Fairfax Financial Holdings Ltd T.FFH

RBC

[retiredcf]

Had to eliminate one paragraph as the cut and paste was a nightmare. GLTA

October 31, 2024

Fairfax Financial Holdings Limited
Q3 Quick Take

OTC BB: FRFHF | USD 1,245.52 | Outperform | Price Target USD 1,425.00

Sentiment: Neutral

Q3 results & Net/Net: Fairfax Financial reported 3Q/24 net earnings per share of $42.62, which compares with our $26.79 net estimate. The Q3 combined ratio tracked better than our estimate (despite elevated cat losses) while NII was modestly short of our forecast. Net realized and unrealized gains approximated $1.3 billion vs. our $0.1 billion assumption. The Q3 core loss ratio was better than forecasted and reserve releases remain at a steady clip. The Q3 expense ratio declined after rising on a y/y basis  in 1H24. Premium growth trended similar to recent quarters with certain areas (specialty and international) leading the way. A conference call will be held tomorrow morning at 8:30 a.m. ET. We expect key areas of focus on the Q3 call to be an update on  P&C pricing observations, growth commentary, recent cat losses, loss cost trends/reserving, and the investment portfolio.

Margins: The Q3 P&C combined ratio amounted to 93.9% vs. 98.3% last year and better than our 99.9% forecast. Total cat losses were $434.5 million (6.8 combined ratio points), close to our $450.4 million (7.1 point) assumption. Favorable reserve development was 2.0 points vs. our 1.2 point forecast and mainly resided in workers' compensation and property. On an ex-cat accident year basis, the combined ratio came in at 89.1% vs. our 92.2% forecast. The Q3 expense ratio was 29.7%.

Investments/other: Interest and dividend income to n, trailing our $632 million expectation. Book value per share was up 5.5% sequentially to end Q3 at $1,033.18. 189 mm was spent on Q3 buybacks (158,875 shares were repurchased). Holding company cash ended the quarter at $2.0 billion, down from $2.5 billion at the end of June.