Fairfax Financial Holdings' (FRFHF) CEO Prem Watsa on Q3 2016 Results - Earnings Call Transcript

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Fairfax Financial Holdings Ltd. (OTCPK:FRFHF) Q3 2016 Results Earnings Conference Call November 4, 2016 8:30 AM ET


Predin Saba - Investor Relations

Prem Watsa - Chairman and Chief Executive Officer

David Bonham - Chief Financial Officer


Paul Holden - CIBC World Markets

Tom MacKinnon - BMO Capital Markets

Mark Dwelle - RBC Capital Markets

Howard Slinker - Slinker & Company


Good morning and welcome to Fairfax’s 2016 Third Quarter Results Conference Call. Your lines have been placed in a listen-only mode. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

Your host for today’s call is Prem Watsa, with opening remarks from Predin Saba. Mr. Saba, you may begin.

Predin Saba

Good morning and welcome to our call to discuss Fairfax’s 2016 third quarter results. This call may include forward-looking statements. Actual results may differ perhaps materially from those contained in such forward-looking statements as a result of a variety of uncertainties and risk factors, the most foreseeable of which are set out under risk factors in our Base Shelf prospectus, which has been filed with Canadian Securities regulators and is available on SEDAR.

I’ll now turn the call over to our Chairman and CEO, Prem Watsa.

Prem Watsa

Thank you, very much Predin. Good morning, ladies and gentlemen. Welcome to Fairfax’s third quarter conference call. I plan to give you some of the highlights and then as always pass it on to Dave Bonham, our CFO for additional financial details.

In the first nine months of 2016, book value per share increased 3.3% adjusted for the $10 per share common dividend paid in the first quarter of 2016. Our insurance companies had an excellent nine months with a combined ratio of 93.4% with excellent reserving and significant underwriting profits of $379 million.

In the third quarter all our operating segments had combined ratios below 100% with an overall combined ratio of 91.3%. Zenith had an excellent combined ratio of 75.6%, Fairfax Asia 82.9%, Odyssey Re 89.5% and Northbridge 89.8% all below 90% combined ratio.

As shown on page 35 of our quarterly report, we realized gains on our investment portfolio of $248 million before equity hedges.

Excluding all hedging losses and before mark-to-market fluctuations in our investment portfolio we earned $450 million in pretax income in the third quarter, Including all hedging losses, and mark-to- mark fluctuations in our investment portfolio we have reported after tax earnings of $33 million in the third quarter or $1.3 million excluding non controlling interest.

Insurance and reinsurance business premium volume was up in the third quarter by approximately 4.4% while the combined ratio for our insurance and reinsurance operations with 91.3%. At the subsidiary level the change in net premiums written in the third quarter and the combined ratios were as follows. OdysseyRe 2% drop in the third quarter in terms of net premiums 89.5% combined ratio, Crum & Forster up 13% and 98.5% combined ratio.

Northbridge in Canadian dollars premiums up 12%, 89.8% combined ratios, Zenith 7% increase in premium 75.6% combined ratio, Fairfax Asia 21% increase in premium and that excludes the LPT Large Portfolio Transfer for last year, it is higher if include it, but if you exclude it, it is up 21% with an 82.9% combined ratio and for Brit the premiums were down approximately 2% with a 96.7% combined ratio. So you can see our insurance companies have done very well for the three months and for the nine months.

As we have said below, as we have said many times before very low interest rates and reduced reserve redundancies means for our industry there is no place to hide. Combined ratios have to drop well below 100% for the industry to make a single digit return on equity with these low interest rates. Well, the short term is always tough to predict. I remind you that fundamentals will eventually play out.

Net investment losses of $200 in the third quarter for us consisted of the following. Please refer to Page 2 of our press release. Net losses on equity and equity related investments were $247 million resulting from net gains of $285 million in our equity investments and a $532 million net loss on our equity hedge mainly because of a 9% increase in the Russell 2000 Index in the third quarter. So the Russell increased very significantly in the third quarter.

We realized gains of $38 million on our equities primarily related to the redemption of the Blackberry convertible in the quarter and realized $57 million of gains on individual equity hedges. As we have mentioned in our annual meetings, annual reports, quarterly calls, and I emphasize on these calls as always, with IFRS accounting where stocks and bonds are recorded at market and subject to mark-to- market gains or losses, quarterly and annual income will fluctuate wildly and investment results will only make sense over the long term.

