Fairfax Financial Holdings Limited (FFH) Earnings Call Transcript & Summary

Good morning and welcome to Fairfax Financial Holding Limited's 2021 Annual General Meeting. I'm Jennifer Allen, Vice President and Chief Financial Officer of Fairfax. Prem Watsa, our Chairman and CEO, will be hosting today's meeting. I'll now hand it over to Prem.

Good morning, ladies and gentlemen, and welcome to our 36th Annual Meeting, 35 years since we began in 1985. I'm Prem Watsa, Chairman of Fairfax. This is the second time our AGM is conducted online and hopefully, it'll be the last time. A warm welcome to all our shareholders and employees across the world and to all the people who support us. We will again miss seeing you in person this year. Now you know I'm a little bit of an optimist, and we've all had a very difficult year with COVID-19. It reminds me of the story of a group of retirees meeting last year in Toronto, in our coffee house, to discuss the world's many problems, including COVID-19. One of them shocks his friends by announcing, "I'm an optimist," he says. His friend goes, "Then why do you look so worried?" He replies, "You think it's easy to be an optimist?" Well, last year, it was tough to be an optimist. But nowadays -- but normalcy is returning, and we should all meet in person next year. And we look forward to meeting all of you in person. Over the last years, our company have adapted to these trying circumstances in the last year exceptionally well. It has been truly inspiring to see how our people have risen to the challenge created by the virus around the world. Our companies have looked out for our employees while continuing to care for the needs of our customers. A big thank you to all of our employees for their many untold adjustments and sacrifices necessary to keep our businesses operating and running smoothly in these unprecedented times. In the midst of the pandemic, our fair and friendly culture shone brightly. We had no layoffs in our insurance and reinsurance companies due to COVID-19. All 15,000 of our employees work from home. We continue to provide outstanding service to our customers and we made a special donation of $4 million to help with the pandemic efforts in the communities where we do business. We must also remember those who have suffered from the virus and the many who have lost their lives or family members to the virus. It's been a very difficult time. While Fairfax and all our companies have been a great place to work where we do not tolerate or condone any form of racism or discrimination, we still know that it's not been eradicated in society even in 2021. After many events that unfolded last summer, many injustices in our society came to light. I decided it was time to step up to the plate. I joined the Black North Initiative founded by Wes Hall, a Canadian businessman and a good friend in Toronto, to end systemic racism in Canada. I personally spoke to members of the black community at our own companies, Fairfax, in Canada, the United States and the U.K. -- the 3 countries, Canada, the United States and the U.K. And we created the Black Initiative Action Committee at Fairfax under the chairmanship of Craig Pinnock, the Chief Financial Officer of Northbridge. And the idea was to make our company even more attractive for people from the black community and other minorities. While there is much to be done, we are making headway, and Fairfax should be a leading example of how one company can make a difference. Since the inception of Fairfax, we've always been focused on a few things: the way we operate, the way we treat each other and the way we help our communities. Our management team and Board ensure that honesty and integrity are never compromised and that full disclosure is provided to all our stakeholders. We now have 15,000 employees around the world working in our decentralized environment following these basic principles. I'm pleased to say we recently posted our first ESG, environmental, social and governance, report on our website to summarize how we think about ESG. 2020, last year, completed 35 years since we began in September 1985. Last year, I mentioned to you, if you look at all of the companies listed on the New York Stock Exchange, AMEX and NASDAQ at the end of 1985, we're approximately 6,100 at the end of 1985. At the end of 2020, there were only 666 still trading on these exchanges from that group of 6,100. That is to say, only 1/10 survived, i.e., almost 90% have gone bankrupt, have been taken over, merged, whatever. So we are very pleased to be in the category that have survived. If you could then ask how many have thrived, and we used 15% annual compounded return over that 35-year period in stock price. Only 1% approximately or about 71 companies have survived, have made a return of 15% annually over that time period. Our 16.4% compounded return for our stock, less than our growth in book value, would put us in that 1%. So we -- so you can see we have been blessed mightily. And I know many of you, more recent shareholders, have not benefited from these long-term results, and we are working hard to remedy that. The first quarter that we came out with a press release last -- yesterday evening is only the beginning. I've also said, and I repeat, we are very blessed to have such a wonderful group of long-term shareholders, all of you who have stood by us through the ups and downs of business life over a long period of time. And we're just coming out of a down period. We could have a great year in -- we would have had a great year in 2020, but COVID-19 intervened. I've said this before to you, but I'll say it again, our culture is a very valuable asset, even though it's not shown on our balance sheet, and the creation and preservation of that culture is the biggest achievement for us over the past 35 years and the continuing driver for our success. As you know, it is protected for all time. This fair and friendly culture, which is, in our name, is why companies all over the world want to deal with us, and it is our biggest advantage and we got it fiercely. I want to take this opportunity to thank our directors, all 12 of them, for their strong support of our company. Over our 35-year history, we have always operated at Fairfax with an outstanding small team with great integrity, team spirit and no egos, protects our company from unexpected downside risk. We're always looking at downside risk. And we try to take advantage of opportunities when they arise. This group, as you have noticed, has worked together for a long time with trust and a long-term focus. Now I want to highlight the Fairfax Innovation Award, the Fairfax Innovation Award. It was created to recognize teams at Fairfax' operating companies whose innovations have had a transformative and positive impact on their organizations. In 2020, 27 initiatives from 13 Fairfax companies around the world was submitted with a diverse range of innovative projects. After reviewing all the submissions, Ki from Brit Insurance has been selected as the 2020 winner. Quite an amazing accomplishment that's shown here on your screen. Ki is the first fully digital and algorithmically driven Lloyd's of London syndicate. A follow-on syndicate, Ki offers instant capacity that can be accessed through an easy-to-use online platform, providing unprecedented service to brokers and clients anywhere anytime. Ki was developed by Brit's innovative team in collaboration with Google Cloud and the University of London and is targeting gross written premiums, first year, on 2021, of [ GBP 400 million ], which would make Ki the largest start-up syndicate in the history of Lloyd's. They're well on that way right now. And congratulations to Brit and the Ki team for a wonderful initiative and a very deserving winner of the 2020 Fairfax Innovation Award. If we were doing this live, we'd give you a big clap. Well done. Now every year, I introduce our management team to you at this time for the past 2 years. To save time, we've highlighted our management team in pictures just before the meeting. It is these leaders who made Fairfax such a wonderful company. We are blessed with a very unusual group of smart, hard-working and trustworthy people, our real strength, and the reason why I'm so confident that we will do well over the long term. I'm sure you would have noticed the long-term tenure of most of these executives with Fairfax. And again, if we were there, they'd all be in front of us, and we get them a nice round of applause. Now -- so today, even though we're all coming together on the web, we will, as we have done for the past 35 annual meetings, quickly go through the formal meeting, give a short presentation with slides, have a Q&A and then you can submit your questions in real time on this platform, which will be received by Jeff Stacey and Jeff Fenwick who will moderate the Q&A after the presentation. Before we go any further, I wanted to thank Vinodh who's an officer at Fairfax and our team at Fairfax for setting this up so well. And this is virtual and lots of work goes into it, and we've got a terrific production team to help us produce this annual meeting. Just a reminder that at 2:00 p.m., we will have the 6th Fairfax India Annual Meeting, which will take place virtually also. Now let's go to the formal part of the meeting, which -- so that we can finish some of the things we have to do in a formality. So I will call the formal meeting to order. I'm Prem Watsa, Chairman and CEO of Fairfax, act as chairman of the meeting. I will ask Eric Salsberg, the Secretary, to act as secretary of the meeting. I shall also appoint Shirley Tom and Louise Waltenbury of Computershare Trust Company to act as scrutineers and to compute the votes of any polls taken at the meeting and to report thereon to me as chairman. I can report that as result of reviewing an affidavit of mailing and a preliminary report of the scrutineers, I'm satisfied that notice of this meeting have been duly given, that a quorum is present and that this meeting is therefore properly called and constituted. I propose to move quickly to the formal meeting, as I mentioned previously, announce that the minutes of the previous Annual Shareholders Meeting held on April 16, 2020, are available for inspection upon request of Fairfax' Corporate Secretary. As well, I now formally place before the meeting the annual report of the company ended December '20, which includes the company's financial statements for its fiscal years ended December '20 and 2019 and the report of our auditor PricewaterhouseCoopers on the 2020 statements. In addition, I declare that the total number of votes attached to shares represented at this meeting by proxy, which have been directed to be voted in favor of each matter to be considered, is in each case not less than 95% of all votes that may be cast on such matters. As mentioned earlier, voting today will be conducted by electronic ballot. I will ask that the balloting be opened to registered holders and appointed proxy holders. The polls are now open. And at this point, all registered holders and proxy holders who have properly logged in will be able to see on the screen all motions to be brought forth at the meeting. Following the presentation of the motions, Jennifer Allen will confirm for us when the polls were closed. Once the electronic balloting closes, your votes will be submitted. So we move on to the election of directors. I will now move directly to the election of directors and invite a nomination for directors.

I am Peter Clarke, and I nominate as directors of the corporation for the ensuing year Anthony Griffiths, Robert Gunn, David Johnston, Karen Jurjevich, William McFarland, Christine McLean, Timothy Price, Brandon Sweitzer, Lauren Templeton, Benjamin Watsa, Prem Watsa and William Weldon.

Thank you, Peter. As no other nominations for directors have been received and as the number of directors nominated is exactly the number to be elected, I confirm that those 12 nominees are proposed for election as directors of the corporation. Given the virtual meeting requirements, we will have a vote on this together with the next resolution, appointment of auditors. I will now invite a resolution regarding the appointment of an auditor.

I move that PricewaterhouseCoopers LLP be appointed as auditor of the corporation to hold office until the next annual meeting.

I second the motion.

Thank you, Peter. Thank you, Jen. We will now take a brief pause to allow registered holders and proxy holders to complete the electronic voting on the motions brought forth at this meeting. [Voting]

Mr. Chairman, the voting is now completed, and the polls are closed.

Thank you, Jen. I've been advised by the scrutineers that the ballots and proxies deposited for the meeting have now been voted. I can confirm that the nominated directors have now been appointed as directors of the corporation to hold office until the next annual meeting. In addition, I confirm that PricewaterhouseCoopers has been appointed as auditors of the company to hold office until the next annual meeting. We'll file a report on SEDAR setting out the voting results following the meeting. I propose now to terminate the meeting. After that, I'd like to talk to you about our operations. And then as I said to you, with the moderators, we will have a question-and-answer session. I now invite a motion for termination.

I move that this meeting be terminated.

Thank you, Jen.

And I second that motion.

