Q1 2024 Fairfax Financial Holdings Ltd Earnings Call

Operator: Good morning, and welcome to Fairfax's 2024 first quarter results conference call. Your lines have been placed in a listen-only mode.

Good morning, and welcome to Fairfax is 'twenty 'twenty four first quarter results conference call. Your lines have been placed in a listen only mode. After the presentation. We will conduct a question and answer session at that time to ask a question. Please press star one on your phone keypad.

Operator: After the presentation, we will conduct a question and answer session. At that time, to ask a question, please press star 1 on your phone keypad. For time's sake, we ask that you limit your question to one. And this conference is being recorded. If you have any objections, you may disconnect at this time. Your host for today's call is Peter Clarke, with opening remarks from Mr. Derek Bulas. Mr. Bulas, please begin.

Four times sake, we ask that you limit your question to one and today's conference is being recorded if.

If you have any objections you may disconnect at this time.

Your host for today's call is Peter Clark with opening remarks from Mr. Derek Buluk Mr. Bula. Please begin.

Derek Bulas: Good morning and welcome to our call to discuss Fairfax's 2024 first quarter results. This call may include forward-looking statements. Actual results may differ materially from those contained in such forward-looking statements as a result of a variety of uncertainties and risk factors, the most foreseeable of which are set out under risk factors in our base shelf prospectus, which has been filed with Canadian securities regulators and is available on CDAR. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements except as required by applicable securities law. I'll now turn the call over to our President and COO, Peter Clarke.

Derek Bulas: Good morning, and welcome to our call to discuss Fairfax is 'twenty 'twenty four first quarter results. This call may include forward looking statements actual results may differ perhaps materially from those contained in such forward looking statements. As a result of a variety of uncertainties and risk factors. The most foreseeable of which are set out under risk factors.

Our base shelf prospectus, which has been filed with Canadian securities regulators and is available on SEDAR.

Derek Bulas: Fairfax disclaims any intention or obligation to update or revise any forward looking statements, except as required by applicable Securities law I will now turn the call over to our President and C O O Peter Clark.

Peter S. Clarke: Thank you, Derek. Good morning, everyone, and welcome to Fairfax's 2024 First Quarter Conference Call. I plan to give you some highlights and then pass the call to Wade Burton, our President and Chief Investment Officer of Hamblawatsa, to comment on investments, and Jen Allen, our Chief Financial Officer, to provide some additional financial details. We had a strong start to 2024 with net earnings of $777 million in the first quarter of 2024 and a Strong Operating Income from our Insurance and Reinsurance Operations, adjusted to an undiscounted basis and before risk margin of $977.

Peter S. Clarke: Thank you Derek good morning, everyone and welcome to Fairfax is 'twenty 'twenty four first quarter conference call.

Peter S. Clarke: I plan to give you some highlights and then pass the call to Wade Burton, our President and Chief investment Officer of Ham Lavazza.

Peter S. Clarke: I meant on investments and Jen Allen, our Chief financial Officer to provide some additional financial details.

Peter S. Clarke: This is up from $843 million in the first quarter of 2023. Driving this result was underwriting income from our property and casualty insurance and reinsurance companies of $373 million in the quarter, with a combined ratio of 93.6. I will speak more on the underwriting results later. Consolidated Interest and Dividend Income was $590 million in the quarter, up from $382 million in the first quarter of 2023, benefiting from an increased investment portfolio, now approximately $65 billion, and actions taken last year locking in higher rates on our fixed income portfolio.

Peter S. Clarke: We had a strong start to 2024 with net earnings of $777 million in the first quarter of 2024.

Wade Burton: And strong operating income from our insurance and reinsurance operations.

Wade Burton: Adjusted to an on discounted basis, and before risk margin of 977 million.

Jennifer J. S. Allen: This is up from $843 million in the first quarter of 2023.

Jennifer J. S. Allen: Driving this result, with underwriting income from our property and casualty insurance and reinsurance companies up $373 million in the quarter with a combined ratio of $93 six.

Jennifer J. S. Allen: I will speak more on the underwriting results later.

Jennifer J. S. Allen: Consolidated interest and dividend income was $590 million in the quarter up from $382 million in the first quarter of 2023.

Jennifer J. S. Allen: Benefiting from increased and increased investment portfolio now approximately 65 billion.

And actions taken last year locking in higher rates on our fixed income portfolio.

Peter S. Clarke: As we said at our annual meeting, we can see this base of interest and dividend income for the next three to four years. The consolidated share of profits of associates in the first quarter was 128 million. This is down from 334 million in the first quarter of 2023, primarily relating to associate income from golf insurance, which is now consolidated, and IAFL finance, which is now marked to market accounting, and other one-off items. The two most significant associate investments, Eurobank and Poseidon, continue to perform very well and make up a significant amount of our associate earnings. Our consolidated investment return for the first quarter was 1%.

Jennifer J. S. Allen: As we said at our annual meeting we can see this base of interest and dividend income for the next three to four years.

Consolidated share of profits of associates in the first quarter was 128 million.

Jennifer J. S. Allen: This is down from 334 million in the first quarter of 2023, primarily relating to associate it hadn't come up golf insurance, which is now consolidated and I L Finance, which is now the mark to market accounting.

Jennifer J. S. Allen: And other one off items.

The two most significant associate investments Eurobank and put side and continue to perform very well and make up a significant amount of our associate earnings.

Jennifer J. S. Allen: Our consolidated investment return for the first quarter was 1%.

Peter S. Clarke: Investment income was driven by interest and dividend income, as I said, of $590 million, and our share of profits from associates of $128 million, offset by $59 million of net losses on investment. The net losses on investments of $59 million comprise mark-to-mark losses on bonds of $319 million due to increasing interest rates, offset by mark-to-market gains on common stocks of $275 million. As we have said many times in the past, net gains or losses on investments only make sense over the long term and will fluctuate quarter to quarter and, for that matter, many times a year or two a year. Also, as mentioned in previous quarters, our book value per share of $945 does not include unrealized gains or losses in our associate investments and our consolidated investments, which are not mark to mark.

Jennifer J. S. Allen: Investment income was driven by interest and dividend income as I said up $590 million.

Jennifer J. S. Allen: Our share of profits of associates of $128 million.

Jennifer J. S. Allen: Offset by 59 million of net losses on investments.

The net losses on investments of 59 million comprised mark to Mark losses on bonds of $319 million due to increasing interest rates.

Jennifer J. S. Allen: Set by Mark to market gains on common stocks of $275 million.

Jennifer J. S. Allen: We have said many times in the past net gains or losses on investments only make sense over the long term and will fluctuate quarter to quarter.

Jennifer J. S. Allen: And for that matter, many times a year to year.

Jennifer J. S. Allen: Also mentioned in previous quarters, our book value per share of 945 does not include unrealized gains or losses in our associate investments.

Jennifer J. S. Allen: And our consolidated investments, which are not mark to market at.

Peter S. Clarke: At the end of the first quarter, the fair value of these securities is in excess of carrying value by $1.2 billion, an unrealized gain position of approximately $52 per share excluding tax. Under IFRS 17, our net earnings are affected by the discounting of our insurance liabilities and the application of a risk adjustment. In the first quarter of 2024, our net earnings benefited by $273 million pre-tax from the effects of discounting losses occurring in the year, changes in the risk margin, the unwinding of discounts from previous years, and changes in the discount rate on prior year insurance liability. As interest rates move up and down, we will see positive or negative effects on net earnings from this.

Jennifer J. S. Allen: At the end of the first quarter. The fair value of these securities is in excess of carrying value by $1 2 billion and unrealized gain position or approximately $52 per share on a pretax basis.

Jennifer J. S. Allen: Under Ifr at 17, our net earnings are affected by the discounting of our insurance liabilities and the application of a risk adjustment in.

Jennifer J. S. Allen: In the first quarter of 2020 for our net earnings benefited by $273 million pretax from the effects of discounting losses occurring in the year changes in the risk margin.

Jennifer J. S. Allen: Finding a discount from previous years.

Jennifer J. S. Allen: And changes in the discount rate on prior year insurance liabilities.

Jennifer J. S. Allen: As interest rates move up and down we will see positive or negative effects on net earnings from discounting.

