Q3 2024 Fairfax Financial Holdings Ltd Earnings Call

Good morning, and welcome to Fairfax is 2024 third quarter results conference call. Your lines have been placed on a listen only mode.

Operator: Good morning, and welcome to Fairfax's 2024 3rd 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 1 on your phone keypad. For time's sake, we ask that you limit your questions to one. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

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 Fatone sake, we ask that you limit your questions to one today's conference is being recorded if you have any objections you may disconnect at this time.

Peter Clarke: Your host for today's call is Peter Clarke, with opening remarks from Mr. Derek Bulas.

Speaker Change: For today's call is Peter Clark with opening remarks from Mr. Derek Viewless Mr. <unk>. Please begin.

Derek Bulas: Mr. Bulas, please begin. Good morning, and welcome to our call to discuss Fairfax's 2024 third quarter results. This call may include forward-looking statements.

Derek Viewless: Good morning, and welcome to our call to discuss Fairfax is 2024 third 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 in our base.

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 in our base shelf prospectus, which has been filed with Canadian securities regulators and is available on CDAR.

Derek Viewless: Shelf prospectus, which has been filed with Canadian Securities regulators.

Derek Viewless: Billable on SEDAR.

Peter Clarke: Fairfax disclaims any intention or obligation to update or revise any forward-looking statements except as required by applicable security I'll now turn the call over to our President and COO, Peter Clarke.

<unk> disclaims any intention or obligation to update or revise any forward looking statement, except as required by applicable securities law.

Speaker Change: I'll now turn the call over to our President and COO Peter Clark.

Peter Clarke: Thank you, Derek. Good morning, and welcome to Fairfax's 2024 third 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 another strong quarter with net earnings of over $1 billion. This included operating income from our insurance and reinsurance operations of $1.1 billion. Operating income is up 18% or approximately $170 million from the third quarter of 2023. Driving this result was underwriting income from our property and casualty insurance and reinsurance companies of $390 million with a combined ratio of $93.9.

Peter Clark: Thank you Dara good morning, and welcome to Fairfax is 2024 third 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 Ambler Whatsapp to comment on investments.

Peter Clark: And Jen Allen, our Chief financial Officer to provide some additional financial details.

Peter Clark: We had another strong quarter with net earnings of over 1 billion.

Peter Clark: This included operating income from our insurance and reinsurance operations of $1 1 billion.

Peter Clark: Operating income is up 18% or approximately $170 million from the third quarter of 2023.

Peter Clark: Driving this result was underwriting income from our property and casualty insurance and reinsurance companies of $390 million with.

Peter Clark: With a combined ratio of $93 nine.

Peter Clark: Consolidated interest and dividend income was $610 million up from $513 million in the third quarter of 2023.

Peter Clarke: Consolidated interest and dividend income was $610 million, up from $513 million in the third quarter of 2023. benefiting from an increased investment portfolio, which is now approximately $69 billion. increasing rates over the last number of years and from our mortgage portfolio. consolidated share profits of associates in the third quarter was $260 million and remains a significant contributor to operating income. Our two largest associate investments, Eurobank and Poseidon, continue to perform very well and make up a significant amount of our associate earnings. Net gains on investments were $1.3 billion in the quarter, comprised net gains on equity exposures of $323 million, and net gains on bonds of $829 million due to decreasing interest rates, and other gains of $136 million, primarily preferred shares.

Benefiting from an increased investment portfolio, which is now approximately 69 billion.

Peter Clark: Increasing rates over the last number of years and from our mortgage portfolio.

Peter Clark: Consolidated share of profits of associates in the third quarter was $260 million and remains a significant contributor to operating income.

Peter Clark: Our two largest associate investments Eurobank and Poseidon.

Peter Clark: Continue to perform very well and make up a significant amount of our associate earnings.

Net gains on investments were $1 3 billion in the quarter comprised net gains on equity exposures of 323 million and.

And net gains on bonds up $829 million due to the decreasing interest rates.

Peter Clark: And other gains of $136 million, primarily preferred shares.

Net gains on investments does not include the expected pretax gain of $366 million on the sale of Stelco that was announced in July.

Peter Clarke: Net gains on investments does not include the expected pre-tax gain of $366 million on the sale of Stelco that was announced in July. Stelco received shareholder approval in September and is now only subject to regulatory approvals and other customary closing conditions. We expect it will close in early November.

Peter Clark: Telco received shareholder approval in September and is now only subject to regulatory approvals and other customer customary closing conditions.

Peter Clark: We expect it will close in early November.

Peter Clark: As we have said in the past net gains or losses on investments only make sense over the long term and will fluctuate quarter to quarter or for that matter year to year.

Peter Clarke: As we have said in the past, net gains or losses on investments only make sense over the long term, and will fluctuate quarter to quarter, or for that matter, year to year. As mentioned in previous quarters, our book value per share does not include unrealized gains or losses in our associate and consolidated non-insurance investment. which are not mark to mark. At the end of the third quarter, the fair value of these securities is in excess of carrying value by $1.9 billion, an unrealized gain position, or $87 per share on a pre-tax basis. Under IFRS 17, our net earnings are affected by the discounting of our insurance liabilities and the application of a risk adjustment.

Peter Clark: As mentioned in previous quarters, our book value per share does not include unrealized gains or losses in our associate and consolidated non insurance investments, which are not mark to market.

Peter Clark: At the end of the third quarter. The fair value of these securities is in excess of carrying value by $1 9 billion in.

Peter Clark: An unrealized gain position or $87 per share on a pre tax basis.

Under Ifr at 17, our net earnings are affected by the discounting of our insurance liabilities and the application of our risk adjustment.

Peter Clarke: In the third quarter of 2024, our net earnings were affected negatively by $732 million pre-tax from the effects of discounting losses occurring in the quarter. Changes in the risk margin, the unwinding of the discount from previous years, and changes in the discount rate on prior year insurance liability. As interest rates move up and down, we'll see positive or negative effects on net earnings from discounting. The loss in the quarter on discounting includes a loss of $765 million from the effect of changes in interest rates, reflecting these decreasing rates. This partially offsets the mark-to-market gain on our bond portfolio of $829 million, which is included in our net gains on investment.

Peter Clark: In the third quarter of 2020 for our net earnings were affected negatively by $732 million pretax from the effects of discounting losses occurring in the quarter.

Peter Clark: Changes in the risk margin the unwinding of the discount from previous years and changes in the discount rate on prior year insurance liabilities.

Peter Clark: As interest rates move up and down we will see positive or negative effects on net earnings from discounting.

Peter Clark: The loss in the quarter on discounting includes <unk>.

Peter Clark: Loss of $765 million from the effect of changes in interest rates, reflecting the decreasing rates.

Peter Clark: This partially offsets the mark to market gain on our bond portfolio of $829 million, which is included in our net gains on investments.

Peter Clark: Our book value per share at September 30th.

Peter Clarke: Our book value per share at September 30 was $1,033 compared to $940 per share at December 31, 2023. An increase of 11.7% adjusted for the $15 dividend paid in the first quarter. We continue to benefit from a stable base of annual operating income of $4 billion. And we expect, of course, no guarantees it is sustainable for the next three to four years. The $4 billion of operating income consists of $2 billion plus from interest and dividend income. $1.25 billion plus from underwriting profit, that's with normalized catastrophe losses, and $750 million from associates and non-insurance companies.

Peter Clark: 1033, compared to $940 per share at December 31, 2023.

Peter Clark: An increase of 11, 7% adjusted for the $15 dividend paid in the first quarter.

We continue to benefit from a stable base of annual operating income up $4 billion.

Peter Clark: And we expect of course no guarantees it is sustainable for the next three to four years.

Peter Clark: The $4 billion of operating income consists of $2 billion plus from interest and dividend income.

Peter Clark: $1 billion in a quarter plus from underwriting profit.

Peter Clark: That's with normalized catastrophe losses, and $750 million from associates and non insurance companies.

Peter Clarke: fluctuations in the stock and bond prices will be on top of that. But this really only matters over the long term.

Peter Clark: Fluctuations in the stock and bond prices will be on top of that.

Peter Clark: But this really only matters over the long term.

Peter Clark: In the third quarter, we announced Bob Samson will be appointed CEO of Riverstone effective January one 2025.

Peter Clarke: In the third quarter, we announced Bob Sampson will be appointed CEO of Riverstone effective January 1, 2025. Bob has been with Riverstone for 28 years and his deep understanding of the culture, operations and strategy of our runoff operations provides great continuity and will ensure Riverstone continues to thrive. Nick Bentley, who has done an outstanding job leading Riverstone over the last 16 years, will remain as chairman of Riverstone and will continue to contribute to the group in this capacity. This has been another wonderful internal succession at Fairfax.

Peter Clark: Bob has been with Riverstone for 28 years and his deep understanding of the culture operations and strategy of our run off operations provides great continuity.

Peter Clark: And we will ensure riverstone continues to thrive.

Peter Clark: Nick Bentley, who has done an outstanding job, leading riverstone over the last 16 years will remain as chairman of Riverstone and will continue to contribute to the group in this capacity.

Peter Clark: This has been another wonderful internal succession at Fairfax.

Moving on to our insurance and reinsurance operations results.

