Hoodlum

Thank @Viking for posting that link. I did just read from Fair and Friendly to the end, and may read the rest when I have time. This quote likely sums up how how much has improved in management over the years. Hard as it is to imagine now, Fairfax did not always have an easy time hiring top talent. Today’s leadership meetings give off a “United Nations of Fairfax” vibe – as Fairfax attracts the best and brightest people from all over the world. In the old days, those meetings had more of a “grizzled North American turnaround guys scowling at each other” feel. Fairfax’s latest acquisitions came with known, superior management teams — and today Fairfax has a deep bench to tap for succession events. None of those were really options with the C&F acquisition — senior management was moving on and Fairfax needed to find a brand-new team.

it would be interesting to better understand what drives the changes in reserve releases, to help predict what the future releases could be. The chart from Raymond James shows how we could experience multiple years of >$1B in reserve releases, considering the growth in the Fairfax insurance subs from 10 years ago.

I noticed that reserve releases in the US averaged 1% over the past 25 years. Fairfax’s reserve release last year was 2.4% and likely similar this year, with the increases largely due to the claims from the 2022 Hurricane season. But I wonder if we will starting seeing somewhat higher reserves for claims, due to greater uncertainty and possibly higher inflation than we had prior to COVID. This is somewhat baked in to the CR but could be another development to monitor. https://www.swissre.com/institute/research/sigma-research/Economic-Insights/reserving-higher-uncertainty.html Reserve developments in some key markets suggest that there is a high reserve buffer. US insurers have released reserves consistently since 2006. In the US, the average reserve development has been a 1% release per year for the past 25 years (see Figure 1). In the UK, meanwhile, the long-run trend in reserve development has been close to equilibrium, without large releases. Underwriters in continental Europe have historically been conservative in their loss estimates, and releases in the years leading up to 2021 have been even larger than the already-significant historical average.

oops. I was looking at the wrong ticker.

Current projections suggest we will not see reinsurance ROE drop during the next 2-3 years, like we experienced prior to the recent hard market. https://www.reinsurancene.ws/reinsurer-returns-to-remain-robust-with-steady-roe-through-2027-guy-carpenter/

Fairfax exercised their rights under the Metlen bonds issued on 03/28, that had an exercise price of €40/share. Metlen's closing price today was €56, so a nice gain in just 90 days (even greater in US$). Fairfax now owns 8.34% of Metlen's outstanding shares. Fairfax was likely required to convert to shares now, in advance of the LSE inclusion. https://www.metlengroup.com/news/ase-announcements/insiders-announcements/announcement-of-regulated-information-04-07-2025/

@Viking A great summary of some of the tailwinds that will impact Q2 results, although it is difficult for us to accurately determine what they would be in some cases. The one I was thinking about today was the currency tailwind and what impact that would have on the Book value. So I went back to Q4 where the Fairfax results included a $22/share unrealized foreign currency net loss. I took a quick look at the swing of the CAD/EUR vs the USD in Q4 and then compared the same during Q2. I should not have been surprised to notice that the swing in Q2 was almost exactly the same as it was in Q4, except in the opposite direction. It would not surprise me if we see close to a $20/share unrealized foreign currency net gain in BV reported for Q2.

Natalia Strafti has stepped down as CEO of Grivali Hospitality after 18 months in her new role. She was also deputy CEO since 2021. Natalia started at Eurobank in 2000, moving to Grivalia 10 years ago. She will be a big loss for Grivali and I wonder where they will look for their new CEO. https://money-tourism.gr/en/natalia-strafti-leaves-as-ceo-of-grivalia-hospitality/

Thanks for posting this. After accounting for the additional shares from the convertible debt that was provided to Metlen in March, Fairfax would own 8.35% of Metlen. This is now a $680M investment for Fairfax, quickly approaching $1B.

