Full Year 2024 Fairfax Financial Holdings Ltd Earnings Call
Speaker Change: Good morning and welcome to Fairfax's 2024 year-end results conference call. Your lines have been placed in a listen-only mode. After the presentation, we will conduct a question and answer session.
Speaker Change: Operating income from our insurance and reinsurance operations on a non discounted basis and before risk margin was four 8 billion.
Speaker Change: Our book value per share increased 14, 5% adjusted for a 15 dollar dividend to a 1000 at 60.
Speaker Change: Included in our book value was a loss of $477 million or almost $22 per share in the other comprehensive income relating to currency losses due to the significant strengthening of the U S dollar against many currencies around the world primarily in the fourth quarter after the elections in the United States.
Speaker Change: We view these unrealized foreign currency movements as market fluctuations.
Speaker Change: Unrealized gains or losses on our equity and fixed income investments.
Speaker Change: Our insurance and reinsurance companies are in great shape, writing over 32 billion of premium worldwide.
Speaker Change: We benefit greatly from our scale and diversification and the exceptional talent and experience of our long serving president and teams that run our insurance and reinsurance company.
Speaker Change: In the fourth quarter, we closed our previously announced purchase of sleep country, Canada and also in the fourth quarter, we acquired the remaining 57% ownership of peak achievement.
Speaker Change: A big welcome to Stewart Schaefer and his team at sleep country, and Ed Canal, he and the team at peak.
Speaker Change: We also announced a 33% investment in <unk>, a property and casualty insurance company based in France.
Speaker Change: It writes primarily specialty commercial insurance.
Speaker Change: The transaction is subject to regulatory approvals and expected to close in the second quarter.
Speaker Change: I will now give you some additional detail on the components of our net earnings for the year.
Speaker Change: Our investment return for 2024 with six 7% driven by increased interest and dividend income strong share of profits of associates and net gains on equities offset by unrealized losses on our bond portfolio due to rising interest rates.
Speaker Change: Consolidated interest and dividend income of two and a half billion was up 32% year over year benefiting from our growing investment portfolio reinvesting at higher interest rates and increased dividend income.
Speaker Change: Net gains on investments of approximately $1 1 billion for the year were driven by gains on our equity exposures of $1 9 billion offset by unrealized losses on our bond portfolio.
Speaker Change: $731 million, primarily from U S. Treasuries again due to the increase in interest rates in the fourth quarter.
Speaker Change: The net gains of $1 9 billion on our equity and equity related holdings.
Speaker Change: Driven by realized gains and unrealized mark to market gains on our Fairfax Trs telco E Orla mining offset by unrealized losses on our finance and commercial International Bank.
We have always said and please remember our net gains or losses on investments only make sense over the long term and look for actuate from quarter to quarter or for that matter year to year.
Speaker Change: More on investments from late.
Speaker Change: I've mentioned in previous quarters, our book value per share of 1060 does not include unrealized gains or losses in our equity accounted investments and our consolidated investments, which are not mark to market.
Speaker Change: At the end of the year the fair value of these securities is in excess of carrying value by one and a half billion an unrealized gain position were $68 per share on a pre tax basis.
Speaker Change: This is after realizing a gain on stelco, a $352 million, which we sold in 2024 and closed in the fourth quarter.
Speaker Change: As we had an ownership above 20% we equity account its telco.
Speaker Change: The market value was much higher than the carrying value and the way. The accounting works is that gain is not reflected in our book value until realized.
Speaker Change: And this was the case for Selco.
Speaker Change: In 2024 net earnings included an unrealized loss due to increasing interest rates in the year of $530 million.
Speaker Change: This consisted of unrealized losses on our bond portfolio 731 previously mentioned.
Speaker Change: Set by the increase in discount on our insurance and reinsurance contracts held at $201 million.
Speaker Change: For comparison purposes in 2023. This number was a net benefit of $496 million.
A swing of around $1 billion year to year.
Speaker Change: Our insurance and reinsurance businesses Rose $32 5 billion of gross premium in 2024, an all time high up 12, 6% versus 2023.
Speaker Change: The growth was driven by the consolidation of golf insurance, whose operating results were consolidated into our results beginning January one 2024.
Speaker Change: Excluding golf premium of $2 7 billion gross premium was up three 1%.
