Fairfax 2026

[dartmonkey]

1 hour ago, MungerWunger said:

That all makes sense, but when they say 'FFH currently trades at 1.1x [book]', it looks like they mean it currently trades at 1.1x their estimate of year-end book value, right? Or maybe that is now 1.2x, given the share price rise today.

[valueinvesting101]

Also how is buyback of 375K shares equals to 1.1% reduction of shares outstanding? Is that after offsetting shares issued?

[TwoCitiesCapital]

12 hours ago, tnathan said:

Question that I’m sure has been answered somewhere else but I’m not that well versed in fairfax …if the positive outcomes happen and bvps compounds at 20% for the next 3-5 years, then the leverage on the float naturally comes down. Is there a plan to acquire another carrier? Obviously a good problem to have but doesn’t the model really slowdown unless you’re able to keep the float leverage at that 3x1 mark? 

 

If they keep repurchasing shares with excess profits, that helps quite a bit in terms of getting rid of excess balance sheet capacity without having to acquire another carrier. And would be more in line with their comments on the past about being done with large acquisitions and invoking Teledyne comparisons

[SafetyinNumbers]

3 hours ago, kab60 said:

And Lancashire at 6xNTM earnings (with Q1 in the book) vs. 10x for Fairfax.

Will be interesting to check back and see if the street is correct about the $165 in FTM EPS. Seems low to me but CATs can always surprise in the short term. Of course, that might accelerate revenue growth which would probably result in multiple expansion. 
 

Generally, I think there are a lot of idiosyncratic situations out there that seem like great risk rewards and many investors have high hurdle rates so Fairfax isn’t interesting to them. We are all playing different games. 

[djokovic1]

6 hours ago, kab60 said:

What I do know is that I can buy Lancashire ~6x earnings (and I'd expect a similar ROE in a next 1-2 years) and at a much cheaper TBV multiple.

 

Happy to get some counter balancing views!

 

I don't know much about Lancashire, it looks cheap but Fairfax trades at a similar earnings and book value multiple. (Your 1.9x BV is incorrect in my view). I estimate $220-$240 EPS in 2026 and similar in 2027. So FFH trades at ~7.5x P/E (consensus isn't too different ~8x PE). 

Also Fairfax has a much longer track record of compounding, 40 years at 19%. Lancashire is 12% for 20 years, good but doesn't compare to Fairfax at a similar multiple. ROE is not the most important metric. It's ROE * Reinvestment rate. Fairfax is redeploying most of its capital. Lancashire doesn't do buybacks even though it's so cheap...why? It's a common problem with UK companies.

The delta between 19% compounding and 12% compounding is driven mainly by great capital allocation and additional return from investing well (we disagree on that but if you work through the numbers you will see the delta comes from good investing).

Lastly I had shared this earlier on the board:

 

[Ice77]

There is a listed non-life insurer in which Fairfax holds a non-majority but still significant stake. It trades at 7× P/E, has an ROE in the high teens, and has consistently maintained a combined ratio in the low to mid-90s. It operates in a market where GDP growth is averaging 8%, and where consumers are just hitting the S-curve, as indicated by GDP per capita. The float is limited, so it is not easy to accumulate shares. However, for those with patience, it presents a compelling opportunity. They had a small banner at one of the booths at the recent Fairfax AGM, but I doubt many people here have even heard of it. 

[Marco Van Basten]

5 minutes ago, Ice77 said:

There is a listed non-life insurer in which Fairfax holds a non-majority but still significant stake. It trades at 7× P/E, has an ROE in the high teens, and has consistently maintained a combined ratio in the low to mid-90s. It operates in a market where GDP growth is averaging 8%, and where consumers are just hitting the S-curve, as indicated by GDP per capita. The float is limited, so it is not easy to accumulate shares. However, for those with patience, it presents a compelling opportunity. They had a small banner at one of the booths at the recent Fairfax AGM, but I doubt many people here have even heard of it. 

Could you please share the name?

[Ice77]

16 minutes ago, Marco Van Basten said:

Could you please share the name?

