The announcement of the delay follows the company's disclosure on Feb. 9, 2006, that it will restate its financial statements for years 2001 through 2004 as well as for the nine months ended Sept. 30, 2005. The restatement corrected the accounting treatment for certain contract features of seven ceded reinsurance contracts and the accounting treatment of ceding commissions relating to three ceded aggregate excess-of-loss contracts. The need to delay filing Form 10K allows Odyssey additional time to more fully complete their year-end process, which includes a review of the company's finite reinsurance contracts.
Due to Odyssey's need to delay the filing of its Form 10K, Fairfax Financial Holdings Ltd. (Fairfax) [NYSE:FFH] (Toronto, Canada) — which owns approximately 80% of the outstanding shares of Odyssey — has also delayed the filing of its annual report as per Canadian regulatory requirements. As a result, the FSR and ICRs of all of Fairfax's wholly owned operating subsidiaries also have been placed under review with negative implications, as have the operating subsidiaries of Northbridge Financial Corp. (Northbridge) [TSX:NB] (Toronto, Canada). In addition, the debt ratings of Fairfax and its subsidiaries also have been placed under review with negative implications.
These rating actions are the direct result of uncertainties posed by Odyssey's prolonged audit process. If the audit process and A.M. Best's review concludes with no material additional negative information or concerns for Odyssey or Fairfax, A.M. Best expects to remove the under review status and maintain the existing FSRs, ICRs and debt ratings.
For a complete listing of Odyssey Re Holding Corp.'s, Fairfax Financial Holdings Ltd.'s and Northbridge Financial Corp.'s FSRs, ICRs and debt ratings, please visit http://www.ambest.com/press/031703fairfax.pdf.