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Fairfax Financial Holdings (TSX:FFH) is back in focus after announcing a C$650 million senior notes offering. The company plans to use the proceeds to refinance existing obligations, fund potential acquisitions, and add flexibility to its corporate liquidity.
See our latest analysis for Fairfax Financial Holdings.
The senior notes announcement comes after a busy few weeks that included full year 2025 earnings and progress on a sizeable share buyback. It also lands while the share price sits at CA$2,326.23 after a 1 year total shareholder return of 14.53% and a 5 year total shareholder return above 4x, even as the year to date share price return of 10.73% and 90 day share price return of 3.65% point to cooling momentum in the short term.
If this kind of capital allocation story has your attention, it could be worth widening your watchlist to see what insurers and other financials are doing next to raise capital. You can then use that as a reference point alongside our list of 3 top founder-led companies.
With Fairfax trading at CA$2,326.23 after strong multi year returns and fresh debt raised for refinancing and acquisitions, the key question now is simple: is there still a margin of safety here, or is the market already pricing in future growth?
Fairfax Financial Holdings’ most followed narrative puts fair value at CA$2,707.92, above the last close of CA$2,326.23. This naturally raises questions about what is built into that gap.
Underwriting performance remains strong, with a consolidated combined ratio of 93.3% and favorable reserve development contributing to $427 million in quarterly underwriting profit; the company’s disciplined, diversified, and decentralized underwriting approach mitigates loss volatility, helping deliver steady margins and profitability.
Want to see what kind of revenue path and profit margins need to hold for that valuation to stack up, and how earnings and share count assumptions interact in this narrative? The full story sets out a detailed earnings glide path, a firm view on future profitability, and a specific multiple the market would need to accept for Fairfax by the end of the forecast period.
Result: Fair Value of CA$2,707.92 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, you still need to weigh risks, such as earnings pressure if higher investment income eases, and the impact of rising catastrophe losses on underwriting margins.