Fairfax set to enter Chinese insurance market

Toronto-based Fairfax Financial Holdings Ltd is set to enter the Chinese insurance market with the purchase of a 15% interest in Alltrust Insurance Co. for $66 million (US).

The deal, announced August 31, 2009, is subject to final approval by the Chinese Insurance Regulatory Commission (CIRC) and is the culmination of a multi-year process that had Alltrust considering offers from a number of large North American and European insurance companies.

Alltrust was established in 2004 and is headquartered in Shanghai, with a total of 25 provincial branches and 150 sub-branches employing more than 4,000 workers. Some of its insurance products include auto, liability, property and short-term health insurance.

Prem Watsa, Fairfax’s chairman and CEO, called Alltrust “one of the leading private insurers in China” and noted that it has “shown tremendous profitable growth.”

Alltrust chairman Henry Du was full of praise for his new Canadian business partners, calling Fairfax a “world-class organization” and saying that “Fairfax and its many businesses and wealth of insurance and investment experience around the world will be of great assistance to us as we look to continue to grow our profitable enterprise throughout China.”

The move adheres to Fairfax’s habit of entering foreign markets via joint ventures, a strategy Watsa referenced when comparing the deal to ICIC Lombard Insurance, Fairfax’s joint venture in India.

Fairfax Financial Holdings Ltd is a financial services holding company whose subsidiaries are involved in P&C insurance and reinsurance and investment management. Its Canadian insurance subsidiary is the Northbridge Financial Corporation, whose companies include Lombard Canada and Federated Insurance.

This story was originally published by Canadian Insurance Top Broker.