Fairfax 2025

[Viking]

2 hours ago, Hoodlum said:

Eurobank sold it's 8.58% share of remaining Demetra assets for €27M, which is help offset the purchase of the Hellenic shares from Demetra.  The completion of the Hellenic share acquisition from Demetra is expected to close Feb 10 and the final closing including squeeze of remaining share holders by May.  Hellenic Bank acquisition of CNP Assurances is also expected to close in Q1.

 

https://cyprus-mail.com/2025/01/17/eurobank-to-finalise-hellenic-bank-acquisition-by-may

 

https://knews.kathimerini.com.cy/en/business/eurobank-sells-€27m-stake-in-demetra-holdings

 

After another big dividend increase this summer, we will likely see a much higher valuation for Eurobank.

 

@Hoodlum The Hellenic Bank CEO presented at a bank conference (material below is from your link). It looks like there are lots of opportunities to grow top line and bottom line at Hellenic Bank - it will be a multi-year process.

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Meanwhile, Hellenic Bank announced this week that the acquisition of CNP Assurances will also be finalised in the first quarter of 2025. 

 

This development, the bank stated, will establish it as “a leading financial group with a strong presence in both the banking and insurance sectors in Cyprus”.

 

“Customer service, financing growth, completing the merger, and expanding operations remain our priorities for 2025,” Louis said. 

 

What is more, he pointed out that Cyprus would serve as the group’s headquarters for expansion into the East, “where wealth is being created”. 

 

Louis added that the goal is to “promote Cyprus as an attractive base for foreign investors“.

 

Louis also spoke about the importance of strengthening trust between banks and society. 

 

“Despite the criticism they face, banks support society and development, listening to the needs of the state and investing tangibly in the country’s future,” he said.

 

“The banks are supporting and financing Cypriot businesses and households, with Hellenic Bank’s total lending in 2024 reaching €1.1 billion,” Louis added. 

However, he cautioned that lending now takes place under “a much stricter supervisory framework and demanding criteria to avoid past mistakes”.

Furthermore, Louis provided commentary on the role that banks play in attracting investors.

 

“The services sector is a significant asset that we must preserve and strengthen by ensuring stability in our tax and legal framework, which should not create uncertainty for potential investors,” he stated.

[Viking]

Just now, Viking said:

 

@Hoodlum The Hellenic Bank CEO presented at a bank conference (material below is from your link). It looks like there are lots of opportunities to grow top line and bottom line at Hellenic Bank - it will be a multi-year process.

----------

Meanwhile, Hellenic Bank announced this week that the acquisition of CNP Assurances will also be finalised in the first quarter of 2025. 

 

This development, the bank stated, will establish it as “a leading financial group with a strong presence in both the banking and insurance sectors in Cyprus”.

 

“Customer service, financing growth, completing the merger, and expanding operations remain our priorities for 2025,” Louis said. 

 

What is more, he pointed out that Cyprus would serve as the group’s headquarters for expansion into the East, “where wealth is being created”. 

 

Louis added that the goal is to “promote Cyprus as an attractive base for foreign investors“.

 

Louis also spoke about the importance of strengthening trust between banks and society. 

 

“Despite the criticism they face, banks support society and development, listening to the needs of the state and investing tangibly in the country’s future,” he said.

 

“The banks are supporting and financing Cypriot businesses and households, with Hellenic Bank’s total lending in 2024 reaching €1.1 billion,” Louis added. 

However, he cautioned that lending now takes place under “a much stricter supervisory framework and demanding criteria to avoid past mistakes”.

Furthermore, Louis provided commentary on the role that banks play in attracting investors.

 

“The services sector is a significant asset that we must preserve and strengthen by ensuring stability in our tax and legal framework, which should not create uncertainty for potential investors,” he stated.

 

Mr. Market is starting to warm to Eurobank's purchase of Hellenic Bank. Fairfax's position in Eurobank has increase $336 million 17 days into 2025. Yes, early days. But it is a positive development. 

 

Fairfax's carrying value for Eurobank will likely come in at around $2.5 billion at December 31, 2024. That would put excess of FV over CV at about $750 million. This is economic value that is being created by Fairfax that is not being captured in accounting value: EPS, BV or ROE. 

