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1. Company Snapshot

1.a. Company Description

Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally.The company operates through Insurance and Reinsurance, Run-off, and Non-Insurance Companies segments.It insures against losses to property from fire, explosion, earthquake, windstorm, flood, boiler explosion, machinery breakdown, and construction defects, as well as underwrites automobile, commercial and personal property, and crop insurance.


The company also offers workers' compensation, employer's liability, accident and health, medical malpractice, professional liability, and umbrella coverage insurance products; marine, aerospace, surety risk, and other risks and liabilities insurance products; and reinsurance products.In addition, it retails home improvement goods, toys and baby products, golf equipment, sports apparel and accessories, housewares and home décors, and tableware and gifts; invests in retail business; and owns and operates holiday resorts.Further, the company provides integrated travel and travel-related financial services; originates, processes, and distributes pulses and staple foods; creates, produces, and distributes entertainment content; and provision of pet medical insurance and database services, as well as media and marketing solutions.


The company was formerly known as Markel Financial Holdings Limited and changed its name to Fairfax Financial Holdings Limited in 1987.Fairfax Financial Holdings Limited was incorporated in 1951 and is headquartered in Toronto, Canada.

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1.b. Last Insights on FFH

Fairfax Financial Holdings Limited faced negative drivers, including a recent share price pullback, with a 1-day share price return of -1.17% and 7-day share price return of -2.92%. The company's substantial $15 per share dividend, although a positive event for shareholders, may have raised questions about its sustainability. Additionally, the company's exit from Orla Mining, selling 25,000,000 common shares for approximately C$441.10 million, may have impacted investor confidence. Recent ratings from AM Best, however, affirmed the company's creditworthiness, with a stable outlook.

1.c. Company Highlights

2. Fairfax's Stellar 2025 Performance: A Closer Look

Fairfax's 2025 financial performance was nothing short of exceptional, with the company reporting its best year ever. The company's net earnings after taxes stood at $4.8 billion, driven by a record underwriting income of $1.8 billion and a record interest and dividend income of $2.6 billion. Earnings per share (EPS) came in at $78.67, beating analyst estimates of $75.77. The company's book value per share increased by 20.5% to $1,260, up from $1,060 at the end of 2024. With a combined ratio of 93.0% on an undiscounted basis, the company's underwriting profit was a record $1.8 billion.

Publication Date: Feb -24

📋 Highlights
  • 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.

3. NewsRoom

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AM Best Assigns Issue Credit Rating to Fairfax Financial Holdings Limited Senior Unsecured Notes; Comments on Re-Opened Senior Unsecured Notes

Feb -27

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Fairfax C$650 Million Notes Issue Reshapes Debt Profile And Options

Feb -27

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Fairfax Completes C$650 Million Senior Notes Offering

Feb -27

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AVANTE CORP. ANNOUNCES CHANGES TO BOARD OF DIRECTORS

Feb -26

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A Look At Fairfax Financial Holdings (TSX:FFH) Valuation After Its C$650 Million Senior Notes Offering

Feb -26

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Is Fairfax Financial Holdings (TSX:FFH) Still Attractive After Mixed Returns And Long Term Surge

Feb -26

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Fairfax Financial Q4 Earnings Call Highlights

Feb -24

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Fairfax Financial Holdings Ltd (FAXRF.PFD) Q4 2025 Earnings Call Highlights: Record Net ...

Feb -20

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.14%)

6. Segments

property and casualty insurance and reinsurance - global insurers and reinsurers

Expected Growth: 6.5%

Fairfax Financial Holdings' growth in property and casualty insurance and reinsurance services is driven by increasing demand for risk management, expansion into emerging markets, and strategic acquisitions, leading to a forecast CAGR of 6.5%.

property and casualty insurance and reinsurance - international insurers and reinsurers

Expected Growth: 5.2%

Fairfax Financial Holdings Limited's international property and casualty insurance and reinsurance benefits from increasing global demand for risk management, low interest rates, and growth in emerging markets, driving a 5.2% CAGR forecast.

property and casualty insurance and reinsurance - north american insurers

Expected Growth: 4.5%

Fairfax Financial Holdings Limited’s North American property and casualty segment growth is driven by increasing demand for insurance products, consolidation in the industry, and the company’s strategic acquisitions, which will continue to fuel growth.

Non-Insurance Companies

Expected Growth: 8.3%

Fairfax's non-insurance companies, such as retail and manufacturing, are expected to grow driven by strategic acquisitions, expansion into emerging markets, and increased demand for products, contributing to a forecast CAGR of 8.3%.

Corporate and Other

Expected Growth: 5.4%

Fairfax Financial Holdings Limited's corporate and other operations are driven by strategic investments and divestitures, contributing to growth. The company's diversified business segments, including insurance, reinsurance, and investment management, also support growth.

Life Insurance and Run-Off

Expected Growth: 5.6%

Fairfax Financial Holdings' life insurance and run-off management benefits from increasing demand for insurance products, growth in emerging markets, and strategic acquisitions, driving revenue growth

Eliminations and Adjustments

Expected Growth: 4.3%

Fairfax Financial Holdings' growth is driven by its strong reinsurance business, diversified portfolio, and strategic acquisitions, which are expected to contribute to its profitability and revenue growth.

7. Detailed Products

Insurance

Fairfax Financial Holdings Limited offers a range of insurance products, including property, casualty, and specialty insurance, to individuals, businesses, and governments.

Reinsurance

Fairfax Financial Holdings Limited provides reinsurance products to other insurance companies, helping them manage risk and increase capacity.

Investments

Fairfax Financial Holdings Limited invests in a diversified portfolio of stocks, bonds, and other securities to generate returns and support its insurance operations.

Run-off Operations

Fairfax Financial Holdings Limited manages and resolves legacy insurance liabilities, providing a cost-effective solution for companies seeking to exit the insurance market.

Retail and Commercial Banking

Fairfax Financial Holdings Limited offers retail and commercial banking services, including loans, deposits, and credit cards, to individuals and businesses.

8. Fairfax Financial Holdings Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

Fairfax Financial Holdings Limited operates in the financial services industry, which is characterized by a moderate threat of substitutes. While there are alternative financial products and services available, the company's diversified portfolio and strong brand recognition mitigate the threat of substitutes.

Bargaining Power Of Customers

Fairfax Financial Holdings Limited's customers have limited bargaining power due to the company's diversified product offerings and strong market position. The company's ability to provide a range of financial services and products reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Fairfax Financial Holdings Limited's suppliers have a moderate level of bargaining power. While the company relies on a network of suppliers for its operations, it has a diversified supply chain and is not heavily dependent on any single supplier.

Threat Of New Entrants

The threat of new entrants in the financial services industry is low due to the high barriers to entry, including regulatory requirements and the need for significant capital investments. Fairfax Financial Holdings Limited's established market position and brand recognition also make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players competing for market share. Fairfax Financial Holdings Limited faces intense rivalry from other financial institutions, which can lead to pricing pressures and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 32.00%
Debt Cost 5.48%
Equity Weight 68.00%
Equity Cost 8.20%
WACC 7.33%
Leverage 47.05%

11. Quality Control: Fairfax Financial Holdings Limited passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 3.9

Quality: 6.7

Yield: 8.0

Momentum: 7.0

Volatility: 9.7

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A-Score: 6.8/10

Value: 7.4

Growth: 6.9

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Quality: 6.5

Yield: 4.0

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A-Score: 5.7/10

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Growth: 2.8

Quality: 5.7

Yield: 8.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

2308.98$

Current Price

2308.98$

Potential

-0.00%

Expected Cash-Flows