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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 20, 2002 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Odyssey Re Holdings Corporation's (Odyssey Re) [NYSE: ORH] (New York) reinsurance and insurance subsidiaries. These ratings apply to Odyssey America Reinsurance Corporation (Connecticut), Odyssey Reinsurance Corporation and Hudson Insurance Company (both of Delaware). Concurrently, A.M. Best has assigned a "bbb" senior debt rating to $110 million convertible senior debentures due 2022 and extended indicative ratings to its remaining $290 million under its shelf registration.
The ratings reflect Odyssey Re's global market position, ranking it among the top 20 reinsurance organizations internationally and among the five largest broker market reinsurers in the United States on a net premium written basis. Its diversified geographic and client base, combined with its large line capacity, broad product capability and client relationship focus, have enabled Odyssey Re to strengthen its competitive position within the global reinsurance market. Moreover, within the last several years, Odyssey Re has taken aggressive corrective actions that have resulted in improved underwriting and operating performance. In A.M. Best's opinion, this recent trend is sustainable over the near term, given recent improvements in reinsurance pricing, contract terms and conditions.
Further, the recently announced restructuring of the company's direct parent, TIG Insurance Company (California) will reduce TIG's ownership interest and alleviate external pressure on Odyssey Re's stand-alone capitalization.
These strengths are partially offset by Odyssey Re's exposure to continued potential for adverse reserve development emerging from its long-tail casualty reserves and more recently, aggressive growth in new business opportunities. The company has exposure to casualty business written in the London market through an affiliated Lloyd's syndicate, which has undergone significant operational changes in previous years. As a result, there is some uncertainty with regard to the adequacy of current pricing and related reserve assumptions.
As of September 30, 2002, Odyssey Re's financial leverage, including the convertible senior debentures, remains below 20%, and its fixed charge and cash coverage ratios, 12.6x and 6.4x respectively, are well within the acceptable ranges of its rating category. A.M. Best expects the company to maintain these conservative measurements in the near to medium term due to sustained earnings trends in the company's core business segments.
Odyssey Re Holdings Corporation, which is majority held by Fairfax Financial Holdings Limited, had total assets of $5.2 billion and shareholders' equity of $1.0 billion at September 30, 2002.
The financial strength ratings of A (Excellent) have been affirmed for the following operating subsidiaries of Odyssey Re Holdings Corporation:
- Odyssey America Reinsurance Corporation
- Odyssey Reinsurance Corporation
- Hudson Insurance Company
The following debt rating has been assigned:
Odyssey Re Holdings Corporation-
- "bbb" on $110 million 4.375% convertible senior debentures, due 2022
The following indicative debt ratings available under a $400 million shelf registration have been assigned:
Odyssey Re Holdings Corporation,-
- "bbb" on senior unsecured debt
- "bbb-" on subordinated debt
- "bb+" on preferred shares
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.