Fairfax 2025

[Parsad]

4 minutes ago, gfp said:

poor old coot is so out of it he doesn't know what day thanksgiving is

 

LOL!  Cheers!

[Munger_Disciple]

3 minutes ago, gfp said:

poor old coot is so out of it he doesn't know what day thanksgiving is

 

Bloomberg on the WSJ report: https://archive.ph/t0Hwb

Did Bloomberg just quote you @gfp?

[djokovic1]

Markel results also solid, especially on the underwriting front. CR showed a big improvement, 3% points attributed to a light CAT quarter.

[gfp]

13 hours ago, Munger_Disciple said:

Did Bloomberg just quote you @gfp?

 

No way man.  Can you imagine me running something called "Hudson Value Partners" ?  

[Crip1]

5 hours ago, djokovic1 said:

Markel results also solid, especially on the underwriting front. CR showed a big improvement, 3% points attributed to a light CAT quarter.

Premium growth as well as lower combined. BV is up a little over 10% YTD. 

 

Certainly not a guarantee, but it does bode well for next week's FFH report.

 

-Crip

[Munger_Disciple]

5 hours ago, gfp said:

 

No way man.  Can you imagine me running something called "Hudson Value Partners" ?  

 

LOL

[djokovic1]

On 10/31/2025 at 6:01 PM, Crip1 said:

Certainly not a guarantee, but it does bode well for next week's FFH report.

 

Agreed, similar MD&A on insurance from BRK

 

 

[Hsmpanl]

39 minutes ago, djokovic1 said:

 

Agreed, similar MD&A on insurance from BRK

 

 

Surely at this point the market knows FFH earnings in Q3 will be excellent. Recent price action in insurers must be all about forward looking lower returns as the hard market subsides and interest rates decrease. I've been trying to decide when to add more to FFH and seems like no penalty for waiting at this point. May even be advantageous if share price continues to drift lower with poor sentiment.

[SafetyinNumbers]

3 hours ago, Hsmpanl said:

Surely at this point the market knows FFH earnings in Q3 will be excellent. Recent price action in insurers must be all about forward looking lower returns as the hard market subsides and interest rates decrease. I've been trying to decide when to add more to FFH and seems like no penalty for waiting at this point. May even be advantageous if share price continues to drift lower with poor sentiment.

MKL reacted pretty well to its beat. 

[dartmonkey]

6 hours ago, Hsmpanl said:

I've been trying to decide when to add more to FFH and seems like no penalty for waiting at this point. May even be advantageous if share price continues to drift lower with poor sentiment.

I think you have to go with what you know.

 

We know it’s firing on all cylinders, with predictably strong earnings for several years, buying back shares well beneath 10x earnings, with some positive surprises with unpredictable timing (Fairfax India, GoDigit, Ki, opportunistic sales)… Buying at today’s price will look great, in a few years’ time, almost for sure. 

 

What we don’t know is whether today’s price is as low as it gets, or whether the price might go a little lower before it bottoms out. If you wait, maybe you get a few more shares and a better return, or maybe you miss the boat. There’s no way of knowing, but you don’t have to know. 

 

 

[Parsad]

18 minutes ago, dartmonkey said:

I think you have to go with what you know.

 

We know it’s firing on all cylinders, with predictably strong earnings for several years, buying back shares well beneath 10x earnings, with some positive surprises with unpredictable timing (Fairfax India, GoDigit, Ki, opportunistic sales)… Buying at today’s price will look great, in a few years’ time, almost for sure. 

 

What we don’t know is whether today’s price is as low as it gets, or whether the price might go a little lower before it bottoms out. If you wait, maybe you get a few more shares and a better return, or maybe you miss the boat. There’s no way of knowing, but you don’t have to know. 

 

 

 

Problem is that Fairfax has enough free cash flow coming in regularly to buy back shares when they drop.  So a deep bottom may only happen during a market crisis or a massive catastrophe loss in the industry.  And when that happens, other things may also get very cheap.  So presently, relative to the market, Fairfax is cheap...just not cheap enough for me to load up tons.  Cheers!

