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Article 6 - the final article in our 6-part series on Fairfax's insurance business. Why Fairfax's Insurance Platform Is Built to Last Insights from Fairfax's 2026 AGM In a previous article, we reviewed Fairfax's insurance transformation from 2014 to 2025. That story was told through financial results. Net premiums written increased from $6.1 billion to $26.3 billion. Float more than tripled. Most importantly, shareholders participated in that growth on a per-share basis. The increase in size is easy to see. It is evident in Fairfax's reported financial statements. What is less well understood is how much the quality of the insurance franchise has improved over the past fifteen years. Record underwriting profits are one visible sign of that improvement, but the real story lies beneath the numbers. The 2026 Annual General Meeting provided compelling evidence of that transformation. Rather than focusing on financial results, investors heard directly from the executives who built and now operate Fairfax's insurance business. Although each spoke from a different perspective, together they described the same underlying system: a decentralized organization built around exceptional people, disciplined underwriting, and long-term thinking. Understanding both changes—the growth in scale and the improvement in quality—is essential to understanding Fairfax today—and why the company's insurance business has never been better positioned for the future. Prem Watsa: It Starts with People Prem Watsa opened the discussion by talking about acquisitions. But he was not really talking about acquisitions. He described Markel (Canada) as Fairfax's most important acquisition because it established the company in the property and casualty insurance business. He then identified Skandia America Re as his second most important acquisition—not because of the business itself, but because it ultimately led to Andy Barnard joining Fairfax and building its global insurance operations. As Watsa explained: "The best one is Markel Insurance because otherwise you're not in the P/C insurance game. And the second best was a small company called Skandia America Re... because it brought Andy Barnard to Fairfax." It was a classic Prem Watsa answer. Fairfax's greatest asset is not its float, investment portfolio, or insurance subsidiaries. It is the people running them. That theme ran throughout the AGM and provided the foundation for everything that followed. Andy Barnard: Fifteen Years of Preparation Andy Barnard then provided perhaps the clearest framework for understanding Fairfax's recent success. Looking back on his fifteen years leading Fairfax's insurance operations, Barnard divided the period into two distinct phases. From 2011 to 2019, Fairfax prepared for future growth. The company acquired Brit and Allied World, expanded internationally, strengthened leadership teams, and built the organizational capabilities needed to compete on a global scale. The second phase began in 2020. With the platform in place, Fairfax was positioned to capitalize on a hardening insurance market. Premium volume nearly doubled, underwriting profits surged, and years of preparation translated into exceptional operating results. Barnard summarized the period this way: "The first period, from 2011 to 2019, was a period of preparation... The second period, from 2020 to 2025... we virtually doubled our premium volume, and our underwriting profit more than quadrupled." Exhibit 1: Andy Barnard's Framework Barnard's framework also helps investors better understand the insurance cycle. Hard markets create opportunities, but only companies that have spent years preparing are positioned to capitalize on them. Fairfax's insurance franchise was built before the hard market arrived. The hard market simply revealed its strength. Brian Young: The Message for Today If Barnard explained the past, Brian Young focused on the present. His message addressed investor concerns about a softening insurance market. Fairfax remains committed to underwriting discipline. There is no pressure on operating companies to write business simply to maintain premium growth. Growth matters, but profitability matters more. As Young stated: "There's no pressure on any of our companies to write for top line growth." This helps explain why growth has recently slowed across parts of Fairfax's insurance operations. Management is deliberately choosing underwriting profitability over market share. For long-term shareholders, that is exactly the right decision. Lou Iglesias: How Discipline Works Lou Iglesias of Allied World provided a clear illustration of Fairfax's decentralized operating structure. Authority is pushed down to experienced underwriters. Decisions are made close to the customer and close to the risk. Underwriters are trusted to exercise judgment—including walking away when pricing becomes inadequate. Iglesias summarized the philosophy simply: "Hire really great people and give them the authority and accountability to get the job done." Rather than relying on centralized oversight, Fairfax relies on capable people supported by clear accountability. It is the practical application of the philosophy Prem Watsa described at the beginning of the discussion. Silvy Wright: Discipline in Practice Silvy Wright showed how that philosophy works in practice. Northbridge did not pursue premium growth aggressively in 2025. Instead, management maintained underwriting standards while competing through customer service, claims management, relationships, and helping customers improve safety. Growth slowed. Results remained strong. As Wright explained: "We are not pressured to write premium at a loss." For investors, this illustrates an important principle. In insurance, slower premium growth is not necessarily a sign of weakness. It can be evidence of underwriting discipline. Peter Clarke: The Benefits of Scale Peter Clarke concluded the discussion by highlighting one of Fairfax's greatest competitive advantages: diversification. Today, Fairfax operates across numerous geographies, products, and markets. When pricing weakens in one area, capital can be redirected to more attractive opportunities elsewhere. As Clarke observed: "Even though North America rates are coming down, we have all these opportunities around the world." This flexibility is one of the lasting benefits of building a global insurance platform. What Investors Learned An earlier article documented Fairfax's insurance transformation through financial results. The 2026 AGM explained how those results were achieved. A consistent picture emerged. Fairfax's success was not simply the product of a favorable insurance market. It reflected years of preparation, disciplined capital allocation, decentralized decision-making, and an unwavering commitment to underwriting profitability. More importantly, the AGM demonstrated that Fairfax's insurance business has become better—not just bigger. Over the past fifteen years, the company has assembled an exceptional leadership team, strengthened its underwriting culture, expanded into attractive global markets, and built a decentralized operating model that empowers talented people to make disciplined decisions close to the customer. These improvements are structural rather than cyclical. Insurance pricing will inevitably fluctuate over time. Premium growth will accelerate during hard markets and slow during soft markets. Those cycles are outside management's control. The quality of Fairfax's people, its underwriting discipline, its decentralized operating model, and its global platform are different. Those are enduring competitive advantages that should persist through multiple insurance cycles. The financial statements tell investors that Fairfax has become much larger. The 2026 AGM explained why it has become much stronger. Understanding both changes is essential to understanding Fairfax today—and why the company's insurance business has never been better positioned for the future.

