Exhibit 10.43
Amendment Number 1 to Investment Agreement
This Amendment Number 1 (“Amendment”) to the Investment Agreement (“Agreement”)
dated as of October 1, 2002, between Crum & Forster Indemnity Company and
Hamblin Watsa Investment Counsel Ltd. and Fairfax Financial Holdings Limited is
effective as of April 1, 2007.

  1.   Capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Agreement.     2.   The last sentence of
Section 2 of the Agreement is hereby amended to read in its entirety as follows:

The investment guidelines shall at all times be in compliance with the
investment statutes of the Delaware Insurance Code.

  3.   Section 3A(e) of the Agreement is hereby amended to read in its entirety
as follows:

Such transactions between affiliated companies must comply with the prior
approval or reporting requirements of the Delaware Insurance Code.

  4.   The second sentence of Section 10 of the Agreement is hereby amended to
read in its entirety as follows:

Attached hereto as Schedule C is a copy of the current fee schedule and FFH
agrees to give us thirty (30) days prior written notice of any change in such
schedule, which change shall comply with the prior approval or reporting
requirements of the Delaware Insurance code.

  5.   Section 17 of the Agreement is hereby amended to read in its entirety as
follows:

This Agreement, including the schedules attached hereto and made a part hereof,
may only be amended by written agreement signed by the parties and must comply
with the prior approval or reporting requirements of the Delaware Insurance
Code; provided, however, that any amendment to Schedule A may become effective
without the prior approval of the Delaware Department of Insurance, provided
that such amendment shall be filed with the Delaware Department of Insurance not
later than its effective date and shall, if disapproved by the Delaware
Department of Insurance, be void as of the date of such disapproval.

  6.   Section 2, Governing Laws: Jurisdiction: Service of Process, of
Schedule D of the Agreement is hereby amended to read in its entirety as
follows:

This Agreement shall be governed and construed in accordance with the laws of
Delaware, our state of domicile. Each of the parties thereto submits to the
jurisdiction of the state and federal courts of Delaware, in any action or
proceeding arising out of or relating to this Agreement and all claims in
respect of any such action or proceeding may be heard or determined in any such
court; and service of process, notices and demands of such courts may be made
upon you by personal service to the person and at the address contained in
Section 1 above as such person or address may be changed from time to time.

  7.   Section 3, Insurance Department Approval, of Schedule D of the Agreement
is hereby amended to read in its entirety as follows:

This Agreement may be subject to the non-disapproval or approval of the Delaware
Department of Insurance, and such terms and conditions hereof as may be required
by the Delaware Department of Insurance to be altered or amended shall be deemed
acceptable to the parties hereto, to the extent same shall not change the
substance and intent of this Agreement.

  8.   Section 4, Inspection of Records, of Schedule D of the Agreement is
hereby amended to read in its entirety as follows:

You and we and the duly authorized representatives of each of us shall, at all
reasonable times, each be permitted access to all relevant books and records of
the other pertaining to this Agreement. You and your duly authorized
representatives shall provide to the Delaware Department of Insurance, within
fifteen (15) days of any request from the Delaware Department of Insurance
therefor, copies of all your books and records as they pertain to us (or any
portion thereof as may be specifically requested).

  9.   Schedule A is hereby amended to read in its entirety as attached hereto
in Exhibit A.     10.   Unless specifically modified in this Amendment, all
other terms and conditions contained in the Agreement shall remain in full force
and effect.

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute this Amendment as of the date written below.

                 
Hamblin Watsa Investment Counsel Ltd.
          Crum & Forster Indemnity Company    
 
               
By:/s/ Paul Rivett
          By: /s/ Dennis J. Hammer    
 
         
 
   
Authorized Signature
Paul Rivett
          Authorized Signature
Dennis J. Hammer    
 
               
Printed Name
          Printed Name    
Vice President & Chief Operating Officer
          Senior Vice President, Controller    
 
               
Title
          Title    
 
               
Fairfax Financial Holdings Limited
               
 
               
By: /s/ Paul Rivett
               
 
               
Authorized Signature
               
Paul Rivett
 
Printed Name
               
Vice President & Chief Legal Officer
 
               
Title
               

 

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SCHEDULE A
INVESTMENT GUIDELINES
FUNDAMENTAL OBJECTIVES

1.   Invest on a long-term basis in accordance with applicable insurance
regulatory guidelines.   2.   Ensure preservation of invested capital for
policyholder protection, always providing sufficient liquidity for the payment
of claims and other policy obligations.