[SafetyinNumbers]

12 hours ago, Parsad said:

 

Problem is that Fairfax has enough free cash flow coming in regularly to buy back shares when they drop.  So a deep bottom may only happen during a market crisis or a massive catastrophe loss in the industry.  And when that happens, other things may also get very cheap.  So presently, relative to the market, Fairfax is cheap...just not cheap enough for me to load up tons.  Cheers!

I think in the last year at some point you said you wouldn’t start a new position in FFH if you didn’t own one already. Is that still the case?

[valueventures]

14 hours ago, Parsad said:

 

Problem is that Fairfax has enough free cash flow coming in regularly to buy back shares when they drop.  So a deep bottom may only happen during a market crisis or a massive catastrophe loss in the industry.  And when that happens, other things may also get very cheap.  So presently, relative to the market, Fairfax is cheap...just not cheap enough for me to load up tons.  Cheers!

What is your approximate weighting to FFH today? Thanks!

[djokovic1]

On 11/1/2025 at 6:56 PM, Hsmpanl said:

Surely at this point the market knows FFH earnings in Q3 will be excellent.

 

I'm not sure, if analysts have FFH's Q3 combined ratio at 97%. Also I think FY 2025 consensus estimates are low. All that is pretty short term, but more importantly I think FY26 and FY27 are way too low (of course any one year can be volatile due to cat / investment returns).

 

I did a comparison of Markel and FFH on some key KPI that I like to look at. It shows FFH has a much better compounding engine, a big reason being due to higher investment leverage / float per unit equity. It creates a meaningful difference in ROE. Additionally, this better FFH engine trades at a meaningful discount to Markel. Markel themselves think their shares are quite undervalued. And for multiple reasons, some captured by the table, I would definitely invest in FFH before going near MKL.
Note: We know book value of FFH is understated materially but I haven't made any adjustment in the table below.

 

Does anyone know why Markel doesn't operate at higher investment leverage or higher float to equity? Is it something they do consciously or is it something their business model requires them to run at lower leverage? I know they have a higher equity proportion in their investments than FFH and that requires them to hold more capital against it ie operate at lower leverage.

Edited November 2, 2025 by djokovic1

[Viking]

2 hours ago, djokovic1 said:

 

I'm not sure, if analysts have FFH's Q3 combined ratio at 97%. Also I think FY 2025 consensus estimates are low. All that is pretty short term, but more importantly I think FY26 and FY27 are way too low (of course any one year can be volatile due to cat / investment returns).

 

I did a comparison of Markel and FFH on some key KPI that I like to look at. It shows FFH has a much better compounding engine, a big reason being due to higher investment leverage / float per unit equity. It creates a meaningful difference in ROE. Additionally, this better FFH engine trades at a meaningful discount to Markel. Markel themselves think their shares are quite undervalued. And for multiple reasons, some captured by the table, I would definitely invest in FFH before going near MKL.
Note: We know book value of FFH is understated materially but I haven't made any adjustment in the table below.

 

Does anyone know why Markel doesn't operate at higher investment leverage or higher float to equity? Is it something they do consciously or is it something their business model requires them to run at lower leverage? I know they have a higher equity proportion in their investments than FFH and that requires them to hold more capital against it ie operate at lower leverage.

@djokovic1, there is lots of really interesting stuff to talk about here. It appears one of the changes between Fairfax and Markel has been their focus over the past decade.

- Fairfax’s focus has been its P/C insurance business - growth and improving its quality.

- Markel’s focus appears to have been Markel Ventures. Its P/C insurance business has hit some speed bumps (and couldn’t have come at a worse time - during the hard market).
 

As a result, it appears Fairfax believes more than ever that P/C insurance is its core business engine. This has important implications when it comes to the amount of leverage and the rates of return the company will be able to generate over the next decade. 
 

I think lots of investors (including me) focus on Fairfax’s investment management business. And don’t fully appreciate the strategic beauty of what Fairfax has accomplished with its insurance business over the past decade - and what it means for the company moving forward. This likely causes investors to underestimate Fairfax and the returns it is capable of delivering.

—————

 

As it got older as a company, Berkshire Hathaway shifted more and more capital to its non-insurance businesses. As a result, the importance of P/C insurance shrunk dramatically over time. 
 

As Fairfax gets older as a company, it appears to be leaning into its P/C insurance business. P/C insurance is becoming more important over time. 
 