Article #5 in our 6 part series on Fairfax's insurance business. Let me know if I got the high-level description of the call option feature correct. Partnerships: An Underappreciated Growth Strategy Previous articles explained how Fairfax built one of the world's largest property and casualty insurance groups through disciplined acquisitions, strong underwriting, and organic growth. Another important contributor has received much less attention: partnerships. Over the past fifteen years, Fairfax repeatedly partnered with long-term investors to accelerate the expansion of its global insurance platform. Rather than funding every acquisition itself, management shared ownership of selected businesses, allowing Fairfax to acquire interests in more high-quality insurers than it could have using only its own capital. The strategy evolved over time. Partnerships initially maximized the size of Fairfax's insurance platform. As internally generated capital accumulated, Fairfax increasingly used that capital to increase its ownership of those same businesses. Together, the two phases illustrate one of Fairfax's more innovative capital allocation strategies. Phase One: Building the Insurance Platform By the early 2010s, Fairfax's acquisition strategy had evolved. Rather than focusing primarily on distressed insurers, management increasingly targeted higher-quality insurance businesses. These acquisitions required substantially more capital but also offered stronger long-term growth prospects. At the same time, Fairfax's equity hedging program reduced internally generated capital available for acquisitions. Partnerships helped solved that problem. By investing alongside long-term partners, Fairfax could pursue larger opportunities without relying solely on its own balance sheet. Fairfax generally used two partnership models. In some cases, it acquired control immediately. In others, it acquired a significant minority interest and patiently waited for the opportunity to obtain control. Although structured differently, both approaches pursued the same objective: long-term ownership of outstanding insurance businesses. Model 1: Controlling Partnerships In some transactions, Fairfax acquired control immediately while inviting partners to invest alongside it. Fairfax sourced the opportunity, negotiated the acquisition, and remained the controlling shareholder. Its partners—primarily Canadian pension funds—provided part of the required equity. Brit and Allied World are the best examples. Exhibit 1: Fairfax – Model 1: Controlling Partnerships The three largest transactions required almost US$6.9 billion of capital. Fairfax invested approximately US$4.7 billion, while partners contributed US$2.3 billion. As a result, Fairfax controlled almost US$7 billion of insurance acquisitions while providing only about two-thirds of the required capital. Accounting Implications Because Fairfax owned more than 50% of these businesses, it consolidated 100% of their premiums, assets, liabilities and operating results into its financial statements. Economically, however, Fairfax owned less than 100%. The partners' share of earnings was reported separately as non-controlling interests. Model 2: Strategic Minority Investments Not every opportunity required immediate control. Sometimes Fairfax acquired a significant minority interest while another shareholder remained in control. Rather than insisting on ownership from day one, management built a long-term relationship, learned the business and waited patiently for the opportunity to acquire control. Singapore Re and Gulf Insurance Group illustrate this approach. Fairfax was comfortable sitting in the passenger seat until the opportunity arose to move into the driver's seat. Exhibit 2: Fairfax – Model 2: Strategic Minority Investments Fairfax initially acquired a 28.1% interest in Singapore Re in 2009 and a 43.4% interest in Gulf Insurance Group in 2010. In both cases, Fairfax eventually acquired control years later. Accounting Implications Because Fairfax initially owned between 20% and 50%, these investments were accounted for using the equity method (share of profit of associates). As a result, their premiums, underwriting results and float did not appear in Fairfax's reported insurance operations until control was obtained. The different accounting treatments help explain why the economic impact of Fairfax's partnership strategy is not always obvious from the financial statements. Phase Two: Increasing Economic Ownership By 2021, Fairfax had entered a new phase. Years of disciplined underwriting, a strong insurance market, improving investment income, and substantial operating cash flow began transforming the company’s financial position. Fairfax was generating far more capital internally than it had a decade earlier. Rather than buying new insurers at significantly higher valuations, management began increasing its ownership of businesses it already owned. Between 2021 and 2024, Fairfax committed approximately US$2.1 billion to buy out partners in four existing insurance businesses. Singapore Re: increased ownership to 100% Brit: increased ownership to 100% Gulf Insurance Group: increased ownership from 43.4% to approximately 97% Allied World: increased ownership from 70.9% to 83.4% Exhibit 3: Fairfax – Insurance Partners Bought Out (2021–2024) The strategy had evolved. Initially, partnerships allowed Fairfax to build a larger insurance platform than it could otherwise have afforded. Now they allowed Fairfax to increase its ownership of the underwriting profits, investment income, float, and long-term value generated by that platform. Why Investors Miss the Economics The accounting creates an interesting paradox. During the first phase of the strategy, controlling