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Member, Beacon International Group, Ltd.
TORONTO--Toronto-based Fairfax Financial Holdings Ltd. plans to sell up to 3.5 million shares of its Zenith National Insurance Corp. stock for up to $170 million.
At Fairfax's request, Woodland Hills, Calif.-based Zenith National Insurance Corp. filed a registration statement with the Securities and Exchange Commission on June 16 for the sale of up to 3.5 million shares held by Fairfax, including a possible 400,000-share overallotment, for a proposed maximum offering price of $48.56 a share.
Fairfax said it decided to sell the shares to benefit its TIG Insurance subsidiary, which is now in runoff.
In addition, the sale may mean that Zenith will have a lower deductible under the Terrorism Risk Insurance Act of 2002. The Treasury Department told Zenith in January that as an affiliated insurer, Fairfax's direct earned premiums must be combined with Zenith's in calculating Zenith's deductible under TRIA, according to the SEC registration statement. Zenith's TRIA deductible totaled about $251 million in 2004.
The sale, though, would lower the percentage of shares owned by Fairfax to less than 25% of its outstanding shares, from 41% as of December 2003.