AM Best Upgrades Issuer Credit Ratings of Northbridge Financial Corporation’s Members and Affirms Credit Ratings of Wentworth Insurance Company Limited

AM Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICRs) to “a+” (Excellent) from “a” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of the members of Northbridge Financial Corporation (Northbridge), which is composed of Federated Insurance Company of Canada, Northbridge General Insurance Corporation, Zenith Insurance Company and Verassure Insurance Company. All companies are domiciled in Ontario, Canada. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Wentworth Insurance Company Limited (Wentworth) (Barbados). The outlook of these Credit Ratings (ratings) is stable. The aforementioned companies are subsidiaries of Fairfax Financial Holdings Limited (Fairfax) [TSX: FFH].

The ratings of Northbridge reflect the group’s balance sheet strength, which AM Best assess as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The upgrade of Northbridge’s Long-Term ICRs follows AM Best’s recognition of implicit support provided by Fairfax to Northbridge. Northbridge’s ratings benefit from the favorable financial flexibility and significant levels of cash and marketable securities held at the ultimate holding company level. In addition, Northbridge benefits from shared resources including ERM, reinsurance, actuarial, talent and investment management among other less quantifiable benefits, such as best practices and capital management. The rating actions also reflect Northbridge’s position within Canada’s commercial insurance market, diversified commercial lines franchise and strong broker distribution network. In recent years, the group has benefited from hardening rates across most lines, as well as strong underwriting results in the small- to mid-market commercial segment. Additionally, these ratings acknowledge the group’s favorable reserve development in most years and the financial flexibility provided by Fairfax, which maintains financial leverage that is in line with its current ratings, as well as additional liquidity sources given its access to capital markets and lines of credit.

The ratings of Wentworth reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also are enhanced by the benefits the company derives from its position in the Fairfax enterprise. In addition, Wentworth’s ratings are supported by its historically profitable underwriting performance and favorable loss reserve development. Though Wentworth’s ratings were placed under review in September 2022, due to volatility in risk-adjusted capitalization, Fairfax has demonstrated support for Wentworth by derisking the investment portfolio and providing capital to support the very strong balance sheet assessment.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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