A.M. Best Co. has affirmed the issuer credit rating (ICR) of "bbb" and the unsecured debt ratings of Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada) (NYSE: FFH) (TSE: FFH). A.M. Best also has affirmed the financial strength ratings (FSR) of A (Excellent) and ICRs of “a” of Crum & Forster Insurance Group (Crum & Forster) (New Jersey) and Seneca Insurance Group (Seneca) (New York), both wholly-owned subsidiaries of Fairfax. Additionally, A.M. Best has affirmed the ICR of “bbb” and the unsecured debt ratings of Crum & Forster Holdings Corp. (Morristown, NJ).

At the same time, A.M. Best has affirmed the FSR of B+ (Good) and ICR of “bbb-” and the FSR of B++ (Good) and ICR of “bbb” of TIG Insurance Group and Fairmont Specialty Group (both of Texas), 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 Crum & Forster reflect its role within Fairfax, its strong risk-adjusted capital levels, proven opportunistic underwriting strategy (particularly in underserved markets) and management’s commitment to reduce the group’s property catastrophe exposure to improve overall profitability. Significantly reduced legacy issues, including the commutation of most finite reinsurance contracts and the resolution in 2008 of its largest outstanding asbestos claim, also lends to the group’s profitability prospects going forward.

Over the past five years, statutory surplus has grown at a compounded annual rate of 5.2% (after significant dividends were paid) much of which has been driven by realized investment gains and net investment income. An extraordinary dividend paid in 2008 resulted in a decline in surplus that year, but due to the growth in surplus in the preceding years, risk-adjusted capitalization remains at a level that is well supportive of the current ratings. Crum & Forster’s ratings also incorporate support from Fairfax, whose strong financial position, demonstrated track record of supporting subsidiaries and historic investment acumen provide the ability to support the group.

These factors are somewhat offset by Crum & Forster’s remaining legacy issues as it pertains to latent exposure written pre 1990 (or decades ago), weaker than expected underwriting results reported in 2008 and the continued challenges associated with the competitive pricing environment.