Speaker Change: Our North American insurance segment increased gross gross premiums by $469 million in 2024 or five 6%.
Speaker Change: <unk> continued to grow with specialty business with growth of seven 8% for the year driven by its surplus in specialty lines accident, and health business and Seneca insurance.
Speaker Change: Northbridge was up four 4% in Canadian dollars, reflecting continued strong customer retention and continued rate increases.
Speaker Change: While the net premiums were down one 2% year over year.
Speaker Change: Due to continued competitive workers' compensation market.
Speaker Change: Our global insurer and Reinsurer segment was up one 5% with gross premiums of $17 2 billion in 2024.
Allied World was up four 5% for the year with gross premiums of $7 2 billion.
Speaker Change: The reinsurance the reinsurance segment was up 13%.
Speaker Change: It's global markets insurance premium was up 9%, while its north American insurance segment was relatively flat.
Speaker Change: Odyssey group's premiums were down one 4% in 2024 with gross written premium of $6 2 billion.
Speaker Change: Its insurance business was down three three percentage points, principally from targeted decreases at Hudson and its crop and financial lines of business.
Speaker Change: While reinsurance was flat impacted negatively by the non renewal of a large quota share in the fourth quarter of 2023.
Speaker Change: Excluding the quota share contract odyssey's reinsurance business was up seven 3% in 2024.
Speaker Change: <unk> gross premium was up 1% for the year, primarily in property, both direct and reinsurance offset by long tail casualty in select areas.
Speaker Change: On a net basis, though.
Speaker Change: Premium was up 6% as they retained the greater share of profitable business.
Speaker Change: Our international insurance and reinsurance operations gross premium increased significantly in 2024.
Speaker Change: <unk> 2023, with gross written premium of $6 5 billion up over 80% or $2 9 billion.
Speaker Change: The growth was primarily the result of the consolidation of golf insurance that added $2 7 billion of gross premium in our international operations.
Speaker Change: Excluding golf insurance or international operations, gross premiums were up 5% or almost $200 million.
Speaker Change: Despite U S dollar strengthening.
Speaker Change: And in international operations now make up approximately 20% of our total gross premiums.
Speaker Change: In the long term prospects of our international operations are excellent and will be a significant source of growth over time, driven by excellent management teams.
Speaker Change: On underwriting we had a very strong end to the year with a fourth quarter combined ratio of $89 five producing an underwriting profit of $658 million.
Speaker Change: Focusing on the full year, our combined ratio was 92 seven.
Speaker Change: Producing record underwriting profit of $1 8 billion.
Speaker Change: The combined ratio included catastrophe losses of $1 1 billion, adding four and a half combined ratio points, primarily from hurricane milk, Milton and Helene in the United States.
Speaker Change: The significant catastrophe events in Canada, and the floods in Dubai.
Speaker Change: This compares to a combined ratio of $93, two and catastrophe losses of four points in 2023.
Speaker Change: As our premium base has expanded and with the benefits of diversification, we expect to be able to absorb significant catastrophe losses within our under underlying underwriting profit.
Speaker Change: For the full year 2024, our global insurers and reinsurers posted a combined ratio of 91%.
Speaker Change: Led by Allied World with a combined ratio of $89, one and an underwriting profit of $545 million and its seventh consecutive year of improved combined ratios.
Speaker Change: Since we acquired them in 2017.
Speaker Change: How do you see group had another great year.
Speaker Change: [noise] excuse me and produced a combined ratio of 91 two.
Speaker Change: Underwriting income of $505 million driven by a combined ratio of $84 seven in the reinsurance business and all its segments producing underwriting profit.
Speaker Change: Grip continues to produce excellent results as well with $191 million of underwriting profit and another year of sub 95 combined ratio at 93 six.
Speaker Change: Our North American insurers had a combined ratio of 93, 7% in 2024.
Speaker Change: Led by North bridge with a combined ratio of $89 three an underwriting income of $232 million.
Speaker Change: Despite the negative headwinds of the Canadian dollar.
Speaker Change: And withstanding significant catastrophe losses that affected candidate this year.
Speaker Change: An outstanding result.
Speaker Change: From Forrester continues to grow profitably with a combined ratio of 95 and zenith our workers' compensation specialist had a combined ratio of $99 one managing multiple years of price decreases in that line of business.
Speaker Change: Our international operations delivered a combined ratio of 97 three.
