Moody's has downgraded the senior debt rating of Fairfax Financial to reflect poor operating earnings over the past several years, negative operating cash flows and its weakened capitalisation.
The international ratings agency lowered the rating to Ba2 from Baa3.
Moody's said Fairfax's poor performance was caused by its acquisition of underperforming insurers and reinsurers. But, it said plans to re-underwrite and re-price should help profitability in the medium term.
A positive factor, Moody's said, was Fairfax's portfolio of cash and short-term investments, expected to reach $800m (£552.8m) by the end of the year. It said this could be used to support Fairfax's US primary insurance operation.
