Fairfax 2026

[SafetyinNumbers]

5 hours ago, djokovic1 said:

 

Thanks, if I had to guess I feel we may not have to wait more than 1-2 years of continued compounding. You never know when the inflection happens but when it happens it happens all of a sudden and everybody is then rushing to buy the momentum. Good news is, we don't need it to happen for great returns as that's on top of the 15%+ compounding.

What do you think the odds are the multiple goes above the recent high of 1.69x within 2 years? 
 

You could absolutely be right. I just don’t know if I should expect it. Right now most Canada institutional funds are likely overweight banks and underweight insurance in a big way. The banks are much bigger so if the capital flows reverse, FFH could have multiple expansion even if premium growth remains slow. It really depends on shareholders like us who sell based on valuation. It seems from this board there is a lot of supply at 1.5x. 

[SafetyinNumbers]

On 6/6/2026 at 4:15 PM, HoldForDearLife said:

That's underwriting a 95% CR, no? Not egregious, but that's not exactly a "nothing" assumption either in a softening market. If you were to underwrite at a 100% CR instead, you'd need the return on the equity portfolio to be around 8.0 % to offset the drop in underwriting income. 

 

That said, one of the many reasons I like Fairfax is that you're in no way dependent on terrific underwriting for the investment to make sense. If we go five years at a low 100s combined ratio, we're probably going to remain profitable and suffer less than competitors. We have the cash to survive a bad year with catastrophes. Compared to many other insurers with combined ratios in the low 80s, I do very much prefer "our expectations" over them. 

No, I think it’s about 97.5. Every combined ratio point is about 1% on pre-tax ROE. Last year head office and interest expense were about 2.5% assuming RBC is accurate..

 

 

Edited yesterday at 01:52 AM by SafetyinNumbers

[SafetyinNumbers]

2 hours ago, Hamburg Investor said:

Comparing Fairfax's absolute CR today to prior years would indeed be misleading. Combined ratios move with the underwriting cycle. A 93% CR in a hard market is not the same as a 93% CR in a soft market. Agreed entirely.
 

But this analysis doesn't do that. It compares Fairfax to the average U.S. P&C insurer in the same year, every year from 2000 to 2024. The industry index experiences the same hard and soft markets as Fairfax. The comparison re-calibrates automatically each year:
 

"What did the average U.S. insurer achieve this year? How did Fairfax compare?"

This is a terrific analysis, thanks for sharing it. I have a variant perception on how Fairfax has managed its insurance operations. They built it by issuing expensive equity to buy cheap float. The float was cheap for a reason but these were still incredible deals even though the accounting makes it hard to appreciate.
 

Beginning in 2013, I think they were aggressive releasing reserves as the previous hard market had ended. This had the side benefit of increasing income to offset the hedges they had put on. I thought we would see more reserve releases by now this cycle and while they have increased, they don’t really need the income so my guess is they are trying to hold back.

 

I think the reason combined ratios jump after every insurance acquisition is because they prefer to have excess reserves and reduce taxes payable. It sacrifices short term income but benefits leverage and cash flow. You can see in the table above that their outperformance dwindled after they bought Allied in 2017 until 2021.

Further they have been investing in productivity gains so we might see some of those benefits show up during the next few years as well. I would be surprised if they don’t keep beating the industry by a wide margin. 

 

[villainx]

5 hours ago, Hamburg Investor said:

On the "Hard Market" Argument – I'd Genuinely Like to Understand It

 

I guess I wonder instead of versus average US PC insurer, a comparison against a couple of peer or above average PC insurer might be of value?  

 

[djokovic1]

7 hours ago, SafetyinNumbers said:

What do you think the odds are the multiple goes above the recent high of 1.69x within 2 years? 

 

I think quite high. The simple logic being 15%+ compounding should trade at 2x+ book. As I have said before, I think it's relatively unknown or under researched outside of Canada based on my experience talking to investors about it. No reason that should be the case. Just a matter of time.