Our CPI linked derivatives with an notional value of approximately $114 million produced unrealized losses of $77 million in the third quarter. The majority of these contracts are based on the U.S. CPI Index by 32% or the European Union CPI Index about 41%. Further information is available on Page 3 of our press release where we have included a table on our deflation swaps.

On average they have approximately 5.9 or 6 years to run. These contracts are very volatile, but and as I've said many times to you before, our CDS experience comes to mind. When you are with a view on statements please remember that when we own more than 20% of the company we actually account and when we own about 40% about 30% we consolidate. So that mark-to market gains in these companies are not reflected in our results.

As you can see on Page 12 of our quarterly report, the fair values of our investments says $3.1 billion versus a carrying value of $2.6 billion and unrealized gain of $0.5 billion not on our balance sheet. Investment gains have been an important component of our returns over time. Since we began we've had $11.3 billion in realized and unrealized gains.

As previously announced last December Fairfax agreed to acquire a 40% interest in Eurolife, the third largest insurer in Greece. This transaction closed in the third quarter. On June 27, 2016 we agreed to acquisition an 80% interest in AMAG an Indonesian insurer. AMAG has an excellent long term track record in the Indonesian general insurance sector, a well diversified sales channel with the Panin Bank and this is we think a great opportunity for us to continue to expand our operations in this region. This transaction closed in early October.

As previously announced on July 06, 2016 the company agreed to acquire 100% interest in Zurich Insurance, South Africa, a South Africa and Botswana insurer. Africa is a continent that represents a long term growth opportunity for Fairfax, but where we have traditionally done little primary commercial insurance business. The transaction is subject to closing conditions including various regulatory approvals and is expected to close by the end of the fourth quarter of 2016.

In October of this year we agreed to acquire AIG's insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey and certain assets and renewable rights with respect to the portfolio of local business written by AIG Europe in Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia. Through an ongoing partnership, Fairfax will support and service AIG's multinational businesses in the countries in which we have acquired that business. Total consideration is approximately $240 million.

Each transaction is subject to customary closing conditions including regulatory approvals and each transaction is expected to close next year. We are honored to be AIG's preferred network partner all over the world to provide outstanding service to their multinational clients.

The Latin American companies are well-established in their respective markets with experienced management teams and a disciplined approach to underwriting and they will significantly expand Fairfax's footprint in Latin America. The acquisition of the Eastern European operations follows on our recent expansion in Eastern Europe through our previously announced QBE transaction and will accelerate our plans for long-term growth in the region. We will all of the AIG employees in the 13 countries to the Fairfax family.

Fairfax India is now almost fully invested its 1.1 billion that it raised about a year ago in six investments. We like all of them and are excited about the potential in India under Prime Minister Modi's leadership. We continue to be very concerned about the prospects for the financial markets and the economies of North America and Western Europe, accentuated as we have said many times before by potential weakness in China and emerging markets.

As we have said now for some time we believe that continues to be a disconnect between the financial markets and the underlying economic fundamentals. You never know when these markets will reverse, but be cautioned, caveat emptor or buyer beware. As of September 30, 2016 we had $5.5 billion in cash and short-term investments in our portfolios which is 19.3% of our total investment portfolios to take advantage of opportunities that may come our way.

Given the uncertainties of the U.S. election and the fact that we live in a mark-to-market world in the fourth quarter we have sold approximately 90% of our U.S. long term treasuries in our investment portfolio. And as a result we will have cash and short term investments in excess of $10 billion or 35% of the portfolio. Since we began buying treasuries in 2010 we have realized a cumulative gain. Now this is a cumulative gain of over $1 billion.

As we have done in the past it is important to remind our shareholders of the significant value we have created in our investments in numerous companies that are not valued at market value in our statements. We receive offers to purchase some of these holdings from time to time and for the right price these holdings may be sold opportunistically in order to maximize value for our shareholders. Such holdings include insurance associates where we have no reasonable potential for majority control or significant influence. All of our insurance associates at the end of last year are listed on page 57 in our 2015 annual report.

Now I would like to turn it over to Dave Bonham, our CFO so he can give you some more information on the underlying fundamental. Dave?

