glider3834

viking with Excess of fair value over book value number that Fairfax reports, I believe it excludes non-market traded, non-insurance consolidated subs like Sporting Life Group or AGT

1H results out today 'Mytilineos recorded its historically best H1 year performance led by the energy sector, achieving another large increase in net profitability and consolidating high performance. In particular, turnover increased to €2,516 million compared to €2,154 million in the first half of 2022, marking an increase of 17% despite the significant de-escalation of energy and metal prices. Earnings before Taxes, Interest and Depreciation (EBITDA) also recorded a significant increase, by 49%, to €438 million compared to €293 million in the corresponding period of the previous year, benefiting from the steady increase in the profitability of the Energy Sector and in particular the activity of Renewable Energy Sources (RES), which contributed the largest percentage (29%) to the Sector's EBITDA, as well as the supply of electricity and natural gas, as a result of the continuous internationalization of the company's activities. Mytilineos achieved its historically best performance in the first half of the year led by the Energy Sector. In particular, in addition to the significant contribution of M Renewables (RES of Greece and abroad), which saw its profitability more than double (+117%) compared to the first half of 2022, the Energy sector was also favored by the substantial strengthening of the presence of Mytilineos in the supply of natural gas in the wider region of the Balkans and SE Europe. ' https://www.capital.gr/epixeiriseis/3729301/mytilineos-alma-61-stin-kathari-kerdoforia-to-a-examino/

yes agree nwoodman - its a really brilliant study While not a 10 bagger, Fairfax India has had close to 6-7xbagger with NSE India & after around 7 years! They paid $27M & on grey mkt valuation their 1% appears to have value close to $200M https://www.livemint.com/market/ipo/nse-ipo-creates-buzz-in-unlisted-market-shows-the-investor-interest-in-issue-11687254813352.html - what I didn't realise is they originally wanted to buy 5% & not 1%!

good point viking on PV of this transaction I would expect it would be a net positive for Fairfax's underwriting profitability & overall CR

thanks nwoodman - still kicking myself over Piraeus when it was trading close to a PE of 2x a year ago -but I was already fully invested and seriously overweighted with Eurobank via Fairfax

thanks a great summary Viking - also if Eurobank decide to take control of Hellenic bank https://www.ekathimerini.com/economy/1215031/eurobank-eyes-control-of-hellenic-bank/ that could potentially also add meaningfully to their pre-tax profit growth https://cyprus-mail.com/2023/06/28/hellenic-bank-expects-pre-tax-profit-to-exceed-e200-million-in-2023/

yes Fairfax which started around 1986 effectively 'acquired' these liabilities via acquisitions of subs they made On the positive side higher investment returns, asbestos liabilities becoming increasingly smaller relative to shareholders equity and Fairfax has been reducing its long tail exposure eg sale of Riverstone Europe Riverstone US/TRG - Run-off - shareholder equity (31Dec) 2022 $405M (3% of FFH shareholder equity) 2012 $1,773M (23% of FFH shareholder equity)

full disclosure guys thats me dino was replying to cheers

https://www.bloomberg.com/news/articles/2023-07-07/greece-s-eurobank-plans-to-expand-overseas-wealth-management

https://www.businesswire.com/news/home/20230706093283/en/AM-Best-Upgrades-Credit-Ratings-of-Odyssey-Group-Holdings-Inc.’s-Members

yes my figures below - from annual reports edit note: accidentally deleted so re-posting

I also think this IFRS 17 accounting shift is potentially one reason why they were comfortable entering into forward contracts to buy around $3B in Treasuries in Q1 and effectively lock in rate - as they don't need to be as concerned about BV impact from MTM. I can't see why they wouldn't continue to make these types of moves if they like where interest rates are & they want to extend duration further. But lets wait & see what they do.

With IFRS 17 accounting I would expect higher rates should also result in higher discount rate being applied to their insurance liabilities/ reserves and reducing PV of these liabilities, which should offset the MTM loss on their bonds. Also any rates impact should be greater on their reserves which are longer in duration and larger in size than their bond portfolio.

