Odyssey Re rating set for upgrade; Fairmont Specialty receives initial review

Two Fairfax operations are under the eye of rating agencies, with one set for possible upgrade.Odyssey Re’s operations may see its financial strength rating upgraded by Moody’s Investors Service on the back of strong first quarter results. Moody’s says it will review the company’s future earnings prospects, reserve adequacy, reinsurance recoverables, capitalization and the liquidity of Odyssey Re Holdings as part of the review. One factor will be the impact the risk presented by prior year business.In related news, Odyssey Re recently declared a first quarter dividend of US$0.03125 per share.Fairfax’s new Fairmont Specialty, which includes the subsidiaries of TIG Holdings Inc., has received an initial rating of “B++” (very good) with a stable outlook, from A.M. Best.The group of companies has been under review since January when Fairfax announced the group’s formation from existing subsidiaries including Ranger Insurance, TIG Premier, Fairmont Insurance and Ranger Lloyd’s.The group was formed to continue on specific specialty business of TIG and Ranger, specifically in New Jersey, Hawaii and Texas. TIG Premier and Fairmont’s existing reserves were sold back to run-off company TIG Insurance Group, leaving the new entity to start with a relatively clean slate.”The rating incorporates Fairmont Specialty’s excellent level of initial capitalization, the favorable results track record produced by the remaining business segments and the limited liability exposure,” says A.M. Best. Offsetting this is “the need for the new management team to develop its own track record within the newly re-organized and re-aligned companies with regard to the sustainability of the positive earnings momentum of 2002 and 2003”.