Press Release - APRIL 30, 2019

AM Best Affirms Credit Ratings of Fairfax Financial Holdings Limited and Majority of Its Subsidiaries


CONTACTS:
 Jennifer Marshall, CPCU, ARM
Director
+1 908 439 2200, ext. 5327
jennifer.marshall@ambest.com

Michael Lagomarsino, CFA FRM
Senior Director
+1 908 439 2200, ext. 5810
michael.lagomarsino@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - APRIL 30, 2019
AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” and the various Long-Term Issue Credit Ratings (Long-Term IR) on the unsecured debt and preferred equity of Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada). AM Best also has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a+” of the subsidiaries of Odyssey Group Holdings, Inc. (Odyssey Group). The outlook of the Credit Ratings (ratings) is stable. Additionally, AM Best has assigned the FSR of A (Excellent) and the Long-Term ICR of “a+” to Newline Europe Versicherung AG (Newline AG) (Germany), which has been rated as a member of and added to the Odyssey Group. The outlook assigned to the ratings is stable. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of the members of the Crum & Forster Insurance Group (C&F), the members of the Zenith National Insurance Group (Zenith Group), the members of Northbridge Financial Corporation (Northbridge) (Toronto, Canada) and Wentworth Insurance Company Limited (Wentworth) (Barbados). In addition, AM Best has affirmed the Long-Term ICRs of “bbb” and the Long-Term IRs of Zenith National Insurance Corp. (headquartered in Woodland Hills, CA) and Fairfax (US) Inc. (Delaware), both of which are indirect wholly owned, downstream holding companies of Fairfax. The outlook of these ratings is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings of Odyssey Group reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect group member Odyssey Reinsurance Company’s (Odyssey Re) rank among the top global reinsurers, supported by its diversified global geographic footprint, which includes reinsurance and specialty primary insurance, large-line capacity and broad product offerings. These positive attributes are supported by Odyssey Re’s strongest risk-adjusted capitalization and strong operating performance. Somewhat offsetting these strengths is Odyssey Re’s challenging operating environment. The ratings assigned to Newline AG reflect its strategic importance to the group, as it provides the ability to continue servicing customers in the European Union post-Brexit. It also reflects the explicit support afforded to that entity via a net worth maintenance agreement and reinsurance agreement with its parent, Newline Insurance Company Limited.

The ratings of C&F reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect the benefits the group derives from its role within the larger Fairfax enterprise. C&F also benefits from its diversified and growing product portfolio and distribution networks. Management continues to focus on growth in its specialty business at appropriate rates, terms and conditions. Partially offsetting these positive rating factors are the competitive market conditions that persist in the commercial lines sector and relatively unfavorable expense levels.

The ratings of the Zenith Group reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also are enhanced by the benefits the group derives from its position in the Fairfax enterprise. Furthermore, the ratings reflect management’s expertise and commitment to maintaining underwriting discipline throughout market cycles. Zenith’s underwriting performance over many years has outperformed the workers compensation market. Somewhat offsetting these positive rating factors is Zenith’s concentration of written premium in California and Florida.

The ratings of Northbridge reflect the group’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings of Northbridge also acknowledge the group’s position within Canada’s commercial insurance market, diversified commercial lines franchise and strong broker distribution network. The group continues to benefit from improved and strong underwriting performance within its small to mid-market commercial segment. Partially offsetting these positive rating factors are competitive market conditions that persist in Canada’s commercial and personal lines segments, and the group’s relatively unfavorable expense levels.

The ratings of Wentworth reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also are enhanced by the benefits it derives from its position in the Fairfax enterprise. In addition, the ratings of Wentworth are supported by its historically profitable underwriting performance and loss reserve position. The company benefits from its investment portfolio, which includes a significant allocation of cash and short-term securities. Partially offsetting these positive rating factors are the company’s limited business profile and a concentration of property catastrophe exposures within its book of business, which subjects it to a substantial degree of volatility as evidenced over the past few years.

A complete listing of Fairfax Financial Holdings Limited and its subsidiaries’ FSRs, Long-Term ICRs and Long-Term IRs also is available.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.


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