Fairfax stock positions

[Hamburg Investor]

1 hour ago, gfp said:

 

Aren't they just referring to the 3:1 leverage the quantity of investable float provides vs net worth?

That's not how I read the following sentences "The portfolio seems full of right tail options with high margin of safety. Plus 10-12% IRR ideas when levered 3:1 are 30%+ pre-tax ROE."

Isn't that "ideas" referring to leverage on a single investment basis? So leverage one by one; or am I misinterpreting that?

We had that same argument a few days ago, if I got it right. Where I stumbled across it. But I think it was 15% ROE that was leveraged to 45%. I didn't ask about it, but maybe someone remembers.

The float argument makes sense, but I believe this leverage is currently more like 2.6 or 2.7 (and falling, as the insurance business is now growing more slowly than the investments again).

[gfp]

Sounds like a back of the envelope description of the leverage on the balance sheet, primarily from float, to me 

[Viking]

4 hours ago, petec said:

 

I think this is one of the biggest changes from the bad old days - they've realised that IV has to be reflected in BV or the market won't pay for it. 

 

However, for all the reasons we have discussed, they also have a lot more value to realise these days than they did. It's much easier to monetise investments when they've gone up!

 

I agree. I have been harping for years about 'move to quality.' It's not just on the buy side (new purchases). It's also internal expectations within Fairfax - these have been raised. Holdings are expected to be profitable. To actually deliver a 15% return over time. That wasn't the case pre-2017 - back then it was more of a hope. And when they floundered (which happened often) they were constantly bailed out by mom and dad (Fairfax). 

 

There seems to a much, much better financial discipline within Fairfax these days. And it looks like this financial discipline is getting institutionalized / becoming part of the culture.

 

I just look at what was going on in 2015, 2016 and 2017 (and previous years). Since about 2018, everything has gotten much better. It is hard to put it into words.

 

Since 2018, compounding has been working its magic. Value is being created. Much more than is generally appreciated. That is likely why Fairfax is buying back a meaningful amount of stock at US$1,700/share. They see all the hidden value.  

Edited October 15, 2025 by Viking

[wondering]

Orla Mining's stock price has gone up like a rocket the past year (up 190%).

 

When does Fairfax exit this stock?  

 

I don't know if because Orla mines gold and gold is not a mineral with many industrial uses, and it's traditionally held a hedge against the dollar/inflation, how does an investor determine when the stock is overvalued or has reached intrinsic value?

[Viking]

28 minutes ago, wondering said:

Orla Mining's stock price has gone up like a rocket the past year (up 190%).

 

When does Fairfax exit this stock?  

 

I don't know if because Orla mines gold and gold is not a mineral with many industrial uses, and it's traditionally held a hedge against the dollar/inflation, how does an investor determine when the stock is overvalued or has reached intrinsic value?

 

It might make sense to come at it from two angles:

1. What is driving the gold price higher? Is it a cyclical (short term) or secular (longer term) thing? 
2. What is going on at the company?

On both fronts, I think it makes sense to continue to hold Orla. Yes, it will be volatile. 

[dartmonkey]

4 hours ago, Hamburg Investor said:

That's not how I read the following sentences "The portfolio seems full of right tail options with high margin of safety. Plus 10-12% IRR ideas when levered 3:1 are 30%+ pre-tax ROE."

Isn't that "ideas" referring to leverage on a single investment basis? So leverage one by one; or am I misinterpreting that?

Agree with gfp that this just refers to float leverage. If float is 1.6x equity, that actually means that alongside every $1 in equity, they ALSO invest $1.60 in float, so they are levered 2.6:1, not 1.6:1. 

Then you have to consider that they typically hold bonds in an amount equivalent to the float, so it's not like they can just leverage up 10% ROE stock investments to get 26% ROE. If they get 4% pre-tax on the float, plus 3.5% underwriting (their 20-year average), and 10% returns on their own equity, that would give them 7.5%*1.6+10%*1=22% pretax, say 17.5% ROE posttax which is great and doable. I think that is what is meant by "10-12% ROE ideas" above, the returns on the equity investment ideas, not what they can get on the overall portfolio. 