Peter S. Clarke: The gain in the first quarter of 2024 on discounting includes a gain of $192 million from the effect of changes in interest rates, benefiting from increasing rates. This partially offsets the mark-to-market losses on our bond portfolio of $319 million. Our book value per share at March 31, 2024 was $945 compared to $940 per share at December 31, 2023, an increase of 2.3% adjusted for the $15 dividend paid in the first quarter.

Jennifer J. S. Allen: The gain in the first quarter of 2024 on discounting includes a gain of $192 million from the effect of changes in interest rates.

Jennifer J. S. Allen: Benefiting from increasing rates.

Jennifer J. S. Allen: This partially offsets the mark to market losses on our bond portfolio of $319 million.

Jennifer J. S. Allen: Our book value per share at March 31, 2024 was 945 compared to 940 per share at December 31, 2023.

Jennifer J. S. Allen: An increase of two 3% adjusted for the 15 dollar dividend paid in the first quarter.

Peter S. Clarke: As we said, for the last number of quarters, the most important point we can make for you is to repeat what has been said in the past. For the first time in our 38-year history, we can say to you, we expect.

Jennifer J. S. Allen: As we said for the last number of quarters. The most important point, we can make for you for you is to repeat what has been said in the past.

Jennifer J. S. Allen: For the first time in our 38 year history, we can say to you. We expect of course, no guarantees sustainable operating income of $4 billion.

Peter S. Clarke: Personnel Guarantees, and Sustainable Operating Income of $4 Billion. Operating income consisting of $2 billion plus from our interest and dividend income, one and a quarter billion plus from underwriting profit with normalized cap losses, and $750 million from associates and non-insurance companies. Fluctantuations in stock and bond prices will be on top of that, and this only really matters over the long term.

Jennifer J. S. Allen: Operating income consisting of 2 billion plus from our interest and dividend income.

Jennifer J. S. Allen: One and a quarter billion plus from underwriting profit with normalized cat losses and.

Jennifer J. S. Allen: $750 million from associates and non insurance companies.

Jennifer J. S. Allen: Fluctuations in stock and bond prices will be on top of that.

Jennifer J. S. Allen: And this only really matters over the long term.

Jennifer J. S. Allen: Okay.

Peter S. Clarke: Yesterday, we were very excited to announce some leadership changes that further build on Odyssey Group succession plans that were first put in place in February 2020. Carl Obrey, who is currently the CEO of Odyssey Reinsurance Company, will succeed Brian Young as CEO of Odyssey Group, effective January 1st, 2025. Carl will be responsible for Odyssey Group's global operations, overseeing its three franchises, Odyssey Re, Hudson Insurance, and New Line Group. Karl has been with the Odyssey Group for over 20 years, most recently as CEO of Odyssey Re, and prior to that, 15 years as CEO of Odyssey Group's London Market Division. Carl has had an outstanding track record, with some disappointments.

Jennifer J. S. Allen: Yesterday, we were very excited to announce some leadership changes. That's further builds on Odyssey group succession plans that were first put in place in February 2023.

Jennifer J. S. Allen: Carl Ovary, who is currently the CEO of Odyssey reinsurance company will succeed Brian Young as CEO of Odyssey Group effective January one.

Jennifer J. S. Allen: 2025.

Karl will be responsible for Odyssey group's global operations overseeing its three franchises Odyssey read Hudson insurance and new line groups.

Jennifer J. S. Allen: Karl has been with the Odyssey group for over 20 years, most recently as CEO of Odyssey re and prior to that 15 years as CEO of Odyssey group's London market Division.

Jennifer J. S. Allen: Karl has had an outstanding track record.

Jennifer J. S. Allen: With disappointment.

Peter S. Clarke: Brian Young, beginning January 1, 2025, will join Fairfax on a full-time basis as president of Fairfax Insurance Group and work alongside Andy Barnard, who will assume the role of chairman. We are very happy with this seamless internal succession within Odyssey Group and having Brian, with his extensive knowledge and experience of the insurance industry, join Fairfax. Moving on to our insurance and reinsurance operations results, our insurance and reinsurance businesses wrote $8 billion of gross premium in the first quarter of 2024, up 12.8% versus the first quarter of 2023.

Jennifer J. S. Allen: Brian Young beginning January one 2025, well joined Fairfax on a full time basis as president of Fairfax Insurance group and work alongside Andy Barnard, who will assume the role of chairman.

Jennifer J. S. Allen: We are very happy with this seamless internal succession within the Odyssey group and having Brian with his extensive knowledge and experience of the insurance industry joined Fairfax.

Peter S. Clarke: The growth was driven by the consolidation of golf insurance, which was consolidated into our results for the first time this quarter. Excluding Golf's premium of $649 million, gross premium was up approximately 3.6%. Our North American insurance segment increased gross premiums by $152 million in the quarter, for 7.9%. Crumb and Forster had double-digit growth at 12% driven by its accident and health business, surplus and specialty lines, and Seneca Insurance. Northbridge was up 4% in Canadian dollars, reflecting excellent customer retention and rate increases.

Jennifer J. S. Allen: Moving onto our insurance and reinsurance operations resolved.

Jennifer J. S. Allen: Our insurance and reinsurance businesses wrote 8 billion of gross premium in the first quarter of 2024 up 12, 8% versus the first quarter of 2023.

Jennifer J. S. Allen: The growth was driven by the consolidation of golf insurance, which was consolidated into our results for the first time this quarter.

Jennifer J. S. Allen: Excluding golf premium of $649 million gross premium was up approximately three 6%.

Jennifer J. S. Allen: Our North American insurance segment increased gross premiums by $152 million in the quarter.

Jennifer J. S. Allen: Or seven 9%.

Jennifer J. S. Allen: From Forrester had double digit growth at 12% driven by its accident and health business surplus in specialty lines and Seneca insurance.

Jennifer J. S. Allen: North bridge was up 4% in Canadian dollars.

Jennifer J. S. Allen: Selecting excellent customer retention rate increases.

Peter S. Clarke: Offset by Decrease in New Business. Seeing as gross premiums were down 2.6% in the first quarter of 2024 compared to the first quarter of 2023 due to the continued competitive workers' compensation. Our global insurer and reinsurer segment increased modestly with gross premiums written at $4.3 billion in the quarter, up 1.4% versus the first quarter of 2023. Allied World was up 6.4% in the quarter, led by its reinsurance segment, which had double-digit growth, while its insurance segment was up approximately 3%.

Jennifer J. S. Allen: Offset by decrease in new business.

Jennifer J. S. Allen: Seeing this gross premiums were down two 6% in the first quarter of 2024 compared to the first quarter of 2023.

Jennifer J. S. Allen: Due to the continued competitive workers' compensation market.

Jennifer J. S. Allen: Our global insurer and Reinsurer segment increased modestly with gross premiums written of $4 3 billion in the quarter up one 4% versus the first quarter of 2023.

Jennifer J. S. Allen: Allied World was up six 4% in the quarter led by its reinsurance segment, which had double digit growth while its insurance segment was up approximately 3%.

Peter S. Clarke: Brits' premium was up 2% to $913 million in the quarter, with growth in its direct book, primarily property, largely offset by contractions and reinsurance and discontinued lines, while Key continued to grow and was up approximately 5%. Odyssey's gross premiums written were down 5.2%, principally at Hudson and in their London market division, offset by a decrease in their reinsurance business, which was down 10.7%. The reinsurance business was impacted by the previously disclosed non-renewal of a large quota share in the fourth quarter of 2023.

Jennifer J. S. Allen: Written premium was up 2% to $913 million in the quarter with growth in its direct book, primarily property largely offset by contractions in reinsurance and discontinued lines.

Jennifer J. S. Allen: While King key continued to grow and was up approximately 5%.

Jennifer J. S. Allen: Odyssey's gross premiums written were down five 2% with its insurance business up 4.8, principally at Hudson and then their London market Division.

Jennifer J. S. Allen: All set by a decrease in our reinsurance business, which was down 10, 7%.

Jennifer J. S. Allen: The reinsurance business was impacted by the previously disclosed non renewal of a large quota share in the fourth quarter of 2023.

Peter S. Clarke: Excluding the quota share contract, Odyssey's reinsurance business was up 3% in the first quarter of 2020. Our international operations gross premium was up significantly in the first quarter of 2024 versus the first quarter of 2023, with gross written premium of $1.6 billion, up 78% or $694 million. The growth was primarily the result of the consolidation of golf insurance that added $649 million of gross premium in our international operation. Excluding golf, our international operations gross premiums were up 5%.

