FFH Q4 earnings & conference call

[Viking]

2 hours ago, gfp said:

And remember that when FFH reports holding “mortgages “ they aren’t usually agency mbs - they are extremely high yielding, short term construction loans originated through the “pacwest” / KW team.

 

+1   Another point Bill McMorrow has made before is Pac West was forced to sell its good businesses when it was forced to raise money. The quality aspect is important.  

Edited February 21 by Viking

[Buffett_Groupie]

On 2/19/2026 at 6:52 PM, Viking said:

Outstanding year. Best in company's history. Reported diluted EPS was a strong $214 per share. The number that matters much more - economic EPS - was $269 per share ($214 + $55, from change in excess of FV over CV). BVPS is now $1,260.  

 

Q1 is shaping up to be a strong start to 2026:

• $350 million gain from pending sale of Eurolife's life insurance business in Greece
• Equities are up ~$1.3B (as of Feb 18)
• 'Normal' (solid) quarter for insurance

 

 

Surprised how subdued the market reacted in terms of the share price despite the outstanding results 

[Crip1]

13 minutes ago, Buffett_Groupie said:

Surprised how subdued the market reacted in terms of the share price despite the outstanding results 

Give it a few days...it's a trend that's been observed in the past, multiple times, and I am thinking that it recurs this week.

 

-Crip

[SafetyinNumbers]

9 hours ago, Crip1 said:

Give it a few days...it's a trend that's been observed in the past, multiple times, and I am thinking that it recurs this week.

 

-Crip

I have noticed that as well but not so sure this time. I’m not sure who the uptick buyer is other than passive as quants don’t like flatlining revenue growth. That being said, Barry Schwartz, said on Twitter that he was buying on Friday. Those are the kind of buyers we need.

[gfp]

What date do we usually see the annual letter / annual report?

[giulio]

around march 7th iirc

[Hoodlum]

3 hours ago, gfp said:

What date do we usually see the annual letter / annual report?

 

I believe it will occur on April 16th.  We will receive a press release from Fairfax with the actual date, about 10 days prior to the call.

[gfp]

3 minutes ago, Hoodlum said:

 

I believe it will occur on April 16th.  We will receive a press release from Fairfax with the actual date, about 10 days prior to the call.

 

That sounds late and there is no call for an annual report so maybe you are thinking of something else?  giulio's March 7th sounded like the right ballpark.  that was the date they released last year's annual report

[MMM20]

On 2/20/2026 at 9:03 AM, MMM20 said:

Yeah I don’t see the livestream on there this time.

replay is up on Quartr now, in case anyone cares: https://web.quartr.com/link/companies/6110/events/403229?targetTime=0.0

[Hoodlum]

1 hour ago, gfp said:

 

That sounds late and there is no call for an annual report so maybe you are thinking of something else?  giulio's March 7th sounded like the right ballpark.  that was the date they released last year's annual report

 

I may have been thinking of the AGM.

[UK]

7 hours ago, MMM20 said:

replay is up on Quartr now, in case anyone cares: https://web.quartr.com/link/companies/6110/events/403229?targetTime=0.0

I think the last question (from private investor) about bigest risks was really good, but FFH missed a bit an opportunity here to elaborate in more detail:)

[MMM20]

11 hours ago, UK said:

I think the last question (from private investor) about bigest risks was really good, but FFH missed a bit an opportunity here to elaborate in more detail:)

I recognize that guy’s fake name from BRK stuff. We should welcome the BRK converts with open arms. Maybe more are seeing that the “next BRK” (I know it’s not fair, but you know what I mean) might be outside the US…

 

Edited February 24 by MMM20

[Crip1]

On 2/22/2026 at 9:06 PM, SafetyinNumbers said:

I have noticed that as well but not so sure this time. I’m not sure who the uptick buyer is other than passive as quants don’t like flatlining revenue growth. That being said, Barry Schwartz, said on Twitter that he was buying on Friday. Those are the kind of buyers we need.

Well, we're into our third day after earnings release and it looks like your skepticism was warranted. 

