The Western Investment Company of Canada Limited (TSXV: WI)
(“
Western” or the “
Corporation”)
today filed Management’s Information Circular (the
“
Circular”) for its upcoming Annual General and
Special Meeting of Shareholders taking place on December 6, 2024 at
11:00 AM Mountain Time (the “
Meeting”).
Western shareholders are urged to read and carefully consider
the contents of the Circular. The Circular is being mailed to
shareholders along with other meeting materials and can also be
accessed through Western’s website (www.winv.ca) or Sedar+
(www.sedarplus.ca).
A Letter to Shareholders From Scott Tannas
Dear Fellow Shareholders,
On behalf of Western’s Board of Directors and Management Team, I
want to thank you for the overwhelming support we have received to
shift your company from a private equity investment platform to a
property and casualty insurance and investment holding company.
Your support has translated into a very well received Private
Placement that was subsequently up-sized to $30 million to drive
your company’s growth in the insurance space. Our Rights Offering
also appears to be enjoying a strong reception in the market. We
are collectively excited about the shareholder value we can create
over the long-term as a property and casualty insurance and
investment holding company, and the tremendous opportunities this
shift will unlock.
Focusing on What We’re Best AtOur shift towards
an insurance focus began with a small company we funded as a
private equity investment back in 2019 called the Fortress
Insurance Company (“Fortress”). It was a fully
licensed, but under-utilized, insurance company doing about $0.4
million per year in business for one client. From there, under
Shafeen Mawani’s leadership, Fortress grew its gross written
premiums at a compound annual growth rate (“CAGR”)
of more than 170% between 2019 and 2023, all while keeping loss
ratios low and maintaining very high capital reserves. (Fortress
expects the CAGR of its gross written premiums to moderate to 112%
for full-year 2024 compared with 2020)
Given the outstanding success of Fortress, our fundamental
background in insurance, and all of the strong relationships we
have built along the way, about a year ago we decided it was time
to focus on what we do best.
Establishing a Controlling Interest in Fortress
One of our stated goals was to consolidate Western’s ownership of
Fortress to at least 51%. We are particularly gratified that not
only have 100% of Fortress shareholders agreed to tender their
shares, but the vast majority of them accepted shares in Western.
This leaves us with more available cash to build Fortress and
pursue other accretive opportunities as we move forward. As of the
date of this letter, Western currently owns 83.57% of Fortress with
agreements to acquire the remaining 16.43%.
Managing the Float for Enhanced ReturnAt around
the same time we decided to focus on insurance, we met Paul Rivett.
Paul’s name is familiar to many given his time and success at
Fairfax Financial. Paul joined Fairfax in 2003 and served as
President between 2013 and 2020. Over this period, Paul established
his reputation as a trusted builder of partnerships and
relationships with a value investor’s philosophy.
We very quickly began pursuing the idea of teaming up with Paul
because of his value focus, conservative float management
philosophy, impeccable track record of success, integrity, and how
his vision aligned with our aspirations for Western.
The irony to us is that float management seems antithetical to
most insurance companies who hand their investment management over
to an outside agency despite the significant returns that can be
achieved with modest effort, and a highly conservative strategy.
That is why several industry leaders have pursued this model. Given
their enormous success, it’s puzzling that only a handful of people
see that these two separate activities - insurance underwriting and
float management - belong in one business. While at Fairfax, Paul
was at the center of this approach and their value investing
philosophy. He has seen it, knows it, lived it, and succeeded at
it. We are confident he can do the same at Western.
Growth Opportunities and Capital Allocation The
advantage of being a smaller company is that even modest
opportunities can meaningfully increase our earnings and book value
per share. In other words, small gains in both investments and
acquisitions can substantially increase shareholder value. With our
collective years of experience and trusted relationships, we can
surface bespoke opportunities that will create considerable
shareholder value. We are focused on a mix between prudent organic
growth and accretive acquisitions, which we think will grow
Fortress to $100 million per annum in written premiums by 2028,
while maintaining low loss ratios and excess capital reserves.
We also recognize that there are additional opportunities
arising from individuals that can bring specialized expertise and
books of business. In recent months we have received a number of
calls from established brokers, producers, and underwriters that
want to work in, and with, a more entrepreneurial and nimbler group
like Western. Hiring additional talent and acquiring books of
business will meaningfully contribute to our growth.
Currently, most of the assets we aim to acquire are not “for
sale”, but the addressable opportunity set is quite large. Our team
is compiling and prioritizing a comprehensive database of potential
bespoke opportunities. In Canada, out of approximately 100 small
insurers in the market, both domestic and internationally owned, we
are conducting a comprehensive 360-degree analysis. We will
methodically monitor and maintain detailed proprietary information
on these selected targets. At the outset, we are emphasizing a
focus on specialty lines of insurance business, $10 to $30 million
in annual premiums, with a strategic moat. While these
opportunities may fall outside the typical acquisition scope of
major insurance firms, they hold significant potential for us.
Their smaller size allows for more reasonable valuation multiples.
