Fairfax Financial Q2 2026 Earnings Call Transcript

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Provided by Quartr
July 31, 2026

Key Takeaways

  • Positive Sentiment: Underwriting performance remained strong, with $427 million of underwriting income and an IFRS 17 combined ratio of 81.9%, improving from 84.1% a year earlier. Favorable reserve development contributed $152 million, or 2.3 combined-ratio points.
  • Negative Sentiment: Management said insurance pricing continues to soften, particularly in North American property and increasingly across other lines, making premium growth more challenging. Fairfax plans to prioritize higher-margin business and pull back from less attractive opportunities.
  • Positive Sentiment: The investment portfolio reached CAD 77.3 billion, with a two-year duration, a 5% yield, and more than 75% of fixed income invested in government bonds. Management believes the portfolio is well positioned if inflation and interest rates remain higher than expected.
  • Positive Sentiment: Fairfax reported CAD 2.1 billion of net earnings attributable to shareholders, while book value per basic share rose 4.8% to $1,304.39 in the first six months. The company also repurchased approximately 1.1 million shares for CAD 1.7 billion and said its stock remains undervalued.
  • Neutral Sentiment: Fairfax completed a partial sale of Poseidon for $1.9 billion and recorded an $838 million realized gain, while advancing transactions involving Kennedy Wilson, Andrew Peller, Sleep Number, IIFL Capital, and Eurolife. Associate income was volatile in the quarter due to a CAD 92 million Helios write-down and a CAD 46 million Waterous loss, although management maintained a positive long-term outlook.
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Earnings Conference Call
Fairfax Financial Q2 2026
00:00 / 00:00

Transcript Sections

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Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Underwriting income of $427 million in the second quarter of 2025. All our major insurance and reinsurance segments continue to post strong results with good underlying margins while remaining disciplined in a softening insurance market, especially in North America. For comparable purposes, our IFRS 17 combined ratio was 81.9% compared to 84.1% a year ago. Our global insurers and reinsurers posted a combined ratio of 92% and underwriting profit of $289 million. Allied World led the way with a combined ratio of 90.2%. Odyssey's combined ratio was 93.6%. Brit had a combined ratio of 94.6%, and Ki had an outstanding quarter with a combined ratio of 81.5%, benefiting from favorable reserve movements. Our North American insurers had a combined ratio of 94.1% for the second quarter. Northbridge had another great quarter with a combined ratio of 89%.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Crum & Forster had underwriting income of $54 million or a combined ratio of 95.5%, while Zenith, our workers' compensation specialist, after a couple of years of above 100 combined ratios, posted a small underwriting profit at 98%. Our international operations delivered a combined ratio of 95.2% for the quarter, with underwriting income of $55 million and all our international segments producing underwriting income. Colonnade in Eastern Europe had an excellent combined ratio of 87.7%. Bryte continues to produce strong results with a combined ratio of 94%, and Fairfax Asia had a combined ratio of 94.6%, led by Singapore Re at 87.3%. Gulf Insurance had a combined ratio of 99.3% in the second quarter, notwithstanding the difficult conditions from the war in Iran.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

In the second quarter, our insurance and reinsurance companies recorded favorable reserve development of $152 million or a benefit of 2.3 points on our combined ratio. Each of our major segments recorded favorable reserve development. We are focused on setting our ongoing reserves at conservative levels, especially on long-tail lines of business. Through our decentralized operations, our insurance and reinsurance companies continued to produce strong results, writing annualized gross premium of over $34 billion, with underlying margins remaining attractive in the main, in spite of softening rates. In many lines, it is becoming more competitive, but we benefit from our size and scale. More importantly, we have exceptionally long-term management teams that are all focused on the bottom line and have the experience to manage the cyclical nature of our insurance business.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Our long-term approach enables our companies to stay disciplined, patient, and focused on profitability rather than top-line growth targets. I will now pass the call to Wade Burton, our President and Chief Investment Officer of Hamblin Watsa, to comment on our investments.

