Prem Watsa’s Fairfax Financial Holdings lost close to $1.3 billion during its first quarter, due largely to unrealized losses on investments and market volatility over the coronavirus pandemic.
The company also reported COVID-19 losses of $84.3 million for Q1.
Fairfax’s Q1 $1.26 billion loss, amounting to negative $47.38 per diluted share after payment of preferred share dividends, compared to net income of $769.2 million, or $26.98 per diluted share after payment of preferred share dividends in the 2019 first quarter.
Watsa, in prepared remarks, said the Canadian insurance holding company has the stability and financial resources to deal with pandemic-related costs in the months ahead.
“We remain focused on continuing to be soundly financed and have drawn on our credit facility solely to ensure that we maintain high levels of liquid assets during these uncertain times,” Watsa said. He noted that Fairfax had about $2.5 billion in cash and marketable securities on hand as of March 31.
The consolidated combined ratio of insurance and reinsurance operations was 96.8 for the quarter. In Q1 2019 that number was 97. Fairfax said the improvement came from more net premiums as well as higher net favorable prior year reserve development. This was partially offset, however, by higher Q1 catastrophe and COVID-19 losses.
Net premiums written by the Fairfax insurance and reinsurance operations nearly hit $3.7 billion, a 10 percent increase over the previous year, the company said.
Net investment losses surpassed $1.5 billion, mostly because of the plunge in equity markets in March as the COVID-19 pandemic erupted.
Source: Fairfax Financial Holdings
(Photo credit: Prem Watsa, CEO of Fairfax, speaking to financial journalists following the annual general meeting of Fairfax Financial Holdings Limited, held April 22, 2010 in Toronto, Ontario, Canada. Photographer Norm Betts/Bloomberg News)