Canada-based Fairfax Financial Holdings, a property and casualty re/insurer, is acquiring Allied World Assurance Company Holdings for $4.9 billion in cash and stock as the two companies have entered into a merger agreement approved by their boards.
The offer price represents a premium of 18 percent to the closing price of $45.77 per Allied World Share on December 16, 2016.
Allied World will operate within the Fairfax group on a decentralized basis after closing.
The acquisition will diversify Fairfax’s group risk portfolio, and Allied World will leverage from Fairfax’s presence in the international re/insurance markets.
Allied World’s growing international reach is highly complementary to Fairfax’s existing worldwide operations and the acquisition further diversifies Fairfax’s group risk portfolio, a press release said. In addition, Allied World will be able to leverage Fairfax’s expertise in Canada, the United States and international insurance and reinsurance markets, thus enhancing Allied World’s global product offering and providing it with expanded underwriting opportunities and support.
“We are excited to have Allied World join the Fairfax group,” said Prem Watsa, chairman and chief executive officer (CEO) of Fairfax.
“Allied World is a high-quality company with an excellent long-term track record and an outstanding management team led by Scott Carmilani. We are looking forward to supporting Scott and the entire team at Allied World in growing their business over the long-term.”
Carmilani, the CEO and Chairman of Allied World, added: “This is a tremendous opportunity for Allied World. Our shareholders are being rewarded for the strong performance of Allied World over the last 10 years since going public.
“We are strategically aligning ourselves with Fairfax, one of the premier companies in the insurance industry which has a great track record of supporting their operating companies and creating value for shareholders. We are excited to be joining the Fairfax organization – we share their passion for underwriting excellence and their entrepreneurial approach to growing the business with a long-term orientation.
“Our shareholders will benefit from Fairfax’s tremendous investment capabilities as demonstrated by its superior long-term investment track record. The success of Fairfax’s decentralized approach in empowering their management teams to drive profitable underwriting and combining Fairfax’s investment philosophy will position us to create long-term value for shareholders,” he continued.
Fairfax provides a great home for Allied World to continue to build a strong business for our customers, business partners and employees.”