Fairfax 2025

[Santayana]

22 minutes ago, djokovic1 said:

No that’s incorrect. I don’t know where rates will go next.

 

You lock in current rates because you can and they are so good for shareholders, you don’t need to worry about where they go next. 
 

Again a simple question to you, would you prefer a guaranteed 15-20% return for 2 years or 4 years?

Why not 10 years or 20 years if you're going to look at it like that?

[Viking]

4 hours ago, petec said:

 

What are you putting in this bucket?

One way to estimate the increase in intrinsic value in a given year at Fairfax is to sum three buckets:

1. Reported EPS
2. The change in excess of fair value over carrying value for associate and consolidated holdings (after tax). 
3. The change (increase in value) in everything else not captured in 1 and 2 (after tax).

The first two buckets are pretty straight forward. Fairfax tells us what these amounts are when they report their financial results. 
 

The third bucket is not straight forward as Fairfax doesn’t help us (very much). We tend to find out about this bucket prospectively - after Fairfax monetizes and asset (sells or revalues it). Some examples:

• The recent sale of Fairfax’s 80% stake in Eurolife’s life insurance business for $944.7 million. Speculation is it could result in an investment gain of about $300 million when it closes in Q1, 2025 (about $15/share pretax).
• BIAL. How much has this airport increased in value in 2025? Has that been captured in buckets 1.) or 2.) above? 
• Ki Insurance. How much has Ki increased in value in 2025? Has that been captured in buckets 1.) or 2.) above? 
• Poseidon. This is another big holding for Fairfax. I don’t think its carrying value has changed much over the past 3 years. Does this make sense? 

I could go on. There are lots of examples of value that is likely building at Fairfax each year that is not captured in buckets 1.) or 2.) above. 
 

An important change:  This was happening at Fairfax in the past. But it was primarily in the P/C insurance side of the business. Not the equity holdings (for reasons we have discussed many times before). That dynamic changed beginning (roughly) about 5 years ago. Now it is happening both with the P/C insurance and the equity holdings. 
 

Compounding:  Compounding doesn’t care if the value is known to investors or not. Or to put it another way - ‘hidden value’ will compound over time just like ‘known value.’ This is important. A big unknown number (if my thesis is correct) is quietly getting much bigger.
 

What if I am completely wrong?  Investors ignore buckets 2.) and 3.) when they analyze/value Fairfax. So it is not built into the stock price. So there is no downside to my thesis (if I am wrong)… only upside (if I am right). 

 

Edited October 21, 2025 by Viking

[djokovic1]

18 minutes ago, Santayana said:

Why not 10 years or 20 years if you're going to look at it like that?

Because you need liquidity on the assets side to pay for your liabilities. So with that constraint your asset duration has to be less than liability duration.

[Santayana]

2 hours ago, djokovic1 said:

Because you need liquidity on the assets side to pay for your liabilities. So with that constraint your asset duration has to be less than liability duration.

Exactly, it’s all about liquidity.

[Parsad]

6 hours ago, value_hunter said:

I noticed this happened several times. When Fairfax stock price reached all time high, it quickly reverse, followed by a few days big drop. See last Aug and this April.  What's mentality of the seller for this kinds of behavior? I understand the first two days maybe profit taking. But why keep selling in day 3 and 4? Are they changed their view to pessimistic right after reach ATH?

 

If you plan on trading in and out...it might be of concern.  If you don't plan on selling for 20+ years...then who cares about the selling.  In other words, if you are a long-term shareholder, ignore the short-term noise.  Cheers!

[djokovic1]

3 hours ago, Santayana said:

Exactly, it’s all about liquidity.

???
You have to match your liquidity needs while maximizing ROE.

Liquidity is not the reason for their current posture (and Ben confirmed as much)

[hasilp89]

Similar to Broker updates WRB call seemed pretty negative on property pricing and E&S. Fairfax is very diversified but is it safe to assume premium growth slowed in Q2?

 

"And that is -- I think the past 90 days is just a continuation of clear evidence that the insurance industry is still a cyclical industry. And for whatever the reason may be, some would say, fear and greed. The industry continues to seemingly make an art out of self-sabotage when it comes to its own success."

[dartmonkey]

55 minutes ago, hasilp89 said:

I think the past 90 days is just a continuation of clear evidence that the insurance industry is still a cyclical industry. And for whatever the reason may be, some would say, fear and greed. The industry continues to seemingly make an art out of self-sabotage when it comes to its own success."

Yes capitalism is a bummer, with all that conpetition. Just when things were going nicely, with combined ratios in the low 90s, someone has to go and start offering lower premiums...