David Bonham

Thank you, Prem. So in the third quarter of 2016 Fairfax has reported net earnings of $1 million and that resulted in a net loss of $0.42 per diluted share and that's after considering payment of our preferred share dividends. So that I compares to the third quarter of 2015 when we reported net earnings of $425 million or net earnings of $18.16 per diluted share. Year-to-date in 2016 Fairfax has produced net earnings of $189 million $6.62 per diluted share and that was lower than in 2015 when we reported net earnings of $464 or about the 2015 when we reported net earnings of $464 million or about $19 per diluted share.

Underwriting profit at our insurance and reinsurance operations in the third quarter and first nine months of 2016 was a $175 million and $379 million with combined ratios of 91% and 93%. That was somewhat lower than the underwriting profits of $177 million and $440 million and combined ratios of 91% in each of those respective periods and 93% was somewhat more than the other writing profits of $177 million and $440 million and combined ratios of 91% in each of those respective periods in 2015.

Quarter-to-date underwriting profit decreased by $3 million due to lower net favorable prior year reserve development and higher current period catastrophe. Top three losses partially offset by an improvement in the current accident your loss experience excluding Cats?

Year-to-date underwriting profit decreased by $62 million due to higher current period catastrophe losses, partially offset by increase in net payroll prior reserve development. Current period catastrophe losses in the third quarter of 2016 totaled $59 million when three combined ratio points and totaled $248 million or for combined ratio points in the first nine months of 2016. Cat losses in the third quarter were mostly attritional while the Fort McMurray wildfires accounted for $66 million of the year-to-date total cat losses.

Our combined ratios benefited from net favorable prior year reserve development in the third quarter and first nine months of 2016 of $137 million and $397 million and that translated into about seven combined ratio points in each of those respective periods. That compared to net favorable reserve development of $151 million and a $303 million in the third quarter and first nine months of 2015.

Net premiums written by our insurance and reinsurance operations increased by 4% in the third quarter and by 14% in the first nine months of 2016 reflecting growth at Crum & Forster, Northbridge and Zenith National. The increase in the first nine months of 2015 also reflected the incremental impact of the consolidation of Brit's net premiums written of about $600 million.

So turning to our operating company results starting with Northbridge. Northbridge's underwriting profit was $24 million in the third quarter and $27 million for the first nine months of 2016 produced a combined ratio of 90% and 96% in each of those respective periods. The underwriting results in the third quarter and first nine months of 2016 included $5 million and $26 million of current period catastrophe losses and as we said the first nine month catastrophe losses were principally comprised of the impact of fourth Fort McMurray and that was with the net incurred loss of $23 million at Northbridge or about three combined ratio points.

Northbridge is underwriting results in the third quarter and first nine months including the benefit of net favorable prior year reserve development of $42 million and $79 million representing about 17 and 12 combined ratio points on their combined ratio. This compared to net favorable development of $40 million and $59 million representing about 18 and 9 combined ratio points in the same periods last year.

In Canadian dollar terms net premiums written by Northbridge in the third quarter and first nine months of 2016 increased by 12% and 10% reflected increased and new business writings and modest price increases across the group partially offset by the impact of reduced reinsurance costs.

Looking at OdysseyRe, OdysseyRe reported underwriting profits of $59 million and $133 million at combined ratios of 90% and 91% in the third quarter and first nine months of 2016 compared to underwriting profit of $62 million and $191 million last year. Cat losses in the third quarter and the first nine months totaled $33 million and $135 million translating into about 6 and 9 combined ratio points in each of those respective periods. That was an increase from the cat losses of $29 million and $85 million that we experienced in the third quarter and the first nine months of 2015.

OdysseyRe's combined ratios in the third quarter and first nine months of 2016 included the benefit of $45 million and $148 million of net favorable prior year reserve development and that principally related to catastrophe and other property loss reserves. That compared to the benefit of $66 million and $106 million of net favorable development the last year in the third quarter first nine months.

OdysseyRe wrote $499 million and just over $1.6 billion of net premiums in the third quarter and first nine months of 2016 and excluding the impact of the nonrenewal of the Florida property quota share reinsurance contract on June 1, 2015 that we mentioned on prior conference calls, net premiums written decreased by 1.9% in the third quarter and by about 1.8% in the first nine months. That principally reflects the impact of additional purchases of property catastrophe excess of loss reinsurance at very favorable pricing and that will significantly mitigate the impact of small to medium-sized catastrophe events on documents on OdysseyRe U.S. and its international operations.

