Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) announces
fiscal year 2023 net earnings of $4,381.8 million ($173.24 net
earnings per diluted share after payment of preferred share
dividends) compared to fiscal year 2022 net earnings of $3,374.2
million ($131.37 net earnings per diluted share after payment of
preferred share dividends). Book value per basic share at
December 31, 2023 was $939.65 compared to $762.28 at
December 31, 2022 (an increase of 24.7% adjusted for the $10
per common share dividend paid in the first quarter of 2023).
"2023 was the best year in our history with net
earnings of $4.4 billion, producing record adjusted operating
income of $3.9 billion (or operating income of $5.7 billion
including the benefit of discounting, net of a risk adjustment on
claims) from our property and casualty insurance and reinsurance
operations, reflecting records achieved in our core underwriting
performance, interest and dividends of $1.7 billion and increased
favourable results from profit of associates. All of our major
insurance and reinsurance companies achieved combined ratios below
100% for a consolidated combined ratio of 93.2% and underwriting
profit of $1.5 billion, on an undiscounted basis. Gross premiums
written grew by 4.8% or $1.3 billion to $28.9 billion, while net
premiums written grew by 3.5%, primarily reflecting new business
and incremental rate increases in certain lines of business.
"On December 26, 2023 we acquired an additional
46.3% of Gulf Insurance, increasing the company's total equity
interest to 90.0% which will add approximately $2.7 billion of
gross premiums written to our consolidated results in 2024.
"We have increased our annual interest and
dividend income run-rate to approximately $2.0 billion and we
anticipate it will remain at this level for approximately the next
four years. Our fixed income portfolio continues to be
conservatively positioned with effectively 69% of the fixed income
portfolio invested in government bonds, 20% in high quality
corporate bonds, primarily short-dated, and 11% in first mortgage
loans.
"Our net gains on investments of $1.9 billion
were principally comprised of net gains on common stocks of $1.2
billion and bonds of $0.7 billion.
"We remain focused on being soundly financed and
ended 2023 in a strong financial position with $1.8 billion in cash
and investments in the holding company, our debt to capital ratio
at 23.1%," said Prem Watsa, Chairman and Chief Executive
Officer.
The table below presents the sources of the
company's net earnings in a segment reporting format which the
company has consistently used as it believes it assists in
understanding Fairfax:
| |
Fourth quarter |
|
Year ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
| |
($ millions) |
| Gross premiums written |
6,639.3 |
|
|
7,019.1 |
|
|
29,092.5 |
|
|
27,912.6 |
|
| Net premiums written |
5,161.5 |
|
|
5,612.8 |
|
|
22,903.6 |
|
|
22,271.7 |
|
| Net insurance revenue |
5,680.9 |
|
|
5,306.0 |
|
|
21,957.4 |
|
|
20,194.3 |
|
| |
|
|
|
|
|
|
|
| Sources of net
earnings |
|
|
|
|
|
|
|
| Operating income - Property
and Casualty Insurance and Reinsurance: |
|
|
|
|
|
|
|
|
Insurance service result: |
|
|
|
|
|
|
|
|
North American Insurers |
265.7 |
|
|
245.5 |
|
|
977.1 |
|
|
964.0 |
|
|
Global Insurers and Reinsurers |
714.7 |
|
|
823.1 |
|
|
2,828.0 |
|
|
1,886.7 |
|
|
International Insurers and Reinsurers |
100.9 |
|
|
59.6 |
|
|
330.8 |
|
|
230.2 |
|
|
Insurance service result |
1,081.3 |
|
|
1,128.2 |
|
|
4,135.9 |
|
|
3,080.9 |
|
|
Other insurance operating expenses |
(246.8 |
) |
|
(182.6 |
) |
|
(822.1 |
) |
|
(701.8 |
) |
| |
834.5 |
|
|
945.6 |
|
|
3,313.8 |
|
|
2,379.1 |
|
|
Interest and dividends |
482.1 |
|
|
279.5 |
|
|
1,654.7 |
|
|
746.1 |
|
|
Share of profit of associates |
153.4 |
|
|
164.5 |
|
|
761.6 |
|
|
721.5 |
|
| Operating income - Property
and Casualty Insurance and Reinsurance |
1,470.0 |
|
|
1,389.6 |
|
|
5,730.1 |
|
|
3,846.7 |
|
| Operating income (loss) - Life
insurance and Run-off |
(187.3 |
) |
|
(85.2 |
) |
|
(144.6 |
) |
|
77.4 |
|
| Operating income (loss) -
Non-insurance companies |
(40.3 |
) |
|
61.1 |
|
|
121.9 |
|
|
221.3 |
|
|
Net finance income (expense) from insurance contracts and
reinsurance contract assets held |
(1,010.3 |
) |
|
45.3 |
|
|
(1,605.6 |
) |
|
1,617.3 |
|
| Net gains (losses) on
investments |
1,464.4 |
|
|
496.2 |
|
|
1,949.5 |
|
|
(1,573.2 |
) |
| Gain on
sale and consolidation of insurance subsidiaries |
290.7 |
|
|
1,219.7 |
|
|
549.8 |
|
|
1,219.7 |
|
|
Interest expense |
(130.5 |
) |
|
(125.7 |
) |
|
(510.0 |
) |
|
(452.8 |
) |
| Corporate overhead and
other |
(153.4 |
) |
|
26.0 |
|
|
(182.8 |
) |
|
(52.2 |
) |
| Earnings before income
taxes |
1,703.3 |
|
|
3,027.0 |
|
|
5,908.3 |
|
|
4,904.2 |
|
| Provision for income
taxes |
(28.5 |
) |
|
(546.1 |
) |
|
(813.4 |
) |
|
(1,092.5 |
) |
| Net
earnings |
1,674.8 |
|
|
2,480.9 |
|
|
5,094.9 |
|
|
3,811.7 |
|
| |
|
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
1,328.5 |
|
|
2,318.1 |
|
|
4,381.8 |
|
|
3,374.2 |
|
|
Non-controlling interests |
346.3 |
|
|
162.8 |
|
|
713.1 |
|
|
437.5 |
|
| |
1,674.8 |
|
|
2,480.9 |
|
|
5,094.9 |
|
|
3,811.7 |
|
| |
The table below presents the insurance service
result for the property and casualty insurance and reinsurance
operations reconciled to underwriting profit (loss), a key
performance measure used by the company and the property and
casualty industry in which it operates. The reconciling adjustments
are (i) other insurance operating expenses as presented in the
consolidated statement of earnings, (ii) the effects of discounting
of losses and ceded losses on claims recorded in the period, and
(iii) the effects of the risk adjustment and other, which are
presented in insurance service expenses and recoveries of insurance
service expenses.
