Fairfax Financial Holdings Ltd. Thursday reported a huge jump in second-quarter profit as global equity markets rebounded.

The company said net earnings surged to US$275.4 million, or US$15.65 a share, in the second quarter, ended June 30, compared with US$27.6 million, or 84¢ share, in the same quarter a year earlier.

Fairfax reported a US$330 million investment gain, the result of removing short and hedge positions held at the end of the year.

“We are pleased that, in a difficult environment, we have maintained our disciplined underwriting standards, and our insurance and reinsurance operations have produced a consolidated combined ratio of 98.4% in the second quarter,” said Prem Watsa, chairman and CEO, in a release.

“As to our investments, our continuing focus on high quality common stocks reflects our view that these should provide excellent returns over the long term, though the volatility of the equity markets may result in lumpy quarterly or annual results.”

Fairfax also saw a turnaround in underwriting for its insurance and reinsurance operations after a loss in the same period a year earlier. The combined ratio of the company’s insurance and reinsurance operations fell to 98.4 % on a consolidated basis from 105.8 % a year earlier.

Underwriting profit improved to US$17.3 million, compared with an underwriting loss of US$65 million in the second quarter of 2008.

The company also recorded gains in interest and dividend income. Income rose 12 % to US$184.5 million from US$164.7 million.

Revenues rose 40 % to US$1.7 billion while net premiums written fell 4.8 % to US$1.1 billion, Fairfax said.

IE