Fairfax Financial Stock

Good morning, and welcome to Fairfax's 2026 Second Quarter Results Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Your host for today's call is Peter Clarke with opening remarks from Mr. Derek Bulas. Mr. Bulas, please begin.

Good morning, and welcome to our call to discuss Fairfax's 2026 second quarter results. This call may include forward-looking statements. Actual results may differ perhaps materially from those contained in such forward-looking statements as a result of a variety of uncertainties and risk factors, the most foreseeable of which are set out under Risk Factors in our base shelf prospectus, which has been filed with Canadian securities regulators and is available on SEDAR+. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements, except as required by applicable securities laws. I'll now turn the call over to our President and COO, Peter Clarke.

Good morning, and welcome to Fairfax's 2026 Second Quarter Conference Call. I plan to give you some highlights and then pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa, to comment on investments; and Amy Sherk, our Chief Financial Officer, to provide some additional financial details. We had another strong quarter with operating income from our insurance and reinsurance companies adjusted to undiscounted basis and before risk margin of $1.1 billion in the second quarter of 2026.

Underwriting income was solid at $459 million up from $427 million in the second quarter of 2025. Interest and dividend income was $737 million, up from $660 million. And our profits of associates were $43 million, down from $131 million in the second quarter of 2025. In addition to our strong operating income, we also had strong net investment gains $769 million in the quarter.

As we have always said, we expect investment gains to perform well over the long term, but they do fluctuate from quarter-to-quarter. Our net earnings for the second quarter were $1.4 billion and $2.1 billion for the first 6 months. All in, our book value per share at the end of the second quarter was $1,304, up 4.8% from year-end 2025 adjusted for our $15 dividend. During the quarter, we purchased 680,000 shares for cancellation for $1.1 billion or $1,601 per share. We closed 2 significant transactions in the second quarter of 2026. The sale of half our position in Poseidon for $1.9 billion, a pretax realized gain of $838 million, and we continue to hold the remaining half of our original position.

In June, with a consortium led by Bill McMorrow, we closed the private utilization of Kennedy Wilson. We have been partners with Bill and his team for more than 15 years and have collaborated on more than $8 billion of real estate transactions over that time. We are very excited about the continued opportunities going forward, and a big welcome to Bill and his team. In the quarter, we also announced the privatization of Andrew Peller Ltd. The Peller family has been a leading name in wine in Canada for generations and we are very pleased to partner with John Peller, Paul Dubkowski, their Chief Executive Officer, and the rest of the team.

We expect this transaction to close in the third quarter of 2026. Also in June, Sleep Country announced the acquisition of Sleep Number, a U.S. manufacturer and retailer of mattresses. Stewart Schaefer and his team have done an outstanding job working through this acquisition and at the closing of the transaction, Country will be the world's second largest sleep retailer, with over 800 locations across Canada and the United States. Amy will provide some additional financial details on each of these transactions later.

With the conflict in Iran, Members of the Fairfax family are once again and unfortunately facing difficult and dangerous circumstances. GIG management, Gulf is ensuring that all employees in the Gulf region have the support they need to stay safe, which remains our first priority. While the duration of the conflict remains uncertain, Gulf continues to operate as usual under very challenging conditions and related losses have been minimal. Our thoughts and prayers are with our employees at Gulf.

I will now give you some additional detail on the components of our net earnings for the quarter. Our consolidated investment return was 2%, driven by interest and dividend income, strong net gains on investments, partially offset by lower profits of associates. Consolidated interest and dividend income of $737 million was up 11% year-over-year, benefiting from a growing investment portfolio and increasing government yields. Profits of associates, up $43 million in the quarter, was lower by $88 million from a year ago, driven by Helios Fairfax Partners carrying value being lower to its market price and from mark-to-market losses on the Waterous fund.

We continue to be very excited about the long-term prospects of both those companies. Our other underlying associate companies continue to perform very well. Net gains on investments of $769 million were driven by gains on our equity exposures, including the realized gain on our sale of half of our position in Poseidon, offset by mark-to-market losses on our investment in Orla and unrealized losses on our bond portfolio, primarily from U.S. treasuries due to the increase in interest rates in the second quarter.

More on investments from Wade. As mentioned in previous quarters, our book value per share of $1,304 does not include unrealized gains or losses in our equity accounted investments and our consolidated investments, which are not mark-to-market. At the end of the second quarter, the fair value of these securities is in excess of carrying value by $4.4 billion, an unrealized gain position or $220 per share on a pretax basis. This is a significant increase from a year ago at $110 per share and at year-end 2025 at $115 per share.

In the second quarter, net earnings included $103 million unrealized loss due to increasing interest rates in the quarter. This consisted of unrealized losses on our bonds of $122 million, up by the increase in discount under IFRS 17 on our insurance and reinsurance reserves held of $19 million. For the second quarter of 2025, this number was a net gain of $120 million. This is a swing of over $220 million quarter -- this quarter versus last quarter 2025. Our insurance and reinsurance businesses wrote $9.4 billion of gross premium in the second quarter of 2026. That is up 4.1% versus the second quarter of 2025.

Our North American Insurance segment's gross premium was up 3.5% or $81 million. Crum Forster's premium was up 5.6%, primarily from its accident health business, while premium was down across its excess and surplus segment, commercial lines and at Seneca, due to softening market conditions. Venus increased premium $18 million or 10%, primarily from its expanding large account workers' compensation segment and through earned pricing increases. While Northbridge's gross premium was down 2.9% in Canadian dollars, reflecting a competitive marketplace.

Our global insurer and reinsurer segment was up 2.8% with gross premiums of $5.1 billion in the second quarter of 2026. Brit's gross premium was $947 million, up 5% in the second quarter of 2026 versus second quarter of 2025, with the majority of the growth from the recent expansion of its Brit Re platform in Bermuda. Odyssey Group's premiums were up 3.1% with gross premium of $1.8 billion. Insurance premiums increased in its crop and health care business, while Odyssey's U.S. and Latin American reinsurance business was down to softening rate environment.

Allied World premium was flat in the quarter with gross premiums of $2.1 billion. Their Global Markets division was up 9%, while its reinsurance segment was flat and its North American insurance premium was down 3% due to the competitive pricing. Key developed within Brit is in its second year operating as a stand-alone business. Keys gross premium was up 15% in the second quarter of 2026, driven by property treaty offset by open market North American business. And our international insurance and reinsurance operations, gross premiums were $2 billion, up 8.2% in the second quarter of 2026, benefiting from strong underlying growth and favorable movements of foreign exchange.

Fairfax Asia was up 26%, rate was up 16%, LatAm 11% and Gulf Insurance up 5.4%. Offsetting this growth was Colonade down 8% and Polish Re down 2%. International operations currently account for about 21% of our overall gross premium. Looking ahead, these operations offer strong long-term potential for sustained growth. Thanks to skilled management teams emerging insurance markets and robust local economies. Our combined ratio was 93.1% in the second quarter, with underwriting income of $459 million compared to a 93.3% combined ratio and underwriting income of $427 million in the second quarter of 2025.

All our major insurance and reinsurance segments continue to post strong results with good underlying margins while remaining disciplined in a softening insurance market, especially in North America. For comparable purposes, our IFRS 17 combined ratio was 81.9% compared to 84.1% a year ago. Our global insurers and reinsurers posted a combined ratio of 92% and underwriting profit of $289 million. Allied World led the way with a combined ratio of 90.2%, Odyssey's combined ratio was 93.6%. Brit had a combined of 94.6% and Key had an outstanding quarter with a combined ratio of 81.5% benefiting from favorable reserve movements.

Our North American insurers had a combined ratio of 94.1% for the second quarter. Northbridge had another great quarter with a combined ratio of 89%. Crum Forster had underwriting income of $54 million or a combined ratio of 95.5% while Zenith our workers' compensation specialist after a couple of years of above 100 combined ratios posted a small underwriting profit at 98%. Our international operations delivered a combined ratio of 95.2% for the quarter with underwriting income of $55 million and all our international segments producing underwriting income.

Colonade in Eastern Europe had an excellent combined ratio of 87.7%. Brit continues to produce strong results with a combined ratio of 94% and and Fairfax Asia had a combined ratio of 94.6%, led by Singapore Re at 87.3%. Gulf insurance the largest company in our international operations had a combined ratio of 99.3% in the second quarter, notwithstanding the difficult conditions from the war in Iran. In the second quarter, our insurance and reinsurance companies recorded favorable reserve development of $152 million or a benefit of 2.3 points on our combined ratio.

Each of our major segments recorded favorable reserve development. We are focused on setting our ongoing reserves at conservative levels, especially on long tail lines of business. Through our decentralized operations, our insurance and reinsurance companies continue to produce strong results, writing annualized gross premium of over $34 billion with underlying margins remaining attractive in the main in spite of softening rates.

In many lines, it is becoming more competitive but we benefit from our size and scale, and more importantly, we have exceptionally long-term management teams that are all focused on the bottom line and have the experience to manage the cyclical nature of our insurance business. Our long-term approach enables our companies to stay disciplined, patient and focused on profitability rather than top line growth targets. I will now pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa to comment on our investments.

Thank you, Peter, and good morning. Our investment portfolio ended the third quarter of 2026 at $77.3 billion. Fixed income made up $15.3 billion, common and preferred stocks, including our TRS and real estate came to $13.4 billion and associated and consolidated investments ended the quarter at $11.6 billion. Within that fixed income portfolio, $8.5 billion was cash and short-term bonds namely be T-Bills, $32 billion in government bonds, $6.1 billion in corporate bonds and $5.6 billion in mortgages. Credit quality remains healthy. Over 75% is in government bonds with the remainder in high-quality corporates and first mortgages.

Duration is 2 years, and the yield is 5%. We continue to earn good money on a safe liquid fixed income portfolio. There are many moving parts in today's picture, a new unproven Fed chair and Kevin Warsh, healthy but stable inflation, heavy fiscal spending, large deficits, the Iran war, tariffs and steady wage and goods inflation. One thing we're confident of, the days of 0 and in many cases, negative rates are behind us. The risk is tilted towards inflation running higher than expected, which favors our high-quality, short-duration fixed income portfolio.

Within the $25 billion equity and equity-like portfolio, where our target return is 15%, we have $9.9 billion in common stocks, $6.6 billion in associates and $4.2 billion in consolidated. Associates are investments like Eurobank and Poseidon, where we don't hold a controlling stake. Consolidated investments are where we do hold a controlling stake. We also hold $4.4 billion in preferred shares, insurance associates, real estate and derivatives, primarily our Fairfax TRS, which Peter has already covered.

The vast majority of everything we own in our equity portfolio has 3 main threats. We like the people running the businesses, the companies are financially sound, and we're carrying them at values where we believe we can earn our 15% return. Judged on these main criteria, the equity and equity-like portfolio is in a very strong position. The overall pricing of the portfolio is cheap. By that, I mean either the stock trades cheaply as a publicly traded common stock or we're preparing the consolidated investment at conservative values.

But more importantly, our lineup of partners and CEOs has never been better. I'm Kevin Plank at Under Armour, David Sokol at Poseidon, Fokion Karavias at Eurobank, Evangelos Mytilineos, at Midland and MATLAB and Adam Waterous at Greenfire Resources and Strathcona Resources, just to name a few. All world-class partners focused on making money for our shareholders.

Last, a word on AI and software companies. First, AI, we've become heavy users of AI inside our company and has added real multiples to our analytical productivity. That's good news. Second, software companies. We've studied a number of software companies that AI may put at risk. We haven't yet found one where we can make with certainty to long-term earnings power. That makes it impossible to land on an intrinsic value we have confidence in. So even though many software company prices have come down a lot, none have come down enough for us to invest.

And with that, I'll turn the call over to our CFO, Amy Sherk.

Thank you, Wade. I'll begin my comments by discussing some of our key transactions. On May 29, 2026, the company sold 23.1% of its 45.3% equity interest in Poseidon for cash consideration of $28.30 per share or aggregate proceeds of $1.9 billion, which decreased the company's equity interest to 22.2%.

Accordingly, the company recorded a realized of $838 million in the consolidated statement of earnings. The company continues to apply the equity method of accounting to the retained portion of its investment in Poseidon. On June 16, 2026, all of the outstanding common shares of Kennedy-Wilson not already owned by the company and certain senior executives of Kennedy Wilson who together with the company formed the consortium were acquired by Kona Bidco, a newly formed holding company established by the consortium.

Kona Bidco acquired the common shares of Kennedy Wilson for $10.90 per share in cash funded principally by $1.3 billion of acquisition financing obtained by Kona Bidco. Concurrently, the company invested cash of $400 million and also contributed its existing holdings in Kennedy Wilson preferred and common shares into Kona BidCo. For Kona BidCo mandatorily redeemable preferred shares with a fair value of $716 million, which the company has classified as bonds and Kona Bidco common shares with a fair value of $145 million, which the company has recorded as an investment in associates.

Although the company received a majority economic interest through its Kona Bidco investments, it does not have control over Kona Bidco or Kennedy Wilson. Accordingly, the company has concluded that it has significant influence over Kona Bidco and has commenced applying the equity method of accounting to its indirect equity interest in Kennedy Wilson. During the second quarter, the company closed out derivative contracts on 418,795 Fairfax subordinate voting shares with an original notional amount of $132 million or CAD 172 million and received cash of $517 million from its derivative counterparty upon settlement.

At June 30, 2026, the company continues to hold equity total return swaps on just over 1.3 million Fairfax subordinate voting shares with an original notional amount of $532 million or $396.59 per share. That's CAD 674 million or CAD 502.68 per share. The following transactions are expected to close in the second half of the year. On June 14, 2026, the company formed a consortium with John Edwards Enterprises, Inc. or JEEI and the company entered into an agreement to acquire all voting and nonvoting shares of Andrew Peller Limited not already owned by JEEI for approximately $233 million or CAD 330 million.

Together with JEEI shares, the consortium, which the company expects to consolidate, will own 100% of the equity of Andrew Peller Limited. Closing of the transaction is subject to shareholder, regulatory and other conditions and is expected to be in the third quarter of 2026. On June 12, 2026, Sleep Country entered into an agreement to acquire the assets and assumed certain liabilities of Sleep Number, a U.S. manufacturer and retailer premium adjustable mattresses. Sleep Country will acquire Sleep Number for purchase consideration of approximately $530 million as determined through a Chapter 11 court supervised bidding process that has not been approved.

The purchase consideration will be funded by additional Sleep Country borrowings as described in Note 11 of our Q2 interim report and closing of this transaction is subject to customary conditions and is expected to be today. On May 7, 2026, Fairfax India entered into an investment agreement with IFL Capital and its existing promoters to increase the company's equity interest in IFL capital through a series of transactions to a minimum of 51% for aggregate consideration of approximately $417 million or INR 39.3 billion.

Closing of this transaction is subject to customary closing conditions, including regulatory approvals and is expected to be in the latter half of 2026. Also, on May 6, 2026, the company entered into definitive agreements on its previously announced transaction with Eurobank, pursuant to which Eurobank will acquire the company's 80% equity interest in the life insurance operations of Eurolife for cash consideration of approximately $930 million or EUR 813 million. The company will continue to maintain its 80% equity interest in Eurolife General, the property and casualty insurance business operated by Eurolife.

And concurrently, the company will purchase a 45% equity interest in Eurobank's Cyprus non-life insurance company, ERBA for cash consideration of approximately $68 million or EUR 59 million, with an option to acquire the remainder of ERBA in the future. The proposed transactions are subject to regulatory approval and customary closing conditions and are expected to close in the third quarter of 2026.

Now a few comments on our noninsurance companies results in the second quarter and first 6 months of 2026. Non-insurance companies reported operating income of $194 million in the second quarter of 2026 compared to $126 million in the second quarter of 2025. This primarily reflected higher operating income in our other segment due to improved operating income and a majority of the operating companies and at Fairfax India principally driven by increased share of profit of associates.

Noninsurance companies reported operating income of $231 million in the first 6 months of 2026 compared to $85 million in the first 6 months 2025, primarily reflecting higher operating income in the Other segment, principally driven by nonrecurring noncash impairment charges recorded by Boat Rocker in the first 6 months of 2025 prior to its deconsolidation on August 1, 2025. Looking at our share of profit from investments in associates in the second quarter and first 6 months of 2026, consolidated share of profit of associates of $43 million in the second quarter of 2026 and principally reflected share of profit of $108 million from Eurobank, $33 million from the company's reduced share of Poseidon all partially offset by a write-down of $92 million of Helios Fairfax Partners to its fair value and share of profit of profit -- sorry, share of loss of $46 million from Waterous Energy Fund III, a limited partnership investment that recorded unrealized mark-to-market losses on a publicly traded common stock holding.

Consolidated profit of associates of $414 million in the first 6 months of 2026, principally reflected share of profit of $237 million from Eurobank, 109 million from Poseidon and $71 million from Waterous Energy Fund III, partially offset by a write-down of $92 million of Helios Fairfax Partners to its fair value. I will close with a few comments on our financial condition, maintaining an emphasis on financial soundness at June 30, 2026.

The company held $2.3 billion of cash and investments at the holding company has access to our $2 billion unsecured revolving credit facility and additional -- and an additional $2.2 billion at fair value of investments in associates and market traded consolidated noninsurance companies. It's $2 billion unsecured revolving credit facility was undrawn. At June 30, the excess of fair value over carrying value of investments in noninsurance associates and market traded consolidated noninsurance subsidiaries was $4.4 billion compared to $3.1 billion at December 31, 2025, with the increased excess principally related to the company's investment in publicly traded Eurobank and the remaining shares held in Poseidon.

Pretax excess of $4.4 billion is not reflected in the company's book value per share but is regularly reviewed by management as an indicator of investment performance. The company's total debt to total capital ratio, excluding noninsurance companies, increased to 28% at June 30, 2026, compared to 26.2% at December 31, 2025, reflecting increased total debt, principally from issuances, partially offset by redemptions of unsecured senior notes and decreased common shareholders' equity. Common shareholders' equity decreased by $234 million to $26 million at June 30, 2026, primarily reflecting purchases of just 1.1 million subordinate voting shares for cancellation for consideration of $1.7 billion or $1,630.6 per share, payments of common share dividends of $329 million and other comprehensive loss of $276 million primarily related to unrealized foreign currency translation losses, net of hedges due to the strengthening of the U.S. dollar against various currencies.

The company views these unrealized foreign currency movements as market fluctuations, similar to unrealized gains or losses on its equity and fixed income portfolios, partially offset by net earnings attributable to shareholders of Fairfax of $2.1 billion.

In closing, book value per basic share was $1,304.39 at June 30, 2026, shared to 1,260.19 at December 31, 2025, representing an increase per basic share in the first 6 months of 2026 of 4.8% adjusted to include the $15 per share dividend paid in the first quarter of 2026. That concludes my remarks, and I will now turn the call back to Peter. Thank you.

Thank you, Amy. We are now happy to take on any questions you might have. .

[Operator Instructions] And our first question now is from Scott Fletcher with CIBC.

There's been a lot of commentary across the insurance sector this quarter just around continued softening in property lines, and that's softening, spreading out into the casualty lines as well. Just curious if you're seeing a broadening out of the softening market, whether in the primary insurance or the reinsurance businesses? And should we expect any changes to premium growth or combined rates going forward to reflect that softening?

Thanks, Scott. In the second quarter, we continue to see similar trends that we have reported in the last number of years, softening across many of our companies, especially in North America, and particularly in the property market. We may see some coming into cash, but generally, it's really on the property side. And it's making it challenging for our companies to grow. And there's really now a focus on the bottom line.

I think these are looking to optimize their portfolios. They put more weight on the higher-margin business and pull back on the less attractive business. But as we said before, we benefit greatly from our diversified operations by product and by geography. So for example, our international operations continue to grow at a very good clip, where there's less pricing pressure. Our international segment, as I said earlier, was up 8% and that's for the International segment. I should point out that some of our larger companies, Allied World, Odyssey Group, Brit, they also have significant international books of business.

So when we look at our international segment on its own, that now makes up about 20% of our total business. But if we look at all the international business, including the others, it's probably closer to 35% and growing. So we have that flexibility, and we benefit from the diversification. Also, just to point out, as I said, the property business is the most under pricing pressure and in aggregate property makes up only about 35% of our total business, our total premium.

So again, we benefit from the diversification across all our lines of business. Thank you for the question and next question please?

And that is from Bart Dziarski with RBC Capital Markets. One moment, please. Mr. Dziarski. His line is out of queue. Our next is from Tom MacKinnon with BMO Capital Markets.

Can you hear me?

Yes, sir.

We can hear you, yes.

Yes, super. I noticed that in the quarter you sold nearly 1/4 of the TRS on the Fairfax stock. What are the takeaways with respect to that? Do you -- does that mean you think the stock is not as attractive right now where it sits? And if so, why would you continue to buy back the stock? So comments around that.

Right. No. No, of course, we still -- we're still -- we think we're still buying our stock back. You can see we bought back almost 1 million shares in the quarter. So we think it still remains undervalued. It's just the TRS, we entered into it in 2020, and it's been an outstanding investment for us. We had a cumulative gain so far of about $2.5 billion over that time period. As Amy said, and you said we took off approximately 24% of the position in the quarter but we still hold a significant position at about 1.3 million shares. And we believe it's a very attractive long-term position and investment for us over time. Thank you for the question. And next question, please. .

Jaeme Gloyn with National Bank Capital Market.

Just a question on the bond portfolio as it's constructed today with previous mortgages that I believe you got fro Kennedy Wilson and now the Kennedy Wilson investments treated as a bond. It seems like a pretty good chunk that's tied up in real estate exposed, let's say, income-producing investments. So maybe talk us through that thought process, that strategy and how you got comfortable with taking on this level of risk type real estate.

Sure, Jaeme. So if we look -- as Wade said, our fixed income portfolio is approximately $53 billion and over 75% of that is in government bonds. And we're very pleased where we are from a duration standpoint as well. So we have a lot of flexibility in our portfolio and especially on the fixed income portfolio.

In regards to real estate, as I said earlier, we've had a 15-year relationship with Bill and the Kennedy Wilson team, and they produced outstanding results for us through mortgages, real estate. And that's something that we don't have in-house. So we -- when the opportunity to privatize the company with Bill and the team, and they will operate as normal, completely separate from Fairfax. We thought it was a great long-term investment for us. And we're very comfortable where we are on our exposure to real estate mortgages, et cetera. Thank you for the question. Next question please.

We have another from Bart Dziarski with RBC Capital Markets. .

Sorry about earlier, a couple of calls. I just wanted to ask about profit for associates. So I know there's a couple of one-timers this quarter, but I think if you normalize for that, it's still looking light relative to the $1 billion of guidance. And so maybe walk us through, is that still a good number to think about? And if so, what are the pieces that give you confidence to get there?

No. Thanks, Bart. Yes. No, you're right. It can fluctuate our associate income quarter-to-quarter. We had a couple of one-offs this quarter. But we are still very high on all the companies we own in that bucket and the potential, we think, going forward is very strong. In regards to guidance, we really don't like to give guidance, but we've sort of, in the past, said we think we have about $1 billion of income from associates and our consolidated investments. So if you look at both of those combined, I think we're actually running quite above that number we previously gave maybe at year-end or at our annual meeting. So thank you for the question.

Next question is from Benjamin Sanderson, Private Investor.

Question on the right side of the balance sheet, specifically float and your use of leverage that you may have planned. So when I look at the right side, the entire cost, including interest expense is still negative and float grew maybe something in the order of $400 million this quarter. So 2 questions. On float, over what time interval do you want us thinking about or tracking float growth or shrinkage? And then two, I think you guys added like $1 billion-ish of leverage at pretty attractive rates, not much above government bonds. Would you add more and under what circumstances? I'll keep it at that.

No, thanks for the question. Just your first question on the float. Float is as we said many, many times, is very important and is probably one of the most important things in our business model. And really, we take a long-term approach, as we founded float at very high levels over the past 40 years. And that's what we're focused on, not in any one quarter or any one year for that matter. But over time, we look to build that float and then Hamblin Watsa invest the proceeds of that. And again, our insurance companies are performing extremely well. So the cost of that float is positive, and we had over $400 million of underwriting profit in the quarter. On the leverage side, over the last number of years -- or last couple of years, we have done a number of debt issues. Primarily, what we've done is we've taken out our preferred shares at much more economically beneficial terms and rates, and we replaced it with 30-year debt. So that's where -- and so preferred shares have not previously been in our leverage ratios. Now this 30-year debt is. So that's ticked up a little bit. And we want to be opportunistic. And we always -- we don't want any maturities for 3 years. So we like to refinance our debt. But thank you for the question.

