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Fairfax strikes deal with Tower to sell ASI subsidiary

Prem Watsa, chairman and CEO of Fairfax Financial.

jim ross The Globe and Mail

Fairfax Financial Holdings Limited and Tower Group International Ltd. have struck a deal to sell a Bermuda subsidiary of American Safety Insurance Holdings Ltd. to a third party.

Tower was set to acquire American Safety Reinsurance Ltd. as part of Fairfax's acquisition of the parent company in June, but Fairfax will now pay $5-million for Tower to give up its right so the subsidiary can be sold to Catalina Holdings Ltd.

As part of the deal, Catalina has also agreed to vote its shares in American Safety in favour of the proposed $306-million (U.S.) acquisition of American Safety by Fairfax.

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Fairfax, a Toronto-based financial services holding company, has said the overall deal with provide it with $480-million of additional investable assets.

American Safety's board of directors said in June it had approved the deal. Directors and executives with about 10 per cent of American Safety's shares have agreed to vote in favour of the Fairfax deal.

Fairfax, through its subsidiaries, is involved in property and casualty insurance and reinsurance and investment management in Canada and the U.S.

American Safety is a Bermuda-based holding company that targets underserved specialty risks through U.S.-based American Safety Insurance Services Inc. and its U.S. insurance and Bermuda reinsurance companies.

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