 

The company is BIDV Insurance Corporation (BIC) in Vietnam.Just FYI, to access these shares, one needs either a prime broker or an account with a local broker. IB etc do not provide access to Vietnam. 

 

https://www.fairfax.ca/about-fairfax/ (#27 in the Fairfax map) 

[dartmonkey]

Quote

 

safety:

Will be interesting to check back and see if the street is correct about the $165 in FTM EPS. Seems low to me but CATs can always surprise in the short term. Of course, that might accelerate revenue growth which would probably result in multiple expansion. 

 

djokovic:

I don't know much about Lancashire, it looks cheap but Fairfax trades at a similar earnings and book value multiple. (Your 1.9x BV is incorrect in my view). I estimate $220-$240 EPS in 2026 and similar in 2027. So FFH trades at ~7.5x P/E (consensus isn't too different ~8x PE). 

 

 

I agree that $165 in EPS is unlikely for 2026 and $220-$240 seems more likely.

 

Quick and dirty, Fairfax had insurance earnings from operations of $4.8b in 2024 and $4.6b in 2025. Adding losses from run-off and earnings from non-insurance businesses and backing out the effect of IFRS-mandated discounting of future claims, wiping out most of the gains from bonds, you get adjusted (my adjustment) operating earnings of $5.4b in 2024 and $4.3b in 2025. 

 

Then to get to pre-tax income, you have to subtract off interest paid and corporate overhead, which is pretty constant at about $1b, and add investment gains. Obviously 2025 was an exceptional year for gains on investments, going from $1.1b in gains in 2024 to $3.2b in 2025, so we ended up getting $5.6b of net earnings in 2024 and $6.4b in 2025. And barring a major insurance catastrophe, we are very likely to get something like $5b in operating earnings again in 2026 and 2027, as the company has reasserted many times, most recently at annual meeting a few weeks ago, and even extending the prediction (not a guarantee!) for another 2 years, to include 2028 and 2029. 

 

So what is a realistic guess for investment gains in 2026? We know we already have over $1.2b in gains from the Eurolife and Poseidon transactions, both in Q2, so I think a $2b gain for the year, about midway between 2024 and 2025, is a fair guess. Assuming that interest paid and corporate overhead remain at about $1b between them, that would put net pre-tax earnings at $5b +$2b -$1b = $6b, and assuming similar rate for taxes and non-controlling interests (25%), that would give us about $4.5b in net earnings, divided by about 20m shares at the end of the year, we should at $225/share. And every year that we buy 5% of the outstanding shares at less than 8x earnings (current share price is $1631) and accumulate more assets makes it easier to hit this $225/share target going forward after 2026. 

 

Possible positive deviations from this: realized investment gains of course, since I think my $2b is probably too low, but also Fairfax India has a lot of upside. On the downside, I didn't remove about $150m in earnings from the half of Poseidon that they sold, but I also didn't increase any of the earnings from their associated and consolidated companies nor from their acquisitions. Also, underwriting earnings may drop a bit as the soft insurance market develops, and then, there's always that next big megacap...

Edited May 4 by dartmonkey

[kab60]

9 hours ago, djokovic1 said:

 

Happy to get some counter balancing views!

 

I don't know much about Lancashire, it looks cheap but Fairfax trades at a similar earnings and book value multiple. (Your 1.9x BV is incorrect in my view). I estimate $220-$240 EPS in 2026 and similar in 2027. So FFH trades at ~7.5x P/E (consensus isn't too different ~8x PE). 

Also Fairfax has a much longer track record of compounding, 40 years at 19%. Lancashire is 12% for 20 years, good but doesn't compare to Fairfax at a similar multiple. ROE is not the most important metric. It's ROE * Reinvestment rate. Fairfax is redeploying most of its capital. Lancashire doesn't do buybacks even though it's so cheap...why? It's a common problem with UK companies.

The delta between 19% compounding and 12% compounding is driven mainly by great capital allocation and additional return from investing well (we disagree on that but if you work through the numbers you will see the delta comes from good investing).