Next now is from Jaeme Gloyn with National Bank Capital Markets.

I just wanted to go to the interest and dividend income, pretty nice step-up this quarter. Was there anything onetime in that? Or is that considered a new run rate for interest and dividends?

Yes. No, it was a very nice step up, I think, about 11% this quarter versus a year ago. Really, I think a lot has to do with it as our investment portfolio grows, -- we continue to invest those additional funds at fairly good rates. Our run rate is about 5%. So it's a combination of the portfolio getting bigger and the government rates have been up. So as bonds mature, we've been reinvesting at higher rates. So the combination of the 2, I don't think there's anything unusual in there in the quarter.

Ruby Longhi, private investor.

Thank you for the call. Very informative and excited about the future of Fairfax. You've mentioned a couple of times in the call about Helios Fairfax Partnership Corporation and the continued decline in the market value despite there's been an increase in the book value. And I know it's very hard to look at this, like there's lots of -- there's thin liquidity. It'd be interesting for me, all the private companies in the portfolio, trying to value private companies in an emerging market must be exceedingly challenging. But could you give any idea about what your belief is about the intrinsic value of the fund or the potential of the holding and why perhaps like how do you educate people to really see this differently inside your portfolio?

No, thanks for your question. And you're right. In the quarter, we reduced our carrying value down to the market value as it's been running lower for a number of quarters. But there's an excellent team running Helios Fairfax partners. They cleaned up some of the investments from the past, and we are really excited for the prospects going forward. The reduction in the quarter was really just an accounting accounting exercise, and we're still very, very high on Helios. .

Any guidance on intrinsic value?

No, we don't give guidance on that. We leave that for you guys to come up with. Thank you for the question. .

Our next question now is from Stephen Boland with Raymond James.

I might have missed your opening comments, Pete. Just in terms of what's going on in Europe with the wildfires, can you talk a little bit about exposure there as it seems to be continuing to get more and more material across a bunch of different countries.

Yes. Obviously, there's nothing in our numbers in the second quarter. And to date, we haven't seen a lot. We're watching it very closely and -- but really have nothing to report on that at this stage. We've also had a lot of wildfires in Canada. And unfortunately, it's in places that there's not a lot of insured property. So again, our Northbridge has not been affected by that either. And I think that in Canada, in particular, they're starting to get these fires under control with a little bit of help from the weather. So we'll likely have more to report on that in the third quarter. Thank you for your question.

I have no further questions at this time. I would like to turn it back to management for any closing remarks. .

Well, Fran, if there are no other further questions, thank you for joining us on our second quarter 2026 conference call. Thank you again, Fran.

Thank you so very much. And thank you, everyone, for your participation. As we are concluded. Please go ahead and disconnect. Thank you so very much.

Good morning, and welcome to Fairfax's 2026 First Quarter Results Conference Call. [Operator Instructions]

Your host for today's call is Peter Clarke, with opening remarks from Derek Bulas. Derek, you may begin.

Good morning, and welcome to our call to discuss Fairfax's 2026 first quarter results. This call may include forward-looking statements. Actual results may differ perhaps materially from those contained in such forward-looking statements as a result of a variety of uncertainties and risk factors, the most foreseeable of which are set out under risk factors in our base shelf prospectus, which has been filed with Canadian securities regulators and is available on SEDAR+.

Fairfax disclaims any intention or obligation to update or revise any forward-looking statements, except as required by applicable securities laws.

I'll now turn the call over to our President and COO, Peter Clarke.

Thank you, Derek. Good morning. Welcome to Fairfax's 2026 First Quarter Conference Call. I plan to give you some highlights and then pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa, to comment on investments and Amy Sherk, our Chief Financial Officer, to provide some additional financial details.

We had a great start to 2026 with operating income from our insurance and reinsurance companies adjusted to an undiscounted basis and before risk margin of $1.2 billion in the first quarter of 2026, up from $686 million in the first quarter of 2025. All components of our operating income were strong and up significantly from the first quarter of 2025. Underwriting income was $382 million, interest and dividend income of $561 million, and our profits of associates were $271 million.

In the quarter, we had net losses on investments of $386 million primarily mark-to-market losses on bonds versus net gains on investments of $1.1 billion in the first quarter of 2025. That's a swing of almost $1.5 billion quarter-over-quarter. As we have always said, we expect investment gains to perform well over the long term, but will fluctuate quarter-to-quarter.

Our net earnings for the first quarter of 2026 were $696 million. And all in, our book value per share at the end of the first quarter was $1,250, up 0.5% from year-end 2025 and adjusted for our $15 dividend.

During the quarter, we purchased 375,000 shares for cancellation for $631 million. We expect to close two significant transactions in the second quarter of 2026. The sale of half our position in Poseidon for $1.9 billion, a pretax gain of approximately $837 million, and the sale of Eurolife's life operations for approximately $935 million for a pretax gain of approximately $350 million.

In February of 2026, the Special Committee of Kennedy Wilson accepted the $10.90 per share offer from Bill McMorrow and us to take the company private, a 46% premium to the price it traded prior to the offer. We are waiting regulatory and shareholder approvals. We expect to close the transaction sometime in the second quarter.

With the conflict in Iran, unfortunately, members of the Fairfax family again find themselves in harm's way. GIG management is ensuring all employees in the Gulf region have the support that they need to stay safe, and this is our first priority. It is still uncertain how long this will last, but Gulf continues to operate as usual under these most difficult conditions and losses related to this conflict have been minimal. Our thoughts and prayers are with all the employees at Gulf.

I will now give you some additional detail on the components of our net earnings for the quarter. Our consolidated investment return was 0.8% driven by interest and dividend income, strong profits of associates, offset by net losses on investments, again, primarily on mark-to-market losses on our bonds. Consolidated interest and dividend income of $662 million was up 9% year-over-year, benefiting from our growing investment portfolio.

Profits of associates of $371 million in the quarter was driven by Eurobank, the Waterous Energy Fund III and Poseidon. Our associate companies continue to post very solid stable results.

In the quarter, we had net losses on investments of $386 million from mark-to-market losses on our bond portfolio, primarily from U.S. treasuries due to the increase in interest rates in the first quarter and losses on equity exposures of $82 million. Offset by other net gains of $60 million, primarily gains on foreign exchange, offset by mark-to-market losses on our preferred shares in Digit.

The net loss of $82 million on our equity and equity-related holdings were driven by unrealized losses on Fairfax TRS of $342 million, offset by net gains on Orla and Strathcona. As I said earlier, and please remember, our net gains or losses on investments only makes sense over the long term and will fluctuate from quarter-to-quarter, for that matter, year-to-year. More on investments from Wade.

As I mentioned in previous quarters, our book value per share of $1,250 does not include unrealized gains or losses in our equity accounted investments and our consolidated investments, which are not mark-to-market. At the end of the first quarter, the fair value of these securities is in excess of carrying value by $3.9 billion, an unrealized gain position or $190 per share on a pretax basis. This is a significant increase from a year ago at $67 per share and year-end 2025 at $150 per share.

In the first quarter, net earnings included $184 million unrealized loss due to increasing interest rates in the quarter. This consisted of unrealized losses on our bonds of $364 million that I previously mentioned. Offset by the increase in discount under IFRS 17 on our insurance and reinsurance reserves of $180 million. For the first quarter of 2025, this number was a net gain of $120 million.

Our insurance and reinsurance businesses wrote $8.7 billion of gross premium in the first quarter of 2026, up 4.1% versus the first quarter of 2025. Our North American Insurance segment's gross premium was relatively flat year-over-year decreasing $18 million or less than 1% from the first quarter of 2025 due to a softening insurance market. Crum & Forster's premium was down 2.7%, driven by its surplus and Specialty segment and Seneca's property business, offset by increases in its accident and health business.

Northbridge's gross premium was down 4.8% in Canadian dollars, reflecting a competitive marketplace. In U.S. dollars, its premium was down only 0.4% due to the strengthening of the Canadian dollar.

Zenith premiums were up 10% for the first quarter of 2025 -- '26, sorry, due to earned rate increases and new business in workers' compensation. Our global insurer and reinsurer segment was up 2.5%, with gross premiums of $4.8 billion in the first quarter of 2026 over the first quarter of 2025.

Allied World's premium was up 3.7% in the quarter, with gross premiums of $2.2 billion. The Reinsurance segment was up 10.4% from new and renewal business, most notably crop, while its global insurance premium was down 2.6%, primarily from its North American Insurance segment, offset by growth in its global market segment.

Odyssey's premiums were down 1.2% in the first quarter of 2026, with gross premium written of $1.5 billion. It's U.S. reinsurance business was the driver of the decrease primarily due to property treaty, reflecting reinstatement premiums from the first quarter of 2025 on the California wildfire losses that did not reoccur in 2026. Its insurance business at Hudson and Newline was relatively flat.

Brit's gross premium was $810 million, up 3.8% in the first quarter of 2026, versus the first quarter of 2025. Excluding California wildfire reinstatement premium in the first quarter, gross premium was up 6.8%. Over half the growth came from the recent expansion of its Brit Re platform in Bermuda.

Ki, the algorithmic follow-on Lloyd's syndicate developed within Brit, is in its second year operating as a stand-alone business. Ki's gross premiums was up 11.7% in the first quarter of 2026, driven by property treaty, casualty business, offset by open market North American property. Ki announced in the first quarter, it is adding a fifth capacity partner to its platform that will begin in the second quarter of 2026.

Our international insurance and reinsurance operations gross premiums were $1.7 billion, up 16.4% in the first quarter of 2026 versus the first quarter of 2025 benefiting from high single-digit underlying growth and favorable movements of foreign exchange. Gulf was up 30% in the quarter, Bryte up 28%, Fairfax LATAM 9%; and Fairfax Central and Eastern Europe up 17%. Fairfax Asia gross premiums was up 3% year-over-year and on a net basis, was up 31%, with reduced cessions due to a new reinsurance program implemented in 2026. International operations currently account for about 20% of our overall gross premiums.

Looking ahead, these operations offer strong long-term potential for sustained growth. Thanks to skilled management teams, emerging insurance markets and robust local economies. Our combined ratio was 94.1% in the first quarter, with underwriting income of $382 million, compared to 98.5% combined ratio and underwriting income of $97 million in the first quarter of 2025. The big driver of the difference year-over-year was lower catastrophe losses in the first quarter of 2026, with approximately 1.8 combined ratio points versus 12.7 points on the combined ratio in the first quarter of 2025, primarily from the California wildfire losses. This was offset by lower prior year favorable development in the quarter over last year.

Our global insurers and reinsurers posted a combined ratio of 92.5%, Odyssey Group led the way with a combined ratio of 91.1%, Brit's combined ratio was 93%, Allied World had a combined ratio of 93.4%, and Ki's combined ratio was 94.7%. That included 3.8 points of separation costs.

Our North American insurers had a combined ratio of 96% for the quarter. Northbridge had a combined ratio of 94.1%, Crum & Forster had underwriting income of $52 million for a combined ratio of 95.5% while our Zenith, our workers' compensation specialist, we are dealing with the effects of multiple years of price decreases in the workers' compensation space, although this is reversing, had an elevated combined ratio of 103.7% trending down in the first quarter of 2025 of 106.3%.

Our international operations delivered a combined ratio of 95.8% for the quarter with underwriting income of $46 million with all our international segments producing underwriting income. Colonnade in Eastern Europe had an excellent combined ratio of 89.8%. Bryte continues to produce strong results with a combined ratio of 94.9% and Fairfax Asia had a combined ratio of 96.3%, led by Singapore Re at 85%. Gulf insurance, the largest company in our international operations, got off to a good start in 2026 with a combined ratio of 95.9% in the first quarter, notwithstanding the difficult conditions from the war in Iran.

In the first quarter, our insurance and reinsurance companies recorded favorable reserve development of $86 million or a benefit of 1.3 points on our combined ratio. Each of our major segments recorded favorable reserve development. We are focused on setting our ongoing reserves at conservative levels especially on long tail lines. Through our decentralized operations, our insurance and reinsurance companies continue to produce strong results. Writing annualized gross premium of over $33 billion, with underlying margins remaining attractive, in the main, in spite of softening rates.

In certain lines, it is becoming more competitive, but we benefit from our size and scale. And more importantly, we have exceptional long-term management teams that are all focused on the bottom line and have the experience to manage the cyclical nature of the insurance business.

I will now pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa to comment on our investments.

Thank you, Peter, and good morning. March 31, 2026, ends another good quarter on the investment side. Performance continues to be excellent. Equities are up 2.9% on the quarter, 28.9% for the last 12 months and 20.5% through 3 years. Similarly, our bonds have outperformed, up 0.3% on the quarter, 5.6% for the last 12 months and 4.9% through 3 years.

Our fixed income portfolio was safe and earning strong interest income and our public equities associates and consolidated noninsurance investments continued to perform well. We ended the quarter with $49.8 billion in fixed income investments and $26.6 billion in equity and equity exposed investments. The fixed income portfolio includes $5.6 billion in mortgages, $6 billion in corporates, all very short term, mainly investment grade and no, I'll repeat, zero traditional private credit exposure and $38.2 billion in government bonds and treasuries.

Duration is 2.2 years, average maturity is 3 years and our yield is approximately 5%. A lot of safety and flexibility is built into the fixed income portfolio, which is our response to the playing field as it sits. The economic and interest environment has many conflicting factors, so we're playing it safe, keeping lots of flexibility and making a good return as we wait.

As I said, we have $26.6 billion invested in common shares, equity and associates, consolidated noninsurance equity investments and preferred shares, all doing well, especially the bigger investments.

Peter already discussed the Poseidon sale. Otherwise, it was a quiet quarter, so I thought it would be a good quarter to give a discussion about how we look at investments in publicly traded common stocks versus investing in private companies. The underlying process is the same. We work to uncover true economic profits and/or profit capacity. We think about where those profits are going. We focus on balance sheet and balance sheet flexibility, then we think about the price we pay for those profits. The same underlying process for both public and for private. In both cases, we know management is a key factor. As Buffett pointed out, a great manager, can't save a leaky boat, but what we have learned is that they make a huge difference paddling boats that do float.

The advantages of buying public common stocks is, one, the ability to capitalize on the moves of the stock market, and two, liquidity. The ability to enter and exit an investment quickly is a good thing. The advantages of making direct investments in private companies is we control the profits. That is we can choose to reinvest the profits in the businesses we've invested in or we can take the profits out and invest them elsewhere.

In general, the flexibility to invest in either public or private companies is a huge advantage for us. It allows us to be opportunistic agnostic and truly seek the best possible investments. For example, today, with the Shiller P/E at all-time highs, you would not expect we'd find a lot of $0.50 in the stock market, and we aren't. But we have been able to make outstanding acquisitions on the private side, including Meadows, Peak and Sleep Country.

We have the advantage of a history of being terrific long-term partners, 40 years of fair and friendly transactions with a long, long line of very happy partners, along with permanent no-call capital makes us an attractive home for many companies. To do all of this well takes a skilled and focused investment team, and I'm so proud of the team we've built over the last 10 or 15 years.

Our people are decision makers, they are analysts and value investors. We have skilled defensive players and skilled offensive players, all have experience in public and private investments. And having the independence to make decisions is so important, and they're all doing it. We call them in where we need them on the bigger investments. And with that, it is amazing to watch them come together as a group. And having this team in place is especially important now given how big and globally spread out we are and how big we hope and plan to be in the next 50 years.

I will now turn the call over to Amy Sherk, our CFO.

Thank you, Wade. I'll begin my comments by discussing some of our key transactions. On March 9, 2026, AGT completed a CAD 450 million offering of its common shares at CAD 23 per share. Immediately prior to closing of the offering, Fairfax exercised its AGT equity warrants at CAD 22.50 per common share for aggregate consideration of CAD 340 million in exchange for settlement of a CAD 340 million loan receivable from AGT.

Concurrent with closing, the company also acquired CAD 200 in AGT common shares in a private placement for CAD 23 per share. The company's ownership in AGT was diluted from 66% to 56% as a result of these transactions and we, therefore, continue to control AGT. The following 3 transactions were already discussed by Peter, so I will just provide some additional details.

On March 10, 2026, the company announced that it entered into agreements to sell an aggregate equity interest of approximately 23.1% of Poseidon for aggregate proceeds of approximately $1.9 billion. Following the sales, Fairfax will retain an equity ownership of approximately 22.2% of Poseidon. The pretax gain on closing is estimated to be $837 million, and the company expects to continue to apply the equity method of accounting to its investment in the common shares of Poseidon following the sale.

On October 13, 2025, the company announced that it had entered into a term sheet with Eurobank, pursuant to which Eurobank will acquire the company's 80% equity interest in the life insurance operations of Eurolife for cash consideration of approximately $935 million or EUR 813 million. The estimated pretax gain on closing is approximately $350 million. Accordingly, the company continues to classify assets of $3.3 billion and liabilities of $3.5 billion related to Eurolife life operations as held for sale at March 31, 2026.

On February 16, 2026, the company and Kennedy Wilson entered into a definitive merger agreement pursuant to which Kennedy Wilson will be acquired in an all-cash transaction by a consortium led by certain senior executives of Kennedy Wilson together with the company. The consortium will acquire all outstanding common shares of Kennedy Wilson not already owned for $10.90 per share in cash, and the company has committed to providing the consortium with funding of up to $1.65 billion, principally to fund the transaction's cash purchase price. These transactions are expected to close in the second quarter of 2026.

A few comments on our noninsurance company results in the first quarter of 2026, non-insurance companies reported operating income of $37 million in the first quarter of 2026 compared to an operating loss of $41 million in the first quarter of 2025, primarily reflecting strong share of profit of associates at Fairfax India, partially offset by nonrecurring expenses at AGT related to its initial public offering in the first quarter of 2026. Our noninsurance companies, including Sleep Country, Recipe, Dexterra, Meadows and Peak continued to perform well in the first quarter of 2026.

Looking at our share of profit from investments in associates, we reported increased consolidated share of profit of associates of $372 million in the first quarter of 2026, compared to $129 million in the first quarter of 2025. Share of profit in the first quarter of 2026 principally reflected share of profit of $129 million from Eurobank, $117 million from the Waterous Energy Fund III and $77 million from Poseidon.

I will close with a few comments on our financial condition. Maintaining an emphasis on financial soundness at March 31, 2026, the company held $2.5 billion of cash and investments at the holding company, had only $300 million drawn from its $2 billion unsecured revolving credit facility and an additional $2.1 billion at fair value of investments in associates and market-traded consolidated noninsurance companies owned by the holding company.

Holding company cash and investments support the company's decentralized structure and enable the company to deploy capital efficiently to its insurance and reinsurance companies. At March 31, 2026, the excess of fair value over carrying value of investments in noninsurance associates and market-traded consolidated noninsurance subsidiaries was $3.9 billion compared to $3.1 billion at December 31, 2025, with the increase principally related to the announced sale of 23.1% of the company's investment in Poseidon, which we have already talked about.

The pretax excess of $3.9 billion is not reflected in the company's book value per share, but is regularly reviewed by management as an indicator of investment performance. The company's consolidated total debt to total capital ratio, excluding noninsurance companies, increased to 27.8% at March 31, 2026, compared to 26.2% at December 31, 2025, reflecting increased total debt, principally due to the issuances of unsecured senior notes of $476.6 million or CAD 650 million in February 2026 and decreased common shareholders' equity.

Subsequent to March 31, 2026, on April 15, the company redeemed at maturity $91.8 million principal amount of its 8.3% unsecured senior notes. And on April 29, 2026, the company announced its intention to redeem on May 29, 2026, all of its outstanding CAD 450 million full amount of 4.7% unsecured senior notes, which are due on December 16, 2026.

Common shareholders' equity decreased to $25.8 billion at March 31, 2026, from $26.3 billion at December 31, 2025, primarily reflecting purchases of about 375,000 subordinate voting shares for cancellation for cash consideration of $631 million or $1,684 per share, payment of common share dividends of $329 million and other comprehensive loss of $227 million, primarily related to unrealized foreign currency translation losses net of hedges due to the strengthening of the U.S. dollar against various currencies.

The company does view these unrealized foreign currency movements as market fluctuations, similar to our unrealized gains and losses on its equity and fixed income portfolios. This was all partially offset by our net earnings attributable to shareholders of Fairfax of $696 million.

Lastly, book value per share was $1,250.14 at March 31, 2026, compared to $1,260.19 at December 31, 2025, representing an increase per basic share in the first quarter of 2026 of 0.5% adjusted to include the $15 per common share dividend paid in the first quarter.

That concludes my remarks for the first quarter of 2026, and I'll turn it back to Peter.

Thank you, Amy. And Denise, we are now happy to take any questions that you might have.

[Operator Instructions] The first question today does come from Stephen Boland with Raymond James.

Peter, I guess this is for you. I know you addressed this at the annual meeting and some of the events around that, but I just want to talk a little bit about softness. When I look at the premium that was reported between the North American and international this quarter, flat for North America, a little bit up in international. Is that the dynamic we're seeing? And what is the messaging going to the subsidiaries from head office? Or is it just intuitive that the subsidiaries are beginning to avoid where price -- pricing just isn't profitable down the line. Is there any messaging coming from the head office on that? Or you let the subsidiaries do what they do?

No, that's a good question. And I think just to start off, there really doesn't have to be any messaging to our companies. They're very -- the presidents are very experienced and they've managed through cycles before. And it's very clear, we're all on the same page that underwriting profit is a focus and underwriting discipline.

So there's no -- if you need to reduce your premium and pricing is inadequate, that's totally fine from us. And we take a long-term approach, long-term view. We're building the company over the long term. And so again, I think the presidents all do the right thing, all are focused on underwriting profit. And that message is very, very clear from Fairfax as well.

The next question comes from Tom MacKinnon with BMO Capital Markets.

Just a question with respect to Gulf. Net premiums written in 2025 were, in fact, flat to modestly down versus 2024. We got a spike up here in the first quarter of 2026. Is there any more color you can share with us? And I noticed that you've been increasing retention with respect to Gulf as well. Are there any concerns here about increasing retention in an area where there's heightened risk as well? So if you can provide any kind of more color on that, I'd appreciate it.

Sure. For Gulf, yes, 2025 premiums were down. I think we disclosed that they lost a large health contract in Kuwait at the end of '24, which affected their premiums in 2025. And that treaty, in particular, they did cede a lot of business. They only retained a portion of the business. So that affected their net retentions.

So coming into 2026 off a lower base, they are expanding again in the accident and health business, and it's coming off a lower base. So that's why you'll see the bounce back in the premiums and is partly responsible for the net retention increasing. So it's really driven by that one large contract that wasn't renewed in late 2024.

Next question comes from Bart Dziarski with RBC Capital Markets.

I wanted to ask around the Poseidon transaction. So congrats on the announcement there, and just hoping you can give us some more color in terms of why now, why sell a portion and not the whole stake? And then what you expect to do with the proceeds once the transaction closes?

No. Thanks for the question, Bart. No, Poseidon, it has been an excellent investment for us. I think we first invested around 2018, and our compounded annual return was 25% per year. Our cost was about $9.50, $10, and we carried it at $15.50, I believe. So we sold half the position for $230 had a very nice gain, $837 million, and we're very happy to hold the remaining 22%. Our partner, ONE, that took it public -- private, sorry, last year was wanting to increase its ownership. So we were fine selling about half of our position.

The next question is from Jaeme Gloyn with National Bank Capital Markets.

Just want to quickly touch on the reserves and development this quarter. It looks like a little bit of a step down from this time last year and sort of the pacing that we've been seeing. Can you talk about a little bit more detail on perhaps what's driving that? Is there a shift in how you're looking at the portfolio? And I just want to sort of understand that trajectory if it's at these levels or this is sort of a little bit of a one-off.

I think, Jaeme, I think when we look at reserves, first quarter is not really a big quarter for us to move reserves. In the fourth quarter, we do a thorough reserve analysis, actuarial review of all our reserves. So most of the actions are taken in the fourth quarter. So in the first quarter, it's usually a lower movement on the reserves than others. I think maybe last year, the favorable development was higher than normally expected. So quarter-to-quarter, especially in the first half of the year, I wouldn't really put any real focus on that number.

That comes from Tom MacKinnon with BMO Capital Markets.