Wade Burton
President and Chief Investment Officer at Hamblin Watsa Investment Counsel

Thank you, Peter, and good morning. Our investment portfolio ended the second quarter of 2026 at CAD 77.3 billion. Fixed income made up CAD 52.3 billion. Common and preferred stocks, including our TRS and real estate, came to CAD 13.4 billion, and associate and consolidated investments ended the quarter at CAD 11.6 billion. Within that fixed income portfolio, CAD 8.5 billion was cash and short-term bonds, mainly U.S. T-bills. CAD 32 billion was in government bonds, CAD 6.1 billion in corporate bonds, and CAD 5.6 billion in mortgages. Credit quality remains outstanding. Over 75% is in government bonds, with the remainder in high-quality corporates and first mortgages. Duration is two years, and the yield is 5%. We continue to earn good money on a safe, liquid fixed income portfolio. There are many moving parts in today's economic picture.

Wade Burton
President and Chief Investment Officer at Hamblin Watsa Investment Counsel

A new unproven Fed chair in Kevin Warsh, healthy but stable inflation, heavy fiscal spending, large deficits, the Iran war, tariffs, and steady wage and goods inflation. One thing we're confident of, the days of zero, and in many cases negative rates are behind us. The risk is tilted toward inflation running higher than expected, which favors our high-quality, short-duration fixed income portfolio. Within the CAD 25 billion equity and equity-like portfolio, where our target return is 15%, we have CAD 9.9 billion in common stocks, CAD 6.6 billion in associates, and CAD 4.2 billion in consolidated. Associates are investments like Eurobank and Poseidon, where we don't hold a controlling stake. Consolidated investments are where we do hold a controlling stake. We also hold CAD 4.4 billion in preferred shares, insurance associates, real estate, and derivatives, primarily our Fairfax TRS, which Peter's already covered.

Wade Burton
President and Chief Investment Officer at Hamblin Watsa Investment Counsel

The vast majority of everything we own in our equity portfolio has three main threads. We like the people running the businesses, the companies are financially sound, and we're carrying them at values where we believe we can earn our 15% return. Judged on these main criteria, the equity and equity-like portfolio is in a very strong position. The overall pricing of the portfolio is cheap. By that, I mean either the stock trades cheaply as a publicly traded common stock, or we're carrying the consolidated investment at conservative values. More importantly, our lineup of partners and CEOs has never been better. From Kevin Plank at Under Armour, David Sokol at Poseidon, Fokion Karavias at Eurobank, Evangelos Mytilineos at Mytilineos, and Adam Waterous at Greenfire and Strathcona Resources, just to name a few. All world-class partners focused on making money for our shareholders.

Wade Burton
President and Chief Investment Officer at Hamblin Watsa Investment Counsel

Last, a word on AI and software companies. First, AI. We've become heavy users of AI inside our company, and it's added real multiples to our analytical productivity. That's good news. Second, software companies. We've studied a number of software companies that AI may put at risk. We haven't yet found one where we can point with certainty to long-term earnings power. That makes it impossible to land on an intrinsic value we have confidence in. Even though many software company prices have come down a lot, none have come down enough for us to invest. With that, I'll turn the call over to our CFO, Amy Sherk.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Thank you, Wade. I'll begin my comments by discussing some of our key transactions. On May 29th, 2026, the company sold 23.1% of its 45.3% equity interest in Poseidon for cash consideration of $28.30 per share or aggregate proceeds of $1.9 billion, which decreased the company's equity interest to 22.2%. Accordingly, the company recorded a realized gain of $838 million in the consolidated statement of earnings. The company continues to apply the equity method of accounting to the retained portion of its investment in Poseidon. On June 16th, 2026, all of the outstanding common shares of Kennedy Wilson, not already owned by the company and certain senior executives of Kennedy Wilson, who together with the company formed the consortium, were acquired by Kona Bidco, a newly formed holding company established by the consortium.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Kona Bidco acquired the common shares of Kennedy Wilson for $10.90 per share in cash, funded principally by $1.3 billion of acquisition financing obtained by Kona Bidco. Concurrently, the company invested cash of $400 million and also contributed its existing holdings in Kennedy Wilson preferred and common shares into Kona Bidco for Kona Bidco mandatorily redeemable preferred shares with a fair value of $716 million, which the company has classified as bonds, and Kona Bidco common shares with a fair value of $145 million, which the company has recorded as an investment in associates. Although the company received a majority economic interest through its Kona Bidco investments, it does not have control over Kona Bidco or Kennedy Wilson. Accordingly, the company has concluded that it has significant influence over Kona Bidco and has commenced applying the equity method of accounting to its indirect equity interest in Kennedy Wilson.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

