April 20, 2020 by Greg Meckbach
Northbridge Insurance’s premiums are up 20% compared to early 2019 and hard market conditions will continue, Fairfax Financial Holdings Ltd. officials said Thursday.
“The hard market conditions that we have been experiencing through 2019 and into the first quarter of 2020 will continue,” said Andy Barnard, president of Fairfax insurance Group, during the Toronto-based firm’s annual general meeting. “We are seeing continued very strong rate action, rate improvement in our major companies.”
Fairfax has not formally released its exact financial results for the three months ending Mar. 30, but Barnard did say Monday that Northbridge’s gross written premiums in 2020 Q1 will be up about 20% over the same period in 2019.
Related – Intact’s take on how COVID-19 could extend the hard market
For the most part, Fairfax attributes premium growth to commercial rate increases.
In addition to Northbridge, Allied World of Zug, Switzerland (of which Fairfax acquired the majority in 2017), also had double digit rate increases.
Odyssey Group’s premium increases are in the single digits, said Barnard.
“Clearly the impact of the coronavirus and the shutdown of the economy is another major variable, and we will see how that plays out. But as we look at our business today, things are continuing to look very strong in terms of market conditions.”
Fairfax-owned insurer Zenith National, based in California, will see a premium drop because it writes workers compensation in the United States, where total employment has dropped. With fewer workers to insure, less premium is coming in for Zenith in particular, Fairfax officials suggest.
Allied World is primarily a liability writer and the directors’ and officers’ line, as well as excess casualty, is recording “impressive growth” in premium, said Barnard.
Across all of its insurers, Fairfax will have 12% more gross written premiums in 2020 Q1 than the first quarter of 2019, said Prem Watsa, founder, chairman and CEO of Fairfax.
Because of the pandemic, almost 100% of Fairfax’s employees worldwide are working from home, Watsa said Thursday. The AGM was held by webcast, the first time in Fairfax’s 34-year history that it cancelled all in-person events at the AGM.
Before the pandemic, Watsa had never used Microsoft Teams, he said. Now he uses it every day.
In addition to its insurers, Fairfax has a number of holdings outside the P&C industry, including retailer Golf Town and a controlling interest in Vaughan, Ont.-based Recipe Unlimited, formerly known as Cara, the corporate owner of over a dozen Canadian big-name restaurants.
An investor asked about the impact of COVID-19 on Recipe, which includes Harvey’s, The Keg, Swiss Chalet, Milestone’s, Kelsey’s, Montana’s and New York Fries among others.
“They are picking up quite a bit from home delivery and pickup and waiting for the economy to get restarted,” said Watsa. “They will be fine. It’s no fun going through this, of course. It’s a difficult time to close all restaurants but the Canadian government has been very good in terms of the people who work in these restaurants and we think it’s only a matter of time before we get back to full operations.”
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