{"id":22645,"date":"2013-07-31T22:25:34","date_gmt":"2013-08-01T02:25:34","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=22645"},"modified":"2013-07-31T22:25:34","modified_gmt":"2013-08-01T02:25:34","slug":"ffh-sp-revises-outlook-to-stable-from-positive","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=22645","title":{"rendered":"FFH: S&amp;P Revises Outlook to Stable from Positive"},"content":{"rendered":"<p>Standard &#038; Poor&#8217;s <a href=\"http:\/\/www.standardandpoors.com\/prot\/ratings\/articles\/en\/us\/?articleType=HTML&#038;assetID=1245355298934\">has announced<\/a>:<\/p>\n<blockquote>\n<ul>\n<li>Following a review under our revised insurance criteria, we are affirming our ratings on Fairfax and its core subsidiaries.\n<li>The ratings predominantly reflect our view of the group&#8217;s strong business and financial risk profiles, based on its strong competitive position and very strong capital and earnings.\n<li>We have revised our outlook to stable from positive based on our view that Fairfax will gradually improve its underwriting results and fixed-charge coverage metrics but not enough to warrant an upgrade in the near term.<\/ul>\n<p><b>&#8230;<\/b><br \/>We assess Fairfax&#8217;s capital and earnings as very strong, which we expect to continue in our base-case economic scenario despite the current low interest rates. Its capital adequacy according to our proprietary capital model is currently at the lower end of the &#8216;AA&#8217; category, which is somewhat lower than historically mainly because of the reduction in interest rates used to discount loss reserves. The group&#8217;s exposure to natural peril and man-made catastrophes and uncertainty related to its substantial casualty reserves (both ongoing and runoff) translate into a moderate risk position score, partially offsetting its very strong capital adequacy. Shareholders&#8217; equity (including preferred shares) totaled $8.9 billion as of year-end 2012, up from $8.4 billion as of year-end 2011. We expect Fairfax to maintain its capital adequacy at an &#8216;AA&#8217; level.<br \/><b>&#8230;<\/b><br \/>We regard Fairfax&#8217;s risk position as moderate. The group has minimal exposure to employee benefit liabilities. Although its exposure to high risk assets is at 70% of total adjusted capital, Fairfax carries substantial cash and liquid fixed-income securities to counterbalance the volatility of equities. About 75% of the portfolio is invested in cash and fixed-income securities with a weighted average rating of &#8216;A+&#8217;. But we are concerned about potential capital and earnings volatility due to its exposure to property catastrophe losses, its willingness to take significant concentrated investment positions to achieve above-average returns, and its asbestos and environmental exposure.<\/p><\/blockquote>\n<p>The now obsolete Positive Outlook was <a href=\"http:\/\/www.prefblog.com\/?p=16826\">reported on PrefBlog<\/a> when it came into effect &#8230;. nearly two years ago!<\/p>\n<p>Fairfax has the following preferreds outstanding: FFH.PR.C, FFH.PR.E, FFH.PR.G, FFH.PR.I AND FFH.PR.K. All are FixedResets; all are relegated to the Scraps index on credit concerns.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Standard &#038; Poor&#8217;s has announced: Following a review under our revised insurance criteria, we are affirming our ratings on Fairfax and its core subsidiaries. The ratings predominantly reflect our view of the group&#8217;s strong business &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-22645","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/22645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22645"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/22645\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}