Toronto-based Fairfax Financial Holdings Limited posted a third quarter loss of $127.7 million of losses after tax and minority interests, due primarily to Hurricanes Charley, Frances, Ivan and Jeanne.
Fairfax said that excluding these losses, which mainly affected its insurance and reinsurance companies, OdysseyRe (See related article) and Crum & Forster, it continues to “produce excellent underwriting performance.” It also stated that the losses had not “adversely affected the capital adequacy of any of these companies and will not require the provision of any funds by the holding company.”
Fairfax’ combined ratio from its insurance and reinsurance operations was 109.3 percent in the third quarter, and an even 100 percent for first nine months of 2004. But, if the hurricane related losses are excluded, the company posted a combined ratio of 90.0 percent and 93.5 percent respectively, “with every operating company producing a combined ratio excluding hurricane losses below 100 percent, compared to a combined ratio of those operations of 96.5 percent and 97.7 percent for the third quarter and first nine months respectively of 2003.”
The company also noted that at the end of the third quarter it “took another step towards simplifying its runoff structure when TIG agreed to commute a number of excess of loss reinsurance contracts aggregating $665 million of coverage. This commutation, which is subject to applicable regulatory approvals and is expected to be completed in the fourth quarter, resulted in a net after-tax loss taken in the third quarter of $57.9 million.”
The bulletin noted that Fairfax’ aggregate loss after tax and minority interests of $185.6 million, was due primarily to the hurricane losses and the TIG commutation. It also noted that this had “produced a net loss of $108.9 million ($8.08 per basic and diluted share) in the third quarter of 2004, compared to a net loss of $10.7 million ($1.02 per basic and $1.07 per diluted share) in 2003. Excluding the hurricanes and the TIG commutation, net earnings in the 2004 third quarter would have been $76.7 million.”
A detailed third quarter report can be accessed at the company’s Web site: www.fairfax.ca.
* The amounts noted are in U.S. dollars.
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