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Fairfax profit up as cat losses decline

Canadian company Fairfax Financial Holdings, which has acquired Allied World, says second-quarter net earnings jumped 31% to $US311.6 million ($393.4 million).

“Our insurance companies continued to have excellent underwriting performance in the second quarter and first half,” Chairman and CEO Prem Watsa said. “All our insurance companies again had combined operating ratios less than 100%.”

Gross written premium grew to $US2.77 billion ($3.5 billion) from $US2.62 billion ($3.31 billion) and underwriting profit increased to $US108.4 million ($136.9 million) from $US82.3 million ($103.9 million).

The combined operating ratio for the insurance and reinsurance operations improved to 94.9% from 95.7% as catastrophe losses declined compared with the corresponding period last year, when the Fort McMurray wildfires destroyed homes and buildings in Alberta province.

Fairfax and co-investors completed the acquisition of a 94.6% stake in Allied World last month and will mop up the remaining shares this quarter. Fairfax will then have a 67% interest, with its partners holding 33%.

The Toronto-based company this year offered to buy New Zealand insurer Tower. But talks were halted after Vero trumped its bid. Vero’s offer was later blocked by the competition regulator.