Q2 2025 Fairfax Financial Holdings Ltd Earnings Call
Good morning and welcome to fairfax's 2025 second 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 *1 on your phone keypad. For time's sake, we ask that you limit your question to 1.
Today's conference is being recorded if you have any objections, you may disconnect at this time.
Now your host for today's call is Peter Clark with opening remarks from Mr. Derek bulis. Derek. Please begin
Good morning and Welcome to our call to discuss fairfax's. 2025 second quarter results. This call may include forward-looking statements actual results, May differ, perhaps materially from those contained and such forth 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 perspective, which has been filed with Canadian Securities regulators and is available on Cedar Bluff
I'll now turn the call over to our President and COO, Peter Clarke.
Thank you, Derek.
Good morning everyone and welcome to fairfax's 2025 second 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 hamble Watsa to comment on investments.
And then Amy shirk our Chief Financial Officer to provide some additional Financial details.
We had an excellent sector with net. Earnings of 1.4 billion up from 915 million. In the second quarter of 2024,
This gives us net earnings of 2.4 billion for the first half of 2025.
Operating income from our insurance and reinsurance companies.
Adjusted to an undiscounted basis. And before risk margin was 1.1 billion in the second quarter of 2025.
This is relatively flat from the second quarter of 2024.
Underwriting income was strong in the quarter at 427 million.
Our interest in dividend income, was 666 million up from 614 million in the second quarter of 2024.
While our share of profits of Associates, was 131 million down, 221 million the previous year.
Net gains on investments in the quarter were again, very healthy at 952 million.
All-in, are book value per share increased to 1,158 in the second quarter up 10.8%, in the first half of the Year adjusted for our 15 Dollar dividend.
Our insurance and reinsurance companies are in great shape. Writing over 33 billion of annualized Premium worldwide.
We benefit greatly from our scale and diversification and the exceptional talent and experience of our long-serving presidents. And the teams that run our insurance and reinsurance operations,
I will now give you some additional detail on the components of our net earnings for the quarter.
Our Consolidated investment return was solid with a return of 2.6%, driven by increased interest in dividend income, Strong, net gains on investments.
Partially offset by the lower profits of Associates.
Consolidated interest in dividend income of 666. Million was up, 8.5% year-over-year benefiting from a growing Investment Portfolio and increased dividend income in the quarter.
Profits of Associates was 131 million.
Down by 90 million. Compared to the second quarter of 2024.
Profits of an associate's continues to be driven by Gyro Bank and Precise Inc.
Offset this quarter by losses on the waterous fund from Mark to Market unrealized losses in its portfolio.
the reduction from last year also reflects,
Peak achievements or Bower. Now being cons accounted for as a Consolidated investment and no longer in associate.
In the quarter, we had net gains on investments of 952 million.
Driven by gains on our equity, exposures of $800 million.
Gains on our bond portfolio at $75 million.
Primarily from government bonds, due to the decrease in interest rates in the second quarter and gains on investments of 77 million.
primarily reflecting unrealized gains on our preferred shares in digit of 358 million,
Offset by losses of 251 million primarily on Foreign Exchange contracts used as an economic hedge against our investments in foreign currencies.
I should note that the losses on these contracts went through our net earnings
While many of our foreign exchange gains on investments those Investments Consolidated or treated as Associates.
Are reflected in other comprehensive income and make up a significant amount of the 3344 million oci gain in the quarter.
At the end of the day, both are captured in our book value.
The net gains of $800 million in our equity and equity-related holdings were driven principally by unrealized gains on our Fairfax TRS.
File Finance.
We have always said, and please remember our net gains or losses on investments, only make sense over the long term and will fluctuate from quarter to quarter or for that matter year to year.
More on investments from Wade.
As mentioned in previous quarters, our book value per share of 1,158 does not include unrealized gains or losses. In our Equity accounted Investments and our Consolidated Investments which are not marked to Market,
At the end of the second quarter, the fair value of these securities.
Is in excess of carrying value by 2.4 billion.
And unrealized gain position of $100 to $110 per share on a pre-tax basis.
An increase of approximately 900 million for the year.
As I said before our insurance and reinsurance businesses had an outstanding quarter writing 9.1 billion of gross premium.
In the second quarter of 2025 up, 2.6% versus the second quarter of 2024.
Our Global insurer and reinsurer segment was up, 3.7% with gross premiums of 4.9 billion. In the second quarter of 2025
Brits. Gross premium was 902 million in the quarter up 9.3% year-over-year.