 

[Munger_Disciple]

54 minutes ago, dartmonkey said:

Agree with gfp that this just refers to float leverage. If float is 1.6x equity, that actually means that alongside every $1 in equity, they ALSO invest $1.60 in float, so they are levered 2.6:1, not 1.6:1. 

Then you have to consider that they typically hold bonds in an amount equivalent to the float, so it's not like they can just leverage up 10% ROE stock investments to get 26% ROE. If they get 4% pre-tax on the float, plus 3.5% underwriting (their 20-year average), and 10% returns on their own equity, that would give them 7.5%*1.6+10%*1=22% pretax, say 17.5% ROE posttax which is great and doable. I think that is what is meant by "10-12% ROE ideas" above, the returns on the equity investment ideas, not what they can get on the overall portfolio. 

 

 

[djokovic1]

@Hamburg Investor This is the way to think about Fairfax's compounding engine:

 

(1-combined ratio) * (Net premiums written / average book equity) + Investment returns * (Investment portfolio / average book equity) - (central and interest costs) / average equity gives you an pre-tax ROE.

 

Now the net premiums written / average book equity have historically been ~100%. So the ROE from your underwriting will be (1-combined ratio) or underwriting profit as they are no leverage on this side of returns, unlike the investment book. I assume 5% forward looking.

 

But the majority of your returns come from your investing book because the investment portfolio / avg. book equity is ~3:1 (and has been around there for the last 10 years).

The below is an example of their compounding engine using the logic above with some assumptions roughly aligning with current numbers. What that shows you is the underwriting profit is not a big driver of ROE it's mostly the investment returns (20% vs 80%). That being said you always want to see them being prudent and have a positive underwriting profit (and a negative cost of float) which they have consistently achieved over the last 10 years.

 

Happy to answer anything else on this, as when I made sense of this by looking at their last 10 year returns, everything clicked for me.

 

Edited October 15, 2025 by djokovic1

[Viking]

What return did Fairfax generate on its investment in Eurolife over the past 9 years? (The initial purchase closed August of 2016.) We will need to wait until Fairfax reports results to get the full picture. My guess is this investment has worked out very well (and perhaps even exceptionally well) for Fairfax and its shareholders.

 

The return Fairfax earned will be comprised of the following items:

• Total amount paid by Fairfax for 80% stake in Eurolife
  • Aug 2016 = 40% = $181.0 million (€162.5)
  • 2017 to 2021 = 10% = amount paid? (My guess is about €40 million)
  • July 2021 = 30% = $142.7 million (€120.7)
• Dividends paid from Eurolife to Fairfax (see details below for payments made from 2016 to 2019)
  • Although we don't get the exact amount that went to Fairfax, we can assume it was a big number (compared to the amount they had invested). 
• Total amount paid to Fairfax for its 80% stake in Eurolife's life insurance business:
  • $944.7 million (€813).
• Value of 80% of Eurolife's P/C business which Fairfax continues to own.

  • At Dec 31, 2024, shareholders' equity (100%) = €66.1 million (US$68)

  • If we value the business at 1.5x BV = US$100 million. This puts Fairfax's ownership stake at about US$80 million.

Summary

 

Fairfax paid $181 million in August 2016 for 40% of Eurolife. Over the next three years it received large dividend payments from Eurolife (likely covering much of the initial purchase price). It invested about another $190 million from 2017 to 2021 to increase its ownership to 80%. In October 2025 it sold its 80% stake in Euolife's life insurance business for $944.7 million. It is retaining its 80% ownership position in Eurolife's P/C insurance business likely worth about $80 million. 

 

This is important to understand because it gives us the opportunity to evaluate the management team at Fairfax and their capital allocation abilities. 

