A.M. Best Affirms Financial Strength Ratings of Odyssey Re Holdings Corporation's Reinsurance and Insurance Subsidiaries and Assigns Debt Ratings.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 20, 2002 A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Odyssey Re Holdings Corporation's (Odyssey Re) (NYSE NYSE See: New York Stock Exchange : ORH ORH Worcester (Airport) ORH Operation Restore Hope ORH Worcester, MA, USA - Worcester /James D O'Brien Field (Airport Code) ) (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ) reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. and insurance subsidiaries. These ratings apply to Odyssey America Reinsurance Corporation (Connecticut), Odyssey Reinsurance Corporation and Hudson Insurance Company (both of Delaware). Concurrently, A.M. Best has assigned a "bbb" senior debt rating to $110 million convertible senior debentures due 2022 and extended indicative ratings to its remaining $290 million under its shelf registration. The ratings reflect Odyssey Re's global market position, ranking it among the top 20 reinsurance organizations internationally and among the five largest broker market reinsurers in the United States on a net premium written basis. Its diversified geographic and client base, combined with its large line capacity, broad product capability and client relationship focus, have enabled Odyssey Re to strengthen its competitive position within the global reinsurance market. Moreover, within the last several years, Odyssey Re has taken aggressive corrective actions that have resulted in improved underwriting and operating performance. In A.M. Best's opinion, this recent trend is sustainable over the near term, given recent improvements in reinsurance pricing, contract terms and conditions. Further, the recently announced restructuring of the company's direct parent, TIG n. 1. A game among children. See Tag. 2. A capacious, flat-bottomed drinking cup, generally with four handles, formerly used for passing around the table at convivial entertainment. Insurance Company (California) will reduce TIG's ownership interest and alleviate external pressure on Odyssey Re's stand-alone capitalization. These strengths are partially offset by Odyssey Re's exposure to continued potential for adverse reserve development emerging from its long-tail casualty reserves and more recently, aggressive growth in new business opportunities. The company has exposure to casualty business written in the London market through an affiliated Lloyd's syndicate, which has undergone significant operational changes in previous years. As a result, there is some uncertainty with regard to the adequacy of current pricing and related reserve assumptions. As of September 30, 2002, Odyssey Re's financial leverage, including the convertible senior debentures, remains below 20%, and its fixed charge and cash coverage ratios, 12.6x and 6.4x respectively, are well within the acceptable ranges of its rating category. A.M. Best expects the company to maintain these conservative measurements in the near to medium term due to sustained earnings trends in the company's core business segments. Odyssey Re Holdings Corporation, which is majority held by Fairfax Financial Holdings Fairfax Financial Holdings Limited TSX: FFH.SV NYSE: FFH is a Toronto, Ontario based financial services holding company which, through its subsidiaries, is engaged in property, casualty and life insurance and reinsurance, investment management and insurance claims Limited, had total assets of $5.2 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $1.0 billion at September 30, 2002. The financial strength ratings of A (Excellent) have been affirmed for the following operating subsidiaries of Odyssey Re Holdings Corporation: - Odyssey America Reinsurance Corporation - Odyssey Reinsurance Corporation - Hudson Insurance Company The following debt rating has been assigned: Odyssey Re Holdings Corporation-- -- "bbb" on $110 million 4.375% convertible senior debentures, due 2022 The following indicative debt ratings available under a $400 million shelf registration have been assigned: Odyssey Re Holdings Corporation-- -- "bbb" on senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. -- "bbb-" on subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". -- "bb+" on preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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