Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces
fiscal year 2020 net earnings of $218.4 million ($6.29 net earnings
per diluted share after payment of preferred share dividends)
compared to fiscal year 2019 net earnings of $2,004.1 million
($69.79 net earnings per diluted share after payment of preferred
share dividends). Book value per basic share at December 31,
2020 was $478.33 compared to $486.10 at December 31, 2019 (an
increase of 0.6% adjusted for the $10 per common share dividend
paid in the first quarter of 2020).
"In 2020 all of our insurance and reinsurance companies except
Brit achieved a combined ratio below 100%. Our consolidated
combined ratio of 97.8% in 2020 included catastrophe losses of
$644.3 million or 4.7 combined ratio points and COVID-19 losses of
$668.7 million or 4.8 combined ratio points. Core underwriting
performance continued to be very strong with a combined ratio
excluding COVID-19 losses of 93.0%, continued favourable reserve
development and growth in gross premiums written of 12.5%,
resulting in operating income of $915.8 million despite the
catastrophe and COVID-19 losses.
"Our net losses on investments of approximately $1.5 billion at
March 31, 2020 reversed over the remainder of the year and we
finished 2020 with net gains of $313.1 million. We continue to
focus on being soundly financed and ended the year with
approximately $1.3 billion in cash and investments in the holding
company. We expect that by end of the first quarter, with the
closing of the RiverStone Barbados transaction described below, we
will have in excess of $1.0 billion of cash and investments in the
holding company, with our credit facility fully paid off.
"Throughout much of last year, I made public statements to the
effect that our belief was that Fairfax shares were trading in the
market at a ridiculously cheap price. Following our value investing
philosophy, since the latter part of 2020 we have purchased total
return swaps with respect to 1,407,864 subordinate voting shares of
Fairfax with a total market value at the time of those agreements
of $484.9 million ($344.45 (Cdn$443.93) per share)," said Prem
Watsa, Chairman and Chief Executive Officer.
The table below presents the sources of the company's net
earnings in a segment reporting format which the company has
consistently used as it believes it assists in understanding
Fairfax:
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
($ millions) |
Gross premiums written |
4,904.3 |
|
|
4,237.6 |
|
|
19,125.9 |
|
|
17,511.2 |
|
Net premiums written |
3,727.4 |
|
|
3,221.5 |
|
|
14,864.5 |
|
|
13,835.6 |
|
|
|
|
|
|
|
|
|
Underwriting profit |
166.8 |
|
|
123.8 |
|
|
309.0 |
|
|
394.5 |
|
Interest and dividends -
insurance and reinsurance |
120.3 |
|
|
155.5 |
|
|
560.6 |
|
|
657.0 |
|
Share of profit (loss) of
associates - insurance and reinsurance |
27.9 |
|
|
(28.6 |
) |
|
46.2 |
|
|
56.0 |
|
Operating income - insurance
and reinsurance |
315.0 |
|
|
250.7 |
|
|
915.8 |
|
|
1,107.5 |
|
Run-off (excluding net gains
(losses) on investments) |
(147.0 |
) |
|
(169.7 |
) |
|
(194.6 |
) |
|
(214.7 |
) |
Non-insurance companies
(excluding net gains (losses) on investments) |
(65.0 |
) |
|
(166.3 |
) |
|
(178.7 |
) |
|
(2.4 |
) |
Interest expense |
(117.1 |
) |
|
(117.0 |
) |
|
(475.9 |
) |
|
(472.0 |
) |
Corporate overhead and other
income (expense) |
15.5 |
|
|
1.0 |
|
|
(252.7 |
) |
|
98.1 |
|
Net gains on investments |
1,235.8 |
|
|
640.4 |
|
|
313.1 |
|
|
1,716.2 |
|
Gain on deconsolidation of
insurance subsidiary |
— |
|
|
— |
|
|
117.1 |
|
|
— |
|
Pre-tax income |
1,237.2 |
|
|
439.1 |
|
|
244.1 |
|
|
2,232.7 |
|
Recovery of (provision for)
income taxes |
(278.8 |
) |
|
63.6 |
|
|
(206.7 |
) |
|
(261.5 |
) |
Non-controlling interests |
(49.3 |
) |
|
169.3 |
|
|
181.0 |
|
|
32.9 |
|
Net earnings attributable to
shareholders of Fairfax |
909.1 |
|
|
672.0 |
|
|
218.4 |
|
|
2,004.1 |
|
Highlights for fiscal year 2020 (with comparisons to fiscal year
2019 except as otherwise noted) include the following:
- The consolidated combined ratio of
the insurance and reinsurance operations was 97.8%, producing an
underwriting profit of $309.0 million despite COVID-19 losses of
$668.7 million (primarily at Brit, Odyssey Group and Allied World,
and representing 4.8 combined ratio points) and catastrophe losses
of $644.3 million (representing 4.7 combined ratio points),
compared to a combined ratio of 96.9% and an underwriting profit of
$394.5 million in 2019. The insurance and reinsurance operations
continued to experience net favourable prior year reserve
development, with a benefit of $454.9 million or 3.3 combined ratio
points.
