Hoodlum

Brit is expanding Property D&F to Bermuda. https://www.britinsurance.com/news/brit-launches-property-df-in-bermuda Brit Group Holdings Limited (“Brit”) is pleased to announce that it will begin writing Property D&F in Bermuda through Brit Re. This will see Brit Re write US and Global Property D&F from January, with a focus on US-based complex risks. Core appetite will include industrial, manufacturing and realty risks, among other industry verticals. The new offering will be led by Tom Ayton, Vice President, Property D&F, who has relocated from Brit’s London office. Tom has been with the Brit group since 2021 and has also held Property D&F underwriting roles at Agora and Markel.

I am thinking more about the claims that get released after a few years. This is usually what gets released during Q4 and has been increasing over the past 2 years due to the hard market that started in 2019. There is certainly no guarantee of what it would be for 2025, but I believe we are seeing a trend due to the 5 years hard market that we experienced.

Thanks for posting @CharlesMunger I noticed the larger trade on 12/16 for 50k through Scotia under the CBOE trading network, but initially thought it was for 100k. There was a similar 109k buyback done on 11/11. Scotia is who Fairfax uses for buybacks and it looks like they use the CBOE trading network for some of their larger buybacks. 12/16 11/11

I am thinking $80 before taxes, based on ~$20 for reserve releases. ~$65 after taxes. The size of the reserve release will dictate how large the earnings will be.

Based on Q3 results it looks like IIFL Capital is included in unrealized gains, if I am reading it correctly. Net change in unrealized gains on investments of $59.5 million principally arose from increases in the fair values of the company’s private company investments in BIAL ($160.2 million), Seven Islands ($35.1 million) and Saurashtra ($16.2 million), partially offset by decreases in the fair values of publicly listed investments in IIFL Capital ($68.1 million), Fairchem Organics ($19.6 million), CSB Bank ($19.2 million), IIFL Finance ($15.1 million) and 5paisa ($6.2 million), and on private company investments in Sanmar ($12.2 million) and Jaynix ($9.3 million).

It looks like Fairfax India will be selling a majority of its shares in IIFL to TPG. This sale would ensure that any remaining shares are now marked to market, if they are not already. https://www.moneycontrol.com/news/business/mc-exclusive-tpg-said-in-be-talks-with-iifl-capital-for-stake-acquisition-13760162.html/amp

That 22% is for the A shares. They are just reporting on what Fairfax reported over the weekend. I am sure that Fairfax sees value here. We may find out more on the next conference call.

@Viking Those are amazing details you have provided. The two that really stood out to me were the 443% underwriting profit increase per share over the past 6 years, along with the 30.6% CAGR ($10.1B total gain) for top 10 equities over the past 5 years. Absolutely incredible!

Does this still count as a new high for FFH?

It looks like Canada Feds are going to review preparedness for major BC earthquake with the P&C insurance companies. not sure how long this gift link will work for this article. I provided a couple of paragraphs from the article. https://www.theglobeandmail.com/gift/88b464f77c2863c66a9326ee3eb93664ae337885ca5483f02881b645ad033c36/UNDXRFRAUREIJK4GKWACFLTWRA/ The federal government is launching consultation with insurers to review the industry’s resilience to earthquakes – a catastrophic event that experts say could hit Canada within the next 50 years. For decades, Canadian property and casualty insurers have been sounding the alarm on the country’s unpreparedness for a major earthquake off the coast of British Columbia. Natural Resources Canada estimates the province has a 30-per-cent chance of experiencing a significant quake by 2075. “Insurers are well-positioned to respond to earthquakes, with sufficient resources to cover insured losses for a one-in-500-year event,” Mr. Sabourin said in an e-mail. “However, more can be done to ensure Canadian consumers are protected by a resilient financial system in the face of more extreme earthquakes.” The largest Canadian earthquake ever recorded was in 1700 – estimated to be between an 8.7- and 9.2-magnitude event off the coast of Vancouver Island. In a report released last month, the IBC estimates a 9.0-magnitude earthquake would result in total economic losses of $128-billion and 43,700 jobs over the subsequent 10 years. Insured losses could cost the insurance industry about $52.6-billion, more than 11 times the Fort McMurray wildfire in 2016, which cost insurers $4.7-billion in losses.

As expected the Dividend stays the same at $15/share. The comment from the press release would seem to suggest that the dividend is not locked at $15, and could increase when cash is not needed for other areas. https://www.fairfax.ca/press-releases/fairfax-declares-annual-dividend-01-05-2026/ Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) (“Fairfax”) announces that it has declared a dividend of US$15.00 per share on its outstanding multiple voting and subordinate voting shares, payable on January 22, 2026 to shareholders of record on January 15, 2026. Applicable Canadian withholding tax will be applied to dividends payable to non-residents of Canada. Consistent with the practice of prior years, the amount of this dividend was determined taking into account the current operating results of Fairfax and its insurance and reinsurance companies and the current cash position at the Fairfax holding company. Consequently, as each year’s circumstances are different, this dividend should not be regarded as indicative of the amount of any future annual dividends.