Peter Clarke: Moving on to our insurance and reinsurance operations results. Our insurance and reinsurance businesses wrote $8.2 billion of gross premiums in the third quarter of 2024. up 13.9% versus the third quarter of 2023. The growth was driven by the consolidation of Gulf Insurance, whose operating results were consolidated into our results beginning January 1st, 2024. excluding Galt's premium of $778 million, gross premium was up 3.2%. Our North American insurance segment increased gross premiums by $213 million. in the third quarter or 9.6%. Chrome Forster grew 12.7% with the majority of the increase in its specialty and surplus segment and the accident and health division.

Peter Clark: Our insurance and reinsurance businesses wrote $8 2 billion of gross premiums in the third quarter of 2024.

Peter Clark: Up 13, 9% versus the third quarter of 2023.

Peter Clark: The growth was driven by the consolidation of golf insurance, whose operating results were consolidated into our results beginning January one 2024.

Peter Clark: Excluding golf's premium of $778 million gross premium was up three 2%.

Peter Clark: Our North American insurance segment.

Peter Clark: Increased gross premiums by $213 million.

Peter Clark: In the third quarter or nine 6%.

Peter Clark: From Forester grew 12, 7% with the majority of the increase in its specialty and surplus segment and the accident and health Division.

Peter Clark: North Bridge was up six 9% in Canadian dollars, while <unk> gross premiums were slightly down in the third quarter compared to the third quarter of 2023 due to the continued competitive workers' compensation market.

Peter Clarke: Northridge was up 6.9% in Canadian dollars, while Xena's gross premiums were slightly down in the third quarter compared to the third quarter of 2023 due to the continued competitive workers' compensation market. Our global insurer and reinsurer segment decreased modestly, with gross premiums written a $4.1 billion in the quarter, down one and a half percent versus the third quarter of 2023. Odyssey's gross premiums written were down 4.7% due to the previously disclosed non-renewal of a large quota share in the fourth quarter of 2023. Excluding the quota share contract, Odyssey's business was up 7.2% in the third quarter driven by its reinsurance operation.

Peter Clark: Our global insurer and Reinsurer segment decreased modestly with gross premiums written of $4 1 billion in the quarter down one 5% versus the third quarter of 2023.

Peter Clark: Odyssey gross premiums written were down four 7% due to the previously disclosed non renewal of a large quota share in the fourth quarter of 2023.

Peter Clark: Excluding the quota share contract Odyssey's business was up seven 2% in the third quarter driven by its reinsurance operations.

<unk> gross premium was down three 8% or $34 million in the quarter.

Peter Clarke: Brett's gross premium was down 3.8% with $34 million in the quarter. primarily property business at key. and the trimming of cyber and casualty business. while their net premiums were up 3%, seeding less business year over year. Allied World was up 50 million or 3% in the quarter, with approximately half coming from its reinsurance segment. Our international insurance and reinsurance operations gross premium increased significantly in the third quarter of 2024 versus the third quarter of 2023, with gross written premium of $1.7 billion, up over 100%, or $857 million. The growth was primarily the result of the consolidation of golf insurance that added $778 million of gross premium in our international operation.

Peter Clark: Primarily property business at key.

Peter Clark: And the trimming of cyber and casualty business.

Peter Clark: While there net premiums were up 3% ceding lap last business year over year.

Peter Clark: Allied World was up $50 million or 3% in the quarter with approximately half coming from its your reinsurance segment.

Speaker Change: Our international insurance and reinsurance operations gross premium increased significantly in the third quarter of 2024 versus the third quarter of 2023 with gross written premium of $1 7 billion.

Speaker Change: Up over 100% or $857 million.

Speaker Change: The growth was primarily the result of the consolidation of golf insurance that added $778 million of gross premium in our international operations.

Peter Clarke: Excluding golf insurance, our international operations had strong growth, with gross premiums up 9%. We continue to be very excited about the long-term prospects of our international operations and we expect it will be a significant source of growth over time. We have excellent management teams with a strong footprint in Asia, the Middle East, Eastern Europe, South Africa, and Latin America. On a consolidated basis, our combined ratio was 93.9 in the third quarter of 2024, producing underwriting profit of $390 million. The combined ratio included catastrophe losses of $434 million, adding 6.8 combined ratio points. The main drivers of the catastrophe losses were Hurricane Helene, costing $105 million.

Speaker Change: Excluding golf insurance, our international operation.

Speaker Change: Operations had strong growth with gross premiums up 9%.

Speaker Change: We continue to be very excited about the long term prospects of our international operations and we expect it will be a significant source of growth over time.

Speaker Change: We have excellent management teams with a strong footprint in Asia, the Middle East Eastern Europe, South Africa, and Latin America.

Speaker Change: On a consolidated basis, our combined ratio was $93 nine in the third quarter of 2024, producing underwriting profit of $390 million.

Speaker Change: The combined ratio included catastrophe losses of 434 million, adding six eight combined ratio points.

The main drivers of the catastrophe losses were hurricane Helene costing $105 million.

Peter Clarke: flooding and hailstorms in Canada of 114 million. with the remaining primarily from attritional catastrophe law. This compares to a combined ratio of 95 in the third quarter of 2023, which included catastrophe losses of 6.7 points. Historically, the third quarter is generally the quarter we experienced the largest catastrophe loss. mostly driven by US hurricane. Our global insurers and reinsurers posted a combined ratio of 92 and underwriting profit of $288 million in the third quarter. Allied had another excellent quarter with a combined ratio of 88.5 with both its insurance and reinsurance segments producing combined ratios below 100.

Speaker Change: And flooding and Hailstorms in Canada of $114 million.

Speaker Change: With the remaining primarily from Attritional catastrophe losses.

Speaker Change: This compares to a combined ratio of $95 in the third quarter of 2023, which included catastrophe losses of $6 seven points.

Speaker Change: Historically, the third quarter is generally the quarter, we experienced the largest catastrophe losses.

Mostly driven by U S Hurricanes.

Speaker Change: Our global insurers and reinsurers posted a combined ratio of 92, an underwriting profit of $288 million in the third quarter.

Speaker Change: Allied had another excellent quarter with a combined ratio of $88 five with both its insurance and reinsurance segments producing combined ratios below 100.

Speaker Change: Odyssey posted a solid combined ratio at 93, eight despite nine six points of catastrophes.

Peter Clarke: Odyssey posted a solid combined ratio at 93.8, despite 9.6 points of catastrophe. and Britt continues to produce sub 95 combined ratios at 94.2. Our North American insurers had a combined ratio of 95.3 in the third quarter of 2024, an underwriting profit of $87 million. Northbridge had a strong quarter with underwriting income of $34 million and a combined ratio of 94, notwithstanding $67 million of catastrophe loss. The insurance industry in Canada had one of its worst quarters of catastrophe losses in history, with losses of over $7 billion. From Forster had a combined ratio of 95.7, an underwriting profit of $47 million, while Zenith had a combined ratio of 96.6.

Speaker Change: And Britt continues to produce sub 95 combined ratios at 94 two.

Speaker Change: Our North American insurers had a combined ratio of 95 three in the third quarter of 2024 and underwriting profit of $87 million.

Speaker Change: Northbridge had a strong quarter with underwriting income of $34 million and a combined ratio of 94.

Speaker Change: Notwithstanding $67 million of catastrophe losses.

The insurance industry in Canada had one of its worst quarters of catastrophe losses in history with losses of over $7 billion.

Speaker Change: From Forrester had a combined ratio of $95 seven and underwriting profit of $47 million, while Xena had a combined ratio of 96, six but the benefit of favorable reserve development and juggling a different a difficult pricing environment in the workers' compensation market.

Peter Clarke: with the benefit of favorable reserve development and juggling a difficult pricing environment in the workers' compensation market. Our international operations delivered a combined ratio of 98.5 in the third quarter of 2024, an underwriting profit of $15 million. Excluding the effects of the purchase price adjustments on our acquisition of golf insurance, underwriting income was $31 million. Our LATAM operations continue to post strong underwriting results with a combined ratio of 94.4 and have consistently produced underwriting profit for the last five years, benefiting greatly from underwriting actions taken after our acquisition in 2007. Our business in Eastern Europe, consisting of Colonnade Insurance, Polish Re and our businesses in Ukraine had another solid quarter with a combined ratio of 97.5.

Speaker Change: Our international operations delivered a combined ratio of $98 five in the third quarter of 2024 and underwriting profit of $15 million.

Speaker Change: Excluding the effects of the purchase price adjustments on our acquisition of golf insurance.

Underwriting income was $31 million.

Speaker Change: Our Latam operations continue to post strong underwriting results with a combined ratio of $94 four.

Speaker Change: And have consistently produced underwriting profit for the last five years benefiting greatly from underwriting actions taken after our acquisition in 2017.

Speaker Change: Our business in eastern Europe, consisting of colonnade insurance, Polish Sri and our businesses in Ukraine had another solid quarter with a combined ratio of 97, 5%.

Peter Clarke: all companies producing underwriting profit. Despite Colonnade and Polish Re dealing with significant storm losses in the Fairfax Asia and Bright also contributed to our underwriting profit with a combined ratio of 95.1 and 93.9 respectively. Golf's combined ratio in the quarter was 102.4, reflecting purchase price adjustments on the acquisition. Excluding the purchase price adjustments, golf combined ratio was 98%. Our insurance and reinsurance companies continue to manage their business and performance continues to be measured on underwriting profit on an undiscounted basis. For disclosure purposes, we have provided in our press release an interim report, the discounted combined ratio.

