Fairfax Financial Holdings Limited, the insurance and reinsurance holding company, has reported net earnings of $494.3 million for the second quarter of 2019, supported primarily by net investment gains of $448.6 million.
Earnings were up from just $63.1 million in Q2 2018, when Fairfax recorded a net loss of $58.2 million on its investments.
Underwriting profit from Fairfax’s insurance and reinsurance operations decreased slightly over the last quarter, slipping from $115.8 million in 2018 to $101.0 million this year.
Operating income, meanwhile, increased to $330.0 million, versus $237.3 last year, reflecting higher interest and dividends.
Fairfax’s re/insurance operations include Brit, Allied World, Northbridge, Odyssey Group, Crum & Forster, and Zenith National.
On a six-monthly basis, Fairfax earnings were also up significantly at $1.26 billion, compared with $747.4 million during the first half of 2018.
Again, investment gains were a major contributor, at $1.17 billion, while underwriting profit accounted for $189.4 million. Operating income came in at $576.7 million in H1 2019.
During Q2, the combined ratio of Fairfax’s insurance and reinsurance operations was 96.8%, compared with 96.1% in 2018, primarily reflecting lower net favourable prior year reserve development.
Net premiums written increased by 6.2% to $3.37 billion during this period, and by 13.7% to $7.30 billion for the first six months of the year.
“Our insurance companies continued to have strong underwriting performance in the second quarter and first half of 2019 with a second quarter consolidated combined ratio of 96.8%, and our operating income was excellent at $330 million,” said Prem Watsa, Chairman and Chief Executive Officer at Fairfax.
“Net gains on investments of $449 million included a gain of $171 million from the deconsolidation of Grivalia Properties upon its merger with Eurobank,” he explained. “We continue to be soundly financed, with no holding company debt maturities until 2021.”
Brit, like its parent company, recently reported a recovery in its profits during Q2, with growth primarily driven by strong underwriting results and an absence of loss creep on events from 2017 and 2018.
