Fairfax Financial Holdings Limited (OTC:FRFHF) Q3 2025 Earnings Call Transcript

Fairfax Financial Holdings Limited (OTC:FRFHF) Q3 2025 Earnings Call Transcript November 7, 2025

Operator: 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.

Derek Bulas: 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.

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.

Wade Burton: 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.

Amy Sherk: 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.

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

Q&A Session

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

Stephen Boland: 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.

Peter Clarke: 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.

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

Jaeme Gloyn: 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?

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

Jaeme Gloyn: There was a strategic exited line at Northbridge.

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

Tom MacKinnon: 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?

Peter Clarke: 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.

Operator: That comes from Daniel Baldini with Oberon Asset Management.

Daniel Baldini: 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.

Peter Clarke: 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.

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

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

Peter Clarke: 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.

Operator: There are currently no further questions.

Peter Clarke: 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.

Operator: 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.