Fairfax fixes U.S. accounting error; buys more shares in Torstar

Fairfax Financial Holdings Limited has restated audited financial statements in 2005 and parts of 2006 to correct a U.S. GAAP accounting error.
Also, it announced the acquisition of additional shares in Torstar Corporation, the parent company of the Toronto Star.
Fairfax is a financial services holding company. Through its subsidiaries, it is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management in both Canada and the United States.
Fairfax filed restated audited consolidated financial statements for the year ended Dec. 31, 2005 and related disclosures. The company said the new filings correct “a 2005 U.S. GAAP accounting error,” as described in a Nov. 2, 2006 news release.
In that release, the company notes:
“During its review in preparing the third quarter financial statements, management identified an error in the U.S. GAAP accounting for changes in the fair value attributed to embedded options in convertible bonds for the year ended December 31, 2005.
“The correction of this error will have no cumulative impact on U.S. GAAP shareholders’ equity as at Dec. 31, 2005 or on U.S. GAAP comprehensive income for the year ended Dec. 31, 2005, but will have the net effect of increasing the U.S. GAAP net loss for the year ended Dec. 31, 2005 by $26.8 million to $313.4 millionand increasing U.S. GAAP other comprehensive income for that year by the same $26.8 million amount.
“This correction will have no impact on any Canadian GAAP consolidated financial statements or any Canadian GAAP disclosures.”
On the Canadian front, the company announced, “Fairfax purchased, in the investment portfolios of its insurance subsidiaries, 354,000 Class B shares of Torstar Corporation,” bringing its total holdings in Torstar Corporation to 7.15 million Class B shares.
“The shares were purchased through the facilities of the Toronto Stock Exchange for investment purposes,” the company said in a press release. “Fairfax continually reviews its investment alternatives and may purchase additional shares of Torstar Corporation from time to time in accordance with applicable laws.”