Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces
net earnings of $1,068.9 million ($42.26 net earnings per diluted
share after payment of preferred share dividends) in the third
quarter of 2023 compared to net earnings of $499.4 million ($19.31
net earnings per diluted share after payment of preferred share
dividends) in the third quarter of 2022. Book value per basic share
at September 30, 2023 was $876.55 compared to $762.28 at
December 31, 2022 (an increase of 16.4% adjusted for the $10
per common share dividend paid in the first quarter of 2023).
"We continued to build on our outstanding first
half of 2023, with the third quarter producing adjusted operating
income of $967.2 million (or operating income of $1,424.4 million
including the benefit of discounting, net of a risk adjustment on
claims) from our property and casualty insurance and reinsurance
operations, reflecting strong core underwriting performance,
increased interest and dividends and favourable results from profit
of associates. We achieved an underwriting profit of $291.6 million
on an undiscounted basis and a consolidated combined ratio of 95.0%
for the quarter, reflecting significantly lower catastrophe losses
and excellent current accident year underwriting margins. Gross
premiums written grew by 5.0% and net premiums written grew by
4.8%, primarily reflecting new business and continued incremental
rate increases in certain lines of business.
"Net gains on investments of $56.0 million in
the quarter was principally comprised of mark to market gains on
common stocks of $273.3 million, which was largely offset by mark
to market losses on bonds of $196.7 million due to continued rising
interest rates.
"We remain focused on being soundly financed and
ended the quarter with approximately $1.2 billion in cash and
investments in the holding company," said Prem Watsa, Chairman and
Chief Executive Officer.
The table below presents the sources of the
company's net earnings in a format which the company has
consistently used as it believes it assists in understanding
Fairfax:
|
Third quarter |
|
First nine months |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
($ millions) |
Gross premiums written |
7,272.2 |
|
|
6,922.9 |
|
|
22,453.2 |
|
|
20,893.5 |
|
Net premiums written |
5,879.1 |
|
|
5,611.2 |
|
|
17,742.1 |
|
|
16,658.9 |
|
Net insurance revenue |
5,724.5 |
|
|
5,150.0 |
|
|
16,276.5 |
|
|
14,888.3 |
|
|
|
|
|
|
|
|
|
Sources of net
earnings |
|
|
|
|
|
|
|
Operating income - Property
and Casualty Insurance and Reinsurance: |
|
|
|
|
|
|
|
Insurance service result: |
|
|
|
|
|
|
|
North American Insurers |
186.4 |
|
|
246.2 |
|
|
711.4 |
|
|
718.5 |
|
Global Insurers and Reinsurers |
667.6 |
|
|
160.7 |
|
|
2,113.3 |
|
|
1,063.6 |
|
International Insurers and Reinsurers |
78.6 |
|
|
61.9 |
|
|
229.9 |
|
|
170.6 |
|
Insurance service result |
932.6 |
|
|
468.8 |
|
|
3,054.6 |
|
|
1,952.7 |
|
Other insurance operating expenses |
(183.8 |
) |
|
(164.9 |
) |
|
(575.3 |
) |
|
(519.2 |
) |
|
748.8 |
|
|
303.9 |
|
|
2,479.3 |
|
|
1,433.5 |
|
Interest and dividends |
453.7 |
|
|
200.5 |
|
|
1,172.6 |
|
|
466.6 |
|
Share of profit of associates |
221.9 |
|
|
241.5 |
|
|
608.2 |
|
|
557.0 |
|
Operating income - Property
and Casualty Insurance and Reinsurance |
1,424.4 |
|
|
745.9 |
|
|
4,260.1 |
|
|
2,457.1 |
|
Operating income - Life
insurance and Run-off |
33.0 |
|
|
56.1 |
|
|
42.7 |
|
|
162.6 |
|
Operating income -
Non-insurance companies |
125.9 |
|
|
125.6 |
|
|
162.2 |
|
|
160.2 |
|
Net finance income (expense) from insurance contracts and
reinsurance contract assets held |
(7.9 |
) |
|
422.9 |
|
|
(595.3 |
) |
|
1,572.0 |
|
Net gains (losses) on
investments |
56.0 |
|
|
(457.5 |
) |
|
485.1 |
|
|
(2,069.4 |
) |
Gain on sale of insurance subsidiary |
— |
|
|
— |
|
|
259.1 |
|
|
— |
|
Interest expense |
(124.8 |
) |
|
(114.4 |
) |
|
(379.5 |
) |
|
(327.1 |
) |
Corporate overhead and
other |
(15.3 |
) |
|
(19.1 |
) |
|
(29.4 |
) |
|
(78.2 |
) |
Earnings before income
taxes |
1,491.3 |
|
|
759.5 |
|
|
4,205.0 |
|
|
1,877.2 |
|
Provision for income
taxes |
(304.3 |
) |
|
(176.8 |
) |
|
(784.9 |
) |
|
(546.4 |
) |
Net
earnings |
1,187.0 |
|
|
582.7 |
|
|
3,420.1 |
|
|
1,330.8 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Shareholders of Fairfax |
1,068.9 |
|
|
499.4 |
|
|
3,053.3 |
|
|
1,056.1 |
|
Non-controlling interests |
118.1 |
|
|
83.3 |
|
|
366.8 |
|
|
274.7 |
|
|
1,187.0 |
|
|
582.7 |
|
|
3,420.1 |
|
|
1,330.8 |
|
The table below presents the insurance service
result for the property and casualty insurance and reinsurance
operations reconciled to underwriting profit (loss), a key
performance measure used by the company and the property and
casualty industry in which it operates. The reconciling adjustments
are (i) other insurance operating expenses as presented in the
consolidated statement of earnings, (ii) the effects of discounting
of losses and ceded losses on claims recorded in the period, and
(iii) the effects of the risk adjustment and other, which are
presented in insurance service expenses and recoveries of insurance
service expenses.