However, we are not interested in underperforming companies or
mediocre businesses, even if they are available at substantial
discounts. We are only seeking good businesses at fair prices.
Similarly with respect to investing the insurance float, we do
not need to pursue overly ambitious goals or speculate on
macro-economic trends to achieve successful compound returns. As
Paul likes to say, “we’ll keep it on the fairway”. It takes a lot
of work to earn a dollar and, when we do, our first priority will
be protecting and growing that dollar prudently.
Finally, regarding our other existing private equity
investments, while our focus will shift to insurance, our approach
is to ensure that our actions do not negatively impact the other
investments in our portfolio. We have invested significant effort
and resources in guiding these private equity investments through
the challenges posed by COVID-19, and we are committed to
preserving and building on that progress in order to maximize their
value for Western shareholders. We will continue our good
stewardship of these outstanding businesses.
While Western’s shift towards insurance is no longer reliant on
a vote at the Annual General and Special Meeting, we invite you to
exercise your rights as a shareholder and vote your shares on
December 6, 2024. Thank you again for your overwhelming support. We
are grateful for your trust, and look forward to our shared
success.
Sincerely,
Scott Tannas
Meeting DetailsThe Meeting will take place on
December 6, 2024 at 11:00 AM Mountain Time at:
The offices of DS Lawyers Canada LLP,Suite 800,
Dome Tower, 333 – 7th Avenue S.W., Calgary, Alberta T2P 2Z1
Registered shareholders and duly appointed proxyholders will be
able to participate, vote and submit questions at the Meeting.
How to VoteWestern encourages shareholders to
vote in advance of the Meeting using either the form of proxy or
the voter instruction form that will be mailed to them with the
Meeting materials and submitting them by no later than 11:00 a.m.,
Mountain Time, on December 4, 2024.
About The Western Investment Company of
Canada Limited Western is a unique publicly traded,
private equity company founded by a group of successful Western
Canadian businesspeople, and dedicated to building and maintaining
ownership in successful Western Canadian companies, and helping
them to grow. Western's shares are traded on the Exchange under the
symbol WI.
For more information on Western, please visit its website at
www.winv.ca.
To add yourself to our email news alert subscription please
visit this link.
CONTACT INFORMATION - The Western Investment Company of Canada
Limited
Scott Tannas President and Chief Executive Officer (403)
652-0408 or stannas@winv.ca
Advisories
This document contains forward-looking statements. More
particularly, this document contains statements concerning: the
completion of and potential uses of proceeds from the Private
Placement, the Rights Offering, and the future business plans and
opportunities of Western, including potential acquisition
opportunities. Readers are cautioned that the foregoing list of
factors should not be construed as exhaustive.
The forward-looking statements are based on certain key
expectations and assumptions made by Western, including
expectations and assumptions concerning the ability of Western to
successfully implement its strategic plans and initiatives, the
timing of receipt of required regulatory approvals (including TSXV
approval) and third party consents and the satisfaction of other
conditions to the completion of the Private Placement.
Readers should also refer to the forward-looking statements and
associated assumptions and risk factors contained in Western's
August 30, 2024 news release regarding the Private Placement and
the other transactions referred to therein. The transactions
referred to in Western's August 30, 2024 news release (including
the Rights Offering) remain subject to TSXV approval.
Although Western believes that the expectations and assumptions
on which the forward-looking statements made by Western are
reasonable, undue reliance should not be placed on the
forward-looking statements because no assurance can be provided
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, risks that required TSXV, regulatory and third party
approvals and consents are not obtained on terms satisfactory to
the parties within the timelines provided for, or at all, and risks
that other conditions to the completion of the Private Placement
are not satisfied on the required timelines or at all, the ability
of management to execute its business strategy, and the impact of
general economic conditions in Canada and the United States. A
description of additional assumptions used to develop such
forward-looking information and a description of risk factors that
may cause actual results to differ materially from forward-looking
information can be found in Western's disclosure documents on the
SEDAR+ website at www.sedarplus.ca.
The forward-looking statements contained in this news release
are made as of the date hereof and Western undertakes no obligation
to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
This news release also contains Future-oriented Financial
Information ("FOFI") about prospective results of
operations, including gross written premiums of Fortress, which are
subject to the same assumptions, risk factors, limitations, and
qualifications as set forth in the above paragraphs. FOFI contained
in this news release was made as of the date of this news release
to provide information about management's current expectations and
plans relating to the future. Readers are cautioned that such
information may not be appropriate for any other purpose. Western
disclaims any intention or obligation to update or revise any FOFI
contained in this news release, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy securities in the United States,
nor shall there be any sale of the securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful. The
Warrants and underlying Common Shares and the Common Shares being
offered have not been, nor will they be, registered under the 1933
Act or under any U.S. state securities laws, and may not be offered
or sold in the United States absent registration or an applicable
exemption from the registration requirements of the 1933 Act, as
amended, and applicable state securities laws.
"Neither the TSX Venture Exchange nor its Regulatory
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release."
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