Fitch Revises Fairfax's Rating Outlook To Negative; Downgrades TIG Insurance Group's IFS Rating.Business Editors NEW YORK--(BUSINESS WIRE)--June 20, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has revised its Rating Outlook to Negative from Stable for the debt securities of 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 (Fairfax) and the Insurer Financial Strength ratings of the Fairfax Primary Insurance Group. The Stable Rating Outlook of the Odyssey Re Group is unaffected. Fitch has also removed 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 Group (TIG) from the Fairfax Primary Insurance Group for rating purposes, and downgraded its Insurer Financial Strength Rating one notch to 'BBB' from 'BBB+' and assigned a 'BB' rating to the outstanding senior debt of its parent -- TIG Holdings, Inc. The Rating Outlook for TIG is Negative. These actions largely reflect: (1) TIG's moderate capitalization combined with a decline in market profile of TIG during 2002 following the downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. by various rating agencies in late 2001, management changes and business restructuring, (2) increased uncertainty in Fitch's view as to the levels of holding company cash resources that will be maintained at Fairfax in light of its moderate financial flexibility, sizable internal and external debt maturities in 2003 and the inability of the Crum & Forster Insurance Group (CFI CFI abbr. cost, freight, and insurance ) and TIG to pay parental dividends in 2002 and likely 2003. Although Fairfax has a number of realistic alternatives to address maturing debt such as refinancing Refinancing An extension and/or increase in amount of existing debt. , tapping its committed bank facility, monetizing existing assets and/or taking sizable subsidiary dividends from non-U.S. subsidiaries, Fitch is concerned that upcoming debt maturities could potentially further strain holding company cash resources despite the expectation of improving operating results. Importantly, due to regulatory restrictions tied to negative unassigned funds at the statutory level, Fitch would expect upstream dividend paying ability at U.S. subsidiaries CFI and TIG to lag expected earnings improvements by 2-3 years. Additionally, the proposed initial public offering of a minority stake in Crum & Forster Holdings, Inc., a core asset of Fairfax, is viewed by Fitch as a potential near-term positive for Fairfax, but potentially negative longer term as future expected parental dividends could be significantly reduced. Furthermore, this viewpoint considers Fairfax's sizable debt levels and parental dividend/earnings capabilities of the remaining subsidiaries if TIG is unable to pay parental dividends for an extended period due to its moderate statutory capital position. Fairfax Financial Holdings Limited is a publicly traded insurance holding company that is listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. with operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. primarily engaged in property/casualty insurance, 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 claims management services. The company had assets of C$34.8 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 C$3.3 billion at March 31, 2002. Entity/Issue/Type/Action/Rating/Outlook Fairfax Financial Holdings Limited --Senior Debt Affirm 'BB+' / Negative. TIG Holdings, Inc. --Senior Debt Assign 'BB' / Negative; --Trust Preferred Assign 'BB-' / Negative. Members of The Fairfax Primary Insurance Group (see list below) --Insurer Financial Strength Affirm 'BBB+' / Negative. Odyssey Re Group (see list below) --Insurer Financial Strength Affirm 'A-' / Stable. Members of the TIG Insurance Group (see list below) --Insurer Financial Strength Downgrade 'BBB' / Negative. The members of the Fairfax Primary Insurance Group are: Commonwealth Insurance Co. Commonwealth Insurance Co. of America Zenith Insurance Co. Federated Connected and treated as one. See federated database and federated directories. Insurance Co. of Canada Industrial County Mutual Insurance Co. Crum & Forster Insurance Co. Crum & Forster Underwriters of Ohio Crum & Forster Indemnity Co. The North River Insurance Co. United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Fire Insurance Co. Lombard General Insurance Co. of Canada Lombard Insurance Co. Markel Insurance Co. of Canada The members of the Odyssey Re Group are: Compagnie Transcontinentale De Reassurance Odyssey America Reinsurance Corp. Odyssey Reinsurance Corp. The members of the TIG Insurance Group are: Fairmount Insurance Company Ranger Insurance Co. TIG American Specialty Ins. Company TIG Indemnity Company TIG Insurance Company TIG Insurance Company of Colorado TIG Insurance Company of 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 TIG Insurance Company of Texas TIG Insurance Corporation of America TIG Lloyds Insurance Company TIG Premier Insurance Company TIG Specialty Insurance Company |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion