Fairfax Financial Holdings Limited: Second Quarter Financial Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 07/30/15 -- (Note: All dollar amounts in this news release are expressed in U.S. dollars, except as otherwise noted. The financial results are reported under International Financial Reporting Standards, except as otherwise noted.)
Fairfax Financial Holdings Limited (TSX: FFH)(TSX: FFH.U) announces a net loss of $185.7 million in the second quarter of 2015 ($8.87 net loss per diluted share after payment of preferred share dividends) compared to net earnings of $363.7 million in the second quarter of 2014 ($16.15 per diluted share after payment of preferred share dividends), principally reflecting unrealized losses on investments. Book value per basic share at June 30, 2015 was $387.53 compared to $394.83 at December 31, 2014 (an increase of 0.6% adjusted for the $10 per common share dividend paid in the first quarter of 2015).
"Our insurance companies continued to have excellent underwriting performance in the second quarter and the first half of 2015 with consolidated combined ratios of 91.9% and 91.6% respectively, but unrealized losses on bonds of $677.2 million, due to rising interest rates, produced a net loss for the quarter. All of our major insurance companies again had combined ratios less than 100% in the quarter with OdysseyRe at 88.1% and Zenith at 88.4%. We also realized gains from our equity and equity-related investments of $581.9 million in the quarter," said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. "We are maintaining our defensive equity hedges and deflation protection as we remain concerned about the financial markets and the economic outlook in this global deflationary environment. We continue to be soundly financed, with quarter-end cash and marketable securities in the holding company in excess of $1.1 billion."
Highlights in the second quarter of 2015 (with comparisons to the second quarter of 2014 except as otherwise noted) included the following:
Included in realized gains is a gain of $269.8 million realized upon the company's sale of a portion of its holdings in the Bank of Ireland in the first quarter of 2015 and $236.4 million realized on the sale of Ridley Inc. in the second quarter of 2015. Of the unrealized losses on equity and equity-related investments in the second quarter and first six months of 2015, $321.7 million and $381.9 million respectively resulted simply from reclassifying unrealized gains to realized gains.
Fairfax holds significant investments in equity and equity-related securities. In response to the significant appreciation in equity market valuations and uncertainty in the economy, the company has hedged its equity investment exposure. At June 30, 2015, equity hedges represented 101.0% of the company's equity and equity-related holdings. The hedge ratio increased from 89.6% at December 31, 2014 primarily because of net sales of equity and equity-related holdings and net unrealized depreciation of those holdings caused by the unfavourable impact of foreign currency translation. The market value and the liquidity of these hedges are volatile and may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known over the long term.
There were 22.3 and 21.2 million weighted average shares outstanding during the second quarters of 2015 and 2014 respectively. At June 30, 2015, there were 22,266,171 common shares effectively outstanding.
Summarized (without notes) interim consolidated balance sheets and statements of earnings and comprehensive income, along with segmented premium and combined ratio information, follow and form part of this news release. Fairfax's detailed second quarter report can be accessed at its website .
As previously announced, Fairfax will hold a conference call to discuss its second quarter results at 8:30 a.m. Eastern time on Friday, July 31, 2015. The call, consisting of a presentation by the company followed by a question period, may be accessed at 1 (800) 857-9641 (Canada or U.S.) or 1 (517) 308-9408 (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, August 14, 2015. The replay may be accessed at 1 (888) 562-6304 (Canada or U.S.) or 1 (203) 369-3880 (International).
Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.
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. 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: a reduction in net earnings if our loss reserves are insufficient; underwriting losses on the risks we insure that are higher or lower than expected; the occurrence of catastrophic events with a frequency or severity exceeding our estimates; changes in market variables, including 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; the timing of claims payments being sooner or the receipt of reinsurance recoverables being later than anticipated by us; the inability of our subsidiaries to maintain financial or claims paying ability ratings; risks associated with implementing our business strategies;
risks associated with our use of derivative instruments; the failure of our hedging methods 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; 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; 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 supervision or regulation, including additional tax regulation, in the United States, Canada or other 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; 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; an impairment in the carrying value of our goodwill and indefinite-lived intangible assets; our failure to realize deferred income tax assets; and assessments and shared market mechanisms which may adversely affect our U.S. insurance subsidiaries. Additional risks and uncertainties are described in our most recently issued Annual Report which is available at and in our Supplemental and Base Shelf Prospectus (under "Risk Factors") filed with the securities regulatory authorities in Canada, which is available on SEDAR at . Fairfax disclaims any intention or obligation to update or revise any forward-looking statements.
SEGMENTED INFORMATION
(unaudited - US$ millions)
Net premiums written and net premiums earned by the insurance and reinsurance operations (excluding Runoff) in the second quarters and first six months of 2015 and 2014 were:
Net Premiums Written
Net Premiums Earned
Combined ratios of the insurance and reinsurance operations (excluding Runoff) in the second quarters and first six months of 2015 and 2014 were:
(1) Brit is included in the company's financial reporting with effect from June 5, 2015.
Contacts:
Fairfax Financial Holdings Limited
John Varnell
Vice President, Corporate Development
(416) 367-4941
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Datum: 30.07.2015 - 21:02 Uhr
Sprache: Deutsch
News-ID 410562
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