Speaker Change: All companies producing underwriting profit.

Speaker Change: Spike colonnade in Polish re dealing with significant storm losses in the region.

Speaker Change: Fairfax Asia and bright also contributed to our underwriting profit with the combined ratio of $95, one and $93 nine respectively.

Speaker Change: Golf's combined ratio in the quarter was 102 four <unk>.

Speaker Change: Reflecting purchase price adjustments on the acquisition.

Speaker Change: Excluding the purchase price adjustments golf combined ratio was $98 three.

Speaker Change: Our insurance and reinsurance companies continue to manage their business and performance continues to be measured on underwriting profit on an undisclosed basis.

Speaker Change: For disclosure purposes, we have provided in our press release and interim report that discounted combined ratio.

Peter Clarke: For the third quarter, the discounted combined ratio was 83.9 compared to the undiscounted combined ratio of 93. In the quarter, our insurance and reinsurance companies had prior year favorable development of $130 million or a benefit of two points on our combined ratio. This compares to 56 million in the third quarter of 2023, or one point on our combined Our companies perform full actuarial reserves reviews in the fourth quarter and are in the process of that now. Our overall reserves remain strong. The performance of our insurance and reinsurance operations have not gone unnoticed by the rating agency.

Speaker Change: For the third quarter, the discounted combined ratio was $83 nine compared to the <unk> combined ratio of $93 nine.

Speaker Change: In the quarter, our insurance and reinsurance companies at prior year favorable development of $130 million or a benefit of two points on our combined ratio.

Speaker Change: This compares to $56 million in the third quarter of 2023 or one point on our combined ratio.

Speaker Change: Our companies performed full actuarial reserves reviews in the fourth quarter and are in the process of that now.

Our overall reserves remained strong.

Speaker Change: The performance of our insurance and reinsurance operations have not gone unnoticed by the rating agencies.

Peter Clarke: This year our Financial Strength Ratings and Debt Ratings were upgraded to A-plus and BBB-plus by S&P with a positive outlook. Allied World's A financial strength rating and Fairfax's triple B plus debt rating were put on positive outlook by AMBES. and Fitch revised the outlook on their triple B rating for Fairfax's debt deposit. Through our decentralized operations, our insurance and reinsurance companies continue to thrive. consistently producing solid underwriting profit and led by exceptional management teams. Our companies are positioned very well to continue capitalizing on their opportunities in their respective markets. As a group, we benefit from our size and scale, writing approximately $33 billion of gross premium worldwide across a diversified book of business, both by product and geography.

Speaker Change: This year, our financial strength ratings and debt ratings were upgraded to a plus and triple B plus by S&P with a positive outlook.

Speaker Change: Allied worlds AA financial strength rating and Fairfax is triple B plus debt ratings were put on positive outlook by am best.

Speaker Change: And Fitch revised the outlook on their triple B rating for Fairfax is that a positive.

Speaker Change: Through our decentralized operations, our insurance and reinsurance companies continue to thrive.

Speaker Change: Consistently producing solid underwriting profit and led by exceptional management teams.

Speaker Change: Our companies are positioned very well to continue capitalizing on their opportunities in their respective markets.

Speaker Change: As a group we benefit from our size and scale, writing approximately 33 billion of gross premium worldwide across a diversified book of business, both by product and geography.

Speaker Change: I will now pass the call to Wade Burton to provide some additional comments on our investments.

Wade Burton: I will now pass the call to Wade Burton to provide some additional comments on our Thank you, Peter, and good morning, everyone. The investment results in the quarter were strong, with interest and dividend income of $610 million, profits of associates of $260 million, and net gains on investments of $1.3 billion. With that said, there was not a lot of activity in the quarter on the investment side.

Wade Burton: Thank you Peter and good morning, everyone.

Wade Burton: The investment results in the quarter was strong with interest and dividend income of $610 million profits of associates of $260 million and net gains on investments of $1 3 billion.

Wade Burton: With that said it was not a lot of activity in the quarter on the investment side.

Fairfax total investment portfolio now stands at 69 billion to end the quarter.

Wade Burton: Fairfax total investment portfolio now stands at $69 billion to end the quarter with $49 billion in fixed income and $20 billion in equity. of the $49 billion in fixed income, $35 billion are in U.S. Treasuries, other government bonds and cash. There are another $5 billion in mortgages and $9 billion in short-dated investment rate corporate. Including cash, average maturity is 3.7 years and the yield is 4.7%.

Wade Burton: With 49 billion in fixed income and $20 billion in equities.

Wade Burton: Of the 49 billion in fixed income $35 billion in U S treasuries other government bonds and cash.

Wade Burton: There are another 5 billion in mortgages and $9 billion in short dated investment grade corporates.

Including cash average maturity of three seven years and the yield is four 7%.

Wade Burton: With inflation steadying at or around the fed's target the fed cut rates 50 basis points in September with an eye to getting to a neutral stance.

Wade Burton: With inflation steadying at or around the Fed's target, the Fed cut rates 50 basis points in September with an eye to getting to a neutral stand. So many variables, including a very close U.S. election with widely differing policies between the two candidates. Thank you for studying it all and watching it. For now, we continue to have a defensively positioned fixed income portfolio while still making very healthy, very robust interest rates. For the $20 billion in equities, not much change. Our core holdings and investments continue to perform well, all making good income against invested capital. Our experienced investment team is constantly searching for new opportunities, but as managers of insurance float, we have the very great benefit of taking a long-term approach to investing.

Wade Burton: So many variables, including a very close U S election with widely different policies between the two candidates we're studying it all and watching it closely.

Wade Burton: For now we continue to have a defensively positioned fixed income portfolio, while still making very healthy very robust interest income.

Wade Burton: For the $20 billion in equities not much change.

Wade Burton: Our core holdings and investments continue to perform well all making good income against invested capital.

Wade Burton: Our experienced investment team is constantly searching for new opportunities, but as managers of insurance float we have the very great benefit of taking a long term approach to investing.

Wade Burton: It means we can wait for prices to come to us and we won't invest unless we see a margin of safety.

Wade Burton: It means we can wait for prices to come to us and we won't invest unless we see a margin of safety.

Wade Burton: We did make one significant announcement in the quarter, we bought out our main partners in peak achievement.

Wade Burton: We did make one significant announcement in the quarter. We bought out our main partners in Picocheap. and Athletic Wear and Equipment Company focused on hockey and lacrosse. It is an outstanding business operating in a highly consolidated industry, well run by Ed Kinnelly and his team, incredible track record, and we paid a fair price. We think we will make a very good return over the long run for our shareholders. And importantly, Ed runs the company very much in tune with the Fairfax culture.

Wade Burton: And Atlantic, where an equipment company focused on hockey and lacrosse.

Wade Burton: It is an outstanding business operating in a highly consolidated industry well run by Ed Kelly and his team incredible track record and we paid a fair price.

We think we will make a very good return over the long run for our shareholders and importantly, Ed runs the company very much in tune with the Fairfax culture.

Wade Burton: Looking back over the last two years, we've made three significant long term equity investments.

Wade Burton: Looking back over the last two years, we've made three significant long term equity investments. One in Meadow Dairy, a dominant milk ingredients company in the UK that is doing very well. Another in sleep country, a dominant mattress distributor and retailer in Canada, and now a third, Peak, a dominant sporting goods company focused on hockey and lacrosse. All immediately are or will contribute to our earnings. And we believe all will continue to contribute more and more as their businesses progress.

Wade Burton: One in meadow dairy a dominant milk ingredients company in the U K that is doing very well.

Wade Burton: Another in sleep country, a dominant mattress distributor and retailer in Canada.

Wade Burton: And now a third peak a dominant sporting goods company focused on hockey and lacrosse.

Wade Burton: All immediately are or will contribute to our earnings and we believe all will continue to contribute more and more as their business is progress.

Wade Burton: I will now pass it to Jen Allen our CFO.

Jennifer Allen: I will now pass it to Jen Allen, our CFO. Thank you, Wade. Our net earnings in the third quarter of 2024 of just over $1 billion included a pre-tax expense of $732 million related to our IFRS accounting for insurance and reinsurance contracts. That net expense of $732 million from discounting insurance and reinsurance contracts was comprised of a net finance expense from our insurance contracts held of about $1.1 billion, which reflected interest accretion from unwinding the effects of discounting associated with the net losses on the claims of $348 million and the unfavorable effect of decrease in discount rates during the period on net loss on claims of $765 million.

Jen Allen: Thank you Wade our net earnings in the third quarter 2024 of just over 1 billion included a pre tax expense of $732 million related to our iron crafts accounting for insurance and reinsurance contract.

Wade Burton: That net expense of $732 million from discounting insurance and reinsurance contracts with comprised of a net finance expense from our insurance contracts.

Wade Burton: Held of about $1 1 billion, which reflected interest accretion from unwinding the effects of discounting associated with the net losses on the claims.

Wade Burton: $348 million.

Wade Burton: Unfavorable effect of decrease in discount rates during the period, our net loss on claims at $765 million.

