Good morning, and welcome to Fairfax First Quarter Results Conference Call. Your lines have been placed on a listen only mode. After the presentation, we
will conduct a question and answer session.
Today's conference is being recorded.
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Your host for today's call is Prem Watsa with opening remarks from Mr. Derek Buelles. Mr. Buelles, please begin.
Good morning, and welcome to our call to discuss Fairfax's twenty twenty one first 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, and which now include the risk of adverse consequences to Fairfax's business, investments, and personnel resulting from or related to the COVID nineteen pandemic. Fairfax disclaims any intention or obligation to update or revise any forward looking statements, except as required by applicable securities law. I'll now turn the call over to our Chairman and CEO, Prem Watsa.
Thank you, Derek. Good morning, ladies and gentlemen. Welcome to Fairfax's twenty twenty one first quarter conference call. I plan to give you some of the highlights and then pass the call to Peter Clark, our chief operating officer, to comment on our insurance and reinsurance operations and some additional financial details. Peter will be on all future calls.
Unfortunately, Jim Allen could not be with us today because her mother-in-law passed away in the last few days, but she will be back for the second quarter conference call. She is very much in our thoughts and prayers. Fairfax's net earnings were $8.00 $6,000,000 in the 2021, which equates to net earnings per diluted share of $28.91 Fairfax's book value per share in the first quarter increased by 6.1% adjusted for the $10 per share common dividend paid in the first quarter to $497 per share. Our net earnings of $8.00 $6,000,000 reflected both strong underwriting results and net gains on investments. Our net loss in the 2020 of 1,300,000,000 primarily from the effects of the pandemic have reversed with net earnings of $2,300,000,000 in the last twelve months and book value is up 18%.
Our net loss on investments of approximately $1,500,000,000 at the end of the 2020 completely reversed in 2020 with net gains of, remember, of $313,000,000 and then it increased further in the 2021 by $842,000,000 In thirty five years, we have never experienced swings in stock prices like we did in 2020, but stock prices have rebounded extremely well. Most importantly, our total float increased by 12% to $25,000,000,000 and float per share increased by 15% to $949 per share in the last twelve months. This is in the last twelve months. We think we are now in a virtuous cycle, both in gross premiums written, underwriting profits and value investing were coming to the fore, working well. It is still early days.
Our insurance and reinsurance companies produced a consolidated combined ratio of 96% in the first quarter, which included above average catastrophe losses of $211,000,000 or 5.7 combined ratio points. Excluding cat losses, the consolidated combined ratio was 19.3% with 17% growth in gross premium written on the back of a strong pricing environment. All of our major insurance companies generated combined ratios of less than 100% despite a higher level of cat losses in the first quarter. More on this from Peter Clark. In the first quarter, operating income was strong at $298,000,000 Net unrealized gains on investments were $842,000,000 with gains on net equity exposure of 1,000,000,000 partially offset by net unrealized losses on bonds from rising interest rates.
The net gains on equities included gains on BlackBerry, Bank of America, Stalfo and BET. In accordance with IFRS rules, not included in the net gain number is mark to market movement on our investments in noninsurance associates and certain consolidated investments, which increased significantly in the first quarter by approximately $1,100,000,000 Any gains or losses in these securities will typically only be accounted for when they are sold. We have provided a table in our MD and A on Page fifty nine and sixty that provides the unrealized gains or losses on these securities. Net losses on our bond portfolio were 166,000,000 due to increasing interest rates, primarily on our corporate bonds at the purchase in the 2020. Unrealized losses were mitigated through net sales of $800,000,000 of our cocoa bonds in the 2021 at a yield less than 1%, realizing gains of 145,000,000,000 As we mentioned at our annual meetings and in our annual reports and quarterly calls with IFRS accounting, where starts and bonds are recorded at market and subject to mark to market gains or losses, quarterly annual income will fluctuate.
Investment results will only make sense over the long term. As I've said previously, long term value investing has gone through a very difficult time for many years now. Valuations of value oriented stocks versus growth stocks, particularly technology, have never been so extreme, exceeding even the extremes of the .com era in February. As the economy normalizes, we expect a reversion to the mean with value oriented stocks coming to the fore. After the Pfizer vaccine was announced last November, we started to see this taking place.