Lastly I had shared this earlier on the board:

 

I look at TBV vs BV, which is what most Fairfax investors seem to quote. BV includes goodwill from buyouts, like other insurance co's they own. I much prefer TBV, although you can say argue unrealized gains needs included.

 

When you are levered 1:3 or whatever through float, you don't need good stock picking to do well. You need to make a bit of money on insurance and cash in on 5% t-bills. All that leverage adds a lot of torque. But its not just to the upside. It works both ways. And comes at a cost given much higher CR than say WRB, Beazley or Lancashire.

 

As I said, I wouldn't expect any investment outperformance given their size, so I don't think 40 years TR means much to forward returns expect that they have proven capable and trustworthy. London-listed insurers tend to payout excess cash through special divys. Given no WHT, I really like that, as I prefer to invest the money myself given my opportunity set is much more juicy.

 

 

[tnathan]

32 minutes ago, kab60 said:

I look at TBV vs BV, which is what most Fairfax investors seem to quote. BV includes goodwill from buyouts, like other insurance co's they own. I much prefer TBV, although you can say argue unrealized gains needs included.

 

When you are levered 1:3 or whatever through float, you don't need good stock picking to do well. You need to make a bit of money on insurance and cash in on 5% t-bills. All that leverage adds a lot of torque. But its not just to the upside. It works both ways. And comes at a cost given much higher CR than say WRB, Beazley or Lancashire.

 

As I said, I wouldn't expect any investment outperformance given their size, so I don't think 40 years TR means much to forward returns expect that they have proven capable and trustworthy. London-listed insurers tend to payout excess cash through special divys. Given no WHT, I really like that, as I prefer to invest the money myself given my opportunity set is much more juicy.

 

 

Haven't you just stated the bull case? at 3:1 you don't even have to be good to get 15% growth in book value. So as long as they don't blow up on insurance things look pretty good from this valuation

[SafetyinNumbers]

1 hour ago, kab60 said:

I look at TBV vs BV, which is what most Fairfax investors seem to quote. BV includes goodwill from buyouts, like other insurance co's they own. I much prefer TBV, although you can say argue unrealized gains needs included.

 

When you are levered 1:3 or whatever through float, you don't need good stock picking to do well. You need to make a bit of money on insurance and cash in on 5% t-bills. All that leverage adds a lot of torque. But its not just to the upside. It works both ways. And comes at a cost given much higher CR than say WRB, Beazley or Lancashire.

 

As I said, I wouldn't expect any investment outperformance given their size, so I don't think 40 years TR means much to forward returns expect that they have proven capable and trustworthy. London-listed insurers tend to payout excess cash through special divys. Given no WHT, I really like that, as I prefer to invest the money myself given my opportunity set is much more juicy.

 

 

What are your historical returns like? What do you expect Fairfax’s equity portfolio to do going forward? 

[kab60]

1 hour ago, tnathan said:

Haven't you just stated the bull case? at 3:1 you don't even have to be good to get 15% growth in book value. So as long as they don't blow up on insurance things look pretty good from this valuation

Yes, that's the bull case. Everybody seems to know the bull case. Bear case is CR keeps moving higher as market softens, and interest rates come down. And if equity markets ever get hit and/or we get a recession, their equities - whether public or private - might get wacked too. That's 3 engines that have been a tailwind which might become a headwind. Everyone seems to assume the good times roll on. And they might. My point is there's a lot of torque in either direction given their leverage.

[kab60]

57 minutes ago, SafetyinNumbers said:

What are your historical returns like? What do you expect Fairfax’s equity portfolio to do going forward? 

~30% annually since 2014. Down ~5% in 2018 IIRC, otherwise no down years. Given size of Fairfax' capital base, I'd assume a market-like return although I wouldn't expect it to track the market.

[djokovic1]

1 hour ago, kab60 said:

Everybody seems to know the bull case.

 

Yes on this website, but most investors I know don't know much about it and those who do still shun Fairfax for 2010-2020. I did too. Everyone knows Markel and Berkshire. Much fewer know about Fairfax and fewer still are willing to look deeper to consider investing in it. But that's irrelevant, what's important is whether they continue compounding at 15-20%.

