Fairfax Financial Holdings Ltd. and Cunningham Lindsey Group Inc. have entered into an agreement with private equity funds managed by Stone Point Capital LLC that will see Cunningham Lindsey taken private.

Pursuant to the agreement, Stone Point will acquire a 51% interest in a newly-formed holding company that will own the operating businesses of Cunningham Lindsey for approximately $80 million. Fairfax will invest approximately $30 million and senior management of Cunningham Lindsey and its operating companies will be investing as well. The proceeds from these investments will be used to repay Cunningham Lindsey’s $72.8 million unsecured term loan facility and for working capital.

In order to satisfy the condition to the Stone Point investment that Fairfax be the sole shareholder of Cunningham Lindsey, Fairfax will make a cash offer, by way of an amalgamation transaction, of approximately $10 million — which is included in the $30 million — to acquire all of the outstanding subordinate voting shares of Cunningham Lindsey that it does not currently own.

Upon completion of the foregoing going-private transaction and completion of the above-mentioned investments, Fairfax will hold an approximately 45% interest in the operating companies of Cunningham Lindsey through its 100% ownership of Cunningham Lindsey; and senior management of Cunningham Lindsey and its operating companies will hold an approximately 4% interest in these operating companies.

“Since 1985, Stone Point has raised more than $10 billion in committed capital to make investments in the global insurance and financial services industries and has invested in more than forty insurance and financial services companies,” said Jan Christiansen, Cunningham Lindsey’s president and CEO. “Bringing in a new partner of this calibre with a proven track record of success will help us to accelerate our strategy for growth.”

A special meeting of shareholders of Cunningham Lindsey will be held to consider the proposed transaction, which is also subject to applicable regulatory approvals and customary closing conditions.

“The personal investment by senior management reflects their confidence in this transaction and their commitment to Cunningham Lindsey, and ensures stability within the organization and continuity for our clients. Cunningham Lindsey will continue to function as five operating companies, with our current management teams and organizational structure remaining in place,” stated Christiansen.

On completion of the proposed transaction, anticipated to occur by mid- December, Cunningham Lindsey’s subordinate voting shares will be delisted from the Toronto Stock Exchange. The company’s $125 million of 7% unsecured Series “B” debentures due June 16, 2008 will remain outstanding.