On new business opportunities and its thin pro cyber and property and specialty lines of business.
As well on the reinsurance side through its Bermuda reinsurer.
In the second quarter of 2025 Key Road, 230 million of Premium.
Up 6.4% from the second quarter of 2024 driven by its casualty in cyber business.
Odyssey's premiums were up 2.4% in the quarter, with gross written premium of $1.7 billion.
Its Insurance business was the driver of the growth at both new line and Hudson while its reinsurance business was relatively flat.
Allied World premium increased 2.3% in the quarter with gross premiums of almost 2.1 billion
They're North American Insurance. Segment was up. 2.4%.
From new business and rate increases primarily on its casualty business.
The global market segment was up 4.1%.
Driven by property business and their reinsurance segment was flat year-over-year.
And insurance segment, wrote gross, premiums of 2.3 billion. In the second quarter of 2025 down 1% over the second quarter of 2024.
Zenus premium was up 7.3% in the quarter.
Reflecting new workers comp business and price increases in its Agri Business book.
From forester's, premium, remained flat.
And North bridges's gross, premium was down 2.9%, in Canadian dollar terms.
The decrease at Northbridge reflects moderating rates for commercial lines in Canada.
The international insurance and reinsurance operations. Gross premiums were 1.8 billion up 4.2% in the second quarter of 2025 versus the second quarter of 2024.
Our Central and Eastern European business led by Colonnades and polish wreck continues to grow profitably, writing, 220 million, a premium in the quarter.
Up 38%.
Right in South Africa, grew premium 20%.
And Fairfax, Asia. Grew 9.4%.
With strong growth across all its companies, with the exception of Falcon Hong Kong.
While setting the growth with Fairfax Latin America down, 7.2% driven by Foreign Exchange movements in Argentina and at Fairfax Brazil.
And Gulf Insurance's premium decreased 1.3%.
Principally due to the loss of a significant insurance contract. That was non-renewed in the third quarter of 2024
Our international operations now make up approximately 20% of our total gross premiums.
Of the group within our decentralized structure.
Underwriting results in the quarter were very strong, with the combined ratio of 93.3.
Producing underwriting profit of 427 million.
All, but 1 of our insurance and reinsurance operations, posted an underwriting profit in the quarter.
Our Global insurers and reinsurers had a combined ratio of 91.7.
And underwriting profit of $293 million.
Allied world had a combined ratio of 91.1.
Odyssey 91.9.
Brits combined ratio with 92.2 and key was 93.4 and I was outstanding result, especially after a difficult first quarter due to the significant catastrophe, losses, from the California wildfires.
Our North American insurers had a combined ratio of 95.2 for the second quarter.
led by Northbridge with a combined ratio of 92,
From Forrester, we had an underwriting income of $52 million and a combined ratio of 95.4.
while Zenith our workers compensation, Specialists had an elevated, combined ratio of 103.3 representing an underwriting loss of 6 million,
Zenith has been dealing with multiple years of rape decreases in the workers compensation space.
But we are happy to say rates have now begun to stabilize, and Zenith is pleased to see some premium increases coming its way.
Our international operations delivered a solid quarter, with a combined ratio of 95.5.
Fairfax Asia had a very strong quarter with a combined ratio of 89.5.
Driven by an outstanding performance in Singapore, Reed posted a combined ratio in the low 80s.
Bright who has been taking underwriting actions? The last number of years are seeing it come through in the results.
Data combined ratio of 92.8.
Latin, America posted a combined ratio of 95.1.
And Central and Eastern Europe was at 95.3.
Golf Insurance. The largest company in our International operations had a combined ratio of 97.9
In the second quarter.
Negatively affected by elevated loss, ratios on its Health business and the expense drag from the loss of the large contract in its Kuwaiti operations.
Golf's combined ratio continues to improve and we are confident. They will return their to their historical sub. 95 underwriting results.
In the second quarter, our insurance and reinsurance companies recorded favorable Reserve development of 163 million.
Or a benefit of 2 and a half points on our combined ratio.
Each of our major segments, recorded, favorable reserved to development with releases coming, primarily on short-tailed property business.
Through our decentralized operations, our insurance and reinsurance companies continue to thrive.
Writing over 33 billion in annualized Gross premiums.
With healthy underlying margins and led by our exceptional management teams.