Speaker Change: Fairfax Asia had a great year with a combined ratio of 92.1 led by Singapore REIT.
Speaker Change: And all our other Asian companies produced underwriting profit.
Speaker Change: Latin America produced another excellent year.
Speaker Change: 95%, despite some difficult economic conditions in some of the countries they do business.
Speaker Change: Colonnade, who writes business across eastern Europe was affected by the significant flood losses in the third quarter and came in with a combined ratio of 96.
Speaker Change: While bright in South Africa. After a number of difficult years from catastrophes had a great year with a combined ratio of 94 nine.
Speaker Change: Euro lighting briefs had a small underwriting loss at 103 point.
Speaker Change: 103.0, driven by a very competitive environment.
Speaker Change: Finally golf insurance, which was consolidated in our results for 2024 at an elevated combined ratio of 109 effected by the Dubai floods.
Speaker Change: And three two points of purchase price adjustments from the Fairfax consolidation.
Speaker Change: This will be eliminated after this year.
Speaker Change: Excluding these adjustments the combined ratio was 97 seven.
Speaker Change: We are confident they will return to their historical sub 95 underwriting results going forward.
Speaker Change: For the year, our insurance and reinsurance companies recorded favorable reserve development of 594 million or a benefit of two four points on our combined ratio.
Speaker Change: This compared to $310 million or a benefit of one four points in 2023.
Speaker Change: This was the 18th consecutive year, our insurance and reinsurance operations had favorable reserve development.
Speaker Change: We're focused on setting our ongoing reserves at conservative levels, especially on long tail lines of business.
Speaker Change: Offsetting this our run off operations strengthened reserves by $221 million as part of their annual actuarial reserve process, the strengthening related primarily to late and liabilities due to the continued increases in litigation activity.
Speaker Change: Through our decentralized operations, our insurance and reinsurance companies continue to thrive writing close to 33 billion in gross premiums producing record underwriting profit and as we said before led by our exceptional management teams.
Speaker Change: Companies are positioned very well to continue capitalizing on their opportunities in their respective markets.
Speaker Change: Finally, a comment on the devastating fire losses that occurred in southern California last month.
Speaker Change: For us this will be primarily a reinsurance event as we have very little direct insurance exposure to the fires.
Speaker Change: Our main exposure is through the reinsurance business at Odyssey bread and Allied World.
Speaker Change: Insured industry losses are estimated to be in the $35 billion to $45 billion range and we typically take on one to one 5% of the industry losses.
Speaker Change: This could be a little higher given this is our reentry insurance event for us.
Speaker Change: But at a high level, our early estimate of the net losses would be in the $500 million to $750 million range on a pre tax basis.
Speaker Change: With that said we are five weeks since the fire started and we have not received many reports from our seasons.
Speaker Change: We will have a much better estimate at the end of the first quarter.
Speaker Change: We expect much of the loss and possibly all will be covered by our first quarter cat margins and underwriting income.
Speaker Change: Many people have lost their homes and many businesses have been destroyed by the fires.
Speaker Change: As part of our overall charitable, giving which is 2% of pre tax profit.
Speaker Change: We have donated $1 million to the Red Cross and support of the relief efforts for the people affected by the wildfires as we also did for the people affected by Hurricane Mill.
weight burden: I will now pass the call to weight burden, our president and Chief investment officer of handle at Wassa the comment on our investments.
Speaker Change: Thank you Peter and good morning.
weight burden: We ended 2024 in excellent shape on the investment side.
weight burden: Our 47 billion U S. Dollar fixed income portfolio is earning $2 5 billion in interest and dividend income and very high quality investments with a five 1% yield and duration of three three.
weight burden: Our $20 billion of equity investments had an excellent year with solid unrealized and realized gains and strong associate earnings.
weight burden: Our experienced investment team continues to closely monitor all the holdings, both fixed income and equities.
weight burden: As many of you know our long term track record is outstanding averaging seven seven on the seven 7% on the slope over 39 years with only a handful of down years and nothing worse than negative four 5% primarily unrealized.
weight burden: In 2020 for the overall portfolio was up six 7% in spite of mark to market losses on fixed income due to higher rates.
weight burden: It was a solid year of performance and we are well positioned from a downside perspective going into 2025 and beyond.