Two examples, I'll make it clear for you, and I mentioned this in the ATM that we had a few weeks ago. Fairfax India was selling at $9.60 per share at the end of the at the 2020 while while its book value was more than $16 per share. Today, it's up to $12.50 per share. The book value is about $18 per share. We think it's only a matter of time that Fairfax India exceeds its 2020 high and does exceptionally well as the Indian economy recovers from COVID-nineteen.
The Indian government, as I said at our AGM, came up with an exceptional business friendly budget recently. Last few days, recognizing the tough times in India due to the spread of COVID nineteen, we decided to donate 5,000,000 to India and also to Dexera, our 49% owned company, to help them build emergency field hospitals in the country. Our thoughts and prayers are with the people of India as they battle this wave of COVID nineteen infections. That was a Fairfax India. The second example is Atlas Corp, formerly Seaspan run by David Circle and Bill Chen, closed 2019 at $14 a share, went down to six dollars and thirty cents a share in March, and today, back to $14.
Atlas is financially very strong, has expanded significantly recently, as I mentioned in our annual report, and has great management. So it is only a matter of time before it exceeds its previous high. We expect a significant return on our common stock portfolio as the economy continues to normalize. In early March twenty twenty one, Farmers Edge completed an initial public offering of CAD 144,000,000 in exchange for approximately 8,500,000.0 common shares of Farmers Edge. Prior to the IPO, Fairfax exercised its warrants and converted its convertible debentures for common shares, resulting in the company's controlling equity interest in Commerce Edge increasing to almost 60% on completion of the IPO and capital transactions.
Now has no debt and a lot of cash on its balance sheet. Pharmadex continues to be consolidated in our statement with a carrying value of $213,000,000 while the market value was $54,000,000 on March 31. On 03/24/2021, Boat Rocker completed an IPO of CAD 170,000,000 in exchange for about 19,000,000 shares of Boat Rocker. Prior to the IPO, the company converted its convertible debentures just like Farmers Edge to subordinate voting shares of Port Walker. Port Walker converted its preferred shares to subordinate to subordinate voting shares and issued additional subordinate voting shares to a third party, resulting in Fairfax having an economic and voting interest in both Rocket, 4556% on completion of the IPO and capital transactions.
Rocket also has no debt now and lots of cash on its balance sheet. Bulk Rocket continues to be consolidated in our statement with a carrying value of 105,000,000 while the market value was $173,000,000 on March 31. We continue to have approximately $1,400,000,000 at the holding company, predominantly in cash and short term securities. Please note our cash in the holding company is to meet any and every contingency that Fairfax might face in this uncertain period. We're not making any long term investments with this cash other than to support our insurance and reinsurance operations.
With the closing of the Riverstone Barbados transaction in the second quarter, we expect to continue to have $1,300,000,000 in cash and investment at the holding company with our credit facility fully paid off. At 03/31/2021, the company's insurance and reinsurance operations held approximately $17,500,000,000 in cash and short dated securities, representing approximately 40% of portfolio investments, comprised of $14,700,000,000 of subsidiary cash and short term investments and $2,800,000,000 of short dated U. S. Specialties. Our investment portfolios will be largely unimpacted by rising interest rates as we have not reached the yield.
As we've said in the past, this may well be the big risk in the economy today. In fact, if interest rates go up, we would benefit because we have a lot of short term short dated securities. We continue to invest with Kerry Wilson and of course, interest mortgages with a term less than five years with a run rate of approximately 22,000,000 in growth premium, and our insurance subsidiary is growing significantly. A huge focus on underwriting discipline, a portfolio of over 40,000,000,000, and HWIC operating in a stock pickers market, which is what we think we are in now, all grounded on our parent friendly culture that over thirty five years, we expect to generate a 15% return for our shareholders over time. In the past thirteen thirty five years, we've had many years when our book value has gone 40 to 50%, and our stock prices increased a 150%.
