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 $695.7 million, or $31.11 per diluted share, down from $945.7 million, or $42.70 per diluted share, a year earlier.
The print missed analyst expectations, with EPS shortfall against a consensus of $35.96 and revenue of $8.81 billion topping the $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 $1,250.14 at March 31, against $1,260.19 at year-end 2025, a 0.5% gain after adjusting for the $15 per share dividend paid during the quarter.
P&C insurance and reinsurance operations generated adjusted operating income of $1.21 billion, up from $685.5 million. The consolidated undiscounted combined ratio improved to 94.1% from 98.5%, with underwriting profit climbing to $381.6 million from $96.9 million.
Current-period catastrophe losses fell to $119.3 million from $781.3 million a year earlier, when the California wildfires drove claims activity. Net favorable prior-year reserve development eased to $86.1 million from $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 $53 billion, the second-highest first-quarter figure on record after 2011 and more than triple the 21st-century Q1 average.
Swiss Re Institute later estimated the California wildfires alone at $40 billion in insured losses, the costliest wildfire event in history. By contrast, Gallagher Re estimates Q1 2026 global insured cat losses at roughly $20 billion, 47% below the recent five-year average.
Gross premiums written rose 4.1% to $8.81 billion, while net premiums written advanced 4.2% to $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 $385.9 million, against gains of $1.06 billion a year earlier, including $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 $662.1 million. Fairfax repurchased 374,883 subordinate voting shares for $631.3 million, or $1,684 per share.
Two pending second-quarter transactions are flagged: the sale of a 23.1% Poseidon stake for about $1.9 billion, with a pre-tax gain of about $837 million, and the divestiture of Eurolife Life Operations to Eurobank for roughly $935 million, with a pre-tax gain of about $350 million.