- Net premiums written by the
insurance and reinsurance operations increased by 11.0% to
$14,717.7 million from $13,261.1 million, while gross premiums
written increased by 12.5%.
- Float of the insurance and
reinsurance operations increased by 10.1% to $22,705.0 million at
December 31, 2020 from $20,631.1 million at December 31,
2019.
- Operating income of the insurance
and reinsurance operations decreased to $915.8 million from
$1,107.5 million, principally reflecting lower underwriting profit,
primarily as a result of COVID-19 losses of $668.7 million and
higher catastrophe losses, and lower interest and dividends.
- COVID-19 losses of the insurance and
reinsurance operations of $668.7 million derived primarily from
coverages related to business interruption (approximately 35%,
principally from international business) and event cancellation
(approximately 34%). Incurred but not reported losses comprised
approximately 51% of total COVID-19 losses.
- Operating losses of the
non-insurance companies of $178.7 million was primarily comprised
of losses, significantly COVID-19 related, from the Restaurants and
retail segment of $69.5 million, losses from Thomas Cook India of
$66.5 million and losses from the Other segment of $53.7 million
(principally losses of $110.1 million at Fairfax Africa,
partially offset by income at Dexterra Group and AGT).
- Consolidated interest and dividends
of $769.2 million decreased from $880.2 million, primarily
reflecting lower interest income earned, principally on U.S.
treasury bonds and cash and short term investments, partially
offset by higher interest income earned on high quality U.S.
corporate bonds.
- Consolidated share of loss of
associates of $112.8 million principally reflected impairment
losses of $240.3 million (principally related to investments in
Quess, Resolute, Atlas Mara and Astarta) and share of loss of
Sanmar of $48.6 million and Bangalore Airport of $30.5 million,
partially offset by share of profit of Atlas Corp. of $116.4
million and RiverStone Barbados of $113.0 million.
- Interest expense of $475.9 million
(inclusive of $62.8 million on accretion of lease liabilities) was
primarily comprised of $286.3 million incurred on borrowings by the
holding company and the insurance and reinsurance companies and
$126.8 million incurred on borrowings by the non-insurance
companies (which are non-recourse to the holding company).
- At December 31, 2020 the
company's insurance and reinsurance companies held approximately
$16.1 billion in cash and short-dated investments representing
approximately 38.3% of portfolio investments (net of derivative
obligations), comprised of $13.2 billion of subsidiary cash and
short-term investments and $2.9 billion of short-dated U.S.
treasuries.
