The Western Investment Company of Canada Limited has announced it is pivoting from a private equity investment platform to a property and casualty insurance and investment holding company.
As part of its insurance-focused strategy, Western has increased its ownership of Fortress Insurance Company, an Alberta-based firm Western funded in 2019, to over 83%, with agreements in place to acquire full control of the company.
The company’s strategic shift includes raising funds through an upsized private placement now valued at $30 million, to enhance shareholder value. Western also plans to identify specialty insurance companies with annual premiums between $10 million and $30 million, specifically targeting firms with strategic market niches.
Western’s repositioning follows the success of the Fortress deal. Under Western’s stewardship, Fortress achieved a compound annual growth rate (CAGR) exceeding 170% in gross written premiums between 2019 and 2023, noted a news release.
CEO Scott Tannas highlighted Fortress’s capital reserves and low loss ratios as key factors in its rapid growth. He expects the company’s gross written premiums to reach $100 million per annum by 2028.
Western has also forged a partnership with Paul Rivett, former president of Fairfax Financial, renowned for his expertise in value-based float management. Tannas believes Rivett’s experience will support the company’s aim to integrate insurance underwriting with conservative float management, which is anticipated to provide stable, compounded returns.
“Float management seems antithetical to most insurance companies,” Tannas noted. “Given their enormous success, it’s puzzling that only a handful of people see that these two separate activities – insurance underwriting and float management – belong in one business. While at Fairfax, Paul was at the center of this approach and their value investing philosophy. He has seen it, knows it, lived it, and succeeded at it.”
In a statement, Tannas expressed appreciation to shareholders for their “overwhelming support” for the company’s new direction.
“We are collectively excited about the shareholder value we can create over the long term as a property and casualty insurance and investment holding company, and the tremendous opportunities this shift will unlock,” Tannas said.
Western’s shift in focus is set for discussion at the company’s Annual General and Special Meeting, scheduled for December 6, 2024, in Calgary.
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