...The ratings on Fairfax Financial Holdings Ltd. (TSX:FFH; Fairfax) reflect its strong business risk profile and moderately strong financial risk profile. The company's credit profile benefits from its large and diversified re/insurance operations that are well established in their respective markets, and an improving earnings profile from ongoing investment repositioning that in our view should progressively improve fixed-charge coverage and support very strong risk-adjusted capitalization. These strengths are partially offset by a moderate risk position reflecting inherent earnings volatility and constrained financial flexibility. The company has an acquisitive business strategy and active approach to investment management that can heighten volatility over an extended period. However, Fairfax's investment outlook has shifted and management is readjusting its investment strategy accordingly. In addition, Fairfax is likely to focus on digesting its recent acquisitions, strengthening its combined...