Thank you, Peter. I declare the meeting terminated. So now we'll go to the presentation that we have for you, and then a Q&A after that. So this is what we do for you every year. And basically, what it is, is to say that, I've used this expression before, that nothing here that's not in our annual meeting -- annual report, other than the first quarter results at -- some of the numbers that we mentioned to you last evening. So -- but a picture is worth a thousand words, and so I'm going to go through this very quickly for you, highlighting some of the things that are important. Looking at -- first of all, I'd begin with our guiding principles, then I go into how we've successfully navigated the pandemic. That was the hand that we were dealt with. I want to talk about the long-term strengths of Fairfax, the huge long-term strengths we have. And I want to make a few comments on the financial markets. So with that as background, let's just go to the guiding principles. So guiding principles very simply is something that we've had all 35 years. And it shows that we run our companies for the benefit of our customers, providing outstanding service to the customers, looking after the employees that we have, making a return for our shareholders, which we still continue to define as 15%, and then putting some money back into the communities, 1% to 2% of our pretax profits. The whole company, when we began, was worth $2 million. Last year, despite of a pandemic, 2020, we put USD 23 million back into the communities we did business. When you do all of those things, we think business is a good thing. We think business is a force for good. I'll talk to you a little about that. And we think this is how companies should be run for long-term benefit to all of those different constituents. Our focus is long term, growth in book value and not quarterly earnings. We go through friendly acquisitions. We are always soundly financed, and we provide complete disclosure to our shareholders in our annual report, which you'll see. Next slide is structure. Our companies are decentralized. So this structure is so important for us, over 35 years. The fact that we are decentralized, we empower our management, big, big plus. We'll talk a little more about it. So our companies are decentralized, except, as you can see, performance evaluation, of course, succession planning, things like that, which are corporate functions, complete and open communication between Fairfax and the subs, share ownership incentives, large incentives based on underwriting profit. That's how what we have encouraged across our whole group. And we remind ourselves we're a small holding company and not an operating company. We don't run anything in Fairfax. There's only the better part of 33 people in the holding company. We purposely keep it small so bureaucracy can build up, and empowerment works very well. Values, of course, are the key for us. Honesty and integrity, essential in all our relationships, never be compromised. We're results-oriented team players. You see no egos. You've seen all of this before. And we remember that we are hard-working, but we have families, and we want to do everything we can to succeed, but not at the expense of our families. Next, you'll just see business is taking risk. You make some mistakes. You learn from them. You try not to do them again and then continue forward. But we'll never bet the company on any acquisition or project. Finally, you're spending so much time in the office, you might as well have a few laughs. So we believe in having fun at work. Those are our guiding principles. that's the reason we have a wonderful culture, the culture that is a fair and friendly culture. It's based on the fact that -- the golden rule, treat people like you want to be treated yourself. And we have a wonderful group of people that you will -- many of you have met them before, and you'll -- these are our presidents and officers, directors, and you'll meet them again next year. So we were handed a tough deal. The whole world was handed a tough deal last year. Right out of the blue, I call it the blackest of black swans. 180 countries were shut down. COVID-19 closed down the economies of more than 180 countries. 15,000 employees working from home across the world without missing a beat, as I told you before. We said no COVID-19 layoffs in any of our insurance companies. I'm happy to say all our presidents fulfilled that mandate, no layoffs. It's the worst thing we could do. All our employees are family. We think of them as family. We weren't going to have any layoffs. And finally, we had the -- as I mentioned earlier, I joined the BlackNorth Initiative. We set up a committee at Fairfax, among all our companies, and we're well on our way to end, as far as we can as one company, discrimination in the workforce. So that's sort of the hand we were dealt with. I want to just show you what we have done very quickly. So the first, of course, is underwriting. And this -- the top -- these are like -- the 7 companies there, you got Northbridge, Odyssey, Crum & Forster, Zenith, Brit, Allied, Fairfax Asia, they are about 90% of our consolidated. When you consolidate all our insurance companies, then this is about 90% of our business, about approximately USD 19 billion. And you can see the combined -- in spite of COVID losses of $660 million plus, we had a 98% combined ratio. COVID cost us 5%. Excluding COVID losses, we have -- you can see that, 93%. And our premiums grew by 12%. The only one that had a combined ratio above 100% was Brit. Brit has a terrific track record. But when you have COVID come in like it did and you had some business interruption and cancellation insurance, it's a big specialty product. And Lloyd's, as you can see, it cost 16 percentage points for COVID losses. That's a loss -- that's how business -- you get these losses -- that was totally profitable in the past. But then last year, it wasn't. We expect Brit to come back strong and be very profitable in the years to come. But this is the group of companies that we have, that $19 billion across the world and -- but it's consolidated. Now the next slide -- next slide, please. I'll just show you very quickly the underwriting -- yes, this is how our numbers work out. Underwriting profit, investment income, which is interest and dividend income. You add the 2, you get about $900 billion. That's our operating income. Then from that, you take out runoff. Runoff is mainly asbestos. The incurred losses are coming down significantly, but we still have these expenses that are going through. One of these days, Peter Clarke, our Chief Operating Officer, says it'll end. But right now, this is what's flowing through. Noninsurance operating losses like last year, a lot of noninsurance companies, which are either equity accounted or consolidated like Recipe and Thomas Cook had losses and they flow in. Interest expenses is consolidated. That $476 million is not ours. We are responsible for about $280 million of that. The rest is basically consolidation of all the other companies. When you have -- when we have an investment, and we have more than 50% or we control it with 40%, then it's consolidated and the interest expense comes into our statements. The other -- we -- last year, about this time, we sent a press release saying that we had -- the markets had come down dramatically in March. We had a $1.5 billion unrealized loss. We thought it was unrealized. We thought it would come back. I gave you many examples of when that's happened. Well, by the end of the year, that $1.5 billion became a positive $313 million. So it turned pretty dramatically. And in the first quarter, that $313 million has gone up by another $875 million approximately. And then I'll talk about the other $1 billion, but the $875 million is reported. There's $1 billion on top of that, pretax income, net earnings. That's just how our companies [ cope ]. So it's basically underwriting profit, investment income, some ins and outs. And when you -- equity account are consolidated, you have to flow the business. But these are all investments, and I'll come back to that. Next slide, please. So we talked about monetization of some of our private investments. So we have a robust acquisition of Horizon North by Dexterra. So Dexterra is now the new name of the company and we own 49% of it. And we're expecting great things from Dexterra in the years to come. We sold Davos Brands, as you know, to Diageo. Fairfax Africa has merged with Helios. We've got terrific team and Tope and Baba, 15-year track record, and they're going to make Helios Fairfax partners. We call it one of the most successful investors in Africa. And we think it's -- you should follow that with a lot of interest. We've got our shares. We're not selling a single share, and we're backing Tope and Baba. They're exceptional. Peak Achievement sold its holdings in Easton, as you know. We didn't -- for 5 years, we backed Farmers Edge. We nurtured it, and the same with Boat Rocker with the IPOs. Both these companies today have more than $100 million in cash, no debt and very, very sound businesses going forward. We expect a lot of good things from both of them. We did that. And then we've got several IPOs in the works in India. We'll talk a little more about that in the afternoon. So we continue to monetize. There's a few other things that we're looking at monetizing, but this is in spite of the pandemic. In the midst of the pandemic, we were able to do all of this. Next slide, please. So when -- in March, stock prices went down, there was a crash. There was extreme uncertainty, creates a panic, corporate spreads widened significantly. Our team, led by Brian Bradstreet and [ Kleben Sava ], who's our trader on the bond side, [indiscernible] and supported with -- all our investment teams supported them because every day, there was a new issue. We all worked together, $4 billion in investment-grade bonds, average yield 4.1%, term to maturity 4 years. We didn't go long term, and net gains on corporate bonds of almost $0.5 billion. And we've sold about half of them now at less than a 1% yield, less than a 1% yield. We bought them with a 4.1% yield. Next slide, please. Well, then Wade Burton, you thought of Wade as an equity guy. Well, he's pivoted and he's responsible for these first mortgage bonds. And he's invested $1.5 billion with our long-term partner, Kennedy Wilson, which has been a fantastic partner. We've done really well with them and with Bill McMorrow and team, secured by high-quality real estate, Western United States, this is where Kennedy Wilson has tremendous expertise. The long-term value -- the loan-to-value ratio, that means the mortgage loan to the value of the property, less than 60%, average yield of almost 5% and a maturity of 4 years. Again, short term, we're worried about interest rates going up, so we don't want to go long. And so $1.5 billion we put in there, and we'll likely put a lot more. Next slide, please. So this just shows you our financial position as it existed in 2020. And important point for you to know is that the way we -- the way you handle unexpected events like the pandemic is -- the way we handle it is to make sure we have cash in the holding company in excess of $1 billion, no maturities in the 3 -- we basically have bonds. We don't have bank debt. No maturities for the next 3 years, and then a credit line, a bank line of $2 billion. So in the very near future, with the RiverStone and OMERS deals being closed, we'll have [ $1.3 billion ] in the -- in cash and marketable in our holding company, no bank debt. We have refinanced everything that matures in the next 3 years at lower interest rates than what they were maturing at. And we have a credit line that's unused of $2 billion. That just makes us strong financially. This is something we've done right from the day we began because you don't know what will happen in the future. You really don't know, like the pandemic, just came right out of the blue. And so what you do is to have a very strong financial position. And so we'll be at [ $1.3 billion ]. And that's after -- the RiverStone U.K. transaction is subject to regulatory approval. And as soon as we get that, then our numbers will be like I mentioned to you. Next slide, please. This is a very -- now I've gone to the long-term strengths of Fairfax. What are the strengths? We're building -- we've built Fairfax over 35 years. We're going to build it over long after I'm gone for the next 100 years. And what are the key strengths? I'm highlighting them to you very quickly. The first was decentralized operations. We're one of the most decentralized operations that -- 23 companies here that -- if you look at the 6, 7, 8 companies here, and then if you look at Fairfax Asia and you look at other insurance here, there's about 23 of them. Presidents running them, groups that are working together and tons of experience at Fairfax, all their own companies. Huge, they're all empowered. Fairfax has got a very small holding company, very few people, got 15,000 people in all these companies. And so they're empowered, and the bureaucracy is very simple -- is very minimized. So you can see, if we want to -- if there's a problem, we can find that out pretty quickly. Andy Barnard -- all of these companies reporting to Andy, as I'll show you soon. And if there's an opportunity in any of the companies, we can take advantage of it. They're focused right now. From $19 billion, we are -- we've already grown. The gross premium has grown by 17%. If you work that out, that work out to more than $22 billion. So more than $3 billion of gross premium at exactly the right time because these are very good times in terms of pricing for us. We've had times when the pricing wasn't good. Now the pricing is good and we expand, and we're expanding significantly. Northbridge has expanded, Odyssey is expanding huge, Crum & Forster is expanding. Zenith workers' compensation is not expanding as they shouldn't be expanding because prices are not going up. And it's flattening out and they might expand in the next year or 2. Brit, of course, will expand. And Allied World, top 1,000 companies, is expanding the most among all our companies. Fairfax Asia is expanding, and many of our companies in the other area are expanding. Business is good. It's a hard market. We're expanding. Next slide, please. This just shows you in pictorial form, in a pie chart how globally diversified our operations are. That $19 billion, -- the United States, you can see, is about 2/3 of the business, and then you can see where else we are. It's all over the world, and that's the left pie chart. The one on the right shows you all the different specialties that we have. All of this is to say we don't have to buy anything. We might have to fill a few gaps, as I'll mention to you. But we've got tremendous specialties, and we've got empowered management groups who've been with us for a long time. We love the culture that Fairfax has built. Next slide, please. So this shows you -- the consolidated, you can see, is about $19 billion in premium. That's 100%. But see the nonconsolidated, that's basically the Gulf Insurance Group, GIG we call it. It's about $1.5 billion, $500 million in Eurolife, and there's another $400 million in Digit and Falcon Thailand makes up the rest. And so that's $2.5 billion in premium, pretty significant amount. We're just buying AXA Gulf, GIG. Our partners are KIPCO. We're buying AXA Gulf This is the Middle Eastern operations of AXA, almost $1 billion in premium. And GIG will become the third largest company in that whole area. We started with GIG having about $500 million in premium. It's got $1.5 billion, and now we're just $1 billion, which, by the way, will be internally financed in the main, will be about $2.5 billion, which is very significant in that area. We've got terrific management teams. It's pretty decentralized also. There's -- the $2.5 billion has a portfolio of about $5.5 billion. So you can see we've got -- Fairfax is all about underwriting profit on the insurance side and managing the investment portfolios. And so you can see there's a significant amount of scope and scale to our operations and we are growing in the future. One -- next slide, please. So this just shows you, again, in our map where we are. And there'll be places we'll buy things a little here and a little there. But basically, we are not looking to make any acquisitions -- any significant acquisition, the property casualty side, and we're not looking to do any stock issues. That's over. We've built a tremendous business in excess of -- likely by 2021 in excess of $20 billion. If you add the -- if you add our consolidated -- nonconsolidated operations, $24 billion plus, something like that. And so we're focused on cooperation, working together and expanding. So next slide, please. So here's a really -- a long-term strength of Fairfax, the operating management team. This will be on our website. But just to have a quick look at -- Andy Barnard have been crucial for our business. Best thing we ever did was attract Andy -- that were -- 25 years ago, built Odyssey, pass it on to Brian Young. Brian has done a fantastic job for the past 10, 11 years. But here, look at Silvy Wright and you look at all of the presidents who run -- just put your eyes to that, and you'll see them -- a long service with Fairfax and/or in the companies like Allied, for example, Lou has been there for 9 years, and we bought Allied about 4 years ago. So very strong management team, empowered and why we're so excited about our companies. Next slide, please. Another [ one ] -- so with the insurance business, what's the beauty of the insurance business is this float. The float that we had when we began, you could see $13 million, $2.5 a share. The float is $927, and float has no cost for the last 5 years. No cost meaning a benefit of 1% and in the last 10 years, a benefit of 1.2%. So what does that mean? So in the last 5 years, we had an underwriting profit cumulative of $1 billion; last 10 years, $2 billion; in 2020, about $300 million. 