Jennifer Allen: This was partially offset by a net benefit of $381 million from discounting losses and seeded loss on claims incurred in the period, net of changes in our risk adjustment. As reflected in our third quarter of 2024, generally a decrease in interest rates will result in an increase to the carrying value of both the company's fixed income portfolio and the net liability incurred for claims for insurance contracts. While the change to the carrying value of each of these will not necessarily be equal in magnitude when there's a movement in interest rates, the impact on the company's net earnings is mitigated.

Wade Burton: It was partially offset by a net benefit of $381 million from discounting losses and ceded loss on claims incurred in the period net of changes in our risk adjustment.

Wade Burton: As reflected in our third quarter of 2020 for generally a decrease in interest rates will result in an increase to the carrying value of both the company's fixed income portfolio and the net liability incurred for claims for insurance contracts.

Wade Burton: While the change to the carrying value of each of these will not necessarily be equal in magnitude when there's been movement in interest rates the impact on the company's net earnings is mitigated.

Jennifer Allen: I'll refer you to page 38 in the MD&A of the company's interim consolidated financial statements for the three and nine months ended September 30, 2024, for a table that presents the company's total effects of discounting and risk adjustment on our net insurance liabilities and the effects of changes in interest rates on the company's bond portfolio. We set this out in a format that the company believes assists in understanding the company's net exposure to the interest rate environment. In the third quarter of 2024, the decrease in discount rates during the period produced net gains on our bond portfolio of $829 million that exceeded the net finance expense of $765 million related to the effects of the decrease in the discount rates on our net loss on claims, which resulted in a net benefit of $64 million in the quarter.

Wade Burton: I'll refer you to page 38 in the N DNA of the company as interim consolidated financial statements for the nine three and nine months ended September 30th.

Wade Burton: 2024 for a table that presents the company's total effects of discounting and risk adjustment under.

Wade Burton: And our net insurance liabilities and the effects of changes in interest rates on the company's bond portfolio.

Wade Burton: We set this out in a format that the company believes assist in understanding the company's net exposure to the interest rate environment.

Wade Burton: In the third quarter of 2024, a decrease in discount rates during the period produced net gains on our bond portfolio of $829 million.

Wade Burton: Exceeded the net finance expense of $765 million related to the effects of the decrease in the discount rates on our net loss on claims which resulted in a net benefit of 64 million in the quarter.

Wade Burton: In the third quarter 2023, we reported a net benefit of $459 million from gift accounting insurance and reinsurance contracts principally related to the net benefit of gift county losses, and ceded loss on claims of $387 million.

Jennifer Allen: In the third quarter of 2023, we reported a net benefit of $459 million from discounted insurance and reinsurance contracts, principally related to the net benefit of discounted losses and seeded loss on claims of $387 million, which is recognized in our insurance service result as a reduction to losses and seeded losses, which was partially offset by net finance expense from insurance contracts and reinsurance contracts held of $8 million. That net finance expense of $8 million consisted of interest accretion from the unwinding the effects of discounted associated with our net claims payments made during the period of $369 million, partially offset by the effective increase in discount rates in the same period of $362 million.

Recognizing that our insurance service result, as a reduction to losses and ceded losses, which was partially offset by net finance expense from insurance contracts and reinsurance contracts held of $8 million.

Wade Burton: That net finance expense of 8 million consisted of interest accretion from the unwinding the effects of discounted associated with their net claims payments made during the period of $369 million.

Wade Burton: Partially offset by the effective increase in discount rates in the same period, a $362 million.

Jennifer Allen: Unlike the third quarter of 2024, in the third quarter of 2023, we saw increase in the interest rates during the period, which resulted in a net finance benefit of $362 million related to the effects of increases in discount rates on the company's prior year net loss on claims that exceeded the net loss on the company bond portfolio of $197 million, which resulted in the net benefit of $165 million in 2023.

Wade Burton: Unlike the third quarter of 2024 in the third quarter of 'twenty three we saw an increase in the interest rates during the period.

This resulted in a net finance benefit of $362 million related to the effects of increases in discount rates on the company's prior year net loss on claims that exceeded the net loss on the company bond portfolio of $197 million, which resulted in a net benefit of $1 65 in 2023.

Wade Burton: A few comments on our non insurance companies in the quarter.

Jennifer Allen: A few comments on our non-insurance companies in the quarter, the operating income of our non-insurance companies reporting segment decreased to $49 million in the third quarter of 24 from $126 million in the third quarter of 23, which primarily reflected lower operating income in the other segment that was driven by lower margins at AGT and lower business volumes at Boat Rocker. And we also saw lower operating income at Fairfax, India that was driven by lower share profits from its investments in Associates. This was partially offset by higher operating income in the reinsurance and retail segment. As Wade noted, with our recently announced Sleep Country and Peak Achievement transactions, we expect the operating income from our non-insurance companies reporting segment will grow in the future periods.

Wade Burton: Operating income of our non insurance companies reporting segment decreased to 49 million in the third quarter 'twenty four from $126 million in the third quarter of 'twenty three.

Wade Burton: Which primarily reflected lower operating income in the other segment that was driven by lower margins at ADT and lower business volumes at boat rocker.

Wade Burton: And we also saw lower operating income at Fairfax, India that was driven by lower share of profit from its investments in associates.

Wade Burton: This was partially offset by higher operating income in the reinsurance and retail segment.

Wade Burton: As we've noted with our recently announced sleep country and peak achievement transactions. We expect the operating income from our non insurance companies reporting segment will grow in the future periods, reflecting the operating income diversity. These investments will add to the segment.

Jennifer Allen: Reflecting the operating income diversity, these investments will add to the segment. Our share profit from investments in Associates in the quarter we reported consolidated share profits of 260 million, principally reflecting the share profit of 138 million from Eurobank and 62 million from Poseidon. That reflected in the nine months of 2023 consolidated share profit of associates of $609 million, principally reflecting share profits of $344 million from Eurobank, $163 million from Seiden and $52 million from Peak Achievements. That reflected its sale of Rawlings Sporting Goods that was partially offset by share of loss of $60 million from Fairfax India's investment in Sanmar Chemical Group.

Wade Burton: Our share of profit from investments and associates in the quarter, we reported consolidated share profits at 260 million, principally reflecting the share of profit of <unk> $38 million from Eurobank and $62 million from Poseidon.

Wade Burton: That reflected in the nine months of 2023 consolidated share of profit of associates at $609 million, principally reflecting share profit of $344 million from Eurobank <unk> hundred $63 million from siding and $52 million from peak achievements that reflected its sale of rolling sporting goods that was.

Wade Burton: The offset by share of loss of $60 million from Fairfax, India is investment in Sanmark Chemical group.

Wade Burton: On July 31, 2024 Euro bank paid a dividend of 370 million of which the company share was 128 million and was recorded in the third quarter of 2020 for as a reduction to our euro bank carrying value under the equity method of accounting.

Jennifer Allen: On July 31, 2024, Eurobank paid a dividend of $370 million, of which the company's share was $128 million and was recorded in the third quarter of 2024 as a reduction to our Eurobank carrying value under the equity method of accounting.

Wade Burton: A few comments on transactions and updates in the quarter.

Jennifer Allen: A few comments on transactions and updates in the quarter. As mentioned in prior quarter, on May 23rd, 2024, Digit Insurance, which is the general insurance subsidiary of the company's investment in our associate Digit, completed its IPO. Digit Insurance common shares are now traded on the BSE and NSE in India, and closed at 373 rupee per share at September 30th, 2024. The company's investment in Digit compulsory convertible shares is marked to market on a quarterly basis, reflecting changes in Digit Insurance's traded share price. That resulted in a net gain on investments of $184 million in the third quarter of 2024.

Wade Burton: As mentioned in prior quarter on May 23rd 2024 digit insurance, which is the general insurance subsidiary of the company's investment in our associate digit completed its IPO digit insurance common shares are now traded on the Bse and NSE in India and closed at $3 73 rupee per share at Sept.

Wade Burton: Timber 30 of 2024.

Wade Burton: The company's investment in digit compulsory convertible shares as mark to market on a quarterly basis, reflecting changes in digit insurance has traded share price.

Wade Burton: That resulted in a net gain on investments of 184 million in the third quarter of 2024.

Wade Burton: Okay.

Jennifer Allen: On October 1st, 2024, the company, through our insurance and reinsurance subsidiaries, acquired all of the issued and outstanding common shares of Sleep Country Canada for purchase consideration of US $881 million. That total purchase consideration was comprised of cash of $563 million and new non-recourse borrowings to the holding company of $318 million by a newly formed purchasing entity which amalgamated with Sleep Country upon close. The company will commence consolidating Sleep Country and its non-insurance company reporting segment in our fourth quarter of 2024.

Wade Burton: On October one 2024, the company through our insurance and reinsurance subsidiaries acquired all of the issued and outstanding common shares of sleep country, Canada.

Wade Burton: For purchase consideration of USD $881 million.

Wade Burton: That total purchase consideration was comprised of cash of $563 million and new non recourse borrowings to the holding company of $318 million.

Wade Burton: By our newly formed purchasing entity, which amalgamated with sleep country upon close.

The company will commence consolidating sleep country, and it's not insurance company reporting segment in our fourth quarter of 2024.