 

Comments from Prem about the Eurolife purchase from Fairfax’s 2019AR. 

 

"Through the crisis in Greece, we acquired a gem in Eurolife, a Greek property and casualty and life insurance company that operates predominantly in Greece but also in Romania. Alex Sarrigeorgiou has run Eurolife since 2004, following Eurobank’s decision to grow its insurance business, and we acquired it with OMERS as our partner in 2016. Since our initial 40% purchase of Eurolife in 2016 for €163 million, Eurolife has earned €347 million and paid dividends of €298 million and shareholders’ equity has increased from €400 million to €720 million at the end of 2019 after the payment of dividends. This phenomenal performance was predominantly because Eurolife had a significant holding of Greek government bonds whose rates went from 8% to 1% during that time period while its non-life business had an average combined ratio of 72%. We currently own 50% and equity account for Eurolife but plan to buy the rest of OMERS’ shares in 2020."

 

Edited October 16, 2025 by Viking

[SafetyinNumbers]

3 hours ago, Viking said:

What return did Fairfax generate on its investment in Eurolife over the past 9 years? (The initial purchase closed August of 2016.) We will need to wait until Fairfax reports results to get the full picture. My guess is this investment has worked out very well (and perhaps even exceptionally well) for Fairfax and its shareholders.

 

The return Fairfax earned will be comprised of the following items:

• Total amount paid by Fairfax for 80% stake in Eurolife
  • Aug 2016 = 40% = $181.0 million (€162.5)
  • 2017 to 2021 = 10% = amount paid? (My guess is about €40 million)
  • July 2021 = 30% = $142.7 million (€120.7)
• Dividends paid from Eurolife to Fairfax (see details below for payments made from 2016 to 2019)
  • Although we don't get the exact amount that went to Fairfax, we can assume it was a big number (compared to the amount they had invested). 
• Total amount paid to Fairfax for its 80% stake in Eurolife's life insurance business:
  • $944.7 million (€813).
• Value of 80% of Eurolife's P/C business which Fairfax continues to own.

  • At Dec 31, 2024, shareholders' equity (100%) = €66.1 million (US$68)

  • If we value the business at 1.5x BV = US$100 million. This puts Fairfax's ownership stake at about US$80 million.

Summary

 

Fairfax paid $181 million in August 2016 for 40% of Eurolife. Over the next three years it received large dividend payments from Eurolife (likely covering much of the initial purchase price). It invested about another $190 million from 2017 to 2021 to increase its ownership to 80%. In October 2025 it sold its 80% stake in Euolife's life insurance business for $944.7 million. It is retaining its 80% ownership position in Eurolife's P/C insurance business likely worth about $80 million. 

 

This is important to understand because it gives us the opportunity to evaluate the management team at Fairfax and their capital allocation abilities. 

 

Comments from Prem about the Eurolife purchase from Fairfax’s 2019AR. 

 

"Through the crisis in Greece, we acquired a gem in Eurolife, a Greek property and casualty and life insurance company that operates predominantly in Greece but also in Romania. Alex Sarrigeorgiou has run Eurolife since 2004, following Eurobank’s decision to grow its insurance business, and we acquired it with OMERS as our partner in 2016. Since our initial 40% purchase of Eurolife in 2016 for €163 million, Eurolife has earned €347 million and paid dividends of €298 million and shareholders’ equity has increased from €400 million to €720 million at the end of 2019 after the payment of dividends. This phenomenal performance was predominantly because Eurolife had a significant holding of Greek government bonds whose rates went from 8% to 1% during that time period while its non-life business had an average combined ratio of 72%. We currently own 50% and equity account for Eurolife but plan to buy the rest of OMERS’ shares in 2020."

 

Thanks for this Viking. It seems like OMERS investment may have been in shares with a preferred rate of return much like how the minority interests for Allied World and Odyssey Re are funded which really boosted returns. 

