The ratings news just keeps on coming Monday. First Royal Bank of Canada was downgraded by Moody's, then S&P downgraded Manulife Financial Corp., and now Moody's has put Fairfax Financial Holdings Ltd. under review for a possible upgrade.

At the moment, Fairfax's senior unsecured debt is rated Ba1. To be upgraded, Moody's said Fairfax needs to maintain holding company liquidity in the range of $750-million (U.S.) to $1-billion in cash and marketable securities and keep leverage under 35 per cent. It would also help if some of the main insurance and reinsurance companies Fairfax is invested in are upgraded.

Fairfax was under review because Moody's said the company has demonstrated "a continuation of favourable trends in terms of the group's financial flexibility, abated risk at its run-off operations, and overall improved diversification of the Fairfax group of companies."

The review will focus on three areas: the likelihood of Fairfax maintaining its liquidity, management's strategy for subsidiaries in the face of consistent weakness in property and casualty insurance and the run-off operations' effect on earnings.

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