95% combined on the business that we're writing approximately $15 billion, this is net of the [ $19 billion ], which is growth. That results in $750 million each year. So we have -- and we think the next few years, because of a hard market, the 95% is very much there. We have catastrophes that we have all sorts of things that can affect that, but the underlying ratio, we think, underlying -- underwriting profit. So we get $750 million, and then we have the use of this $24 billion in the investment side. That's the magic of the property casualty business. That's why we got into the business 35 years ago. Next slide, please. So then that $24 billion in float plus about $19 billion in capital, which is our shareholders' equities of preferred and some debt, gives you $43 billion of an investment portfolio. And that's how it's structured. First thing is it's all long-term value-oriented. Second is -- the point to make is it's -- look at that, 39%, almost 40% in 1- to 2-year treasury bonds, earning no income to speak of. But we think it's the right thing to do, not to reach for yield to be very safe, go into things like mortgages. And the first mortgages, which, by the way, if they default, Kennedy Wilson can take it over and look after it very simply because it's 60%. And they've got -- they put -- well, we put money, they invest between 10% and 20%. So we are partners together, and we don't -- any -- don't expect any default. But if that happens, we've got a ton of protection. Our common stock position is 27%. That comes in our position. It's all value-oriented. I'll talk a little more about that. It hasn't done as well. It's now -- in the fourth quarter, it began to do well with the vaccines. Normalcy returning. First quarter is coming back, and we really like everything we've got. The 27% is marketable stocks that we can sell. And we have yet to see -- the first quarter is good, but we -- but there's a long ways to go. And when you ask me any question, and I'll be happy to answer it. Can we go on to the next slide? This just shows you our -- the IFRS accounting is tough, very difficult to understand. I know that you -- and many of you have told us this. Common stocks where you own 5%, 6%, something, common stocks, positions than -- that's at mark-to-market. That's $4.6 billion, 4 point -- that's mark-to-market, no difference. Common stocks, when you have 20% or -- in that area or a little more, it's equity accounted. That means you take the earnings, less the dividends, any other adjustments, and there -- that's what it's carried at, not at market. And common stocks consolidated, there are like Recipe or Thomas Cook, they're consolidated. Then that's like we own 100%, and then there's minority interest that take out the percentage that we don't own. And that is shown here. These are all noninsurance investments, and you can see them here. And there's a ton of -- there -- I listed all of the management teams. They're exceptional management teams. And so that $4.6 billion at the end of December has gone up by $875 million. The $3.76 billion and the $1.3 billion, the carrying value for equity accounted and consolidated, that's gone up by $1 billion. So in total, we've gone up by $1.875 billion. Only $875 million is going to be shown. The other $1 billion is going to be -- sell -- you're not going to see it. But you got to understand how the value is being built up. It's very, very significant in our common stock. This is a huge long-term strength. We've made a ton of money over 35 years, and now we are so sizable that we are expecting we're going to do really well over time. It's the same people that have been looking after the monies. We went through a time period with value investing not being so good. In fact, at the end of '19, 2019, it was 10 years that value investing underperformed growth -- about to change in 2020 and then the pandemic came in. We think it's about -- we think it's changing already. And with the vaccines that are coming in, with pent-up demand built up, we think we're just beginning a time when value investing is going to be very, very profitable. More in the Q&A. Let's go on to the next slide. So you see our rate of return here over a long period of time. You could see it. First point I made last year is that you see the time -- that negative return, the portfolio went down is you can see that's 1, 2, 3, 4, 4x. And if you just notice the first time and then look at the next year, we had a very good year. And then the second time, you can see in the [indiscernible] and again, the next year was very significant. You had third and fourth, the same thing. This year -- first quarter 2020 was a very significant [ negative ] year. But we made it -- it was the pandemic, COVID-19, but we made all of that up in the year itself. As I said, $1.5 billion turned around, went up $300 million. And now we are seeing not only the $875 million, but also the investments that we have. As I mentioned to you before, the consolidated and associates up about $1 billion. So that's $1.875 billion. You're not going to see the $1 billion, though, in terms of profits. That will just be in a note. But that's something we'll disclose to you on a regular basis. Next slide, please. So this is investments in India. We're very excited about what's happening in India. Mr. Modi has got his second term. He's really focused on being business friendly. And here, it shows $2 billion. The Fairfax India is 34%, $495 million. That's what we own of Fairfax India, but we control about $3 billion in assets. So the difference between $3 billion and $500 million, $495 million at the end of December. $2.5 billion, if you add that to the $2 billion that we have -- we have about $4.5 billion in India, and we're excited about the possibilities. The stock is selling at $12.5. The book value is over [ 16 ]. You'll get the first quarter later on. There's a lot -- and even that's very understated. It's conservative because we'll be taking a lot of companies public at significant premiums of what they're carried in, in our books. So Fairfax India and India is going to be a tremendous place to put money, and we're expecting to put a lot more money over time. And there's a lot of good things happening there. [ More ] in person with the Chairman who's really the CEO and has done a fantastic job running this company [indiscernible] in Bombay and Sumit and the management team of [ Fairbridge ], and [ Gopal ], of course, working here who used to be at [ ICS at Lombard ], investment guy, fantastic track record. We're really happy with them. Next slide. So here's our investment, another long-term strength of Fairfax. This is the team that we have. It's basically very flat, and we've got next generation, which is Wade Burton and Lawrence Chin. You could see the experience. We've -- been with us for 12 years. And they're looking after the different areas that we've allocated. Money managers are empowered like [indiscernible] and [ Jeff Ware ] and you could see them there. Big, big strength, and all based on a value-oriented philosophy and a long-term outlook. It's a huge, huge strength. Roger, Brian, [ Gendron ], we worked together for a long, long time, and we're having a ball working with these younger people. Next slide, please. This is an interesting slide because it's our long-term strength of Fairfax, is our track record. We've had a terrific track record from the time we started. But you can see -- and you can see the white bar is the book value growth. And book value growth went up to [ $478 million ]. We pay a dividend of $10. But the stock price stopped. That's why I said it was ridiculously cheap, and I bought some. We made an investment of -- in -- that we disclosed, about $500 million in our total return swap. And we think Fairfax is -- I used the word ridiculously cheap. [indiscernible] cheap now, but things have improved so significantly and will improve in the future that I think the best is yet to come. Lots of opportunity for Fairfax. Next, please. Next slide, if you don't mind. So the last few slides I have for you is on the speculation in the financial markets. So I talked about this in the annual report. You can see it, the dot-com darlings, there we're like 10 of them. You can see them there. And see what happened between February, like, say, March 2000 and December 2002 to like about '03, I would say, and you can see the devastation in that time period. The NASDAQ dropped about 80% and a whole ton of companies went bankrupt. These -- out of these 10 companies, take -- Microsoft, Oracle and IBM were the only ones that today are selling at a higher price than they were selling in 2000. And Microsoft took 16 years, that's 1-6, 16 years before it hit the price that it hit in 2000. You can see the price earnings ratio, 90x on average, S&P 500 about [ 27 ]. And if you go onto the next slide, today, speculation in the financial markets today. So you got the [indiscernible] plus Microsoft again, and Microsoft's got a fantastic record, I must say. And -- but it's selling at the -- you can see the price earnings ratios, particularly not Amazon and Netflix, terrific companies. These are all very good companies, not unlike the ones that were there in 2000. These are all the big companies. And then the question -- and see how well they've done in the last 5 years, 300% versus the S&P, which went up 100%, and these are now accounting for 25%, 26% of the Standard & Poor's, 5 companies accounting for a big percentage. Really good companies. The question is, can you continue to extrapolate that? And so this is from [indiscernible] who's really -- they've been doing value investing for 101 years, and these tables are from them. We think it's not going to be pretty, particularly for the smaller companies, which don't have the financials like these ones have. So if you go on to the next slide. So here is Tesla, which has been a terrific company in terms of revolutionized electric vehicles and phenomenal success. But here's how the market cap is compared to how much unit sales they do. Look at the unit sales in red on the right pie chart, some chart that one of the investment counsel has put out. You got Toyota next to them. You've got General Motors on the other side. You got Volkswagen. And these guys are all producing electric vehicles. And so it's left to be seen. But this is the type -- and this is Tesla, of course. You've got ZOOM Media, as I pointed out, $130 billion, I think. That market cap was a $3 billion in sales, $3 billion in revenues. We don't think -- not sure. First of all, we don't have any investments in them, but we don't think it'll be a pretty ending whenever it ends. The next slide, please. This shows you the housing bubble, what happens this year, just to say, bubbles burst. Economics is important. The fundamentals are important. And you can't go for long without the fundamentals. Next slide, please. So this just shows you in 2000 -- so there's a bifurcated market today. There's a market that's technology, growth areas that -- being valued at really high prices. And then there's the run-of-the-mill companies that are good companies but are selling the value-oriented stocks, and they're selling at reasonable prices. In 2002, see what happened, and Fairfax equity portfolios went up 25%. But in that 3-year time period, the markets all dropped. That's '99 to 2002. Markets all dropped by 45% to 50%, [ variably a lot ]. We went up 100% because of value investing, and we think that we look at the companies that we have. We look at Atlas, and I'll be happy to answer any questions. Atlas and Stelco and others that we have, and we say they've got a long ways to go. Eurobank, a long ways to go. And so the markets might come down, but we think our investment portfolio is in very good shape. Next slide. This just shows you the Treasury rates. Just wanted to show you the long-term Treasury rates. Roger, Brian, we remembered, in 1980s, in 1981, '82, 14%, 15% interest rates. You couldn't -- most people thought inflation would never come down, and most people thought interest rates wouldn't come down. And 40 years later, you have the opposite. Most people think inflation will never go up, and interest rates are highly unlikely to go up. And I'm -- pretty smart people are making that point. And we just think there's so much of demand, so much of fiscal stimulus and monetary stimulus to that -- it perhaps is only a question of time before inflation picks up. It began to pick up a little and interest rates go up. The big risk today is bonds. Bonds have no margin of safety. It goes up 100 basis points, as I said in our annual report. You lose -- depending on your term, you lose anywhere between 15% to 30% for 100 basis points only, and it's a long ways from where it used to be. Next slide, please. So then -- I'm just going to end with 2 slides. One, this is something that I really love showing you and I want to show others is, business can be a force for good. Over 35 years, we wrote cumulative premiums of $175 billion. That's gross premium. After reinsurance, we get net premiums, and we paid $95 billion of claims. So our customers benefited by $95 billion over that time period. That's providing service to our customers. We -- our employees -- $1.8 billion to our employees all over the world. Donations since we began, $230 million, and now we're making $23 million, $25 million, $30 million every year. Pretax -- we have paid taxes to the governments. Benefit, $3 billion plus in taxes. And of course, for our shareholders, we grew book value by 18.7%, which is what we control since inception. And so I just think all over the world, when I see a country that's business-friendly, and India has become business-friendly, Greece has become business-friendly, that's why we think these countries are going to benefit greatly. North America, of course, has been business friendly. The United States being the star, in spite of changes in government, have been very, very business-friendly. Next slide. And this is the second last slide. Just to show you that we continue -- this is the -- since we began, we started with 5 million. We issued 23. You can see 29 we issued, we bought 6.5. We have bought 1.8 million recently. We'll continue to buy shares, not at the expense of our financial position, not at the expense of making sure insurance companies can take advantage of the hard market. But our excess capital will be going to buy stock. And for our final slide is the one that we've had -- we always end our meetings like this, which is to say our guiding principles. We are building our financial strength for the next decade. We think we're in great shape. Our guiding principles have remained intact. Our performance is good, not recently, but long term. Our strengths are very, very good, both in the operating companies and the investment management side, but it's buttressed. The foundation is a fair and friendly Fairfax culture. It's a wonderful culture. People feel very comfortable with it, and it's the reason why we'll last for a long time. So with that, I would -- I'm going to open it up now for questions. And we have Jeff Stacey and Jeff Fenwick, who have done this before for us, and we really appreciate both of them taking time out of their schedules to join us in this meeting. And if you have any questions, send it to them. And any question is fine, and we'd be happy to answer it. And I'll have Andy Barnard with us. We'll have Peter Clarke with us also, Chief Operating Officer; and Jen Allen, our Chief Financial Officer. So why don't we start with the first one. Over to you, Jeff.