|
Third quarter |
|
First nine months |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
($ millions) |
Insurance service
result |
932.6 |
|
|
468.8 |
|
|
3,054.6 |
|
|
1,952.7 |
|
Other insurance operating expenses |
(183.8 |
) |
|
(164.9 |
) |
|
(575.3 |
) |
|
(519.2 |
) |
Discounting of losses and ceded losses on claims recorded in the
period |
(391.4 |
) |
|
(401.6 |
) |
|
(1,419.9 |
) |
|
(889.9 |
) |
Changes in the risk adjustment and other |
(65.8 |
) |
|
80.8 |
|
|
(116.5 |
) |
|
65.6 |
|
Underwriting profit
(loss) |
291.6 |
|
|
(16.9 |
) |
|
942.9 |
|
|
609.2 |
|
Interest and dividends |
453.7 |
|
|
200.5 |
|
|
1,172.6 |
|
|
466.6 |
|
Share of profit of
associates |
221.9 |
|
|
241.5 |
|
|
608.2 |
|
|
557.0 |
|
Adjusted operating income - Property and Casualty Insurance
and Reinsurance |
967.2 |
|
|
425.1 |
|
|
2,723.7 |
|
|
1,632.8 |
|
Highlights for the third quarter of 2023 (with
comparisons to the third quarter of 2022 except as otherwise noted,
and excluding the effects of IFRS 17 when discussing the combined
ratio and adjusted operating income) include the following:
- Net premiums
written by the property and casualty insurance and reinsurance
operations increased 4.8% to $5,837.9 million from
$5,573.1 million, while gross premiums written increased by
5.0%, primarily reflecting new business and continued incremental
rate increases in certain lines of business.
- The consolidated
combined ratio of the property and casualty insurance and
reinsurance operations was 95.0%, producing an underwriting profit
of $291.6 million, compared to a combined ratio of 100.3% and
an underwriting loss of $16.9 million in 2022, driven by
decreased catastrophe losses of $388.7 million or 6.7 combined
ratio points in the quarter, continued improvement in current
accident year underwriting margins from prudent underwriting and
continued growth in business volumes (net insurance revenue
increased by 11.3%).
- Adjusted
operating income of the property and casualty insurance and
reinsurance operations increased by 127.5% to $967.2 million from
$425.1 million, principally due to strong underwriting profit and
increased interest and dividends.
- Net finance
expense from insurance contracts and reinsurance contract assets
held of $7.9 million in 2023 reflected interest accretion resulting
from the unwinding of the effects of discounting associated with
net claim payments made, partially offset by the benefit of
increases in discount rates during the period due to continued
rising interest rates, compared to net finance income from
insurance contracts and reinsurance contract assets held of $422.9
million in 2022 which reflected the benefit of increases in
discount rates that was only partially offset by the interest
accretion.
- Consolidated
interest and dividends(1) increased significantly from $256.5
million to $512.7 million. At September 30, 2023 the company's
insurance and reinsurance companies held portfolio investments of
$56.8 billion (excluding Fairfax India's portfolio of $2.0
billion), of which $6.4 billion was in cash and short term
investments representing 11.2% of those portfolio investments.
During the first nine months of 2023 the company used cash and net
proceeds from sales and maturities of U.S. treasury and other
government short term investments and short-dated U.S. treasuries
to purchase $5.8 billion of U.S. treasuries with maturities between
3 to 5 years and $2.4 billion of U.S. treasuries with maturities
between 5 to 7 years, and to make net purchases of $2.1 billion of
short-dated first mortgage loans and $1.6 billion of corporate and
other bonds with maturities primarily between 2 to 5 years. These
actions should result in continued higher levels of interest income
for approximately the next 4 years.
