Accounting changes impact Odyssey Re income

A change in accounting practices by Fairfax’s Odyssey Re Holdings Corp. (NYSE, TSX: ORH) has contributed to its first quarter 2003 income dropping 17%
Net income for the quarter was US$46.6 million, or US$0.72 per share, versus US$19.4 million, or US$0.30 per share in the first quarter of 2002. However, with a gain of US$36.9 million, or US$0.56 per share, as a result of the full amortization of negative goodwill as part of the accounting change, first quarter 2002 income was US$56.3 million. Earnings stated now are on a diluted basis.
After tax operating income for first quarter 2003 is US$21.7 million, or US$0.34 per share, versus US$18.9 million, or US$0.29 per share during the same period last year.
The company’s combined ratio stayed on par, at 98.95 for the most recent quarter, versus 98.8% the year prior. However, U.S. insurance results improved significantly to 92.9% from 114.5% over the same comparitive period.
Both premiums and investment results were up for the first quarter of this year over the same period last year. Gross premiums written were US$563.8 million (Q1 2002: $403.8 million), and net premiums written were US$489.9 million (Q1 2002: US$362.8 million). The company notes that all operations, the Americas, EuroAsia, London Market and U.S. insurance felt the impact of premium growth.
Total net investment results were up sharply in the first quarter 2003 to $70.7 million versus US$28.9 million in the same period last year. Net investment income was up only slightly to US$32.4 million for the most recent quarter from US$28.2 million a year prior. But net realized capital gains rose to US$38.3 million from US$0.7 million in first quarter 2002, largely as a result of the sale of fixed income securities.
The company paid a cash dividend of US$0.025 per share at the end of the quarter, for a total payout of US$1.6 million.