Guest misterstockwell Posted October 29, 2009 Posted October 29, 2009 http://www.fairfax.ca/Assets/Downloads/2009Q3.pdf
valuecfa Posted October 29, 2009 Posted October 29, 2009 Great stuff! Interesting side note" During the third quarter, in response to the significant appreciation in equity market valuations during 2009, the company hedged approximately one-quarter of its equity investment exposure by entering into S&P 500 index-referenced total return swap contracts ($1.5 billion notional amount at approximately the 1,062 level of the S&P 500 index).
Guest misterstockwell Posted October 29, 2009 Posted October 29, 2009 ....of course, if they could ever make more than pennies on their underwriting, we would really have something special
Zorrofan Posted October 29, 2009 Posted October 29, 2009 I am reassured to see that FFH is hedging once again! This environment continues to offer FFH the sort of opportunities to shine (and by shine I mean make oddles of money!) but it is good to see a bit of caution as well. cheers Zorro ;D
niels12think Posted October 29, 2009 Posted October 29, 2009 Book is now $371/share. Cheers! $371/share at end of Q3. If October was similar to July-September, then book is now approx. $390/share ;) Beautiful ! Cheers
oldye Posted October 29, 2009 Posted October 29, 2009 BV of 7.65 Billion vs 2.9 billion in 2006. You're right this quarter was nothing special, they've been knocking the leather off the ball since 06.
islonim Posted October 29, 2009 Posted October 29, 2009 goog q but poor underwriting results, especialy comparing to other insurance co...
Parsad Posted October 29, 2009 Posted October 29, 2009 Underwriting was 99% overall. Still very good. I'm pretty sure Fairfax pads the reserves when things are good unlike many other insurers. Thus the annual surpluses that usually appear over time as reserves are drawn down. I bet they pull a wad out of Odyssey once it is completely under their control. Cheers!
smw397 Posted October 29, 2009 Posted October 29, 2009 Great stuff! Interesting side note" During the third quarter, in response to the significant appreciation in equity market valuations during 2009, the company hedged approximately one-quarter of its equity investment exposure by entering into S&P 500 index-referenced total return swap contracts ($1.5 billion notional amount at approximately the 1,062 level of the S&P 500 index). That's what I was hoping to see. Other than the huge leap in book value, of course ;D
islonim Posted October 29, 2009 Posted October 29, 2009 lets hope so... I read the reports from almost every ins co. this q and almost of them had cr in the low 90 even if yOu exlude prior year resrve release.
valuecfa Posted October 29, 2009 Posted October 29, 2009 lets hope so... I read the reports from almost every ins co. this q and almost of them had cr in the low 90 even if yOu exlude prior year resrve release. I suppose this is sometimes what happens when you purchase some insurance companies for well under book value. You get the immediate undervalued assets, yet you have many years of mediocre underwriting. So long as investment returns are at above satisfactory levels then i sure don't mind breaking even on underwriting into the foreseeable future. However, if this company could keep there CR into the low to mid 90s as an average, then it would make this investment a much larger and rewarding holding in my portfolio.
EdWatchesBoxing Posted October 30, 2009 Posted October 30, 2009 Strong results on the investment side, but this info was already known to board members. Without looking at details, I guess that ORH had an OK CR, NB and C&F probably had a high CR, Asia was outstanding. (I cheated and checked the report and I was right!) For underwriting, keep ORH where it is and continue improvements with NB and C&F and FFH be alright. If they had decided to bring in ORH first before NB, they may have gotten NB at a lower price.