weight burden: Also if rates stay where they are which we think they might interest income could be even higher over the next few years.
weight burden: Higher rates hurt the market in 2024 with unrealized bond losses of $731 million, but really set us up for excellent interest income for the next few years.
weight burden: I wanted to highlight two investments on this call.
weight burden: First our investments in India in this fast growing economy Fairfax has direct investments.
weight burden: Of over $4 5 billion U S dollars.
weight burden: This includes a 900 million market value $679 million carrying value investment in controlling stake in Fairfax, India.
weight burden: We have an incredible investment team led by a Chandran Ratna Swamy, both Paul sound erosion and Sumit Malhotra.
weight burden: When you think Fairfax, India book value significantly understates, the intrinsic value of its holdings, especially.
weight burden: Considering our current 64% stake in Bangalore Airport alone is 48% of the assets of Fairfax, India.
weight burden: The other key investments and Fairfax, India of I F. L capital TSB Bank and seven islands shipping are performing very well, making good profits and growing.
weight burden: Outside of Fairfax, India. We also have a large investment in India. The biggest tour operator Thomas Cook.
weight burden: Quest is the largest staffing company in India and of course, our direct investment in digital are very fast growing and profitable online insurance company.
weight burden: Second I wanted to discuss and investments that closed just after year end 2024.
weight burden: We invested in the largest independent timeshare company in America called the Berkeley Group.
Carolyn: Carolyn <unk> and her team at vacation or Fairfax partners here.
Carolyn: The investment is underpinned by asset value, where we directly owned 1950 full service vacation units, mostly located in Las Vegas, Orlando and other high traffic vacation areas in the U S.
Carolyn: The opportunity here is for Carolyn and her team to generate overnight rental income from the huge stock of nightly vacancies.
Carolyn: Her experience designing hotwire online booking software and then as an executive at Starwood is perfect for a vacation is trying to do with Berkeley.
Carolyn: In fact prior to this acquisition her group at vacation made investments and five smaller timeshare assets from 2019 to 2024.
Carolyn: And in each case, they were very successful at significantly growing EBITDA in a short period of time.
Carolyn: The total deal was $835 million, which we funded with a $275 million five year preferred note at 13, 5%.
Carolyn: A $365 million seven year senior secured note at nine 5%.
Carolyn: And $170 million mortgage warehouse loan with a five year maturity as sulfur plus 400.
Speaker Change: The $50 million equity is funded 50% by Fairfax, and 50% by Caroline and our partners we.
Carolyn: We are absolutely thrilled to be your partner on this.
Carolyn: Overall Fairfax. This investment book is in great shape to end the year, we have an outstanding team of investors and business partners and we are very excited about the returns we can generate with our mix of talent and assets.
Carolyn: The close of the year I wanted to remind you all of three core tenants on the investment side is Fairfax.
Carolyn: One we always focus on the downside first they have to believe Theres a margin of safety before we make an investment.
Carolyn: Two we are value investors.
Carolyn: Big part of that is independently studying the fundamentals of each and every investment we make.
Carolyn: And finally third we're always focused on absolute return over the long run.
Carolyn: We believe the focus on the long run and absolute returns is a huge competitive advantage for investment performance and ultimately shareholder returns.
Speaker Change: And with that I'll pass it to Jen Allen our CFO.
Jen Allen: I'll begin my comments by discussing the impact changes in interest rates had on our consolidated statement of earnings in the fourth quarter and full year of 2024.
Jen Allen: Typically the effect that had on discounting on a prior year net loss on claims in our fixed income portfolio.
Jen Allen: Our net earnings of just under $3 9 billion in the full year of 2024 included a net loss of $530 million.
Jen Allen: Selecting the effects of increases in interest rates during the year, which was comprised of net losses on bonds at $731 million, primarily unrealized that was partially offset by a net benefit reporting on their insurance contracts and reinsurance contracts held at $201 million.
Jen Allen: I'd like to note that of that $530 million net loss reported for the full year 'twenty for a significant portion or 438 million was incurred in the fourth quarter of 2024.
Jen Allen: This compared to 2023, where we reported a net benefit of $496 million, reflecting decreases in the interest rate environment in 2023.
Jen Allen: In that year was comprised of net gains on our bond portfolio of 714, primarily unrealized that was offset by net loss on our insurance and reinsurance contract how the $218 million.
