Prem Watsa’s €70 million investment in FBD is a timely fillip for the embattled insurer which is currently going back to its farming roots.

It is a trademark move by the opportunistic Canadian who was one of the North American investors who invested so successfully in Bank of Ireland along with Wilbur Ross.

Fairfax has started selling down its stake in Bank of Ireland and is not seen as long-term holder holder of the bank which does not fit snugly with its core activities: property and casualty insurance and reinsurance and also investment management.

FBD is a much better fit and Watsa may have longer-term ambitions. The deal is a complex one, but should Watsa convert his bond into shares he would end up owning around 19 per cent of the insurer, putting him in a strong position in the event of an uplift.

However, he has to hang around for three years before he can convert – unless the shares – currently €6.75 – remain above €8.50 for sustained period. This is far from likely given the mountain that FBD has to climb. The company does not currently see itself making profits until “the end of 2016”.

But by the time the three years are up Watsa will have a pretty good idea as to whether the company has been successfully turned around. Questions about the stability of the Irish insurance market will also have been resolved and the longer-term outlook for the economy should be clearer.

In the meantime he will be getting a 7 per cent a year coupon on his €70 million. Smart move.