Dear Friends, Business Partners and Colleagues,

Odyssey Group had a fantastic year, delivering solid underwriting results and record operating income. Underwriting profits increased year on year by 59% to $365 million, as the combined ratio improved 200 basis points to 93.9%, and operating income increased nearly 50% to $973 million.

Net investment income of $616 million reached an all-time high in 2023. The benefit of higher rates has been significant, but another important factor contributing to record interest and operating income has been the rapid growth in our premium writings in recent years. As we expanded in the hard market, invested assets at Odyssey have ballooned from $8.8 billion in 2018 to $15.1 billion today. The combination of higher rates and invested asset growth has resulted in a tripling of our interest income since 2018. With higher rates locked in, our earnings outlook looks very positive for the next few years. It’s also important to note that higher interest income allows us to retain more underwriting risk (and profit!) and acts to buffer capital from shock losses.

As a reminder, Odyssey Group is a global (re)insurance enterprise, encompassing three distinct yet complementary operating platforms supported by six divisions, 37 business units and a network of 30 principal offices in 13 countries. Please take a few moments to learn more about our business and financials in this report, which includes detailed profiles of our three operating platforms: OdysseyRe, Hudson and Newline. We hope you find this information useful.

Following six years of sequential growth, Odyssey Group’s gross premiums written reduced modestly by 3% to $6.6 billion in 2023. While we continue to grow many parts of our business, we lost more than $600 million of premium as a result of: 1) the non-renewal of a large quota share in OdysseyRe, 2) targeted reductions in Hudson Crop, and 3) meaningful rate compression in Hudson’s U.S. D&O business. Yes, the market is getting more competitive again, and we are not afraid to pull back if the margin is not there. We will always be patient for growth.

I am pleased to report that all three of our operating platforms made an underwriting profit this year. OdysseyRe led the way with a combined ratio of 89.5%, followed by Newline at 91.3% and Hudson at 98.3%. Overall, Odyssey Group’s 93.9% in 2023 marks the 12^th successive year that we have delivered a combined ratio below 100%. Over that period, we have generated $2.7 billion of underwriting profit at an average combined ratio of 93.0%.

Another positive long-term trend worth highlighting is that 2023 marks the 16^th consecutive year that our loss reserves have developed favorably. Although reserve takedowns have slowed in recent years, reserve releases still improved the combined ratio by 1.3% ($80 million) in 2023. For the more recent accident years of 2020-2022, we have largely held firm on our original casualty loss picks, even though actual loss development to date has been better than we would have expected. We will review these picks for downward adjustment in the fullness of time, consistent with our reserving philosophy, which is always to react to bad news quickly and good news slowly. Disciplined underwriting and prudent reserving go hand in hand and are essential to managing the market cycle effectively.

Our business is thriving, and the future looks very promising. The management succession plan implemented last year has gone very smoothly. Both Carl Overy, CEO of OdysseyRe, and Bob Pollock, CEO of Newline, have adapted exceptionally well to their new leadership roles. We continue to make significant investments in people and technology to enhance our services and expand our product offerings. Underwriting margins and net investment income have grown considerably in recent years, and we expect them to increase further in the year ahead. Our balance sheet has never been stronger, and our capital flexibility has never been greater. What’s more, A.M. Best upgraded Odyssey to A+ last July, and S&P put our A rating on positive outlook a few months later. These positive rating agency actions are frankly way overdue, but finally welcome at long last.

Philanthropy is central to our mission and a product of our good fortune. When we do well, we want to help others in need. Currently, we set aside 2% of our pretax earnings for charitable purposes. We distributed $9.6 million to 178 charities in 2023, most of which were nominated by our own employees, and have pledged an additional $14 million for future donations. Since its formation in 2007, the Odyssey Group Foundation has pledged $85 million to more than 500 charities around the world. For more details about our charitable endeavors and the worthy organizations we are supporting, please view the Giving Back section of this report.

We are truly grateful to you, our valued business partners, for your loyalty and support. We can’t thank you enough for all that you have done for us through the years. We know we are here to serve you and will continue to work hard to maintain the friendship and trust that we have built over time.

Odyssey has been a proud member of Fairfax for nearly 28 years. This is a wonderful place to work, and Prem Watsa is an inspiration to us all. The compassion Prem shows for people runs deeply throughout the entire organization. We treat our employees like family; it is a defining aspect of our culture and the bedrock of our success.

To my 1,426 Odyssey colleagues, congratulations for accomplishing so much in 2023. We scaled new heights this year thanks to your hard work and collective efforts. Let’s continue to keep our eye on the prize, and I’m confident we will go even higher in the years to come.

Brian D. Young

President & Chief Executive Officer