Moving on to Crum & Forster, Crum & Forster produced underwriting profits of $7 million and $23 million in the third quarter and first nine months at combined ratios of 99% and 98% respectively. And there was no net prior year reserve development in either 2016 or 2015 at Crum & Forster. Current period catastrophe losses were $1 million and $17 million in the third quarter and first nine months of 2016 compared to $5 million and $12 million in the comparable periods last year.

Crum & Forster's net premiums written increased by 13% in the third quarter and first nine months of 2016 primarily reflecting growth and line of business combined with the incremental impact of the 2015 acquisitions of Redwoods, Travel Insured International and Brownyard.

Zenith National reported underwriting profits in the third quarter and first nine months of $52 and $115 and combined ratios of 76% and 81%. That compared to underwriting profits of $36 million and $97 million and combined ratios of 82% and 83% in those respective periods in 2015. Those combined ratios in 2016 included 15 and 13 combined ratio points of net favorable prior year reserve development in the third quarter and first nine months.

Net premiums written by Zenith increased to $180 million and $671 million in the third quarter and first nine months of 2016 from $168 million and $642 million in those respective periods last year. This increase of 7% and 5% in the third quarter and first nine months principally reflect an increase in exposure partially offset by modest price decreases.

And now looking at Brit, in the third quarter and first nine months of 2016 Brit contributed $405 million and just over$1.1 billion to the consolidated net premiums written and produced underwriting profits of $12 million and $26 million representing combined ratios of 97% and 98% respectively.

As a reminder, Brit was acquired in June of 2015, so comparative figures for 2015 are only for the period in which Brit was owned by Fairfax. The underwriting results in the third quarter and first nine months of 2016 included current period catastrophe losses of $13 million and $48 million translating into 4 and 5 combined ratio points. Cat losses in the first nine months of 2016 were again principally comprised of the impact of the Fort McMurray wildfires where Brit incurred net losses of $22 million and not increased its combined ratio by about 2 points.

Fairfax Asia's underwriting profit of $12 million and $37 million and combined ratios of 83% and 81% in each of the third quarter and first nine months of 2016 improved when compared to underwriting profits of $5 million and $20 million and combined ratios of about 90% in those comparable periods in 2015. The combined ratios in 2016 included about $5 million and $35 million respectively of net favorable prior year reserve development. That compared to about $7 million and $18 of favorable development in the third quarter and first nine months last year.

Under the insurance and reinsurance other segment it produced underwriting profits of $9 million and $18 million combined ratios of 92% and 95% in each of the third quarter and the first nine months of 2016. And runoff reported operating losses that decreased to $12 million in the third quarter of 2016 compared to an operating loss of 19 million in the third quarter of 2015. The year-over-year decrease principally reflects lower operating expenses in our runoff operation.

Looking at some of our consolidated figures, our consolidated interest and dividend income decreased modestly quarter-over-quarter from $106 million to $105 but increased from $367 million in the first nine months to $419 million in 2016. And that reflected increased holdings of power yielding government bonds and corporate bonds partially offset by the sales of U.S. State and Municipal bonds.

Fairfax recorded an income tax recovery of $30 million in the third quarter of 2016 on pretax earnings of $2.5 million. It is really the small base of pretax earnings that's the principal factor resulting in the unusual effective tax rate. However, the items reconciling our statutory tax rate to our effective tax rate remain fairly consistent with prior periods.

And before the details on that I'd draw your attention to note 13 of our third quarter report where we show our detailed income tax reconciliation and we also show a tabular breakdown of our pretax results by jurisdiction and the related tax provisions. We ended the third quarter with an investment portfolio inclusive of holding company cash of $29.5 billion compared to $29.5 billion at the end of 2015.

And looking at our financial position our total debt to total capital ratio increased to 24.8% at September 30, from 21.8% at December 31, 2015 primarily resulted from the issuance of $400 million principal amount of 4.5% unsecured senior notes that we issued in the first quarter 2016 and also an increase in subsidiary death in the third quarter which included Fairfax India's term loan of $225 million and Cara's borrowings of about 208 million to finance its acquisition of St-Hubert. Increased long term debt was somewhat offset by the increase in our common shareholder's equity through the issuance of 1 million subordinate voting shares in the first quarter and higher non-controlling interest in the third quarter.