Okay. Peter, you note the -- a bit of a shift here in terms of more premium growth coming out of international, I guess, than the North American and the global insurers and reinsurers. And now you're -- obviously, the international running around a 96% combined and the rest of the North American and global reinsurers running around 93%. So as you kind of shift more business into the 96% combined and versus the 93% combined, how do you feel about this $1.5 billion outlook for underwriting profit going forward?

No, that's -- you're right. There has been -- in this quarter, at least, and there's been a shift between the mix of business between our larger companies, which are primarily a large portion of their business comes from North America. And that's really where we're seeing the softening of rates, and it's much more competitive.

So as you said, we don't see as much growth there. They were about 1.5% for that -- the larger companies, they were up 1.5% in the first quarter. And then our international operations, where they're not seeing the price decreases as much, more attractive business, we would hope that, that the combined ratio will drop over time.

Gulf, for example, they're still running a little bit above 95%. But historically, they've run in the below 95% low 90s. So I think we'll see that combined ratio for the international group continue to go down as well, helping the overall mix of business. We write about $33 billion now, and we benefit from that greatly. Like I said, 80% is still with our larger companies, but that 20% of international business, it's about $6.5 billion of premium, and that's quite significant, and it gives us the scale and diversity to manage these cycles. So...

[Operator Instructions] We currently have no questions.

Well, Denise, if there are no further questions, thank you for joining us on our first quarter conference call. Thank you very much.

Thank you. That does conclude today's conference. We appreciate your participation. You may disconnect and have a great rest of your day.

Good morning, ladies and gentlemen. Welcome to our 41st Annual Meeting. Thank you. 40 years since we began in 1985. I'm Prem Watsa Chairman of Fairfax, and it's great to see all of you here. This is such a big pleasure for all of us at Fairfax to have all our wonderful shareholders with us. Many 25, 30 years with shares in our company. Welcome to all our shareholders and employees across the world. It's being on the Internet and to all the people who support us.

So I wanted to begin by just saying that 40 years is a long time. 1985, the Dow Jones in that time was about $1,000 plus or minus. And at that time, when you looked at the company's earnings, it used to be net income and net income 6x, 7x, 8x 1985 long time ago. Then the Dow Jones went to $5,000, $10,000, $15,000, $20,000. And then you had to change, justify these high prices. So we went to EBITDA, earnings before everything, interest, taxes, deficit. And it worked for some time. And -- but then we went to $40,000 and now we are heading close to $50,000 on the Dow Jones. And so as you'd expect, we had to use a better formula, and that's this. EBITDA, earnings before Iran, tariffs and Donald's announcements. I don't know what the next variation is going to be like. So we celebrated our 40th anniversary since we began best year in history, as you know, net income increased to $4.8 billion, and our company has been transformed since 2022. I've said that for the last 4 years. Gross premiums were up in the 4 years by 40%, underwriting profit, 127%. Interest and dividend income is up 302%, and book value per share is up 100% in those 4 years, and book value increased by 21% in 2025, $1,260 per share. That's in U.S. dollars. And our stock price increased by 31% in Canadian dollars, $2,616.

Now you'll remember that we announced that with passing of Mr.Athapan, one of the world's best underwriters, we were instituting a cup to be awarded to one company each year for underwriting excellence, and in 2024, that award was presented to Silvy Wright and Northbridge.

This year, this year, I'm happy to announce the award goes to Allied World. We acquired Allied World in 2017. It's been a phenomenal performance. I've said it in our annual report. Okay.

Do I get to take this with me?

You have to return it. We've got something else for him, but this is a rolling trophy. Congratulation. Thank you.

Last year, we also announced an award in honor of Ricky Salsberg, who is the heart and soul of Fairfax. We are very pleased to announce that 2025 winner is [ Arlene Paladino ] and she is with Crum & Forster since 1979, became the CFO in 2017. And since then, she has built a best-in-class finance department and influence extends right through the company, most importantly, she exemplifies our culture. [ Arlene Paladino ]. Thank you, Arlene. Thank you so much. Arlene 1 minute, 1 minute. This is the the plaque that comes, her name is going to -- that's Silvy Wright right there. Bijan was last year's winner and Arlene is this year's winner.

Also in the owner of Rick Salsberg, we announced that we would help fund our Memorial Leadership Lecture Series in Ricky's name at the University of Toronto, Law School. We are happy to say the inaugural lecture was held January of this year in front of a packed house, and involved a panel of established leaders, a ton of lawyers and it went really, really well. I invite you to join us for the next one in 2027. As we've often said, our people are our greatest asset. The health of [indiscernible] well-being remained our top priority. It's now almost a year since we last Vinod,and we continue to honor his memory by strengthening our focus on the heart, health of our employees and our families. This commitment has already saved many, many people across our organization, and we give these tests -- we look after pay for these tests all of our companies in the world.

The Fairfax Innovation Award was created in 2017 many, many years ago and to recognize teams whose innovations have had a transformative and positive impact on their organization this year, an impressive 33 initiatives that submitted with a diverse range of innovative products. It's fantastic to see that's the beauty of decentralization. All Fairfax companies continue to innovate within that market. And after reviewing all the submissions, we are happy to announce that ARX from Ukraine had been selected as the winner, and we have, I think right here -- ARX defied industry, that's right from Ukraine, defied industry expectations by launching a sustainable war risk insurance product. Congratulations to the team. It is now more than 4 years since Russia invaded Ukraine. And as I mentioned last year, our presidents are keeping our people safe and they are heroes working under extraordinary conditions, and our business is doing exceptionally well.

Now I want to take a moment to recognize. I want to take a moment to recognize [ Andre Aliski ] and Slava from ARX [indiscernible]. Very happy to have [ Aliski ] here in person. [ Aliski ] come right in. Give him a nice round of applause. And I think you can see [ Aliski ] all over the world where get this. But [ Olesky ],thank you for joining us, and thank you for the wonderful work you've done in Ukraine. Give a nice round of applause.

Thank you. I am not going to miss this opportunity to say a great thanks for you Prem and for whole Fairfax. Behalf of all our employees of my colleagues in Ukraine because we are feeling strong support since the first day till now, and we believe till it will be necessary. Thanks a lot.

Thank you very much. With the contact in Iran, unfortunately, members of the Fairfax family once again found themselves in harm's way. GIG management is ensuring that all our employees in the Gulf region have the support that they need to stay safe. A big thank you to Bijan, Fareed and Paul Adamson, give them a nice round of applause. You know we treat our employees as one big family, and we do not want to have layoffs like you have seen recently in the tech industry or other industries, particularly when they're in such strong financial shape. We are careful in adding employees because we don't like layoffs.

While Fairfax and our employees have been a Great Place To Work, where we do not tolerate or condone any form of racism or discrimination, we still know that it has not been eradicated in our society even in 2026. As you know, in 2020, we created the Black Initiative Action Committee at Fairfax under the Chairmanship of Craig Pinnock, the CFO of Northbridge to make our company even more attractive for people in the black community and other minorities. We're grateful to say we have maintained our strong partnership with the Black North initiative, reaffirming our commitment to eradicating anti-black systemic racism through collective efforts across corporate Canada. But when I speak of racism, we are shocked and saddened by the anti-semitism that has risen in Canada, the United States and many parts of the world. It should not be tolerated. There is no place for anti-semitism period. And I wanted to make sure we all understand that.

Since the inception of Fairfax, we have always been focused on a few things. The way we operate, the way we treat each other and the way we help our communities. Our management team and Board ensure that honesty and integrity are never compromised, and that full disclosure is provided to all our shareholders. We follow the golden rule, treat people like you want to be treated yourself. We now have 22,000 employees around the world working in our decentralized environment following this basic principles. I'm pleased to say we recently posted our fifth ESG environment, social and governance report on our website and we're always focused on ESG. But when it is our fifth report, we have been following ESG principles since we began 40 years ago. We just didn't call it ESG. I've always said this, and I repeat, we are very blessed to have such a wonderful group of shareholders, long-term shareholders, many, many of you have been shareholder for 10 years, 20 years, 25 years, and maybe even longer. And through the ups and downs of business life, so warm welcome again.

Now the biggest asset that we have is not on the balance sheet. The biggest moat in our company is our culture, and it's not on our balance sheet and the creation and preservation of that culture, the biggest achievement for us over the past 40 years and the continuing driver of our success. And it will continue because Fairfax is not for sale. I've considered myself before I've told you as a steward, I don't own the company because I cannot sell it, stewards can't sell. And I am looking forward to this company going forward long after I'm gone. So the fair and friendly culture, which is in our name is why companies all over the world want to deal with us. It's our biggest advantage and regard it fiercely. They trust us.

I also want to take the opportunity to thank our directors, all 12 of them for their strong support of our company. Now one of our directors is retiring Robert Hartog, our Lead Investor, Lead Director and Chair of the Audit Committee since we began in 1985, many of you might remember, Robert, Introduce me to David Johnston when Robert retired in 2006. We had lunch and thus with a lunch with David and thus, began a 20-year relationship. David was the dean of the law school at the University of Western Ontario, principal of the University of [indiscernible], President of the University of Waterloo and Chair of the Harvard Board of Overseas, the Harvard Board made David, Chair. David, with the best Government General Canada has ever had. We were very fortunate to have David as our Director, all these years, and we wish David and Sharon, their 5 daughters, and hear this, 14 grandchildren a long and happy retirement. Let's give David Johnston, a nice round, standing ovation for David.

David will always be a friend of Fairfax and very close friend of me. Over our 40-year history, we have always operated at Fairfax with an outstanding small team with great integrity, team spirit and no egos, protects our company from unexpected downside risks and which takes advantage of opportunities as and when they arise. This group has worked together for a long time with trust and long-term focus, as you will see in my presentation.

But I want to recognize Peter Clarke, who is our President, has been with us for 29 years and his first job with his Fairfax and he will join me for the presentation. He's going to do half the presentation, I'm going to do half after we -- and he'll join me for the Q&A also after we go through the formal part of the meeting. And Peter runs now all our quarterly conference calls with Amy Sherk, our CFO, and Wade Burton, our Chief Investment Officer. Peter Clarke, let's give them a nice round of applause.

I am not retiring but I wanted all of you to get to know our talented team. I am watching, of course, with great interest. In November 2025, we announced that Bill McMorrow and his management team will take Kennedy Wilson private with the help of Fairfax. We have invested with Bill since 2010, and have done exceptionally well over that time period. All our investments with Bill and Kennedy Wilson have worked out very well. So when Bill suggested, we take Kennedy Wilson private, we were very pleased to be a partner, and on February 17, 2026, Kennedy Wilson announced that the special committee had accepted $10.90 per share from Bill and us, a 46% premium from the price of $7.47 since it traded at, before the offer. We are very excited to have Bill, Matt and his team joined the Fairfax team. So I wanted to give them a nice round of applause. Will McMorrow.

Now I wanted to -- we didn't have a chance to thank Alan Kestenbaum of Stelco. And I think Alan is right here. And we put some money with him about $200 million at $20 a share. He called me one day at about 10:00 at night and said time to sell for $70 a share. And I said it Alan, I thought you were looking at $140 and he said $20 to $70 Prem is much easier than $70 to $140 and he timed it perfectly. And at the rate of return for us, this is in 2018, we sold it in '24, 29% in 6 years Alan Kestenbaum. Give him a nice round of applause.

Then I got to also introduce Sigma, a waterworks construction company. This is a friend of mine who have been my friend for 58 years. We went to the same engineering school in India. He created a company, and he sold it about in 2007, and 10 years later, we helped them acquire it back again in 2017. And we invested $41 million, and he gave us back $327 million, a compound growth rate of 31%. [ Victor Pious ], gave a nice round of applause.

And finally, I wanted to thank David Sokol. We put some money with David at 2018 quite some time back, and at $6.50, we put more money in and eventually, we put $1.2 billion with David at $9.40 and we've just sold half, as you've seen half our shares at $28.30. The biggest gain we've made and because of David Sokol outstanding entrepreneur, outstanding manager, done a fantastic job, a 25% compounded rate of return. David Sokol, give him a nice round of applause.

So I wanted to recognize all of them. And just very quickly, Jonathan Alderson, many, many young families suffer from autism. Jonathan has done a wonderful job. He's here is developing something called Thrive. I bring that to your attention again. In January of this year, we had our investor trip. We have an investor trip to India, and we had restarted it last year after a 5-year gap due to the pandemic. And we talked about it last night. It's an outstanding trip. Trip of a lifetime and it gives our shareholders an opportunity to interact with the leadership. And you meet lots of our companies in India, and you really have a wonderful, wonderful time. And all the participants who go for this trip think it's a trip of a lifetime. And this time, Peter Clarke and Louanne will be joining the trip. So you'll really get to know Peter over that week, Peter Clarke, why he's such an exceptional guy. And the dates are from January 9 to the 16 in the foyer outside the auditorium, you can proceed to Thomas Cook both for more information. [indiscernible] that recommended highly, it's limited to 25 couples. That's our trip of a lifetime.

And I've introduced our management team in the past. They're all here. You have a chance to see them. Our President of our companies, President of many of our Noninsurance companies, and you saw the pictures going before we began. These are the leaders I happen to be one here, but these are the leaders who keep Fairfax going. That's why I'm so excited about the possibilities for Fairfax, all the leaders that we have here. And we are really blessed with a very unusual group of smart, hardworking and trustworthy leader companies. You'll see their long tenure. I'm going to talk about that. In the foyer, we have about 38 booths of the company's, our insurance companies, our noninsurance companies. The company that serves some food, like recipe and cake, they're all there. And the leaders are there to answer any questions you might have.

We have the IVY Business School showcasing the [indiscernible] Chair for value investing with Professor George Athenos [indiscernible]. He had another conference yesterday outstanding what he's done and brought value investing to Canada and one of the best value investing conferences in the world. We have the co-op students from the University of Waterloo. And then I just wanted to say we began a donations program about 35 years ago, and it's gone up very significantly, but under the leadership of many, many people, this has been produced why we give. It's a really lovely document. It's by all of our individual companies, insurance companies and then we put 2% is what we donate, 1% goes into the foundation and for bigger projects. And it's really well done. I recommend it to you on your way out, you can pick it up.

And then we are also -- we are happy to give you this one you have to pay. This is 50 years of Chairman's letters, you can easily get it. If you want to -- some of you might want to look at it. Most of you don't want to, but it's available costs you $50. And Dave Thomas has done a terrific book for us. This is really we meant it for our own people, but he is selling it. And we really thank him, done a terrific book The Fairfax Way. It's also discounted at $20 for the book. And Dave is right here, give Dave a nice round of applause. It's a lovely book.

And our latest investment Under Armour has got a nice hat for you with Fairfax and not expensive and beautiful back pack also for sale, not for free. They've really produced very, very good products, as you'll see, and I think that gets me -- so as we've done in the past 40 annual meetings, we go quickly through the formal meeting, give a short presentation with slides and have a Q&A with Peter and myself after this slide. So should be just -- and you can submit your questions in real time on this platform. So you can send it. We've got Jeff, Stacey there, and he will have 1, 2, 3, 4 stations plus Jeff -- and to take any of your questions after the presentation. So now let's begin the formal part of the meeting.

Thank you. And the formal part of the meeting is ladies and gentlemen, welcome to this meeting. I'm Prem Watsa Chairman. Derek Bulas, is the Vice President and Chief Legal Officer; Corporate Secretary of Fairfax. I shall appoint Shirley Tom and Louise Waltenbury of Computershare Trust Company to act as scrutineers and to complete the vote of any polls taken at this meeting and to report thereon to me as Chairman. I can report that as a result of reviewing an affidavit of mailing and a preliminary report of this scrutineers. I'm satisfied that notice of this meeting has been duly given and a quorum is present, that this meeting is, therefore, properly constituted called and constituted.

Today's agenda will consist of the of tabling the annual report, which is here, nice 40 years, nice color, you can't miss it. And that's there for you. It's to elect our Board of Directors; second, to reappoint our auditors, and third, to consider the shareholder proposal that we received from investors for Paris Compliance on behalf of the [ Salal ] Foundation. I propose to move quickly through the formal business. announced at the minutes of the previous annual meeting held on April 10 are available for inspection, by a request to the Fairfax Corporate Secretary as well and now formally place the annual report, which includes the company's financial statements, the auditors, Price Waterhousecoopers statement. And I declare that the total number of votes attached to the shares represented in the meeting by proxy have been directed to be voted in favor of the election of the Board of Directors, and the reappointment of our auditors, in each case, not less than 94% of all votes.

Finally, I declare that the total number of votes attached to the shares represented at the meeting by proxy which have been directed to be voted Against the shareholders' proposal is not less than 80% of all votes that may be cast at the meeting. So voting today will be conducted by electronic ballot for those attending. And for here, there will be a show of hands, and I'll ask for the balloting to be opened to the registered holders and appointed proxy holders. The polls are now open on the platform. And at this point, all registered holders and proxy holders attending virtually who have properly logged in, will be able to vote. Following the presentation, Jen Allen will confirm when the polls are closed. Once the electronic balloting closes, your votes will be submitted.

So now I'll go to the election of directors. With your consent, I will now move directly to the election of directors. I now invite nominations for directors.

I am Jennifer Allen, and I nominate as directors for the corporation for the ensuing year. Robert Gunn, Karen Jurjevich, Christine Magee, William McFarland, Christine McLean, Brian Porter, Lauren Templeton, Benjamin Watsa, Prem Watsa and William Wilton.

Thank you, Jen. Are there any further nominations?

As there's no other nominations for directors have been received, and as the numbers of directors nominated is exactly the number to be elected, I confirm that those 11 nominees are proposed for election as directors of the company. Given the hybrid meeting and the fact that we will also conduct a virtual vote, we will have a vote on this together with the next resolution. I now invite a resolution regarding the appointment of an auditor.

I move that PricewaterhouseCoopers LLP be appointed as auditors of the corporation to hold office until the next annual meeting.

Thank you, A.B.

I'll second that motion.

Thank you. And for those attending in person, I would ask that you please vote for resolutions 1 and 2 by a show of hands. All in favor? Any contrary? Can't see any contrary.

The final item of the business is to consider the shareholder proposal submitted by investors for the Paris Compliance on behalf of the [ Salal ] Foundation. At this time, I recognize Kira Taylor, representative of investors for Paris Compliance to present this proposal and take a motion that is to put to vote. Mrs. Taylor. Please go ahead.

Good morning, Mr. Watsa, members of the Board and fellow shareholders. I'd like to start where I believe we agree. Fairfax has built something genuinely rare, a company built on long-term thinking, patient capital and stewardship over decades. In a world obsessed with quarterly results, this is a philosophy worth defending. It also provides a useful lens when considering the proposal before you today.

Climate risk already costing hundreds of billions in damages each year is becoming an increasingly larger risk as time goes on. For an investor, this will influence winners and losers in the equity market and for an insurer, it greatly affects underwriting risk. Fairfax has already stated that climate change represents a material risk to its business, the question raised by this proposal is whether shareholders have sufficient transparency to understand how that risk is being measured and managed across the enterprise.

The Board has indicated that Fairfax is already assessing climate-related risks internally. That work is important and encouraging. At the same time, investors rely on disclosure to evaluate how material risks are being addressed. Internal analysis does not provide investors with decision-useful information. For example, the commitment to hold assets over the long term invites reflection on the kinds of exposures that are being financed and underwritten over that same time horizon. Shareholders need insights into the significant exposure Fairfax has to high emitting sectors, which face transition risks set to compound over decades.

Fairfax is currently the third largest underwriter of fossil fuel projects globally, the Iran oil and gas shock has exposed the serious security vulnerabilities of fossil fuels. Sharing Fairfax's financed emissions disclosures with appropriate context around estimates and evolving methodologies would help bridge that gap. It would allow shareholders to better understand the company's exposure and to track progress over time. There has also been discussion about timing, including whether such disclosure is premature in advance of regulatory requirements. Many investors view voluntary disclosure of material risks, a good part of -- good governance. Therefore, investors already expect this disclosure, particularly when many peers have taken similar steps, some several years ago already. The Board has also highlighted data challenges. These are widely recognized across the financial sector. Most large financial institutions have already begun reporting financed emissions and clearly note assumptions and limitations so that their processes can improve over time.

Without trying, there can be no iterative process. Beginning with an initial disclosure can help establish the systems and governments needed for more refined analysis later. Finally, Fairfax's decentralized structure is a strength that allows for entrepreneurial management and local decision-making. At the same time, investors evaluate Fairfax on a consolidated basis and group-level disclosure complements that structure by providing a clearer picture of overall performance, just as we are doing here today.

This proposal is intended to support that complementary process. The request itself is modest. It asked Fairfax to disclose financed emissions across material scopes in absolute terms as a first step. This is not a request for targets or strategic shifts, but for measurement and transparency. Fairfax has an identity as a contrarian institution that resists noise, pressure and market fashions and that instinct has served the company well. But I'd ask the Board to consider whether in this case, that same instinct may lead to filing climate risk in the wrong category, as simply outside pressure to be resisted rather than systemic long-term financial risks. Thank you for your consideration.

Thank you very much. Ms Taylor. Would someone second the motion?

I second the motion.

Thank you, Ms Wang. And I would direct your attention to Schedule A of Fairfax's management policy circular, which describes in detail the position of the Board and management of this matter. The Board of Directors recommends that shareholders vote Against this shareholder proposal. We will now proceed to a vote on the shareholder proposal. For those attending in person, I would ask that you please vote a show of hands. And then again, remind those attending in person that our Board recommends voting against this proposal. All in favor? Contrary? Thank you.

We will now take a brief pause for 60 seconds to allow registered holders -- to allow our registered holders and proxy holders to complete the electronic boarding and all the motions brought forth at this meeting. Jen Allen will start a time-up.

[Voting]

Mr. Chairman, the voting is now complete, and the polls are closed.

Thank you very much, Jen. I have been advised by the scrutineers that the policies -- the proxies deposited for the meeting have now been voted. I can confirm that the nominated directors have been appointed as directors of the company to hold office until the next annual meeting.

In addition, I confirm that PricewaterhouseCoopers has been appointed as auditors of the company to hold office until the next Annual Meeting.

And on the shareholder proposal, the voting results show that -- approximately 80% of the votes casts were against the proposal. As there are a greater number of votes against than in favor, this motion is not carried, and the shareholder proposal has not passed. We will now file -- and we will file a report on SEDAR setting out the voting results following the meeting. I propose now to terminate the meeting. After that, I'd like to talk about our company plus a Q&A session. I now invite a motion for termination.

I move that this meeting be terminated. Thank you, Jen.

I second the motion.

Thank you. Amy, I declare the meeting terminated. Thank you very much.

So now we go to our presentation. Now we've done it for a long time. Peter come on in and Peter is going to take -- I'm going to talk about some of the principles and Peter is going to talk specifically. Peter is going to talk about the operations of the company. And so we'll just go straight into the presentation, and then we'll open it up for Q&A.

So we always start with our guiding principles. There's a moat, a set of principles that distinguishes Fairfax is these principles. The objectives very simply to provide outstanding service to our customers look after our employees who provide that service, make a return for our shareholders and never forget the communities that we operate in, recognize that we're all very fortunate. Always, you can take a long-term view unless you're soundly financed and always provide full disclosure to shareholders.

Second is structure. I have found decentralized structures that we've had all these years in spite of the ups and downs, works wonderfully, and we are decentralized, except for performance evaluation, success in planning, acquisitions, financing, investments that have come -- that are done by Fairfax. Complete and open communication between our companies and ourselves. We've done it for years. Share ownership, large incentives encouraged only for performance, not for the top line, very dangerous in the financial business to have incentives for the top line. And we remind ourselves, we are not an operating company. And our values are most important section here, right in the first one, understand integrity, essential in all our relationships, will never be compromised. Results-oriented, not political. It shows you the type of people who feel comfortable at Fairfax team players, no egos, confrontational [indiscernible] not appropriate. We value loyalty to Fairfax and our colleagues. We follow the golden room. We treat others as we would want to be treated. Hard working, not the expense of our families. We -- that's an odd one to put in that company, but we do, we don't want to succeed at the expense of our families. And we always look for opportunity. We're always looking at the downside making sure that we survive the downside and then look at the upside.

And we make mistakes. We made a ton of the sake, most of you who have been with us for a long time, will remember them. And but we try to learn from them and go forward. We never bet the company on any project or acquisition, and we believe in having a few laps at the office. So that's our values, and it served us very well for a long time.

Here's the golden rule, and I've shown you this before. That's about 20 [indiscernible] groups, that's -- they all follow this principle. So this time, I wanted to just take today, what is hateful to you do not do to your neighbor. This is the whole [indiscernible]. All the rest is commentary. Right from [indiscernible].

