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

A very good morning to all of you. Lovely to see you here. This is our 39th annual meeting, 38 years since we began in 1985. I'm Prem Watsa, Chairman of Fairfax. It's really great to see all of you here and those of you joining us virtually through the Internet. Welcome to all our shareholders and employees across the world and all the people who support us. Now you know that we've had the best year in our history, $4.4 billion net income after taxes. This is from a company that never made $1 million prior to 1985, when we got involved. Billions of dollars, it reminds me of this guy who said to god, "God, is it true that to you 1 billion years is like a second?" God said, "Yes." The guy said, "God, is it true that to you $1 billion is like $0.01?" God said, "Yes." The guy said, "God, can I have $0.01?" And God said, "Sure, just a second." It took us less than a second, 38 years. It's now more than 2 years since Russia invaded Ukraine in February 2022. As I mentioned last year, our presidents are keeping our people safe. And they are our heroes working under extraordinary difficult conditions, and our business is doing exceptionally well. And we have a group led by JD Dolan who looks after them, provides all sorts of support. And to JD Dolan and his team, let's give them a nice round of applause. Now let's recognize our presidents in Ukraine. We've got 3 companies: Andrey, Oleksiy and Slava from ARX, Universalna and Colonnade. We're the biggest company in Ukraine. And we are fortunate to have Slava with us here. Slava, where are you hiding? You stand up -- and recognize him. As I mentioned to you, there's been tremendous support from our European companies, from JD Dolan. And we are treating them as we treat all our companies, one big family. Please keep our Ukrainian brothers and sisters in your thoughts and prayers as we stand beside them united in our support. In the last 4 years particularly, our fair and friendly culture has shown brightly. As you know, we had no layoffs in our insurance and reinsurance companies due to COVID-19. All 21,000 of our employees, including about 3,700 and almost 4,000 employees at Gulf, work from home. We continue to provide outstanding service to our customers. We treat our employees as one big family. And we don't want to have layoffs like you've seen recently in the tech industry or other industries particularly when they are in such strong financial shape. We are very careful in adding employees because, as I said, we don't like layoffs. While Fairfax and all our companies have been a great place to work where we do not tolerate or condone racism or discrimination, we still know that it's not been eradicated in our society even in 2024. As you know, in 2020, we created the Black Initiative Action Committee at Fairfax under the chairmanship of Craig Pinnock, the Chief Financial Officer of Northbridge, to make our company even more attractive to people from the black community and other minorities. We are making headway. And Fairfax should be, as I said before, a leading example of how one company can make a difference throughout -- can make a difference. Throughout 2023, we continued to advance the committee's recommendations. And it's resulted in a framework built upon 6 key pillars, which includes expanding our talent pool, mentoring and community alliances and partnerships, to name a few. And many of these are mentioned in our ESG report. We're also grateful to say that we maintain our strong partnership with the BlackNorth Initiative, which is a program in Canada that is committed to eradicating anti-black systemic racism through collective efforts across corporate Canada. I want to move on now to the Fairfax Innovation Award. It was created in 2017 to recognize teams at Fairfax, we're a very decentralized company, operating at the -- recognize teams at Fairfax as operating companies whose innovations have had a transformative and positive impact on their organizations. This year, an impressive 45 initiatives from 15 Fairfax companies around the world were submitted, diverse range of innovative projects. It is really fantastic to see that all Fairfax companies have continued to innovate within their markets. After reviewing all their submissions, Ki digital marketplace has been selected as the 2023 winner. There they are. Under Mark Allan, their team is right in front, and the whole company behind them, one big team. Huge congratulations to Mark and his team. Really well done. And they've done now -- they provide digital access to their partnership capacity. I think, in a few years, they've almost gone to $1 billion in revenue with underwriting profitability, phenomenal performance by Ki. Since the inception of Fairfax, we have always 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 full disclosure is provided to the people we deal with, following the golden rule: Treat people like you want to be treated yourself. I have a few points on this in our presentation. Now we have 21,000-plus employees, including Gulf, around the world, working in our decentralized environment following these basic principles. I'm pleased to say we recently posted our third ESG, environmental, social and governance, report. It's in, it's on our website. And while it's at the third report, we've begun following ESG principles, broadly speaking, since we began 38 years ago. We just didn't call it ESG. We did it because it was the right thing to do. 2023 completed 30 years and -- 38 years since we began in September 1985. And as I mentioned to you in the past, if you look at all the companies listed on the American stock exchanges, New York Stock Exchange, American Stock Exchange, NASDAQ, at the end of 1985, there were a little more than 6,000. At the end of 2023, there were about 600 still trading on these 3 exchanges. That is to say only 1/10 survived. Almost 90% have either gone bankrupt, been taken over, merged et cetera. They don't exist like they did in 1985, so we are very blessed to be in this category that have survived. If you then ask how many have thrived, I -- and we define thrive as made more than 15% compounded, over that 38-year period: only 1% or about 55 companies. And the number decreases every year. And our 18.2% compounded return in terms of stock price, including dividends, would put us in that 1%. In fact, it would rank us 17th, so we have been blessed mightily in terms of these 38 years. So we have a terrific culture that we're very happy about but needless to say it's performance oriented, over the long term, though, not any quarter, not any year, but over time. And we particularly think, as I've said in our annual report, the next 5 years will be great years for Fairfax and its shareholders. Now we have -- I've said this before. We are very blessed to have such a wonderful group of long-term shareholders who have stood with us through the ups and downs of business life, businesses ups and downs. Things happened. COVID happened. Different things happened, and -- but our shareholders in the main have stood with us. Our culture is the most 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 38 years, very tough to do. It takes a long time to get that culture ingrained in your companies. And it's protected for all time because Fairfax is not for sale. I happen to have a few shares that helps me make that comment. The fair and friendly culture, which is in our name, is why companies all over the world want to deal with us. It's our biggest advantage and we guard it fiercely. Now just a few things. I wanted to mention a book by Amitabh Kant. This is a book called Made in India, 75 years of economic history from independence, socialism to now free enterprise and business-friendly policies that Mr. Modi is adopting; well worth reading. I just thought I'd recommend that to you. I also want to take this opportunity to thank our directors, all 12 of them, for their strong support of our company, our directors. As I said in our annual report, we were very saddened to report the passing of Tony Hamblin on October 2, 2023. Tony was our boss at Confederation Life during the 1970s and early 1980s before he and I began Hamblin Watsa in September 1984. Tony was President of Hamblin Watsa until he retired in 2006. He's a great boss; and then a great partner for Roger Lace, Brian Bradstreet and myself and for all those years. And we will miss him dearly. All of us at Hamblin Watsa and Fairfax offer our sincere condolences to Tony's wife, Gail; and their 2 sons, Drew and Geoff. Now this is the first time that Rick Salsberg is missing the AGM, in 38 years, because of some health issues. Please keep him in your prayers. And I know he's watching us on the Internet. Brad Martin, our Vice President, Strategic Investments, and Officer at Fairfax, is retiring after 26 years with Fairfax. Brad has been an officer and been part of many of our major acquisitions [indiscernible] since he started with us. It's a long time, 26 years, almost like the history of Fairfax. And he has come from Torys. He's a lawyer. And he will continue to sit on many of our Boards that we have significant interests like Eurobank, Blue Ant. We thank Brad for his hard work and many contributions for Fairfax for all these years and wish him and his family a very happy retirement, Brad Martin. So over our 38-year history, we've always operated at a -- at Fairfax with an outstanding small team, our business is decentralized, with great integrity, team spirit, no egos. Protects our company from unexpected downside risks. And we take advantage of opportunities when they arise. This group has worked together for a long time, and I'll show you that in our slides, with trust and a long-term focus. I'm very happy to report that Peter Clarke, our President, has just completed his second year as our President and has been outstanding. Peter has been with Fairfax for over 26 years and really represents our culture very well, smart, hard working and with no ego. And now Peter will join me in the Q&A section. I need some help, so Peter, our President, will join me after the presentation, in our Q&A section. And then in the future, Peter will run all our quarterly calls with Jenn Allen, our Chief Financial Officer; and Wade Burton, our Chief Investment Officer. I am not retiring, but I want these young -- I want you all to get a sense for these young people. And they're going to do the conference calls and I'll be watching them carefully, but -- and so we have a very busy year. And let's recognize Peter with a nice round of applause, Peter Clarke. Now a couple of new things that have happened. We've -- at our annual meeting, we had come to an agreement to buy KIPCO's 46% ownership in Gulf Insurance. We're happy to say that we were able to close that deal late last year. We're thrilled to have GIG. It's a company we've known for almost 14 years now. It's a talented group led by Khaled Al Hasan and Paul Adamson. And so they're joining the Fairfax group. GIG has a very strong presence in the Middle East, probably the largest company, about $3 billion in premium; and operates in about 13 different countries. And so we are very excited about that. Let's just welcome Khaled and Paul Adamson. And in 2023, we invested in a leading U.K.-based manufacturer of food ingredients, Meadow Foods, founded by the Chantler family. And Meadow has a 30-year-plus history of partnering exclusively, as I mentioned in the annual report, with the world's leading food manufacturers such as Cadbury and others. And a big welcome to Raj Tugnait and his team at Meadow's. Raj with -- is with us today, Raj. He had a big chocolate bar with my name inscribed on it and -- getting close to my heart. We have a new investment which is extremely exciting for us at Fairfax. It's going to help thousands of autistic children around the world. We've invested in the world's first algorithm that uses in-depth profile of [ each ] child to create a learning and development plan called THRIVE guide. The founder, Jonathan Alderson, has a massive degree from Harvard and is author of the book Challenging the Myths of Autism. Jonathan has worked for 25 years with over 3,000 children around the world, with great success. I know this because he has helped 5 kids from Fairfax families and with outstanding results. And Jonathan is here. Let's give him a nice round of applause, Jonathan Alderson. In this shareholders' letter, I -- in this year's shareholders' letter, I had mentioned that we are restarting our shareholders' trip to India. The trip of a lifetime, we call it. [ Trips will -- they ] took place in 2019, 2020, but the COVID -- we had to stop it. Pleased to announce that, thanks to Madhavan Menon from Thomas Cook and Dipak Deva, the dates for the next trip are from January 11 to January 18, 2025. And Kasi Rao will be coordinating that. And he'll be outside, at the Thomas Cook booth, ready to take your names and give you -- any questions that you have to answer. You've got a good chance to see all our companies. And Thomas Cook will provide a trip of a lifetime, and I can't recommend that more highly to you. Now every year, I introduce our management team to you. For the past few years, we've done it through photographs and pictures. It is these leaders who make -- we're a very small holding company, so it's very much based on a decentralized approach, empowerment and these leaders who make Fairfax such a wonderful company. We are blessed with an unusual group of smart, hard-working, trustworthy people. That's our real strength. That's the strength of Fairfax and the reason why I'm so confident that we will do well over the long term. Remember we're building our company for the long term, long after I am gone. I'm sure that you have noticed the long tenure of these executives when you saw the pictures go, and I'll give you a quick rundown in our presentation. Please give them a nice round of applause, our leaders. Talking about long term and being with us for some time, I did want to recognize that, last year, I celebrated 50 years in -- my wedding anniversary, 50 years wedding anniversary, with my wife, Nalini. And she's here, Nalini. So we have many of our large subsidiaries, all the booths there. We've got 37 booths. We've got our managers. After this, you'll have the opportunity of a little meal -- and our Keg restaurants. Mark McEwan will be there. We have the Ivey Business School showcasing the Ben Graham chair for value investing. George will be here, many of our students from Waterloo -- it's a terrific university. We've got some members from there. And maybe just before I go on to the slides, just to make this point on donations. In the 33 years since we began our donations program, our annual donations have gone up approximately 155 times at a compound rate of 17%. We are now donating 2% of pretax profits, 1% through each of the companies, to donate it as they see fit; and 1% through our foundation. And we call it doing good by doing well. We've got to do well first. And this year, we've got this terrific annual report because we have so many companies that are giving money to their causes. And it's all over the world, and for the first time, we've put it all together. Jonathan Godown and team, we had a very good team with them, have put this together. It's well worth reading. And it will make you very, very inspired about our company in terms of the support that we provide communities in terms of money and time across our system. So Jonathan Godown and his team. Thank you. So now, as we've done for the 38 annual meetings that we've attended -- quickly go through the formal meeting, give you a short presentation with slides and then a Q&A. Peter and I will be happy to have a Q&A with all of you and answer any questions. There's mics put in. And we're taking questions from the Internet to Jeff Stacey, who's right there. And you can submit your questions as you have in the past. So with that, we'll move right into the formal meeting. I'll put this in here. And so the formal meeting: Ladies and gentlemen, welcome to the Fairfax Annual Shareholders Meeting. Prem Watsa, Chairman and CEO of Fairfax. I'll act as Chairman. Derek Bulas, the Vice President and Chief Legal Officer of Fairfax, will act as Secretary. 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 this meeting and to report thereon to me as Chairman. I can report that, as a result of the reviewing and affidavit of mailing and preliminary report of scrutineers, I'm satisfied that notice of meeting had been duly given, quorum is present and that this meeting is properly constituted. I propose to move quickly through the formal business. And as -- and the minutes of the previous annual meeting, held last year, April 20, are available for inspection upon request to Fairfax' Corporate Secretary. As well, I can now formally place before the meeting our annual report with no pictures. It's right there for you to read. And that's for December '23, with the December '22 statements; and the report of the auditor, PricewaterhouseCoopers. And 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 meeting is 78% of the votes that may be cast at the meeting. So voting today will be conducted -- because we have people on the net, will be conducted by electronic ballot also, for those attending virtually; show of hands, for those attending in person. I will ask that the ballots be opened to registered holders and appointed proxy holders. The polls are now open on the platform. And at this point, all registered holders and proxy holders attending virtually, who are probably logged in, will be able to see the screen on all motions to be brought forth to this meeting. Following the presentation of this motion, Jennifer Allen will confirm for us when the polls have closed. Once the electronic balloting closes, your votes will be submitted. With your consent, I will now move directly to the election of directors. I now invite nominations for directors.

