Fairfax reports 84% drop in Q2 profit

Fairfax Financial Holdings Limited (TSX: FFH) reported profits of US$27.6 million for 2008 Q2, marking an 84% drop from the US$168.1 million reported in 2007 Q2.The results include the US$84.2-million impact of a reinsurance commutation initiated by Crum & Foster, the firm’s U.S. insurance operations. They also include the US$112.8 million worth of “other than temporary impairments” recorded to reduce the carrying value of investments, a release says.The combined ratio of Fairfax’s insurance and reinsurance operations in 2008 Q2 was 105.8% on a consolidated basis, an increase from 94.0% for the same period of last year.Northbridge, the firm’s Canadian commercial insurance operations, reported a combined ratio of 99.6% for the quarter (compared to 2007 Q2’s 86.9%). OdysseyRe, Fairfax’s reinsurance operations with a Canadian presence, reported a ratio of 98.7% for the same quarter (compared to 2007 Q2’s 93.9%). Northbridge reported a net loss of Cdn$82.4 million for the quarter, compared to net earnings of Cdn$116.7 million over last year, according to a Northbridge release.Underwriting profit at Northbridge dropped to Cdn$1.2 million for 2008 Q2, from 2007 Q2’s Cdn$35.5 million. OdysseyRe reported a quarter net income of US$66.9 million, also marking a drop from 2007’s Q2 net income of US$147.6 million.