Candyman1

Rumors of a take over bid on BB. Not sure how to think about it ... it seems after all the trials and tribulation with BB it would be nice to get money for BB and have it off the plate of FFH. On the other hand they seem to be making progress. Deep down, I think I would rather get rid of it. In the end it is now fairly small percentage of FFH.

At March 31, 2023 the company's fixed income portfolio duration increased from approximately 1.6 years at December 31, 2022 to approximately 2.5 years at quarter end, with $14.1 billion remaining invested in cash and principally short-dated investments (comprised of cash, short term investments and the bond portfolio invested in short-dated U.S treasuries), enabling the company to benefit significantly from increased interest income in the remainder of 2023 and provides an opportunity for the portfolio to be deployed into longer-dated bonds.

Insurance companies were already somewhat limited in their ability to book reserves. Reserves already needed to be somewhat in line with expected cash payouts. Now they are finetuning it even more in order to get as close as possible to "the exact number". To me it feels like regulators trying to be too perfect. It will lead to FFH, and the rest of the insurance industry, being more closely to the line and we will likely in the whole insurance industry see more case of reserve development volatility because of this. Leaving some leeway for somewhat conservative reserving was a good idea. In the end, the only thing that matters is how much cash were you paid for providing the insurance, what were your cash returns on the float, and how much cash did you payout for a specific vintage closed. The rest is just all assumptions. But I do understand why regulators want to do this. It is not the people that are too conservative they are targeting, it is the people/companies that are not conservative enough with their reserving assumptions. FFH has had plenty of experience buying insurance companies in the past that had used to optimistic reserve assumptions in order to be able to book better results in the short-term. And the regulators think they have a "perfect formula" which is bs. The perfect formula for me would be to take the actuarial assumptions and double them, but I am side tracking. That is why you see Prem almost dismissing IFRS 17 and he would rather not implement it, but he has no choice. Over reserving is not just good policy for insurance companies, but it is also for other companies and even people. All my regular bills I pre pay many months ahead of time. I do not have a mortgage on my residence, I pay cash for cars, etc. Yes, as many have said, those prepaid bills are float I could have used to invest, but one never knows what setbacks happen, I am now 55 and believe me, setbacks happen to people, I have seen plenty of it as well have experienced them myself, and if I end up with a setback I have many months where I can figure out how to replace income for my coming bills. Now at this time it has way less impact as I have enough money to not have to work again, but it has been a great principle the live by till now. Well, those principles could be just as relevant for companies. In the long-term for FFH the impact of IFRS 17 will be small. A similar thing hit BRK recently as now they have to include the unrealized part on their public asset book in their earnings statement, while the past it just was the realized part. And we have seen the impact of that recently. On paper one could argue that it represents the exact situation at a specific time of BRK better, but I would not call this new system an improvement over the old one.

+1

I agree that it will likely be positive for the stock, but on a net basis, we just took likely over reserving out of the liability side of the balance sheet. I always expected FFH to be over reserved and over time the over reserving of those past years would have made it in into the income statement anyway. That overall has been going on for some time at FFH, but since they are growing their book long term, it tends to be hidden. So yes, likely people will look at book value per share is higher and stock could trade up, but operationally nothing seems to have changed. That $94 dollars in book value per share was just moved from the liability side of the balance sheet to equity.

Anyone worried for FFH about the risk of large floods out west due to coming melt off. I live near the mountains and man is there a lot of snow currently. Not sure if FFH has a lot of exposure. I remember a smaller snow year, but it stayed colder than normal for longer, like this year, and suddenly the temps shot up into the 70s and just those few days took out a number of bridges. Similar thing might happen now on much larger scale.

Wow, prem referred to making $100 a share for a number of years.

19.11 bv per share Just a thought ... isn't Adani kinda played out ... seems like he was absorbing massive amounts of investments in India ... I wonder if it made the investment space for Fairfax India better ... now India is a lot bigger than Adani, but it seems to me he was absorbing massive amounts of infrastructure investments. Just a thought.

Yeah, good point ... I think they might want to only include going forward assets ...