I am Peter Clarke. And I nominate as directors of the corporation for the ensuing year Robert Gunn, David Johnston, Karen Jurjevich, Bill McFarland, Christine McLean, Brian Porter, Tim Price, Brandon Sweitzer, Lauren Templeton, Ben Watsa, Prem Watsa and William Weldon.

Thank you, Peter. Are there any further nominations? As there -- as no further 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 company. Given the hybrid meeting and the fact that we will also conduct a virtual vote, we will have a vote on this together with the next resolution. Let's give our Board members a nice round of applause again. Thank you. 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.

Thank you, Peter.

I'll second that motion.

Thank you, Jenn. For those attending in person, I would ask you that you please vote by a show of hands. All in favor? Any against? We will now take a brief pause for 60 seconds to allow registered holders and proxy holders to complete their electronic voting on the motions brought forth at this meeting. [Voting]

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

Thank you very much, Jenn. I have now been advised by the scrutineers that the proxies deposited for the meeting have now been voted. I can confirm that the nominated directors have been appointed as directors of the company to hold office until the next annual meeting. In addition, I can confirm that PricewaterhouseCoopers has been appointed as auditor of the company to hold office until the next annual meeting. We will therefore file a report on SEDAR setting out the voting results following the meeting. I propose now to terminate this meeting. After that, I'd like to talk to you about the operations. And then we'll have a Q&A session. Can I have a motion for termination?

I'll move that this meeting be terminated.

Thank you, Jenn.

And I'll second that motion.