Jennifer J. S. Allen: Excluding the quota share contract Odyssey's reinsurer <unk> business was up 3% in the first quarter of 2024.

Jennifer J. S. Allen: Our international operations gross premium was up significantly in the first quarter of 2024 versus the first quarter of 2023 with gross written premium up $1 6 billion.

Jennifer J. S. Allen: Up 78% or $694 million.

Jennifer J. S. Allen: The growth was primarily the result of the consolidation of golf insurance that added 649 million of gross premium.

International Operation.

Jennifer J. S. Allen: Excluding golf, our international operations gross premiums were up 5%.

Peter S. Clarke: Growth with Strong Act, Colonnade Insurance, Polish Re, Eurolife, and our Ukrainian operations will be offset by Fairfax. Additionally, with the closing in the fourth quarter of 2023 of our acquisition of an additional 46% interest in golf insurance, and an additional 7% in April 2024.

Jennifer J. S. Allen: Both with strong colonnade insurance Polish read your life and our Ukrainian operations.

Set by Fairfax Asia.

Jennifer J. S. Allen: With the closing in the fourth quarter of 2023 of our acquisition of an additional 46% interest in golf insurance.

Jennifer J. S. Allen: And then an additional 7% in April 2024.

Peter S. Clarke: Approximately 20% of our consolidated gross premium is now coming from our international operations, with the addition of Gulf Insurance, our consolidated resolve. It provides further diversification and scale within our insurance and reinsurance operations. As we have said in the past, the long-term prospects of our international operations are excellent and will be a significant source of growth over time.

Jennifer J. S. Allen: Approximately 20% of our consolidated gross premium is now coming from our international operations.

Jennifer J. S. Allen: With the addition of golf insurance, our consolidated results.

Jennifer J. S. Allen: It provides further diversification and scale within our insurance and reinsurance operations.

Jennifer J. S. Allen: As we said in the past our long term prospects of our international operations are excellent and will be a significant source of growth over time.

Peter S. Clarke: Driven by excellent management teams, underpenetrated insurance markets, and a strong local economy, our combined ratio was 93.6 in the first quarter of 2024, producing an underwriting profit of $373 million. The combined ratio included catastrophe losses of $101 million, adding 1.7 combined ratio points, primarily from attritional catastrophe law. This compares to a combined ratio of 94% and catastrophe losses of 3.7 points in the first quarter of 2023. Our global insurers and re-insurers posted a combined ratio of 91.6 in the first quarter.

Jennifer J. S. Allen: Driven by excellent management teams Underpenetrated insurance markets and strong local economies.

Jennifer J. S. Allen: Our combined ratio was $93 six in the first quarter of 2024, producing an underwriting profit of $373 million.

Jennifer J. S. Allen: The combined ratio included catastrophe losses of 101 million, adding 1.7 combined ratio points.

Jennifer J. S. Allen: Primarily from Attritional catastrophe losses.

Jennifer J. S. Allen: This compares to a combined ratio of 94% and catastrophe losses of $3 seven points in the first quarter of 2023.

Jennifer J. S. Allen: Our global insurers and reinsurers posted a combined ratio of 91 six in the first quarter.

Peter S. Clarke: Britt had a great start to the year with a combined ratio of 89.7 and $75 million of underwriting profit, reflecting the positive underwriting actions taken over the last number of years. Allied World produced the largest underwriting income in the group at $100 million and a combined ratio of 91.5, with strong results in both its global insurance segment and reinsurance segment. Odyssey Group produced a combined ratio of 92.8, including an 87.3 combined ratio in its reinsurance business.

<unk> had a great start to the year with a combined ratio of $89 seven and $75 million of underwriting profit.

Jennifer J. S. Allen: Reflecting the positive underwriting actions taken in the last number of years.

Jennifer J. S. Allen: Allied World produced the largest underwriting income in the group at $100 million and a combined ratio of 91 five with strong results in both its global insurance segment and reinsurance segments.

Jennifer J. S. Allen: Odyssey group produced a combined ratio of 92.8, including at 87, three combined ratio and its reinsurance business.

Peter S. Clarke: Our North American insurers had a combined ratio of 94.7 in the first quarter of 2024 and an underwriting profit of $90 million, led by Northbridge with another strong quarter at a 91 combined ratio. Kermit Forster had a combined ratio of 95.9, while Zenith had a combined ratio of 99.1 with the benefit of favorable reserve development.

Jennifer J. S. Allen: Our North American insurers had a combined ratio of 94.7 in the first quarter of 2024, and an underwriting profit of $90 million led.

Jennifer J. S. Allen: Led by North bridge with another strong quarter at a 91 combined ratio.

Jennifer J. S. Allen: Crum <unk> Forster at a combined ratio of $95 nine while DNS had a combined ratio of $99 one with the benefit of favorable reserve development.

Peter S. Clarke: Our international operations delivered a combined ratio of 98.5 in the first quarter. Fairfax Asia had another good quarter with a combined ratio of 93.8. And our Latin American operations came in at 94.2, with our Central and Eastern European operations producing a solid 94.8.

Jennifer J. S. Allen: Our international operations delivered a combined ratio of $98 five in the first quarter.

Fairfax Asia had another good quarter with a combined ratio of 93, eight and our Latin American operations came in at 94 point to.

Jennifer J. S. Allen: With our central and eastern European.

Jennifer J. S. Allen: Operations, producing a solid 94 eight.

Peter S. Clarke: Golf Insurance had an elevated combined ratio of 103.4 compared to the past that reflected seasonality in its medical book, some losses in Turkey, and purchase price adjustments on the acquisition. We expect that over the course of the year, Golf will continue to boast combined ratios similar to previous years. On a consolidated basis, our international operations produced underwriting profit of $14 million, or $27 million excluding golf insurance. Our insurance and reinsurance companies continue to manage their business, and performance continues to be measured on underwriting profit on an undiscounted basis.

Jennifer J. S. Allen: Gulf Insurance had an elevated combined ratio in the quarter of $103 four compared to the past that reflected seasonality in its medical book losses in Turkey, and purchase price adjustments on the acquisition.

Jennifer J. S. Allen: We expect over the course of the year golf will continue to both combined ratios similar to previous years.

Jennifer J. S. Allen: On a consolidated basis, our international operations produced underwriting profit of $14 million or $27 million, excluding golf insurance.

Jennifer J. S. Allen: Yeah.

Jennifer J. S. Allen: Our insurance and reinsurance companies continue to manage their business and performance continues to be measured on underwriting profit on an undisclosed basis.

Peter S. Clarke: For disclosure purposes, we have provided in our press release and interim report the discounted combined ratio. For the first quarter, the discounted combined ratio was 82.9 compared to the undiscounted combined ratio of 93.6. For the quarter, our insurance and reinsurance companies' prior year development was relatively flat, with reserve development of 30 million with favorable reserve development of 30 million, or a benefit of half a combined ratio point. This is the same as the first quarter of 2023, with a slightly higher benefit on the combined ratio of 0.6 combined ratio points due to lower premium volume. Typically, there's not a lot of movement on reserves in the first quarter, as full actuarial reserves, and reserve reviews are done in the fourth quarter of the year.

Jennifer J. S. Allen: For disclosure purposes, we have provided in our press release and interim report that discounted combined ratio.

Jennifer J. S. Allen: For the first quarter, the discounted combined ratio was $82 nine.

Jennifer J. S. Allen: Compared to the on discounted combined ratio of $93 six.

Jennifer J. S. Allen: For the quarter, our insurance and reinsurance companies prior year development was relatively flat with reserve development of $30 million with favorable reserve development of $30 million or a benefit of have a combined ratio point. This.

Jennifer J. S. Allen: This is the same as the first quarter of 2023.

Jennifer J. S. Allen: With a slightly higher benefit on the combined ratio of <unk> six combined ratio points due to lower premium volume.

Jennifer J. S. Allen: Typically there's not a lot of movement on reserves in the first quarter as full actuarial reserves reserve reviews are done in the fourth quarter of the year IRA.

Peter S. Clarke: Our reserves remain strong. Through our decentralized operations, our insurance and reinsurance companies continue to thrive, consistently producing solid underwriting profits and led by exceptional management teams. Our companies are positioned very well to continue capitalizing on their opportunities in their respective markets in 2024. I will now pass the call to Wade Burton to provide some additional comments on our investment.