 

So, what to do? Some board members will say that Fairfax has been on sale for years now, but the last time it really went on sale was November of 2025, I increased my position (already my biggest holding by far) by 15% and then sold back 2/3rds of that increase a month later for a 12% return. Net-net is that I increased my position by 5% at a net cost of under $1,150/share. We're not there yet, but if we get close to US$1,600 or below, it will be tough to not deploy some dry powder back into FFH and see if the November/December deal can be replicated.

 

-Crip 

 

 

[jbwent63]

Hello all. This post may seem controversial, but I'm hoping it will spur some debate, or at least will show where my thinking is wrong.

 

On page 2 of the press release, we can see that in Q4 2025 income before tax was $1,756 million. This included $717 million of gains on investments. If you were to exclude these gains (thinking like Buffett here....they wont always be there), you get $1,039 million. Using the same logic for Q4 2024, you get an amount that is double the 2025 amount ($1,677 + 403 = $2,080) (note that the $403 was a loss, which is why it is added back). For the year we see a similar result, although not as dramatic. Adjusted net income before tax for 2025 is $3,289 vs $4,571 in 2024.

 

I'm usually quite good at analyzing income statements (insurance under IFRS is much more complex) and while I can see some small differences, I am having difficulty coming up with the reason this figure is only half what it was in the year prior quarter, and that the whole year is down by about 30% +/-. I'm thinking that the CR on a discounted basis is part of the story, in Q4 it was 410 bps higher than the prior year, and for the year it was 250 bps higher. Also it appears that the interest rate fluctuations caused a net negative that was larger in 2025 (gains in bonds did not offset financing costs on the float).

 

Anyone else have any further observations. I'm trying to think about operating earnings (as a long time Berkshire shareholder, longer than Fairfax) vs. gains on investments. It appears to have deteriorated, perhaps masked by the outsized gains on the investment book.

 

Thanks for reading.

[UK]

3 hours ago, MMM20 said:

I recognize that guy’s fake name from BRK stuff. We should welcome the BRK converts with open arms. Maybe more are seeing that the “next BRK” (I know it’s not fair, but you know what I mean) might be outside the US…

 

Sure, I fully agree and literally doing my best re BRK converts in my circle with the 'Security I like the best' agenda:). I sicerely think investors owning a lot of BRK today should diversify into FFH at least to some extend (I myself do not believe in diversification much:)).

[djokovic1]

@jbwent63 It's a good question. A big part of the delta is caused by the line item "Net finance income (expense) from insurance contracts and reinsurance contract assets held". My understanding is that this line item is the change in the balance sheet caused by interest rates and FX moves and technically should not be counted within operating results (Fairfax defines it as such below).

If you use Fairfax's definition of operating income, 2025 was roughly on par with 2024 for the full year. 

 

 

Net finance income (expense) from insurance contracts and reinsurance contract assets held – This measure

represents the net change in the carrying amounts of the company’s insurance contracts and reinsurance contract

assets held arising from the effects of the time value of money, and is calculated as the sum of the respective

amounts presented in the consolidated statement of earnings.

 

Operating income (loss) – This measure is used by the company as a pre-tax performance measure of operations

that excludes net finance income (expense) from insurance contracts and reinsurance contract assets held, net

gains (losses) on investments, interest expense and corporate overhead and other, and that includes interest and

dividends and share of profit (loss) of associates, which the company considers to be more predictable sources of

investment income. 

[mengan]

5 hours ago, jbwent63 said:

Anyone else have any further observations. I'm trying to think about operating earnings (as a long time Berkshire shareholder, longer than Fairfax) vs. gains on investments. It appears to have deteriorated, perhaps masked by the outsized gains on the investment book.

 

Mainly due to IFRS accounting related to Net finance income (expense) from insurance contracts and reinsurance contract assets held.

 

Also due to a giant "one-time" addition to life insurance run-off.  One-time = likely recurring.

[SafetyinNumbers]

4 minutes ago, mengan said:

 

Mainly due to IFRS accounting related to Net finance income (expense) from insurance contracts and reinsurance contract assets held.

 

Also due to a giant "one-time" addition to life insurance run-off.  One-time = likely recurring.