Just on cat risk exposure its worth considering Fairfax's corporate structure. Fairfax subs have historically had different levels of risk exposure to different types of cat events - for example when Hurricane Ian occured, Brit bore 50% of the overall losses sustained by Fairfax. With the recent earthquake in Turkey, Odyssey Group sustained most of the losses from that event. And intuitively it makes sense to do this rather than spreading the risk exposure equally. If you intentionally write more risk exposure to a particular type of risk/s/event through one sub ( and also managing risk exposure at an aggregate level), you are ring fencing most of the losses from the rest of your business (ie the other subs) through your corporate structure.

https://www.business-standard.com/finance/personal-finance/digit-life-enters-insurance-space-with-maiden-product-group-term-plan-123062600546_1.html

National Stock Exchange of India (NSE) - unlisted market transactions are suggesting valuation around US$20B - on that basis Fairfax India 1% stake would be worth around US$200M - timing of IPO still unclear https://www.livemint.com/market/ipo/nse-ipo-creates-buzz-in-unlisted-market-shows-the-investor-interest-in-issue-11687254813352.html 'The current share price in the unlisted market values the bourse at around ₹1,65,825 crore.' “At this price, the PE Ratio of the bourse stands at roughly 22 times on historical basis versus BSE Ltd at 37 times and MCX at 50 times and international exchanges trading between 30x to 40x," the brokerage report said.

check out Lauren Templeton comments on Fairfax culture from 16 min 20 s mark

thanks - yes exciting news - can they scale rapidly? they have built Digit's brand recognition in India, they have built a partner ecosystem, already have API integrations (couldn't they use these to distribute life products on top of existing non-life?), they have also onboarded banks as minority shareholders/partners for distribution capability using bancassurance model, Kamesh Goyal has experience in life insurance with Allianz - nothing is certain of course but the ingredients look to be there IMHO this was interesting interview covering how they have used tech (AI,ML)/analytics to lower costs, scale quickly, reduce claim time/ improve customer experience 'Technology is the backbone of Digit and ever since our inception in 2017, we have developed multiple tech-enabled solutions that have accelerated our growth in a short span of time. The use of Big Data for business intelligence and data analytics has helped us close the gap between data, insights, and actionable solutions. This has also helped us in being more cost-efficient. We believe in a hybrid model of AI, analytics and human assessment to constantly improve the processes for our customers and partners. We have built ‘smartphone-enabled inspections’ for instant motor insurance pre-inspection using AI and ML. This has eliminated the need for inspection by physical surveyors and has made the process efficient by bringing down the turnaround time from a few days to a matter of 5-10 minutes. Our team is working constantly to make these solutions active for the entire userbase. We also have a system that helps us in detecting frauds through the use of image analytics, AI, and ML. Our integrated API solutions on the cloud help in triggering automatic claim notifications for travel insurance customers if their flight gets delayed beyond 90 minutes. Our tech solutions have also been built for our partner ecosystem to help serve the customers better. The reception of tech integrated solutions has been phenomenal and has helped Digit gain an edge over other players in a short span of time.' https://www.analyticsinsight.net/exclusive-interview-with-vishal-shah-head-of-data-science-at-digit-insurance/

yeh comparing health & liability numbers for April maybe there has been some re-categorisation but not sure - I guess we wait for May to see if there is some trend here

Right so like looking from customer perspective - why are they buying the product or using the service?

I am always thinking about how can I make my research process better? I am curious to ask if other members of cobf forum would like to share experiences of how they have gone about picking up different pieces of information to gain a unique perspective on stocks that may run counter to the existing narratives that are being pitched on different media outlets. Here is a quote from an interview with Ted Weschler at Berkshire https://kingswell.substack.com/p/ted-weschler-variant-perception-charity “I want to be able to look myself in the mirror and say that I’m reading enough weird stuff that nobody else is reading the same stuff that I am,” he says. “If you’re just reading the New York Times and the Wall Street Journal, there’s no way you’re going to beat other people.” Even so, Weschler makes a point to read as many newspapers and trade journals as possible. Newspapers, in particular, present readers with a random set of stories, curated by editors, that make for a well-rounded reader. It’s all about building up a critical mass of information and data that will help you connect the dots when examining a potential investment idea. “I read Furniture Today and Uranium Weekly,” Weschler laughs. “I’m not sure there’s a lot of people who subscribe to both of those, but you’re looking at one of them.” In the insurance space, some of the things I read https://www.reinsurancene.ws/ https://www.insidepandc.com/ https://www.theinsurer.com/ https://www.ajg.com/gallagherre/news-and-insights/ I also try & push my knowledge completely outside my comfort zone - I watched a Netflix series that was super interesting on understanding black holes & I don't want to spoil the show you might want to watch - but it underlines that to get the answer to a difficult problem, you may need to take a unique research approach that no-one else may have pursued.

Milk puts (like other agri product derivatives) i think would be related to insurance business eg protection sold to dairy farmers example below from Hudson crop insurance site 'Dairy Revenue Protection (DRP) is an insurance plan approved by the Federal Crop Insurance Corporation to allow dairy farmers to purchase risk management protection against declines in quarterly revenue from milk sales as a result of a decline in milk prices, a decline in milk production, or both.' https://hudsoncrop.com/products/drp/

no worries

Digit market share up to 3.2% Apr-23 - YoY growth rate 39.6% https://www.gicouncil.in/statistics/industry-statistics/segment-wise-report-on-homepage/