This post is the result of me telling an online contact that I would post my views on Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF) and their recent filings, since I recently went through them, on the Corner of Berkshire and Fairfax board but as I started typing I realized I had pages of notes and it was becoming too long so I decided to make it my first (and only) blog post (so please address all the blame to him for how long, boring and inaccurate all this is). I’m really sad that I missed the Fairfax AGM this year in Toronto because this year more than others I had many questions that I would have loved to see answered, but unfortunately I just got back to the US from a long trip abroad.
As a disclaimer let me say that I no longer own Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF) except for a few shares just so I can get the annual report sent to me and attend the annual meeting if I want to. But I do that for almost all the companies I’ve owned over time. Anyways, here we go
1. The insurance and underwriting results:
Nothing much to say here other than very good results. A combined ratio in the low 90s is pretty outstanding actually, so maybe Fairfax should be given the benefit of the doubt that their insurance operations have finally turned a corner and are now really good performers.
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However, let’s keep in mind that it was a very light catastrophe year and they’re only 2 years removed from a combined ratio of 114 and underwriting losses of $750M, albeit 2011 was a very bad cat year, and a lot of the windfall in 2013 comes from releasing reserves set up during those bad years. But then again, in the insurance world you’re always better off with a company that conservatively over reserves than the opposite.