FairFacts

Petec "Won't they equity account it and therefore still not record it in BV?" I'm not certain of this but I believe that if FFH receive the spin-out shares in Quess they will book them at their current market value which will be reflected in BV.

TwoCities You are absolutely right, my bad, there are no BB warrants.

Interesting that the Debt and Warrant Deal on page 21 doesn't show the warrants held in Blackberry (I believe $500 mil of them).

"Can someone explain to me what impact the following transaction will have on Thomas Cook India and also Fairfax?" I think that it goes like this: FFH owns 66% of Thomas Cook India Thomas Cook owns a majority of Quess, I think it might be down to 49% now. If TC spins out Quess it will no longer own, nor consolidate Quess in its numbers. FFH will now own 66% of the 49% of Quess Stock which means FFH wil have a direct holding of 32.3%. FFH will not consolidate Quess and thefore the gain will be recognised which until now was an unrealized gain in Thomas Cook. Also, FFH can directly sell off Quess shares as and when it pleases. We would see and imediate uptick in Book Value if this goes ahead.

Looks like they have added positions in GM and GE since last 13-F was filed. (p23 half way down the page).

I too liked the expansion of the investment team and the additional responsibilities of the younger members. PW restated the investment goals and 15% increase in BV target. 'With $40 billion in investments, a current run rate of $11.5B in net premiums written and $12.5B in common shareholders equity, we need an investment return of approximately 7% in order to achieve an annual increase in 15% in BV per share, assuming a consolidated combined ratios of 95%"........."We have drilled deeper and by analysing each of our 21 insurance companies we have estimated the investment return needed for each company in order to achieve our 15% target. We have delegated investment responsibility for each of our insurance companies to one member of our investment team".

'scuse my Ignorance, why are there no Leaps or even options trading in Fairfax?

my two cents... BRK is currently valued at 1.6x BV MKL is currently valued at 1.7x BV FFH is currently valued at 1.1x BV (and even less if you add the unbooked adjustments to FMV of TC/Quess and FIH). WB has always said that at 1.2x his company is undervalued and at 2x it is overvalued. I imply that the mid point 1.6x is his idea of FMV. In my view FFH is so thinly covered by analysts and trades such low volumes its entirely possible (probable) that it is mispriced. As they digest AWH, getting the under writing under control (AWH and BRIT), leverage the float AND grow revenues into a better market the insurance businesses look well placed to do really well over the next few years. Looking at some of the larger investments, BB, TC/Quess, FIH and Gravalia there is the possibility of some serious upside. Having dropped the hedging and winding down the CPI options we'll get a chance to see FFH for what it can really do. The market could wake up at any time and award this the multiple it deserves. For me, the most compelling source of information is the conference calls and listening directly to PW. He has changed his emphasis notably this year: 1. Dropping the bond holdings, removing equity hedges, going on the offensive. 2. Still maintaining a conservative posture eg not reaching for yield. 3. Added AWH to the stable and stated that this is the last big acquisition. 4. Repeatedly stated that they will firstly strengthen FFH financial position and then buy back stock. (first part is underway and stock purchases starting slowly). 5. Most importantly on the year-end call he said "$15bil revenue now in place, we expect to generate 15% return to shareholders of about net $70/share"....later in the Q&A he said..."we expect $2bil after tax in 2018". I have never heard him get this close to giving guidance even though he emphatically said he was not and never would issue guidance. All thats needed now is a liitle proof, if the next few quarters go according to plan I fully expect to see FFH priced at +1.5x BV by the end of the year.

CB, good perspective I tend to agree that we should do well if the market starts to harden (IF)

Interesting article in the WSJ yesterday. The gist of it is that loose monetary policy is opening up new ways for insurers to spread risk, pressurizing rates for the reinsurers. "Reinsurers fared poorly in January during annual price-renewal negotiations with insurers, according to industry analysts, with easy money opening up new ways for insurers to spread risk beyond reinsurers, such as issuing bonds, pressuring prices." Overall is this good or bad for Fairfax. On one hand it should cost less to reinsure for the inurance bussinesses which should be positive but negative for Odyssey's reinsurance business.

ABM and Petec, I was a little surprised too at the low level of repurchases, these are total guesses as to why: 1. We were able to refinance existing debt at 7.5% with new debt at 4.25% in December, was that because of improved debt ratings? The increase in holding company cash would have helped with this. 2. Also, we increased the LOC from $1bil to $2bil maybe getting better terms due to 1. above. 3. Fairfax India has announced that it will go back to the market for $1.5bil, will FFH maintain its existing percentage holding which will cost $495m for its share of the new issue? 4. Finally, are they worried about the AWH performance and being ultra conservative until they see how things go? Other than that Prem has consistently stated that they would be buying back stock opportunistically, the current price in my view is very opportunistic indeed so why the delay?

With regard to Brit I guess this answers my question "We increased the level of reinsurance purchased in 2017, with spend increasing from 22.6% to 25.6% of premiums written. Our relationship with the Bermuda domiciled special purpose reinsurer Versutus Limited has continued to grow, with the amount of capital deployed to support Brit increasing to US$187.0m for 2018. We have also expanded the use of quota shares to manage our net exposure and have purchased a two year catastrophe protection, which largely explains the increase in ceded premium in the period. The events of 2017 have illustrated the benefits of these protections." Taken from Brit Limited press release 2/16/18 page 2.

I took a look at the last three years ('15,'16 and '17) through Q3. Brit went from 86.3% (2015), 77% (2016), 73% 2017 AWH was 71.4% in 2017. Dunno what conclusion to draw from this, worth keeping an eye on going forward.....

Greetings, this is my first post here, Does anyone know why Net Premiums Written have fallen from 87% (Q4'16) or 85% (2016) to 81% in 2017 of Gross Premiums Written?