Daphne

Welcome back DAZEL, I've missed your enthusiasm. ;)

Has anyone noticed the volume over the last few days? Particularly first trade of the day?

Given that making money in the insurance business tends to be a longer term proposition coupled with the covid hit of 2020 ...hybrid capital, generally a shorter term proposition, is likely hiding in the bushes for the foreseeable future.

Christmas comes early...Santa Prem is on a roll.

Check out the blackberry Amazon deal!!!

The Globe and Mail has confirmed a report last week by IP industry journal IAM that BB-T +2.06%increase recently began shopping the majority of its 38,000 patents to interested parties. Tech+IP Capital, LLC, a U.S. investment banking firm, is handling the sale for BlackBerry. A source familiar with the situation told The Globe the company isn’t certain what price it will get, but it’s believed the portfolio could be worth more than US$450-million - a significant size for a deal in the global patent trade, but a fraction of the US$4.5-billion a consortium led by Apple Inc. Apple Inc. paid in 2011 for a trove of 6,000 Nortel Networks patents. The Globe is not identifying the source as they are not authorized to speak publicly on the matter.

Not going public but monetizing assets Canada’s biggest patent holder, BlackBerry Ltd., is looking to unload most of its intellectual property in a deal that could mark another turning point for the fallen former smartphone giant.

The “pattern” I’m seeing here is that this board is filling up with conspiracy theorists. Dr. John Grohol, a psychologist and the founder of Psych Central, says that conspiracy theorists come up with ideas out of thin air to match whatever 'fact' they think is true, and often use paranoia-based beliefs to convince others.

Hang on....no need to ratchet up the conspiracy theories. I’ve worked on a number of deals, at the most senior levels in the insurance sector, in the retail sector, in media etc. One in the insurance sector was a multi country deal concluded in ten days start to finish. So, if we’re going to speculate here, try this plausible scenario (plausible because I’ve seen it happen). Buyer starts talking to Prem and co about their desire to buy out Torstar and take it private. Prem says, who’s going to run it? They say we have a few people in mind. Prem says, what about Paul, he knows the business, is brilliant at what he does and is looking for a position that keeps him closer to home. Could be a terrific fit. The rest is history. McLuhan said it best....if I hadn’t believed it I wouldn’t have seen it.

India: a huge and skilled workforce ready and able to to take on so much more manufacturing as the Covid fallout lands squarely on China. Geopolitics may very well drive the future here.

Curious what you find funny. If you had a quarter of what Prem has...packed in your head, I’d be surprised!