Jen Allen: And similar to the fourth quarter of 'twenty for most of that benefit was reported in the full year 23 $496 million as a result of a decrease in the interest rates in the fourth quarter 'twenty three that represented $329 million of that benefit in the year.
Jen Allen: When you compare the year over year change on a pre tax basis. It represents just over 1 billion movement in our pre tax earnings on a year over year as a result of changes in interest rates.
Jen Allen: The full year included that net loss of $5 30, compared with a benefit in 'twenty three or $4 96.
Jen Allen: The adoption of ire for 17, generally an increase or decrease in interest rate would result in a decrease an increase to our carrying values of both the fixed income portfolio and now our net liability for incurred claims for insurance contracts.
Jen Allen: While the change to the carrying values of each does not necessarily equal magnitude in size.
Jen Allen: There is the movement in interest rate, that's mitigated and partially offset internet earnings now.
Jen Allen: A few comments on our non insurance companies in the fourth quarter.
Jen Allen: If you exclude any impact which was nil in the fourth quarter of Fairfax, India performance fee and to noncash goodwill impairment charges that we reported in the fourth quarter 'twenty three.
Jen Allen: The operating income up our non insurance companies increased to $150 million in the fourth quarter of 2024.
Jen Allen: From 52 million in the fourth quarter 23 now.
Jen Allen: Primarily reflected higher operating income in our restaurant and retail segment, which increased by 38 million and that was primarily all driven by our acquisition of sleep country on October one 2024, where their operating results are now consolidated into our reporting.
Jen Allen: It was higher operating income at Fairfax, India increased by $35 million and that was driven by primarily their share of profit from its underlying investments in associates and that was principally related to its interest in Bangalore International Airport.
Jen Allen: And our operating income from the other segment at $18 million compared to an operating loss in 2023, primarily was driven by higher business volumes at ADT.
Jen Allen: Looking for the full year of 2024.
Jen Allen: We also exclude the impact of Fairfax, India performance fee.
Jen Allen: The noncash goodwill impairment charges that were taken in 'twenty three.
Jen Allen: Operating income on our non insurance companies modestly decreased to $241 million in the full year 'twenty four from 299 million and 23, we.
Jen Allen: We had lower operating income at Fairfax, India, a decrease of $92 million that was driven by a lower share of profit from its investments in associates.
Jen Allen: But that was partially offset by higher operating income in our restaurant and retail segment, which was an increase of $48 million and as noted it was driven by the acquisition of the country and lower expenses that recipe due to improved cost management and better sales mix of higher margin products.
Jen Allen: Please turn to look at our share of profit of investments in associates in both the fourth quarter and full year 'twenty four.
Jen Allen: We continue to report strong consolidated share of profit of associates of $347 million in the fourth quarter, principally related to share of profit of $171 million from Eurobank and $50 million from Poseidon.
Jen Allen: And then the full year 2024, our consolidated share profit of associates was 956 million principally.
Jen Allen: Reflecting the share of profit of $515 million from Eurobank $213 million from Poseidon and $57 million from our peak achievement investment.
Jen Allen: That was partially offset by share of loss of $73 million from Fairfax, India investment in Sanmark chemicals group.
Jen Allen: A few comments on the transactions in the fourth quarter and subsequent to Q2.
Jen Allen: During the fourth quarter, we completed two significant acquisitions and commence consolidating each of these acquisitions in our non insurance companies reporting segments.
Jen Allen: On October one 2024, we acquired all of the issued and outstanding common shares of sleep country.
Jen Allen: Cash consideration of $881 million or Canadian one 2 billion.
Jen Allen: And then on December 20th 2024, we increased our interest in Pik achievement to 100% by acquiring a 42, 6% equity owned by think are holding and 14, 8% equity interest owned by other minority shareholders.
Jen Allen: Aggregate purchase consideration of $765 million.
Jen Allen: Fairfax was required to re measure our existing equity accounted investment in peak achievement to the fair value of $326 million.
Jen Allen: One consolidation and as a result, we reported a pretax gain of $203 million and our net gains on investments in our consolidated statement of earnings.
Jen Allen: And that reflected peak achieved in now carried at approximately eight five times free cash flow.
Jen Allen: During 2020 for these and other small acquisitions resulted in an increase to goodwill and intangible assets of.
