ORH Odyssey RE Holdings Corp.

A.M. Best Co. has commented that the ratings of Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada) [NYSE: FFH; TSE: FFH] are expected to be unchanged following its proposed acquisition of the outstanding common shares of Odyssey Re Holdings Corp. (ORH) (Delaware) [NYSE: ORH]. Fairfax currently owns 72.6% of ORH.

The transaction is valued at approximately $1 billion at the proposed price of $60 per share, and the acquisition is expected to be fully financed by an equity issuance under Fairfax’s existing shelf registration. Fairfax anticipates that cash and marketable securities at the holding company level will remain in excess of $1 billion following the completion of the transaction. The proposed acquisition is subject to the approval of the majority of ORH minority shareholders, as well as that of the securities and insurance regulators in Canada and the United States.

By acquiring the outstanding shares of ORH, Fairfax regains complete financial control over a global broker market reinsurance platform, which is already well aligned with its strategy, goals and values through Fairfax’s majority ownership. Fairfax will benefit from the availability of 100% of ORH’s revenues, which should be enhanced modestly by the elimination of expenses related to maintaining ORH’s separate public listing.

Partially offsetting these positive factors for Fairfax are the possibility of unanticipated shareholder or regulatory objections to the proposed transaction and the potential for increased dividend expense following the equity issuance. The company’s global reinsurance business will remain somewhat challenged by market conditions generally, by its specific legacy issues and by the need to integrate its various reinsurance properties at a strategic level. On balance, however, A.M. Best believes the potential benefits to Fairfax outweigh these negative factors.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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