The strong results of our insurance operations have, not gone on notice by the rating agencies.
In the second quarter, Standard & Poor's upgraded the financial strength ratings of our core operating companies to double A minus.
And our debt rating to A minus.
Also, in the quarter, AM Best upgraded Allied World’s rating to A+ and Fairfax’s debt rating to A-.
Our companies are positioned very well to continue capitalizing on their opportunities in their respective markets in the second half of 2025.
I will now pass the call to Wade Burton, our president, and chief investment officer of hlo Watson to comment on our investments.
Thank you, Peter and good morning.
It was a quiet quarter on the investment front for Fairfax. We have weathered the Tariff situation while so far and monitor it closely.
We continue to look for ways to benefit and protect our float as events evolve.
We ended the quarter with $49 billion in fixed income investments.
The yield is 5.1%.
And our dividend and interest income run rate is a healthy 2.6 billion perom.
Our duration is 2.4 years, including 11 billion in cash. And short-term treasuries,
Watch inflation and the FED actions.
Within the fixed income portfolio are mortgages continue to perform. Well we have been repaid on 1.8 billion of mortgages from the Pacific Western Bank transaction. Where we purchased approximately 4 billion in commitments at 95% of par in the spring of 2023.
The irr on the loans repaid thus far is 14.7%.
Thanks to the outstanding work of Bill MC moral, Matt Windish and their team at Kennedy Wilson, these mortgages are proving to be a fantastic investment for Fairfax.
Our equity and associate investments ended the quarter at almost $25 billion.
the largest Investments, including gyro Bank, Poseidon recipe, Sleep Country, Peak achievement Fairfax, India are all performing, well,
All our run by capable managers in the Fairfax mold and adding nicely to our associate and not Insurance income.
It's early days in the timeshare investment Berkeley run by Caroline shin.
But so far it is exceeded expectations.
Berkeley has approximately 125,000 available room nights per month.
they started the year at virtually nil occupancy for overnight stays
In month one, Caroline brought that number to 10%.
The next month 20% and the third month 35%.
I'm happy to report. Year-to-date operating income has already reached our full year, expectations.
Again, outstanding and capable Partners doing an excellent job for Fairfax shareholders.
Our biggest challenge on the investment front is the US Stock Market. It is up a lot from lows and expensive against earnings.
This makes it a challenge to find new investment ideas.
Our experienced investment, team continues to work hard to Monitor and search.
And the benefit of permanent Capital, as always.
Means we can be patient and let opportunities come to us.
Overall, Fairfax continues to be an outstanding shape on the investment side.
That's it from me. I'll now turn the call over to Amy Sherk. Our CFO
Thank you, wave. I'll begin my comments. By discussing the
impact changes.
We've had on our Consolidated statement of earnings in the second quarter and for 6 months of 2025 and specifically the effects it had on discounting on prior year net losses on claims and our fixed income portfolio, net earnings of 1.4 billion in the second quarter of 2025 included. A net benefit of 120 million reflecting the effects of changes in interest rates during the course,
Comprised of a net benefit on insurance contracts and reinsurance contracts held at $46 million and gains on bonds of $75 million, primarily on realized.
We generally expect that a decrease in interest rates will result in an increase to the carrying values of the company's fixed income portfolio and liability for incurred claims net of reinsurance.
Resulting in the partial mitigation of interest rate risk.
In the current quarter, we recorded a benefit on both as short-term interest rates decreased modestly and longer-term interest rates increased.
Net gains on bonds, reflected a modest decrease in shorter term interest rates while the net benefit on insurance contracts and reinsurance contract assets held reflected the increase in longer term interest rates.
Comparatively, net earnings of $915 million in the second quarter of 2024 included a net loss of $29 million.
Reflecting the effects of changes in interest rates comprised of net losses on bonds of 191 million, partially offset by the net benefit on insurance contracts, and reinsurance contract assets held of 161 million.
When you compare the year-over-year change on a pre-tax basis, the changes in interest rates resulted in an approximate $150 million movement in our pre-tax earnings.
Please refer to page 37 of the mdna within the company's interterm Consolidated financial statements for the second quarter of 2025 for a table that presents. The companies total effects of discounting and risk adjustment on our Net Insurance liabilities and the effects of changes in interest rates, on the company's fixed income portfolio.