Jennifer J. S. Allen: Our reserves remain strong.

Jennifer J. S. Allen: Through our decentralized operations, our insurance and reinsurance companies continue to thrive.

Jennifer J. S. Allen: Consistently producing solid underwriting profit and led by exceptional management teams.

Jennifer J. S. Allen: Our companies are positioned very well to continue capitalizing on their opportunities in their respective markets in 2024.

Jennifer J. S. Allen: I will now pass the call to Wade Burton to provide some additional comments on our investments.

Wade Sebastian R. E. Burton: Thank you, Peter. Good morning.

Wade Burton: Thank you Peter good morning.

Wade Sebastian R. E. Burton: I'll give a rundown of the investment portfolio at the end of the quarter. It stands at around $65 billion U.S., including $9.3 billion cash in short-term treasuries, the fixed income portfolio is $46 billion, and the rest of the $19 billion is in equities in the form of associated investments, limited partnerships, preferred, and common stock. A fixed income portfolio is built for safety. Government bonds make up the vast majority, with some smaller investments in short-term investment-grade corporates and first mortgages.

Wade Burton: I'll give a rundown of the investment portfolio at the end of the quarter. It stands at around $65 billion, including $9 3 billion cash and short term treasuries. The fixed income portfolio is 46 billion and the rest of the $19 billion in equities in the form of associated investments limited partnerships preferred and common stocks.

Wade Burton: The fixed income portfolio was built for safety.

Wade Burton: Government bonds make up the vast majority with some smaller investments in short term investment grade corporates and first mortgages.

Wade Sebastian R. E. Burton: Including cash and short-term treasuries, the duration of the fixed income portfolio is 2.8 years, and the yield is 5%. The mortgage book stands at $4.8 billion, all first mortgages, and the duration is under two years.

Wade Burton: Including cash and short term treasuries the duration on the fixed income portfolio was two eight years and the yield is 5%.

Wade Burton: The mortgage book stands at $4 8 billion all are first mortgages and the duration is under two years.

Wade Sebastian R. E. Burton: These mortgages provide us with excellent income yielding over 8.25%, and they're monitored closely by us and by Kennedy Wilson, our long-term partners in real estate. Prem, Brian Bradstreet, Lawrence Chin, and I and the rest of the HWIC team continue to watch the inflation data very closely. We think it will be difficult for the Fed to drop rates if inflation stays above 3%.

These mortgages provide us with excellent income yielding over eight 5% and they are monitored closely by us and by Kennedy Wilson, our long term partners and real estate.

Speaker Change: Graham, Brian Bradstreet, Lawrence Chin, and I and the rest of the <unk> team continued to watch the inflation data very closely.

Speaker Change: We think it'll be difficult for the fed to drop rates, if inflation stays above 3%.

Wade Sebastian R. E. Burton: We might be in a higher rate environment for longer than many expect, and our view is the higher interest costs will likely take a bite out of growth as they pass through the system. The point is, it's unsure whether rates are going to settle up higher or lower, but our portfolios are well-structured to handle it either way, and as I said, we're watching it very closely. As for the $19 billion in equity and equity-like investments, associate investments make up the bulk.

Speaker Change: We might be at a higher rate environment for longer than many expect and our view is the higher interest costs will likely take a bite out of growth as they pass through the system.

The point is it's unsure whether rates are going to settle up higher or lower but our portfolios are well structured to handle it either way and as I said, we're watching it very closely.

Speaker Change: Yeah.

Speaker Change: As for the 19 billion in equity and equity like investments the associate investments make up the bulk of.

Wade Sebastian R. E. Burton: These are the companies where we have strategic or significant investments like Poseidon and Euro. They are, on the whole, doing well, and we believe they are cheap against carrying value. Of the key investments, only two had negative net income in 2023. One is Farmer's Edge, which we've written to zero, and the other is Gravalia Hospitality. Our CEO there, George Chrysokos, estimates that once it's fully matured, the one and only resort in Athens alone is perhaps worth more than the entire carrying value of Gravalia Hospitality on our board. I would also add two things.

Speaker Change: These are the companies, where we have a strategic or significant stake.

Speaker Change: Since like Poseidon and Eurobank.

Speaker Change: They are on the whole doing well and we believe cheap against carrying value.

Speaker Change: Of the key investments only two had negative net income in 2023, one as farmers edge, which we've written to zero and the other is grevillea hospitality.

Our CEO Darren George Chris Coast estimates that once its fully matured the one and only resort in Athens alone is perhaps worth more than the entire carrying value of gabelli of hospitality on our books.

Speaker Change: I would also add two things one front end losses is the nature of high end resort development. So these early year losses are to be expected.

Wade Sebastian R. E. Burton: One, front-end losses are the nature of high-end resort development, so these early-year losses are to be expected, and two, Grevalia is tracking to plan with George in charge. And given the outstanding set of assets that we have, we are confident about a good outcome here. Common stocks make up a small percentage of the equity portfolio at less than $5 billion, not including LPN value. North American stock markets are high, and as you'd expect, we aren't seeing a ton of opportunity.

Speaker Change: And to go Valeant is tracking to plan.

Speaker Change: With Georgia charge and given the outstanding set of assets that we have we're confident about a good outcome here.

Speaker Change: Common stocks make up a small percentage of the equity portfolio at less than 5 billion not including LP investments.

Speaker Change: North American stock markets are high and as you'd expect we aren't seeing a ton of opportunities here.

Wade Sebastian R. E. Burton: So to summarize, the portfolio is built to be safe first. We manage the investments the way Prem, Peter, Andy, Brian, and all of our presidents manage their insurance. Protecting our downside, being opportunistic, and not too concerned or focused on quarter-by-quarter fluctuation. For now, we've locked in good interest income, taken very little credit risk, and we haven't extended duration too far, given worries about inflation. And, in the main, our equity investments are cheap, soundly financed, and doing well. I'll now turn it over to Jen Allen.

Speaker Change: So to summarize the portfolio is built to be safe first we manage the investments the way Prem Peter Andy Brian and all of our presidents manage their insurance businesses.

Speaker Change: Protecting our downside being opportunistic and not too concerned or focused on quarter by quarter fluctuations.

Speaker Change: For now we've locked in good interest income taken very little credit risk and we have an extended duration too far given worries about inflation.

Speaker Change: And in the main our equity investments, our chief soundly financed and doing well.

I'll now turn it over to Jen Allen.

Jennifer J. S. Allen: Thank you, Wade. I'll begin my comments on the net benefit IFRS 17 had on our consolidated statement of earnings in the first quarter of 2024. In the first quarter of 2024, net earnings of $777 million included a pre-tax net benefit of $273 million related to IFRS 17. This pre-tax benefit was reported within two financial statement lines in our consolidated statement of earnings. First, included with the insurance service result line was the benefit from discounting losses and ceded losses on claims.

Jennifer J. S. Allen: Thank you.

Jennifer J. S. Allen: I'll begin my comments on the net benefit I first 17 had within our consolidated statement of earnings in the first quarter of 2024.

Jennifer J. S. Allen: In the first quarter of 2024 net earnings at 777 million included a pre tax net benefit of $273 million related to <unk>.

Jennifer J. S. Allen: That's pre tax benefit was reported within <unk> financial statement lines in our consolidated statement of earnings.

Jennifer J. S. Allen: First included with insurance service was outlined was the benefit from discounting losses and ceded loss on claims.

Jennifer J. S. Allen: Net Inchanges and Risk Adjustment and Other of $439 million, which was partially offset by the second component that we present in the separate line in the financial statement, net finance expense from insurance and reinsurance contracts of $166 million in the quarter, which was comprised of interest decrement or an expense of $358 million reflecting the unwinding of the effects from discounting associated with net claims paid made during the period, which was partially offset by the benefit of the effect As Peter noted, the benefit of the effective increases in discount rates on prior year net losses on claims of $192 million partially offset our net losses recorded on the company's bond portfolio of $319 million during the period.

Jennifer J. S. Allen: I didnt changes in risk adjustment are there are $439 million.

Jennifer J. S. Allen: It was partially offset by the second component that we presented in a separate line in our financial statement.

Jennifer J. S. Allen: Net finance expense from insurance and reinsurance contracts of $166 million in the quarter.

Jennifer J. S. Allen: Which was comprised of interest accretion.

