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Fairfax close to purchase of Indonesian insurer - bloomberg article


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http://www.bloomberg.com/news/articles/2016-05-16/watsa-s-fairfax-said-to-near-takeover-deal-for-indonesia-insurer

 

Fairfax close to buying Indonesian insurer: Bloomberg

 

Canadian conglomerate Fairfax Financial is in advanced talks to buy control of PT Paninvest’s non-life insurance unit, according to a report on Bloomberg.

 

The deal would value the Indonesian carrier at around $200mn, with an agreement expected to be announced in the coming weeks.

 

The transaction comes with a so-called bancassurance agreement, which would allow insurance products to be distributed and sold through the branches of Paninvest’s lending affiliate PT Bank Pan Indonesia.

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Fairfax is doing a lot of acquisitions of tuck in international insurance operations.  Growing the float is undoubtedly a good thing, and I suspect the international markets are fair less fully valued than domestic insurers, with more room to run as more Asian economies grow and need more insurance.  So seems great to me if they can get the underwriting profit where they need it, and they appear to be doing much better at that as well.  But what are the added risks in buying international insurers over domestic ones?  There has to be incremental risk to this above what Berkshire faced earlier on in the float growth stage, though it ended up huge in international insurance obviously. 

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  • 8 months later...

I was lucky enough to buy AMAG about 3 years ago - well before FFH Asia became the majority shareholder. At this time it traded below book value and had a dividend yield of about 5 %.  Now they pay no dividend, the net profit is lower than it was back then and they trade at about 1.3 of book value. As they increased in the last days again I am at an unrealised profit of roughly 100%. Has anybody an idea if they are still worth holding with FFH Asia now as the majority share holder. Of course they are now not as attractive valued as they were back then. On the other hand they are not verz expensive yet if compared to some other insurers. And in general it is very difficult at the moment to find really attractive investment opportunities - not just in the US.

Opinions, ideas and advices are very welcome.

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