(Note: All dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are derived from unaudited interim consolidated financial statements for the three and six months ended June 30, 2024 prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") applicable to the preparation of interim financial statements, including International Accounting Standard 34 Interim Financial Reporting. This news release contains certain non-GAAP and other financial measures, including underwriting profit (loss), adjusted operating income (loss), combined ratio (both discounted and undiscounted), book value per basic share, total debt to total capital ratio excluding non-insurance companies and excess (deficiency) of fair value over carrying value, that do not have a prescribed meaning under IFRS Accounting Standards and may not be comparable to similar financial measures presented by other issuers. See "Glossary of non-GAAP and other financial measures" at the end of this news release and in the company's Interim Report for the three and six months ended June 30, 2024 for further details.) TORONTO, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (TSX:FFH) announces net earnings of $915.4 million ($37.18 net earnings per diluted share after payment of preferred share dividends) in the second quarter of 2024, primarily reflecting increased adjusted operating income of $1,119.4 million and net gains on investments. Book value per basic share at June 30, 2024 was $979.63 compared to $939.65 at December 31, 2023 (an increase of 6.0% adjusted for the $15 per common share dividend paid in the first quarter of 2024). "In the second quarter of 2024 our property and casualty insurance and reinsurance operations produced adjusted operating income of $1,119.4 million up from $913.5 million in the second quarter of 2023 (or operating income of $1,553.1 million (2023 - $1,526.4 million) including the benefit of discounting, net of a risk adjustment on claims), primarily reflecting increased interest and dividends and share of profit of associates. Our underwriting performance in the second quarter of 2024 continued to produce favourable results with our insurance and reinsurance companies reporting a consolidated combined ratio of 93.9% and consolidated underwriting profit of $370.4 million, on an undiscounted basis. Gross and net premiums written grew by 10.8% and 11.5%, reflecting the acquisition of Gulf Insurance, which added $815.9 million in gross premiums written and $523.8 million in net premiums written. Excluding Gulf Insurance, gross premiums written grew by 0.6% and net premiums written grew by 3.0%. "Net gains on investments of $241.6 million in the quarter was principally comprised of mark to market gains on common stocks of $377.4 million, partially offset by mark to market losses on bonds of $190.8 million. "We remain focused on being soundly financed and ended the quarter with approximately $2.5 billion of cash and marketable securities (prior to Allied World's subsequent redemption of its $500.0 million of senior notes) and an additional $2.0 billion, at fair value, of investments in associates and consolidated non-insurance companies owned by the holding company," said Prem Watsa, Chairman and Chief Executive Officer. The table below presents the sources of the company's net earnings in a segment reporting format which the company has consistently used as it believes it assists in understanding Fairfax:   Second quarter   First six months   2024     2023     2024     2023     ($ millions) Gross premiums written 8,918.2     8,042.5     16,974.5     15,181.0   Net premiums written 6,898.4     6,199.9     13,199.4     11,863.0   Net insurance revenue 5,946.4     5,392.1     12,033.5     10,552.0                   Sources of net earnings               Operating income - Property and Casualty Insurance and Reinsurance:               Insurance service result:               North American Insurers 296.0     249.2     583.7     525.0   Global Insurers and Reinsurers 671.1     820.4     1,313.1     1,445.7   International Insurers and Reinsurers 86.2     74.7     194.0     151.3   Insurance service result 1,053.3     1,144.3     2,090.8     2,122.0   Other insurance operating expenses (249.2 )   (193.9 )   (475.3 )   (391.5 ) Interest and dividends 547.1     407.4     1,047.6     718.9   Share of profit of associates 201.9     168.6     305.5     386.3   Operating income - Property and Casualty Insurance and Reinsurance 1,553.1     1,526.4     2,968.6     2,835.7   Operating income (loss) - Life insurance and Run-off (7.4 )   6.3     15.5     9.7   Operating income - Non-insurance companies 25.2     36.9     42.5     36.3   Net finance expense from insurance contracts and reinsurance contract assets held (204.7 )   (424.0 )   (370.7 )   (587.4 ) Net gains (losses) on investments 241.6     (342.1 )   183.1     429.1   Gain on sale of insurance subsidiary —     259.1     —     259.1   Interest expense (160.4 )   (130.4 )   (311.9 )   (254.7 ) Corporate overhead and other (36.2 )   12.4     (59.8 )   (14.1 ) Earnings before income taxes 1,411.2     944.6     2,467.3     2,713.7   Provision for income taxes (355.4 )   (115.5 )   (641.8 )   (480.6 ) Net earnings 1,055.8     829.1     1,825.5     2,233.1                   Attributable to:               Shareholders of Fairfax 915.4     734.4     1,691.9     1,984.4   Non-controlling interests 140.4     94.7     133.6     248.7     1,055.8     829.1     1,825.5     2,233.1                           The table below presents the insurance service result for the property and casualty insurance and reinsurance operations reconciled to underwriting profit, a key performance measure used by the company and the property and casualty industry in which it operates. The reconciling adjustments are (i) other insurance operating expenses as presented in the consolidated statement of earnings, (ii) the effects of discounting of losses and ceded losses on claims recorded in the period, and (iii) the effects of the risk adjustment and other, which are presented in insurance service expenses and recoveries of insurance service expenses.   Second quarter   First six months Property and Casualty Insurance and Reinsurance 2024     2023     2024     2023     ($ millions) Insurance service result 1,053.3     1,144.3     2,090.8     2,122.0   Other insurance operating expenses (249.2 )   (193.9 )   (475.3 )   (391.5 ) Discounting of losses and ceded losses on claims recorded in the period (510.3 )   (606.1 )   (876.6 )   (1,028.5 ) Changes in the risk adjustment and other 76.6     (6.8 )   4.5     (50.7 ) Underwriting profit 370.4     337.5     743.4     651.3   Interest and dividends 547.1     407.4     1,047.6     718.9   Share of profit of associates 201.9     168.6     305.5     386.3   Adjusted operating income 1,119.4     913.5     2,096.5     1,756.5                           Highlights for the second quarter of 2024 (with comparisons to the second quarter of 2023 except as otherwise noted, and excluding the effects of IFRS 17 when discussing the combined ratio and adjusted operating income) include the following: Net premiums written by the property and casualty insurance and reinsurance operations increased 11.5% to $6,841.6 million from $6,134.4 million, while gross premiums written increased by 10.8%, primarily reflecting the consolidation of Gulf Insurance on December 26, 2023 that contributed $523.8 million to net premiums written and $815.9 million to gross premiums written in 2024, and continued growth across most operating companies, partially offset by decreases at Odyssey Group (principally reflecting the non-renewal of a significant quota share contract which contributed nominal underwriting profit and decreased U.S. crop insurance). The company's property and casualty insurance and reinsurance operations produced underwriting profit of $370.4 million compared to $337.5 million in 2023, and an undiscounted combined ratio of 93.9% in 2024, consistent with the 93.9% in 2023, primarily reflecting increased net favourable prior year reserve development of $131.8 million that was offset by an increased underwriting expense ratio due to investments in personnel and technology to support continued growth in business volumes. Adjusted operating income (which excludes the benefit of discounting, net of a risk adjustment on claims) of the property and casualty insurance and reinsurance operations increased by 22.5% to $1,119.4 million from $913.5 million, principally reflecting increased interest and dividends and share of profit of associates and continued strong underwriting profit. The company recorded a total net benefit of $229.5 million from applying IFRS 17, which was comprised of a net benefit of $434.2 million from discounting losses and ceded losses on claims recorded in the period, net of changes in risk adjustment and other, partially offset by net finance expense from insurance contracts and reinsurance contract assets held of $204.7 million (which included interest accretion from unwinding the effects of discounting associated with net losses on claim payments made of $366.1 million, partially offset by the benefit of modest increases in discount rates during the period on prior year net losses on claims of $161.4 million). The benefit of the effect of increases in discount rates on prior year net losses on claims of $161.4 million largely offset net losses recorded on the company's bond portfolio of $190.8 million. Consolidated interest and dividends increased significantly from $464.6 