Jennifer Allen: I'll close with a few comments on our financial condition. At September 30th, 2024, our cash and investments at the holding company was $2 billion, with access to our fully undrawn $2 billion unsecured revolving credit facility that was amended in July to extend the expiry from July 14th, 2028 to July 17th, 2029. And we also have an additional $2.1 billion at fair value of investments in associates in consolidated non-insurance companies owned by the holding company and no long-term debt maturities until 2026. On July 19, 2024, pursuant to an agreement and in exchange for cash received from the holding company of $597 million, Allied World became the primary co-obligor on the company's 6.1% unsecured senior notes that are due in 2055.

Wade Burton: I'll close with a few comments on our financial condition at September 30th 2024, our cash and investments at the holding company was $2 billion with access to our fully Undrawn 2 billion unsecured revolving credit facility that was amended in July to extend the expiry from July 14 2028.

Wade Burton: To July 17 2029.

Wade Burton: And we also have an additional $2 1 billion at fair value of investments in associates and consolidated non insurance companies owned by the holding company and no long term debt maturities until 2026.

Wade Burton: On July 19th 2024 pursuant to an agreement and in exchange for cash received from the holding company of $597 million.

Allied World became the primary co obligor on the company's six 1% unsecured senior notes that are due in 2055.

Jennifer Allen: On July 24, 2024, Allied World used the majority of those proceeds to redeem its $500 million principal amount of 4.35 senior notes that were due on October 29, 2025. In the first nine months of 24, we purchased for cancellation a little over 1 million subordinate voting shares, principally under our normal course issuer bid at a cost of $1.1 billion, or US $1,113 per share, of which 159,000 subordinate voting shares at a cost of $181 million were completed in the third quarter of 2024. At September 30 24, our excess of fair value over carrying value of our investments in the non insurance associates and market traded consolidated non insurance subsidiaries was $1.9 billion compared to the $1 billion at December 31, 2023.

Wade Burton: July 24, 2020 for Allied World use the majority of those proceeds to redeem its 500 million principal amount of $4. Three five senior notes that were due in October 2009 2025.

Speaker Change: And the first nine months of 'twenty four we purchased for cancellation, a little over 1 million subordinate voting shares principally under our normal course issuer bid at a cost of $1 1 billion.

Speaker Change: Our U S $1113 per share of which 159000 subordinate voting shares at a cost of $181 million were completed in the third quarter of 2024.

Speaker Change: At September 30, 24, our excess of fair value over carrying value of our investments in the non insurance associates and market traded consolidated non insurance subsidiaries was $1 9 billion.

Speaker Change: Compared to the 1 billion at December 31, 2023.

Jennifer Allen: That pre-tax excess of $1.9 billion or $87 per share is not reflected in our book value per share, but is regularly reviewed by management as an indicator of the underlying investments performances. And included in that $1.9 billion is approximately $366 million gain anticipated to be recognized by the company in the fourth quarter of 2024, relating to our sale of Stelco's common shares. The company's total debt to total capital ratio, excluding our non-insurance companies, increased modestly to 24.2% at September 30, 2024, compared to 23.1% at December 31, 2023, reflecting an increase in total debt that was offset by our increased shareholder equity, principally reflecting the strong net earnings in the quarter in the 2024-9 months, reduced by purchases of our subordinate boarding shares for cancellation I mentioned previously.

That pretax excess of $1 9 billion or $87 per share is not reflected in our book value per share, but is regularly reviewed by management as an indicator of the underlying investments performances.

And included in that $1 9 billion is approximately $366 million gain.

Speaker Change: Anticipated to be recognized by the company in the fourth quarter of 2024 relating to our sale of <unk> common shares.

Speaker Change: The company's total debt to total capital capital ratio, excluding our non insurance companies increased modestly to $24. Two at September 30th 2024, compared to 23, one at December 31 23.

Speaker Change: Reflecting an increase in total debt that was offset by our increased shareholder equity principally.

Speaker Change: Reflecting the strong net earnings in the quarter and its 2020 for nine months reduced by purchases of our subordinate voting shares for cancellation I mentioned previously.

Our book value per share was over $1000 at 1033 at September 30th 24, compared to the 940 at December 31, 23, representing an increase in our book value per share in the nine months of 11, 7% adjusted for a Q1 dividend.

Jennifer Allen: Our book value per share was over $1,000 at $1,033 at September 30th, 2024, compared to the $940 at December 31st, 2023, representing an increase in our book value per share in the nine months of 11.7% adjusted for our Q1 dividend. And in closing, our common shareholder equity increased just by just over $1.1 billion to $22.7 billion at September 30, 2024, up from the $21.6 billion at year-end 23, reflecting the strong net earnings in the first nine months of 24, attributable to Fairfax shareholders of $2.7 billion, which was partially offset by the purchase of the 1 million subordinate boarding shares for cancellation for the cash consideration of the $1.1 billion at the U.S.

And in closing our common shareholder equity increased by just over $1 1 billion.

Speaker Change: $22 7 billion at September 30th 24 up from the $21 6 billion at year end 23, reflecting the strong net earnings in the first nine months of 'twenty four attributable to Fairfax shareholders of $2 7 billion, which was partially offset by the purchase of the <unk>.

Speaker Change: 1 million subordinate voting shares for cancellation for.

Speaker Change: The cash consideration of the $1 1 billion at the U S 1113 per share and payments that we made on our common and preferred share dividends of $400 million.

Jennifer Allen: $1,113 per share and payments that we made on our common and preferred share dividends of $400 million.

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

Peter Clarke: That concludes my remarks for the third quarter of 2024, and I'll turn this call back over to Peter.

Peter Clarke: Thank you, Jaeme. We now look forward to answering your questions. Please give us your name and company name and try to limit your questions to only one so that it is fair to all on the call.

Peter Clark: Thank you Dan.

Peter Clark: We now look forward to answering your questions.

Peter Clark: Please give us your name and company name and try to limit your questions to only one so that it is fair to all on the call.

Operator: Cedric, we are now ready for questions. Thank you, and as another quick reminder, if you'd like to ask a question, please press star then one on your phone. Remember to unmute your phone and record your name and company clearly when prompted. If you'd like to withdraw that question, you may press star two.

Peter Clark: Cedric we are now ready for questions.

Cedric: Thank you and there's another quick reminder, if you'd like to ask a question. Please press Star then one on your phone remember to mute your phone and record your name and company clearly when prompted.

Speaker Change: You'd like to withdraw that question you May press Star two Okay. My first question comes from Nick <unk> with CIBC capital market. Your line is open.

Nikolaus Priebe: Okay, and our first question comes from Nik Priebe with CIBC Capital Market. Your line is open. Okay, thanks. So interest and dividend income was sort of flattish in the quarter sequentially.

Speaker Change: Okay. Thanks, so interest and dividend income was sort of flattish in the quarter sequentially just in.

In light of market yields retracing higher here, what's your internal view on how the new money rate today might compare to existing book yield? Just trying to get a sense of whether you see with maturity rollovers, or whether that looks fairly balanced today.

Speaker Change: In light of market yields retracing higher here with what's your internal view on how the new money rate today might compare to existing book yield just trying to get a sense of whether you see.

Speaker Change: With maturity rollovers or whether that looks for the balance today.

Speaker Change: Yeah.

Peter Clarke: Hi, Nick, it's Peter here. Yeah, I think, you know, as we've said, you know, we have, we think we've locked up at, you know, $2 billion plus of interest and dividend income for the next, you know, three to four years. And, you know, even with rates coming down somewhat, we're able to invest still at fairly good yields. And, you know, the, it's currently running more at close to $2.5 billion. So again, we think that $2 billion is a good proxy for the next three to four years.

Peter Clark: Hi, Nick its Peter here Yeah.

Peter Clark: Yeah, I think you know as we've said.

Peter Clark: We have we.

Peter Clark: So we think we've locked up that 2 billion plus of interest and dividend income for the next three to four years and you.

Peter Clark: You know, even with the rates coming down somewhat.

Peter Clark: We're able to invest are still at fairly good yields and.

Peter Clark: It's currently running more at close to $2 5 billion. So again, we think that $2 billion is a good proxy for the next three to four years.

Speaker Change: Okay. Thank you next question please.

Okay, thank you.

Tom Mackinnon: Next question, please. Thank you. Our next question comes from Tom MacKinnon with BMO Capital. Your line is open. Yeah, thanks. Good morning.

Speaker Change: Thank you. Our next question comes from Tom Mackinnon with BMO capital. Your line is open.

Yeah. Thanks, Good morning, just with respect to we've heard other companies talk about a hurricane Milton loss estimates are you able to share anything with us with respect to what are the impact of Midland could be it for your fourth quarter.

Peter Clarke: Just with respect to we've heard other companies talk about Hurricane Milton loss Are you able to share anything with us with respect to what the impact of Milton could be for your fourth quarter? Sure. I can't give you an exact number, but we can point you in the right direction. You know, we're still collecting the information. We had our model losses, but it's been slow, the reported losses coming in. We, you know, we really think that it'll easily come within the cap margin for the fourth quarter, and so should not have a significant effect on the combined ratio.

Speaker Change: Sure.

Speaker Change: I can't give you an exact number but we can point you in the right direction.