- Net gains on investments of $313.1
million ($1,235.8 million in the fourth quarter) consisted of the
following:
|
Fourth quarter of 2020 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
21.4 |
|
|
1,159.8 |
|
|
1,181.2 |
|
Short equity exposures |
(376.6 |
) |
|
238.6 |
|
|
(138.0 |
) |
Net equity exposures |
(355.2 |
) |
|
1,398.4 |
|
|
1,043.2 |
|
Bonds |
(23.2 |
) |
|
135.0 |
|
|
111.8 |
|
Other |
(102.2 |
) |
|
183.0 |
|
|
80.8 |
|
|
(480.6 |
) |
|
1,716.4 |
|
|
1,235.8 |
|
|
Year ended December 31, 2020 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Long equity exposures |
392.9 |
|
|
(21.0 |
) |
|
371.9 |
|
Short equity exposures |
(703.9 |
) |
|
175.3 |
|
|
(528.6 |
) |
Net equity exposures |
(311.0 |
) |
|
154.3 |
|
|
(156.7 |
) |
Bonds |
102.7 |
|
|
459.5 |
|
|
562.2 |
|
Other |
(542.2 |
) |
|
449.8 |
|
|
(92.4 |
) |
|
(750.5 |
) |
|
1,063.6 |
|
|
313.1 |
|
- Net gains on bonds
of $562.2 million principally reflected unrealized appreciation of
high quality corporate bonds. Net losses on short equity exposures
of $528.6 million resulted from closing out the company's remaining
short equity total return swaps. Net losses on Other of $92.4
million primarily reflected the company's investment in U.S.
treasury bond forward contracts.
- At March 31, 2020 the company had
drawn $1,770.0 million on its credit facility as added liquidity
support for its insurance and reinsurance companies should it be
needed as a result of the effects of the COVID-19 pandemic. The
company subsequently repaid $1,070.0 million, leaving $700.0
million outstanding at December 31, 2020. The company expects that
by the end of the first quarter, with the closing of the RiverStone
Barbados transaction, it will have in excess of $1.0 billion of
cash and investments in the holding company, with its credit
facility fully paid off.
- During 2020, the company provided
$1,381.4 million of cash and marketable securities in capital
support to its subsidiaries, all to its insurance and reinsurance
companies to support growth in a favourable pricing environment and
to support fluctuations in their investment portfolios from the
economic effects of the COVID-19 pandemic.
- On December 8, 2020, Fairfax Africa
completed its transaction with Helios Holdings Limited and was
renamed Helios Fairfax Partners ("HFP"). The company deconsolidated
Fairfax Africa and commenced accounting for its interest in HFP as
an investment in associate, resulting in a loss of $61.5 million
that included recycled foreign currency translation losses of $26.9
million and a partial reversal of the initial impairment loss of
$164.0 million recorded in the third quarter of 2020 due to an
increase in the market traded share price of Fairfax Africa between
then and closing.
- On December 2, 2020 the company
entered into an agreement with CVC Capital Partners (“CVC”) whereby
CVC will acquire 100% of RiverStone Barbados Limited ("RiverStone
Barbados"). OMERS, the pension plan for Ontario’s municipal
employees, will sell its 40% joint venture interest in RiverStone
Barbados as part of the transaction. On closing the holding company
expects to receive consideration of approximately $730 million for
its 60% joint venture interest in RiverStone Barbados and a
contingent value instrument for potential future consideration of
up to $235.7 million. Closing of the transaction is subject to
various regulatory approvals and is expected to occur in the first
quarter of 2021. Pursuant to the agreement with CVC, prior to
closing the company entered into an arrangement with RiverStone
Barbados to purchase (unless sold earlier) certain investments
owned by RiverStone Barbados at a fixed price of approximately $1.2
billion prior to the end of 2022.
- On February 10, 2021 the company
entered into an agreement pursuant to which OMERS will acquire an
approximate 14% interest in Brit for cash proceeds of approximately
$375 million. The transaction is subject to customary closing
conditions, including regulatory approvals, and is expected to
close in the second quarter of 2021. After closing, the company
will retain the flexibility to repurchase OMERS’ interest in Brit
over time.
- On November 12, 2020 the company and
Allied World entered into an agreement to sell its majority
ownership interest in Vault Insurance, with Allied World to retain
a 10% stake in Vault following the sale. Scott Carmilani was
instrumental in creating and growing Vault and has pivoted from his
role with Fairfax to Chairman of the Board of Vault. We are very
grateful to Scott for all of his contributions to Fairfax,
especially at Allied World, a company which he led from being a
start-up to becoming an industry leading and highly successful
worldwide insurance and reinsurance business. Closing of the
transaction is subject to various regulatory approvals and is
expected to occur in the first quarter of 2021.
