Daphne

It’s in pre results quiet period and therefore not allowed to buy back until after results

HSBC gave me a rate of 1.2280

A combination of strengthening Can $ and the Hurricanes.

Anything new? Interesting?

Fairfax Financial Holdings Limited: Financial Results for the Year Ended December 31, 2016 Marketwired MarketwiredFebruary 16, 2017 TORONTO, ONTARIO--(Marketwired - Feb 16, 2017) - (Note: All dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are prepared using the recognition and measurement requirements of International Financial Reporting Standards except as otherwise noted, and are unaudited.) Fairfax Financial Holdings Limited (FFH.TO)(TSX:FFH.U) announces a fiscal year 2016 net loss of $512.5 million ($24.18 net loss per diluted share after payment of preferred share dividends) compared to fiscal year 2015 net earnings of $567.7 million ($23.15 net earnings per diluted share after payment of preferred share dividends), reflecting net losses on investments, particularly in the fourth quarter, more then offsetting strong operating income. Book value per basic share at December 31, 2016 was $367.40 compared to $403.01 at December 31, 2015 (a decrease of 6.4% adjusted for the $10 per common share dividend paid in the first quarter of 2016). "Our insurance companies continued to have excellent underwriting performance in the fourth quarter and full year of 2016 with consolidated combined ratios of 90.1% and 92.5% respectively. In 2016, all of our insurance companies again had combined ratios less than 100%, with Zenith National at 79.7%, Fairfax Asia at 86.4% and OdysseyRe at 88.7%. Our operating income was strong at $1,039 million. Net losses on investments of $1,204 million were primarily as a result of fundamental changes in the U.S. in the fourth quarter that may bolster economic growth and business development in the future. Consequently, we removed all our defensive equity index hedges and reduced the duration of our bond portfolios to approximately one year. Our investment actions resulted in our having cash and short term investments in excess of $10 billion at year-end," said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. "In the fourth quarter we announced our agreement to purchase Allied World for $4.9 billion, a transformative acquisition for Fairfax. We continue to be soundly financed, with year-end cash and marketable securities in the holding company approaching $1.4 billion." 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: Fourth quarter Year ended December 31, 2016 2015 2016 2015 Gross premiums written 2,244.1 2,202.4 9,534.3 8,655.8 Net premiums written 1,954.6 1,910.5 8,088.4 7,520.5 Underwriting profit 197.4 264.2 575.9 704.5 Interest and dividends - insurance and reinsurance 101.2 96.1 463.3 477.0 Operating income 298.6 360.3 1,039.2 1,181.5 Run-off (excluding net gains (losses) on investments) (121.0 ) (67.6 ) (149.4 ) (74.1 ) Non-insurance operations 57.5 44.6 133.5 127.8 Corporate overhead, interest expense and other (126.3 ) (63.1 ) (374.0 ) (351.5 ) Net losses on investments (1,073.7 ) (200.1 ) (1,203.6 ) (259.2 ) Pre-tax income (loss) (964.9 ) 74.1 (554.3 ) 624.5 Income taxes and non-controlling interests 263.4 29.3 41.8 (56.8 ) Net earnings (loss) attributable to shareholders of Fairfax (701.5 ) 103.4 (512.5 ) 567.7 Highlights for 2016 included the following: The combined ratio of the insurance and reinsurance operations was 92.5% on a consolidated basis, producing an underwriting profit of $575.9 million, compared to a combined ratio and underwriting profit of 89.9% and $704.5 million respectively in 2015, primarily reflecting greater catastrophe losses in 2016. Net premiums written by the insurance and reinsurance operations increased by 10.7% to $7,905.0 million, primarily reflecting that Brit was consolidated only in June 2015 (net premiums written increased by 3.8% excluding Brit). The insurance and reinsurance operations produced operating income (excluding net losses on investments) of $1,039.2 million, compared to $1,181.5 million in 2015, reflecting decreased underwriting profit and lower share of profit of associates, partially offset by increased interest income. Interest and dividend income of $555.2 million increased from $512.2 million in 2015. As at December 31, 2016, subsidiary cash and short term investments accounted for 37.4% of the company's portfolio investments. Interest income as reported is unadjusted for the positive tax effect of the company's significant holdings of tax-advantaged debt securities (holdings of $3,263.9 million at December 31, 2016 and $4,946.2 million at December 31, 2015). Net investment losses of $1,203.6 million in 2016 (net investment losses of $259.2 million in 2015) consisted of the following: Fourth quarter of 2016 ($ millions) Realized gains (losses) Unrealized gains (losses) Net gains (losses) Net gains (losses) on: Long equity exposures (180.7 ) 334.6 153.9 Equity hedges and short equity exposures (2,681.4 ) 2,334.1 (347.3 ) Net equity exposures (2,862.1 ) 2,668.7 (193.4 ) Bonds 150.9 (932.4 ) (781.5 ) CPI-linked derivatives - (62.2 ) (62.2 ) Other 195.9 (232.5 ) (36.6 ) (2,515.3 ) 1,441.6 (1,073.7 ) Year ended December 31, 2016 ($ millions) Realized gains (losses) Unrealized gains (losses) Net gains (losses) Net gains (losses) on: Long equity exposures (184.2 ) 79.5 (104.7 ) Equity hedges and short equity exposures (2,634.8 ) 1,441.9 (1,192.9 ) Net equity exposures (2,819.0 ) 1,521.4 (1,297.6 ) Bonds 648.7 (326.0 ) 322.7 CPI-linked derivatives - (196.2 ) (196.2 ) Other 98.9 (131.4 ) (32.5 ) (2,071.4 ) 867.8 (1,203.6 ) Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps. On October 10, 2016 the company completed the acquisition of an 80% interest in PT Asuransi Multi Artha Guna Tbk. ("AMAG") from PT Bank Pan Indonesia Tbk. ("Panin Bank") for $178.9 million. Fairfax Indonesia will be integrated with AMAG and AMAG will distribute its insurance products through a long-term bancassurance partnership with Panin Bank. AMAG is an established general insurer in Indonesia. On October 18, 2016 the company agreed to acquire from American International Group ("AIG") insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey, and certain assets and renewal rights with respect to the portfolio of local business written by AIG Europe in Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia. Through an ongoing partnership, Fairfax will support and service AIG's multinational business in the countries where business operations are acquired. Total consideration will be approximately $240 million. Each transaction is subject to customary closing conditions, including relevant regulatory approvals, and each transaction is expected to close during 2017. On December 7, 2016 the company completed the acquisition of a 100% interest in Bryte Insurance Company Limited (formerly known as Zurich Insurance Company South Africa Limited) ("Bryte Insurance") from Zurich Insurance Company Ltd. for $128.0 million (1.8 billion South African rand). Bryte Insurance is an established property and casualty insurer in South Africa and Botswana. On December 16, 2016 the company completed an underwritten public offering of Cdn$450 million principal amount of 4.70% senior notes due 2026, realizing proceeds of $334.5 million (Cdn$446.2 million) net of commissions and expenses. On January 30, 2017 the company announced cash tender offers to purchase a targeted aggregate principal amount of up to Cdn$250 million of its outstanding senior notes due 2019, 2020 and 2021. On December 18, 2016, the company entered into an agreement to acquire all of the issued and outstanding shares of Allied World Assurance Company Holdings, AG ("Allied World"), a market-leading global property, casualty and specialty insurer and reinsurer. Under the terms of the agreement, Allied World shareholders would receive a combination of Fairfax subordinate voting shares and cash equal to $54.00 per Allied World share, for a total equity value of approximately $4.9 billion. On January 27, 2017, the company entered into an agreement pursuant to which Ontario Municipal Employees Retirement System will invest $1 billion in order to indirectly acquire approximately 21% of the issued and outstanding shares of Allied World simultaneously with the acquisition of Allied World by Fairfax. Closing of the transaction is subject to regulatory approvals and certain Allied World shareholder approvals, and is expected to occur in the second quarter of 2017. The company held $1,371.6 million of cash, short term investments and marketable securities at the holding company level ($1,329.4 million net of short sale and derivative obligations) at December 31, 2016, compared to $1,276.5 million ($1,275.9 million net of short sale and derivative obligations) at December 31, 2015. The company's total debt to total capital ratio increased from 21.8% at December 31, 2015 to 28.7% at December 31, 2016 as a result of debt issued during 2016 by the company, Fairfax India and Cara to finance various purchases and of the company's lower shareholders' equity at the end of 2016. At December 31, 2016 the company owned $110.4 billion notional amount of CPI-linked derivative contracts with an original cost of $670.0 million, a market value of $83.4 million, and a remaining weighted average life of 5.6 years. The majority of the contracts are based on the underlying United States CPI index (53.8%) or the European Union CPI index (39.5%). ($ in millions) Underlying CPI Index Floor Rate(1) Average Life (in years) Notional Amount Cost Cost(2) (in bps) Market Value Market Value(2) (in bps) Unrealized Loss United States 0.0 % 5.7 $ 46,725.0 $ 286.9 61.4 $ 35.2 7.5 $ (251.7 ) United States 0.5 % 7.8 12,600.0 39.5 31.3 34.3 27.2 (5.2 ) European Union 0.0 % 5.0 43,640.4 300.3 68.8 12.5 2.9 (287.8 ) United Kingdom 0.0 % 5.9 4,077.6 22.6 55.4 0.5 1.2 (22.1 ) France 0.0 % 6.1 3,322.5 20.7 62.3 0.9 2.7 (19.8 ) 5.6 $ 110,365.5 $ 670.0 $ 83.4 $ (586.6 ) (1) Contracts with a floor rate of 0.0% provide a payout at maturity if there is cumulative deflation over the life of the contract. Contracts with a floor rate of 0.5% provide a payout at maturity if cumulative inflation averages less than 0.5% per year over the life of the contract. (2) Expressed as a percentage of the notional amount. At December 31, 2016 common shareholders' equity was $8,484.6 million, or $367.40 per basic share, compared to $8,952.5 million, or $403.01 per basic share, at December 31, 2015. Subsequent to year-end:

