Release Date: February 14, 2025
For a detailed transcript of the earnings call, please consult the complete earnings call transcript.
-
Fairfax Financial Holdings Ltd (FAXRF.PFD) announced impressive net earnings of $3.9 billion after tax for 2024.
-
The firm reported record underwriting income of $1.8 billion alongside record interest and dividend income of $2.5 billion.
-
Book value per share rose by 14.5% to $1,060, adjusting for a $15 dividend.
-
The insurance and reinsurance sectors generated $32.5 billion in gross premiums, reflecting a 12.6% increase from 2023.
-
Fairfax’s investment portfolio achieved a 6.7% return, spurred by rising interest and dividend income along with solid equity gains.
-
The firm faced a $477 million loss in other comprehensive income attributed to currency losses linked to a stronger US dollar.
-
Unrealized losses in the bond portfolio reached $731 million, mainly from rising interest rates.
-
The Gulf insurance division exhibited a heightened combined ratio of 100.9%, influenced by Dubai floods and adjustments in purchase price.
-
Fairfax’s runoff operations had to bolster reserves by $221 million due to increased litigation activity.
-
The company incurred a net loss of $530 million due to interest rate hikes affecting the bond portfolio.
Q: What led to the substantial rise in interest and dividend income in Q4 relative to earlier quarters? A: The growth was primarily a result of increased dividend income, especially from Digit Insurance, which accounted for about $100 million. – Peter Clarke, President and CEO
Q: Is the dividend from Digit Insurance a recurring event, and how should it be anticipated moving forward? A: The dividend was tied to the IPO proceeds of Digit Insurance and is envisioned as a one-time event, not a regular occurrence. – Jen Allen, CFO
Q: Considering the $2.5 billion in cash and investments at the holding company, is maintaining at least $1 billion still the objective? A: Yes, it is wise to retain at least $1 billion to protect our insurance and reinsurance entities. The current figure is elevated due to recent debt issuance and share repurchases, but it may decrease slightly. – Peter Clarke, President and CEO
Q: Has the recent experience with California wildfires influenced Fairfax’s approach to catastrophe exposure? A: No, Fairfax is content with its current level of catastrophe exposure. The losses are within expected parameters and manageable given underwriting profits. – Peter Clarke, President and CEO
