A.M. Best Comments on Fairfax's Sale of Odyssey Shares.

OLDWICK, N.J. -- A.M. Best Co. has commented on Fairfax Financial Holdings Limited's (Fairfax) [NYSE:FFH] (Toronto, Canada) announcement today that it intends to sell approximately 9 -10 million in common shares of Odyssey Re Holdings Corp. (Odyssey) [NYSE: ORH] (Stamford, CT), which it currently owns, while continuing to maintain majority ownership. A.M. Best views this divestiture as positive for Odyssey whose financial strength ratings (FSR), Issuer Credit Ratings (ICR) and debt ratings remain unchanged.

Given the appropriate economics, A.M. Best views this as a positive for Fairfax whose FSR, ICR and debt ratings also remain unchanged. A.M. Best believes the realized gain on the sale, reduced volatility of future earnings and the significant cash proceeds at the holding company neutralizes the reduction of Odyssey's earnings and a decreased shareholder dividend due to the decrease in ownership. The cash proceeds should bring holding company liquidity to approximately 45% of total outstanding Fairfax (including Crum & Forster) debt. A.M. Best would support the use of this cash infusion to reduce financial leverage. This transaction is expected to further improve Fairfax's existing comfortable liquid position and financial flexibility.

In late August 2006, Fairfax announced that it had determined that Odyssey's inclusion in its U.S. tax group was no longer necessary to maintain the remaining portion of its future income tax asset related to capitalized losses within the U.S. consolidated tax group. That determination made more transparent the fact that Fairfax's balance sheet, holding company liquidity and overall financial position have strengthened to a point where the company's dependency on Odyssey for liquidity as well as earnings has significantly declined. Therefore, Fairfax is in a comfortableCobut not dependentCoposition to monetize the value of Odyssey at a point in time where its market capitalization is strong. Alternatively, Odyssey is not dependent on Fairfax to maintain its operations or capital structure.

This transaction will allow for greater ownership diversification for Odyssey's stock, which should allow increased float and therefore heightened investor interest. While Odyssey has positively tested its attraction in the capital markets with the sale of common and preferred shares in 2005 and senior notes in February 2006, its financial flexibility should strengthen.

Fairfax's ownership of Odyssey is estimated to decrease from just above 80% at June 30, 2006 to approximately 60%. Fairfax's ownership has otherwise recently been diluted through the year-to-date partial conversion of Odyssey's 4.375% convertible notes and the conversion of Fairfax's 3.15% convertible debentures (convertible into Odyssey common shares). Fairfax declined to maintain its 80% ownership through the purchase of the shares of the converted securities.

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