- Consolidated
share of profit of associates of $291.5 million principally
reflected share of profit of $118.9 million from Eurobank, $45.5
million from Poseidon (formerly Atlas) and $20.5 million from
Stelco.
- Net gains on investments of $56.0
million consisted of the following:
|
|
|
|
|
|
|
Third quarter of 2023 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains (losses) |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Equity exposures |
67.9 |
|
|
205.4 |
|
|
273.3 |
|
Bonds |
(113.5 |
) |
|
(83.2 |
) |
|
(196.7 |
) |
Other |
(7.9 |
) |
|
(12.7 |
) |
|
(20.6 |
) |
|
(53.5 |
) |
|
109.5 |
|
|
56.0 |
|
(1) Comprised of interest and
dividends earned by the property and casualty insurance and
reinsurance operations of $453.7 million (2022 - $200.5 million),
with the remainder earned by life insurance and run-off,
non-insurance companies and corporate and other.
|
First nine months of 2023 |
|
($ millions) |
|
Realized gains (losses) |
|
Unrealized gains |
|
Net gains (losses) |
Net gains (losses) on: |
|
|
|
|
|
Equity exposures |
158.6 |
|
|
688.8 |
|
847.4 |
|
Bonds |
(517.9 |
) |
|
234.9 |
|
(283.0 |
) |
Other |
(122.0 |
) |
|
42.7 |
|
(79.3 |
) |
|
(481.3 |
) |
|
966.4 |
|
485.1 |
|
Net gains on equity exposures of $273.3 million
was primarily comprised of net gains on equity derivatives and
unrealized gains on common stocks, convertible bonds and
convertible preferred stocks. At September 30, 2023 the
company continued to hold equity total return swaps on 1,964,155
Fairfax subordinate voting shares with an original notional amount
of $732.5 million (Cdn$935.0 million) or $372.96 (Cdn$476.03) per
share, on which the company recorded $162.0 million of net gains in
the third quarter of 2023.
Net losses on bonds of $196.7 million was
principally comprised of net losses of $169.0 million on U.S.
treasuries.
- The company's
fixed income portfolio is conservatively positioned with
effectively 70% of the fixed income portfolio invested in
government bonds and 19% in high quality corporate bonds, primarily
short-dated.
- Excluding the
impact of Fairfax India’s performance fees to Fairfax (accruals of
$20.4 million in the third quarter of 2023 and $4.8 million in the
third quarter of 2022), which are offset upon consolidation,
operating income of the non-insurance companies increased to $146.3
million from $130.4 million, principally reflecting higher business
volumes, and continued stable results at Restaurants and
retail.
- Interest expense
of $124.8 million (inclusive of $12.1 million on leases) was
comprised (other than on leases) of $80.7 million incurred on
borrowings by the holding company and the insurance and reinsurance
companies and $32.0 million incurred on borrowings by the
non-insurance companies (which are non-recourse to the holding
company).
- At
September 30, 2023 the excess of fair value over carrying
value of investments in non-insurance associates and consolidated
non-insurance subsidiaries was $600.9 million.
- The company's
total debt to total capital ratio, excluding non-insurance
companies, decreased to 21.6% at September 30, 2023 compared
to 23.7% at December 31, 2022, principally reflecting
increased common shareholders' equity as a result of the strong net
earnings reported in the first nine months of 2023.
- During the first nine months of
2023 the company purchased 257,589 of its subordinate voting shares
for cancellation at an aggregate cost of $179.8 million.
There were 23.2 million and 23.6 million
weighted average common shares effectively outstanding during the
third quarters of 2023 and 2022 respectively. At September 30,
2023 there were 23,115,838 common shares effectively
outstanding.
Consolidated balance sheet, earnings and
comprehensive income information, together with segmented premium
and combined ratio information, follow and form part of this news
release.
As previously announced, Fairfax will hold a
conference call to discuss its third quarter 2023 results at 8:30
a.m. Eastern time on Friday November 3, 2023. The call,
consisting of a presentation by the company followed by a question
period, may be accessed at 1 (888) 390-0867 (Canada or U.S.) or 1
(212) 547-0141 (International) with the passcode “FAIRFAX”. A
replay of the call will be available from shortly after the
termination of the call until 5:00 p.m. Eastern time on
Friday, November 17, 2023. The replay may be accessed at 1 (800)
814-6745 (Canada or U.S.) or 1 (203) 369-3349 (International).
Fairfax Financial Holdings Limited is a holding
company which, through its subsidiaries, is primarily engaged in
property and casualty insurance and reinsurance and the associated
investment management.