 

4 hours ago, kab60 said:

London-listed insurers tend to payout excess cash through special divys. Given no WHT, I really like that, as I prefer to invest the money myself given my opportunity set is much more juicy.

 

I don't understand this thinking. If it's cheap enough, then you should want them to buy back as much stock as possible with excess cash (you own the stock after all because its cheap!). Rather than having to do extra work and find new investments. And that's with 0% taxes. Any sort of taxes makes the argument for divs much worse. It's a cultural problem in the UK, rare to find support for buybacks.

On the torque, I am very happy with it. From my perspective they are maximising the horsepower of their engine with prudent leverage. Berkshire arguably is underlevered. Markel in the middle. The biggest risk would be a zero interest rate scenario again which you alluded to. 
 

[kab60]

5 minutes ago, djokovic1 said:

 

Yes on this website, but most investors I know don't know much about it and those who do still shun Fairfax for 2010-2020. I did too. Everyone knows Markel and Berkshire. Much fewer know about Fairfax and fewer still are willing to look deeper to consider investing in it. But that's irrelevant, what's important is whether they continue compounding at 15-20%.

 

 

I don't understand this thinking. If it's cheap enough, then you should want them to buy back as much stock as possible with excess cash (you own the stock after all because its cheap!). Rather than having to do extra work and find new investments. And that's with 0% taxes. Any sort of taxes makes the argument for divs much worse. It's a cultural problem in the UK, rare to find support for buybacks.

On the torque, I am very happy with it. From my perspective they are maximising the horsepower of their engine with prudent leverage. Berkshire arguably is underlevered. Markel in the middle. The biggest risk would be a zero interest rate scenario again which you alluded to. 
 

Given I pay no taxes on the divys, I generally prefer divys to buybacks. I can buy more shares if it's my best idea currently. Or I can put money into an even better idea. Fairfax has a fine track record, but more cyclical companies should return cash through dividends instead of deploying it pro-cyclically into M&A and buybacks when they gusher cash.

 

I don't mind the torque per se. I'm just pointing out that it's a cyclical business with lots of leverage to interest rates, and that I think other names in the space seem cheaper to me but perhaps more importantly, if the cycle turns (to shit), you might still make out like a bandit due to getting bought out. I'm sure I'll be back in Fairfax at some point, but perhaps not when all 3 engines are firing at the same time and the industry is starting to soften. FWW, I very often sell 'too early'. I suppose it's also why I've never really lost my shirt. I can appreciate people have a different perspective and perhaps different tax implications too, and as I said, I think it'll do better than most things on a very long timeline and with very little maintenance cost. That's valuable. And that's why it's basically the only name I'll recommend to folks as a set-it-and-forget-it type of stock.

[Junior R]

1 hour ago, kab60 said:

Given I pay no taxes on the divys, I generally prefer divys to buybacks. I can buy more shares if it's my best idea currently. Or I can put money into an even better idea. Fairfax has a fine track record, but more cyclical companies should return cash through dividends instead of deploying it pro-cyclically into M&A and buybacks when they gusher cash.

 

I don't mind the torque per se. I'm just pointing out that it's a cyclical business with lots of leverage to interest rates, and that I think other names in the space seem cheaper to me but perhaps more importantly, if the cycle turns (to shit), you might still make out like a bandit due to getting bought out. I'm sure I'll be back in Fairfax at some point, but perhaps not when all 3 engines are firing at the same time and the industry is starting to soften. FWW, I very often sell 'too early'. I suppose it's also why I've never really lost my shirt. I can appreciate people have a different perspective and perhaps different tax implications too, and as I said, I think it'll do better than most things on a very long timeline and with very little maintenance cost. That's valuable. And that's why it's basically the only name I'll recommend to folks as a set-it-and-forget-it type of stock.

what country are you in

[Txvestor]

15 hours ago, dartmonkey said:

 

I agree that $165 in EPS is unlikely for 2026 and $220-$240 seems more likely.

