The Ontario Municipal Employees Retirement System has agreed to contribute $1 billion in financing toward Fairfax Financial Holdings Ltd.'s pending acquisition of Allied World Assurance Co. Holdings AG, Bloomberg News reported, citing "people familiar with the matter."

Bloomberg News earlier reported that Fairfax had sought support from the Canadian pension fund to support the $4.9 billion cash-and-stock deal.

Fairfax has said that it could limit dilution of shares if it could get partners to finance $2.7 billion of the purchase price. In this regard, it is talking to other group of funds to contribute the remaining $1.7 billion in financing. Under the terms of the merger agreement, cash financing of the total $2.7 billion will reduce the stake of Allied shareholders in the company to 10%, according to the report.