book value per share of 657 plus about 13 in per share in carrying value of non insurance subs this is interesting "On January 1, 2023 the company adopted the new accounting standard for insurance contracts ("IFRS 17") which will first be presented in the company's consolidated financial reporting in the first quarter of 2023, with comparative periods restated. IFRS 17 brings considerable changes to the measurement, presentation and disclosure of the company’s insurance and reinsurance operations. It will not, however, affect the company's underwriting strategy, its prudent reserving, management's use of the traditional performance metrics of gross premiums written, net premiums written and combined ratios, or the company's cash flows. The company anticipates recording a transition adjustment to increase opening common shareholders' equity as at January 1, 2022 which is not expected to exceed 2.5% of common shareholders’ equity as at December 31, 2021, primarily reflecting a decrease to insurance contract liabilities from the introduction of discounting claims reserves and the deferral of additional insurance acquisition costs which were previously expensed as incurred, partially offset by a new risk adjustment for uncertainty related to the timing and amount of cash flows arising from non-financial risks. Given the increasing interest rate environment experienced throughout 2022 and the beneficial impact it will have on the discounting of claims reserves under IFRS 17, the company anticipates recording a material benefit to the restated consolidated statement of earnings for the full year of 2022 and common shareholders’ equity as at December 31, 2022." Looks like in Q1 2023 we will see "a material benefit to equity per share based on the above. Had no idea this had happened. New shares FFH outstanding end q4 was 23.3 million. My guess is that on the bonds we should get back between 15 and 25 dollars per share from the 2022 losses just from runoff ... 38 billion in cash and fixed income with duration of 1.6 years ... new fixed income run rate is 1.5 billion and about 9.4 billion in short term/cash and 28.6 billion invested in fixed income, mostly 1 to 3 years ... Looks nice overall ...

Thank you for clarifying.

For what it is worth, an estimate of about $60 billion in insured losses. Reasonable estimate of about $600 million for FFH, so I guess the loss will be between $20 and $30 per share for FFH. https://www.wsj.com/articles/flood-insurance-fell-in-florida-before-hurricane-ian-struck-11664591058?mod=saved_content Risk-modeler Karen Clark & Co. on Friday estimated that the privately insured loss from Hurricane Ian would be close to $63 billion, including wind, storm surge and inland flood damages, while total economic damage will be well over $100 billion, including uninsured properties, damage to infrastructure and cleanup costs.

Just wondering, if one looks at the price declines of bonds in general and specifically long dated bonds. - How much of a dent has that been to capital in the industry? I would expect a decent impact. - Do regulators allow the insurance industry to treat those bonds like either for sale (mark to market) or to maturity (no mark to market) as they do with banks? One argument that is being made is that they often match their bond portfolio to their liabilities. I would like to know the actual treatment works overall. - My guess is that most of it is mark to market. And if so, given leverage in insurance industry, isn't there an additional argument for maintaining the hard market for a while?

Viking, any chance you have that FFH investment spreadsheet available to post? Would like to see where we sit compared to Q1 2022.

I think with Atco, the main issue to think about is what happens to container shipping prices (and thus ship leasing prices) over the next few years. What I am afraid of is that a. demand for container shipping declines for some reason and b. how many ships are on order. If container shipping goes into a large downturn, I think it will reflect on ATCO's stock price. - What will happen to demand for container shipping long-term (i.e. will it continue to grow the way it has over the last few decades? Or not?) I know there is a lot of talk about de-globalization and on shoring. I think that will be way harder to achieve than politicians think. - I looked at the 2022 investor day presentation on page 27 it lists a global container fleet of 25.4 million TEU (which was a 4.9% increase over last year) and a backlog of newbuilt orders of 6.1 million TEU, that is about 25% of the current fleet, and very few demolitions (which is to be expected and demolitions will increase if container shipping prices come down.) Still that seems that ballpark the container fleet capacity is increasing for the next few years at between 4% and 6%. How will that impact the value of ships and the value of ATCO if we go from a shortage of ships to a surplus? Despite that amazing contracted cash flow, will people even consider that? - One issue that worries me a lot is what happens if for some reason it turns out we built too many ships and the industry goes into one of those long down shipping cycles, as they tend to do? Could it be that some of the lessors just break the contracts? I remember dealing with coal companies and in pr releases they kept talking about that new contract of X millions of tons for the next five years, until I found out that in a down period, these coal burning utilities just would not allow the trains on their terrain to unload and said f... off to the coal miners. Could the same happen to ATCO? Not saying it will. Lets say Maersk has leased a number of ships at higher prices, will they be willing to blow up their reputation for a short-term gain? Also, how will ATCO have to deal with Maersk? Do they look for a compromise and lower the price? Not sure how the dynamics will work. I think ATCO's position will be pretty good, still it worries me. On the other hand, lets not forget that the people running ATCO are great. I believe that APR business has a decent chance of doing much better over the next few years. Given the transition to more renewables, it looks like there might be a fair amount of demand for leased generating capacity as there will be bumps in the road. Just read a WSJ article about many grid operators worry that too many cabon based utilities have been shut down and renewable project have not booted up yet. Also wind and solar are intermittent, so more backup capacity will be needed anyway. Also, I would not be surprised if Sokol is thinking way beyond the current APR business. The guy has built a number of businesses and will likely continue to push growth. Btw. I remember when I had access to Bloomberg (about 12 years ago), that one could lookup in a fairly detailed way all ship orders on Bloomberg. If someone has access to Bloomberg, feel free to post that info here. I would appreciate that. ATCO did inform us about the total orders, but I would like to see if there is data of container shipping orders by size.