Fairfax Financial Holdings says it saw a net loss of $75.1m in Q3 2022 against net earnings of $462.4m in the same period in 2021.
However, gross written premiums for the company in Q3 2022 reached $6,922.9m, up from $5,970.0m in Q3 2021. The firm said that this was an increase of 18.6%.
Prem Watsa, chairman and chief executive officer at the firm, said: “Our core underwriting performance in the third quarter of 2022 continued to be very strong, with growth in gross premiums written of 16.3% and net premiums written of 18.6%, primarily reflecting new business and continued incremental rate increases.
“Despite significant catastrophe losses of $803.3m or 15.0 combined ratio points in the quarter, our consolidated combined ratio was 100.3% for the quarter and 96.0% for the first nine months. Our operating income for the first nine months was a record $1.6bn reflecting increased interest and dividends, increased share of profit of associates, and strong underwriting income.”
The company said it had seen net losses on investments in the period totalling $519.1m. These were, it said, principally comprised of mark to market losses on bonds of $242.4m due to continued rising interest rates, losses on common stocks of $154.8m reflecting the 5% drop in the S&P 500 in the quarter and unrealized foreign exchange losses of $141.9m.
Watsa added: “With the short duration of 1.6 years on our $37bn fixed income portfolio, our fixed income portfolio only dropped 3.1% in the first nine months, while interest and dividend income increased significantly due to rising interest rates, from a run rate of approximately $530m annually at the end of 2021 to a current run rate of approximately $1.2bn annually. We continue to focus on being soundly financed and ended the quarter with approximately $0.9bn in cash and investments in the holding company, which does not include any proceeds from the sale of our pet insurance business which closed on October 31, 2022.”
In terms of its insurance and reinsurance subsidiaries, Brit saw a rise in gross written premiums for the quarter of more than 16% to $961 million, as the firm’s net premiums written spiked 20.4% to $847.7 million. Brit’s combined ratio for the quarter improved slightly, year-on-year, to 1117.4%.
Odyssey Group has recorded Q3 2022 gross written premium of $1.6 billion, reflecting growth of over 27%, as net premiums written within this business jumped by 32% to $1.5 billion. The firm’s combined ratio ended the quarter at 107.8%, compared with 109.5% a year earlier.
In today’s results announcement, Fairfax has also revealed that it increased its ownership interest in Allied World to 82.9% from 70.9% for total consideration of $733.5 million, inclusive of the fair value of a call option exercised and an accrued dividend paid, and recorded a loss in retained earnings of $228.1 million.