Fairfax Financial (TSX:FFH) can look sleepy right up until it doesn’t, and that setup feels very real as 2026 gets rolling. If rates stay firm and markets keep throwing curveballs, a company that blends careful insurance underwriting with long-term investing can keep compounding while everyone else argues about the next headline. That mix explains why Fairfax has earned “solid buy” status for decades, and commentators have highlighted its Berkshire-like record since the mid-1980s. But, is that still the case?
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FFH
Fairfax runs a global property and casualty insurance and reinsurance group, plus a smaller collection of non-insurance businesses. The insurance operations collect premiums, pay claims, and generate float that management invests across bonds, equities, and select private holdings. In short, Fairfax tries to make money twice: once from underwriting discipline and again from patient capital allocation.
That business snapshot shows 2026 offers two tailwinds that fit Fairfax’s DNA. Higher yields can lift interest and dividend income on the investment portfolio, and a firm pricing environment can keep underwriting margins healthy if management avoids chasing volume. At the same time, the model brings a trade-off. Quarterly results can swing when equity markets move, even when the core insurance engine keeps humming, as investment gains never arrive on a schedule.
The stock’s recent path shows that swing in real time. It logged a 52-week range of roughly $1,836.92 to $2,700.00, and it slid back into the low-$2,300s in late January after a sharp drop from early-month highs. That move doesn’t change the long game, but it does remind you that even quality compounders can feel jumpy when investors rotate between risk-on and risk-off moods. Around this level, market data pegs Fairfax at roughly a $50.6 billion market cap with a beta near 0.52, so it often feels steadier than many financial names, even though it still moves when investors rush for the exits.
Earnings support
Now for the numbers that drive the story. In the third quarter of 2025, Fairfax reported net earnings of US$1.2 billion, or US$52.04 per diluted share. Book value per basic share climbed to US$1,203.65 at Sept. 30, 2025, up 15.1% from Dec. 31, 2024 after adjusting for the US$15 dividend paid earlier in 2025.
Underwriting carried its weight in that same quarter. Fairfax reported a consolidated combined ratio of 92% and an underwriting profit of US$540.3 million, which signals discipline rather than luck. Management also highlighted adjusted operating income of US$1.3 billion from property and casualty insurance and reinsurance operations, a useful anchor for 2026 as it relies less on market swings than investment gains do.
Q2 2025 reinforced the pattern. Fairfax reported net earnings of US$1.4 billion, or US$61.61 per diluted share, alongside a combined ratio of 93.3% and underwriting profit of US$426.9 million. Net gains on investments reached US$952 million that quarter, which shows the upside of the portfolio when markets cooperate. However, it also hints at the variability investors should expect from quarter to quarter.
Looking ahead
For the 2026 outlook, valuation and execution matter most. With the shares near $2,300 and trading around 8 times earnings, the market does not price in perfection, and a price-to-book around 1.5 leaves room for book value growth to keep doing its quiet magic.
Fairfax also flagged deal activity that can reshape the mix of earnings and risk, including an agreement to sell its 80% interest in Eurolife’s life insurance operations to Eurobank for about US$940 million and to acquire a 45% equity interest in ERB Asfalistiki for about US$68 million.
In 2026, watch the combined ratio and underwriting profit first, since that tells you whether growth comes with hidden risk. Track book value per share each quarter, since it captures the compounding story better than a noisy monthly chart. Expect investment gains to bounce around, and treat big drawdowns as the price of admission for long-term upside. Finally, keep an eye on catastrophe seasons and macro shocks, as even great insurers face bad years and reserve surprises, and equity drawdowns can hit results fast.
Bottom line
If you want a calmer way to stay invested through a noisy year, Fairfax still looks like a sensible candidate for a long-term watchlist. Furthermore, it’s a patience-first mindset that matters most.
