Canada's Fairfax Q1 net earnings fall on investment losses

Overview

• Canada insurance and reinsurance group's Q1 net earnings fell yr/yr on investment losses

• Q1 underwriting profit rose sharply, reflecting improved underwriting and lower catastrophe losses

• Company repurchased 374,883 shares for $631.3 mln during the quarter

Outlook

• Company did not provide specific guidance for the current qtr or full yr

Result Drivers

• UNDERWRITING IMPROVEMENT - Co said higher Q1 underwriting profit reflected disciplined underwriting and lower catastrophe losses

• PREMIUM GROWTH - Net premiums written rose 4.2%, driven by growth in international insurance and reinsurance, especially medical and motor lines at Gulf Insurance and key segments at Allied World and Brit

• INVESTMENT LOSSES - Net losses on investments of $385.9 mln were mainly due to mark-to-market losses on bonds from higher interest rates

Company press release: ID:nGNX6285KP

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the property & casualty insurance peer group is "buy"

• Wall Street's median 12-month price target for Fairfax Financial Holdings Ltd is C$3,015.43, about 28.5% above its April 29 closing price of C$2,346.41

• The stock recently traded at 9 times the next 12-month earnings vs. a P/E of 10 three months ago

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