Hoodlum

National Bank mentioned a few of the driving factors for stock price increase this year. It looks like analyst are starting to catch on to what has already been mentioned here. https://www.theglobeandmail.com/investing/markets/inside-the-market/article-fridays-analyst-upgrades-and-downgrades-for-jan-26/

This may explain some of the rise this week in share price. I expect we will see increases in target price from others over the next month. https://www.marketbeat.com/instant-alerts/tse-ffh-analyst-earnings-estimates-2024-01-24/ Of course these are in Cdn dollars.

I think this last sentence is important because if we do see a sizable drop in interest rates, then that would suggest we are in a recession and allows them to move to longer corporate bonds with higher interest rates. This would allow them to extend the duration further for higher yields.

Likely done to cover the additional $5/share dividend.

In the official press release from today, Fairfax plans to buy the remaining 10% of GIG in Q1. https://www.fairfax.ca/press-releases/fairfax-successfully-completes-acquisition-of-additional-46-32-interest-in-gulf-insurance-group-from-kipco-2023-12-26/

The GIG sale has now closed. https://www.zawya.com/en/press-release/companies-news/kipco-completes-the-sale-of-its-46-stake-in-gig-to-fairfax-financial-holdings-yi3hmkx4?amp=1

Fairfax passed the 10% ownership threshold in Canada for reporting and had to issue a press release.

This was an interesting read on the impact of losses from Severe Convective Storms (SCS) on reinsurance losses. SCS losses have increased on average 7% annually over the past 30 years and have a record $60B loss ($50B of which was in the US) in 2023. While more focus is placed on the one time events of Hurricanes and Earthquakes, it was interesting to see how these these storms have been adding up to a more significant portion of Property losses and continue to grow a a high rate, helping to extent a hardening of the market. https://www.globalreinsurance.com/home/swiss-re-scs-losses-reach-record-60bn-in-2023/1447322.article

DBRS Morningstar just upgraded Fairfax Financial from BBB(high) to A(low). Unless i am mistaken, I believe this is the first rating agency to rate FFH at A(low). https://www.dbrsmorningstar.com/research/424865

Now that the US is involved and have linked their assassination attempt to Canada's assassination, it will be interesting see how this plays out. It looks like the US undercover officer who was acting as a hitman in the US received a video of the Canadian assassination the day after it took place. This was the proof the Canadian government had on India. The key will be connecting these people back to the Indian government. https://www.theglobeandmail.com/canada/article-us-investigation-into-alleged-plot-to-kill-sikh-activist-in-new-york/

Foran mining has raised $200 through a private placement at $4.10/share. I wonder if Fairfax is participating to increase their equity. https://www.theglobeandmail.com/business/article-canadian-critical-minerals-miner-foran-raising-200-million-a-rare/

This will be a big challenge. Like homeowners, the builders have been conditioned to ever increasing new home prices over the past 30 years in Canada. Any land purchased in the past 5 years would have been based on this continuing trend. New home builders are generally slow in reducing their prices or starting new developments, which is not going to work during this high demand period. I am not sure how to work around this as there are many challenges. Home builders have to pay more for borrowing and if they start building on their land for less than they anticipated, the banks may ask for more money down once the land value falls below the cost of the initial estimated value. So basically home builders will try to wait this out hoping for lower interest rates and the return to “norm” for home buying. We also have the added complexity of working from home which is helping to drive both the upgrading of homes along with empty towers. This added mismatch of markets makes a solution even more complex.

Brett is doubling down on his analysis. https://www.morningstar.com/stocks/fairfax-earnings-positive-momentum-continues

The first early estimate of insured losses fromHurricane Otis is $3-6B. This range will narrow over the next couple weeks as more data comes in. Does anyone know approx what Fairfax's share of this would be. https://www.reinsurancene.ws/verisk-estimates-3bn-6bn-of-industry-insured-losses-from-hurricane-otis/

Below is from Scotia Bank analyst. https://www.theglobeandmail.com/investing/markets/inside-the-market/article-mondays-analyst-upgrades-and-downgrades-for-oct-30/

Here is an initial estimate for Acapulco Hurricane damage. Not sure what the insured costs would be. https://www.insurancejournal.com/news/international/2023/10/26/745851.htm

I hope that the residents had enough time to find cover. https://www.artemis.bm/news/high-probability-mexico-cat-bond-loss-will-be-50-62-5m-from-otis-plenum/

The closest comparable would be Hurricane Pauline hitting Acapulco as a Category 4 Hurricane in 1997. That hurricane caused $9.7B in damage although I don't know how much of that is covered by insurance. My highly pie in the sky guestimate is that this could be $20B+ for the Category 5 hurricane now. But total insured amount will likely be much less than that. I don't think this will be a big insurance event although it will help contribute to an ongoing hard market. I believe this is the latest in the year that we have seen a category 5 hurricane hit North America.

Brett is slowly coming around. https://www.morningstar.com/stocks/fairfax-financial-raising-our-valuation-cad-970

UBS says Hurricane Idalia could cost insurers $9.36 bln. I don’t know what Fairfax’s exposure to the Florida market would be. https://www.reuters.com/world/us/hurricane-idalia-could-cost-insurers-936-bln-ubs-2023-08-30/

But haven't the Atlantic Hurricanes had the most impact on the insurance business.

It looks like Hurricane season will be closer to normal this year, less active than the last few years. This El Nino effect will likely continue for the next 2-3 years. https://www.noaa.gov/news-release/2023-atlantic-hurricane-season-outlook

I am thinking that most of the sellers have dried up over the past couple months. So volume is not needed to drive up the price which is still well book book. The possibility of a BIAL IPO could be driving some speculation of an increase in book this year. I just wish I had bought more when it dipped below $10.

It looks like the IPO was approved on Friday. https://www.businesstoday.in/latest/corporate/story/irdai-gives-final-approval-to-go-digit-general-insurance-for-listing-354245-2022-11-25 Also, another positive development for the Insurance sector. https://www.msn.com/en-in/money/topstories/insurance-reforms-may-see-pe-funding-surge-in-sector/amp/ar-AA14CNJX

Walmart is one of the worst stores setup for handling the virus. Here is Canada they have the entrance and exit backwards so that you have to cross people going in the opposite direction between the 1st and 2nd set of doors. After 4 months they still haven't figure this out. Not to mentioned they are the only large retailer in Canada that doesn't offer tap for payments and no one is cleaning off the machine between customers purchases.