By Chris Munro

May 1 - (The Insurer) - Fairfax Financial’s Q1 2025 underwriting profit fell by 74.0% to $96.9 million as it absorbed $781.3 million of California wildfire-driven catastrophe losses while each of its (re)insurance subsidiaries bar Crum & Forster experienced deterioration in their combined ratios during the three-month period.

The Toronto, Canada-based company’s property and casualty (re)insurance operations booked adjusted operating income of $685.5 million in Q1 2025, down from the prior-year period’s $977.1 million.

That decrease, Fairfax said, principally reflected a drop in underwriting profit due to the California wildfires.

The California wildfires accounted for $692.1 million of the $781.3 million of catastrophe losses that Fairfax took during the three months to March 31, 2025.

In Q1 2024, Fairfax’s P&C (re)insurance operations faced $101.4 million of catastrophe losses.

Fairfax had in February predicted it would face an estimated $500 million to $750 million of net losses from the California wildfires, with those primarily affecting its Odyssey, Brit and Allied World units.

During 2025’s first quarter, Fairfax’s P&C (re)insurance operations recorded net favorable prior-year reserve development of $219.1 million, compared with the prior-year period’s $29.9 million.

Fairfax’s P&C (re)insurance businesses booked a consolidated combined ratio of 98.5% for Q1 2025, a deterioration of 4.9 points year on year.

P&C (re)insurance gross premiums written (GPW) increased 5.0% year on year to $8.40 billion, while net premiums written $(NPW.SI)$ expanded by 8.4% to $6.77 billion.

Drilling down into the results of the individual (re)insurers, on an undiscounted basis, Allied World’s combined ratio worsened by 4.2 points to 95.7%, its GPW increased 7.8% to $2.16 billion and its NPW expanded by 9.3% to $1.71 billion.

Odyssey Group’s combined ratio deteriorated by 13.0 points year on year to 105.8%, while its GPW grew 7.9% to $1.54 billion and its NPW increased 8.8% to $1.49 billion.

Brit’s Q1 2025 combined ratio deteriorated by 7.4 points from the prior-year period to 97.6%, with its GPW growing 7.4% to $781.0 million, and its NPW up 4.8% to $588.7 million.

Ki – which on January 1, 2025, was split out from its former parent Brit – booked a combined ratio of 98.3% for the first three months of 2025, up 10.1 points year on year. The unit’s GPW increased 9.5% to $203.8 million, while its NPW expanded 14.1% to $173.7 million.

That four-strong group of global (re)insurers generated a consolidated combined ratio of 100.4% for the first quarter of 2025, compared with 91.6% in the prior-year period.

The quartet’s first quarter 2025 GPW climbed 7.8% year on year to $4.69 billion, while its NPW totaled $3.97 billion, up 8.6%.

Fairfax’s North American insurers of Northbridge, Crum & Forster and Zenith National collectively booked a combined ratio of 95.5% in Q1 2025, up 80 basis points year on year.

That North American insurance trio’s GPW totaled $2.21 billion, up 6.7% year on year, while its NPW was $1.81 billion, growth of 8.3% from the prior-year period.

Crum & Forster booked a combined ratio of 95.4% for 2025’s first quarter, an improvement of 50 bps year on year, while its GPW of $1.46 billion represented an increase of 12.8% from the prior-year period. The carrier’s NPW was $1.12 billion, year on year growth of 17.4%.

“In the first quarter of 2025 our property and casualty insurance and reinsurance operations produced adjusted operating income of $685.5 million (or operating income of $945.5 million including the benefit of discounting, net of a risk adjustment on claims), including California wildfire losses of $692.1 million and reflecting continued strong interest and dividend income,” said Fairfax’s chairman and CEO Prem Watsa.

Across the company, Fairfax booked net gains on investments of $1.06 billion, compared with a net loss of $58.5 million in the prior-year period.

The improvement, Watsa noted, was principally comprised of net gains on common stocks of $779.5 million and mark to market gains on bonds of $388.4 million.