S&P’s assigns Odyssey Re Holdings BBB-minus rtg

Standard & Poor’s has assigned its triple-’B'-minus counterparty credit rating to Canadian-based Odyssey Re Holdings Corp. The outlook is stable.

Standard & Poor’s also said that it assigned its preliminary triple-’B'-minus senior debt, double-’B'-plus subordinated debt, and double-’B’ preferred stock ratings to Odyssey Re’s $400 million shelf registration. (Approximately $110 million of the aggregate principal amount was issued on June 18, 2002, in the form of a 4.375 percent convertible senior debenture due in 2022.)

“Standard & Poor’s expects the proceeds from any future offering to be used to support the insurance operations, refinance existing obligations, or both,” Standard & Poor’s credit analyst Matthew Coyle said. However, Standard & Poor’s does not expect any future offering to increase Odyssey Re’sfinancial leverage (debt as a percent of capital) materially. As of June 30, 2002, financial leverage was about 17.3 percent, which is conservative for the ratings.

Traditionally, Odyssey Re was known as a mid-sized broker market reinsurer, providing pro rata and excess-of-loss reinsurance to ceding companies in the U.S. However, in recent years, the company has expanded its operations abroad, which Standard & Poor’s believes could improve the overall risk profile of the organization. In addition, operating revenues and margins continue to improve, as the organization is in a good position to take advantage of the current favorable pricing and underwriting trends. Capitalization remains strength of the rating but could weaken somewhat in the short-term as the strain of new business growth takes its toll.