About Islam, not one of you truly believes until you wish for others, what you wish for yourself. How about Hinduism, taking the big ones. This is the sum of duty do not do to others what would cause pain, if done to you. And finally, Christianity in everything due to others as you would have them do to you. But this is the law and the prophets.

Amazing, other the other faiths have the same principle. Do to others what you want done for you. And we've tried to follow that all these years. Our formula is very simple. I've shown it to you for 40 years, disciplined underwriting, not on the top line, value investing and over that time, you get superior long-term returns, not in any 1-year or in 5 -- years, over time. And that's our rate of return there. The 40-year compounding, you can see there -- and our stock price was 3.25%, 3.25%, 3.23% to be exact, but 3.25%. And it's created a $1,900. That's in U.S. dollars, Fairfax stock price, book value is in U.S. dollars, too. And you can see the S&P 500 during that same time period. The rate of return. Our stock price has gone up 19.5%. And if you look at -- this is a fascinating slide. I showed it in our annual report, and I just highlighted for you. It's very end-date sensitive.

So 2020, they looked at $434 million, our rate of return was still pretty good, but 16%. And as the stock price goes up, 19.5% rate of return over time. The last 5 years have been very, very good to us. I've told you before that in 1985, there were 6,000 companies listed in the United States. 6,000 on all the exchanges, 600 still continue in their present form. The rest of them have taken over bankrupt whatever. They don't exist in that form. And then you say, how many companies did get more than 15% return, and that's 56 companies and which is less than 1% of the 6,000. And we are very grateful and very blessed. We are fortunate to have a 19.5% return and you can see that ranks us #7 -- in the -- if you look at the profits in Canada, net income last year, we made $4.8 billion, and you say, where does that rank us? That ranks us at the 10th largest company in Canada. And this is a company that never made $1 million in 1985, prior to 1985. So we're very, very grateful and not proud, but grateful, grateful means you didn't do it yourself. You had blessings from above. And so that's why we're not proud, we are very grateful for all the blessings we've had.

Who has done it? All of this is from our executives Peter and I are there, but you can see Andy Bernard, you can see you can see Brian Young, they came together as a team. And Johnny Varnell, you can see at the last line there, 39 years. And you can see Peter Clarke has been with us for 28 years. This is ending last year, and now 29 years with lots of our officers have been with us for a long time. Outstanding management, you can see Brian Young there, as I told you 30 years, Khaled second row to the right just retired 48 years with GIG, 48-year GIG was just been formed. And then you can see Vasili, which is as a third row right to the right. Vasili's 18 years. He's taken over a year of life, and Alex has become Chairman, and he's also Chairman of our Cyprus Company that we acquired and been with us for a long time.

And then if you go to the next one, the outstanding investment team that we have, [indiscernible] 40 years here, worked with them for at least 10 years before that. Brian [indiscernible], 39 years, another 10 years before that. And so we've worked together for more than 50 years and young Wade Burton, 18 years taking it forward. Wade Burton is the succession for us, but you can see all the others that we have and the time they've been with us. Chandran there for 32 years, and lots to lots of gratitude for that management team, holding company presidents and the investment committee. And with that, I'm going to pass it on to Peter Clarke, who's going into the operations, give them a nice run of applause.

Thank you. Thank you very much, Pam, and good morning to everyone here today. You might have seen this slide before, but this slide is a high-level view of our insurance operations that generate the $33 billion of gross premiums we write. Not included in this, is the nonconsolidated companies, Digit, Albingia and BIC, which would add another approximately $2 billion to this number at the 100% level. The 7 companies starting on the left, make up approximately 80% of our gross premium, primarily in North America, although many have global operations, in particular, Odyssey Group, Brit and Allied World. The remaining 20% of our premium is our international operations. Although only 20% of the total, it is over $6 billion in premium, and that is more than all of Fairfax 15 years ago.

We are very excited about the prospects of our international operations. In many of the countries, the insurance penetration is very low, and we expect it to increase. Supported by strong GDP growth in those countries. Each of our companies are separately capitalized, as Prem said, with the President, CFO and run on a decentralized basis. This structure not only provides the many benefits of empowering our people but provides great financial flexibility for the group and a very flat structure where information can flow very quickly. As we always say, bad information, bad news comes up quickly, goes right to Andy and Brian, then to Prem and I, and the good news can come on the regular quarterly reporting.

Over the past 40 years, we have built out our insurance operations to be 1 of the top 20 property casualty groups in the world. Not easy to replicate, especially in the short term. As we have said in the past, the company has been transformed since 2017, this corresponds with our acquisition of Allied World and a hard insurance market that began in 2019. Underwriting profit, you can see, increased from a loss of $600 million to a record profit of $1.8 billion in 2025 with 3 consecutive years of underwriting profit above $1.5 billion. Within our underwriting profit, we have absorbed on average $1 billion of catastrophe losses in each of the last 3 years and had favorable reserve development each year.

Interest and dividend income has increased from $600 million to $2.6 billion, and our share of profits of associates has increased from $200 million to almost $1 billion. Today, all steady contributors to our net earnings. And you can see our investment portfolio at approximately $40 billion in 2017 has almost doubled to $75 billion in 2025. In total, our operating income, this is for our insurance companies only has increased from a loss of $200 million in 2017 or income of approximately $1 billion normalized for catastrophe losses is $4.6 billion today up over 4x over this time period. And most importantly, our shares outstanding have decreased from 28 million to 21 million at year-end. That's a 25% decrease over that time period. So when we talk about all these metrics on a per share basis, they have increased significantly more. .

For the last 3 years, we have said we can see a strong base of operating income, now running at $5 billion on a consolidated basis, and we continue to see that for the next 3 to 4 years. Of course, nothing is certain, so there's no promises. This consists of interest and dividend income of $2.5 billion plus. Underwriting profit of $1.5 billion and share of profits of associates of $1 billion plus as well. All this adds up to the $5 billion of operating income and potentially earnings of $150 per share after taxes, interest expense and other expenses. This is before any net investment gains or losses on our net income.

Although net gains has always been a significant contributor to our growth in book value, you can only look at that over the long term. Gains will fluctuate from quarter-to-quarter or for that matter, year-to-year, both up and down. And in our mind, that's only important over the long term. Now for our income statement for 2025. As I said before, gross premiums of $33 billion. That's up 2% from 2024. And we continue to benefit greatly from our scale and our diversification of our premium base both by geography and by product. Our combined ratio was 93%, producing an underwriting profit of $1.8 billion, notwithstanding significant losses from the California wildfires in the first quarter of 2025.

As Prem mentioned before, I should note, we have no top line targets at Fairfax or none of our companies are compensated for top line growth. Everything is bottom line and focused on underwriting profit. Investment income was very strong and included net gains on investments of $3 billion, producing an overall investment return of 9.3% for the year, an excellent return in 2025. And finally, this resulted in net earnings for the year, record earnings of $4.8 billion and a growth in book value of 20.5% adjusted for our $15 dividend.

Prem has mentioned every year the importance of float and how it is a huge benefit of the Property and Casualty Insurance business. And I just wanted to repeat that once again this year. Our float exceeded $40 billion in 2025, almost $2,000 per share and is compounded by 18% since inception. Over the last 10 years, we have had cumulative underwriting profit of $8 billion or a benefit of 3.2% on our float. That means we were paid to hold the float. And the last 5 years, cumulative underwriting profit of $7 billion or a benefit on the float of 4.5%. And this is before any investment income off the float. You can see why we really like the Property Casualty business.

As I said before, we benefit greatly from our diversified global operations. We operate all across the world. We have 22,000 employees with underwriting operations in 50 countries, and we do business in over 100 countries. You can see we have most of the world covered. And over the last number of years, we have been focusing on organic growth, which our companies have done an exceptional job at during the hard market, more than doubling our premiums. We benefit greatly from the experience of our presidents and the management teams that run our companies, especially on managing the cyclical nature of the Insurance business. This is very, very important, not only in the hard market years, but likely more important than the soft markets.

Our investment portfolio is $75 billion and is managed by [indiscernible] Watsa on a long-term value-oriented philosophy with capital preservation of priority. The investment portfolio is well positioned today to take advantage of the volatile macro environment with over 40% of the portfolio in cash and U.S. Canadian government bonds. Interest and dividend income of $2.5 billion has an average maturity of 3-years. Our Mortgage portfolio in partnership with Kennedy Wilson continues to produce outstanding results producing stable interest income. And our portfolio has limited exposure to corporate credit and anything we do have is very short term and no private credit other than positions in other strategic investments.

Our common stocks at 25% of our portfolio are very well positioned with great management teams and we believe continue to have significant upside over the long term. Not included in our portfolio or in our book value at year-end is $3.1 billion of market value that is in excess of our carrying value for our investments in associates and listed consolidated noninsurance operations. Adjusted for the increased valuation of [indiscernible] or Atlas, from our recently announced sale, that total unrealized gain was $4.2 billion. or about $200 per share on a pretax basis. At year-end, we carry Poseidon at $15.50 per share. That was our carrying value. We had a fair value of $20 per share, and in the first quarter, we announced that we sold half our position at $28.30 per share. This represents a pretax gain of $865 million.

But like I said, the difference between market value and carrying value is not in our book value until the sale is realized. Interest -- increased interest and dividend income has been a significant contributor to our increased earnings for the last 3 years, and we expect that to continue. Our current run rate is approximately $2.7 billion today. Prior to 2023, with interest rates at historical lows, our duration was less than 1.5 years and provided us the opportunity to extend duration and benefit from higher rates as interest rates increased significantly in 2022. We continue to have great optionality in our fixed income portfolio with 20% in cash and short-term treasuries. And as I said before, with very limited exposure to corporate credit. And as we wait for opportunities to arrive, we are earning a 5% return on our fixed income portfolio.

[indiscernible] Watsa has produced excellent investment returns over the long term with an average return of 7.7% since inception. You can see there's only been 4 years in 40 that we had an investment loss in the year, and each of those were primarily due to unrealized mark-to-market losses, which reversed in the following year. Capital preservation is key, and [indiscernible] Watsa has done an exceptional job at protecting on the downside. You can see how our investments performed in some of the most significant declines in the markets. Namely 1987, the dot-com bust in 2000 to 2002, the global financial crisis in 2007 and 2008 and then again in COVID in 2020.

Finally, our financial position remains very strong and is always our first priority. Our holding company cash and investments is at $2.7 billion at year-end. In addition, in the holding company, we have investments in associates and consolidated noninsurance investments of $2.2 billion. We continue to opportunistically refinance our near-term maturities with a target of no significant maturities for 3-years and have a $2 billion credit facility. Our shareholder equity increased $3.3 billion in 2025 driven by net earnings, and we purchased 1 million shares for $1.6 billion during the year. Our debt leverage ratios remain within our targets and we expect will trend lower as our equity base continues to grow. Our leverage increased year-over-year from the refinancing of our preferred shares with 30-year debt with favorable economics and our interest coverage before gains is very strong at 9 to 10x interest expense.

Our insurance companies are well capitalized, with strong net earnings producing excess capital that will provide significant dividends to the holding company. We have many opportunities to allocate capital, including growing our insurance operations, at the right time, acquiring minority interest in our existing companies, attractive investments and of course, buying back our own shares, none of course, at the expense of our financial position.

Thank you, and I'll now pass it back to Prem.

Thank you again. So just a few more slides and then we'll open it up for Q&A. Noninsurance investments, you can see Recipe, Peak, Sleep Country, all of them there. $8.5 billion of revenue. And the $400 million is reflecting the all other. We took some write-offs, $137 million. But if this is all [indiscernible] of course they are 100% owned. But if you take the associates, which is like 20% above 20% to 50% associates like Seaspan, Eurolife, you get about $1 billion. That $397 million, $400 million, take the write-off of and then you add the associate at about $1 billion that Peter was talking about.

Investments in India. We've taken it in terms of fair value, $4.3 billion. But if you take the amount we control, it's more like $7 billion plus. And this is the equity. If you take the enterprise value, it's much, much higher, but this is the equity that we have. And Fairfax India, we think, as you heard in that Fairfax India presentation, the returns could be much higher in the future.

Eurobank, this is really a fantastic experience for us. I gave you the stock price, EUR 31 1-year and then EUR 38, EUR 0.38. And here the euro price and the net cash invested was about EUR 1.1 billion. And then [indiscernible] who's here with us, who runs Eurobank, pays out more than 50% in either a dividend or a stock buyback. Because we own 1/3 of the company, we have to sell. We can't go above 33% because then there's a takeover for everybody. So you see our net cash invested goes from $1 billion in 2024, $600 million, $500 million because of the buybacks and the market value just gone the other way. Here, it shows total return in euro dollars of $4 billion. It's really unrealized, but at the best return we've ever made in terms of amounts. We've got a 15% compounded but it's $4 billion.

Poseidon sale, we've talked about it, been phenomenal. David has done an outstanding job. I just highlighted some of the key parameters, which we've given in our annual report. It's quite amazing what leadership, great leadership does, and we are fortunate to have been a shareholder with David. This every year, we talk about business can be a force for good. And over 40 years have seen that. Cumulative premiums of $300 billion, if you add it all up, $324 billion, net claims of $163 billion, that's -- we've given our clients, customers $163 billion that helps them in any losses that they've had. The salaries $2.9 billion is a company that had total sales of $10 million in 1985. $2.9 billion to all our employees for the families, made cumulative donations, $570 million since we began our donations program. We pay about USD 90 million every year across the system and pay taxes, I forget sometimes we pay taxes, $8.3 billion of taxes since inception cumulative to do business, grew our book value per share 18.7%. Our share -- our stock price $19.5, and we developed a strong and friendly culture, which is our key key plus the moat.

And final slide next decade, we're always talking about the next 10 years. Guiding principles are there. Our performance, we're happy with demonstrated strengths that you've seen that Peter highlighted. And most importantly, we're well positioned for the future, much bigger company able to take big catastrophe losses, $1 billion, $1.5 billion, still have a combined ratio of 95%, terrific reserving by all our companies. And but the key fair and friendly Fairfax culture. So thank you for listening, and I'm going to open it up for questions.

Okay. So we'll get to questions here for Peter and myself, we'll have 1, 2, 3, 4 and 5, and please leave if you have to no problem at all, you can leave at any time. And this is -- this meeting is for our shareholders. So we're happy to answer any questions that you might have. So 1, 2, 3, 4, and then it goes to Jeff [indiscernible] for #5. So we start with #1.

Good morning. My name is Daniel Goche from Ottawa. I'm a recent Fairfax company shareholder in Fairfax India as well and Helios Fairfax Partners so the Fairfax Trifecta. Thank you, Prem and Peter for a great presentation.

Congratulations on a phenomenal 40 years and having the best year once again in Fairfax's history. I would like to make the most of this opportunity to ask you a three-part question. What are you most grateful about in your company track record as you mentioned, your shareholder letter in your presentation, the fact that booked value and share price have historically compounded close to 20% annually, which is phenomenal, sitting on -- and long-term shareholders are sitting on a gain of around 800x since your IPO. The fact that an employee earning $40,000 per year who had participated fully near share employee purchase program would have accumulated more than 4,000 shares of Fairfax worth $10.7 million at the end of 2025 or the fact that since you began your donations program, you have made donations totaling more than $0.5 billion to numerous charity supporting communities worldwide. You are blessed and you're blessing others, well done indeed.

The second part of my question is regarding your investment strategy. You said that you'd like to buy $1 for $0.50 as a value investor, and the shares of Helios Fairfax Partners formerly Fairfax Africa are currently trading below 50% of book value. Have you considered for capital deployment purposes to increase your ownership in the Helios? And you've said in your shareholder letter that Eurobank is by far the best investment you've had in 40 years. Kindly, can you please tell us about -- a little bit more about your investment strategy, how you can find and invest in the next Eurobank.

And finally, during my younger years, I had the privilege of serving on the Board of Directors of the Writing Association, of former Prime Minister, Paul Martin. So I'm compelled to ask you this political question on political economy. Where or which countries are you the most bullish on the current economic prospects and investment opportunities? Here at home with Prime Minister Carney, former Central banker, who recently achieved a majority government this weekend, is committed to spending billions of dollars for building Canada stronger or in the United States with President Donald Trump ushering in a golden age or under Prime Minister Modi with the growing prosperity and economic growth in India or perhaps another region or country in the world that you would like to share?

Daniel, thank you, you've given us enough question to last the whole meeting.

First of all, a warm welcome to our shareholder meeting and to become a shareholder. Your first question, what really makes me grateful. We wanted to be begin by wanting to build a good company. Ricky Salsberg who's now with the Good Lord, we wanted to build a good company, that's what we are focused on. After 40 years, I'm biased, I think we have a very good company, and we have a great culture. All of these people will talk about that culture with you as and when you have a moment, we've got a terrific culture across all our companies. And that's what I'm really grateful for. Peter, would you add to that? Anything that you want to add? .

No, I think that's -- that sums it up. The culture, the return, it all comes together and...

And all the other things that you added about the return, but the culture is very important. And the culture is the moat. That's why after I'm gone, Peter is going to be taking over, it will continue. And it's all within all our presidents have the same opinion of culture. I said last -- yesterday, at dinner time when I said to our shareholders that people want to be good people. And they don't want to fire people that are friends and they're sensitive to people and their jobs and their families and so, and we found that. And you can do that and still get 19.5% compounded over 40 years. right? You can be a good company, a good citizen of the world.

Second thing that you said with the investments, Helios, we look at all of that. Helios is run by two terrific guys [indiscernible] at Babar and we are a big friend of them, and we'll consider all the possibilities.

The third one, Eurobank. The third one is very interesting, and I think it's -- I'll ask you answer your fourth one, and then I'm going to ask to [indiscernible] talk about Eurobank. We have them here, and so we'll ask him to say a few words.

But on when I travel, like I'm 75, going to be 76, have traveled a whole bunch of places. Business-friendly policies work. And Countries Greece was very socialistic and then the Prime Minister who is now serving a second term became business-friendly and Greece is flying. right? Good example.

India was socialistic for 67 years, 67 years killed a country. That's one of the reasons I asked me to come to Canada, in 1972. But so we have to be worried about socialism and we have to be worried about giving before we earn. So our book is called doing good by doing well, you're going to do well. Like how do we give $90 million for charity if we -- the whole company never made $1 million. You make $4.8 billion, you can give $90 million. So we're very focused on that. I'm a big believer in free enterprise, lack of regulation, Daniel, lack of put the taxes down, give people the freedom. We have the [indiscernible] we celebrated our success, and Canada has got tons of success from very humble beginnings, have gone to the United States, on the weekend for [indiscernible] in the United States so inspiring to see so many people who've done well come from very humble beginnings. And so I look at -- and in Canada and the United States they have gone together for 200 years. They been friends, brothers, sisters all working together. 60% of our business is in the U.S. We've got some of the finest people working in the United States in our company. And so we think all of these that will -- differences will get sorted out over time.

And in fact, Mr. [indiscernible] said a long time ago, 50 years ago, 40 years ago, we were so frightened about what was happening -- and there were so many bad things that were happening. He said, and he thought we wouldn't survive and long behold now we're like 40 years since that time. So these things will change. This too will pass that expression. And coming to Canada, I'm a big fan of Canada. We created a -- Canada has got a wonderful country, but we did create a [indiscernible] University, we created a center for free enterprise, and we really want to push free enterprise across Canada. Education, pods showing how people have come from nothing. And we've got about 35, 36 members on the way to 100 members because you have to hear and see about the journey. So we're going to do that. It opens in May.

But let me just ask [indiscernible], why don't you give us a little -- he's talked about his strategy for 3 -- he's got a strategy for 3 years. He's laid it out publicly. And -- but give them a nice round of applause. We've done a fantastic...

Thank you all, and thank you, Prem, and let me also thank you for your statement that Eurobank has been by far the best investment that Fairfax had over 40 years. Obviously, this is a great honor but the big responsibility for everyone at Eurobank. It is true that we had some tough times, but thanks for the support of Fairfax your long-term commitment and all the initiatives at the management of Eurobank too, we got really positive results. And indeed, 2025 marked another strong year for Eurobank.

If you remember, last year at this annual meeting, I said that we commit on return on equity of about 15%. Actually, last year, we delivered instead of 15%, closed EUR 1.4 billion bottom line. Earnings per share of EUR 0.37. And we are paying a cash dividend, which is increased versus last year by 13%, and we're about to approve a new share buyback program close to EUR 300 million. At the same time, we are further enhancing the business model of the group. We source about 50% of our revenues out of Greece, 35% out of Cyprus, 15% in Bulgaria. Our banking segment is experiencing a very strong growth with loans increasing by more than 12% in 2025. The Wealth Management business is also advancing quite well, evidenced by 30% increase in assets under management, and also our footprint in Life Insurance is increasing, thanks to the acquisitions that we have done in Cyprus, we acquired the largest insurance there, and also the acquisition of the Life Component of EuroLife in Greece, which is enhancing further our footprint in this country.

Now as you said, we recently presented our 3-year plan for the year's '26, '27, '28, in which we anticipate a further increase of our return on equity to 17% by 2028. Earnings per share growth about 10% per annum on average for the 3-year period. And we anticipate to distribute to our shareholders more than 55% of our earnings through cash dividend and also share buybacks. So overall, and without underestimating the fact that we live in a very volatile world. We may experience one of the most serious energy crisis of the last decade. I remain very optimistic about the growth prospects of Eurobank across our three countries: Greece, Cyprus and Bulgaria and across all our business segments.

And one last point that I would like to share with you. Eurobank is actively promoting the concept, the idea that Greece and, to a greater extent, Cyprus, may act as strategic ways for Indian companies that would like to expand their businesses, their products, their services across the EU. So in this context, the in the office of Eurobank is scheduled to be inaugurated in about 1 month from today in the presence of the President of the Republic of Cyprus. We spend an official visit to India around that time. And this event is going to receive a number of business announcements for which I would like to thank Fairfax for help and especially Fairfax Digital, the Chairman and the CEO of Fairfax Digital, my friend [indiscernible]. Thank you for that. And thank you for all the support to this journey.

Thank you very much [indiscernible]. Great performance. Number two, if you don't mind.

Good morning, Mr. Chairman. Thank you so much for being a capitalist with compassion and showing us all how it's done when capitalism gets a really bad rep. My name is Ashwin [indiscernible] and I come from Waterloo. My question is about the elephant in the room, AI. What is Fairfax AI strategy? I understand it's a [indiscernible] life company. But -- how is it going to affect Fairfax's and customers? How is it going to affect the business itself? How is it going to affect our shareholders? And the broader question is, I use AI every day, and I see the capabilities of this technology. It seems straight out of Sci-Fi. I'm concerned that a lot of people might lose jobs, and this is going to affect the overall economy and society stability even. So where do you think all of this is going to go

So that's a really good question. Let's speak into the one person doesn't know too much about technology. But I do use AI and having lived for a long time, and we had the Internet and when it came and there was also predictions made and ultimately, the economy somehow generates job. So I don't see a major -- if a job is -- you lose a job here, you get another job elsewhere. But we'll answer that question when Brian Young talks about our Insurance business. We'll -- he'll tell you how we are approaching AI. So thank you very much for your question, and welcome for our meeting. Number 3?

Akash from London, England. I found Fairfax only 2 years ago, unfortunately, like a lot more here, I've owned it for much longer, but they are better late than never. And -- but it gave me the opportunity to read your shareholder letters for the last few decades, 25 years in a row like a book. And I fell in love with Fairfax, and your exclamation marks.

The only thing that Rick Salsberg couldn't take out exclamation mark every day.

They were lovely. And it was a great experience and gave me a lot of conviction about the future. My question was actually going to be about AI. So now I have to think of something on the fly. But I was with talking to the team members yesterday, and it was about the TRS. And the question was, when you with the TRS versus the buyback, how would you think of when you closed the TRS, would you think of buying it back? Or would you close it down just by selling it?

We look at all options. But Peter, you have looked at the TRS. Why don't you give them a little -- Peter is right on top of all of that stuff.

Yes, the TRS, really, we treat it as an investment back a number of years ago, we bought approximately, I think, 2 million shares. We've taken a bit of the TRS off. It's 1.8 million shares today. But we're always evaluating it comes into -- when we look at our capital and we've been buying back our shares, like I said, bought back outright about 1 million shares last year, just over $1.6 billion. And as long as we keep thinking -- we think the Fairfax shares that are undervalued, they'll do well. We'll continue to hold our TRS. As it goes up, we'll take some off for exposure purposes, but we treat it like one of our other investments essentially.

