The sale comes just weeks after the insurer shifted its general insurance operations in Taiwan as part of its efforts to reshape its global organisation and stem a decline in profitability.
Like Taiwan, Zurich said that although South Africa and Botswana remained attractive markets, there was limited scope for the company to achieve an operating scale that warranted continued investment.
“The acquisition is the ideal outcome for our customers, our employees, the group and the insurance markets in South Africa and Botswana,” said Edwyn O’Neill, chief executive of Zurich’s business in South Africa.
The sale, which will be a 100% acquisition, is subject to regulatory approval and is expected to be finalised by the end of this year.
Fairfax said in a statement that the acquisition will allow the financial services firm, listed on the Toronto Stock Exchange, to expand its commercial insurance presence in Africa.
“Africa is a continent that represents a long-term growth opportunity for Fairfax, but where we have traditionally done little primary commercial insurance business. This acquisition represents a key step in expanding our presence in this important market,” said Fairfax’s chief executive Prem Watsa.
Following large losses and two profit warnings in 2015, Zurich is in the process of undergoing a massive cost-cutting and efficiency drive aimed at saving over $1bn (£700m, €900m) that will impact around 8,000 of Zurich’s 55,000 employees by the end of 2018.
The insurer’s existing operations in Hong Kong and Singapore have emerged intact from the latest global review into the company’s operations.
However, one of world’s largest providers of general and life insurance products, said it is planning to scale-back its general insurance operations in the Middle East as part of the restructuring plan.