Speaker Change: We're still collecting the information we had our model losses, but it's been slow the reported losses coming in.

Speaker Change: So we you know, we really think that it'll easily come within the cat margin for the fourth quarter, and so should not having a significant effect on the combined ratio.

With that said, you know, we've had a number of hurricanes in the third quarter, and, you know, fortunately, they haven't hit some of the larger centers in Florida. And, you know, Hurricane Milton was a big hurricane, and if it would have hit Tampa, you know, we would have had much different, a different outcome. For us, we're benefiting, though, from, you know, our size and scale. And, you know, we modeled that loss, even a direct hit into Tampa, Category 4. And we think that we still would have had underwriting profit for the year, even under the, you know, a significant event.

Speaker Change: With that said you know we've had a number of hurricanes in the in the third quarter.

Speaker Change: And you know Fortunately they haven't hit some of the larger centers in in Florida.

Speaker Change: And Hurricane Melton was a big hurricane and if it would've hit Tampa.

Speaker Change: Had much different a different outcome.

Speaker Change: For us, we're benefiting though from our size and scale.

Speaker Change: And we modeled that loss, even a direct hit into a into Tampa category four and we think that we still would have had underwriting profit for the year, even under the <unk>.

Significant event like that.

Speaker Change: Can you share the Caf I should say it's within.

Peter Clarke: Can you share the cat question that you say it's within? The cap margin, we don't really disclose that. You know, if you look at it, Currently, we've been absorbing over $1 billion of catastrophes the last number of years. So that should give you some sense of where our combined ratio is coming in and the cat load. Typically, it's about 5% to 6% in the combined ratio.

Speaker Change:

Speaker Change: The cat margin, we don't really disclose that.

Speaker Change: If you look at it.

Speaker Change: Currently we've we've been absorbing over $1 billion.

Speaker Change: Of catastrophes, the last number of years, so that could should give you some sense of where our combined ratio is coming in and and.

Speaker Change: The cat load typically it's about 5% to 6%.

Speaker Change: In the combined ratio.

Speaker Change: Next question please.

Jaeme Gloyn: Next question, please. Next question comes from Jaeme Gloyn with National Bank Financial. Your line is open. Yeah, thanks. Just wanted to maybe touch on the growth outlook and what you're seeing in the in the markets. You know, growth kind of run around the little single digits on an organic basis. Are you positive? Are you maybe more cautious on on the markets where you're operating? Can you give us a little bit more color as to where you see that trending over the next year? It's difficult to predict, but in the third quarter, our premium was up.

Speaker Change: Next question comes from James <unk> with National Bank Financial your line is open.

Yes. Thanks.

Speaker Change: Just wanted to maybe touch on the growth outlook and what you're seeing in the in the markets.

Speaker Change: Gross kind of run around the low single digits on an organic basis.

Speaker Change: Are you positive or are you maybe more cautious on.

Speaker Change: The markets, where you're operating in can you give us a little bit more color as to where you see that trending over the next year.

Speaker Change: It's difficult to predict but.

Speaker Change: In the in the third quarter, our premium was up it was up 14%, but as I said that included the addition of the call premium excluding that it was about 3%, which it has been running the last bill.

It was up 14%, but as I said, that included the addition of the call premium. Excluding that, it was about 3%, which it has been running the last number of quarters, give or take. But what we benefit from is if you go across all our companies, we had Crumforster up 13%, Northbridge up 5%, Allied up 3%. Our international operations, excluding Gulf, are growing quite nicely as well. They are up 9%. And then you have Odyssey that we're down 5%, but as I mentioned, that includes that one one-off quarter share treaty, that the effects of that will unwind in the fourth quarter.

Speaker Change: Last number of quarters give or take.

Speaker Change: But what we benefit from is if you look if you go across all our companies, we had crum <unk> Forster up 13% Northbridge up 5% Allied up 3%.

Speaker Change: Our international operations, excluding golf.

Speaker Change: <unk> are growing quite nicely as well they're up 9%.

Speaker Change: And then you have the Odyssey that were down 5%, but as I mentioned that includes that one one off quota share treaty that the effects of that will unwind in the fourth quarter, so it'll be more normalized growth going forward.

Peter Clarke: So it'll be more normalized growth going forward. And BRIT, then we're down 4% in the third quarter. And I think you'll see that turnaround as well as they've been really focusing on the margins in their business and cutting back and reallocating capital to more profitable lines. So I would expect that you'll see BRIT on the positive side of premium growth going forward.

Speaker Change: And Brett than was down 4% in the third quarter.

Speaker Change: And I think youll see that turnaround as well as they've been.

Speaker Change: <unk> been really focusing on on the margins in their business and cutting back and reallocating.

Speaker Change: Capital to more profitable lines, so I would expect that.

Speaker Change: You'll see Brett I'm, you know on the positive sign of premium growth going forward.

But really, the companies are number one, they're focused on underwriting profit. and that's the goal and growth is secondary. The other thing I'll mention, though, is if you go back over the last five years, you know, we've grown the we've grown our premium base by about 12% per year. And, and really grew during the, you know, the 2000 and 2000 to 2023 time period, right in the hard market, where we grew about 18 and a half percent per year. So the company's did an outstanding job of taking, you know, taking advantage of the market. And that's what we want them to do.

Speaker Change: But really the company is our number one they're focused on underwriting profit.

Speaker Change: And.

Speaker Change: And that that's the goal.

Speaker Change: And our growth is secondary.

Speaker Change: The other thing I'll mention though is if you go back over the last five years.

Speaker Change: We've grown the week.

Speaker Change: We are growing our premium base by about 12% per year.

Speaker Change: And really grew during the.

Speaker Change: The 2002 thousand to 2023 time period late in the hard market, where we grew about 18, 5% per year. So the company has done an outstanding job of taking.

Speaker Change: Taking advantage of the market.

And that's what we want them to do and so we'll keep looking for opportunities.

Peter Clarke: And so we'll keep looking for opportunities. And we'll see what what comes.

Speaker Change: And.

Speaker Change: We'll see what the what comes.

Speaker Change: Next question please.

Next question, please. Thank you.

Speaker Change: Okay. Thank you next question comes from Jon <unk> with RBC capital markets. Your line is open.

Scott Heleniak: Our next question comes from Scott Heleniak with RBC Capital Markets. Your line is open. Thanks. Good morning. Hi.

Speaker Change: Thanks, Good morning.

Peter Clarke: The vaccine year loss ratio in Q3, excluding catastrophes and reserve development, it definitely tracked better than what you saw in the first half of the year. And is there anything you can call out on that? Any seasonal benefits or mix or any different product areas where you saw improvement on that core loss ratio compared to where it had been tracking? Anything you can expand on that? You know, on a quarter basis, it's difficult as there's lots of fluctuations in the numbers and because you can have, you can have not only development on prior years, but you can have development in the quarter on, you know, previous quarters of the same year.

Speaker Change: Hi.

Speaker Change: The accident year loss ratio in Q3, excluding catastrophes and reserve development.

Speaker Change: We tracked better than what you saw in the first half of the year and is there anything you'd call out or any any seasonal benefits or mix or any different product areas, where you saw improvement on that the core loss ratio compared to where it had been tracking anything you can expand on that.

Speaker Change: Yeah.

Speaker Change: You don't want it on a quarter basis, its its difficult as theres lots of fluctuations in the numbers and because you can have.

You can have not only development on prior years, but you can have development in the quarter on previous quarters of the same year.

So I wouldn't, you know, off the top of my mind, I wouldn't say there's anything unusual in there. It's just quarter to quarter. You can see fluctuations in the, you know, the X cat X prior year development combined ratio.

Speaker Change: So I Wouldnt I, you know off the top of my mind I wouldn't say, there's anything unusual in there.

Speaker Change: It's just a quarter to quarter you can see fluctuations in the you know the ex cat ex prior year development combined ratio.

Speaker Change: Dan anything to add to that yeah. No I think it is just the volatility within the quarter I would look at it more on a consistent basis within the nine months if youre looking at 2023, Scott verses 2024 were relatively in line.

Jennifer Allen: Jen, anything to add to that? Yeah, no, I think it's it's just a volatility within the quarter, I would look at it more on a consistent basis within the nine months, if you're looking at 2023, Scott versus 2024, we're relatively in line, excluding the caps, we're at the 61% on a loss ratio basis, which is which is consistent, period over period.

Speaker Change: Excluding the cats, where we're at the 61% on a loss ratio basis, which is which is consistent period over period.

Speaker Change: Next question.

Akshay Dhalakal: Next question. I think our next question comes from Akshay Dhalakal, private investor, your line is open. Good morning team. I've been an investor for over four years and it's been a happy investment so far. I want to congratulate on the fantastic quarter.

Speaker Change: Thank you and our next question comes from Akshay, It's alcohol private Investor Your line is open.

Akshay: Hey, good morning team.

Speaker Change: Hmm left Pickler are 40 years and that it's been a happy investments so far.

Speaker Change: And I want to congratulate on the fantastic quarter.

