Stephen Boland

Stephen Boland asked about premium declines observed in Q4 2025, competitive pressures across business lines, and any notable differences in market conditions between North American and global insurance segments.

Answer

Peter S. Clarke, President and COO of Fairfax Financial, acknowledged softening rates and increased competition, making top-line growth challenging. He emphasized the company's focus on underwriting profit and the benefits of diversification across geographies and products. Clarke detailed low single-digit price increases overall, with casualty lines seeing higher increases and property, D&O, and cyber experiencing declines. He also noted that flattening premiums free up capital for strategic deployment, including share buybacks and investments in associates.

Stephen Boland with Raymond James inquired about the premium declines observed in Q4 over Q4, specifically addressing softness and competition within certain business lines, and seeking clarification on any differences between North American and global insurers.

Answer

Peter S. Clarke, President and COO of Fairfax Financial, acknowledged softening rates making growth challenging but emphasized the company's focus on underwriting profit and discipline. He highlighted benefits from diversified operations, allowing growth in attractive areas while curtailing activity in less attractive ones. Clarke noted low single-digit price increases overall, with higher increases in casualty lines and declines in property, D&O, and cyber, particularly pressure in property catastrophe reinsurance. He provided specific pricing trends for Northbridge (up 2%), Crum & Forster (up 5.5%), Odyssey (flat to 2%), Brit and Ki (down 5%), and Allied World (flat or up 1%). International markets were noted as less cyclical. Clarke also mentioned that flattening premium frees up capital for deployment into buybacks, minority interests, or investments in associates and non-insurance consolidated companies.

Stephen Boland asked if the significant losses from the California wildfires would prompt Fairfax to reconsider its reinsurance coverage strategy.

Answer

Peter Clarke, President and COO, explained that the loss, while from a significant event, was within the company's risk appetite and expected range. He emphasized that Fairfax prefers to take its catastrophe exposure on the reinsurance side, which it finds easier to control. He noted that still producing an underwriting profit demonstrates the strength and scale of their global operations.

Stephen Boland asked whether the significant losses from the California wildfires would prompt Fairfax to reconsider its reinsurance coverage strategy.

Answer

Peter Clarke, President and COO, stated that the wildfire loss, though significant, was within the company's risk appetite. He explained that Fairfax prefers to take its catastrophe exposure on the reinsurance side for better control and measurement. Clarke highlighted that the ability to still post an underwriting profit demonstrates the strength and scale of their global insurance operations.

Asked about the sequencing of raising debt and making acquisitions at Corient, and whether the capital restructuring process had caused them to miss any M&A opportunities.

Answer

A debt raise at Corient would not necessarily signal an imminent or specific acquisition; it could be for general purposes. The capital structuring process has not prevented any deals; the focus has been on finalizing the separation and integration, and there were no must-do deals that were passed up.

Stephen Boland followed up on M&A funding, asking whether CI Financial would raise debt at Corient before an acquisition is announced or simultaneously. He also questioned if the ongoing capital restructuring had caused the company to pass on any attractive acquisition opportunities during the quarter.

Answer

Executive Kurt MacAlpine stated that a debt offering at Corient would not necessarily be tied to a single, specific deal and could be used to fund future opportunities. He clarified that the capital structuring process did not cause them to miss any desired acquisitions. The priority has been finalizing the business separation and integration model, which is now complete and allows for efficient, day-one integration of new firms.

Sought clarification on the mechanics of raising debt for the U.S. entity, the process for removing debt covenants, and the strategy for balancing the buyback of long-term versus short-term debt.

Answer

The company has a clear path to separate the U.S. and Canadian debt stacks, either through a consent process to alter covenants on a small portion of debt or by borrowing at the parent level temporarily. Debt buybacks will be dynamic, targeting tranches that offer the most value, and they view their long-dated debt as a significant asset that allows for flexible and rapid deleveraging.