Fairfax Financial Holdings Limited: Financial Results for the Second Quarter
(Note: All dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are derived from unaudited interim consolidated financial statements for the three and six months ended June 30, 2025 prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") applicable to the preparation of interim financial statements, including International Accounting Standard 34 Interim Financial Reporting. This news release contains certain non-GAAP and other financial measures, including underwriting profit (loss), adjusted operating income (loss), gross premiums written, net premiums written, combined ratio (both discounted and undiscounted), book value per basic share, total debt to total capital ratio excluding non-insurance companies and excess (deficiency) of fair value over carrying value, that do not have a prescribed meaning under IFRS Accounting Standards and may not be comparable to similar financial measures presented by other issuers. See "Glossary of non-GAAP and other financial measures" at the end of this news release and in the company's Interim Report for the three and six months ended June 30, 2025 for further details.)
TORONTO, July 31, 2025 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (TSX:FFH) announces net earnings of $1,436.7 million ($61.61 net earnings per diluted share) in the second quarter of 2025 compared to net earnings of $915.4 million ($37.18 net earnings per diluted share) in the second quarter of 2024, primarily reflecting increased net gains on investments. Book value per basic share at June 30, 2025 was $1,158.47 compared to $1,059.60 at December 31, 2024 (an increase of 10.8% adjusted for the $15 per common share dividend paid in the first quarter of 2025).
"In the second quarter of 2025 our property and casualty insurance and reinsurance operations produced adjusted operating income of $1,130.0 million (or operating income of $1,453.8 million including the benefit of discounting, net of a risk adjustment on claims), reflecting continued strong underwriting performance and robust interest and dividend income. Our property and casualty insurance and reinsurance companies reported a consolidated combined ratio of 93.3% and consolidated underwriting profit of $426.9 million, on an undiscounted basis. Gross premiums written grew by 2.6% primarily reflecting new business across reinsurance and casualty lines, while our net premiums written grew by 4.8%, primarily reflecting increased retentions.
"Net gains on investments of $952.0 million in the quarter was principally comprised of net gains on common stocks of $800.4 million. As we have said in the past, we expect our common stock positions to perform well over the long term, but our net gains will fluctuate from quarter to quarter," said Prem Watsa, Chairman and Chief Executive Officer.
The table below presents the sources of the company's net earnings in a segment reporting format which the company has consistently used as it believes it assists in understanding Fairfax:
Second quarter
First six months
2025
2024
2025
2024
($ millions)
Gross premiums written
9,176.3
8,918.2
17,650.3
16,974.5
Net premiums written
7,257.1
6,898.4
14,100.2
13,199.4
Net insurance revenue
6,402.0
5,946.4
12,555.0
12,033.5
Sources of net earnings
Operating income - Property and Casualty Insurance and Reinsurance:
Insurance service result:
North American Insurers
230.4
296.0
500.1
583.7
Global Insurers and Reinsurers
630.2
671.1
855.4
1,313.1
International Insurers and Reinsurers
149.6
86.2
263.8
194.0
Insurance service result
1,010.2
1,053.3
1,619.3
2,090.8
Other insurance operating expenses
(259.5
)
(249.2
)
(511.7
)
(475.3
)
Interest and dividends
579.7
547.1
1,095.9
1,047.6
Share of profit of associates
123.4
201.9
195.8
305.5
Operating income - Property and Casualty Insurance and Reinsurance
1,453.8
1,553.1
2,399.3
2,968.6
Operating income (loss) - Life insurance and Run-off
5.4
(7.4
)
26.5
15.5
Operating income - Non-insurance companies
126.0
25.2
84.9
42.5
Net finance expense from insurance contracts and reinsurance contract assets held
(298.5
)
(204.7
)
(903.1
)
(370.7
)
Net gains on investments
952.0
241.6
2,008.1
183.1
Interest expense
(207.4
)
(160.4
)
(397.8
)
(311.9
)
Corporate overhead and other
(77.3
)
(36.2
)
(98.2
)
(59.8
)
Earnings before income taxes
1,954.0
1,411.2
3,119.7
2,467.3
Provision for income taxes
(352.1
)
(355.4
)
(564.8
)
(641.8
)
Net earnings
1,601.9
1,055.8
2,554.9
1,825.5
Attributable to:
Shareholders of Fairfax
1,436.7
915.4
2,382.4
1,691.9
Non-controlling interests
165.2
140.4
172.5
133.6
1,601.9
1,055.8
2,554.9
1,825.5
The table below presents the insurance service result for the property and casualty insurance and reinsurance operations reconciled to underwriting profit, a key performance measure used by the company and the property and casualty industry in which it operates. The reconciling adjustments are principally (i) other insurance operating expenses, as presented in the consolidated statement of earnings, and (ii) the effects of discounting losses and ceded losses on claims recorded in the period and (iii) the effects of changes in the risk adjustment, both of which are included in insurance service expenses and recoveries of insurance service expenses in the consolidated statement of earnings.
