Fairfax Financial Holdings Limited: Financial Results for the Second Quarter
July 30 2020 - 5:02PM
Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces
net earnings of $434.9 million ($15.26 net earnings per diluted
share after payment of preferred share dividends) in the second
quarter of 2020 compared to net earnings of $494.3 million ($17.18
net earnings per diluted share after payment of preferred share
dividends) in the second quarter of 2019. Book value per basic
share at June 30, 2020 was $435.11 compared to $486.10 at
December 31, 2019 (a decrease of 8.3% adjusted for the $10 per
common share dividend paid in the first quarter of 2020).
"In the second quarter of 2020, all of our insurance companies
achieved a combined ratio below 100%, except for Brit. 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 $1.9 billion in
cash and investments in the holding company," said Prem Watsa,
Chair and Chief Executive Officer.
The table below presents the sources of the company's net
earnings (loss) in a format which the company has consistently used
as it believes it assists in understanding Fairfax:
|
Second quarter |
|
First six months |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
($ millions) |
Gross premiums written |
4,702.7 |
|
|
|
4,335.4 |
|
|
|
9,478.4 |
|
|
|
9,062.0 |
|
|
Net premiums written |
3,555.5 |
|
|
|
3,354.3 |
|
|
|
7,401.9 |
|
|
|
7,295.8 |
|
|
|
|
|
|
|
|
|
|
Underwriting profit
(loss) |
(13.3 |
) |
|
|
101.0 |
|
|
|
89.8 |
|
|
|
189.4 |
|
|
Interest and dividends -
insurance and reinsurance |
153.2 |
|
|
|
168.0 |
|
|
|
312.6 |
|
|
|
338.4 |
|
|
Share of profit (loss) of
associates - insurance and reinsurance |
(19.4 |
) |
|
|
61.0 |
|
|
|
(56.3 |
) |
|
|
48.9 |
|
|
Operating income - insurance
and reinsurance |
120.5 |
|
|
|
330.0 |
|
|
|
346.1 |
|
|
|
576.7 |
|
|
Run-off (excluding net gains
(losses) on investments) |
(15.5 |
) |
|
|
(12.8 |
) |
|
|
(38.3 |
) |
|
|
(30.8 |
) |
|
Non-insurance companies
(excluding net gains (losses) on investments) |
(80.3 |
) |
|
|
114.4 |
|
|
|
(114.3 |
) |
|
|
155.7 |
|
|
Interest expense |
(122.2 |
) |
|
|
(121.9 |
) |
|
|
(237.9 |
) |
|
|
(233.5 |
) |
|
Corporate overhead and other
income (expense) |
2.2 |
|
|
|
(32.3 |
) |
|
|
(249.9 |
) |
|
|
83.1 |
|
|
Net gains (losses) on
investments |
644.1 |
|
|
|
448.6 |
|
|
|
(895.4 |
) |
|
|
1,172.5 |
|
|
Gain on deconsolidation of
insurance subsidiary |
— |
|
|
|
— |
|
|
|
117.1 |
|
|
|
— |
|
|
Pre-tax income (loss) |
548.8 |
|
|
|
726.0 |
|
|
|
(1,072.6 |
) |
|
|
1,723.7 |
|
|
Recovery of (provision for)
income taxes |
(122.5 |
) |
|
|
(146.5 |
) |
|
|
109.8 |
|
|
|
(329.6 |
) |
|
Non-controlling interests |
8.6 |
|
|
|
(85.2 |
) |
|
|
138.4 |
|
|
|
(130.6 |
) |
|
Net earnings (loss)
attributable to shareholders of Fairfax |
434.9 |
|
|
|
494.3 |
|
|
|
(824.4 |
) |
|
|
1,263.5 |
|
|
Highlights for the second quarter of 2020 (with comparisons to
the second quarter of 2019 except as otherwise noted) include the
following:
- The consolidated combined ratio of the insurance and
reinsurance operations was 100.4%, producing an underwriting loss
of $13.3 million, compared to a combined ratio of 96.8% and an
underwriting profit of $101.0 million in 2019, primarily
reflecting 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 insurance and reinsurance
operations increased by 5.4% to $3,555.5 million from
$3,372.5 million.
