What’s new: In brief (February 01, 2005)

Standard & Poor’s has assigned the following ratings to Fairfax Financial Holdings’ US$750 universal shelf, registered with Canadian and U.S. regulators: “BB” senior debt; “BB-” subordinated debt; and “B+” preferred stock. S&P does not expect significant amounts of incremental debt to be part of any offerings under the shelf, but notes Fairfax may offer subordinated voting shares, preferred shares, debt securities, warrants and other securities in Canada and the U.S. At the same time, Fairfax has cancelled a previous universal shelf registration statement filed last March, which had about US$130 million in capacity remaining. S&P estimates Fairfax’s ratio of debt to tangible equity as about 50% as of third-quarter 2004.

A.M. Best has issued a stable outlook for the U.S. life and health industry on the back of improved earnings and stronger balance sheets. But the rater says the industry is “at a crossroads” because of the “aggressive competitive stance being taken by major players in key market segments”. Insurers are also feeling the pressure of increasing regulatory and accounting requirements, Best adds. For 2005, life insurers will be dealing with the need for scale to compete in many segments as costs rise, volatile earnings and diminished long-term capitalization, and even further regulatory scrutiny.

The next monthly luncheon of the Insurance Brokers of Toronto Region will feature guest speaker Mike Colle, Parliamentary Assistant to the Minister of Finance, discussing the Ontario government’s position on insurance. The luncheon is set for February 15 at 12:00 p.m. at Toronto’s Ramada Hotel Don Valley. For details, visit www.ibtr.org.