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Fairfax Financial Holdings had about US$2.5 billion in cash and marketable securities in its holding company at March 31.

Nathan Denette/The Canadian Press

Fairfax Financial Holdings Ltd. is warning that it expects to lose US$1.4 billion in the first quarter because of the COVID-19 pandemic.

The Toronto-based holding company says its preliminary result will also mean about a 12 per cent decrease in book value adjusted for the $10 per common share dividend paid in quarter.

Chief executive Prem Watsa says that despite the unprecedented turbulence its insurance companies continued to have strong underwriting performance in the quarter.

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Net losses on investments currently estimated at about US$1.5 billion primarily reflect unrealized losses in the fair value of our common stock and bond portfolio from the sudden shock of COVID-19, he said. That reverses a significant portion of the US$1.7 billion net gains on investments reported in 2019.

Watsa says in a statement that the company has drawn on its credit facility solely to ensure that it maintains high levels of cash. It had about US$2.5 billion in cash and marketable securities in its holding company at March 31.

Fairfax will also absorb its share of US$200 million in losses related to its investments in Quess, Resolute Forest Products and Astarta.

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