- Operating income of the insurance and reinsurance operations
decreased to $120.5 million from $330.0 million, reflecting
COVID-19 losses of $308.1 million.
- Total COVID-19 losses in the first six months of 2020 of $392.4
million derived primarily from coverages related to business
interruption (approximately 46%, principally from international
business) and event cancellation (approximately 36%). Incurred but
not reported losses comprised approximately 70% of the total.
- Consolidated interest and dividends of $205.0 million decreased
from $221.6 million, primarily reflecting lower dividend income
earned on common stocks and lower interest income earned due to
sales and maturities of U.S. treasury bonds in the second half of
2019, partially offset by higher interest income earned on the
reinvestment of the U.S. treasury bond proceeds into higher
yielding, high quality corporate bonds and commercial paper.
- Consolidated share of loss of associates of $23.1 million
primarily reflected share of losses of the non-insurance associates
(principally Quess, Sanmar and Eurobank) from the economic effects
of COVID-19, partially offset by share of profit of RiverStone
Barbados, compared to share of profit of associates of $143.2
million in 2019 which primarily reflected a spin-off distribution
gain at IIFL Finance.
- Interest expense of $122.2 million (inclusive of $16.3 million
on accretion of lease liabilities) was primarily comprised of $74.4
million incurred on borrowings by the holding company and the
insurance and reinsurance companies and $31.5 million incurred on
borrowings by the non-insurance companies (which are non-recourse
to the holding company).
- At June 30, 2020 the company's insurance and reinsurance
companies held approximately $13.6 billion in cash and short dated
investments representing approximately 35% of portfolio
investments, comprised of $9.7 billion of subsidiary cash and
short-term investments and $3.9 billion of short-dated U.S.
treasuries.
- Net investment gains of $644.1 million consisted of the
following:
|
Second quarter of 2020 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
55.1 |
|
|
|
201.0 |
|
|
|
256.1 |
|
|
Short equity exposures |
— |
|
|
|
(96.6 |
) |
|
|
(96.6 |
) |
|
Net equity exposures |
55.1 |
|
|
|
104.4 |
|
|
|
159.5 |
|
|
Bonds |
69.2 |
|
|
|
412.6 |
|
|
|
481.8 |
|
|
Other |
(249.8 |
) |
|
|
252.6 |
|
|
|
2.8 |
|
|
|
(125.5 |
) |
|
|
769.6 |
|
|
|
644.1 |
|
|
|
|
|
|
|
|
|
First six months of 2020 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
320.9 |
|
|
|
(1,142.8 |
) |
|
|
(821.9 |
) |
|
Short equity exposures |
(248.1 |
) |
|
|
25.7 |
|
|
|
(222.4 |
) |
|
Net equity exposures |
72.8 |
|
|
|
(1,117.1 |
) |
|
|
(1,044.3 |
) |
|
Bonds |
110.4 |
|
|
|
297.4 |
|
|
|
407.8 |
|
|
Other |
(366.0 |
) |
|
|
107.1 |
|
|
|
(258.9 |
) |
|
|
(182.8 |
) |
|
|
(712.6 |
) |
|
|
(895.4 |
) |
|
- Net gains on bonds of $481.8 million primarily reflected a
tightening of corporate credit spreads subsequent to the global
economic disruption in March 2020 caused by the COVID-19 pandemic.
Net gains on long equity exposures of $256.1 million was primarily
comprised of unrealized appreciation of common stocks and
equity-related derivatives.
- At March 31, 2020 the company had drawn $1,770.0 million on its
credit facility, solely as a precaution, to support its insurance
and reinsurance companies should it be needed if the effects of the
COVID-19 pandemic continued for an extended period. During the
second quarter of 2020 and subsequent thereto, the company repaid
$800.0 million and $270.0 million respectively of that borrowing,
leaving $700.0 million borrowed under that facility currently.
- On April 29, 2020, the company completed an offering of
$650.0 million principal amount of 4.625% unsecured senior notes
due April 29, 2030 at par for net proceeds after commissions and
expenses of $645.0 million. The company used $500.0 million of the
net proceeds to partially repay the amount drawn on its credit
facility.