During the second quarter, the company closed out derivative contracts on 418,795 Fairfax subordinate voting shares with an original notional amount of $132 million or CAD 172 million and received cash of CAD 517 million from its derivative counterparty upon settlement. At June 30th, 2026, the company continues to hold equity total return swaps on just over 1.3 million Fairfax subordinate voting shares with an original notional amount of CAD 532 million or CAD 396.59 per share. That's CAD 674 million or CAD 502.68 per share. The following transactions are expected to close in the second half of the year. On June 14th, 2026, the company formed a consortium with John Edwards Enterprises, Inc., or JEEI. The company entered into an agreement to acquire all voting and non-voting shares of Andrew Peller Limited, not already owned by JEEI, for approximately $233 million or CAD 330 million.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Together with JEEI's shares, the consortium which the company expects to consolidate will own 100% of the equity of Andrew Peller Limited. Closing of the transaction is subject to shareholder, regulatory, and other conditions and is expected to be in the third quarter of 2026. On June 12th, 2026, Sleep Country entered into an agreement to acquire the assets and assume certain liabilities of Sleep Number, a U.S. manufacturer and retailer of premium adjustable mattresses. Sleep Country will acquire Sleep Number for purchase consideration of approximately $530 million, as determined through a Chapter 11 court-supervised bidding process that has now been approved. The purchase consideration will be funded by additional Sleep Country borrowings as described in Note 11 of our Q2 interim report. Closing of this transaction is subject to customary conditions and is expected to be today.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

On May 7th, 2026, Fairfax India entered into an investment agreement with IIFL Capital and its existing promoters to increase the company's equity interest in IIFL Capital through a series of transactions to a minimum of 51% for aggregate consideration of approximately $417 million or INR 39.3 billion. Closing of the transaction is subject to customary closing conditions, including regulatory approvals, is expected to be in the latter half of 2026. On May 6th, 2026, the company entered into definitive agreements on its previously announced transaction with Eurobank, pursuant to which Eurobank will acquire the company's 80% equity interest in the life insurance operations of Eurolife for cash consideration of approximately EUR 930 million or EUR 813 million. The company will continue to maintain its 80% equity interest in Eurolife General, the property and casualty insurance business operated by Eurolife.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Concurrently, the company will purchase a 45% equity interest in Eurobank's Cyprus non-life insurance company, ERBA, for cash consideration of approximately EUR 68 million or EUR 59 million, with an option to acquire the remainder of ERBA in the future. The proposed transactions are subject to regulatory approval and customary closing conditions, are expected to close in the third quarter of 2026. A few comments on our non-insurance companies results in the second quarter and first six months of 2026. Non-insurance companies reported operating income of $194 million in the second quarter of 2026 compared to $126 million in the second quarter of 2025. This primarily reflected higher operating income in our other segment due to improved operating income at a majority of the operating companies and at Fairfax India, principally driven by increased share of profit of associates.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Non-insurance companies reported operating income of $231 million in the first six months of 2026 compared to $85 million in the first six months of 2025, primarily reflecting higher operating income in the other segment, principally driven by non-recurring, non-cash impairment charges recorded by Boat Rocker in the first six months of 2025 prior to its deconsolidation on August 1st, 2025.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Looking at our share of profit from investments in associates in the second quarter and first six months of 2026, consolidated share of profit of associates of CAD 43 million in the second quarter of 2026 principally reflected share of profit of CAD 108 million from Eurobank, CAD 33 million from the company's reduced share of Poseidon, all partially offset by a write-down of CAD 92 million of Helios Fairfax Partners to its fair value and share of loss of CAD 46 million from Waterous Energy Fund III, a limited partnership investment that recorded unrealized mark-to-market losses on a publicly traded common stock holding.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Consolidated share of profit of associates of CAD 414 million in the first six months of 2026 principally reflected share of profit of CAD 237 million from Eurobank, CAD 109 million from Poseidon, and CAD 71 million from Waterous Energy Fund III, partially offset by a write-down of CAD 92 million of Helios Fairfax Partners to its fair value. I will close with a few comments on our financial condition. Maintaining an emphasis on financial soundness at June 30th, 2026, the company held CAD 2.3 billion of cash and investments at the holding company, has access to our CAD 2 billion unsecured revolving credit facility, and an additional CAD 2.2 billion at fair value of investments in associates and market-traded consolidated non-insurance companies. Its CAD 2 billion unsecured revolving credit facility was undrawn.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

