AM Best Affirms Credit Ratings of Members of Northbridge Financial Corporation

OLDWICK, NJ–(BUSINESS WIRE)–am the best has the Financial Strength Rating of A (excellent) and the Long-Term Issuer Credit Rating of “a” (excellent) from the members of the Northbridge Financial Corporation (Northbridge), of which the Federated Insurance Company of Canada (Manitoba, Canada) is a part, confirmed, Northbridge General Insurance Corporation, Zenith Insurance Company and Verassure Insurance Company. The outlook of these credit ratings (ratings) is Stable. All companies are based in Ontario, Canada, unless otherwise noted. Northbridge Financial Corporation is a subsidiary of Fairfax Financial Holdings Limited (Fairfax) [TSX: FFH].

Northbridge’s ratings reflect the group’s balance sheet strength, which AM Best rates as the strongest, its reasonable operating performance, neutral business profile and adequate corporate risk management.

The rating affirmations also reflect Northbridge’s position in Canada’s commercial insurance market, diversified commercial line franchise and strong broker distribution network. In recent years, the group has benefited from increasing rates in the transportation segment as well as strong underwriting results in the small to medium commercial segment. In addition, these ratings recognize the favorable development of the Group’s reserves over most years and the financial flexibility offered by Fairfax, which maintains financial leverage consistent with its current ratings, as well as additional sources of liquidity due to its access to capital markets and lines of credit.

These positive valuation factors are partially offset by the intensely competitive market conditions that exist in Canada’s commercial and consumer segments. In addition, there is some volatility in the Group’s investment returns, although the Group has proven adept at managing its capital levels and offsetting volatility with generally favorable underwriting performance.

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This press release relates to ratings published on AM Best’s website. All ratings information relating to the press release and relevant disclosures, including details of the issuing authority for each rating referenced in this press release, can be found at AM Best Last review activity site. For more information on the use and limitations of rating opinions, see Best Credit Ratings Guide. Information on the proper use of Best’s credit ratings, Best’s performance ratings, Best’s preliminary credit ratings and AM Best press releases can be found here Guide to Proper Use of Best’s Ratings & Assessments.

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