Benjamin Graham Sanderson

Benjamin Graham Sanderson asked about the biggest systemic risks Fairfax currently faces in both its insurance and investment operations, the strategies employed to mitigate these risks, and how the Kennedy Wilson partnership contributes to de-risking the system.

Answer

Peter S. Clarke, President and COO of Fairfax Financial, identified catastrophe exposure and reserves as key risks in the insurance operations, which are mitigated by the company's diversified platform and strong reserving track record. For investments, he highlighted the value investing philosophy with its focus on downside protection. Clarke explained that the Kennedy Wilson partnership de-risks the system by bringing world-class real estate and mortgage management capabilities in-house, building on a long-standing and profitable relationship that Fairfax previously lacked at that scale.

Benjamin Graham Sanderson, an individual investor, posed a broad question regarding the biggest systemic risks Fairfax Financial currently perceives across its insurance and investment operations, how these risks are being mitigated, and specifically how the Kennedy-Wilson partnership contributes to de-risking the system.

Answer

Peter S. Clarke, President and COO of Fairfax Financial, identified two main areas: insurance operations and investments. For insurance, he highlighted the strength of 25 decentralized companies and experienced professionals, with constant concerns around catastrophe exposure and reserves, where Fairfax has a strong track record. For investments, he pointed to the long-term value investing philosophy, emphasizing downside protection. Regarding Kennedy-Wilson, Clarke noted their 12-16 year relationship, their expertise in managing Fairfax's real estate and mortgage business with outstanding returns, and how bringing this capability in-house through the partnership is a significant benefit, as Fairfax lacked that scale internally.