A.M. Best Co. announced that it has placed the financial strength rating (FSR) and the issuer credit ratings (ICR) of the operating subsidiaries of Odyssey Re Holding Corp. and the debt ratings of Odyssey under review with negative implications following the Company’s announcement that it will delay the filing of its 2005 Form 10K for at least 30 days (See related article).
Odyssey said it would restate its financial statements for years 2001 through 2004 as well as for the nine months ended September 30, 2005. “The restatement corrected the accounting treatment for certain contract features of seven ceded reinsurance contracts and the accounting treatment of ceding commissions relating to three ceded aggregate excess of loss contracts,” Best noted. “The need to delay filing Form 10K allows Odyssey additional time to more fully complete their year-end process, which includes a review of the company’s finite reinsurance contracts.”
Best also indicated that as a consequence of the delay, Toronto-based “Fairfax Financial Holding Limited – which owns approximately 80 percent of the outstanding shares of Odyssey – has also delayed the filing of its Annual Report as per Canadian regulatory requirements.
“As a result, the FSR and ICRs of all of Fairfax’s wholly-owned operating subsidiaries have also been placed under review with negative implications, as have the operating subsidiaries of Northbridge Financial Corporation. In addition, the debt ratings of Fairfax and its subsidiaries have also been placed under review with negative implications.”
Best explained its action as being the “direct result of uncertainties posed by Odyssey’s prolonged audit process.” Best added that if the audit process and its own review “concludes with no material additional negative information or concerns for Odyssey or Fairfax,” it “expects to remove the under review status and maintain the existing FSRs, ICRs and debt ratings.”
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