In This Article:
Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Fairfax Financial Holdings Ltd (FAXRF.PFD) reported a strong net earnings of $3.9 billion after taxes for 2024.
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The company achieved record underwriting income of $1.8 billion and record interest and dividend income of $2.5 billion.
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Book value per share increased by 14.5% to $1,060, adjusted for a $15 dividend.
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The insurance and reinsurance operations generated $32.5 billion in gross premiums, marking a 12.6% increase from 2023.
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Fairfax's investment portfolio yielded a 6.7% return, driven by increased interest and dividend income and strong equity gains.
Negative Points
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The company faced a $477 million loss in other comprehensive income due to currency losses from the strengthening US dollar.
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Unrealized losses on the bond portfolio amounted to $731 million, primarily due to rising interest rates.
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The Gulf insurance segment reported an elevated combined ratio of 100.9%, impacted by Dubai floods and purchase price adjustments.
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Fairfax's runoff operations had to strengthen reserves by $221 million due to increased litigation activity.
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The company experienced a net loss of $530 million due to interest rate increases, impacting the bond portfolio.
Q & A Highlights
Q: What caused the significant increase in interest and dividend income in Q4 compared to previous quarters? A: The increase was primarily due to a higher dividend income, notably from Digit Insurance, which contributed approximately $100 million. - Peter Clarke, President and CEO
Q: Is the dividend from Digit Insurance a regular occurrence, and how should it be expected in the future? A: The dividend was related to the IPO proceeds of Digit Insurance and is considered a one-off event, not a regular occurrence. - Jen Allen, CFO
Q: With $2.5 billion in cash and investments at the holding company, is the baseline still to hold at least $1 billion? A: Yes, maintaining at least $1 billion is prudent for the protection of our insurance and reinsurance companies. The current amount is higher due to recent debt issuance and share buybacks, but it may come down slightly. - Peter Clarke, President and CEO
Q: Does the recent experience with California wildfires affect Fairfax's approach to catastrophe exposure? A: No, Fairfax is comfortable with its current level of catastrophe exposure. The losses are within expectations and manageable within underwriting profit. - Peter Clarke, President and CEO