Buyer of AIG divisions guides with a light reinReprints
DALLAS — Fairfax Financial Holdings Ltd. intends to allow the businesses it recently acquired from American International Group Inc. to run autonomously, according to the Toronto-based company’s founder, chairman, and CEO, Prem Watsa.
Mr. Watsa, responding to a question Monday at the Property Casualty Insurers Association of America’s annual meeting in Dallas, said his firm believes in having decentralized operations.
AIG announced earlier this month that it would sell some of its businesses in Latin America and Central and Eastern Europe to Fairfax for about $240 million. Fairfax will also acquire renewal rights for a portfolio of businesses written by AIG’s Central and Eastern European operations.
“Our system is based on very smart management,” Mr. Watsa said, “so we don’t like combining our companies.”
Mr. Watsa said his company applied a similar approach last year when it acquired Lloyd’s of London insurer and reinsurer Brit P.L.C. in a $188 million deal.
“We have two other Lloyd’s franchises,” he said. “Most people would have smashed them together, and you’d have savings. But we found you can quantify savings but you can’t quantify the effects of empowerment, the effects of working together. You can’t quantify that.”
“We believe that when people are happy and everyone is working in teams,” Mr. Watsa said, “results tend to follow.”