TORONTO, Oct. 31, 2019 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (TSX:FFH and FFH.U) announces net earnings of $68.6 million ($2.04 net earnings per diluted share after payment of preferred share dividends) in the third quarter of 2019 compared to net earnings of $106.2 million ($3.34 net earnings per diluted share after payment of preferred share dividends) in the third quarter of 2018, primarily reflecting net losses on investments, partially offset by higher operating income. Book value per basic share at September 30, 2019 was $462.98 compared to $432.46 at December 31, 2018 (an increase of 9.5% adjusted for the $10 per common share dividend paid in the first quarter of 2019). "Despite the catastrophe activity in the quarter, our insurance companies continued to have strong underwriting performance with a third quarter consolidated combined ratio of 97.5%, with Zenith National at 87.1% and all but one of our other major companies between 96.2% and 97.9%, and our operating income remained excellent, improving to $280 million. We continue to be soundly financed, with over $1 billion cash and marketable securities at the holding company and no significant holding company debt maturities until 2022," said Prem Watsa, Chairman and Chief Executive Officer. The table below shows the sources of the company's net earnings, set out in a format which the company has consistently used as it believes it assists in understanding Fairfax: Third quarter First nine months 2019 2018 2019 2018 ($ millions) Gross premiums written 4,211.6 3,763.6 13,273.6 11,763.0 Net premiums written 3,318.3 2,960.8 10,614.1 9,376.7 Underwriting profit 81.3 74.2 270.7 299.1 Interest and dividends - insurance and reinsurance 163.1 139.2 501.5 400.8 Share of profit of associates - insurance and reinsurance 35.7 36.5 84.6 24.9 Operating income 280.1 249.9 856.8 724.8 Run-off (excluding net gains (losses) on investments) (14.2 ) (49.2 ) (45.0 ) (102.3 ) Non-insurance operations 8.2 65.7 163.9 244.8 Interest expense* (121.5 ) (84.8 ) (355.0 ) (259.9 ) Corporate overhead and other income / expense 14.0 (2.6 ) 97.1 (113.8 ) Net gains (losses) on investments (96.7 ) 41.2 1,075.8 917.2 Pre-tax income 69.9 220.2 1,793.6 1,410.8 Income taxes and non-controlling interests (1.3 ) (114.0 ) (461.5 ) (557.2 ) Net earnings attributable to shareholders of Fairfax 68.6 106.2 1,332.1 853.6 * Including $19.2 million and $50.8 million in the third quarter and first nine months of 2019, respectively, related to the revised accounting for leases effective January 1, 2019 Highlights for the third quarter of 2019 (with comparisons to the third quarter of 2018 except as otherwise noted) include the following: The consolidated combined ratio of the insurance and reinsurance operations was 97.5%, producing an underwriting profit of $81.3 million, compared to a combined ratio of 97.6% and an underwriting profit of $74.2 million in 2018. Net premiums written by the insurance and reinsurance operations increased by 12.1% to $3,318.1 million (13.7% excluding the net premiums written by operations not present in the third quarters of both 2019 and 2018). The operating income of the insurance and reinsurance operations increased to $280.1 million from $249.9 million, reflecting primarily higher interest and dividends. Interest and dividends of $214.9 million increased from $193.7 million, primarily reflecting higher interest income earned on increased holdings of high quality U.S. corporate bonds, partially offset by lower interest income earned on decreased holdings of U.S. municipal bonds. Share of profit of associates of $149.6 million increased from $63.9 million, principally reflecting increased share of profit of Eurolife and IIFL Finance. Interest expense of $121.5 million is comprised of $65.7 million incurred on borrowings by the holding company and the insurance and reinsurance companies, $36.6 million incurred on borrowings by the non-insurance companies (which are non-recourse to the holding company) and $19.2 million of accretion on lease liabilities subsequent to the adoption of IFRS 16 on January 1, 2019. Short-dated U.S. treasury bonds and high quality corporate bonds represented 25.7% of the company's portfolio investments at September 30, 2019 compared to 34.7% at December 31, 2018. Net investment losses of $96.7 million in 2019 consisted