Fairfax's (consolidated operating company) competitive position is good. Operating performance in 2006 is strong. FFH's (Fairfax holding company) liquidity has improved. Good capitalization of consolidated Fairfax. FFH is viewed as weak (but improving) from a governance, risk control, and ERM perspective. Frequent and sizeable reserve charges. High debt leverage, but declining. High reinsurance recoverables, but decreasing. The counterparty credit rating on Fairfax Financial Holdings Ltd. (NYSE: FFH) and its related core entities is based upon the company's good competitive position, improving earnings, good and improving capitalization, and strong liquidity. Reserves, recoverables, and financial leverage have all improved in the last few years and are not viewed as significant negatives to the rating. In contrast to these positive factors are the
