Fitch: Zenith Remains on Watch Negative after Closing of Fairfax Acquisition; No Action on Fairfax

CHICAGO--(BUSINESS WIRE)--Fitch's ratings of Zenith National Insurance Corp. (Zenith) remain on Watch Negative following the closing of its acquisition by Fairfax Financial Holdings Limited (Fairfax). The ratings on Fairfax are unaffected by this transaction.

The Rating Watch will be resolved pending a more comprehensive review of Fairfax and its subsidiaries, including Zenith, in the context of Fitch's group rating methodology.

Fitch maintains a Negative Rating Watch on the following ratings of Zenith and subsidiaries:

Zenith National Insurance Corp.
-- Issuer Default Rating (IDR) 'BBB+'.

Zenith National Insurance Capital Trust I
-- $58.5 million 8.55% trust preferred securities due Aug. 1, 2028 at 'BB+'.

Zenith's insurance subsidiaries:
Zenith Insurance Company
ZNAT Insurance Company
-- Insurer Financial Strength (IFS) rating 'A'.

Fitch currently rates Fairfax and subsidiaries as follows with a Stable Rating Outlook:

Fairfax Financial Holdings Limited (Fairfax)
-- IDR 'BBB-';
-- Senior debt 'BB+';
-- $181 million 7.75% due April 15, 2012 'BB+';
-- $91 million 8.25% due Oct. 1, 2015 'BB+';
-- $283 million 7.75% due June 15, 2017 'BB+';
-- $144 million 7.375% due April 15, 2018 'BB+';
-- CDN$400 million 7.5% due Aug. 19, 2019 'BB+';
-- $92 million 8.3% due April 15, 2026 'BB+';
-- $91 million 7.75% due July 15, 2037 'BB+'.
-- CDN$250 million series C preferred shares at 'BB-';
-- CDN$200 million series E preferred shares at 'BB-'.

Fairfax, Inc.
-- IDR 'BBB-'.

Odyssey Re Holdings Corp.
-- IDR 'BBB';
-- $50 million series A unsecured due March 15, 2021 'BBB-';
-- $50 million series B unsecured due March 15, 2016 'BBB-';
-- $40 million series C unsecured due Dec. 15, 2021 'BBB-';
-- $225 million 7.65% due Nov. 1, 2013 'BBB-';
-- $125 million 6.875% due May 1, 2015 'BBB-';
-- $50 million series A preferred shares 'BB';
-- $47 million series B preferred shares 'BB'.

Odyssey America Reinsurance Corp.
-- Insurer Financial Strength (IFS) 'A-'.

Crum & Forster Holdings Corp.
-- IDR 'BB+';
-- $330 million 7.75% due May 1, 2017 'BB'.

Crum & Forster Insurance Group:
Crum and Forster Insurance Company
Crum & Forster Indemnity Company
The North River Insurance Company
United States Fire Insurance Company
-- IFS 'BBB'.

Northbridge Financial Insurance Group:
Commonwealth Insurance Company
Commonwealth Insurance Company of America
Federated Insurance Company of Canada
Lombard General Insurance Company of Canada
Lombard Insurance Company
Markel Insurance Company of Canada
Zenith Insurance Company (Canada)
-- IFS 'BBB+'.

These rating actions reflect the application of Fitch's current criteria which is available on Fitch's web site at 'www.fitchratings.com' and specifically include:

-- 'Insurance Rating Methodology' (Dec. 29, 2009);
-- 'Non-Life Insurance Rating Methodology' (March 24, 2010).

Additional information is available at 'www.fitchratings.com'.

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