Akash, one advantage we have is the TRS as Peter was saying, we can acquire them. We have some time. But we can use our money to go and buy shares in a marketplace where there's no option right, we're going to buy them. So he looks at both of those things before we -- as you said. So thank you very much, Akash. Number 4?

Good morning, Peter, and Prem. Charles Fisher from Seattle.

Nice to see you, Charles. Always good to see you.

Thank you, Prem. I wanted to thank you both organization for just what's become a fantastic week in Toronto. People are coming now on Sunday, Monday, there's great meetings. You guys organized lovely meetings. It's a fantastic week, the best week in North America as far as I'm concerned for any shareholder meeting.

I've been paying you, Charles.

I do have a concession to make, Prem. I'm cheating on you. Fairfax is only my second largest holding. I have another holding in a big spectrum company called NextNav which will have a resolution shortly, and I promise to put a chunk of those proceeds into Fairfax to make it fully my largest position. I also have gotten to know the folks at [indiscernible], Adam and his Kids Connor and Reily very well. And I really like them very much, and I was wondering if you had some comments that you'd like to make [indiscernible].

So [indiscernible] is run by Adam [indiscernible], Strathcona is the first investment that he made. And approximately $100 million that we put in. We've got that back in a dividend. He paid us a $10 dividend. We've got that back. And the [indiscernible] position is worth about $400 million. So we got our capital back and its $400 million, is now working on Green Fire. We've -- we're investing with them, just happened.

And Adam's annual report on [indiscernible] for [indiscernible] company one of the best annual reports I've read about the oil business. I recommend all of you reading it, and I recommend Strathcona and GreenFire for the long-term investors. So thank you. Thank you very much. So we go on to number 5. Jeff

Peter. Our first question is about the current insurance environment. The question is as follows. Fairfax had record underwriting profits in 2025 of $1.8 billion and achieved its objective of $1.5 billion. You commented, however, in your shareholder letter, the insurance pricing is beginning to soften. I would appreciate hearing any additional comments you might have about the current insurance underwriting environment. And specifically, do you think that Fairfax can still achieve its $1.5 billion underwriting profit target in a soft insurance market

So thank you, Jeff. And usually, Peter will answer this, but we do have Andy Barnard and Brian Young and Lu and Silvy.So we'll ask them that. And as Andy makes his way up to speak, let me just say that yesterday, I said people ask me, what is the biggest -- best acquisition you've made? And I say the best one is Macau, the first one because otherwise, you're not in the game. And so I mentioned that and I said the second best was a company, a small little company called Skandia. And why?

Because I had to get someone to run Scandia, and I went to New York three times and to get Andy Bernard and [indiscernible] time he said, "You got to be kidding me. He said, first dinner, I'm not going to leave this transatlantic to come and join a run-off company called Scandia. That's how it began. Second and third, and ultimately, we were fortunate to get him 30 years ago, and he's had a huge impact on Fairfax. In 2011 I said to him, as I told -- of you know, to all of the insurance company reports to him. And I think he came here and said, at that time, almost, what, 15 years ago said that he would hope that the insurance business will have the same reputation of being fantastic like the investment business that we want. And the investment business did a little less well, and the insurance business has done fabulously well. Andy, over to you. Come on in.

Thank you very much, Brent, for all of that. I'm going to let Brian and the others talk about our sort of our position, the market, our prospects. I thought -- as Prem mentioned, I've been in this role now for 15 years, and I thought I'd just give a little brief broad perspective on how I look back on that.

And so I divide that 15 years, which started in 2011 into two periods. First, 2011 up to 2019. And I really look back in some of this benefit of hindsight, of course, this was a period of preparation. We added during that period, Allied World and Brit too very powerful new platforms capabilities that really build out our suite of products. We had Allied, we had Crum & Forrester, bolstering its capabilities. We had a few small acquisitions. We added to what Crum we're capable of. Northbridge earlier on in that time. It finished its integration, which really positioned it as a much stronger company. And of course, during this time, Odyssey and Zenith flourished during most of that time, a few tough years at the beginning for Zenith, but over the course of time, the -- both those companies were doing very well. And then, of course, we built out that International operation during the latter part of that first period. As Peter mentioned, how significant that has become and what we think that's going to do for us in the future.

So this was really a period of preparation that brought us up to -- when we get to 2020 across Fairfax across our companies, we now had in place excellent leaders leaders that are fully aligned with Fairfax culture, then body the trust, the transparency, the talent that without which our decentralized system could not function. And so all that's in place as we roll into 2020, of course, the big thing at the start of the year was the pandemic. A lot of companies heading for the hills, a lot of uncertainty. Plus we had a very attractive hard market. that had already been underway and was gathering for us and I think the pandemic just accelerated. So we were at that time in just a unique position because of our structure, our capability, our leadership to thrive and thrive, we did.

Over the next years, as we go into the second period, 2020 up through 2025. Peter talked about some of this, he's going back to 2017. But if I look from 2020, we virtually doubled our premium volume, and almost all of that was organic with the one exception of GIG, but the vast majority of that growth was all organic, driven by our companies by their leaderships, by their management teams. And more importantly than that, our underwriting profit over that period more than quadrupled. And so this is where we really came into our heyday.

Today, to 2026, we're recognized as an underwriting powerhouse in the industry by the marketplace, by the rating agencies, we had huge increases in our ratings over the last year, 1.5 years. And so we've really -- again, looking back on it all over that 15 years with the benefit of hindsight, we just positioned ourselves so favorably to really take off when the market conditions were supportive of that strategy. So I believe that what we built is -- is built to last. It is built to withstand the pressures of the market cycle that those who follow the industry, you know that we're in a softening cycle, things become more challenging, but we're very confident about our capabilities about our management abilities to navigate through some more challenging times and to sustain superior performance as we go off into the future from here.

So I personally -- I've been in this industry now for close to 50 years. I've been at Fairfax for 30 years. I'm not going anywhere quite yet. However, my good friend and partner of the last 36 years, Brian Young, is taking on a larger and larger share of the oversight responsibilities in Fairfax. Those of you who have followed Odyssey, particularly from the time, Brian took the helm in 2011. It's very clear that Brian is someone that knows how to make money in this business. And so I think our future is very, very bright as we move forward from here. So let me turn the microphone over to my friend, Brian Young.

Thank you, Andy. I learned some big news a few minutes ago. Andy told me that he is going to be a grandfather for the third time. So big hand, Andy.

But I will cover the AI question and the current market environment, our ability to generate an underwriting profit in the current environment. But first, just highlights for 2025, as Peter mentioned, actually $1.82 billion of underwriting profit in 2025, fractionally higher than $1.79 billion in 2024. Combined ratio of 93%. Embedded in that was 4.8 points of CAT loss the $1.2 billion that Peter mentioned, the biggest being the California wildfires in Q1.

Within the 93%, we benefited from 2.9 points of favorable reserve development. And it's important to note that Fairfax has had 19 consecutive years of favorable reserve development for the last 2 decades. Our reserves have been a store of value. And as you all know, we are really focused. All of our companies are focused on disciplined underwriting and strong reserving, prudent reserving is really foundational to disciplined underwriting. Most of our -- we have more than 30 operating companies. Nearly all of them equal or exceeded expectations from an underwriting perspective in 2025. The small number that didn't we weren't expecting them to make underwriting profits given the market circumstances that they faced. So there were no negative surprises in really any of our companies I'd like to highlight a few standout performers, focused first on the big companies, and let's start with the recent -- the most recent recipient of the Athapan Award, Allied World, our largest company generating record underwriting profits of $546 million, a fantastic result. Congratulations, Lou and to the team, and I'm going to let Lou come up and tell us what the secret sauce is that's made Allied so successful.

The second company I'd like to highlight, last year's recipient of the Athapan Award Northbridge. Silvy and team delivered the lowest combined ratio, 88.3% of all our big companies in the last 4 out of 5 years, Northbridge has delivered a combined ratio below 90%. And Silvy will come up after Lou and give us an update on Northbridge.

Turning to the international side. We generated $220 million of underwriting profit, more than double that we generated in 2024, standout performers [indiscernible] bright Singapore Re, all generated record underwriting profits. Singapore Re, headed by [ Philippe Mellier ], had not only the lowest combined ratio on the international side, they had the lowest combined ratio of all of our companies at 77%, well done Philippe.

Our premium $33.3 billion, it's slowing down. The market is getting more challenging, no doubt. And we have to exercise more discipline. We have to be more selective in the risks that we take. We have to focus on our line size deployment. But we still think there's opportunity out there in the market. The sectors of the business that are under the most pressure are the ones that have generated the most profit. So yes, the margins are shrinking, but we still think their margins and when the margins are not there when that margin of safety we need to take on the volatility of insurance, then we're going to scale back. There's no pressure on any of our companies to write for profit. And I've experienced that at Odyssey working there for 28 years, leading it from 14 never did I or any of our people have any pressure to write for top line.

On the question of AI, it's important in our decentralized structure, innovation comes from the ground. It can't be forced from the top down. And we've got 30-plus wonderful businesses. Everyone is focused. AI may well be very transformative, and we're -- we want to be -- we're not at the cutting edge, and we don't really want to be in the cutting edge. I mean we're where we think we need to be in the pack with the rest of the insurance industry. But to understand and take advantage of the innovative things that we're doing at the company level, we formed an AI working group, across the Fairfax organization, and we have more than 75 people participating in the working group, we have more than 100 use cases that we've developed. We have a SharePoint site. So if we develop a use case in a company in a certain part of the world, we can share that with the other companies through the forum through the SharePoint site.

In terms of the AI use cases, most of them have really been focused on improving process, doing things faster and smarter trying to underwrite more business efficiently through the use of AI, using AI to inform our underwriting decisions. So really, I would say if you were to look at it, and Mark [indiscernible] used the phrase I think it's great does AI bang the cash register, does it lower your loss ratio, does it lower your expense ratio? I would say right now it really focuses more on -- we're not banging the cash register yet as yet other than the fact with AI, we are able to underwrite more business using the tool than previously. But lowering the loss ratio, lowering the expense ratio in terms of the AI tools that we're using, that's really the focus.

And I think lastly, it's really important to say, and Prem has emphasized it ad nauseam that AI will not cost us any jobs. We don't believe in laying off employees period. And that includes AI. It may result if AI allows us to operate more efficiently then maybe the rate of growth in our employee count will slow down, which will help the expense ratio. But it won't come at the expense of people. Thank you. Maybe now I can turn it over to Lou.

Thank you, Brian. Great to see everybody. It's good to see so many of you, only get to see once a year and talk about our businesses here at Fairfax and at Allied. And it's also not every day that I feel like Allied World has won the Stanley Cup. So we're really proud of that as well.

Brian mentioned our underwriting profit. We did have a record year last year on underwriting profit. We also had a high watermark on our net income. And I just want -- I want to recognize the investment group at Fairfax, who does a tremendous job on our portfolio. Having that type of net income really helps our cash flow and everything else. So it's really, really good to see. So we grew our company to $7.4 billion last year. And Brian talked about the market a bit. It is softening some. I would say it's very -- getting a little bit more price competitive. But for those of you who've been with our industry for a long time, it's not a traditional soft market. We're not bottoming out, right?

So terms and conditions are holding pretty well. Combined ratios don't have so much pressure on them, still manage the profitability. And so when you look at that, you say, well, there are opportunities around the world to be able to get some growth right? So we're not giving up on that because I think there are certainly some opportunities. So what I wanted to talk about just for a couple of minutes is what are some of the things that we do to help us manage the cycle, right?

Because we feel like we've built a company that could perform in all segments of the cycle. And in order for that to happen, we have to execute on many strategies every single day. Right? So the company has to be structured in a way to give us that ability. So there are a couple of things in there. And I think the first thing to talk about is the structure of having a very flat organization. And I think you see that elsewhere in Fairfax, but at Allied, we have a very flat organization. We don't have many layers. So strategies and communication moves quickly. This gives us the opportunity to move fast in different marketplaces around the world. So as the markets change, we can change strategies. We can execute on those strategies.

Our underwriters are at the desk since there's not lots of layers. They don't have to get multiple sign-offs to do their job to able to make a decision. We run with the mantra of hire really great people. give them the authority and accountability to be able to get the job done. Now additionally, we have over 40 products. We are in 29 offices around the world, and that's growing. We're expanding our presence around the world geographically, which really gives us lots of diversity. And so the product diversity that we have, and we're also -- we're in 11 countries, and we're in 4 continents. So the earnings stream is very diverse. And when we have that type of diverse earnings stream it really limits earnings volatility. So when the market starts to get a little bit tougher, it's really helpful to have different earnings streams because you may have to slow some down, right?

If you're not getting the marketplace that you like in a certain product or a certain country, you're going to have to slow that down, but maybe there's an opportunity someplace else. So the diverse earnings stream is really very helpful. And I think you see that throughout Fairfax as well.

The third thing that I would touch on is underwriting discipline, right? Underwriting discipline helps in every marketplace, whether it's a hard market, soft market in the middle. It's extremely important. It runs through every Fairfax company. It's part of the culture of Fairfax. So our underwriters -- now what does that mean really? Our underwriters understand rate adequacy, they understand when they're negotiating a deal, where that rate crosses the line to not being enough for the exposure that they're taking on. When we run into that situation, we have the ability to say no, which we say no a lot more than we say yes.

But what we really prefer to do is to say, "No, we don't like the deal that way, but we do like it this other way, right? And we'll put a proposal out that works for us, and we hope works for the client. And we've been able to do business like that and sell deals like that fairly often, even in this marketplace when things are getting just a little bit softer. So that's been very helpful. Now nothing works without great people. And every year, I come up here, and I think I talk about how great the people are at Ally. We've had people with us for a very long period of time. They've seen all different cycles, so they understand how to manage in the different cycles and through the different cycles. And we have a very low attrition rate at the company. So our people are really the key to making all the strategies work. And so for us, we're going to continue to do the things that we're good at. As the markets soften some, we're going to limit our mistakes so that when the market does get to a better place, we could do all the things that Andy talked about that we did a couple of years ago and not have any distractions. So thank you very much, everybody. Have a great day.

Thank you, low. Good morning, everyone. First, I'll start with a little concession to Lou. Northbridge employees wanted to do a Rory [indiscernible] macro repeat, but we are happy that Allied World has won the cup this year.

So a little perspective on Canada, just sort of Northbridge Financial represents the Canadian insurance operations for Fairfax. $3.4 billion in revenue, and we're the third largest commercial insurer in Canada. We have a very good position, maybe a smaller fish at the Fairfax but a bigger fish in this country. So what happens -- so market conditions? What happened in '25, as Lou said, the price competition really started to ramp up. And we're starting to see competitors trying to buy business. And sorry, I apologize for being a broken record, but once again, we are not pressured to write premium at a loss. And so with that in 2025, our employees did the right thing. They remained disciplined, not only in underwriting but claims and expense management. But equally important is we doubled down on really focusing on customer loyalty customer service and customer safety. So not only are there when things go wrong, but we're trying to help our customers have a safer operations.

And so with that, we did not grow in 2025. However, we have our record year, as Brian noted. So with that, 2026, it looks like the price competition continues and we will manage accordingly. And along with just being disciplined, we're also looking at building areas where we can grow when it's the right time to grow, for instance, increasing our lines on renewable energy in Canada. So just manage the market and then be ready to go when it's time. And just one little comment. We talked about the culture and of course, many times and the beautiful word of being empowered not just at the president level, but throughout the company. And I just wanted to share with you that our employees are like you, they're shareholders. Over 70% of our employees at Northbridge are shareholders. So not only are they empowered but they're owners in doing the right thing. Thank you.

Thank you very much Silvy. Peter, anything to add, final words on the insurance industry.

Sure. Just two quick things, Prem. And I mentioned in my remarks that we write $33 billion of premium across the world and that grew by 2.3% this year. But I was looking at it, and it's interesting when you look at the international operations and how we benefit from diversification scale, is bright in South Africa. They grew 20% this year. Colonade 18%, Asia was up 15% and Polish Re was up 15%. And -- so even though North America rates are coming down, we're maybe not growing as much, we have all these opportunities around the world. And then just secondly, I just have to comment that we have 2 cups in Fairfax One is the Mr. Athapan Cup. And we also have a hockey game between the Fairfax head office and the Allied Group, and unfortunately, now Allied owns both cups for this year and I have to say it did come into the evaluation process a bit, but we left that aside.

And I happen to be the coach of the hockey team and the holding company. We're coming out to you.

Okay. So we go on to number one.

Yes. Hello. My name is Angela, I just finished my HBA to your IVY, and I wanted to extend appreciation to Prem for all the support you offer institution and with the values [indiscernible]. My question is simple. I was wondering if you could speak a little more closely about specific metrics or benchmarks used to hedge against climate-related underwriting exposure?

Peter, you want to add that question, Peter?

Sure. No. As we said before, obviously, insurance, we protect people against catastrophes and we write a lot of catastrophe business, and climate is a big part of that. So for us, that's what we view as a service we provide our clients, and we take that very seriously. But -- the other side of that is we have to manage our exposures. And I think we talk about that a lot. We have a lot of internal limits we have. We ensure that each 1 of our companies manage their catastrophe exposure within the capital that they have at their level. And they look at total limits exposed. They look at PMLs. They work with their clients to reduce exposure.

And then we protect ourselves through reinsurance. But bottom line is we manage it at the company level. We aggregated at the Fairfax level. That's one thing we do do. We look at our total exposure Today, when we look at -- we look at it like a one in 250 PML, so that's every 1 in 250 years, what would be your expected loss. Today, that's around $3.4 billion, $3.5 billion, well within our $4 billion. That was never in the past, would we say our 1 in 250 was manageable within our net earnings. Today and especially over the last number of years, it is. So we're quite comfortable with that. And but it's a very important product that we offer to our clients, and we take it very seriously. Thank you for your question.

Thank you for your question, Angela. And just to add to what he says, there's limits in our business. So we -- mainly our exposure comes from reinsurance and we look at those limits, and we make sure that as Peter was saying, within 15% of the company's shareholders' equity capital. And never forget there's always price. The price of property exposure now cats coming down. But when the price is up, that takes all of those possibilities into account, and that's when we expand that we have expanded in the past. So price and limits. But thank you for your question, number two.

I'm Paul Durnan from Burlington. I read in the Globe Mail today, an article that disturbed me, Bombardier Recreational Products is taking a $500 million write-down on tariffs, steel, aluminum, copper, and revised totally their 2027 outlook and the stock price went down quite sharply. Maybe you can't look forward to precise numbers, but I'm scared based on that one alone. How is the future going to unfold for this whole country?

Well, those tariffs are important. And we've got two companies. We've got Sleep Country, 40% market share, mattresses across Canada, 40% market share. And they are getting a lot of stuff from all over the world. But they've been able to get some concessions from the suppliers, some they pass on. They had record profits in 2025. And lot of tariffs.

And another one is [indiscernible] Skates, which is skates and Hockey skates, have 50% market share across the world in that case, and we get, again, all sorts of purchases from different countries, tariffs, but they will get supply concessions and pass on some of the costs, and long story short record profits in Bauer. So you're able to navigate as a business -- that doesn't stand still and say the tariffs have gone up. Whoa its May. No, you negotiate, you figure out what happens. And that's happening and I speak to a lot of companies in Canada. A lot of companies have done that the same thing. And we are able to face those tariffs and succeed. You want to add?

Yes. Like okay, I'm not -- do you want -- I want to stretch this out to be broader than just the companies that you are involved in, generally, all across Canada, I'm concerned about this matter.

No, I think it's a good concern. But the people I talk to who run companies, they've faced these situations before. There's all sorts of hurdles that you face in business. COVID, imagine COVID business stopped, you couldn't -- our sales went to zero in many industries, and you have to survive that. And so these are things that companies have to work out we're just one example of that. But your concern is valid. And thank you for bringing it to our attention.

Number 3?

Prem, it's Jason from Thunder Bay, Peter Hi, as well. I have to admit, I'm a bit sleepy this morning. Part of that because Brian Bradstreet was with us until 11:00 p.m. after the dinner yesterday. And he was mostly talking about his views on currency debasement, really foreseeing that politicians will continue to inflate away debt to GDP in the U.S. is now past the peak of World War II. So maybe you could just give us some color on how you see the massive debts every Western government has right now, how we get out of it and gold as well?

Well, that's one of the reasons we're not gold box, but one of the reasons people like gold, the fact that currency debasement taking place. We really don't have much to add on that. The fact is there's a huge amount of debt. The fact is that the United States has $2 trillion to -- the deficit is about 6% of GDP, huge. But they've got a whole bunch of revenue coming in with the tariffs that most of us don't like, but there's tariffs coming in. And so we have to wait and see what happens. There's two major problems.

One is the markets are high. I talked about NVIDIA. NVIDIA had last night at our shareholders and NVIDIA had net income 3 years ago of $8 billion. That's $8 billion, 3 years ago. 2025, something like $117 billion, like massive net income, that's not revenue. And then it sells at about 33x whatever types of earnings, right? So a huge PE on earnings that have skyrocketed. This happened before. It's happened with the -- in the 2000s with the digital stuff that came in with the network Internet companies. And for history's sake, Microsoft was $60 in 2003 years later, it was down 75%. We couldn't see it. High PE, all of the things that happened here. And then if you go further back, you the [indiscernible] same sort of thing.

So you have one risk as the markets are high. There's lots of individuals in the stock market your friends are all in the stock market. They're buying stock, they are trading stock, they're buying options. They're trying to make money in the short term. The other side is the potential that the United States will be very strong potential, that, that productivity is going to be very high, that the deficits are going to come down. For example, if the economy in the United States, I think the -- all the projections are based on 1.5% economic growth for 10 years. But if it goes when 1% more, that eliminates the deficit, that's how sensitive it is.

If the GDP grows by 1% more, so instead of 1.5% goes to 2.5% the deficit goes. So lots of pluses and minuses. The bottom line that you have to be cautious, very careful, which is what we are careful, careful, careful because the war in Iran anything can happen. So that's how we're looking at it being very cautious. We've got government bonds 3 to 4 years, not 10 years, 3 or 4 years. And any of us talking investments are very well financed and very strong. But your concerns are well taken. And Brian [indiscernible] been with us for 50 years. And he is someone you should listen to. So thank you for your question, and we go on to #4.

My name is Ernest Wang from Toronto. I'm a relatively new shareholder. So looking forward to learn more about the culture as I become a longer-term shareholder. I wanted to ask the AI question from an insurance perspective. Fairfax is a meaningful underwriter of cyber insurance. And as we are seeing with developments in AI, such as Mythos last week, -- we are really in unchartered territories. So how is Fairfax -- how are these types of events in AI in general changing the wafer fax looks at its cyber exposure in the underwriting business?

And you heard Brian talk about it. Cyber is a great example. When we were expanding, the price was way many, many people didn't want to write the business. And we had about 3 or 4 companies [indiscernible] it and and we did very well. But now the competition is coming in, prices are coming down, and we've got less exposure. But we're very sensitive about that. Peter, you want to add to it?

Yes. And we have exposure to that in two ways where we have the exposure on ourselves being attacked. And we're doing a lot of work on that as well right for us the group that we're ensuring that we have best practices in place, 24 hours surveillance, et cetera, et cetera. So that's a real focus of Fairfax, and then we do right cyber, as Prem said, it's come down the last number of years, and all of our companies are working on it. They manage it through limits, through reinsurance and exclusions. So as AI progresses, it's coming quickly, but rest assured, they're working on it. And it's an industry issue, and they're on top of it.

And I have a second question. You highlighted that Fairfax's private credit exposure was quite limited. Do you view this as -- however, many other insurance companies have invested heavily into private credit -- so do you view this as a potential issue going down the road?

Definitely do. Anything that is everybody tries -- private credit has gone through the roof. Most of this private credit is for PE firms. So a private equity firm buys a company leverages maybe 7x, 8x to equity. And then send something else to private credit. Private credit that has finance this. It's not financing a company like ours, for example, right? So there's a lot of risk and the ratings are from companies that are very new and perhaps not -- you don't get S&P rating this stuff.

And so I've seen it before, private credit, private equity, all of those you have to be careful about. And it's another risk in the marketplace, private credit. And these risks as such, like we saw in the mortgage business, they can -- it's like a fire, they go right through. So we stay away from that. And basically, we -- outside private credit, we have no exposure.