- The company held $1,252.2 million of
cash and investments at the holding company level ($1,229.4 million
net of derivative obligations) at December 31, 2020, compared
to $975.5 million at December 31, 2019.
- The company's total debt to total
capital ratio, excluding non-insurance companies, increased to
29.7% at December 31, 2020 from 24.5% at December 31,
2019, primarily reflecting the $700.0 million drawn on the credit
facility and the issuance of $650.0 million principal amount of
4.625% unsecured senior notes due April 29, 2030.
- During 2020 the company purchased
457,603 subordinate voting shares for treasury and 343,871 for
cancellation at an aggregate cost of $238.8 million. From the
fourth quarter of 2017 up to December 31, 2020, the company
has purchased 1,121,085 subordinate voting shares for treasury and
965,075 subordinate voting shares for cancellation at an aggregate
cost of $874.9 million.
- At December 31, 2020, common
shareholders' equity was $12,521.1 million, or $478.33 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 payment in the
first quarter of the annual common share dividend of $275.7 million
and unrealized foreign currency translation losses, partially
offset by net earnings attributable to shareholders of Fairfax of
$218.4 million.
There were 26.4 million and 26.9 million weighted average common
shares effectively outstanding during 2020 and 2019 respectively.
At December 31, 2020 there were 26,176,506 common shares
effectively outstanding.
Unaudited consolidated balance sheet, earnings and comprehensive
income information, together with segmented premium, combined
ratio, prior year reserve development and catastrophe and COVID-19
loss 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,
float 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. Float is calculated by the company as the sum of
insurance contract liabilities and insurance contract payables,
less the sum of insurance contract receivables, recoverable from
reinsurers and deferred premium acquisition costs. 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 2020 year-end results at 8:30 a.m. Eastern time on
Friday February 12, 2021. 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, February 26, 2021. The
replay may be accessed at 1 (800) 759-4964 (Canada or U.S.) or 1
(203) 369-3596 (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
Varnell |
|
Vice 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; 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 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.
Information onCONSOLIDATED BALANCE SHEETSas at
December 31, 2020 and December 31, 2019 (unaudited - US$
millions)
|
December 31, 2020 |
December 31, 2019 |
Assets |
|
|
|
Holding company cash and investments (including assets pledged for
derivative obligations – $79.5; December 31, 2019 – $5.5) |
1,252.2 |
|
|
975.5 |
|
Insurance contract receivables |
5,816.1 |
|
|