Thank you, Prem, and good morning to everyone participating in today's virtual meeting. Before we get started, I just wanted to remind you about how to submit a question during the meeting. [Operator Instructions] Jeff Fenwick and I will try to get to as many of your questions as we can in the time we have. So with that, on to the questions. Prem, first and foremost, Fairfax is an insurance underwriter. Would you discuss the current environment for insurance and reinsurance markets?

Thank you very much, Jeff. That's a key question. We are in the insurance business, and I give you a sense for it. But why not pass it on to the fellow who is in charge of all our insurance businesses, Andy Barnard.

Thank you, Prem, and good morning, everyone. Our underwriting operations at Fairfax are in great shape. Last year, we produced an overall combined ratio of 97.8%, as Prem showed you, and that included almost 5 points of COVID losses. Our gross premiums grew 12% in 2020, and that growth has accelerated into 2021. In our decentralized system, nothing matters so much is the quality of the people we have leading our companies. And as we've said for many years now, we are blessed with an exceptionally talented group of CEOs. In times like these, with significant market hardening underway, the advantages of our decentralized approach shine through. While other large organizations manage from the center and often hamper their field operations' ability to react, our companies are nimble and ready to grow. This is a huge benefit. Because underwriting discipline has been a hallmark at Fairfax, our companies are less struggling to fix past problems and more focused on the opportunities in front of them. Closing in on $20 billion of gross premiums worldwide, we enjoy a widely diversified portfolio, with a strong presence in hundreds of market segments. The breadth of operations is especially useful when markets are tightening and opportunities are rising. Now I'd like to ask several of our CEOs to comment more specifically on their companies and the market conditions that they're experiencing. And for that, let's start with Brian Young of Odyssey Group. Brian?

Thank you, Andy. 2020 was a terrific year for Odyssey. I've been running the company now for 10 years. And in many ways, it was the most rewarding. I really have to thank my team, my managers, the employees that work for them for doing a fantastic job all the time, but especially in 2020 as we navigated through the pandemic. And honestly, we're all about underwriting profitability. We're in the business to make an underwriting profit, not just every now and then or most of the time, but always. Sometimes we won't. Insurance, reinsurance is a volatile business, but we've been hugely successful at it. Over the last 9 years, we've made an underwriting profit in each of the last 9 years. And over that period of time, we generated nearly just about $2 billion of underwriting profit at a combined ratio of 91% over the period. In 2020, our combined ratio was just under 96% on a U.S. GAAP basis. On an IFRS basis, it was a point less, and that generated $150 million of underwriting profit. I should mention in a year in which most of our peers generated underwriting losses, our combined ratio in 2020 was 8 points better than our industry peer group, and we're very proud about that. The market is hardening and has been for quite some time. I mean, rate started to change in the insurance markets, particularly in the U.S., London, Bermuda in late '17, early '18. Things speeded up in 2019, and they accelerated further in 2020. And we've taken advantage of those improving market conditions. In 2020, Odyssey wrote $4.4 billion in premium. That was up 16% on the prior year and 60% over the prior 3 years. And in the first quarter of 2021, we've gotten off to a fantastic start. Our volume will be up more than 20% in 2021. As we look forward in terms of market conditions, while we had seen fantastic market conditions, particularly in insurance lines, less so in reinsurance the last 3 years, and we expect to continue to see excellent market conditions. Rate -- the rate acceleration is slowing. Where we may have gotten 20% or 30% rate increases in a certain business segment, we're expecting rate increases more in the 10% to 20% range. Still attractive, still excess of loss cost trends, still expanding margins, and so we feel good about the business. Our appetite has increased. Just a reminder, Odyssey, today, we're a global reinsurance business operating through OdysseyRe. And we have a specialty insurance business in the U.S. operating through Hudson and internationally through Newline. Of the $4.4 billion we write today, 50% is in reinsurance, and we operate through 19 profit centers. As OdysseyRe around the world, the combination of Hudson and Newline is $2.2 billion. Hudson has 9 profit centers, and Newline has 7. So we have 35 profit centers around the world. We have tremendous diversification. Our network is extensive, both in terms of geography, but in terms of distribution. And so where we see opportunity in the market, we've really taken advantage of that, and we'll continue to take advantage of that in a disciplined way. Where things aren't working, we're asking our underwriters to put their pens down. But where we see opportunity like we do today, we're looking to grow the business. If you ask me what was the biggest challenge we face during 2021, it's not really the business. Again, we remain very bullish on our business. It really is getting people back to work as quickly as we can. While we have thrived in the pandemic, we are a business whose culture thrives in an office environment. We made it through 2020 because of our culture, and we're a team-oriented business, and we want to carry that through. And we think it's important to get our people back to the office as soon as we can safely, and we're hoping we can do it in the months ahead. Thanks, Andy.

And that's great. Now let's move to Lou Iglesias of Allied World. Lou?

