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A.M. Best Assigns Debt Rating to Fairfax Financial Holdings Limited's Forthcoming Senior Notes

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Posted on 14 Aug 2009

On Friday August 14, 2009, 9:35 am EDT

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has assigned a debt rating of “bbb” to the forthcoming CAD 400 million (USD 368 million) 7.5% senior unsecured fixed rate notes due 2019 to be issued by Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada) [NYSE: FFH; TSE: FFH]. The outlook for the rating is stable.

The proceeds will be utilized to augment Fairfax’s cash position, increase short-term investments and marketable securities at the holding company, retire outstanding debt and other corporate obligations and for general corporate purposes.

Fairfax’s pro-forma unadjusted debt-to-total capital ratio is expected to increase modestly to 26.8% following the transaction, compared to 23.7% at June 30, 2009 (U.S. GAAP). This calculation includes the debt of Odyssey Re Holdings Corp., a majority-owned public company capable of servicing its debt. The financial leverage and coverage ratios remain well within A.M. Best’s guidelines for its debt ratings.

A.M. Best notes that cash, short-term investments and marketable securities held at the holding company level totaled $880.1 million at June 30, 2009, affording the company additional financial flexibility.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.


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