partnerships immediately increased Fairfax's reported premiums, underwriting results, and float because those businesses were fully consolidated. During the second phase, buying out minority partners produced no change in those reported operating measures because the businesses had already been consolidated. Instead, the benefit flowed directly to Fairfax shareholders through increased ownership of the earnings those businesses generated. The insurance platform did not become larger. Fairfax simply owned more of it. That distinction is easy to overlook. Many investors focus on premium growth when evaluating insurers. Viewed through that lens, buying out minority partners appears to accomplish very little. Economically, however, Fairfax increased its ownership of businesses already producing substantial underwriting profits, investment income, and float. The growth shifted from the top line to the bottom line. For long-term shareholders, that is what ultimately matters. Controlling Partnerships: The Call Option Advantage The controlling partnership model contained another important feature: call options. When Fairfax negotiated these transactions, it secured the right to purchase its partners' interests in the future using valuation frameworks established at the time of the original investment. What is a call option? "A call option is a financial contract that gives the buyer the right, but not the obligation, to purchase a specific stock or asset at a predetermined price (the 'strike price') before a set expiration date. Buyers pay a fee, called a 'premium,' for this contract." — Investopedia What makes a call option valuable? "The primary benefit of holding a call option is the right, but not the obligation, to buy an asset at a set price before a specific date. This allows you to profit if the asset's market price rises, while strictly limiting your total potential loss to the initial cost paid." — Investopedia The same principle applies to Fairfax's controlling partnerships. The best time to acquire insurance businesses is typically during a soft insurance market, when underwriting results are weaker and valuations are generally lower. The most expensive time is often near the end of a hard market, when strong premium growth and improved underwriting profitability have increased earnings and driven valuations materially higher. Many of Fairfax's partnership agreements were negotiated during a soft insurance market. The call options established valuation frameworks at that time. Since then, one of the strongest hard insurance markets in decades has materially increased underwriting profits, earnings, and the value of high-quality insurance companies. The practical effect is significant. Fairfax can increase its ownership of certain businesses today while paying prices based on valuation frameworks negotiated during a soft market. In effect, management has the opportunity to acquire larger ownership interests in high-quality businesses at below-current market valuations. For shareholders, the call option feature transformed what initially appeared to be a financing arrangement into a long-term capital allocation advantage. What Remains? Fairfax is approximately half way through the process. Between 2021 and 2024, Fairfax increased its ownership of Singapore Re to 100%, Brit to 100%, Gulf Insurance Group to approximately 97%, and Allied World to 83.4%. By 2025, Fairfax economically owned approximately US$24.6 billion of its reported US$26.3 billion of net premiums written. Minority partners now account for only about US$1.7 billion, or roughly 6%, of reported premiums. Exhibit 4: Remaining Minority Interests (2025) The largest remaining minority interests are Allied World and Odyssey, where Fairfax owns approximately 83.4% and 90%, respectively. These businesses represent the largest remaining opportunity to increase Fairfax's ownership of an insurance platform it already controls. What Have We Learned? Fairfax's partnership strategy was much more than a financing tool. It was an innovative capital allocation strategy designed to exploit the insurance cycle. During the soft market, partnerships allowed Fairfax to acquire substantially more high-quality insurance businesses than it could have financed using only its own capital, when valuations were most attractive. As underwriting profits, investment income, and operating cash flow strengthened, management shifted to the second phase of the strategy—using internally generated capital to increase its ownership of those same businesses rather than acquiring new insurers at much higher valuations. The call option feature made the strategy even more powerful. By negotiating the right to purchase its partners' interests using valuation frameworks established years earlier, Fairfax positioned itself to increase ownership after one of the strongest hard insurance markets in decades while effectively paying soft-market prices. The accounting makes the economics easy to miss. Partnerships initially increased reported premiums because controlled businesses were fully consolidated. Later buyouts produced little change in reported premiums, but materially increased Fairfax's ownership of underwriting profits, investment income, float, and future earnings. Viewed across an entire insurance cycle, this is classic Fairfax: patient, creative, unconventional, and long term in its thinking. Management built flexibility into the original transactions, waited for the economics to become highly favourable, and then deployed internally generated capital when the opportunity was greatest. The result was a larger insurance franchise, greater economic ownership for common shareholders, and another meaningful contributor to long-term per-share value creation.