Thank you, Andy. And I wish I could be with everybody personally right now, talking to everyone together. Hopefully, that time will come soon. In contrast to Odyssey's mix, we're much heavier on the insurance side. We're 80% insurance and 20% reinsurance. And while we faced many challenges in 2020 from the global pandemic, it was very important for us to stay extremely focused on the marketplace because we really do feel that this is our time in the marketplace where we're positioned, how the market is running and the products and geographies that we have. So it's very important that we stayed very focused. And we had a successful year in 2020. Just to give some metrics. Our combined ratio came in at 95.4, and we grew the company just slightly over 20%, and that's $800 million of growth over 2019. And it was very broad-based growth. So if you look across our products and our geographies, we have 43 global divisions worldwide, and 80% of those divisions showed growth in 2020. And that's the type of growth that we like to see diversified across the market. And of course, the areas and the products that had the best market opportunities were the ones that grew the most. So our global professional lines business, our D&O, our E&O, our global casualty business, property business and, more locally, our U.S. environmental business, our health care business in Asia and Europe, our commercial business in Europe, all showed strong growth in very, very good market opportunities. So we finished the year in 2020 at $4.6 billion of top line. And to put that in perspective, that's 53% growth over the end of 2017, which is the year that Fairfax acquired Allied World. Now Andy and Brian and Prem all talked about market conditions being strong, and they are strong, and that's really what gives us our desire to grow. The cycle continues to curve upwards into the hard market in the markets that we're in. So we're seeing that market curve upwards. And the other thing that we're seeing is that based on what we've seen in the first quarter of 2021, we're certainly not at the top of that market, so we feel like we have more room to run here. And our growth that we've seen has been largely rate-based growth as opposed to exposure-based growth, in other words, as opposed to adding risk to the company. And of course, we've done some of that because we are -- we do like some of the markets that we're in, but our growth has been largely rate-based. And 2020, as a company, we achieved rate increases over 25%, which consistently led our peer group. And so this type of growth, we think, is very healthy. It helps to limit the volatility in our company. It helps to improve our overall risk profile. And we also feel like we're putting on good quality IBNR reserves in this type of marketplace. And the market's been -- Brian has mentioned, the market has been moving in this direction for some time. Again, I would say, shortly after 2017 was over, shortly after Fairfax -- we became part of the Fairfax family, we started seeing the market moving up in several of our products. In 2020, we saw material strengthening. Of course, some of that due to COVID and the uncertainties around COVID, but not only that. There are many factors in the market right now that are pushing it upwards. And so some of those include -- and we're coming off a drawn-out soft market, and so there's a need for rate in many products. There's been claims inflation. There's low interest rates. There's been a number of large cat losses. But a couple of things have been a little bit different, and one of those is we've had many unexpected losses, unmodeled losses, such as COVID, such as wildfires, such as convective storms, the Texas winter storm, right? So these unmodeled unexpected losses into the marketplace help to drive the market upward, I think, even more than some of the other things that I mentioned. And the key to be able to handle these is to be ready, to have a strong balance sheet, have a strong underwriting, strong IBNR and then you could handle the unexpected types of losses when they come along. But I'd say one of the characteristics of this market that has been especially important to us has been -- what we've seen a global contraction of capacity in the marketplace. So in other words, many carriers in the soft market we found themselves over lined in areas, and there's -- for the past 1.5 years has been a big supply crunch. And when you bring supply out of the marketplace, any marketplace, generally, prices go up. And so an example of this would be a company may have had $100 million line out on a client, and they pull it back to $10 million. Well, that opens up a big gap, and we've been going in and filling those needs for our clients in what is a hard marketplace for that type of activity. So let me finish up the market discussion by just saying this is a different type of hard market. Traditionally, what we're more used to is a market hardening based on the reinsurance industry tightening up pulling the direct market along or a lack of capital pulling the direct market along. Well, there is capital, and this market has not been led by the reinsurance industry. It's really led by the direct marketplace. It's a grassroots market hardening. And I think when that happens, in my view, anyway, I would feel like it's a less fickle market, and I think that there's likely a little bit more time for this market to run. Well, let me finish by just saying how proud I am of all the people at Allied World. We faced 2020. It was a global crisis. The team was very professional, very committed. We all went remote, and we didn't skip a beat. And we have a wonderful team in Allied World. And one of the key things was, during the crisis, we also had all this opportunity, and the team recognized that. And so we didn't lose the opportunity because of the crisis, and we're not going to. And we're committed to moving forward with all that focus. So Andy, I'll stop there, and I'll turn it back over to you. Thank you.

Fantastic, Lou. Now let's ask Matthew Wilson of Brit to offer some of his thoughts. Matthew?

Well, thanks, Andy, and good morning from the U.K. While underwriting conditions in the Lloyd's market are currently very strong indeed, and certainly the best that they've been in over a decade, we've seen compound rate increases in excess of 30% since 2018. And we've also seen a fall in our attritional loss ratio for the fourth consecutive year. That said, we must recognize, as Prem mentioned at the start, that 2020 was a challenging year for Lloyd's and for Brit, principally driven by the COVID loss activity. Lloyd's ultimate gross COVID loss is estimated at over $8 billion and is 5% of the Lloyd's market. Brit, therefore, was not immune from those losses. We had net COVID losses of $270 million, which was the equivalent of 16 points on our combined ratio. And the greatest proportion of those by far emanated from contingency insurance and reinsurance. And for those of you not familiar with that, that's the cancellation and abandonment of sporting events and conferences globally. And as a specialty market, in particular, Lloyd's does have a disproportionate share of that class of business. The underlying result, however, was much more encouraging, and the attritional loss ratio, as I said, fell for the fourth consecutive year to a respectable 52%. And our ex COVID combined ratio was 2% better than Lloyd's. And actually, that's the fifth consecutive year of outperformance of the Lloyd's market. We grew our premium to $2.4 billion from $2.2 billion, growing our net earned premium by over 8% in '20 over 2019. Through that period, to put it in context, from 2018 to 2020, the Lloyd's market has remained flat, as it has addressed its global underperformance. That means that with our 20% growth over that period, we actually became the second largest managed agency in Lloyd's, showing that we are taking advantage of this hardening market. Rates, as I said, continue to strengthen, and we saw 10.6% of rate increase in 2020. And for the first quarter of 2021, that's continued with a further 8.6% of rates. And our attritional actually for the first quarter hit 48%, which equals the lowest attritional loss ratio that Brit has had in the last decade. Undoubtedly, for us, the most exciting development in 2020 was the creation of Ki. As Prem said, Ki is the first fully digital and algorithmically underwritten syndicate in Lloyd's. We developed it as a collaboration between Brit, Google Cloud and the University College London. And we worked with the Google Cloud engineers to build a front-end web-based platform, so that the brokers could actually access our business. And UCL, one of the world's preeminent academics, they design of algorithms for use in the financial markets. And those algorithms we're using within the system to select risk. I think it's important to say that, whilst it was a collaboration, Brit and Ki own all of the IP going forward in this system. We became operational on the 1st of January for 2021 and pleased to say that we've already written $180 million of gross written premium as at the 1st of April. Blackstone have invested alongside Ki -- sorry, alongside Fairfax in Ki, and that's the first time that Blackstone have ever invested in the Lloyd's market. At scale, we think that Ki will have an operating expense ratio of 1/3 of that of the average Lloyd's syndicate, and that equates to a 10% combined ratio advantage over our peers, and that's before any outperformance potential of the algorithm. So we really believe that Ki can disrupt the $50 billion Lloyd's marketplace, and it was the largest tech start-up in the U.K. in 2020, which we believe can therefore take a significant market share, coupled with a significant outperformance as we move forward. In finishing, I'd just like to say that, I mean, my view is that any culture is exhibited not in the best of times, but under extreme pressure. Our people at Brit work in one of the last face-to-face trading environments globally. But since working from home within a 24-hour period, it's worked seamlessly since March 2020. And we've been singled out by multiple brokers for our service excellence to clients. So I'd like to thank everyone at Brit for remaining focused, and despite the pressures, not diverting from our overall ambitions. Thanks, Andy.

Thank you very much, Matthew. And now let's turn it over to Silvy Wright, the CEO of Northbridge. Silvy?

Thank you, Andy, and hello, everyone. I'm very happy to provide you a Canadian perspective into our market as well as Northbridge, although we do have some common messages. I'll start with the market conditions. 2020 market conditions were very firm in Canada, and the reasons for that were: one, prior year underwriting results were not great. We had inadequate pricing in some segments. We've had increased weather catastrophes over the last 5 years, in particular. Some markets had pulled out, out of unprofitable lines. And in addition, there has been a low interest yield environment, which puts pressure on improving the underwriting profit. Although the commercial lines market was very firm, it was a really different picture for personal lines, in particularly the auto. With the lockdowns here in Canada, we started to experience a decrease in auto claims. And because of that, the personal auto rates were not increased. And in fact, insurance companies provided premium relief and rebates. From a Northbridge perspective, we had a very good 2020. We're the third largest commercial lines insurer in Canada, and we write -- we wrote $2.3 billion in premium in 2020, a 15% increase over 2019, and that compares to the industry that grew 7% for the same period. We had a 92% combined ratio, which is a very strong year. And we're very proud of our customer retention ratio, which was 91%. Like all our sister companies, we've been operating remotely since March 2020. And as Prem said, we haven't missed a beat. We have successfully supported our customers. And I want to extend a huge thank you to all our employees that made that happen. Looking at 2021, we expect the commercial lines market to continue to be firm. And the personal lines auto will, of course, be impacted by the continued lockdowns here in Canada. We are very optimistic about 2021 and our focus on delivering exemplary customer service and our underwriting discipline. We have started 2021 with a very strong first quarter. So with that, Prem, I'll hand it back over to you. Thank you.

Thank you very much, Silvy. Now we'll pass it on. Thank you, Andy. You can see we've got very strong management. We selected a few, just to give you a sense for the stability in our management team and the hardened veterans. They know how to take advantage of our hard market and grow significantly. And we're delighted to show that to you. And thanks, Andy, for setting all that up. We'll go on to Jeff Fenwick for the next question. Jeff?

Prem, thank you, and good morning, everybody. Prem, the first question from the investor -- one of the investors is with respect to Fairfax' investments in total return swaps. He's hoping that you could comment on the performance over the last year, some of the gains and losses and perhaps comment on the decision to build a large notional value position in Fairfax' own stock and what the plan is for that investment.

Thank you, Jeff. Yes. So we had some small exposure to total return swaps when we see some special opportunities, very marketable. And mostly, we buy it in our insurance companies, so the liquidity is very, very significant there. And we bought some in March, and we've reduced it quite significantly. But it's a very small portion of our investment portfolio. We used some of that in the holding company. We did buy some of it, as I said earlier, because we thought Fairfax was exceptionally cheap. And so we took the opportunity to buy some Fairfax shares, which I think has gone up by about $100 since we bought it in U.S. dollars. And we're quite happy with that -- with those shares that we bought. We think it'll be a really good investment over the next 4, 5 years. Thank you, Jeff. Can I pass it on to Jeff Stacey?

Prem, a question about Digit Insurance. Fairfax current ownership stake in Digit is 49% as of the end of the year, but the company has indicated that it can increase this to 74% upon conversion of a convertible preferred security when permitted by the recent Indian budget. There was a recent funding round for Digit earlier this year where the valuation was reported to be 1.4 -- excuse me, $1.9 billion. So the question that came in is if Fairfax' ownership increases to 74%, and we use this recent valuation, it would suggest that the fair market value of Digit would be closer to $1.4 billion versus the current carrying value of $517 million at the end of the year. Is that a reasonable inference to make? And would Fairfax consider an IPO for Digit in 2021 that could potentially monetize the significant unrealized gains?