Thank you, Peter. I declare the meeting terminated. Thank you very much, ladies and gentlemen. So now we go to our presentation, and after that, we have a Q&A. And I'll run through this very quickly. So first of all, our guiding principles. They haven't changed for 38 years. We expect to compound 15%. The key number is long term, not in any particular quarter and not in perhaps a few years, long term because sometimes, as you've seen recently, it takes time for things to work out. And we've run our company for 38 years for the long term. We always want to be soundly financed, provide complete disclosure to our shareholders. Our companies are decentralized, huge, huge plus, tough to do. And we have in our holding company 35 people, but we could have 200 people. If we're not careful, it can just go to the roof. And we are very, very sensitive about that; and keep it small so that our companies are run unfettered by the presidents, except for performance evaluation. As you'd expect, succession planning, acquisition finding and investments are done by Fairfax. Investing will always be done with a long-term value-oriented philosophy. And of course, we expect cooperation among our companies, and it is really good to see that it's going -- really increasing quite a bit. Complete and open communication. Share ownership, you can see, always based on profitability. And Fairfax will be a small holding company. And this is the key for us, our values, which makes our company such a good company for people to join. Honesty and integrity-first relationship will not be compromised, first value. Results-oriented, not political, team players; no egos. Confrontational style is not appropriate. We value loyalty. Follow the golden rule. I'm going to show you what we mean by that, treat people as we want to be treated. So a fabulous rule. We have emphasized that right through. That's when we added. We didn't have that in our guiding principles. We've just added that. And we've talked about it and actually use it in our companies and we put it in. Not hard working at the expense of our families. We always look at opportunities and look at downside protection always. We make mistakes, learn from them, and -- but we will never bet the company on any project or acquisition. We're very careful about that. And we're spending a lot of time in the office. We might as well have a few laughs. We believe in having fun at work. These are our guiding principles, ladies and gentlemen; and have been with us for a long, long time. And it's what differentiates Fairfax from other companies and what's behind our culture. This is what we added, the golden rule. And so in Christianity it says, in everything, do to others as you would have them do to you, "for this is the law and the prophets." Judaism, what is hateful to you, do not do to your neighbor. This is the whole Torah. All the rest is commentary. Hinduism, this is from the scriptures. "This is the sum of duty." Do not do to others what would cause pain if it has done to you. Islam: Not one of you truly believes until you wish for others what you wish for yourself. Fascinating. All these big religions, and there's about 13 of them, have the same golden rule in their scriptures, so what we've done is we put this golden rule, this particular slide, in all our companies and their offices just to remind us all that we're the same. At the end of the day, we're all the same. And it's been a great addition to our company. If I -- there's a few slides. The next few are the most important ones. Fairfax -- and I've said it in our annual report, said it last year. I'll say it again. Fairfax has been transformed since 2017. Even we couldn't see it. If you had asked me 3 years ago, 4 years ago, I couldn't see that. Our premiums have gone up, as you can see, [ 109% ] from 13.8% to 28.9%. The float has gone up, the investment portfolio, common shareholders' equity. Underwriting profit, because of this expansion in a hard market, wasn't expanded then in a soft market. It was expanded in a hard market. And by the way, it was expanded by our decentralized presidents of our companies. Underwriting profit, interest and dividends, $2 billion, very -- or $1.9 billion there. It's running at about $2 billion, as I said; share of profits of associates and reinsurance operating income of $3.9 billion, operating income of $4 billion that we can see for the next 4 years. Components, I'll talk about, but -- so it's been transformed. The company has been transformed. And that company, because of this transformation, the intrinsic value of the company has gone up significantly and be recognized in the stock market over time. It's book value went up 25% last year, went up 100% in 3 years. The stock price has tripled, but we are still selling a little above book value, so we think buying back our stock is a good thing. And we continue to do that. So not only has our company been transformed, but our shares outstanding during that time period dropped by 17%. So then you look at gross premium and float and investment. You can see the -- everything is magnified. So our float has increased by -- it's almost 100% for float investment portfolio. And our reinsurance adjusted operating income is about $170 per share, and that's a base. We have $15 billion of common stock investments which are either in mark to market, which means we've got small positions. [ We've got 20% and up, have 20%, less than 50% ], we call associates. And then some, we have more than 50%. We have to consolidate them. You add all three. It's in our annual report. They add up to about $15 billion, $15.5 billion; and we expect, over time, to do very well. We'll make mistakes. I told you about BlackBerry reluctantly, but we'll make mistakes again in the future. But that's not going to stop us making good investments. And we'll talk about some of the ones that we've got now. So when you look at it, interest and dividend, going into the future now. Interest and dividend income, $2 billion. We think we've got that for 4 years, mainly through government bonds. Spreads are very narrow, so we haven't taken too much of a risk in it. And it's government bonds and it's only 4 years, so interest rates could go up. We don't know. It could go up. Jamie Dimon was quoted that it could go to 8%. We're not going to get impacted very significantly, but on the other hand, he says it could go to 2%. Then no one knows what will happen, but we've got this interest and dividend income for some time. We've got the underwriting profit of $1.25 billion, which we think there are hurricanes. And there are wildfires and all of that, but we think -- put all of it together, and we think $1.25 billion is a conservative number. And our share of profit from associates -- which associates? Well, we've got David Sokol here. He runs the Poseidon. It's called Atlas Seaspan. And we think that's going to be a major contributor to us. And Eurobank has done extremely well. We talk about it, and that's another major contributor. And then we've got a whole bunch of others that we talk in our annual report, but they are both -- Fokion is here, and David Sokol. And they'd be happy to answer any questions. So the -- and you and (sic) [ add ] all of that and it comes to $4 billion in operating income. And that -- and from that, of course, you get fluctuations in interest and dividend and fluctuations in stock prices and bond prices that go up and down. Potential earnings. You take that $4 billion. It's about $125 a share, but that's a base that changes and realized gains and unrealized gains and which come in. And that component is only appropriate over the long term, significantly long term. This is our track record from inception, 18.9%, our book value. Share price is a little less than that, 18.3% in U.S. dollars. Canadian dollars is about 18.2%. And the S&P -- much, much better than the S&P, but not in any year or 2. We can see the red line is our stock price gone up. It's gone down and it fluctuates. That's just how stock prices react in the marketplace. Here is -- this is an interesting one. This is the -- I told you about the 1% since 1985. So we are ranked 17. You can see Fairfax. This is the S&P 500. We're not in the S&P 500, but if you compare our return, we are ranked 17% (sic) [ 17th ]. You can see some of the companies above us. And Kroger is the 56th one. It's really the 55th one because we're not there, and that's 15%. I used to work in -- I got my start selling air conditioners and furnaces. And lo my surprise when I looked at this company called Watsco. It's air conditioning and furnaces. I should have stuck to that, 18.5%. And it's got a name like Watsco. Never heard of that, but this is, for your sense, over that long period. Our approach is very simple, disciplined underwriting plus value investing; taken over the long term, can provide you a 15%. Now we are big. We are much bigger. Our shareholders' equity is about $22 billion, but we still think we can achieve that over time, not in any time period, not in a year or 2. And we've demonstrated that for you but because we haven't achieved that 3 years ago. And if you go back 4, 5 years, we haven't achieved that. So here's the executives. In red is all of the executives who have been in the holding company over 10 years. That's reason it's in red. And I'm not going to highlight anyone there, but you can see the number of reds that we've had. And of course, we've got very strong people come in. And Peter Clarke is at 26 years. Andy Barnard is 28 years, and he came with Brian Young. You'll see the next slide. And this is a very big plus for us; huge service to the company; and been with us for a long, long time. That's how you get sustainable earnings, sustainable performance; and how you build culture. Andy Barnard of Fairfax Insurance Group, he's the President, 28 years. You can see Jonathan Godown, who I'm -- just mentioned, 23 years; Brian Young, on your left there, at 28 years; Silvy Wright, 30 years; and on and on. And Khaled, who's just joining us, 46 years, must have started when he was like 10 years old or something, 46 years. And Paul Adamson is at 23 years with the company GIG Gulf that we -- that GIG acquired. And this is the management team that we have. And this is the investment team. And Roger Lace, 38 years, he's the Chairman. Wade Burton, taking us forward, President and CIO, 16 years. And then you -- Brian Bradstreet. Brian, Roger and myself have worked together for the better part of -- actually, counting the time we worked together at Confederation Life, more like closer to 50 years together. And that's been a terrific, terrific relationship. Chandran, who runs Fairfax India, 30 years. And then on, you can -- and look at it. Peter, 26 years. Peter's first job was Fairfax, so with all of us there, it's got 100% with Fairfax and nowhere else. Didn't have a chance to get diluted, by experience, from -- with another company. And then you can see the others, but this is the team that has performed for you and will continue to perform over time. And I just thought I'd highlight that for you. So this -- and just a couple of slides here, unconsolidated balance sheet. So when you buy a share of Fairfax, you've got insurance and reinsurance operations. If you take what -- if you add all our companies, that adds about $24.6 billion, $25 billion. You've got noninsurance operations. You've got holding company cash, investments and other. And you've got long-term debt, accounts payable. This is at the holding company level. And you've got shareholders' equity, very simple way of looking at Fairfax. And if you look at what's this $24.6 billion, that's all our insurance companies create a float of 35 million (sic) [ $35 billion ] there. Our investments are $60 billion. And it shows you where the investments are. If you go into the noninsurance operations. What are they? Recipe; Fairfax India; Grivalia, which is a hospitality company in Greece which is doing exceptionally well; Thomas Cook; and some others. That's where -- the $2.4 billion. That's the equity that we have. Holding company cash and investments, $1.8 billion. That's what we show. There's another $1.6 billion that we don't highlight too much, but that's there too. That can give protection for our companies, the fact that we have cash in the holding company and marketable, plus the associates and other. So if it's Eurobank, for example, or Poseidon, we can always contribute that to our insurance companies for cash. So it's pretty significant, $3.4 billion, but that's what we look at. Undrawn lines of $2 billion at all times, plus this cash and investments, plus associates. And then finally, long-term debt, no near-term maturities and shareholders' equity of $22 billion. That's the way we look at our balance sheet. It's in the annual report. I'm just highlighting it for you. Picture sometimes is worth a thousand words, so this might take you a long time to read, so I just highlighted for you here. Income statement. So we have gross premiums written of $28.9 billion. With GIG, it will be more like $32 billion. Globally diversified, what does that mean? It means that, if you have hurricanes and if you have catastrophes and all of that, we can absorb that. Used to be we couldn't absorb it. It used to be we'd get a cat and our ratios would go above 100%. And it might still do that if we have a massive catastrophe, but barring you have a big catastrophe in Miami or Houston, we can absorb that within our combined ratio below 100%, so it's a big, big plus. Underwriting profit, $1.5 billion; 93% combined (sic) [ combined ratio ]. In that is almost $1 billion of cat losses that we absorbed because, you would see, anything that happens in the world, we'll have a share of it. Any loss, any big hurricane, earthquake, whatever, we'll have our share and -- of it. So then the investment return is interest and dividends; share of profit of associates; gains on bonds, which is balanced by the discount on reserves being less. So it's gain on bonds and the discount sort of like cancel out each other over time. Gains on equities. And so that's we get 8.4% return. And that's how we'd look at our return. And you get $5 billion of income. Net earnings, $4.4 billion; growth in book value, in 2023, 25%. So if you then look at we're an underwriting company. Underwriting profitability, combined ratio for all our companies have done exceptionally well. These are all big companies, international. All have done well. There's 1 or 2 that haven't made a combined ratio of 100%, for a variety of reasons. You'll always have that. We accept that, but they're focused on underwriting profit and strong reserving. Then we expanded very significantly, but -- and as the hard market began, it started shifting in '23. And you can see our growth was only 5%, all in. And we're not unhappy with that. Here's are the underwriting profit and the gross premiums. Just very quickly, this shows that [indiscernible] underwriting profit has gone significant. Cat losses, we can see we always have cat losses, on average 5% or 6% for the whole company. And the combined ratios are shown there. This is the we benefited greatly from the hard insurance market. When the market was hard, we took advantage of it, meaning we were being paid to write risk, write insurance. And when you get paid, then you should act; and so our growth of almost 15% over the last 5 years, progressive. And this list is the only one. And we're in the top 20 companies. We're 21 if you include Lloyd's, but Lloyd's is a syndicate, so if you remove that, we're in the top 20 companies. And these are the best companies, the biggest companies in the world. And I've showed you that before. And it's highly unlikely -- this hard insurance market, we'll talk about it. Andy will say a few words also. It's unlikely to grow like it did in the past 3 or 4 years. In fact, if history is any guide, it will go the other way. This is our company decentralized. I've shown you that. I've shown this to you before, all decentralized. And in the international side, there's a whole bunch of companies. RiverStone is our runoff company. And nothing new to add, just to say GIG is the new one, almost $3 billion in premium but very decentralized. A huge plus of the property casualty business is the float that it generates. So we had no float when we began in 1985. We've got $35 billion today, and that's about $1,500 a share. It's grown at 18%. And so if you make an underwriting profit on the float and you have the ability to invest it -- and no one -- it's not like a loan. And it's not got the ability for people to -- it's not like a life insurance company and have the ability -- have sometimes a loan that can be taken on by life insurance assets. In our case, you have to pay the claim when it's due. So it gives you a ton of money to invest for the long term, and we've benefited from that. Our operations are worldwide, as you can see, United States, Canada, Latin America, Europe, Australia. I think we operate in 100 countries now, which is amazing to think. We were just a small Canadian company. We're now 21,000 right through, and so it gives us the potential. A lot of countries have -- underpenetrated for insurance. So we can grow our international operations particularly significantly. This just shows there have been -- for the 40 years prior to '82, interest rates were going up, a little up and down but basically going up. Since that time, since Paul Volcker raised the rates as high as he did, it's been going down, to the surprise of many, including us when we were there, because we -- our experience took that time period into account. Most people have lived through that. And now it looks like it's on its way up. You can't tell, but I'm just showing that to you in terms of what the -- we've come from a very high rate to a low rate. Inflation is very much in the air. Wages are going up across the United States and Canada 4%, 5%, 5 years, 3 years. The unions have got higher increases, so inflation is going to be a problem for us. And perhaps we can't expect the rates to be at the levels that we experienced in the last 10 years. Just a slide to show you what happened. No one really knows what will happen. What we've done is we're not focused on short-term results. Capital preservation, not to lose money, not quotational value, meaning stocks go -- every year, stocks go up and down, so we don't really spend too much time on that, but actual losses, we try to mitigate. And we bought 5- to 7-year treasuries. Brian Bradstreet has to be commended. We bought U.S. treasuries fourth quarter 2023. And so we've locked in now for the whole portfolio about $2 billion in interest and dividend income, fixed income duration of 3 years or a term of about 4 years. And there's limited credit risk, almost no credit risk. And we've got common stock of 24% there, as you can see. Interest and dividend income. The fact that we didn't -- if you look at -- we took advantage of the hard market. And the other side is on the investment side we did not invest in 2% bonds and 3% bonds and we got no interest and dividend income. You can see percentage of fixed income portfolio and cash and short-dated security 60%, 50%. They were -- and the yields were like 5 basis points, 6 basis points of the -- never got any interest and dividend, but we did not chase yield. We did not reach for yield. And so when, in '22, rates went up, we were one of the few companies who could actually use our cash to buy these. And now our yield is about 4.6%, as you can see, nudging 5%. India, Fairfax India. Yesterday -- we think the opportunity is huge. You've got to think of it in almost decades because here's a country that's going through the -- change. There's an third election for Mr. Modi that's just taking place in May. Likely, he'll get a huge majority. And the country is business friendly. And so we expect to -- we've got about $7 billion if you include Fairfax India and the investments there as -- yes, and in terms of gross, as opposed to net, here. And we are very excited about the possibilities there. We've been there for a long time, 30 years. Chandran has been responsible for Fairfax India. And you can see the rates of return. We expect a lot of good things from India and we are expecting to put more money there. Finally just 1 or 2 more slides. And this one, this shows you the rate of return from since inception. We've had about 7.7%, 8% on average for all that time period. And once in a while, we've had negative returns. That's mark to market, not actual losses, but because you had to mark -- in 1990, bond prices, I think, went down, so our -- we didn't sell any, but that year, it went down. But it bounces back up again. And you could see that didn't happen in 2020, didn't go down as much, but it did -- in March, April, it did go down and then bounced back up. And so the returns only can be looked at in a long term, 7 points -- to make a 15% return, we need like 5%, 5.5%, something like that, and as long as our combined ratios are good. Strong financial position, I showed that to you in our annual report. I'm not going to spend too much time on it, just to say we've got terrific interest coverage; and our financial position very, very strong. And finally, this is a slide that I like. Business can be a force for good. I've seen the effects of socialism all over the world. And it's unbelievable how business can be a huge force for good, and sometimes we forget that. 38 years -- use us as an example, 38 years. We wrote cumulative premiums of $258 billion. That's premiums. We paid $180 million (sic) [ $180 billion ] of claims. We protected people from hurricanes and all sorts of risks that they had to take, paid $180 billion out. That's over 38 years. Annual salary for employees, at 21,000 employees, 2 billion to all our employees all over the world. We made cumulative donations of $315 million, and it's going higher since we began our donations program. We paid taxes. Sometime I forget. We paid taxes. We can't forget that but $5.7 billion, since inception, to countries where we do business. Then we grew our book value significantly, but behind it all, we have a strong, fair and friendly culture, we call it. And that's our biggest strength. So ladies and gentlemen, thank you very much for listening. And we are ready. Thank you. We are happy to answer your questions now. I will -- let's get Peter Clarke here. And you've got the mics there, so we'll go like 1, 2, 3, 4. And we'll go into Jeff for the Internet. And let's give -- Peter, first time. Give him a nice round of applause.

So with that, why don't we go to #1?

Okay. My name is [ Paul Durnan from Burlington ]. Mr. Watsa, you mentioned -- I'm interested in Greece. According to the popular business media, you have an additional commitment there. You said one word associated with hospitality. Are you serving tourists on Mykonos beach...

We -- so tourism for us is -- so we've got a fellow by the name of George Chryssikos. He's among the best real estate people you'll ever meet. And he's built most recently something called One&Only, the best, 7-star resort in Athens -- like about 15, 20 minutes from the center of Athens. And we went to inaugurate it. The prime minister was there. And it's just a fantastic property. And he was able to get it at a very good price because, of course, you make a return depending on what you pay. And so that's what we meant. He's got Amanzoe, all the high-end luxury resorts...

So it's pretty well all hotels that you're buying...

It's hotels, resorts and some in...

Mykonos.

Mykonos, yes, yes, some there too.

Okay, so that -- but there's nothing else, just hotels.

Yes, just resorts and hotels, yes.

Yes. How many in total are you...

I think about 8 or 9 or 10, something like that, yes.

Anything looking forward in Greece? Like are you -- other expansions?