I noticed from Fairfax's 2024 newsletter that Fairfax had $729M invested with BDT. I wonder if Fairfax indirectly owns additional UAA shares through BDT as well. With CEO Kevin Plank owning ~12% of shares (but still >50% voting control), both BDT (15%) and Fairfax (12% and increasing) are providing a vote of confidence in his direction for UA. I wonder if they are considering taking UA private.

Fairfax continues to acquire UAA shares, including the latest on 11/30 that was above $5/share. They now own 51.5M shares (12% of outstanding) with market value of $272M. https://www.sec.gov/Archives/edgar/data/915191/000094787126000006/xslF345X05/ownership.xml

This was from the 2024 Shareholders report. So maybe a dividend increase will come after buybacks slow down. As expected, we maintained our dividend of $15 per share in 2024 and used our excess cash flow to buy back 1.3 million shares at $1,179 per share or $1.6 billion. As I have said before, this represents a hidden dividend for all of you remaining shareholders of $73 per share (Huge!).

They have not stated that.

I would prefer no increase as well, but I think they will try to keep the dividend close to 1% of share price. During the decade span of $10/share dividend, we did not have the growth in book that we are experiencing now.

Has anyone done any estimate of Q4 earnings? I am thinking we will have a base of $35/share from underwriting, bond interest and dividend. Then about $25/share from mark to market equity gains, for a total of $60/share. The big unknown will be the size of the reserve release. I believe we could at least match the release from 2024, but thinking a somewhat more conservative $20/share which would be halfway between the 2023 and 2024 releases. That would take us to $80+/share before taxes. Based on today’s share price, we would be at 8.0x PE and <1.5x book based on 2025 earnings. What do others think will be reported for Q4 and 2025.

I think with the share buybacks and the closing of preferred debt, along with the Allied minority interest repurchase, we may not see the dividend increase until next January and likely to $20/share. I believe we will find out on Monday as they usually announce it on the 2nd business day of January.

That is my thinking as well. For the Canadian investor it is hard for them to get past the mistakes that Fairfax made 10+ years ago and don’t believe the company is any different today. In some ways the US investor doesn’t have the same baggage and looks at Fairfax more objectively. But since it is OTC for a US investor there is some hesitation to accumulate a position due to the low daily share volume and limits for some US accounts/taxes.

The option for Fairfax to buyback their minority interest in Allied World will expire in September of this year. I thought that Fairfax would do this in Q4, but it looks like this will occur in 2026 now. Will Fairfax wait until August for this?

Based on the latest Form 4, Fairfax now owns 38.2M share (~$190M) https://www.sec.gov/Archives/edgar/data/915191/000094787125001099/xslF345X05/ownership.xml

Fairfax continues to buy both the A and C shares of UAA. The stock jumped 8% today on the latest stock purchase update. https://www.stocktitan.net/sec-filings/UA/form-4-under-armour-inc-insider-trading-activity-913ef43993b8.html

It would be interesting to see some of the analyst reports on Metlen. They have some very high price targets compared to current stock price from the past few weeks. https://en.protothema.gr/2025/12/26/where-foreign-investment-firms-set-the-bar-for-greek-equities-in-2026/ Citi places Metlen at the heart of the European industry for 2026 and within its top three mid-cap picks. It gives a “buy” recommendation and a base target price of EUR 52. The US investment bank refers to a company that has now transcended the narrow boundaries of the aluminium sector and is evolving into a modern industrial group, with parallel growth drivers in energy, EPC projects, circular metallurgy, and the defence industry. Bank of America raises its target price on Metlen to 64 euros and underlines that it has significant growth potential in both the metals and energy sectors. Morgan Stanley says Metlen remains “misunderstoodly cheap” in terms of its prospects, giving it a target price of €66, highlighting that it retains a clear lead as one of the most diversified and resilient growth stories in the European energy and metals market.

thanks @Viking for keeping track of the details. Going into this quarter I had lowered my expectations for earnings from investment gains, as I figured we had a good run already this year and were due for a slow down. So this has been a very pleasant surprise. The resource investments such as the Waterous Funds, ORLA Mining, Foran Mining and Altius minerals really show Fairfax’s long term patience along with some great timing.

ORLA share price has rebounded after the sale of shares by Fairfax and hit new all-time highs this week. If the Fairfax stock price holds or continue to increase by year end (TRS), we will see a sizeable gain (realized and non-realized) from the larger Fairfax investments in Q4.