- During the second quarter of 2020, the company provided $633.7
million of cash and marketable securities in capital support,
primarily to its insurance and reinsurance operations to support
growth in a favourable pricing environment and to support
fluctuations in their investment portfolios from the economic
effects of COVID-19.
- Since mid-March 2020, the company has reinvested cash and short
term investments at its insurance and reinsurance operations
primarily into higher yielding investment grade corporate bonds
with an average maturity date of 4 years and average interest rates
of 4.1%, which will benefit interest income in the future. Up to
June 30, 2020, the company had purchased approximately $3.9 billion
of such bonds.
- Subsequent to June 30, 2020:
- On July 10, 2020 Fairfax Africa entered into a merger agreement
with Helios Holdings Limited ("Helios") pursuant to which Helios
will acquire a 45.9% voting and equity interest in Fairfax Africa
in exchange for the contribution of certain fee streams and be
appointed sole investment advisor to Fairfax Africa. Closing of the
transaction is expected to be in the third quarter of 2020, subject
to various conditions including regulatory and shareholder
approvals, and the acquisition of Fairfax Africa's 42.4% equity
interest in Atlas Mara by Fairfax for consideration of
approximately $40 million. Upon closing Fairfax Africa will be
renamed Helios Fairfax Partners Corporation and continue to be
listed on the Toronto Stock Exchange.
- The company held $1,888.8 million of cash and investments at
the holding company level ($1,873.4 million net of short sale and
derivative obligations) at June 30, 2020, compared to $975.5
million ($975.2 million net of short sale and derivative
obligations) at December 31, 2019.
- The company's total debt to total capital ratio, excluding
non-insurance companies, increased to 31.8% at June 30, 2020
from 24.5% at December 31, 2019, primarily reflecting the
$970.0 million drawn on the credit facility and decreased total
capital due to decreased common shareholders' equity.
- During the second quarter of 2020 the company purchased 246,443
subordinate voting shares for treasury and 174,905 for cancellation
at an aggregate cost of $115.0 million. From the fourth quarter of
2017 up to June 30, 2020, the company has purchased 1,061,165
subordinate voting shares for treasury and 846,887 subordinate
voting shares for cancellation at an aggregate cost of $823.3
million.
- At June 30, 2020, common shareholders' equity was
$11,458.7 million, or $435.11 per basic share, compared to
$13,042.6 million, or $486.10 per basic share, at December 31,
2019. The decrease in common shareholders' equity per basic share
was primarily due to the net loss attributable to shareholders of
Fairfax in the first half of 2020 and the payment in the first
quarter of the annual common share dividend of $275.7 million.
There were 26.5 million and 26.9 million weighted average common
shares effectively outstanding during the second quarters of 2020
and 2019 respectively. At June 30, 2020 there were 26,335,174
common shares effectively outstanding.
Unaudited consolidated balance sheet, earnings and comprehensive
income information, together with segmented premium and combined
ratio information, follow and form part of this news release.
In presenting the company’s results in this news release,
management has included operating income (loss), combined ratio and
book value per basic share measures. Operating income (loss) is
used in the company's segment reporting. The combined ratio is
calculated by the company as the sum of claims losses, loss
adjustment expenses, commissions, premium acquisition costs and
other underwriting expenses, expressed as a percentage of net
premiums earned. Book value per basic share is calculated by the
company as common shareholders' equity divided by the number of
common shares effectively outstanding.
As previously announced, Fairfax will hold a conference call to
discuss its second quarter 2020 results at 8:30 a.m. Eastern time
on Friday July 31, 2020. The call, consisting of a
presentation by the company followed by a question period, may be
accessed at 1 (888) 390-0867 (Canada or U.S.) or 1 (212) 547-0141
(International) with the passcode “FAIRFAX”. A replay of the call
will be available from shortly after the termination of the call
until 5:00 p.m. Eastern time on Friday, August 14, 2020. The
replay may be accessed at 1 (800) 568-5428 (Canada or U.S.) or 1
(402) 344-6795 (International).