[Txvestor]

On 10/14/2025 at 5:24 PM, Viking said:

 

Below are some of my key take-aways from Fairfax’s recently announced sale of its 80% stake in Eurolife’s life insurance business to Eurobank (who owns the other 20%) for proceeds of US$944.7 million. Fairfax will also buy 45% of Eurobank’s P/C insurance business in Cypress for $69 million. Both transactions are expected to close in Q1 2025.

 

1.) This is a very large transaction. Proceeds to Fairfax will be $876 million ($944.7m less $69m).

2.) This is a strategic transaction.

• Financial services in SE Europe is moving to an integrated model - banking, wealth management and insurance. Life insurance is a core business for Eurobank (buyer). Not for Fairfax (seller).
• Fairfax continues to own 80% of Eurolife’s P/C insurance business in Greece/Bulgaria. And expands into Cypress (buying 45% of Eurobank’s P/C insurance business in Cypress for $69 million).

3.) The price being paid is fair for both parties (P/BV = 1.45 x at Aug 31, 2025).

• This makes sense given Fairfax owns about 32.3% of Eurobank.

4.) This deal demonstrates that Fairfax is a good long term partner. When it needed cash back in 2016, Eurobank sold 80% of Eurolife to Fairfax. Now that it is flush with cash, the life insurance asset is being returned to Eurobank - where it has always belonged. This should help Fairfax with future deal flow.

5.) Fairfax’s use of minority partners has been brilliant. When Fairfax bought 80% of Eurolife in 2016 (for $361 million) they were also short on cash. They brought on OMERS as a short term partner, with each paying $180 million for 40% of Eurolife. Fairfax took out OMERS in 2021.

6.) This transaction allows Fairfax to successfully monetize another investment. Fairfax should book a large investment gain when the deal closes in Q1-2026.

• In very rough terms, Fairfax paid about $361 million in two instalments (2016 to 2021) for 80% of Eurolife. Fairfax has also received significant dividends from Eurolife. When the deal closes, Fairfax will be paid $944.7 million and will continue to own the legacy P/C insurance business of Eurolife.
• We will likely get more of the financial details when Fairfax reports Q3 results in a few weeks.

7.) This transaction will come as a surprise to investors/analysts. It shouldn’t. This is the third asset monetization of 2025 for Fairfax (after Sigma in Q1 and Praktiker in Q3). Each year Fairfax monetizes/revalues a number of assets - it is an important part of their business model.

• For 8 years Fairfax has been improving the quality of the assets (insurance and equities) on its balance sheet. With transactions like Eurolife, we are seeing the results. With much more to come.

8.) Over the past 5 years, Fairfax has been delivering a masterclass in capital allocation. This transaction is just the latest in a long list of accomplishments for the company. Welcome to ‘new Fairfax.’

What I liked most about this transaction is that they kept the P&C segments of  Eurolife's insurance business. Additionally they got further into the Southeast Europe P&C market with a nice 45% stake of Eurolife's P&C business in Cyprus(which mostly came to them via the Hellenic bank acquisition), and they have the future option to buyout the rest.

 

Now we don't know what the more recent underwriting margins/CRs were at the P&C insurance segment lately, nor what they are in Cyprus. But apparently P&C combined ratio was 60% at the time of Fairfax acquisition and Prem said 72% a few years later. So although smaller it contributed a much higher proportion of the profits. Life insurance underwriting is by definition a lot more of a tight affair. Margins are thin and underwriting a lot more predictable. Hence it is a lot more commoditized. I think 1.45X book value is a very good deal. Recently(last year) when NWLI (a generally conservatively managed Texas based life insurer) was sold, they sold for 0.73X book value.

 

On the other hand, 1.45 times book value for a well managed P&C insurer with solid underwriting margins is a terrific deal. 
I would really be curious to see what the underwriting volume and margins turn out to be for this Greece/Cyprus P&C division in particular going forward. It could very well be that this segment alone is worth the  ~$500M they would have put in altogether, ie 361M paid previously in 2016 and 2020 for 80% stake and the roughly $150M or so total valuation at which they are acquiring the Cypress P&C segment. 
 

