Fairfax Financial Holdings Ltd FRFFF

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

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 03, 2024 9:20am

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Post# 36021315

RBC

May 2, 2024

Fairfax Financial Holdings Limited Q1 First Glance - Steady results

TSX: FFH.U | USD 1,095.52 | Outperform | Price Target USD 1,200.00

Sentiment: Neutral

Q1 Results: Fairfax Financial reported 1Q/24 net earnings per share of $32.82 which compares with our $34.77 net estimate. On an operating basis, we calculate that the company earned $32.70 per share versus our $31.00 forecast. The slight upside was mainly in dividend and interest income.

Net/Net: Overall results in Q1 were fairly close to our estimates. Overall underwriting margins were in line as low cat losses were offset by a higher expense ratio. Global Insurers and Reinsurers generated a strong combined ratio (low 90s) while International Insurers & Reinsurance combined ratio weakened a bit y/y. Premium growth was up double digits due to the contribution from Gulf Insurance (premium growth trends were mixed by segment). Interest and dividend income was strong and remains a nice contribution while buybacks were large. A conference call will be held tomorrow morning at 8:30 a.m. ET. We expect the focus on the Q1 call to be views on P&C market commentary, segment results, premium growth, and investment portfolio repositioning.

Premiums: Net premiums in the P&C units grew +11.8% to $6.25 billion, short of our +15.2% estimate. Recall this was the first quarter that Gulf Insurance was included in results, which drove premium growth higher. Fairfax’s International Insurers and Reinsurers unit (+68.4% NWP growth in the quarter) drove the growth due to the acquisition albeit below our +91.0% assumption. North American Insurers NWP grew +7.5% (RBC estimate: +11.4%) to $1.67 billion with growth in Crum & Forster and Northbridge partly offset by a decline in Zenith National (workers' comp unit). Global Insurers and Reinsurers NWP rose +4.0% (RBC estimate: +5.0%), dragged down by a premium decline at Odyssey Group (Brit and Allied World both showed NPW growth).

Margins: The Q1 P&C combined ratio amounted to 93.6% vs. 94.0% last year, in line with our 93.4% forecast. Total cat losses were $101.4 million (1.7 combined ratio points, below our 3.1 estimate). Favorable reserve development was 0.5 points vs. our 0.9- point forecast. On an ex-cat accident year basis, the combined ratio came in at 92.4% vs. 90.9% in Q1/23 (RBC forecast was 91.5%). The expense ratio was up 110 bps y/y to 31.2% due to internal investments (people and technology) and drove most of the y/y accident year combined ratio change.

Investments/other: Interest and dividend income totaled $589.5 million, slightly ahead of our $574.5 million expectation. Book value per share was up 0.6% sequentially to end Q1 at $945.44. Fairfax was active with buybacks and repurchased 240,734 shares for $260.3 million. Holding company cash ended March at $2.5 billion.