In our minds, the best is yet to come. I will now pass the call to Peter Clark, our Chief Operating Officer, to comment on our insurance and reinsurance operations. Peter?
Thank you, Prem. Our insurance and reinsurance companies have had a great start to 2021. We grew by 17% over the 2020, generating gross premiums written of $5,400,000,000 We also produced a combined ratio of ninety six percent and one hundred and forty nine million dollars of underwriting profit despite above average catastrophe losses for our first quarter. By comparison, underwriting profit in the 2020 was $103,000,000 On the underwriting front, Norfridge and Venus reported the lowest combined ratios being 8788%, respectively. All of our major companies produced combined ratios below 100%.
And in fact, with the exception of Bright in South Africa, all our stand alone companies had combined ratios under 100%. As mentioned previously, our gross premium for the quarter was up 17% or $800,000,000 from the year before. This growth has been made possible by favorable market conditions that prevail in many of our markets, but particularly in North America. Allied World grew its premiums by 28%, with growth especially strong in Directors and Officers and Access Casualty segments. Odyssey Group's gross premiums were up 24% with expansion in both its Insurance and Reinsurance segments.
And in Canada, Northbridge's top line expanded 19% in U. S. Dollar terms as it continues to register double digit rate increases. While these three posted the most impressive growth among our major companies, Brit, Crum and Forster and Vena were all able to expand their businesses this quarter as well. Of note, Brit launched its innovative follow on syndicate, Key, in the first quarter, which contributed to its growth rate of 10%.
Growth was strong in many of our international operations as well. Fairfax Brazil's gross premium grew 32%, our other Latin American companies grew 22% and Bright grew by 8%. Overall, our international companies grew by approximately $100,000,000 year over year. We expect growth to remain strong as overall price levels continue to rise at double digit pace. Our global footprint and exceptional management teams gives us stability to generate significant organic growth.
In the first quarter, we absorbed 5.7 loss ratio points from catastrophes, largely due to the extraordinary winter freeze event in Texas and approximately 1 point or $46,000,000 of additional COVID losses. With respect to COVID, our inception to date losses now total up $718,000,000 of which approximately half is held in IBNR. Based on knowledge today, we expect these provisions to adequately cover our exposure. At the same time, the pandemic is ongoing as is much litigation and therefore there remains a degree of some uncertainty. In the quarter, we recorded favorable reserve development of 43,000,000 Our reserve position continues to strengthen as our companies expand with today's wild price business.
Another important side effect of the growth we are experiencing is the reduction in the expense ratio component of our combined ratio. Premiums are growing faster than our underwriting expenses. And nowhere is this more apparent than at Allied World, whose expense ratio dropped a full 2.4 points from 2020. In summary, we are very pleased with the quarter and our prospects going forward. Our decentralized system allows our company to respond quickly to opportunities in their markets.
In times when conditions are improving, such as they are now, this gives us an important advantage. Now some comments on our investment results, our noninsurance company's performance and overall financial position, which Jen Allen would have made if she could have been with us here today. Interest and dividend income of $168,000,000 in the 2021 was down from $218,000,000 in the 2020 and primarily comprised of interest and income earned on high quality U. S. Corporate bonds and first mortgage loans that are secured by high level high quality real estate in The U.
S. And Europe. This is primarily in partnership with Kennedy Wilson and also dividend income from common stock and long equity total return swaps. We continue to hold a significant portion of our investment portfolio in cash, short term investments and other short dated fixed income. This position dampens interest income in the short term but protects us from rising rates and inflation, a trade off we are willing to take today.
Net gains on investments of $842,000,000 in the 2021 were primarily comprised of net gains of $1,000,000,000 on long equity exposure, partially offset by net losses of $166,000,000 on bonds due to higher interest rates and foreign exchange losses of $37,000,000 Most of our equity gains were unrealized and as Prem said, unrealized gains on BlackBerry, Bank of America, Stelco and BBT to name a few. Our net losses on investments of $1,500,000,000 in the 2020 have completely reversed in the last twelve months with net gains on investments of approximately $2,700,000,000 over this time period. Now turning to the results of our non insurance companies. In the 2021, our non insurance consolidated companies had operating losses of $85,000,000 compared to losses of $34,000,000 in the 2020. The 2021 included a performance fee accrual of $56,000,000 by Fairfax India versus a performance fee reversal of $48,000,000 in the 2020.
