August 12, 2019 by Greg Meckbach
The hardening commercial insurance market has resulted in double-digit price increases for some of Fairfax Financial’s insurers, with rates in some lines increasing by nearly a third.
“Price increases are significant, some lines up as much as 30%,” said Paul Rivett, president of Toronto-based Fairfax Financial Holdings Ltd., on a recent conference call.
Rivett was commenting specifically on Allied World Assurance Company, in reply to a question from a stock and bond analyst.
Fairfax released Aug. 1 its Q2 financials, reporting net premiums written, company-wide, of US$3.35 billion in the second quarter, up 5% from US$3.18 billion during the second quarter of 2018.
“Our companies are continuing to see healthy hardening price increases across most lines of business in North America with the exception of workers compensation,” Rivett said of Fairfax’s insurance subsidiaries during the call.
In addition to Zug, Switzerland-based Allied World, insurers owned or controlled by Fairfax include the Stamford, Conn.-based Odyssey Group, London-based Brit, Morristown, N.J.-based Crum & Forster and Toronto-based Northbridge.
Measured in Canadian dollars, Northbridge’s net premiums written were up 17.6% from Q2 2018 to the latest quarter, said John Varnell, Fairfax Financial’s vice president of corporate development, during the call. This, Varnell said, “reflected increased renewal business and prices increases across the group.”
Northbridge ranked 12th in the Canadian property and casualty insurance industry – when measured by net premiums written in 2018 – in Canadian Underwriter’s recently-released 2019 Statistical Guide. Northbridge ranked eighth in aircraft and 10th in boiler and machinery.
Crum and Forster’s premiums were 17% higher in the latest quarter than in the second quarter of 2018, Rivett said Aug. 2.
Allied World’s net premiums written were up 4.5% (from US$628.5 million in Q2 2018 to US$656.5 million in the latest quarter) and Brit was “roughly flat” ($391.5 in the latest quarter compared to $387 million in Q2 2018).
In North America, Allied World writes special liability risks, including professional, environmental and directors and officers. It also writes reinsurance. Fairfax’s acquisition of a majority interest in Allied world – which closed in July, 2017 – was originally valued at US$5 billion.
Helping to finance the deal were Alberta Investment Management Corporation and Ontario Municipal Employees Retirement System (OMERS), each of whom got a minority stake at the time in Allied World.
Fairfax acquired the majority of Lloyd’s insurer Brit in 2015.
Of the US$3.3 billion in net premiums written that Fairfax brought in during the latest quarter, $856 million was from the Odyssey Group, $656.5 million was from Allied World, $600.3 million was from Crum & Forster, $391.5 million was from Brit and $383 million was from Northbridge. Fairfax owned several other insurers.
Outside of insurance, Fairfax’s holdings include Toys R Us Canada, Sporting Life, Golf Town, The Pickel Barrell and the majority of Recipe Unlimited Corp., whose brands include Harvey’s, Swiss Chalet, The Keg, New York Fries, St.-Hubert and Montana’s.