So with that, I'll pass it back over you Prem.

Prem Watsa

Thank you very much Dave. Now we are happy to answer your questions, please give us your name, your company name and try to limit your question to only one, so that's fair to everyone on the call. Gaby we're ready for the questions?

Question-and-Answer Session


Thank you. [Operator Instructions] Our first question is from Paul Holden of CIBC. Your line is open.

Paul Holden

Thank you. Good morning.

Prem Watsa

Good morning, Paul.

Paul Holden

So my one question for you, Prem, would be with respect to the change in holdings on the U.S. Treasuries. So you said you reduced that position or reduced it significantly because of uncertainty of the U.S. election. I won't ask you to predict the outcome of the election, but I will ask you what you might do with that position pending the outcome of the election? I.e., if it goes one way or the other, might you re-enter that position?

Prem Watsa

Well, Paul, thank you for that question. Yes, as we said, sold 90% plus of our treasury bonds and we made the point that the uncertainties in the U.S. election is the reason. We don't know who's going to win the elections, but you could have significant infrastructure spending, you could have that drop in corporate tax rates and while we think that might work in the short term in the long, we still have questions about that. But we do live in a mark-to-market world and we wanted to take that risk and so we've done that.

And so with $10 million of cash Paul and the investment portfolios $1 billion in cash and marketable securities in the holding company, we've to $1 billion of undrawn lines, bank lines, our stocks are hedged. We've got no corporate bonds to speak of. We've got some deflation swaps. We like the position we are in. We've got tremendous flexibility that's built into our company and we can take advantage of any opportunities that come with this U.S. elections or otherwise. But we like that flexibility. We really don't know what will happen and we have to see. And as it happens we will react.

But we have an investment team here that's been managing money in one form or the other for 40 years and we've got three partners for who were I happen to be one who worked together for most of that time period and as this comes along we will react. But this is a very uncertain world that we live in. There is a lot of unintended consequences. I have said that for a few years and if any of these unintended consequences that we've talked about, U.S. elections is one, you've got Brexit, you've got China which we keep emphasizing in our annual reports.

We recognize and we've said to you there is too much debt in the United States and in the rest of the world. All of the monetary policy QE 123 all haven’t worked in any significant way. So when you see all of that we like the fact that we have $10 million plus of cash in the investment portfolios with the idea that we can take advantage of opportunity as and when it comes our way.

Paul Holden

Okay, I understand. So if I get the impression right, your view towards a deflationary world has not changed, which then may suggest that long-dated bonds at some point in time may not be a bad place to be again?

Prem Watsa

Yes, thank you very much Paul. No our deflationary stance hasn’t changed. But our investments and deflation swaps have a cap on it. They are limited and but the possibilities of course are there that they can do very well.

So Gaby, next question please?


Yes, thank you. Our next question is from Tom MacKinnon of BMO Capital. Sir, your line is open.

Tom MacKinnon

My question was asked and answered. Thanks very much.

Prem Watsa

Thank you, Tom. The next question, Gaby?


Yes, thank you. Next question is from Mark Dwelle of RBC Capital Markets. you line is open.

Mark Dwelle

Yes, good morning.

Prem Watsa

Good morning, Mark.

Mark Dwelle

You guys recently announced a deal to acquire a mix of units and assets from AIG. I was hoping you could just kind of go into that in a little bit more detail? It obviously plants a number of flags around the globe and fills in some spots on the Fairfax map. I was also interested if you had an idea of just kind of what the ballpark number of dollars of premiums that might be involved there?

Prem Watsa

Yes, well Mark, we are very exciting first of all to become AIGs preferred network provider as I mentioned to you. So what that means is AIG has many global companies that have insurance needs all over the world. So we would of course look after those requirements and provide outstanding service for them. The same people will be servicing them that have serviced them in the past in all these countries. It is 13 countries are involved. Seven of them, six in Latin America and Turkey. We will have – they are independent companies, so they have their own capital in Latin America and their premiums and many of them are very well established, all of them are well established, but some of them are, you know, in Argentina, I think it is about 80 years, Colombia it is about 40 years.

