Canadian Underwriter

Fairfax’s reinsurance operation Odyssey Re feels Sept. 11 bite

November 7, 2001   by Canadian Underwriter

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New York-based Odyssey Re Holdings Corp. (TSE: ORH) a subsidiary of the Fairfax Financial Holdings group revealed a third quarter net loss for this year of US$41.9 million (equal to a loss of 64c a share) compared with net income of US$14.6 million reported for the same period in 2000.
The negative earnings performance occurred as a result of several catastrophes including the chemical plant explosion in Toulouse, France, and weather damage caused by Typhoon Nari and Hurricane Juliette. The terrorist attacks of September 11 played a significant role in weakening the reinsurer’s financial performance for the 2001 third quarter, with the gross loss resulting from these events amounting to US$171 million, producing a taxed loss of US$52.5 million. These catastrophic events boosted the company’s combined ratio for the 2001 third quarter to 141.7% compared with a ratio of 111.5% reported at the end of September 2000. Excluding the impact of the terrorist attacks, Odyssey says that its combined ratio for the latest reporting period would have clocked in at 104.8%.
Odyssey delivered a net loss of US$1.3 million for the nine-month period to end September 2001 compared with net earnings of US$38.9 million for the same period a year prior. The company’s combined ratio for the latest nine-month reporting period came in at 116.2% against the 109.5% reported at the end of September 2000. Company CEO Andrew Barnard says, "The improvement in rates, terms and conditions prevalent prior to the World Trade Center tragedy will now be accelerated by the global shortage of capacity".

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