Canadian financial conglomerate Fairfax and Japan’s Mitsui Sumitomo Insurance Company have entered a strategic alliance, which will see Mitsui Sumitomo acquiring Fairfax’s 97.7% stake in Singapore-based general insurer First Capital.
The deal is estimated to be worth US$1.6 billion, resulting in a realized net investment gain of approximately US$900 million after tax for Fairfax. Ramaswamy Athappan will remain as First Capital’s CEO and will concurrently hold the chairmanship of Fairfax Asia.
First Capital is one of the largest general insurers in Singapore and writes both personal and commercial lines. Its product offerings include motor, fire, marine hull and cargo, and personal accident insurance.
“We are very excited to become partners with Mitsui Sumitomo,” Prem Watsa, chairman and CEO of Fairfax, said in a statement. “Mitsui Sumitomo's scale in Asia will give First Capital, under the continued leadership of Mr. Athappan, the opportunity to grow significantly. Mr. Athappan championed this transaction, based on his strong belief that it was the best way for First Capital to continue to grow successfully while also creating a valuable long-term partnership for the Fairfax group.”
Masahiro Matsumoto, board member and senior executive Officer of Mitsui Sumitomo added: “We look forward to building our partnership with Fairfax to expand on our complementary global strengths and, in particular, with Mr. Athappan to continue building First Capital.”
Closing of the transaction is subject to regulatory approvals, including the Monetary Authority of Singapore and the Financial Services Agency of Japan. The expected completion time frame is late-2017 to early-2018.
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