Canadian Underwriter

Fairfax profits fall as Odyssey star rises (August 08, 2001)

August 8, 2001   by Canadian Underwriter

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In a strange twist, Canadian-based Fairfax Financial Holdings continues its downward slide as its reinsurance subisidiary, Odyssey Re, experiences phenomenal growth. In releasing second-quarter 2001 results, Fairfax acknowledges that the company’s profits fell 45%, down to $46 million as compared with %83.6 million for the same quarter last year.
The slump saw earnings per share drop to $3.27 from $5.95 for the same period in 2000. Looking over the first half of 2001, Fairfax profits have fallen 36%, to $76.96 million, down from $119.51 for the first half of 2000.
The company blames poor investment gains, including bonds held by its U.S. subsidiaries, and lower interest and dividend income for the lackluster results. One bright spot, however, is that the company’s combined ratio dropped to 109% for the half-year, down from 111%.
At the same time, subsidiary Odyssey Re provides the company with a boost. Introduction of Odyssey stock on the New York exchange in June brought in US$233.5 million. Odyssey also recently saw its rating from Standard and Poor’s increased to A-from BBB+.
In releasing its own second quarter results, Odyssey shows a whopping 110.6% increase in profits, to US$21.9 million from US$10.4 million in second-quarter 2000. This results in earnings of $0.33 per share. The company’s combined ratio also dropped dramatically, to 101.8% from 108.2% for the same period last year.

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