Neither Standard & Poor’s Ratings Services, nor A.M. Best anticipate any changes in their ratings on Toronto-based Fairfax Financial Holdings Ltd. As a result of the Company’s announced decision to acquire all of the outstanding shares of Odyssey Re Holdings Corp. (ORH) that it does not own for $60 per share in cash [See related article at: https://www.insurancejournal.com/news/international/2009/09/09/103604.htm]
S&P said it “does not anticipate any rating changes for Fairfax or Odyssey Re Holdings Ltd. if the proposed acquisition is completed as indicated.” Although the ratig agency did it would revise its assessment to consider Odyssey Re “a core holding of Fairfax rather than a strategically important one, it would not result in a change in the financial strength ratings on Odyssey’s operating reinsurance subsidiaries (all rated A-/Stable/–).”
A.M. Best noted that the “transaction is valued at approximately $1 billion at the proposed price of $60 per share, and the acquisition is expected to be fully financed by an equity issuance under Fairfax’s existing shelf registration. Fairfax anticipates that cash and marketable securities at the holding company level will remain in excess of $1 billion following the completion of the transaction. The proposed acquisition is subject to the approval of the majority of ORH minority shareholders, as well as that of the securities and insurance regulators in Canada and the United States.”
Best also indicated that as a result of the acquisition, “Fairfax regains complete financial control over a global broker market reinsurance platform, which is already well aligned with its strategy, goals and values through Fairfax’s majority ownership. Fairfax will benefit from the availability of 100 percent of ORH’s revenues, which should be enhanced modestly by the elimination of expenses related to maintaining ORH’s separate public listing.”
Source: A.M. Best – www.ambest.com and Standard & Poor’s – www.standardandpoors.com
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