S&P: Fairfax Financial on positive watch

Standard & Poor's said it placed its counterparty credit and financial strength ratings on Fairfax Financial Holdings Ltd. and the operating insurance companies and Crum & Forster Holdings Corp. on CreditWatch with positive implications.

The agency said that the CreditWatch is based on strong earnings in 2007 and we expect 2008 to be another strong year, noting that Fairfax exhibited strong and improved underwriting and a combined ratio of 94% in 2007.

Investment results in 2007 were very strong due to significant increased net investment gains related to credit default swaps of $1.1 billion, which Fairfax sold for proceeds of $199 million in 2007 and $651 million through Feb. 15, the agency said.

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