 

Of course, a big cat year or bad equity performance (both possible in an individual year) can delay that multiple re-rating.

 

 

[SafetyinNumbers]

3 hours ago, djokovic1 said:

I think quite high. The simple logic being 15%+ compounding should trade at 2x+ book. As I have said before, I think it's relatively unknown or under researched outside of Canada based on my experience talking to investors about it. No reason that should be the case. Just a matter of time.

I have spent a lot of time talking to professional and retail investors about Fairfax and they are aware of but it doesn’t pass their heuristic screen or meet their return expectations. They are also not the types to buy on upticks. I thought the last 5 years of compounding book above 20% would change some minds but the momentum sellers have more than offset them. Maybe in the next 2 years that supply will be gone and passive buying will help increase the multiple. 
 

3 hours ago, djokovic1 said:

Of course, a big cat year or bad equity performance (both possible in an individual year) can delay that multiple re-rating.

I think a big cat year accelerates the multiple rerating if it means a hard market in property which it should as revenue growth accelerates and momentum buyers who seem to only buy on upticks show up. 

[Crip1]

12 hours ago, SafetyinNumbers said:

What do you think the odds are the multiple goes above the recent high of 1.69x within 2 years? 
 

 

I don't have any idea, it may not ever do it, and it really doesn't mean much to me, personally. Achieving a long term 15% ROE, lumpy or otherwise, is all I'm concerned about. P/B or P/E will fluctuate, and that allows us to buy when the opportunity is right, which is where we're currently at, or sell a little opportunistically if we want to add to our dry powder. 

 

As I've said before, the closer the price gets to being fully valued, the more tempting it is to sell. Being perpetually undervalued for a company that continues to grow value is a great place to be.

 

-Crip

[Viking]

2 hours ago, Crip1 said:

Being perpetually undervalued for a company that continues to grow value is a great place to be.

 

-Crip

Paradoxically, being perpetually undervalued becomes one of the drivers of outperformance. It is very counterintuitive.
 

I am reading The Outsiders by William Thorndike. Many of the Outsider companies went through periods when their stock was cheaper than peers - even though their performance over the long term was much, much better than peers. 
 

Outsider CEOs/companies are like great artists… they are mostly celebrated in posterity. 

Edited 22 hours ago by Viking

[Intelligent_Investor]

They just need to put the word "AI" in their AR and the stock will start ripping and trade up to 2x book or more 

[gfp]

45 minutes ago, Viking said:

Paradoxically, being perpetually undervalued becomes one of the drivers of outperformance. It is very counterintuitive.
 

I am reading The Outsiders by William Thorndike. Many of the Outsider companies went through periods when their stock was cheaper than peers - even though their performance over the long term was much, much better than peers. 
 

Outsider CEOs/companies are like great artists… they are mostly celebrated in posterity. 

 

 

https://www.dataroma.com/m/ins/ins.php?t=y2&am=0&sym=BH&o=fd&d=d

[roundball100]

45 minutes ago, Viking said:

[...]. Outsider CEOs/companies are like great artists… they are mostly celebrated in posterity. 

Does this mean that as FFH investors, or reward will be in the afterlife also?  Just kidding.  

[roundball100]

Just now, roundball100 said:

Does this mean that as FFH investors, or reward will be in the afterlife also?  Just kidding.  

or -> our

[Viking]

29 minutes ago, gfp said:

 

 

https://www.dataroma.com/m/ins/ins.php?t=y2&am=0&sym=BH&o=fd&d=d

Yes, having a shareholder friendly management team is also important (in terms of who ultimately gets rewarded over the long term). 