 

Edited November 2, 2025 by Viking

[Parsad]

11 hours ago, SafetyinNumbers said:

I think in the last year at some point you said you wouldn’t start a new position in FFH if you didn’t own one already. Is that still the case?

 

No, I would increase my ownership if it traded below book value.

 

9 hours ago, valueventures said:

What is your approximate weighting to FFH today? Thanks!

 

Makes up about a third of my net worth.  I can sleep well at night with that size position in Fairfax. 

 

If it falls below book value, I can sleep well with 50% of my net worth in Fairfax.  Cheers!

[djokovic1]

8 hours ago, Viking said:

Fairfax’s focus has been its P/C insurance business - growth and improving its quality.

 

Yes thats a good point and I agree with you. The main delta in the leverage comes from the amount of float relative to equity FFH has (1.5x) relative to MKL (1x), which is due to the P&C insurance operation.

 

That leverage has negative cost of capital as long as FFH has an underwriting profit, i.e its great leverage to have as Buffett has mentioned multiple times in the past.

[SafetyinNumbers]

10 hours ago, Parsad said:

 

No, I would increase my ownership if it traded below book value.

 

 

Makes up about a third of my net worth.  I can sleep well at night with that size position in Fairfax. 

 

If it falls below book value, I can sleep well with 50% of my net worth in Fairfax.  Cheers!

I appreciate you think it’s too expensive to add to your already large position but to be clear hypothetically if you didn’t own any, you would not start a new position unless it traded below book value. Is that correct?

[Hoodlum]

Odyssey Re has created a new AI Business Solutions role that will looks for ways to use AI in the underwriting process.

 

https://www.reinsurancene.ws/odysseyre-names-randhir-bilkhu-as-head-of-ai-business-solutions/

 

Odyssey Reinsurance Company, the property and casualty reinsurance arm of Odyssey Group Holdings, Inc., a subsidiary of Fairfax Financial Holdings Limited, has appointed Randhir Bilkhu as Head of Artificial Intelligence (AI) Business Solutions.

In his new role, Bilkhu will report to the Chief Executive Officer of Reinurance.
 

His remit is to identify and implement opportunities to utilise AI and technology to add value to the underwriting process.

 

Edited November 3, 2025 by Hoodlum

[SafetyinNumbers]

Substack post on why this time of year is usually a good time to add to Fairfax. 

 

https://open.substack.com/pub/berczyparkcapital/p/fairfax-financial-seasonality-opportunity?r=ecc87&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

[gfp]

On 10/21/2025 at 12:38 PM, gfp said:

See you at $1570 USD / share!

 

We hit $1570!     

[flesh]

I know analyst earnings estimates are often wonky, however I wonder why they are modeling such a large earnings decrease 2-3 years out? 95-130 usd earnings 2028-2029? Just wondering how they get there. Soft market, high cr, fixed rates drop? 

[SafetyinNumbers]

33 minutes ago, flesh said:

I know analyst earnings estimates are often wonky, however I wonder why they are modeling such a large earnings decrease 2-3 years out? 95-130 usd earnings 2028-2029? Just wondering how they get there. Soft market, high cr, fixed rates drop? 

There is only 1 analyst with estimates in 2028-29 and that’s Morningstar. He forecasts unusually high cat losses in the out years. Generally, quants don’t like P&C insurance because it’s lumpy and the float looks like debt but this guy is also not a good analyst. 
 

 

[Parsad]

10 hours ago, SafetyinNumbers said:

I appreciate you think it’s too expensive to add to your already large position but to be clear hypothetically if you didn’t own any, you would not start a new position unless it traded below book value. Is that correct?

 

Yes, correct.  Between book value and say 1.5 times book value...you are getting a ROI of 12-15% annualized if they hit their ROE target of 15% annualized.  I need a little more than that in terms of margin of safety...I'm aiming for closer to 17-20% annualized.  Cheers!

[Parsad]

4 hours ago, SafetyinNumbers said:

There is only 1 analyst with estimates in 2028-29 and that’s Morningstar. He forecasts unusually high cat losses in the out years. Generally, quants don’t like P&C insurance because it’s lumpy and the float looks like debt but this guy is also not a good analyst. 
 

 

 

Yes, and that's Brett Horn...we know how accurate he is!!  I wouldn't pay any attention to him.  Cheers!