Fairfax reports nearly quadruples Q2 net income

Fairfax Financial Holdings (TSX: FFH) reported a net income of $83.3 million in 2011 Q2, marking an increase from 2010 Q2’s net income of $23.7 million.
The increase in earnings arose primarily from net gains on investments of $119.6 million during 2011 Q2, a vast improvement from the net losses on investments of $29.3 million during the same period of 2010.
The combined ratio of the company’s insurance and reinsurance operations was 100.5%, producing an underwriting loss of $6.1 million in 2011 Q2. In 2010 Q2, the company reported a consolidated combined ratio and underwriting profit of 99.2% and $8.7 million, respectively.
“Underwriting results in the second quarter of 2011 were negatively affected by $88.1 million of pre-tax catastrophe losses (net of reinsurance and reinstatement premiums) primarily related to U.S. tornado losses which increased the combined ratio by 6.9 points,” a Fairfax release says.
Northbridge, Fairfax’s Canadian commercial insurer, reported a combined ratio of 104.3% in 2011 Q2, a small decrease from 106.6% in 2010 Q2.
OdysseyRe, Fairfax’s reinsurance unit, reported a combined ratio of 93.1% in 2011 Q2, and 92.8% in 2010 Q2.
“Despite the challenging insurance industry and investment environment, during the second quarter we recorded good operating results and essentially maintained our common shareholders’ equity and book value per share,” said Prem Watsa, chairman and CEO of Fairfax.
“Excluding acquisitions, our consolidated premiums grew by 10% during the second quarter… The company continues to be soundly financed with cash and marketable securities at the holding company level in excess of $1 billion.”