Both these intercompany amounts are eliminated in Fairfax corporate overhead. Excluding the impact of the performance fees, operating losses for our non insurance consolidated companies decreased to $29,000,000 in the 2021 from $82,000,000 in the 2020, a significant improvement. Many of our non insurance consolidated companies have been affected significantly by the effects of COVID-nineteen, especially our restaurant and retail businesses, Thomas Cook India and others. They have done an outstanding job navigating through the pandemic and we believe will rebound strongly when we get through this. Please note the excess of fair value over carrying value of our non insurance associates and certain non insurance subsidiaries increased by GBP £681,000,000 and £397,000,000 respectively, for a combined increase of approximately £1,100,000,000 in the 2021.
The excess is not reflected in our book value per share. We disclosed this in our annual report and we'll continue to disclose it in the MD and A of our interim reports going forward. And finally, a few comments on our financial position. Our total debt to total capital ratio, excluding the consolidated non insurance companies, increased to 30.2% at 03/31/2021, up from 29.7% at 12/31/2020, primarily reflecting increased total debt principally related to our $600,000,000 U. S.
Bond issue. The proceeds of our CAD $850,000,000 bond issue was immediately used to pay down our 2022 and 2023 maturities, so had no effect on our ratios. Excluding the remaining CAD500 million on our credit facility, which we plan on repaying at the closing of our Riverstone Barbados transaction, our total debt to total capital ratio drops to 28.6%. Additionally, from the proceeds of our US600 million dollars debt issue, we're going to pay off additional debt in the second quarter, which will further reduce our leverage ratios. We expect our total HoldCo insurance debt of approximately $7,000,000,000 to drop closer to $6,000,000,000 in the second quarter.
And we are focused on lowering our financial leverage over time. The liquidity position of the company remains strong. Our cash and marketable securities at the holding company was $1,400,000,000 at the end of the 2021. And at the close of the Riverstone Barbados transaction, our cash and marketable securities at the holding company will be approximately $1,300,000,000 with our credit facility paid off in full and no significant maturities until 2024. And now I will pass the call back over to Prem.
Okay. Thank you, Peter, and look forward to answering your questions. Please give us your name and your company name, and try to limit your question to only one so that so that it's all fair it's all fair to the one everyone on the call. Amanda, we are ready for your questions.
Thank you. Our first question comes from Junior Ra with Private Investor. Your line is open.
Good morning. Congratulations on a wonderful quarter. Question for you guys. Did you guys increase your total return swaps in 2021 for Fairfax? Because it seems like it grew by $500,000
Yeah. We've had the ability to do that, Junior. And Okay. We'll continue to look at it. We think it's a great investment for Fairfax, and we will continue to look at it as we go forward.
Okay. So that's maybe about, like, seven to 8% of the outstanding shares then, right, I think.
Yeah. Yeah. So I work the math out. It's about 2,000,000 shares and 26. Right?
Yeah. Yeah. So that's what it is. Yeah. Yeah.
Yeah. That's the Okay. Thanks a what it is. Thank you, Julia. Next question, Amanda.
Thank you. Our next question comes from Tom MacKinnon with BMO Capital. Your line is open.
Yes. Thanks very much. Just following up on the Hey, good morning, Tom. Yes. Good morning, Tom.
Just following up on the long total return swaps. Is the total notional that you have in these investments over $2,000,000,000 is that correct? And does that mean I think that you've now that you've increased it in Fairfax, it would be nearly a third of that is associated with the Fairfax stock. Is there any color you can give as to what other instruments are in or other stocks or indices or whatever are in the remaining $1,500,000,000 or so in terms of what you have in terms of total return swaps long notional?
Yeah. So so, Tom, in terms of Fairfax shares, as you as you said in the press release, right, we have about 730,000,000, 2,000,000 shares at approximately $372 US. This is all in US dollars. 730,000,000 is is the total return swaps on Fairfax. And, of course, it's already doing well.