Jennifer J. S. Allen: Hence a 358 million, reflecting the unwinding of the effects from discounting associated with net claims paid made during the period.

Jennifer J. S. Allen: Which was partially offset by the benefit of the effective increased discount rates during the period on prior year net losses on claims of $192 million.

Jennifer J. S. Allen: As Peter noted the benefit of the effective increases and discount rate on prior year net losses on claims of $192 million.

Jennifer J. S. Allen: Partially offset our net losses recorded on the company's bond portfolio of $319 million in the period.

Jennifer J. S. Allen: This compared to a pre-tax net benefit in the first quarter of 2023 of $310 million that was comprised of the same components I just commented on for 2024. Namely, it included the insurance service result line with the benefit from the discounting of losses and cedar losses on claims, net of changes in the risk adjustment of $474 million, which was partially offset by the net finance expense from insurance and reinsurance contracts of $163 million.

This compared to a pre tax net benefit in the first quarter of 2023 of $310 million that was comprised of the same components I just commented on for 2024.

Jennifer J. S. Allen: Mainly it included the insurance service result line with the benefit from discounting of losses and ceded lost time claims.

Jennifer J. S. Allen: The changes in the risk adjustment of $474 million.

Jennifer J. S. Allen: Which was partially offset by the net finance expense and insurance and reinsurance contracts of $163 million that reflected interest accretion or an expense of $331 million in the quarter related to the unwinding of the effects from discounting.

Jennifer J. S. Allen: That reflected interest accretion or an expense of $331 million in the quarter related to the unwinding of the effects from discounting, and it was partially offset by a benefit from an increase in discount rates in the respective periods of $168 million. A few comments on our non-insurance company results in the quarter. Our non-insurance company reported operating income of $17 million in the first quarter of 2024, compared to an operating loss of just under $1 million in the first quarter of 2023.

Jennifer J. S. Allen: And it was partially offset by a benefit from an increase in discount rates and the respective periods of 168 million.

Jennifer J. S. Allen: Excluding the impact of Fairfax, India's performance fee to Fairfax and accrual of nil and a reversal of an accrual of 14 and a half million in the first quarters of 2024 and 23, respectively, and the impact of a non-cash goodwill impairment charge on our non-insurance companies recorded during the first quarter of 2023. The operating income of our non-insurance company increased to $17.3 million in the first quarter of 2024, up from $8.5 million in the first quarter of 2023. The increase primarily reflected lower operating expenses in our other segments and increased operating income at AGT.

Speaker Change: A few comments on our non insurance company results in the quarter.

Speaker Change: Our non insurance company reported operating income in the first quarter of 2024 17 million compared to an operating loss of just under $1 million in the first quarter of 2023.

Speaker Change: Excluding the impact of Fairfax, India performance fee to Fairfax, and accrual of nil and a reversal of an accrual of 14 and a half million dollars in the first quarters of 2024 and 23, respectively.

Speaker Change: And the impact of a noncash goodwill impairment charge on our non insurance companies recorded during the first quarter 2023.

Speaker Change: The operating income of our non insurance company increased to $17 3 million in the first quarter of 24 up from eight and a half million dollars in the first quarter of 2023.

The increase primarily reflected lower operating expenses in our other segment and increased operating income at ADT.

Jennifer J. S. Allen: This was partially offset by lower operating income at Fairfax, India, primarily related to its share of profit in association. Turning to our consolidated share profit of Associates of $127 million in the first quarter of 2024, it principally reflected a share profit of $79.3 million from Eurobank. $36 million from Exco, $35 million from Poseidon, which was partially offset by a share of loss of $29 million from Helios Fairfax Partners and no share of profit from Gulf Insurance in the first quarter of 24, as Gulf Insurance as of December 26, 2023, is now consolidated into our results, where the first quarter of 23 included a share of profit of $29 million from Gulf Insurance.

Speaker Change: This was partially offset by lower operating income at Fairfax, India, primarily related to its share profit and associate.

Speaker Change: Turning to our consolidated share of profit of associates of $127 million in the first quarter of 2024 at.

Speaker Change: It principally reflected the share of profit of $79 3 million from Eurobank.

$36 million from Exco $35 million from deciding which was partially offset by share of loss of $29 million from Helios Fairfax partners.

Speaker Change: And no share of profit from golf insurance in the first quarter of 'twenty four as golf insurance as of December 26, 2023 is now consolidated into our results for the first quarter of 'twenty. Three included a share of profit of $29 million from golf insurance.

Jennifer J. S. Allen: A note on the share profit of 79.3 from Eurobay: This also included approximately $45 million of recycling or reclassification of foreign currency losses from other comprehensive income to the statement of earnings as a result of their sale of a subsidiary. These foreign currency losses had no impact on our carrying value of our investment in Eurobanks, and our share of profit from Eurobank in the first quarter of 2024 adjusted for this reclassification at $124 million, up $30 million from the first quarter of 2023.

Speaker Change: A note on the share of profit of $79 three from Euro Bank.

Speaker Change: This also included approximately 45 million of recycling or reclassification of foreign currency losses from other comprehensive income to the statement of earnings as a result of their sale of a subsidiary.

Speaker Change: These foreign currency losses had no impact on our carrying value of our investment in Eurobank and share of profit from Euro bank in the first quarter of 2024 adjusted for this reclassification was 124 million up $30 million from the first quarter of 2023.

Jennifer J. S. Allen: We had one key transaction closed subsequent to March 31st, 24, where the company completed a mandatory tender offer for the non-controlling interest in Gulf Insurance that increased our equity interest from 90% to 97.1% for cash consideration of $127 million. I'll close with a few comments on our financial condition.

We had one key transaction closed subsequent to March 31, 24, where the company completed a mandatory tender offer for the Noncontrolling interest in golf insurance.

Speaker Change: It increased our equity interests from 90% to 97, 1% for cash consideration of $127 million.

Speaker Change: I'll close with a few comments on our financial condition. During the first quarter of 2024, we completed four debt transactions on January 12, 24, we completed the reopening of our 400 million principal amount of 6% notes that were giving 2033 for an additional 200 million principle.

Jennifer J. S. Allen: During the first quarter of 2024, we completed four debt transactions. On January 12, 24, we completed the reopening of our 400 million principal amount of 6% notes that were due in 2033 for an additional 200 million principal. Then on January 29th, 2024, we used a portion of the net proceeds from those 2033 offerings to redeem our $279 million principal amount of 4.875 notes that were due in 2024. And then on March 15th, 2024, we used the remainder of the net proceeds from the 2033 offering to redeem our Canadian $349 million principal amount of our 4.95 notes that were due in 2025.

Speaker Change: Then on January 29, 2024, we used a portion of the net proceeds from those 2033 offering to redeem our 279 million principal amount of $4 875 notes that we're giving 2024.

Speaker Change: And then on March 15th 2024, we issued.

Speaker Change: We use the remainder of the net proceeds from the 2033 offering.

Speaker Change: To redeem our Canadian 349 million principal amount of our $4 95 notes that were due in 2025.

Jennifer J. S. Allen: And lastly, on March 22, 2024, we completed an offering for $1 billion principal amount of 6.35 unsecured notes that are due in 2054, a 30-year issuance. The result of those offerings is reflected in our liquidity position of the company.

Speaker Change: And lastly on March 22nd 2024, we completed an offering for 1 billion principal amount of $6. Three five unsecured notes that argue in 2054, a 30 year issuance.

Speaker Change: The result of those offerings is reflected in our liquidity position of the company.

Jennifer J. S. Allen: At March 31, 2024, our cash investments at the holding company were $2.5 billion, an increase from December 31, 2023 of $1.8 billion, principally reflecting our recent $1 billion 30-year debt issue. Additional significant transactions in the first quarter of 2024 included dividends received from our insurance and reinsurance companies of $451 million, receipt of Fairfax India's performance fee of $110 million, and it was partially offset by net distributions for our payments made on our common and preferred share dividends of $376 million.

Speaker Change: At March 31st 2024, our cash and investments at the holding company was 2.5 billion an increase from December 31, 2023 at $1 8 billion, principally reflecting our recent 1 billion 30 year debt instrument.

Speaker Change: Additional significant transactions in the first quarter of 'twenty four included dividends received from our insurance and reinsurance companies of 451 million receipt of Fairfax, India performance fee of $110 million and it was partially offset by net distributions for our payments made on our common and preferred share dividends of 376 million.