Well, Greece, we've got Eurobank, which has been a phenomenal success story. We've got an insurance company there run by a gentleman by the name of Alex, the second largest company, terrific company. And we've got Grivalia. And we've got interest in a company called MYTILINEOS, which is like about 10%. They make solar panels and -- very big in manufacturing solar panels and things like that. And we've just been -- we've been there for the better part of 10 years and it's been phenomenal. Prime Minister of Greece, about 5 years ago, got elected with a majority. Business-friendly guy got elected with a majority, got elected just recently with a bigger majority this year for another 4 years. And Greece is changing in front of your eyes and, in our estimation, best country to invest in Europe.

Yes. And that prime minister just recently came to Canada for the first time in 40 years, and according to the press, he wants some liquefied natural gas from us.

He wants to take some -- he's going to pay for it, but yes. Yes, no, thank you very much. Yes, #2.

Congratulations on another great year. Your insurance team is making this look so routine, Andy, Brian, Silvy. Just we know it's not easy, but they make it look easy.

It's phenomenal, isn't it?

Yes, unbelievable. My question for you is you mentioned inflation and maybe higher rates. And I'm wondering if there's a danger that we're going to see claims inflation while we're not going to see any inflation in the premiums. And what can your team do to protect against that and keep our combined ratio high?

No, that's a very good question. And Peter, do you want to give a little -- Peter works on both the investment side and the insurance side. I'll ask Peter to add to that. And then after that, Peter, perhaps we'll get Andy Barnard, [ insurance ]. You said that they are making it sound easy. Well, we've got to put them on the spot. And they'll tell you -- Andy Barnard, Brian Young and Lou Iglesias. We'll ask them to give us a little update on what they see in the business. Because that's we've got $32 billion, but it's all insurance, right? So Peter, do you want to just -- anything you would say?

Sure. No, just to add the pricing is the most important thing. And today, we're still seeing -- we came off the backs of 3 or 4 years of double-digit price increases, so we think that there's good margin in the business, generally speaking, worldwide. And we're still getting single-digit, middle 5%, 6% rate overall; and so we're thinking we're keeping up with claims inflation. And then the second piece to that is we want to ensure that all our companies reserve well and so build the margin into the reserves so that, if inflation is higher than expected, like they say on the investment side, we have a margin of safety.

Well said, Peter. Hey, Andy and -- hey. Let's give Andy Barnard, a really big round of applause. Our insurance business has changed since Andy took over in 2011. I said in the annual report he's written $200 billion cumulative under him. And we had about $5.3 billion in underwriting profit. It just changed dramatically, and the best decision we made was to make Andy Barnard in-charge. Andy?

Well, thank you very much for that, Prem. I've obviously had a lot of help in what we've been able to accomplish over the last 13 years. You've seen the results. You're familiar, $1.5 billion of underwriting profit, the best ever. Really across the board, all of our companies are doing well. And they've all contributed to that performance in 2023. The dynamics in the marketplace, though, are changing. As Prem mentioned earlier, the growth that we had at the beginning of this decade, we're not likely to repeat that in 2024 and in the near future. There's more capacity that's come back into the market. That brings more competition. Some of the areas of business that fueled our growth have been suffering significant rate deterioration. At the same time, there are other bright spots. The property market, after Hurricane Ian, really took off, and we've been able to take advantage of that. Overall, we look at the marketplace as still being quite favorable to us. We have very strong companies. They all have excellent positions within their markets and that gives us opportunity, so we think that we'll be able to grow again. We may be able to hit the 5% that we did last year. Maybe we'll do more, maybe a little less, but it is important to understand, I mean, we went through a period at the beginning of this decade when we had great opportunity. As we've talked in past meetings and as you've seen, we grew at virtually the best pace of any company around our size in the marketplace. And so that's given us a great advantage to continue to exercise cycle management, which in my experience there's really nothing more important from the top and managing insurance businesses, to exercise discipline and cycle management; grow when capacity is shrinking; and be prepared to tone it down when the competition, when the supply really begins to increase. So we're sort of in that kind of mode right now. As I say, I think we'll be able to grow in 2024, but all in all, we've just been going through a fantastic period, something that we've not seen before in terms of how much we've been able to generate on the underwriting side. And so on balance, we're really quite pleased with where we sit today, recognizing that the challenges do exist. So with that, let me turn it over to my colleague, Brian Young. And he can give you some perspective on the dynamics within Odyssey. And then we'll hear from Lou, who can likewise speak about what's going on in his marketplace. So Brian?

Thank you, Andy. Thanks.

Hey. Let's give Brian -- has been with us for 28 years.

Thank you, everybody. It's been a pleasure for me. I've worked with Andy for 33 years. The last 28, at Odyssey, he's been a mentor and a friend. I owe you so much. Thank you for everything; and as well for you, Prem. It's been a pleasure working here for 28 years. Prem talked a lot about culture, and culture is everything to Odyssey. I am blessed to work with a great group of individuals. I've had the same management team for the 13 years that I've worked at Odyssey; and many of those people, I've worked with my entire career. It's a real strength for an organization like ours, which is a global business. We have 37 profit centers in 30 countries -- sorry, in 30 principal offices in 13 countries. And so it's a -- diverse. It's a diffused organization. And with that, it's really critical that people work together, that we see things the same way. And so hats off to my team. We announced last year, at this time, a transition. I am moving up to Fairfax, which Prem mentioned in his annual report. I'm still the CEO of Odyssey, but as this transition is ongoing, I appointed Carl Overy as CEO of OdysseyRe, our global reinsurance business. Carl and I have worked together directly for over 20 years. Bob Pollock was appointed to replace Carl as CEO of the London market division, which is -- encompasses a branch of OdysseyRe, as well as Newline, our international insurance operation. Both Carl and Bob have done an outstanding job in this transition. And I thank all of my colleagues for helping them in this transition. We've got great business leaders besides Carl and Bob. Chris Gallagher has run Hudson successfully, a key part of Odyssey. Or it's our U.S. and insurance business. Lucien Pietropoli in Asia Pac; Isabelle Dubots-Lafitte in EMEA; Bob, I mentioned, in London; Brian Quinn running North America reinsurance; and Philippe Mallier running Latin America. These are the guys, the team that's driving our business, along with all of our corporate heads, who've done an outstanding job. 2023 was an exceptional year for Odyssey. We made $365 million of underwriting profit, up 60% from the prior year. It was our second highest underwriting profit total since 2013. For 12 straight years, Odyssey has made an underwriting profit. Over those 12 years, the underwriting profits have totaled $2.7 billion. We've had a great run; and during some difficult, challenging times in the markets. Cats were painful from 2017 to 2021, but we weathered the storm, made profits in all those years and now benefited from the rising rates that have happened as a result of all that cat activity. Pretax income, $1.2 billion, for Odyssey; net income $980 million. These are all-time highs for Odyssey. And the outlook is fantastic. Andy mentioned the market is slowing down, and we saw it in 2023. We actually lost a little bit of volume in 2023. We had to make cuts. We large -- we lost a large quota share deal. That resulted in $333 million walking out the door. We cut back in our U.S. crop business in Hudson, a couple hundred million dollars. These were necessary changes, and this only improves the profit profile of the company. Profit outlook is fantastic. I'm excited for 2024. Yes, we can have big cats, but we've never been in a better position to weather them. In 2023, we had 615 million of investment income. That's triple the investment income we had in 2018. Obviously we want that investment income to flow to the bottom line, but god forbid we had big cats, that 615 million provides a ballast, a buffer against those losses. And that investment income allows us to take more risk as well, risk which obviously is going to generate margin; and so that is all good. I'll leave the comments about the insurance market to Lou and [ Mark and Martin ] and Silvy. Let me focus on the reinsurance market. The reinsurance market has had a very good run. We are -- we see the market overall as positive, recognize it's a global business. And every market is a little bit different at any given point in time, but property cat pricing has increased dramatically in recent years, strongest in the U.S. but has grown in other parts of the world as well. And the property cat business, we see as a highly profitable business today. U.S. cat prices, in my view, have never been better. Having said that, we are seeing competition in the market. There's more capacity available to support risk. It hasn't really resulted in much of a downturn in pricing yet, but [ it's to come ]. I mean, when you start to see placements oversubscribed significantly, that will lead, down the road, to price pressure, but prices are at very attractive levels. And even prices came off a little bit, we would still lean into this market. As far as other lines of business goes, where there are losses, you see increases in pricing. I'd say the market overall is fairly disciplined. On casualty business, which is about 30% of Odyssey's portfolio, we continue to see rate in most lines of business. D&O and cyber would be notable exceptions. Reinsurance commissions and casualty have been coming down. There's been adverse development in the 14- to 18-year period. And reinsurers are pushing commission terms down to compensate for those prior year losses, so overall I think it is an attractive time to be in the business. Whether we can grow in 2024, I think it will be a little bit of a challenge, but we've got a great network, a great group of people. And where we see opportunity, we'll take advantage of it. Thank you.

Thank you very much, Brian. Come on in, Lou. Lou runs Allied World, as you know. And we bought it in 2017, and since that time, they've doubled the premium. And it's going to be a tremendous company for us. Lou?

Well, thank you, Prem. Congratulations to Brian, team at Odyssey, great job. Good to see everyone. I saw many of you over at the trade show. And I picked up this great flashlight pen. Thanks to RiverStone, so thank you, Nick. This will come -- certainly come in handy. You saw some of the numbers earlier. We had a strong year at Allied in '23. We posted a combined ratio of 89.5%, which resulted in record underwriting profit for us of $480 million. Our net written premium actually grew about 7% last year, which we think was very positive for us as well. That was our second year in a row of record underwriting profit. And so the team is really, really hitting it on all cylinders. Very, very proud of the team that we have. The earnings that we had as well was very well diversified. So we're a global company. Each one of our major geographies around the world made a profit in '23. Each one of our major product lines made a profit in '23 as well. So we think that, that is a very healthy way to have the earnings stream because it gives us a good opportunity to grow in many, many different areas. So we grew the company, as Prem mentioned, to $6.9 billion last year. And that's kind of well more than double now than when Fairfax acquired us, so we're happy about that. Andy talked a little bit about the opportunities in the harder market. And that's when we had most of our growth. And so growing during that time. We're growing during better rate, better terms and conditions. Things are starting to moderate some now, but we come into that moderating type of market in a position of strength, and so we feel good about how we're moving into that market. In addition, during the growth phase that we had, we scaled our company. And we have a expense ratio that's in the low 20s, which gives us a very nice financial advantage when it comes to our combined ratio. Now of course, none of this is possible at all without great people. And I'm really, really proud of our culture at Allied and at Fairfax; really proud of our people. We have dedicated professionals. Many have been with the company for a very long time, so like many other of the companies in Fairfax, they work well together. They understand how to work in all of our different markets that we're in around the globe. And they understand how to work in all different segments of the underwriting cycle, which is important, especially when you have a little bit of a transitioning cycle similar to what we're seeing today. So thank you to all the people that have -- at Allied. We're very, very proud of everybody. We've talked about challenges. We're certainly not without our challenges. I would say interest rates are one, for sure, but those are the general financial interest rates and general financial inflation, mostly on the inflation side. But there's not only that inflation. There's also social inflation that we're seeing showing up in the claims and size of claims. There's a [ torque bar ] that is more aggressive than I've ever seen in my career. There's something called litigation funding, where you can now invest in lawsuits. So you could buy some stocks. You could buy some fixed-income prem and you could buy some lawsuits. And that, unfortunately, is growing in popularity. They've gotten so brazen that they even call us at Allied and ask if we want to invest in litigation funding, which that's a very quick no. So we have that, that we have to deal with. In addition to that, the -- we are seeing climate change. We are seeing some unusual climate patterns. And they're causing some property losses that are unmodeled and unexpected coming at us in some unusual ways, so we have to make sure that, when we're looking at cat on the direct side or the reinsurance side, we're putting aside enough money to cover what we expect to have as well as to cover what we know is coming that is not in those expectations, all right? And that's one of the ways we get the question about how you're addressing climate change. That's one of the ways to address climate change. So there are many challenges. There's no time to rest. We have to stay ahead of these. And we stay ahead of these by underwriting discipline, all right, not only on price but making sure we're careful with limits deployed on an account-by-account basis because managing your limits manages inflationary trends and claims, yes. So we're very careful with that. So it's terms and conditions. It's pricing. It's limits management. It's claims expertise. The claims that are coming at us are more complex. We have to make sure we have very, very good claims experts; and that our claims expertise is up to par; and of course, conservative reserving. We have to make sure that our reserves are very, very strong. Now the market, I would say, for our products globally is generally stable, all right? So we've had a run-up for the past couple years. We've had a pretty good market for a few years. We got towards the top of that, that cycle curve. And for some products, we have come down the other side some, some professional lines products, but for the most part, we've kind of been rattling around the high part of the curve. Now that may sound really good, but I think what's happened in the industry is the industry has adjusted for the increased cost of risk. And so you went up the curve. And we're kind of staying there because we have to as an industry. Everybody knows we really can't get below that cost of risk, all right, so the industry is staying up there without coming all the way down the other side, so there is some stability. And I'll add to that, that while there is -- there are new competitors in the market, there hasn't been a great flow of new capital, all right? Surplus has been generally stable for the past 3 years, so not a great, great flow of new capital. And on the reinsurance side, Brian mentioned the rates are up some in reinsurance, which that has been a bit of a lagger. Or the direct market was going higher before the reinsurance market started to catch up, so that reinsurance market should work to kind of buoy the direct market some. Okay, so going forward, I'm very, very confident in how we're positioned at Allied; very confident in our products, in our geographies, especially our people. I continue to be optimistic. There are places to be able to fight for profitable growth, and we're going to be in those spaces. So let me finish by thanking Prem and Peter, thanking Andy, everybody at Fairfax for being such great partners. And everybody have a great day.

