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Fairfax subsidiary delays results

Another subsidiary of Canadian combine Fairfax Financial Holdings announced last week that it would be delaying the filing of its second quarter results because it needed extra time to adjust accounting errors.

New Jersey-based Crum & Forster filed a Form 12b-25 with the Securities and Exchange Commission on 15 August stating it would be unable to meet the deadline for its results.

The company stated: “The company is in the process of correcting certain investment accounting errors and evaluating the impact of such corrections on its previously issued financial statements.

“Management is also in the process of completing its assessment of the impact of the corrections on the company’s disclosure controls and procedures and changes to internal control over financial reporting and will report its conclusions, if necessary, in the Quarterly Report.”

The announcement came just a week after another Fairfax subsidiary, reinsurer Odyssey Re, said it would delay filing its quarterly financial report while it continues to review its accounting treatment of various investments.

The reinsurer, which has previously said it was restating earnings for the years 2001 through to first quarter 2006, reiterated it does not think the changes will affect shareholders’ equity.

The announcements from the two Fairfax subsidiaries follow the parent company itself revealing on 27 July that its discovery of "non-cash accounting errors" would force a restatement.

Fairfax's restatement is expected to reduce shareholders’ equity by up to 5 percent, or as high as $190mn, according to the company.

“Crum & Forster expects to file its second quarter financial statements no later than Monday 21 August 2006 - no greater than five calendar days beyond the prescribed due date,” a Fairfax spokesman said. 

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