Fitch Affirms Fairfax's Re-Opening Senior Notes at 'BBB-'

  Fitch Affirms Fairfax's Re-Opening Senior Notes at 'BBB-'

Business Wire

CHICAGO -- January 22, 2013

Fitch Ratings has affirmed the existing 'BBB-' rating on Fairfax Financial
Holdings Limited's (Fairfax) 5.84% senior notes due Oct. 14, 2022.

The notes affirmed include those issued on Jan. 21, 2013 under a CDN$250
million re-opening of senior notes. Those notes represent a further issuance
of an original CDN$200 million issuance completed in October 2012, resulting
in a total of CDN$450 million of such senior notes outstanding.

Fairfax intends to use the net proceeds of the offering to augment its cash
position, increase short-term investments and marketable securities held at
the holding company level, to retire outstanding debt and other corporate
obligations from time to time, and for general corporate purposes.

Fairfax's financial leverage ratio (adjusted for equity credit and to exclude
unrealized gains on fixed income investments) was 33.8% at Sept. 30, 2012, up
slightly from 33.2% at Dec. 31, 2011. Following the CDN$450 million total
senior note issuance and fourth quarter 2012 repayment of a $200 million loan
note issued by TIG Insurance Company, Fairfax's pro forma financial leverage
ratio increases to approximately 35.6% at Sept. 30, 2012. This level is just
above Fitch's expected range of 20%-35%. Fitch expects Fairfax's financial
leverage ratio to return to below 35% through normal shareholders' equity
growth and/or through additional debt repurchases.

Operating earnings-based interest and preferred dividend coverage (excluding
net gains and losses on investments) has been very low in recent years as
operating earnings have declined with weaker underwriting results and high
catastrophe losses. Including holding company cash, operating earnings-based
coverage has been better, averaging 6.5x from 2009 to 2011, with 5.1x through
the first nine months of 2012.

Fairfax continues to maintain a sizable amount of holding company cash,
short-term investments and marketable securities of approximately $1 billion
at Sept. 30, 2012, which Fitch believes provides Fairfax a sufficient cushion
for meeting potential subsidiary cash flow shortages and liquidity to service
its debt.

On Oct. 16, 2012, Fitch affirmed all of its ratings for Fairfax and its
subsidiaries with a Stable Outlook.

Fitch affirms the following rating:

Fairfax Financial Holdings Limited
-- CDN$450 million 5.84% senior notes due Oct. 14, 2022 at 'BBB-'.

Fitch currently rates Fairfax and subsidiaries as follows:

Fairfax Financial Holdings Limited
-- IDR 'BBB';
-- Senior debt 'BBB-';
-- $82 million 8.25% due Oct. 1, 2015 'BBB-';
-- $48 million 7.75% due June 15, 2017 'BBB-';
-- $144 million 7.375% due April 15, 2018 'BBB-';
-- CDN$400 million 7.5% due Aug. 19, 2019 'BBB-';
-- CDN$275 million 7.25% due June 22, 2020 'BBB-'.
-- $500 million 5.8% due May 15, 2021 'BBB-';
-- CDN$400 million 6.4% due May 25, 2021 'BBB-';
-- $92 million 8.3% due April 15, 2026 'BBB-';
-- $91 million 7.75% due July 15, 2037 'BBB-';
-- CDN$250 million series C preferred shares 'BB';
-- CDN$200 million series E preferred shares 'BB';
-- CDN$250 million series G preferred shares 'BB';
-- CDN$300 million series I preferred shares 'BB';
-- CDN$230 million series K preferred shares 'BB'.

Fairfax, Inc.
-- IDR 'BBB'.

Crum & Forster Holdings Corp.
-- IDR 'BBB';

Crum & Forster Insurance Group:
Crum and Forster Insurance Company
Crum & Forster Indemnity Company
The North River Insurance Company
United States Fire Insurance Company
-- Insurer Financial Strength (IFS) 'A-'.

First Mercury Insurance Company
-- IFS 'A-'.

Northbridge Financial Insurance Group:
Federated Insurance Company of Canada
Northbridge Commercial Insurance Corporation
Northbridge General Insurance Corporation
Northbridge Indemnity Insurance Corporation
Northbridge Personal Insurance Corporation
Zenith Insurance Company (Canada)
-- IFS 'A-'.

Odyssey Re Holdings Corp.
-- IDR 'BBB';
-- $50 million series A unsecured due March 15, 2021 'BBB-';
-- $50 million series B unsecured due March 15, 2016 'BBB-';
-- $40 million series C unsecured due Dec. 15, 2021 'BBB-';
-- $183 million 7.65% due Nov. 1, 2013 'BBB-';
-- $125 million 6.875% due May 1, 2015 'BBB-'.

Odyssey Reinsurance Company
-- IFS 'A-'.

Zenith National Insurance Corp.
-- IDR 'BBB'.

Zenith Insurance Company
ZNAT Insurance Company
-- IFS 'A-'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'. The issuer did
not participate in the rating process, or provide additional information,
beyond the issuer's available public disclosure. The ratings above were
unsolicited and have been provided by Fitch as a service to investors.

Applicable Criteria and Related Research:

-- 'Insurance Rating Methodology' (Jan. 11, 2013);

-- 'Fitch Rates Fairfax's Senior Notes 'BBB-'; Affirms Ratings' (Oct. 16,
2012).

Applicable Criteria and Related Research:

Insurance Rating Methodology - Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=698731

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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
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DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
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Contact:

Fitch Ratings
Primary Analyst
Brian C. Schneider, CPA, CPCU, ARe, +1-312-606-2321
Senior Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Dafina M. Dunmore, CFA, +1-312-368-3136
Director
or
Committee Chairperson
Mark E. Rouck, CPA, CFA, +1-312-368-2085
Senior Director
or
Media Relations
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com
 
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