A.M. Best Affirms Ratings of CRC (Bermuda) Reinsurance Limited

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the financial strength of A (Excellent) and issuer
credit rating of "a" of CRC (Bermuda) Reinsurance Limited (CRC) (Bermuda). CRC
is a direct wholly owned subsidiary of Fairfax Financial Holdings Limited
(Fairfax) (Toronto, Canada) [NYSE: FFH, TSX: FFH]. The outlook for both ratings
is stable.

The ratings and outlook reflect CRC`s adequate capitalization, favorable
long-term operating and underwriting performance and the implicit and explicit
support provided by Fairfax. The majority of premiums written by CRC is ceded
from the subsidiaries of Northbridge Financial Corporation (Northbridge)
(Canada), which is currently wholly owned by Fairfax, subsequent to its tender
offer in first quarter 2009 for all of the remaining shares of Northbridge,
which Fairfax did not currently own.

Partially offsetting these positive rating factors is the significant
underwriting loss posted by CRC in 2008, the increased risk the company has
taken on through its new 40% quota share with Advent Syndicate 780 and CRC`s
limited source of business, which is concentrated with Northbridge. CRC also is
exposed to the ongoing competitive pricing environment as well as
weather-related losses. Despite these attenuating factors, on balance, A.M. Best
views the outlook as stable.

CRC`s underwriting performance deteriorated in 2008 as soft market conditions
and difficult weather conditions in Canada negatively affected results, which
have historically been positive. Sub par underwriting results in 2008, however,
were offset by significant realized gains mainly from the company`s equity
hedges more than offsetting the declines in its equity position. CRC`s loss
reserve development has been variable over the years but has cumulatively proven
to be redundant. The investment portfolio has remained conservative with the
majority of assets invested in Canadian government bonds and cash and marketable
securities.

Through year-end 2008, CRC maintained a conservative risk profile. However,
beginning in 2009 CRC entered into a 40% quota share reinsurance contract with
Advent Syndicate 780 and its affiliate, Advent Capital (Holdings) Plc (United
Kingdom), which is a majority owned Fairfax affiliate. The assumed retrocessions
consist of worldwide property and catastrophe business, which introduces a
heightened element of risk and could result in greater variability of earnings.
Fairfax has provided CRC a $15 million guarantee to support its balance sheet.
This explicit support was a factor in the affirmation of CRC`s ratings, and A.M.
Best believes that CRC`s capital level will remain supportive of its ratings.

For Best`s Ratings, an overview of the rating process and rating methodologies,
please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors that may have been considered, can be found
at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
Joyce Sharaf, 908-439-2200, ext. 5046
joyce.sharaf@ambest.com
Daniel Ryan,908-439-2200, ext. 5325
daniel.ryan@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009