A.M. Best Affirms Ratings Of Fairfax Financial Holdings Limited; Upgrades Issuer Credit Ratings Of Seneca Insurance Group

A.M. Best Co. has affirmed the issuer credit rating (ICR) of “bbb” and the unsecured debt and preferred equity ratings of Fairfax Financial Holdings Limited (Fairfax) (Toronto, Ontario) (TSX: FFH and FFH.U). Additionally, A.M. Best has affirmed the ICR of “bbb” and unsecured debt rating of Crum & Forster Holdings Corp. (Morristown, NJ), an indirect, wholly owned, downstream holding company of Fairfax.

A.M. Best also has upgraded the ICRs to “a+” from “a” and affirmed the financial strength rating (FSR) of A (Excellent) of Seneca Insurance Group (Seneca) (New York, NY) and its property/casualty members. In addition, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of “a” of Crum & Forster Insurance Group (Crum & Forster) (Morristown, NJ) and its property/casualty members.

At the same time, A.M. Best has affirmed the FSR of B+ (Good) and ICRs of “bbb-” and the FSR of B++ (Good) and ICRs of “bbb” of TIG Insurance Group (TIG) and Fairmont Specialty Group (Fairmont) (both of Manchester, NH), and their property/casualty members, respectively, which are both in run-off. The outlook for all ratings is stable. (See link below for a detailed listing of the companies and ratings).

The ratings of Seneca reflect its consistently better-than-average underwriting and operating performance, which has been sustained over many years; strong level of risk-adjusted capitalization and management of loss reserves that has resulted in favorable development of prior years’ loss reserves.

Partially offsetting these positive factors are Seneca’s above-average level of expenses relative to premiums and a five-year average investment yield that lags that of its commercial casualty peer group, although Seneca’s yield improved in 2009.

The ratings of Crum & Forster recognize its underwriting performance (as reflected in its better-than-average loss and loss adjustment expense levels); its diversified product portfolio; favorable development of recent accident years’ loss reserves; reduced reliance on finite reinsurance; and risk-adjusted capital levels that are well-supportive of the ratings. Crum & Forster’s ratings also reflect the support of Fairfax.