Fairfax sees net earnings and GWP increase in Q2 2024

Fairfax Financial Holdings Limited has announced its financial results for the second quarter of 2024, reporting net earnings attributable to shareholders of $915.4 million, which compares to the $734.4 million seen in the second quarter of 2023.

This increase, according to Fairfax, primarily reflects increased adjusted operating income of $1,119.4 million and net gains on investments.

Additionally, book value per basic share at June 30, 2024 was reported to be $979.63 compared to $939.65 at December 31, 2023 (an increase of 6.0% adjusted for the $15 per common share dividend paid in the first quarter of 2024).

In Q2 2024 the net earnings were $1,055.8 million, compared to $829.1 million in Q2 2023.

Fairfax’s insurance and reinsurance companies reported a consolidated combined ratio of 93.9% and consolidated underwriting profit of $370.4 million, an improved figure when compared with the $337.5 million reported in Q2 2023.

Net premiums written (NPW) by the property and casualty insurance and reinsurance operations increased 11.5% to $6,841.6 million from $6,134.4 million, while gross premiums written (GPW) increased by 10.8%.

According to Fairfax, this increase mainly reflects the consolidation of Gulf Insurance on December 26, 2023 that contributed $523.8 million to NPW and $815.9 million to GWP in 2024, and continued growth across most operating companies, partially offset by decreases at Odyssey Group.

Underwriting profit in Q2 2024 also saw growth, increasing to $370.4 million compared to $337.5 million in the same period the year prior.

Undiscounted combined ratio was 93.9% in 2024, consistent with the 93.9% in 2023, primarily reflecting increased net favourable prior year reserve development of $131.8 million that was offset by an increased underwriting expense ratio due to investments in personnel and technology to support continued growth in business volumes, the firm noted.

Fairfax subsidiary Odyssey Group, a reinsurance and specialty insurance provider, posted GWP of $1,707.5 million in Q2 2024, down 9.5% when compared to the $1,887.3 million reported in Q2 2023.

Brit, specialty insurer and reinsurer focused on underwriting complex risks and also part of Fairfax, reported GWP of $1,041.8 million in this years second quarter, a figure 6.5% down from the $3,945.9 million seen in the same period last year.

Allied World, also a provider of re/insurance solutions and a Fairfax subsidiary, saw a 7.2 % increase in its GPW, to $2,021.1 million in Q2 2024 from $1,872.2 million in Q2 2023.

Prem Watsa, Chairman and Chief Executive Officer, stated: “In the second quarter of 2024 our property and casualty insurance and reinsurance operations produced adjusted operating income of $1,119.4 million up from $913.5 million in the second quarter of 2023 (or operating income of $1,553.1 million (2023 – $1,526.4 million) including the benefit of discounting, net of a risk adjustment on claims), primarily reflecting increased interest and dividends and share of profit of associates.

“Our underwriting performance in the second quarter of 2024 continued to produce favourable results with our insurance and reinsurance companies reporting a consolidated combined ratio of 93.9% and consolidated underwriting profit of $370.4 million, on an undiscounted basis.Gross and net premiums written grew by 10.8% and 11.5%, reflecting the acquisition of Gulf Insurance, which added $815.9 million in gross premiums written and $523.8 million in net premiums written. Excluding Gulf Insurance, gross premiums written grew by 0.6% and net premiums written grew by 3.0%.

“Net gains on investments of $241.6 million in the quarter was principally comprised of mark to market gains on common stocks of $377.4 million, partially offset by mark to market losses on bonds of $190.8 million.

Watsa concluded: “We remain focused on being soundly financed and ended the quarter with approximately $2.5 billion of cash and marketable securities (prior to Allied World’s subsequent redemption of its $500.0 million of senior notes) and an additional $2.0 billion, at fair value, of investments in associates and consolidated non-insurance companies owned by the holding company,”

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