Second quarter
First six months
Property and Casualty Insurance and Reinsurance
2025
2024
2025
2024
($ millions)
Insurance service result
1,010.2
1,053.3
1,619.3
2,090.8
Other insurance operating expenses
(259.5
)
(249.2
)
(511.7
)
(475.3
)
Discounting of losses and ceded losses on claims recorded in the period
(356.9
)
(510.3
)
(822.3
)
(876.6
)
Changes in the risk adjustment and other
33.1
76.6
238.5
4.5
Underwriting profit
426.9
370.4
523.8
743.4
Interest and dividends
579.7
547.1
1,095.9
1,047.6
Share of profit of associates
123.4
201.9
195.8
305.5
Adjusted operating income
1,130.0
1,119.4
1,815.5
2,096.5
Net Earnings:
Highlights for the second quarter of 2025 (with comparisons to the second quarter of 2024 except as otherwise noted, and excluding the effects of IFRS 17 when discussing the combined ratio and adjusted operating income) include the following:
Net premiums written by the property and casualty insurance and reinsurance operations increased by 4.8% to $7,170.1 million from $6,841.6 million, primarily reflecting growth in gross premiums written and increased retentions. Gross premiums written increased by 2.6%, primarily reflecting growth across most operating companies including new business across reinsurance and casualty lines, modest rate increases in certain key segments and reinstatement premiums related to the California wildfires.
Underwriting profit of the company's property and casualty insurance and reinsurance operations increased to $426.9 million from $370.4 million in 2024, and the undiscounted combined ratio improved to 93.3% from 93.9% in 2024, primarily reflecting growth in business volumes, modest increased net favourable prior year reserve development of $163.2 million (2024 - $131.8 million) and decreased current period catastrophe losses of $140.1 million (2024 - $164.2 million).
Adjusted operating income (which excludes the impact of discounting, net of a risk adjustment on claims) of the property and casualty insurance and reinsurance operations increased to $1,130.0 million from $1,119.4 million, principally reflecting increased underwriting profit and increased interest and dividends, partially offset by decreased share of profit of associates.
The consolidated statement of earnings included a net benefit of $120.4 million (2024, net loss of $29.4 million) from the effects of changes in discount rates, which was comprised of a net benefit on insurance contracts and reinsurance contract assets held of $45.6 million (2024 - $161.4 million) and net gains on bonds of $74.8 million (2024 - net losses of $190.8 million).
Consolidated interest and dividends increased from $614.0 million in 2024 to $666.3 million (comprised of interest and dividends of $579.7 million (2024 - $547.1 million) earned by the investment portfolios of the property and casualty insurance and reinsurance operations, with the remainder earned by life insurance and run-off, non-insurance companies and corporate and other). At June 30, 2025 the company's insurance and reinsurance companies held portfolio investments of $67.8 billion (excluding Fairfax India's portfolio of $2.2 billion), of which $10.0 billion was in cash and short term investments representing 14.8% of those portfolio investments.