For further information, contact: |
|
John Varnell |
|
|
Vice President, Corporate Development |
|
|
(416) 367-4941 |
CONSOLIDATED BALANCE SHEETSas at
September 30, 2023, December 31, 2022 and January 1,
2022 (US$ millions except per share amounts)
|
|
September 30, 2023 |
|
December 31, 2022 |
|
January 1, 2022 |
|
|
|
|
|
|
Restated(1) |
|
|
|
Restated(1) |
Assets |
|
|
|
|
|
|
|
|
|
Holding company cash and investments (including assets pledged for
derivative obligations – $140.5; December 31, 2022 – $104.6;
January 1, 2022 – $111.0) |
|
|
1,230.6 |
|
|
|
|
1,345.8 |
|
|
|
|
1,478.3 |
Insurance contract
receivables |
|
|
862.5 |
|
|
|
|
648.9 |
|
|
|
|
650.1 |
|
|
|
|
|
|
|
|
|
|
|
Portfolio investments |
|
|
|
|
|
|
|
|
|
|
Subsidiary cash and short term
investments (including restricted cash and cash equivalents –
$607.8; December 31, 2022 – $854.4; January 1, 2022 –
$1,246.4) |
|
|
6,372.8 |
|
|
|
|
9,368.2 |
|
|
|
|
21,799.5 |
Bonds (cost $34,785.8;
December 31, 2022 – $29,534.4; January 1, 2022 – $13,836.3) |
|
|
34,172.6 |
|
|
|
|
28,578.5 |
|
|
|
|
14,091.2 |
Preferred stocks (cost $894.6;
December 31, 2022 – $808.3; January 1, 2022 – $576.6) |
|
|
2,394.5 |
|
|
|
|
2,338.0 |
|
|
|
|
2,405.9 |
Common stocks (cost $6,272.8;
December 31, 2022 – $5,162.6; January 1, 2022 – $4,717.2) |
|
|
6,627.6 |
|
|
|
|
5,124.3 |
|
|
|
|
5,468.9 |
Investments in associates
(fair value $7,265.5; December 31, 2022 – $6,772.9; January 1, 2022
– $5,671.9) |
|
|
6,324.3 |
|
|
|
|
6,093.1 |
|
|
|
|
4,749.2 |
Derivatives and other invested
assets (cost $980.7; December 31, 2022 – $869.8; January 1, 2022 –
$888.2) |
|
|
1,094.3 |
|
|
|
|
828.5 |
|
|
|
|
991.2 |
Assets pledged for derivative
obligations (cost $119.2; December 31, 2022 – $52.4; January 1,
2022 – $119.6) |
|
|
117.9 |
|
|
|
|
51.3 |
|
|
|
|
119.6 |
Fairfax India cash, portfolio
investments and associates (fair value $3,366.5; December 31, 2022
– $3,079.6; January 1, 2022 – $3,336.4) |
|
|
2,004.4 |
|
|
|
|
1,942.8 |
|
|
|
|
2,066.0 |
|
|
|
59,108.4 |
|
|
|
|
54,324.7 |
|
|
|
|
51,691.5 |
|
|
|
|
|
|
|
|
|
|
|
Reinsurance contract assets
held |
|
|
9,713.3 |
|
|
|
|
9,691.5 |
|
|
|
|
9,893.1 |
Deferred income tax
assets |
|
|
142.2 |
|
|
|
|
137.3 |
|
|
|
|
449.1 |
Goodwill and intangible
assets |
|
|
5,485.9 |
|
|
|
|
5,689.0 |
|
|
|
|
5,928.2 |
Other assets |
|
|
7,795.9 |
|
|
|
|
6,981.3 |
|
|
|
|
6,034.1 |
Total assets |
|
|
84,338.8 |
|
|
|
|
78,818.5 |
|
|
|
|
76,124.4 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
|
5,398.6 |
|
|
|
|
4,806.6 |
|
|
|
|
4,587.6 |
Derivative obligations |
|
|
334.5 |
|
|
|
|
191.0 |
|
|
|
|
152.9 |
Deferred income tax
liabilities |
|
|
1,162.8 |
|
|
|
|
868.0 |
|
|
|
|
586.5 |
Insurance contract
payables |
|
|
1,397.9 |
|
|
|
|
1,402.7 |
|
|
|
|
1,826.0 |
Insurance contract
liabilities |
|
|
41,815.5 |
|
|
|
|
39,906.6 |
|
|
|
|
39,742.2 |
Borrowings – holding company
and insurance and reinsurance companies |
|
|
6,593.1 |
|
|
|
|
6,621.0 |
|
|
|
|
6,129.3 |
Borrowings – non-insurance
companies |
|
|
2,038.9 |
|
|
|
|
2,003.9 |
|
|
|
|
1,623.7 |
Total liabilities |
|
|
58,741.3 |
|
|
|
|
55,799.8 |
|
|
|
|
54,648.2 |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
Common shareholders’
equity |
|
|
20,262.1 |
|
|
|
|
17,780.3 |
|
|
|
|
15,199.8 |
Preferred stock |
|
|
1,335.5 |
|
|
|
|
1,335.5 |
|
|
|
|
1,335.5 |
Shareholders’ equity
attributable to shareholders of Fairfax |
|
|
21,597.6 |
|
|
|
|
19,115.8 |
|
|
|
|
16,535.3 |
Non-controlling interests |
|
|
3,999.9 |
|
|
|
|
3,902.9 |
|
|
|
|
4,940.9 |
Total equity |
|
|
25,597.5 |
|
|
|
|
23,018.7 |
|
|
|
|
21,476.2 |
|
|
|
84,338.8 |
|
|
|
|
78,818.5 |
|
|
|
|
76,124.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per basic
share |
|
$ |
876.55 |
|
|
|
$ |
762.28 |
|
|
|
$ |
636.89 |
(1) Restated for the transition to IFRS 17.