And the others are on an opportunistic basis. So we've looked at buying some common shares, Tom, but they're not long term, and they're the ones that we bought. Quite a bit, we've already sold, and and so we continue to look at opportunities, but it's it's short term stuff. Meaning, we're not gonna hold these up for a long a long period of time. Okay.
That's great. And if I could
just squeeze another 40% cash, where do you think you would wanna deploy that? As I understand, what you have in terms of your equity holdings, if you include like your investments in non insurance companies and investments in associates, I think you're kind of at your internal max there. So would we think that if you were to deploy that cash, it would more than likely go into fixed income as opposed to equities?
Yes. So so, Tom, you take risk today. You know, I tell I say this many times. In the nineteen eighties, Tom, interest rates are very high. Inflation was very high, and nobody expected to come down.
This is in the nineteen eighty one, eighty two. Long treasuries were, like, 14%. Long Canada's were 30 was 16%, and nobody expected to come down. And inflation was high. Today, it's the opposite.
Ten year treasuries in The United States are lower today than they were in the Great Depression, and the only exception was last year. Last year, went down to, like, a half a percent, and back to the 1.65%. But the 1.65 is lower than in the in the Great Depression, and nobody sees inflation picking up. You heard the the Federal Reserve. The Fed says it's transitory.
And you look at commodities. Crop of prices at the highest price has been a record high. Lumber prices are record high. Steel prices are very close to a record high. Corn prices.
Procter and Gamble is increasing prices. So there's all sorts of price increases taking place, and and then you've got the economy coming back. You've got the you've got pent up demand. You've got all the supply problems that, you know, takes place till it's normalized. And so the big risk in our mind is inflation increasing, and you can say how fast it increases and interest rates increase.
We saw in the last year, two year rates in The United States or less, meaning two years, one year, six months, have been flat. But ten year rates have gone by from point 5%. Ten year rates to, as I said, 1.65%. And but, you know, let's let's go a little further a little back pre COVID. That brings some and the two percent there were two and a half percent there were.
And so that's a big risk we see. So we are we'd rather not take capital loss because the bond markets today have no margin of safety. I see you have to be very, very careful. And so we forego interest and dividend income interest income purposely. We can easily buy, you know, longer bonds and get higher interest rate, but we think we're just asking for capital loss.
So that's what we're doing now.
Thanks for the color.
Very Thank much, Ram. Amanda, next question.
Our next question comes from Jaeme Gloyn with National Bank Financial. Your line is open.
Yes, thanks. Good morning. Good morning, Jaeme. First question, it's great to see
the leverage commentary and that starting to trend downward. On the flip side, I'm seeing the premiums to surplus ratio pick up nicely as you take advantage of the harder markets. Just wondering if you could talk about your capital position in terms of being able to continue to drive those premium growth rates in line with the hard markets.
Yes. I'll take a crack at it and then pass it on to Peter. But the markets are hard. The markets are generally price increases are taking place across the board, pretty well across the world. And our companies are exposed to property casualty insurance across the world, and they're taking advantage of it.
And and who knows how long it'll last, but if history is any bad, it'll should last for a few years. We have the ability to expand. We have the capital to expand. The companies are very well capitalized. And as Peter said, we've got the 1,300,000,000.0 as a holding company.
But But Peter, your response, anything you'd like to add, Peter, to that? Sure.
Thanks. Jamie. I think last year, we put some capital into our insurance and reinsurance operations. So they started the year well capitalized. And, you know, their premiums are growing, but they're growing profitably.
So they're generating some significant earnings. Add to that, the investment bouncing back. I think the earnings within the operations will fund the growth going forward. So I think generally right across the group, we're quite satisfied where we are on the capital front.
So, you know, to add to what Peter said, Jamie, I mentioned this in our comments on the call. This is a virtuous cycle. This means, you know, there are times and the last time which really took place in any significance was in 2001 after the September 11. We have reasons are growing, Prices are rate increases are taking place. Growing by your premium.