[Txvestor]

This was a slide from the MKL AGM last week. When we look at these insurance companies Q to Q and even Y to Y theirs is a lot of noise in the data. What's interesting about this is it look at the metrics in 5yrs pools of time.
I have not had a chance to complete the same bar graphs for Fairfax but it can easily be done from the archived annual letters. I just looked at the Fairfax numbers briefly. 
What I see is the underwritten premiums are 2.5x and over 3x higher when looked at on a per share basis. Underwriting profit is up even more than that, even if it's during a hard market. I beleive they're very likely to stay profitable through the soft part of the cycle. Main reasons being improved underwriting, size, and diversification both across lines and geographically. I also wouldn't exclude some muted levels of growth through this phase. With international operations at 20%, and growth engines like Ki and Digit in the mix. 
Their book value has only a little over doubled largely as a consequence of the disastrous hedges and shorts the worst of which was in the first 5yr 2011-2015 period. Billions in capital was torched.
That trauma is still in the market place even as the changes shunning those practices started around 2017. 
Net investment income is also up 2.5x due to the reset in interest rates, which appears more long lasting than not. 
Associates and Consolidated equity gains is where they have really killed it. Between EB, Poseidon, Orla and the many others discussed here. That portfolio has done remarkably well, some of it was monetized and a significant chunk not yet. 
The stock price has kept up with these gains up roughly 3-4x but hasn't rerated very much per se. Go forth I think we are likely to see the BV grow faster unburdened by the hedges/shorts etc.
 

Share buybacks increase the delta between BV and IV which the market may or may not be recognizing. But it will eventually have to. 
Finally, something else stood out from what the Markel management team mentioned. They said that in the last five years their invested capital has grown 6% a year and their returns at 16% a year. To some extent that represents a divergence of intrinsic value over book value. 
I'm certain the same thing is happening at Fairfax as well. I just hadn't realized the difference could be that dramatic.

 

 

Edited 18 hours ago by Txvestor

[Hoodlum]

On 6/6/2026 at 9:00 AM, Jaygo said:

I would assume the buybacks are absolutely ripping right now. If you look at the buyback kings like AutoZone it was steady buybacks for 25 years.

 

It is conceivable that were under 20 million this year and much lower share count a few years out so if this process has basically just started within the past 5 years we are in for a show. Good things take time.

 

We may bicker about value, ROE, wives and performance but the thought of FFH at 15 million shares outstanding feels pretty good if you look at AZO since 1998. The kicker is that AZO has taken on a lot of debt but I feel Fairfax will handle this better so the result could potentially be more impressive. FFH 10k anyone?

 

 

We should soon see how much the buybacks were in May.

 

[SafetyinNumbers]

10 minutes ago, Hoodlum said:

 

We should soon see how much the buybacks were in May.

 

What’s the over/under? 

 

[Hoodlum]

21 minutes ago, SafetyinNumbers said:

What’s the over/under? 

 

 

200k shares.  I'll take the over.

[SafetyinNumbers]

3 hours ago, Hoodlum said:

 

200k shares.  I'll take the over.

Are expectations really that high?

[Hoodlum]

24 minutes ago, SafetyinNumbers said:

Are expectations really that high?

I am thinking they can buyback 1% of outstanding at the current stock price, which is a little over 200k shares. 

[SafetyinNumbers]

33 minutes ago, Hoodlum said:

I am thinking they can buyback 1% of outstanding at the current stock price, which is a little over 200k shares. 

They are definitely capable. I’m just not sure where expectations are. 

[Viking]

On 6/7/2026 at 3:29 PM, Hamburg Investor said:

 

 

 

Same Company, Different Underwriter: How Fairfax Went from 4 Points Below the Market to 4 Points Above It – In a Single Year
 

FFH Was a Bad Underwriter. Then 2011 Happened. It Hasn't Looked Back Since.

 

I've been digging into Fairfax's combined ratio data relative to the average U.S. P&C insurer, and I want to share what I think is one of the most compelling changes in the Fairfax story. I'd also genuinely love to hear pushback from those who see things differently.