Fairfax Financial Holdings Limited is a holding company which,
through its subsidiaries, is engaged in property and casualty
insurance and reinsurance and the associated investment
management.
For further information,
contact:
John VarnellVice President, Corporate Development(416) 367-4941
Certain statements contained herein may constitute
forward-looking statements and are made pursuant to the “safe
harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors which may cause the actual results, performance
or achievements of Fairfax to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, but
are not limited to: a reduction in net earnings if our loss
reserves are insufficient; underwriting losses on the risks we
insure that are higher or lower than expected; the occurrence of
catastrophic events with a frequency or severity exceeding our
estimates; changes in market variables, including interest rates,
foreign exchange rates, equity prices and credit spreads, which
could negatively affect our investment portfolio; risks associated
with the global pandemic caused by COVID-19, and the related global
reduction in commerce and substantial downturns in stock markets
worldwide; the cycles of the insurance market and general economic
conditions, which can substantially influence our and our
competitors' premium rates and capacity to write new business;
insufficient reserves for asbestos, environmental and other latent
claims; exposure to credit risk in the event our reinsurers fail to
make payments to us under our reinsurance arrangements; exposure to
credit risk in the event our insureds, insurance producers or
reinsurance intermediaries fail to remit premiums that are owed to
us or failure by our insureds to reimburse us for deductibles that
are paid by us on their behalf; our inability to maintain our long
term debt ratings, the inability of our subsidiaries to maintain
financial or claims paying ability ratings and the impact of a
downgrade of such ratings on derivative transactions that we or our
subsidiaries have entered into; risks associated with implementing
our business strategies; the timing of claims payments being sooner
or the receipt of reinsurance recoverables being later than
anticipated by us; risks associated with any use we may make of
derivative instruments; the failure of any hedging methods we may
employ to achieve their desired risk management objective; a
decrease in the level of demand for insurance or reinsurance
products, or increased competition in the insurance industry; the
impact of emerging claim and coverage issues or the failure of any
of the loss limitation methods we employ; our inability to access
cash of our subsidiaries; our inability to obtain required levels
of capital on favourable terms, if at all; the loss of key
employees; our inability to obtain reinsurance coverage in
sufficient amounts, at reasonable prices or on terms that
adequately protect us; the passage of legislation subjecting our
businesses to additional adverse requirements, supervision or
regulation, including additional tax regulation, in the United
States, Canada or other jurisdictions in which we operate; risks
associated with government investigations of, and litigation and
negative publicity related to, insurance industry practice or any
other conduct; risks associated with political and other
developments in foreign jurisdictions in which we operate; risks
associated with legal or regulatory proceedings or significant
litigation; failures or security breaches of our computer and data
processing systems; the influence exercisable by our significant
shareholder; adverse fluctuations in foreign currency exchange
rates; our dependence on independent brokers over whom we exercise
little control; impairment of the carrying value of our goodwill,
indefinite-lived intangible assets or investments in associates;
our failure to realize deferred income tax assets; technological or
other change which adversely impacts demand, or the premiums
payable, for the insurance coverages we offer; disruptions of our
information technology systems; and assessments and shared market
mechanisms which may adversely affect our insurance subsidiaries;
and adverse consequences to our business, our investments and our
personnel resulting from or related to the COVID-19 pandemic.
Additional risks and uncertainties are described in our most
recently issued Annual Report which is available at www.fairfax.ca
and in our Supplemental and Base Shelf Prospectus (under “Risk
Factors”) filed with the securities regulatory authorities in
Canada, which is available on SEDAR at www.sedar.com. Fairfax
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
securities law.