As I was listening to Andy and Brian and Lou, it remind me we celebrated our 35th anniversary as a company, Fairfax, at Banff Springs hotel in -- 2 years late last year. We went, took all our employees. The spouses had a great time. And I was reading about the Canadian Pacific railroad to the -- really, in 1881, John A. Macdonald decided to build that railroad. And it linked Canada and made it one country, but that railroad, the fellow behind it was a fellow, Scottish immigrant by the name of George Stephens (sic) [ George Stephen ], and raised the money, terrific guy, for the person who built it. The Americans had a railroad to -- 10 years, 15 years ahead, so a gentleman by the name of William Van Horne did a fantastic job building that railroad. And it struck me Canada and the United States work like this. And we have our own here, all 3 of the gentlemen who just spoke to you all from the United States; and we've been very fortunate, the terrific partnership, U.S. and Canada. So give them a nice round of applause, [ all guys ]. So we go to #3.

Prem, Trevor Scott, Tidefall Capital. You mentioned in 2023, in numerous times, about being very conservative with your bond portfolio given the spreads. And you talked about potentially going into corporates at the right time in the economic cycle. I'm just wondering for an update. Or I guess I'm asking backhandedly, what's your view of a recession in the next 12 to 24 months?

So you know that no one knows that, but it's a very good point you raise. So we've got government bonds that will take us for the next 4 years, so that $2 billion in interest and dividend income for 4 years. Somewhere there, we're thinking the rates either stay here and cause a recession or go up further and cause a recession. Somewhere, they're going to cause a recession. And the spreads historically -- I can't predict them, but the spreads widened significantly. And people move into U.S. treasury. The government bonds and corporate spreads widened, which means we can then -- investment grade really good corporate bonds at good spreads, we can extend it for another 3, 4, 5 years, so we are quite excited about that possibility. That's just how we're thinking. I'd mentioned that last year, still thinking about that, but you can -- we react. So we don't forecast that something is going to happen. We see it and then we react. We react pretty fast. Like Brian Bradstreet [indiscernible] team is just outstanding. We just did a $1 billion 30-year bond issue, $1 billion. There were $4 billion in demand 2 or 3 weeks ago. You couldn't do it today because everyone thinks rates are going up. Those -- at that time, the -- they thought rates were going down. We reacted very quickly and got at a very good rate, so -- but that's the opportunity that we faced. You can make -- and you'll know when rates go up. I mean usually a recession causes the rates to go up. And our team will take advantage of that. Mic #4.

Prem, [ John Lu ] from Portland, Oregon, shareholder for 22 years, so I wanted to thank you and your team for all the work and lessons you've given myself and my family and everyone else here.

See this is the kind of shareholder we like, 22 years. Give him a nice round...

So my question regards Kennedy Wilson, which I'm pretty enthusiastic about, but I'd love to hear your updated thoughts on the company.

So Kennedy Wilson is a relationship we've had 13 years-plus. And we're very fortunate. Bill McMorrow is here. And so we've got every real estate investment we made with Kennedy Wilson separate from, like, joint ventures. Every one of them has done exceptionally well, as I said in our annual report. And then more -- I thought for you all the Pacific Western construction launch would be quite interesting. It all came from Bill and it -- we've got about 4 billion now in that area. And Wade Burton is on the Board of Kennedy Wilson and works very closely with Bill; and Matt, Bill's #2. And so Bill, it will be fantastic if you'd give us a little update. Thank you very much. Give Bill McMorrow a nice round of applause.

Well, thank you, Prem. And really just congratulations on your extraordinary year in 2023. And as he mentioned, we've been partners now for almost 14 years. And the partnership really was born out of the Great Recession of 2008 and 2009. And I think, to give you a little bit of perspective of over the last 11 years: We've bought about $35 billion of assets, primarily in the United States, United Kingdom, Ireland and Japan. And 1/3 of that, we've done as partners with Prem and his Fairfax team. It's been the most amazing partnership really that -- as Prem and I talk about all the time, that's really built on trust and the ability to move with speed. I would say that 75% or 80% of the transactions we do are with financial institutions, primarily banks. And the key to all of that is that you've got to be viewed as a very reliable counterparty. They have to know that you're going to close the deal. And so in every one of these corrections, it presents opportunities. We've worked with banks, probably close to 100 banks now over the last 10 or 11, 12 years in the markets that I mentioned, so it seems like quite a while ago, Prem, but about a year ago, this time, as you all know, we had a dislocation, I will call it, in the American financial system that was driven really by 2 banks, Silicon Valley Bank and First Republic. And unlike any other period in history, we have the Internet today which can take money out of the financial system in a heartbeat. And so that's what happened in the United States as those 2 banks failed, along with Signature Bank, the -- there's 4,500 banks in the United States. And of that, 4,000 of those are what we call regional banks that rely on their depositors to fund their balance sheet. So what happened in February and March of last year is that the people were taking their money out of the regional banks and putting it into U.S. treasuries or into the major banks like JPMorgan and Bank of America. And so we -- it was -- I was talking with Byron Trott last night. It was a very precarious time in the U.S. banking system. And fortunately, our Treasury Secretary and the Head of the Federal Reserve came out on a Sunday night and said that the U.S. banking system was safe. All the deposits were fine, but it didn't stop people from taking money out of the bank. And so in the case of Pacific Western Bank, in a 45-day period of time, this was a $45 billion bank, they lost $13 billion in deposits that went someplace else, so they had to do something to shrink their balance sheet. And so we've been doing business with Pacific Western Bank for probably the better part of 25 years. They called us up and said, "We'd like to sell our performing construction loan portfolio." And so we, along with Fairfax, bought a $4 billion construction loan portfolio at a discount, but the other important part of the transaction was that the team that originated all of those loans that I'd known for 20 years came to Kennedy Wilson. And so we've not only taken that construction loan portfolio that we bought that's performed extremely well, but we've now grown that business. We've now closed another $1 billion of construction loans. We have another $1 billion in closing right now. And we took a -- Prem, a very conservative approach to how we handled it. Most people that buy credit from banks tend to leverage their position, sometimes 30%, 40% and 50%; and so we have that all in an unlevered vehicle. We don't have any loans against it. It's all performing extremely well. I should have said too that on the -- we probably realized now -- on the $13 billion that we've co-invested together, we've probably realized on about $8 billion of that. And the returns have been in excess of 20%. In the case of the credit business, these are unlevered returns generally in the 9% range, which is a really great return for the kind of risk that we're taking. The last thing I would say is that these are typically what's happened in the United States. These are all loans that we're making to build multifamily housing -- either student housing or multifamily. The -- with these higher rates, the universe of people that can come up with -- our average loan is $80 million. And so the equity that's going into these loans is generally $70 million or $75 million, the equity, which generally goes in first. The number of companies that can put up $75 million worth of equity has shrunk, and so not only are these great loans, but the quality of the borrowers is probably the best I've ever seen. They're some of the biggest development companies that you could find in the United States. So we have very low leverage on the loans. We have no leverage against the portfolio. And we've got some of the best borrowers that, as I said, I've ever seen. So I would say the last thing too, Prem, that has been the -- really the key to our success. I mentioned trust. Prem has talked about the culture, but our -- it's our ability to make decisions in a very quick period of time. And this is something that -- Prem and Wade Burton and the entire team, over these 14 years, we've built up just a tremendous relationship where we can move quickly. The Pacific Western transaction had to -- we had to do that in 30 days. And so we had to put 100 people on that transaction to analyze every piece of collateral, look at every construction management agreement, look at the insurance, all of these kinds of things. And so when you're doing something like that and the bank is really relying on you, you just can't fail. And so I thank you so much for everything that we've been able to do together over those 14 years.

Thank you very much, Bill. And it really is a wonderful, wonderful partnership, really, really terrific partnership. Jeff?

First question is about another one of your large investments, Poseidon corporation. In 2023, Atlas was taken private, and Fairfax maintained its 43.4% ownership in the company. The company has now renamed Poseidon. Can you provide an update on the plans for this company?

Well, first of all, we've -- this has been a hugely successful investment. And the fellow behind it is David Sokol. He's Executive Chair. He's the person who's the prime mover. He's got a terrific guy who works with him as CEO, Bing Chen; and they've done a tremendous job. He's going to give you an update, but in the times when the opportunity was there, he doubled the number of ships that they have, it's container ships, from 100 to 200, which is quite amazing. Again, opportunity there. He reacted and took advantage of it. Give David a nice round of applause, David. Thank you for coming, David.

