Fairfax Financial Holdings Limited (TSX and NYSE: FFH) reported net earnings of US$562.4 million for 2009 Q3, marking an increase from 2008 Q3’s net income of US$467.6 million.
The company cites the following factors that contributed to the year-over-year increase in net income:
• Improved underwriting profit at Fairfax’s insurance and reinsurance operations (compared to a significant underwriting loss in 2008 Q3 stemming from hurricane losses); and
• Increased interest and dividend income, partially offset by reduced net investment gains (US$797.8 million, compared to US$864.6 million of net gains on investments in 2008 Q3).
Northbridge, Fairfax’s Canadian insurance operations, reported a combined ratio of 103.5% in 2009 Q3, marking an improvement over 2008 Q3’s combined ratio of 109.3%.
Northbridge also reported a drop in net premiums earned, from US$279.8 million in 2008 Q3 to US$248.4 million in 2009 Q3.
Odyssey Re, one of Fairfax’s reinsurance units, reported a combined ratio of 96.9% in 2009 Q3, an improvement when compared to the 109.3% reported in 2008 Q3.
Odyssey Re also reported a decrease in net premiums earned in Q3, dropping from 2008 Q3’s US$545.4 million to 2009 Q3’s US$493.9 million.
“Our third quarter in 2009 was a key milestone in the history of Fairfax,” said Prem Watsa, chairman and CEO of Fairfax.
“Besides excellent results, we have now privatized OdysseyRe and we financed it by issuing US$1 billion of common stock. We have also now publicly issued 10-year bonds and preferred shares in Canada for the first time ever.”
Following the OdysseyRe privatization, Fairfax has more than US$1 billion in cash and marketable securities at the holding company level.