CONSOLIDATED BALANCE SHEETSas at June 30,
2020 and December 31, 2019 (unaudited - US$ millions)
|
|
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
|
|
Holding company cash and
investments (including assets pledged for short sale and derivative
obligations – $58.0; December 31, 2019 – $5.5) |
|
1,888.8 |
|
|
|
975.5 |
|
|
Insurance contract
receivables |
|
6,152.7 |
|
|
|
5,435.0 |
|
|
|
|
|
|
|
|
|
Portfolio investments |
|
|
|
|
|
|
Subsidiary cash and short term
investments (including restricted cash and cash equivalents –
$608.4; December 31, 2019 – $664.8) |
|
9,660.8 |
|
|
|
10,021.3 |
|
|
Bonds (cost $16,494.3;
December 31, 2019 – $15,353.9) |
|
17,028.1 |
|
|
|
15,618.1 |
|
|
Preferred stocks (cost $250.8;
December 31, 2019 – $241.3) |
|
550.0 |
|
|
|
578.2 |
|
|
Common stocks (cost $4,527.9;
December 31, 2019 – $4,158.2) |
|
3,769.2 |
|
|
|
4,246.6 |
|
|
Investments in associates
(fair value $3,669.0; December 31, 2019 – $4,521.7) |
|
4,684.7 |
|
|
|
4,360.2 |
|
|
Derivatives and other invested
assets (cost $1,030.8; December 31, 2019 – $1,168.7) |
|
745.8 |
|
|
|
759.1 |
|
|
Assets pledged for short sale
and derivative obligations (cost $212.4; December 31, 2019 –
$146.7) |
|
213.6 |
|
|
|
146.9 |
|
|
Fairfax India and Fairfax Africa
cash, portfolio investments and investments in associates (fair
value $3,021.5; December 31, 2019 – $3,559.6) |
|
2,206.1 |
|
|
|
2,504.6 |
|
|
|
|
38,858.3 |
|
|
|
38,235.0 |
|
|
|
|
|
|
|
|
|
Assets held for sale |
|
— |
|
|
|
2,785.6 |
|
|
Deferred premium acquisition
costs |
|
1,454.4 |
|
|
|
1,344.3 |
|
|
Recoverable from reinsurers (including recoverables on paid
losses – $672.0; December 31, 2019 – $637.3) |
|
9,938.9 |
|
|
|
9,155.8 |
|
|
Deferred income taxes |
|
568.5 |
|
|
|
375.9 |
|
|
Goodwill and intangible
assets |
|
5,990.7 |
|
|
|
6,194.1 |
|
|
Other assets |
|
5,730.6 |
|
|
|
6,007.3 |
|
|
Total assets |
|
70,582.9 |
|
|
|
70,508.5 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
4,819.1 |
|
|
|
4,814.1 |
|
|
Short sale and derivative obligations (including at the holding
company – $15.4; December 31, 2019 – $0.3) |
|
256.4 |
|
|
|
205.9 |
|
|
Liabilities associated with
assets held for sale |
|
— |
|
|
|
2,035.1 |
|
|
Insurance contract
payables |
|
3,046.2 |
|
|
|
2,591.0 |
|
|
Insurance contract
liabilities |
|
37,043.5 |
|
|
|
35,722.6 |
|
|
Borrowings – holding company
and insurance and reinsurance companies |
|
6,659.2 |
|
|
|
5,156.9 |
|
|
Borrowings – non-insurance
companies |
|
2,318.5 |
|
|
|
2,075.7 |
|
|
Total liabilities |
|
54,142.9 |
|
|
|
52,601.3 |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common shareholders’
equity |
|
11,458.7 |
|
|
|
13,042.6 |
|
|
Preferred stock |
|
1,335.5 |
|
|
|
1,335.5 |
|
|
Shareholders’ equity
