Fairfax Also to Make Significant Investment in
JAB’s Latest Consumer Fund, which will Include Pet Insurance as a
Core Part of its Portfolio
JAB Holding Company (“JAB”) and Fairfax Financial Holdings
Limited (“Fairfax”) (TSX: FFH and FFH.U) today announced a
transformational strategic partnership, in which JAB’s pet
insurance business has agreed to acquire all of Fairfax’s interests
in the Crum & Forster Pet Insurance Group™ (“C&F Pet”) and
Pethealth Inc., including all of their worldwide operations. As
part of the transaction, Fairfax will also make a $200 million1
investment in JCP V, JAB’s latest consumer fund.
As a result of the transaction, in which Fairfax will receive
$1.4 billion in the form of $1.15 billion cash and $250 million in
seller notes, JAB’s combined global pet insurance and ecosystem
platform will be estimated to have gross written premiums and pet
health services revenues of well over $1.2 billion by 2023,
insuring more than 2.1 million pets. The pet insurance industry,
which has been expanding at a rate of approximately 20% per year on
a global basis, is expected to continue to see many years of
steady, strong growth, driven by attractive long-term trends in
petcare and significant opportunities to expand penetration,
especially in the US and Canadian markets which have less than 3%
penetration. C&F Pet today insures over 500,000 pets and
markets or serves as underwriter for numerous brands, including
ASPCA® Pet Health Insurance, 24Petprotect, Hartville Pet Insurance,
Spot Insurance Services, Pumpkin Insurance Services and PetCoach,
LLC (provider of Petco pet insurance plans) in the United States
and Pets Plus Us in Canada. Pethealth provides wellbeing and safety
solutions to shelters and pet parents under the 24Pet brand, which
includes the 24Petwatch Registry with over 20 million registered
pets.
“Fairfax is very happy to partner with Olivier Goudet and JAB
Holding Company,” said Prem Watsa, the Founder, Chairman and CEO of
Fairfax. ”JAB has had an outstanding track record over the past 10
years and we expect this to continue. While we have sold our pet
insurance business to JAB, we will invest $200 million in their JCP
V to become their partners. We expect JAB to soon become leaders in
pet healthcare and pet insurance globally. We wish them much
success.”
“We are extremely excited to partner with Prem and his
organization on this transformational transaction, and to welcome
them as a partner in our fund,” said Olivier Goudet, Managing
Partner and CEO of JAB. “Prem has an incredible multi-decade track
record of building great businesses and compounding returns, and we
look forward to accelerating the growth of their pet insurance
business as part of our focused pure-play pet insurance
platform.”
“Today’s transaction is a major milestone for us in our mission
to become a global leader in pet insurance and the pet health
ecosystem,” said Dirk Beeckman, CEO of JAB’s pet insurance
portfolio. “It also significantly advances our mission of providing
the leading health and wellbeing ecosystem for pets through the
offering of affordable, comprehensive pet products and brands
throughout a pet’s lifecycle. C&F Pet‘s long history of
disciplined omni-channel underwriting fits perfectly with our
culture, and we look forward to working with the team.”
“We are extremely proud of what we have built and accomplished
together in the animal welfare community and the pet insurance
ecosystem,” said Gary McGeddy, President of Crum & Forster
A&H. “We are confident that JAB will continue to invest and
focus on pets and pet parents while growing their global presence
and we are excited about the future and our partnership.”
The transaction is subject to customary closing conditions,
including various regulatory approvals, and is expected to close in
the second half of 2022.
About JAB
JAB Holding Company invests in consumer-focused industries with
attractive long-term dynamics, including strong growth prospects,
attractive margin and cash flow characteristics, and proven
resiliency. Together with JAB Consumer Partners, JAB Holding
Company is the largest shareholder of Keurig Dr Pepper, a leader in
the North American beverage market, and has controlling stakes in
JDE Peet’s, the largest pure-play fast-moving consumer goods coffee
company in the world; NVA, one of the world’s largest animal care
services platforms; Independence Pet Group, a leading provider of
pet insurance; Krispy Kreme Doughnut, a global leader in doughnuts
and other premium-quality sweet treats; Panera Brands, one of the
world’s largest fast casual restaurant companies, which includes
Panera Bread, Caribou Coffee and Einstein Bagels; Pret A Manger, a
leading company in the ready-to-eat food market; and Espresso
House, the largest branded coffee shop chain in Scandinavia. JAB
Holding Company is also the largest shareholder in Coty Inc., a
global leader in beauty, and owns luxury goods company Bally.
About Fairfax
Fairfax Financial Holdings Limited is a holding company which,
through its subsidiaries, is primarily engaged in property and
casualty insurance and reinsurance and the associated investment
management.
About Crum & Forster Pet
For over 20 years, Crum & Forster Pet Insurance Group™ has
been committed to helping people get access to reliable and
affordable pet insurance plans. From routine exams to unexpected
illnesses, our plans are available to pet parents of cats and dogs.
Plans are customizable based on individual needs, including
coverage levels, policy limits, and deductibles. We pride ourselves
on pioneering new advancements in the industry. Crum & Forster
Pet Insurance Group is founding member of the North American Pet
Health Insurance Association (NAPHIA). Pethealth Inc. offers pet
services through two brands 24Pet and VioVet. 24Pet are the experts
in lost pet solutions, pet adoptions, animal welfare and shelter
support. A family of platforms, services, products, and people,
obsessed with pets. From connecting them with loving families, to
protecting and helping keep them happy, healthy, and home. VioVet
is a UK registered veterinary online pet retailer that offers a
variety of pet and horse supplies, including prescription and
non-prescription medications, supplements, food, toys and more.
