Prem Watsa arrived in Canada in 1972 with little money, worked his way through business school, and learned the insurance business
Inspired by Warren Buffett, Watsa used insurance floats as low-cost capital to invest wisely and grow steadily.
Through disciplined underwriting, counter-cyclical investing, and over 70 acquisitions, Fairfax grew into a $100 billion asset empire
In 1972, Prem Watsa emigrated to Canada from India with a small amount of cash in his pocket. Born in Hyderabad, Watsa came to Canada to build a better future, even though he had very little money. To pay for business school, he borrowed money, worked hard, and later enrolled in the MBA program at the University of Western Ontario. During this period, he supported himself by selling appliances door-to-door.
After completing his studies, Watsa worked as an investment analyst and later joined an insurance company, where he spent several years learning how the insurance business really worked. Instead of choosing a safe career path, he decided to think bigger.
While studying successful investors, Watsa became deeply influenced by Warren Buffett. He closely examined how Buffett built Berkshire Hathaway and identified a powerful idea at the center of Buffett’s success: insurance float.
Insurance float refers to the money insurance companies collect as premiums upfront, which they hold until claims are paid in the future. This money can be invested in the meantime, allowing the insurer to earn returns before it is actually owed. Buffett used this float through companies like GEICO, investing it in stocks such as Coca-Cola and entire businesses like BNSF Railway.
Watsa realized that insurance float was a form of low-cost, long-term capital, superior to loans or equity funding. In 1985, he decided to apply this strategy himself.
That year, Watsa acquired a small, nearly bankrupt Canadian trucking insurance company. He renamed it Fairfax Financial Holdings. His first step was not rapid growth, but discipline. He tightened underwriting standards and stopped issuing risky insurance policies simply to increase revenue. This focus on profitability worked. Within a few years, the insurance business became stable and started generating consistent float.
With this growing pool of capital, Watsa repeated the strategy. Over the next several decades, Fairfax acquired dozens of insurance companies across North America and around the world. Each acquisition followed the same pattern: buying distressed or undervalued insurers, fixing their operations, generating reliable float, and reinvesting that float wisely.
What truly set Watsa apart was how and when he invested. He often deployed Fairfax’s capital during market crashes, when prices were low and other investors were forced to sell. He invested in undervalued stocks, bonds, and entire businesses, taking a patient, long-term view.
By staying disciplined and avoiding speculation, Fairfax completed more than 70 acquisitions, built a diversified global insurance empire, and accumulated control over more than $100 billion in assets. Today, Fairfax is valued at around $41–44 billion USD and holds investments in companies such as BlackBerry and General Electric, alongside its extensive insurance and reinsurance operations.
Prem Watsa founded Toronto-based Fairfax Financial Holdings in 1985 and continues to serve as its Chairman and CEO. His journey from a new immigrant with little pocket change to one of the world’s most respected value investors is widely studied by institutional investors, private equity firms, and business schools.
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