TORONTO - 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.

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.