Fairfax's profit slumps on investment losses

Thu Nov 3, 2016 6:45pm EDT
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(Reuters) - Fairfax Financial Holdings Ltd (FFH.TO: Quote), led by well-known contrarian investor Prem Watsa, barely eked out a profit for the third quarter as the company booked steep losses on its investments.

Fairfax recorded net investment losses of $199.5 million in the quarter, compared with a gain of $425.6 million a year earlier.

Losses on investments were primarily due to price fluctuations in stocks and Consumer Price Index-linked derivative contracts, the company said in a statement.

"We are maintaining our defensive equity hedges and deflation protection as we remain concerned about the financial markets and the economic outlook in this global deflationary environment," Watsa said in a statement.

Net earnings attributable to shareholders of Fairfax shrank to $1.3 million in the third quarter ended Sept. 30, from $424.8 million a year earlier.

On a per share basis, the company reported a loss of 42 cents, compared with a profit of $18.16 a year earlier.

The Toronto-based financial services holding company said net premiums written fell 2.9 percent to $1.97 billion in the three months.

(Reporting by Arathy S Nair in Bengaluru; Editing by Saumyadeb Chakrabarty)

Fairfax Financial Holdings Ltd. Chairman and Chief Executive Officer Prem Watsa speaks during the company's annual meeting in Toronto April 11, 2013. REUTERS/Aaron Harris