Hoodlum

The IIFL Capital transaction is expected to close in Q4. https://www.fairfaxindia.ca/press-releases/fairfax-india-to-acquire-additional-equity-interest-in-iifl-capital-services-limited-2026-05-07/

It looks like Fairfax has made progress with the EuroLife sale, but is this now closing in Q3? Fairfax may need to acquire the Allied minority interest from OMERS without these funds, as the option to purchase the Allied shares expires in August. https://www.eurobank.gr/en/group/grafeio-tupou/etairiki-anakoinosi-07-05-2026-i

Fairfax increasing stake in IIFL Capital to 51%. https://www.reuters.com/world/india/fairfax-raise-stake-indias-iifl-capital-with-211-million-investment-2026-05-07/

I suspect most investors and analysts believe interest rates will go lower vs go higher. I believe much of this is due to recency bias, as interest rates were lower for much of the past 15 years until recently. So they look at the current “high” interest rates as an aberration, rather than being closer to historical norm.

What is interesting is that the Float/BV ratio for 2025 was the lowest ever for Fairfax. We may see that drop again a bit more this year. Fairfax is still able to earn ~$200US/share in this soft insurance environment by pulling back on low profit lines in certain regions. This is much different that prior soft markets where Fairfax kept a much higher Float/BV ratio and shows how their insurance businesses have improved with better managed risk to larger Cat events.

Blackberry stock jumped again today after a WSJ article on Blackberry. More opportunity for Fairfax to exit their position.

I thought these comments from Peter at the end of the call were interesting. It looks like they are anticipating CR to continue dropping for their international business, helping to partially offset the softening insurance lines. And then our international operations, where they're not seeing the price decreases as much, more attractive business, we would hope that, that the combined ratio will drop over time. Gulf, for example, they're still running a little bit above 95%. But historically, they've run in the below 95% low 90s. So I think we'll see that combined ratio for the international group continue to go down as well, helping the overall mix of business. We write about $33 billion now, and we benefit from that greatly. Like I said, 80% is still with our larger companies, but that 20% of international business, it's about $6.5 billion of premium, and that's quite significant, and it gives us the scale and diversity to manage these cycles.

I bought a few extra share too quickly this morning at 2300. I should have known better. LOL.

The Insurance companies are not impacted by the ware in Iran. "The company has performed assessments of the potential direct impacts of this military conflict on its operations and concluded that there are no significant impacts to its financial condition at this time as its insurance policies generally exclude acts of war."

Fairfax added 3-5 year bonds

It looks like Fairfax has extended duration to 3 years. The company's fixed income portfolio has an average term to maturity of 3 years and continues to be conservatively positioned with 76% of the fixed income portfolio invested in U.S. treasury and other government bonds, 13% in high quality corporate bonds, primarily short-dated, and 11% in first mortgage loans.

I believe the blackout period ends on Tuesday next week.

Fairfax announced early redemption of their $450M notes due in December. I guess this is what the $400M Notes offering was planned for. Nice work extending these notes for another 10 years while lowering the interest rate by 0.30%. I just realized that the new $400M and $250M in Notes were issues at the end of February, when the yields bottomed out. We will soon see if the bond team also took advantage of the lower yields that week by reducing further some of Fairfax's remaining long treasuries. https://www.fairfax.ca/press-releases/fairfax-announces-early-redemption-of-senior-notes-due-december-16-2026-2026-04-29/

I won't bother timing that, but I will have some cash ready for Friday. It will be interesting to see If Fairfax sold more of their long bonds in Q1. Yields continue to go up today with the 2 year reaching 4.16% briefly for the first time in over a year.

I have found that bonds usually lead equities during economic shifts. We will see if the higher yields hold or go higher in the coming days.

Maybe that is Tom's style? But I would agree with you that it is not something I look for from someone leading a company and my thinking would be the same even if the comparison was with Chubb and happened to be equally incorrect.

Thanks @Redskin212 It is great to hear that Fairfax has a good succession plan in place for Brian. That was the one area where I wasn't aware of who the successor would be. I look forward to hear more from Kleven.

@Viking I don't remember Kleven Sava previously being mentioned as successor for Brian. Was that mentioned at the AGM?

@Hamburg Investor I believe your analogy with your home mortgage decision is similar to how Fairfax look at their bond duration. They have not looked a trying to time smaller fluctuations of .25 changes rates, but rather look at risks in the market that could have a more significant impact on rates and impact the value of the bonds materially over a short term, impacting their ability to grow/sustain their underwriting. They also look at the long term rates to determine if the reward is worth the risk. Fairfax has been very clear that they don't try to match liabilities with duration, like other insurance companies. But much of this depends on how much trust you have in Fairfax's ability to decide the duration for their bond portfolio. We also have our own biases of where we think long term rates could go in the short to medium term, and this may or may not match up with what Fairfax is doing. But I believe we have seen a long enough track record from the Fairfax bond team to suggest that they are one of top bond managers globally and have been right far more than being wrong. So I will side with Fairfax on what they are doing. Of course my own biases generally match up with them right now so that make the decision easier. LOL

The US airlines don’t have fuel hedges, while most other international airlines have close to 50% hedged for this quarter. It is interesting that the US government could actually end up covering the fuel price hedge for their airlines.

Thanks @Viking for this overview of the Bond portfolio in comparison to their peers. I would be surprise if Fairfax extended duration during March as this was similar to last Summer yields when they did not extend and the war was just getting started in March. It would actually not surprise me if they sold the remaining 10+ year bonds at the end of February, shortening the duration further.

They didn’t commit to a timeline, just that they hope the approval will be soon. The Quatr app has the recording and the transcript of the call that is searchable.

that is quite interesting. I may do a contribution to the fund in my kids names. I will wait to see the structure of the fund and how it will be run.

First Quarter results will be out on April 30th. I don't remember seeing Q1 results in April before. https://www.fairfax.ca/press-releases/fairfax-announces-conference-call-2026-04-24/

The first Hurricane Season projection is on the lower end of average compared to prior years. El Nino will start in May which will cause a warming of the Pacific and wind shear blowing east over the Atlantic. https://news.ncsu.edu/2026/04/2026-hurricane-season-could-see-12-to-15-named-storms-6-to-9-hurricanes/#:~:text=The Atlantic hurricane season runs from June 1 through Nov. 30.