Consolidated share of profit of associates of $130.7 million (2024 - $221.4 million) principally reflected share of profit of $104.6 million from Eurobank and $68.5 million from Poseidon, partially offset by share of loss of $59.5 million from the Waterous Energy Fund.
Net gains on investments of $952.0 million consisted of the following:
Second quarter of 2025
($ millions)
Realized gains (losses)
Unrealized gains
Net gains
Net gains (losses) on:
Equity exposures
96.2
704.2
800.4
Bonds
(147.2
)
222.0
74.8
Other
(359.6
)
436.4
76.8
(410.6
)
1,362.6
952.0
First six months of 2025
($ millions)
Realized gains (losses)
Unrealized gains
Net gains (losses)
Net gains (losses) on:
Equity exposures
593.1
986.8
1,579.9
Bonds
(198.5
)
661.7
463.2
Other
(262.6
)
227.6
(35.0
)
132.0
1,876.1
2,008.1
Net gains on equity exposures of $800.4 million included a net gain of $547.9 million on the company's continued holdings of equity total return swaps on 1,760,355 Fairfax subordinate voting shares with an original notional amount of $664.0 million (Cdn$846.1 million) or $377.19 (Cdn$480.62) per share and net gains on common stocks of $213.2 million.
Net gains on bonds of $74.8 million principally reflected net gains on U.S. treasuries as a result of a modest decline in interest rates during the quarter. The company's fixed income portfolio continues to be conservatively positioned with 70% of the fixed income portfolio invested in U.S. treasury and other government bonds and 19% in high quality corporate bonds, primarily short-dated.
Net gains on other of $76.8 million principally reflected unrealized gains of $358.0 million on the company's holdings of Digit compulsory convertible preferred shares, partially offset by net losses of $270.0 million principally from foreign currency contracts used to economically hedge against fluctuations in exchange rates that primarily affect the company's foreign currency denominated investments. Conversely, foreign currency denominated associates and subsidiaries experienced foreign currency translation gains of $334.3 million that were recorded in other comprehensive income.
The non-insurance companies reported a higher operating income of $126.0 million compared to $25.2 million in 2024 primarily reflecting the consolidation of Peak Achievement on December 20, 2024, the acquisition of Sleep Country on October 1, 2024 and increased operating income at Fairfax India.
Other Key Financial Highlights:
At June 30, 2025 the holding company held just over $3.0 billion of cash and marketable securities and an additional $1.9 billion, at fair value, of investments in associates and consolidated non-insurance companies.
At June 30, 2025 the excess of fair value over carrying value of investments in non-insurance associates and consolidated non-insurance subsidiaries increased to $2.4 billion from $1.5 billion at December 31, 2024, primarily reflecting an increase in the market value of the company's investment in Eurobank.
On May 13, 2025 the company acquired a 33.0% equity interest in Albingia SA ("Albingia"), a French insurance company that writes specialty property and casualty insurance, for cash consideration of $236.5 million (€209.7 million) and commenced applying the equity method of accounting to its investment in Albingia.
On May 20, 2025 the company completed an aggregate offering of $900.0 million principal amount of unsecured senior notes, comprising $500.0 million of 5.75% unsecured senior notes due 2035 and $400.0 million of 6.50% unsecured senior notes due 2055.
Digitide Solutions Limited and Bluspring Enterprises Limited, which were spun off by Quess on April 21, 2025, commenced publicly trading in India on June 11, 2025, at which time the aggregate fair value post spin-off of the two entities and Quess was substantially the same as Quess' fair value prior to the spin-offs. The company applies the equity method of accounting to its 34.75% equity interest in each entity.
