TEXT - S&P rates Crum & Forster units

Mon Dec 3, 2012 4:29pm EST

Overview
     -- Fairfax Financial Holdings Ltd. (FFH) wholly owns the core operating 
companies of Crum & Forster Insurance Group (C&F).
     -- We have assigned a financial strength rating of 'A-' and a positive 
outlook to the operating companies.
     -- We expect the operating companies to remain integral members of the 
Fairfax companies.

Rating Action
On Dec. 3, 2012, Standard & Poor's Ratings Services assigned its 'A-' 
long-term financial strength and counterparty credit ratings to Crum & Forster 
Indemnity Co., American Underwriters Insurance Co., First Mercury Insurance 
Co., Seneca Insurance Co. Inc., and Seneca Specialty Insurance Co.

Rationale
The ratings on Crum & Forster Indemnity Co. are based on its membership within 
C&F's intercompany pooling agreement. The ratings on American Underwriters 
Insurance Co. and First Mercury Insurance Co. are based on their 100% 
reinsurance agreement with United States Fire Insurance Co. The ratings on 
Seneca Insurance Co. Inc. and Seneca Specialty Insurance Co. are based on the 
specialty business that the companies write, which is essential to C&F's 
strategy of focusing more on specialty lines than the middle-market. These two 
companies are managed as profit centers with other C&F insurance operations.

We consider C&F core within the FFH corporate structure. Since its 
acquisition, C&F has been a significant source of dividends for FFH to support 
holding-company debt service and expansion. C&F's focus on underwriting a 
broad product mix of specialty insurance provides FFH a diverse source of 
premium revenue. Management will leverage production relationships with 
affiliate companies to enhance C&F's business prospects.

Outlook
The positive outlook is linked to our outlook on FFH. We expect the C&F 
operating companies to remain core operations of FFH based on their 
consolidated contributions to profits and gross written premiums, without any 
material change to C&F's business mix.

Related Criteria And Research
Group Methodology, April 22, 2009

Ratings List
New Rating
American Underwriters Insurance Co.
Seneca Specialty Insurance Company
Seneca Insurance Company Inc.
Crum & Forster Indemnity Co.
First Mercury Insurance Co.
 Counterparty Credit Rating
  Local Currency                        A-/Positive/--     

American Underwriters Insurance Co.
Seneca Specialty Insurance Company
First Mercury Insurance Co.
Crum & Forster Indemnity Co.
Seneca Insurance Company Inc.
 Financial Strength Rating
  Local Currency                        A-/Positive/--
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