November 3, 2016 / 10:47 PM / 2 years ago

Fairfax's profit slumps on investment losses

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

(Reuters) - Fairfax Financial Holdings Ltd (FFH.TO), 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

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