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Rating Action:
Moody’s affirms Crum & Forster’s Baa1 insurance
financial strength rating; outlook remains positive
17 December 2021
New York, December 17, 2021 – Moody’s Investors Service (”Moody’s”) has affirmed the Baa1
insurance financial strength rating on United States Fire Insurance Co. and North River Insurance
Co., the primary operating subsidiaries in the intercompany pool of Crum & Forster Holdings Corp.
(collectively, Crum & Forster). Crum & Forster is wholly owned by Fairfax Financial Holdings Limited
(Baa3 senior, stable). The rating outlook for Crum & Forster is positive.
RATINGS RATIONALE
According to Moody’s, the rating affirmation reflects the company’s diversified product mix in
specialty and standard commercial insurance markets and good underwriting profitability in the
past several years. The company also benefits from being part of Fairfax, a large and diversified
organization. These strengths are offset by significant exposure to high risk assets relative to
statutory surplus, potential volatility from casualty reserves, large catastrophe events in the northeast
region, and high financial leverage at Fairfax Financial.
The positive outlook reflects Crum & Forster’s stable underwriting results coupled with a shift to
niche specialty lines that are generally more profitable than standard commercial lines. The group’s
significant exposure to high risk assets in its investment portfolio has resulted in volatile net income
and fluctuations in the company’s capital; however, Fairfax has provided capital support as needed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following factors could result in an upgrade for Crum & Forster: 1) reduction in high-risk assets
relative to shareholder’s equity; 2) continued development of the core franchise while maintaining a
moderate catastrophe risk profile; 3) combined ratio below 100%; and 4) gross underwriting leverage
at or below 4.5x.
Given the positive outlook, a downgrade is unlikely. However, the following factors could lead to
a return to a stable outlook for Crum & Forster: 1) a decline in shareholder’s equity of more than
10%; 2) significant adverse reserve development; 3) combined ratio materially above 100%; and 4)
adjusted financial leverage consistently above 35% and earnings coverage consistently less than 2x
at Fairfax Financial.
The following ratings have been affirmed:
United States Fire Insurance Co. – insurance financial strength at Baa1;
North River Insurance Co. – insurance financial strength at Baa1.
The outlook for each entity remains positive.
Crum & Forster’s operating subsidiaries mostly write specialty insurance coverages, with specific
targets by product, geography or customer group. Products offered include umbrella liability, accident
and health, pet health insurance, and general liability. The group’s excess and surplus casualty
division primarily provides liability insurance for security-related, construction, manufacturing
and other classes, as well as umbrella liability on mainly smaller accounts. Crum & Forster also
writes property coverage through its small-risk insurer, Seneca, and through certain other specialty
businesses. As of September 30, 2021, Crum & Forster reported statutory surplus of approximately
$1.8 billion.
The principal methodology used in these ratings was Property and Casualty Insurers
Methodology published in September 2021 and available at
https://www.moodys.com/
researchdocumentcontentpage.aspx?docid=PBC_1254163
. Alternatively, please see the Rating
Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see
the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure
form. Moody’s Rating Symbols and Definitions can be found at:
https://www.moodys.com/
researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement
provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or
note of the same series, category/class of debt, security or pursuant to a program for which the
ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices.
For ratings issued on a support provider, this announcement provides certain regulatory disclosures
in relation to the credit rating action on the support provider and in relation to each particular credit
rating action for securities that derive their credit ratings from the support provider’s credit rating.
For provisional ratings, this announcement provides certain regulatory disclosures in relation to the
provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent
to the final issuance of the debt, in each case where the transaction structure and terms have not
changed prior to the assignment of the definitive rating in a manner that would have affected the
rating. For further information please see the ratings tab on the issuer/entity page for the respective
issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies)
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associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach
exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated
entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no
amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited
Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the
related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in
our credit analysis can be found at
http://www.moodys.com/researchdocumentcontentpage.aspx?
docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s
affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No
1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the
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The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s
affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada
Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK.
Further information on the UK endorsement status and on the Moody’s office that issued the credit
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Please see www.moodys.com for any updates on changes to the lead rating analyst and to the
Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory
disclosures for each credit rating.
Chris Scott
AVP-Analyst
Financial Institutions Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Sarah Hibler
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
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