Thank you, Prem. It's a pleasure to be here. And as the other folks have commented, Fairfax is a phenomenal partner, and our whole team appreciates the relationship. Even when you have to work through difficult issues, they work through them professionally and you move on. Seaspan, essentially a shipping company, in '20 and '21, our management team, led by Bing Chen -- by the way, our CFO, Will Kostlivy, is here with me here today. We recognized and particularly led by Bing and his development team that our customers needed refreshing of their vessels. And it was an interesting time because the market wasn't in great shape in '18 and '19, but with the new requirements for reduction of CO2, the age of the fleet that was out there, it became apparent that there was real opportunity, so working with the customers, we're building 70 new ships today. We've delivered 42. What I think is impressive about that for our team is that we designed these ships in cooperation with our customers, $8 billion construction program that we initiated in '20 and '21; simultaneously financed all the vessels to be coterminous with the long-term charters averaging 12 to 18 years. So we've delivered 42 of those ships. Every one of them has been delivered early or on time, under budget. The management of the shipyards has been really something fun to watch. We'll deliver another 26 yet this year. And then 2 of that, the final 70, will be delivered in January of 2025, so the team has done a remarkable job. One of the really remarkable things that we didn't see coming is that those same ships today, because we locked in fixed pricing in 2020 and 2021, will be 30% more expensive. So the ships we're delivering this year, if you wanted to duplicate them, a, it would take you 2 years, but also you'd pay a 30% premium. So we have a build-in margin that is purely good fortune from our perspective, but nonetheless, you take it when it comes along. So that's where we are. Now that's going to show some pretty dramatic improvement in economics this year. We'll probably see revenues up around 25%, EBITDA north of 35% and net income above 20% growth from '23 through '24, but that's just a function of these ships coming on. They go on to charter immediately when they're delivered. We operate the ships. We do not take any fuel risk in the vessels. We just manage and operate the ships. And then we'll have another significant growth step in 2026 because the rest of those ships will be on for the full year entirely. So we'll be at 196 ships operating for that we have in a partnership. And then we have 6 extremely large car-carrying vessels that we're under contract to build. They'll go into construction later this year, delivered in '26 and '27. And each of those will carry about 10,000 vehicles, so they're actually the largest car carriers ever constructed. So that's the business. It will be a step function type of business. It's not one that our revenues -- we don't take short-term risk. Or we don't get the reward in the short-term markets. We do everything on a long-term basis, tie our financings to those charters, but it's a great business. And Prem, I'm pleased to say you're -- on the same basis that we went private, your investment should go up about 50% this year just based on the increased cash flow of the business, so it's been a pleasure. And we -- hopefully, the market will keep providing us opportunity in the future. I would suggest that, the next 2 or 3 years, we're going to see fewer opportunities because the amount of newbuilding, including our own, of the last 2 years is adding 30% to the existing market. The market only grows about 2% a year in the container shipping business. And so there's going to be a huge amount of scrapping of older vessels, predominantly driven by fuel choice, but it's going to -- there's going to be a couple of years of digestion of that much; unfortunately, all of our contracts. And I should mention one of our things we focus on is contracted backlog. And we have -- last year, we used up about $1.5 billion of our contracted backlog. We've already replaced it, so far, this year, so we have about $18 billion, a little over $18 billion of contracted backlog of operational revenue. So basically trying to keep 5 or 7 years constantly ahead of ourselves before we need to recontract anything.

David, thank you very much. $18 billion of contracted revenue, David said, and fixed-price financing. They make the spread. Ships have gone up by 30% from when they bought it. This is the type and very, very risk conscious, unbelievably risk conscious. This is an outstanding performance. Thank you very much, David. My goodness. Who's that at #2?

My question is, out of all of the companies in Fairfax, how many women are CEOs?

That is my granddaughter. [ How many, 3 ]?

I don't know.

And yes, my grandson is -- I'm asking Peter for the answer [indiscernible], but my grandson is also there. [ Logan ] is right here too. Give them a nice round of applause. [indiscernible]?

I'd say, not enough.

So you'll be happy to know our Canadian company is run by Silvy Wright, and she's right here. And we have one of the best workers' compensation companies in the United States, run by Kari Van Gundy, and she is right there. So 2 terrific CEOs and a lot more to come. And hopefully, you'll be one of them. [indiscernible]. We'll go into 3.

I believe...

We'll -- okay, sorry. Go back into 1, if you don't mind.

My name is [ Salman Khan ]. If you notice closely, you would have seen that I'm not the Bollywood actor. Sorry to disappoint the people who are reading the transcript.

You can give him a run for his money.

My question is for Peter, but small comment for you, Prem. You said that BlackBerry was a mistake. As a shareholder, I don't think it was a mistake. It was an asymmetric risk. Sometimes it works out. Many times, it doesn't. I'm happy we took the chance. I hope we take more of those in the future. So it was a good deal.

Yes. And we want you to attend every meeting.

A question for Peter. I think we are all fans of this idea of marrying insurance with value investing. And both of those things are pretty hard to get right. Most companies don't. And Fairfax is one of the few that I can see that gets it right, but it's good in the sense that it's globally diversified. We've got so many companies around the world, so that's good. Help me reconcile this thought: We are decentralized. We've got all these operations around the world. We've got one in Gulf now. How do you make sure that the culture of Fairfax, the underwriting discipline -- I'm not so concerned about investing side, but the underwriting discipline particularly, how do you make that pass through to these companies that you acquired? Because I'm assuming that, when you acquire them, they come in a good shape, but they are not exactly Fairfax of kind. So how do you do that, being decentralized? How do you push the culture forward to 21,000 employees?

Peter?

Sure. Just on the underwriting side, though, over time, sort of when we acquired companies, our focus changed somewhat. In the late 1990s, early 2000s, we bought turnaround companies, but if you look at -- and most recent, starting with Zenith and Brit and Allied, we bought companies with strong track records, strong management teams. So it's really what we started with has been hugely successful for us, and then just having and keeping people for the long term. Like Prem has said, Brian Young has been with us 28 years. He knows the culture. He knows the company. He knows Fairfax as well as any of us. So the management teams we have in place right now have been with us so long that the culture is just ingrained within the company. Gulf, for example, we've been invested in Gulf for about 12 years, and an outstanding track record. They're 94% combined ratio for the better part of that whole time period, with very strong reserving, so it's -- I would say it's really the companies, when we're acquiring them now, are much higher quality than they might have been in the past.

Small follow-up, just a small follow-up to that. Do you have an influence on the way they invest the float that they get? Or is that managed by them?

Yes...

Yes. Float is always managed by us. It wasn't managed when we were the junior partner. We had 44%. They had 46%, but [ it was ] their company. We didn't -- we helped them, but we didn't manage it. Now we manage the portfolio. We own 90%. And I think we made an offer for the 10% and 7% came in, so we got like 97%. That, the 7%, closed, but the float is always -- when we have control, we manage the float, so we'll be managing the float going forward. And then we'll go to #3.

Vishal Patel, 1832 Asset Management. Prem, Charlie Munger, Warren Buffett's business partner, passed late last year. Are there any principles you learned from Charlie that's been applied to Fairfax' success over the years?

The big one was just -- Charlie made this point years ago, 2 points. One was that, earlier on, like us, they depended on stock gains, bond gains. In fact, it's like when they began years ago. And then they got the ability to be a railroad company, Burlington Northern, to get operating income, but one of the biggest [ pluses ], biggest questions that -- answers that you suggested was that you have to have patience. And when you see an opportunity, you're going big when you understand it. And when you don't understand it, just stay away. So all insurance people, of course, when they saw that opportunity, we double our premium, right? Interest rates, when we saw the opportunity, [ we went 4 years ], but going forward -- it's a very good question. We're big now. And the idea of buying good businesses at fair prices, big positions, compounding for a long period of time, we're focused on that, looking at that. We've got good investments like we've had with Kennedy Wilson and with Seaspan Poseidon, but we'd be looking at -- and this is not an environment right now that you can find them because the prices are high, but we're looking at getting positions in companies where we can compound for a lot of -- without any tax, as they say. But we learned a lot from Berkshire and Charlie. I mean we followed them for a long, long time. When I first went to the Berkshire meeting, there was like less than 200 people, at the annual meeting. And we used to have a dinner on Sunday night. Mike Goldberg used to be there those days, with Ajit Jain. A dinner on Sunday night and the annual meeting on a Monday morning, before it shifted to the weekend. And so it's a long history. We learned a ton from them, yes. So thank you for your question. Maybe a follow-up there...

Well, maybe a different person, but I think you knew Ned Goodman as well. And I think Ned passed. So is there anything from Ned? And I think there's the [ pet ] insurance business maybe that came from Dundee corp.

Yes. Like -- I knew Ned too. I didn't know him as well, but I did know him, yes. Thank you very much for your question. #4.

[ Ravi Sawadee ] from [indiscernible], individual investor, 25 years with Fairfax as shareholder...

25 years. See another terrific...

Yes.

Hey. I should ask every shareholder to say, [ I've been here. Live with it ]." By the way, before you ask the question: It's amazing what compounding does. So when we started -- you'll remember this, but when we started, our stock price was $3.25, say $3. And if we double it, it went to $6. Our book value in U.S. dollars was USD 1.5, and if we doubled it, it went to $3. Three or 4 years ago, our book value was $450. And if you doubled it, it went to $940, which is what it is now. Now say $1,000. You double that. It goes from $1,000 to $2,000. I mean the effect of compounding is unbelievable. And I was just thinking about that the other day as we were going through the -- our statements, [ where you come from ], but the key is to be long term. Now as an investor, the controlling shareholder, I had no choice but to own the stock right from the beginning, for 38 years. And I don't think I've ever owned anything else for that long. And it was forced, handcuffed and the best thing that happened to me -- sorry. Go right ahead with your questions.

Mr. Watsa, thanks for sharing 1.6 billion [ with -- at ] associate level, but my question is for Mr. Clarke, if he can answer. As a layman investor, I believe that, if a hurricane 5 catastrophic event happens to direct hit to Miami City, that might be a $500 billion event. I wonder if you agree with me. And Fairfax cost will be 1%. That's what I believe as a layman investor. And if this even happens twice in a row in 2 years, how Fairfax can see their balance sheet...

So before Peter answers. That's exactly right. We look at stuff like that. And if it happens, how are we going to survive that? So the big [ plus ] on these events is their limits, right? And so we really focus on the worst case events, from mainly Odyssey and Allied, but Peter? Peter does all the modeling and looking at it all the time. Peter?

Sure. Yes, no, as Prem said, we're focused on our catastrophe exposure, of course. And it starts with our insurance operations. The #1 thing is they have to manage their risk appetite within their capital base, but on top of that, we do a lot of work at the Fairfax level aggregating the exposures. And we really look at PMLs. So this is your probable maximum losses. And over the last 3 or 4 years, from our premium growth, we've benefited greatly from the diversification we now have within that 30 billion of premium that we write. And we can really absorb -- we can absorb significant catastrophes and still show an underwriting profit. Like the last couple of years -- this past year, cat losses were marginally down, so we had a fairly good year, but the year before that, we had probably -- I think we had 1.3 billion of losses, and over 1 billion the year before, and still posted underwriting profit. So as our premium base got bigger, we have more margin in the business for catastrophe losses, but our exposure has stayed relatively flat. So we do look at it. Northeast wind is one of our largest exposures. Southeast hurricane wind again is another one, so we're all -- we're on top of that. We look at it all the time and starts with our companies, yes. We have a team at the head office that we look at it. And of course, he's all into the details as well, so...

That's the one risk that can destroy our company, so we are all focused on it all the time. You mentioned Miami. Of course, Houston, California earthquake, right, those are all big item, but one that you worry about -- there's a windstorm coming along, what he was saying, northeast wind. It's coming along the coast and hitting New York, rarely happened. It's happened once or maybe twice. Coming along -- it doesn't come into the -- it doesn't come inland, comes along and then comes into New York, which would be the -- we think, the worst one, and -- but we look at all of that all the time. So your question is a good one. That's something you have to do. You have to survive, stuff like that.

On the lighter side, I just came back from India yesterday to attend the meeting -- and a lot of Indians there too.

[ Very good ].

And last year, I visited Bangalore airport, loved it. And this year, I went to Mangalore just to pay my respect to Watsa family for giving us a good life.

You mentioned the Bangalore international airport. Please pick up this lovely book on the Bangalore international airport, on that booth. It just shows you what a magnificent airport that Hari Marar and his team have built. It's called T2. Some destinations, you remember; some, you never forget. Bangalore international airport. This book is available there. Next, #1...

