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

OLDWICK, N.J.--()--AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) 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+” (Excellent) of the subsidiaries of Odyssey Group Holdings, Inc. (Odyssey Group). Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) of the members of the Crum & Forster Insurance Group (C&F). In addition, AM Best has affirmed the Long-Term ICRs of “bbb” (Good) and the Long-Term IRs of Zenith National Insurance Corp. (headquartered in Woodland Hills, CA) and Fairfax (US) Inc. (Delaware), both of which are indirectly, wholly owned downstream holding companies of Fairfax. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and Long-Term IRs.)

Concurrently, AM Best has removed from under review with developing implications and upgraded the FSR to A (Excellent) from A-(Excellent) and the Long-Term ICR to “a” (Excellent) from “a- (Excellent) of Monitor Life Insurance Company of New York (Monitor Life) (New York, NY). The outlook assigned to the ratings is stable. Monitor Life was acquired recently by C&F to serve a strategic role in the expansion of the group’s accident and health (A&H) business into additional states and products.

The ratings of Odyssey Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM). The ratings also reflect group member Odyssey Reinsurance Company’s (Odyssey Re) inclusion among AM Best’s top 50 global reinsurer ranking, supported by the group’s diversified global geographic footprint, which includes reinsurance and specialty primary insurance, large-line capacity and broad product offerings. In recent years, Odyssey has continued to produce favorable underwriting returns while continually expanding their business profile. This continued development drove a change in the group’s business profile assessment to favorable from neutral. Odyssey Group’s ratings also reflect a notch of drag, due to Fairfax’s higher-than-average financial leverage and equity investment allocations that exposes itself to potential earnings and balance sheet volatility.

The ratings of C&F reflect its balance sheet strength, which AM Best assesses 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’s operating results have displayed increased stability in recent years, mostly due to the group’s continued expansion of its A&H and surety business, which have produced consistently favorable underwriting returns.

The ratings of Monitor Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM, as well as the financial support and strategic importance to its parent, United States Fire Insurance Company, part of C&F. In the near term, Monitor Life’s operating results are expected to be breakeven as the company produces modest amounts of direct written business with a limited product portfolio as it builds scale. Monitor Life currently has a limited portfolio of group A&H products with licenses in 28 geographies and plans to expand nationwide. Additionally, products will be distributed through the Crum & Forster nationwide distribution network. Monitor Life’s ERM program is coordinated by the parent organization.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” have been affirmed with stable outlooks for the following subsidiaries of the Odyssey Group Holdings, Inc.:

  • Odyssey Reinsurance Company
  • Hudson Insurance Company
  • Hilltop Specialty Insurance Company
  • Hudson Excess Insurance Company
  • Greystone Insurance Company
  • Newline Insurance Company Limited
  • Newline Europe Versicherung AG

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed with stable outlooks for the following members of Crum & Forster Insurance Group:

  • Crum & Forster Indemnity Company
  • Crum and Forster Insurance Company
  • The North River Insurance Company
  • United States Fire Insurance Company
  • Crum & Forster Specialty Insurance Company
  • First Mercury Insurance Company
  • American Underwriters Insurance Company
  • Seneca Insurance Company, Inc.
  • Crum & Forster SPC
  • Seneca Specialty Insurance Company

The following Long-Term IRs have been affirmed with stable outlooks:

Fairfax (US) Inc.—
-- “bbb” (Good) on USD 300 million 4.875% senior unsecured debentures, due 2024

Zenith National Insurance Corp.—
-- “bbb-” (Good) on USD 77.3 million 8.55% subordinated deferrable debentures, due 2028

Fairfax Financial Holdings Limited—
-- “bbb” (Good) on CAD 350 million 4.95% senior unsecured notes, due 2025
-- “bbb” (Good) on USD 125 million 8.3% senior unsecured notes, due 2026
-- “bbb” (Good) on CAD 450 million 4.7% senior unsecured notes, due 2026
-- “bbb” (Good) on CAD 650 million 4.25% senior unsecured notes, due 2027
-- “bbb” (Good) on EUR 750 million 2.75% senior unsecured notes, due 2028
-- “bbb” (Good) on USD 600 million 4.85% senior unsecured notes, due 2028
-- “bbb” (Good) on CAD 500 million 4.23% senior unsecured notes, due 2029
-- “bbb” (Good) on USD 650 million 4.625% senior unsecured notes, due 2030
-- “bbb” (Good) on USD 600 million 3.375% senior unsecured notes, due 2031
-- “bbb” (Good) on CAD 850 million 3.95% senior unsecured notes, due 2031
-- “bbb” (Good) on USD 125 million 7.75% senior unsecured notes, due 2037
-- “bb+” (Good) on CAD 187.9 million Series C cumulative, five-year rate reset preferred shares
-- “bb+” (Good) on CAD 62.1 million Series D cumulative, floating rate preferred shares
-- “bb+” (Good) on CAD 136.0 million Series E cumulative, five-year rate reset preferred shares
-- “bb+” (Good) on CAD 52.5 million Series F cumulative, floating rate preferred shares
-- “bb+” (Good) on CAD 193.0 million Series G cumulative, five-year rate reset preferred shares
-- “bb+” (Good) on CAD 57.0 million Series H cumulative, floating rate preferred shares
-- “bb+” (Good) on CAD 260.5 million Series I cumulative, five-year rate reset preferred shares
-- “bb+” (Good) on CAD 39.5 million Series J cumulative, floating rate preferred shares
-- “bb+” (Good) on CAD 237.5 million Series K cumulative, five-year rate reset preferred shares
-- “bb+” (Good) on CAD 230 million Series M cumulative, five-year rate reset preferred shares

The following indicative Long-Term IRs have been affirmed on the universal shelf registration with stable outlooks:

Fairfax Financial Holdings Limited—
-- “bbb” (Good) on senior unsecured debt
-- “bbb-” (Good) on subordinated debt
-- “bb+” (Good) on preferred shares

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 Guide to 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Dan Hofmeister
Senior Financial Analyst
+1 908 439 2200, ext. 5385
dan.hofmeister@ambest.com

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

Gregory Dickerson
Associate Director
+1 908 439 2200, ext. 5161
gregory.dickerson@ambest.com

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

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Contacts

Dan Hofmeister
Senior Financial Analyst
+1 908 439 2200, ext. 5385
dan.hofmeister@ambest.com

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

Gregory Dickerson
Associate Director
+1 908 439 2200, ext. 5161
gregory.dickerson@ambest.com

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