Underwriting profit and reserves are, you know, big redundancies build build up in reserves that you only see over time. And so the cycle is virtuous right now. And our presidents, if you'll and you know them, and you've seen them, and you saw some of them in our AGM, they're all experienced veterans in the market place. They know how to take advantage of the business and get paid. Basically, you're getting paid for the risk that you're taking.
And insurance is a risk business. So you need to get paid. And if you don't get paid, then you will. Like, I've seen it, then you keep payments flat or you come down as they have been. Because there have been rate decreases in workers' compensation.
And Carrie Bongambia has done a tremendous job. But this is a virtual cycle. And on top of that, for a month different from from 02/2001, because you remember the the peak for the Blackbaud boom was in February. And in February, if you look at if you look at our annual reports, 2000 to 02/2002, 02/2003, stock markets all over the world led by the.com, led by Nasdaq, dropped by 50%. And Nasdaq dropped by something like 75.
Our portfolios, our stock portfolio went up a 100%. That's 100% because value investing came back into into the form. It lasted for many, many years after that. We see a lot of similarities today when we look at the companies that we own. And and so so we think not only as the insurance business in a virtuous cycle, but it's backed as Peter was saying by the fact that value investing is making a comeback.
Jim?
Yes. That's great. Thank you. And my next question is around the expense ratio and the commentary around that coming down.
Can you just give me a little
bit of color as to like the sustainability of that expense ratio? Or is that driven by any initiatives or changes in the operations? Or is it more just a benefiting factor of the higher markets and the higher premiums earned?
Yes. So Jimmy, like, this is the advantage that Peter mentioned in his comments, but I'll ask him to add after I just say this. But when premiums go up and up and up, you know, one of the things we did in last year with our clients, simply said, you cannot use COVID nineteen as a reason to reduce staff to fire people. We would these are our loyal employees who've been with us for a long time. And so we said to each of our presidents, we cannot use COVID nineteen to reduce staff.
So we have no reduction in staff at all. And our employees are, you know, appreciated that. And and so now, we're increasing our premiums, but we're not we're not adding staff. Right? Jamie, so it's it's not any, you know, restructuring or any of that type of thing because these are all our loyal staff.
But we're not adding that to them, and they're working hard as we're writing more premium. But, Peter?
Yeah. I think the only thing that just sort of add to what you've already said, Prem, is that it's really when the premium a lot of the expense ratio benefit's coming from the premium side and especially when, when it's through pricing. Right? Your our premium's going up because of an increased rate. You don't, you don't need, additional expenses to support that.
So that's where the biggest benefit comes is coming from. I should point out that all our companies are very cost conscious and focused on the expense ratio as well. And we have benefited in the past twelve months too from some lower expenses generally related to travel and entertainment as as everybody has been working from home and, really, travel has been nonexistent.
Well, that's what I said, Jamie. What Peter is saying is because of the rate increases, like our 17% growth in that first quarter is mainly rate increases as opposed to volume. And so the expense ratio, I like being a great example, dropped almost by 200 points. Any other questions, Jimmy?
That's great. Thank you very much.
Thank you, Jimmy. Amanda, next question please.
Thank you. Our next question comes from Ken McNeill with Richardson Wealth. Your line is open.
Thank you. My question is around BlackBerry. Are you restricted from selling BlackBerry if you aren't when it hit 36, did you sell any? And if you didn't, why wouldn't you?
Yeah. No. Thank you for the question. I I think in the annual meeting, we discussed this, and I made the point that we were restricted. We were restricted from September to March 1.
And the restriction was because our conversion price went from $10 to $6. And what the SEC is the the short swing rule. If you transact in a BlackBerry securities or any securities that you had issued to you and they considered the convertible to be a new issue, you'd have to give all the profits back to the company. So we were restricted. There was no way we checked it 10 times, but we checked it once.
And so we had no no option but to wait. And after we waited, as you know, the stock price came down significantly. So that's where we are today. You. Thank you.
That's And our last the next question.
Thank you. Our last question comes from Mark Dwelle with RBC Capital Markets. Your line is open.
