Financial Outcomes for the Third Quarter

TORONTO, Nov. 03, 2022 (WORLD NEWSWIRE)–

( Note: All dollar quantities in this press release are revealed in U.S. dollars other than as otherwise kept in mind. The monetary outcomes are originated from monetary declarations prepared utilizing the acknowledgment and measurement requirements of International Financial Reporting Standards as released by the International Accounting Standards Board (” IFRS”), other than as otherwise kept in mind, and are unaudited. This press release includes particular non-GAAP and other monetary steps, consisting of underwriting revenue (loss), running earnings (loss), integrated ratio, integrated ratio points, float, book worth per fundamental share, overall financial obligation to overall capital ratio omitting non-insurance business and excess (shortage) of reasonable worth over bring worth, that do not have actually a recommended significance under IFRS and might not be similar to comparable monetary steps provided by other companies. See “Glossary of non-GAAP and other monetary steps” in the business’s Interim Report for the 3 and 9 months ended September 30, 2022)

Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) reveals a bottom line of $75.1 million ($ 3.65 bottom line per diluted share after payment of favored share dividends) in the 3rd quarter of 2022 compared to net revenues of $462.4 million ($ 16.44 net revenues per diluted share after payment of favored share dividends) in the 3rd quarter of 2021. Reserve worth per fundamental share at September 30, 2022 was $569.97 compared to $630.60 at December 31, 2021 (a decline of 7.9% changed for the $10 per typical share dividend paid in the very first quarter of 2022).

” Our core underwriting efficiency in the 3rd quarter of 2022 continued to be really strong, with development in gross premiums composed of 16.3% and net premiums composed of 18.6%, mainly showing brand-new organization and continued incremental rate boosts. In spite of considerable disaster losses of $803.3 million or 15.0 integrated ratio points in the quarter, our consolidated combined ratio was 100.3% for the quarter and 96.0% for the very first 9 months. Our operating earnings for the very first 9 months was a record $1.6 billion showing increased interest and dividends, increased share of revenue of partners and strong underwriting earnings.

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” Bottom lines on financial investments of $519.1 million throughout the quarter were primarily consisted of mark to market losses on bonds of $242.4 million due to ongoing increasing rate of interest, losses on typical stocks of $154.8 million showing the 5% drop in the S&P 500 in the quarter and latent forex losses of $141.9 million. The gain on the sale of our family pet insurance coverage organization to JAB of roughly $1 billion was not represented in the 3rd quarter as the deal just closed on October 31, 2022.

” With the brief period of 1.6 years on our $37 billion set earnings portfolio, our set earnings portfolio just dropped 3.1% in the very first 9 months, while interest and dividend earnings increased substantially due to increasing rate of interest, from a run rate of roughly $530 million each year at the end of 2021 to an existing run rate of roughly $1.2 billion each year.

” We continue to concentrate on being comfortably funded and ended the quarter with roughly $0.9 billion in money and financial investments in the holding business, which does not consist of any profits from the sale of our family pet insurance coverage organization which closed on October 31, 2022,” stated Prem Watsa, Chairman and President.

The table listed below provides the sources of the business’s net revenues (loss) in a format which the business has actually regularly utilized as it thinks it helps in comprehending Fairfax:

Emphasizes for the 3rd quarter of 2022 (with contrasts to the 3rd quarter of 2021 other than as otherwise kept in mind) consist of the following:

• Net premiums composed by the residential or commercial property and casualty insurance coverage and reinsurance operations increased 18.6% to $5,573.1 million from $4,697.6 million, while gross premiums composed increased by 16.3%.

• The consolidated combined ratio of the residential or commercial property and casualty insurance coverage and reinsurance operations was just partially above 100% at 100.3%, producing an underwriting loss of $16.9 million, compared to a combined ratio of 101.1% and an underwriting loss of $46.5 million in 2021. The enhanced underwriting outcome was driven by ongoing development in organization volumes (net premiums made increased by 21.9%), enhanced existing year mishap experience and sensible cost management, partly balanced out by increased disaster losses of $803.3 million or 15.0 integrated ratio points (mainly connected to losses on Typhoon Ian of $560.6 million or 10.5 integrated ratio points, and hailstorms in France of $92.5 million or 1.7 integrated ratio points), compared to disaster losses of $604.6 million or 13.9 integrated ratio points in 2021.

• Operating earnings of the residential or commercial property and casualty insurance coverage and reinsurance operations increased by 73.7% to $425.1 million from $244.7 million, primarily due to increased interest and dividend earnings and share of revenue of partners.

• Float of the residential or commercial property and casualty insurance coverage and reinsurance operations increased by 10.3% to $28,599.0 million at September 30, 2022 from $25,936.8 million at December 31, 2021.

• Omitting the effect of Fairfax India’s efficiency charges to Fairfax (accruals of $4.8 million and $18.6 million in the 3rd quarters of 2022 and 2021 respectively), which are balanced out upon combination, running earnings of the non-insurance business increased by $86.1 million to $130.4 million, mainly connected to greater organization volumes in the Other reporting section and greater share of revenue of partners at Fairfax India.