 

Fairfax received a dividend payment from Eurobank of $126 million in 2024. Because Eurobank is an associated holding:

• This payment did not show up in 'interest and dividends' for Fairfax.
• Fairfax's carrying value for Eurobank was reduced by $126 million.

Eurobank's dividend payment caused the excess of FV to CV to increase. 

 

[Maverick47]

2 hours ago, Viking said:

Fairfax received a dividend payment from Eurobank of $126 million in 2024. Because Eurobank is an associated holding:

• This payment did not show up in 'interest and dividends' for Fairfax.
• Fairfax's carrying value for Eurobank was reduced by $126 million.

Eurobank's dividend payment caused the excess of FV to CV to increase. 

@Viking  Really appreciate your sharing the above.  I try my best to be aware of the impact of accounting nuances and how they might in some cases overstate or understate financial realities, but am more comfortable with GAAP and less so with IFRS.  I have to say that I wasn’t aware of how dividends from associates affected carrying values.

 

By the way, thanks for the two- part Top 10 list for 2024 earlier in this thread.  When I saw them I said to myself that the only thing better than finding a new long form post from @Viking is finding two new long form posts…

[Viking]

45 minutes ago, Maverick47 said:

@Viking  Really appreciate your sharing the above.  I try my best to be aware of the impact of accounting nuances and how they might in some cases overstate or understate financial realities, but am more comfortable with GAAP and less so with IFRS.  I have to say that I wasn’t aware of how dividends from associates affected carrying values.

 

By the way, thanks for the two- part Top 10 list for 2024 earlier in this thread.  When I saw them I said to myself that the only thing better than finding a new long form post from @Viking is finding two new long form posts…

 

@Maverick47 , as I have said many times before, I am not an accountant. Like you and others on this board, I am simply trying to keep learning so I can better understand the performance and value the company. Sometimes I get it wrong - so I would really appreciate other board members letting me know when I make a mistake. (I have thick skin... what is important other than me is getting things right.)

 

As we keep peeling the onion back another layer there are sometimes accounting peculiarities that become useful/helpful to understand.

 

One other nuance for associate holdings that has been mentioned on the board before is there is a one quarter lag in when an associate holding reports and when Fairfax reports. Fairfax's reporting (share of profit of associates) is one quarter behind what is actually happening at the associate holding. Now I am not sure if this is true for all associate holdings but I think it is the case with Eurobank and Poseidon...  

 

PS: I am planning on digging a little more into the insurance side of Fairfax (sometime the next month or so). I know that is your specialty so I will be looking for your feedback/input  

Edited 2 hours ago by Viking

[dartmonkey]

5 hours ago, Viking said:

 

Mr. Market is starting to warm to Eurobank's purchase of Hellenic Bank. Fairfax's position in Eurobank has increase $336 million 17 days into 2025. Yes, early days. But it is a positive development. 

 

Fairfax's carrying value for Eurobank will likely come in at around $2.5 billion at December 31, 2024. That would put excess of FV over CV at about $750 million. This is economic value that is being created by Fairfax that is not being captured in accounting value: EPS, BV or ROE. 

 

Fairfax received a dividend payment from Eurobank of $126 million in 2024. Because Eurobank is an associated holding:

• This payment did not show up in 'interest and dividends' for Fairfax.
• Fairfax's carrying value for Eurobank was reduced by $126 million.

Eurobank's dividend payment caused the excess of FV to CV to increase. 

 

 

I've just been trying to figure out the logic of dropping the carrying value based on receiving dividends, and based also on Eurobank's earnings. From Fairfax's Q3 report, I see that Carrying Value went from $2099.5 at year end 2023 to $2385.2 on Sept 30, 2024, the number in your table, and they also mention that in Q3 Fairfax received dividends worth $127.9m from Eurobank (slightly different from the number in your table.) Also, Fairfax's share of Eurobank's earnings in Q1-Q3 was $343.7m. There are also exchange rate changes in USD:EUR, with the USD up about 1% over the same time period.

Can anyone explain in simple terms how Fairfax might have updated the carrying value of their Eurobank stake? We non-accountants thank you in advance.