increased by 5.4% to $3.5 billion from $3.3 billion.
Operating income of the re/insurance operations decreased to $120.5 million from $330.0 million.
For the first half of 2020, total COVID-19 losses have reached $392.4 million, a figure derived primarily from coverages related to business interruption and event cancellation.
“In the second quarter of 2020, all of our insurance companies achieved a combined ratio below 100%, except for Brit,” said Prem Watsa, Fairfax’s Chair and Chief Executive Officer.
“Our consolidated combined ratio of 100.4% in the second quarter of 2020 included $308.1 million or 9.2 combined ratio points of COVID-19 losses.
“Core underwriting performance continues to be very strong with a combined ratio excluding COVID-19 losses of 91.2%, continued favourable reserve development and growth in gross premiums written of 8.4%, and operating income was $120.5 million despite the COVID-19 losses.
“We remain focused on continuing to be soundly financed and ended the quarter with approximately $1.9 billion in cash and investments in the holding company.”