Fairfax Financial Holdings Limited · TSX:FFH
Fairfax Financial — Fairfax Financial Holdings Ltd/ CAN (Faxrf, Faxxf, Ffhpf, Frfff, Frfgf, Frfhf, Frfxf, Frfzf, Fxfhf, Fxflf) — Merger or Acquisition (December 2016)
25 slides from Fairfax Financial's merger presentation, Dec 19, 2016
Slide 1: Important Information and Where To Find It
Important Information and Where To Find It This presentation is for informational purposes only and does not constitute or form part of an offer to sell or the solicitation of an offer to buy or subscribe to any securities, nor shall there be any sale of securities in any jurisdiction in which such
Slide 2: Fairfax Disclaimer
Fairfax Disclaimer Certain statements contained herein may constitute forward-looking information (within the meaning of Canadian securities legislation) and forward-looking statements (within the meaning of the United States Private Securities Litigation Reform Act of 1995). These statements can be
Slide 3: Allied World Disclaimer
Allied World Disclaimer Certain statements contained herein may constitute forward-looking statements within the meaning of applicable Canadian and United States securities laws and are made pursuant to the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 19
Slide 4: Key Transaction Terms
Key Transaction Terms Ownership ~27% by Allied World shareholders (~10% if Fairfax exercises option to replace $2.7 billion of stock with cash) Transaction Allied World is being merged into a subsidiary of Fairfax, with the Fairfax subsidiary surviving as a wholly-owned subsidiary of Fairfax May be
Slide 5: Compelling Strategic Acquisition
2 Compelling Strategic Acquisition Brings together two great underwriting companies with strong franchises and complementary business profiles The businesses fit well together, diversifying Fairfax’s premium base and earnings profile Allied World brings a world-class specialty insurance and reinsura
Slide 6: Fairfax – Company Profile
Fairfax – Company Profile Fairfax Financial Holdings Limited is a diversified holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment Corporate objective is to achieve a high rate of return on invested capital and build long-term
Slide 7: Fairfax – Long History of Value Creation
Fairfax – Long History of Value Creation 4 ____________________ Source: SNL Financial, Company filings. CAGR: 20% (US$ in millions, except for per share data) Fairfax has achieved sustainable, long-term value creation for its shareholders Q3 2016 2015 2012 2009 2006 2003 2000 1997 1994 1991 1988 198
Slide 8: Overview of Fairfax Insurance Operations
Overview of Fairfax Insurance Operations (3% of Total) $2.0BN IFRS equity Manager of global runoff business 100% ownership $8.0 Billion in Net Premiums Written (LTM 9/30/16) $2.1BN NPW (26% of Total) $1.8BN NPW (23% of Total) $1.5BN NPW (19% of Total) $0.9BN NPW (11% of Total) $0.8BN NPW (10% of Tot
Slide 9: Fairfax's Diversified Model – Strong Underwriting Results
Fairfax’s Diversified Model – Strong Underwriting Results (US$ in millions) NA $1,088 $1,520 Source: Company filings. (1) Ongoing operations. (2) For the period June 5, 2015 to December 31, 2015. 6 2014 2015 YTD 9/30/16 Underwriting Profit $552 $705 $379 Total $1,636 Combined Ratio 2014 2015 YTD 9/3
Slide 10: Fairfax – Strong Track Record of Investing
Fairfax – Strong Track Record of Investing 7 Total Return on Investment Portfolio Fairfax Average: 8.6% (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 1986 1990 1994 1998 2002 2006 2010 2014
Slide 11: Creates A Leading Globally Diversified P&C Insurer
Creates A Leading Globally Diversified P&C Insurer (US$ in millions) Focused on P&C specialty and commercial insurance and reinsurance globally Fairfax operating philosophy and expertise deployed across independently managed businesses Leading position in North America and Bermuda, with global reach
Slide 12: Allied World Segment Overview
Allied World Segment Overview LTM 9/30/16 GPW: $1,809MM (US$ in millions) 10 LTM 9/30/16 GPW: $518MM LTM 9/30/16 GPW: $700MM North American Insurance Global Markets Insurance Reinsurance % of GPW: 60% 17% 23% ____________________ Source: Company filings. (1) Other includes surety, trade credit, and
Slide 13: Allied World Is An Underwriting-Focused Company
11 ____________________ Source: SNL Financial. Allied World Is An Underwriting-Focused Company Strong underwriting results with a history of favorable net reserve development (US$ in millions) Combined Ratio Average = 87.0% Favorable Development $110.7 $123.1 $280.1 $248.0 $304.5 $242.0 $170.3 $180.