Jen Allen: $2 3 billion and an increase in non recourse debt of $1 2 billion as presented on our balance sheet.
Jen Allen: And finally on December 13, 2024, we purchased the remaining shares of threat from bridge.
Jen Allen: Minority shareholders, increasing the company's ownership in great from 86, 2% to now a wholly owned sub at 100%.
Jen Allen: I'll close with a few comments on our financial condition.
Jen Allen: At December 31, 2024, cash and investments at the holding company was $2 5 billion.
Jen Allen: With access to our fully Undrawn 2 billion unsecured revolving credit facility.
Jen Allen: And we also have an additional 2 billion at fair value of investments in associates and consolidated non insurance company owned at the holding company and no long term debt maturities until the fourth quarter of 2026.
Jen Allen: On November 22024, we completed an offering for an aggregate Canadian 700 million principle.
Jen Allen: Out of unsecured senior notes, comprising Canadian $450 million at 473% unsecured senior notes that are due in 2004.
Jen Allen: Sure.
Jen Allen: And at Canadian <unk> 250 million of five <unk> to 3% unsecured senior notes due in 2054.
Jen Allen: A portion of the aggregate net proceeds were used to redeem all of the company's series C and D preferred shares on December 31st.
Jen Allen: In the full year 2024, we purchased 135 million subordinate voting shares for cancellation at.
Jen Allen: At a cost of approximately $1 6 billion or USD 11, 79 per share of which 334000 subordinate voting shares or a cost of $461 million were completed in the fourth quarter of 2024.
Jen Allen: At December 31, 2020 for the excess of our fair value over carrying value of our investments in associates and our non insurance Consol.
Jen Allen: Consolidated subsidiaries was one 5 billion.
Jen Allen: Compared to 1 billion at December 31, 23, with $397 million of that increase related to the publicly traded eurobank.
Jen Allen: The pretax access of one 5 billion or $68 per share is not reflected in our book value per share that is regularly reviewed by management as an indicator of investment performance.
Jen Allen: The excess of that carried fair value over carrying value at December 31, 24.
Jen Allen: No longer includes an unrealized gain of $3 52 on Stifel. As it was realized in the fourth quarter as Peter noted a 2024.
Jen Allen: Our total debt to total cap ratio, excluding our non insurance companies.
Jen Allen: Increased to 24, 8% at December 31, 24, compared to 23, 1% at December 31 23.
Jen Allen: Primarily reflecting increased total debt primarily related to our issuance of the 1 billion principal amount of senior notes that are giving 2054 that was offset by our increased shareholder equity.
Our book value per basic share of a 1050 at December 31, 24 compared to 940 at December 31, 23, which represented an increase in per basic share for the full year of four 5% adjusted to include our $15 per common share dividend that we paid in the first quarter of two.
Jen Allen: 44.
Jen Allen: And in closing a few remarks on our common shareholder equity increased by just over $1 3 billion to 23 billion at December 31 24.
Jen Allen: With $21 6 billion in the prior period.
Jen Allen: It reflected our net earnings attributed to Fairfax shareholders of $3 9 billion and that was partially offset by the purchases of the $1 3 million subordinate voting shares for cancellation for cash consideration of $1 6 billion.
Jen Allen: The other comprehensive loss from Cta at $477 million or $22 per share related to unrealized foreign currency losses.
Jen Allen: As a result of the significant strengthening of the U S dollar against many currencies around the world.
Jen Allen: And similar to the net loss that we incurred from the changes in interest rates that unrealized foreign currency losses was primarily all incurred in the fourth quarter of 2024.
Jen Allen: Lastly, we had payment of our common share and prep triggered preferred dividends of $412 million.
Jen Allen: That concludes my remarks, and I'll turn the call back over to Peter Thank you.
Peter: Thank you Jan.
Cedric: Cedric we are now happy to take on any questions.
Peter: You might have.
Speaker Change: Thank you as a reminder.
Speaker Change: If you'd like to ask a question. Please press star followed by one.
Speaker Change: Please mute your phone and record your name and company clearly when prompted.
Speaker Change: Please limit yourself to one question.
Speaker Change: Okay and our first question comes from Nick <unk>.
Speaker Change: I'm, sorry, if I mispronounced that from CIBC capital markets. Your line is open.