Most of our -- I told you, government bonds. Spreads are very narrow. So it's government bonds. And if you have any bonds that are corporate bonds, it's 1 or 2 years of duration, very good credit, that we are sure we'll get up. Bonds because if interest rates go up and you have corporate bonds that you can come down. So this is another thing that could affect the life insurance companies, particularly but also property casualty companies. And all of these are possibilities that could change the market. The market is going down right now, property casualty market. But if the capital shrinks because they've got private credit or something else, and their capital shrinks, then of course, the market can turn. And for us right now, as Brian has said and Andy have said, we got to be very careful, and that's what we are very disciplined. So thank you for the question. Jeff, number 5?

Next question is about capital allocation. Can you discuss the decision process for determining the size of the annual dividend versus making stock repurchases or holding the capital for other purposes?

Yes. So that's a good question. I mean it's -- we don't have any formula. We give a dividend which I know for a lot of our shareholders is taxable. And it used to be $1 went to $2, $5 and $10, and now it's $15, is less than 10% of our net income, and we are comfortable with that, less than 10%. And -- but our number -- financial [indiscernible] like Peter said, financial soundness is #1. We are focused on that, particularly for some of the things that might happen in the economy. But after that, we want to buy back our shares. And it's if you look at the float of our company, our gross premium and you look at the 40 years and the growth in our premium might be if you look at the growth in up here, it might be -- is in the annual report, but 15%, 16%, 17%. And in the last 5 years, it might be only 10% or 12%.

But then you look at growth per share in gross premiums per share, the fact that we've dropped the shares that Peter was saying, it's pretty close, like per share growth in the float or gross premium certainly goes up to very close to the absolute gross premium growth or the float. And that's what per share does. And we're very focused on per share float and growth in premiums and all of the other things, per shares, not the absolute number doesn't count, it's per share. That's what will affect your share price over time. So that's what we look at. And then we look at there.

The other things that come, Jeff are ones that we don't forecast. I just cover the log. After 40 years, companies want to be partners with us. They're looking to be partners with us. And you won't believe the number of opportunities we get. And quite often, we have to say no, because the price is high or whatever. But we get some very good opportunities to partner with good companies, and that's a big advantage. That's what happens over time. Over 40 years, you get that. We've treated your partners well at behalf. So Jeff, thank you very much. Number one?

Good afternoon, Chair. So I was able to read The Fairfax Way by David Thomas, phenomenal book, would recommend it to anyone. Slightly disappointed that it's on sale now. I paid full price for the hard cover. I could have just bought the [indiscernible].

So I learned a lot about Fairfax from that book. And one of the things that was really special was that you were -- the book said you were really candid about Fairfax's price. You are open and honest about whether the company was undervalued, whether it was overvalued. And you're one of the best capital allocators in this country and maybe even in the world. So right now, what is the intrinsic value of Fairfax? And given all the market conditions, concerns about bubbles, like is Fairfax undervalued, fairly valued or overvalued? Basically, I'm trying to make some money here Mr. Chair.

And you want to do it in a week. No. So we give you all the information and then used to be book value is a great measure. But a lot of our things -- Peter talked about $4 billion, that's not our balance sheet. And a lot of our companies are worth a lot more than book value. The intrinsic value is much higher. But for 40 years, we've never told you what intrinsic value is. That's the work you've got to do and you compare us to everyone else. But the single biggest thing you can do as an investor is to invest in our company, if you want to, but take a long-term view.

Don't look at it every 3 months, 6 months, 9 months go up and down, get excited and you want to sell some and then buys it. Look at it over the long term because compounding takes place over time. And that's the suggestion I'll make for you. But you've already had a good start reading Dave Thomas' book. So thank you for your question. Number two?

Mr. Watsa, my name is Jia. I am individual investor from Toronto. I am a long-term follower of Fairfax, but a recent shareholder. I have a question that might contradict with your annual letter. The company, BlackBerry, they've released earnings last week.

Are bringing me back to BlackBerry?

They released earnings last week, they're impressive. They're EBITDA positive. I know you don't like EBITDA but they're cash flow positive and they're buying back shares. And that's been a trend over the past 3 quarters as well. So my question is, do you think this could be yet another example of patients paying off for Fairfax perhaps we see a slide on BlackBerry in a few years.

I hope it is.

And I have a quick follow-up, and this is what related to the overall stats sector, we see a much more adjustment in the valuation metrics for the Software as a Service company. So -- and Mr. Watsa as a value investor, do you think now is the right time to start evaluating some of the opportunities in the space?

We looked at it and ourselves, we haven't bought any. But I think a lot of them have come down quite a bit. And so we'll consider -- we never talk about what we're going to buy, right? As you expect us not to. But we look at all the possibilities. And I gave you the example of Under Armour, $50 to $5, that got our attention I don't think that's happened yet in some of the companies you're talking about. But thank you for your question. Thank you. Number 3?

I'm Peter Stern from Toronto. One comment on AI. I've got a couple of decades in IT experience. And one thing, if we have any exposure to AI companies, we should pay attention to the intellectual property lawsuits that some of these AI companies are being exposed to, that's something that could become a big problem for these AI companies as I foresee it. My experience is too much garbage and garbage out with AI in my opinion. Now completely separate subject. The Middle East situation, how do you see that playing out? And the infrastructure that you run is bombing. What is our exposure there? And do you see any like opportunities as a result of a bad situation right now potentially getting better eventually, hopefully.

So that's a very good question. We have something called GIG and GIG Gulf. And in total, they are approximately $3 billion in premium. First worry for us was our people. And I'm happy to tell you, we've looked at all our people, and they're all safe. And we've -- with Ukraine, we had the experience of how to protect our people, and we protected them really well. That's point number one.

Point number two, the company continues to do very well. Our losses are very small and far between, war risk is not covered. If that war [indiscernible] exclusions unless you have a specific exposure to war, then you get the premium. But all in all, we think been a very good position. Peter?

Yes. On the insurance side, really, the losses will come through the marine business, aviation, political risk. So we're going to have some losses on that, but we're not big players in those lines of business. And we're only -- we're 6 weeks into this war. So it's hard to tell where it goes from here. And -- but we're paying close attention to it. We'll monitor our risks. That's actually something we're really good at that when there's a risk out there as a group, we look at it, study it stays first, protect our cells, then is there any way that we can take advantage of it. As of right now, there'll be very little effect on our first quarter earnings.

Thank you very much. Number 4?

My name is Aryan, and I am from Toronto, relatively recent shareholder, but a long fan. Throughout this meeting and in general analysis of Fairfax, to me, it seems that the company's success is a product of both the company's structure in terms of both financial values, governance and the company's ability to execute well. As business landscapes evolve due to various factors like tariffs or AI or any other sorts of factors, how do you think about any potential change in decision-making processes at Fairfax? Would there ever be a set of circumstances where you would think that this company should take a more centralized approach or do you think the decentralized approach is one that should stay permanently?

That's a really good question because it's a 40-year. We've gone through all sorts of problems. And we think about that when we have faced a problem, one of our insurance companies used to be Markel Insurance company years ago, and we could easily have said, you know what, we're going to centralize. And we didn't -- and then we had the TIG with another big one. A big plus was we never changed the structure.

All of these years, we've never changed the structure. And what you see is what Andy and Brian and all our company Presidents have said about the empowerment. Unbelievable how that works. And we -- last year, we had a thing on decentralization. We said, Andy, myself, Peter, we put it all together. And we said, sometime long after I'm gone, some bright wizard will come, perhaps like you, you're a young man and say, why don't you centralize all this? You'll save money here and you save $1 billion. That's what we could say.

But what you lose is what you can't qualify. The culture between each company, the empowerment that they get, the fact that many of them will leave, and you see it in the insurance business and you see it in other companies. And so that, in our minds, will never change. That's why we put it in. So that 10 years from now, someone comes with that idea, where he says 2024 annual report. And the decentralization works, our principles will never change. And Peter, would you add to that?

First of all, I'm a huge fan of decentralization as well, and I see the benefits of it. But just as an example, if you go back to 2019, started the hard market, we were writing maybe $16 billion, $15 billion of premium. The hard market hit. And if we were writing as a group $16 billion, we wouldn't have been able to expand like we did. Over the next 3 to 4 years, we grew the premium by 16%, 17% per year because there was 26 companies writing $2 billion, $3 billion, $4 billion on the ground, nimble, ready to react and they were able to double their premium. If that was like one group at the holding company we wouldn't have done it. And I think over that time period, if you look at all the property casualty groups or companies we grew the most out of anyone and took advantage of that. So that's just one example. There's many, many others.

Thank you, Peter. Thank you very much. That is a very good question. We go to number 5?

The next question is about Fairfax's banking investments. With increasing exposure to banking through Eurobank, CIB and CSB Bank, can you comment about how you think about and manage banking sector risk?

Yes. So the credit risk is the biggest risk that you have in in banking. And one of the keys is also not to have any incentive for the top line. And our investments would have none of that. And then -- and like Eurobank is a great example, terrific bank, very private. I say private. When I first met them, I said, how are you compared to the other 3 or 4 banks. They say they are the private bank. So what do you mean, a private bank. As everyone comes at 9:00, we come at 8:00.

Everyone leaves at 4 or 5 and we leave at 6,7,8. And I said, okay, I did that, hard-working group of people who work for a long time. And Brian Porter mentioned to me that the key is the ability to get the deposits, are like our float. And all our banks have that exposure and have that strength. And so we like it. You can see force on talking about 15%, 16%, 17% and paying back 50%, 55% of the profit through dividends and buybacks. So it's a big strength for us, and it's worked out very well. Jeff continues to work out very well. Number one?

It's Anderson from Calgary. Been with you guys as a shareholder since 2003.

22 years. It's a long time.

A little bumpy. Question for Peter. I know that Prem says, he has no plans to retire any time soon. But supposing he did, and you could only talk to him, say, once a week on Saturday morning, what would you still need to consult with them on? And what types of questions -- would you ask?

Well, I guess, first of all, yes, like you said, he's not going anywhere, and we're thankful for that. And my biggest issue is keeping up with Prem. That's the big -- the hardest part of my job, but no, it's been great. Now the company has been set up. I've been here for 28 years. All we have our guiding principles that we follow. Those will never change. And we're in very good alignment on where we want the company to go forward. I take -- I do talk to him most Saturday mornings, by the way, but -- and really look forward to that and the guidance. That guidance obviously is what Prem makes very good decisions. He makes decisions very quickly. And that's something that I respect greatly.

And so those may be a couple whenever.

Whenever I talk to Peter 99.9% the same thing. We talk all the time. And Peter is basically in the company, everyone reports into Peter. And so slowly, but steadily, we are working that through. All the people are reporting to Peter. The investment side comes under Peter, he knows about what's happening on both sides and like I tried to do. And so it's working very well. But 22 years is terrific, and I hope you've held all your shares and that's terrific. That's a really big -- big shareholders who've got very wealthy. And I hope that's the same experience you have. But thank you for your question, number one. And Number 1, number 2 -- and then we go to #3?

Akash again. When studying Fairfax, I was looking at other similar great companies like Berkshire and Markel. And one thing that is different is the investment leverage, which is sort of the investment assets by equity, where Fairfax is at around 3:1, Markel, maybe 2:1 and Berkshire 1:1. So -- and they all have different amounts of equity in their portfolio equity holding. I just wanted to get your sense of what are the puts and takes because of operating with that leverage, maybe a higher leverage, which obviously provides for a higher ROE, but we also know there's no free lunch in finance. And just a separate question, as a big tennis fan myself, I would love to know Prem who's your favorite tennis player.

Djokovic.

The other well, the other question was just on investment leverage. Obviously, we've had an outstanding track record on the investment side. And as I pointed out in our slides, one of the biggest -- one of the biggest things how [indiscernible] Watsa has outperformed the market is protecting on the downside. As you said, in 1987, we made money. We didn't lose money. 2008, 2009. We actually made money while most of the industry lost money. So that investment leverage very -- it's attractive to us. And as long as we continue to invest with a long-term value approach with preserving capital, I think the -- we have no problems with their leverage, and it's been a big part of growing our book value over time.

Well said, Peter and Akash remember, if we hadn't bought how many, 28 to 21 shares, our leverage would be low. So we're buying it because the shares are cheap, not because we're trying to get the leverage up to 3x. And the stock is at above its intrinsic value, for example, we're not going to buy, leverages will be coming down. But now we will look back at these shares that we bought last year and the year before and in the first quarter, you're going to look back and say that, God, they did that. And -- but always, as he said, with our financial position very sound. But thank you for that question. We'll go on to my man, is that a Alan Chan.

Yes. unfortunately.

And how long have you been a shareholder, Alan?

Only 28 years.

28 years, give him a nice round of applause, and he's a young man and he doesn't have to work.

So I have two questions. One is for Prem and other one is for Peter. So Prem, my son wants to be a filmmaker. So when are you going to increase the dividend to...

I don't think you need that, Alan.

So second question for Peter. Since you're in the insurance business, how can you ensure that the stock price will be $5,000 within the year? Thank you.

Thank you. That might be it. It was more of a comment than a question.

I thought you wanted an answer i was worried what Peter was going to say. So it's pretty well, timing is good, 12:00. You got any question here, Jeff, that the last question?

There actually is one last question here that's come in just in the last few minutes online. Question is as follows. You've had exceptional growth in float at Fairfax. At what scale do you believe it becomes difficult to earn the required return on this float? And how do you adapt your investment strategy accordingly?

That's another very good question. A smaller amounts of money are easy to manage the large amounts of money. But in the insurance business, you have a limit as to how much you can put into stocks. So out of that $75 billion portfolio, only about $23 billion, $24 billion, something like that is in common shares and in holdings of companies. And that $23 billion, $24 billion, and you look at the world, we think we still have lots of opportunity. And -- but we have to be careful how you choose and that type of thing. We have big friends in India. India has got a fantastic opportunity because it's going from developing country into a developed country over the next decades.

But we really want to take a moment to thank you all for coming. We look forward to having a little bite with you and the foyer and thanks for all the people who helped with this meeting together. It takes a lot of time and effort. So thank you very much. Very well done boys.

Good morning, and welcome to Fairfax's 2025 Fourth Quarter Results Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Your host for today's call is Peter Clarke with opening remarks from Derek Bulas. Derek, please begin.

Good morning, and welcome to our call to discuss Fairfax's 2025 year-end results. This call may include forward-looking statements. Actual results may differ perhaps materially from those contained in such forward-looking statements as a result of a variety of uncertainties and risk factors, the most foreseeable of which are set out under risk factors in our base shelf prospectus, which has been filed with Canadian securities regulators and is available on SEDAR+. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements, except as required by applicable securities laws.

I'll now turn the call over to our President and COO, Peter Clarke.

Thank you, Derek. Good morning, and welcome to Fairfax's 2025 Fourth Quarter and Year-End Conference Call. I plan to give you some highlights and then pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa to comment on investments; and Amy Sherk, our Chief Financial Officer, to provide some additional financial details.

2025 was the best year in our history. We earned $4.8 billion after taxes, the most ever, with record underwriting income of $1.8 billion and record interest and dividend income of $2.6 billion. We also had strong contributions from investments in associates, our noninsurance consolidated investments and net gains on investments. Operating income from our insurance and reinsurance operations on an undiscounted basis and before risk margin was again very strong at $4.6 billion. We have many sources of income, and they all performed very well this year. Our book value per share increased 20.5% adjusted for our $15 dividend to $1,260, up from $1,060 at December 31, 2024, an increase of approximately $200 per share.

Last year, we purchased for cancellation just over 1 million shares at an average cost of $1,615 per share. At December 31, 2025, there were 20.9 million shares outstanding. And in the first 6 weeks of 2026, we purchased a further 131,000 shares at an average cost of $1,685 per share.

Our insurance and reinsurance companies are in great shape, writing over $33 billion of premium worldwide. We continue to benefit from our scale and diversification through our decentralized insurance operations supported by the deep expertise and long tenure of our presidents and the leadership teams across our insurance and reinsurance businesses.

As we have said before, we can see our consolidated operating income for the next number of years at $5 billion, of course, no guarantees, and this consists of $1.5 billion of underwriting profit, interest and dividend income of $2.5 billion and $1 billion income from our associates and noninsurance consolidated income. On February 17, 2026, it was announced Kennedy Wilson entered into a definitive merger agreement pursuant to which they will be acquired in an all-cash transaction by a consortium led by Bill McMorrow, Chairman and Chief Executive Officer of Kennedy Wilson; certain other senior executives and together with Fairfax. Under the merger agreement, the consortium will acquire all outstanding shares of Kennedy Wilson not already owned by members of the consortium for $10.90 per share in cash. The per share purchase price represents a 46% premium to Kennedy Wilson's unaffective share price as of November 4, 2025. The last trading day prior to Kennedy Wilson receiving and publicly disclosing the consortium's proposal.

Fairfax has committed to provide the consortium with funding up to an aggregate amount of $1.65 billion, which is the amount necessary to fund the cash purchase price and the redemption of certain preferred shares and other expenses. Bill McMorrow will have effective control and will continue to lead and have ultimate responsibility for the company while Fairfax will have a majority economic interest in the company. The transaction is subject to customary closing conditions, including shareholder approvals and is expected to close in the second quarter of 2026.

I will now give you some additional detail on the components of our net earnings for the year. Our investment return for 2025 was outstanding with a return of 9.3%, driven by very stable interest and dividend income and associate earnings and a very strong year on net gains on our equity investments. Consolidated interest and dividend income of $2.6 billion was up $62 million year-over-year, benefiting from a growing investment portfolio offset by lower interest rates and decreased dividend income, primarily from a one-off dividend from Digit Insurance from its IPO in 2024.

Net gains on investments of $3.2 billion for the year, we're one of the highest ever in our history, driven by gains on our equity exposures of $3 billion, unrealized gains on our bond portfolio of $385 million, primarily from U.S. treasuries due to the decrease in interest rates during the year, offset by foreign exchange losses of $440 million, much of which was offset by foreign currency translation gains recorded in other comprehensive income. Net gains of $3 billion on our equity and equity-related holdings were driven by realized gains and unrealized mark-to-market gains on investments with our major contributors being our Fairfax TRS, Orla Mining, a position we sold about half of our common shares or 1/4 of our interest including convertibles and warrants in the fourth quarter.

Also, contributing with CIB Bank and Metlen Energy. We have always said, and please remember, our net gains or losses on investments only makes sense over the long-term and will fluctuate from quarter-to-quarter or for that matter, year-to-year. More on investments from Wade. As mentioned in previous quarters, our book value per share of $1,260 does not include unrealized gains or losses in our equity accounted investments and our consolidated investments, which are not mark-to-market. At the end of the year, the fair value of these securities is in excess of carrying value by $3.1 billion, an unrealized gain position or $150 per share on a pretax basis. This increased from $1.5 billion or $68 per share last year.

In 2025, changes in discount rates resulted in a pretax loss of $59 million, with net gains on bonds of $385 million offset by a loss on net reserves of $444 million. This compares to a pretax loss of $530 million in 2024 with bond losses of $731 million offset by a benefit of $201 million on net reserves. Our insurance and reinsurance businesses wrote $33.3 billion of gross premium in 2025, an all-time high, up 2.3% or $750 million versus 2024. Our North American Insurance segment increased gross premiums by $468 million in 2025 or 5.3%. Crum & Forster had growth of 9.5%, driven by its accident and health business and surplus in specialty lines. Zenith premiums were up 6.5% year-over-year due to positive rate in workers' compensation business, primarily in California, its complementary P&C business and new business in its large account segment.

Northbridge's premiums were down 2.6% in Canadian dollars with planned reductions in its personal lines business and in transportation. Their customer retentions continue to remain strong, benefiting from strong customer service. Our global insurer and reinsurer segment, gross premium was up 2.4%, with gross premiums of $17.6 billion in 2025, up $412 million year-over-year. Brit's gross premium was up 3.8% for the year primarily from Brit Re and growth in high-margin classes, including property, financial lines and marine business. On a net basis, Brit's premium was up 4.2% and retaining a greater share of profitable business.

Allied World was up 3.3% for the year with gross premiums of $7.4 billion, with each of their operating segments growing with the reinsurance segment up 6.5%, its global markets up 4.7% and North American insurance was up 1%. Odyssey Group's premiums were flat in 2025 with gross written premium of $6.3 billion. Its insurance business was down 4.8% principally from targeted decreases at Hudson in its crop and financial lines of business, while reinsurance was up 3.9%, mainly property business, in the United States, including reinstatement premiums from the California wildfires.

Ki, their premium was up 3.8%, primarily on property lines, offset by open market businesses. And our international insurance and reinsurance operations gross premium $6.4 billion in 2025 versus $6.5 billion in 2024. The decline was primarily from Gulf Insurance due to the decrease in health insurance business in its operations in Kuwait. Excluding Gulf Insurance, our international operations premiums were up almost 8%. Fairfax Asia, led by Singapore Re, Colonnade in Eastern Europe, Bryte Insurance in South Africa, our Ukrainian companies, ARX and Universalna and Polish Re all had double-digit growth in the year. A very nice diversified platform that is growing profitably.

Our international operations write a significant amount of premium at $6.4 billion. This is bigger than the whole of Fairfax only 15 years ago. We continue to be excited about the prospects for our international operations, and we expect it will be a significant source of growth over time, driven by excellent management teams that are more and more collaborating among themselves and leveraging the strength of Fairfax.

On the underwriting front, we had a very strong end to the year with a fourth quarter combined ratio of 88.6% producing an underwriting profit of $753 million. Focusing on the full year, our combined ratio was 93.0% on an undiscounted basis, producing record underwriting profit of $1.8 billion. The combined ratio included catastrophe losses of $1.2 billion, adding 4.8 combined ratio points, primarily from the California wildfires in the first quarter of 2025, Hurricane Melissa in the fourth quarter and other attritional losses. This compares to a combined ratio of 92.7%, underwriting profit of just under $1.8 billion and catastrophe losses up 4.5 points in 2024.

As our premium base has expanded and with the benefits of diversification, we expect to be able to absorb significant catastrophe losses within our underlying underwriting profit. For the full year 2025, our global insurers and reinsurers posted a combined ratio of 92.1%, led by Allied World with a combined ratio of 89.3% and an underwriting profit for Allied of $546 million, the largest underwriting profit among all our companies. Odyssey Group had another solid year, producing a combined ratio of 93.8% with underwriting income of $375 million. These results include 11 points of catastrophe losses, primarily from the California wildfire losses in the first quarter of 2025. Of all our company's Odyssey felt the effects of catastrophe losses the most this year, not unexpected.

Brit continues to produce excellent results with $183 million of underwriting profit and a third year in a row of sub-95 combined ratio at 92.7%. Ki had a combined ratio of 95.7% with an underwriting profit of $33 million in its first full year reporting as a separate company from Brit. These results were affected by separation costs of 4.4 combined ratio points excluding these nonrecurring costs, the combined ratio would have been in the low 90s, an excellent year for Ki. Our North American insurers had a combined ratio of 93.8% in 2025, very similar to its combined ratio in 2024.

Northbridge had the lowest combined ratio of all our major companies with an 88.7% and underwriting income of $238 million. Crum & Forster continues to grow profitably with a combined ratio of 94.8% and an all-time record underwriting profit for them at $236 million. Zenith, our workers' compensation specialist had a combined ratio of 102% managing multiple years of price decreases in that line of business, although now trending in the right direction. Our international operations delivered a combined ratio of 94.7% for the year. Fairfax Asia led the way with a combined ratio of 90.3%, led by Singapore Re, offset by elevated combined ratios at Fairfirst in Srilanka that were affected by Cyclone Ditwah late in the year and Falcon Thailand who suffered 2 major catastrophes in the year.

Our operations in South America had an excellent year at 94.5% combined with all its operations producing underwriting profit led by Southbridge in Chile and Fairfax Brazil. Colonnade who write business across Eastern Europe had a great year with underwriting profit of $23 million, more than double the previous year and Polish Re had an excellent year with record underwriting profit and a combined ratio of 94.5%.

Bryte in South Africa, for the second year in a row, posted a combined ratio below 95% at 92.2%. Eurolife's non-life operations in Greece had a small underwriting profit at 100.5%, reflecting a very competitive environment, especially in its motor business. And finally, Gulf insurance was back to underwriting profitability in 2025 with a combined ratio of 96.5% and underwriting profit of $53 million. Our international operations diversified across the globe wrote $6.4 billion of gross premium and produced $219 million of underwriting profit. This is a 5x increase over the last 5 years. You can see why we are very excited about our international operations.