• Consolidated share of revenue of partners of $317.7 million primarily shown share of revenue of $81.1 million from Resolute, $80.2 million from Eurobank and $58.3 million from Atlas Corp.

• Interest cost of $114.4 million (inclusive of $11.3 million on leases) was consisted of $79.9 million sustained on loanings by the holding business and the insurance coverage and reinsurance business and $23.2 million sustained on loanings by the non-insurance business (which are non-recourse to the holding business).

• At September 30, 2022 the business’s insurance coverage and reinsurance business held portfolio financial investments of $49.2 billion (omitting Fairfax India’s portfolio of $2.0 billion), of which roughly $8.2 billion remained in money and short-term financial investments representing roughly 16.7% of those portfolio financial investments. Throughout the 3rd quarter of 2022 the business utilized existing money and the profits from sales and maturities of brief outdated financial investments to buy $7.2 billion of U.S. treasuries and Canadian federal government bonds, and brief outdated high quality business bonds, benefiting interest and dividend earnings.

• Bottom lines on financial investments of $519.1 million included the following:

Bottom lines on equity direct exposures of $154.8 million was mainly consisted of latent devaluation of typical stocks, equity warrants and convertible bonds and bottom lines on long equity overall return swaps. At September 30, 2022 the business continued to hold equity overall return swaps on 1,964,155 Fairfax secondary ballot show an initial notional quantity of $732.5 million (Cdn$ 935.0 million) or roughly $372.96 (Cdn$ 476.03) per share, on which the business tape-recorded $82.3 countless bottom lines in the 3rd quarter of 2022 and has actually tape-recorded cumulative net latent gains of $233.7 million given that beginning.

Bottom lines on bonds of $242.4 million consisted of bottom lines on U.S. treasuries of $193.8 million and bottom lines of $90.0 million on business and other bonds (primarily U.S. and other business bonds), partly balanced out by net gains on U.S. treasury bond forward agreements of $59.7 million.

Bottom lines on other of $121.9 million was mainly consisted of latent forex losses of $141.9 million, primarily associated to the fortifying of the U.S. dollar versus the business’s financial investments denominated in the Canadian dollar, British pound, Indian rupee and euro.

• At September 30, 2022 the shortage of reasonable worth over bring worth of financial investments in non-insurance partners and combined non-insurance subsidiaries was $424.1 million.

• The business’s overall financial obligation to overall capital ratio, omitting non-insurance business, increased to 28.3% at September 30, 2022 compared to 24.1% at December 31, 2021, primarily due to the issuance on August 16, 2022 of $750.0 million primary quantity of 5.625% unsecured senior notes due 2032, reduced typical investors’ equity and a decrease in non-controlling interest showing the business’s acquisition of extra typical shares of Allied World from non-controlling interests.

• On September 27, 2022 the business increased its ownership interest in Allied World to 82.9% from 70.9% for overall factor to consider of $733.5 million, inclusive of the reasonable worth of a call alternative worked out and an accumulated dividend paid, and tape-recorded a loss in maintained revenues of $228.1 million.

• On July 5, 2022 the business increased its interest in Grivalia Hospitality S.A. (” Grivalia Hospitality”) to 78.4% from 33.5% by obtaining extra shares for money factor to consider of $194.6 million (EUR190.0 million). The business started combining Grivalia Hospitality in the 3rd quarter of 2022. Grivalia Hospitality gets, establishes and handles hospitality realty in Greece, Cyprus and Panama.

• Deals closing or closed subsequent to September 30, 2022:

  • On October 31, 2022 the business offered its interests in the Crum & & Forster Animal Insurance Coverage Group and Pethealth, consisting of all of their around the world operations, to Self-reliance Family pet Group and particular of its affiliates, which are bulk owned by JAB Holding Business (” JAB”). The business got profits of $1.4 billion in the type of $1.15 billion in money and $250 million in seller debentures, and the business has a dedication to invest $200.0 million in JCP V, a JAB customer fund. In its combined monetary reporting in the 4th quarter of 2022, the business anticipates to tape-record a pre-tax gain of roughly $1,278 million and an after-tax gain of roughly $992 million.

  • On October 31, 2022 a consortium made up of the business, the Washington Household, David Sokol, Chairman of the Board of Directors of Atlas, and Ocean Network Express Pte. Ltd., an international container, transport and shipping business (jointly, the “Consortium”), signed a conclusive arrangement to obtain all of the exceptional typical shares of Atlas, besides those shares owned by the Consortium, at a money purchase rate of $15.50, plus payment of all common course dividends up till closing of the deal. Pursuant to the deal, the business would move its approximate 45% interest in Atlas, inclusive of the business’s interest upon ultimate workout of its holdings in Atlas equity warrants, into an entity formed by the Consortium, and is not obliged to buy any extra interest not currently owned by the Consortium. The other members of the Consortium have actually dedicated to totally money the money element of the deal, and the business would continue its ownership in Atlas as part of the Consortium. Closing of the deal is anticipated to be finished in the very first half of 2023 and undergoes invoice of investor and regulative approvals and particular other popular closing conditions.

