Fairfax Financial Holdings Limited reported first quarter 2025 net earnings of US$945.7 million, or US$42.70 per diluted share, up from US$776.5 million in the same period last year.
The increase was driven primarily by net investment gains of US$1.06 billion, which offset a decline in adjusted operating income following US$692.1 million in wildfire-related losses.
Chairman and CEO Prem Watsa described the performance as “resilient” given the scale of catastrophe claims in California.
“Despite the significant catastrophe losses of$781 million, our insurance and reinsurance operations reported an underwriting profit and maintained a combined ratio of 98.5%, on an undiscounted basis,” said Watsa.
The company’s book value per share rose to US$1,080.38, up 3.5% after adjusting for the US$15 per share dividend paid in the quarter.
Fairfax’s property and casualty insurance and reinsurance businesses generated US$6.8 billion in net premiums written, up 8.4% year-over-year, while underwriting profit declined to US$96.9 million from US$373 million last year, reflecting the impact of wildfire losses. However, strong investment returns and reserve development helped cushion the drop.
|
Key metric (USUS$ millions) |
Q1 2025 |
Q1 2024 |
YoY Change |
|---|---|---|---|
|
Net premiums written |
6,843.1 |
6,301.0 |
+8.4% |
|
Underwriting profit |
96.9 |
373.0 |
▼ |
|
Combined ratio (undiscounted) |
98.5% |
93.6% |
+4.9 pts |
|
Adjusted operating income |
685.5 |
977.1 |
▼ |
|
Net investment gains |
1,056.1 |
(58.5) |
▲ |
Adjusted operating income dropped 30% year-over-year primarily due to catastrophe losses. That said, net favorable prior-year reserve development of US$219.1 million (up from US$29.9 million in Q1 2024) helped stabilize the result.
Investment income, including dividends and associate earnings, totalled US$606.5 million, up from US$589.8 million last year. Fairfax reported US$779.5 million in equity gains, boosted by gains in convertible bonds, equity warrants, and the disposition of its stake in Sigma Companies International. It also logged US$388.4 million in bond gains, driven by a decline in interest rates.
Fairfax ended the quarter with US$2.1 billion in holding company cash and marketable securities, plus US$1.7 billion in investments in associates and consolidated non-insurance entities. The total debt-to-capital ratio (excluding non-insurance companies) ticked up slightly to 25.3%, reflecting recent borrowings and the redemption of preferred shares.
The company repurchased 205,610 shares for US$289.2 million and redeemed Series E, F, and M preferred shares with a total carrying value of US$352.1 million.
Fairfax continues to hold a conservative fixed-income portfolio, with 70% in U.S. treasuries and government bonds and 20% in high-quality corporates.
Subsequent to March 31, Fairfax received shares in two Quess spin-off entities—Digitide and Bluspring—and expects both to be listed in India during Q2 2025. The firm will apply equity accounting to both investments.
Watsa emphasized that the company remains “soundly financed” and committed to long-term value creation, despite a volatile macroeconomic environment and ongoing geopolitical uncertainty.
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