[Hoodlum]

23 minutes ago, dartmonkey said:

Yes capitalism is a bummer, with all that conpetition. Just when things were going nicely, with combined ratios in the low 90s, someone has to go and start offering lower premiums...

Unfortunately, those trying to sustain/grow their market share now, will likely regret that decision with the next large Cat event.  It would seem that the Cat Bonds are helping to drive down the pricing as well.  I have been concerned about how well funded these instruments would be during a large Cat event, as there seems to be very little controls in place for this.

 

Fairfax will continue to buy back as many share as possible at this price.  

https://www.bloomberg.com/news/articles/2025-10-21/catastrophe-bonds-huge-market-gains-put-reinsurers-on-backfoot

[Crip1]

1 hour ago, hasilp89 said:

Similar to Broker updates WRB call seemed pretty negative on property pricing and E&S. Fairfax is very diversified but is it safe to assume premium growth slowed in Q2?

 

"And that is -- I think the past 90 days is just a continuation of clear evidence that the insurance industry is still a cyclical industry. And for whatever the reason may be, some would say, fear and greed. The industry continues to seemingly make an art out of self-sabotage when it comes to its own success."

I mean, we knew this was coming, and it's not a "one and done" type of thing...this looks to be the beginning of a multi-year development. So, what's that mean for Fairfax?

* One leg of profitability, Underwriting Income, is going to be reduced, potentially to close to zero. Combined ratios may still be in the 95-98 range, but owners need to be prepared for 100, plus or minus a point or two. And premium growth will diminish, or potentially reverse. 

* The other two legs, Investment Portfolio and Associates/Owned Businesses, will not be impacted by the turn of the insurance cycle. They will be impacted by the overall economy, interest rates and the individual business's performance. This is an area where the investment leverage becomes a substantial strength.

* "When the tide goes out, you see who's been swimming naked". There is zero doubt that there will be companies swimming butt-naked out there. The extent of this is undeterminable at this point. But to the extent that Fairfax's "other two legs" perform at least acceptably, Fairfax will be poised to pounce on the market once it turns grabbing market share from naked swimmers...but we're talking years down the road.

 

All in all, this is going to be short-term pain (a few years) to recognize long-term gain (a decade or so). The amplitude of the pain/gain is under management's control. I'm not remotely tempted to sell a single share. Patience.

 

-Crip

 

[gfp]

I tried to assign a task to ChatGPT and it broke the damn thing

[Junior R]

Fairfax owns 

14,899,273

 of CLF shares it will be really interesting to see if they sold this Yesterday during the comment on rare earth mining ...that would be 200m if they did to allocate to other investments 

[hasilp89]

54 minutes ago, Crip1 said:

I mean, we knew this was coming, and it's not a "one and done" type of thing...this looks to be the beginning of a multi-year development. So, what's that mean for Fairfax?

* One leg of profitability, Underwriting Income, is going to be reduced, potentially to close to zero. Combined ratios may still be in the 95-98 range, but owners need to be prepared for 100, plus or minus a point or two. And premium growth will diminish, or potentially reverse. 

* The other two legs, Investment Portfolio and Associates/Owned Businesses, will not be impacted by the turn of the insurance cycle. They will be impacted by the overall economy, interest rates and the individual business's performance. This is an area where the investment leverage becomes a substantial strength.

* "When the tide goes out, you see who's been swimming naked". There is zero doubt that there will be companies swimming butt-naked out there. The extent of this is undeterminable at this point. But to the extent that Fairfax's "other two legs" perform at least acceptably, Fairfax will be poised to pounce on the market once it turns grabbing market share from naked swimmers...but we're talking years down the road.

 

All in all, this is going to be short-term pain (a few years) to recognize long-term gain (a decade or so). The amplitude of the pain/gain is under management's control. I'm not remotely tempted to sell a single share. Patience.

 

-Crip

 

Thanks Crip. Hard to disagree with that and appreciate the thoughtful insight.

[Hektor]

53 minutes ago, gfp said:

I tried to assign a task to ChatGPT and it broke the damn thing

Stopped "thinking" is the funniest in this post 

[SafetyinNumbers]

1 hour ago, Crip1 said:

I mean, we knew this was coming, and it's not a "one and done" type of thing...this looks to be the beginning of a multi-year development. So, what's that mean for Fairfax?

* One leg of profitability, Underwriting Income, is going to be reduced, potentially to close to zero. Combined ratios may still be in the 95-98 range, but owners need to be prepared for 100, plus or minus a point or two. And premium growth will diminish, or potentially reverse. 

* The other two legs, Investment Portfolio and Associates/Owned Businesses, will not be impacted by the turn of the insurance cycle. They will be impacted by the overall economy, interest rates and the individual business's performance. This is an area where the investment leverage becomes a substantial strength.

