FFH: S&P Assigns Positive Outlook

Standard & Poor’s has announced:

• Fairfax continues to successfully leverage its growing insurance business platform and related balance sheet assets to deliver above-average long-term investment performance for the consolidated organization.
• We believe the company’s consolidated competitive profile is improving and better positioned to drive profitable future growth.
• Therefore, we are revising our outlook on ultimate parent Fairfax Financial Holdings and its core insurance and reinsurance companies to positive from stable.
• We are affirming our ‘BBB-‘ counterparty rating on Fairfax Financial Holdings and its intermediary holding companies and our ‘A-‘ financial strength ratings on its core insurance operating companies.

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The positive outlook reflects the 1-in-3 likelihood of a one notch upgrade on FFH’s core insurance and reinsurance operating companies in the next 24 months.
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We could lower the ratings on Fairfax Group if its consolidated capital adequacy decreases below a very strong level, if the company reports major adverse reserve development–a development of more than two percentage points of prior year net loss reserves–if earnings volatility increases over a multiyear period excluding the effect of the equity hedge and Consumer Price Index-linked securities, or if its core subsidiaries’ underwriting performance consistently lags the underwriting performance of the industry.

Fairfax has the following preferreds outstanding: FFH.PR.C, FFH.PR.E, FFH.PR.G and FFH.PR.I. All are FixedResets; all are relegated to the Scraps index on credit concerns.

S&P rates the preferreds P-3; DBRS rates Pfd-3.