  • In June 2022, Digit Insurance coverage and the business used to the Insurance coverage Regulatory and Advancement Authority of India (” IRDAI”) for approval to transform the business’s holdings in obligatory convertible favored shares released by Go Digit Infoworks (” Digit CCPS”) into equity shares of Go Digit Infoworks (” Digit”). The IRDAI consequently interacted that the application can not be thought about in its existing type as conversion of the Digit CCPS would lead to Digit (presently categorized as an Indian promoter of Digit Insurance coverage) ending up being a subsidiary of the business, which is presently forbidden for Indian promoters, regardless of that the foreign direct financial investment guidelines have actually been changed to enable foreign financiers to own up to 74% in an Indian insurance provider. Digit, Digit Insurance coverage and the business plan to continue to check out all opportunities under appropriate law to accomplish the business’s bulk ownership of Digit through conversion of the business’s Digit CCPS, and the business anticipates to report a gain of roughly $375 million when it attains bulk ownership of Digit.

  • On October 28, 2022 the business got all of the several ballot shares (” MVS”) and secondary ballot shares in the capital of Dish, besides those shares owned by the business and 9,398,729 MVS owned by Cara Holdings Limited, at a money purchase rate of Cdn$ 20.73 per share or roughly $342 million (Cdn$ 466 million) in aggregate. The deal increased the business’s equity ownership in Dish from 39.4% at September 30, 2022 to an approximate 84% useful ownership. The deal was officially authorized at an unique conference of investors of Dish hung on October 21, 2022, where 99.87% of all investors omitting Fairfax and Cara Holdings Limited enacted favour of the deal. Court approval of the deal was gotten on October 25, 2022, and the deal closed on October 28, 2022.

  • On July 5, 2022 Domtar Corporation participated in a contract with Resolute Forest Products Inc. to obtain all of the exceptional typical shares of Resolute for a mix of money factor to consider of $20.50 and a Contingent Worth Right (” CVR”) per Resolute typical share of approximately $6 per share. The CVR offers holders with the right to a share of any future softwood lumber responsibility deposit refunds. Closing of the deal undergoes investor approval, which was gotten on October 31, 2022, and regulative approvals and fulfillment of other popular closing conditions, and is anticipated to close in the very first half of 2023. Undaunted and the buyer just recently revealed their intent to offer Resolute’s Thunder Bay pulp and paper mill to additional help with the regulative evaluation procedure. Pursuant to the proposed deal, on July 5, 2022 the business determined its financial investment in Resolute as held for sale and at September 30, 2022 the per share bring worth of Resolute amounted to the money factor to consider of $20.50 per share, or $508 million in aggregate. Subsequently, the business presently does not anticipate to tape-record any gains on closing of this proposed deal.

There were 23.6 million and 25.9 million weighted typical typical shares successfully exceptional throughout the 3rd quarters of 2022 and 2021 respectively. At September 30, 2022 there were 23,445,778 typical shares successfully exceptional.

Unaudited combined balance sheet, revenues and detailed earnings info, together with segmented premium and combined ratio info, follow and form part of this press release.

As formerly revealed, Fairfax will hold a teleconference to discuss its 3rd quarter 2022 results at 8:30 a.m. Eastern time on Friday November 4, 2022. The call, including a discussion by the business followed by a concern duration, might 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 readily available from quickly after the termination of the call till 5:00 p.m. Eastern time on Friday, November 18, 2022. The replay might be accessed at 1 (866) 452-2115 (Canada or U.S.) or 1 (203) 369-1219 (International).

Fairfax Financial Holdings Limited is a holding business which, through its subsidiaries, is mainly participated in residential or commercial property and casualty insurance coverage and reinsurance and the associated financial investment management.

COMBINED BALANCE SHEETS
as at September 30, 2022 and December 31, 2021
( unaudited – US$ millions other than per share quantities)

COMBINED DECLARATIONS OF INCOMES
for the 3 and 9 months ended September 30, 2022 and 2021
( unaudited – US$ millions other than per share quantities)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
for the 3 and 9 months ended September 30, 2022 and 2021
( unaudited – US$ millions)

SEGMENTED INFO
( unaudited – US$ millions)

3rd party gross premiums composed, net premiums composed and integrated ratios for the residential or commercial property and casualty insurance coverage and reinsurance operations (omitting Life insurance coverage and Run-off) in the 3rd quarters and very first 9 months ended September 30, 2022 and 2021 were as follows:

Gross Premiums Composed

3rd quarter

Fairfax disclaims any intent or commitment to upgrade or modify any positive declarations, whether as an outcome of brand-new info, future occasions or otherwise, other than as needed by appropriate securities law.