Set out in a format. The company believes assists in understanding its net exposure, to interest rate risk.
now, if you comments on our non- insurance company results for the second quarter of 2025,
Reported an operating income of 126 million in the second quarter of 2025 compared to 25 million. In the second quarter of 2024, primarily reflecting the acquisition of Sleep Country on October 1st 2024 and the consolidation of pick achievement on December 20th 2024.
Sleep Country and Pick reported operating income of $20 million and $38 million, respectively, in the second quarter of 2025.
In addition, Fairfax India reported increased operating income driven by Sheriff profits of Associates. In the second quarter of 2025 compared to share of losses on Associates in the second quarter of 2024.
Looking at our share of profits from investments in associates in the second quarter, as Peter has said, our consolidated share of profit of associates of $131 million in the second quarter of 2025 principally reflected our share of profit of $105 million from EuroBank and $69 million from Poseidon, partially offset by our share of loss of $60 million from the Waterous Energy Fund, a limited partnership investment that recorded unrealized mark-to-market losses on a publicly traded common stock holding during the second quarter and for six months of 2025.
A few comments on transactions within the quarter.
On April 21st 2025.
Quest fund off, digitized Solutions, limited and Blue Springs, Enterprise limited, and both digitized and bluesprings commenced trading publicly in India on June 11th.
At listing, the aggregate fair value of the 3 companies digitized Blue Spring and Quest. Post spin-offs with substantially, the same as quest's fair value and immediately prior to the spin-off.
The company applies the equity method of accounting to its 34.8% equity interest in each entity.
On May 13th 2025 the company acquired, a 33% Equity interest in ellinia for cash consideration of 237 million or 210 million euro and commenced applying the equity method of accounting to its Investments.
Albia is a French insurance company that has been operating in the French market since 1962, and it writes specialty property and casualty insurance.
Subsequent to June 30th 2025.
On June. Sorry on June 16th. 2025 the company entered into an agreement with keg royalties income funds.
Uh, to acquire all issued and outstanding units of The Keg fund. But it does not already own for Canadian 1860 per unit for approximately 151 million for Canadian 207 million payable in cash.
The transaction is subject to the approval of the keg fund unit holders and other closing conditions and is expected to close in the third quarter of 2025
Lastly, as an update to the boat rocker transaction disclosed in our q1 2025 interim report, boat rocker received shareholder approval to proceed with the transaction on June 7th. 2025 and the transaction is expected to close imminently.
I will close with a few comments on our financial condition. Maintaining an emphasis on financial soundness, at June 30, 2025, the company held $3 billion in cash and investments. At the holding company, we have access to our fully drawn $2 billion unsecured revolving credit facility, and we also have an additional $1.9 billion at fair value of investments in associates and consolidated.
Non insurance companies owned by the holding company.
Holding company cash and Investments support. The company's decentralized structure and enable the company to deploy Capital, efficiently to its insurance and reinsurance companies.
On May 20th 2025 the company completed offerings of 500 million 5.75%. 10 year, unsecured senior notes due in 2035 and 400 million, principal amount of 6.5% 30-year, unsecured senior notes, due in 2055 for total net proceeds of 890 million after discount, commissions and expenses.
17th 2025.
Pursuant to an agreement and in exchange for cash and cash equivalents received from the holding company of $522 million, or Canadian $708 million, including accrued interest, Brit became the primary co-obligor of Fairfax's Canadian $450 million principal amount of 4.73% unsecured senior notes, due 2034, and Canadian $250 million principal amount of 5.23% unsecured senior notes, due in 2054.
These notes are now the joint and several obligations of the holding company and Brit with Brit being the primary co- obligor. And at first instance, responsible for payment of principal premium if any and interest on these notes.
At June 30, 2025, the excess of fair value over carrying value of investments in non-insurance associates and market-traded consolidated non-insurance subsidiaries was $2.4 billion, compared to $1.5 billion at December 31, 2024.
The pre-tax excess of $2.4 billion is not reflected in the company's book value per share but is regularly reviewed by management as an indicator of investment performance.
The company's total debt to total capital ratio, excluding non-insurance companies, increased to 25.9% at June 30, 2025, compared to 24.8% at December 31, 2024.
This primarily reflected increased total debt and redemption of the company's Series E, F, and M preferred shares, partially offset by increased common shareholders' equity.
Subsequent to June 30th 2025 on July 16th 2025, the company extended, the expiry date of its 2 billion unsecured revolving credit facility from July 17th 2029 to July 16th 2030 on substantially. The same terms with a Syndicate of lenders.
