Fairfax reports drop in Q3 net income, attributes drop in investment income

Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) reported a drop in net income, from $562.4 million in 2009 Q3 to $219 million in 2010 Q3.
The company attributes the year-over-year decrease to lower net investment gains, reporting $68.1 million in 2010 Q3 and $797.8 million in 2009 Q3.
The consolidated combined ratio of the company’s insurance and reinsurance operations was 102.6%, producing an underwriting loss of $30.7 million in 2010 Q3. The marks a decrease from 2009 Q3’s combined ratio of 99.8% and underwriting income of 99.8%.
Northbridge, Fairfax’s Canadian commercial insurance unit, reported a slight increase in net premiums written, from $218.9 million in 2009 Q3 to $227 million in 2010 Q3.
Northbridge’s combined ratio deteriorated from 2009 Q3’s 103.5% to 105.4% in 2010 Q3.
Net premiums written for Odyssey Re, Fairfax’s reinsurance unit, were flat year-over-year, with $524 million reported in 2009 Q3 and $524.3 million reported in 2010 Q3.
Odyssey Re saw its combined ratio improve, from 96.9% in 2009 Q3 to 92.2% in 2010 Q3.
“We acquired 41.3% of Gulf Insurance Company, which has an insurance presence in seven countries across the Middle East and North Africa, for $217.1 million, and still ended the third quarter with $1.3 billion of cash and marketable securities at the holding company level,” said Prem Watsa, chairman and CEO of Fairfax. “Our financial position continues to be very strong as we manage through the prevailing soft insurance markets.”