Fitch Places Fairfax & Odyssey Re on Rating Watch Negative

Business Wire, March 23, 2006

CHICAGO -- Fitch has placed Fairfax Financial Holdings Limited (Fairfax), Odyssey Re Holdings Corp. and its insurance subsidiaries (Odyssey Re), and TIG Holdings Inc. (TIG) on Rating Watch Negative. The rating action on TIG reflects the alignment of TIG's and Fairfax's debt ratings given that Fairfax guarantees TIG's debt. The holding company ratings of Crum & Forster Holdings Corp., and the insurance company ratings of Crum & Forster Insurance Group, Northbridge Financial Insurance Group, and TIG Insurance Group are not affected by this action. (See complete list of ratings below.)

The Negative Rating Watch reflects uncertainty with respect to several recent events, the culmination of which has increased the level of uncertainty beyond Fitch's expectations for the rating.

These recent events include:

-- Odyssey Re's announcement in February 2006 that they were restating financial results for 2001 to 2004 and the first nine months of 2005 to correct errors related to finite reinsurance contracts;

-- Odyssey Re's announcement last week that it would delay its 10-K filing up to 30 days, citing the need for additional time to complete the restatement of its financial results. As a result, Fairfax, which owns 80% of Odyssey Re, has also delayed the filing of its annual report;

-- Fairfax's announcement yesterday that the company and its CEO, Prem Watsa, received subpoenas from the Securities and Exchange Commission (SEC) in connection with an answer to a question on the Feb. 10, 2006 investor conference call concerning the review of the company's finite reinsurance contracts. Fairfax also announced that its independent auditors and a shareholder have received subpoenas from the SEC related to subpoenas issued to Fairfax.

Fitch's ratings of Fairfax and its subsidiaries have incorporated a certain amount of risk related to the ultimate potential negative impact of issues surrounding the company's use of finite reinsurance, including the various subpoenas received previously. Fitch currently adjusts the reported results of Fairfax to exclude approximately $750 million of finite benefits from three contracts.

However, these recent events have added a heightened level of concern that the financial condition of Fairfax and Odyssey Re could be more stressed than what is currently reflected in their ratings. In addition, there is also the increased risk that the ongoing investigations by the SEC and the U.S. Attorney's office for the Southern District of New York could bring about a civil action against the company. Fitch believes that any such action could negatively impact the company's franchise, reputation, and competitive position, in addition to the financial impact of any fines and/or penalties levied.

Fitch expects to revisit the Negative Rating Watch following a review of Fairfax's annual report and Odyssey's 10-K, when filed, for any significant adjustments to the companies' financial position that have not already been factored into the rating. However, even if the impact of any such restatements is not material, the Negative Rating Watch may continue to be maintained due to the uncertainty surrounding the ongoing investigations.

The following ratings have been placed on Rating Watch Negative:

Fairfax Financial Holdings Limited

-- Issuer Default Rating 'BB-';

-- $62 million unsecured due April 15, 2008 'B ';

-- $466 million unsecured due April 15, 2012 'B ';

-- $100 million unsecured due Oct. 1, 2015 'B ';

-- $190 million unsecured due April 15, 2018 'B ';

-- $98 million unsecured due April 15, 2026 'B ';

-- $91 million unsecured due July 15, 2037 'B ';

-- $96 million convertible due July 15, 2023 'B '.

Fairfax, Inc.

-- Issuer Default Rating 'BB-';

-- $101 million exchangeable due Nov. 19, 2009 'B '.

Odyssey Re Holdings Corp.

-- Issuer Default Rating 'BBB-';

-- $50 million series A unsecured March 15, 2021 'BB ';

-- $50 million series B unsecured due March 15, 2016 'BB ';

-- $40 million unsecured due Nov. 30, 2006 'BB ';

-- $80 million convertible due June 15, 2022 'BB ';

-- $225 million unsecured due Nov. 1, 2013 'BB ';

-- $125 million unsecured due May 1, 2015 'BB ';

-- $50 million series A preferred shares 'BB';

-- $50 million series B preferred shares 'BB'.

Odyssey Re Group:

Odyssey America Reinsurance Corporation

Clearwater Insurance Company

-- Insurer financial strength 'BBB '.

TIG Holdings, Inc.

-- Issuer Default Rating 'BB-';

-- TIG Capital Trust I $52 million trust preferred stock due 2027 'B'.

The following ratings remain unchanged by Fitch:

Crum & Forster Holdings Corp.

-- Issuer Default Rating 'BB-';

-- $300 million unsecured due June 15, 2013 'B '.

Crum & Forster Insurance Group:

Crum & Forster Insurance Company

Crum & Forster Indemnity Company

The North River Insurance Company

United States Fire Insurance Company

-- Insurer financial strength 'BBB-'.

Northbridge Financial Insurance Group:

Commonwealth Insurance Company

Commonwealth Insurance Company of America

Federated Insurance Company of Canada

Lombard General Insurance Company of Canada

Lombard Insurance Company