At June 30th, the excess of fair value over carrying value of investments in non-insurance associates and market-traded consolidated non-insurance subsidiaries was CAD 4.4 billion, compared to CAD 3.1 billion at December 31st, 2025, with the increased excess principally related to the company's investment in publicly traded Eurobank and the remaining shares held in Poseidon. The pre-tax excess of CAD 4.4 billion is not reflected in the company's book value per share, but is regularly reviewed by management as an indicator of investment performance. The company's total debt to total capital ratio, excluding non-insurance companies, increased to 28% at June 30th, 2026, compared to 26.2% at December 31st, 2025, reflecting increased total debt, principally from issuances, partially offset by redemptions of unsecured senior notes and decreased common shareholders' equity.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

Common shareholders' equity decreased by CAD 234 million to CAD 26 billion at June 30th, 2026, primarily reflecting purchases of just 1.1 million subordinate voting shares for cancellation for consideration of CAD 1.7 billion, or CAD 1,630.61 per share, payments of common share dividends of CAD 329 million and other comprehensive loss of CAD 276 million, primarily related to unrealized foreign currency translation losses, net of hedges due to the strengthening of the U.S. dollar against various currencies. The company views these unrealized foreign currency movements as market fluctuations, similar to unrealized gains or losses on its equity and fixed income portfolios, partially offset by net earnings attributable to shareholders of Fairfax of CAD 2.1 billion.

Amy Sherk
Amy Sherk
VP and CFO at Fairfax Financial

In closing, book value per basic share was $1,304.39 at June 30th, 2026, compared to $1,260.19 at December 31st, 2025, representing an increase per basic share in the first six months of 2026 of 4.8%, adjusted to include the $15 per share dividend paid in the first quarter of 2026. That concludes my remarks, and I will now turn the call back over to Peter. Thank you.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Thank you, Amy. We are now happy to take on any questions you might have.

Operator

Thank you. We'll now begin the question-and-answer session. If you would like to ask a question, please press star one. Please unmute your phone and record your name clearly when prompted. Your name is needed to introduce your question. To withdraw that request, you may press star two. Our first question now is from Scott Fletcher with CIBC. Your line is open.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Good morning, Scott.

Scott Fletcher
Scott Fletcher
Analyst at CIBC

Hi. Good morning, and thanks for taking the question this morning. There's been a lot of commentary across the insurance sector this quarter just around continued softening in property lines, and that softening spreading out into the casualty lines as well. Just curious if you're seeing a broadening out of the softening market, whether in the primary insurance or the reinsurance businesses, and should we expect any changes to premium growth or combined ratios going forward to reflect that softening?

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Thanks, Scott. In the second quarter, we continued to see similar trends that we have reported in the last number of years, softening across many of our companies, especially in North America and particularly in the property market. Generally, it's really on the property side, and it's making it challenging for our companies to grow. There's really now a focus on the bottom line. The companies are looking to optimize their portfolios. They put more weight on the higher-margin business and pull back on the less attractive business. As we said before, we benefit greatly from our diversified operations by product and by geography. For example, our international operations continue to grow at a very good clip, where there's less pricing pressure. Our international segment, as I said earlier, was up 8%, and that's for the international segment.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

I should point out that some of our larger companies, Allied World, Odyssey Group, Brit, they also have significant international books of business. When we look at our international segment on its own, that now makes up about 20% of our total business. If we look at all the international business, including the others, that's probably closer to 35% and growing. We have that flexibility, and we benefit from the diversification. Also, just to point out, as I said, the property business is the most under pricing pressure. In aggregate, property makes up only about 35% of our total business, our total premium. Again, we benefit from the diversification across all our lines of business. Thank you for the question. Next question, please.

Operator

That is from Bart Dziarski with RBC Capital Markets. Your line is open. One moment, please. Small delays. Bart, your line is open. Mr. Dziarski. His line is out of queue. Our next is from Tom MacKinnon with BMO Capital Markets. Your line is open.

Tom MacKinnon
Tom MacKinnon
Analyst at BMO Capital Markets

Yeah, thanks very much. Can you hear me?

Operator

Yes, sir.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

We can hear you.

Tom MacKinnon
Tom MacKinnon
Analyst at BMO Capital Markets

Oh, great.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Yep.

