February 13, 2015 by Canadian Underwriter
Northbridge Insurance’s fourth-quarter premiums dropped 5.56% from 2013 to 2014 while its combined ratio deteriorated by 2.3 points, though its Toronto-based parent company, Fairfax Financial Holdings Ltd. – which had lost $564 million in 2013 – reported net income of $1.66 billion in 2014.
“Our results in 2014 were the best in our 29-year history, with record underwriting profit of $552 million” stated Prem Watsa, Fairfax’s chairman and chief executive officer, in a release Thursday. “We had a record combined ratio of 90.8%, with OdysseyRe at 84.7% and all our major insurance companies having combined ratios less than 100%.”
All figures are in United States dollars.
In addition to releasing its financial results for 2014, Fairfax Financial also noted Thursday it expects the acquisition of the general insurance business of Malaysian insurer MCIS to close by March 31.
Fairfax Financial’s Canadian insurance operations include Federated Insurance and Northbridge, whose net premiums earned dropped 5.6%, from $250 million in Q4 2013 to $236 million in the latest quarter. For the full year, Northbridge’s net premiums earned were $942 million last year, down 4.8% from $990 million in 2013.
Northbridge’s combined ratio in Q4 2014 was 92.7%, up 3.3 points from 90.4% during the same period in 2013. For all of 2014, Northbridge’s combined ratio improved 2.6 points, to 95.5%, from 98.2% for the 12 months ending Dec. 31, 2013.
For all of Fairfax’s insurance and reinsurance operations – excluding runoff – the combined ratio improved 2.8 points, from 89.1% in Q4 2013 to 86.3% in the latest quarter. For the full year, the combined ratio was 90.8% in 2014, a 1.9-point improvement from 92.7% in all of 2013.
Also for the entire company, Fairfax Financial reported revenue of $2.07 billion in the three months ending Dec. 31, up 23% from $1.68 billion in Q4 2013. Net earnings in the most recent quarter were $38 million, while Fairfax Financial essentially broke even (losing $1.8 million) in Q4 2013.
Company-wide, Fairfax reported gross premiums written of $1.78 billion in Q4 2014, up 6% from $1.68 billion in Q4 2013. GWP for the entire year was $7.46 billion last year, up 3.2% from $7.23 billion in 2013.
Fairfax Financial reported net losses on claims of $924 million in Q4 2014, up 11% from $831 million in 2013. For the full year, net losses on claims were $3.79 billion in 2014, up 3.3% from $3.67 billion in 2013.
Net premiums earned, company wide, were $1.605 billion in the latest quarter, up 2.2% from $1.57 billion in Q4 2013.
Of the NPE in Q4 2014, $527.3 million was in the United States, where Fairfax operates Zenith National Insurance, Crum & Forster, United States Fire Insurance Company, Seneca Insurance Company, The North River Insurance Company, First Mercury Insurance Company and American Underwriters Insurance Company.
OdysseyRe’s net premiums earned were essentially unchanged, from $585 million in the fourth quarter of 2013 to $586 million in Q4 2014.
OdysseyRe of Stamford, Conn., operates Odyssey Reinsurance Company, Hudson Insurance Company, Hudson Specialty Insurance Company, Hudson Excess Insurance Company, Clearwater Select Insurance Company and Newline, which is Lloyd’s Syndicate 1218.
OdysseyRe’s combined ratio improved to 75.8% in the most recent quarter, down 3.3 points from 79.1% in Q4 2013.
Fairfax is planning to expand its international operations.
On Dec. 16, 2014, the firm announced an acquisition agreement with QBE Insurance (Europe) Ltd., whereby Fairfax will gain QBE’s existing business and renewal rights in the Czech Republic, Hungary and Slovakia. Then on Thursday, Fairfax said it expects those QBE operations will be transferred to Fairfax by the third quarter of this year.
On Dec. 1, Fairfax announced its intent to acquire the general insurance business of MCIS of Malaysia, whose products include auto, property, liability, marine, engineering and performance bonds. That transaction is expected to close in the first quarter of 2015, Fairfax noted Thursday.
In addition to its insurance operations, Fairfax Financial has a controlling interest in a variety of other firms, such as Sporting Life Inc., Kitchen Stuff Plus Inc. and William Ashley China Corp.