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Moody's affirms Odyssey Reinsurance's insurance financial strength rating

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Moody's affirms Odyssey Reinsurance's insurance financial strength rating

Moody's affirmed the A3 insurance financial strength rating of Odyssey Reinsurance Co., a wholly owned subsidiary of Fairfax Financial Holdings Ltd.

The outlook for Odyssey Reinsurance's rating was changed to positive from stable, reflecting the company's good profitability relative to higher-rated reinsurance peers and healthy capitalization.

Moody's said the affirmation shows Odyssey Reinsurance's continued progress in diversifying its business across many countries in Europe, the Middle East, Africa and Asia. The company's strengths are tempered by increased competition in the global reinsurance market, Moody's said, adding that pricing is expected to improve following the series of catastrophe losses in the U.S. in the third quarter.

Given the positive outlook, Moody's said a downgrade is unlikely. The ratings agency noted several factors that could lead to an upgrade, including the company's continued development of its core franchise while maintaining a moderate catastrophe risk profile, strong overall profitability in line with higher-rated peers and meaningful reduction of high-risk assets.