GUIDELINES

1.   Approach

All investments are to be made using the long-term value investing approach by
investing in the securities of companies and other entities at prices below
their underlying long-term values to protect capital from loss and earn income
over time and provide operating income as needed.
With regard to equity securities, the investment manager will attempt to
identify financially sound companies and other entities with good potential
profitability which are selling at large discounts to their intrinsic value.
Appropriate measures of low prices may consist of some or all of the following
characteristics: low price earnings ratios, high dividend yields, significant
discounts to book value and free cash flow. Downside protection is obtained by
seeking a margin of safety in terms of a sound financial position and a low
price in relation to intrinsic value. Appropriate measures of financial
integrity which are regularly monitored, include debt/equity ratios, financial
leverage, asset turnover, profit margin, return on equity, and interest
coverage.
As a result of this long-term value investing approach, it is anticipated that
purchases will be made when economic and issue-specific conditions are less than
ideal and sentiment is uncertain or negative. Conversely, it is expected that
gains will be realized when issue-specific factors are positive and sentiment is
buoyant. The investment time horizon is one business cycle (approximately
3-5 years).
With respect to fixed income securities, the long-term value investing approach
is similar. The investment manager will attempt to purchase attractively priced
bonds offering yields better than treasury bonds with maturities of 30 years or
less that are of sound quality, i.e. whose obligations are expected to be fully
met as they come due. Rating services are not regarded as an unimpeachable
source for assessing credit quality any more than a broker’s recommendation on a
stock is necessarily correct. With any form of investment research and
evaluation, there is no substitute for the reasoned judgment of the investment
committee and the investment manager.

2.   Liquidity

An adequate cash flow shall be maintained to ensure that claims and operating
expenses are paid on a timely basis. An operating cash position is to be
maintained at appropriate levels and will be managed by the insurance company in
accordance with an approved list of liquid investments, as determined from time
to time by the investment committee. These securities will be managed by the
insurance company as part of the treasury function and are primarily restricted
to treasury and agency securities of the U.S. government.

3.   Regulatory

All applicable insurance regulations will be complied with.

4.   Diversification

The portfolio is to be invested in a wide range of securities of different
issuers operating in different industries and jurisdictions in order to
diversify risk.

5.   Prudent Person Rule

Prudent investment standards are considered in the overall context of an
investment portfolio and how a prudent person would invest another person’s
money without undue risk of loss or impairment and with a reasonable expectation
of fair return.

6.   Investment Committee

The board of directors of the insurance company shall appoint an investment
committee that shall consist of at least one member of the board of directors of
the insurance company and any other members as the board of directors of the
insurance company deems appropriate. The investment committee shall meet at
least once each quarter to review the investments and loans of the insurance
company.

 

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STRATEGY

1.   Maintain Adequate Liquidity

A detailed review of portfolio liquidity is undertaken on a periodic basis. This
liquidity analysis determines how much of each portfolio is in cash or can be
converted into cash in a given time period. The insurance company determines its
near term liquidity requirements and the liquidity of the portfolio will be
modified from time to time to match such near term requirement.

2.   Asset Allocation

The asset allocation will be determined by the investment manager and will
include short-term investments that will generate appropriate cash flows and
long- term investments such as stocks and bonds, both domestic and foreign, that
generate investment gains. The asset allocation will be in monitored from time
to time in order to comply with regulatory guidelines and meet insurance policy
liabilities.

3.   Foreign Exchange Risk

The investment manager shall use its discretion to hedge any foreign currency
investments and exposures. The investment manager may use a variety of methods
to reduce such exposures, including forward foreign exchange contracts, currency
options and natural hedging with foreign pay liabilities of the insurance
company. Un-hedged foreign investments will be limited to 10% of admitted assets
at cost, subject to adjustment to conform with applicable insurance regulatory
requirements. Un-hedged exposure above this amount must be approved by the
investment committee.