Yes. Thank you. My name is [ George Teichman ]. I live in Toronto. And I'm a very happy investor in Fairfax. Thank you for your culture; your financials; and of course, compounding, which I truly believe in. I really understand that. I'm very interested in one of your investments that you've had for quite a while. And I used to go to Waterloo, to the annual meetings of BlackBerry. And I saw you there, Mr. Watsa. I've been very much -- I'm very -- I've been very loyal to BlackBerry. I still use my KEY2, believe it or not.

My goodness. Wow.

it's a G4 and it is better than a Samsung I threw away in Florida 2 weeks ago when I was there. It is much better. At any rate, it's a different company now. We know that. They're into software. They're into cybersecurity; and into AI, Cylance. What is your current thought about BlackBerry? The stock is down now to about $4. It is at its absolute low. I'm thinking I do not want to sell. I think that there could be a second coming. Do you feel the same way?

I've been looking for the second coming for 10 years, but first of all, the guy running it, you've seen him many times in Waterloo. John Chen is a fantastic person, gave it all. And no one worked harder, as I said in the annual report, but unfortunately, he wasn't able to grow the company. So the company's -- and when we went in, there might have been 15 billion, maybe even higher, in revenue. And as you know, now it's about 600 million. And John did a terrific job in terms of combining -- making sure the company could survive but couldn't make it grow. And so the question is, can it grow? It's got all the possibilities of growth. I backed John, so when John retired, I stepped off the board, as you know. And I think it -- I'm hoping the second coming comes. It's a terrific company. It's got fabulous technology and people, and -- but I'm no longer on the board. And I only wish BlackBerry nothing but best wishes as they go forward. So thank you for the question. Thank you very much. Can I -- Jeff, I come to you.

So we've had a few questions about Eurobank, so I'm going to attempt to put a general question and a specific question together about Eurobank. So the first general question is 2023 was an excellent year for Eurobank, and they're going to begin paying a dividend in 2024. What are your thoughts on the long-run prospects for Eurobank? And then specifically, we had a question. What are the plans for the expansion of Eurobank in India, only wealth management? Or do you have a long-term plan for Eurobank to operate there? So 2 questions put together.

So we are very fortunate we have Fokion, who's been with Eurobank in excess of 20 years, likely 25 years or maybe longer. And he's done a fantastic job. And we back them. We own 1/3 of Eurobank. I have to tell you, though, it's been a little bit of an up and down, nothing to do with Fokion, but Greece went through some problems. We bought the -- I said it last night. We bought the first [ slug ] of stock at EUR 31. And someone said about Charlie Munger's, I think. The second one was at EUR 1, and we are thinking this is the bottom. It can't go further down. Well, it went to 0.45. And we bought the -- perhaps the biggest [ slug ] at 0.45, on average about 0.92. And because of Fokion's exceptional performance, it's [ really at 1.90 ] today; and it's still cheap. And we think, over time, it will be a terrific investment from the time we bought it. So with that, Fokion. Give him a nice round of applause, Fokion.

So Prem, it was quite a journey. So 2023 was maybe the best year for Fairfax, but it was also a record year for Eurobank with a bottom line of EUR 1.1 billion. So what were the drivers of this performance? First, we operate in a region with quite solid macro outlook. We discussed already about Greece. I think that was the first question. Greece is doing quite well, very well, I would say, versus the rest of the Eurozone. Last year, growth was at 2%. We expect more this year. We have a stable government; a prime minister who is very much pro-growth, pro-business. In our second core market, in Cyprus, growth was 2.5% in 2023. And in our third core market, in Bulgaria, growth was close to 2%. And this compares with a growth for the Eurozone last year of about 0% plus. So that was one thing. The second was the monetary policy shift driving rates higher. That boosted our income, mainly our net interest income, but the third point, maybe the most important, is our business model that is allowing us to capture all the opportunities in the region. So we had a very strong year with earnings per shares at EUR 0.31, return on equity at 18%. The tangible book value per share over the period of 2022 and 2023, over a 2-year period, increased by close to 50%. And our core equity increased by 180 basis points to 17%. You may recall, Prem, that several years ago we had a problem with equity. Still we have a problem with equity. Before, we had a shortage of equity. Nowadays, we have excess capital. Having excess capital is a nice problem to have but still a problem. So as Jeff mentioned, we are planning to relaunch the dividend payment plan. For the first time since 2008, we are going to pay a dividend this year. Off the financial results of 2023, we envisaged a payout ratio between 25% to 30%. That should be around 0.09 per share or about a 5% dividend yield. Now going forward in 2024 and for the 3-year period 2024 to 2026, we are committing to keep delivering resilient returns in the area of 15% despite the fact that in Europe we expect to enter a declining interest rate cycle, yes. I believe that, by June, the ECB will cut -- will start cutting rates. And this will continue in the second half of the year. Europe is maybe in a different cycle than the U.S., so the challenge for us is to keep delivering resilient returns in this new environment. Second, in terms of the shareholder reward, we want to enhance that further. We have a payout ratio of up to 40% next year, in 2025, and hopefully, close to 50% in 2026. And last but not least, we need to fully integrate some recent acquisitions that we have done outside Greece, namely in Bulgaria and in Cyprus. Especially, in Cyprus, the acquisition of Hellenic Bank, the second largest bank of Cyprus, is a very important one. We have done a great transaction at a very attractive price. And this transaction is going to add significant value in our group. Now about India. I had the opportunity to visit India last February for the first time. I was really impressed by what I saw. I want to thank Sanjay for making all the nice introductions. We signed an MOU with NPCI about enabling UPI in Greece. It was a transaction that found its place in the joint statement between the Prime Ministers of India and Greece. Obviously we're not planning to establish a banking presence in India. However, we would like to make Greece and Cyprus the gateway for Indian companies that want to do business in Europe, in the EU. Especially, Cyprus has a number of advantages. Both India and Cyprus are commonwealth countries. Being ex-U.K. colonies, they have the same legal system. In Cyprus, there is the English law, and actually the corporate law is exactly the same like the one in India. Business languages in both countries is English, and therefore, there are good prospects for that. So this is our main objective. So overall, we feel very excited about the prospects of the bank going forward. I think we have a strong track record, a really dedicated management team. We worked together with the people in the management team for the last 15 years or so. And more importantly, we have a business plan, a business model that should allow us to deliver this 15% target in terms of return on equity.

Fokion, thank you very much, very well done. So where are we now? We are #2. Next question, from #2.

My name is [ Ignacia ]. I'm from Toronto. I've been a shareholder for, drumroll, 2 years.

Terrific. Very good.

My question is about Orla Mining. The [ copper Panama ] situation is quite a concerning precedent. I'm wondering why Orla Mining is still lucrative at this point.

Yes, okay. Orla Mining is a gold company and it's got terrific sponsorship. Pierre Lassonde is behind that company. The guy running it running is Jason Simpson. And it's one of the low-cost companies in gold; and the lowest cost, like $800, $900 an ounce. And the price of gold, of course, has passed $2,000. And it's got many interesting prospects. And so we back very smart people, right? So all of these people that you're seeing. And so Jason Simpson and Pierre are very, very -- and Pierre ran Franco-Nevada, built a very good company. And so that's the reason we are backing them. And we think, over time, that will do well. And I look forward to hearing from you in the years to come. We go into #3.

Just obviously this year's results just showed how much a quality insurance business is you really built across the business and [ really lend ] into the hard market. And my question is that I think cyber has contributed quite significantly to that growth, so it would be interesting to hear a little bit more about the areas of the market that you've seen opportunity across your companies; and then secondly to that, at group level, how you think about the aggregate on that. Obviously the PMLs are more difficult to measure and model than with hurricane and earthquake [indiscernible], so it would be just helpful to know how you think about that as a group.

No, that's good. And Peter, you can take a crack at this, but -- so catastrophe is all over the place. We had this fire in Maui. I think we lost $70 million or something like that. And so you have to be -- I mean we had an earthquake in Greece. I think it was an earthquake [ or rains ] and some cats, and you have losses. And so we have to keep on looking where the unexpected can happen. We know about the windstorms in Miami and all of that, but it's the unusual that gets you. And Peter, what would you say for that?

Yes. Just your question on cyber. You're right. During the -- sort of in '19 to '22 period, we were getting significant rate. We basically started out with a very small book. We were -- we had teams in place, but they took advantage of the hard market. Rates were in excess of 50% in many of those years, and so a lot of the growth you've seen in cyber was more rate than exposure, but you're exactly right. Cyber is much like our cat exposure on the property side in that you can have accumulation of risk. And so that's another area that we're focused on at the holding company level, so we aggregate that. And it being a new risk per se, we look at limits as well. So focus on limits. There's modeling companies out there that we look at similar PMLs to the catastrophe side, but again we want to make sure we're comfortable with the limits that we write.

Thank you very much. Thank you for your questions. We'll go on to mic #4.

Matthew Cullen, American Capital Advisory, Richmond, Virginia. I've been a Fairfax shareholder for 4 years. One quick comment or anecdote and then a question. First of all, I'm a little bit late to the party. This was my first meeting. I didn't quite know what to expect, but when I came through custom control, someone from Dexterra greeted me and took me nicely through that, so that was a wonderful experience that -- it kind of told me that this was going to be a [ good time ]...

That doesn't happen to me, but I'm happy about your...

Yes, well, thank you for a lovely meeting. I guess my question is around float. It seems like float per share and growing float are extremely important, but it also seems like all float is not created equal during periods of lower interest rates, rising interest rates. I'm just curious. When you guys think about float going forward and especially if the market is slowing down a little bit, is it about growth rate in float? Is it float per share? Is it yield on float? I assume it's a little bit of both, but has your thinking -- it just seems like nobody cared about -- or people cared less about float businesses when rates were low. And this is an even more valuable asset now that rates are not low.

Float is a hugely valuable asset. Most insurance companies don't use it well because you've got this -- for us it's about $35 billion. That contributes to the $60 billion, $65 billion investment portfolio we have. So which other company -- if you have a steel company [ yourself ], the assets are -- in the steel business or -- and we like the Stelco that we have; and Poseidon, its container ships. And here we've got liquid assets. We've got $65 billion that we can sell, buy, do whatever we want; and there's no claim on it. You can't ask that you want your money back. You -- some of the claims will be paid in 6 months, some of them in 2 years, some of them in 10 years. And we have use of the money. And so it's a very, very valuable asset not recognized as much by most of the insurance industry because they just stick with matching liabilities and assets. And we've got 20%-plus in common shares. And over time, as our capital, the denominator, becomes bigger, then we'll have a bigger percentage, but Peter, do you want to add to that?

I think -- no. I think you summed that up pretty well. Over time as we grow -- we don't focus on top line or on growth, so as we continue to grow, float will continue. And we'll invest it over the long term.

#1.

Hello. My name is Kiera Taylor. I'm with Investors for Paris Compliance. So as you mentioned, climate change is a pretty significant risk for the company and the insurance industry in general. So I think what we've seen in response to this is financial institutions publish their strategies for achieving net 0 emissions, so my question is when could investors expect to see Fairfax publish a net 0 strategy.

We'd -- we're looking at all of that. Most of these companies have published [ it with the future ]. Climate change does have an impact but also the price that you pay, so we are very sensitive to providing cat insurance at a fair price. And that goes up and down, yes. Right now it's very good, but it can change, of course. Peter, do you want to add to that in terms of what we have done in the past and what we plan to do?

Sure. So one of the things we are working on today is we put together at the group level a proprietary model to measure our carbon footprint and our greenhouse gases. And really that's scope 1 and scope 2. And so we're putting that together. We want to really understand it, make sure we're getting the consistent answer across the group. And that will be put in our ESG report essentially that we publish each year. In the next couple of years, there's a number of disclosure items that are coming out both in the United States and Canada, and we're preparing for that. And we will make sure, ensure all our companies and Fairfax will be in compliance with all those obligations.

