Strong Q4 at Allied World, Odyssey and C&F help drive Fairfax to record ’24 UW profit

By David Bull

Feb 13 - (The Insurer) - Fairfax Financial delivered a 14 percent increase in fourth quarter underwriting profit to $658.3mn including improved combined ratios at Allied World, Odyssey Group, Crum & Forster and Northbridge that helped it to a record full-year 2024 underwriting profit that grew 18 percent to $1.79bn.

Adjusted operating income from the Canadian firm’s P&C insurance and reinsurance operations increased from $1.21bn to $1.53bn in the quarter, and from $3.94bn to $4.76bn for the year.

Gross premiums written at the group level increased by 14 percent in Q4 to $7.55bn, with net premiums written up 15 percent to $5.92bn.

For the full year, GPW was up 13 percent to $32.83bn, with NPW up 12 percent to $25.61bn.

Fairfax Financial reports a breakdown of the insurance service result as part of operating income from its P&C insurance and reinsurance operations.

North American insurers, which includes Northbridge, Crum & Forster and Zenith National, contributed an insurance service result that increased by 13 percent to $301.2mn for the fourth quarter and by 13 percent to $1.10bn for the year.

Global insurers and reinsurers, which includes Allied World, Odyssey Group and Brit, delivered a 44 percent jump in insurance service result to $1.03bn in Q4, and 7 percent to $3.04bn for the year.

And the international insurers and reinsurers division increased its insurance service result by 44 percent to $144.1mn in the last quarter of the year, and by 40 percent to $463.6mn for the year.

Total operating income from P&C insurance and reinsurance increased 39 percent to $2.05bn in Q4, and by 14 percent to $6.53bn for the full year.

The improved P&C (re)insurance performance was more than offset by net losses on investments in the fourth quarter of $403.2mn – compared with a gain of $1.46bn in the prior-year period – with net earnings falling from $1.67bn to $1.32bn.

For the 12-month period, a drop in net gains on investments from $1.95bn to $1.07bn offset the higher underwriting and operating profits from P&C (re)insurance, with net earnings down from $5.09bn to $4.26bn.

Improved underwriting results

Fairfax Financial reported that its overall P&C (re)insurance combined ratio improved moderately in the fourth quarter from 89.9 percent to 89.5 percent on an undiscounted basis, and from 93.2 percent to 92.7 percent for the year.

The quarter included $399.2mn of cat losses, or 6.4 points on the combined ratio, with the largest contributor Hurricane Milton at $235.4mn and 3.8 points. This was partially offset by favorable prior-year reserve development of $301.4mn, up from $151.7mn in Q4 2023.

Cat losses for the full year climbed from $897.3mn to $1.10bn, or from 4.0 points to 4.5 points. There was favorable prior-year reserve development of $593.6mn, up from $309.6mn.

Standout Q4 performance came at Allied World, where the combined ratio narrowed from 86.1 percent to 83.4 percent; Odyssey Group, which improved the metric from 88.1 percent to 85.3 percent; Crum & Forster, which dropped from 95.9 percent to 92.6 percent; and Northbridge from 91.5 percent to 83.3 percent.

The combined ratio for the quarter deteriorated at Brit, however, from 88.3 percent to 97.2 percent; with the metric also increasing at Zenith National from 87.0 percent to 101.8 percent; and in the firm’s international insurers and reinsurers division, from 93.4 percent to 95.5 percent.

For the full year, Allied World’s combined ratio improved from 89.5 percent to 89.1 percent; Odyssey Group’s narrowed from 93.4 percent to 91.2 percent; Crum & Forster from 97.7 percent to 95.0 percent; and Northbridge from 91.1 percent to 89.3 percent.

Brit’s combined ratio for the 12 month period was up from 91.9 percent to 93.6 percent; with Zenith National up from 93.8 percent to 99.1 percent; and international insurers and reinsurers up from 95.9 percent to 97.3 percent.

In the fourth quarter, GPW was broadly flat at Northbridge, Crum & Forster, Zenith National and Allied World, with Odyssey Group – up 19 percent to $1.56bn – and Brit, up 15 percent to $915.9mn the fastest growing.

For the full year, GPW at Crum & Forster grew the most, up 8 percent to $5.63bn; followed by Allied World, which grew top line by 5 percent to $7.15bn; and Northbridge, which grew by 2.8 percent to $2.51bn.

International insurers and reinsurers – which includes the acquired Gulf Insurance – saw GPW surge by 56 percent in the quarter to $1.46bn; and by 81 percent for the year to $6.51bn.

NPW growth was led by Odyssey Group in Q4, climbing 26 percent to $1.46bn; followed by Brit, up 15 percent to $787.7mn.

For the full year, NPW grew the most at Crum & Forster, up 9 percent to $4.23bn; followed by Brit, up 5.8 percent to $3.16bn; Allied World, up 4.3 percent to $5.05bn; Northbridge, up 3.8 percent to $2.23bn; and Odyssey Group, up 2.7 percent to $5.90bn.

International insurers and reinsurers grew NPW by 54 percent for the quarter to $991.8mn; and by 73 percent to $4.03bn for the year.