4.   Interest Rate Risk

Interest rate risk will be minimized primarily through investment in a variety
of term to maturity fixed income securities with maturities less than thirty
years. Maximum fixed income portfolio duration is limited to the equivalent of a
twenty year term to maturity treasury security.
INVESTMENT CLASS EXPOSURE
The following exposure ranges established by the investment committee shall be
monitored and maintained by the investment manager for the stated asset classes:

          Class   Range
Equities
    0-25 %
Fixed Income
    0-100 %

Within the fixed income portfolio, the taxable/tax exempt mix will be determined
relative to the consolidated tax position of the insurance company and its
affiliates and the relative investment attractiveness of available tax exempt
securities.
The investment committee will monitor the total asset class exposure and, if
deemed appropriate, will provide specific direction from time to time to the
investment manager with respect to the asset exposure ranges.
RETURN EXPECTATIONS
The foregoing asset class exposure is expected, on an annual basis, to result in
returns better than the Consumer Price Index plus 3% over a ten year period
before the disbursement of investment management fees. However, in any one year
the annual return may be significantly above or below this expectation.
INVESTMENT OBJECTIVES OF THE INVESTMENT MANAGER
The investment manager, subject to regulatory and insurance company imposed
constraints mentioned elsewhere, expects to provide additional returns to those
returns that would be earned by the alternative of passively managing a
surrogate market index.
Measured over four year moving periods, performance of the investment manager is
expected to result in the following returns:

     
All Equities
  S&P 500 + 1% point
Fixed Income:
   
     Taxable Bonds
  Merrill Lynch Intermediate Treasury Index + 0.25%      Tax-Advantaged Bonds
Lehman Brothers 3&5 Year State GO Indexes

 

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AGGREGATE INVESTMENT LIMITS, PERMITTED INVESTMENT
CATEGORIES AND INDIVIDUAL INVESTMENT LIMITS
PERMITTED INVESTMENT CATEGORIES WITHIN ASSET CLASSES
The following are some examples of permitted investments within each asset
class:

     
Equity
  Common shares, rights and warrants.
 
   
Fixed Income
  Bonds, debentures, preferred shares, including those convertible into common
shares.
 
   
Cash
  Cash on hand, demand deposits, treasury bills, short-term notes and bankers’
acceptances, term deposits and guaranteed investment certificates.

All of the above may be either U.S. domestic, Canadian, or other foreign
investments.
Convertible preferred securities will be classified as equities if the preferred
dividend is not being paid.
Private placement issues in public companies are allowed.
INVESTMENT CONSTRAINTS
All investments will be made in accordance with all applicable insurance
legislation as amended from time to time.
INDIVIDUAL INVESTMENT LIMITS
Any combination of investments in any one corporate issuer will be limited to a
maximum of 3% of admitted assets.
QUALITY CONSTRAINTS
The investment manager may invest in the permitted investment categories subject
to the following quality constraints:
Investments in money market instruments (less than or equal to 1 year term) will
be limited to those included on the list approved by the insurance company. This
list will include money market instruments of the U.S. Treasury, agencies of the
U.S. government, and as a minimum commercial paper rated A1 or higher by Moody’s
and rated P1 or higher by Standard & Poor’s.
Investments in bonds and preferred securities will be limited by bond rating
category as follows:
LIMITS AS      % OF ADMITTED ASSETS

                  Bond Rating   % of Total   Min./Max.
A or better
    50 %   Min.
BBB
    50 %   Max.
Less than BBB
    20 %   Max.

The above limits are subject to adjustment to conform with applicable insurance
regulatory requirements.
Limits are determined on a cost basis and include convertible securities.
Downgrades will be taken into account when making new investments but will not
necessarily result in the sale of existing positions.
Securities which are not rated by any public rating agency must be rated by the
investment manager and included as part of the categories above for the purposes
of determining overall exposure by bond rating category.
Any exceptions to the above must be approved by the investment committee.
PROHIBITED INVESTMENTS
In addition to any applicable insurance legislation prohibitions:

(a)   No Real Estate will be purchased without investment committee approval.  
(b)   No Mortgages on real estate will be purchased without investment committee
approval. The exceptions to this are obligations issued by an agency of the U.S.
Government, or by U.S. domiciled corporations that are issued as part of a
registered public offering that also meet the minimum quality tier requirements.

 

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FOREIGN INVESTMENT LIMITS
Foreign Securities may be purchased in compliance with applicable insurance
legislation and with the policy on foreign exchange risk outlined herein. Unless
otherwise required by applicable insurance legislation, Canadian securities
shall not be considered foreign securities and securities issued by U.S.
domestic companies or other U.S. domestic entities that are denominated in
foreign currencies shall not constitute foreign securities.
OTHER
Derivative securities may be purchased up to 7.5% of the portfolios cost at
book, subject to adjustment to conform with applicable insurance regulatory
requirements. Use of derivative investments is infrequent and primarily for
hedging purposes. The aforementioned limit on the purchase of derivative
securities shall not apply to traditional securities with limited embedded
derivative components such as convertible bonds and optional maturity date
bonds.