Uccmal Posted October 30, 2009 Posted October 30, 2009 Well my prediction of 700 M after tax wasn't far off, and I just guessed. :P The companies are obviously reining in their underwriting to a high degree, but at a certain point they must be writing some shit to get the cash through the door. Anyway, there is lots of room for growth in that area. When the hard market comes they will be able to issue multiples of the present premiums. I also think the problem with comparing Fairfax to others on underwriting on a Q over Q basis is the same as comparing their overall results on a Q by Q basis. FFH is writing business with extensive geographical and business line diversity. Most other companies have more concentrated business that may just happen to be profitable at the moment. Come payback time you may see a dramatic difference in what has to be paid out. A CR of 80 or 90 could very quickly become a CR of 180 where there is concentration. Another example of Buffett's swimming naked. Whereas FFHs cr of 98 may become 107 for a quarter or two and then they can really write business. One of the most compelling items is the 175 M per Quarter from interest and dividends versus a former 130 M. This offers really good cover for tough underwriting. As some of those investments start to raise their dividends this line will become really interesting. We are starting to see the magic of compounding where more cash is begetting more cash. Care to place bets on the stock movement tomorrow?
oldye Posted October 30, 2009 Posted October 30, 2009 They got NB when the cad was around its low around 80 cents vs the dollar so they pretty much paid 1.1 book for the stake they didn't already own.
ERICOPOLY Posted October 30, 2009 Posted October 30, 2009 A CR of 80 or 90 could very quickly become a CR of 180 where there is concentration. I remember MRH had impressive combined ratios until they lost 70% of equity from the hurricanes of 2005.
StubbleJumper Posted October 30, 2009 Posted October 30, 2009 Did anyone else notice the commutations? They lost $100m on commutations at TIG and C&F which is like 9 points of CR..... Now this happens with some regularity, but either you discount your reserves or you don't. FFH doesn't, so when they commute contracts, we shouldn't bitch and moan about poor underwriting. Christ! SJ
ERICOPOLY Posted October 30, 2009 Posted October 30, 2009 Why did "fair value" of equity accounted investments fall from $737.5m (Q2) to $570.1m (Q3)? Okay, I found it -- it was a decrease in "Fair Value" of ICICI Lombard. Hmmm... but why?
oec2000 Posted October 30, 2009 Posted October 30, 2009 ....of course, if they could ever make more than pennies on their underwriting, we would really have something special I read the reports from almost every ins co. this q and almost of them had cr in the low 90 even if yOu exlude prior year resrve release. Boy, am I glad I don't work for you guys! ;) Management has virtually doubled BVPS in the two most turbulent years in US financial history since the Great Depression. Anybody could have done that, right? Yeah, we need to take away Prem's bonus. What? Prem doesn't pay himself a bonus....oops, sorry. :D Just kidding, OK?
ERICOPOLY Posted October 30, 2009 Posted October 30, 2009 Did anyone else notice the commutations? They lost $100m on commutations at TIG and C&F which is like 9 points of CR..... They only lost $21.1 on commutations in all three quarters combined of 2009 (all in Q3 actually). You are probably looking at the line where they talk of the $80m commutation at C&F -- but look at the date on that... 2008.
EdWatchesBoxing Posted October 30, 2009 Posted October 30, 2009 They got NB when the cad was around its low around 80 cents vs the dollar so they pretty much paid 1.1 book for the stake they didn't already own. Good point, I was only thinking about NB and its CR, I didn't think about the FX.
Parsad Posted October 30, 2009 Posted October 30, 2009 You got it square on Oec! Not only that, virtually everyone on here would have gotten their asses kicked if we weren't paying attention to what Prem and his team were talking about for the last four years in their presentations. I think we can give them some slack. Cheers!
StubbleJumper Posted October 30, 2009 Posted October 30, 2009 Did anyone else notice the commutations? They lost $100m on commutations at TIG and C&F which is like 9 points of CR..... They only lost $21.1 on commutations in all three quarters combined of 2009 (all in Q3 actually). You are probably looking at the line where they talk of the $80m commutation at C&F -- but look at the date on that... 2008. You're right. My bad. ??? ??? ???
tyska Posted October 30, 2009 Posted October 30, 2009 What I found interesting was the earinng estimates from this link this morning. http://ca.us.biz.yahoo.com/research/earncal/20091029.html?t=ffh Company Symbol EPSEstimate* Time Add to MyCalendar Fairfax Financial Holdings FFH 9.91 After Market Close Add How much press would anothe company get beating an estimate by 3 times. Dan
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