Viking

Fairfax; reasonable risk/return bet. Growing BV should also lead to higher multiple. I am looking for a 10-15% return in 2020. 1.) Trading at about 1 X BV (not expensive) when compared to other insurers. BV should increase nicely in Q4 (underwriting and good equity markets) and recently announced UK Riverstone divestiture will add another $10 to BV in Q1 2020. 2.) Insurance pricing is firming: should continue to grow written premiums at double digit levels in 2020 3.) Bond portfolio is positioned at short end of curve; will benefit if rates in US continue to rise 4.) Equity portfolio looks reasonably valued; will benefit if we get a risk-on in equity markets in Q1 (especially Indian holdings and perhaps Greece/Eurolife). 5.) Sentiment in company is likely at all time low. However, execution in 2019 was very good. More of this should see sentiment start to slowly improve (resulting in higher PE multiple). 6.) Near term catalyst: will pay US$10/share dividend in January This article sums FFH as an investment pretty well (hat tip Wisowis): https://www.woodlockhousefamilycapital.com/post/the-horse-story "(FFH can reach 10% by following a number of roads. For example, one road requires a ~95% combined ratio and ~5% return on its portfolio. That seems do-able.) Anyway, a consistent 10% would grow book value at a decent clip and then you’d likely get an additional lift from the valuation even if the stock moved just to 1.2x book. As RayJay reports, a comparable set of North American insurers with an 11% ROE trades for 1.7x book value per share."

9.4% (about 12% ex currency as the CAN$ appreciated versus US$). Very happy with return as I had very high cash balances for much of the year :-)