It wouldn’t surprise me if they increased the life and  run off reserves because they didn’t need the earnings last year and the auditors forced them to release P&C reserves. 

[SafetyinNumbers]

5 hours ago, jbwent63 said:

Hello all. This post may seem controversial, but I'm hoping it will spur some debate, or at least will show where my thinking is wrong.

 

On page 2 of the press release, we can see that in Q4 2025 income before tax was $1,756 million. This included $717 million of gains on investments. If you were to exclude these gains (thinking like Buffett here....they wont always be there), you get $1,039 million. Using the same logic for Q4 2024, you get an amount that is double the 2025 amount ($1,677 + 403 = $2,080) (note that the $403 was a loss, which is why it is added back). For the year we see a similar result, although not as dramatic. Adjusted net income before tax for 2025 is $3,289 vs $4,571 in 2024.

 

I'm usually quite good at analyzing income statements (insurance under IFRS is much more complex) and while I can see some small differences, I am having difficulty coming up with the reason this figure is only half what it was in the year prior quarter, and that the whole year is down by about 30% +/-. I'm thinking that the CR on a discounted basis is part of the story, in Q4 it was 410 bps higher than the prior year, and for the year it was 250 bps higher. Also it appears that the interest rate fluctuations caused a net negative that was larger in 2025 (gains in bonds did not offset financing costs on the float).

 

Anyone else have any further observations. I'm trying to think about operating earnings (as a long time Berkshire shareholder, longer than Fairfax) vs. gains on investments. It appears to have deteriorated, perhaps masked by the outsized gains on the investment book.

 

Thanks for reading.

I think if you treat gains as one off then you make the same mistake as the street and underestimate earnings power. Better to have a range of expectations for equity returns and see what the earnings sensitivity is. The accounting methodology for significant influence and control positions (SICP) means that gains are constantly being deferred (Eurobank is the best example) but eventually they have to come through. As we are in the 14th year of SICP and the investment size has been growing with the balance sheet, my guess is these gains are more reliable than investors think.

[gfp]

33 minutes ago, SafetyinNumbers said:

they increased the life and  run off reserves because they didn’t need the earnings last year

 

That would be the wrong reason to do something like that and honestly a very bad sign.  But it was hypothetical and likely false so here's hoping that is the case.

 

Messing with reserving because "you don't need the earnings" is just as bad as messing with the reserving because you don't want to miss analyst expectations by a penny a share.  Once you go there its all over

[djokovic1]

I actually use this alternative methodology as a sense check which uses operating earnings as the base. 

Using rough numbers (in USD):

 

Operating earnings: $5bn * 12x (take your pick on multiple) = $60bn

 

+ Investment portfolio ($75) - Float ($40) - LT Debt ($14) - NCI ($4) = $77bn. Add $3bn for excess of FV over carrying value and you get to $80bn of intrinsic value.

Divide by 22.4 diluted shares out to get to fair value of $3,571. Current stock price is <50% of that, at ~$1,700.

It's quick and rough but if you see anything obviously wrong please let me know.

Edited February 24 by djokovic1

[Maverick47]

11 minutes ago, gfp said:

 

That would be the wrong reason to do something like that and honestly a very bad sign.  But it was hypothetical and likely false so here's hoping that is the case.

 

Messing with reserving because "you don't need the earnings" is just as bad as messing with the reserving because you don't want to miss analyst expectations by a penny a share.  Once you go there its all over

@gfp I agree with you 100% that we don’t want to be partnered with any insurer that would adjust reserving practices in an effort to meet or not disappoint analyst expectations, and I’m also certain that this is not something we have to worry about with Fairfax.

 

They have a history of reserving appropriately, that is to say, edging more towards redundancy than inadequacy.

 

I’m also not surprised that run-off reserves might need to be strengthened when they get re-estimated after the passage of each year.  These are the most difficult losses to estimate since they are not amenable to any sort of traditional loss data analysis techniques.  Asbestos and environmental claims, which tend to comprise much of commercial insurance run-off reserves, often require sizable amounts of judgment in order to estimate them, because even 40, 50 or 60 years have elapsed since the exposure occurred that leads to the bodily injury claims (think mesothelioma for example) new claims can still arise from unexpected sources.