Tom MacKinnon
Tom MacKinnon
Analyst at BMO Capital Markets

Yep, super. Notice that in the quarter, you sold nearly a quarter of the TRS on the Fairfax stock. What are the takeaways with respect to that? Does that mean you think the stock is not as attractive right now where it sits? If so, why would you continue to buy back the stock? Comments around that. Thanks.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Right. No, of course. We're still buying our stock back. You can see we bought back almost 1 million shares in the quarter. We think it still remains undervalued. It's just the TRS, we entered into it in 2020, and it's been an outstanding investment for us. We had a cumulative gain so far of about $2.5 billion over that time period. As Amy said, and you said, we took off approximately 24% of the position in the quarter, but we still hold a significant position at about 1.3 million shares. We believe it's a very attractive long-term position and investment for us over time. Thank you for the question. Next question, please.

Operator

Thank you. Jaeme Gloyn with National Bank Capital Markets, your line is now open.

Jaeme Gloyn
Analyst at National Bank Capital Markets

Yeah, thanks.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Thank you.

Jaeme Gloyn
Analyst at National Bank Capital Markets

Just a question on the bond portfolio as it's constructed today with previous mortgages that I believe you got from Kennedy Wilson. Now the Kennedy Wilson investment is treated as a bond. It seems like there's a pretty good chunk that's tied up in real estate exposed to, let's say, income-producing investments. Maybe talk us through that thought process, that strategy, and how you got comfortable with taking on this level of risk tied to real estate.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Sure, Jaeme. If we look, as Wade said, our fixed income portfolio is approximately CAD 53 billion, and over 75% of that is in government bonds. We're very pleased where we are from a duration standpoint as well. We have a lot of flexibility in our portfolio, and especially on the fixed income portfolio. In regards to real estate, as I said earlier, we've had a 15-year relationship with Bill and the Kennedy Wilson team. They've produced outstanding results for us through mortgages, real estate, and that's something that we don't have in-house. When the opportunity to privatize the company with Bill and the team, they'll operate as normal, completely separate from Fairfax, we thought it was a great long-term investment for us. We're very comfortable where we are on our exposure to real estate mortgages, et cetera.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Thank you for the question. Next question, please.

Operator

We have another from Bart Dziarski with RBC Capital Markets. Sir, your line is open.

Bart Dziarski
Bart Dziarski
Analyst at RBC Capital Markets

Great. Good morning. Thanks, everyone. Sorry about earlier. I'm managing a couple of calls. Thanks for taking the question. I just wanted to ask about profit for associates. I know there's a couple of one-timers this quarter, but I think if you normalize for that, it's still looking light relative to the $1 billion of guidance. Maybe walk us through, is that still a good number to think about? If so, what are the pieces that give you confidence to get there? Thanks.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

No, thanks, Bart. Yeah, no, you're right. It can fluctuate our associate income quarter-to-quarter. We had a couple of one-offs this quarter. We are still very high on all the companies we own in that bucket, and the potential, we think, going forward is very strong. In regards to guidance, we really don't like to give guidance, but we've sort of in the past said we think we have about $1 billion of income from associates and our consolidated investments. If you look at both of those combined, I think we're actually running quite above that number we previously gave maybe at year-end or at our annual meeting. Thank you for the question. Next question, please.

Operator

Next question is from Benjamin Sanderson, a private investor, your line is open.

Benjamin Sanderson
Shareholder at Private Investor

Good morning, Peter. Good morning, Wade.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Good morning.

Benjamin Sanderson
Shareholder at Private Investor

Thanks for the call. Question on the right side of the balance sheet, specifically float and your use of leverage that you may have planned. When I look at the right side, the entire cost, including interest expense, is still negative. Float grew maybe something in the order of $400 million this quarter. Two questions. On float, over what time interval do you want us thinking about or tracking float growth or shrinkage? Then two, I think you guys added like $1 billion-ish of leverage at pretty attractive rates, not much above government bonds. Would you add more, and under what circumstances? I'll keep it at that, thanks again, guys.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Thanks for the question. Just your first question on the float. Float is, as we've said many times, is very important and is probably one of the most important things in our business model. Really, we take a long-term approach. We've compounded float at very high levels over the past 40 years, and that's what we're focused on. Not in any one quarter or any one year for that matter, but over time, we look to build that float and then Hamblin Watsa invest the proceeds of that. Again, our insurance companies are performing extremely well, so the cost of that float is positive. We had over $400 million of underwriting profit in the quarter. On the leverage side, over the last couple of years, we have done a number of debt issues.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Primarily what we've done is we've taken out our preferred shares at much more economically beneficial terms and rates, and we replaced it with 30-year debt. Preferred shares had not previously been in our leverage ratios. Now this 30-year debt is. That's ticked up a little bit. We want to be opportunistic, and we don't want any maturities for three years, so we like to refinance our debt. Thank you for the question. Next question, please.

