OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has revised the outlook to positive from stable and affirmed the Long-Term Issuer Credit Rating (Long- Term ICR) of “bbb+” (Good) and the Long-Term Issue Credit Ratings (Long-Term IR) on the unsecured debt and preferred equity of Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada) [TSX: FFH]. In addition, AM Best has revised the outlook to positive from stable and affirmed the Long-Term ICR of “bbb+” (Good) of Fairfax (US) Inc. (Delaware) and the Long-Term ICR of “bbb+” (Good) and Long-Term IRs of Zenith National Insurance Corp. (headquartered in Woodland Hills, CA), both of which are indirectly, wholly owned downstream holding companies of Fairfax. (See below for a detailed listing of Long-Term IRs.)
The outlook revision to positive for Fairfax reflects the improved earnings profile of the consolidated group. Fairfax deployed significant cash into highly rated fixed income instruments as interest rates increased in 2022. This resulted in dividend and interest income run rate more than tripling by year-end 2023. This improved investment cash flow, coupled with continued stabilization of underwriting earnings at various operating subsidiaries, has resulted in improved operating performance metrics relative to peers in recent years, and prospectively.
At the same time, AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of the operating affiliates of Allied World Assurance Company Holdings, Ltd.’s (Bermuda) (Allied World Holdings), collectively referred to as Allied World or the group. Concurrently, AM Best has revised the outlook to positive from stable and affirmed the Long-Term ICRs of “bbb+” (Good) of Allied World Holdings and its downstream holding company, Allied World Assurance Company Holdings I, Ltd (Bermuda). AM Best also has revised the outlook to positive from stable and affirmed the Long-Term IR of “bbb+” (Good) of $500 million, 4.35% senior unsecured notes of Allied World Assurance Company Holdings I, Ltd, due 2025, which are unconditionally and irrevocably guaranteed by Allied World Holdings. (See below for a detailed listing of the companies and Credit Ratings [ratings].)
The ratings of Allied World reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
AM Best has revised Allied World’s business profile assessment to favorable from neutral, reflecting the company’s strong growth, favorable market position and solid underwriting performance across many of the key markets where it competes. The revised outlooks to positive reflect sustained improvement in Allied World’s overall operating performance, which has stabilized at improved levels for the past several years. AM Best views Allied World’s solid recent and prospective underwriting results as reflective of sound cycle management strategies that have reduced volatility, while at the same time steadily increasing underwriting income. Similar to Fairfax’ other (re)insurance affiliates, Allied World’s operating earnings also will continue to benefit from significantly higher investment income, due to the parent company’s material deployment of cash into highly rated fixed income investments that have seen yields rise in the high interest rate environment.
Allied World’s operations are supported by risk-adjusted capitalization that has remained at the strongest level over time, as measured by Best’s Capital Adequacy Ratio (BCAR).
The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed with the outlooks revised to positive from stable for the following operating subsidiaries of Allied World Assurance Company Holdings, Ltd:
- Vantapro Specialty Insurance Company
- Allied World Assurance Company, Ltd
- Allied World Surplus Lines Insurance Company
- Allied World Assurance Company (U.S.) Inc.
- Allied World National Assurance Company
- Allied World Specialty Insurance Company
- Allied World Insurance Company
- Allied World Assurance Company (Europe) Designated Activity Company
The following Long-Term IRs have been affirmed with the outlooks revised to positive from stable:
Zenith National Insurance Corp.—
— “bbb” (Good) on USD 77.3 million 8.55% subordinated deferrable debentures, due 2028
Fairfax Financial Holdings Limited—
— “bbb+” (Good) on USD 125 million 8.3% senior unsecured notes, due 2026
— “bbb+” (Good) on CAD 450 million 4.7% senior unsecured notes, due 2026
— “bbb+” (Good) on CAD 650 million 4.25% senior unsecured notes, due 2027
— “bbb+” (Good) on EUR 750 million 2.75% senior unsecured notes, due 2028
— “bbb+” (Good) on USD 600 million 4.85% senior unsecured notes, due 2028
— “bbb+” (Good) on CAD 500 million 4.23% senior unsecured notes, due 2029
— “bbb+” (Good) on USD 650 million 4.625% senior unsecured notes, due 2030
— “bbb+” (Good) on USD 600 million 3.375% senior unsecured notes, due 2031
— “bbb+” (Good) on CAD 850 million 3.95% senior unsecured notes, due 2031
— “bbb+” (Good) on USD 750 million 5.625% senior unsecured notes, due 2032
— “bbb+” (Good) on USD 600 million 6% senior unsecured notes, due 2033
— “bbb+” (Good) on USD 125 million 7.75% senior unsecured notes, due 2037
— “bbb+” (Good) on USD 1 billion 6.35% senior unsecured notes, due 2054
— “bbb-” (Good) on CAD 187.9 million Series C cumulative, five-year rate reset preferred shares
— “bbb-” (Good) on CAD 62.1 million Series D cumulative, floating rate preferred shares
— “bbb-” (Good) on CAD 136.0 million Series E cumulative, five-year rate reset preferred shares
— “bbb-” (Good) on CAD 52.5 million Series F cumulative, floating rate preferred shares
— “bbb-” (Good) on CAD 193.0 million Series G cumulative, five-year rate reset preferred shares
— “bbb-” (Good) on CAD 57.0 million Series H cumulative, floating rate preferred shares
— “bbb-” (Good) on CAD 260.5 million Series I cumulative, five-year rate reset preferred shares
— “bbb-” (Good) on CAD 39.5 million Series J cumulative, floating rate preferred shares
— “bbb-” (Good) on CAD 237.5 million Series K cumulative, five-year rate reset preferred shares
— “bbb-” (Good) on CAD 230 million Series M cumulative, five-year rate reset preferred shares
The following indicative Long-Term IRs on securities available on the universal shelf registration have been affirmed with the outlooks revised to positive from stable:
Fairfax Financial Holdings Limited—
— “bbb+” (Good) on senior unsecured debt
— “bbb” (Good) on subordinated debt
— “bbb-” (Good) on preferred shares
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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