TORONTO, July 31 (Reuters) - Fairfax Financial Holdings , the Canadian property and casualty insurer run by investment authority Prem Watsa, said on Thursday it rebounded to profit in the second quarter from a year-earlier loss due to gains in its investment portfolio and stronger underwriting results.
The Toronto-based company said it earned $363.7 million, or $16.15 a share, in the quarter. That compared with a year-before loss of $157.8 million, or $8.55 a share.
Fairfax, which has hedged the bulk of its stock portfolio since 2010, posted net investment gains of $409 million during the quarter as strength in its equity and bond investments more than offset losses from its equity hedges.
That compared with a net investment loss of $415.7 million in the second quarter of 2013.
Fairfax said in a statement that 85 percent of the stock portfolio is currently hedged.
Operating income from Fairfax's insurance and reinsurance operations was $202.2 million in the quarter, up from $187.5 million a year earlier, due to improved underwriting.
Since taking over the company in 1985, Watsa has built a reputation as a shrewd investor with moves such as betting against the U.S. housing market and then reaping huge profits when the market collapsed five years ago.
(Reporting by Cameron French; Editing by Peter Galloway)