 

Quick and dirty, Fairfax had insurance earnings from operations of $4.8b in 2024 and $4.6b in 2025. Adding losses from run-off and earnings from non-insurance businesses and backing out the effect of IFRS-mandated discounting of future claims, wiping out most of the gains from bonds, you get adjusted (my adjustment) operating earnings of $5.4b in 2024 and $4.3b in 2025. 

 

Then to get to pre-tax income, you have to subtract off interest paid and corporate overhead, which is pretty constant at about $1b, and add investment gains. Obviously 2025 was an exceptional year for gains on investments, going from $1.1b in gains in 2024 to $3.2b in 2025, so we ended up getting $5.6b of net earnings in 2024 and $6.4b in 2025. And barring a major insurance catastrophe, we are very likely to get something like $5b in operating earnings again in 2026 and 2027, as the company has reasserted many times, most recently at annual meeting a few weeks ago, and even extending the prediction (not a guarantee!) for another 2 years, to include 2028 and 2029. 

 

So what is a realistic guess for investment gains in 2026? We know we already have over $1.2b in gains from the Eurolife and Poseidon transactions, both in Q2, so I think a $2b gain for the year, about midway between 2024 and 2025, is a fair guess. Assuming that interest paid and corporate overhead remain at about $1b between them, that would put net pre-tax earnings at $5b +$2b -$1b = $6b, and assuming similar rate for taxes and non-controlling interests (25%), that would give us about $4.5b in net earnings, divided by about 20m shares at the end of the year, we should at $225/share. And every year that we buy 5% of the outstanding shares at less than 8x earnings (current share price is $1631) and accumulate more assets makes it easier to hit this $225/share target going forward after 2026. 

 

Possible positive deviations from this: realized investment gains of course, since I think my $2b is probably too low, but also Fairfax India has a lot of upside. On the downside, I didn't remove about $150m in earnings from the half of Poseidon that they sold, but I also didn't increase any of the earnings from their associated and consolidated companies nor from their acquisitions. Also, underwriting earnings may drop a bit as the soft insurance market develops, and then, there's always that next big megacap...

A wildcard to earnings is the TRS position. I think we all agree the stock is cheap, but Mr Market can't be unpredictable. It's already off $300 from its peak, that's north of $500M that could quite easily show up in the earnings statement over the course of the year. 

[SafetyinNumbers]

5 hours ago, kab60 said:

~30% annually since 2014. Down ~5% in 2018 IIRC, otherwise no down years. Given size of Fairfax' capital base, I'd assume a market-like return although I wouldn't expect it to track the market.

It makes sense for you not to buy Fairfax because your return expectations are well ahead of most investors. Congrats on your performance, you should be hitting billionaire status soon if you keep it up. 

[Viking]

1 hour ago, Txvestor said:

A wildcard to earnings is the TRS position. I think we all agree the stock is cheap, but Mr Market can't be unpredictable. It's already off $300 from its peak, that's north of $500M that could quite easily show up in the earnings statement over the course of the year. 

Fairfax’s share price closed at about $1,700 at March 31, 2026. So that is the price of the TRS that is baked into Fairfax’s book value of $1,250 (at March 31, 2026). The TRS is a significant investment for Fairfax (its third largest, based on exposure after Eurobank and Poseidon). 
 

My view is Fairfax is undervalued at $1,700. One example of how book value at $1,250 looks conservative. 

[73 Reds]

3 minutes ago, Viking said:

Fairfax’s share price closed at about $1,700 at March 31, 2026. So that is the price of the TRS that is baked into Fairfax’s book value of $1,250 (at March 31, 2026). The TRS is a significant investment for Fairfax (its third largest, based on exposure after Eurobank and Poseidon). 
 

My view is Fairfax is undervalued at $1,700. One example of how book value at $1,250 looks conservative. 

Yep, and simple math tells us that if Fairfax merely compounds at its historical rate for the next 2 years, book value will exceed the current market price.

[kab60]

1 hour ago, SafetyinNumbers said:

It makes sense for you not to buy Fairfax because your return expectations are well ahead of most investors. Congrats on your performance, you should be hitting billionaire status soon if you keep it up. 