Fairfax has had a very active 2019. For fun, i decided to try and come up with a 2019 Top 10 list of events driving value for shareholders. Some events were driven by Fairfax (corporate/subs) and some were driven by management teams in the stock/equities held. The breadth of the items below is very interesting and informative. On balance, it is clear to me that Fairfax, on balance, has done many things to build a more valuable company for shareholders over the past year. Please feel free to comment; what items are missing? One obvious bucket is ‘Share of profits of associates’ and how fast it is growing. Here is a summary of the types of items impacting shareholder value: - being positioned to capitalize at subs on hard market in insurance - solid growth in interest and dividend income - seeding new/newer investments: Seaspan (tranche 2) - monetizing mature investments: ICICI Lombard sale and sale of 40% of Riverstone UK. - merging investments to make the whole stronger: Eurobank/Grivalia - selling investment to put it in a better position to thrive: APR Energy - simplifying corporate structure to better enable companies to succeed: Thomas Cook demerger of Quess and IIFL split into Finance, Securities and Wealth Top 10 Events Driving Shareholder Value During 2019 1.) Ongoing: emergence of hard market for pricing in certain insurance lines: leading to double digit growth in net premiums written at many of the subs. Looks like double digit growth should continue in 2020. 2.) Ongoing: Solid increase in interest and dividend income: while short of FFH goal of $1 billion, looks to be close to $900 million for 2019, versus $784 in 2018 and $559 in 2017. - January: Seaspan: tranche 2 of $250 million at 5.5% = $14 million in interest income/year 3.) January: Seaspan: Fairfax’s additional $250 million investment = 37 million shares purchased at cost of $6.75; with shares currently trading at $14.25 paper gain = $278 million. - 25 million additional warrants exercisable at $8.10 = paper gain of $154 million 4.) Eurobank: stock closed at $0.54 Euro on Dec 31, 2018. Today the stock is at 0.92 Euro; paper gain = US $400 million. Eurobank looks well positioned. a.) April: merger with Grivalia improved balance sheet b.) April: Cairo Securitization - plan to hive off 7.5 billion euro chunk of underperforming assets is now almost complete (target Q1 2020). c.) July: election of pro business government in Greece with clear majority in parliament. Lowered corporate tax rate; approved Hercules (vehicle for banks to reduce non-performing assets. - see b). 5.) Sept/Oct: ICICI Lombard sales: of remaining 10% position for proceeds of US $729 million; recorded a net gain on investments of $240 million in 2019 (there was more in previous years). 6.) December: OMERS paid US$560 million for 40% of Riverstone UK, which gives it a total value of $1.4 billion. Will increase BV by $10/share. 7.) Fairfax India: book value is up significantly in 2019 (+$3/share). BIAL looks like a jewel of an investment that will grow double digits for years to come. a.) Dec 16: Bangalore International Airport (BIAL): Fairfax India to sell an 11.5% interest in Anchorage Infrastructure (holds airport investments) for gross proceeds of 9.5 billion Indian rupees ($134-million at current exchange rates). Fairfax India’s ownership of BIAL will fall from 54% to 49%. As a result of the transaction, Fairfax India will record investment gains of approximately $506 million, an increase in book value per share of $3.30 per share. The investment gains are supported by positive operational developments at BIAL. For the 12-month period ending October 2019, total traffic at BIAL was approximately 33.7 million passengers. The second runway commenced operations in December 2019. The expansion project for a second terminal at BIAL is expected to be completed in 2021. b.) Dec 23: Sanmar Chemicals Group: completed its previously announced transaction with Fairfax India. During the period since announcing the transaction in the third quarter of 2018 through September 30, 2019, Fairfax India recorded investment gains from the Sanmar common shares and bonds of approximately $210 million and $100 million, respectively. 8.) November: Sale of APR Energy to Seaspan: moved an underperforming unit into a better situation; obtained Seaspan shares is return. - APR Energy: US $300 mill / $11.10 per share = 27 million shares - $14 (share price today) - $11.10 (cost) = $2.90 x 27 million shares = $78 million paper gain Under-performers: 9.) Recipe. Shares fell from CAN $26.19 to about $19.50 = $180 million paper loss. Hard to see this turning any time soon. Restaurant stocks in Canada have been crushed this year. Most provinces are increasing minimum wages aggressively and will be doing so in the coming years as well, which is a severe negative for the hospitality industry. It appears all the home delivery options available are negatively impacting revenue. The good news is the assets are quality and have value; at $19.50 they look cheap. 10.) Blackberry: shares fell from US $11.17 to about $6.50 = $220 million paper loss (double if you include convertible shares they own). The purchase of Cylance has not resulted in the growth expected. Most recent quarter results were ok. If they can get the Cylance unit growing the shares will do very well. 2020 will be very interesting to watch. 11.) Resolute Forest Products: shares fell from US $7.93 to about $4 = $120 million loss of papar. Dec: purchased 3 sawmills in US South for $150 million; should new home construction in US pick up in 2020 this could become a solid aquisition for RFP. Not sure what to think 12.) AGT take private More work needed (by me to understand the businesses): 13.) Indian Investment: Quess, Thomas Cook, IIFL Finance - Securities - Wealth - there was a lot of noise with these investments in 2019. Thomas Cook demerged its Quest stake and IIFL split into 3. This made it difficult to follow. The good news is these 5 firms are now independent with easy to understand share structures; we know how much Fairfax owns of each. And it will be much easier to monitor and understand what is happening moving forward. Quess: Amazon investment suggests Quess is undervalued. Quess also looks like a real jewel of an investment set to grow at double digits for many years to come. a.) July Amazon invested US$ 7.43 million for a 0.51% stake in Quess ($ went to fund growth of Qdigit unit); they paid INR 676/share and market price at the time was INR 430 (they paid a 50% premium). b.) December: Thomas Cook India demerged their 50% holding in Quess Corp in order to simplify the corporate structure.

Great decision buying AMD. It continues to surprise me how some (only a few) companies can re-invent themselves. My son (who is in grade 12) alerted me about 2 years ago to what was going on at AMD; he and his buddies are into technology and he explained to me that AMD was a company on the rise. Alas, i was too busy thumb sucking to do anything about it. I use it as an example with him to how small investors can do well if they do what Peter Lynch advises: take advantage of what you see in your circle of competence.

Thanks. The price history at close for past 5 years that you shared, suggests if one was holding since Dec 2014, annual return has been about 2%/yr (from dividends) in generally a bull market. Wow! Will take a substantial run up in price to justify for those of us who have held. Looking in the rear view mirror is important. Why has the stock price gone sideways for 5 years? 1.) what errors were made? 2.) has the company learned the lessons? The much more important number for me is $608.19 (Dec 24 stock price). 3.) What will the company do moving forward? The shares currently trade below book value (cheap compared to other insurance companies). - Their insurance businesses are performing well and look to be in a hardening market; this is a big positive. - their bond portfolio is positioned well (short end of curve) should rates continue to move higher - their equity portfolio looks well positioned as we enter 2020 should we see economic growth continue to chug along And sentiment towards the company is terrible. This is not to suggest the company is perfect; it is not. I think the company has learned some valuable lessons. However, on balance, i like the decisions the company has made the past 2 years. More importantly, the company (and its equity holdings) is doing lots of things to drive shareholder value in 2020 and beyond. Q4 results should be solid. I like the risk reward at current prices.