| |
Fourth quarter |
|
Year ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
| |
($ millions) |
| Insurance service
result |
1,081.3 |
|
|
1,128.2 |
|
|
4,135.9 |
|
|
3,080.9 |
|
|
Other insurance operating expenses |
(246.8 |
) |
|
(182.6 |
) |
|
(822.1 |
) |
|
(701.8 |
) |
|
Discounting of losses and ceded losses on claims recorded in the
period |
(393.7 |
) |
|
(412.8 |
) |
|
(1,813.6 |
) |
|
(1,302.7 |
) |
|
Changes in the risk adjustment and other |
138.5 |
|
|
(36.7 |
) |
|
22.0 |
|
|
28.9 |
|
| Underwriting
profit |
579.3 |
|
|
496.1 |
|
|
1,522.2 |
|
|
1,105.3 |
|
| Interest and dividends |
482.1 |
|
|
279.5 |
|
|
1,654.7 |
|
|
746.1 |
|
| Share of profit of
associates |
153.4 |
|
|
164.5 |
|
|
761.6 |
|
|
721.5 |
|
|
Adjusted operating income - Property and Casualty Insurance
and Reinsurance |
1,214.8 |
|
|
940.1 |
|
|
3,938.5 |
|
|
2,572.9 |
|
|
|
Highlights for fiscal year 2023 (with
comparisons to fiscal year 2022 except as otherwise noted) include
the following:
- Net premiums
written by the property and casualty insurance and reinsurance
operations increased by 3.5% to a record $22.7 billion from $21.9
billion, and gross premiums written increased by 4.8%, reflecting
growth across most operating companies, partially offset by
decreases at Odyssey Group (principally reflecting the non-renewal
of a significant quota share contract which contributed nominal
underwriting profit and decreased U.S. crop insurance) and at Brit
following strategic underwriting actions to reduce both its gross
and net property catastrophe exposure. The growth in both net and
gross premiums written was also partially offset by decreased
premium volume in both cyber and professional liability lines of
business impacted by both pricing and coverage as the company
continues to be disciplined in writing new business. Excluding the
non-renewal of Odyssey Group's quota share contract, gross premiums
written increased by 6.0% and net premiums written increased by
5.0%.
- The consolidated
combined ratio of the property and casualty insurance and
reinsurance operations was 93.2%, producing a record underwriting
profit of $1,522.2 million, and included lower catastrophe losses
of $897.3 million (representing 4.0 combined ratio points),
compared to a combined ratio of 94.7% and an underwriting profit of
$1,105.3 million in 2022. The property and casualty insurance and
reinsurance operations continued to experience net favourable prior
year reserve development, with a benefit of $309.6 million or 1.4
combined ratio points.
- Adjusted
operating income of the property and casualty insurance and
reinsurance operations increased by 53.1% to a record of $3,938.5
million from $2,572.9 million, reflecting the best year in the
company's history for underwriting profit and interest and
dividends.
- Float of the
property and casualty insurance and reinsurance operations
increased by 14.9% to $33.4 billion at December 31, 2023 from
$29.1 billion at December 31, 2022.
- Operating loss
of the Life insurance Run-off operations was $144.6 million
compared to an operating profit of $77.4 million in 2022,
principally reflecting net adverse prior year reserve development
at Run-off of $259.4 million on an undiscounted basis, primarily
related to latent hazard claims stemming from recent incremental
increases in litigation activity and its associated costs.
- Consolidated
interest and dividends increased significantly from $961.8 million
to a record $1,896.2 million (comprised of $1,654.7 million earned
in the property and casualty insurance and reinsurance operations
investment portfolio, with the remainder earned in life insurance
and run-off, non-insurance companies and corporate and other),
primarily reflecting higher interest income earned, principally due
to extending the duration of the fixed income portfolio to take
advantage of a general increase in sovereign bond yields throughout
the year, net purchases of longer-dated U.S. treasury government
bonds during 2023 and net purchases of first mortgage loans during
2022 and 2023. At December 31, 2023 the company's insurance
and reinsurance companies held portfolio investments of $60.7
billion (excluding Fairfax India's portfolio of $2.3 billion), of
which $7.2 billion was in cash and short term investments
representing 11.8% of those portfolio investments. During 2023 the
company used cash and net proceeds from sales and maturities of
U.S. treasury and other government short term investments and
short-dated U.S. treasuries to purchase $11.7 billion of U.S.
treasuries with maturities between 5 to 7 years and to make net
purchases of $2.3 billion of short-dated first mortgage loans.
These actions should result in continued higher levels of interest
income for approximately the next four years based on the current
fixed income portfolio.
- Consolidated
share of profit of associates of $1,022.2 million (comprised of
$761.6 million earned in the property and casualty insurance and
reinsurance operations investment portfolio, with the remainder
earned in life insurance and run-off, non-insurance companies and
corporate and other), principally reflected share of profit of
$437.7 million from Eurobank, $149.6 million from Poseidon
(formerly Atlas) and $129.1 million from EXCO Resources.
- Net gains on investments of
$1,949.5 million (net gains on investments of $1,464.4 million in
the fourth quarter) consisted of the following:
| |
Fourth quarter of 2023 |
| |
($ millions) |
| |
Realized gains (losses) |
|
Unrealized gains |
|
Net gains |
|
| Net gains (losses) on: |
|
|
|
|
|
|
|
Equity exposures |
348.0 |
|
|
22.2 |
|
370.2 |
|
|
Bonds |
102.6 |
|
|
894.5 |
|
997.1 |
|
|
Other |
(98.9 |
) |
|
196.0 |
|
97.1 |
|
| |
351.7 |
|
|
1,112.7 |
|
1,464.4 |
|
| |
Year ended December 31, 2023 |
| |
($ millions) |
| |
Realized gains (losses) |
|
Unrealized gains |
|
Net gains |
|
| Net gains (losses) on: |
|
|
|
|
|
|
|
Equity exposures |
506.6 |
|
|
711.0 |
|
1,217.6 |
|
|
Bonds |
(415.3 |
) |
|
1,129.4 |
|
714.1 |
|
|
Other |
(220.9 |
) |
|
238.7 |
|
17.8 |
|
| |
(129.6 |
) |
|
2,079.1 |
|
1,949.5 |
|
| |
- Net gains on
equity exposures of $1,217.6 million was primarily comprised of
unrealized gains on common stocks, convertible bonds and net gains
on equity derivatives. At December 31, 2023 the company
continued to hold equity total return swaps on 1,964,155 Fairfax
subordinate voting shares with an original notional amount of
$732.5 million (Cdn$935.0 million) or $372.96 (Cdn$476.03) per
share, on which the company recorded net gains of $624.8 million
(fourth quarter of 2023 - $178.1 million).Net gains on bonds of
$714.1 million primarily reflected net gains on U.S. treasuries and
U.S. treasury bond forward contracts.
