Good competitive position based on diversification of operations Strong investment expertise Holding company cash (a significant strength to the rating) Minimal immediate liquidity concerns Significantly improving operating performance Improved financial flexibility Good capitalization Lack of demonstrated sustainable track record in underwriting results Concern about reserve adequacy High debt leverage High reinsurance recoverables The counterparty credit rating on Fairfax Financial Holdings Ltd. (Fairfax) is based on its operating companies' good competitive position and diversification in the U.S., Canada, and internationally. Operating performance significantly improved in 2002 and 2003, although the runoff operations are still creating a significant drag on total company earnings. Fairfax's capital adequacy and financial flexibility are both improving, and investments are viewed as a strength for the rating.