 

The Data: A Clean Break at 2011

When you measure Fairfax's combined ratio against the U.S. P&C industry average year by year, the picture is striking:

 

• Before 2011: Fairfax underperformed the average U.S. P&C insurer by roughly 2.5% to 4 percentage points per year, depending on the starting year you choose. 2000 and 2001 were really bad years (the red dotted line directly starts below 100. 2002 to 2004 was the exception). From 2000 to 2011 the yearly percentage points, with which FFH lagged the average US PC Insurer summed up to nearly 30 percentage points. From 2004 to 2011 it's nearly a straight line of underperformance: The red dotted line in all but one year (2007) dropped.
• After 2011 until 2025: Fairfax has outperformed the average U.S. P&C insurer by roughly 4 percentage points per year – consistently, and in aggregate that summed up to 50 percentage points over 13 years running.

The swing in relative underwriting performance between the two eras is approximately 6.5% to 8 percentage points per year. In insurance and watching nearly a quarter century, that is not a rounding error, that's not a coincidence. That is the difference between a mediocre underwriter and a genuinely excellent one. These are two fundamentally different businesses.

 

Why 2011? What Actually Changed?

Andrew Barnard became President of Fairfax Insurance Group in 2011. Those who have followed Viking's and others exceptional write-ups and scissions on Fairfax will already know how thoroughly he documented the cultural and structural changes in Fairfax's underwriting discipline around this time.
 

What changed in practice was substantial: underwriting authority was decentralized to individual business units, accountability for combined ratios was tied more directly to management, and a culture of underwriting discipline replaced what had previously been a more growth-oriented, volume-first approach. Reserve adequacy improved. Lines of business that were structurally unprofitable were cut or restructured. The result was not a gradual improvement – it was a near-immediate re-set of underwriting culture that showed up in the numbers within the first few years and has held ever since.
 

This is not correlation dressed up as causation. The mechanism is documented, the timing is precise, and the results have been durable.

 

On Acquisitions: An Argument For, Not Against

A legitimate question is whether part of Fairfax's CR improvement after 2011 reflects the addition of better-underwriting businesses through acquisitions – Brit, Allied World, Gulf Insurance, and others – rather than purely organic improvement.
 

I'd actually argue the opposite: the fact that Fairfax consistently acquired and integrated businesses that improved rather than diluted its underwriting performance is itself evidence of better management judgment. Pre-2011, Fairfax had a pattern of acquiring businesses that added underwriting volatility. Post-2011, the acquisitions have been disciplined and, on balance, accretive to underwriting quality. Isn't that another data point showing, that the strategy has changed and that FFH after 2011 had a hunger for another type of insurance company?
 

It is also worth noting that North America remains Fairfax's dominant market. The core North American insurance operations – Northbridge, Odyssey Re, Crum & Forster, Zenith – have driven the bulk of earned premium throughout this period. The structural improvement is not an artifact of geographic mix-shift toward more profitable international markets. The house was rebuilt from its core. That's why I think it's not perfect, but legitimate to compare FFH with the US PC insurance market. 

 

On the "Hard Market" Argument – I'd Genuinely Like to Understand It

A view that comes up frequently here is that Fairfax's strong recent underwriting results are primarily explained by the hard market. I want to engage with this seriously, because I may be missing something.

Comparing Fairfax's absolute CR today to prior years would indeed be misleading. Combined ratios move with the underwriting cycle. A 93% CR in a hard market is not the same as a 93% CR in a soft market. Agreed entirely.
 

But this analysis doesn't do that. It compares Fairfax to the average U.S. P&C insurer in the same year, every year from 2000 to 2024. The industry index experiences the same hard and soft markets as Fairfax. The comparison re-calibrates automatically each year:
 

"What did the average U.S. insurer achieve this year? How did Fairfax compare?"
 

In a hard market, the average U.S. insurer also improves – so Fairfax gets no automatic credit in this analysis simply for operating in a favorable pricing environment. The market cycle is effectively stripped out by design.
 