- The company's
fixed income portfolio is conservatively positioned with
effectively 69% of the fixed income portfolio invested in
government bonds, 20% in high quality corporate bonds, primarily
short-dated, and 11% in first mortgage loans.
- On December 26,
2023 the company acquired an additional 46.3% equity interest in
Gulf Insurance for $756.1 million which increased the company's
interest to a controlling 90.0%. On closing of the transaction, the
company re-measured its previously held equity accounted investment
in Gulf Insurance and recognized a pre-tax gain of $279.9 million.
The company also commenced consolidating Gulf Insurance and
managing Gulf Insurance's $2.4 billion investment portfolio.
- Excluding the
impact of Fairfax India’s performance fees to Fairfax (an accrual
of $69.4 million in 2023 and a reversal of $36.4 million in 2022),
which are offset upon consolidation, and the impact of non-cash
impairment charges of $107.9 million recorded throughout the year
related to the non-insurance companies, including Farmers Edge,
operating income of the non-insurance companies decreased modestly
to $299.2 million from $318.3 million, primarily reflecting higher
operating expenses at Restaurants and retail, partially offset by
higher business volumes at Dexterra Group and Thomas Cook India. At
December 31, 2023 the holding company had a performance fee
receivable of $110.2 million pursuant to its investment advisory
agreement with Fairfax India for the period from January 1, 2021 to
December 31, 2023. The company elected to receive the performance
fee payable in cash and expects receipt of payment within the first
six months of 2024.
- Net finance
expense from insurance contracts and reinsurance contract assets
held of $1.6 billion in 2023 reflected interest accretion resulting
from the unwinding of the effects of discounting associated with
net claim payments made and the effect of modest decreases in
discount rates during the year, compared to net finance income from
insurance contracts and reinsurance contract assets held of $1.6
billion in 2022 which reflected the benefit of significant
increases in discount rates during 2022 that was partially offset
by the interest accretion.
- Interest expense
of $510.0 million (inclusive of $49.5 million on leases) was
primarily comprised (other than on leases) of $330.5 million
incurred on borrowings by the holding company and the insurance and
reinsurance companies and $130.0 million incurred on borrowings by
the non-insurance companies (which are non-recourse to the holding
company).
- Provision for
income taxes of $813.4 million with an effective tax rate of 13.8%
principally reflected non-taxable investment income that included
the benefit of the gain on the sale of Ambridge by Brit, the tax
rate differential on income and losses outside Canada primarily
related to income taxed at lower rates in the U.S., Bermuda and
Mauritius, and the change in tax rate for deferred income taxes
related to deferred tax assets recognized as a result of new tax
laws in Bermuda during the fourth quarter of 2023 including the
introduction of a 15% corporate income tax effective January 1,
2025.
- The excess of
fair value over carrying value of investments in non-insurance
associates and market traded consolidated non-insurance
subsidiaries increased significantly to $1,006.0 million at
December 31, 2023 from $310.0 million at December 31,
2022, with $315.2 million of that increase related to publicly
traded Eurobank.
- The company's
total debt to total capital ratio, excluding non-insurance
companies, decreased to 23.1% at December 31, 2023 from 23.7%
at December 31, 2022, primarily reflecting increased common
shareholders' equity as a result of the record net earnings
reported in 2023, the impact of the Gulf Insurance transaction and
the issuance of senior notes due 2033 (discussed below).
- On December 7,
2023 the company completed an offering of $400.0 million principal
amount of 6.00% unsecured senior notes due 2033. Subsequent to
December 31, 2023, the company completed a re-opening of those
notes for $200.0 million principal amount and used a portion of the
aggregate net proceeds to redeem its remaining $279.3 million
principal amount of senior notes due 2024. On February 14, 2024 the
company announced that it will use the remainder of the net
proceeds to redeem its Cdn$348.6 million principal amount of senior
notes due 2025.
- During 2023 the
company purchased 110,528 of its subordinate voting shares for
treasury and 364,723 for cancellation at an aggregate cost of
$363.2 million.
There were 23.2 million and 23.6 million
weighted average common shares effectively outstanding during 2023
and 2022 respectively. At December 31, 2023 there were
23,003,248 common shares effectively outstanding.
Consolidated balance sheet, earnings and
comprehensive income information, together with segmented premium
and combined ratio, prior year reserve development and catastrophe
loss information, follow and form part of this news release.
As previously announced, Fairfax will hold a
conference call to discuss its 2023 year-end results at 8:30 a.m.
Eastern time on Friday February 16, 2024. The call, consisting
of a presentation by the company followed by a question period, may
be accessed at 1 (888) 390-0867 (Canada or U.S.) or 1 (212)
547-0141 (International) with the passcode “FAIRFAX”. A replay of
the call will be available from shortly after the termination of
the call until 5:00 p.m. Eastern time on Friday, March 1,
2024. The replay may be accessed at 1 (800) 934-9450 (Canada or
U.S.) or 1 (203) 369-3854 (International).
Fairfax Financial Holdings Limited is a holding
company which, through its subsidiaries, is primarily engaged in
property and casualty insurance and reinsurance and the associated
investment management.