CONSOLIDATED STATEMENTS OF EARNINGSfor the
three and nine months ended September 30, 2023 and 2022(US$
millions except per share amounts)
|
|
Third quarter |
|
First nine months |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Restated(1) |
|
|
|
Restated(1) |
Insurance |
|
|
|
|
|
|
|
|
Insurance revenue |
|
|
7,098.9 |
|
|
|
6,426.3 |
|
|
|
20,033.0 |
|
|
|
18,185.9 |
|
Insurance service expenses |
|
|
(5,704.5 |
) |
|
|
(5,669.2 |
) |
|
|
(15,921.4 |
) |
|
|
(15,529.5 |
) |
Net insurance result |
|
|
1,394.4 |
|
|
|
757.1 |
|
|
|
4,111.6 |
|
|
|
2,656.4 |
|
Cost of reinsurance |
|
|
(1,374.4 |
) |
|
|
(1,276.3 |
) |
|
|
(3,756.5 |
) |
|
|
(3,297.6 |
) |
Recoveries of insurance service expenses |
|
|
922.5 |
|
|
|
992.3 |
|
|
|
2,685.7 |
|
|
|
2,624.7 |
|
Net reinsurance result |
|
|
(451.9 |
) |
|
|
(284.0 |
) |
|
|
(1,070.8 |
) |
|
|
(672.9 |
) |
Insurance service result |
|
|
942.5 |
|
|
|
473.1 |
|
|
|
3,040.8 |
|
|
|
1,983.5 |
|
Other insurance operating expenses |
|
|
(207.3 |
) |
|
|
(146.8 |
) |
|
|
(658.8 |
) |
|
|
(459.0 |
) |
Net finance income (expense) from insurance contracts |
|
|
(22.7 |
) |
|
|
506.0 |
|
|
|
(833.8 |
) |
|
|
1,951.9 |
|
Net finance income (expense) from reinsurance contract assets
held |
|
|
14.8 |
|
|
|
(83.1 |
) |
|
|
238.5 |
|
|
|
(379.9 |
) |
|
|
|
727.3 |
|
|
|
749.2 |
|
|
|
1,786.7 |
|
|
|
3,096.5 |
|
Investment
income |
|
|
|
|
|
|
|
|
Interest and dividends |
|
|
512.7 |
|
|
|
256.5 |
|
|
|
1,359.6 |
|
|
|
628.5 |
|
Share of profit of associates |
|
|
291.5 |
|
|
|
317.7 |
|
|
|
894.5 |
|
|
|
764.0 |
|
Net gains (losses) on investments |
|
|
56.0 |
|
|
|
(457.5 |
) |
|
|
485.1 |
|
|
|
(2,069.4 |
) |
|
|
|
860.2 |
|
|
|
116.7 |
|
|
|
2,739.2 |
|
|
|
(676.9 |
) |
Other revenue and
expenses |
|
|
|
|
|
|
|
|
Non-insurance revenue |
|
|
1,744.5 |
|
|
|
1,397.6 |
|
|
|
4,862.5 |
|
|
|
3,913.1 |
|
Non-insurance expenses |
|
|
(1,640.4 |
) |
|
|
(1,314.1 |
) |
|
|
(4,791.0 |
) |
|
|
(3,898.4 |
) |
Gain on sale of insurance subsidiary |
|
|
— |
|
|
|
— |
|
|
|
259.1 |
|
|
|
— |
|
Interest expense |
|
|
(124.8 |
) |
|
|
(114.4 |
) |
|
|
(379.5 |
) |
|
|
(327.1 |
) |
Corporate and other expenses |
|
|
(75.5 |
) |
|
|
(75.5 |
) |
|
|
(272.0 |
) |
|
|
(230.0 |
) |
|
|
|
(96.2 |
) |
|
|
(106.4 |
) |
|
|
(320.9 |
) |
|
|
(542.4 |
) |
Earnings before income
taxes |
|
|
1,491.3 |
|
|
|
759.5 |
|
|
|
4,205.0 |
|
|
|
1,877.2 |
|
Provision for income
taxes |
|
|
(304.3 |
) |
|
|
(176.8 |
) |
|
|
(784.9 |
) |
|
|
(546.4 |
) |
Net
earnings |
|
|
1,187.0 |
|
|
|
582.7 |
|
|
|
3,420.1 |
|
|
|
1,330.8 |
|
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
|
1,068.9 |
|
|
|
499.4 |
|
|
|
3,053.3 |
|
|
|
1,056.1 |
|
Non-controlling interests |
|
|
118.1 |
|
|
|
83.3 |
|
|
|
366.8 |
|
|
|
274.7 |
|