PS: if I were to hazard a guess, I would say they combined P&C underwriting volume for both Greece and Cyprus would be in the €150-170M range with a 20+% underwriting margin. And eurobank reported a 13.2% growth in underwritten premiums for that division last year. Value that at whatever you think. 

Edited October 16, 2025 by Txvestor

[SafetyinNumbers]

6 hours ago, Haryana said:

Maybe someone in accounting could tell whether the Eurolife dividends to Fairfax will reduce its cost basis and increase the capital gains by same amount?

It would have but it’s consolidated and we know they sold for 1.45x BV so I think the gain is .45x book value. 

[petec]

19 hours ago, Viking said:

 

I agree. I have been harping for years about 'move to quality.' It's not just on the buy side (new purchases). It's also internal expectations within Fairfax - these have been raised. Holdings are expected to be profitable. To actually deliver a 15% return over time. That wasn't the case pre-2017 - back then it was more of a hope. And when they floundered (which happened often) they were constantly bailed out by mom and dad (Fairfax). 

 

There seems to a much, much better financial discipline within Fairfax these days. And it looks like this financial discipline is getting institutionalized / becoming part of the culture.

 

I just look at what was going on in 2015, 2016 and 2017 (and previous years). Since about 2018, everything has gotten much better. It is hard to put it into words.

 

Since 2018, compounding has been working its magic. Value is being created. Much more than is generally appreciated. That is likely why Fairfax is buying back a meaningful amount of stock at US$1,700/share. They see all the hidden value.  

 

Yes. For me, they've gone from "we are long term investors and are happy to wait for our 15% return" to "we are long term investors but we still work hard to ensure that our 15% return happens in a reasonable timeframe, and that we can realise it into book value so that we can see it".

[petec]

A very minor and pedantic point for which I apologise in advance. Cyprus is an island. Cypress is a tree! 

[petec]

13 hours ago, Viking said:

"Through the crisis in Greece, we acquired a gem in Eurolife, a Greek property and casualty and life insurance company that operates predominantly in Greece but also in Romania. Alex Sarrigeorgiou has run Eurolife since 2004, following Eurobank’s decision to grow its insurance business, and we acquired it with OMERS as our partner in 2016. Since our initial 40% purchase of Eurolife in 2016 for €163 million, Eurolife has earned €347 million and paid dividends of €298 million and shareholders’ equity has increased from €400 million to €720 million at the end of 2019 after the payment of dividends. This phenomenal performance was predominantly because Eurolife had a significant holding of Greek government bonds whose rates went from 8% to 1% during that time period while its non-life business had an average combined ratio of 72%. We currently own 50% and equity account for Eurolife but plan to buy the rest of OMERS’ shares in 2020."

 

I'd forgotten about this. Quite astonishing really. They bought a good business at a cheap price plus free levered upside optionality in Greek government bonds when they were trading cheap but the underlying problems were being resolved, and they did it partly with cheap funding from OMERS. An extraordinary deal.

[Hoodlum]

40 minutes ago, petec said:

 

I'd forgotten about this. Quite astonishing really. They bought a good business at a cheap price plus free levered upside optionality in Greek government bonds when they were trading cheap but the underlying problems were being resolved, and they did it partly with cheap funding from OMERS. An extraordinary deal.

It is interesting to see how OMERS has been involved with Fairfax investments over the past 10 years.  There was the initial Fairfax India IPO, Allied acquisition and the $1B share purchase in 2021.   I am sure there are other involvements that I am missing. Fairfax must have a very good relationship with someone at OMERS. 

[hardcorevalue]

Stock back to $2400, hard to not see big value here unless rates go to zero for a long while. 

[Viking]

1 hour ago, petec said:

A very minor and pedantic point for which I apologise in advance. Cyprus is an island. Cypress is a tree! 