|
For further information, contact: |
John Varnell |
| |
Vice President, Corporate
Development |
| |
(416) 367-4941 |
| |
|
Information onCONSOLIDATED BALANCE SHEETSas at
December 31, 2023, December 31, 2022 and January 1,
2022 (US$ millions except per share amounts)
|
|
|
December 31, 2023(1) |
|
December 31, 2022 |
January 1, 2022 |
|
|
|
|
|
Restated(2) |
Restated(2) |
|
Assets |
|
|
|
|
|
|
Holding company cash and investments (including assets pledged for
derivative obligations – $197.7; December 31, 2022 – $104.6;
January 1, 2022 – $111.0) |
|
1,781.6 |
|
|
|
1,345.8 |
|
1,478.3 |
|
Insurance contract receivables |
|
926.1 |
|
|
|
648.9 |
|
650.1 |
| |
|
|
|
|
|
|
Portfolio investments |
|
|
|
|
|
|
Subsidiary cash and short term investments (including restricted
cash and cash equivalents – $637.0; December 31, 2022 – $854.4;
January 1, 2022 – $1,246.4) |
|
7,165.6 |
|
|
|
9,368.2 |
|
21,799.5 |
|
Bonds (cost $36,511.9; December 31, 2022 – $29,534.4; January 1,
2022 – $13,836.3) |
|
36,850.8 |
|
|
|
28,578.5 |
|
14,091.2 |
|
Preferred stocks (cost $898.3; December 31, 2022 – $808.3; January
1, 2022 – $576.6) |
|
2,447.4 |
|
|
|
2,338.0 |
|
2,405.9 |
|
Common stocks (cost $6,577.2; December 31, 2022 – $5,162.6; January
1, 2022 – $4,717.2) |
|
6,903.4 |
|
|
|
5,124.3 |
|
5,468.9 |
|
Investments in associates (fair value $7,553.2; December 31, 2022 –
$6,772.9; January 1, 2022 – $5,671.9) |
|
6,607.6 |
|
|
|
6,093.1 |
|
4,749.2 |
|
Derivatives and other invested assets (cost $952.0; December 31,
2022 – $869.8; January 1, 2022 – $888.2) |
|
1,025.3 |
|
|
|
828.5 |
|
991.2 |
|
Assets pledged for derivative obligations (cost $137.7; December
31, 2022 – $52.4; January 1, 2022 – $119.6) |
|
139.3 |
|
|
|
51.3 |
|
119.6 |
|
Fairfax India cash, portfolio investments and associates (fair
value $3,507.6; December 31, 2022 – $3,079.6; January 1, 2022 –
$3,336.4) |
|
2,282.7 |
|
|
|
1,942.8 |
|
2,066.0 |
| |
|
63,422.1 |
|
|
|
54,324.7 |
|
51,691.5 |
| |
|
|
|
|
|
|
Reinsurance contract assets held |
|
10,887.7 |
|
|
|
9,691.5 |
|
9,893.1 |
|
Deferred income tax assets |
|
301.1 |
|
|
|
137.3 |
|
449.1 |
|
Goodwill and intangible assets |
|
6,376.3 |
|
|
|
5,689.0 |
|
5,928.2 |
|
Other assets |
|
8,290.2 |
|
|
|
6,981.3 |
|
6,034.1 |
|
Total assets |
|
91,985.1 |
|
|
|
78,818.5 |
|
76,124.4 |
| |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
5,487.2 |
|
|
|
4,806.6 |
|
4,587.6 |
|
Derivative obligations |
|
444.9 |
|
|
|
191.0 |
|
152.9 |
|
Deferred income tax liabilities |
|
1,250.3 |
|
|
|
868.0 |
|
586.5 |
|
Insurance contract payables |
|
1,206.9 |
|
|
|
1,402.7 |
|
1,826.0 |
|
Insurance contract liabilities |
|
46,171.4 |
|
|
|
39,906.6 |
|
39,742.2 |
|
Borrowings – holding company and insurance and reinsurance
companies |
|
7,824.5 |
|
|
|
6,621.0 |
|
6,129.3 |
|
Borrowings – non-insurance companies |
|
1,899.0 |
|
|
|
2,003.9 |
|
1,623.7 |
|
Total liabilities |
|
64,284.2 |
|
|
|
55,799.8 |
|
54,648.2 |
| |
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common shareholders’ equity |
|
21,615.0 |
|
|
|
17,780.3 |
|
15,199.8 |
|
Preferred stock |
|
1,335.5 |
|
|
|
1,335.5 |
|
1,335.5 |
|
Shareholders’ equity attributable to shareholders of Fairfax |
|
22,950.5 |
|
|
|
19,115.8 |
|
16,535.3 |
|
Non-controlling interests |
|
4,750.4 |
|
|
|
3,902.9 |
|
4,940.9 |
|
Total equity |
|
27,700.9 |
|
|
|
23,018.7 |
|
21,476.2 |
| |
|
91,985.1 |
|
|
|
78,818.5 |
|
76,124.4 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Book value per basic
share |
$ |
939.65 |
|
|
$ |
762.28 |
$ |
636.89 |
| |
| (1) Includes
the company's preliminary estimates of the fair values of assets
acquired and liabilities assumed in connection with the acquisition
of Gulf Insurance. Those fair values will be finalized within
twelve months of the acquisition date and differences, if any, from
the company's preliminary estimates will result in
reclassifications between the affected balance sheet lines and
goodwill. |
| (2) Restated
for the transition to IFRS 17. |
| |
Information onCONSOLIDATED STATEMENTS OF
EARNINGSfor the fourth quarters and years ended
December 31, 2023 and 2022(US$ millions except per share
amounts)
| |
Fourth quarter |
|
Year ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| |
|
|
|
Restated(1) |
|
|
|
|
|
Restated(1) |
|
|
Insurance |
|
|
|
|
|
|
|
|
Insurance revenue |
|
6,901.8 |
|
|
|
6,517.6 |
|
|
|
26,934.8 |
|
|
|
24,703.5 |
|
|
Insurance service expenses |
|
(6,022.7 |
) |
|
|
(4,937.8 |
) |
|
|
(21,944.1 |
) |
|
|
(20,467.3 |
) |
|
Net insurance result |
|
879.1 |
|
|
|
1,579.8 |
|
|
|
4,990.7 |
|
|
|
4,236.2 |
|
|
Cost of reinsurance |
|
(1,220.9 |
) |
|
|
(1,211.6 |
) |
|
|
(4,977.4 |
) |
|
|
(4,509.2 |
) |
|
Recoveries of insurance service expenses |
|
1,258.0 |
|
|
|
649.7 |
|
|
|
3,943.7 |
|
|
|
3,274.4 |
|
|
Net reinsurance result |
|
37.1 |
|
|
|
(561.9 |
) |
|
|
(1,033.7 |
) |
|
|
(1,234.8 |
) |
|
Insurance service result |
|
916.2 |
|
|
|
1,017.9 |
|
|
|
3,957.0 |
|
|
|
3,001.4 |
|
|
Other insurance operating expenses |
|
(307.6 |
) |
|
|
(197.4 |
) |
|
|
(966.4 |
) |
|
|
(656.4 |
) |
|
Net finance income (expense) from insurance contracts |
|
(1,318.9 |
) |
|
|
62.5 |
|
|
|
(2,152.7 |
) |
|
|
2,014.4 |
|
|
Net finance income (expense) from reinsurance contract assets
held |
|
308.6 |
|
|
|
(17.2 |
) |
|
|
547.1 |
|
|
|
(397.1 |
) |
| |
|
(401.7 |
) |
|
|
865.8 |
|
|
|
1,385.0 |
|
|
|
3,962.3 |
|
|
Investment income |
|
|
|
|
|
|
|
|
Interest and dividends |
|
536.6 |
|
|
|
