Fairfax Financial

Fairfax was incorporated as Markel Service of Canada on March 13, 1951, and continued under the Canada Business Corporations Act in 1976. The name was subsequently changed to Markel Financial Holdings Ltd.

In 1984, Prem Watsa left GW Asset Management to found his own asset management firm, Hamblin Watsa Investment Counsel Ltd. together with his former boss from Confed, Tony Hamblin. Tony was the Chief Investment Officer at Confed. The five founding partners were: Tony Hamblin, Prem Watsa, Roger Lace, Brian Bradstreet and Frances Burke.

In 1985, Watsa took control of Markel Financial, a Canadian-based specialist in trucking insurance. The company was controlled by the Virginia-based Markel family.

In May 1987, Watsa re-organized Markel Financial Holdings Limited and renamed it Fairfax Financial Holdings Limited (FAIRFAX: short for "fair, friendly acquisitions").

From 1985 to the end of 2010, the firm had a compound growth rate of approximately 25% in book value per share (per year), it is about 243 times what Fairfax began with in 1985.[5][6]

Prem Watsa has served as chairman and chief executive officer of Fairfax Financial Holdings Limited since 1985 and as vice president of Hamblin Watsa Investment Counsel since 1985. Watsa, directly, and indirectly through 1109519 Ontario Limited, The Sixty Two Investment Company Limited and 810679 Ontario Ltd., owns the controlling equity voting interest of Fairfax Financial Holdings Limited ("Fairfax").[7] He owns roughly 10% of Fairfax, which accounts for 99% of his personal wealth. His 10-for-1 multiple voting shares give him just over 50% ownership.

As early as the 2003, in an annual report issued by the company, chief executive Prem Watsa raised concerns about securitized products and talks about the subprime mortgage crisis and the United States housing bubble.[8]

In an interview in The Globe and Mail in 2007, Watsa said believed that the global credit squeeze is in its "early days", and indicated he believed there may be similarities to the Japanese asset price bubble.[9]

The investment team of HWIC benefited from the subprime fallout, like John Paulson's New York-based Paulson & Co., Kyle Bass' Hayman Capital, Andrew Lahde's California-based Lahde Capital, Julian Robertson's "Tiger Cubs" (formerly known as "Tiger Management Corp."),[10] and Michael Burry's Scion Capital (White Mountains Insurance Group is a minority investor in Scion Capital LLC), they have used derivatives to bet on the housing bubble. As of September 30, 2007, Fairfax and its subsidiaries owned an enormous credit default swap (CDS) book with a $18.5 billion notional amount and an average term to expiry of 4.2 years, on about 25 to 30 companies, the majority of which were bond insurers and mortgage lenders. The CDS book had a cost of $344 million, and a market value of $546 million. The market value of these swaps had fluctuated significantly in the 3rd quarter of 2007 from less than $200 million at the end of June, to $537 million at the end of July to almost $1 billion (twice that value) in August to $544 million at the end of September.

As of December 31, 2010, Fairfax had total assets of approximately $31.7 billion, and its revenue for the prior twelve months was approximately $6.2 billion. Since Watsa took over, the company book value per share has compounded by 23% per year,[11] while the common stock price has followed the growth at 19% per year.

On September 23, 2013, Fairfax made an offer to purchase cell phone maker BlackBerry for $4.7 billion or $9.00 a share.[12] BlackBerry announced it had signed a letter of intent but would be open to other offers until November 4, 2013. Fairfax already held 10% of BlackBerry.[13] The deal was later scrapped in favor of a US$1 billion cash injection which, according to one analyst, represented the level of confidence BlackBerry's largest shareholder had in the company.[14]

In 2016, Fairfax offered seed funding to Kitchener startup, DOZR Inc. through their investment and innovation unit, Fair Ventures.[15] Fair Ventures and Fairfax went on to support DOZR through multiple funding pitches, including the Colorado-based BaseCamp Equity Partners pitch in 2019. This pitch landed DOZR with $14 million CAD.[16]

In 2017, Fairfax Financial Holdings increased its ownership of Torstar's non-voting shares from 20% to 40%. In late May 2020, Torstar accepted an offer of a sale of the company to NordStar Capital. The $52 million deal, supported by Fairfax, was expected to close by year end.[17][2]

On April 24, 2018, it was announced that Fairfax Financial Holdings Ltd. would acquire the Canadian division of Toys "R" Us for approximately $234 million with the intention to keep the 82 remaining stores in Canada open under the Toys "R" Us brand even after the chain's liquidation in the United States. The deal was completed on June 1, 2018.[18] Fairfax sold Toys R Us Canada to businessman Doug Putman in 2021.

Fairfax Latin America Ltd. is a wholly-owned subsidiary of Fairfax. Based in Miami, Florida, it offers a wide range of general insurance products, including property, automobile and various specialty lines, through its subsidiaries located in Argentina, Chile, Colombia and Uruguay. Fairfax Latin America has approximately 970 employees and, in 2021, generated annual gross premiums that exceeded US$727 million. Fairfax Latin America underwrites through SBS Seguros Colombia S.A., Southbridge Insurance Company, Meridional Seguros and SBI Seguros Uruguay S.A.

Fairfax Financial has over 8,200 employees worldwide (5,000 of them in the United States). There are just 30 employees at head office in Toronto.

On August 9, 2022, Fairfax Financial proposed a $954 million takeover bid for the Canadian restaurant operator Recipe Unlimited Corp.[19]

• AbitibiBowater Inc. (new—scheduled to close on March 31, 2008) Fairfax made an investment of $350 million in AbitibiBowater convertible debentures with an 8% cash coupon.[52] The debentures are convertible into common shares of AbitibiBowater Inc at US$10.00 per share. The debentures has an ability to pay interest in the form of additional "pay-in-kind" debentures at a rate of 10%, and has an AbitibiBowater subsidiary guarantee. They have a maturity of 5 years and are non-callable. Fairfax will have the right to appoint two directors to the Board of Directors.
• Toys 'R' Us Inc. which it sold in 2021 to Putnam.[53]