Fairfax sees strong investment gains in 2008 Q3

Fairfax Financial Holdings Limited (TSX: FFH) reported a 2008 Q3 net profit of US$467.6 million, an increase from 2007 Q3’s profit of US$253.2 million.
These Q3 results include net gains on investments of US$856.8 million and US$274.6 million of net catastrophe losses, a Fairfax release says.
Investment gains, the company reported, were based on a net gain of US$651.8 million related to short equity and equity index positions and US$531.6 million related to credit default swaps. These were partially offset by US$176.7 million in other than temporary impairments on common stock and bond investments.
The combined ratio of the company’s insurance and reinsurance operations in 2008 Q3 was 115.5%. Its subsidiaries Northbridge Financial Corporation (TSX: NB) and Odyssey Re posted quarterly combined ratios of 113% (up from 2007 Q3’s 88.4%) and 113% (up from 97.8% over last year) respectively.
Northbridge reported net earnings of Cdn$74.6 million for 2008 Q3, an increase over the Cdn$53.9 million reported in the same period of last year. The commercial insurer also posted an underwriting loss of Cdn$37.8 million over 2007 Q3’s underwriting gain of Cdn$32.7 million.
Odyssey Re’s net income for the quarter was US$121.5 million, compared to US$112.1 million in the same period of last year.
The reinsurer’s gross premiums written for 2008 Q3 were US$656.7 million, an increase of 3.3% compared to US$635.8 million for 2007.