333.3 |
|
|
|
1,896.2 |
|
|
|
961.8 |
|
|
Share of profit of associates |
|
127.7 |
|
|
|
258.4 |
|
|
|
1,022.2 |
|
|
|
1,022.4 |
|
|
Net gains (losses) on investments |
|
1,464.4 |
|
|
|
496.2 |
|
|
|
1,949.5 |
|
|
|
(1,573.2 |
) |
| |
|
2,128.7 |
|
|
|
1,087.9 |
|
|
|
4,867.9 |
|
|
|
411.0 |
|
|
Other revenue and expenses |
|
|
|
|
|
|
|
|
Non-insurance revenue |
|
1,752.0 |
|
|
|
1,668.5 |
|
|
|
6,614.5 |
|
|
|
5,581.6 |
|
|
Non-insurance expenses |
|
(1,777.7 |
) |
|
|
(1,622.5 |
) |
|
|
(6,568.7 |
) |
|
|
(5,520.9 |
) |
|
Gain on sale and consolidation of insurance subsidiaries |
|
290.7 |
|
|
|
1,219.7 |
|
|
|
549.8 |
|
|
|
1,219.7 |
|
|
Interest expense |
|
(130.5 |
) |
|
|
(125.7 |
) |
|
|
(510.0 |
) |
|
|
(452.8 |
) |
|
Corporate and other expenses |
|
(158.2 |
) |
|
|
(66.7 |
) |
|
|
(430.2 |
) |
|
|
(296.7 |
) |
| |
|
(23.7 |
) |
|
|
1,073.3 |
|
|
|
(344.6 |
) |
|
|
530.9 |
|
|
Earnings before income taxes |
|
1,703.3 |
|
|
|
3,027.0 |
|
|
|
5,908.3 |
|
|
|
4,904.2 |
|
|
Provision for income taxes |
|
(28.5 |
) |
|
|
(546.1 |
) |
|
|
(813.4 |
) |
|
|
(1,092.5 |
) |
|
Net earnings |
|
1,674.8 |
|
|
|
2,480.9 |
|
|
|
5,094.9 |
|
|
|
3,811.7 |
|
| |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
|
1,328.5 |
|
|
|
2,318.1 |
|
|
|
4,381.8 |
|
|
|
3,374.2 |
|
|
Non-controlling interests |
|
346.3 |
|
|
|
162.8 |
|
|
|
713.1 |
|
|
|
437.5 |
|
| |
|
1,674.8 |
|
|
|
2,480.9 |
|
|
|
5,094.9 |
|
|
|
3,811.7 |
|
| |
|
|
|
|
|
|
|
|
Net earnings per share |
$ |
57.02 |
|
|
$ |
98.62 |
|
|
$ |
186.87 |
|
|
$ |
140.83 |
|
|
Net earnings per diluted share |
$ |
52.87 |
|
|
$ |
91.87 |
|
|
$ |
173.24 |
|
|
$ |
131.37 |
|
|
Cash dividends paid per share |
$ |
— |
|
|
$ |
— |
|
|
$ |
10.00 |
|
|
$ |
10.00 |
|
|
Shares outstanding (000) (weighted average) |
|
23,076 |
|
|
|
23,387 |
|
|
|
23,183 |
|
|
|
23,638 |
|
|
|
| (1) Restated
for the transition to IFRS 17. |
|
|
Information onCONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME for the fourth quarters and years ended
December 31, 2023 and 2022(US$ millions)
| |
Fourth quarter |
|
Year ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
| |
|
|
Restated(1) |
|
|
|
|
Restated(1) |
|
| |
|
|
|
|
|
|
|
|
Net earnings |
1,674.8 |
|
|
2,480.9 |
|
|
5,094.9 |
|
|
3,811.7 |
|
| |
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Items that may be reclassified to net
earnings |
|
|
|
|
|
|
|
|
Net unrealized foreign currency translation gains (losses) on
foreign subsidiaries |
123.0 |
|
|
208.3 |
|
|
(39.6 |
) |
|
(676.6 |
) |
|
Gains (losses) on hedge of net investment in Canadian
subsidiaries |
(52.1 |
) |
|
(28.6 |
) |
|
(56.6 |
) |
|
149.5 |
|
|
Gains (losses) on hedge of net investment in European
operations |
(34.2 |
) |
|
(65.0 |
) |
|
(27.8 |
) |
|
51.8 |
|
|
Share of other comprehensive gains (losses) of associates,
excluding net gains (losses) on defined benefit plans |
97.3 |
|
|
107.8 |
|
|
30.5 |
|
|
(132.0 |
) |
|
Other |
(7.2 |
) |
|
(0.9 |
) |
|
0.3 |
|
|
2.2 |
|
| |
126.8 |
|
|
221.6 |
|
|
(93.2 |
) |
|
(605.1 |
) |
|
Net unrealized foreign currency translation losses on foreign
subsidiaries reclassified to net earnings |
— |
|
|
19.7 |
|
|
1.9 |
|
|
19.7 |
|
|
Net unrealized foreign currency translation (gains) losses on
associates reclassified to net earnings |
19.8 |
|
|
(3.0 |
) |
|
18.2 |
|
|
(4.3 |
) |
| |
146.6 |
|
|
238.3 |
|
|
(73.1 |
) |
|
(589.7 |
) |
|
Items that will not be reclassified to net
earnings |
|
|
|
|
|
|
|
|
Net gains (losses) on defined benefit plans |
(46.8 |
) |
|
16.2 |
|
|
(32.9 |
) |
|
121.7 |
|
|
Share of net gains (losses) on defined benefit plans of
associates |
(1.1 |
) |
|
— |
|
|
(5.1 |
) |
|
59.4 |
|
|
Other |
7.2 |
|
|
— |
|
|
28.2 |
|
|
— |
|
| |
(40.7 |
) |
|
16.2 |
|
|
(9.8 |
) |
|
181.1 |
|
| |
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of income
taxes |
105.9 |
|
|
254.5 |
|
|
(82.9 |
) |
|
(408.6 |
) |
|
Comprehensive income |
1,780.7 |
|
|
2,735.4 |
|
|
5,012.0 |
|
|
3,403.1 |
|
| |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Shareholders of Fairfax |
1,436.3 |
|
|
2,539.3 |
|
|
4,353.4 |
|
|
3,163.5 |
|
|
Non-controlling interests |
344.4 |
|
|
196.1 |
|
|
658.6 |
|
|
239.6 |
|
| |
1,780.7 |
|
|
2,735.4 |
|
|
5,012.0 |
|
|
3,403.1 |
|
| |
| (1) Restated
for the transition to IFRS 17. |
| |
SEGMENTED INFORMATION (US$ millions)
Third party gross premiums written, net premiums
written and combined ratios, on an undiscounted basis, for the
property and casualty insurance and reinsurance operations
(excluding Life insurance and Run-off) in the fourth quarters and
full years ended December 31, 2023 and 2022 were as
follows:
Gross Premiums Written
| |
Fourth quarter |
|
Year ended December 31, |
|
% change year-over-year |
| |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Fourth quarter |
|
Full year |
|
Northbridge |
623.7 |
|
594.6 |
|
2,442.2 |
|
2,301.7 |
|
4.9 |
% |
|
6.1 |
% |
|
Crum & Forster |
1,296.1 |
|
1,137.2 |
|
5,217.5 |
|
4,571.3 |
|
14.0 |
% |
|
14.1 |
% |
|
Zenith National |
149.1 |
|
139.0 |
|
738.3 |
|
727.9 |
|
7.3 |
% |
|
1.4 |
% |
| North
American Insurers |
2,068.9 |
|
1,870.8 |
|
8,398.0 |
|
7,600.9 |
|
10.6 |
% |
|
10.5 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
1,461.5 |
|
1,424.1 |
|
6,840.5 |
|
6,490.0 |
|
2.6 |
% |
|
5.4 |
% |
|
Odyssey Group(1) |
1,314.6 |
|
1,765.9 |
|
6,332.6 |
|
6,559.7 |
|
(25.6) |
% |
|
(3.5) |
% |
|
Brit(2) |
799.3 |
|
1,007.6 |
|
3,731.7 |
|
3,945.9 |
|
(20.7) |
% |
|
(5.4) |
% |
| Global
Insurers and Reinsurers |