million to $614.0 million (comprised of interest and dividends of $547.1 million (2023 - $407.4 million) earned by the investment portfolios of the property and casualty insurance and reinsurance operations, with the remainder earned by life insurance and run-off, non-insurance companies and corporate and other). At June 30, 2024 the company's insurance and reinsurance companies held portfolio investments of $61.5 billion (excluding Fairfax India's portfolio of $2.0 billion), of which $7.7 billion was in cash and short term investments representing 12.6% of those portfolio investments. During the first six months of 2024 the company used net proceeds from sales and maturities of U.S. treasuries to purchase $729.6 million of other government bonds and $207.9 million of short-dated first mortgage loans. Consolidated share of profit of associates of $221.4 million principally reflected share of profit of $126.1 million from Eurobank, $66.5 million from Poseidon and $31.5 million from Peak Achievement (principally reflecting its sale of Rawlings Sporting Goods), partially offset by share of loss of $39.0 million from Sanmar Chemicals Group. On May 23, 2024 Digit Insurance, the general insurance subsidiary of the company's investment in associate Go Digit Infoworks ("Digit"), completed an initial public offering comprised of an issuance of new equity and an offer for sale of existing equity shares held by Digit and other shareholders, which valued Digit Insurance at approximately $3.0 billion (249.5 billion Indian rupees or 272 Indian rupees per common share). As a result of the initial public offering and the increase in the fair value of the company's investment in Digit compulsory convertible preferred shares at June 30, 2024, the company recorded a total pre-tax gain of $149.9 million related to its investment in Digit, recorded as a gain of $106.3 million in net changes in capitalization in the consolidated statement of changes in equity and a net gain on investments in the consolidated statement of earnings of $43.6 million on the company's holdings of Digit compulsory convertible preferred shares. Digit Insurance's common shares are now traded on the BSE and NSE in India and closed at 338 Indian rupees per common share on June 30, 2024. Net gains on investments of $241.6 million consisted of the following:               Second quarter of 2024   ($ millions)   Realized gains (losses)   Unrealized gains (losses)   Net gains (losses) Net gains (losses) on:           Equity exposures 193.7     183.7     377.4   Bonds (24.0 )   (166.8 )   (190.8 ) Other (44.8 )   99.8     55.0     124.9     116.7     241.6     First six months of 2024   ($ millions)   Realized gains (losses)   Unrealized gains (losses)   Net gains (losses) Net gains (losses) on:           Equity exposures 708.4     (55.9 )   652.5   Bonds (5.1 )   (504.5 )   (509.6 ) Other 17.0     23.2     40.2     720.3     (537.2 )   183.1                     Net gains on equity exposures of $377.4 million principally reflected net gains on common stocks of $184.5 million and a net gain of $131.5 million on the company's continued holdings of equity total return swaps on 1,964,155 Fairfax subordinate voting shares with an original notional amount of $732.5 million (Cdn$935.0 million) or $372.96 (Cdn$476.03) per share. Net losses on bonds of $190.8 million principally reflected net losses of $76.7 million on U.S. treasuries. The company's fixed income portfolio is conservatively positioned with effectively 70% of the fixed income portfolio invested in government bonds and 20% in high quality corporate bonds, primarily short-dated. At June 30, 2024 the excess of fair value over carrying value of investments in non-insurance associates and consolidated non-insurance subsidiaries was $1,514.5 million. On June 24, 2024 the company completed an offering of $600.0 million principal amount of 6.10% unsecured senior notes due 2055 (the "2055 notes") and an additional $150.0 million principal amount of its 6.00% unsecured senior notes due 2033. Subsequent to June 30, 2024, on July 19, 2024 Allied World became the primary co-obligor of the 2055 notes in exchange for cash received from the company of $596.6. On July 24, 2024 Allied World used the majority of those proceeds to redeem all of its outstanding $500.0 million principal amount of 4.35% senior notes due 2025. The company's total debt to total capital ratio, excluding non-insurance companies, increased to 25.9% at June 30, 2024 from 23.1% at December 31, 2023, principally reflecting the issuance of $1.0 billion principal amount of senior notes due 2054. Had the Allied World senior notes described above been redeemed at June 30, 2024, the company's total debt to total capital ratio, excluding non-insurance