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The call presented several strong operating and strategic positives: materially higher operating income, improved underwriting results and combined ratio, sizable near-term monetizations (Poseidon, Eurolife), strong associate profits, and a conservative, high-yield fixed income position. These positives were offset by meaningful quarter-to-quarter mark-to-market investment losses driven by rising interest rates, some softness in North American premiums and elevated combined ratios in select businesses (e.g., Zenith), a modest decline in shareholders' equity/book value on a nominal basis, and a slight increase in leverage. On balance, the operational and strategic highlights — including expected one-time gains, strong associate performance and sound liquidity — outweigh the quarter-specific investment mark-to-market pressures and localized underwriting challenges.
Fairfax’s forward guidance focused on expected Q2 closings and continuing emphasis on underwriting discipline: management expects to close the sale of half its Poseidon stake for ~$1.9B (estimated pretax gain ≈ $837M) and the Eurolife life business for ≈ $935M (pretax gain ≈ $350M), and to complete the Kennedy Wilson take‑private at $10.90/share in Q2 with Fairfax committed up to $1.65B of funding. Management reiterated that investment results will fluctuate quarter‑to‑quarter (Q1 net losses on investments ≈ $386M vs Q1‑2025 gains ≈ $1.1B) but should perform well over the long term; book value per share was $1,250 at March 31, 2026 (up 0.5% Q‑on‑Q adjusted for the $15 dividend) and excludes $3.9B of unrealized pretax excess fair value (~$190/share). On insurance, the guidance stressed underwriting profit and decentralized discipline after a strong Q1 that produced $1.2B of operating income from insurance/reinsurance, $382M of underwriting income, a 94.1% combined ratio (vs 98.5% a year ago), $86M of favorable reserve development (1.3 pts), and annualized gross premiums written of > $33B (international Q1 premiums $1.7B, +16.4%, now ~20% of total).
Operating income (insurance & reinsurance, undiscounted before risk margin) of $1.2B in Q1 2026 vs $686M in Q1 2025 (≈+75%). Underwriting income of $382M (vs $97M prior year) and combined ratio improved to 94.1% from 98.5% (improvement of 4.4 percentage points), driven largely by lower catastrophe losses (1.8 pts vs 12.7 pts prior year).
Net earnings attributable to shareholders of $696M in Q1 2026. Book value per share of $1,250.14 at March 31, 2026 (adjusted increase of 0.5% from year-end 2025 when including the $15 dividend).
Consolidated interest and dividend income of $662M, up 9% year-over-year. Equities up 2.9% in the quarter and 28.9% over the last 12 months; bonds up 0.3% quarter and 5.6% over 12 months. Share of profit from associates of $372M in Q1 2026 vs $129M in Q1 2025 (≈+188%), driven by Eurobank, Waterous Energy Fund III and Poseidon.
Planned sale of half of Poseidon for aggregate proceeds of ~$1.9B with an estimated pretax gain of ~$837M, and sale of Eurolife life operations for ~€813M (~$935M) with an estimated pretax gain of ~$350M; both expected to close in Q2 2026.
Fixed income portfolio of $49.8B with duration 2.2 years, average maturity ~3 years and yield ~5%; emphasis on safety and flexibility (large allocation to government bonds/treasuries). Equity and equity-exposed investments of $26.6B. Total annualized gross premium writings now over $33B.
Insurance & reinsurance gross premiums of $8.7B in Q1 2026, up 4.1% YoY. International insurance gross premiums $1.7B, up 16.4% YoY (notable: Gulf +30%, Bryte +28%, Fairfax CEE +17%, Fairfax LATAM +9%). International operations now ~20% of overall gross premiums and provide long-term growth potential.
Purchased 375,000 shares for cancellation for $631M in the quarter. Holding company had $2.5B of cash and investments and only $300M drawn on a $2B revolver at March 31, 2026, supporting decentralized capital deployment.
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. Under...