attributable to shareholders of Fairfax |
|
12,794.2 |
|
|
|
14,378.1 |
|
|
Non-controlling interests |
|
3,645.8 |
|
|
|
3,529.1 |
|
|
Total equity |
|
16,440.0 |
|
|
|
17,907.2 |
|
|
|
|
70,582.9 |
|
|
|
70,508.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per basic
share |
|
$ |
435.11 |
|
|
|
$ |
486.10 |
|
|
CONSOLIDATED STATEMENTS OF EARNINGSfor the
three and six months ended June 30, 2020 and 2019(unaudited - US$
millions except per share amounts)
|
|
Second quarter |
|
|
First six months |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Income |
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
4,702.7 |
|
|
|
|
4,335.4 |
|
|
|
|
9,478.4 |
|
|
|
|
9,062.0 |
|
|
|
Net premiums written |
|
3,555.5 |
|
|
|
|
3,354.3 |
|
|
|
|
7,401.9 |
|
|
|
|
7,295.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums earned |
|
4,259.0 |
|
|
|
|
3,954.9 |
|
|
|
|
8,475.3 |
|
|
|
|
8,182.2 |
|
|
|
Premiums ceded to reinsurers |
|
(925.5 |
) |
|
|
|
(795.7 |
) |
|
|
|
(1,754.0 |
) |
|
|
|
(1,500.4 |
) |
|
|
Net premiums earned |
|
3,333.5 |
|
|
|
|
3,159.2 |
|
|
|
|
6,721.3 |
|
|
|
|
6,681.8 |
|
|
|
Interest and dividends |
|
205.0 |
|
|
|
|
221.6 |
|
|
|
|
422.9 |
|
|
|
|
457.5 |
|
|
|
Share of profit (loss) of associates |
|
(23.1 |
) |
|
|
|
143.2 |
|
|
|
|
(228.3 |
) |
|
|
|
265.5 |
|
|
|
Net gains (losses) on investments |
|
644.1 |
|
|
|
|
448.6 |
|
|
|
|
(895.4 |
) |
|
|
|
1,172.5 |
|
|
|
Gain on deconsolidation of insurance subsidiary |
|
— |
|
|
|
|
— |
|
|
|
|
117.1 |
|
|
|
|
— |
|
|
|
Other revenue |
|
905.6 |
|
|
|
|
1,468.7 |
|
|
|
|
2,086.6 |
|
|
|
|
2,496.6 |
|
|
|
|
|
5,065.1 |
|
|
|
|
5,441.3 |
|
|
|
|
8,224.2 |
|
|
|
|
11,073.9 |
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Losses on claims, gross |
|
2,968.7 |
|
|
|
|
2,613.9 |
|
|
|
|
5,752.5 |
|
|
|
|
5,683.2 |
|
|
|
Losses on claims, ceded to reinsurers |
|
(693.7 |
) |
|
|
|
(600.8 |
) |
|
|
|
(1,299.5 |
) |
|
|
|
(1,270.5 |
) |
|
|
Losses on claims, net |
|
2,275.0 |
|
|
|
|
2,013.1 |
|
|
|
|
4,453.0 |
|
|
|
|
4,412.7 |
|
|
|
Operating expenses |
|
621.0 |
|
|
|
|
610.5 |
|
|
|
|
1,276.5 |
|
|
|
|
1,212.3 |
|
|
|
Commissions, net |
|
559.7 |
|
|
|
|
535.2 |
|
|
|
|
1,117.7 |
|
|
|
|
1,064.0 |
|
|
|
Interest expense |
|
122.2 |
|
|
|
|
121.9 |
|
|
|
|
237.9 |
|
|
|
|
233.5 |
|
|
|
Other expenses |
|
938.4 |
|
|
|
|
1,434.6 |
|
|
|
|
2,211.7 |
|
|
|
|
2,427.7 |
|
|
|
|
|
4,516.3 |
|
|
|
|
4,715.3 |
|
|
|
|
9,296.8 |
|
|
|
|
9,350.2 |
|
|
|
Earnings (loss) before
income taxes |
|
548.8 |
|
|
|
|
726.0 |
|
|
|
|
(1,072.6 |
) |
|
|
|
1,723.7 |
|
|
|
Provision for (recovery of)
income taxes |
|
122.5 |
|
|
|
|
146.5 |
|
|
|
|
(109.8 |
) |
|
|
|
329.6 |
|
|
|
Net earnings
(loss) |
|
426.3 |
|
|
|
|
579.5 |
|
|
|
|
(962.8 |
) |
|
|
|
1,394.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