Speaker Change: Ian.

Jennifer J. S. Allen: Purchases for the cancellation of $240,700 subordinate voting shares at a cost of $260 million and a capital contribution to our insurance operations of $140 million. The holding company also has access to our fully undrawn $2 billion unsecured revolving credit facility. We also own investments in associates and consolidated non-insurance companies of $1.7 billion, but that's not included within our holding company cash and investments balance. And we now have no long-term debt maturities until April 2026.

Speaker Change: Purchases for cancellation of 247000 subordinate voting shares at a cost of $260 million.

Speaker Change: And a capital contribution to our insurance operations of $140 million.

Speaker Change: The holding company also has access to our fully Undrawn 2 billion unsecured revolving credit facility.

Speaker Change: We also own investments in associates and consolidated non insurance companies of $1 7 billion. That's not included within our holding company cash and investments balance and.

Speaker Change: And we now have no long term debt maturities until April 2026.

Jennifer J. S. Allen: At March 31st, 2024, the excess of our fair value over carrying value of the investments and our non-insurance associates and Market Traded Consolidated Non-Insurance Subsidiaries was $1.2 billion compared to $1.2 billion at December 31, 2023. As Peter noted, the pre-tax excess of $1.2 billion is not reflected in our book value per share but is regularly reviewed by management as an indicator of investment performance. The company's total debt to total cap ratio, excluding our non-insurance companies, increased to 24.4% at March 31st, 2024, compared to 23.1% at December 31st, 2023, and this principally reflected the issuance of our senior notes due in 2054.

Speaker Change: At March 31, 2020 for the excess of our fair value over carrying value of the investments in our non insurance associates.

Speaker Change: And the market traded consolidated non insurance subsidiaries was $1 2 billion compared to the 1 billion at December 31 2023.

As Peter noted the pretax excess of $1 2 billion is not reflected in our book value per share, but its regulated reviewed by management as an indicator of the investment performance.

Speaker Change: The company's total debt to total cap ratio, excluding our non insurance companies increased to 24, 4% at March 31st 2024, compared to 23, 1% at December 31, 2023, and it principally reflected the issuance of our senior notes due in 2054.

Jennifer J. S. Allen: Book value per basic share of $945.44 at March 31st, 2024, compared to $939.65 at December 31st, 2023, representing an increase in per basic share in the first quarter of 2024 of 2.3% adjusted to include the $15 per common share dividend that we paid in the first quarter of 2024. And lastly, our common shareholders' equity modestly decreased by $29.5 million to just under $21.6 billion, or just over $21.6 billion at December 31, 2023.

Speaker Change: Book value per basic share at $945 and 40% at March 31 24.

Speaker Change: Compared to $939.65 at December 31, 23, representing an increase in per basic share in the first quarter of 'twenty four.

Speaker Change: Two 3% adjusted to include the $15 per common share dividend that we paid in the first quarter of 2024.

Speaker Change: And lastly, our common shareholders' equity modestly decreased by 29, and a half million to just under $21 6 billion.

Speaker Change: Just over $21 6 billion at December 31, 2023.

Jennifer J. S. Allen: This primarily reflected the payments of our common and prefect dividends of $376 million, our purchases of 240.7 thousand subordinate voting shares for cancellation for cash consideration of $260 million, or U.S. $1,081 per share, and other comprehensive income losses of $149 million related to unrealized foreign currency losses, net of hedges. And, of course, this was partially offset by our strong net earnings in the quarter of $777 million. That concludes my remarks for the first quarter of 2024, and I'll now turn the call back over to Peter.

Speaker Change: This primarily reflected the payments of our common and preferred dividends of $376 million.

Speaker Change: Our purchases of 247000 subordinate voting shares for cancellation for cash consideration of 260 million or U S $1081 per share and other comprehensive income loss of $149 million related to unrealized foreign currency losses net of hedges.

Speaker Change: And of course, this was partially offset by our strong net earnings in the quarter of $777 million.

Speaker Change: That concludes my remarks for the first quarter of 2024, and I'll now turn the call back over to Peter.

Peter S. Clarke: Thank you Jan.

Peter S. Clarke: And before we go on to questions, I would just like to pass this to Prem to make one quick comment.

And before we go on to questions I would just like to pass it to Prem to make one quick comment.

Prem Watsa: Thank you very much, Peter. I really am heartbroken to let you know that I heard from Rick Salzberg's daughter yesterday morning that he had passed away in his sleep. Rick was our partner, trusted friend, and consul for almost four decades. He loved Fairfax, and we would not be here without him. And everybody loved Ricky, all of us at Fairfax, his family, friends, neighbors, and just about anyone he met on the subway. Fairfax will never be the same.

Thank you very much a beta.

Prem: Really I'm heartbroken to let you know that I heard from Rick Salsberg, daughter yesterday morning that he had passed away and asleep.

Prem: Correct Pushout partner.

Prem: <unk> friend and consigliere for almost four decades, they love Fairfax and he and we would not be here without them.

Prem: And everybody loved Ricky all of US at Fairfax is family friends neighbors, and just about anyone who you met on the subway.

Prem: <unk> will never be the same.

Prem Watsa: In honor of Ricky and in remembrance of him, Fairfax will close its head office on Monday, May 6. Please keep his wife, Lynn, his daughter, Lee, his son, Aaron, and all the family in your prayers. And God bless Ricky's family. I just wanted to end by thanking the good Lord for giving us Ricky for almost four decades and taking him away to heaven when we were at our strongest. I will now pass it on to Peter for the Q&A.

Prem: In honor of Ricky and in memory Remembrance of him.

Prem: <unk> will close its head office on Monday may 6th.

Prem: Keep his wife lend his daughter of Lee as Sun, Aaron and of all the family in your press and God Bless Ricky's family I just wanted to end by thanking the good Lord forgiving us Ricky for almost four decades, and taking them a way to happen when we were at our strongest.

Prem: Position I will now pass it on to Peter for the Q&A Brita.

Peter S. Clarke: Thank you, Prem. We are now happy to take any questions you might have.

Peter S. Clarke: Thank you Pam we are now happy to take any questions you might have.

Operator: Thank you, sir. To ask a question, please press star 1. Please unmute your phone. If you did muffle and record your name clearly when prompted, your name is needed to introduce your question. If you want to withdraw your question, you may press star 2. But again, please press star 1 and we will get your question uploaded. One moment, please, for the first question, and that will be from Tom MacKinnon with BMO Capital. Your line is open.

Peter S. Clarke: Thank you Sir.

Peter S. Clarke: To ask a question. Please press star one please on mute your phone if you did mute and record your name clearly when prompted your name is needed to introduce your questions.

Peter S. Clarke: Do you care to withdraw your question you May press Star two but again, please press star one.

Peter S. Clarke: And we will get your question uploaded one moment. Please for the first question.

Peter S. Clarke: And that will be from Tom Mackinnon with BMO capital. Your line is open.

Tom MacKinnon: Yeah, thanks very much. This question for Wade or Peter, just with respect to the total return swaps you have on your own shares, can you talk about why you continue to hold them, the duration of them, are they kind of settled in cash quarterly, what's involved in perhaps not renewing them, and as a follow-on if you can tie that, you're still buying back stock as well, so you have two approaches here, maybe the strategy with respect to using those two approaches and how you Transcripts provided by Transcription Outsourcing, LLC.

Tom MacKinnon: Yeah, Thanks very much.

Tom MacKinnon: This question for weight or Peter just with respect to the total return swap.

Tom MacKinnon: Swaps you have on your own shares are.

Tom MacKinnon: Can you talk about why you continue to hold and the duration of them or are they kind of settled into cash quarterly what's involved and perhaps not renewing them and as a follow on if you can tie that you're still buying back stock as well. So you have two approaches here maybe.

Tom MacKinnon: The strategy with respect to using those two approaches and how you.

Tom MacKinnon: Will you continue to buyback your stock you seem to have accelerated that a little bit as well.

Speaker Change: So a bit of a mouthful there, but hopefully you can take down on thanks.

Peter S. Clarke: Hey, thanks, Tom. This is Peter here.

Speaker Change: Hey, Thanks, Tom This is Peter here.

Peter S. Clarke: Yeah, we continue to hold our our Trs position on Fairfax.