About Independence Pet Group
Independence Pet Group is an integrated, full-stack pet
insurance platform indirectly majority owned by JAB Holding
Company. It offers a comprehensive range of underwriting options,
turnkey partner solutions, and consumer-facing insurance products
through its wholly own subsidiary, Independence American Insurance
Company, a leading provider of underwriting services to the pet
insurance sector with licenses in all 50 states. It also is a
majority shareholder in Pet Partners, Inc., which distributes and
administers through world-class pet insurance brands AKC Pet
Insurance and its worksite brand, PetPartners. PetPartners in turn
owns Figo, a leading direct-to-consumer brand which utilizes a
highly engaging and mobile friendly Pet Cloud that allows consumers
to manage their pet's healthcare, socially engage with fellow pet
parents, and easily discover and locate services within the pet
ecosystem, and Third Party Pet, providing business services to
breeders, pet retailers and their customers ranging from live pet
inventory management software, scheduling and facilitating
adoptions, micro-chip and registration services and customized pet
products.
Forward Looking Statements
Certain statements contained herein may constitute
forward-looking statements and are made pursuant to the “safe
harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995 and applicable Canadian securities
laws. Particularly, statements about the transaction described
above and the terms thereof (including relating to the terms,
conditions and the timing for closing of the proposed transaction
described above) are forward-looking statements. Such
forward-looking statements are subject to known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Fairfax to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include,
but are not limited to: failure to complete the transaction
described above which is subject to customary conditions; reduction
in net earnings if our loss reserves are insufficient; underwriting
losses on the risks we insure that are higher or lower than
expected; the occurrence of catastrophic events with a frequency or
severity exceeding our estimates; changes in market variables,
including interest rates, foreign exchange rates, equity prices and
credit spreads, which could negatively affect our investment
portfolio; risks associated with the global pandemic caused by a
novel strain of coronavirus (“COVID-19”), and the related global
reduction in commerce and substantial downturns in stock markets
worldwide; the cycles of the insurance market and general economic
conditions, which can substantially influence our and our
competitors’ premium rates and capacity to write new business;
insufficient reserves for asbestos, environmental and other latent
claims; exposure to credit risk in the event our reinsurers fail to
make payments to us under our reinsurance arrangements; exposure to
credit risk in the event our insureds, insurance producers or
reinsurance intermediaries fail to remit premiums that are owed to
us or failure by our insureds to reimburse us for deductibles that
are paid by us on their behalf; our inability to maintain our long
term debt ratings, the inability of our subsidiaries to maintain
financial or claims paying ability ratings and the impact of a
downgrade of such ratings on derivative transactions that we or our
subsidiaries have entered into; risks associated with implementing
our business strategies; the timing of claims payments being sooner
or the receipt of reinsurance recoverables being later than
anticipated by us; risks associated with any use we may make of
derivative instruments; the failure of any hedging methods we may
employ to achieve their desired risk management objective; a
decrease in the level of demand for insurance or reinsurance
products, or increased competition in the insurance industry; the
impact of emerging claim and coverage issues or the failure of any
of the loss limitation methods we employ; our inability to access
cash of our subsidiaries; our inability to obtain required levels
of capital on favourable terms, if at all; the loss of key
employees; our inability to obtain reinsurance coverage in
sufficient amounts, at reasonable prices or on terms that
adequately protect us; the passage of legislation subjecting our
businesses to additional adverse requirements, supervision or
regulation, including additional tax regulation, in the United
States, Canada or other jurisdictions in which we operate; risks
associated with government investigations of, and litigation and
negative publicity related to, insurance industry practice or any
other conduct; risks associated with political and other
developments in foreign jurisdictions in which we operate; risks
associated with legal or regulatory proceedings or significant
litigation; failures or security breaches of our computer and data
processing systems; the influence exercisable by our significant
shareholder; adverse fluctuations in foreign currency exchange
rates; our dependence on independent brokers over whom we exercise
little control; impairment of the carrying value of our goodwill,
indefinite-lived intangible assets or investments in associates;
our failure to realize deferred income tax assets; technological or
other change which adversely impacts demand, or the premiums
payable, for the insurance coverages we offer; disruptions of our
information technology systems; assessments and shared market
mechanisms which may adversely affect our insurance subsidiaries;
adverse consequences to our business, our investments and our
personnel resulting from or related to the COVID-19 pandemic; and
the failure to complete or realize the anticipated benefits of the
transaction described above. Additional risks and uncertainties are
described in Fairfax’s most recently issued Annual Report which is
available at www.fairfax.ca and in Fairfax’s Base Shelf Prospectus
(under “Risk Factors”) filed with the securities regulatory
authorities in Canada, which is available on SEDAR at
www.sedar.com. Fairfax disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by applicable securities law.
1 All dollar amounts in the news release are expressed in U.S.
dollars unless otherwise noted.
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Media
JAB: Tom Johnson or Jake Yanulis, Abernathy MacGregor,
tbj@abmac.com or jjy@abmac.com
Crum & Forster Pet: Hallie Harenski, Head of Corporate
Communications at mediainquiries@cfins.com
Fairfax: John Varnell, Vice President, Corporate Development at
(416) 367-4941
Independence Pet Group: Amanda Trcka, Marketing Communications
and PR Manager at (203) 231-9975 or atrcka@petpartners.com
Fairfax Financial (TSX:FFH)
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