Fairfax Financial Holdings Ltd., led by well-known contrarian investor Prem Watsa, barely eked out a profit for the third quarter as the company booked steep losses on its investments.
Fairfax recorded net investment losses of US$199.5 million in the quarter, compared with a gain of US$425.6 million a year earlier.
Losses on investments were primarily due to price fluctuations in stocks and Consumer Price Index-linked derivative contracts, the company said in a statement.
“We are maintaining our defensive equity hedges and deflation protection as we remain concerned about the financial markets and the economic outlook in this global deflationary environment,” Watsa said in a statement.
Net earnings attributable to shareholders of Fairfax shrank to US$1.3 million in the third quarter ended Sept. 30, from US$424.8 million a year earlier.
On a per share basis, the company reported a loss of 42 cents, compared with a profit of US$18.16 a year earlier.
The Toronto-based financial services holding company said net premiums written fell 2.9 percent to US$1.97 billion in the three months.
In a conference call Friday, CEO Prem Watsa said the company has "tremendous flexibility" and that the can "take advantage of any opportunities that come with this U.S. elections or otherwise."
"Given the uncertainties of the U.S. election and the fact that we live in a mark-to-market world, in the fourth quarter, we have sold approximately 90 per cent of our U.S. long-term treasuries in our investment portfolio.
-- With files from BNN