For the year, our insurance and reinsurance companies recorded favorable reserve development of $752 million or a benefit of 2.9 points on our combined ratio. This is compared to $594 million or the benefit of 2.4 points in 2024. This is the 19th consecutive year our insurance and reinsurance operations have had favorable reserve development, amounting over that time period cumulatively to $6.9 billion. We have a strong reserving philosophy and are focused on setting our ongoing reserves at conservative levels, especially on long tail lines of business. Offsetting this, our runoff operations strengthened reserves by $298 million as part of their annual actuarial reserve process. The strengthening related primarily to latent liabilities due to the continued increases in litigation activity.

Through our decentralized operations, our insurance and reinsurance companies continue to thrive writing close to $33 billion in gross premium, producing record underwriting profit and as we've said before, led by our exceptional management team. Our companies are positioned very well to continue capitalizing on their opportunities in their respective markets in 2026.

I will now pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa to comment on our investment.

Thank you, Peter. Good morning. Our investment portfolios ended the quarter at USD 74.9 billion. Of the $74.9 billion, $50 billion was invested in fixed income and $24.9 billion stocks, investment in associates, LPs and preferreds. The $50 billion in fixed income is earning a very nice yield of 5% despite being very short duration and mostly invested in government bonds. We're playing it safe with spreads at lows and uncertainty around inflation numbers, yet earning good money while we do that. We're keeping a close eye on inflation, treasury actions, fed funds rate, GDP growth and corporate profitability, both in the U.S. and globally. If there's one thing our fixed income group has proven is that it has the ability to act quickly when the time is right. It's really a core competitive advantage throughout our investment group. When we feel the time is right, we will act. For now, we're playing it safe in fixed income.

All of our top holdings on the $24.9 billion of equity and equity-like investments had good years in 2025. Eurobank, Atlas, Recipe, Fairfax India, Metlen, Sleep Country, EXCO peak achievements are all in great shape, all earning their cost of capital and all beautifully run by people we like and trust. These top holdings are a very large percentage of our equity and equity-like investments and they're making our jobs easy. We've added a new stock to our portfolios. The company is called Under Armour, headed and run by Kevin Plank. Kevin, as a youth was a college level football player and saw an opportunity to make better athletic wear for under equipment. He started Under Armour in his garage in 1996. By 2001, revenues were $50 million, 2005, they were $280 million and in 2017, the company reached $5 billion in sales, profits every year through 2017.

2017 through 2025 were what we would call the lean years. restructuring charges, new CEOs, lawsuits increased SKUs, lower product prices and lower margins. The stock went from as high as in the $50s to as low as in the $4s. Kevin stepped down as CEO in 2020; and finally, took back the role of CEO in 2024. He is refocusing the company on product development, marketing and brand development and reducing SKUs. This is exactly the right plan for the long run. costly and lumpy, and the stock market sometimes doesn't have the patience for that. We can see that they have the balance sheet, the focus and the discipline to turn the company around. And at Fairfax, we focus on the long run. So the lumpiness creates an opportunity for us to take advantage of. With a founder, we are so excited to have running this business.

Lastly, you will have seen post year-end 2025 we are taking our long-time partner, Kennedy Wilson Private, buying out minority shareholders at $10.90 a share. Three points on this. One, we have had a long-standing and very profitable relationship with Bill McMorrow, Matt Windisch and the team at Kennedy Wilson from mortgages to LP investments to investments in their shares. Two, Kennedy Wilson has world-class capabilities underwriting real estate. Having this capability in-house at Fairfax has a huge long-term benefit for Fairfax shareholders. Three, the cultural fit between Kennedy Wilson and Fairfax is outstanding. Over the last 16 years, we developed a deep-seated friendship built on respect and openness and striving for excellence, all while treating people well. Overall, 2025 was an outstanding year on the investment side and we are in great shape to weather any coming storms and to take advantage of opportunities.

And with that, I will pass it to Amy Sherk, our CFO.

Thank you, Wade. I'll begin my comments by discussing our noninsurance company results in the fourth quarter and full year of 2025. Noninsurance companies reported an operating income of $101 million in the fourth quarter of 2025 compared to $150 million in the fourth quarter of 2024. Operating income of the noninsurance companies increased to $397 million in the full year of 2025 from $241 million in 2024 despite a primarily noncash impairment charge recorded at Boat Rocker Media of $109 million in 2025 before the company deconsolidated Boat Rocker on August 1. The increase in operating income in 2025 primarily reflected the acquisition of Sleep Country on October 1, 2024, and the consolidation of Peak Achievement on December 20, 2024, which recorded operating income of $92 million and $103 million, respectively, in the full year of 2025.

Looking at our share of profit from investments in associates in the first -- in the fourth quarter and full year of 2025, we continue to report strong consolidated share of profit of associates of $252 million in the fourth quarter of 2025 principally related to share of profit of $123 million from Eurobank, $70 million from Poseidon and $34 million from EXCO Resources. In the full year of 2025, consolidated share of profit of associates was $816 million, principally reflecting share of profit of $474 million from Eurobank, $287 million from Poseidon, $55 million from Go Digit and $53 million from EXCO Resources, partially offset by share loss of $65 million from Waterous Fund 3 and $45 million from Fairfax India's investment in Sanmar Chemicals. The decreased share of profit of associates of $816 million in 2025 compared to $956 million in 2024, primarily reflected the company's consolidation of Peak Achievement on December 20, 2024, and its sale of Sigma on March 28, 2025. Peak Achievement and Sigma contributed $57 million and $34 million, respectively, to our share of profit of associates in the full year of 2024.

A few comments on our transactions for the quarter. Pursuant to the company's previously announced proposed sale of its Eurolife Life operations to Eurobank, at December 31, 2025, the company had classified assets of $3.4 billion and liabilities of $3.6 billion related to Eurolife Life operations as held for sale in our consolidated balance sheet. The current estimated pretax gain on closing is approximately $350 million. Prior to closing, the company will purchase certain investments held by the Eurolife Life operations which will affect the game ultimately realized on the sale.

The proposed transactions are subject to entry into definitive agreements and customary closing conditions and are expected to close in the second quarter of 2026. Subsequent to December 31, 2025, on February 5, 2026, AGT filed an amended and restated preliminary prospectus with Canadian Securities regulatory authorities for a proposed CAD 460 million initial public offering and secondary offering of its common shares of $425 million as a treasury issuance and $35 million in the secondary sale with an expected price range between CAD 26 and CAD 30 per common share. Both Fairfax and AGT's CEO are not selling any common shares in the offering. Subsequent to AGT's initial public offering, the company expects to have directly or indirectly an equity interest in AGT of approximately 51% to 53%.

A few words on our IFRS 17 results. The company's consolidated statement of earnings in the fourth quarter and full year of 2025 were also impacted by changes in interest rates and specifically the effects it had on discounting on prior year net losses on claims and our fixed income portfolio. Net earnings of $1.2 billion and $4.8 billion in the fourth quarter and full year of 2025 included a net benefit of only $9 million and a net loss of $59 million, reflecting the effects of changes in interest rates during the quarter and for the full year of 2025. The net benefit in the fourth quarter comprised of a net benefit on insurance contracts and reinsurance contracts held of $42 million and net losses on bonds of $34 million. The net loss for the full year was comprised of a net loss on insurance contracts and reinsurance contracts held of $444 million and net gains on bonds of $385 million.

Comparatively, net earnings of $1.2 billion and $3.9 billion in the fourth quarter and full year of 2024 included net losses of $438 million and $530 million, respectively, reflecting the changes -- the effects of changes in interest rates. The net losses in the fourth quarter and full year of 2024 comprised of net losses on bonds of $1.1 billion and $731 million, partially offset by the net benefits of insurance contracts and reinsurance contracts held of $613 million and $201 million, respectively. When you compare the year-over-year change in interest rates on a pretax basis for the quarter and year, the changes resulted in an approximate $446 million and $471 million positive movement in our pretax earnings. This demonstrates our general expectation that our interest rate risk is now partially mitigated.

I will close with a few comments on our financial condition. Maintaining an emphasis on financial soundness at December 31, 2025, the company held $2.7 billion of cash and investments at the holding company, had access to our $2 billion unsecured revolving credit facility, an additional $2.2 billion at fair value of investments in associates and consolidated noninsurance companies owned by the holding company. Holding company cash and investments support the company's decentralized structure and enable the company to deploy capital efficiently to its insurance and reinsurance companies. At December 31, 2025, the excess of fair value over carrying value of investments in noninsurance associates and market-traded consolidated noninsurance subsidiaries was $3.1 billion compared to $1.5 billion at December 31, 2024, with $1.4 billion of that increase related to an increase in the publicly traded market price of Eurobank.

The pretax excess of $3.1 billion is not reflected in the company's book value per basic share, but is regularly reviewed by management as an indicator of investment performance. The company's total debt to total capital ratio, excluding noninsurance companies, increased to 26.2% at December 31, 2025, compared to 24.8% at December 31, 2024. This primarily reflected increased total debt and redemption of the company's Series E, F, G, H and M preferred shares, partially offset by increased common shareholders' equity. On the redemption of our Canadian dollar-denominated preferred shares in 2025, we recognized a gain of $187 million in equity on the favorable foreign exchange movement.

Common shareholders' equity increased by approximately $3.3 billion to $26.3 billion at December 31, up from $23 billion at December 31, 2024, primarily reflecting net earnings attributable to shareholders of Fairfax of $4.8 billion and other comprehensive income of $425 million, primarily related to unrealized foreign currency translation gains net of hedges, as a result of the strengthening of foreign currencies against the U.S. dollar, partially offset by purchases of just over 1 million subordinate voting shares for cancellation for a cash consideration of $1.6 billion or $1,614.69 per share. And payments of common and preferred share dividends totaling $368 million. Subsequent to December 31, 2025, the company has purchased another 130,573 of its subordinate voting shares for cancellation at an aggregate cost of $220 million or $1,684.70 per share.

In closing, book value per basic share was $1,260 at December 31, 2025, compared to $1,060 at December 31, 2024, representing an increase per basic share in the full year of 2025 at 20.5% adjusted for our $15 per common share dividend paid in the first quarter.

That concludes my remarks, and I will now turn the call back to Peter.

Thank you, Amy. We are now happy to take any questions that you might have. Denise?

[Operator Instructions] Our first question comes from Stephen Boland with Raymond James.

Just maybe discussion around some of the premium declines we saw Q4 over Q4 softness, competition within certain business lines? And is there any difference between what you're seeing in North America and the global insurers?

Sure. Thanks, Stephen. In the fourth quarter, we continue to see softening rates across our companies and that's making it a little more challenging to grow. But as we said in the past, all our companies are focused on underwriting profit and discipline. We have no incentives to grow the top line throughout the group. But we do benefit greatly from our diversified operations by geography and by product. And the wide variety of the markets and segments of our -- that our companies participate in allow us to grow in more attractive areas while curtailing activity and more and less attractive ones. This is a significant strength for us.

At a high level, we saw price increases in the low single-digit level with higher price increases in the casualty lines and declines in property, D&O and cyber. The property catastrophe business, especially on the reinsurance side, we are seeing the most pressure on pricing, but again, that's coming from very strong margins. In Canada, in Northbridge, we've seen pricing up about 2% in the year. You may know, we -- the personal lines are probably up closer to 9%, 10%, but that's not a big part of our business. Crum & Forster is about 5.5%. Odyssey with more of their premium coming from the reinsurance side, it's flat to 2% -- and then in Lloyd's, we're seeing probably the most pricing pressure at Brit and Ki pricing is down about 5%. And then Allied World, they're about flat or up 1%.

On the international side, it varies across the group. But in a lot of those markets, the pricing tends to be a little less cyclical than in the North American market. But one thing, though, when our pricing -- when pricing levels aren't there, premium isn't growing. This frees up capital for us, and then capital allocation becomes very important. Historically, we have allocated capital very well, and we continue to have many attractive opportunities to deploy it. This includes buying back our own stock, as we've said before, buying minority interest in our own companies or investing as we have been in very good companies, our associates and our noninsurance consolidated companies like a Sleep Country or a Peak. So -- we think we have a lot of great opportunity. As I said, the market, we still see softening. But within Fairfax, we have many different sources of earnings, and we can benefit from that.

Next question comes from Tom MacKinnon with BMO Capital Markets.

I asked this question maybe a little over a year ago, but sort of the tax rate outlook going forward. And the answer I got was between '22 and '25. Now in 2024, it was 24%, but in 2025, it was 18%. So I'll ask the question again about a tax rate outlook going forward and why the -- why was 2025 different than sort of that outlook you provided a little more than a year ago. And what is your outlook for it going forward?

Yes, there's a lot of activity on the tax side and our tax people in Canada and the United States have been extremely busy you might have known as the Pillar Two tax that has been coming through. And in Canada, we have the EFILE taxes. But Amy, do you want to comment a little bit more on the specifics.

Sure. Thanks, Peter, and thanks for the question, Tom. We would continue to give the advice that was given last year, which is an appropriate range for our effective tax rate every year going forward. This year, we had something going through that were unique. One of them would be that we had some significant unrealized mark-to-market gains in India. And those gains attract the capital gains rate that is significantly lower than the 26.5% statutory rate here in Canada. So that was a big driver. There has also been a lot of action by domestic governments in terms of introducing their own minimum tax rate. And with that come some tax impact here in Canada when we look at our global minimum tax or Pillar Two tax. So those were really the big drivers this year that lowered our tax rate. But I think the advice provided last year still remains to be true.

Thanks, Amy. Yes. As you know, Tom, we're right across the world. So it really depends where our earnings come from, and that can affect the ultimate tax rate that we pay. Next question please.

That comes from Bart Dziarski with RBC Capital Markets.

Great. And my question, I guess. So your underwriting income for the year was about $1.8 billion. That's 2 years in a row now of $1.8 billion. I know you've got the 1.5-plus guidance. So just how are you thinking about that guidance going forward? I heard your commentary around the softening pricing but we're also seeing your earnings through the cat losses and you've got favorable releases. So putting it all together, I just wanted to your outlook there on the underwriting income guide.

Sure. Yes. No, we're still -- we still target $1.5 billion of underwriting profit. That's what we're looking for. You're right. In the last 2 years, it's been a little higher than that 1 point -- a little less than $1.8 billion in 2024, a little more than $1.8 billion in 2025. But generally speaking, the cat losses have also been relatively benign or as expected. We haven't had any major catastrophes. With that said, with our premium base the way it is, we are able to absorb significant amount of catastrophes now versus, if you look 10, 15 years ago. But we're just trying to be conservative. We think our reserves are extremely strong. We just came through a hard market.

And as I said in my opening remarks, we've had 19 years of favorable reserve development. I think that we have a great process in place for setting our reserves throughout the group. It's all done at the local levels with oversight at the Fairfax holding company and good process in place. So I think the $1.5 billion is a good point. Next question please.

The next question comes from Jaeme Gloyn with National Bank Capital Markets.

Just wanted to go back to the premium growth discussion and maybe get a little bit more nuance on 2 particular business lines. So one would be the Odyssey Group down in the fourth quarter, 10%. And then the offset would be Crum & Forster, up 27% in the fourth quarter on gross premiums written. Can you sort of dig into those 2? Is this a little bit more as to what was driving some of those results either new business or on nonrenewed accounts, something like that, that could be driving some more outsized performance than just price.

Sure. And I think when you look at it, if you look at our premium volume by quarter, typically, Jaeme, the fourth quarter is by far the lowest. The first quarter is usually the highest when we write most of our business. So you're coming off a smaller base. So we don't put a lot of -- we don't look a lot on a quarter-to-quarter basis. But for Crum & Forster, premium was up, and it's really on their specialty lines of business, which are less price-sensitive. And in Crum, it's really the A&H division there -- they've been growing. They've -- through Gary McGeddy, they have an outstanding specialty there, and they've been growing not only in the United States, but taking their A&H business internationally. So that's a big driver there.

On Odyssey, it would probably -- it's more on the reinsurance side. Again, it's a fourth quarter, not a kind of business is written. It's more 1/1. And so any fluctuations there make the percentage change little emphasize. So I would say those are the 2 main things. Next question, please.

That comes from Daniel Baldini with Oberon Asset Management.

Thanks for the wonderful results. So with that said, my question is there any end in sight to these losses from the runoff business? You've disclosed them separately for, I believe, the last 10 years. And when I add them up, it comes to almost $1.6 billion. Now I understand that there are reserves associated with this business, and they produce investment gains. But I can't imagine that when you sort of entered into these deals, you expected losses of this magnitude. So a little bit of color there would be great.

Sure. Good question. A lot of these liabilities, we inherited through acquisitions back in the late '90s, early 2000s. And they're really latent liabilities. There are asbestos environmental pollution claims. And we have a specialized team that we've segregated these claims, and they're focused on it. We would -- I would say, personally, they're best-in-class. They've been managing these liabilities for a long time. But they're very difficult claims. And as -- in the United States, it's very litigious, and there is continuing, especially on the asbestos front, some of these claims are 30, 40 years old, and we're -- we look at them every year. Typically, you can't use general actuarial techniques to come up with the reserves. So it's a matter of reacting to what happens.

Please stand by. The conference will continue in just 1 moment. We did have a technical issue.

Hi, Denise.

Yes, sir, you may continue. Thank you.

Sorry about that. We had a small disconnection, but we're ready to take more questions. Next question please.

The next question comes from David Erb with Merrion Investment Management.

You have -- Fairfax has roughly $1 billion investment in Fairfax India at current pricing, I believe. And within Fairfax India, roughly half the portfolio is the airport investment BIAL. There's been a little bit of discussion historically about taking BIAL getting in a public listing. And I'm just curious if you could provide an update on that progress.

Sure. No. I think that's more of a Fairfax India question. But yes, the Bangalore Airport is a significant investment for Fairfax India. And one, obviously, we're very excited about I know they are in the process of having conversations with the regulators and -- but there's not a lot more that I can say on the IPO process. Thank you, though, for the question and next question please.

Next question is from Tom MacKinnon with BMO Capital Markets.

Yes. With respect to the Eurolife transaction, $3.4 billion in assets, I assume then are not part of your general fund anymore. Do I have that correct? And where would we see -- presumably, you're making investments, interest and dividend income on those assets? So where would we see the -- would there be a decline in interest and dividend income going forward with respect to losing those $3.4 billion in assets? And where would that be? Would that be in your interest in dividend income? Or would that be in your -- I'm just trying to figure out what line would that be in your life and runoff business. Where would that show up?

So the majority of that would be in our life and runoff business. The P&C business is remaining with us. So that's going to continue. And Tom, we're going to get approximately $950 million for the Life business. And eventually, we'll deploy that and that will create earnings off that as well. But generally speaking, yes, it's the interest and dividend income will come off the life and runoff segment. Amy, anything to add?

The only thing I would add is that held-for-sale accounting means that we just have one line on our balance sheet for the held for sale assets in one line for the held-for-sale liabilities. And we continue to mark-to-market those investments and record any income earned on those investments until the transaction is closed.

Thank you, Amy, and thank you, Tom. Next question please.

Next question comes from Jaeme Gloyn with National Bank Capital Markets.

Just wanted to go back to the capital deployment and you mentioned you had capital freed up here with the stock market. So buybacks have been fairly active over Q4 and now year-to-date. So maybe talk through how you're looking at buybacks in the next few months here through 2026. The timing of that minority interest and you can just refresh that? And what does the total return swap, how does that factor into your capital deployment plans?

Sure. Well, I guess, like I said, with the premiums flattening off, it does produce -- it can produce excess capital at our insurance operations that would produce more dividends up to the holding company. First and foremost, our financial strength that we always said is that's our #1 key, and that's to have significant cash in the holding company. We don't want any long-term -- any debt maturities for the foreseeable future and then our line of credit. So financial strength is #1.

Number 2 is, like you said, we've been buying back our own stock at these prices, we think we're pleased to do that. We always look at what the intrinsic value is, and that factors into our capital allocation decision-making. On the Fairfax TRS, we've always said that, that's an investment. We continue to believe it's a very good investment. So we continue to hold that. And buying back Allied and Odyssey, I think, again, both companies, we know very well. They're both performing exceptionally well. So we'd like to do that over time as well. And so those are really the things we're looking at today, always subject to change, of course, Jaeme. But thank you. And next question please.

The next question comes from Bart Dziarski with RBC Capital Markets.

Maybe a question for Wade on the investment book. So we're seeing quite a dislocation in markets today. And so are you thinking about maybe shifting some of the positions, taking advantage and being opportunistic in this environment? I'd love to get some color on that.

I guess I would say we have a very robust skilled investment team, and we're constantly looking at all securities. We underwrite for 15%. And as you say, I mean, you're talking about the software and AI, but we're working very hard. And anytime we uncover any opportunities, we will act. So that's what I'd say. We're watching it all very closely, as you can imagine.

Thank you, Bart. Next question please.

Next question comes from [ Dio Kerathalas ] with a private investor.

How are you balancing share repurchases versus holding company liquidity? And what valuation trigger would make you significantly more aggressive on buybacks?

That's a difficult question. Again, we always -- we discussed it internally all the time. We have many options, right, that with excess capital, with excess dividends coming up. And all I really can say at these prices today, we continue to buy back our stock. We did a significant amount last year. And -- but going forward, things change, and we just -- we are constantly evaluating that and very difficult to put a number on it. But thank you for your question. And we'll take one more question, please.

And the final question does come from Benjamin Graham Sanderson, he's an individual investor.

New shareholders still getting aligned with the way you guys think loving it so far. You guys seem like risk of masters and I'm very much enjoying reading back your history and current actions going forward. Question is a very broad one. What currently are the biggest systemic risk you see to the Fairfax system and both in insurance and investments, how are you approaching that to mitigate them? And specifically, how does that relate to the Kennedy Wilson partnership? How does that partnership derisk the system, if at all?

No. Thank you very much. Yes. No, I think there's -- there's 2 things in this business, and it's the -- we have the insurance operations. And what we've built over the last 40 years, I think is quite substantial, very difficult to replicate. We have essentially 25 separate insurance companies writing $33 billion across the globe. And but -- and some of the best insurance professionals running these companies, on average, our CEOs and Presidents have almost 20 years' experience and that includes last year, we had a succession of 5 separate CEOs that went seamlessly.

We always concerned on the insurance side, on the catastrophe exposure, which we monitor constantly and of course, reserves. And again, we have a very strong track record on the reserving side.

On the investment side, we've had a long-term track record there. I think the investment philosophy of value investing serves us very well with protection on the downside and that's been a significant strength over time.

On Kennedy-Wilson, we're just -- we have a 12-year or 16-year I guess, relationship with Kennedy-Wilson. They've effectively managed our real estate and mortgage business over that time period and has provided us with outstanding returns. And we don't have that capability, at least that size and scale in-house. So we're very excited of what they bring to the table and looking very forward to working with them going forward.

So thank you for your question. And if there's no more questions, I'll pass it back to Denise.

That does conclude today's conference call. We appreciate all of you dialing in for this call. Have a wonderful day and weekend. You may disconnect. Thank you.

Thanks.

Good morning, and welcome to Fairfax's 2025 Third Quarter Results Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Your host for today's call is Peter Clarke with opening remarks from Derek Bulas. Derek, please begin.

Good morning, and welcome to our call to discuss Fairfax's 2025 third quarter results. This call may include forward-looking statements. Actual results may differ perhaps materially from those contained in such forward-looking statements as a result of a variety of uncertainties and risk factors, the most foreseeable of which are set out under Risk Factors in our base shelf prospectus, which has been filed with Canadian securities regulators and is available on SEDAR+. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements, except as required by applicable securities law.

I'll now turn the call over to our President and COO, Peter Clarke.

Thank you, Derek. Good morning, and welcome to Fairfax's 2025 Third Quarter Conference Call. I plan to give you some highlights and then pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa, to comment on investments; and Amy Sherk, our Chief Financial Officer, to provide some additional financial details.

We had an excellent third quarter with net earnings of $1.2 billion, up from $1 billion in the third quarter of 2024. This gives us net earnings of $3.5 billion for the first 9 months of 2025. Operating income from our insurance and reinsurance companies adjusted to an undiscounted basis and before risk margin was $1.3 billion in the third quarter, up from $1.1 billion in the third quarter of 2024. Our interest and dividend income was $655 million. Underwriting income was very strong in the quarter at $540 million, while our share of profits in associates was $305 million.

We had strong operating income from our noninsurance consolidated companies at $211 million and net gains on investments in the quarter were again very healthy at $426 million. All in, our book value per share increased to $1,204, up 15.1% for the first 9 months of the year, adjusted for our $15 dividend.

