Fundamentals snapshot
FRFHF · PNK · Financial Services · Insurance - Property & Casualty
Current price
$1,690.03
52-week range
$1,500.00 - $1,949.00
Market cap
$34.86B
One-glance verdict
We don't put a cash-flow fair value on banks and insurers. For these companies the reported 'cash flow' is really just money moving between loans, deposits and trades — not the leftover profit the owners could actually pocket — so the usual method would print a misleading number.
Balance sheet
Net debt $7.36B. Interest coverage shows how many times profit covers the interest bill.
What stands out
What this company does
Fairfax Financial is a holding company (a company that owns other companies) with two main parts to its business. It primarily sells various types of insurance, collecting regular payments from customers, and also owns a diverse collection of other businesses, from restaurants to retail stores. Fairfax uses the cash collected from its insurance operations to invest in and grow its group of companies, aiming to increase its overall value over time.
Fairfax Financial began in 1985 when its founder, Prem Watsa, took control of a small Canadian trucking insurance company. [5, 7] The name 'Fairfax' was chosen to stand for 'fair and friendly acquisitions,' which became its core growth strategy. [3, 7] Instead of starting new businesses from scratch, the company grew by buying other insurance companies. A major turning point was successfully navigating the 2008 financial crisis by making smart investments that protected it from the market crash. [7, 16] This history of careful acquisitions and savvy investing has turned it into a large global company.
Fairfax is a holding company, which is a bit like a parent company that owns a collection of different businesses called subsidiaries. [1, 3] Its main business is property and casualty insurance, which is insurance that protects homes, cars, and businesses from damage or lawsuits. [1, 6] It also sells reinsurance, which is essentially insurance for other insurance companies, helping them cover very large claims. [4] Fairfax invests the money it collects from insurance premiums (the regular payments customers make) with the goal of growing it over the long term. [3] It also owns a variety of non-insurance businesses, from restaurants to sporting goods companies. [2]
This is the company's largest and most important business, making up the majority of its operations. [1, 3] Fairfax owns many different insurance brands like Allied World and Crum & Forster, which operate mostly independently around the world. [9, 13] Businesses pay these companies for insurance policies to cover potential losses from things like workplace accidents, natural disasters, or cyber attacks. [1] This segment also includes reinsurance, where other insurance companies pay Fairfax to take on some of their biggest risks, protecting them from massive, unexpected losses.
This is a smaller part of Fairfax's insurance operations. [12] It includes some life insurance businesses that provide policies which pay out when a person passes away. The 'Run-off' part of the name refers to the business of managing old insurance policies that are no longer being sold. [10, 12] In this business, Fairfax continues to collect any remaining premiums and is responsible for paying any claims on these old policies until they all expire.
Separate from its main insurance work, Fairfax owns a diverse portfolio of other companies. [2, 12] This is like an investment portfolio, but instead of just owning stock, Fairfax often owns the whole company. These businesses operate in completely different industries and include restaurant chains like Recipe Unlimited, retailers like Sporting Life, and even Thomas Cook India, a travel services company. [12] This collection of different businesses helps diversify Fairfax's overall operations beyond the financial world.
Management's primary goal is to increase the company's book value per share (a measure of the company's net worth for each share of stock) by 15% per year over the long haul. [3, 17] Their strategy relies on two main pillars: disciplined underwriting (being very careful about the insurance risks they take on to make sure they are profitable) and value investing. [3, 9] They invest the large pool of cash collected from insurance premiums, known as the 'float,' into other businesses they believe are undervalued. [9] The company also continues to believe in its decentralized model, letting the presidents of the companies it owns run their own operations, which they believe allows for quicker and smarter decisions. [3, 16]
Price history
Is it cheap or expensive?
For a bank or insurer, the "free cash flow" shown on its statements is mostly money flowing through loans, deposits and trades — not the leftover profit the owners could actually keep, which is what this kind of valuation needs. Running that through the usual method would spit out a meaningless number, so we leave the cash-flow fair value out here rather than show you something misleading.
Is it drowning in debt?
Net debt $7.4B. Interest coverage 8.8x.
Fairfax Financial Holdings Limited's profit covers its interest bill about 8.8 times over.
Total debt $14.05B Interest coverage 8.84x This is the baseline the peer rows are being compared against.
Total debt $4.38B Interest coverage 14.27x +62% vs FRFHF Carries about 1.6x more debt cushion than FRFHF.
Total debt $128.89B Interest coverage 17.27x +95% vs FRFHF Carries about 2.0x more debt cushion than FRFHF.
Total debt $8.93B Interest coverage 6.22x -30% vs FRFHF Carries about 1.4x less debt cushion than FRFHF.
Total debt $9.27B Interest coverage 19.34x +119% vs FRFHF Carries about 2.2x more debt cushion than FRFHF.
Total debt $25.14B Interest coverage 18.07x +105% vs FRFHF Carries about 2.0x more debt cushion than FRFHF.
What you should know
The numbers
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Valuation
Profitability
Health
Growth
Cash flow
Dividend
Metric explainer
Debt comparison
What you should know