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Mitsui Sumitomo to buy Fairfax's First Capital Insurance for $1.6bn

IBR Staff Writer Published 24 August 2017

Mitsui Sumitomo Insurance has agreed to acquire Singapore-based non-life insurer First Capital Insurance from Canada's Fairfax Financial for $1.6bn.

Fairfax Financial and Mitsui Sumitomo have entered into a binding agreement to pursue a global strategic alliance.

Under the deal, Mitsui will purchase 97.7% interest in First Capital Insurance.

The transaction includes the cash purchase price of $1.6bn resulting in a realized net investment gain of nearly $900m after tax.

The existing CEO of First Capital Ramaswamy Athappan will be continuing in his position, retain his responsibilities as chairman of Fairfax Asia.

Fairfax chairman and CEO Prem Watsa said: “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."

The transaction is subject to the receipt of concerned regulatory approvals. It is anticipated that the approval from Monetary Authority of Singapore and the Financial Services Agency of the Government of Japan may occur late in 2017 or early 2018.

Mitsui Sumitomo member of the board and senior executive officer Masahiro Matsumoto said: “Mitsui Sumitomo and Fairfax share the same long-term vision and values."

Recently, Fairfax has completed $4.9bn acquisition of Swiss insurer Allied World Assurance by its indirect Switzerland subsidiary Fairfax Financial (Switzerland) for 100% of the shares of Allied World.

As per the merger agreement signed in December 2016, Allied World will be merged with Fairfax (Switzerland) to form a single entity which will be renamed as Allied World Assurance Company.

Image: Fairfax signs a binding agreement with Mitsui Sumitomo. Photo: courtesy of adamr at FreeDigitalPhotos.net