Odyssey Re sees revenue gains from hard market

Odyssey Re Holdings Corp. (TSX: ORH), the reinsurance operation of Fairfax Financial Holdings Ltd., produced net taxed income of US$208.2 million for the financial year ended December 2002. This equates to earnings of US$3.20 a share. As a result, the company declared a cash dividend of 25 a share for the year.

Odyssey lifted gross written premiums by 64.2% year-on-year to US$1.9 billion for 2002, with net written premiums rising by 65.7% over the same period. The company recorded particularly strong growth in business from the London and Euro Asia markets. Odyssey’s combined ratio for the 2002 financial year fell to 99.1% compared with the 115.4% recorded at the end of 2001.

Odyssey also achieved robust growth on the investment side with investment income rising by 7.3% to US$123 million for the 2002 financial year compared with the prior year’s US$114.6 million. However, the company’s biggest windfall lay in realized gains which surged to US$135.8 million for 2002 against the US$13.3 million reported the year before. “Realized capital gains were predominantly from the sale of fixed income securities which benefited from the decline in interest rates during the year,” the company observes in a statement.

Odyssey’s total assets amounted to US$5.3 billion by the end of the 2002 financial year, equal to a book value of US$16.25 a common share. Odyssey announced that its parent Fairfax has applied to privately purchase 4.5 million of the company’s common shares in issue, thereby increasing its stake to over 80%. The intended share purchase was ascribed to group beneficial tax reasons.