* Runoff unit to buy Brit Insurance at a discount to book value
* Brit Insurance had net reserves of $1.3 bln
* Expects deal to close in fourth quarter
June 18 (Reuters) - Canada's Fairfax Financial Holdings Ltd's RiverStone runoff unit will buy Brit Insurance Ltd of London from Brit Group for about $300 million to expand in the reinsurance market.
Brit Insurance, which wrote UK domestic as well some international insurance and reinsurance, was placed in runoff earlier this year.
"We continue to look for opportunities to grow profitably in the runoff area," Fairfax's Chief Executive Prem Watsa said in a statement.
In a runoff, an insurance company stops writing new business and only manages the existing book until all the policies in that book expire.
Prem Watsa, an Indian-born Canadian, has built a reputation as a shrewd contrarian investor by moves such as betting against the U.S. housing market in the last decade and reaping billions when the market collapsed.
Watsa, known as the "Warren Buffett of the North", took control of Fairfax in 1985 and sits on the board of Research in Motion . He also holds an 18.5 percent interest in pulp and paper company Resolute Forest Products Inc .
The Canadian property and casualty insurer said Brit Insurance had net reserves of about $1.3 billion and cash and invested assets of about $1.9 billion at March 31.
RiverStone will buy Brit Insurance at a discount to its book value, said Fairfax, which put the UK insurer's book value at about $530 million.
The deal, likely to be funded by internal resources at RiverStone, is expected to close in the fourth quarter of 2012.
Fairfax last month said it would buy Thomas Cook Group Plc's 77 percent stake in its India operations for about $150 million.
Fairfax shares closed at C$390.02 on Friday on the Toronto Stock Exchange.