Fairfax buys Zenith

Article Excerpt

FAIRFAX FINANCIAL HOLDINGS $373.55 (Toronto symbol FFH: SI Rating: Average) (416-367-2612; www.fairfax.ca; Shares outstanding: 19.4 million; Market cap: $7.2 billion; Dividend yield: 2.7%) plans to buy the 91.7% of Zenith National Insurance Corp. (New York symbol ZNT) that it doesn’t already own for $1.4 billion U.S. To help pay for the purchase, Fairfax has raised $200 million U.S. by issuing new shares. Zenith has two wholly owned subsidiaries: Zenith Insurance Company and ZNAT Insurance Company. These firms sell workers’ compensation insurance to businesses across the U.S. Sharply higher layoffs during the economic slowdown have hurt Zenith’s business. Fairfax has taken advantage of its strong financial position to buy other insurers whose share prices have dropped with the slow economy. It recently paid $960 million U.S. for the 27.4% of Odyssey Re Holdings Corp. that it didn’t already own. Early last year, Fairfax paid $375 million to buy the 36.4% of Northbridge Financial that it didn’t already own. Northbridge is one of Canada’s biggest…

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