Fairfax Financial Holdings Ltd T.FFH

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

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.

TSX:FFH - Post by User

Fairfax Financial Holdings Ltd

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Post by retiredcfon Feb 14, 2022 8:42am

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Post# 34425639

RBC Upgrade

Their upside target is also raised to US$850.00. GLTA

February 11, 2022

Fairfax Financial Holdings Limited
Making all the right moves

Our view: Probably the best underwriting result we've seen in 20 years following the company. Strong growth in a hard market is true to its playbook and opportunistic. Investment portfolio positioning could also be a '22 tailwind. Add all that to a $1 billion buyback in the quarter and we see a management that is making all the right moves yet a share multiple that still greatly lags peers. We think there is significant room for multiple expansion and continue to view FFH shares as a best-in-class value opportunity at about 0.75x book value.

Key points:

Estimates/price target: We are increasing our 2022 net earnings per share estimate to $67.50 from $63.00. Results are positively impacted by a lower share count, a better combined ratio and rising premiums. These positives are partly offset by higher assumed minority interest (Odyssey is a very profitable unit) and modest adjustments to reserving and cat assumptions. Our 2023 estimate rises to $73.75 from $64.50 mostly as a result of reduced share count. On an operating basis we are similarly raising our estimate to $55.78 from $52.21 for 2022 and to $62.05 from $53.72 for 2023. Our estimates do not include Go-Digit which would become consolidated once necessary approvals are achieved (a modest positive to '22 and beyond).

Price target: We are increasing our price target to $675 (about C$875, at 1.30 CAD/USD) from $600 which remains based on about a 1.0x multiple which we apply to estimated ending 2022 book value. With good visibility to further book value growth together with a company generating underwriting profits and favorable reserve development in the middle of a hard market we think 1.0x book value is a very attractive multiple.

4Q results: Reported 4Q21 net earnings per share of $33.64 vs. $32.68 last year and our $14.15 estimate. Results include $938 million of net realized and unrealized gains on investments and $17 million related to the sale of a business unit. On an operating basis, which excludes these items, the company earned $5.13 per share (RBC forecast was $11.47). A sizeable asbestos charge, much higher corporate overhead and weaker ordinary investment income were the main reasons for the weaker-than-forecast operating result.