3,575.4 |
|
4,197.6 |
|
16,904.8 |
|
16,995.6 |
|
(14.8) |
% |
|
(0.5) |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
International Insurers and Reinsurers |
934.8 |
|
734.1 |
|
3,587.3 |
|
2,965.2 |
|
27.3 |
% |
|
21.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Property
and casualty insurance and reinsurance |
6,579.1 |
|
6,802.5 |
|
28,890.1 |
|
27,561.7 |
|
(3.3) |
% |
|
4.8 |
% |
| |
Net Premiums Written
| |
Fourth quarter |
|
Year ended December 31, |
|
% change year-over-year |
| |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Fourth quarter |
|
Full year |
|
Northbridge |
557.0 |
|
529.5 |
|
2,145.4 |
|
2,059.3 |
|
5.2 |
% |
|
4.2 |
% |
|
Crum & Forster |
937.3 |
|
847.5 |
|
3,902.3 |
|
3,658.4 |
|
10.6 |
% |
|
6.7 |
% |
|
Zenith National |
153.5 |
|
144.6 |
|
755.1 |
|
739.9 |
|
6.2 |
% |
|
2.1 |
% |
| North American
Insurers |
1,647.8 |
|
1,521.6 |
|
6,802.8 |
|
6,457.6 |
|
8.3 |
% |
|
5.3 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Allied World |
960.8 |
|
935.0 |
|
4,839.5 |
|
4,456.1 |
|
2.8 |
% |
|
8.6 |
% |
|
Odyssey Group(1) |
1,162.5 |
|
1,541.2 |
|
5,740.6 |
|
5,908.0 |
|
(24.6) |
% |
|
(2.8) |
% |
|
Brit(2) |
686.7 |
|
882.1 |
|
2,982.7 |
|
3,142.2 |
|
(22.2) |
% |
|
(5.1) |
% |
| Global Insurers and
Reinsurers |
2,810.0 |
|
3,358.3 |
|
13,562.8 |
|
13,506.3 |
|
(16.3) |
% |
|
0.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| International Insurers
and Reinsurers |
645.9 |
|
518.1 |
|
2,329.8 |
|
1,963.1 |
|
24.7 |
% |
|
18.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Property and casualty
insurance and reinsurance |
5,103.7 |
|
5,398.0 |
|
22,695.4 |
|
21,927.0 |
|
(5.5) |
% |
|
3.5 |
% |
| |
Combined Ratios
| |
Fourth quarter |
|
Year ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Northbridge |
91.5 |
% |
|
92.5 |
% |
|
91.1 |
% |
|
89.4 |
% |
|
Crum & Forster |
95.9 |
% |
|
94.2 |
% |
|
97.7 |
% |
|
94.5 |
% |
|
Zenith National |
87.0 |
% |
|
95.2 |
% |
|
93.8 |
% |
|
94.7 |
% |
| North American
Insurers |
93.6 |
% |
|
93.8 |
% |
|
95.2 |
% |
|
92.9 |
% |
| |
|
|
|
|
|
|
|
|
Allied World |
86.1 |
% |
|
88.7 |
% |
|
89.5 |
% |
|
90.7 |
% |
|
Odyssey Group |
88.1 |
% |
|
88.0 |
% |
|
93.4 |
% |
|
96.3 |
% |
|
Brit(2) |
88.3 |
% |
|
88.2 |
% |
|
91.9 |
% |
|
97.9 |
% |
| Global Insurers and
Reinsurers |
87.5 |
% |
|
88.3 |
% |
|
91.7 |
% |
|
94.8 |
% |
| |
|
|
|
|
|
|
|
| International Insurers
and Reinsurers |
93.4 |
% |
|
101.4 |
% |
|
95.9 |
% |
|
99.3 |
% |
| |
|
|
|
|
|
|
|
| Property and casualty
insurance and reinsurance |
89.9 |
% |
|
90.9 |
% |
|
93.2 |
% |
|
94.7 |
% |
| |
|
(1) Excluding the non-renewal of a significant quota share
contract which contributed nominal underwriting profit, gross
premiums written and net premiums written decreased by 6.5% and
2.8% in the fourth quarter of 2023, and increased by 1.7% and 2.9%
in the full year of 2023. |
|
(2) Excluding Ki Insurance, gross premiums written decreased
by 19.7% and 8.3% in the fourth quarter and full year of 2023 and
net premiums written decreased by 21.4% and 6.6% in the fourth
quarter and full year of 2023. Excluding Ki Insurance, the combined
ratios were 88.4% and 91.7% in the fourth quarter and full year of
2023 and 89.0% and 97.6% in the fourth quarter and full year of
2022, reflecting Brit's strategic underwriting actions to reduce
both its gross and net property catastrophe exposure. |
| |
Prior year reserve development and current
period catastrophe losses of the property and casualty insurance
and reinsurance operations (which excludes Life insurance and
Run-off) in the fourth quarters and full years ended
December 31, 2023 and 2022 were as follows:
Net (Favourable) Adverse Prior Year Reserve
Development
| |
Fourth quarter |
|
Year ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
Northbridge |
(29.0 |
) |
|
(15.3 |
) |
|
(75.9 |
) |
|
(33.1 |
) |
|
Crum & Forster |
(0.1 |
) |
|
(0.1 |
) |
|
(0.5 |
) |
|
(0.5 |
) |
|
Zenith National |
(19.7 |
) |
|
(8.9 |
) |
|
(50.8 |
) |
|
(43.6 |
) |
| North American
Insurers |
(48.8 |
) |
|
(24.3 |
) |
|
(127.2 |
) |
|
(77.2 |
) |
| |
|
|
|
|
|
|
|
|
Allied World |
1.4 |
|
|
(0.1 |
) |
|
— |
|
|
30.5 |
|
|
Odyssey Group |
(86.1 |
) |
|
(45.7 |
) |
|
(78.6 |
) |
|
(49.9 |
) |
|
Brit |
(2.8 |
) |
|
9.6 |
|
|
(3.0 |
) |
|
(1.7 |
) |
| Global Insurers and
Reinsurers |
(87.5 |
) |
|
(36.2 |
) |
|
(81.6 |
) |
|
(21.1 |
) |
| |
|
|
|
|
|
|
|
| International Insurers
and Reinsurers |
(15.4 |
) |
|
(18.1 |
) |
|
(100.8 |
) |
|
(97.9 |
) |
| |
|
|
|
|
|
|
|
| Property and casualty
insurance and reinsurance |
(151.7 |
) |
|
(78.6 |
) |
|
(309.6 |
) |
|
(196.2 |
) |
| |
Current Period Catastrophe
Losses
| |
|
Fourth quarter |
|
|
Year ended December 31, |
| |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
| |
Losses(1) |
|
Combinedratio
impact(2) |
|
Losses(1) |
|
Combinedratio impact(2) |
|
Losses(1) |
|
Combinedratio
impact(2) |
|
Losses(1) |
|
Combinedratio impact(2) |
|
Hawaii wildfires |
|
3.3 |
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
183.6 |
|
|
0.8 |
|
|
|
— |
|
|
— |
|
|
Turkey earthquake |
|
1.2 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
113.0 |
|
|
0.5 |
|
|
|
— |
|
|
— |
|
|
Italy hailstorms |
|
30.8 |
|
|
0.5 |
|
|
|
— |
|
|
|
— |
|
|
|
47.2 |
|
|
0.2 |
|
|
|
— |
|
|
— |
|
|
Hurricane Ian |
|
— |
|
|
— |
|
|
|
6.4 |
|
|
|
0.2 |
|
|
|
— |
|
|
— |
|
|
|
567.0 |
|
|
2.8 |
|
|
France hailstorms |
|
— |
|
|
— |
|
|
|
22.8 |
|
|
|
0.4 |
|
|
|
— |
|
|
— |
|
|
|
118.7 |
|
|