Merry Christmas to all board members. Hope everyone has a successful and prosperous 2020 :-)

When you look at Fairfax over the past year they have been very busy (and many of their equity holdings havealso been very busy). In aggreggate it is clear that the company is worth more today than it was 12 months ago. I think Faifax is better positioned today than at any time in the past 7-8 years to grow BV. As they continue to execute we will get growth in BV and a higher PE multiple which will be very nice for shareholders. It is also interesting to look at Fairfax’s year end closing share price (from 2018 AR): 2014 = $608.78 CAD 2015 = $656.91 2016 = $648.50 2017 = $669.34 2018 = $600.98 2019 = $608.19 (Dec 24)

You're assuming the proceeds go to FFH and aren't a capital increase at RSUK. I suspect you're right but the release isn't totally clear. If so, the proceeds are to support premium growth - the release does seem to indicate that. My guess is FFH is pretty motivated to do all three (take out minority partners, support premium growth and buy back stock). I expect we will see more transactions in the next year or two that position them to execute on all three objectives.

OMERS paid US$560 million for 40% of Riverstone UK, which gives it a total value of $1.4 billion. If we did a sum of the parts valuation for Fairfax before this transaction my guess is no one would have said Riverstone UK was worth anything close to this much. It is encouraging that a business as hairy as this is worth $1.4 billion. And i applaud Fairfax for surfacing value in a most unexpected way. This is one of the strengths of Fairfax: they can be very creative. Benefits of this transaction: - Proceeds of $560 million - increase in BV of US$10 - clarity of total value of Riverstone UK Fairfax has a market cap of only US$13 billion. The question, as is being discussed, is what to do with the proceeds? 1.) buy out minority partners in Brit and Allied. If the pricing in the insurance market continies to harden then this becomes more important to do sooner rather than later 2.) grow premiums at insurance operations 3.) buy back stock. We know FFH thinks their stock is very undervalued right now. Lots of good options. Nice to see for a change :-)

Fairfax over the years has made many purchases. What i really like about many of the transactions i am seeing this year is the company is setting units up to be more successful. It sounds like RiverStone wants to grow its business. These moves, because of the cash involved, also provide shareholders with an updated value of the business. My guess is Fairfax has more to come in the next 12 months. With FFH shares trading a little above BV i think FFH is highly motivated to unlock value. I would not be surprised to see a transaction (or a few) that brings in a chunk of cash and allows FFH to buy back a meaningful amount of FFH shares. Regarding the RiverStone transaction i am not sure if the proceeds from OMERS will be going to FFH corporate or to RiverStone to be used to grow their business. “The cash purchase price for the RiverStone UK investment of at least US$560 million, subject to certain book value adjustments at closing, will result in Fairfax recording a gain of approximately US$280 million before tax (an increase in book value per basic share of Fairfax of approximately US$10 before tax on a pro forma basis). Upon completion of the transaction, Fairfax will deconsolidate the UK run-off group and apply the equity method of accounting for its remaining interest. Fairfax may further monetize its remaining interest in UK run-off in the future although the company also retains the flexibility to repurchase its interest over time.”

Thanks for posting link to 50 minute interview. Very interesting to get his views one year later. He sounded pretty bullish about stocks in the near term: monetary easing, decent economy, some improvement on trade front. My concern is i am hearing this from lots of people...

I am not sure who the buyer is. “The interest in Anchorage will be sold by way of a private investment agreement.” My guess is the problem with private investments like BIAL is coming up with a proper valuation. If they sold a portion of BiAL to an outside investor this would perhaps give then an opportunity to update their internal valuation.