Another interview with Murad Al-Katib of AGT Foods. What I found interesting was his comment at 20 min where he mentioned that AGT is doing relatively well during this time of significant economic strife, due to only 27% of AGT Foods sales coming from the US, China and India combined. I would have expected the combined sales to these 3 regions to represent a larger percentage of their sales. They are certainly well diversified globally and should be able to withstand any geo-political shocks that other companies will go through.

Thomas Cook India’s credit rating was upgraded and the credit agency specifically mentioned the upgrade to Fairfax by S&P as impacting the Thomas Cook upgrade. This should bode well for all Fairfax owned businesses that owe debt. https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/ThomasCookIndiaLimited_June 23_ 2025_RR_371239.html The upgrade in rating follows the rating upgrade on the debt facilities of the parent, Fairfax Financial Holdings Ltd (Fairfax) by S&P Global Ratings to ‘A-/Stable’ from ‘BBB+/Positive’. The rating upgrade by S&P Global Ratings was owing to strengthened capitalisation, driven by improved earnings and capital management. S&P Global Ratings has also revised its outlook for Fairfax rating’s to stable reflecting its expectations of strong earnings, driven by underwriting and investment activities, while maintaining very strong capitalization. Strong support from the parent, driven by the group’s strategic importance: The Thomas Cook India group is strategically important to Fairfax and has been one of the acquisition vehicles for the parent in India. Over the years, Fairfax has been extending regular funding support to the group via equity or preference shares mainly towards business acquisitions. During March 2021, the group received significant fund infusion worth Rs 436 crore of OCCRPS from Fairfax. This mitigated the impact of operating losses incurred over fiscals 2021-2022 and supported liquidity. Rs 303 crore out of Rs 436 crore was converted into equity in March 2022 and the remaining in September 2022. This indicates strong support received from the parent, Fairfax. Also, Fairfax has regular managerial oversight over the group, with three nominees on the board. Any change in the support philosophy of the parent towards the group shall be a key rating sensitivity factor.

Maybe it is time for an update from Mr Horn.

I wonder if we are now seeing the impact of the additional US analyst coverage of Fairfax over the past couple of months (Raymond James, Value Line, possibly others). I know many including myself were waiting for the TSX60 index to provide more visibility, but Fairfax may be getting that now through the US. The timing of Buffett stepping down from his role at Berkshire likely contributed to this as well.

I think we will see a Fairfax close out a larger portion of the TRS this quarter (end of June) then they did at year end. This is my guess and preference as well.

Thanks. Yes, that makes sense now.

After thinking the above through further, I remembered that the Fairfax option to purchase the OMER minority ownership of Allied expires next September, so Fairfax would own 100% of Allied by then and at that time it would not matter who owns the debt. The potential interest savings to Allied over likely the 2 years from mid-2024 to mid-2026 would be ~$72M. But OMERS is paid at a fixed dividend based on prime, so I don't think they would benefit from this savings at Allied. Unless I missed something I think this helps answer why it would not matter that Fairfax took over the debt now, and there may have been a benefit to Fairfax for doing it this way.

Interesting. Maybe they always do this but I never noticed, as this is not mentioned in their press release. The 2055 notes in 2024 were used to pay off Allied debt, so for that one I could maybe understand why Allied was a co-obligor. But that does bring up a question I had in the past. What benefit did Fairfax receive for paying off the Allied Debt? According to the 2024 Q4 report it would seems that adding Allied as the co-obligor provided some financial benefit to Fairfax. Does anyone understand how this benefit could be worth $596M? On June 24, 2024 the company completed an offering of $600.0 million principal amount of 6.10% unsecured senior notes due 2055 (the "2055 notes") and an additional $150.0 million principal amount of its 6.00% unsecured senior notes due 2033. Subsequent to June 30, 2024, on July 19, 2024 Allied World became the primary co-obligor of the 2055 notes in exchange for cash received from the company of $596.6. On July 24, 2024 Allied World used the majority of those proceeds to redeem all of its outstanding $500.0 million principal amount of 4.35% senior notes due 2025.

