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TMCNet:  A.M. Best Assigns Ratings to Fairfax Financial Holdings Limited's Senior Notes Offering

[January 17, 2013]

A.M. Best Assigns Ratings to Fairfax Financial Holdings Limited's Senior Notes Offering

OLDWICK, N.J. --(Business Wire)--

A.M. Best Co. has assigned a debt rating of "bbb" to the $250 million 5.84% senior unsecured notes due 2022 of Fairfax Financial Holdings Limited (Fairfax) (Toronto) [TSX: FFH]. The assigned outlook is stable. All existing ratings for Fairfax and its subsidiaries are unchanged.

These notes represent a re-opening of the series, which Fairfax issued in October 2012. The aggregate amount outstanding after giving effect to this offering is $450 million. The senior notes will be issued under a prospectus supplement to Fairfax's short form base shelf dated December 10, 2012. The majority of the proceeds will be used to buy back a portion of Fairfax's outstanding debt over the next 12 months, augment its cash position, increase short-term investments and marketable securities and for other cororate obligations.

At September 30, 2012, Fairfax's adjusted debt-to-total capital ratio was calculated at approximately 30%. In the mid-term, Fairfax's financial leverage and coverage ratios are expected to remain within A.M. Best's guidelines for its current ratings. These calculations include the debt of wholly owned subsidiaries, which are capable of servicing their own debt. In addition, Fairfax had cash and investments of approximately $1 billion at September 30, 2012.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


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