Here is an update of Fairfax’s Seaspan investment as of today: 1.) $500 million / $6.50 per share = 77 million shares - $14 (share price today) - $6.50 (cost) = $7.50 = $578 million - investment was made in two stages; 1/2 in early 2018 and 1/2 in early 2019 2.) 25 million warrants: $14 - $8.05 (exercise price) = $5.95 x 25 mill shares = $149 million - awarded early 2019 - not sure how FFH values these as i dont think they have been exercised 3.) APR Energy: $300 mill / $11.10 per share = 27 million shares - $14 (share price today) - $11.10 (cost) = $2.90 x 27 million shares = $78 million - my estimate of what FFH will get when deal closes in Q1 2020 (deal was announced Nov 2019) Bottom line, as of today FFH is up on its Seaspan investment (since inception) $578 + $149 + $78 = $805 million. Yes, it is a paper gain as Seaspan looks to be a long term hold. It does demonstrate how FFH swings for the fences when it invests. And when it connects the returns can be very good (in thiscase 24 months later). 4.) senior notes 2023 = $500 million at 5.5% = $27.5 million interest income each year This part of their investment is icing on the cake. On Sept 30 Seaspan was trading at $10.63. Trading at about $14 today stock is up 32% in past 10 weeks.

I think that anything that resolves the impass is viewed as a positive for the economy moving forward as businesses will now be able to plan knowing Brexit is coming. This is better than the situation that has existed the past 3 years (where no one had any idea what was going to happen).

I do not understand his comparison of US equities today to Japan at their bubble peak. Yes, there are parts of the US market that are bubbly (hello Amazon, Microsoft, Apple). But the rise in a few large caps has been masking weakness in many other parts of the market. The US did have its equity bubble and was 2000. The S&P was at the same nominal value in 2012. When Japan peaked out in 1989 pretty everything over there was at nosebleed levels. (I also remember being taught in Canadain university back then how the Japanese model of capitalism was so much superior to the US model moving forward...) If i had to pick a bubble today... it would be all the negative yielding bonds (not country specific) although Japan and Europe stand out as leaders in this phenomenon.

What is happening? Are we really going to get a US / China trade deal? And Brexit clarity? Both on the same day? Or is this just fake news; a hoax. All we need now is a Santa Clause sighting... If both materialize and provide some clarity/stability we could see a nice risk-on rally in stocks (Santa Clause rally) as we end 2019 and begin 2020. (Of course, the US/China trade spat is just getting started. And much needs to be clarified regarding Brexit. But after all the shitty back and forth for years lets just enjoy the moment :-)

Fairfax’s second largest investment is Eurobank. The recent election of a pro-business government (and the fact they secured a majority) is a big deal. For Eurobank, positive that ‘Hercules’ plan is moving forward (will remove a large chunk of non-performing loans from balance sheet of banks). Real estate prices are up 7% year over year; expected to increase at faster rate over next year; also very positive for banks (their main form of colateral). While Greece continues to have its share of issues, it does look to be improving with an improving outlook and this bodes well for Eurobank stock in the coming years. Dec.09 -- Alex Patelis, chief economic adviser to Greek Prime Minister Kyriakos Mitsotakis, discusses his expectations for Greece's economy and the Hercules plan. He speaks on "Bloomberg Markets: European Close." - https://www.msn.com/en-us/money/videos/greece-could-cut-np-stock-by-half-with-hercules-scheme-patelis-says/vi-BBY0t8W

Here is an article discussing Quess demerger from Thomas Cook India (written Dec 5) and what TC India looks like moving forward. After demerger of Quess Corp, the standalone business of Thomas Cook India looks interesting with a reasonable valuation- https://www.freepressjournal.in/business/thomas-cook-india-is-the-noise-hiding-an-undervalued-gem “What exactly is happening with Thomas Cook India? Thomas Cook India holds about 50% stake in Quess Corp. In order to simplify the corporate structure, the management decided to demerge the company’s holding in Quess Corp. Essentially, shareholders of Thomas Cook will receive shares of Quess after about 2 weeks. The ratio, which was announced about a year ago, stands such that for every 100 shares of Thomas Cook, shareholders will receive 18.89 shares of Quess Corp.