Book value per basic share was 1,158 at June 30th 2025 compared to 1,060 at December 31st 2024 representing an increase per basic share in the first 6 months of 2025 of 10.8% adjusted to include the 15 per share.
Common dividend paid in the first quarter of 2025.
In closing common shareholders Equity increased by approximately 2 billion to 25 billion at June 30th, 2025 up from 23 billion at December. 31st 2024, primarily reflecting net, earnings attributable, to shareholders of Fairfax of 2.4 billion, other comprehensive income of 450 million. Primarily related to unrealized foreign currency translation Gaines, net of Hedges as a result of the strengthening of foreign currencies against the US dollar partially offset.
By payments of common and preferred share dividends of 358 and purchases of 256,650. Subordinate, voting shares for cancellation for cash consideration, of 361 million or 1,406.22 per share.
That concludes my remarks, and I will now pass the call back to Peter. Thank you.
Thank you, Amy.
We are now happy to take any questions you might have.
Thank you. We'll now begin the question and answer session. If you would like to ask a question, please, press star 1 please unmute your phone and record your name clearly when prompted your name is needed to introduce your question.
To withdraw that request. You may press star 2?
Our first question now is from Jamie Lloyd with National Bank Financial. Your line is open.
Yeah, thank you. Uh, good morning. Um, just wanted to, uh, first touch on the the commercial line seems uh, that we're seeing in uh, in the
Commercial lines. How is that? Impacting uh your us businesses and in particular property. Um, and uh, uh, maybe a follow-up after that.
Sure. Jamie. Um, just on the pricing front, uh, I think you know, it depends on each company and by geography. But generally the theme is, um, that on the property. Uh, business, you know, rates are uh, rates are are coming down. Um, in some in some uh, countries, you know, sing Lotus, single, uh, rate, uh, increases. But in many, um, it can be down, uh, you know, low single digits to up to 10% while on the liability side and Casualty. Um, we're still seeing strong rates and anywhere, uh, you know, High single digits to up to 20%.
Um, in Canada Northridge their commercial lines are about uh, mid single digits um, in in total with property down, casualty up, same at crumb and Forrester. You know, their liability business is up about 7 and a half percent property, low single digits,
Um, Odyssey on the reinsurance side, uh, property is down single single digits. Casualty up single digits.
Um, and probably, uh, where we're seeing on most of the rate, uh, you know, negative rate pressure that's in Lloyd's at, uh, grit and key where we're, um, you know, seeing uh, small single digit decreases.
so, at a high level, that's, um,
That's that's where it is. But um, you know, we write 33 billion of premium and we benefit greatly from that diversification. So there may be some lines that are going down some lines going up and we have the flexibility to um be able to grow. Um and of course, number 1 is discipline underwriting. You know, underwriting focuses is number 1 for all our companies and we take a long term approach. Um, so there's no Top Line, uh, focus on at any, any 1 of our companies
Next question, please.
Our next is from Tom McKinnon with BMO Capital markets. Your line is now open.
Yeah, thanks. Uh, good morning everyone. Uh, question. Just with respect to Zenith here. Um, can you see high loss Trends here? Um, I what is really driving? This is it. Uh, is the legal environment getting worse here? Um, and you are seeing you mentioned. You're starting to see rates stable.
Izing here. Um, would that lead us to believe that uh um these lost Trends won't be higher, um, or you're going to just be able to price for them? Are you going to be able to get a combined ratio here below 100? Because you've been running above for a couple quarters now. Thanks,
Yeah, thanks, Tom. Thanks for the question. Uh, yeah, Zenith really, um, you know, their combined ratios come under pressure from, uh,
From rate decreases. There's been that like on probably close to 5 years of rate decreases. Um, now they benefited in the past from, uh, you know, Reserve redundancies that uh that helped the current calendar year numbers. Um but um you know those rate decreases are are starting to compound and came through but they have been stabilizing over the last 6 to 12 months and um so we we don't see decreases anymore. Um, rates are stabilizing and in the second half of the year, they're expecting to get, um, price increases. So, um, we're very pleased with that. Sarah 100% focused on getting that combined ratio below 100. And um, you know, the workers compensation Market is a cyclical market and Zenith has done an outstanding job over the last 30 years of managing, uh, the cycle. And they continue to do that.
And um and uh they're doing their very best to get that uh underwriting profit back uh in the short term.
Next question, please.
