Moody's lifts Odyssey outlook to stable

Moody's Investors Service said it has revised its outlook for Odyssey Re Holdings Corp., senior debt rated Baa3, and its rated insurance operating subsidiaries, insurance financial strength rated A3, to stable from negative.

The change in outlook reflects the resolution of issues surrounding the company's recent accounting restatements, the modest impact of the restatement on shareholders' equity, as well as a favorable view of the company's future profitability and business prospects, the agency said.

Moody's said the ratings are based on expectations that the company will maintain discipline in the reinsurance market, reducing premium volume in the event of pricing weakness; adjusted financial leverage, currently at about 28%, will moderate to under 25% in the medium term; gross underwriting leverage will remain within the mid-single digits; cash coverage of interest and stockholder dividends will remain at 3x or better; adverse reserve development will remain less than 5% of total loss reserves, and losses from catastrophes will not result in an impact on shareholders' equity of greater than 10%.

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