Author Topic: FFH AGM 2020  (Read 6146 times)



Parsad

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Re: FFH AGM 2020
« Reply #11 on: April 16, 2020, 01:34:42 PM »
First time I heard Prem acknowledge that he had made bad stock selections, which is very positive.  Stock portfolio is now divided between different persons, which will lead to a more diversified and probably more large cap portfolio. 
They were very bullish about the hard market in insurance. Especially bullish about Allied World.

They also said premiums wouldnít grow for a few quarters. I found that a bit contradictory. But overall it was positive.

I think he meant that in the short-term we are seeing a contraction, but will see premiums increase as the expansion restarts later on. 

I think alot of insurers are taking a significant hit presently...can't see how we do not see a hard market when premium pricing renews around November.  We were already starting to see dramatic increases in some lines before Covid-19.  I know that strata fees on the West Coast had jumped 300-700% and insurers were no longer offering coverage for many or deductibles had jumped 200-300%.  I'm also seeing huge increases in D&O Insurance and some other non-casualty lines.  Cheers!
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petec

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Re: FFH AGM 2020
« Reply #12 on: April 16, 2020, 01:54:12 PM »
First time I heard Prem acknowledge that he had made bad stock selections, which is very positive.  Stock portfolio is now divided between different persons, which will lead to a more diversified and probably more large cap portfolio. 
They were very bullish about the hard market in insurance. Especially bullish about Allied World.

They also said premiums wouldnít grow for a few quarters. I found that a bit contradictory. But overall it was positive.

I think he meant that in the short-term we are seeing a contraction, but will see premiums increase as the expansion restarts later on. 

I think alot of insurers are taking a significant hit presently...can't see how we do not see a hard market when premium pricing renews around November.  We were already starting to see dramatic increases in some lines before Covid-19.  I know that strata fees on the West Coast had jumped 300-700% and insurers were no longer offering coverage for many or deductibles had jumped 200-300%.  I'm also seeing huge increases in D&O Insurance and some other non-casualty lines.  Cheers!

Thanks. Whatís a strata fee?
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drzola

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Re: FFH AGM 2020
« Reply #13 on: April 16, 2020, 02:05:26 PM »
Hint as by asking this you may have put yourself in the 10%  lowest percentile here?  ( just kidding )
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petec

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Re: FFH AGM 2020
« Reply #14 on: April 16, 2020, 02:17:37 PM »
Itís not a term Iíve ever heard in the UK but Iím happy to be educated.
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Cigarbutt

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Re: FFH AGM 2020
« Reply #15 on: April 16, 2020, 02:29:09 PM »
It's condominium or condo (i guess commonhold property for you) insurance.
Premiums have rocketed higher recently in some parts of Canada.
http://www.ibc.ca/on/home/types-of-coverage/condominium-or-strata-coverage

petec

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Re: FFH AGM 2020
« Reply #16 on: April 16, 2020, 10:56:12 PM »
Thanks! Commonhold isnít common here.
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petec

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Re: FFH AGM 2020
« Reply #17 on: April 17, 2020, 01:35:32 AM »
Lord but this replay is clunky. I keep getting cut off, and there's no easy way to navigate back to where you were. If anyone from Fairfax is reading this, please put out a transcript or at least load the audio onto a webcast system that allows navigation.
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petec

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Re: FFH AGM 2020
« Reply #18 on: April 17, 2020, 02:22:01 AM »
My AGM notes FWIW.

1Q. BV down 12% in 1Q20 but bear in mind they don't mark consolidated or associate-accounted investments, which includes big ones like FIH, Recipe, Eurobank, so this doesn't capture the full drawdown. 

Capital. Implies ratings agencies are unconcerned - no discussions on being downgraded. No covenants on bonds, and they are well within the 35% debt:equity covenant on the bank line. No holdco maturities for 4 years. Buybacks yes, but not at the expense of growing insurance subs or making good investments.

Investing. Last few years "we have not made good selections - first to admit that." But only one of their 5-y time periods did not show investment gains (2011-16) and they are confident they have a good team looking at opportunities globally and across asset classes (bonds, equities, PE, real estate). Have some very good people - Wendy Teramoto was Wilbur Ross' right hand woman for 20 years. Most of the portfolio is still managed by Prem/Roger/Brian (with input from the others which has improved analysis) but the portion delegated to team members is growing. PMs get oversight from Wade (day to day) and Prem/Roger/Brian on a less frequent basis. This is working well and will naturally lead to a less concentrated and more liquid portfolio. Have bought $2.9bn of 4y investment grade corporate bonds at 4.25% yields - mentioned DIS spread as having gone from 50bps to 250bps. May not do much more as spreads have closed somewhat. Also looking at put bonds and pref+warrant deals. And bought some high quality stocks like XOM, "the most financially sound oil company, with a 100 year record, at a 10% yield", and GOOG. Monetisation of private investments continues - "at least $1bn" to come, but over time, no rush.

Insurance. Premium growth will now be flat for "several quarters" but underlying hard market developing. "Continued strong rate improvement" e.g. DD at Allied, DD and accelerating at Northbridge and HSD at Odyssey, Crum. Allied is at the leading edge of the hard market and has plenty of capital. Crum growing premiums over 20%. Riverstone UK has huge opportunity because Lloyds is restructuring and has put many portfolios into runoff (hence the OMERS deal, although nobody asked why OMERS buying a stake from Fairfax, rather than via an equity injection, helps RSUK to grow). Xenith is the only major platform not seeing rates moving the right way but is reporting strong CRs and they know exactly how to handle this market. Business interruption not an issue as nearly all of Fairfax's exposure is standard contracts which require physical damage to property - courts would have to overturn contracts for these contracts to provide broad based coverage. Highly unlikely they will have to pay anything significant but it might end up going to the supreme court. Scott Carmilani's new role is to encourage cooperation and transfer of best practice - e.g. knowledge about insuring long haul trucking in one geography may be transferrable to others.
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Xerxes

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Re: FFH AGM 2020
« Reply #19 on: April 17, 2020, 07:18:09 AM »
i had sent them an email during AGM asking them about the position sizing of Exxon vs. say BB's common shares.
My question wasn't answered. Hopefully when the 13F comes out, (i think May) we see if they really bough the dip meaningfully or not.

Overall, i think it was a good AGM, not a reassuring one that would put a floor under the stock but was happy to hear that they bought Alphabet and Exxon.

On Alphabet also like to know what is the position sizing on that ? i personally own Alphabet for some years now, so i am not missing out on it, but wether they made $30 million purchase vs. a blackberry size tells me something about the change in their investment philosophy.

i could do without the historical perspective of various indices. i like history but like to know how you performed and what are you are doing about it than knowing that crash happens. Totally agree with them that building intrinsic value through insurance liquidity injection has more value than buyback.

Found it funny when Prem lost track of his thought as he was answering the question about deflation hedges. Reminds me of my dad, who likes to speak in public gathering and doesn't really listen to the question. :-)

« Last Edit: April 17, 2020, 07:19:49 AM by Xerxes »