FFH AGM Comments

[Partner24]

He went on to say that even though the stock was below book they were not going to jeopardize the capital position in any way.  REad nother way - he is managing investor expectations downward in this regard. 

 

and that's terrific! Go Prem go!!  ;D

 

[SFValue]

A very interesting comment by Prem was that they view the acquisition of NB as adding flexibility and strength to FFH.  He mentioned that now they have the ability to upstream (200 Mill on average per annum ??? (is that right - please correct me if I am allucinating here)) to the holding co.

 

In other words the 400 mill they spend in NB is worth much more to FFH than the cash.

 

regarding buy backs, my take is that like everything else they do, it is opportunistic.  Last year they bought 1 mill shares, this year (so far) they are buying other equities and bonds, so they look at everything.  They look for value everywhere. having said that, it is obvious that the 1 mill shares that they bought last year represents value to them.

 

 

 

[Crip1]

Prem, when asked about further acquisitions, said that he was not against buying non-insurance companies, but his preference is to buy more float-generating P&C insurance (Packer pointed out Prem's desire to NOT invest in Life companies).

 

This surprised me a little in that I thought that he would expand his universe of companies which would be wholly owned by the holding company. It seems that Polish RE and others like it are in his sweet spot which, upon analysing, makes sense.

 

-Crip

[gaf63]

Crip in one of the points Sam brought up at the dinner:

 

 

"When considering investments, Sam stressed that a strong balance sheet is imperative in this environment. Quality is vital and cannot be compromised upon".

 

I'm curious if he mentioned their investment in LVLT and how this jives with his comment above.

 

Thanks, G

[oec2000]

Oec, A question was asked if Prem was happy with the debt to equity ratios and the capital stucture of the company.  He answered by saying that they had 1.5 B in cash and equivalents at year end, and then spent 350 on NB.  He then said they bought in 1 million shares of FFH last year.  He went on to say that even though the stock was below book they were not going to jeopardize the capital position in any way.  REad nother way - he is managing investor expectations downward in this regard. 

 

Myself and another board member surmised from this that buy backs, including ORH, were not a priority for now.  Having a huge amount of capital was. 

 

Al, I did ask a question about optimal leverage/capital structure and I am not sure whether you were referring to this question. If it was, I must say I came away with a different take about buybacks. I actually thought he was very comfortable with their capital position right now; that they had lots of capacity to write more business if opportunities arose; that as their investments performed their underwriting capacity would increase accordingly.

 

To my recollection, nothing explicitly stated about buybacks. My impression (and it is only an impression) is that buyback decision will be driven by attractiveness relative to other opportunities and buybacks are not off the table.

 

Having said all this, I do not completely trust my recollection and interpretation of everything that was discussed (so much info to process from the dinner and the AGM) so would appreciate hearing from others who were there.

[Crip1]

Gaf,

 

LVLT did not come up in this regard. Sam's statement's were the result of my question "What have you learned over the past year". His response revolved around making sure that the margin of safety is adhered to from a price perspective, from a "food chain" perspective, and from a financial strength perspective. My speculation here is that the mistakes to which Prem admitted (Abitibi and CanWest) were situations where the margin was not as wide as it needed to be. The one investment which Prem did trumpet, JNJ, does have a quite good margin from a Financial Strength perspective and, thought arguable, from a price perspective (Prem clarly said that JNJ has doubled their earnings in the past 5 years but their stock price has been flat...if that happened again, JNJ woulkd be selling at 6x earnings which he does not see happening).

 

You know, there are more things that pop into my head every now and again....will do my best to consolidate them lest I end up posting 20 times to this thread.

 

-Crip

[Uccmal]

oec, I thought it was your question!  :)