Our next is from Charles Fischer with LF Partners. Your line is now open.
Good morning, Peter, Amy and Wade, um, congrats on another great quarter.
For the low mark on Bangalore and key, and they assume a 20% tax rate on those additions.
I therefore conclude and adjusted book value of closer to $1,400 versus the $1,150 that you report, giving us about a 1.3 times on my adjusted book.
Is there something in that approach? That, uh, you you think is not accurate or might not be fair?
No, I think that's a fair approach. Um, yeah we mentioned that, um, you know, our Consolidated Investments and investments in Associates. Um, we we carry them on based on Equity accounting and for the listed companies, the market value is almost 2 2.8. Um so that's a fair adjustment to make to the book value.
That's why we think our intrinsic value is higher than, uh, than our current Book value.
Do work.
Our next question is from Bart jarsky with RBC Capital markets and your line is open.
Hi, good morning. Thanks for taking the question. Um just uh 1 on Capital allocation. In terms of we've got a healthy cash cash position at 3 billion, leverage mid 20s. So just wondering how you're thinking about uh buying back more stock at the current level, especially with the disconnect in the intrinsic value.
No. Thanks for the question, Bart. Yeah we ended the quarter with about 3 billion dollars in cash and marketable security that the holding company. Um, that does include we did a bond issue in May for approximately or for 900 million and uh we haven't deployed that Capital as of now, you know, we're going to look uh, in the second half of the year.
Um, you know, see where where our excess capital is where our cash is and the dividends that will be getting out of our, uh, subs and then, um, you know, we'll take a harder look at, um, where do we deploy? That excess Capital. But as we said in the in the past, you know, our Capital priorities have not changed. Number 1 is we want to be strongly financed and we say that is significant cash in the holding company? No no, uh, bond maturities for 3 years. We look at and then our credit facility of um, of 2 2 billion unused Bank lines of 2 billion, uh, which Amy said we extended to, uh, 5 years ago again, in the second quarter.
next is we want to make sure our insurance companies are
Adequately capitalized. Um, and, um, you know, we've, uh,
Um we've been taking last dividends out the last number of years as their premium volume has gone significantly. Um as that slows down there could be more more Capital there.
Um, we also, uh, we, as we said in the past, we have minority interest in some of our insurance operations. We're always interested in, uh, purchasing that
and and share repurchases as well. Um, slowed down a little bit in the second quarter. But, um, we think, um,
We will uh we we always would like to buy back our our own shares.
Right next question, please.
Our next question now.
Was from David.
Raymond James and your line is open and your line is open.
Good morning, just just
morning.
Just just on that uh, that last point about July back.
Can you provide a bit of context about why it's slow this quarter? And then
On a related note. I'm just looking at the TRS sizing. Uh, in fact in another large game this quarter
You're gonna have insurance performed.
Are you at this stage now? Where you're you're considering your juicing application at any time in the near future? Thanks.
Thanks David. Um in regards to the share buyback.
The first, um, for the first 6 months of the year, we bought back about 250,000 shares. Um, and so we're happy with that. As I said it that slowed down in the second quarter with about 51,000.
Um, but our stock was up, um, almost 18% in the quarter um so that um so we'll wait and see and uh see what we do in in the second half.
Next question, please.
Our next question, from Jame Goin with National Bank Financial. Your line is open now.
Yeah, I just wanted to clarify something on the uh, the waterous uh, Mark to Market um is it uh all Investments within the water that would be Mark to Market? So I'm thinking of another uh,
Publicly traded investment there. That had a, a nice rebound, this quarter, um, and of larger scale. So is it is it just? Is it isolated? Or is it? Uh,
Um, do they all Mark to Market and flow through that share profit?
Yeah. In in, in this fund, it's a little odd because we Equity account, um, the fund, um, because we're a major shareholder in it, but this is a separate, uh, fund from, uh, from the previous, uh, um, the water is 1 fund. And, um, because it's, this is the only holding in the fund its marked to Market. So, it goes through our associate, uh, income. Um, so a little, a little different than our normal, uh, Associates.
Hope that answers your uh, question Jamie.
Next question, please.
Now, from Tom McKinnon with BMO Capital markets, your line is open.
Yeah, just a question overall, on the expense ratio it's it's up a point quarter over quarter, not due to commissions here, you know, uh, increasing technology spends as you kind of separate key from the pack. Um, how should we be thinking about the, uh, Trend in the expense ratio? Um, is it more like it was in the first quarter? Or is it more like it was in the second quarter? Uh, thoughts there. Thanks.