0.6 |
|
|
Australian floods |
|
— |
|
|
— |
|
|
|
(2.4 |
) |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
71.4 |
|
|
0.3 |
|
|
Other |
|
146.6 |
|
|
2.6 |
|
|
|
130.4 |
|
|
|
2.4 |
|
|
|
553.5 |
|
|
2.5 |
|
|
|
498.6 |
|
|
2.4 |
|
| Total catastrophe losses |
|
181.9 |
|
|
3.2 |
|
|
|
157.2 |
|
|
|
3.0 |
|
|
|
897.3 |
|
|
4.0 |
|
|
|
1,255.7 |
|
|
6.1 |
|
| |
| (1) Net of
reinstatement premiums. |
|
(2) Expressed in combined ratio points. |
| |
Certain statements contained herein may
constitute forward-looking statements and are made pursuant to the
“safe harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995 and any applicable Canadian
securities regulations. Such forward-looking statements are subject
to known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of
Fairfax to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to: our ability to complete acquisitions and other
strategic transactions on the terms and timeframes contemplated,
and to achieve the anticipated benefits therefrom; a reduction in
net earnings if our loss reserves are insufficient; underwriting
losses on the risks we insure that are higher than expected; the
occurrence of catastrophic events with a frequency or severity
exceeding our estimates; changes in market variables, including
unfavourable changes in interest rates, foreign exchange rates,
equity prices and credit spreads, which could negatively affect our
investment portfolio; the cycles of the insurance market and
general economic conditions, which can substantially influence our
and our competitors’ premium rates and capacity to write new
business; insufficient reserves for asbestos, environmental and
other latent claims; exposure to credit risk in the event our
reinsurers fail to make payments to us under our reinsurance
arrangements; exposure to credit risk in the event our insureds,
insurance producers or reinsurance intermediaries fail to remit
premiums that are owed to us or failure by our insureds to
reimburse us for deductibles that are paid by us on their behalf;
our inability to maintain our long term debt ratings, the inability
of our subsidiaries to maintain financial or claims paying ability
ratings and the impact of a downgrade of such ratings on derivative
transactions that we or our subsidiaries have entered into; risks
associated with implementing our business strategies; the timing of
claims payments being sooner or the receipt of reinsurance
recoverables being later than anticipated by us; risks associated
with any use we may make of derivative instruments; the failure of
any hedging methods we may employ to achieve their desired risk
management objective; a decrease in the level of demand for
insurance or reinsurance products, or increased competition in the
insurance industry; the impact of emerging claim and coverage
issues or the failure of any of the loss limitation methods we
employ; our inability to access cash of our subsidiaries; our
inability to obtain required levels of capital on favourable terms,
if at all; the loss of key employees; our inability to obtain
reinsurance coverage in sufficient amounts, at reasonable prices or
on terms that adequately protect us; the passage of legislation
subjecting our businesses to additional adverse requirements,
supervision or regulation, including additional tax regulation, in
the United States, Canada or other jurisdictions in which we
operate; risks associated with applicable laws and regulations
relating to sanctions and corrupt practices in foreign
jurisdictions in which we operate; risks associated with government
investigations of, and litigation and negative publicity related
to, insurance industry practice or any other conduct; risks
associated with political and other developments in foreign
jurisdictions in which we operate; risks associated with legal or
regulatory proceedings or significant litigation; failures or
security breaches of our computer and data processing systems; the
influence exercisable by our significant shareholder; adverse
fluctuations in foreign currency exchange rates; our dependence on
independent brokers over whom we exercise little control;
operational, financial reporting and other risks associated with
IFRS 17; impairment of the carrying value of our goodwill,
indefinite-lived intangible assets or investments in associates;
our failure to realize deferred income tax assets; technological or
other change which adversely impacts demand, or the premiums
payable, for the insurance coverages we offer; disruptions of our
information technology systems; assessments and shared market
mechanisms which may adversely affect our insurance subsidiaries;
risks associated with the global pandemic caused by COVID-19, the
conflicts in Ukraine and Israel and the development of other
geopolitical events and economic disruptions worldwide; and risks
associated with recent events in the banking sector which have
elevated concerns among market participants about the liquidity,
default and non-performance risk associated with banks, other
financial institutions and the financial services industry
generally. Additional risks and uncertainties are described in our
most recently issued Annual Report, which is available at
www.fairfax.ca, and in our Base Shelf Prospectus (under “Risk
Factors”) filed with the securities regulatory authorities in
Canada, which is available on SEDAR+ at www.sedarplus.ca. Fairfax
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
securities law.
