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Fairfax estimates $1.4 billion first-quarter loss due to virus


Fairfax Financial Holdings Inc., which owns Crum & Forster, Allied World Assurance Co. Holdings Ltd. and several other insurers, expects to post a $1.4 billion loss for the first quarter of 2020 due to coronavirus-related investment losses.

In a statement late Tuesday, the Toronto-based company said it will likely report $1.5 billion in unrealized investment losses in its portfolio “from the sudden shock of COVID-19.”

The loss will compare with a $1.7 billion gain on investments in the first quarter of 2019, the statement said.

“Since mid-March 2020, Fairfax has been reinvesting its cash and short-term investments into higher yielding investment grade U.S. corporate bonds,” the statement said.

In addition, “solely as extra security” Fairfax has drawn $1.8 billion from its credit facility, the statement said.

The group’s insurance and reinsurance companies, which also include Brit Ltd. in London and Odyssey Group Holdings Inc. in Stamford, Connecticut, will report a consolidated combined ratio below 100% for the quarter, the statement said. A combined ratio of below 100% indicates an underwriting profit.

U.S. insurers will start reporting first-quarter results next week.

More insurance and risk management news on the coronavirus crisis here