Dominion Bond Rating Service has placed the rating of Fairfax Financial Holdings Limited “Under Review with Negative Implications”, following the announcement that Fairfax will delay the release of its annual report.

The delay in Fairfax’s filing is due to the delay by its subsidiary, Odyssey Re Holdings Corp., in filing its own annual report. Odyssey Re had previously announced the restatement of its financial results for 2001 through 2004 and requires additional time to complete the year-end process, DBRS notes.

“In addition to the uncertainties related to these delays, DBRS’s review will also consider the outlook for the Fairfax businesses and debt ratios,” the rating agency says. “Despite an additional US$300 million in new equity issued in 2005, two years of severe hurricane activity and the continued earnings drag of the company’s run-off business have kept the debt ratio as high as it has ever been, at 43%. However, the company has maintained significant cash at the holding company level, and has reduced its refinancing risk by extending its near-term maturities.”

“The company’s inability to address its high leverage ratio has become a source of increased concern as it impairs the company’s financial flexibility,” it adds.