Speaker Change: Yeah. Thanks. It is one of the things that stood out to me was the interest and dividend income stepped up quite meaningfully between Q3 and Q4 after plateauing in the preceding few quarters I Wouldnt think that the consolidation of ownership and Brett would have had a meaningful impact.
Speaker Change: No there was a steepening of the yield curve in the quarter, but was there anything specific that you would call out in Q4 that would have driven the sequential growth in Atlanta.
Speaker Change: Hey, good morning, Nick.
Speaker Change: Thanks for the question.
Speaker Change: Yeah, no our run rate on our interest and dividends is running about $2 5 billion.
Speaker Change: In the fourth quarter, our dividend didn't come with a little higher than in the past quarters. We did receive a dividend from digit insurance. So that's probably what you're seeing in that number.
Speaker Change: Got it and Mike what was the magnitude of that one.
Mike: It was approximately $100 million.
Speaker Change: Okay. Thank you.
Mike: Thanks next question please.
Tom Mackinnon: Next question comes from Tom Mackinnon with BMO capital markets. Your line is open.
Tom Mackinnon: Yeah, Thanks, just falling on an accomplishment.
Tom Mackinnon: Yeah morning, yes that a dividend associated with the compulsory convertible press from digit I don't think you've got that dividend in the past is this the first time, you're getting it and is that dividend paid quarterly or annually.
Tom Mackinnon: Thanks, Yeah and the.
Jen Allen: The dividend really relates to the IPO with digit earlier in the year, but why don't I pass it to Jenn, who may have some more detail sure. Thanks, Peter Good morning, Tom So as Peter indicated is when we did the IPO one digit back in May 2024, if you recall we did.
Jen Allen: Sell into the market at the holding company, which is where Fairfax has got its ownership and did get info works. Those proceeds remained at the holding company until the dividend was paid out in the fourth quarter by about $112 million. So that is the additional increase that you'll see in the fourth quarter related to the IPO proceeds being distal.
Jen Allen: <unk>.
Speaker Change: And is that dividend normally in the fourth quarter or is that how we should be thinking of that going forward.
Jen Allen: No it related to the IPO proceeds specifically.
Jen Allen: Okay. So it is unusual.
Jen Allen: That's correct, that's a one off.
Jen Allen: Okay. Thanks, Thank you.
Next question please.
Speaker Change: Next question comes from Jack Cohen with National Bank Financial Your line is open.
Speaker Change: Hi, Good morning, So you reported.
Speaker Change: $2 5 billion in cash and investments at the Holdco 10 year is at.
Speaker Change: On still to hold at least 1 billion or is that minimum increase as the business and scale.
Speaker Change: Yeah, We say 1 billion. We continue we continually look at what you know what amount we want to keep at the holding company.
Speaker Change: We've grown significantly over the years withheld that amount for many many years and as we say that is for the protection of our insurance and reinsurance companies.
Speaker Change: It's not for investment purposes not for acquisitions.
Speaker Change: You know we think.
Speaker Change: We think the $1 billion is prudent it's been running a little higher.
Speaker Change: But.
Speaker Change: The $2 5 billion may come down a little bit as we we raised some debt late in the year and we bought back some of our preferred shares, but we play it by ear and we're very comfortable where we are today.
Speaker Change: Okay that's perfect.
Speaker Change: And next question please.
Speaker Change: Yes. Our next question comes from foot hard got Gandhi with Mbeki excuse me and bake in BK will your line is open.
Vital Default: Yes, Hi, this is vital in default because one question from my side in the last few recent increase spend because a lot of exposure in D. C. We would like to know specifically in Saudi or withheld belongs in this competitive market. There are specific segments, such as b and C or volatility or planning to focus on.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Yes, I think your question was on golf insurance and as I said, we consolidated golf insurance into our results this year.
Speaker Change: And you know we've had an owners strip position in them for the better part of 10 years, we've been a huge partner, we're very excited to have them, 100% owned de.
Speaker Change: They operate through 12 different regions.
Speaker Change: In.
Speaker Change: In the Middle East.
Speaker Change: And they do have the they have approximately 50% ownership in.
Speaker Change: Company in Saudi Arabia, and we're just very excited for the potential for golf going forward.
Speaker Change: Thank you for the question and next question. Please.
Speaker Change: Our next question comes from Fernando to real but with core Mark Your line is open.