5,435.0 |
|
|
|
|
|
Portfolio investments |
|
|
|
Subsidiary cash and short term investments (including restricted
cash and cash equivalents – $751.9; December 31, 2019 –
$664.8) |
13,197.8 |
|
|
10,021.3 |
|
Bonds (cost $14,916.1; December 31, 2019 – $15,353.9) |
15,734.6 |
|
|
15,618.1 |
|
Preferred stocks (cost $268.3; December 31, 2019 – $241.3) |
605.2 |
|
|
578.2 |
|
Common stocks (cost $4,635.5; December 31, 2019 – $4,158.2) |
4,599.1 |
|
|
4,246.6 |
|
Investments in associates (fair value $4,154.3; December 31, 2019 –
$4,521.7) |
4,381.8 |
|
|
4,360.2 |
|
Investment in associate held for sale (fair value $729.5; December
31, 2019 – nil) |
729.5 |
|
|
— |
|
Derivatives and other invested assets (cost $944.4; December 31,
2019 – $1,168.7) |
812.4 |
|
|
759.1 |
|
Assets pledged for derivative obligations (cost $196.1; December
31, 2019 – $146.7) |
196.4 |
|
|
146.9 |
|
Fairfax India (and Fairfax Africa at December 31, 2019) cash,
portfolio investments and associates (fair value $2,791.0; December
31, 2019 – $3,559.6) |
1,851.8 |
|
|
2,504.6 |
|
|
42,108.6 |
|
|
38,235.0 |
|
|
|
|
|
Assets held for sale |
— |
|
|
2,785.6 |
|
Deferred premium acquisition costs |
1,543.7 |
|
|
1,344.3 |
|
Recoverable from reinsurers (including recoverables on paid losses
– $686.8; December 31, 2019 – $637.3) |
10,533.2 |
|
|
9,155.8 |
|
Deferred income tax assets |
713.9 |
|
|
375.9 |
|
Goodwill and intangible assets |
6,229.1 |
|
|
6,194.1 |
|
Other assets |
5,857.2 |
|
|
6,007.3 |
|
Total assets |
74,054.0 |
|
|
70,508.5 |
|
|
|
|
|
Liabilities |
|
|
|
Accounts payable and accrued liabilities |
4,996.1 |
|
|
4,814.1 |
|
Derivative obligations (including at the holding company – $22.8;
December 31, 2019 – $0.3) |
189.4 |
|
|
205.9 |
|
Liabilities associated with assets held for sale |
— |
|
|
2,035.1 |
|
Deferred income tax liabilities |
356.4 |
|
|
— |
|
Insurance contract payables |
2,964.0 |
|
|
2,591.0 |
|
Insurance contract liabilities |
39,206.8 |
|
|
35,722.6 |
|
Borrowings – holding company and insurance and reinsurance
companies |
6,614.0 |
|
|
5,156.9 |
|
Borrowings – non-insurance companies |
2,200.0 |
|
|
2,075.7 |
|
Total liabilities |
56,526.7 |
|
|
52,601.3 |
|
|
|
|
|
Equity |
|
|
|
Common shareholders’ equity |
12,521.1 |
|
|
13,042.6 |
|
Preferred stock |
1,335.5 |
|
|
1,335.5 |
|
Shareholders’ equity attributable to shareholders of Fairfax |
13,856.6 |
|
|
14,378.1 |
|
Non-controlling interests |
3,670.7 |
|
|
3,529.1 |
|
Total equity |
17,527.3 |
|
|
17,907.2 |
|
|
74,054.0 |
|
|
70,508.5 |
|
|
|
|
|
|
|
|
|
Book value per basic share |
$ |
478.33 |
|
|
$ |
486.10 |
|
Information onCONSOLIDATED STATEMENTS OF
EARNINGSfor the fourth quarters and years ended
December 31, 2020 and 2019(unaudited - US$ millions except per
share amounts)
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Income |
|
|
|
|
|
|
|
Gross premiums
written |
4,904.3 |
|
|
4,237.6 |
|
|
19,125.9 |
|
|
17,511.2 |
