Fairfax to acquire $860mln Kipco stake in Gulf Insurance Group

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Gulf Insurance Group (GIG), a leading insurance group in Middle East and North Africa, has announced that one of its key subsidiaries - Fairfax Financial Holdings Limited - is set to acquire its entire 46.3% stake in Kuwait Projects Company (Kipco) for KD263.7 million ($860 million) at a rate of KD 2 per share.

With this move, Fairfax will become the largest shareholder of the company with an aggregate ownership of 90.01%, said a statement from GIG.

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

Its corporate objective is to achieve a high rate of return on invested capital and build long-term shareholder by running Fairfax and its subsidiaries for the long-term benefit of customers, employees, shareholders and the communities where it operates.

According to GIG, this move further benefits GIG in many ways with Fairfax’s extensive global insurance experience in over 40 countries.

Fairfax’s substantial presence across 5 continents enables the Group to further enhance its exciting customer experience with increased focus on digitalized products and services while addressing the need for innovative insurance solutions for customers through multiple global network backed by Fairfax’s strong underwriting expertise, it stated.

Fairfax operates on a decentralized basis, with each management team responsible for developing and applying a focused underwriting strategy relevant to the market in which they operate, it added.

On the key deal, GIG Chairman Farqad Abdullah Al-Sane said: "This marks yet another development in the group’s way forward. The transformation and growth of GIG has been significant with an unmatched support of our major shareholders – Kipco from 1997 and Fairfax from 2010."

"This transaction shows Fairfax’s long-term commitment to the Group that makes GIG further stronger and pave the way for a sustainable future enhancing its scale and impact. We are very excited and looking forward to the new opportunities we will be experiencing on this journey," he added.

According to Kipco, the deal is contingent on the buyer obtaining the necessary regulatory approvals and, depending on the timing of the execution of the off-market trade, profit from the sale is expected to be in the range of KD70-80 million.

Announcing the deal at Kipco's AGM, Group CEO Sheikha Dana Naser Sabah Al Ahmad Al Sabah said: "As a holding investment company, our strategy is to acquire, scale and exit companies when the time is opportune. This deal is the culmination of three decades of value creation and growth. Our journey in the insurance business has been a journey of success."

"Since becoming our partners in 2010, we have worked with Fairfax to build a strong insurance provider that operates in 13 markets. We believe that the company will continue to grow under Fairfax and will remain a leading player in the MENA insurance market," she stated.

Group CEO Khaled Saoud Al Hasan said: "Since 1997, as a strategic investor, Kipco’s role has been predominant and we wholeheartedly recognize their extensive and impeccable experience helping GIG to emerge as one of the top insurance player in the Mena region."

"The exponential growth the Group delivers is a great testament to the strategic alignments and collaborations. It is very evident that the total business portfolio has largely been expanded since Fairfax’s investment in GIG during 2010, displaying a distinguished performance at all levels of our operation," observed Al Hasan.

"We remain focused and continue our business as usual to deliver unprecedented growth while benefitting from Fairfax’s global expertise and international exposure," he added.