So their existing operations very disciplined underwriting. AIG has been known in the past for disciplined underwriting. And we'll manage them on a decentralized basis with in the case of Latin America. Each of the country heads will run it separately. They'll report into Miami. We will have a very small office in Miami and that will come through, Bijan who has been in AIG for the better part of 20+ years and too Andy Bernard. And in the case of Eastern Europe, we have Peter Chukwari [ph] who is looking after Eastern Europe operations, reporting into Bijan and Andy.

So this was directly. In the case of Eastern Europe its branches established and these countries with all the people, with all the systems and but we will capitalize them through Colonnade, our Luxembourg company, and write the business through there. So for us we are very excited about this opportunity and we think in our structure all of these companies will be underwriting will make an underwriting, but very soon likely in 2017. And then of course the investment income gives us diversification, broad diversification.

In terms of premiums you know if you had all of it and gross premiums it will add up to Mark in the $700 million, $800 million area that's gross premiums and then we'd be looking at retaining, we'd have to reinsure of course in terms of protecting us from exposures. But the gross premium is that it has that level and we bought these operations at book value and so we think over time this will be a good return for our shareholders and of course we will provide outstanding service to AIG who will Fairfax will be their preferred network partner.

And in the future if they decide to divest any more countries because it makes sense for them, its small, we'd be the obvious choice because they will work with us and we have AIG people with us like Bijan and we're really happy and I've said this, but I want to say it again, we welcome the employees from AIG's operations to Fairfax. We are very excited. We met many of the leaders but we're looking forward to meeting the individual people, the individual employees. In total they might be somewhere in the 1500 area in terms of all of the countries.

Mark Dwelle

Thank you for that. That's very comprehensive and certainly a relatively larger deal than might have been suggested by the actual purchase price. Second question I have related to Hurricane Matthew. Do you have any preliminary sense of what losses related to that might be? And if nothing else, maybe just a sense of which operating units might have exposure to that event?

Prem Watsa

Yes, I'll pass that on to Dave. Dave, your sense of that?

David Bonham

Yes, so Hurricane Matthew should not be a significant event for us. There will be a little bit of exposure at Crum & Forster and some at OdysseyRe and perhaps a bit at Brit. But I don’t, I wouldn’t expect anything significant in terms of Hurricane Matthew in the fourth quarter.

Mark Dwelle

Okay thanks.

Prem Watsa

Of course as you know market Hurricane Matthew went along the coast and could have been a much bigger event, but the industry and all of us were very fortunate. Even the residents in Florida that had then come in early and sooner. And so yes, we don’t think it is going to be a very significant event Mark.

Mark Dwelle

Very good, that's all my questions, thanks.

Prem Watsa

Thanks very much, Mark. Next question please.


Yes, thank you. Our next question is from Howard Slinker of Slinker & Company. Sir, your line is open.

Howard Slinker

Hi Prem.

Prem Watsa

Hi good morning, howard.

Howard Slinker

Just two or three technical questions. Inflationary hedges, BPS basis points?

Prem Watsa

Yes, yes it is.

Howard Slinker

And then second, if you choose, and deflation emerges, can you refund or cash in those hedges before maturity, or do you have to wait until maturity?

Prem Watsa

No, they are tradable instruments Howard and so they have maturity of say six years on average, but you can trade them before. Same sort of structure is spread for the swaps that we acquired some years back. They had five year, seven years to maturity, but you can trade, there is a market and that you can trade them on and so yes, we would of course and we never waited for maturity and credited for swaps. Our investments there and we - unlikely we will wait for maturity and in this case too.

Howard Slinker

Finally, the phone was breaking up as you were saying what I thought were premiums written for the AIG subsidiaries acquired. Did you say about $800 million in premiums written?

Prem Watsa

Yes, I said $700 million to $800 million, so $700 million to $800 million, yes. So it is relatively significant for us in terms of premium.

Howard Slinker

Good to see you the other day. Thanks.

Prem Watsa

Thank you. Yes, thank you very much, Howard.


Thank you. [Operator Instructions]

Prem Watsa

Well, Gaby if there are no more questions, I thank you very much all for joining us on this call. We look forward to presenting to you again in the next quarter. Thank you, Gaby.


Thank you. That concludes today's conference call. Thank you all for joining. You may now disconnect.

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