|
Net premiums
written |
3,727.4 |
|
|
3,221.5 |
|
|
14,864.5 |
|
|
13,835.6 |
|
|
|
|
|
|
|
|
|
Gross premiums
earned |
4,791.1 |
|
|
4,269.7 |
|
|
17,898.8 |
|
|
16,611.0 |
|
Premiums ceded to
reinsurers |
(1,095.5 |
) |
|
(987.3 |
) |
|
(3,910.1 |
) |
|
(3,381.3 |
) |
Net premiums
earned |
3,695.6 |
|
|
3,282.4 |
|
|
13,988.7 |
|
|
13,229.7 |
|
Interest and
dividends |
164.5 |
|
|
207.8 |
|
|
769.2 |
|
|
880.2 |
|
Share of profit (loss) of
associates |
64.7 |
|
|
(245.5 |
) |
|
(112.8 |
) |
|
169.6 |
|
Net gains on
investments |
1,235.8 |
|
|
640.4 |
|
|
313.1 |
|
|
1,716.2 |
|
Gain on deconsolidation of insurance
subsidiary |
— |
|
|
— |
|
|
117.1 |
|
|
— |
|
Other revenue |
1,417.5 |
|
|
1,647.9 |
|
|
4,719.6 |
|
|
5,537.1 |
|
|
6,578.1 |
|
|
5,533.0 |
|
|
19,794.9 |
|
|
21,532.8 |
|
Expenses |
|
|
|
|
|
|
|
Losses on claims,
gross |
3,521.1 |
|
|
3,475.6 |
|
|
12,234.8 |
|
|
11,758.9 |
|
Losses on claims, ceded to
reinsurers |
(1,015.9 |
) |
|
(1,311.8 |
) |
|
(2,910.3 |
) |
|
(3,070.8 |
) |
Losses on claims,
net |
2,505.2 |
|
|
2,163.8 |
|
|
9,324.5 |
|
|
8,688.1 |
|
Operating
expenses |
642.8 |
|
|
654.7 |
|
|
2,536.5 |
|
|
2,476.3 |
|
Commissions,
net |
620.7 |
|
|
582.0 |
|
|
2,355.0 |
|
|
2,206.8 |
|
Interest
expense |
117.1 |
|
|
117.0 |
|
|
475.9 |
|
|
472.0 |
|
Other expenses |
1,455.1 |
|
|
1,576.4 |
|
|
4,858.9 |
|
|
5,456.9 |
|
|
5,340.9 |
|
|
5,093.9 |
|
|
19,550.8 |
|
|
19,300.1 |
|
Earnings before income
taxes |
1,237.2 |
|
|
439.1 |
|
|
244.1 |
|
|
2,232.7 |
|
Provision for (recovery of) income
taxes |
278.8 |
|
|
(63.6 |
) |
|
206.7 |
|
|
261.5 |
|
Net
earnings |
958.4 |
|
|
502.7 |
|
|
37.4 |
|
|
1,971.2 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Shareholders of
Fairfax |
909.1 |
|
|
672.0 |
|
|
218.4 |
|
|
2,004.1 |
|
Non-controlling
interests |
49.3 |
|
|
(169.3 |
) |
|
(181.0 |
) |
|
(32.9 |
) |
|
958.4 |
|
|
502.7 |
|
|
37.4 |
|
|
1,971.2 |
|
|
|
|
|
|
|
|
|
Net earnings per
share |
$ |
34.28 |
|
|
$ |
24.62 |
|
|
$ |
6.59 |
|
|
$ |
72.80 |
|
Net earnings per diluted
share |
$ |
32.68 |
|
|
$ |
23.58 |
|
|
$ |
6.29 |
|
|
$ |
69.79 |
|
Cash dividends paid per
share |
$ |
— |
|
|
$ |
— |
|
|
$ |
10.00 |
|
|
$ |
10.00 |
|
Shares outstanding (000) (weighted
average) |
26,194 |
|
|
26,826 |
|
|
26,447 |
|
|
26,901 |
|
Information onCONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME for the fourth quarters and years ended
December 31, 2020 and 2019(unaudited - US$ millions)
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Net
earnings |
958.4 |
|
|
502.7 |
|
|
37.4 |
|
|
1,971.2 |
|
|
|
|
|
|
|
|
|
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 |
231.2 |
|
|
133.2 |
|
|
(139.7 |
) |
|
101.4 |
|
Losses on hedge of net investment in Canadian
subsidiaries |
(101.1 |
) |
|
(44.4 |
) |
|
(38.0 |
) |
|
(105.6 |
) |
Losses on hedge of net investment in European
operations |
(37.6 |
) |
|
(9.0 |
) |
|
(75.8 |
) |
|
(35.3 |
) |
