Investing.com -- Fairfax Financial Holdings reported lower third-quarter earnings on Tuesday as investment losses, driven largely by rising interest rates and declines in bond valuations, offset stronger performance across its insurance and reinsurance operations.
Net earnings attributable to Fairfax shareholders fell 19.3% to $929.6 million, or $43.32 per diluted share, from $1.15 billion, or $52.04 per diluted share, a year earlier.
The results highlight a divergence between Fairfax's core insurance operations, which continued to deliver strong underwriting performance and premium growth, and its investment portfolio, where interest-rate-driven bond losses weighed heavily on earnings. Despite the quarterly profit decline, the company increased its book value per share and continued to pursue major strategic acquisitions, including its proposed $5.6 billion purchase of a controlling stake in India's IDBI Bank.
Fairfax Chairman and Chief Executive Prem Watsa said the company continued to deliver strong underwriting results and highlighted its selection by the Indian government as the strategic buyer for a 60.72% stake in IDBI Bank.
The proposed acquisition is valued at approximately $5.6 billion, with Fairfax considering a combination of cash, existing credit facilities, asset sales and contributions of its interests in Digit and IIFL Capital to finance the transaction. Definitive agreements and regulatory approvals remain outstanding.
Fairfax's book value per basic share increased 8.4%, adjusted for dividends, to $1,349.15 at the end of September from $1,260.19 at the end of 2025.
The decline came despite improved operating performance in its core property and casualty insurance business. Adjusted operating income from insurance and reinsurance operations rose 2.4% to $1.38 billion from $1.34 billion a year earlier, supported by underwriting profits, investment income and higher contributions from associates.
The company's investment portfolio recorded net losses of $858.7 million in the quarter, compared with net gains of $426.2 million in the same period last year. Bond losses accounted for $827.7 million of the decline, largely reflecting unrealized losses on U.S. Treasuries as interest rates increased. Fairfax also recorded $257.9 million in unrealized losses on preferred shares, primarily related to its investment in Digit.
Insurance underwriting remained solid, with underwriting profit reaching $523.9 million, compared with $540.3 million a year earlier. The undiscounted combined ratio, a key measure of underwriting profitability, stood at 92.5%, compared with 92% in the prior-year quarter. A ratio below 100% indicates that an insurer collected more in premiums than it paid out in claims and expenses.
Gross premiums written in the property and casualty insurance and reinsurance operations increased 9.3% to $8.94 billion, while net premiums written rose 5.4% to $6.91 billion, reflecting growth across its international and global insurance businesses.
Original Article
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