Fairfax 1-Q earnings impacted by market softening

Insurance giant Fairfax Financial Holdings Ltd. (TSX: FFH) saw net income dip for the first quarter of 2005 to US$35.2 million (US$2.03 a share) versus the US$39.0 million (US$2.63 a share) reported for the same period last year.

The company’s total revenue dropped marginally for the latest reporting period to US$1.47 billion from the US$1.48 billion posted for 2004’s first quarter. However, Fairfax was able to boost net premiums written for the first quarter of this year by 5.9% to US$1.10 billion from last year’s US$1.04 billion.

The company produced an underwriting gain of US$33.5 million from its ongoing operations for the first quarter of 2005 (2004 1-Q: US$44.4 million). All of the company’s operations were able to reduce combined ratios to below 100%. Fairfax’s combined ratio for the first-quarter 2005 clocked in at 96.7% (2004 1-Q: 95.7% ratio).

This reflects improved combined ratios for primary operations, including a ratio of 91.4% for Canadian operations (2004 1-Q: 92.8%), and a ratio of 95.9% for U.S. operations (20041-Q: 99.7%) and Asian operations at 99.8% (2004 1-Q: 91.7%).

Investment income rose to US$107.1 million for the first quarter of 2005 from US$92.4 million a year earlier, while realized gains on investments reached US$131.4 million from US$72.6 million over the same comparative period.