Odyssey Exceeds ROE Target for 1-Q

Fairfax’s reinsurance operation, Odyssey Re Holdings Corp. (NYSE: ORH) posted a return on equity (ROE) of 17% for the first quarter of 2004. The reinsurer produced a taxed profit of US$59.0 million (US90 a share) for the first quarter of this year compared with the US$46.6 million (US72 a share) reported for the same period in 2003.

While realized gains were strong at US$22.6 million for the latest quarter (2003 1-Q: US$24.9 million), the company’s success came largely from strong underwriting performance. After-tax operating income rose year-on-year by 67% to US$36.3 million for the first quarter of this year (2003 1-Q: US$21.7 million) on a combined ratio of 95.0%, which shows a three percentage point improvement on the 98.9% ratio shown for the first quarter of 2003.

The company’s increased gross written premiums by 11.6% for the latest reporting period, with strong growth seen in Euro-Asia (51.8%), U.S. insurance (25.7%), and the London market (15.9%). Net written premiums in the first quarter of this year rose by 12.9% year-on-year to US$553.2 million (2003 1-Q: US$489.9 million). In total, revenue for the first quarter came in at US$616.6 million, up from the US$518.0 million reported for the first quarter of last year. Investment income was relatively stable at US$35.5 million, versus US$34.8 million a year ago. “Odyssey Re continues to produce solid results by executing well in both the underwriting and investment arenas,” says president Andrew Barnard. “Our annualized return on equity for the first quarter is 17%, exceeding our long term target of 15%.”