That is clearly not my return expectation going forward. I am looking at stuff that will do +15% between earnings+growth, and then I turn over the book regularly to harvest multiple re-ratings as/if they occur to juice ROE.

 

If I had to hold forever, I would go Fairfax over Lancashire. Shorter term, I prefer Lancashire. I think there is surprisingly little talk on here about the industry cycle. Broker commentary on lack of price discipline is pretty bad, but who knows if that is priced in. What I do know is that it increases likelihood of M&A.

[dartmonkey]

2 hours ago, Txvestor said:

A wildcard to earnings is the TRS position. I think we all agree the stock is cheap, but Mr Market can't be unpredictable. It's already off $300 from its peak, that's north of $500M that could quite easily show up in the earnings statement over the course of the year. 

The total return swaps on 1.76m shares means that they lose $1.76m for every $1 decrease in their share price. The share price dropped US$206 in Q1, from 2025-12-31 to 2026-03-31, which is why they already lost $206*1.76m= $363m in Q1 (the company reported that the loss was $341.8m, which may be the effects of tax, or maybe there's something else that's wrong with my calculation.) But the point is, if we're counting in US dollars, the stock is off $206 from year end and about $300 from its peak (I believe this was Dec 30, 2025, at $1949 intraday on Jan 2, 2026) but that is already baked in as of the end of Q1. The share price was $1702 on March 31st, and is now slightly lower, at about $1650 as I write this, so that means there's another $50*1.76m= about $90m loss, pretty insignificant.

 

Anything can happen to the share price, of course, but with $215 diluted EPS last year and very likely over $200 this year, I don't think there's much chance of the share price going lower than say $1000, and even that drop from the $1702 share price at the end of Q1 would be represent a manageable loss of about $702*1.76m = $1.2b pre-tax. And if they hold something like their current price, representing about 7-8x earnings, there would be no significant further loss in Q2-3-4.

[tnathan]

7 hours ago, kab60 said:

Yes, that's the bull case. Everybody seems to know the bull case. Bear case is CR keeps moving higher as market softens, and interest rates come down. And if equity markets ever get hit and/or we get a recession, their equities - whether public or private - might get wacked too. That's 3 engines that have been a tailwind which might become a headwind. Everyone seems to assume the good times roll on. And they might. My point is there's a lot of torque in either direction given their leverage.

Yep agree. I think if something does break a lot of people on here might not have the patience to take the drawdown, buy more, and wait for the other side

[SafetyinNumbers]

2 hours ago, kab60 said:

That is clearly not my return expectation going forward. I am looking at stuff that will do +15% between earnings+growth, and then I turn over the book regularly to harvest multiple re-ratings as/if they occur to juice ROE.

 

If I had to hold forever, I would go Fairfax over Lancashire. Shorter term, I prefer Lancashire. I think there is surprisingly little talk on here about the industry cycle. Broker commentary on lack of price discipline is pretty bad, but who knows if that is priced in. What I do know is that it increases likelihood of M&A.

My hurdle rate is 10% so it makes it really easy to own a very big position in Fairfax because it’s hard to see how ROE drops below that on a FTM basis. While your analysis of Fairfax’s equity book suggests market like returns (I’m not sure what you think that is), I think they can easily do north of 10% on the equity book given how much accounting returns have lagged economic returns because of accounting policy. With a 5% coupon on the fixed income portfolio that’s 15%+ on an after tax basis. Underwriting less head office expenses and interest expenses should stay net positive which further helps the ROE.
 

I think the P/B multiple will trend towards Fairfax’s limit on the buyback which I think is 1.5x BV. The longer it takes the better as buybacks will just enhance forward ROE but also constrain BVPS growth. The next hard market I think will cause the multiple to explode higher but it could take a decade for all I know. @kodiak made a good point that climate change might means higher frequency of catastrophic events which might help a hard market come faster. Long rates could also go higher which might harden the market due to bond losses at competitors and enhance returns on the investment portfolio. Lots of moving parts!
 

 

Edited May 5 by SafetyinNumbers