Things are lining up nicely for Fairfax as we look out to 2020. 1.) insurance: P&C insurance pricing is up and expected to continue to improve into 2020. The increases started about a year ago (growth in net premiums written) as we move into 2020 we should see the benefit start flowing through to net premiums earned. RBC is quite bullish on parts of P&C business and is forcasting improving earnings and for the market to bid the PE multiples for the sector higher. This would be a double benefit (higher earnigs and a higher multiple) which would spike stock prices. 2.) bonds: FFH is positioned very conservatively (short duration). If the global economy stabilizes (think soft landing) and starts to grow again then bond yields will likely trend a little higher. This will be good for FFH. Net interest income grew nicely in 2019 (compared to 2018). 3.) equity investments: two factors are key: economic growth and the US$. I think global economic growth could surprise to the upside in 1H 2020. And i think the US$ could finally start to weaken. This would be good for Europe and Emerging Markets (think India). This would be good for FFH investment portfolio. Short term 4.) Dividend: US $10 dividend coming in January (2% payout) Valuation 5.) with stock trading roughly a little above book value safe to say stock is undervalued at US $453. Wild card 6.) FFH must not be happy with stock price. At some point Fairfax will do something to take advantage of this. Of course, timing (and what they might do) is impossible to predict. Now if global and US economic growth weakens, US stocks sell off, bond yields fall, the US$ strengthens and insurance pricing materially softens then FFH stock will not do well :-) The stock price is roughly flat with where it was trading a year ago; company is in a much better position today. I like the risk/reward moving forward at US $453.

Do you mind elaborating on the points above? Is it the personal reasons or you believe market force (such as passive investing) would ultimately benefit those companies' stocks? Isn't the best money in deep value from cyclicals, commodities or some sort of distress regardless of the industry or company declining or growing? You just cannot hold them long term... Thrifty, sorry for the delayed response... i will buy small amounts of all sorts of companies; this helps to keep learning. But when i look at what have been my best decisions the past 20 years there really are only a few and most have been quality large caps. I remember buying Blackberry back when FFH was just getting started (i was probably piggybacking). After buying, by the third conference call i realized Blackberry management was not good. I sold my position at a loss (my position was large but my loss was not too bad... before the stock really started heading south). The problem with holding a poorly run company in trouble is there tend to be lots of negative surprises. Every month there is another surprise and the stock gets hit. This makes it very hard to stay the course. A year or two later Apple was getting killed; Samsung was going to eat its lunch. I initiated a position and by the third conference call i was all in (i may have been 100% invested in Apple at that point). Every conference call the news was getting better (but the stock kept going down). Every month there were positive surprises. I find in these types of situations it is much easier to be patient as an investor. A similar situation played out with US bank stocks a couple of years later. Over a 5-6 year period the big US banks morphed from shit to quality (JPM always was quality) but most investors missed it because they were too blinded by the past (and not able to let it go) to see what was really going on at the time. A real caterpillar to butterfly story (except WFC who tried to turn back into a caterpillar). When Trump got elected in 2016 they really took off but ‘the story’ had been getting better for years before then. They were quality. The news kept getting better. And it was easier to be patient. My big miss earlier this year was not buying Google when it was trading under $1,100. (I did buy a little and then sold it for a small gain). I should have bought a bunch and held on. Big. Quality. Cheap Same story with BAM. Bought a little and sold after a small gain. Should have bought a bunch and held on. Big. Quality. Cheap. Canadian (which is a small positive for me). As you can probably tell, i also like to concentrate my portfolio at times. Big. Quality. Cheap. Allows me to do this. (Small, shitty company and big position would not work for me... i would be stressed amd likely lose most of my money :-). Next time :-) the nice thing is over time you can really get up to speed on a large number of companies. And every couple of years (or less) they get cheap. Once you know a company it does not take a huge amount of time to get back up to speed (if it falls off your radar for a couple of years). So the number of companies in your universe keeps expanding... Bottom line is i prefer to hold large cap and quality. (For my largest positions). Easier to be patient. Fits my psychological make up :-) the cool thing is there are lots of different models. (And i will buy small positions in lots of different things... but rarely do i scale these up.) The trick is to find a model that is a fit for you.

Cherzeca, what i like about Gundlach’s presentations is the detail. It is a pretty thorough review of many of the current economic data points. I find he is much less opinionated the last 6-9 months. My key take away today is he thinks economic growth may tick up a little to start the new year; i have hear the same from other analysts. If this happens stocks should do well; bond yields should also increase a little.

