A.M. Best Comments on the Acquisition of Odyssey Re Holdings Corp.’s Minority Shares by Fairfax Financial Holdings Limited
September 08 2009 - 3:36PM
Business Wire
A.M. Best Co. has commented that the financial strength
rating of A (Excellent) and issuer credit ratings (ICR) of “a” of
Odyssey Reinsurance Group (Odyssey Re) (Delaware) and its
members are unchanged. Concurrently, A.M. Best has commented that
the ICR of “bbb” and debt ratings of Odyssey Re’s parent,
Odyssey Re Holdings Corp. (ORH) (Delaware) (NYSE: ORH), also
are unchanged following the announcement that Fairfax Financial
Holdings Limited (Fairfax) (Toronto, Canada) (NYSE: FFH; TSE:
FFH) intends to acquire all of the outstanding shares of ORH’s
common stock that it currently does not own.
Fairfax currently owns 72.6% of ORH’s outstanding common shares.
Under the terms of Fairfax’s current proposal, Fairfax intends to
purchase the remaining minority held shares of common stock at a
purchase price of $60 per share to be funded through an equity
offering by Fairfax. Fairfax has stated that following the closing
of the transaction, it plans for ORH to run as a decentralized,
independent company with no expected changes to its business
strategy and senior management team. The Fairfax proposal is
currently being reviewed and evaluated by an independent special
committee of the Board of Directors of Odyssey Re. There can be no
assurance that any transaction will be approved by the special
committee or consummated. Odyssey Re ranks as the 15th largest
reinsurer in the world based on 2008 gross premiums written.
A.M. Best believes that Odyssey Re’s business strategy is not
expected to change in a meaningful way and the group will benefit
prospectively from the liquidity and financial resources of
Fairfax. Fairfax, through Hamblin Watsa Investment Counsel, has
managed Odyssey Re’s investments, which have contributed
significantly to Odyssey Re’s earnings in recent years. Given the
historic majority ownership of ORH by Fairfax, A.M. Best also
believes that integration risk should not be a significant issue,
going forward.
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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