Canadian Underwriter

Fairfax 3-Q performance shows widening loss spiral

November 7, 2001   by Canadian Underwriter

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Toronto-based Fairfax Financial Holdings Ltd. (TSE: FFH) produced a net loss of $458.3 million for the third quarter of this year compared with a loss of $22.1 million for the same period a year prior. The latest quarterly loss translates to $35.23 a share against the $1.93 a share loss reported for the third quarter of 2000. The significant loss hike disclosed by the financial services holding company is mainly attributed to the impact of the September 11 terrorist attacks, and the need to strengthen claim reserves for its U.S. insurance operations relating to 2000 and other prior accident years. "reflecting unexpected claims development from pre-acquisition claims reserves," a company statement says. Fairfax’s after-tax loss resulting from the World Trade Center terrorist attacks was $131.1 million.
Revenue growth remained almost static for the latest quarterly reporting period, as well as for the nine-month period to end September. Revenue for the nine months of this year amounted to $4.39 billion compared with $4.36 billion for the same period in 2000. However, for the 2001 nine-month period, Fairfax produced a net loss of $381.4 million against net earnings of $97.4 million for the same period a year prior.

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