434.9 |
|
|
|
|
494.3 |
|
|
|
|
(824.4 |
) |
|
|
|
1,263.5 |
|
|
|
Non-controlling interests |
|
(8.6 |
) |
|
|
|
85.2 |
|
|
|
|
(138.4 |
) |
|
|
|
130.6 |
|
|
|
|
|
426.3 |
|
|
|
|
579.5 |
|
|
|
|
(962.8 |
) |
|
|
|
1,394.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share |
|
$ |
16.00 |
|
|
|
|
$ |
17.94 |
|
|
|
|
$ |
(31.76 |
) |
|
|
|
$ |
46.01 |
|
|
|
Net earnings (loss)
per diluted share |
|
$ |
15.26 |
|
|
|
|
$ |
17.18 |
|
|
|
|
$ |
(31.76 |
) |
|
|
|
$ |
44.17 |
|
|
|
Cash dividends paid
per share |
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
10.00 |
|
|
|
|
$ |
10.00 |
|
|
|
Shares outstanding
(000) (weighted average) |
|
26,487 |
|
|
|
|
26,899 |
|
|
|
|
26,645 |
|
|
|
|
26,964 |
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three and six months ended June 30, 2020 and 2019(unaudited
- US$ millions)
|
|
Second quarter |
|
|
First six months |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) |
|
426.3 |
|
|
|
|
579.5 |
|
|
|
|
(962.8 |
) |
|
|
|
1,394.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to net earnings
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized foreign currency translation gains (losses) on
foreign operations |
|
124.8 |
|
|
|
|
55.8 |
|
|
|
|
(459.4 |
) |
|
|
|
150.4 |
|
|
|
Gains (losses) on hedge of net investment in Canadian
subsidiaries |
|
(88.1 |
) |
|
|
|
(45.1 |
) |
|
|
|
103.3 |
|
|
|
|
(89.1 |
) |
|
|
Losses on hedge of net investment in European operations |
|
(19.1 |
) |
|
|
|
(55.0 |
) |
|
|
|
(1.6 |
) |
|
|
|
(39.8 |
) |
|
|
Share of other comprehensive income (loss) of associates, excluding
net gains on defined benefit plans |
|
(19.0 |
) |
|
|
|
18.7 |
|
|
|
|
(88.9 |
) |
|
|
|
(11.0 |
) |
|
|
Net unrealized foreign currency translation losses reclassified to
net earnings (loss) |
|
— |
|
|
|
|
— |
|
|
|
|
161.9 |
|
|
|
|
— |
|
|
|
|
|
(1.4 |
) |
|
|
|
(25.6 |
) |
|
|
|
(284.7 |
) |
|
|
|
10.5 |
|
|
|
Items that will not be reclassified to net earnings
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Net losses on defined benefit plans |
|
(27.1 |
) |
|
|
|
— |
|
|
|
|
(27.1 |
) |
|
|
|
— |
|
|
|
Share of net gains on defined benefit plans of associates |
|
1.9 |
|
|
|
|
3.2 |
|
|
|
|
11.2 |
|
|
|
|
18.5 |
|
|
|
|
|
(25.2 |
) |
|
|
|
3.2 |
|
|
|
|
(15.9 |
) |
|
|
|
18.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of income taxes |
|
(26.6 |
) |
|
|
|
(22.4 |
) |
|
|
|
(300.6 |
) |
|
|
|
29.0 |
|
|
|
Comprehensive income
(loss) |
|
399.7 |
|
|
|
|
557.1 |
|
|
|
|
(1,263.4 |
) |
|
|
|
1,423.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
399.7 |
|
|
|
|
455.9 |
|
|
|
|
(995.6 |
) |
|
|
|
1,269.1 |
|
|
|
Non-controlling interests |
|
— |
|
|
|
|
101.2 |
|
|
|
|
(267.8 |
) |
|
|
|
154.0 |
|
|
|
|
|
399.7 |
|
|
|
|
557.1 |
