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Cat losses dent Fairfax underwriting performance

Fairfax Financial Holdings, which is acquiring New Zealand insurer Tower, says higher catastrophe losses hit its underwriting income last year.

Underwriting profit fell to $US575.9 million ($751.1 million) from $US704.5 million ($918.8 million) in 2015, and the combined operating ratio for insurance and reinsurance operations deteriorated to 92.5% from 89.9%.

Operating income dropped to $US1.04 billion ($1.36 billion) from $US1.18 billion ($1.54 billion), while gross written premium increased to $US9.5 billion ($12.39 billion) from $US8.7 billion ($11.35 billion).

The Canadian holding company says its $NZ197 million ($184.4 million) acquisition of Tower is expected to be completed in the second quarter, pending regulatory approval and backing from the New Zealand insurer’s shareholders.

Fairfax made an overall net loss of $US512.5 million ($668.36 million) last year, compared with a $US567.7 million ($740.36 million) net profit in 2015, due to bigger investment losses and higher corporate overheads.

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