Fairfax Financial Holdings, the property and casualty insurer run by investment guru Prem Watsa, said on Thursday that its fourth-quarter loss widened by 56 percent due to catastrophe claims and losses on the company’s equity hedges.
The Toronto-based company lost $771.5 million, or $38.47 a share, in the fourth quarter of 2011. That compared with a year-before loss of $494.4 million, or $24.77 a share.
Net losses from investments rose to $914.9 million from $887.9 million, which Fairfax attributed to a “non-correlation between the performance of the company’s equities and its equity-related hedges”, which, Fairfax said, should reverse in future periods.
Watsa hedged the company’s equity position in 2010 and took investment losses in that year’s fourth-quarter because stock markets rose.
For the quarter, the insurer took an underwriting loss of $292.8 million due to higher claims. For the full-year, Fairfax took $1 billion in catastrophe losses related to events, which included the Japanese earthquake, flooding in Thailand, U.S. tornadoes, New Zealand earthquakes and Hurricane Irene.
Since taking over the company in 1985, Watsa has build a reputation as a shrewd contrarian investor by moves such as betting against the U.S. housing market in the last decade and reaping billions when the market collapsed.
Recently, he has taken a substantial position in Research In Motion and was appointed to the BlackBerry maker’s board last month as part of a front office shakeup in which co-CEOs Jim Balsillie and Mike Lazaridis stepped down.