Fairfax Financial Holdings Ltd., the Canadian insurer managed by Prem Watsa, announced on Thursday to buy all the shares of U. S. insurer Zenith National Insurance Corp. that it does not already, own in a deal worth about $1.4 billion.

According to Reuter's data Fairfax currently possesses an 8.23 percent stake in Zenith. Zenith specializes in workers' compensation and has faced hardships in the financial crisis as employers have laid off workers.

The acquisition, which represents a premium of more than 31 percent on Zenith's Wednesday closing share price, will make Zenith a wholly owned subsidiary of Toronto-based Fairfax.

The company reveals that it will raise $200 million in a share sale, however, still hopes to maintain about $1 billion in cash and marketable securities at the holding company level.

Fairfax Chief Executive Prem Watsa posted, "Zenith will continue to operate its business as it has always been run under Stanley's excellent leadership, with investment management centralized at Fairfax. All other Fairfax group companies will continue to operate independently on a decentralized basis".

Zenith shares registers a 30.5 percent rise to $37.74 shortly after the New York Stock Exchange opened, while Fairfax shares lowered 0.1 percent to C$367.99 on the Toronto Stock Exchange.