Fairfax Financial Holdings’ president and chief operating officer, Peter Clarke, summed up the quarter’s theme on the company’s Nov. 4 earnings call: Really, the growth today is being driven by the international operations.
The results, however, tell a more complicated story. Net earnings attributable to shareholders fell 19.3% to $929.6 million in the third quarter ended Sept. 30, 2026, from $1.15 billion a year earlier, as investment losses overwhelmed a strong insurance performance, the Toronto-based insurer reported on Tuesday. The call was hosted by Clarke, with opening remarks from Derek Bulas, vice president, chief legal officer, and corporate secretary, who noted the discussion may include forward-looking statements.
Bond losses erase a fifth of quarterly profit
The drag came from the investment portfolio. Bond losses accounted for $827.7 million of the decline, largely unrealized losses on U.S. Treasuries, and the company also booked $257.9 million in unrealized losses on preferred shares, mainly its stake in Digit.
Wade Burton, president and chief investment officer of Hamblin Watsa, described the backdrop on the earnings call transcript: It is a volatile time in fixed income, particularly rates.
In the quarter, net losses on investments totaled $859 million, versus net investment gains of $426 million in the third quarter of 2025.
Underwriting holds firm as international premiums surge 27%
Insurance operations cushioned the blow. Adjusted operating income from insurance and reinsurance companies, on an undiscounted basis and before risk margin, rose to $1.4 billion from $1.3 billion a year earlier. Underwriting income was $524 million, slightly down from $540 million, while consolidated interest and dividend income climbed to $669 million from $655 million and profits of associates rose to $378 million from $305 million.
Among the individual carriers, Allied World posted a combined ratio of 88.2%, Brit 89.6%, Brit Re 91.7%, and Odyssey Group 93.6%. The North American insurers collectively had a combined ratio of 95.1%, while Northbridge reported 94.5%, including more than 10 points of catastrophe losses from above-average Canadian catastrophe losses in the quarter. Crum & Forster recorded underwriting income of $66 million, or a combined ratio of 94.8%. Odyssey Group reported higher attritional losses and underwriting expenses, suggesting reinsurance pricing pressure at some reinsurers as the market softens.
Gross premiums written in the property and casualty operations rose 9.3% to $8.94 billion and net premiums written rose 5.4% to $6.91 billion. International operations led the way: gross premiums there reached $1.9 billion, up 27.1%, or $409 million, driven largely by Gulf Insurance, whose marine business saw significant rate increases amid the conflict with Iran. Because most of that business was not retained, international operations grew about 13% on a net basis. International operations now account for about 21% of gross premiums. The undiscounted combined ratio stood at 92.5%, versus 92.0% a year earlier; on an IFRS 17 basis it was 81.7%, compared with 81.5%.
Book value climbs 8.4% to $1,349 per share
Fairfax’s balance sheet strengthened even as earnings fell. Book value per share ended the quarter at $1,349, up 8.4% from year-end 2025 after adjusting for the company’s $15 dividend. Common shareholders’ equity rose $629 million to $26.9 billion at Sept. 30, 2026, from $26.3 billion at Dec. 31, 2025, helped by nine-month net earnings of $3 billion, though partly offset by $1.8 billion of share buybacks and $329 million of dividends. The debt-to-total-capital ratio, excluding non-insurance companies, eased to 27.3% at Sept. 30 from 28% at June 30, though it remained above the 26.2% at Dec. 31, 2025.
For the nine months ended Sept. 30, 2026, net income was $3.02 billion, down from $3.53 billion a year earlier.
Eurolife sale closes; IDBI Bank stake advances
Fairfax was also busy outside insurance. On Oct. 27, 2026, it completed the sale of its Eurolife life operations to Eurobank for approximately $906 million, a deal expected to produce a pre-tax gain of about $200 million in the fourth quarter of 2026. Its Sleep Country subsidiary completed the acquisition of Sleep Number for $523 million, all financed internally.
The largest move is still pending: Fairfax has been selected by the Indian government as the strategic buyer for a 60.72% stake in IDBI Bank, a transaction valued at approximately $5.6 billion. IDBI’s current profitability is roughly $1 billion over the 12 months to June 2026, and the transaction also contemplates an intended combination with Digit and IIFL Capital.
This transaction represents a once in a lifetime opportunity to purchase a majority interest in a bank in one of the world’s fastest growing economies,
Shares jump 9% after hours on earnings beat
Investors focused on the beat. Fairfax reported adjusted earnings per share of $43.32, well above the $33.05 analysts had forecast—a 31.1% beat—and revenue of $9.11 billion against expectations of $8.42 billion, an 8.2% surplus, according to Investing.com. Shares rose 9.18% to $2,717.34 in after-hours trading on Nov. 4, moving to within a few dollars of the 52-week high of $2,724.70 and about 31.5% above the 52-week low of $2,066.16.