So Jeff, that's a very good question. First of all, Digit is an outstanding company that Kamesh is the entrepreneur. He built the second largest company. We built the first one, which is ICICI Lombard. He built it with a terrific competitor, building Allianz Bajaj. He was the guy who built that, and then he spent another 17 years in total with Allianz, the last 6, 7, 8 years in Munich. And then -- but then he wanted to do something entrepreneurial, and he came to us and about 4 years ago. And from scratch, he built a company with about 2,000 employees, $400 million plus in premiums at the end of March 2021, the year ending, and he is profitable. Underwriting, as I told you, as combined ratio of the [indiscernible] was 113%, but he's profitable. This before I answer your question. Here's how Kamesh looks at it, and I think it's right on. India's insurance business, property casualty, they call it non-life, is about $25 billion. In the next 10 years, he thinks 15% growth, it'll grow to about $100 billion, which is not unreasonable. And his aim from $400 million is to have 5% of that $100 billion, so it's about $5 billion. So that's the growth opportunity that's facing the property casualty business in India, and that's facing Digit in particular. And that's one of the reasons we went into the business because we saw this opportunity, huge opportunity. Now Digit is -- we are fortunate that the government has changed the rules and allow us to go to 74%, which we can do to the convertible, as you mentioned. It's valued at, in our books, on 100% level at $900 million. The -- there was $28 million that was done at -- Jeff, $28 million was done at, I think, $1.9 billion, as you said. And so that's a significant increase, but we haven't reflected that, and it's not going to be reflected there because it was a small amount of money. Some private equity guys wanted to do it, put the money in. In terms of an IPO and possibilities, of course, we'll look at that. There's a significant amount of growth opportunity at Digit, and our own companies are going to benefit from that as that -- Digit, as you -- some of you may know is totally digital. There's no paper at all. They started that totally digital. And so the possibilities are huge in a growing underpenetrated market in India, that Digit will grow significantly, but we always look at possibilities. And the Indian government has taken out restrictions, Jeff, on Indian companies accessing the U.S. markets. So you can list in U.S. markets, but they haven't worked out all the details yet, and the throes are working out the details. But we've got a wonderful story in Digit as we have in all our companies. I mean, I told you, Jeff, that in our annual report that Odyssey started with about $250 million. And you heard Brian Young, $4.5 billion and growing over 25 years, and they're coming out with a book that will be in the summer. And then we'll share with all our shareholders a copy of that book next year when we all meet together. But we've got tremendous talent like Kamesh across all insurance companies. We got, as I said, 23 in the consolidated area and another 5 in the -- which is not consolidated. But Kamesh is a great example of what a wonderful leader can do. And the opportunity is huge, and we'll keep our options nice and open. So Jeff Fenwick, next question.

Thanks, Prem. The next question comes from a long-term shareholder who's asking about balance sheet leverage. He notes that there are often comparisons between Fairfax and firms like Berkshire Hathaway and Markel. These firms tend to run with lower relative leverage levels. His thinking is that perhaps that would make the stocks less volatile through challenging periods, and the question is whether Fairfax might look in time to lower its leverage level.

Yes. So Jeff, in terms of leverage, our leverage is on the high side. Once we do this, the RiverStone sale, once that takes place, and there was deal, leverage will start coming down quite significantly. And then, of course, all of these increases, the [ 8 75 million ], the $1 billion that's not reflected in our balance sheet because of the accounting, that will all have an impact. But over time, we see our leverage ratio coming down significantly. Last few years, we haven't -- our profitability hasn't been high, so that's impacted our leverage, too. But having said all of that, our financial position is rock solid. I'm very comfortable with our financial position. The fact that we have no maturities in 3 years. We access the Canadian bond market, as you know, Jeff. We access the U.S. bond market. We've never had such support in Canada or the United States, wide range of bond managers and both -- those institutions in both countries have supported us. And so we just see, over time, our leverage coming down, and we're very much focused on that over time. Next question, Jeff Stacey.

Prem, we've had some questions coming about...

A little louder, Jeff.

We've had some questions come in about Farmers Edge and Boat Rocker Media. As you alluded to in your presentation, both of those companies completed IPOs during the first quarter. I'm just wondering if you could comment on the accounting treatment for these 2 positions and whether Fairfax will be booking an accounting adjustment in its first quarter results.

Yes. So first of all, on Farmers Edge and Boat Rocker, we nurtured both those companies for 4, 5 years. In the case of Farmers Edge, there were quite a few losses. And the way -- when you consolidated -- when you consolidate these companies, the losses flow into our income statement, balance sheets, and our carrying values go down. And today, in both cases, as I said before, the companies have gone public, raised money in the public markets. And financially, they're -- and they've got $100 million in cash. They've got no debt. And they're highly unlikely to need any support from Fairfax, both companies, and the opportunities are very significant. In terms of the carrying values in Farmers Edge will be down, and market price -- the IPO will be quite significantly higher. And so there'll be some gain. But on both those companies will -- in 2 weeks, you'll find out when our quarter comes out -- soon as our quarter comes out, you'll find the details on it. But there will be some gains given that we've taken them public. But the important thing, Jeff, is we've nurtured 2 companies. We take the cost for 4, 5 years, and now we're seeing the benefits. And you're going to see the benefits over time because both companies are really in good financial shape, great management team. And we think the opportunity is very significant in the long term in both those companies. Jeff Fenwick?

Thank you. The next question is with respect to Atlas and Eurobank and Fairfax' investment in those firms. Those are very large positions for Fairfax. Are you concerned about the exposure there? And is there any intention and time to take those positions?

A little louder, Jeff. I'm sorry.

Just with respect to Atlas and Eurobank, would Fairfax ever look to reduce its exposures there given how large those investments are?

Yes. So they're 2 very large positions, as you point out. That's why I'm quite excited. Now you look at Atlas. Atlas was at $14 a share in '19. In March, it goes down to $6.5, $7, closes the year at $11, and it's back to $14. But what does this company do? And they, of course, are in the containership business. In 2020, they have reduced their costs. They're the best on-time delivery. Safety is fantastic. And then late in the year, they get the opportunity because the shipping yards have no orders. So they go into the shipping yards in Korea, in Japan, in Shanghai, China, and they give them -- they got a great cost to build new ships, the latest containerships that you can see, large containerships. Containership leasing prices are to the roof, so they go and lock them up for 5 -- they lock them up for 5 years, 10 years and, in some cases, 18 years. And so if we take $100 million, the cash-on-cash yield is about 8%. So if you take $100 million ship, one ship, and they get a cash-on-cash at 8%, leasing less the cost, that's about $8 million. And then they're able to finance that at about 80%. And the way you -- when you take after financing costs on their own equity, it works up to about 15%, maybe 20% and maybe higher. And what they've done is they have expanded in the last few months their capacity by 45%. I talked about that. And what that means is that earnings per share, instead of $1, the next few years can be $2 a share, and that free cash flow can be even more significant. So this is won by a fellow by the name of David Sokol. He's got a tremendous track record at Berkshire Hathaway and his CEO, Bing Chen. So we expect that to be very significant. It's marketable, very significant performance for us. Eurobank is a bank -- there's another company that started at $0.90 at the end of summer and about $0.90 at the end of '19, went down to at the low might be $0.26 -- below $0.30 in 2020. It's back to about $0.80 today. This book value is about $1.35 this year. Next year, $1.50. They're making $0.10 this year and $0.15 next year. And Greece has got the best government in Europe, we've said that for some time, very business-friendly government, transforming how Greece is governed. And I think Eurobank run by Fokion and George Chryssikos will benefit greatly. Fokion is the CEO, and they've already reduced their nonperforming loans to below 10% and next year to about 6%, I think. And so you can -- and they're big positions for us. So at $0.80, it's interesting. But if you think it'll go to book value, and perhaps higher, then you can see how much gain we could get. We have, I think, 1.002 billion shares of -- because it's below $1, so there's lots of shares, 1.002 billion shares in Eurobank. So both those are big positions, but great management team. And I can go into Stelco and all the other CIB bank in Egypt, outstanding bank in Egypt and on and on and on. But we have wonderful positions, and we've been in the investment business for a long time, 45 years, Roger, Brian, Chandran and myself, we've all worked together for a long time. And now Wade Burton and Lawrence, they're managing $1.5 billion. They've done so well that, as I said in the annual report, we're giving them another $1.5 billion, and that will continue over time, so that Wade and Lawrence can manage a large amount of money. And of course, a lot of [indiscernible] money is managed by [indiscernible] on and on and on. So I'm diverting a little bit. Yes, those large positions we like, but they're marketable and salable at any time. Jeff Stacey?

Prem, we've also had a number of questions coming about BlackBerry. Could you tell us about your BlackBerry position? Did you sell when the share price went up? And if you did not sell, why not?

Well, thank you, Jeff. I think many, many people have asked that question, and we weren't in a position as an insider to respond. But now I can respond by saying that the convertible that we had, which is convertible at $10 a share, in September of last year was -- the conversion price went down to $6 a share to extend the term for another 3 years. And the SEC rules, short-swing rule, it's called, is that once you do that, it's considered to be a new security. And so for 6 months, you're forbidden to transact in the shares of the company. And if you do, all the profit goes to the company. And we looked at it hard. We checked all the rules, but it was very specific. And so basically, we were locked out as a company until March 1. This doesn't restrict individuals. It restricts the company because we had a convertible that was a new security. And so it was after March 1 that we would like to sell. The stock was down to below $10 by that time, and so we basically didn't sell. Our stock cost -- all-in cost, everything included, is about that price, $10 a share. So to date, BlackBerry hasn't been a great investment for us. We still back John Chen. We think he's an exceptional executive, and his track record speaks for itself. And we think over time, we'll see what he can achieve. He's got 2 big pieces, as I talked about, the connected cars joint venture with Amazon and -- as one piece, and the second is cybersecurity and Cylance. And so he's focused on both those pieces, both growth opportunities. And -- but we could -- we did not sell. We were not allowed to sell. And after we were allowed to sell, the stock price had come down. Jeff Fenwick?

Okay. Your next question is with respect to Fairfax' large cash position at the holdco. And from the investor is asking, why not take some of that cash and buy back Fairfax' shares?

Yes. So that -- Jeff, as you know, that's cash in the insurance companies, and we got a large amount of cash. The only way you can buy back stock is if you could dividend that stock back to the holding company. So you move the stock positions to the holding company, and you move the cash to the holding company and then dividend. And then you can use that. And we want to keep the cash, of course, of the insurance companies right now. We don't want to reduce capital. If you dividend it out, you reduced capital. And the opportunity, as our CEOs and Brian and Lou and Silvy and Matthew made the point to you, the opportunity is in the insurance business. It's a hard market. It doesn't last for long, and it comes once in a long time. And so we're taking advantage of that, building our business, and then we'll always look at buying back our stock with keeping our financial position solid, making sure we support our insurance companies, as I said before, and then using excess cash to buy back our stock. But that's certainly in our minds, and we don't see a lot of opportunity in terms of buying insurance companies because we've done that. We've got a very large scale business now. Jeff Stacey?

Prem, you alluded in your presentation to RiverStone Europe the pending transaction. Can you provide an update when you expect the RiverStone Europe transaction to close?

Yes. Thank you, Jeff. RiverStone Europe was basically subject to regulatory approval, so it goes to -- any time you do an insurance deal, any place in the world because it's regulated, change of ownership goes to -- and in the U.K. and London, it's a PRA. It goes to the regulatory body, and they do all of that checking and make sure it's acceptable. So it's in that process. We think somewhere before the end of the second quarter. I can never predict these things, Jeff, but we think before the end of the second quarter, it should be done. Jeff Fenwick?

The next question is with respect to COVID, Fairfax' COVID exposures. Prem, do you believe that Fairfax is now well reserved against any future claims? Is there anything here that could hold back performance going forward with respect to COVID?

Yes. Jeff, it's a live cat. You know what that means. That means there's still exposures there, but we've got -- that $669 million, I think, that we put in at the end of 2020 in all our companies, 50% is IBNR, which means it's incurred but not reported. So it's like a reserve that we put in. And we've taken, in the case of Brit, a lot of cancellation insurance for 2021. So if anything comes along in 2021, we don't think it will be significant because we provided for it. But we could have some movement here or there. But it is -- the business interruption is continuing in some parts of the world. It's not in the United States. Contracts are very clear there. But in other parts of the world, they continue. So we feel comfortable, but you always have to be careful with reserving. But our record is good, and we are conservative, so we feel good. Jeff Stacey?

