CO-OP RESEARCH PROJECT Case Study Solution
1.IDENTIFICATION OF COMPANIES:
- Fairfax Financial Holdings Ltd.
- ONEX Corporation.
- CI Financial Corporation.
2. INFORMATION OF IDENTIFIED COMPANIES:
Information regarding the above mentioned companies are discussed below.
· FAIRFAX FINANCIAL HOLDINGS LIMITED:
Address: Suite 800, 95 Wellington Street West, Toronto, Ontario, Canada (M5J 2N7)
· CI FINANCIAL CORPORATION:
Address: 2 Queen Street East, Twentieth Floor Toronto, Ontario (M5C 3G7)
3. CORE VALUES OF THE COMPANIES:
· FAIRFAX FINANCIAL HOLDINGS LIMITED:
- Honesty and integrity in relationship management process which will never be compromised.
- Focused on result oriented work rather than being political.
- Loyalty and team work of employees is valued at Fairfax.
- Always looks at opportunities but emphasizes downside protection and looks for ways to minimize the loss of capital.
- Fairfax is entrepreneurial and encourages calculated risk taking.
- Fairfax believes in having fun at work.
- ONEX Corporation follows financial alignment i.e. they don’t raise pools of capital in which they are not the significant investor.
- Invests in opportunity which are credible with solid reasoning. They don’t just invest client’s money to earn brokerage.
- To maintain crystal clear records and maintain good relationship with clients.
- ONEX invests with client as well to build the relationship of trust.
- ONEX tries to ensure persistent investment returns.
- ONEX’s core value is to follow policies related to code of the business conduct and ethics.
CI FINANCIAL CORPORATION:
- To anticipate and respond to changing needs of Canadians.
- Offers investors and institutionalizes a comprehensive and innovative selection of investment product and services.
- To provide exceptional services, strong performance and actively managed investment solutions.
- To treat their employees and business partners with respect and consideration.
- To support the communities across Canada and to reduce people’s impact on the environment.
- To ensure responsibility thorough in-house responsible investment team.
4. PRODUCT OR SERVICES OFFERED BY THESE
- Fairfax Financial Holdings limited is a holding company that does investments in companies and make those companies its subsidiaries. Fairfax Financial Holdings limited is engaged in property and casualty insurance, reinsurance and investment management businesses. These services are offered to individuals as well as institutional clients so they can mitigate the risk related to the damages of their properties.
· PROPERTY INSURANCE:
Property insurance is the policy offered by Fairfax Financial Holdings limited in which it offers their clients an insurance policy for properties including homes, buildings and offices. The insurance policy offers under properties insurance such as earthquake insurance, renters insurance, home owner insurance, flood insurance and fire insurance. If a claim occurs i.e. any incident happens then the policy holder will be entitled to total cost to recover that property or the replacement cost of the property through property insurance policy.
· CASUALTY INSURANCE:
Casualty insurance policy is offered by companies which protects companies from paying its employees if any injuries or theft happens to the employee. Medical insurance is also included in this type of insurance. This insurance policy is also applied on accidents which happen to the policy holder i.e. if a car accident takes place then the policy holder does not have to pay the damages incurred due to the accident but those damages will be paid by the insurance companies on the behalf of the policy holders. Companies often buy casualty insurance for their employees against policy premiums which is an income for insurance company once they are earned.
The subsidiaries of Fairfax Financial Holdings limited also offer reinsurance policy. In reinsurance policy the insurance company protects itself from paying a large obligation to the policy holder. This protection is obtained by the insurance company by buying an insurance from another company and become policy holder itself. In this scenario a policy premium is paid by the insurance company that has sold the policy to another insurance company that has bought the policy. This situation often rises if the company realizes that it will not be able to cover the damages or to protect themselves from loss which occurs by paying for damages of policy holders
· INVESTMENT MANAGEMENT:
Investment management service is offered by all the three companies mentioned above. These service includes managing individuals and institutional clients’ accounts in the form of allocating their investments in different pool of investment which includes equities, bonds, mutual funds and private equity funds. In the process of managing investments, investment management companies charge a certain percentage of management fee annually and a percentage on return on investment to clients. These fees are usually charged for managing the funds of their clients. Investment management companies also manage pension funds accounts of companies as well and charge higher management fee from them because of their nature of demanding high return on investment. To manage all sorts of accounts; investment management companies usually hire highly educated, skilled and experienced employees as fund managers, portfolio managers and research analysts who specifically do researches on different asset class.
- ONEX Corporation is an asset management company that focuses on managing a private equity fund as a whole. The funds transferred in private equity fund or hedge fund can only be redeemed after specific time period because of huge portfolio disbursement by firm in various asset classes which includes less liquid assets as well. Although investors can redeem their fund before the timeline provided by the company at higher transaction cost.
· PRIVATE EQUITY FUND:
Managing hedge fund or private equity fund is also one of the services provided by the investment management or asset management companies. Private equity is a fund which is not listed on the public exchange. In this type of service, company usually offers specific clients to invest in their funds. These particular clients are usually high net worth clients who can afford to invest large sum of money i.e. minimum $1 million dollar of investment required by the private equity fund or hedge fund. Investor motive of paying high management fees and high fees on profit is to get high returns. The private equity fund is illiquid in nature because of its investment in the diversified asset classes which includes assets under management that are highly illiquid such as investment in the startup companies in the form of venture capital
- CI Financial Corporation is an investment management company with 50 years of history with qualified, skilled and experienced professional. CI Financial manages investments of their clients and provides investment consultant services. CI Financial Corporation focuses on providing best investment advisory and consultancy services to its clients. CI invests in different companies regarding investment advisory and consultancy to cater distinguished services to their clients. CI also provides brokerage services to their clients with an addition of advisory services as well.
Investment management companies offers services to clients by creating a pool of investment allocated to mutual funds. Different mutual funds are designed by analyzing clients’ necessities, risk appetite and required return. After identifying those needs or necessities, the clients’ investments are allocated to mutual funds according to their requirements and investment policy statement. Through investment policy statement clients’ risks and return characteristics are determined and then their funds are allocated to mutual funds after considering their requirements mentioned in investment policy statement. Mutual funds allocate clients’ fund to diversified asset classes such as equities, bonds and T-bills with the intention of providing return on investment to investors………
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