Sure, I think uh, a few things in the second quarter, um, that uh, affected the expense ratio, 1 is the separation cost that key. You're right. Um, that um, that should reduce over the second half of the Year. Also at Gulf Insurance. Um, you know, they had a a
Significant, uh, insurance contract that non-renewed at the end of last year. And, um, so the Top Line, the premium has come down and that's affected the expenses there.
A number of our companies are doing, um, you know, systems, uh, new systems in place Allied, um, Odyssey and you'll see the effects of that coming through. So, it's hard to say a quarter to quarter where that might be but um, you know, all our companies are F focused on the expense ratio especially as you know, as premiums moderate. So, um, I hope that gives you some clarity on that.
Next question, please.
our next is from,
Bart jarki with BMO Capital markets. Your line is open.
Hi, it's uh, RBC Capital markets, but all good. Um, just wanted to follow up. Can we get a bit of a deeper dive on Poseidon? Seems to be doing? Well, not withstanding, kind of what's going on in the macro environment. So, love to get updated views on on that investment. Thanks.
Sure.
Yeah, Poseidon. Um,
1 of the big strengths that Poseidon, um,
um, is that um,
you know, there there are shipping company and a number of years ago, they've locked in the rates for the next
10 years, 5 to 10 years and so they're benefiting from that significantly. Um, they're not feeling the effects of the tariffs.
And um, you know, we have about a 43% ownership in Poseidon it's uh LED has an outstanding management team led by David sill and Bing Chen and we're really just uh, you know 1 Thing supporting sporting the management, right? Riding with the management and uh we've been extremely happy with that investment.
Question please.
Our next is from David pierce with Raymond, James, and your line is now open your line is now open.
Morning, just going back to the minority interest positions in Allied and odyssey. My understanding is the Allies call option expires.
Next year, I believe Odyssey is a couple of years. Further out, are you in a position? You had to provide, you know, timing on, when you might take those minority Partners out or
Just any guidance on on.
On what that might look like over the next year, it would be helpful.
The option, the option. Um, so we're looking at that and it'll be part of our Capital decision-making in the second half of the year. There's really uh, there's no um,
There's no significant lead time that we need to give direction on that. Um, by both, um, you know overtime, we we do hope. You know, we'd like to own a 100% of both Allied and odyssey.
Uh, next question, please.
Our next question is again from Jame Goin with National Bank Financial. Your line is open.
Yeah, thank you just uh a couple uh, questions if I can sneak into here. Uh, first just on, uh, the the interest and dividend income stepped up this quarter. Nicely run rate like 2.7 billion was there was there anything 1 time me in that number, uh, where we shouldn't sort of run that through in the future quarters. And then secondly, on, uh, on the The non-insurance Biz, uh, businesses, um,
You know with the with the country and Peak achievement in there. Um does this sort of reflect a a uh
A fairly normal quarter or there's still some other moving parts we should consider in in that in that business. So 2 parts there, thanks.
Yeah, sure. Just on the, uh,
interesting dividend income. Um, we had, I think in total 666 million in the quarter, it was up.
Big part of that is our Investment Portfolio is growing. Um, you know, our fixed income portfolio. Uh, I think was around 49 million, uh, billion. Um, it ended the quarter at so um, that redeploying that cash that we're earning, um, we get additional, um, interest income from that. And our mortgage book still continues to, uh, develop very strong, um, results and we benefit greatly from that. So I'd say those would be, uh, probably the 2 things that are driving the increase. And, um,
So as our portfolio, grows our interest in dividend income will go up um, as well.
Uh, second on the, uh, non-consolidated uh, uh, companies.
Yeah, we're very pleased with um you know we added um we added Sleep Country at the end of the last year and we began to consolidate peek at the end of the year. Um we think uh 2 both very good, businesses will produce strong cash flows and uh I think uh, you, you're right. Jamie? When you say it's a sort of more ref
collective in our, in the results we can expect in in that, um,
Uh, consolidated non- Insurance income going forward.
So, thank you again for the question.
Next question, please.
Yes, I have no further questions in queue. I would like to turn it back to management for closing results.
Well, if there are no further questions, thank you for joining us on our second quarter 2025 conference call.
thank you again, Fran
Most welcome, as we are concluded again. Thank you everyone for your participation. You may please disconnect at this time.