Markel 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.
Fairfax Financial
In May 1987, Watsa re-organized Markel Financial Holdings Limited and renamed it Fairfax Financial Holdings Limited (FAIRFAX: short for "fair, friendly acquisitions").
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").[6]
As Japan's equity market surged through 1988, Watsa was publicly skeptical. In the FY1988 Letter to Shareholders he wrote that Fairfax had predicted "a collapse in the highly speculative Japanese stock market," and concluded: "If this continues, Japan will be the only equity market of consequence. Count me among the skeptics."[7] Fairfax backed the view by purchasing Nikkei put options. The Nikkei 225 peaked at 38,915 on December 29, 1989 and fell to 23,848 by year-end 1990 — a decline of roughly 39%. The FY1990 annual report disclosed realized gains from those puts, with book value reaching $17.29 per share by December 1990.[8]
1990s
On August 13, 1998, Fairfax Financial Holdings completed the acquisition of Crum & Forster for approximately US$565 million in cash.[9] The acquisition significantly expanded Fairfax’s U.S. commercial insurance operations and added specialty underwriting capabilities.
By the late 1990s Watsa was alarmed by what he described in the FY1999 Letter as "unbelievable speculation" in U.S. equities, citing extreme internet-stock valuations and unusually rapid share turnover. His summary was blunt: "We do not believe in 'New Eras'." [10] Fairfax entered the period holding US$700 million notional of S&P 500 Index puts and US$162 million notional of contracts on a basket of technology stocks, maintaining roughly US$600 million in notional exposure. The Nasdaq Composite fell approximately 78% from its March 2000 peak to its October 2002 trough. The FY2001 letter reported $75.1 million in realized gains from the technology-basket puts and $11.4 million from S&P 500 Index puts.[11] Watsa acknowledged that the position had been painful while the S&P 500 rose — a reminder that being right on the thesis and being right on the timing are different things.
2000s
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.[12]
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.[13]
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."),[14] 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.
2010s
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.
On September 23, 2013, Fairfax made an offer to purchase cell phone maker BlackBerry for $4.7 billion or $9.00 a share.[15] 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.[16] 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.[17]
On January 30, 2015, Fairfax Financial Holdings Limited launched Fairfax India Holdings Corporation, following the election of Narendra Modi, raising approximately US$1 billion to make long-term investments in India.[18]
In 2016, Fairfax offered seed funding to Kitchener startup, DOZR Inc. through their investment and innovation unit, Fair Ventures.[19]
2020s
On August 9, 2022, Fairfax Financial proposed a $954 million takeover bid for the Canadian restaurant operator Recipe Unlimited Corp.[25]
On December 26, 2023, Fairfax Financial completed the acquisition of an additional 46.32% equity interest in Gulf Insurance Group from Kuwait Projects Company (Holding) K.S.C.P., increasing its ownership from 43.69% to 90.01% and obtaining control of the company, with a mandatory tender offer to remaining shareholders announced for the first quarter of 2024.[26]
On July 22, 2024, Fairfax Financial agreed to acquire Sleep Country Canada Holdings Inc. for approximately C$1.7 billion, through an all-cash offer.[27] The sale received final court approval from the Ontario Superior Court of Justice in late September 2024.[28] Sleep Country continues to operate as a separate entity under the Fairfax umbrella.
