S&P upgrades Fairfax’s core (re)insurance units to AA-minus

By Michael Loney

June 20 - (The Insurer) - S&P Global Ratings has raised its long-term issuer credit and financial strength ratings on Fairfax’s core (re)insurance operating subsidiaries to AA-minus from A-plus, citing “sustainable and very strong capitalisation”.

The rating agency said on June 11 that it had also raised its long-term issuer credit rating on Fairfax Financial Holdings Ltd to A-minus from BBB-plus.

The outlook on the ratings is stable.

“The upgrade reflects our view of Fairfax’s sustainable and very strong capitalisation, redundant at the 99.95% confidence level at year-end 2024 through 2027, underpinned by diverse operating earnings and effective capital management,” S&P said.

“In addition, it underscores Fairfax’s ability to consistently deliver strong results, comparable to those of similarly AA-rated peers.”

S&P said that Fairfax has solidified its “very strong” competitive position by growing organically and making strategic acquisitions, supported by large and diversified (re)insurance operations well established in their respective markets, with each entity operating independently.

Fairfax had $32.5 billion in gross premiums written in 2024, with an average growth rate of 13.6% over the past five years.

The Toronto-based holding company is the parent of (re)insurers including Allied World, Odyssey Group, Brit and Crum & Forster.

AM Best last month upgraded the financial strength rating of Allied World’s operating affiliates to A-plus from A and the long-term issuer credit ratings of its holding company to aa-minus from a-plus.

The rating agency cited improved underwriting ratios as well as stronger streams of dividend and interest income in recent years.