I made the same error when I posted on Eurobank's takeout of Hellenic Bank. At least I am consistent. Thanks for pointing this out. 

[LC]

1 hour ago, Hoodlum said:

Fairfax must have a very good relationship with someone at OMERS

 

Prem has worked some magic here I think.

[dartmonkey]

15 hours ago, djokovic1 said:

@Hamburg Investor This is the way to think about Fairfax's compounding engine:

 

(1-combined ratio) * (Net premiums written / average book equity) + Investment returns * (Investment portfolio / average book equity) - (central and interest costs) / average equity gives you an pre-tax ROE.

 

Now the net premiums written / average book equity have historically been ~100%. So the ROE from your underwriting will be (1-combined ratio) or underwriting profit as they are no leverage on this side of returns, unlike the investment book. I assume 5% forward looking.

 

But the majority of your returns come from your investing book because the investment portfolio / avg. book equity is ~3:1 (and has been around there for the last 10 years).

The below is an example of their compounding engine using the logic above with some assumptions roughly aligning with current numbers. What that shows you is the underwriting profit is not a big driver of ROE it's mostly the investment returns (20% vs 80%). That being said you always want to see them being prudent and have a positive underwriting profit (and a negative cost of float) which they have consistently achieved over the last 10 years.

 

Happy to answer anything else on this, as when I made sense of this by looking at their last 10 year returns, everything clicked for me.

 

August 23, SafetyinNumbers posted a table from RBC Capital Markets (made in June 2025) with a very similar logic, based on how much leverage is involved as a multiple of equity:

 

They get a higher ROE (18.8% instead of 15.4%), largely because they are assuming a higher CR (93%), so 7.0% from underwriting, leveraged 1.1x, so 7.8%, whereas djokovic1's calculation gives 5.0% from underwriting, not leveraged (i.e. leverage = 1x)%, and RBC are calling this 'operating ROE', i.e. not counting the cost of headquarters (around 3%). 

 

[Crip1]

1 hour ago, Hoodlum said:

It is interesting to see how OMERS has been involved with Fairfax investments over the past 10 years.  There was the initial Fairfax India IPO, Allied acquisition and the $1B share purchase in 2021.   I am sure there are other involvements that I am missing. Fairfax must have a very good relationship with someone at OMERS. 

Symbiotic relationship. FFH gets access to capital that allows them to make deals that otherwise they couldn't, or that would put them in a more precarious financial situation than is prudent. OMERS gets a healthy return, relatively low-risk, from a trusted partner. 

 

-Crip

[Hoodlum]

2 hours ago, hardcorevalue said:

Stock back to $2400, hard to not see big value here unless rates go to zero for a long while. 

 

Travelers dropped 3% this morning after their Q3 report.  Travelers mentioned a softening on Property and pulling back on some renewals due to pricing.   All insurance/reinsurance are down today.  The share buyback opportunity continues for Fairfax.

 

Edited October 16, 2025 by Hoodlum

[cwericb]

2 hours ago, hardcorevalue said:

Stock back to $2400, hard to not see big value here unless rates go to zero for a long while. 

 

Now down to $2366, over a $150 drop from high the day before yesterday. Did I miss something?

[Hoodlum]

8 minutes ago, cwericb said:

 

Now down to $2366, over a $150 drop from high the day before yesterday. Did I miss something?

 

Likely due to market softening.  BRK is down 7% over past week, CHUBB down 6%.  Also, a general lack of understanding of Fairfax earning during a softer market.  Then you have the knee jerk reactions that come into play as well.

Edited October 16, 2025 by Hoodlum

[mananainvesting]

Anyone knows what's happening here? Would hate for something like this ruin Fairfax's long term reputation. I am long Fairfax, and have no position in Avante.  I have a general disdain for anyone screwing over minority shareholders. 

 

https://x.com/ChapTwelveCap/status/1978598470664487157