Peter Clarke: I had a question on the investment of an insurance subsidiary. So in the report, you mentioned about $100 million investment in Marvel Gurus. So, I wanted to ask if you could please expand on that, and also, you mentioned about a $50 million investment in the same fund in 2017, so I was curious to know, how has that performed since then, from an annualized perspective? Thank you so much. Sure. Yeah, Marble Fund, it's, it's an investment fund. And we initially, we initially invested a number of years ago. And simply put the, the results have been outstanding over the time period over the last five years, the fund has has produced a return of over 22%.

Speaker Change: I had a question on the investment up in insurance subsidiary. So in the report you mentioned.

Speaker Change: Mentioned about $100 million investment in <unk>.

Speaker Change: <unk>.

So I wanted to.

Speaker Change: Ask if you could expand on that and also.

Speaker Change: You mentioned about a $50 million investment in the same funding 2017. So was curious to know how has that performed soon.

Since then from an annualized perspective, thank you so much.

Speaker Change: Sure.

Speaker Change: And Marvel Fund, it's a it's an investment fund and we initially we initially invested a number of years ago.

Speaker Change: And simply put the rib.

Speaker Change: Results have been outstanding over the time period over the last five years the fund has.

Speaker Change: Yeah, it's produced a return of over 22%.

And it is a related party transaction. So that's why we disclosed it. And you know, for related party transactions, we have policies and procedures in place that must be followed. And one of those is is the disclosure. And that's why it was in our interim report.

Speaker Change: And it is a related party transaction. So that's why we disclosed it and you know for related party transactions.

Speaker Change: We have policies and procedures in place.

Speaker Change: That must be followed and one of those is is the disclosure and that's why it was in our interim report.

Speaker Change: Next question please.

Michael Kane: Next question, please. Our next question comes from Michael Kane with Davenport & Company. Your line is open.

Speaker Change: Our next question comes from Michael Caine with Dev important company. Your line is open.

Michael Caine: Good morning, considering the current discount to book value could you. Please comment on the lack of share buybacks at Fairfax, India over the last couple of quarters. Thank you.

Peter Clarke: Good morning. Considering the current discount to book value, could you please comment on the lack of share buybacks at Fairfax, India over the last couple quarters? Thank you. Thanks, Michael. Thanks for your question. The Fairfax India yeah, it continues to trade below book value. You know, we think over time that will reverse. And there's not, there's not a lot of liquidity. But we continue to keep that, you know, keep that option or Fairfax India does. And they'll be, they'll be looking at, you know, over time buying back their own shares. And not a lot more to say on that.

Speaker Change:

Speaker Change: Thanks, Michael Thanks for your question.

Speaker Change: Sure.

Speaker Change: The.

Speaker Change: Fairfax, India, Yes, it continues to trade below book value.

Speaker Change: We think over time that will reverse.

Speaker Change: And there's not a there's not a lot of liquidity.

Speaker Change: But we continue to keep that keep that option or Fairfax, India does.

Speaker Change: And there'll be a there'll be looking at them.

Over time buying back their own shares.

Speaker Change: And not a lot more to say on that.

Next question, please.

Speaker Change: Next question please.

Speaker Change: Yeah.

Ruby: Cedric, do we have any more questions? Yes, I believe the name is Ruby with Inova, your line is open. Hello, thank you very much for the excellent presentation.

Speaker Change: Patrick do we have any more questions.

Patrick: Yes, I believe the name is a Ruby with Nomura. Your line is open.

Ruby Nomura: Hello, Thank you very much for the excellent presentation, well done Peter I, just wanted to look forward a little bit I'm glad that you guys are focusing on underwriting profit as the coal versus grow but when we look around the world lots of lots of uncertainty lots of growth in India.

Well done, Peter. I just want to look forward a little bit. I'm glad that you guys are focusing on underwriting profit as the goal versus growth. But when we look around the world, lots of uncertainty, lots of growth in India, but what about your LATAM operations, in particular, Argentina, which is very small right now, but a more business friendly climate with the new change in leadership and potential for growth. So both growth and profitability is sort of wondering what your comments would be. Growth similar to India, but much more, much less exposure right now. I'd appreciate some input on that.

Ruby Nomura: But what about your Lat am operations in particular, Argentina, which is very small right now but.

Ruby Nomura: At a more business friendly climate with the new change in leadership and potential for grow so both growth and profitability is sort of wondering what your comments would be gross similar to India, but much more a much less exposure.

Ruby Nomura: As you're right now I'd appreciate some input on that.

Speaker Change: Thanks Ruby.

Peter Clarke: Thanks, Ruby. Yeah, that's as I said, in our opening remarks, you know, we're our international operations, we're quite excited about. And we have those opportunities all around the world. You know, a lot of the companies we have, like you said, in Argentina are small today. But over time, there's potential for significant growth.

Speaker Change: That's as I said in our opening remarks.

Speaker Change: You know we're.

Speaker Change: Our international operations were quite excited about and we have those opportunities all around the world.

Speaker Change: A lot of the companies we have like you said in Argentina are small today.

Speaker Change: But over time.

There's potential for significant growth.

And, you know, you look at Fairfax, it started as a $10 million company almost 40 years ago. And, you know, we have a lot of those companies situated around the world. And the prospects are not only in Argentina, but India, Asia. It's really, we're excited about that. But we take the long term approach. You know, we're not looking even five years, but 10 years, 20 years. And we do see that some of these companies could be a significant part of the overall portfolio.

Speaker Change: And you know you look at Fairfax. It started as a $10 million company almost 40 years ago and you know we have a lot of those companies situated around the world.

Speaker Change: And the prospects of not only in Argentina, but India Asia.

It's really we're excited about that but we take the long term approach.

Speaker Change: No we're not look not looking even five years, but 10 years 20 years and we do see.

Speaker Change: That some of these companies could be a significant part of the overall portfolio.

Jaeme Gloyn: Next question, please.

Speaker Change: Next question please.

Our next question comes from Jaeme Gloyn, a follow-up, your line is open. Yeah, thanks. And since we're on round two, maybe I can sneak a couple in here. First one is, is just around the, the duration of the fixed income portfolio. I don't think it was disclosed in the, in the in the results or the report, if you could just give us an update on how that duration sits and compared to the liabilities. And, you know, maybe, you know, thinking about the strategy here around fixed income, is it a little bit of wait and see on the election?

Speaker Change: Our next question comes from James <unk>, a follow up your line is open.

Speaker Change: Yes. Thanks.

James <unk>: Since we're on around two maybe I can sneak a couple in here.

James <unk>: <unk>.

Speaker Change: First one is just around the.

Speaker Change: The duration of the fixed income portfolio I don't think it was disclosed in the <unk>.

Speaker Change: In the <unk> and the results are the report if you could just give us an update on how that duration compared to the to the liabilities and <unk>.

Speaker Change: Maybe.

Speaker Change: Thinking about the strategy here around fixed income is it a little bit of wait and see on the election or do you have some strategies, maybe youre thinking about deploying more capital on the longer dated maturities shifting more into corporate bonds.

Wade Burton: Or do you have some strategies? Maybe you're thinking about deploying more capital into longer dated maturities, shifting more into corporate bonds. Maybe you can sort of talk through how you're thinking about the world on fixed income.

Speaker Change: Maybe you can sort of talk through how you're thinking about the world on fixed income.

Speaker Change: Sure.

Chair. The duration on our bond liabilities on around three and a half years. So it's a little longer than it was last quarter. And if you look at, you know, our liabilities, it's relatively close. We don't match on purpose, but at where we sit today, our liability duration is close to our asset or asset duration. And you can sort of see that in the IFRS 17 numbers that, you know, we had a big loss on the discounting, about $750,000, $760,000. That was offset almost very closely. with the 800 plus million of gains on our bond portfolio.

Speaker Change: The duration on our bond liabilities.

Speaker Change: On area around three and a half years.

Speaker Change: So it's a little longer than it was last quarter.

Speaker Change: And if you look at our you know our liabilities, it's relatively close we don't match on purpose, but.

Where we sit today, our liability duration is close to where our assets are.

Speaker Change: Our asset duration and you can sort of see that in the <unk> 17 numbers.

Speaker Change: That you know we had.

Speaker Change: We had a big loss on the discounting, but 750 $760 million.

Speaker Change: That was offset almost very closely.

Speaker Change: With the 800 plus million of gains on our bond portfolio. So we're pretty much matched our where we are today.

Wade Burton: So we're pretty much matched where we are today.

Speaker Change: As far as going forward I think all of that we could say on that is you know we're very happy that the.

As far as going forward, I think all that we could say on that is, you know, we're very happy that the fixed income portfolio is very liquid. and, you know, with a duration of three and a half years, it gives us lots of flexibility for opportunities in the future. We don't have any significant exposure on the corporate side. Our corporate bonds are, you know, one to two years, very short dated. So that is an opportunity if credit spreads should widen.

Speaker Change: The fixed income portfolio is very liquid.

Speaker Change: And you know with a duration of three and a half years. It gives us lots of flexibility.

Speaker Change: For opportunities in the in the future.

Speaker Change: We don't have any significant.

Speaker Change: Exposure on the corporate side, our corporate bonds or.

Speaker Change: Our you know one to two years very short dated.

Speaker Change: So that is an opportunity if credit spreads should widen in the future.

Speaker Change: Next question.

Tom Mackinnon: Next question. Yes, our next question comes from a follow-up with Tom McKinnon with BMO Capital. Your line is open.