Pretty good talk about the history of AI:

Good article, I'm curious how it plays out. I agree that free market is a most powerful force, and have faith in Adam Smith's model. Uncompetitive companies must close or improve, and a crisis is often helpful to overcome long standing inefficiencies. Companies which are successful for too long become stagnant. The question is how predatory pricing and massive state intervention works out for a nation of 1 billion people. China has a good shot for long term success, but it hasn't won yet. The last empire with state control over economy and industry was Soviet Union, and it failed badly. China allows quite a lot of free market besides state control, so here is innovation. China does hostile moves not only against Germany and Europe, but also against USA, South Korea, Japan, Taiwan, Israel and others. Together those countries could easily organize and compete.

Hard to ignore that this is going downhill for Russia ,even for those living in Moscow. They are importing fuel from India: https://youtu.be/WvgIQV45tEo?is=5lddlfyPJsnwhU9o

The metric that I'd be really looking at for BTC is input cost(electricity, hardware, etc) per bitcoin/price of a bitcoin. When the input cost is greater than cost to mine(aka the incentive to keep the "most secure and powerful decentralized computer network" running), that network will have the incentive to now turn itself off. That means entities with large amounts of resources (e.g. North Korea, NSA, CIA) can control that network to siphon the BTC off inconspicuously while running trick play on their propaganda machines to mitigate any appearance of abnormalities until it can not longer be hidden. When that happens, BTC will be as worthless as any other cryptocurrency. The trends in AI compete with BTC in very similar type of resources, and if AI really gains widespread adoption, it may be the thing that actually kills off BTC. If I were holding a lot of BTC, I'd put a healthy dose of resources into AI just to hedge.

You keep kidding yourself Richard - and keep telling me that your armed Antifa rioters and shooters were exercising their rights to "Free Speech". I can't help it you are delusional.

Since we discussed authoritarism here is a specific issue, since Antifa was brought up. Antifa literally Means Anti fascist which to my knowledge not illegal. It’s not an “organization” either. There is no Antifa leadership. It’s a loose term for left organization and typically small groups that have little if any coordination that range from those who do throw Molotov cocktails to college student groups who demonstrate on the college grounds. How this is designated a terrorist organizations shows how far we have drifted off to authoritarian side here. Declaring an organization a terrorist organization based on nebulous associations is done by intent to scare people and now creates the perception of an enemy within - a very old autocratic scare tactic. Say what you will about free speech in Europe, but I don’t think this would be possible. https://www.whitehouse.gov/presidential-actions/2025/09/designating-antifa-as-a-domestic-terrorist-organization/

lol , I know, and all those policies have been bad for Europe and good for everyone else.

Elites at the World "Economic" Forum have been saying tariffs are always bad while also firmly embracing "Green" ideology. China seized the advantage of their foolishness and European industry paid the price.