Prem, question about the bond portfolio. Long-term interest rates have moved higher recently. Is this move enough to tempt you to increase the duration of the overall bond portfolio?

Unfortunately, no. Jeff. I showed you the chart, it's just the bottom for the 10-year rate in the United States, like all time. Even in the depression of the 1920s, it never went -- there was 0.5% sometime in August, I think, of 2020. It's now come down to 1.6%, 1.65%. But it still hasn't really come back to the pre-COVID levels, and 2% for 10-year bonds is very low. Inflation that was reported yesterday or a couple of days ago was 2.5%, something like that, and that number might go up. The price of commodities are high. Steel prices are high. Any type of price that you see is high. They usually get passed onto in terms of consumer prices. So we -- as I say, the big risk we think is in the bond market. There's no margin of safety. And so we think that's -- now you could have a variant of COVID-19, which shut some of the economies again, which will get these rates could go down because of that or there might be -- people might not spend. There's a lot of money on the sidelines. People have high savings rates in the United States and Canada. They may not spend when you open it up. They might -- as the economy opens up, they might use it to pay down debt. So you got that possibility. But we think the smaller likelihoods, most likely, is people will spend and as the economy comes back, they'll be pent-up demand to go to restaurants, to fly anywhere on holidays. And once you feel comfortable that you've got the vaccine and you're well protected, but there are risks in it. We just don't think they're getting paid enough money, and so we keep it 5 years or less. Anything that we're doing is 5 years or less in the main. Jeff Fenwick?

The next question is related to Fairfax's dividend. Prem, the investor notes that the dividend hasn't been increased in many years now. Is there any thoughts to potentially increasing it in the future?

Not likely, Jeff. We've got it at $10, which is quite -- that's for $260 million. We've got 26 million shares. That's $260 million each year. It goes out for the dividend. We'd like to keep it there and not cut it. And so we don't think it will -- it's unlikely to increase. We'd rather buy back stock when we have excess capital. I think that's the best way to return capital to our shareholders. And so that's what we plan to do. Jeff Stacey?

Prem, in the last year, Fairfax has been quite active with its strategic monetization program. When you look many years into future, do you foresee the company continuing to make controlling purchases in non-insurance businesses? Or is the strategy changing?

So we bought some companies, Jeff, that were private companies. And so they're private companies, and they've -- they weren't as successful as -- we are all about having great management running our companies. And the insurance business, you see how -- what a wonderful team we have. So is the case with our non-insurance investments. And we might have deviated from that a little. They're coming back nicely, we think. And will we have controlling investments, that reminds me of -- we've got a block of some of you, long-term shareholders, will remember. Red Leaf Foods feed business. And 80% -- 2009 I think it was, 80% of the shares came up from Australia, the Australian controlling shareholder have to sell. And so they sold 80% at something like $8 or $9 and -- per share. And 6, 7 years, we got, I don't know, $6, $7 of dividends cumulative. And then someone came and bought it for $45 a share, and the rate of return was exceptional. So we are more focused on -- and they had a terrific CEO running that business. We're focused on good companies, well financed and available at good prices. But I quoted Phil Carret, who talked about management, like I've been in the business now for 45 years, if there's one thing that's key, and I explained to you in terms of Atlas, Stelco, I mean, this company, like Stelco is steel, right, steel company of Canada. It's run by a fellow by the name of Alan Kestenbaum. And steel prices are down, and a tough pandemic. What does he do? He reduces the cost even further. He buys up equity interest. He's one of the best, I know. minds. And he improves his blast furnace and capacity, I think, by 10%. And the price of steel is at directed levels, and he's going to make a ton of dough in the steel business, no doubt. And he's an exceptional guy running it, Alan Kestenbaum. And we bought it at $20 a share, something like that. It went down to $4 in March, and it's now about $30 a share. And so these prices go up and down. They're not -- we might be excited like we are today when prices -- our stock prices have gone up. And then in March, we were disappointed. But it's always a long term that counts. But value investing is back. It's recognized, and we think we're in for a long period of time. Value investing has worked for decades, but the decade ending 2019 decade, value investing hasn't worked. And most value investors are no longer there. Very few of us are there. And so we think the next 10 years could be a really good period for value investing for some of the companies that we have. And -- but we don't have to buy -- we want to buy good companies at good prices, financially sound. We don't have to buy control. We buy 10% or 5%. But we're getting bigger with $43 billion, $22 billion and $20 billion plus in business. So over time -- but we invest worldwide. 75% of it is in fixed income. Only 25% max can be in common shares. So we think we still have an opportunity. A question that you might have is how can you make 15% in this world where there's very little interest income, and that's because of our common stock positions. So in 2019, we basically made 15%. We grew our book value by 15%, and we had a 6.9%, almost 7% return on our portfolios. But most of it came from some interest in dividend income, but a lot came from the equity positions that we have. We're trying to get 15% compounded rate of return on our equity investments. I haven't always done it. I made a few mistakes in the past, but we are patient, and we take a long-term view. So we think, as I said before, the best is yet to come. Jeff Fenwick?

The next question is about Fairfax India. It continues to trade well below its book value, and the investor wants to know whether Fairfax might look to increase its stake in Fairfax India or perhaps Fairfax India might look to do more significant buybacks of its own shares.

Yes. Jeff, that's a very good question. That's another example, right? So the stock is about 12.5, and I think Fairfax India has bought a ton of stock, which we've disclosed, 3% or 4% of the company. So that increases our -- indirectly, all existing shareholders have a bigger share of the company. And so Fairfax India will continue to do that and retire the stock because it's still cheap, but that gives -- that's the reason why I expect, for the next long term, that Fairfax India stock price will go up. Staring you in the face, it's $12.5. Our book value is through $16. We've got IPOs that are coming through. We'll talk a little about that this afternoon. And the stock is at $12.5. So why? Because the COVID-19, India has come through a really tough time. We can see through it. We can see 11% economic growth this year in 2021 and perhaps significant economic growth in the years to come. But most people are not focused on it. There's a bank called CIB Bank. It's a -- any of you who have a chance, look at that bank. It's unbelievable track record, over 25 years. 20% type return on equity, financially among the most sound banks in the world and very, very well managed, very risk conscious, nonperforming loans covered, I don't know, 3 or 4x. And so -- but you can buy at 8x earnings, 7 or 8x earnings. So these things will change. This is why we have bottom-up investors. We look at all these things, and we just think the prospects are very good for many of the investments we've got. Jeff Stacey?

A question that just came in, Prem. Is Fairfax officially out of the stock shorting business?

Thank you for asking, yes. You know how to make a point there, Jeff. But yes, especially out of it. Shorting in terms of the S&P 500. Shorting in terms of individual stocks. We are not going to do that at any time. And we put it into our investment policy document, so there's just no way we can do it. We had 1 stock that we had shorted earlier. No, it wasn't a new one. We just didn't cover it in '19 and let it run and it cost us, as I told you. But yes, that's over. That episode is over. What we're looking at is, like right now, lots of cash and the equity component is focused on good companies available at reasonable prices. And all the time, taking long-term view and backing the management. Always friendly, never unfriendly. But thank you for asking that question, Jeff Stacey. Jeff Fenwick?

Next question is about the way the management team works within Fairfax. The investors are wondering, Prem, if you're still active in the day-to-day decision-making around investments? And how is the -- how are the responsibilities in that team evolving?

So like one of the fellow said, it's time for you to retire. But Jeff, listen, I am active, but I showed you the management teams that we have, right? So in the insurance business, we are very decentralized. And all of our presidents, all of it comes to Andy Barnard and Peter Clarke, Chief Operating Officer. So all of that comes in there. And all the consolidation, of course, is Jen Allen, our Chief Financial Officer and her team. And on the investment side, Wade Burton looks after all of the people managing their portfolios in Asia or in Middle East or in Latin America, they come -- all come into Wade Burton and Lawrence Chang -- Lawrence Chin. And Roger and myself, we manage the portfolio. Some of the big thing -- so anything that goes up above $200 million, $250 million, we're all involved in, and we come together. But Wade and Lawrence can do what they want with the $1.5 billion they have. And we're going to give them another $1.5 billion. They can manage it as they see fit. But as a company, if we have more than $250 million, then we all come together as an investment committee, make sure we look at it. And I love the business, I love the people that I'm working with. I like propagating our culture, which I tend to do whenever I can. And this system works out very well because we've done all our companies on the Internet. And I love investing. So yes, I'm very much involved. I am very involved like -- I like it, but we've got a very flat structure. We're going to take -- Andy and I have worked together for 25 years. As I told you, Andy has been instrumental in our success in the insurance side. On the investment side, Brian, Roger, we've worked together. We -- frightened to tell you how long we worked together, 43 years, 44 years, maybe longer than that, not keeping count any longer. But we've worked together, and that's a lovely relationship. So we're really happy working together. And it's a big plus. The fact that we've all worked together for such a long time is a major plus. If you look at our insurance company, there are not too many insurance companies that would have 2 CEOs, honestly, for 25 years, only 2 CEOs. And the record is stellar, tremendous record. And so we haven't had -- we're very fortunate we haven't had turnover where -- we've been able to keep our people and empower them. And succession planning is all from that company. We don't really get someone from another company internally or externally. It's always from the existing. It always has been to date from the existing company. So yes, I'm very involved and have no plans to retire. Jeff Fenwick, thank you. Jeff Stacey?

Prem, could you please provide an update about Dexterra and AGT?

Yes. So it's funny you ask those 2 companies because Dexterra, they have the similar Chairman, Bill McFarland, who's our Lead Director, he's also Chairman of Dexterra and AGT. Dexterra, the CEO is John Mac Cuish, and they've come out and said -- it's a services business, as you know, and Horizon North was with modular housing. And they've come out and said that in the next few years, they'd be $1 billion company and $100 million in EBITDA over the next few years. And that's -- that'd be in Canada. And then over time, it's a natural business to expand in the United States. And so we're very, very optimistic about Dexterra. It's doing extremely well. It just reported its quarterly results. And AGT, as a company, as I said before, built by Murad in Saskatchewan, over the last 20 years from nothing to about $2 billion. The company worldwide operates lentils basically, but all over the world. And the opportunity in -- for AGT is also very, very significant because of Murad, who is the Founder and the CEO, and he's got a good partner in Turkey called Huseyin, who's -- they work very well together. So tremendous opportunity, we think, in both those companies. Jeff Fenwick?

The next question focuses on ESG principles. ESG has become a much bigger factor for a lot of investors when they're assessing, investing in businesses. Can you speak to how Fairfax is addressing these areas and intends to apply it to the way that it manages its businesses?

