Fairfax agrees to reduce holdings in insurance joint venture with ICICI Bank

Fairfax Financial Holdings Ltd. has agreed to reduce its holdings in Mumbai, India-based insurer ICICI Lombard General Insurance Company Ltd., a joint venture between ICICI Bank and Toronto-based Fairfax.

In its annual report for 2016, released in April, Fairfax reported that on March 31, 2016, Fairfax increased its ownership interest in ICICI Lombard to 34.6%. At the time Fairfax acquired 9% of ICICI Lombard from ICICI Bank for US$234.1 million.

Then on May 27, 2017, Fairfax announced it agreed to sell 12.18% of the fully diluted shares of ICICI Lombard to three different entities. The “proposed transaction” values ICICI Lombard at about US$3.1 billion, Fairfax said in a press release.

It is subject to government and regulatory approval and expected to close during the third quarter of 2017.

“Upon completion of the transaction, the share ownership in ICICI Lombard of ICICI Bank Limited and Fairfax will be approximately 63% and 22%, respectively,” Fairfax added.

ICICI Lombard General Insurance’s products include auto, home, bicycle, travel and health, among others.

In Canada, Fairfax’s insurance holdings include Toronto-based Northbridge. U.S.-based insurers owned by Fairfax include workers compensation insurer Zenith National, commercial insurer Crum & Forster and reinsurer OdysseyRe of Stamford, Conn. In the London market, Fairfax owns Brit PLC.

Of the ICICI Lombard shares that Fairfax agreed to sell, 9% would be sold to Red Bloom Investment Ltd and 1.59% each would be sold to Tamarind Capital Pte. Ltd and IIFL Special Opportunities Fund. Red Bloom is owned by private equity funds managed by Warburg Pincus LLC while Tamarind Capital is owned by Clermont Group.

On Dec. 18, 2016, Fairfax announced a merger agreement with Allied World Assurance Company Holdings AG. Zug, Switzerland-based Allied World has a Toronto branch office from which it writes primary commercial insurance in Canada, including privacy breach, directors and officers, representations and warranty and energy risks. That transaction is valued at nearly US$5 billion.

Fairfax has the option to fund part of the cash portion of the Allied World deal by issuing debt or equity or by bringing in partners. One such partner is Ontario Municipal Employees Retirement System (OMERS), which plans to contribute $1 billion and take a 21% ownership stake in Allied World.

In February, 2017, Fairfax announced it agreed to buy Tower Limited, an Auckland-based insurer that writes coverage in New Zealand, the Cook Islands, Fiji, Papua New Guinea, Samoa and Vanuatu.

Four months earlier, Fairfax announced an agreement to buy American International Group Inc.’s local commercial and consumer insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey.

In June, 2016, Fairfax said it agreed to acquire Zurich Insurance Company South Africa Limited and 80% of Indonesia-based PT Asuransi Multi Artha Guna Tbk (AMAG).