Share of other comprehensive income (loss) of associates, excluding
net losses on defined benefit
plans |
66.4 |
|
|
24.2 |
|
|
67.4 |
|
|
(37.7 |
) |
Net unrealized foreign currency translation losses reclassified to
net earnings |
26.8 |
|
|
— |
|
|
188.7 |
|
|
— |
|
|
185.7 |
|
|
104.0 |
|
|
2.6 |
|
|
(77.2 |
) |
Items that will not be reclassified to net earnings
(loss) |
|
|
|
|
|
|
|
Net losses on defined benefit
plans |
(39.1 |
) |
|
(69.3 |
) |
|
(67.5 |
) |
|
(69.3 |
) |
Share of net losses on defined benefit plans of
associates |
(65.4 |
) |
|
(66.5 |
) |
|
(51.1 |
) |
|
(41.3 |
) |
|
(104.5 |
) |
|
(135.8 |
) |
|
(118.6 |
) |
|
(110.6 |
) |
|
|
|
|
|
|
|
|
Other comprehensive
income (loss), net of income
taxes |
81.2 |
|
|
(31.8 |
) |
|
(116.0 |
) |
|
(187.8 |
) |
Comprehensive income
(loss) |
1,039.6 |
|
|
470.9 |
|
|
(78.6 |
) |
|
1,783.4 |
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
Shareholders of
Fairfax |
900.3 |
|
|
638.3 |
|
|
103.0 |
|
|
1,857.7 |
|
Non-controlling
interests |
139.3 |
|
|
(167.4 |
) |
|
(181.6 |
) |
|
(74.3 |
) |
|
1,039.6 |
|
|
470.9 |
|
|
(78.6 |
) |
|
1,783.4 |
|
SEGMENTED INFORMATION (unaudited - US$
millions)
Gross premiums written, net premiums written and combined ratios
for the insurance and reinsurance operations (excluding Run-off) in
the fourth quarters and full years ended December 31, 2020 and 2019
were as follows:
Gross Premiums Written
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Northbridge |
499.7 |
|
|
409.5 |
|
|
1,735.2 |
|
|
1,521.5 |
|
Odyssey Group |
1,270.1 |
|
|
1,022.6 |
|
|
4,446.7 |
|
|
3,816.0 |
|
Crum &
Forster |
816.5 |
|
|
727.0 |
|
|
3,109.4 |
|
|
2,827.8 |
|
Zenith
National |
133.5 |
|
|
144.1 |
|
|
661.7 |
|
|
732.7 |
|
Brit |
539.5 |
|
|
552.5 |
|
|
2,424.4 |
|
|
2,293.5 |
|
Allied World |
1,156.4 |
|
|
915.4 |
|
|
4,680.7 |
|
|
3,860.3 |
|
Fairfax Asia |
93.8 |
|
|
109.3 |
|
|
424.7 |
|
|
438.3 |
|
Insurance and Reinsurance -
Other |
482.7 |
|
|
418.8 |
|
|
1,874.0 |
|
|
1,710.9 |
|
Insurance and reinsurance
operations |
4,992.2 |
|
|
4,299.2 |
|
|
19,356.8 |
|
|
17,201.0 |
|
Net Premiums Written
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Northbridge |
449.2 |
|
|
375.2 |
|
|
1,540.4 |
|
|
1,350.3 |
|
Odyssey Group |
1,020.6 |
|
|
883.7 |
|
|
3,789.6 |
|
|
3,393.8 |
|
Crum &
Forster |
654.6 |
|
|
593.2 |
|
|
2,543.0 |
|
|
2,331.5 |
|
Zenith
National |
129.8 |
|
|
141.3 |
|
|
646.1 |
|
|
720.8 |
|
Brit |
422.2 |
|
|
417.1 |
|
|
1,775.6 |
|
|
1,656.2 |
|
Allied World |
698.9 |
|
|
431.4 |
|
|
3,017.6 |
|
|
2,428.9 |
|
Fairfax Asia |
57.1 |
|
|
70.0 |
|
|
221.6 |
|
|
231.2 |
|
Insurance and Reinsurance -
Other |
294.7 |
|
|
298.4 |
|
|
1,183.8 |
|
|
1,148.4 |
|
Insurance and reinsurance
operations |
3,727.1 |
|
|
3,210.3 |
|
|
14,717.7 |
|
|
13,261.1 |
|
Combined Ratios
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Northbridge |
89.5 |
% |
|
89.4 |
% |
|
92.4 |
% |
|
96.2 |
% |
Odyssey Group |
