- Record After-Tax Earnings Fairfax earned $4.8 billion in 2025, driven by $1.8 billion in underwriting profit and $2.6 billion in interest/dividend income.
- Book Value Surge Book value per share rose 20.5% to $1,260, up from $1,060 in 2024, reflecting strong capital growth.
- Aggressive Share Buybacks Over 1.13 million shares repurchased in 2025-2026 at an average cost of $1,650, enhancing shareholder value.
- Insurance Premium Growth Gross premiums hit $33.3 billion (up 2.3%), with a 93.0% combined ratio and $1.8 billion underwriting profit.
- Investment Returns $74.9 billion portfolio delivered 9.3% return, supported by $2.6 billion interest/dividend income and $50 billion fixed income allocation.
Insurance and Reinsurance Business
The insurance and reinsurance businesses wrote $33.3 billion of gross premium in 2025, an all-time high, representing a 2.3% increase versus 2024. The company remains focused on underwriting profit and discipline, targeting $1.5 billion of underwriting profit. Softening rates across its companies made it challenging to grow premium, but the company's strong process in place for setting reserves is expected to help mitigate this challenge.
Investment Performance
Fairfax's investment return for 2025 was outstanding, with a return of 9.3%, driven by stable interest and dividend income, associate earnings, and a strong year on net gains on equity investments. The company's investment portfolios ended the quarter at $74.9 billion, with $50 billion invested in fixed income and $24.9 billion in stocks, investments in associates, LPs, and preferreds.
Valuation Metrics
With a Price-to-Book Ratio (P/B) of 1.36, the company's valuation appears reasonable, considering its strong financial performance. The company's Return on Equity (ROE) of 18.7% is also noteworthy. Other valuation metrics, such as the Price-to-Earnings Ratio (P/E) of 7.5 and the Dividend Yield of 0.89%, provide a comprehensive view of the company's valuation.
Capital Deployment and Future Plans
Fairfax has committed to providing funding up to $1.65 billion to a consortium led by Bill McMorrow for the acquisition of Kennedy Wilson in an all-cash transaction. The company has also announced a proposed sale of its Eurolife Life operations to Eurobank, with an estimated pre-tax gain of $350 million. With excess capital generated, the company prioritizes financial strength, maintaining significant cash in the holding company and no long-term debt maturities.
Systemic Risks and Mitigation
The biggest systemic risks to Fairfax include catastrophe exposure and reserves on the insurance side. The company mitigates these risks through its diversified insurance operations and strong track record on reserving. The Kennedy-Wilson partnership is expected to help derisk the system by providing effective management of the real estate and mortgage business, with outstanding returns.