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Mitsui Sumitomo Insurance and Fairfax Financial Holdings will enter into an agreement to explore a broad global partnership in various areas it was announced today, August 23rd 2017, including reinsurance relationships that would lead to successful growth and value creation for both parties.

Fairfax Financial Holdings Limited (Fairfax) and Mitsui Sumitomo Insurance Company Limited of Tokyo, Japan (Mitsui Sumitomo), announce that they have entered into a binding agreement to pursue a global strategic alliance.  Mitsui Sumitomo will acquire Fairfax's 97.7% interest in First Capital Insurance Limited of Singapore (First Capital), with Fairfax retaining a meaningful quota share exposure to First Capital's insurance portfolio.

The cash purchase price for Fairfax's interest in First Capital is US$1.6 billion, which will result in a realized net investment gain of approximately US$900 million after tax (an increase in book value per basic share of Fairfax of approximately US$33 on a pro forma basis).

Ramaswamy Athappan will continue as First Capital's Chief Executive Officer, while continuing to retain his responsibilities as Chairman of Fairfax Asia.

"We are very excited to become partners with Mitsui Sumitomo," said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. "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."

"I am extremely happy to partner with Mitsui Sumitomo," said Mr. Athappan, Chief Executive Officer of First Capital and Chairman of Fairfax Asia. "This wonderful new partnership creates a win-win-win by providing a runway for growth of the company I helped nurture and grow, while also significantly growing the business of both Fairfax Asia and the Fairfax group."

Fairfax purchased Zenith National Insurance Company (The Zenith) in 2010.  The Zenith has offices in San Diego, Orange, Woodland Hills, Fresno, Pleasanton, and Sacramento, California.  Mitsui Sumitomo has an office in Universal City in Southern California. 

 
lonce@adjustercom.com, Lonce Lamonte, journalist