Fairfax reports increased 2006 profit

Fairfax Financial Holdings (TSX: FFH) announced profits of US$159 million [approximately Cdn$184 million] for 2006 Q4, and US$227.5 million [approximately Cdn$264 million] for the year.

The combined ratios of Fairfax’s insurance and reinsurance operations were 88.4% and 95.5% for the Q4 and 2006 year, respectively, compared to 112.7% and 107.7% for the Q4 and 2005 year respectively.

The company’s insurance and reinsurance operations produced an aggregate underwriting profit of US$198.2 million [approximately Cdn$229.7 million] in 2006, compared to an aggregate underwriting loss of US$333.9 million [approximately Cdn$386.9 million] in 2005.

“The improved underwriting results and significantly increased investment income, combined with major initiatives including the company’s OdysseyRe secondary offering and the commutation of the Swiss Re corporate insurance cover, allowed Fairfax to strengthen its financial position during 2006,” Prem Watsa, Fairfax chairman and CEO, said in a statement. “During 2006, our operating insurance and reinsurance subsidiaries performed well and generated significant underwriting profits, while our runoff units continued to make solid progress in reducing claims and containing costs.”