 

Insurers cannot assume that the only claims they will ever pay out are on those that have already been reported to them.  And there can be continuing inflation in the size of jury verdicts or medical expenses for example, which might be assumed to continue even for the remaining lives of claimants that the insurer is already aware of.  I recall learning about this sort of problem in an insurance textbook I once read that was published in the late 1980’s ( in regards to workers compensation insurance claims).  The author stated that the very first workers compensation claim reported in 1914 under a New York State workers compensation was still open as of the publication of the textbook, because the claimant was still alive.

All of us would like any bad news about reserves to be reported and recorded as soon as it is known.  It’s just that getting a “once and done” answer for asbestos and environmental runoff reserves is not likely to ever happen in the near term, given all the assumptions that go into making such an estimate.  I’ve seen a lot of insurers (including one I worked for) base their runoff asbestos and environmental reserve estimate mostly on how much of the previously held runoff reserves they had paid out over the latest year, with some sort of goal of keeping the reserves set at a significant and hopefully conservative multiple of that annual payout rate.
 

At some point, when runoff payouts slow down as potential claimants simply aren’t alive anymore, this sort of estimation approach will overestimate the reserves that should be held, and any reserves that prove to be unneeded will be released into earnings.

 

Until that time, I’m not terribly concerned about an addition to runoff reserves of a few hundred million, even if it were to happen again and again in the future.  First, these reserves are years away from actually being paid out, so Fairfax will be able to invest them as part of their float on behalf both of us as shareholders, and on behalf of the claimants.  Secondly, compared to a current float level of $39 billion, this 2025 addition to loss reserves is a good amount less than a single percent of the overall float.  Pretty much on the order of a rounding error.

[yesman182]

3 hours ago, Maverick47 said:

And there can be continuing inflation in the size of jury verdicts or medical expenses for example, which might be assumed to continue even for the remaining lives of claimants that the insurer is already aware of.

I was recently listening to a quarterly call for an insurance company and they were estimating the social inflation at around 8% per year. When these reserves where put on the books I doubt they were planning for 8% social inflation. 

[civic248]

15 hours ago, yesman182 said:

I was recently listening to a quarterly call for an insurance company and they were estimating the social inflation at around 8% per year. When these reserves where put on the books I doubt they were planning for 8% social inflation. 

Social inflation is very real but at least that is keeping some of the liability lines rates not to fall as badly as the property rates. WHen i was still working for an insurance company last year, i already saw bad softening in property at -5%. I was still able to get some increases on liability and I would bet Commercial auto and xs liability would still be in double digit increases given social inflation, nuclear verdicts, and other plantiff attorneys that buys cases and groups them.

It is very hard to reserve for something like this and I think fairfax reserves conservatively which is good . Lets hope that the market doesn't cave to the pressures of additional entrants in the commercial insurance space which usually happens as investors chase yield and if they can't have it in bonds, they will chase it in insurance float.

[Viking]

Eurobank has become the 800 pound gorilla of Fairfax’s collection of equity holdings. 
 

Eurobank releases results tomorrow (Feb 26). I think they may also be providing an update to their strategic plan (2026 to 2028). 
 

Bank of America names Eurobank as top pick.

 

“Greek banks are set to unveil their fourth-quarter 2025 results starting Feb. 26, with announcements spanning two days. Piraeus Bank and Eurobank will report on the 26th, followed by Alpha Bank and the National Bank of Greece on the 27th.

 

“According to Bank of America, following a strong re-rating in Jan. and a partial correction in Feb.—leaving the sector up 9.5% year-to-date—market attention is shifting to two key drivers: potential upgrades in earnings per share (EPS) through updated business plans, and enhanced shareholder capital returns, supported by improved capital quality.

“Finally, Eurobank is identified as Bank of America’s top pick for 2026, driven by three key catalysts: the potential upgrade of Greece to a developed market, Bulgaria’s entry into the eurozone, and Cyprus joining the Schengen area.”

 

https://www.tovima.com/finance/bofa-highlights-greek-banks-strong-eps-capital-returns-before-q4/

Edited February 26 by Viking