of the following: Third quarter of 2019 ($ millions) Realized gains (losses) Unrealized gains (losses) Net gains (losses) Net gains (losses) on: Long equity exposures 170.7 (159.3 ) 11.4 Short equity exposures — (17.9 ) (17.9 ) Net equity exposures 170.7 (177.2 ) (6.5 ) Bonds 14.3 48.0 62.3 Other (136.7 ) (15.8 ) (152.5 ) 48.3 (145.0 ) (96.7 ) First nine months of 2019 ($ millions) Realized gains (losses) Unrealized gains (losses) Net gains (losses) Net gains (losses) on: Long equity exposures 599.6 362.2 961.8 Short equity exposures (7.9 ) 117.0 109.1 Net equity exposures 591.7 479.2 1,070.9 Bonds (260.2 ) 471.6 211.4 Other (134.6 ) (71.9 ) (206.5 ) 196.9 878.9 1,075.8 Net losses on Other in the third quarter of 2019 in the table above was primarily due to foreign exchange impacts on investments denominated in the euro, which weakened against the U.S. dollar. In two approximately equal transactions in late September and early October 2019 the company sold its remaining 9.9% equity interest in ICICI Lombard for gross proceeds of $729.0 million. On July 15, 2019, the company redeemed its remaining Cdn$395.6 million principal amount of 6.40% unsecured senior notes due May 25, 2021 for cash consideration of $329.1 million (Cdn$429.0 million) including accrued interest, and recognized a loss on repurchase of long term debt of $23.7 million (Cdn$30.7 million). The company held $1,701.8 million of cash, short term investments and marketable securities at the holding company level ($1,699.0 million net of short sale and derivative obligations) at September 30, 2019, compared to $1,557.2 million ($1,550.6 million net of short sale and derivative obligations) at December 31, 2018. The company's total debt to total capital ratio, excluding non-insurance operations, increased to 27.1% at September 30, 2019 from 25.0% at December 31, 2018, primarily reflecting increased borrowings at the holding company, partially offset by increased common shareholders' equity. During the third quarter of 2019 the company purchased 65,815 subordinate voting shares for treasury at an aggregate cost of $29.8 million. From the fourth quarter of 2017 up to September 30, 2019, the company has purchased 621,204 subordinate voting shares for cancellation and 662,789 subordinate voting shares for treasury at an aggregate cost of $635.9 million. At September 30, 2019, common shareholders' equity was $12,417.2 million, or $462.98 per basic share, compared to $11,779.3 million, or $432.46 per basic share, at December 31, 2018. The increase in common shareholders' equity per basic share was primarily due to net earnings. There were 26.9 million and 27.4 million weighted average common shares effectively outstanding during the third quarters of 2019 and 2018 respectively. At September 30, 2019 there were 26,820,057 common shares effectively outstanding. Unaudited consolidated balance sheet, earnings and comprehensive income information, together with segmented premium and combined ratio information, follow and form part of this news release. In presenting the company’s results in this news release, management has included operating income (loss), combined ratio and book value per basic share measures. Operating income (loss) is used in the company's segment reporting. The combined ratio is calculated by the company as the sum of claims losses, loss adjustment expenses, commissions, premium acquisition costs and other underwriting expenses, expressed as a percentage of net premiums earned. Book value per basic share is calculated by the company as common shareholders' equity divided by the number of common shares effectively outstanding. As previously announced, Fairfax will hold a conference call to discuss its third quarter 2019 results at 8:30 a.m. Eastern time on Friday, November 1, 2019. The call, consisting of a presentation by the company followed by a question period, may be accessed at 1 (800) 369-2013 (Canada or U.S.) or 1 (517) 308-9087 (International) with the passcode “Fairfax”. A replay of the call will be available from shortly after the termination of the call until 5:00 p.m. Eastern time on Friday, November 15, 2019. The replay may be accessed at 1 (866) 356-4351 (Canada or U.S.) or 1 (203) 369-0104 (International). Fairfax Financial Holdings Limited is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management.