The quality of this discourse is really disappointing. Aledging, even loosely, that Prem is lying with no proof is a descent into the discourse to which we became too accustom during the endless and mindless American political campaign. Many of you claim to be experienced business people yet you naively admonish Prem for not revealing all his plans and manoeuvres. How silly to imagine that shareholders will be brought into the tent in advance of deals being signed, sealed and delivered.You're right, the US election result was clearly not the only driver in liquidating the hedges and bonds. There was a huge deal underway behind which there were non-disclosure agreements that had to be honoured. As to owning up to mistakes, I've always found Prem and his team to be most humble about their bad moves. Does he dwell on them? Why should he. I for one would be very nervous about a leader who can't learn and then quickly move on. Will this deal be perfect? I don't think anyone at Fairfax believes that. Are they excited...you bet and with good reason. Will it work? Nobody knows for sure but, what I do know is that we have the best possible team in place to make the best of it.

I think the market may be betting that ffh lost a ton when they removed the hedges but am open to other thesis about volume and price

Given the volumes, does anyone think we might be back in the last decade's shorting game?

Thank you for your voice of reason in this discussion Sanjeev. There's no mystery here, Prem has been pretty transparent about why he hedged and your point about the cash hoard reducing the need makes perfect sense.

Stock down $100 in Canada over past month!

Could this be the BIG EVENT? Will this put FFH in the money on its deflation swaps and hedges? Any thoughts? Daphne

Any thoughts from the wise ones on how recent markets are impacting ffh ...particularly hedges and bonds?

With the share price down more than 20% in the past seven months is anyone wondering why?? Prem told us that the winter run-up was due to the Canadian dollar descent but the dollar is further down yet every day the share price is eroding.

Thanks Dazel, love your consistently balanced and thoughtful analyses

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Named today to the Order of Canada.

In addition, some of the buyers in the BRIT equity issue deal, who picked up shares at $650C, may have decided it's time to offload

I'll just add that under UK regulations as long as 24% of BRIT remain outstanding FFH can't take the company private hence the need/ desire to buy up the balance over time

Do u still have a ticket? Where are you located? Daphne

Not Prem and not us.

Good one eric

Any thoughts from our wise board members on what's behind the extraordinary trading volumes of the past couple of weeks?

Just had to weigh in as this is an area about which I know a few things. In fact, I was surprised and disappointed to learn that FFH had employed the services of a spin doctor., though I suspect it may have been the NY lawyers who brought him in. Unfortunately, the best that most spin doctors accomplish is to give the field of crisis communications, and oftentimes their clients bad reputations. Stephen, Pam and Dufus' problems stem in large part from their attempts to spin the story. A pox on all their houses. I haven't seen much benefit accruing to blackberry either. Daphne

Underwriting continues to improve!

At current price dividend is about 14%