Prem Watsa’s 2019 shareholder letter isn’t just a business update—it’s a clear example of long-term investing and disciplined growth in action. Fairfax earned a record $2 billion, with book value up 14.8%, and yet Watsa remains humble and focused: “We are working on it!” he writes, referring to the still-recovering investment returns from earlier years. For investors, that’s lesson one: persistence and patience matter more than perfection.
Fairfax’s global insurance businesses grew organically, with $17 billion in gross premiums written—“like adding another insurance company the size of Northbridge—without paying for it!” Watsa’s focus on fundamentals, not fads, shows that sustainable success comes from solid underwriting, careful expansion, and consistent reinvestment.
He highlights Crum & Forster’s A&H division, which grew from $40 million to nearly $1 billion under steady leadership. That’s lesson two: bet on people, give them time, and compound quietly.
On the investment side, Watsa openly admits past missteps: “If we had not hedged… our average return on investments would have been 5.0%.” Still, Fairfax rebounded with $1.6 billion in equity gains in 2019, thanks to holdings like Digit, Eurobank, and Atlas Corp.
His transparency is refreshing—lesson three: own your mistakes and keep learning. Even great investors miss trends. “Shame on us for missing the most important trend in the US economy,” Watsa writes, reflecting on how Fairfax overlooked the FAANG stocks’ rise.
He also reminds investors of the value of float—$22.4 billion in 2019—with a 2.0% benefit. “This no cost float is perhaps one of Fairfax’s biggest assets,” he explains. Lesson four: cheap capital, wisely deployed, is a powerful edge.
The overarching takeaway? Think long term. Be disciplined. Stay humble. As Watsa puts it: “We think our intrinsic value far exceeds our book value… we expect it will happen again.”
You can read the entire letter here:
Prem Watsa 2019 Annual Shareholder Letter
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