Fairfax's Stable Ratings
AM Best Affirms Fairfax Financial Holdings' Credit Ratings Amid Strong Earnings and Stable Outlook
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AM Best has affirmed the "a-" (Excellent) Long-Term Issuer Credit Rating for Fairfax Financial Holdings Limited, its US subsidiary, and Zenith National Insurance Corp., according to Montreal Gazette. The affirmation comes on the heels of Fairfax's best financial year ever — the Toronto-based insurer posted record net earnings of $4.77 billion in 2025, up from $3.87 billion in 2024.
CEO V. Prem Watsa called 2025 the "best year in our history." The company's underwriting profit hit a record $1.82 billion, and its book value per share climbed 20.5% to $1,260.19. All ratings carry a stable outlook.
Record Earnings Drive AM Best's Confidence
AM Best pointed to Fairfax's "continued favorable earnings trend" as a key reason for the affirmation, according to Stratford Beacon Herald. The insurer's combined ratio — a measure of underwriting efficiency — came in at 93.0% in 2025. A ratio below 100% means the company made money on its insurance operations before counting investment returns.
Fairfax's total investment portfolio stood at $72.92 billion at year-end 2025. The company also bought back over one million of its own shares for $1.6 billion during the year. AM Best said risk-adjusted capitalization is at its "strongest level," giving the company a strong financial cushion.
What the "a-" Rating Means for Borrowing
The rating covers Fairfax's unsecured debt and preferred equity, including CAD 550 million in senior notes due 2055 and CAD 400 million due 2036, Fairview Post reported. An "a-" rating signals that lenders view Fairfax as a low credit risk. That helps the company borrow at lower interest rates.
Fairfax qualifies as a "Well-Known Seasoned Issuer" in Canada. That status lets it issue new securities under a shelf registration without a set dollar limit. AM Best also affirmed the ratings on securities available under that shelf registration, all with stable outlooks, according to County Market.
Strong History, But Some Clouds on the Horizon
Fairfax has compounded book value per share at roughly 18.5% annually since founder Prem Watsa launched the company in 1985. That track record puts it ahead of peers like Markel Group, which averaged about 7.2% per year over the past decade. Analysts at Seeking Alpha describe Fairfax as a "quality compounder" — but note it is "not a cheap one anymore," trading near 1.3 times book value.
Q1 2026 showed some turbulence. Net earnings fell to $695.7 million, down sharply from $945.7 million in Q1 2025. The drop came mostly from mark-to-market losses on bonds — meaning falling bond prices hurt reported profits even without actual sales. Critics say this shows Fairfax's earnings are more sensitive to interest rate swings than traditional insurers.
Kennedy-Wilson Deal Signals Bigger Strategic Moves
Beyond the rating news, Fairfax is making bold moves. In February 2026, Fairfax joined a consortium led by William McMorrow to take real estate firm Kennedy-Wilson Holdings private in a $1.65 billion deal. The transaction caps a 15-year partnership and is expected to close in Q2 2026, according to The Observer.
Environmental critics are also raising flags. Activist group Investors For Paris Compliance notes that Fairfax is among the world's five largest fossil fuel insurers and lacks climate risk disclosures. At the 2026 annual meeting, 38% of independent shareholders voted in favor of emissions reporting — a "strong signal" of internal pressure, according to Corporate Knights.
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