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Fairfax Financial Holdings Limited Subordinate Voting Shares (FFH $2,257.83)
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Intact Financial Corporation (IFC $253.33)
My thoughts are : IFC , largest in Canada , good operators, expanding overseas. FFH, international operations, good operators with Prem and his son and daughter , unique to the industry investing style ( Can you confirm if Sleep Country and The Keg - not my choice for ownership- are owned by FFH or another Prem entity ).
How do these companies compare on industry valuations , who has higher growth prospects ?
Do you have a preference? Thanks. Derek.
It is true that FFH owns 100% of both Sleep Country and The Keg, both of which FFH acquired and privatized from the public market a few years ago. FFH is essentially an investment holding company that has an insurance business to provide additional leverage to compound capital internally by acquiring either public common shares or wholly owned subsidiaries. FFH is trading at 1.3x Price/Book.
On the other hand, IFC’s business model resembles that of a pure insurance company, with a primary focus on growing premiums over time. IFC is trading at 2.1x Price/Book due to its pure insurance business model.
The two companies will probably grow their premiums at a similar pace, likely in the mid- to high-single-digit range over time depending on the cycle of the insurance industry. If investors are looking for pure exposure to the insurance industry, IFC would be our pick. If investors are looking for a moderate mix of insurance exposure along with capital allocation through investments and acquisitions, FFH could also be an attractive option.