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TORONTO, April 14, 2021 (GLOBE NEWSWIRE) — Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces preliminary unaudited financial information which will be finalized for the company’s first quarter of 2021 unaudited financial results, including information reflecting key developments.
“As we did a year ago, we are providing our shareholders with preliminary indications of some key developments for Fairfax’s first quarter of 2021 financial results. Our insurance companies continued to have strong underwriting performance in the first quarter of 2021 with a consolidated combined ratio of approximately 96%, favourable reserve development and strong growth in gross premiums written of approximately 17%. Our investments increased significantly with net gains on investments currently estimated at approximately $875 million for the first quarter of 2021, primarily reflecting net unrealized gains from our common stock portfolio. Mark-to-market movements on certain of our non-insurance consolidated investments and investments in associates, which will not be reflected in our financial statements, also increased significantly in the first quarter of 2021 by approximately $1 billion. We remain focused on continuing to be soundly financed and expect that, at the close of our RiverStone Barbados transaction, we will have paid off our credit facility completely and will have cash and marketable securities in the holding company of approximately $1.3 billion,” said Prem Watsa, Chairman and Chief Executive Officer.
Key financial information for the first quarter of 2021, based on preliminary indications and current estimates but recognizing that the preparation of the company’s first quarter financial statements is not finalized, includes the following:
- We currently expect gross premiums written to increase from the first quarter of 2020 by approximately 17% to approximately $5.5 billion. The company’s insurance and reinsurance operations continued to have strong underwriting performance in the first quarter of 2021, with a consolidated combined ratio of approximately 96% and net favourable prior year reserve development, which will result in solid operating income during the quarter despite the impact of the U.S. winter storms.
- Net gains on investments of approximately $875 million will primarily reflect net unrealized gains on the company’s equity and equity-related holdings, partially offset by net unrealized losses on bonds.
- At March 31, 2021 the excess of fair value over adjusted carrying value of non-insurance investments in associates will be approximately $225 million, which is an improvement of approximately $684 million from the deficiency of $458.5 million at December 31, 2020.
- At March 31, 2021 the excess of fair value over adjusted carrying value of certain consolidated non-insurance subsidiaries will be approximately $125 million, which is an improvement of approximately $329 million from the deficiency of $204.1 million at December 31, 2020.
Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management.
| For further information contact: | John Varnell |
| Vice President, Corporate Development | |
| (416) 367-4941 |
In presenting the company’s preliminary unaudited financial information in this news release, management has included the measure “pre-tax excess (deficiency) of fair value over adjusted carrying value”. The company considers its non-insurance investments in associates and certain consolidated non-insurance subsidiaries to be portfolio investments, and the excess (deficiency) of fair value over adjusted carrying value of these investments, while not included in the calculation of book value per share, is regularly reviewed by management as an indicator of investment performance. The fair values and adjusted carrying values of the company’s investments in non-insurance associates represent their fair values and carrying values that will be presented in note 6 (Investments in Associates) to the interim consolidated financial statements for the three months ended March 31, 2021, with investments in associates primarily held by Recipe, Fairfax India and Thomas Cook India excluded. The fair values of the company’s investments in certain consolidated non-insurance subsidiaries are calculated as the company’s pro rata ownership share of each subsidiary’s market capitalization, as determined by traded share prices at the financial statement date. The adjusted carrying values of those subsidiaries represent each subsidiary’s total equity that will be included in the company’s interim consolidated financial statements for the three months ended March 31, 2021, less the respective carrying value of each subsidiary’s non-controlling interests.
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