Ratings Recap: Inter-Industry,Co-operators Financial, Fairfax, Flagstone

May 16, 2007

A.M. Best Co. has affirmed the financial strength rating of “B+” (Good) and the issuer credit rating of “bbb-” of Inter-Industry Insurance Company Limited (III), headquartered on the Isle of Man, and its wholly owned subsidiary, Insurco Ltd. with stable outlooks. Best said the ratings “reflect III’s solid overall risk-adjusted capitalization, good investment performance and niche business profile. Offsetting factors are the company’s volatile underwriting performance and lack of a retrocession program.”

Standard & Poor’s Ratings Services has revised its outlook on Guelph, Ont.-based Co-operators Financial Services Ltd. (Co-op Financial), Co-operators General Insurance Co. (Co-op General), and Regina, Sask.-based Co-operators Life Insurance Co. (Co-op Life) to stable from positive. S&P also affirmed its “BBB-” long-term counterparty credit rating on Co-op Financial and its “BBB+” long-term counterparty credit and financial strength ratings on Co-op General and Co-op Life.

Standard & Poor’s Ratings Services has assigned its “BB” senior debt rating to Fairfax Financial Holdings Ltd.’s proposed $464.2 million, 7.75 percent senior notes due in 2022. S&P also assigned its preliminary “BB”senior unsecured debt, “B+” subordinated debt, and “B” preferred stock ratings to FFH’s $750 million universal shelf, from which this issue is a drawdown. The new debt issuance is expected to be exchanged for the existing senior notes outstanding of $464.2 million due in 2012, and therefore leverage figures are expected to be stable with zero incremental debt. The interest rate on the existing notes is 7.75 percent.

Fitch Ratings has assigned Flagstone Reinsurance Limited and Flagstone Reassurance Suisse SA “A-” insurer financial strength (IFS) ratings. Fitch has also assigned Flagstone Reinsurance Holdings, Limited an Issuer Default Rating (IDR) of “BBB+.” The rating outlooks are stable.

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