Yes, good morning. Couple of questions. I wanted to get an update on a couple of the transactions that are outstanding. Riverstone Barbados and the partial sale of shares in Brick to Omer's, particularly on the Barbados transaction, that seems like it's been delayed quite a bit from where when it was originally expected to close. But just curious what seems to be the holdup or what the timing is, it looks like at this point.
But this is a related regulatory volumes and you're right, we expected it we expect it to be completed by the first quarter. But CBC is very much the buyer of the medicine in UK, very much wants to buy it. And and it's discussions that CBC is having with the regular regulatory body, which is the PRA in in London. And and we expect that it will happen sometime in the second quarter. But you're right.
It's been delayed, sir.
And then on the Omers and and Brit transaction, is that still on track to close in the second quarter as well? I think that was what the original time line was.
Yeah. Yeah. They they are simultaneous. Right, Mark? So they're they're closed at the same time because, of course I see.
When they when they close the CBC trend, I think it's in The UK, they almost gets paid, I think, 100,000,000 plus for that investment. And is that right, Peter? 600,000,000 plus? That's correct. Yep.
That makes perfect sense. I don't think I saw the distributors. So they go together. We have every reason. Yes, we have every reason to expect that they'd close together.
Okay. Very good. The second question I wanted to ask about was the long equity total return swaps related to the Fairfax shares. We You increased the total amount of notional in the quarter. I guess I had understood when those were originally taken out late last year, the notion was an opportunistic play on the Fairfax shares.
You were a little bit cash constrained with some debt in trying to get these transactions closed. I guess this quarter, we also bought back stock just in the ordinary course. I was curious why to continue increasing the size of the notional swaps rather than just direct that same cash flow to ordinary repurchases.
So so, yeah, Tom, so, Mark, when you look at us, right, when they're buying back stock, our first thing financially sound. Second thing is to make sure we take full advantage full advantage of the insurance marketplace, which we did in the first quarter. We expect to continue in the next few years. So those are the that are very, very important. Then we look at our stock price, and we think it's very attractive.
We think we're in the midst of a virtuous cycle we talked about in terms of the insurance business, which we're very familiar with. What perhaps people are less familiar with is value investing coming back in space. So you've seen that in I I gave the example of that. Sent you an Atlas of Eurobank. Eurobank's book value next year will be a buck 50.
And I've said this before, and I'll say it again. The Greek government is perhaps the best government in Europe, and they're doing all the right things. And you're getting a tremendous tourist season, tremendous investment tremendous attraction for capital investment. They understand that. And they listed 500,000,000, I think it was, euros, at 2% for five years or six years.
And so, you know, bank is selling at, I don't know, a little less than 80¢, and it's got tremendous prospects. Yeah. You know, I go on to Bank of America, Stelco, Resolute, and
on and on
and on. And page fifty nine sixty, we talked about that. I mean, these are these are said that yeah. These are big positions that we've had that in 02/2019, at the end of the year, you could see it coming back. And then COVID nine COVID nineteen in early twenty twenty.
No one can forecast these things. It happened. And in our minds, all of them will delay what was gonna take place, which is interest rate as the economy expands and inflation, interest rates pick up. I mean, you know, mister Biden's got all sorts of programs on top of the economy recovering significantly. And so inflation picks up, interest rates pick up, the economy produces a huge amount of profits for all the companies that I just mentioned.
And interest rates go up, and we've got a ton of cash that will benefit from higher higher income, and they won't take capital losses, which which, you know, people who are rich for yield will do. So so we think our company is really well positioned. We've got tremendous management, and and so we're very excited. So Assaka, we think it's got you know, I've said this many times about stuff myself, but we think Assaka is is very good value for long term investors, which a lot of the people on this call are long term investors. And so so that's why that's why we continue to add to it, Mark, because we think it's gonna be a a very good investment.
It already is, but we think it's just early days.
Okay. I appreciate the insights. Thanks very much.
Thank you very much, Mark. And are there any more questions?
Thank you. And at this time, we have no further questions on the audio line.
Thank you very much, Amanda. There are no further questions. We thank you for joining us on this call, and we look forward to talking to you after the year and second quarter. Thank you, Amanda. Thank
you. That concludes today's conference. Thank you for participating. You may disconnect at this time.