A.M. Best Assigns Debt Ratings to Fairfax Financial Holdings Limited's Forthcoming Senior Notes and Universal Shelf.OLDWICK, N.J. -- A.M. Best Co. has assigned a senior debt rating of "bbb-" to 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's (Fairfax) (Toronto, Canada) (NYSE NYSE See: New York Stock Exchange : FFH FFH Far From Home (band) FFH Fast Frequency Hopping FFH Frigate Helicopter FFH Final Fantasy High (gaming) FFH Fauji Foundation Hospital (Pakistan) FFH Falling for Her ; TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : FFH) forthcoming $464.2 million 7.75% senior unsecured notes due 2022. Additionally, A.M. Best has assigned preliminary debt ratings of "bbb-"senior unsecured, "bb+" subordinated and "bb" preferred stock to Fairfax's $750 million universal shelf. The new notes will be a drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: under this shelf. The outlook for all ratings is stable. The notes will be used to purchase the remaining amount outstanding of Fairfax's 7.75% senior notes, due 2012, which is pursuant to the previously announced tender offer to purchase these existing notes. The new notes will be callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. in 2012, providing additional flexibility as the existing notes are not callable prior to their maturity in 2012. Fairfax's senior debt ratings were upgraded to "bbb-" on May 4, 2007. The rating reflects significant holding company cash, which amounted to $767 million at year-end 2006 and is expected to remain fairly level over the next several years as annual cash inflows are expected to evenly cover cash expenses. Liquidity is at a level that should allow Fairfax the ability to cover any unforeseen negativity and freedom from reliance on the capital markets. This comfort causes a trade-off in that repayment of debt and reduction of leverage will be at a slower than anticipated pace. Fairfax's financial leverage--while still somewhat high--has declined to more reasonable levels at December 31, 2006, with debt to capital at 35% (US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). )--excluding the debt of Odyssey Re Holdings Corp. (Stamford, CT), which is capable of servicing its own debt obligations. Fairfax will continue to reduce its debt through open market purchases but has structured its debt maturities such that only $62 million is required prior to 2012. Should this tender offer be fully completed, only $62 million will be required prior to 2017. For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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