Gundlach had another presentation today. His crystal ball has been pretty murky the past 18 months (like lots of people). Bottom line, my impression is he expects the US economy to continue to chug along in 2020. A few things that stood out to me: 1.) US economic data may pick up in new year as prior year numbers were quite weak (will not take much to get better) 2.) expects lots of leading indicators to turn up moving forward (not gangbusters but still positive) 3.) as a result of 1 and 2, pegs chance of US recession in 2020 at 35% (he was at 65% earlier this year, which was due at the time to many of the leading indicators deteriorating) 4.) US 10 year bond will likely slowly move a little higher 5.) US$ is peaking (he has been sayng this for a while) 6.) corporate bonds are an area to avoid (not rated properly) 7.) US will not have negative interest rates like Europe and Japan (based on Powell’s comments) 8.) politics: does not feel any of the Democrats currently running (including Bloomberg) will be able to defeat Trump

I have done this in the past, in a significant way, by initiating or increasing the position, on three or four occasions. Part of the motivation was because FFH was felt to be an anchor holding that could be held for the long term and part of the motivation was because I thought it was possible to take advantage of the temporary mismatch. I now come to the conclusion that I was wrong with the short term predictive power (process) even if the outcome has always been positive. Maybe others can do this effectively but I come to the conclusion that FFH price had a tendency to go up and luck explains the result. Your post though brought back a nice souvenir when I was planning to do this in November 2012 and, in fact, materially increased my position a certain day which was related to technical selling or something. Then again, if I were a brighter trader, I would have kept the trading chunk for longer as the realized gain on the incremental investment was about 20% vs 100% if I had waited another 2 years or so. Interestingly, I found that this was discussed in 2012. https://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/fairfax-down-8-this-morning/60/ Edit: Here's the link to the first page of the thread: https://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/fairfax-down-8-this-morning/ I see that Viking indicated that he was back in the saddle again and felt that things looked good for the next year or two. Nice call! As Yogi Berra said (versus decision making): When you come to a fork in the road, take it! Cigar, as an update, i did sell 1/2 of my position on Friday (I was way overweight). I was happy to lock in a quick 8% avg return in less than 2 weeks. Very lucky. If the stock continues higher in the coming weeks i will continue to lighten up (as i am still overweight). As i said at the outset, Fairfax for me is a trade. As i continue to get reaquainted with the company i may hold a small position (5%) as a longer term holding (especially if i see sgns the global economy is stabilizing as we enter 2020 which would ge good for their equity holdings).

Thirfty, i used to closely follow what Fairfax was doing from an invesmtent standpoint (i also used to follow Francis Chou) and sometimes made purchases. I generally stopped about 4 or 5 years ago. Today i prefer large cap; quality; out of favour. Fairfax’s style is generally not a good fit for me these days (deep value... declining industries... sometimes declining companies). I am following their investments today more to understand how it is impacting Fairfax book value than to invest directly. Having said that Fairfax India does look interesting at $11.50... Sharper, i agree, the upcoming $10 US dividend is another (small) near term benefit for current owners :-)

Here is a snipet of what RBC had to say in their weekly report today. I have to say i am pretty happy with RBC and their coverage of the insurance industry; lots of good information that really helps to understand the complex issues at play. “For obvious enough reasons the interest rate narrative showed up most strongly on life insurance results and conference calls... ...interest rates declined about 40 basis points in the quarter and more than 100 basis points from a year ago. ...The impact...showed up in two main forms – actuarial assumption review changes and impact on net investment income and/or related spreads. The assumption change narrative is very straightforward, multiple companies lowered their long-term interest rate assumption, often to 3.75%. ...In general these changes had minimal impact on GAAP results, manageable impacts on statutory reserves/capital and minimal ongoing implications for earnings. The more impactful part of the narrative was the impact on spread based businesses...investment income earned in the quarter was down. The net result of all of this is that, as expected lower interest rates are already impacting earnings both in the 3Q and prospectively over however long one wants to assume rates will remain low. ... The impacts tend to be small, companies have suggested maybe 1-3% of earnings per year, but that does add up, particularly if ‘forever’ is your answer to how long longer is. The other part of the narrative is what companies are doing about it. Some have been pretty successful with hedging. Most have repriced products... For most companies its only 7-10% of their portfolio that gets exposed to reinvestment so this is a narrative that less resembles a freight train and more resembles a steam roller. It’s possible to outrun a steam roller, at least for awhile. So our bottom line on interest rates is they are having an impact, the size of the impact is manageable but the duration of that impact is uncertain. That might be sufficient to make valuations across the life insurance sector look attractive, it’s probably not sufficient to provide them a catalyst to get better.”