|
|
|
1,187.0 |
|
|
|
582.7 |
|
|
|
3,420.1 |
|
|
|
1,330.8 |
|
|
|
|
|
|
|
|
|
|
Net earnings per
share |
|
$ |
45.62 |
|
|
$ |
20.71 |
|
|
$ |
129.91 |
|
|
$ |
43.11 |
|
Net earnings per
diluted share |
|
$ |
42.26 |
|
|
$ |
19.31 |
|
|
$ |
120.43 |
|
|
$ |
40.23 |
|
Cash dividends paid
per share |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
10.00 |
|
|
$ |
10.00 |
|
Shares outstanding
(000) (weighted average) |
|
|
23,163 |
|
|
|
23,578 |
|
|
|
23,219 |
|
|
|
23,722 |
|
(1) Restated for the transition to IFRS 17.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the three and nine months ended September 30, 2023 and 2022(US$
millions)
|
|
Third quarter |
|
First nine months |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
Restated(1) |
|
|
|
Restated(1) |
|
|
|
|
|
|
|
|
|
Net earnings |
|
1,187.0 |
|
|
582.7 |
|
|
3,420.1 |
|
|
1,330.8 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to net
earnings |
|
|
|
|
|
|
|
|
Net unrealized foreign currency translation losses on foreign
subsidiaries |
|
(174.3 |
) |
|
(473.5 |
) |
|
(162.6 |
) |
|
(884.9 |
) |
Gains (losses) on hedge of net investment in Canadian
subsidiaries |
|
44.8 |
|
|
132.3 |
|
|
(4.5 |
) |
|
178.1 |
|
Gains on hedge of net investment in European operations |
|
24.0 |
|
|
48.8 |
|
|
6.4 |
|
|
116.8 |
|
Share of other comprehensive loss of associates, excluding net
gains (losses) on defined benefit plans |
|
(63.4 |
) |
|
(76.2 |
) |
|
(66.8 |
) |
|
(239.8 |
) |
Other |
|
2.7 |
|
|
2.1 |
|
|
7.5 |
|
|
3.1 |
|
|
|
(166.2 |
) |
|
(366.5 |
) |
|
(220.0 |
) |
|
(826.7 |
) |
Net unrealized foreign currency translation losses on foreign
subsidiaries reclassified to net earnings |
|
— |
|
|
— |
|
|
1.9 |
|
|
— |
|
Net unrealized foreign currency translation (gains) losses on
associates reclassified to net earnings |
|
3.2 |
|
|
(1.3 |
) |
|
(1.6 |
) |
|
(1.3 |
) |
|
|
(163.0 |
) |
|
(367.8 |
) |
|
(219.7 |
) |
|
(828.0 |
) |
Items that will not be reclassified to net
earnings |
|
|
|
|
|
|
|
|
Net gains (losses) on defined benefit plans |
|
22.8 |
|
|
(12.2 |
) |
|
13.9 |
|
|
105.5 |
|
Share of net gains (losses) on defined benefit plans of
associates |
|
(2.1 |
) |
|
45.2 |
|
|
(4.0 |
) |
|
59.4 |
|
Other |
|
18.2 |
|
|
— |
|
|
21.0 |
|
|
— |
|
|
|
38.9 |
|
|
33.0 |
|
|
30.9 |
|
|
164.9 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
|
(124.1 |
) |
|
(334.8 |
) |
|
(188.8 |
) |
|
(663.1 |
) |
Comprehensive income |
|
1,062.9 |
|
|
247.9 |
|
|
3,231.3 |
|
|
667.7 |
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
976.8 |
|
|
260.7 |
|
|
2,917.1 |
|
|
624.2 |
|
Non-controlling interests |
|
86.1 |
|
|
(12.8 |
) |
|
314.2 |
|
|
43.5 |
|
|
|
1,062.9 |
|
|
247.9 |
|
|
3,231.3 |
|
|
667.7 |
|
(1) Restated for the transition to IFRS 17.
