Canadian insurance firm Fairfax Financial has agreed to acquire Swiss insurer Allied World Assurance in a transaction worth about $4.9bn.

Under the deal, Fairfax will acquire all of the outstanding registered ordinary shares of Allied World, which provides property, casualty and specialty insurance and reinsurance solutions.

Fairfax chairman and CEO Prem Watsa said: "Allied World is a high-quality company with an excellent long-term track record and an outstanding management team led by Scott Carmilani.

“Allied World will operate within the Fairfax group on a decentralized basis after closing, and we are looking forward to supporting Scott and the entire team at Allied World in growing their business over the long-term."

The acquisition is said to further diversify Fairfax’s group risk portfolio with Allied World’s increasing global reach being vastly complementary to the former’s current operations across the world.

The deal will help Allied World in leveraging Fairfax’s expertise in Canada, the US along with global insurance and reinsurance markets to improve its global product offering besides gaining more underwriting opportunities and support.

Allied World president, CEO and chairman Scott Carmilani said: “Our shareholders will benefit from Fairfax's tremendous investment capabilities as demonstrated by its superior long-term investment track record.

“The success of Fairfax's decentralized approach in empowering their management teams to drive profitable underwriting and combining Fairfax's investment philosophy will position us to create long-term value for shareholders.”

The transaction, which has already been approved unanimously by the two firms’ boards of directors, is expected to close in the second quarter of next year. It is subject to approvals and meeting of customary conditions.

Image : Fairfax Financial will acquire Allied World Assurance for $4.9bn. Photo: courtesy of  stockimages/