Floods that devastated Thailand's industrial parks in 2011 have created opportunities for Canadian and other foreign companies to invest in local reinsurers that are in dire need of new capital, A.M. Best says.
The flooding in Thailand resulted in an estimated $15-billion insured loss, A.M. Best reported in its Asia-Pacific edition of BestWeek. Consequently, local reinsurers are on the hunt for an infusion of new capital.
Toronto-based Fairfax Financial Holdings Ltd. announced recently it would purchase a 25% stake in Thai Reinsurance Public Company Limited for approximately US$70 million. As part of the purchase, Fairfax will have the right to nominate two members to the board of directors of Thai Re and will also assist Thai Re with its investment portfolio.
Paul Rivett, Fairfax's chief legal officer, told BestWeek that last year's floods in Thailand left Thai Re with "a need for capital."
The minority stake fits within Fairfax's strategic approach, he continued. "We don't need to have 100% of a business. We're happy to partner in the sense of having minority stakes in good business with very good long-term track records."
The deal is set to close in the second quarter of 2012, subject to shareholder and regulatory approval.