Peter S. Clarke: Yeah, we continue to hold our TRS position on Fairfax. You know, we think it's a great investment position to have the contracts. There's an expiry period at the end of 2025 and 2026, but they can always be extended anytime. So just with the fundamentals of Fairfax, you know, we continue to think it's a really good investment and we will hold on to that. Obviously, the mechanics behind them are different with different credit parties, but they reset approximately half of them reset on a quarterly basis.

Peter S. Clarke: We think we think it's a great investment are positioned to have.

Peter S. Clarke: The contracts you know theres, an expiry period at the end of 2020 25 in 2026, they can always be extended anytime so just with the fundamentals of Fairfax.

Peter S. Clarke: We continue to think it's a really good investment and we will hold onto that essentially the on the mechanics behind them are different with different credit parties, but they reset approximately half of them reset on a quarterly basis.

Peter S. Clarke: And again, on our share buybacks, we like Fairfax and think the share price is at a fair value, but we always balance that with our financial strength and our financial rating. So we'll continue to monitor that on an ongoing basis.

Peter S. Clarke: And again on our share buybacks.

Peter S. Clarke: We like we like the Fairfax and we think the share prices are at a fair value, but we always balance that.

Peter S. Clarke: You know with our financial strength and our financial ratings. So we will continue to monitor that on an ongoing basis.

Operator: Our next question is from Scott. Scott Heleniak with RBC Capital Markets, your line is now open.

Speaker Change: Our next okay, if I can spend right.

Speaker Change: Scott <unk> with RBC capital markets. Your line is now open.

Scott: One moment for that.

Operator: Mr. Heleniak, your line is open. Hello, can you hear me? Yes, sir. Please go ahead. Okay.

Scott: Mr. <unk> your line is open.

Scott: Hello.

Scott: Okay.

Scott: Hello can you hear me yeah.

Speaker Change: Yes, Sir please go ahead okay.

Scott Gregory Heleniak: How are you thinking about premium growth across the different units? It seems like it's still a pretty attractive environment, and rates are up, from what I hear. It looks like you're scaling back maybe in a few areas, honestly, or maybe property a little bit, but just wondering if you can just talk about how you're thinking about growth, where you're seeing the opportunities, and just generally comment on the rate environment and whether anything's really changed across your business.

Speaker Change: Yeah I was just wondering if you are how.

Speaker Change: How are you thinking about premium growth across the different units.

Speaker Change: It seems like it's still a pretty attractive environment and rates are up from what I hear.

Speaker Change: It looks like you're scaling back maybe in a few areas Odyssey rear or maybe property a little bit but just wondering if you can just talk about how youre thinking about growth.

Speaker Change: What are you seeing any opportunities and just kind of generally comment on the on the rate environment and.

Speaker Change: Whether anything's changed really.

Speaker Change: Ross for your businesses.

Speaker Change: Yes.

Peter S. Clarke: No, sure, Scott. You know, over the last, you know, the 2019 to 2023 period, the market was extremely hard, and we took advantage of that. And we grew almost by 15% annually over that time period. Now, rates have come off somewhat, you know, more in certain lines of business, in particular on the cyber book and on, you know, the DNO, where we're seeing rate decreases, including workers comp. And on those other lines, you know, pricing can be down in excess of 10%.

Ross: No sure Scott you know over the last you know that 2019 to 'twenty 'twenty. Three period are you know the market was extremely hard and we took advantage of that and we grew almost by 15% annually over that time period now rates have come off somewhat.

Ross: More in certain lines of business in particular on the cyber book and on our you know the DNO, where we're seeing rate decreases including workers' comp and on those other lines you know pricing can be down in excess of 10%, but on many of the other lines, we're still seeing.

Ross: You know strong a strong pricing, we're seeing our pricing in excess of our loss costs and and there's many opportunities to continue to grow the book Excluding golf you know.

Peter S. Clarke: But on many of the other lines, we're still seeing, you know, strong, strong pricing; we're seeing our pricing in excess of our loss costs, and there are many opportunities to continue to grow the book. Excluding golf, which inflated our premium number in the quarter, we grew on a gross basis about 5%. And on a net, and that probably is closer to 7%, especially when you exclude a one-off transaction at Odyssey that we mentioned in the fourth quarter last year, that was a large quarter share that they didn't renew.

Ross: Which inflated our premium number in the quarter, we grew up on a gross basis about 5% and on a net and.

Ross: And that probably closer to 7%.

Ross: Especially when you exclude a one off transaction at Odyssey that we mentioned in the fourth quarter of last year that was a large quota share that they didnt renew so our companies still see opportunities and are looking to take forward.

Peter S. Clarke: So our company still sees opportunities and is looking to take forward take advantage of that. And just with our scale and diversification, you know, both by product and by geography, we have a lot of, you know, ability to still continue to grow. Next question, Fran.

Ross: And then take.

Ross: Take advantage of that and just with our scale and diversification both by product and by geography, we have a lot of our.

Ross: Our ability to still continue to grow.

Fran: Next question Fran.

Daniel Baldini: From Daniel Baldini with Oberon. Your line is open.

Fran: From Daniel Baldini with Oberon Your line is open.

Peter S. Clarke: Hi, thanks for taking my call. I'll preface it by saying that I don't follow a lot of insurance companies, but my impression is that the reinsurance market, I guess globally, remains pretty strong. And I noted Arches Results the other day; they have a big reinsurance operation, and they had... Net premiums written up 31% with a 77% combined ratio, so I realized there was something unusual a year ago at Odyssey, but the net premiums written are down 2.7%. So I'm just curious about Odyssey's opinion about the reinsurance market. Yeah, the reinsurance market, you know.

Daniel Baldini: Alright, thanks for taking my <unk>.

Daniel Baldini: Up to the previous one no I'll preface it by saying that I don't follow a lot of insurance companies, but my impression is that the reinsurance market I guess globally remains pretty strong and I noted arches results. The other day, they have a big reinsurance operation and they had.

Daniel Baldini: Net premiums written up 31% with a.

Daniel Baldini: 77% combined ratio so.

Daniel Baldini: I realized there was something unusual a year ago at Odyssey, but.

Daniel Baldini: Net premiums written are down two 7% so I'm just curious.

Daniel Baldini: What obviously the opinion is about the reinsurance market.

Peter S. Clarke: Yeah, the reinsurance market, you know, it still continues to be strong, not as strong as it was in 2023. But I think what you have to look at a lot is the mix of business and the mix of business. And then, you know, Odyssey took advantage of the market 2019-2022, as I said before, and grew a lot. So they're starting at a higher base than many others. And so, you know, I think our reinsurance, we have reinsurance at Allied World, at BRIT, and, you know, Odyssey is our largest writer, but they continue to see opportunities. And, you know, excluding that one quota share, they still continue to grow.

Daniel Baldini: Yeah.

Daniel Baldini: <unk> market.

Daniel Baldini: It still continues to be strong not as strong as it was in 2023, but I think what you have to look at a lot is mix of business and mix of business and then you know Odyssey took advantage of the market 2019, 2022, as I said before and grew a lot. So there.

Daniel Baldini: Starting at a at a higher base than many others.

Daniel Baldini: And so you know I think our our reinsurance are you know we have reinsurance at Allied world that breadth and Odyssey is our largest writer, but they continue to see opportunities.

Daniel Baldini: And you know excluding that one one quota share.

Daniel Baldini: Hum.

Daniel Baldini: They'll continue to grow.

Alright, thank you.

Speaker Change: Next question.

Speaker Change: Next question Fran.

Unknown Attendee: Certainly. Andrew Goff with Goff Holdings.

Certainly Andrew Golf with Golf Holdings. Your line is open now.

Unknown Attendee: Your line is open now. Hi. Thank you

Unknown Attendee: Hi, thanks for taking the question. I just had a question regarding the free cash from the insurance subs. I mean, as the interest income has gone up a lot, are you now in a position where you can dividend more up to the corporate level? And, if so, how much could you dividend?

Andrew Acheson Barnard: Hi, Thanks for taking the question I just had a question regarding.

Andrew Acheson Barnard: The free cash from the insurance subs I mean as the interest income has gone up a lot.

Andrew Acheson Barnard: Now in a position where you can dividend more up to the corporate level and if so how much could you dividend up.

