Fairfax Financial Holdings Ltd T.FFH.PR.F

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

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 Feb 18, 2024 10:01am

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Post# 35886557

RBC

February 16, 2024

Fairfax Financial Holdings Limited
Q4 First Glance - Results top expectations

TSX: FFH.U | USD 912.94 | Outperform | Price Target USD 1,085.00

Sentiment: Neutral

Q4 Results: Fairfax Financial reported 4Q/23 net earnings per share of $52.87, which exceeded our $30.70 net estimate. On an operating basis, we calculate that the company earned $31.15 per share vs. our $27.70 forecast. The combined ration was the main source of the upside.

Net/Net: Overall results exceeded our estimates with a good underwriting result. Solid reserve releases and accident year margins were both positives in our view. Growth was impacted by a few large nonrenewals while associate income was below the recent run rate. The company raised their run-rate target of interest and dividend income to $2.0 billion (up from $1.5 billion) and the company expects to achieve this level over each of the next four years. A conference call will be held tomorrow morning at 8:30 a.m. ET. We expect the focus on the Q4 call to be views on P&C market commentary, segment results, premium growth, and investment portfolio repositioning.

Premiums: Net written premiums in the P&C units declined 5.5% to $5.18billion falling short of our +7.0% estimate. This was driven by several non-renewals at Odyssey Group and Brit (all other units reported y/y NWP growth). Fairfax's International Insurers and Reinsurers unit (+24.7% NWP growth in the quarter) led the way and surpassed our +8.5% assumption. North American Insurers NWP grew +8.3% (RBC estimate: +7.6%), with growth of 5% or better across all units (Northbridge, Crum & Forster, and Zenith National). Global Insurers and Reinsurers NWP fell -16.3% (RBC estimate: +6.6%), dragged down by premium declines at Odyssey Group and Brit (Allied World showed almost +3% NWP growth).

Margins: The Q4 P&C combined ratio amounted to 89.9% vs. 91.0% last year, comparing favorably to our 94.4% forecast. Total cat losses w below our 4.1 estimate. Favorable reserve development was $151.7 million (2.7 points) well ahead of our 0.9-point forecast. On an ex-cat accident year basis, the combined ratio came in at 89.4%, which was similar to 89.3% in Q/23 and vs 89.5% in Q/22 (RBC forecase was 91.2%).

Investments/other: Interest and dividend income totaled $536.6 million, slightly ahead of our $533.9 million expectation. Associate income totaled $127.7 million, below our $225 million assumption. Book value per share was 7.2% sequentially to end Q4 at $939.65. Cash and investments at the holding company totalled nearly $1.8 billion as of YE'23.