SEGMENTED INFORMATION (US$ millions)
Third party gross premiums written, net premiums
written and combined ratios, on an undiscounted basis, for the
property and casualty insurance and reinsurance operations
(excluding Life insurance and Run-off) in the third quarters and
first nine months ended September 30, 2023 and 2022 were as
follows:
Gross Premiums Written
|
|
Third quarter |
|
First nine months |
|
% change year-over-year |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Third quarter |
|
First nine months |
Northbridge |
|
613.2 |
|
573.3 |
|
1,818.5 |
|
1,707.1 |
|
7.0 |
% |
|
6.5 |
% |
Crum & Forster |
|
1,442.6 |
|
1,278.7 |
|
3,921.4 |
|
3,434.1 |
|
12.8 |
% |
|
14.2 |
% |
Zenith National |
|
157.1 |
|
165.2 |
|
589.2 |
|
588.9 |
|
(4.9) % |
|
0.1 |
% |
North
American Insurers |
|
2,212.9 |
|
2,017.2 |
|
6,329.1 |
|
5,730.1 |
|
9.7 |
% |
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
|
1,623.2 |
|
1,524.8 |
|
5,379.0 |
|
5,065.9 |
|
6.5 |
% |
|
6.2 |
% |
Odyssey Group |
|
1,621.9 |
|
1,617.6 |
|
5,018.0 |
|
4,793.8 |
|
0.3 |
% |
|
4.7 |
% |
Brit(1) |
|
923.5 |
|
961.0 |
|
2,932.4 |
|
2,938.3 |
|
(3.9) % |
|
(0.2) % |
Global
Insurers and Reinsurers |
|
4,168.6 |
|
4,103.4 |
|
13,329.4 |
|
12,798.0 |
|
1.6 |
% |
|
4.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International Insurers and Reinsurers |
|
848.1 |
|
762.9 |
|
2,652.5 |
|
2,231.1 |
|
11.2 |
% |
|
18.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and casualty insurance and reinsurance |
|
7,229.6 |
|
6,883.5 |
|
22,311.0 |
|
20,759.2 |
|
5.0 |
% |
|
7.5 |
% |
Net Premiums Written
|
|
Third quarter |
|
First nine months |
|
% change year-over-year |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Third quarter |
|
First nine months |
Northbridge |
|
519.8 |
|
502.1 |
|
1,588.4 |
|
1,529.8 |
|
3.5 |
% |
|
3.8 |
% |
Crum & Forster |
|
1,124.7 |
|
1,060.0 |
|
2,965.0 |
|
2,810.9 |
|
6.1 |
% |
|
5.5 |
% |
Zenith National |
|
162.8 |
|
169.7 |
|
601.6 |
|
595.3 |
|
(4.1) % |
|
1.1 |
% |
North American
Insurers |
|
1,807.3 |
|
1,731.8 |
|
5,155.0 |
|
4,936.0 |
|
4.4 |
% |
|
4.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
|
1,105.0 |
|
991.4 |
|
3,878.7 |
|
3,521.1 |
|
11.5 |
% |
|
10.2 |
% |
Odyssey Group |
|
1,566.2 |
|
1,502.9 |
|
4,578.1 |
|
4,366.8 |
|
4.2 |
% |
|
4.8 |
% |
Brit(1) |
|
780.6 |
|
847.7 |
|
2,296.0 |
|
2,260.1 |
|
(7.9) % |
|
1.6 |
% |
Global Insurers and
Reinsurers |
|
3,451.8 |
|
3,342.0 |
|
10,752.8 |
|
10,148.0 |
|
3.3 |
% |
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
International Insurers
and Reinsurers |
|
578.8 |
|
499.3 |
|
1,683.9 |
|
1,445.0 |
|
15.9 |
% |
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and casualty
insurance and reinsurance |
|
5,837.9 |
|
5,573.1 |
|
17,591.7 |
|
16,529.0 |
|
4.8 |
% |
|
6.4 |
% |
Combined Ratios
|
|
Third quarter |
|
First nine months |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Northbridge |
|
88.7 |
% |
|
90.3 |
% |
|
90.9 |
% |
|
88.3 |
% |
Crum & Forster(1) |
|
104.8 |
% |
|
94.7 |
% |
|
98.3 |
% |
|
94.6 |
% |
Zenith National |
|
92.8 |
% |
|
93.8 |
% |
|
96.2 |
% |
|
94.5 |
% |
North American
Insurers |
|
98.3 |
% |
|
93.2 |
% |
|
95.8 |
% |
|
92.6 |
% |
|
|
|
|
|
|
|
|
|
Allied World |
|
89.3 |
% |
|
90.2 |
% |
|
90.6 |
% |
|
91.5 |
% |
Odyssey Group |
|
94.7 |
% |
|
107.8 |
% |
|
95.1 |
% |
|
99.1 |
% |
Brit(2) |
|
94.0 |
% |
|
117.4 |
% |
|
93.2 |
% |
|
102.2 |
% |
Global Insurers and
Reinsurers |
|
92.7 |
% |
|
104.2 |
% |
|
93.2 |
% |
|
97.3 |
% |
|
|
|
|
|
|
|
|
|
International Insurers
and Reinsurers |
|
98.5 |
% |
|
96.9 |
% |
|
96.8 |
% |
|
98.6 |
% |
|
|
|
|
|
|
|
|
|
Property and casualty
insurance and reinsurance |
|
95.0 |
% |
|
100.3 |
% |
|
94.3 |
% |
|
96.0 |
% |
(1) Impacted by Hawaii
wildfires in the third quarter of 2023 which included $78.3 million
of current period catastrophe losses or 8.2 and 2.8 combined ratio
points in the third quarter and first nine months of 2023.