Yes. So I was a little surprised. We looked at ESG and Peter Clarke spearheaded it with John Varnell and Jonathan Godown and others, and they came out with a really good report. And I'm reading it and it's like, that's how we operate. We never thought any other way to do it, particularly in governance and doing well by society. We always thought about doing well and so you can do good. So the idea of 2% to our communities, which was not done by Fairfax, by the way, is done at the insurance company level. Each president does that and allocates it as they see fit with their employees. So it's -- and we give you every annual report. I highlight some of the charitable organizations that we've supported. And it's a big plus. We want to do that, and it's something that we just -- we've begun, I don't know, might have been in '91 or '92. So a long time ago, we decided 2%. And then -- so we looked at ESG, and we do all these things. We never -- we don't like talking a lot about it. But given all of the activities with ESG, and we put that document together, put it on our website, by the way, so you can read it. It gives you a nice long history of ESG. And we're focused, of course, on, I told you, BNI, which is BlackNorth Initiative, making sure there's no discrimination in our companies. Our companies -- I talk to people, as I said, from the black community. They're all very, very happy with Fairfax and the individual subsidiaries. They feel it's perhaps the best place they worked before. So -- and in terms of climate change, of course, we have to take that into account when we price for hurricanes and earthquakes and all of that. And I think the point's been made that pricing is very important there. Prices are low, and we don't have any potential for climate change. Prices are high, and maybe you get paid to take the risk of potentially having more hurricanes. And so we've explained all that, Jeff, and -- in our website. And -- but we'd love anyone to, if you have any suggestions, please let us know. But it's a live document. So as we go forward, we'll keep adding to it and change it. But that's -- it's right there. Of course, it's also decentralized. That's Fairfax. So we put a policy in place. And then each of our companies will adopt it and adapt it as they see fit. Next question, Jeff Stacey?

This just came in. Do you see any negative impact to Fairfax from the proposed corporate tax rate hike in the United States?

Jeff, we'll pay -- of course, there will be some negative impact. We'll pay more taxes. They're talking about 21% going to potentially 28% or 25%. So that means we'll have more taxes to pay. And -- but it's a level-playing field. Whatever the taxes are, we pay it. And it's -- the United States has had taxes go right up to much higher than maybe 35%. So I think we'll manage whatever the taxes are, but we like the fact that it was at 21%. But whatever it is, we'll manage with that. We don't think it will affect us in any significant way. Next question, Jeff Fenwick?

Next question is tied to your investment in CPI-linked derivatives. Prem, the investor asks, given your views on inflation, what do you plan to do with that portfolio of investments?

The division swaps basically, Jeff? Yes. So those we had for protection in the worst case. We still keep them. We haven't sold any. They're not worth a lot. But in the unlikely situation that deflation rears its ugly head, we'll have something that protects us some. But we haven't sold any. And it's like we bought insurance and the insurance wasn't needed. Jeff Stacey?

Question about the insurance pricing cycle. And the investor asked if the insurance pricing cycle remains hard, what level of premiums do you envision Fairfax could be writing on a consolidated basis in 3 years?

It's a really good question. And I can tell you what happened the last time. I will make a couple of points. First one is Odyssey was writing about $1 billion in 2000. 2001 happened, and after 2001, in the next 3 years, and these numbers are in our annual report, 2002, 2003 and 2004, Andy Barnard took it to $2.5 billion, so 150%, more than doubled it. And if you ask him today, he said that, that single decision perhaps was the key for how successful it's been because, of course, you had reserve development, negative development, deficiency from what we acquired. But this amount of business was so redundant that it helped us for a long time. So he went up -- so there it -- that's a virtuous cycle. So it goes up 150%. The investment portfolio was $2 billion. And without -- basically no additional money, we went up to $8 billion, $9 billion, 6, 7 years later. So the increase and -- from $1 billion to $2.5 billion, and it stayed underway and there we had some deficiencies from the past. So underwriting was good, but wasn't as good as today. Like now today, all our companies are really well reserved. It's all business we've written, we've reserved for it. And so when we go forward, you have what they call the virtuous cycle. So you have our premiums going up. You have an underwriting profit and the reserving will become even stronger because the pricing is going up so much. A lot of this increases rate increase, not new business. There's some of the new business also, but so you have rates going up, you have underwriting profitability and then the investment float starts increasing. So we're writing about just 17%. If you take that 17%, that will take the $19 billion to about $22 billion in year 1. Can we grow, in 3 years, 30%, 40%, 50%? We're big now. We're not small. But we have very nimble management team. It's not -- we don't have $19 billion in 2020. What we have is $4.5 billion with Odyssey with -- under Brian. We have about the same with Lou Iglesias. We have -- and you go on, with Matthew, as he said, $2.5 billion, and then the Lloyd's market. So you have all of these different very nimble operations that could take advantage of the business and the specialties. And so it's a very good structure. And I can't predict -- in the last hard market, we doubled our business, but it was small. We doubled our business for Canada, United States, all over the place. Here, it will be difficult to see how much we can go, but I'd love to see some very significant growth. I'm not going to say what the numbers are, but we put our pedal to the metal, and we're ready for as much business as we can. Jeff Fenwick?

The next question is related to your runoff operations. This has been a source of consistent drag on earnings tied to significant adverse development related to asbestos claims. What's the status of this portfolio today of claims? And do you expect them to continue to be problematic to Fairfax going forward?

Yes. So the runoff is -- we've got a terrific team there. You can't underestimate the plaintiff's lawyers. They continue to find ways to get paid. The social inflation plaintiff's lawyers are looking for higher awards. So that's -- we've got a terrific team under Nick Bentley. We're very happy with that. And we monitor it very carefully. We think it's well controlled. But we have to no substitute for just focusing on it because the plaintiff's lawyers are looking at every possibility to increase the awards that they get. We're comfortable with it and it's a dull role, but we are careful with it. I must -- Jeff Stacey, your question on how much we can write. I wondered Andy Barnard -- if Andy will take a crack at that. Andy, any comments on what we would be able to write in this market in 3 years? It's difficult, I know. But any comment on that, Andy?

Sure, Prem. Well, I would say that the premise is that we have the same level of rate hardening over the next 3 years, then I think we could easily be growing 15% to 20% over that time. But that is an uncertain premise. I think it's -- we're going to see eventually some slack, rate increase and -- in which case our growth levels would be down. But at the kind of price increases we've been seeing today, as you've said, I mean we're getting increased premium from our existing book, but there's also much more business that comes into the sweet spot and allows us to write more new business. So I would be comfortable of saying that if we continue with the same level of rate increase that we see today, 15% to 20% compounding over the next 3 years would be a realistic expectation.

I think that's right. And what we have, as Andy has shown you, the 4 precedents, what we have is veterans. Like, they've been through many, many cycles. Brian Young said underwriting profit, underwriting profit, underwriting profit. They're focused on underwriting profit. And when they see it, they go for it. So it's -- they're very, very experienced and so when Andy says if the rate increases like continue, so 15%, 20% each year that could easily take place. Where Andy and I say to them, this is the time to expand and expand as much as you can. So Jeff, is that Jeff Fenwick or Jeff Stacey?

Go ahead.

I guess a follow-on question there, Prem -- the follow-on question to that would be...

Go right ahead, Jeff Fenwick. Sorry.

Sure. The follow-on question to that answer would be the capitalization...

Little louder, Jeff. Little louder, if you don't mind.

Sure. I guess the follow-on is how well capitalized are the insurance operations to continue to pursue that growth and can Fairfax...

Yes. How would we capitalize that -- the insurance company. They're very well capitalized. And of course, Jeff Fenwick, as these -- when you get an $875 million in stock portfolios and another $1 billion in the consolidated because the insurance companies quite often they're mark-to-market. That flows into the capital base of our companies and the capital improves. While last year, of course, the opposite happened because it went down. And we had to support the companies, which we did. But as these stock portfolios go up, $875 million and the mark-to-market and then another $1 billion, so that's going to be -- make our companies even more solid. So our goal for each of our companies has expanded as much as you can. We'll figure out how to make sure you have the right capital. And we don't see any problem in that. Jeff Stacey?

Prem, we have time for about 2 more questions, I think. You alluded at different times about your optimism for the future for Fairfax. This investor is turning that around and saying, what is your biggest fear for the rest of 2021 from an economic and company perspective?

That's a very good question, Jeff. And there's always fears, right? And the big fear, I think, today, and you've heard this from many CEOs and many people in the businesses is that we'll have a variant that doesn't work with the vaccines that we have or you have Johnson & Johnson having problems or AstraZeneca is causing problems. I think it's a small risk. I don't think it's significant from what I read and what I hear. But there is that risk that it doesn't work. New variant comes in, they find out Pfizer is not as effective as they thought, so that's a major risk. But barring that, I think the economy is in a lot of pent-up demand for all sorts of products. And all of us have saved a lot of money. We haven't had any place to go, no place to go out. And so I think the economy, I think the other risk is more significant, which is -- demand is so strong that it pulls up inflation expectations, inflationary increases and interest rates go up. But I don't think that will be a problem because we've handled interest rates at much higher levels, Jeff, in the past, as you know. And in a strong economy, you can have higher interest rates. I don't think, at least in the near future, it's unlikely to have an impact on the economy, but there are risks, and we are conscious of them. Is that -- Jeff Fenwick, is that the last question? Or is that second-last question?

I guess perhaps this can be the last question, Prem. We have an investor asking about cryptocurrency. Given how much Bitcoin has increased and the space has gained in...

Sorry, Jeff. Your -- you need to increase the volume on that. Sorry about that.

Sure. The question is about cryptocurrency. And just given the expansion in that asset class, what's your view on the space? And do you view it as an investable area?

On what again, Jeff? Sorry, I didn't hear that. That was...

Bitcoin and cryptocurrency.

Oh, sorry. Bitcoin and cryptocurrency. Yes, yes. The Bitcoin is -- I talked about it, $1 trillion. There's nothing in it. It's like gold. People are buying it. It's supply and demand. And more recently, I just saw all of the Bitcoin companies that have gone public, and up 5x, 10x, 6x. My instinct is, I'm not going into too much about it, there'll be a lot of pain with this. Anything that goes up so fast tends to come down as fast. We don't know when that will happen. But for us, we stay away from all of that, just because we don't understand it. People who do understand it, then it might be a nice way to participate. But we don't understand it, and we think we have to be very careful because they've gone up a lot. But with that, first of all, let me thank the 2 Jeffs, Jeff Fenwick and Jeff Stacey, for being so kind to join us, and they know our company, both of them know our company really well. And so the company -- the questions come directly to them and then we can have this so that our shareholders benefit from this. And I want to thank each of you for joining us today. This is, hopefully, the last time we'll be doing a virtual annual meeting. I want to see all of you, shake your hands and have a little -- something to eat, like we do at lunchtime. And -- but we really appreciate all of you being with us. And so next year, we'll see you in person. And we'll end the meeting right here. I'll remind you that we have the Fairfax India meeting at 2:00 with Chandran and myself. We look forward to some of you joining there. But now I'll turn it back to the operator, perhaps to formally conclude the call. Thank you very much.