Fairfax Financial Holdings Lted. posted a big jump in first-quarter profit, as the insurance holding company continued to benefit from gains in its investment portfolio.

After markets closed Thursday, Fairfax said net income in the three months ended March 31 was US$631.8 million, or US$33.78 a diluted share. That was up from US$110.9 million, or US$5.88 a share, a year earlier.

Fairfax said net gains on investments in the first quarter were US$1.09 billion, about 10 times higher than in the first quarter of 2007.

Net gains on sales of credit default swaps were US$230.7 million in the quarter, and mark-to-market gains were US$467.4 million, the company said.

But in April, the net loss related to credit default swaps was US$304.6 million, highlighting the volatility of the CDS portfolio.

A US$25.5 million pre-tax charge at new Jersey-based Crum & Forster for an asbestos lawsuit led to a US$7.7 million underwriting loss in the first quarter, Fairfax said. That compared with underwriting profit of US$49.5 million in the same 2007 quarter.

Total interest and dividend income earned decreased to US$180.1 million in the first quarter of 2008 from $198.6 million in the first quarter of 2007, primarily due to the year-over-year decline in average short term interest rates, despite a $2.2 billion increase in the average investment portfolio for the first quarter of 2008 compared to the first quarter of 2007.

Operating income of the company’s insurance and reinsurance operations (excluding net gains on investments) for the first quarter of 2008 was $122.3 million compared to $203.8 million for the first quarter of 2007 as a result of declines in underwriting results and interest and dividend income.

Fairfax said quarterly revenue was US$2.4 billion, up from US$1.5 billion a year earlier.

The company owns a majority of Northbridge Financial Corp and other property and casualty insurers in the U.S. and Asia.