Berlingske - Commentary column - Samuel Rachlin [July th4 2026] : Putin seeks way out, but is entangled in a war that keeps his utopia about Russian greatness and triumph alive [subscription protected] - - - o 0 o - - - Attached : 1. Article translated to English language by the use of Google Translate, 2. Article in Danish language, source for 1. - - - o 0 o - - - Note : Translation is far from perfect, I have only fixed the header here in this post. - - - o 0 o - - - The whole situation is absolutely depressing to think about - I personally have a hard time to see a feasible alternative to just continuing the warfare activities, with continued massive losses of human lives. *sigh* Berlingske - Samuel Rachlin - Putin søger en udvej men er spundet ind i en krig der holder liv i hans utopi om Ruslands storhed og triumf - Opinion - English - 20260705.pdf Berlingske - Samuel Rachlin - Putin søger en udvej men er spundet ind i en krig der holder liv i hans utopi om Ruslands storhed og triumf - Opinion - Danish - 20260705.pdf

Only include dvidend and interest, less withdrawals to live on, as you are measuring the change in unleveraged capital. Use time weighted return. To double capital in 10 years you need around a 10 yr CAGR of 10% (72/10 + 2.8% inflation). For an RRSP/RRIF, substitute the higher of the minimum withdrawal required, or the amount drawn to live on. SD

they need to apply tariffs to protect their industry

Probably, about politics, I am the only on this site thinking that right, left and center are the same thing... I will not be very popular but basically this is how I see politics...

People have given you countless specifics for the last year and a half. And longer, really. The fact that you are deciding to ignore all of them is on you, not them. It isn't a good look, and is the primary thing that pushes me left--I don't want to be associated with the side that is most eager to pretend reality isn't real. The left doesn't actually understand how the world works, but is reasonably close to intellectually honest when talking politics. The right prides itself of being intellectually dishonest, as if reality doesn't matter.

https://www.wsj.com/economy/china-is-devastating-the-last-stronghold-of-german-industry-c7a98514 Germans deserve better leaders: ones that will actually stand up for them instead of being there to merely help empower elites of Europe. Remember--those elites at Davos kept saying that "Free Trade is Always Good", even with an abuser like China...

https://www.nytimes.com/2026/07/04/us/politics/trump-coin-crypto-investors-loss.html The number one use case for crypto continues to be grifting & scamming

I am not so sure about this. Markel breaks down their equity returns pretty clearly, the below is from 2025. The 20 year return is pretty good but based on my calculations Fairfax has done better, ~15% CAGR including the negative impact of hedging and positive impact of CDS and TRS. I include all those elements because they are all active decisions taken which either add or detract from alpha.

Interactive Brokers gives me time weighted rate of return - all time, YTD, etc - that I can compare vs indexes and I withdraw frequently

All the best in your future endeavors! you have been great here!!!

Sadly 3:0 to Morocco, as Canada essentially just ran out of gas/expertise. A great run for both Canada, and the remaining African teams. One has to think that from here on out ... there are going to be a lot more trades with the elite farm club teams of Europe and South America, that raises everyone's game. A future First Nations/Inuit Renaldo would be quite something! SD

Antifa is a designated terrorist organization here in the United States - so it's no joke - Mafia or organized crime, but dedicated to overthrowing the US government through violent means. You're right about the left, but incorrect on the right in the USA. Like my buddy CW, I never hear definitions of "authoritarianism" which gets thrown around here on CoBF every day. The term always gets thrown around - but never any specifics. The USA is currently very polarized, but that's what happens when you are at an impasse - with one group leaning hard toward socialism/communism and the other group fighting to keep our traditional government from changing. The politics is very ugly.

To make it clear, I'm fully against fascism. I don't know WTF antifa actually is, because it seems like a Schrodinger's word. Like, say, "feminism" or "fascism" or "liberalism", the meaning of antifa seems to change based on the convenience of whoever's using it. I think politically, theoretically, you and are on the same side of centre--I'm basically a classical liberal. As such, I believe in things like freedom of speech, civil liberties, free markets, and low levels of regulation. I think the government should interfere with free markets largely in areas where there's good evidence that the benefits significantly outweigh the downside (universal healthcare with private and public components and anti-trust are the two that immediately come to mind for me.) Right now, the challenge for me is that in Canada, the left wing has shifted us way left, far from sensible classical liberal policies,and I get the sense that the same is true of Europe. The USA is doing the exact same thing from the opposite side. All of these are toxic trends toward authoritarianism, just from different sides. That's my point that polarization is terrible--it allows both sides to push us toward authoritarianism by saying that they're doing it to fight back against the evil people on the other side.

I look at them both ways but only time weighted should be compared to the index directly. My money weighted returns are quite a bit higher than the time weighted but I have to present the TWR on other peoples capital

As he did. Morocco - Canada 2:0