(2) Excluding Ki Insurance,
gross premiums written decreased by 4.0% and 4.6% in the third
quarter and first nine months of 2023 and net premiums written
decreased by 9.5% and 1.2% in the third quarter and first nine
months of 2023. Excluding Ki Insurance, the combined ratios were
92.4% and 93.1% in the third quarter and first nine months of 2023
and 114.8% and 101.2% in the third quarter and first nine months of
2022.
Certain statements contained herein may
constitute forward-looking statements and are made pursuant to the
“safe harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995 and any applicable Canadian
securities regulations. Such forward-looking statements are subject
to known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of
Fairfax to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to: our ability to complete acquisitions and other
strategic transactions on the terms and timeframes contemplated,
and to achieve the anticipated benefits therefrom; a reduction in
net earnings if our loss reserves are insufficient; underwriting
losses on the risks we insure that are higher than expected; the
occurrence of catastrophic events with a frequency or severity
exceeding our estimates; changes in market variables, including
unfavourable changes in interest rates, foreign exchange rates,
equity prices and credit spreads, which could negatively affect our
investment portfolio; the cycles of the insurance market and
general economic conditions, which can substantially influence our
and our competitors’ premium rates and capacity to write new
business; insufficient reserves for asbestos, environmental and
other latent claims; exposure to credit risk in the event our
reinsurers fail to make payments to us under our reinsurance
arrangements; exposure to credit risk in the event our insureds,
insurance producers or reinsurance intermediaries fail to remit
premiums that are owed to us or failure by our insureds to
reimburse us for deductibles that are paid by us on their behalf;
our inability to maintain our long term debt ratings, the inability
of our subsidiaries to maintain financial or claims paying ability
ratings and the impact of a downgrade of such ratings on derivative
transactions that we or our subsidiaries have entered into; risks
associated with implementing our business strategies; the timing of
claims payments being sooner or the receipt of reinsurance
recoverables being later than anticipated by us; risks associated
with any use we may make of derivative instruments; the failure of
any hedging methods we may employ to achieve their desired risk
management objective; a decrease in the level of demand for
insurance or reinsurance products, or increased competition in the
insurance industry; the impact of emerging claim and coverage
issues or the failure of any of the loss limitation methods we
employ; our inability to access cash of our subsidiaries; our
inability to obtain required levels of capital on favourable terms,
if at all; the loss of key employees; our inability to obtain
reinsurance coverage in sufficient amounts, at reasonable prices or
on terms that adequately protect us; the passage of legislation
subjecting our businesses to additional adverse requirements,
supervision or regulation, including additional tax regulation, in
the United States, Canada or other jurisdictions in which we
operate; risks associated with applicable laws and regulations
relating to sanctions and corrupt practices in foreign
jurisdictions in which we operate; risks associated with government
investigations of, and litigation and negative publicity related
to, insurance industry practice or any other conduct; risks
associated with political and other developments in foreign
jurisdictions in which we operate; risks associated with legal or
regulatory proceedings or significant litigation; failures or
security breaches of our computer and data processing systems; the
influence exercisable by our significant shareholder; adverse
fluctuations in foreign currency exchange rates; our dependence on
independent brokers over whom we exercise little control;
operational, financial reporting and other risks associated with
IFRS 17; impairment of the carrying value of our goodwill,
indefinite-lived intangible assets or investments in associates;
our failure to realize deferred income tax assets; technological or
other change which adversely impacts demand, or the premiums
payable, for the insurance coverages we offer; disruptions of our
information technology systems; assessments and shared market
mechanisms which may adversely affect our insurance subsidiaries;
risks associated with the global pandemic caused by COVID-19, the
conflicts in Ukraine and Israel and the development of other
geopolitical events and economic disruptions worldwide; and risks
associated with recent events in the banking sector which have
elevated concerns among market participants about the liquidity,
default and non-performance risk associated with banks, other
financial institutions and the financial services industry
generally. Additional risks and uncertainties are described in our
most recently issued Annual Report, which is available at
www.fairfax.ca, and in our Base Shelf Prospectus (under “Risk
Factors”) filed with the securities regulatory authorities in
Canada, which is available on SEDAR at www.sedar.com. Fairfax
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
securities law.
Fairfax Financial (TSX:FFH)
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De Avr 2024 à Mai 2024
Fairfax Financial (TSX:FFH)
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De Mai 2023 à Mai 2024