GLOSSARY OF NON-GAAP AND OTHER FINANCIAL
MEASURES
Management analyzes and assesses the underlying
insurance and reinsurance operations, and the financial position of
the consolidated company, through various measures and ratios.
Certain of the measures and ratios provided in this news release,
which have been used consistently and disclosed regularly in the
company's Annual Reports and interim financial reporting, do not
have a prescribed meaning under IFRS Accounting Standards and may
not be comparable to similar measures presented by other companies.
Those measures and ratios are described below.
Underwriting profit (loss) – A
measure of underwriting performance calculated as insurance service
result with the effects of discounting for net claims incurred in
the current period, changes in the risk adjustment and other, and
other insurance operating expenses all removed as shown in the
table on page 3 of this news release.
Operating income (loss) – This
measure is used by the company as a pre-tax performance measure of
operations that excludes net finance income (expense) from
insurance contracts and reinsurance contract assets held, net gains
(losses) on investments, interest expense and corporate overhead
and other, and that includes interest and dividends and share of
profit (loss) of associates, which the company considers to be more
predictable sources of investment income. Operating income (loss)
includes the insurance service result and other insurance operating
expenses of the insurance and reinsurance operations and the
revenue and expenses of the non-insurance companies. A
reconciliation of operating income (loss) to earnings before income
taxes, the most directly comparable IFRS measure, is presented in
the table on page 2 of this news release.
Adjusted operating income
(loss) – Calculated as the sum of underwriting profit
(loss), interest and dividends and share of profit of associates,
this measure is used in a similar manner to operating income
(loss).
Combined ratio – A traditional
performance measure of underwriting results of property and
casualty companies, it is calculated by the company as underwriting
expense (comprised of losses on claims, commissions and other
underwriting expenses) expressed as a percentage of net premiums
earned. Net premiums earned is calculated as insurance revenue less
cost of reinsurance, adjusted for net commission expense on assumed
business and other. Underwriting expense is calculated as insurance
service expenses less recoveries of insurance service expenses and
other insurance operating expenses, adjusted for the effects of
discounting, risk adjustment and other. The combined ratio is used
by the company for comparisons to historical underwriting results,
to the underwriting results of competitors and to the broader
property and casualty industry, as well as for evaluating the
performance of individual operating companies. The company may also
refer to combined ratio points, which expresses a
loss that is a component of losses on claims, net, such as a
catastrophe loss or prior year reserve development, as a percentage
of net premiums earned during the same period.
Float – In the insurance
industry the funds available for investment that arise as an
insurance or reinsurance operation receives premiums in advance of
the payment of claims is referred to as float. The company
calculates its float as the sum of its insurance contract
liabilities and insurance contract payables, less the sum of its
reinsurance contract assets held and insurance contract
receivables, adjusted to remove the effects of discounting and risk
adjustment from insurance contract liabilities and reinsurance
contract assets held.
Book value per basic share –
The company considers book value per basic share a key performance
measure as one of the company’s stated objectives is to build long
term shareholder value by compounding book value per basic share by
15% annually over the long term. This measure is calculated by the
company as common shareholders' equity divided by the number of
common shares effectively outstanding.
Total debt to total capital ratio,
excluding non-insurance companies – The company uses this
ratio to assess the amount of leverage employed in its operations.
As the borrowings of the non-insurance companies are non-recourse
to the Fairfax holding company, this ratio excludes the borrowings
and non-controlling interests of the non-insurance companies in
calculating total debt and total capital, respectively.
| |
December 31, 2023 |
|
December 31, 2022 |
| |
As presented in information on the consolidated balance
sheet |
|
Adjust for consolidatednon-insurance
companies |
|
Excluding consolidatednon-insurance
companies |
|
As presented in information on the consolidated balance sheet |
|
Adjust for consolidatednon-insurance companies |
|
Excluding consolidatednon-insurance companies |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Total debt |
9,723.5 |
|
|
1,899.0 |
|
7,824.5 |
|
|
8,624.9 |
|
|
2,003.9 |
|
6,621.0 |
|
| Total equity |
27,700.9 |
|
|
1,634.6 |
|
26,066.3 |
|
|
23,018.7 |
|
|
1,690.4 |
|
21,328.3 |
|
| Total capital |
37,424.4 |
|
|
|
|
33,890.8 |
|
|
31,643.6 |
|
|
|
|
27,949.3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Total debt to total capital
ratio |
26.0 |
% |
|
|
|
23.1 |
% |
|
27.3 |
% |
|
|
|
23.7 |
% |
| |
Excess (deficiency) of fair value over
carrying value – These pre-tax amounts, while not included
in the calculation of book value per basic share, are regularly
reviewed by management as an indicator of investment performance
for the company's non-insurance associates and market traded
consolidated non-insurance subsidiaries that are considered to be
portfolio investments, which are Fairfax India, Thomas Cook India,
Dexterra Group, Boat Rocker and Farmers Edge.
In the determination of this non-GAAP
performance measure the fair value and carrying value of
non-insurance associates at December 31, 2023 were $6,825.9
and $6,221.7 (December 31, 2022 - $5,684.3 and $5,418.0),
which are the IFRS fair values and carrying values included in
information on the consolidated balance sheets as at
December 31, 2023 and 2022. Excluded from this performance
measure are (i) insurance and reinsurance associates and (ii)
associates held by market traded consolidated non-insurance
companies that are already included in the carrying values of those
companies.
The fair values of market traded consolidated
non-insurance companies 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 carrying value of each subsidiary represents Fairfax's share of
that subsidiary's net assets, calculated as the subsidiary's total
assets, less total liabilities and non-controlling interests. All
balances used in the calculation of carrying value are those
included in the company's information on consolidated balance
sheets as at December 31, 2023 and 2022.
Grafico Azioni Fairfax Financial (TSX:FFH.U)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Fairfax Financial (TSX:FFH.U)
Storico
Da Gen 2024 a Gen 2025
