Prem Watsa’s Fairfax Sells Insurance Units to Hamilton

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Prem Watsa’s Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF) agreed to sell its two insurance units to Hamilton Insurance Group Ltd., a new insurance company chaired by Sandy Weill.

Hamilton Insurance Group said it acquired Valiant Insurance Company and Valiant Specialty Insurance Company as part of its initiative to establish its platform for its operations in the United States. TIG Insurance Company, a subsidiary of Fairfax Financial Holdings Ltd (TSE:FFH) OTCMKTS:FRFHF) completed the sale today.

Hamilton to rename Fairfax’s insurance units

Hamilton Insurance Group will change the name of its newly acquired insurance units from Fairfax’s subsidiary subject to regulatory approval. Both insurance units will operate under Hamilton USA.

The Bermuda-based insurance company said Valiant Insurance Company will be renamed Hamilton Insurance Company. The Valiant Special Insurance Company will be called Hamilton Specialty Insurance Company.

According to Hamilton Insurance Group, the subsidiary of Fairfax Financial Holdings Ltd (TSE:FFH) OTCMKTS:FRFHF) agreed to reinsure all of the insurance business written by Valiant Insurance and Valiant Specialty Insurance on a 100 quota share basis. It also agreed to assume all other liabilities and obligations that will arise from the two insurance units prior to the closing of the sale.

In a statement, Brian Duperreault, CEO of Hamilton Insurance Group said, “With the completion of these two acquisitions, we will begin to explore in earnest the potential that data analytics represents for the insurance industry.”

On the other hand, Hamilton USA CEO Conan Ward said, “We’re starting with a clean slate with these two carriers. This enables us to move quickly to execute on a truly innovative business model. Working with our technology partner, Two Sigma, we believe we can create significant value for our customers and producers.”

Fairfax’s comment on the deal

Commenting on the sale of the insurance units, Paul Rivett, president of Fairfax Financial Holdings Ltd (TSE:FFH) OTCMKTS:FRFHF) said “As we acquire businesses, we sometimes end up with redundant shell companies that can be monetized rather than dissolved.”

In August, Fairfax Financial Holdings Ltd (TSE:FFH) OTCMKTS:FRFHF) acquired Pethealth Inc.(TSE:PTZ) for $100 million. Prior to that, the Watsa’s firm also purchased Union Assurance PLC, an insurance company in Sri Lanka for $41.4 million.

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