Fairfax Financial reports Q3 profit down from year ago on lower investment gains
Fairfax Financial Holdings Ltd. reported a drop in quarterly profit compared with a year ago as the company saw lower investment gains.
The insurance and investment management firm, which keeps its books in U.S. dollars, said Thursday it earned US$219 million or $10.24 per diluted share for the quarter ended Sept. 30 compared with a profit of $562.4 million or $30.88 per diluted share a year ago.
Revenue totaled $1.68 billion, down from $2.2 billion.
Gains on investments for the quarter totaled $68.1 million compared with $797.8 million a year ago.
The average analyst estimate had be for earnings of $8.25 per share, based on two analysts polled by Thomson Reuters.
“We acquired 41.3 per cent of Gulf Insurance Co., which has an insurance presence in seven countries across the Middle East and North Africa, for $217.1 million, and still ended the third quarter with $1.3 billion of cash and marketable securities at the holding company level,” chairman and chief executive Prem Watsa said in a statement.
“Our financial position continues to be very strong as we manage through the prevailing soft insurance markets.”
Earlier this year, Fairfax bought the remaining 82 per cent of U.S. insurer Zenith National Insurance Corp., workers’ compensation specialist at US$1.4 billion. The offer of US$38 per share valued Zenith at US$1.4 billion, about 31.4 per cent above the market price at the time of the acquisition announcement.
Fairfax also acquired a 19.7 per cent stake in Mega Brands Inc. as part of a US$218.1 million recapitalization of the Montreal-based toy company, maker of the Mega Bloks construction sets.
For a time during the spring, Fairfax was working with Torstar Corp. on a joint bid for the Canwest newspapers but the publications were eventually sold to a group led by Paul Godfrey.
Fairfax is a property and casualty insurance and reinsurance holding company with operations around the world.
