FAIRFAX News Release
Stock Symbol: FFH (TSX and NYSE)
TORONTO, October 29, 2009
THIRD QUARTER FINANCIAL RESULTS
(Note: All dollar amounts in this news release are expressed in U.S. dollars, except as otherwise noted.)
Fairfax Financial Holdings Limited (TSX and NYSE: FFH) announces increased net earnings of $562.4
million in the third quarter of 2009 ($31.04 per share and $30.88 per diluted share) compared to net
earnings of $467.6 million in the third quarter of 2008 ($25.40 per share and $25.27 per diluted share).
The year-over-year increase in quarterly net earnings derived primarily from improved underwriting
profit at the company’s insurance and reinsurance operations (compared to a significant underwriting loss
in the third quarter of 2008 principally related to hurricane losses) and increased interest and dividend
income, partially offset by reduced net investment gains ($797.8 million, compared to $864.6 million of
net gains on investments in the third quarter of 2008). In the first nine months of 2009, net earnings were
$777.4 million ($43.66 per share and $43.42 per diluted share) compared to $1,127.0 million in the first
nine months of 2008 ($60.63 per share and $59.89 per diluted share), reflecting the significant investment
gains on credit default swaps and equity hedges in the first nine months of 2008.
Primarily as a result of significant net earnings and the increased market value of the company’s common
stock and bond investments, book value increased to $371.85 per basic share at September 30, 2009 from
$315.91 at June 30, 2009 and $278.28 at December 31, 2008.
“Our third quarter in 2009 was a key milestone in the history of Fairfax,” said Prem Watsa, Chairman and
Chief Executive Officer of Fairfax. “Besides excellent results, we have now privatized OdysseyRe and
we financed it by issuing $1 billion of common stock. We have also now publicly issued 10-year bonds
and preferred shares in Canada for the first time ever. After the OdysseyRe privatization, Fairfax
continues to have in excess of $1 billion in cash and marketable securities at the holding company level,
and also has a significantly increased annual dividend capacity from its three major insurance/reinsurance
operations. We ended the quarter with common shareholders’ equity of $7.5 billion and a book value per
basic share of $371.85; including the $8 per share dividend paid in the first quarter, book value per share
was up 36.1% in the first nine months of the year. Our company has never been stronger.”
Highlights in the third quarter included the following:
• The combined ratio of the company’s insurance and reinsurance operations in the third quarter of
2009 was 99.8% on a consolidated basis. Underwriting profit earned by the company’s insurance
and reinsurance operations in the third quarter of 2009 improved to $1.6 million from an
underwriting loss of $170.3 million in the third quarter of 2008 primarily related to U.S.
hurricane losses.
• Interest and dividend income of $184.7 million in the third quarter of 2009 increased 36.2% from
$135.6 million in the third quarter of 2008. The year-over-year increase was primarily
attributable to the impact on portfolio yield in 2009 of the purchases in the fourth quarter of 2008
and in 2009 of higher yielding municipal and other tax-exempt debt securities and corporate
bonds using the proceeds of sale of lower yielding government bonds, and the inclusion of the
financial results of Advent and Polish Re in the third quarter of 2009. Interest income as reported
is unadjusted for the positive tax effect of the company’s significant holdings of tax-advantaged