Jeff Fenwick: Thank you I was just wondering if by the way this is from them on for Jeff Fenwick of Carmike.
Jeff Fenwick: I was just wondering if the experience or the wildfires in California are most of the needle at all for Fairfax on how it thinks about cat exposure.
Jeff Fenwick: What other firm plans to pare back a bit further just any any color on that would be helpful.
Jeff Fenwick: Sure.
Jeff Fenwick: I think the simple answer is no we're very comfortable where our exposure is on the on the cat side.
Jeff Fenwick: Through the hard market, we grew significantly.
Jeff Fenwick: We didn't grow as much on our catastrophe exposure, but where we are today, we're very comfortable and our teams are there that.
Jeff Fenwick: You know we have no plan to walking away, we'll look at see what rates happen reached my firm up after such a.
Jeff Fenwick: Large loss such as this.
Jeff Fenwick: But we're very comfortable where we are our losses were within our expectations and manageable within our underwriting profit. So no. We're all good on the catastrophe side.
Jeff Fenwick: Next question please.
Speaker Change: Thank you and our next question comes from Howard Flanker with flanker and company. Your line is open.
Howard Flanker: Thank you first a comment and then a question out of the Blue do you have a team of terrific really disciplined underwriters.
Speaker Change: Nice work.
Speaker Change: My question another little for premise. This if if you heard the.
Speaker Change: A press conference between Donald Trump and the rent remoter yesterday they emerge.
Speaker Change: <unk>.
Speaker Change: Uh huh.
Speaker Change: A possibility or probability of an undersea cable from India to Israel, and then to Italy across Europe and into North America.
Speaker Change: Do you have any thoughts off the top of your head about that prep.
Speaker Change: Okay.
Speaker Change: First of all I guess your comment on our underwriters that's exactly right. We have a great team of underwriters all around the world.
Speaker Change: And and your comment on premise is not with us today.
Speaker Change: I will for sure past your question, along and what's kind of interesting and I thought I saw Jonathan Swipe. Your hand, you might have something to say about it.
Speaker Change: Myself I don't but again, we'll take it away. Thank you.
Speaker Change: Thank you very much for the question.
Speaker Change: Next question please.
Speaker Change: Yeah. So we have a follow up with Tom Mackinnon with BMO capital markets. Your line is open.
Tom Mackinnon: Yes, thanks, good morning.
Tom Mackinnon: Yeah, you still own the equity total return swaps on your own stock you know the stock trades at 1.3 times book.
Speaker Change: Why do you still own this as opposed to perhaps just using buying back more stock.
Speaker Change: Right Yeah, no that's a D. The Trs on Fairfax, that's that's strictly an investment for US we put it back on in 2021 or thereabouts and it's extremes.
Speaker Change: Performed extremely well and we think it will continue to perform very well.
Speaker Change: We are.
Speaker Change: As we said we can see strong underwriting results going forward, our interest and dividend income and strong our associate income and strong.
Speaker Change: We feel we'll be able to continue to compound book value at a very high rate or acceptable rate.
Speaker Change: And our share price will follow you know, we're not trading at a high multiple if you look at our peers.
Speaker Change: And so for US it's still an investment we are very much like.
Speaker Change: Thanks, Bob next question please.
Speaker Change: Yes. Our next question comes from Jack Cohen again with National Bank Financial Your line is open.
Jack Cohen: Okay. Thank you. So last year you reported the maximum dividend capacity available in 2024 from the insurance subsidiaries was $3 billion. I was just wondering if you had an update on this figure for 2025.
Jack Cohen: I think we'll be updating it in our annual report, but eh Jen anything to comment on that no. Yeah. That's correct. So it'll be disclosure in coming up in our annual report that's released on March seven Jack So it'll be a standard disclosure.
Jack Cohen: Nothing I think of us.
Jack Cohen: Concerning to raise if anything you know as Peter noted, we're doing very well, but it is disclosure will provide on that release of the annual report.
Jack Cohen: Thank you next question please.
Speaker Change: I'm showing no further questions for Scott.
Well. Thank you Cedric if there are no further questions. Thank you for joining us on our year end 2024 conference call.
Speaker Change: As you all at our annual meeting in April.
Speaker Change: <unk>.
Speaker Change: Thank you and that concludes today's conference you may all disconnect at this time.