On June 16, 2025 the company entered into an agreement with The Keg Royalties Income Fund ("The Keg Fund") to acquire all of the issued and outstanding units of The Keg Fund that it does not already own for Cdn$18.60 per unit or approximately $151 million (Cdn$207 million), payable in cash. The transaction is subject to the approval of The Keg Fund unitholders and other closing conditions and is expected to close during the third quarter of 2025.
The company's total debt to total capital ratio, excluding non-insurance companies, increased to 25.9% at June 30, 2025 from 24.8% at December 31, 2024, primarily reflecting issuances of unsecured senior notes and the redemption of preferred shares, partially offset by increased common shareholders' equity (principally net earnings and foreign currency translation gains of $444.7 million in the first six months of 2025, partially offset by the payment of common share dividends of $343.6 million and purchases of 256,650 subordinate voting shares for cancellation at an aggregate cost of $360.9 million).
Subsequent to June 30, 2025, on July 16, 2025 the company extended the expiry date of its $2.0 billion unsecured revolving credit facility from July 17, 2029 to July 16, 2030 on substantially the same terms with a syndicate of lenders.
At June 30, 2025 there were 21,591,832 common shares effectively outstanding (December 31, 2024 - 21,668,466).
Consolidated balance sheet, earnings and comprehensive income information, together with segmented premium and combined ratio information, follow and form part of this news release.
As previously announced, Fairfax will hold a conference call to discuss its second quarter 2025 results at 8:30 a.m. Eastern time on Friday August 1, 2025. The call, consisting of a presentation by the company followed by a question period, may be accessed at 1 (800) 369-2143 (Canada or U.S.) or 1 (312) 470-0063 (International) with the passcode "FAIRFAX". A replay of the call will be available from shortly after the termination of the call until 5:00 p.m. Eastern time on Friday, August 15, 2025. The replay may be accessed at 1 (800) 873-9204 (Canada or U.S.) or 1 (203) 369-3573 (International).
Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management.
For further information, contact:
John Varnell
Vice President, Corporate Development
(416) 367-4941
CONSOLIDATED BALANCE SHEETSas at June 30, 2025 and December 31, 2024(US$ millions except per share amounts)
June 30, 2025
December 31, 2024
Assets
Holding company cash and investments (including assets pledged for derivative obligations, $216.7; December 31, 2024, $193.6)
3,044.9
2,502.7
Insurance contract receivables
797.1
780.4
Portfolio investments
Subsidiary cash and short term investments (including restricted cash and cash equivalents, $744.7; December 31, 2024, $1,240.7)
10,038.9
7,620.5
Bonds (cost $37,613.3; December 31, 2024, $37,852.9)
37,800.2
37,390.3
Preferred stocks (cost $956.5; December 31, 2024, $944.6)
2,593.3
2,365.0
Common stocks (cost $7,859.2; December 31, 2024, $7,116.1)
8,632.9
7,464.2
Investments in associates (fair value $9,750.1; December 31, 2024, $8,144.8)
7,914.5
7,153.3
Derivatives and other invested assets (cost $1,019.0; December 31, 2024, $903.9)
1,067.0
1,159.7
Assets pledged for derivative obligations (cost $111.5; December 31, 2024, $154.8)
112.6
150.8
Fairfax India cash, portfolio investments and associates (fair value $3,420.2; December 31, 2024, $3,163.3)
2,152.2
1,916.6
70,311.6
65,220.4
Reinsurance contract assets held
11,094.0
10,682.6
Deferred income tax assets
355.4
325.0
Goodwill and intangible assets
8,425.6
8,278.2
Other assets
9,541.0
8,988.0
Total assets
103,569.6
96,777.3
Liabilities
Accounts payable and accrued liabilities
6,124.7
6,078.3
Derivative obligations
340.4
356.9
Deferred income tax liabilities
1,955.0
1,714.0
Insurance contract payables
1,053.0
923.0
Insurance contract liabilities
50,883.8
