FFH has experienced a tailwind from high interest rates in recent quarters, leading to a better yield in the investment portfolio, and is now trading at 1.0x times' Price/Book. In the 2Q, FFH’s adjusted operating income grew 41%, driven by better-increased interest and dividend income, as well as strong underwriting profit. Better underwriting discipline, growth in premium written and especially the ROEs – one of the key metrics to evaluate financial companies which also shows improvement recently, averaging around 12%-15% range. Overall, the recent results showed a solid quarter with improvement across operating metrics, also trading at only 1.0x book value is a cheap valuation for such a quality insurance name. The other factor was that in 2022, investor sentinment shifted very strongly from 'growth' to 'value'. At 5X earnings, investors saw in FFH a very cheap stock when other sectors were trading at 30X, or more. We would be comfortable adding to FFH overtime.
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