A.M. Best Affirms Ratings of Members of Odyssey Reinsurance Group

A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a+" of the members of Odyssey Reinsurance Group (Odyssey Re).

Concurrently, A.M. Best has affirmed the ICR of "bbb" and the debt ratings of Odyssey Re Holdings Corp. (Odyssey Re Holdings) (Wilmington, DE). The outlook for the ratings is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect Odyssey Re's excellent risk-adjusted capitalization, strong financial performance and a sound business position. Odyssey Re is a global underwriter of reinsurance and specialty primary insurance products and ranks among the top 15 global reinsurance groups in terms of premium volume. Odyssey Re's competitive position benefits from its worldwide market presence with regard to business mix and geographic reach. These positive attributes are further supported by Odyssey Re's diversified geographic client base, combined with its large line capacity, broad product capability and an opportunistic business strategy. Odyssey Re's investment management philosophy emphasizing a total return strategy has augmented the group's earnings.

The ratings also recognize Odyssey Re's strong liquidity and the benefit derived from the access to its ultimate parent company, Fairfax Financial Holdings Limited, and Fairfax's access to public markets.

Somewhat offsetting these strengths are the challenging underwriting and investment environments and the group's historical reliance on both realized and unrealized capital gains to bolster its overall financial performance. A.M. Best views this source of earnings as more variable and less predictable than earnings sourced from underwriting.

Odyssey Re maintains a manageable exposure to natural catastrophes as measured by its 1-in-250-year probable maximum loss estimates relative to statutory surplus. In A.M. Best's opinion, Odyssey Re has developed an excellent and holistic enterprise risk management framework.

Positive rating actions could occur if the group maintains consistently strong underwriting performance and long-term profitability. However, the ratings and outlook may come under negative rating pressure if Odyssey Re experiences outsized catastrophe or investment losses relative to its peer group or if capital erosion due to operating performance exceeds A.M. Best's expectations.

The FSR of A (Excellent) and the ICRs of "a+" have been affirmed for the following members of the Odyssey Reinsurance Group:

-Odyssey Reinsurance Company

-Hudson Insurance Company

-Hudson Specialty Insurance Company

-Hudson Excess Insurance Company

-Newline Insurance Company Limited

The following debt ratings have been affirmed:

Odyssey Re Holdings Corp.-

-- "bbb" on $125 million 6.875 percent senior unsecured notes, due 2015

more information:

ambest.com

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