Fairfax Financial Holdings Ltd FRFFF

Primary Symbol: T.FFH Alternate Symbol(s): T.FFH.P.H | T.FFH.P.I | T.FFH.P.J | FRFXF | T.FFH.P.K | FRFZF | T.FFH.P.M | FAXRF | FAXXF | T.FFH.P.C | T.FFH.P.D | FFHPF | T.FFH.P.E | FRFGF | T.FFH.P.F | FXFHF | FRFHF | T.FFH.P.G | FXFLF

Financial Services Insurance - Property & Casualty

Fairfax Financial Holdings Limited is a Canada-based holding company. The Company, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management. The Company’s segments include Property and Casualty Insurance and Reinsurance, Life insurance and Run-off and Non-insurance companies. The Property and Casualty Insurance and Reinsurance segment includes North American Insurers, Global Insurers and Reinsurers and International Insurers and Reinsurers. The Life Insurance and Run-off segment include Eurolife and Run-off. The Non-insurance companies segment includes restaurants and retail, Fairfax India, Thomas Cook India and others. Eurolife underwrites traditional life insurance policies (endowments, deferred annuities, whole life and term life), group benefits, including retirement benefits, and accident and health insurance policies. The North American Insurers include Northbridge, Crum & Forster and Zenith National.

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Fairfax Financial Holdings Ltd

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Post by retiredcfon May 12, 2023 10:08am

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Post# 35445248

RBC

Fairfax Financial Holdings Limited
Solid Q1 results backed by strong investment and associate earnings

TSX: FFH.U | USD 684.08 | Outperform | Price Target USD 775.00

Sentiment: Neutral

Insurance operating results were largely in line with our expectations. Premium growth in a few units was a bit short of what we would have expected, but that seems to reflect trade-offs between incremental growth in attractively priced lines and pulling back a bit in lines where pricing has begun to soften. Investment income continues to ramp (as expected) and further cash was deployed to yield assets in the quarter. Book value growth was impressive (both from quarterly results and the IFRS bump), and there is more in the pipeline with the completion of the Ambridge transaction and the recently announced Gulf purchase. A strong start to the year. A conference call will be held on Friday, May 12, at 8:30 a.m. ET. We expect the focus on the Q1 call to be growth appetite by unit, investment portfolio positioning, P&C market commentary, and capital deployment plans.

21Q results: Fairfax Financial reported 1Q23 net earnings per share of $49.38 vs. $4.49 last year and our $25.41 estimate. Results include $0.8 billion of net realized and unrealized gains on investments. On an operating basis, which excludes these items, the company earned $34.71 per share (RBC forecast: $22.43). Better than expected investment and associate income was partly offset by weaker than expected non-insurance income.

Premiums: Net written premiums at ongoing operating units rose 6.1% to $5.7 billion, which was short of our +9.7% estimate due to somewhat weaker than forecast growth rates among both North America and Reinsurance units. Allied World saw premium growth of 9.5% and International units grew 11.4% while Crum saw only 2.6% growth and Brit came in at 2.2%. Growth primarily reflects continued strong rate increases and exposure growth.

Margins: The overall combined ratio amounted to 94% vs. 93.1% last year, slightly lagging our 92.9% forecast. Total cat losses were $192 million or 3.7 combined ratio points, which was above our 3.1 estimate, accounting for much of the difference. The Turkey earthquake accounted for about half of losses. Favorable reserve development was 0.6 points, a bit below our 1.0 point forecast. On an ex-cat accident year basis, the company had a combined ratio of 90.9%, essentially in line with our 90.7% forecast.

Investments/other:	Interest and dividend income totaled $382.3 million, beating our $305.9 million. Associate income totaled
$333.8 million, well ahead of our $200 million. Non-insurance company income came in at $(64.7) million, short of our $14.7
million. Book value per share ended the quarter a $803.9, up 6.8% in the quarter. Note that beginning book value of $762.28 reflects the adoption of IFRS 17, which added $309.6 million to book value. Share buybacks totaled $100 million, reflecting 156,685 shares.