Fairfax Financial Holdings Limited

Good morning and welcome to Fairfax's 2023 second quarter results conference call. Your lines have been placed in a listen-only mode. After the presentation, we will conduct a question and answer session. At that time, to ask a question, please press star 1 on your phone keypad. For time's sake, we ask that you limit your question to 1. Today's conference is being recorded. If you have any objections, you may disconnect at this time. Your host for today's call is Prem Wadza with opening remarks from Mr. Derek Beulis. And Mr. Beulis, you may begin.

Good morning and welcome to our call to discuss Fairfax's 2023 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 CDAR. 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 Chairman and CEO, Prem Watsa.

Thank you, Derek. Good morning, ladies and gentlemen. Welcome to Fairfax's 2023 second quarter conference call. I plan to give you a couple of highlights and then pass the call to Peter Clark, our president and chief operating officer, to comment on the quarter, and Jen Allen, our chief financial officer, to provide some additional financial details. As I said in our first quarter, beginning January 1st, 2023, we were required to adopt IFRS 17 accounting This has resulted in many changes to our financial statements, the most significant change being the discounting of our insurance liabilities and the provision of a specific risk margin for uncertainty. I want to stress that this new reporting requirement will not change the way we manage the business, and we will continue to be focused on underwriting profit on an undiscounted basis with strong reserving. we will continue to show our combined ratios and operating income on an undiscounted basis. As I said last quarter, the most important point I can make for you, again, is to repeat that for the first time in our 37-year history, I can say to you we expect, of course with no guarantees, our operating income to be more than $3 billion annually for the next three years. Operating income consists of $1.5 billion plus from interest and dividend income, $1 billion from underwriting profit, and half a billion from associates and non-insurance companies. This works out to about $100 per share after interest expenses, overhead, and taxes. We continue to run above these levels with year-to-date operating income of $1.8 billion excluding the effects of discounting and risk margin. Fluctuations in stock and bond prices will be on top of that, but this only really matters over the long term. Our fixed income portfolio remains conservatively positioned, with approximately 74% in government securities and only 15% in short-dated corporate bonds. Our insurance and reinsurance operations continue to perform exceptionally well, with gross premiums written in the second quarter of $8 billion, up 10%, a combined ratio of 93.9%, resulting in an underwriting profit of $337 million in the quarter. Our stock positions and associates continues to do very well, particularly Fairfax India, Atlas Corp., and EuroBank. I want to bring to your attention the table on page 32 in Fairfax, India's MD&A, which shows Fairfax, India's investment track record. Public equities, private equities from cost from the original investment have compounded at about 12.7%, and the ones that have been monetized, which means sold, either partial or totaled, have gone at 17.5%. That table is worth looking at. It's in the MD&A, first page of the MD&A on Fairfax, India. I will now pass the call to Peter Clark, our President and Chief Operating Officer, for further updates. Peter?