Operator

Thank you. As a reminder, if you do have a question, please press star one to get into queue. My next now is from Jaeme Gloyn with National Bank Capital Markets. Your line is open.

Jaeme Gloyn
Analyst at National Bank Capital Markets

Yeah, thanks. I just wanted to go to the interest in dividend income. Pretty nice step up this quarter. Was there anything one-timey in that, or is that considered a new run rate for interest and dividends?

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Thanks for the question, Jaeme. Yeah, no, it was a very nice step up, I think about 11% this quarter versus a year ago. Really, I think a lot has to do with it. As our investment portfolio grows, we continue to invest those additional funds at fairly good rates. Our run rate is about 5%. It's a combination of the portfolio getting bigger and the government rates have been up. As bonds mature, we've been reinvesting at higher rates. The combination of the two, I don't think there's anything unusual in there in the quarter. Thank you for the question. Next question, please.

Operator

Ruby Lougheed, Private Investor. Your line is open.

Ruby Lougheed
Shareholder at Private Investor

Thank you. Thank you for the call. Very informative and excited about the future of Fairfax. You've mentioned a couple of times in the call about Helios Fairfax Partners Corporation and the continued decline in the market value, despite there's been an increase in the book value. I know it's very hard to look at this, there's thin liquidity. It'd be interesting for me, all the private companies in the portfolio trying to value private companies in an emerging market must be exceedingly challenging. Could you give any idea about what your belief is about the intrinsic value of the fund or the potential of the holding and why perhaps, how do you educate people to really see this differently inside your portfolio? Thank you.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

No, thanks for your question. You're right. In the quarter, we reduced our carrying value down to the market value as it's been running lower for a number of quarters. There's an excellent team running Helios Fairfax Partners. They cleaned up some of the investments from the past, we are really excited for the prospects going forward. The reduction in the quarter was really just an accounting exercise. We're still very high on Helios.

Ruby Lougheed
Shareholder at Private Investor

Any guidance on intrinsic value?

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

No, we don't give guidance on that. We leave that for you guys to come up with. Thank you for the question.

Operator

Thank you. Our next question now is from Stephen Boland with Raymond James. Your line is open, sir.

Stephen Boland
Stephen Boland
Analyst at Raymond James

Morning. I might have missed your opening comments, Peter. In terms of what's going on in Europe with the wildfires, can you talk a little bit about exposure there? It seems to be continuing to get more and more material across a bunch of different countries. Thanks.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Obviously, there's nothing in our numbers in the second quarter. To date, we haven't seen a lot. We're watching it very closely but really have nothing to report on that at this stage. We've also had a lot of wildfires in Canada. Unfortunately, it's in places that there's not a lot of insured property. Again, our Northbridge has not been affected by that either. I think that in Canada in particular, they're starting to get these fires under control with a little bit of help from the weather. We'll likely have more to report on that in the third quarter. Thank you for your question. Next question, please.

Stephen Boland
Stephen Boland
Analyst at Raymond James

Thank you.

Operator

As I have no further questions at this time, I would like to turn it back to management for any closing remarks.

Peter Clarke
Peter Clarke
President and COO at Fairfax Financial

Well, Fran, if there are no other further questions, thank you for joining us on our second quarter 2026 conference call. Thank you again, Fran.

Operator

Oh, thank you so very much. Thank you everyone for your participation as we are concluded. Please go ahead and disconnect. Thank you so very much.

Executives
    • Peter Clarke
      Peter Clarke
      President and COO
    • Amy Sherk
      Amy Sherk
      VP and CFO
Analysts
    • Wade Burton
      President and Chief Investment Officer at Hamblin Watsa Investment Counsel
    • Scott Fletcher
      Analyst at CIBC
    • Tom MacKinnon
      Analyst at BMO Capital Markets
    • Jaeme Gloyn
      Analyst at National Bank Capital Markets
    • Bart Dziarski
      Analyst at RBC Capital Markets
    • Benjamin Sanderson
      Shareholder at Private Investor
    • Ruby Lougheed
      Shareholder at Private Investor
    • Stephen Boland
      Analyst at Raymond James
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