OMERS to Invest in RiverStone UK
December 20 2019 - 7:59AM
Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U)
and OMERS, the pension plan for Ontario’s municipal employees, are
pleased to announce that they have entered into an agreement
pursuant to which OMERS will acquire a 40% interest in Fairfax’s UK
run-off group, RiverStone UK.
The transaction gives RiverStone UK the joint
operational expertise of Fairfax and OMERS and the flexibility to
raise inexpensive capital, while enabling Fairfax to focus on
significant premium growth in the ongoing insurance and reinsurance
businesses. The investment provides RiverStone UK with additional
flexibility to raise capital at historically low rates in Europe in
order to opportunistically pursue UK run-off transactions. Luke
Tanzer will remain CEO of RiverStone UK post-closing.
“We welcome OMERS’ investment in RiverStone UK
and the opportunity it brings to continue to offer the most trusted
and effective run-off solutions in the insurance market,” said Luke
Tanzer, CEO of RiverStone UK.
“When Nick Bentley and Luke Tanzer expressed
their desire to take steps to bring partners into the UK run-off
business, OMERS was the natural choice given our past successes
together,” said Prem Watsa, Chairman and CEO of Fairfax.
“OMERS’ investment and their ability to work jointly with Luke and
his team will provide RiverStone UK with the opportunity to
prudently leverage the business and pursue opportunistic
transactions.”
“The acquisition of RiverStone UK advances our
strategy to make investments that can generate sustainable, stable
income and growth,” said Ken Miner, Executive Vice President and
Global Head of OMERS Capital Markets. “We are excited to work with
Fairfax to maximize the value of this asset for our members.”
The cash purchase price for the RiverStone UK
investment of at least US$560 million, subject to certain book
value adjustments at closing, will result in Fairfax recording a
gain of approximately US$280 million before tax (an increase in
book value per basic share of Fairfax of approximately US$10 before
tax on a pro forma basis).
Upon completion of the transaction, Fairfax will
deconsolidate the UK run-off group and apply the equity method of
accounting for its remaining interest. Fairfax may further monetize
its remaining interest in UK run-off in the future although the
company also retains the flexibility to repurchase its interest
over time.
The transaction remains subject to regulatory
approval and is expected to close in the first quarter of
2020.
About Fairfax
Fairfax is a holding company which, through its
subsidiaries, is engaged in property and casualty insurance and
reinsurance and the associated investment management.
About OMERS
Founded in 1962, OMERS is one of Canada’s
largest defined benefit pension plans, with more than $97 billion
in net assets as at December 31, 2018. OMERS invests and
administers pensions for more than half a million members through
originating and managing a diversified portfolio of investments in
public markets, private equity, infrastructure and real estate. For
more information, please visit omers.com.
Contact Information:
Fairfax:
John Varnell Vice President, Corporate Development Tel: (416)
367-4941
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