Fairfax Financial Holdings Limited: Financial Results for the First Quarter

Core Insights - Fairfax Financial Holdings Limited reported net earnings of $945.7 million in Q1 2025, an increase from$776.5 million in Q1 2024, driven by higher net gains on investments despite a decrease in adjusted operating income to $685.5 million from$977.1 million [1][2][12] - The book value per basic share rose to $1,080.38 as of March 31, 2025, reflecting a 3.5$1,059.60 at the end of 2024, adjusted for dividends [1][18] Financial Performance - The property and casualty insurance and reinsurance operations generated adjusted operating income of $685.5 million, with a consolidated combined ratio of 98.5$96.9 million despite catastrophe losses of $781.3 million from California wildfires [2][8][12] - Gross premiums written increased by 5.0$8,474.0 million, while net premiums written grew by 8.4% to $6,843.1 million, indicating strong business growth [5][22] Investment Gains - Net gains on investments totaled$1,056.1 million, primarily from common stocks ($779.5 million) and bonds ($388.4 million), reflecting favorable market conditions [3][10][12] - The fixed income portfolio remains conservatively positioned, with 70% in U.S. treasuries and government bonds, and 20% in high-quality corporate bonds [10] Cash and Liquidity - The company ended the quarter with approximately $2.1 billion in cash and marketable securities, alongside$1.7 billion in investments in associates and consolidated non-insurance companies [4][12] Segment Performance - The insurance service result for property and casualty insurance and reinsurance operations was $609.1 million, down from$1,037.5 million in 2024, primarily due to increased catastrophe losses [7][12] - The company recorded a net favorable prior year reserve development benefit of $219.1 million, compared to$29.9 million in 2024 [12][19] Shareholder Returns - The company paid a dividend of $15.00 per common share in Q1 2025, consistent with the previous year [18][20] - The total debt to total capital ratio, excluding non-insurance companies, increased to 25.3% from 24.8% at the end of 2024, reflecting short-term borrowings and preferred share redemptions [16][35]