Confirming earlier reports, the Ontario Municipal Employees Retirement System and Fairfax Financial Holdings Ltd. confirmed that the pension plan committed $1 billion in financing toward Fairfax's pending acquisition of Allied World Assurance Co. Holdings AG.

The pension plan agreed to invest $1 billion to indirectly acquire approximately 21% of the issued and outstanding shares of Allied World Assurance, simultaneously with Fairfax Financial's acquisition of the Switzerland-based insurer, which is expected to close in the second quarter.

Fairfax Financial is in ongoing talks with other potential third-party investors regarding their participation in the Allied World transaction. Securing partnerships with third parties for the acquisition is expected to allow the Toronto-based insurer to issue fewer shares for the cash-and-stock-deal.

"OMERS is a proven, long-term investor and the commitment by it will allow us to increase the cash component of our $54.00 per share offer to Allied World shareholders and gives us the flexibility to potentially buy back their interest over 5-7 years' time." Fairfax Financial Chairman and CEO Prem Watsa said in a news release.