81.9 |
% |
|
99.8 |
% |
|
94.7 |
% |
|
97.2 |
% |
Crum &
Forster |
94.7 |
% |
|
97.4 |
% |
|
97.5 |
% |
|
97.6 |
% |
Zenith
National |
92.9 |
% |
|
90.8 |
% |
|
91.9 |
% |
|
85.2 |
% |
Brit |
125.8 |
% |
|
91.4 |
% |
|
114.0 |
% |
|
96.9 |
% |
Allied World |
95.9 |
% |
|
93.6 |
% |
|
95.4 |
% |
|
97.5 |
% |
Fairfax Asia |
89.2 |
% |
|
95.4 |
% |
|
96.8 |
% |
|
97.0 |
% |
Insurance and Reinsurance -
Other |
101.5 |
% |
|
107.9 |
% |
|
99.5 |
% |
|
101.7 |
% |
Insurance and reinsurance
operations |
95.5 |
% |
|
96.2 |
% |
|
97.8 |
% |
|
96.9 |
% |
Prior year reserve development and current period catastrophe
and COVID-19 losses of the insurance and reinsurance operations
(excluding Run-off) in the fourth quarters and full years ended
December 31, 2020 and 2019 were as follows:
Net (Favourable) Adverse Prior Year Reserve
Development
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Northbridge |
(23.9 |
) |
|
(35.2 |
) |
|
(39.2 |
) |
|
(67.1 |
) |
Odyssey Group |
(128.4 |
) |
|
(144.0 |
) |
|
(219.5 |
) |
|
(229.6 |
) |
Crum &
Forster |
(1.1 |
) |
|
(1.5 |
) |
|
(5.2 |
) |
|
(6.2 |
) |
Zenith
National |
(11.7 |
) |
|
(6.7 |
) |
|
(74.1 |
) |
|
(82.1 |
) |
Brit |
(20.4 |
) |
|
(36.4 |
) |
|
(62.8 |
) |
|
(46.5 |
) |
Allied World |
20.2 |
|
|
(47.3 |
) |
|
(5.1 |
) |
|
32.0 |
|
Fairfax Asia |
(5.5 |
) |
|
(7.3 |
) |
|
(18.5 |
) |
|
(28.3 |
) |
Insurance and Reinsurance -
Other |
(8.7 |
) |
|
(16.4 |
) |
|
(30.5 |
) |
|
(52.0 |
) |
Insurance and reinsurance
operations |
(179.5 |
) |
|
(294.8 |
) |
|
(454.9 |
) |
|
(479.8 |
) |
Current Period Catastrophe and COVID-19
Losses
|
Fourth quarter |
|
Year ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Losses(1) |
|
Combinedratio
impact(2) |
|
Losses(1) |
|
Combinedratio impact(2) |
|
Losses(1) |
|
Combinedratio
impact(2) |
|
Losses(1) |
|
Combinedratio impact(2) |
Hurricane Laura |
36.4 |
|
|
1.0 |
|
|
— |
|
|
— |
|
|
148.7 |
|
|
1.1 |
|
|
— |
|
|
— |
|
Hurricane Sally |
59.9 |
|
|
1.6 |
|
|
— |
|
|
— |
|
|
69.9 |
|
|
0.5 |
|
|
— |
|
|
— |
|
Midwest Derecho |
8.8 |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
55.4 |
|
|
0.4 |
|
|
— |
|
|
— |
|
Typhoon Hagibis |
— |
|
|
— |
|
|
146.0 |
|
|
4.5 |
|
|
— |
|
|
— |
|
|
146.0 |
|
|
1.2 |
|
Typhoon Faxai |
— |
|
|
— |
|
|
54.7 |
|
|
1.7 |
|
|
— |
|
|
— |
|
|
76.1 |
|
|
0.6 |
|
Hurricane Dorian |
— |
|
|
— |
|
|
(9.3 |
) |
|
(0.3 |
) |
|
— |
|
|
— |
|
|
66.1 |
|
|
0.5 |
|
Other |
119.4 |
|
|
3.3 |
|
|
80.1 |
|
|
2.4 |
|
|
370.3 |
|
|
2.7 |
|
|
209.6 |
|
|
1.7 |
|
Total catastrophe losses |
224.5 |
|
|
6.1 |
|
|
271.5 |
|
|
8.3 |
|
|
644.3 |
|
|
4.7 |
|
|
497.8 |
|
|
4.0 |
|
COVID-19 losses |
133.1 |
|
|
3.6 |
|
|
— |
|
|
— |
|
|
668.7 |
|
|
4.8 |
|
|
— |
|
|
— |
|
|
357.6 |
|
|
9.7 |
|
|
271.5 |
|
|
8.3 |
|
|
1,313.0 |
|
|
9.5 |
|
|
497.8 |
|
|
4.0 |
|
___________
(1) Net of reinstatement
premiums.(2) Expressed in combined ratio
points.
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