Fairfax Financial Holdings Limited

Good morning and welcome to Fairfax's 2023 year-end 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 put one on your phone keypad. For time's sake, we ask that you limit your questions to one. 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 Watsa with opening remarks from Mr. Derek Bulis. Mr. Bulis, please begin.

Good morning, and welcome to our call to discuss Fairfax's 2023 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 CDAR. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements except as required by applicable securities law. And now I'll turn the call over to our chairman and CEO, Prem Wata.

Thank you, Derek. Good morning, ladies and gentlemen. Welcome to Fairfax's 2023 fourth quarter and year-end 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 2023 end. and Jen Allen, our Chief Financial Officer, to provide some additional financial details. 2023 was the best year in our history by far. We earned $4.4 billion after taxes with a record underwriting income of $1.5 billion, record interest and dividend income of $1.9 billion, and record income from associates of $1 billion. operating income from our insurance and reinsurance operations on an undiscounted basis of $3.9 billion, a record. A consolidated combined ratio was 93.2 percent, as we benefited greatly from our diversification and global presence. Our book value per share increased by 25 percent, adjusted for our dividend to $940. In the last three years, our book value has grown by 25 percent, 22 percent, and 34 percent, including dividends. As I said last year, Fairfax has been transformed in the last few years as we doubled our premium. Let me show you how the intrinsic value of Fairfax has increased significantly since 2017. Gross premiums. 2017, 13.8 billion. 2023, 28.9, up 109%. At a combined average combined ratio of 95% with very strong reserving. Almost all of that growth was organic. Float, 20.4 billion. Now at 33.4 billion, up 64%. Investment portfolio, $39.3 billion, is now at $64.8 billion, up 65%. Common shareholders' equity, $12.5 billion to $21.6 billion, up 73%. Underwriting profit from a loss in 2017 to $1.5 billion profit. Share of profits and associates, $0.2 billion. to 1 billion, up 410 percent, and operating income from a loss to $3.9 billion. Now, this growth is magnified on a per-share basis. Shares outstanding during that time period, 2017 to 23, has dropped by 17 percent from 2017 to 2023. So, for example, gross premiums per share were up 152 percent versus 109 percent on an absolute dollar basis for gross premiums. Investment portfolio per share is up almost 100 percent versus 65 percent on an absolute basis. Operating income was $174 per share in 2023 versus a loss of $8 in 2017. Now, as I've said for the last number of quarters, the most important point I can make for you is to repeat what I've said in the past. For the second time in our 38-year history, I can say to you we expect, with, of course, no guarantees, sustainable operating income of $4 billion, operating income consisting of $2 billion-plus from interest and dividend income $1.2 billion from underwriting profit with normalized catastrophe losses, and $750 million from associates and non-insurance companies. This works out to over $125 per share after interest expenses, overhead, and taxes. Of course, fluctuations in stock and bond prices will be on top of that. And these fluctuations only really matter over the long term. have a lot more for you in our annual report. I will now pass this call to Peter Clarke, our President and Chief Operating Officer, for further updates. Peter?