* "When the tide goes out, you see who's been swimming naked". There is zero doubt that there will be companies swimming butt-naked out there. The extent of this is undeterminable at this point. But to the extent that Fairfax's "other two legs" perform at least acceptably, Fairfax will be poised to pounce on the market once it turns grabbing market share from naked swimmers...but we're talking years down the road.

 

All in all, this is going to be short-term pain (a few years) to recognize long-term gain (a decade or so). The amplitude of the pain/gain is under management's control. I'm not remotely tempted to sell a single share. Patience.

 

-Crip

 

Very much disagree with the conclusion that underwriting income is going to be reduced. Premium and float growth will be reduced as we will write less business. I expect combined ratios to actually go lower over the next 4 years as reserves are released from the hard market over the past 4 years.

[Tommm50]

24 minutes ago, SafetyinNumbers said:

Very much disagree with the conclusion that underwriting income is going to be reduced. Premium and float growth will be reduced as we will write less business. I expect combined ratios to actually go lower over the next 4 years as reserves are released from the hard market over the past 4 years.

Also note Fairfax has significant non-US insurance operations which do not dance to the same music as the (albeit substantial) US market. 

[dartmonkey]

12 hours ago, Parsad said:

18 hours ago, value_hunter said:

I noticed this happened several times. When Fairfax stock price reached all time high, it quickly reverse, followed by a few days big drop. See last Aug and this April.  What's mentality of the seller for this kinds of behavior? I understand the first two days maybe profit taking. But why keep selling in day 3 and 4? Are they changed their view to pessimistic right after reach ATH?

 

If you plan on trading in and out...it might be of concern.  If you don't plan on selling for 20+ years...then who cares about the selling.  In other words, if you are a long-term shareholder, ignore the short-term noise.  Cheers!

What Parsad said is right, but in addition, I think the question of whether the stock always retreats after an all-time high (ATH) is because there is a built-in bias in the post-hoc question of what happens after the ATH.

 

For instance, the highest closing price of FRFHF in the last year (from Oct 21 2024 to Oct 20, 2025) (which is also the highest price ever) was on June 24, when it closed at $1825. It has obviously retreated from there, but of course the stock can not be higher today than its ATH, or else today's price would be the ATH.

 

A better definition of an ATH is the highest level it had obtained thus far. If we want to know whether people switch to pessimism when the stock hits an ATH, we just have to look at whether the stock price goes up or down, in the days following these ATHs, defined prospectively.  Looking at the closing prices over the last 5 years, there have been 1505 closing prices, going from Oct 21 2020 at $285) to yesterday's Oct 20 close at $1650, which means the stock is up 479%, or up 534% if you adjust for the dividend (45% annualized). The average day-to-day gain was $0.91. Along the way, there were 128 days that closed at up-to-then highs, with the last one of course on June 24 2025 at $1825.

 

In the day after these 128 highs, there does seem to be some drop-off, but it is small, and completely reversed by day 5. On the day after an ATH, the average price change was -$0.21. On day 2, it was another -$0.45, day 3 was another -$0.39, but then it's over, with days 4, 5, 6, 7 and 8 and posting changes of +$0.78, +$2.53(!), +$1.13, -$0.25, and +$0.32, with gains by ATH+8 totalling $3.56, not quite as high as you would expect on average (8x the average $0.91 gain) but they are not negative. In other words, instead of getting the average $0.91 gain, we got small losses on days 1, 2 and 3, and then a modest recoveries on 4 of the next 5 days.

 

I wouldn't put too much weight on these calculations: 128 data points is not a lot to go by. Don't expect the big day 5 gain to be replicated in the next 5 years, for instance (athough I willl be looking out for it!) The important point is that the losses in the few days after an ATH are small and only last a few days. Hopefully we will see some confirmation of this soon.

[Junior R]

another interesting to see will be if any of the automated purchases at Fairfax triggered during blackout Window

[Hoodlum]

I looked at other reinsurance stocks in the US and they are either flat or down at most 5% in case of CHUBB over the past week.  FFH is down 10% during the same past week.  It is interesting that there seems to be more panic with FFH.  The USD to CAD is off less than 0.2% during that time, so a non-factor.  

 

I said that I would not buy more FFH, but this is becoming tempting.  I am sure Fairfax is buying as much as they can.
 

Edited October 21, 2025 by Hoodlum

[Junior R]

16 minutes ago, dartmonkey said:

What Parsad said is right, but in addition, I think the question of whether the stock always retreats after an all-time high (ATH) is because there is a built-in bias in the post-hoc question of what happens after the ATH.