So my genuine question is: Does the latest hard market and the softening market of today somehow benefit Fairfax disproportionately relative to its U.S. peers in a way that a relative comparison would not capture? If so, what is the mechanism? I ask in good faith; not to score a point, but because if there is a flaw in the methodology, I want to know.

 

On Volatility: Less Than You'd Expect

One final observation that I find genuinely surprising: the year-to-year volatility in Fairfax's relative performance since 2011 is remarkably, relatively low.

 

Yes, there are exceptions: 2017 stands out, with major hurricane losses pushing Fairfax's CR above the industry average in a difficult year for everyone. That is exactly what you would expect from a company with meaningful catastrophe exposure, isn't it? And the following three years FFHs performance was nearly mirroring that of the average US PC Insurer. And yet, the red dotted line has been remarkably consistent; no harsh ups and downs. The red line in the chart doesn't meander – it trends upwards at the same pace, year after year, with a small step back and a pause. But In 9 out of 13 years FFH outperformed the market between 2.6 to 8.5 percentage points; wild and different years with hard markets and soft, through COVID, through cat years and quiet years alike.

For a company that critics have historically described as an unpredictable, volatile underwriter, that consistency is itself part of the story.

 

The Bottom Line

Fairfax was a structurally below-average underwriter for many years. In 2011, something changed – sharply, lastingly, and with an identifiable cause. For 13 consecutive years, Fairfax has outperformed the average U.S. P&C insurer. The gap between the pre-2011 and post-2011 eras is roughly 6.5 to 8 combined ratio percentage points per year, driven by its core North American operations, sustained through acquisitions, and more consistent than its historical reputation would suggest.

That does not look like a market tailwind. It looks like a structural transformation that happened in one year and has compounded for 13 (or 14; I guess the 2025 combined ratio for the US PC businesses will be above 93%).
 

What am I missing?

@Hamburg Investor, great post. I found reading the two books produced by Odyssey and C&F to be quote helpful in providing a historical perspective on insurance (what has been going on under the hood). 
 

One of the challenges with Fairfax is understanding just how much has changed over the past 10 years - it really is staggering (insurance, investments, capital allocation, earnings etc). (I mean this in a good way.) And it is continuing…

Edited 9 hours ago by Viking

[HoldForDearLife]

On 6/8/2026 at 3:26 AM, SafetyinNumbers said:

No, I think it’s about 97.5. Every combined ratio point is about 1% on pre-tax ROE. Last year head office and interest expense were about 2.5% assuming RBC is accurate..

 

 

Last year's corporate and interest expenses came in at 1.3 billion. If you assume a 4% increase, you get 1.35 BUSD for 2026. Say they write 27.5 billion of net premiums this year, 1.35B of underwriting profit from that base requires a 95.1 % CR. That's how I got to 95 CR in my calculation, I may be wrong though.

[yesman182]

6 hours ago, Viking said:

I found reading the two books produced by Odyssey and C&F to be quote helpful in providing a historical perspective on insurance (what has been going on under the hood). 

I am not aware of these books, but I would like to read them. Do you remember the titles? Are they easy to find? 

[SafetyinNumbers]

2 hours ago, HoldForDearLife said:

Last year's corporate and interest expenses came in at 1.3 billion. If you assume a 4% increase, you get 1.35 BUSD for 2026. Say they write 27.5 billion of net premiums this year, 1.35B of underwriting profit from that base requires a 95.1 % CR. That's how I got to 95 CR in my calculation, I may be wrong though.

I’m not sure exactly how they got there but on interest expense a big chunk is from consolidated holdings and not at the holdco so not appropriate to include the whole amount. For corporate expenses there is a pretty big contra expense via the investment management fees they collect from the insurance companies and FIH. Maybe that’s the difference. 

[SafetyinNumbers]

12 minutes ago, yesman182 said:

I am not aware of these books, but I would like to read them. Do you remember the titles? Are they easy to find? 

Odyssey: https://online.fliphtml5.com/bxxq/xlyw/#p=10

 

Crum: https://online.flippingbook.com/view/43897353/8/