A.M. Best Affirms Financial Strength and Debt Ratings of Odyssey Re

November 10, 2003

A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Odyssey Reinsurance Group (Wilmington, Del.).

In addition, A.M. Best has assigned the financial strength rating of A (Excellent) to Hudson Specialty Insurance Company (New York, N.Y.), a newly purchased reinsured affiliate of Odyssey Re. Concurrently, A.M. Best has affirmed the senior debt ratings of “bbb” as well as all indicative ratings of Odyssey Re Holdings Corp. (Odyssey Re). The outlook for all ratings is negative.

The affirmation of Odyssey Re’s ratings reportedly reflects excellent and improving stand-alone capitalization, disciplined historical underwriting performance, strong and sustained earnings momentum and its position in the global reinsurance market. These attributes are supported by Odyssey Re’s diversified geographic client base, combined with its broad product capability and an opportunistic business philosophy.

Over the past five years, Odyssey Re has reported more favorable underwriting results compared with A.M. Best’s professional reinsurers’ composite average. Together with an astute investment strategy as well as access to the capital markets, Odyssey Re’s risk-adjusted capitalization has been supportive of its significant growth over the past three years. Growth has occurred from robust opportunities emanating from a hard market, market dislocations and capacity shortages in specific global regions.

Estimated 2003 projections indicate financial leverage will remain at approximately 20 percent at the holding company level, supported by fixed charge and cash coverage ratios in the high single digit range, which are well within the acceptable range of its rating category.

Somewhat offsetting these positive attributes is Odyssey Re’s elevated operating leverage relative to its peers and the potential for adverse reserve development emerging from its older long-tail casualty reserves and more recently, from its aggressive growth in new business. A.M. Best expects the company to temper and manage its operating leverage at lower levels for the 2004 accident year as it continues to augment its capital position from both internal and external sources.

A.M. Best is maintaining a negative rating outlook, which was initially assigned to all of the insurance subsidiaries of its majority owner, Fairfax Financial Holding Limited (Fairfax) (Ontario).

The financial strength ratings of A (Excellent) have been affirmed for Odyssey Reinsurance Group and the following members:

*Odyssey America Reinsurance Corporation
*Odyssey Reinsurance Corporation
*Hudson Insurance Company

The financial strength rating of A (Excellent) has been assigned to the following reinsured affiliate of Odyssey Reinsurance Group:

* Hudson Specialty Insurance Company

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