Fairfax Financial Holdings Ltd.

The stable outlook is based on S&P Global Ratings' expectation that earnings accrual and capital management initiatives will strengthen capitalization over the next 12-24 months and Fairfax will maintain its strong competitive position anchored by its large insurance operations. We could lower the ratings in the next 12-24 months if, contrary to our expectations: Capitalization is not redundant at the 'A' confidence level; Fixed-charge coverage is below 4x on a sustained basis; or The volatility profile changes due to an increase in risk tolerance or shifts in investment or business mix resulting in high-risk exposure. We do not anticipate raising our rating in the next 12-24 months. However, we could consider an upgrade based on sustainable improvement in the company's

...Fairfax Financial Holdings Ltd.'s (TSX:FFH; Fairfax) credit profile benefits from the company's large and diversified re/insurance operations that are well established in their respective markets. These operations are well positioned to take advantage of the hardening rate environment, which should add to the prospective underwriting earnings. For the third quarter and first nine months of 2020, gross premiums written grew 13% and 7%, respectively, year-over-year, helped by significant price increases in most of Fairfax's major business segments. A potentially improving investment earnings profile is expected to further add to operating earnings strength. However, the earnings outlook is tempered by the COVID-19-related losses, market volatility, and current interest rate environment. In the first nine months of 2020, Fairfax reported a combined ratio of 98.6% (excluding run-off and corporate expenses), which includes 4.1 points impact from catastrophe losses and 5.3 points from COVID-19-related...

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