Q3 - 2024

[Luke]

Looking forward to this quarter's earnings season. 

[SafetyinNumbers]

33 minutes ago, Luke said:

Looking forward to this quarter's earnings season. 

Consensus seems a bit low for Q3 and maybe a bit high now for Q4 post Milton although there are the special Stelco and Peak Achievement gains expected in Q4 to offset. I also expect reserve releases to step up now that we are lapping the hard market which began ~4 years ago. 
 

 

 

[A_Hamilton]

On 10/12/2024 at 10:17 AM, SafetyinNumbers said:

Consensus seems a bit low for Q3 and maybe a bit high now for Q4 post Milton although there are the special Stelco and Peak Achievement gains expected in Q4 to offset. I also expect reserve releases to step up now that we are lapping the hard market which began ~4 years ago. 
 

 

 

I'm not sure the hard market is leading to large redundancy. It seems inflation and social inflation are moving just as much as price. I think pricing is high in part because it is a hard market, but in part because inflation/litigation/to a lesser extent claims frequency are up.

[SafetyinNumbers]

51 minutes ago, A_Hamilton said:

I'm not sure the hard market is leading to large redundancy. It seems inflation and social inflation are moving just as much as price. I think pricing is high in part because it is a hard market, but in part because inflation/litigation/to a lesser extent claims frequency are up.

That really depends if their assumptions were the same as yours when they wrote that business 4 years ago. We’ll know soon enough. 

[A_Hamilton]

41 minutes ago, SafetyinNumbers said:

That really depends if their assumptions were the same as yours when they wrote that business 4 years ago. We’ll know soon enough. 

I just wouldn't get too excited about it. Every major rating agency and major insurer has spoken about casualty inflation / some with outright deficiency pointed out, others like FFH taking redundancy from other lines and strengthening in casualty. 

 

https://www.carriermanagement.com/news/2024/05/08/261925.htm

 

https://www.insurancebusinessmag.com/us/news/breaking-news/casualty-comes-back-to-bite-476388.aspx

 

 

[SafetyinNumbers]

5 hours ago, A_Hamilton said:

I just wouldn't get too excited about it. Every major rating agency and major insurer has spoken about casualty inflation / some with outright deficiency pointed out, others like FFH taking redundancy from other lines and strengthening in casualty. 

 

https://www.carriermanagement.com/news/2024/05/08/261925.htm

 

https://www.insurancebusinessmag.com/us/news/breaking-news/casualty-comes-back-to-bite-476388.aspx

 

 

I was thinking going from 1-2 points of reserve releases to 3-4 points.

[Haryana]

"2024 third quarter results, which will be announced after the close of markets on Thursday, October 31"

 

https://www.fairfax.ca/press-releases/fairfax-announces-conference-call-2/

[TwoCitiesCapital]

Lol

 

Is it the deteriorating fundamentals OR Q3 earnings that is gonna propel this higher?

[dartmonkey]

The title is a bit misleading - it is the consensus that is deteriorating, not the fundamentals. And it would make sense that, with interest rates coming down, the consensus view of the future might deteriorate. The question is, is that anticipated deterioration already in the share price, or not? Their finding suggests that analysts' worries tend to overcorrect the share price leading to short term gains (in the following month, singular).

 

Most of us probably don't care very much what the price does in the next month, so this finding is not really relevant. Decreasing interest rates will be a brake on interest income from current investments, but there is no reason to think that there will be any decrease in earnings from other sources like underwriting and earnings from consolidated companies with >50% ownership) like Recipe, Grivalia, Sleep Country), in associates ($8b in 20-50% stakes like Eurobank, Poseidon and Quess) and the in common and preferred stock holdings (~$10b in <20% stakes like Commercial International Bank, Occidental Petroleum, Mytilineos and Kennedy Wilson). And as the ~$4b in earnings for the next few years roll in, a lot of them will be going to increase the $44b bond portfolio, too, so interest rates may well be lower in a few years, but those rates will be applied to a much larger fixed income portfolio, so lower rates in a few years don't even necessarily mean lower total interest income.

[Dinar]

Chubb just reported.  Results seem very good to me.

[Mystery Guest]

This what you get with auto generated AI news. 

each shift in a single stat generates a comment not an analysis 

 

Cheers 

[SafetyinNumbers]

2 hours ago, dartmonkey said:

The title is a bit misleading - it is the consensus that is deteriorating, not the fundamentals. And it would make sense that, with interest rates coming down, the consensus view of the future might deteriorate. The question is, is that anticipated deterioration already in the share price, or not? Their finding suggests that analysts' worries tend to overcorrect the share price leading to short term gains (in the following month, singular).

 

Most of us probably don't care very much what the price does in the next month, so this finding is not really relevant. Decreasing interest rates will be a brake on interest income from current investments, but there is no reason to think that there will be any decrease in earnings from other sources like underwriting and earnings from consolidated companies with >50% ownership) like Recipe, Grivalia, Sleep Country), in associates ($8b in 20-50% stakes like Eurobank, Poseidon and Quess) and the in common and preferred stock holdings (~$10b in <20% stakes like Commercial International Bank, Occidental Petroleum, Mytilineos and Kennedy Wilson). And as the ~$4b in earnings for the next few years roll in, a lot of them will be going to increase the $44b bond portfolio, too, so interest rates may well be lower in a few years, but those rates will be applied to a much larger fixed income portfolio, so lower rates in a few years don't even necessarily mean lower total interest income.

Consensus FTM EPS went up first and then retraced a bit. I wonder if that’s all it’s referring to. I think the stock will rally after earnings as the index arbs will be more aggressive after that risk is out of the way.