Prem Watsa's Fairfax offloads RiverStone Europe in $750m deal

Prem Watsa's Fairfax Financial Holdings has agreed to sell all of its interests in run-off insurer RiverStone Europe for approximately $750 million to CVC Capital Partners.

Fairfax and OMERS, the pension plan for Ontario’s municipal employees, are both selling their holdings to CVC, which is making this acquisition through Strategic Opportunities Fund II - a vehicle designed to invest in high-quality businesses that are suited to longer hold investment horizons.

In addition to the purchase price of $750 million, Fairfax will also be entitled to receive up to $235.7 million post-closing under a contingent value instrument.

After closing, RiverStone Europe will operate under the name RiverStone International and will seek to continue its insurance activities led by its existing management team.

Luke Tanzer will remain the managing director of RiverStone Europe and Nick Bentley, the chief executive officer of the RiverStone Group, will remain on the board of RiverStone Europe.

The transaction is expected to close in early 2021.

Fairfax's chairman and chief executive officer Watsa said: “We are very pleased to enter into this transaction with CVC. RiverStone Europe is an industry leader in run-off insurance services, and CVC’s scale and vision will give RiverStone Europe, under the continued leadership of Luke and his management team, the opportunity to further grow the business."

"Fairfax remains committed to continuing to grow its other European businesses, including its Lloyd’s of London activities,” he added.

Tanzer said: “I am extremely happy to partner with CVC in this next chapter of our development. This transaction will provide us with a runway for further growth as we continue to offer the most trusted and effective run-off solutions in the insurance market. We look forward to joining the CVC family and benefitting from their deep experience of financial services, global network and long term pool of capital.”

Peter Rutland, managing partner and head of financial services at CVC, said: “As one of the largest global consolidators of non-life run off insurance books, with a leading position in the UK and Lloyd’s market, embedded cash flows and a predictable financial profile, RiverStone Europe is ideally suited to CVC’s Strategic Opportunities platform, which specializes in backing established businesses in stable markets that have long term growth ambitions. We have got to know RiverStone and Fairfax over many years, and are delighted to now have the opportunity to work with Luke Tanzer and his experienced team.”