Speaker Change: Yes. Our next question comes from a follow up with Tom Mackinnon with BMO capital. Your line is open.

Peter Clarke: A question with respect to the tax rate, you know, it used to track kind of in the low 20s. and now it's been sort of closer to 25%. I mean, how should we be thinking about that going forward? Seeing in the quarter, you know, that 25%, does that, is that what you would expect going forward? Does that kind of reflect some GMT or any other issues that may have happened?

Tom Mackinnon: With respect to the tax rate you know it used to track kind of in the low twenties, maybe and now it's been sort of closer to 25% I mean, how should we be thinking about that going forward. This is what we're seeing in the quarter, you know that 25% does that too.

Tom Mackinnon: Is that what you would expect going forward are does that kind of reflects in PMT or any other issues that may have happened in 2024.

Speaker Change: Hey, Thanks for the question Tom Yeah that the tax rate is elevated in the quarter and Theres a lot of a lot of things going on as you might know on on the tax side, but why don't I pass it to Jen who can give us a little more detail.

Hey, thanks for the question, Tom. Yeah, the tax rate is elevated in the quarter. And there's a lot of a lot of things going on, as you might know, on on the tax side.

Jennifer Allen: But why don't I pass it to Jen, who can give us a little more detail? Yeah, thanks, Tom. So yes, Peter indicated there is a lot of moving parts within the global tax regime. So as you indicated, our effective tax rate is seen at 25.1% elevated over 2023. A couple things driving that. So in 2024, we now are under the global minimum tax where there's a 15% mandated tax in certain jurisdictions that we didn't have prior, primarily being in Bermuda. So on a YTD basis included in that number is about 107 million, about 30 million expense in the quarter.

Jen Allen: Yeah. Thanks, Tom So yes, Peter indicated there is a lot of moving parts within the global tax regime. So as you indicated our effective tax rate is seen at 25, 1% elevated over 2023, a couple of things driving that so in 2024, we now are under the global minimum tax.

Jen Allen: Where there's a 15% mandated taxes.

Certain jurisdictions that we didn't have prior primarily been in Bermuda. So on a widespread basis included in that number is about 107 million about 30 million expense in the quarter.

We also have a change in the tax rate legislation in India, where they changed their long term capital gains rates that also costs us another about 50 million in the quarter. There's a couple of other things we're still closely watching, which is the interest limitation tax rule that's in place. Currently, no impact materially on our financials. But there could be with that's where the 30% limitation rule could come into play at the holding company. And then we're still tracking quite closely the capital gains rate, the inclusion rate change that's coming in Canada as well. So as Peter indicated, a lot of moving parts on tax, I think trying to normalize what that effective tax rate would be is a little difficult, but I would say it is going to be elevated from prior year, if you kind of put in a maybe a 22% to a 25, you're probably going to be in the ballpark where we'll land.

Jen Allen: We also have a change in the tax rate legislation in India.

Jen Allen: Where they change their long term capital gains rate that also cost us another about $50 million.

Jen Allen: In the quarter, there's a couple of other things we are still closely watching which is b interests limitation tax rule. That's in place currently no impact materially on our financials, but there could be with that's where the 30% limitation rule could come into play at the holding company and then we're still tracking.

Jen Allen: <unk> closely the capital gains rate the inclusion rate change that's coming in Canada as well so as Peter indicated a lot of moving parts on tax I think trying to normalize what that effective tax rate would be as it is a little difficult, but I would say it is going to be elevated from prior year. If you kind of put in and maybe at 22.

Per cent to a 25, you're probably going to be in the ballpark, where we'll land.

Jen Allen: Yeah.

Speaker Change: Next question please.

Jaeme Gloyn: Next question, please. Yes, another follow-up from Jaeme Gloyn with National Bank. Your line is open. Yeah, thanks. I, you know, granted you're doing a bigger review on reserves this quarter. But just, you know, given a little bit more attention paid to this on some U.S.

Speaker Change: Yes, another follow up from James <unk> with National Bank. Your line is open.

Speaker Change: Yes. Thanks.

Speaker Change: Granted you're you're doing a bigger review on our reserves this quarter.

Speaker Change: But just given a little bit more attention paid to this on some U S insurers.

insurers and on casualty reserving, is there anything you were seeing in Q3 specifically, or maybe you've even, you know, gotten a little bit of a head start on the reserving review for the end of the year? Is there some extra color you can provide around that and how Fairfax has been performing from a reserve standpoint, specifically on casualty?

Speaker Change: On casualty reserve and is there anything you were seeing in Q3, specifically or maybe you even gotten a little bit of a head start on the on the reserving review for through the end of the year is there. Some extra color you can provide around that in house or boxes that occur.

Speaker Change: We're forming from a reserve standpoint.

Speaker Change: Specifically on casualty.

Speaker Change: Yeah. Thanks, Jamie Yeah, as you said and I said in my opening remarks, we're just going through the full actuarial reviews that all other companies in the fourth quarter.

Peter Clarke: Thanks, Jaeme. Yeah, as you said, and I said in my opening remarks, we're just going through the full actuarial reviews at all our companies in the fourth quarter. And, you know, we'll have more, you know, more to report on our year end call and in our annual report. But, you know, for the year, we've had $300 million of favorable development, so our reserves continue to run off. Well, 130 of that was in the in the third quarter. And we really believe we have a great process in place. You know, instilled within the companies for conservative reserving, it's very important.

Speaker Change: And we'll have more more to report on our year end call in and in our annual report.

Speaker Change: But for.

Speaker Change: For the year, we've had $300 million of favorable developments of our reserves continue to run off well 130 of that was in the in the third quarter and we really believe we have a great process in place.

Speaker Change: <unk> you know instilled within the companies for Conservative reserving, it's very important and this is our you know last year was our 17th year in a row that we've had favorable development and.

And this is our, you know, last year was our 17th year in a row that we've had favorable development. And, you know, for the for the first nine months, we've had $300 million. But in regards to the U.S. casualty, you know, it's an industry, the industry is feeling the effects of these social inflation and nuclear verdicts. And, you know, our companies are seeing it as well, as I said in the past, mainly Krumm, Forster and Allied, and they have been strengthening some of these accident years, 2014 to 2018 in particular. But more or less have had IBNR up or offsetting redundancies in other lines of business.

Speaker Change: For the first nine months, we've had $300 million, but.

Speaker Change: But in regards to the U S casualty.

Speaker Change: It's an industry the.

Speaker Change: The industry is feeling the effects of these social inflation nuclear verdicts and all our companies are seeing it as well as I said in the past, mainly crum <unk> Forster and Allied and there have been a strengthening some of these accident years 2014 to 2018 in particular.

Speaker Change: But more or less.

Speaker Change: Had I b and I are up or offsetting redundancies in other lines of business. So in total we've you know our reserving has been quite strong.

Peter Clarke: So, in total, we've, you know, our reserving has been quite strong. In the third quarter, there was no, on these years, there's been no significant strengthening on the U.S. cash flow. Overall, we think our reserves...

Speaker Change: In the third quarter. There was no on these years Theres been no significant strengthening on the U S.

Speaker Change: Casualty reserves.

Speaker Change: So overall, we think our reserves are in are in really good shape.

and really good.

Speaker Change: Next question please.

Marco Pesteris: Next question, please. Yes, and the next question comes from Marco Pesteris, a private investor. Your line is open.

Speaker Change: Yes, and our next question comes from Mark will boosters private Investor Your line is open.

Speaker Change: Good morning.

Good morning. Could you please provide a little bit more of color on Fairfax India? These are actions and results. Yeah. Oh, Marco, I was just gonna say Fairfax India is a public company, similar to Fairfax, they released their Q1 interim report yesterday at 5pm. You can get that report off their website. If you have any additional questions, you could reach out to the investor line. I just wanted to have your comments, like you commented on the Fairfax Financial Holdings. It's possible. Yeah. Yeah, Fairfax Financial Holdings.

Speaker Change: Would you please provide a little bit models all of them.

Speaker Change: Fairfax India.

Speaker Change: As shown some results.

Speaker Change: Yeah.

Speaker Change: Yeah Omar.

Speaker Change: Well I think it's gonna stay Fairfax, India is a public company similar to Fairfax. They released their Q1 interim report yesterday at five P. M. You can get that report off their website. If you have any additional questions you can reach out to the investor line.

Speaker Change: Okay. Thank you I just wanted to whatever your comments like you commented on the Fairfax Oh.

Speaker Change: Yeah.

Speaker Change: It's possible yes.

Speaker Change: Fairfax Financial Holdings, Yeah, we typically we don't.

Peter Clarke: Yeah, we typically we don't comment on Fairfax, India's underlying results.

Speaker Change: Comment on Fairfax, India is underlying results.

Speaker Change: Next question please.

Next question, please.

Peter Clarke: No further questions, Peter, back to you. Well, if there are no further questions, thank you for joining us on this call. And thank you, Cedric.

Speaker Change: No further questions Peter back to you.

Peter Clark: Well if there are no further questions. Thank you for joining us on this call and thank you Cedric.

Cedric: Youre welcome. Thank you and that concludes today's conference you may all disconnect at this time.

You're welcome. Thank you.

Operator: And that concludes today's conference. You may all disconnect at this time. Thank you.

Cedric: Yeah.

Okay.