Fairfax Financial shares slid following its first-quarter 2026 results, with bond mark-to-market losses and a sharp earnings drop overshadowing a near-doubling of underwriting income at the Canadian insurance group.
Net earnings came in at US$695.7 million, or US$31.11 per diluted share, down from US$945.7 million, or US$42.70 per diluted share, a year earlier.
The print missed analyst expectations, with EPS shortfall against a consensus of US$35.96 and revenue of US$8.81 billion topping the US$8.62 billion forecast. The stock fell about 5.6% after the print, trading near its 52-week low.
Book value per basic share stood at US$1,250.14 at March 31, against US$1,260.19 at year-end 2025, a 0.5% gain after adjusting for the US$15 per share dividend paid during the quarter.
P&C insurance and reinsurance operations generated adjusted operating income of US$1.21 billion, up from US$685.5 million. The consolidated undiscounted combined ratio improved to 94.1% from 98.5%, with underwriting profit climbing to US$381.6 million from US$96.9 million.
Current-period catastrophe losses fell to US$119.3 million from US$781.3 million a year earlier, when the California wildfires drove claims activity. Net favourable prior-year reserve development eased to US$86.1 million from US$219.1 million.
Q1 2025 stands as an unusually heavy comparison base. Aon's Global Catastrophe Recap pegged global insured losses for that quarter at US$53 billion, the second-highest first-quarter figure on record after 2011 and more than triple the 21st-century Q1 average.
Gross premiums written rose 4.1% to US$8.81 billion, while net premiums written advanced 4.2% to US$7.12 billion. Growth was concentrated in International Insurers and Reinsurers – including medical and motor expansion at Gulf Insurance – and in Global Insurers and Reinsurers, led by Allied World and Brit.
Fairfax's 94.1% combined ratio came in softer than several diversified North American carriers reporting on the same benign cat backdrop.
Fairfax posted net losses on investments of US$385.9 million, against gains of US$1.06 billion a year earlier, including US$363.9 million of mark-to-market bond losses tied to higher rates. "We expect our investments to perform well over the long term, but our net gains will fluctuate from quarter to quarter," chairman and chief executive Prem Watsa said.
Interest and dividends rose to US$662.1 million. Fairfax repurchased 374,883 subordinate voting shares for US$631.3 million, or US$1,684 per share.
Two pending second-quarter transactions are flagged: the sale of a 23.1% Poseidon stake for about US$1.9 billion, with a pre-tax gain of about US$837 million, and the divestiture of Eurolife Life Operations to Eurobank for roughly US$935 million, with a pre-tax gain of about US$350 million.