companies, would have been 24.9%. During the first six months of 2024 the company purchased 854,031 of its subordinate voting shares for cancellation at an aggregate cost of $938.1 million. Subsequent to June 30, 2024: On July 15, 2024 Cleveland-Cliffs Inc. ("Cliffs") entered into a definitive agreement with Stelco to acquire all outstanding common shares of Stelco for consideration of Cdn$70.00 per share (consisting of Cdn$60.00 cash and Cdn$10.00 in Cliffs common stock). Closing of the transaction is subject to shareholder and regulatory approvals, and satisfaction of other customary closing conditions, and is expected to be in the fourth quarter of 2024. The company's current estimated pre-tax gain on sale of its holdings of approximately 13 million common shares of Stelco is approximately Cdn$531 million (US$390 million), calculated as the excess of consideration of approximately Cdn$910 million (US$668 million or US$51 per common share) over the carrying value of the investment in associate at June 30, 2024 of approximately Cdn$379 million (US$277.9 million). On July 17, 2024 the company extended the expiry of its $2.0 billion unsecured revolving credit facility on substantially the same terms with a syndicate of lenders from July 14, 2028 to July 17, 2029. On July 21, 2024 the company entered into an arrangement to acquire all of the issued and outstanding common shares of Sleep Country Canada Holdings Inc. ("Sleep Country") for purchase consideration of approximately $862 million (Cdn$1.2 billion) or Cdn$35.00 per common share. The transaction is subject to Sleep Country shareholder approval and regulatory approval and is expected to close in the fourth quarter of 2024. On July 31, 2024 Eurobank paid a dividend of approximately $370 million (€342 million). The company's share of that dividend was approximately $128 million (€118 million), which will be recorded in the company's consolidated financial reporting in the third quarter of 2024 as a reduction of Eurobank's carrying value under the equity method of accounting. At June 30, 2024 there were 22,181,619 common shares effectively outstanding. Consolidated balance sheet, earnings and comprehensive income information, together with segmented premium and combined ratio information, follow and form part of this news release. As previously announced, Fairfax will hold a conference call to discuss its second quarter 2024 results at 8:30 a.m. Eastern time on Friday August 2, 2024. The call, consisting of a presentation by the company followed by a question period, may be accessed at 1 (888) 390-0867 (Canada or U.S.) or 1 (212) 547-0141 (International) with the passcode "FAIRFAX". A replay of the call will be available from shortly after the termination of the call until 5:00 p.m. Eastern time on Friday, August 16, 2024. The replay may be accessed at 1 (800) 551-8152 (Canada or U.S.) or 1 (203) 369-3810 (International). Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management. For further information, contact:                John VarnellVice President, Corporate Development(416) 367-4941 CONSOLIDATED BALANCE SHEETS as at June 30, 2024 and December 31, 2023(US$ millions except per share amounts)     June 30, 2024   December 31, 2023 Assets             Holding company cash and investments (including assets pledged for derivative obligations – $212.5; December 31, 2023 – $197.7)     2,541.6       1,781.6   Insurance contract receivables     813.3       926.1                 Portfolio investments             Subsidiary cash and short term investments (including restricted cash and cash equivalents – $525.5; December 31, 2023 – $637.0)     7,722.7       7,165.6   Bonds (cost $36,760.9; December 31, 2023 – $36,511.9)     36,477.0       36,850.8   Preferred stocks (cost $898.9; December 31, 2023 – $898.3)     2,515.3       2,447.4   Common stocks (cost $6,543.8; December 31, 2023 – $6,577.2)     6,820.4       6,903.4   Investments in associates (fair value $8,278.7; December 31, 2023 – $7,553.2)     7,229.8       6,607.6   Derivatives and other invested assets (cost $888.9; December 31, 2023 – $952.0)     921.4       1,025.3   Assets pledged for derivative obligations (cost $112.8; December 31, 2023 – $137.7)     112.4       139.3   Fairfax India cash, portfolio investments and associates (fair value $3,274.7; December 31, 2023 – $3,507.6)     2,041.2       2,282.7         63,840.2       63,422.1                 Reinsurance contract assets held     10,868.9       10,887.7   Deferred income tax assets     274.5       301.1   Goodwill and intangible assets     6,277.5       6,376.3   Other assets     8,867.0       8,290.2   Total assets     93,483.0       91,985.1                 Liabilities             Accounts payable and accrued liabilities     5,534.8