Dominion Bond Rating Service is changing the trend of Fairfax Financial Holdings Ltd.’s senior unsecured long-term debt to stable from negative.

The trend was changed to negative back in December 2002 due to concerns at the time about the subsidiary operating company TIG Insurance Company and the high degree of leverage at the Fairfax level, DBRS reports.

Now, it says, “The trend change to stable reflects the company’s recent announcement of a planned US$300 million equity issue, subject to regulatory approvals. This will improve the net debt-to-capital ratio by about 6% on a pro forma basis, and will also significantly add to the liquidity at the Fairfax level.”

It also notes, “Although the four hurricanes in Florida this year and continued losses related to the TIG runoff led to a sizeable loss in the third quarter, core operating results continued to improve. Fairfax reported strong core underwriting performance in the third quarter (excluding hurricane losses) with a combined ratio of 90.0%, and in Canada, Northbridge Financial Corporation reported a very strong core combined ratio of 79.8% and 87.5% for the nine months ending September 2004, reflecting the strong commercial insurance market.”

“The company’s large investment portfolio of over US$12.0 billion is invested very conservatively and action has been taken to further protect the portfolio from market volatility,” it adds.