Fairfax Financial Holdings has reported fiscal year 2022 net earnings of $1,147.2 million, compared to 2021’s $3,401.1 million.
However, gross premiums written for the fiscal year rose to $27,912.6 million, from 2021’s $23,910.2 million.
For the fiscal year, net premiums written by its property and casualty (P&C) insurance and reinsurance operations increased by 23.1% to a record $21.9 billion, from $17.8 billion, while gross premiums written increased by 15.8%.
Additionally, the firm saw a strong operating income for its P&C insurance and reinsurance operations as it increased to $2,572.9 million from $1,567.0 million from 2021. This increase reflects an increased share of profit of associates, interest and dividends and underwriting profit.
Consolidated combined ratio of the firms P&C insurance and reinsurance operations was 94.7% for the fiscal year, which produced an underwriting profit of $1,105.3 million, despite significant catastrophe losses of $1,255.7 million. This is an improvement compared to 2021’s combined ratio of 95%, which produced an underwriting profit of $801.2 million.
Prem Watsa, Chairman and Chief Executive Officer, commented: “Our core underwriting performance continued to be very strong, with record underwriting profit of $1.1 billion and a combined ratio of 94.7% in 2022, reflecting growth in gross premiums written of 15.8% or $3.8 billion to $27.6 billion – essentially all organic. All of our major insurance and reinsurance companies had a combined ratio below 100%, despite significant catastrophe losses of $1.3 billion or 6.1 combined ratio points. Our operating income in 2022 was a record $2.6 billion reflecting increased interest and dividends, increased share of profit of associates and strong underwriting income.
“Our net losses on investments of $1.7 billion were principally comprised of mark-to-market losses on bonds of $1.0 billion due to the rising interest rate environment, the majority of which are expected to reverse over the short term, unrealized foreign exchange losses of $304.3 million and losses on equity exposures of $243.8 million. Gain on sale and consolidation of insurance subsidiaries of $1.2 billion represents the gain on the sale of our pet insurance business to JAB that closed and was accounted for in the fourth quarter.
“With the short duration of 1.6 years on our $38 billion fixed income portfolio (comprised of cash, short term investments and short-dated bonds), that portfolio decreased only 2.9% in 2022, while interest and dividend income increased significantly due to rising interest rates, from a run rate of approximately $530 million annually at the end of 2021 to a current run rate of approximately $1.5 billion annually.
“We ended 2022 in a strong financial position with $1.3 billion in cash and investments in the holding company, our debt to capital ratio at 26.2%, and no significant holding company debt maturities until 2024.”
