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Home World Africa

Fairfax acquires Zurich’s South Africa and Botswana insurance operations

by Israel
August 2, 2016
Zurich-South-Africa-Offices

Fairfax Financial Holdings recently announced that it has entered into an agreement with Zurich Insurance Company to acquire 100% of its South African and Botswana operations for an undisclosed amount. The announcement ended speculation that Zurich’s Swiss parent has been planning to exit South Africa.

Zurich said in a statement: “At the group’s Investor Day in May 2015, Zurich stated that reshaping its geographic footprint would be one of its highest priorities over the next two years as it seeks to build a more sustainable business while also improving overall profitability.”

Zurich-South-Africa-Offices

Zurich SA delisted from the Johannesburg Stock Exchange in September 2015 and became a wholly owned subsidiary of Zurich Insurance Group, which acquired the remaining 15% free-float it did not already own.

“While South Africa and Botswana remain attractive markets, a comprehensive assessment found that there was limited scope for Zurich to achieve an operating scale that warranted continued investment,” the insurance group said.

“The acquisition is the ideal outcome for our customers, our employees, the group and the insurance markets in South Africa and Botswana,” remarked Zurich SA CEO Edwyn O’Neill.

“Selecting Fairfax as our acquirer allows us to continue to run the business with a strong local focus, while enjoying the backing and guidance of a global sector expert,” O’Neill added.

The proposed acquisition of Zurich Insurance Company South Africa Limited (ZICSA) “represents an expansion of Fairfax’s commercial insurance presence in Africa and follows its purchase of a 7.15% stake in Africa Re in 2015,” Fairfax stated July 6 in a release.

“Africa is a continent that represents a long-term growth opportunity for Fairfax, but where we have traditionally done little primary commercial insurance business. This acquisition represents a key step in expanding our presence in this important market,” said Prem Watsa, chairman and CEO of Fairfax.

“It [Zurich Insurance Company South Africa] is a high-quality and well-known regional business, with an outstanding management team led by Edwyn O’Neill,” Watsa said, referring to both the SA and Botswana businesses.

The 100% agreement is expected to close by the end of the year, pending various regulatory approvals. While the value of the deal has not yet been disclosed, the net asset value of the combined South African and Botswana business is estimated at some R1.8 billion (£97.3 million).

Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.

Fairfax also has holdings outside of the insurance industry, including retailers William Ashley China, Kitchen Stuff and Sporting Life. Other holdings include The Keg restaurant chain plus a majority voting interest in Cara Operations, owner of restaurants such as Swiss Chalet, Harvey’s, Milestones, Montana’s, Kelsey’s and East Side Mario’s.

Tags: FairfaxZurich
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