|
|
|
|
(1,263.4 |
) |
|
|
|
1,423.1 |
|
|
|
SEGMENTED INFORMATION (unaudited - US$
millions)
Net premiums written, net premiums earned and combined ratios
for the insurance and reinsurance operations (excluding Run-off) in
the second quarters and first six months ended June 30, 2020
and 2019 were as follows:
Net Premiums Written
|
|
Second quarter |
|
|
First six months |
|
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
Northbridge |
|
403.2 |
|
|
|
382.6 |
|
|
|
712.2 |
|
|
|
639.8 |
|
Odyssey Group |
|
935.4 |
|
|
|
856.4 |
|
|
|
1,799.7 |
|
|
|
1,654.9 |
|
Crum & Forster |
|
580.0 |
|
|
|
600.3 |
|
|
|
1,230.5 |
|
|
|
1,140.0 |
|
Zenith National |
|
115.8 |
|
|
|
154.0 |
|
|
|
370.0 |
|
|
|
427.1 |
|
Brit |
|
418.4 |
|
|
|
391.5 |
|
|
|
866.2 |
|
|
|
825.2 |
|
Allied World |
|
790.7 |
|
|
|
656.5 |
|
|
|
1,592.1 |
|
|
|
1,384.2 |
|
Fairfax Asia |
|
44.4 |
|
|
|
52.5 |
|
|
|
105.1 |
|
|
|
105.3 |
|
Insurance and Reinsurance - Other |
|
267.6 |
|
|
|
278.7 |
|
|
|
579.6 |
|
|
|
556.2 |
|
Insurance and reinsurance
operations |
|
3,555.5 |
|
|
|
3,372.5 |
|
|
|
7,255.4 |
|
|
|
6,732.7 |
|
Net Premiums Earned
|
|
Second quarter |
|
|
First six months |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
Northbridge |
|
328.7 |
|
|
|
297.3 |
|
|
|
661.9 |
|
|
|
578.8 |
|
Odyssey Group |
|
885.8 |
|
|
|
791.2 |
|
|
|
1,703.3 |
|
|
|
1,508.5 |
|
Crum & Forster |
|
559.2 |
|
|
|
529.4 |
|
|
|
1,161.9 |
|
|
|
1,028.4 |
|
Zenith National |
|
140.6 |
|
|
|
182.7 |
|
|
|
304.3 |
|
|
|
363.3 |
|
Brit |
|
422.5 |
|
|
|
416.6 |
|
|
|
819.9 |
|
|
|
807.0 |
|
Allied World |
|
681.8 |
|
|
|
626.4 |
|
|
|
1,284.9 |
|
|
|
1,191.2 |
|
Fairfax Asia |
|
56.3 |
|
|
|
47.6 |
|
|
|
111.9 |
|
|
|
93.1 |
|
Insurance and Reinsurance - Other |
|
258.6 |
|
|
|
254.7 |
|
|
|
545.3 |
|
|
|
498.7 |
|
Insurance and reinsurance
operations |
|
3,333.5 |
|
|
|
3,145.9 |
|
|
|
6,593.4 |
|
|
|
6,069.0 |
|
Combined Ratios
|
|
Second quarter |
|
|
First six months |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
Northbridge |
|
94.3 |
% |
|
99.1 |
% |
|
|
95.4 |
% |
|
|
99.4 |
% |
Odyssey Group |
|
99.8 |
% |
|
|
96.6 |
% |
|
|
99.2 |
% |
|
|
95.5 |
% |
Crum & Forster |
|
98.9 |
% |
|
|
97.5 |
% |
|
|
98.1 |
% |
|
|
97.6 |
% |
Zenith National |
|
94.6 |
% |
|
|
84.5 |
% |
|
|
91.0 |
% |
|
|
81.4 |
% |
Brit . |
|
114.9 |
% |
|
|
96.0 |
% |
|
|
107.3 |
% |
|
|
96.4 |
% |
Allied World |
|
98.0 |
% |
|
|
97.9 |
% |
|
|
96.3 |
% |
|
|
100.0 |
% |
Fairfax Asia |
|
99.4 |
% |
|
|
97.9 |
% |
|
|
101.0 |
% |
|
|
98.4 |
% |
Insurance and Reinsurance - Other |
|
99.3 |
% |
|
|
100.3 |
% |
|
|
98.3 |
% |
|
|
100.8 |
% |
Insurance and reinsurance
operations |
|
100.4 |
% |
|
|
96.8 |
% |
|
|
98.6 |
% |
|
|
96.9 |
% |
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