Fairfax Financial Holdings Limited: Financial Results for the Third Quarter

Executive Summary

• Fairfax Financial reported Q3 2025 net earnings of $1,151.7 M ($52.04 per diluted share), up from $1,030.8 M a year earlier.
• Underwriting profit for property‑and‑casualty (P&C) operations rose to $540.3 M (from $389.7 M YoY); combined ratio improved to 92.0% (down from 93.9%).
• The company announced the sale of its 80% stake in Eurolife’s life insurance business for ~$940 M and a concurrent purchase of a 45% equity interest in Eurobank’s Cyprus P&C insurer for ~$68 M, expected to close Q1 2026.

Key Details

• Financial Performance
• Gross premiums written: $8,262.8 M (Q3) vs. $8,302.2 M (prior year).
• Net premiums written: $6,555.5 M, a 2.1% YoY increase.
• Adjusted operating income (P&C): $1,343.2 M, up from $1,136.8 M YoY.
• Consolidated interest & dividends: $655.4 M vs. $609.9 M YoY.

• Net gains on investments: $426.2 M (Q3), driven by $524.6 M net gain on equity exposures (primarily common stocks).

• Underwriting Metrics

• Underwriting profit (P&C): $540.3 M vs. $389.7 M YoY.
• Undiscounted combined ratio: 92.0% (improved from 93.9%).

• Discounted combined ratio: 81.5% (down from 83.9%).

• Investment Portfolio

• Total portfolio investments at Sep‑30‑2025: $70.9 B (excluding Fairfax India).
• Cash & short‑term investments: $11.8 B; government bonds: $32.7 B.

• Equity exposures net gain: $524.6 M (realized $23.9 M, unrealized $500.7 M).

• Capital Structure

• Total debt to total capital (ex‑non‑insurance): 31.3% vs. 26.5% prior year.

• Redeemed all Series G & H preferred shares (carrying value $235.9 M) for $179.7 M cash.

• Strategic Transactions

• Sale of 80% Eurolife life‑insurance interest to Eurobank: ~US$940 M cash consideration; expected pre‑tax gain ≈ US$250 M.

• Purchase of 45% equity in ERB Asfalistiki (Eurobank Cyprus P&C): ~US$68 M cash; option for remaining stake later.

• Other Notable Items

• Non‑insurance subsidiaries reported operating income of $211.4 M, boosted by acquisition of Peak Achievement and Sleep Country.
• Share repurchases: 107,525 subordinate voting shares cancelled at aggregate cost $178.4 M (≈ US$1,659 per share).

Notable Quotes

“In the third quarter of 2025 we reported increased net earnings, reflecting higher adjusted operating income from our property and casualty insurance and reinsurance operations… We are very pleased to be able to maintain the focus of our insurance operations on property and casualty while still benefitting from the continued success of the Eurolife life insurance business through our ownership stake in Eurobank.” – Prem Watsa, Chairman & CEO.