DBRS Confirms Lindsey Morden Group Inc. at B (low)

Dominion Bond Rating Service (“DBRS”) has today confirmed the rating of Lindsey Morden Group Inc. (“Lindsey” or the “Company”) at B (low) with a continuing Negative trend.

The financial position of Lindsey remained weak in 2004, but the Company has made the strengthening of its balance sheet one of its main priorities in the near term. Debt levels remain very high, with liquidity pressure, but Lindsey can continue to rely on its parent, Fairfax Financial Holdings Limited (“Fairfax”), to provide support until March 2006. As part of its refinancing strategy, in June 2005, the Company announced a rights offering which is expected to raise about Cdn$40 million, with the proceeds to be used to reduce debt. Lindsey also previously established a loan agreement for Cdn$105 million with Brascan Asset Management, which can be renewed to March 31, 2006.

More positively, given that Lindsey is a holding company, which through its Cunningham Lindsey subsidiaries provides insurance claims adjusting and other services internationally, it has the benefit of geographic diversification. Past results have been favourable in the U.K. segment, and with the significant hurricane activity in the second half of 2004 improving claims processing volumes, the international segment reported favourable results recently. Partly reflecting this improvement, first quarter 2005 operating earnings were favourable, increasing to Cdn$10.9 million as compared to Cdn$4.7 million in the prior year period.

In addition to its refinancing strategy, the Company is developing products to reduce its dependency on weather-related events and continues to reduce costs. Another major initiative involves the turnaround of the U.S. division. Lindsey has 94 branches and about 370 employees in the U.S., and sees opportunities for growth in a fragmented independent insurance adjusting market. The Company plans to promote the Cunningham Lindsey brand in the U.S. and grow commercial (as opposed to individual) insurance adjusting lines.

The rating remains on a Negative trend given the very high debt levels, limited financial flexibility, and challenging market conditions.