Can I assume by your comments that there was nothing of much interest that was shared at this year’s AGM?

Excellent analysis and IMO the critics sound more like trolls

Ironic indeed!

I’m not sure if the limit on buybacks is cash flow or percentage of volume. I suspect the latter

I could be wrong. It’s been a few years since I remember hearing about them and thought that was just because there was nothing to report. I could also be wrong about what they were. Looking for a silver lining here

With markets depressed in Europe, does anyone know if FFH is yet in the money?

Reports suggest insured damage is $6Billion. Any idea what the FFH exposure is??

Price to book is about 1.16

Did anyone notice that FFH is on sale?? Too bad the low volume will limit buybacks.

National Bank of Canada is initiating coverage on Fairfax Financial Holdings Ltd. (FFH-T) with a strong rating. Analyst Jaeme Gloyn started coverage with an “outperform" rating and a target price of C$850, which expects a total return of about 20.1 per cent, including the company’s 1.4 per cent dividend. Fairfax attempts to achieve 15 per cent BVPS [book value of equity per share] annual growth over the long term through solid underwriting performance and a focus on generating total returns on its asset portfolio – the latter a differentiator versus P&C insurance peers. With a market cap of US$15.5-billion and net premiums written of about US$12 billion (2018E), FFH is one of the top 10 insurance companies in North America," he said. “We believe the company’s diversified operations (geographic, business lines, risks) and decentralized management approach support stable premiums growth (mid-single digit) and consistent combined ratio performance (long-term average of 95 per cent). We believe recently soft total return performance is in the company’s rear-view mirror following a shift to a more “risk-on” (but still conservative) approach. Though the timing of net gains is uncertain, we believe the company holds meaningful upside on several “at-cost” investments. Moreover, continued deployment of cash into other investments as well as declining interest expenses will further support stronger investment profitability,” he said. “We expect Fairfax to deliver consistent double-digit ROE [return on equity] over the long term. Combining our outlook for underwriting profitability and investment returns, we believe FFH will generate about 10 per cent ROE through our forecast horizon. Supported by a solid balance sheet and capital levels, we expect management to enhance ROE through purchasing non-controlling interests, share buybacks and disciplined increases in underwriting leverage (i.e., in hard markets). Catastrophes (e.g., 2017) and adverse market movements (eroding total returns) pose material risks to our outlook; however, we believe these risks are sufficiently reflected in our target valuation,” he said. “With a consensus ROE forecast of just 8.5 per cent in 2019, implying a approximately 1.2 times P/B [price to book value] – also the current trading multiple – we believe consensus (and the market) are missing some aspect of the profitability outlook. We use a 1.3 times P/B multiple on our Q2 2019 BV estimate to arrive at our price target of US$650 (C$850). Given an approximately 20 per cent total return, including a 1.4 per cent dividend yield, we rate the shares Outperform.” The shares are currently trading near C$720. The median target price is C$755.

Any wise thoughts on what may be driving it down? Had thought summer doldrums but today’s action feels a little more aggressive! D

The purpose of my previous thread was to (politely) point out that Ben is not immature (age 38) nor without investment experience (see bio). Expanding on my previous thoughts (not so politely) it is obvious that this board contains not only some naysayers but those who question the integrity of the Watsa family. Consider-Prem’s payday is $600k per year for running a company with a market cap> $18b-ABSURD ! One way or the other Prem’s children will inherit and have to manage over $1b (or more) consisting mostly of Fairfax stock.Shouldn’t they (through Ben)have some idea what’s going on ? It is called skin in the game and being a member of the board is a great place to learn without screwing things up to badly. I know that Fairfax farms out monies to be managed by many other investment companies not just Ben’s.It is called fresh ideas or different viewpoints.Do you really think that $50m was handed to Ben to manage like Monopoly money? His employer has a lot more on the line than the management fees on $50m (reputation and future business come to mind). Finally you have two choices Mr. Stubblejumper-1) Suck it up and confront Prem at the annual meeting with a list of your grievances (real or imagined) 2) Sell your stock.( Betting on a horse when you doubt the jockey’s honesty and ability can only end in disaster)

Misinformation about Ben Watson make this board sound like an outpost of FOX news. Irresponsible claptrap should have no place here. Be responsible and do your research. Benjamin P. Watsa, 38, is a member of Fairfax Board of Directors. Mr. Watsa is a Partner and Portfolio Manager at Lissom Investment Management Inc., a private investment counselor that provides wealth management services for high net worth clients through the Owners Family of Funds, where he manages the Owners Opportunities Fund, a small and mid-cap focused equity fund. Prior to joining Lissom in 2006, Mr. Watsa worked in New York in investment banking as an Analyst in the Financial Institutions Group at Banc of America Securities from 2001 to 2003 and as an Associate at Cochran Caronia Waller from 2003 to 2006. Mr. Watsa is a member of the Finance Committee of the Rideau Hall Foundation, and is a resident of Toronto, Ontario, Canada