 

For instance, the highest closing price of FRFHF in the last year (from Oct 21 2024 to Oct 20, 2025) (which is also the highest price ever) was on June 24, when it closed at $1825. It has obviously retreated from there, but of course the stock can not be higher today than its ATH, or else today's price would be the ATH.

 

A better definition of an ATH is the highest level it had obtained thus far. If we want to know whether people switch to pessimism when the stock hits an ATH, we just have to look at whether the stock price goes up or down, in the days following these ATHs, defined prospectively.  Looking at the closing prices over the last 5 years, there have been 1505 closing prices, going from Oct 21 2020 at $285) to yesterday's Oct 20 close at $1650, which means the stock is up 479%, or up 534% if you adjust for the dividend (45% annualized). The average day-to-day gain was $0.91. Along the way, there were 128 days that closed at up-to-then highs, with the last one of course on June 24 2025 at $1825.

 

In the day after these 128 highs, there does seem to be some drop-off, but it is small, and completely reversed by day 5. On the day after an ATH, the average price change was -$0.21. On day 2, it was another -$0.45, day 3 was another -$0.39, but then it's over, with days 4, 5, 6, 7 and 8 and posting changes of +$0.78, +$2.53(!), +$1.13, -$0.25, and +$0.32, with gains by ATH+8 totalling $3.56, not quite as high as you would expect on average (8x the average $0.91 gain) but they are not negative. In other words, instead of getting the average $0.91 gain, we got small losses on days 1, 2 and 3, and then a modest recoveries on 4 of the next 5 days.

 

I wouldn't put too much weight on these calculations: 128 data points is not a lot to go by. Don't expect the big day 5 gain to be replicated in the next 5 years, for instance (athough I willl be looking out for it!) The important point is that the losses in the few days after an ATH are small and only last a few days. Hopefully we will see some confirmation of this soon.

But I think this was different trigger was Progressive and Travelers earnings 

[Junior R]

1 minute ago, Hoodlum said:

I looked at other reinsurance stocks in the US and they are either flat or down at most 5% in case of CHUBB over the past week.  FFH is down 10% during the same past week.  It is interesting that there seems to be more panic with FFH.  The USD to CAD is off less than 0.2% during that time, so a non-factor.  

 

I said that I would not buy more FFH, but this is becoming tempting.  I am sure Fairfax is buying as much as they can.

Blackout period so its only the automated purchases based on what was set before until earnings 

[hasilp89]

That makes sense in theory but is there anyway to validate it or is it anecdotal? Reserve releases have increasingly become a greater share of U/W Profit for YTD which is a function of Q1 wildfires. How can you know what amount of reserves can be released? With property pricing coming down (Some additional comments from WRB and RYAN) wouldn't flat premium volumes and a single CAT event push combined ratios above 100? 

 

I understand this is all part of the cycle, Short term trends and not a reason to panic (I am not selling shares) but i think some skepticism about the range of near outcomes is warranted.

 

 

 

WRB - The reinsurance marketplace, clearly, the property market, particularly property cat, that bloom is off the rose. From our perspective, there's still margin in the business. We'll see how long that lasts. It's without a doubt eroding. And to that end, you can feel the growing groundswell, but frankly, it's palpable around 1/1 and the appetite that's going to be coming from the reinsurance market. So we'll have to see what 1/1 holds.

 

 

RYAN - We saw a rapid decline in property pricing as the quarter progressed, especially in the month of June. We expect this significantly soft pricing environment to continue at least in the near term, which drives our expectation for property to decline modestly for the full year. Despite this rapid decline in property insurance pricing, flow into the channel remains strong. And we took share, won head-to-head against our competitors and had another quarter of high renewal retention.

 

RYAN - I would just add that our property submission flow remains very strong. Our retention levels are high. But the month of June, the rate deceleration accelerated. Last quarter, we saw a 10% to 20% reductions on average. This quarter, 20% to 30%. So June really accelerated. We're continuing to win head-to-head in the field. 

[Hoodlum]

3 minutes ago, Junior R said:

Blackout period so its only the automated purchases based on what was set before until earnings 

 

It would depend on the instructions given.   They could have instructed their broker to buy as much as possible based on volume, once the price dropped below a certain threshold.  

"Such purchases will be determined by the broker in its sole discretion based on parameters established by Fairfax prior to commencement of the applicable black-out period in accordance with the terms of the ASPP and applicable TSX rules. 

[mananainvesting]

1 hour ago, Hektor said:

Stopped "thinking" is the funniest in this post 

 I got this from Perplexity. 

[hasilp89]

2 minutes ago, mananainvesting said:

 I got this from Perplexity. 

what's the point? That BRK price has gone up in Hard and Soft Markets? Could argue that BRK became more and more valuable as U/W profits declined as a % of total profit?