Fairfax Financial's revenue slumps as cuts in U.S. hedges weigh

Thu Feb 16, 2017 6:15pm EST
 
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(Reuters) - Canada's Fairfax Financial Holdings Ltd FFH.TO on Thursday reported a 27.5 percent slump in revenue, weighed down by losses from the company cutting back on equity hedges following the U.S. presidential election.

Net loss attributable to shareholders of Fairfax was $701.5 million, or $30.77 per share, in the fourth quarter ended Dec. 31, compared with a profit of $133.1 million, or $4.10 per share, a year earlier.

Analysts on average had expected a loss of $22.04 per share, according to Thomson Reuters I/B/E/S.

The company, headed by high-profile investor Prem Watsa, realized losses on equity hedges and short equity exposures of $2.68 billion in the quarter.

This widened net losses on investments to $1.07 billion.

Total revenue fell to $1.77 billion from $2.44 billion. Analysts had expected revenue of $2.67 billion.

Fairfax said in November, that after considering the effect of the U.S. election and the potential for changes that might dramatically impact the U.S. economy and U.S. equity markets, it now deemed it prudent to cut back its hedging.

The Toronto-based financial services holding company said net premiums rose marginally to $1.95 billion in the quarter, from $1.91 billion a year earlier.

Up to Wednesday's close of C$625, the company's shares had fallen 18 percent in the past 12 months on the Toronto Stock Exchange.

(Reporting by Ahmed Farhatha in Bengaluru; Editing by Sriraj Kalluvila)

 
A man walks past a Fairfax Holdings sign directing shareholders to the meeting, at the annual general meeting for shareholders in Toronto, April 9, 2014.  REUTERS/Mark Blinch