So thank you very much for your question. We'll go on to #2.

So this is [ David Chaim ]. I'm a certified financial planner in Toronto. Okay, very good job. Congratulations.

Thank you.

Yes. My question is that does Fairfax have any exposure in China. So [ they are secondary ] largest economic group in the world, so what do you think about the economic future in China? And what's your strategy and plan?

China, you said. You said, for China...

Yes, yes.

Yes. So our exposure to China is very minimal. And we have a company called Alltrust that we've had for some time, and it's about 15%. And how much money would that be...

$75 million.

$75 million that we have in our company. And we've had it for some time, but our interest is not expanding in China. And we think it's difficult. China has done extremely well over a long period of time, but our preference is for a democratic country like India, big population, same type of population. And we think the opportunity is huge in that country, and that's where our interest and financial assets are focused on, but thank you for your question. #3.

I'm [ Rob Bellamy ]. I haven't gone to meetings since 1996. And since then, I've lost my hair and gained about 40 pounds, so I don't expect anyone to recognize me, but I really wanted to come here with my wife today, Prem, and congratulate and thank you and your team. It's been remarkable.

Well, thank you...

And the transformation, fabulous. Part of that transformation is the TRS, which I know nothing about, so I wanted to ask 2 questions. Number one, could the counterparty just say, "[Foreign Language]. I've had enough," and somehow get out? And number two, what is the exit strategy? Because I would be afraid that, if you come out and announce you're finished with a TRS, that might scare a lot of investors.

Yes. No, that's a very good point. No, we'd never get into something where -- then say, "Hey, man. Thank you very much, everyone." So we have terms with them. It's all our Canadian banks and we can extend it. And we've extended it. I think '25, '26 now, something like that. And so we just extend it. And they have a hedging mechanism that they do. And we like -- I mean our company today -- we've got 2 million shares there. And our company today, we think it's extremely inexpensive. And we will never get into a situation where someone says, "Hey. I want your money back." We'll never do that. And so we just think there's a huge amount of potential for those shares, our shares; and so we'll continue to extend it. And we can extend it. There's no gun to our head on it. Thank you very much. Thank you for your question. #4.

Prem, [ Allen Chen ] from Toronto.

Terrific, [ Allen. Allen ], how long have you been our investor?

Only 26 years.

26 years. And for all 26 years, [ Allen ] comes and takes a little photograph with me. And he keeps buying. And he's got -- I won't -- if he wants to say how many shares he's got. You tell them, [ Allen ], but it's a phenomenal story. "We bought them and held them." Not a single share has he sold for 26 years. [ Allen ]?

Yes. So my question is it's such a painful 26 years.

Hey. I thought you're a good supporter.

Yes, the outcome is very satisfactory, but journey is certainly with a lot of pain and suffering, so as I'm getting older, I don't think I can suffer as much as before, so how can you ensure I will suffer less from now on?

[ Allen ], I used to have a full head of hair, but no -- so the -- when I say the company's transformation, one is size, the fact that we've got $32 billion in premium; the fact that, if you have a big catastrophe, we can absorb it, big, big plus. The other thing is we've never had $2 billion or a $500 million that we could look for 4 years from really good credit. I mean like the government, government of Canada, government of the United States, government of all over the place. And we've never had that. And we got $2 billion there and that's like a base. And then you've got the underwriting profit. You've got the associate income. And then you've got the fluctuations in stock prices which we can't do anything about, but I can tell you that our company -- as the largest shareholder. Like we've never been in a position like this. That's why I meant transformation, so that your pain will be minimal. Give him a nice round of applause. Good questions. And #1.

Prem, Doug Vicic from RBC Vancouver. I've been a shareholder for over 15 years for myself and clients.

Terrific. Give him a nice -- very nice to see you. I think you went on that Indian trip, right? You went on the trip to India.

One of my colleagues did and told me I have to be on the next one, so I'm going to see the travel agent.

Yes, good, terrific.

I'm a big fan of corporate culture. I believe the way you treat people is the big reason for your success.

No question.

And I'm interested in understanding a little bit more of how you assess that at the margin. So it's easy to say a company fits or it doesn't fit, but if you find a company you're going to acquire, right industry, right price -- and it's you're not sure on culture. It's close. Can you give an example of how you decide yes or no, yes and we bring it in the fold? Or maybe it's close and we decided no. I'd love to -- if you -- what you can tell us about that.

So here is my experience on that. So we bought some companies in Latin America, from one of the big insurance companies. And we went and saw them and the fellow who manages them from Miami. These are companies in Latin America. He manages -- name is Fabricio. He's here. And so I traveled with Fabricio. We saw all these companies. And then Fabricio, at the end, says to me, "We were owned by this big company. And they wanted you to be ruthless. Forget about treating people well," and all that, to fire them if they don't perform -- and just really bad, whereas he says, "My own family, my friends, my relative, I treated them well, so I have to be like a split personality." With -- in our -- he's telling me this, right? "In your case in Fairfax," he says, you -- there's no difference with the way you treat your family and friends and relatives and your customers and employees and stuff. And I think there's -- most people want to do that. Like you -- do you really want to fire people left, right and center? And so all of those companies are just like just so happy to be part of Fairfax. And it's this culture that we emphasize, but then as I'm -- emphasize it all the time, but all -- you heard Brian Young and you hear Andy Barnard and you heard all of our people. They believe in it. They want to treat people well, right? And so when you have COVID come in, right -- so what do people do? They fire people. They -- no bonuses. Salary cut, but I think you've heard of that, right? People lost their -- we said -- one thing I said to all our people right off the bat: Call them. We couldn't meet, but on our telephone, call. We said, listen, you can't fire anyone because they can't get -- even if you don't like them, because they can't go for an interview. They can't get a job. COVID, there's no interviews, so you have to stay put and wait. And that's no [indiscernible] cutting salary, no cutting bonuses, none of that. And those type of -- everyone can talk about what you do to look after employees and stuff. The other thing I told our guys is we've really -- companies lay off 5%, 10% of the staff. If you got to know some of them, you'd never do that. How can you lay off? You are, yes, at RBC. You have people there, smaller group. Just laying off people 10% of your staff, 5%, we don't want to do that. And if we -- our business slows down, we'll keep the people. We had that in Zenith years ago when the company revenues dropped. And Kari Van Gundy and others, we never told them to lay off staff. Our expense ratio then was greater than the [ loss ] ratio. The [ loss ] ratio was terrific. So I think that is something that people like, people want. And so we've never had a problem. I mean some company that -- like this big company who was firing people. We wouldn't want to do business with them, but if it's like [ mediocre ], they change pretty quick. They change very quick because they like the culture. They want to be in a culture like that. And a business, as I say, is a force for good. Look at all the stuffs that we've done, right? And we started with nothing. And you treat people well and you look after them. And we're looking at -- we -- I've mentioned that -- we found out more recently that you can do a stress test, which you probably do, but that's not good enough to see if you've got any blockage. You have to get something called a calcium score. And you have to get some more testing of your heart, a scan of your heart; and that can show you whether you have a blockage, like 90% blockage. One of our guys had that. And so we've done, we're doing that for anyone who's 45 or 50 all across our companies. We're paying for it and all over the world and for their spouses. And I think we've already had 4, 5 incidents where they didn't know they had a -- they needed a stent. That means you can die any time. And so it's just we have a tremendous concern for the people that we work with. And the fact is we're all equal. We happen to have presidents or myself or whatever, but we treat people -- and it's -- and we always want to -- at least I always wanted to build a good company, performance-oriented but a good company. And I'm happy to say we've done -- we don't rest on our laurels, but we've done that. It's a great culture, but thank you for your question. #2.

[ Jens Andersen ], shareholder from Vancouver, BC. Congratulations on a great year and on the transformation of the company.

Thank you.

There's been a lot of fuss lately around the company's stated book value. And whether it's overstated or understated, whatever the case may be, I think you've done a great job at addressing it. As shareholders, how do you recommend we use the book value that you publish each year in making decisions? And how do you use it yourself?

Yes, that's a very good question. So I've said that, previously, book value is just a -- your first estimate of intrinsic value. What is the intrinsic value? And what's -- intrinsic value means how much earnings can you get from the companies that you have over time, right? And book value is one indication. You've got to look at return on equity over time. And our book value is, in our minds, very conservatively stated. And so our return, our combined -- our book value grew by 25% last year. And because of this $4 billion, our returns on equity are going to be exceptional. So book value is a first measure. And any of our companies, pretty, well, all of them, with some exceptions; and property casualty companies, any of them, we could sell them at multiples of what we have within our books, but -- so with anyone who reads it and understands our -- and we give tremendous disclosure at our annual report. Anyone who reads it is totally comfortable with our statement, but that's the way we look at it, book value, first estimate of intrinsic value. Intrinsic value, when you have compounded over a long period of time at 18%; same management team, it's not different, usually means that the company is worth a lot more than book value. And we've sold at multiples of book value in the past, and if history is any guide, that will happen again. So thank you very much for your question. #4.

Mr. Prem, this is Sreeni Meka from Lakeland Wealth Management Memphis, Tennessee. I wanted to extend to the question about the intrinsic value. I'm a most -- like most of the people here, I'm a value investor and value investing for almost a decade. There's quite a few value managers. They're not as good as they're performing. I am from Memphis. You know what I'm talking, but other than that, I -- intrinsic value, people look into the discounted future cash flows [ and use it -- appropriate ] discount value. And they come up with the price. Pretty much everybody looking to the same way. And another end, you see the with -- assets with no cash flow, like bitcoin or some crazy coins and all these gold, silver or whatever that -- so they have this value, perceived value somebody is betting against somebody else and that -- you we come up with the value, but nowadays -- and the question I am asking as an experienced investor, as equity holder, equity investor: How do you value, other than these cookie-cutter approach like a [ Venn gram ]? So it's like a price-to-book, price-to-earning below these -- it looks like it's not really working [ as if these -- better ], so how do I judge when I'm [ picking the company ]?

Yes. So when you say it doesn't -- it hasn't been working. It hasn't been working for the last 7, 8 years prior to the last 2 or 3, right? And it's changed in the last couple of years. Last couple of years, for the longest time, it was technology, Magnificent Seven. And now the 493 stocks out of the S&P 500 are having their turn, and -- but if you look at 100 years, value stocks have outperformed growth or anything else. We had something called the Nifty 50 in the '70s, long before your time. And '73, '72, they were record levels. And this is Johnson & Johnson, McDonald's, very good companies sold at very high price-earnings ratios. And then '74 came along. Most of them dropped 60% to 75%, but the important point is these companies never saw their stock price at those levels for 15, 16 years. After 2000 -- Microsoft hit $60 in 2000. It hasn't seen -- for 16 years, they didn't see $60 a share. Cisco was $80 a share at that time, dot-com. And it's still selling at $45 even though the earnings have gone up 9x. Earnings have gone up 9x, still selling at $45, 50% of the stock price. So this -- our -- I mean stock market history is riddled with it, and -- but you have to always be concerned of what you pay. There's lots of things you can do, but what you pay for something is very, very important. And that's what we are careful about. In our annual report, I say 2 things. One, this guy Phil Carret says that management -- very tough to figure out good management. We've given you some examples here. Very tough to identify great management. We've been blessed with this management. And the second thing, what Templeton said is, if you can buy something and in the future the earnings are much higher than what you expect, that becomes a good investment, but thank you very much for your question. And thank you all. I think we've pretty well answered it. It's 12:00, over to the reception. Thank you very much.