A.M. Best Comments on the Acquisition of Odyssey Re Holdings Corp.'s Minority Shares by Fairfax Financial Holdings Limited

A.M. Best Co. has commented that the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of "a" of Odyssey Reinsurance Group (Odyssey Re) (Delaware) and its members are unchanged.

Concurrently, A.M. Best has commented that the ICR of "bbb" and debt ratings of Odyssey Re's parent, Odyssey Re Holdings Corp. (ORH) (Delaware) (NYSE: ORH), also are unchanged following the announcement that Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada) (NYSE: FFH; TSE: FFH) intends to acquire all of the outstanding shares of ORH's common stock that it currently does not own.

Fairfax currently owns 72.6 percent of ORH's outstanding common shares. Under the terms of Fairfax's current proposal, Fairfax intends to purchase the remaining minority held shares of common stock at a purchase price of $60 per share to be funded through an equity offering by Fairfax. Fairfax has said that following the closing of the transaction, it plans for ORH to run as a decentralized, independent company with no expected changes to its business strategy and senior management team. The Fairfax proposal is currently being reviewed and evaluated by an independent special committee of the Board of Directors of Odyssey Re. There can be no assurance that any transaction will be approved by the special committee or consummated. Odyssey Re ranks as the 15th largest reinsurer in the world based on 2008 gross premiums written.

A.M. Best believes that Odyssey Re's business strategy is not expected to change in a meaningful way and the group will benefit prospectively from the liquidity and financial resources of Fairfax. Fairfax, through Hamblin Watsa Investment Counsel, has managed Odyssey Re's investments, which have contributed significantly to Odyssey Re's earnings in recent years. Given the historic majority ownership of ORH by Fairfax, A.M. Best also believes that integration risk should not be a significant issue, going forward.

For Best's Credit Ratings, an overview of the rating process and rating methodologies: ambest.com/ratings.

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