Now some additional comments on our insurance operations. Underwriting results in the quarter, as I said before, were very strong with a combined ratio of 92%, producing an underwriting profit of $540 million. We've only had 2 quarters with a higher underwriting profit, and those were the fourth quarters in both the last 2 years, both of which we benefited from reserve releases following the full reviews conducted in the fourth quarter. All our insurance segments continue to produce underwriting profit. We benefited from a lower level of catastrophe losses in the quarter with the third quarter historically being more volatile quarter from catastrophes.

Our global insurers and reinsurers had a combined ratio of 91.3% and underwriting profit of $326 million in the quarter. Allied World had an excellent quarter with a combined ratio of 88.9%, Odyssey Group, 91.2%. Brit's combined ratio was 92.1% and Ki had an elevated combined ratio in the quarter of 105.4%, primarily due to costs from the separation from Brit. As we previously mentioned, in 2025, Ki began operating as its own separate company. Excluding separation costs, Ki's combined ratio year-to-date is 95%.

After a difficult first quarter due to the significant catastrophe losses from the California wildfires, our global insurers and reinsurers have produced underwriting profit of $606 million year-to-date. Our North American insurers had a combined ratio of 93% for the third quarter, led by Northbridge with a very strong combined ratio of 86.9% Crum & Forster had underwriting income of $60 million or a combined ratio of 94.8%, while Zenith, our workers' compensation specialist, after a number of quarters with a combined ratio above 100 came in at 99.7%.

Zenith has been dealing with multiple years of rate decreases in the workers' compensation space, but we are happy to say rates have now begun to stabilize and Zenith are pleased to see some premium increases coming its way. Our international operations delivered a very good quarter with a combined ratio of 92.4%. Bryte, who has been taking underwriting actions the last number of years are seeing it come through in their results. They had a combined ratio of 93.8%. Latin America posted a combined ratio of 94%. Central and Eastern Europe was at 94.5% and Fairfax Asia posted a 94.5% combined ratio as well.

Eurolife General Insurance had a great quarter at 91.2%, benefiting from favorable reserve development and Gulf Insurance, the largest company in our international operations, had an excellent combined ratio of 90.5%, also benefiting from favorable reserve development. Gulf's combined ratio has been trending positively after being elevated in 2024, normalizing to its historical combined ratio levels.

The strong results of our insurance operations have not gone unnoticed by the rating agencies. In the second quarter, Standard & Poor's upgraded the financial strength rating of our core operating companies to AA-. A.M. Best also upgraded Allied World, Crum & Forster and Northbridge's financial strength ratings to A+. Odyssey was already at the A+ level.

In the third quarter, we wrote $8.2 billion of gross premium, down slightly from the third quarter of 2024. If you exclude Gulf Insurance, our premiums were up 3.1%. Our global insurer and reinsurer segment was up 3.2%, with gross premiums of $4.2 billion in the third quarter, reflecting growth across all our companies in this segment. Brit's gross premium was $720 million in the quarter, up 4% year-over-year, with growth in its programs and facilities business as well on the reinsurance side through its Bermuda reinsurer, Brit Re.

In the third quarter 2025, Ki wrote $226 million of premium, up 15% from the third quarter of 2024, principally in property treaty, marine and energy lines of business. Odyssey Group's premiums were up 3% in the quarter with gross premium written of $1.6 billion. Its insurance business was the driver of the growth at both Nine and Hudson, while its reinsurance business was relatively flat. Allied World premium increased 1.7% in the quarter with gross premiums of $1.7 billion. Insurance was up 1.6%, driven by their Global Markets division and their Reinsurance segment was up 2.3%.

Our North American Insurance segment wrote gross premiums of $2.4 billion in the third quarter, approximately flat over the third quarter of 2024. Zenith premium was up 10%, reflecting new workers' comp business and price increases in its agribusiness book. Crum & Forster premium was 1.4%, driven by its Accident & Health business and Surplus and Specialty segment, offset by credit insurance, and Northbridge's gross premium was down 4% in Canadian dollar terms compared to the third quarter of 2024. The decrease at Northbridge reflects moderating rates for commercial lines in Canada.

The international insurance and reinsurance operations gross premiums were $1.5 billion, down 11.6% in the third quarter of 2025 versus the third quarter of 2024. Excluding Gulf Insurance, the international premium was up 10%. Bryte in South Africa had strong growth across its distribution channels with premium of $128 million in the quarter, up 20%. Our Central and Eastern European business led by Colonnade continues to grow profitably, writing $200 million of premium in the quarter, up 11.7%. Fairfax Asia was up 13% with strong growth across all its companies. And in Latin America, premium was up 6.1%.

As I mentioned earlier, offsetting the growth in our International segment was Gulf Insurance, whose net premium was down 13%, principally due to timing. This will normalize in the fourth quarter. Our international operations now make up 20% of our total gross premiums and the long-term prospects of our international operations are excellent and will be a significant source of growth over time, driven by excellent management teams that are more and more collaborating among themselves and leveraging the strengths of the group within our decentralized structure.

In the third quarter, our insurance and reinsurance companies recorded favorable reserve development of $111 million or a benefit of 1.6 combined ratio points on our combined ratio. Each of our major segments recorded favorable reserve development with releases coming primarily on short-tail lines of business. Our companies performed full actuarial reserve reviews in the fourth quarter and are in that process now. In the fourth quarter of 2024, we benefited from reserve releases of $301 million. Our overall reserve position remains strong.

Through our decentralized operations, our insurance and reinsurance companies continue to produce outstanding results, writing over $33 billion in annualized gross premium with healthy underlying margins. While the general trends in the market are softening, we do not believe we are yet in a soft market. The wide variety of markets and segments our companies participate in allow us to grow in more attractive areas while curtailing our activity in less attractive ones.

We also benefit greatly from our team of long-standing presidents running our companies. Our experienced teams have managed effectively through the insurance cycles in the past, both hard and soft. As the market turns, we will maintain underwriting discipline through quality risk selection and price adequacy with a laser focus on the bottom line. The company's robust capital position, strong reserve base, margins in our existing business and the scale and diversification of our operations will allow us to be patient for opportunities to arise.

I will now give you some additional detail on our investment earnings for the quarter. Our consolidated investment return was solid in the third quarter with a quarterly return of 1.9%. Consolidated interest and dividend income of $655 million was up 7.5% year-over-year benefiting from a growing investment portfolio and increased dividend income in the quarter. Profits of associates was strong at $305 million, up by $45 million compared to the third quarter of 2024. Profits of associates continue to be driven by Eurobank and Poseidon Corp.

In the quarter, we had net gains on investments of $426 million, driven by gains on our equity exposures of $525 million, offset by losses on our bond portfolio of $44 million, primarily from government bonds and losses on other investments of $54 million, primarily reflecting unrealized losses on our preferred shares in Digit Insurance. Net gains of $525 million on our equity and equity-related holdings were driven principally by unrealized gains on Orla Mining, Commercial International Bank and [ Forum ].

We have always said, and please remember, our net gains or losses on investments only make sense over the long term and will fluctuate from quarter-to-quarter or for that matter, year-to-year. More on investments from Wade.

As mentioned in previous quarters, our book value per share of $1,204 does not include unrealized gains or losses in our equity accounted investments and our consolidated investments, which are not mark-to-market. At the end of the third quarter, the fair value of these securities is in excess of carrying value by $2.5 billion, an unrealized gain position or $117 per share on a pretax basis, an increase of approximately $1 billion for the year, primarily driven by Eurobank.

In October, we announced an agreement to sell our 80% interest in Eurolife's life insurance operations for approximately $940 million to Eurobank. At the same time, Fairfax will purchase a 45% interest in Eurobank's property and casualty company in Cyprus, ERB Insurance for approximately $68 million. We are pleased to be able to maintain focus of our insurance operations on property and casualty insurance and reinsurance while still benefiting from the continued success of Eurolife's life business through our ownership stake in the bank. We wish the very best to Nikos, Delendas and the entire team that will be moving under the ownership of Eurobank. We expect a pretax gain of approximately $250 million on the transaction that will be trued up and accounted for on closing of the transaction, which is expected in the first quarter of 2026.

We are also happy to announce that Alex Sarrigeorgiou, the current CEO of Eurolife, will transition to become Executive Chairman of Eurolife's General P&C Insurance operation and Chairman of our new Cyprus company. Vassilis Nikiforakis, currently CFO of Eurolife, will become Managing Director and CEO of the General Insurance business. Vassilis has been with Eurolife for 18 years and is another great example of the internal transactions that we like to make within our organization.

Earlier this week, Fairfax and Bill McMorrow, Chairman and CEO of Kennedy-Wilson, issued a take-private offer to the Board of Directors of Kennedy-Wilson for $10.25 per share, a premium of approximately 38% of the closing stock that day. Their Board has formed a special committee to evaluate the proposal and its options. We do not plan to provide any updates on last and until we enter into a definitive agreement regarding the proposed transaction. There have been some questions recently regarding share ownership of our executives.

I wanted to highlight that all our senior executives receive a significant amount of their annual compensation in Fairfax shares with the shares vesting over time. It is not often, but there are times when some executives may sell shares for personal reasons such as estate planning or general tax purposes. We don't generally comment on the specific personal circumstances of any reporting insider, but we can say that it's important to us that all members of our executive team maintain meaningful significant proportions of their personal wealth and Fairfax shares, which is the case today, especially due to the long-term tenor of our officers and executives.

As an insider and Hamblin Watsa executive, it was reported in the quarter that Wade Burton had sold some Fairfax shares for family and estate planning. After the sale, he continues to hold 80% of his original position. Fairfax bought the shares sold by Wade in the open market. And as we mentioned in our press release, Fairfax continued to buy back shares in the third quarter and in the fourth quarter as well under our share buyback plan. We view this as a great long-term investment for the company.

We continue to benefit from a stable base of annual operating income of approximately $5 billion. And we expect, of course, no guarantees, it is sustainable for the next 3 to 4 years, with $2.5 billion from interest and dividend income, $1.5 billion from underwriting profit with normalized catastrophe losses and $1 billion from associates and noninsurance companies. Fluctuations in stock and bond prices will be on top of that, but this only really matters over the long term.

I will now pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa, to comment on our investment.

Thank you, Peter, and good morning. We continue to be in excellent shape on the investment side at Fairfax. Just as a reminder, our portfolio is roughly broken into 3 categories: fixed income to support the reserves, public mark-to-market common stocks and preferred investments and equity accounted associates and privately owned companies. Our fixed income investments ended the quarter at $50.9 billion with an average yield of 5.1%. The fixed income investments are conservatively positioned with low duration and very little credit risk.

What we do take on for credit risk like our mortgage portfolio is stringently underwritten credit by credit. Our team spends a lot of effort analyzing the credit quality on anything not backed by government. Over the years, our performance on this class of fixed income has been outstanding. Our common stock and preferred investments ended Q3 at $14.2 billion. Outside of the Fairfax TRS, which we see as excellent value, the biggest investments are Metlen Energy and Metals, Orla Mining, CIB Bank in Egypt, Strathcona Energy and Strathcona Energy, a Western Canadian oil company capably run by Adam Waterous. We know all of these investments well. Management in all cases is outstanding, all are well financed and cheap.

And from an underlying business standpoint, it's easy to see the path to compounding our investment dollars on each one. The equity accounted associates and privately owned companies ended Q3 at $11.8 billion, led by Eurobank, Poseidon and Recipe, but now also including Sleep Country, Peak Achievement and Meadow, all are in outstanding shape, and most are having a strong 2025 so far. In all our controlled investee companies, operations are decentralized. The presidents run their businesses. Fairfax is in charge of the capital decisions, the President is in charge of operations. We also get involved in succession to make sure any transitions are seamless. While we hope our presidents live forever, sometimes it's not the case, and we work to ensure the companies continue in the Fairfax mold.

Lastly, given it's a quiet quarter on the investment side, I thought I'd touch on our investment team. In the beginning and for many years, it was Prem, Roger and Brian, the founding group, who really ran the investments. Over the last 15 years or so, we have added a lot of outstanding talent, and it's really exciting to see how well the team is working together with the founding group. The team is a big part of why I'm so optimistic and confident about the investment side of Fairfax. It's a sensible, accountable and experienced group focused on the right things for shareholders and really working well together.

With that, I'll pass it over to Amy Sherk, our CFO.

Thank you, Wade. I'll begin my comments by discussing our noninsurance company results in the third quarter of 2025. Noninsurance companies reported operating income of $211 million in the third quarter of 2025 compared to $49 million in the third quarter of 2024, primarily reflecting the acquisition of Sleep Country on October 1, 2024, and the consolidation of Peak Achievement on December 20, 2024, which recorded operating earnings of $34 million and $53 million, respectively, in the third quarter of 2025.

Additionally, operating income for the third quarter of 2025 benefited from higher margins at AGT and higher business volumes at Grivalia Hospitality. Our noninsurance company segment also include our consolidated holdings in Recipe, Fairfax India, Dexterra, Sporting Life, Thomas Cook and Meadow Foods. As Wade mentioned, all of these companies have continued to perform well in the first 9 months of 2025.

Looking at our share of profit from investments and associates in the third quarter of 2025, consolidated share of profit of associates of $305 million in the third quarter of 2025 principally reflected our share of profit of $141 million from Eurobank, $68 million from Poseidon and $39 million from EXCO.

A few comments on transactions within the quarter. On August 13, 2025, the company acquired all of the units of the Keg Royalties Income Fund that it did not already own for purchase consideration of $150 million or CAD 207 million. and subsequently completed a reorganization to amalgamate its wholly owned subsidiary, Keg Restaurants Limited with the Keg Fund. The company then partnered with LSG Growth Partners led by Mr. Richard Jaffray and on September 25, 2025, deconsolidated the assets and liabilities of the Keg from Recipe and its noninsurance reporting segment and has recorded its retained interest in the Keg as an investment in associates.

On August 1, 2025, Blue Ant Media became a public company via reverse takeover of Boat Rocker, which was then renamed Blue Ant Media Corporation. The company deconsolidated the assets and liabilities of Blue Ant Media from its noninsurance reporting segment and recorded its retained interest in Blue Ant Media at fair value through profit and loss within portfolio investments. Subsequent to September 30, 2025, the company has purchased 107,525 of its subordinate voting shares for cancellation at an aggregate cost of $178 million or $1,659 per share.

The company's consolidated statement of earnings in the third quarter and first 9 months of 2025 were also impacted by changes in interest rates and specifically the effects they had on discounting on prior year net losses on claims and our fixed income portfolio. Net earnings of $1.2 billion in the third quarter of 2025 included a net loss of $308 million, reflecting the effect of changes in interest rates during the quarter, comprised of a net loss on insurance contracts and reinsurance contracts held of $263 million and net losses on bonds of $44 million.

We generally expect that a decrease in interest rates will result in an increase to the carrying values of the company's fixed income portfolio and its liability for incurred claims, net of reinsurance, resulting in the partial mitigation of interest rate risk. In the current quarter, however, we recorded net losses on both. Net losses on bonds were disproportionately impacted by unrealized losses on certain other government bonds that experienced an increase in yield during the quarter, which outweighed gains on U.S. treasuries and other bonds that benefited from declining yields, while the net loss on insurance contracts and reinsurance contract assets held primarily reflected decreased short-term discount rates.

Comparatively, net earnings of $1 billion in the third quarter of 2024 included a net benefit of $64 million, reflecting the effect of changes of interest rates comprised of net gains on bonds of $829 million, partially offset by net losses on insurance contracts and reinsurance contract assets held of $765 million. When you compare the year-over-year change on a pretax basis, the changes in interest rates resulted in an approximate $371 million movement in our pretax earnings. Despite the unusual results in the third quarter of 2025, on a year-to-date basis, the company recorded a net loss on insurance contracts and reinsurance contracts held of $486 million and net gains on bonds of $419 million, which aligned with our general expectation for the partial mitigation of interest rate risk.

Please refer to Page 37 of our MD&A within the company's interim consolidated financial statements for the third quarter of 2025, for a table that presents the company's total effects of discounting and risk adjustment on our net insurance liabilities and the effects of changes in interest rates on the company's fixed income portfolio set out in a format that the company believes assists in understanding our net exposure to interest rate risk.

I will close with a few comments on our financial condition. Maintaining an emphasis on financial soundness at September 30, 2025, the company held $2.8 billion of cash and investments at the holding company, has access to our fully undrawn $2 billion unsecured revolving credit facility and an additional $1.9 billion at fair value of investments in associates and consolidated noninsurance companies owned by the holding company. Holding company cash and investments support the company's decentralized structure and enable the company to deploy capital efficiently to its insurance and reinsurance companies.

On August 14, 2025, the company opportunistically completed offerings of $290 million or CAD 400 million and $218 million or CAD 300 million principal amounts of 4.45% and 5.1% unsecured senior notes due in 2035 and 2055 for net proceeds of $288 million and $216 million, respectively, after discount commissions and expenses. At September 30, the excess of fair value over carrying value of investments in noninsurance associates and market traded consolidated noninsurance subsidiaries was $2.5 billion compared to $1.5 billion at December 31, 2024. The pretax excess of $2.5 billion is not reflected in the company's book value per basic share but is regularly reviewed by management as an indicator of investment performance.

The company's total debt to total capital ratio, excluding noninsurance companies, increased to 26.5% at September 30, 2025, compared to 24.8% at December 31, 2024, primarily reflecting increased total debt and redemptions of the company's Series E, F, G, H and M preferred shares partially offset by increased common shareholders' equity. The company's total debt to total capital ratio remains within the company's internal targets.

Common shareholders' equity increased by approximately $2.7 billion to $25.7 billion at September 30, 2025, up from $23 billion at December 31, 2024, primarily reflecting net earnings attributable to shareholders of Fairfax of $3.5 billion, other comprehensive income of $372 million, primarily related to unrealized foreign currency translation gains, net of hedges as a result of the strengthening of foreign currencies against the U.S. dollar, partially offset by purchases of 541,794 subordinate voting shares for cancellation for cash consideration of $857 million or $1,581 per share and payments of common and preferred share dividends totaling $364 million.

In closing, book value per basic share was $1,204 at September 30, 2025, compared to $1,060 at December 31, 2024, representing an increase per basic share in the first 9 months of 2025 of 15.1% adjusted to include the $15 per share common dividend paid in the first quarter of 2025.

That concludes my remarks, and I will now turn the call back to Peter. Thank you.

Thank you, Amy. Denise, we are now happy to take any questions you might have.

[Operator Instructions] Our first question comes from Stephen Boland with Raymond James.

First. You mentioned some pockets of softness and that you're able to be a little bit more nimble, growing in the areas that are not soft, curtailing premium in some of the other areas. I'm just wondering if you could give a little bit more detail where you're seeing some of that softness? Is it geography? Is it certain business lines? If you could provide a little more detail, that would be great.

Sure. Yes. Like I said in the prepared remarks, we benefit greatly from our diversified operations. We write right across the world. We write about $33 billion of premium today. And as I said, that the markets -- we do see softening in the market, but it's not a soft market. And to highlight as well that the underlying margins in the business, we continue to see to be very strong. And on the pricing side, we're getting single-digit price increases. On the casualty side, it tends to be much higher, property side, lower and especially on the property cat business, reinsurance, in particular, we're seeing pricing pressure.

For that, that's not necessarily a bad thing as about 20% of our business is reinsurance. The other 80%, we buy reinsurance on that. So overall, our premiums continue to grow, but we're very focused on when pricing is coming down, we're focused on the bottom line.

The next question comes from Jaeme Gloyn with National Bank Capital Markets.

Yes. I guess if I can ask a couple of questions here in one shot before I get cut off. First, I may have missed it, but can you talk about the strategic exited line in Canada? And then second, on the investment side of the equation, can you give us your thoughts around what are -- what's the strategy for the total return swap and using excess cash and capital to invest in businesses similar to the KW transaction, Peak transaction in businesses that you own. Is that a more likely use of capital in the near term?

Sure. Thanks, Jaeme. And could you repeat your first question?

There was a strategic exited line at Northbridge.

I'm not exactly sure of the strategic exit unless you're talking about their TruShield business, that might be what you're thinking of, and that was just a small book of business they wrote on small businesses. They did exit that, but it wasn't significant for the company.

On your TRS, Fairfax TRS, we continue to hold the position. As we said in the past, it's an investment position for us, and we continue to see good value for that.

And then on the private side, yes, no, if there's companies we know really well with strong management positions and there's minority interest -- if value is there, we'll continue to look at allocating capital to that. But it's all part of the bigger picture really. First is our financial strength we're focused on. Second, capital in our insurance companies, maintaining that, buying back our own shares. We have minority interest in our own insurance companies as well that we'd like to buy back over time. And then we can invest any excess capital in whichever way Hamblin Watsa thinks where the value is. So thank you for your question. And next question, please.

[Operator Instructions] The next question comes from Tom MacKinnon with BMO Capital.

I'm going to follow James' strategy of trying to get in with 2. The first is just with respect to the noninsurance companies, some pretty good lift in terms of their contribution. A lot of it's embedded in align, that's other. You've got Grivalia Hospitality, maybe AGT in there, some other companies. If you can give us a little bit more color what you're seeing there, if there's anything unusual in the quarter?

And then the other is about the cash component of your investment portfolio. It's 17% now, and I think it was 15% in the second quarter. Any comments about why that may have increased and what you're thinking about there?

Sure. Thanks, Tom. Just on our noninsurance consolidated investments, you're exactly right, it's performing very well. Eurobank and Poseidon continue to drive the results. And if you look at both of those companies, the largest companies in that group, continue to perform very, very well. We think there's still good value in both of the companies. They're trading at maybe around 8x earnings. And so with the management teams at both of those, we're very excited about the future. And then adding in that bucket, we have Fairfax India. We have Recipe, Meadows, Peak. So a lot of good companies there that have strong earnings, and we're very excited about the future for these noninsurance consolidated investments.

Your second question on the cash position. You're exactly right. It's been building over time. It's about 17% of the portfolio. With the markets where they are today, we want to keep our portfolio as conservative as possible and with investment flexibility. That's why we have a large cash position. We have a large government bond position. And in the meantime, we're earning a nice return on that. And we can wait for opportunities to come our way and react accordingly. So thank you for your question, Tom.

That comes from Daniel Baldini with Oberon Asset Management.

Wonderful results once again. So my question is about prediction markets. And I noticed a couple of months ago a little article on a website called Risk Market News entitled the Prediction Markets Are Coming for Risk Markets and Insurance. And there were a couple of lines in there that I'll read quickly. So weather prediction markets now handle trades reaching tens of thousands of dollars with institutional participation growing rapidly as firms explore parametric hedging outside traditional insurance structures. The implications are profound, where insurers traditionally relied on cat models and broker negotiations, prediction markets offer instant liquid pricing for weather-related exposures, and it goes on and on.

Anyway, the volumes clearly are very small, but ICE just announced a $2 billion investment in Polymarket. So I'm wondering if you could talk a little bit about how you might position Fairfax to avoid being disrupted by prediction markets.

No, thank you for the question. No, and it's a good question. We're always looking at the future of insurance and insurtech and how it could disrupt our business going forward and especially with AI, we have a group of a team at Fairfax made up from all our companies that are focusing on AI. And in particular, on the weather-related and cat side, we still just -- we traditionally -- we just focus on the reinsurance side. We don't participate on a lot of the models -- I mean, the index models and writing that types of business. But it isn't a risk to our industry. And we look at it carefully. We analyze it. All our companies are on top of it. But for now, we're happy where we are. We're not really participating in that, and we'll see how it goes over time. So thank you for your question.

The next question comes from [ Josh Donfeld ] with [ Greenland ].

I want to ask you about how you're looking at some of the bank privatizations and potential M&A in India.

Yes. No, our -- we have -- as you know, we have a significant investment in India, primarily through Fairfax India, and we have a long history of investing there, and we have a team on the ground that has done an outstanding job. So we'll continue to look at India. We're very high on it as we have some significant holdings such as the Bangalore International Airport, CSB Bank, IIFL Holdings, all within Fairfax India. Outside of that, we have Thomas Cook, Quess and Digit Insurance, our P&C insurance company within India.

On the banking side, currently, CSB is our largest banking position. On privatization, there's really nothing that we would comment on at this time. Thank you for your question.

There are currently no further questions.

Well, thank you, Denise. If there are no further questions then, thank you for joining us on our third quarter 2025 conference call. Thank you.

Thank you. That does conclude today's conference. Thank you for dialing in. We appreciate your participation. Have a great rest of your day, and you may disconnect.