Slide 14: Diversified and Complementary Premium Mix
Diversified and Complementary Premium Mix Line of Business Geography Combined 2015 GPW: $8.7bn 2015 GPW: $3.1bn 2015 GPW: $11.7bn ____________________ Source: Company filings. (1) Includes $641 million of gross premiums written in Bermuda. (US$) 12 73% 27% North America Rest of World 79% 21% North A
Slide 15: Underwriting With Global Reach
Underwriting With Global Reach ____________________ Source: Company filings. Shows headquarter locations for Fairfax Financial insurance and reinsurance subsidiaries. 13 NY008J6H / 834065_1.wor NY008J6H / 834065_1.wor U.S. Head Offices (1) Manchester, NH São Paulo , Brazil Kuala Lumpur, Malaysia Mor
Slide 16: Well-Positioned Operating Profile
Well-Positioned Operating Profile (US$ in millions, except for per share data) ____________________ Source: Company filings. Excludes purchase accounting adjustments. Represents pre-tax income before impact of net gains (losses) on investments and foreign currency exchange. For Fairfax Financial rep
Slide 17: Strong Capitalization Profile
Strong Capitalization Profile ____________________ Source: Company filings. Note: Fairfax has $1 billion in cash and marketable securities at the holding company level. Excludes purchase accounting adjustments. Excludes non-recourse debt for noninsurance operations of $790 million. Includes impact o
Slide 18: High Quality Investment Portfolio
Total Portfolio (as of 9/30/16) = $29.7 Billion (1) Investments per Fairfax share: $1,248.28 ____________________ Source: Company filings. Excludes short sale and derivative obligations of $0.2 billion. Includes impact of new shares issued based on an offer price of $54.00. High Quality Investment P
Slide 19: A Winning Combination
A Winning Combination 17 Leading franchise in global specialty insurance with complementary business profiles Significantly deepens presence in the North American specialty markets Disciplined underwriting combined with successful investing Shared values dedicated to underwriting excellence Longstan
Slide 20: A Winning Combination
A Winning Combination = Leading franchise in global specialty insurance with complementary business profiles = Significantly deepens presence in the North American specialty markets = Disciplined underwriting combined with successful investing = Shared values dedicated to underwriting excellence = L
Slide 21: Allied World – Income Statement
Allied World – Income Statement 18 (US$ in millions) ____________________ Source: Company filings and SNL Financial. Gross Net Net Written Written Combined Favorable Investment Realized Net Premium Premium Ratio Development Income Gains Income Inception 2001 2002 $923 $846 90.8% – $82 $7 $128 2003 1
Slide 22: Allied World – Balance Sheet
Allied World – Balance Sheet 19 (US$ in millions, except for per share data) ____________________ Source: Company filings and SNL Financial. Figure represents average of operating ROE figures since 2002. Book Value Investment Loss & LAE Common Per Share Dividends Return on Portfolio Reserves Debt Eq
Slide 23: Allied World – Management Team
Allied World – Management Team 20 Years at Years in Allied World Industry Scott Carmilani President, Chairman and CEO 14 30 John Bender CEO of Reinsurance Segment 8 27 Thomas Bradley Chief Financial Officer 4 36 Wesley Dupont General Counsel 13 22 Frank D'Orazio President, Underwriting & Global Risk
Slide 24: Non-GAAP and Non-IFRS Financial Measures
Non-GAAP and Non-IFRS Financial Measures In presenting Allied World’s results, management has included and discussed in this press release certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and
Slide 25: Non-GAAP and Non-IFRS Financial Measures
Non-GAAP and Non-IFRS Financial Measures In presentng Aes Weis rests, management has nue and scuse nhs ress release can ron genera aceped accounting pines (non-GAAP) nancial measures win he meaning o Regulation G as promulgated bythe US. Secures and Exchange Commission, Management believes hal hese