Peter S. Clarke: No, that's right. You know, and in the past, as the companies were growing, a lot of the earnings from the subsidiaries were used to fund that growth in the capital within the companies. With the premium leveling off, it is producing additional dividend capacity. And, you know, that gives us a lot of options to bring the cash up the holding company. We usually look at that on a quarterly basis.

Speaker Change: No that's right you know and and in the past again as the companies were growing a lot of the the earnings from the subsidiaries were used to fund that growth and the capital within the companies with the premium level leveling off it is producing a additional dividend capacity.

Speaker Change: And.

Speaker Change: You know that gives us a lot of options you know to bring the cash of the holding company. We usually look at that on a quarterly basis. You know, we're happy to keep the capital in the company invested.

Peter S. Clarke: You know, we're happy to keep the capital in the company, invest it, or bring it up to the holding company. But you're exactly right with the premium volume coming down and the strong and stable earnings we see going forward. It is providing additional dividend capacity to the holding company.

Speaker Change: Or or bring it up to the holding company, but you're exactly right with the premium volume coming down and the strong and stable earnings we see going forward. It is providing additional dividend capacity to the holding company.

Unknown Attendee: Do you have any, can you give us a sense of how much over the next couple years you might dividend up to the corporate level?

Speaker Change: Do you have any can you give us a sense of like how much over the next couple of years, you might dividend up to the corporate level.

Jennifer J. S. Allen: Jen, do you have anything to add to that? Yeah, sure.

Speaker Change: Jan do you have anything to add on that yeah sure Andrew maybe I'm going to reference you to our annual report in our statutory I'd note number 19. So in 2024, we have the ability to get 3 billion out of the underlying insurance companies based off of a statutory requirement level we get.

Jennifer J. S. Allen: Andrew, maybe I'm going to reference you to our annual report in statutory note number 19. So, in 2024, we have the ability to get $3 billion out of the underlying insurance companies based on a statutory requirement level. We give quite a bit of detail on there about which company we can get those dividends from between our North American global and international segment. And in the first quarter of 2024, as I noted in the conference call script, we did receive $451 million of dividends from our subsidiaries in the first quarter already. Okay, thanks. Thank you, Andrew. Next question, Fran?

Jan: Quite a bit of detail in there, which company we can get those dividends from them between our North American Global and International segment and in the first quarter of 2020 for as I noted in the conference call script, we did receive 451 million of dividends from our subsidiaries in the first quarter already.

Speaker Change: <unk>.

Speaker Change: Okay. Thanks. Thank you Andrew next question for him.

Operator: Tom MacKinnon with BMO Capital. Your line is open again. Yeah, thanks.

Tom Mackinnon with BMO capital Your line is open again.

Tom MacKinnon: Yeah. Thanks, very much a question just with respect to the overall expense ratio.

Tom MacKinnon: Trended a little higher this quarter. I think we were kind of running around the 30-ish range, and now we're, you know, 31, almost 31.5. I think there was some additional spend to be able to handle some uptick in volumes, but I assume there's got to be some scale benefits as well. So, how should we be thinking about the expense ratio going forward as

Tom MacKinnon: Trended a little higher this quarter I think we were kind of running around 30 ish range and now we're you know 31, almost 31 and a half.

Tom MacKinnon: I think there was some additional spend to be able to handle some uptick in volumes, but.

Tom MacKinnon: I assume theres got to be some.

Speaker Change: The scale benefits as well so how should we be thinking about the expense ratio going forward as yeah. Thanks.

Peter S. Clarke: Right, Tom. And yeah, we were up about a point or a little more on the expense ratio. One thing that influenced that ratio was the inclusion of golf insurance; it had a higher expense ratio than our operations run a little lower, lower loss ratio, higher expense ratio. And then on the commission side, it really just is a mix of business. So I think that, and as we said, we continue to invest in technology and in our people, and you can see a little bit of an uptick from that as well.

Speaker Change: Great Tom and Yeah, we were up we were up about a point or a little more point on the expense ratio. One one thing that influenced that ratio was was the inclusion of golf insurance It had a higher expense ratio than.

In our operations runs at a little lower a lower loss ratio higher expense ratio and then on the commission side. It really just is mix of business. So.

Speaker Change: I think that end and as we said you know we continue to invest in technology and in our people.

And you can see a little bit of uptick from that as well.

Tom MacKinnon: Thank you, Tom. And, Fran, next question. That'll be from Howard Flinker with Flinker and Company. Your line is open. Hello, everybody.

Speaker Change: Thank you Tom and.

Fran: Fran next question.

Howard Flinker: That'll be from Howard Flinker with Flinker and Company. Your line is open. Hello, everybody.

Fran: That'll be from Howard clinker with Clinker and company. Your line is open.

Howard Flinker: Hello, everybody.

Howard Flinker: And then a net gain of 7% a gain of 7% of net premiums does that include the increment from golf or if we adjusted it shouldn't be roughly cut in half.

Peter S. Clarke: Yeah, that's Howard that excludes that excludes golf. Growth if you include golf and Say that again, please. If that excludes the seven, the 7% would exclude the golf premium. If you include the golf premium, we were in a double digit.

Fran: Yeah that Howard that excludes the that excludes golf.

I'll just say in a couple of your golf growth. If you include our golf insurance.

Speaker Change: Again please.

Speaker Change: That excludes the 7% to 7% would exclude the golf premium.

Speaker Change: If you include the golf premium we were in the double digits.

Operator: Okay, thanks. Thank you. Next question, Fran.

Thanks.

Speaker Change: Thank you our next question Fran.

Operator: That is from Ashif Lalani with Bercy Capital, and your line is open.

Speaker Change: That is from Ashish <unk> with burst your capital and your line is open.

Ashif Lalani: Thank you. My question is with respect to. There is a dislocation in equity markets, and you have an opportunity to reallocate from fixed income to equities. What kind of size is available that the company would be comfortable with?

ashish: Thank you my question is with respect to.

ashish: You know Gary the dislocation in equity markets do you have an opportunity to reallocate.

ashish: Reallocate fixed income equities, what kind of size available.

ashish: Something you'd be comfortable with.

Unknown Attendee: Sorry, can you repeat your question?

ashish: Yeah.

Speaker Change: I'm sorry can you repeat your question.

Ashif Lalani: So my question was, you know, we're sitting on a large amount of fixed income securities and seemingly some surplus capital. So if we did have an opportunity where there was a dislocation in equity markets, how much could we reallocate from the fixed income portfolio to quality equities at a fair price?

Speaker Change: Sure sorry.

Speaker Change: Our political talk too loud my question was.

Speaker Change: You know there are we're sitting on a large amount of our fixed income securities and seemingly some surplus capital. So if we did have an opportunity where there was a dislocation in equity markets are how.

How much could be reallocated from the fixed income portfolio to quality.

Speaker Change: Quality equity that are at a fair price.

Peter S. Clarke: Right. Our fixed income portfolio is very liquid. You know, essentially, our bonds are in our US Treasuries. And, you know, the average duration is about three years. So we have a lot of flexibility there, you know, in the investment portfolio as a whole. You know, it's very defensive.

Speaker Change: Right I, our fixed income portfolio is very liquid I'm you know it's essentially.

Speaker Change: Our bonds are in.

Speaker Change: In our U S treasuries and our you know the average duration is about three three years. So we have a lot of flexibility. There you know the investment portfolio as a whole.

Speaker Change: It's very defensive we have the ability to react to the markets and you know where.

Peter S. Clarke: We have the ability to react to the markets. And, you know, we're very happy where it is positioned today. So should something happen on the equity side, we would have the ability to pivot if we wanted.

Happy where we're at is positioned today, so should should something happen on the equity side, we would have the ability to pivot if we wanted to.

Unknown Attendee: Do you give any idea of size? Question, friend.

Speaker Change: Can you give any idea of side question Frank.

Speaker Change: Yes.

Operator: At this time, I have no further questions in queue.

Speaker Change: At this time I have no further questions in queue.

Peter S. Clarke: Well, thank you, Fran. And if there are no further questions... Thank you for joining us on our first quarter conference call.

Speaker Change: Well, thank you Fran and if there are no further questions.

Operator: As we are concluded, I'd like to thank everyone for joining today. Please disconnect at this time. Have a wonderful day.

Speaker Change: Thank you for joining us on our first quarter conference call.

Speaker Change: As we are concluded I'd like to thank everyone for joining today. Please disconnect at this time have a wonderful day.