Thanks @SafetyinNumbers I was trying to make sense of what changed at RBC. I don’t have access to the report but it sounds like they highlighted future growth at Ki Insurance.

RBC Capital has initiated coverage in the US. https://www.gurufocus.com/news/2932873/fairfax-financial-frfhf-garners-outperform-rating-from-rbc-capital-frfhf-stock-news RBC Capital has initiated coverage on Fairfax Financial (FRFHF, Financial) with an Outperform rating, assigning a price target of $2,050. The firm considers the stock its top value pick, highlighting that Fairfax's current valuation discount compared to its peers will likely decrease. This optimism is based on Fairfax's strong and consistent underwriting and investment outcomes. Additionally, RBC Capital notes that Fairfax's investment portfolio has been strategically adjusted to benefit from the present interest rate situation, which is expected to enhance investment performance further.

Is this a normal procedure for securing Notes offerings? I don't remember seeing this mentioned previously. Fairfax Financial Adds Brit as Co-Obligor to Strengthen Financial Structure - TipRanks.com On June 17, 2025, Fairfax Financial Holdings Limited announced the addition of Brit Group Holdings Limited as a co-obligor to its outstanding senior notes due in 2034 and 2054. This strategic move, formalized through a seventh supplemental indenture, ensures that Brit will assume joint responsibility for the obligations under these notes, thereby strengthening Fairfax’s financial structure without relieving the original issuer of its commitments. This development is expected to enhance the company’s operational flexibility and potentially improve its market positioning by leveraging Brit’s strong presence in the global insurance market.

I would be surprised if Fairfax need to increase the offer any further.

The acquisition of the remaining shares of The Keg Royalty Income Fund is expected to close in Q3. https://financialpost.com/globe-newswire/the-keg-royalties-income-fund-enters-into-arrangement-agreement

I see we hit $2400cdn this morning. The gains on the TRS are going to look great for this qtr. Sing Re (Fairfax Asia) is now licensed to sell reinsurance in India. I guess the regulator had no concerns with Fairfax owning both Go Digit and Sing Re? https://www.lifeinsuranceinternational.com/news/sing-re-reinsurance-licence-india/ The regulatory approval enables the company to establish an IFSC Insurance Office (IIO) in Gujarat International Finance Tec-City (GIFT City). The move authorises Sing Re to conduct property & casualty (P&C) reinsurance as a Category – 2 reinsurer within the Order of Preference framework. The new IIO is expected to facilitate Sing Re’s access to the Indian reinsurance market.

BIAL is raising $1.1B in bonds for both refinancing of existing debt and new expansion projects. https://financialpost.com/pmn/business-pmn/bangalore-airport-in-talks-to-raise-about-1-1-billion-in-bonds The tenor for the privately issued bonds could go up to 15 years, said the people. The initially proposed coupon is 8.15%, but it could be lower as negotiations continue, particularly after the Reserve Bank of India slashed the benchmark rate by 50 basis points, they said. Terms are not yet finalized. ICRA, the local arm of Moody’s Ratings, rated BIAL with a triple-A grade. “The rating considers the healthy improvement in scale of operations,” it said in a note.

I believe there was a previous question post a while back, on what the impact would be of US Bill 899 on Fairfax. While the following article discusses the impact on EU insurance companies, much of it could relate to Fairfax. I also found one comment that was interesting. https://www.reinsurancene.ws/impact-of-section-899-of-us-tax-bill-to-be-relatively-manageable-for-re-insurers-berenberg/ Berenberg believes reinsurers have the greatest flexibility to restructure operations and mitigate the risk of additional taxation. For example, Munich Re could potentially reallocate its US reinsurance treaties to Munich Re AG in Munich, which serves as both the group’s holding company and its main reinsurance unit. Berenberg concluded that while Section 899 presents a potential risk to earnings, the impact is either relatively manageable or can be significantly mitigated through management actions.