<PAGE>

                                                                    EXHIBIT 10.5

                           MASTER REPURCHASE AGREEMENT


Effective as of January 8, 2004 by and between Crum and Forster Insurance
Company ("C&F Insurance") and Fairfax Financial Holdings Limited ("Fairfax").

WHEREAS, C&F Insurance, in the normal course of its business, may from time to
time agree to pay claims to policyholders that require it to sell or otherwise
liquidate certain securities or other invested assets in order to raise
sufficient cash to make such payments; and

WHEREAS, C&F Insurance typically pays policyholder claims prior to receiving
reimbursement for such claims from its reinsurers, requiring C&F Insurance to
make cash payments on claims that can greatly exceed its ultimate net liability
for such claims and creating a timing gap between payments by C&F Insurance and
recovery from its reinsurers; and

WHEREAS, Fairfax, as the indirect owner of C&F Insurance, has an interest in
maximizing the return on invested assets of C&F Insurance; and

WHEREAS, Fairfax seeks to assist C&F Insurance in managing its cash flow to
eliminate or minimize investment losses resulting from the sale or liquidation
of securities in order to cover short-term cash requirements.

NOW, THEREFORE, for due and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:

1.       TRANSACTIONS

         From time to time, the parties hereto may enter into transactions (each
         a "Transaction") in which C&F Insurance agrees to transfer to Fairfax
         certain securities ("Securities") against the transfer of an amount in
         United States dollars equal to the fair market value of such Securities
         on the date of transfer, such amount not to exceed U.S. $5,000,000
         singly or, when combined with amounts then outstanding from any other
         Transaction, in the aggregate (the "Purchase Price") by Fairfax to C&F
         Insurance and Fairfax agrees to transfer to C&F Insurance such
         Securities on or before one hundred eighty-three (183) days after the
         transfer is made (the "Repurchase Date"), against the transfer of funds
         by C&F Insurance. From the date of the transfer of the Securities from
         C&F Insurance to Fairfax until such time that the Securities are
         returned by Fairfax to C&F Insurance, the Securities will be held by
         The Bank of New York. The transactions pursuant to the Agreement shall
         be reported in accordance with SSAP 45.

2.       REPURCHASE

         C&F Insurance shall repurchase the Securities from Fairfax on or before
         the Repurchase Date for an amount not to exceed the sum of the Purchase
         Price and the aggregate amount obtained by daily application of the
         stated interest rate of each Security to the Purchase Price paid for
         such Security on a 360 or 365 day per year basis depending on the
         interest period of the underlying security for the actual number of
         days during the period



                                       1
<PAGE>

         commencing on the (and including) the Purchase Date and ending on (but
         excluding) the Repurchase Date.

3.       INCOME PAYMENTS

         C&F Insurance shall be entitled to receive, with respect to any
         Security at any time, an amount equal to any principal thereof and all
         interest, dividends or other distributions thereon ("Income") paid or
         distributed in respect of the Securities that are not otherwise
         received by C&F Insurance to the full extent it would be so entitled if
         the Securities had not been sold to Fairfax. Fairfax shall, as the
         parties may agree (or, in the absence of any such agreement, as Fairfax
         shall reasonably determine in its discretion), on the date such Income
         is paid or distributed either (i) transfer to or credit to the accounts
         of C&F Insurance such Income with respect to any Securities or (ii)
         with respect to Income paid in cash, apply the Income payment or
         payments to reduce the amount, if any, to be transferred to Fairfax by
         C&F Insurance upon termination of the Transaction.

4.       SECURITY INTEREST

         Although the parties intend that the Transaction be a sale and purchase
         and not a loan, in the event the Transaction is deemed to be a loan,
         C&F Insurance shall be deemed to have pledged to Fairfax as security
         for the performance by C&F Insurance of its obligations under the
         Transaction, and shall be deemed to have granted to Fairfax a security
         interest in, all of the Securities and all income thereon and other
         proceeds thereof.

5.       PAYMENT AND TRANSFER

         Unless otherwise mutually agreed, all transfers of funds hereunder
         shall be in immediately available funds. All Securities transferred by
         one party hereto to the other party (i) shall be in suitable form for
         transfer or shall be accompanied by duly executed instruments of
         transfer or assignment in blank and such other documentation as the
         party receiving possession may reasonably request, (ii) shall be
         transferred on the book-entry system of a Federal Reserve Bank, or
         (iii) shall be transferred by any other method mutually acceptable to
         C&F Insurance and Fairfax.

6.       SEGREGATION OF SECURITIES

         To the extent required by applicable law, all Securities in the
         possession of Fairfax shall be segregated from other securities in its
         possession and shall be identified as subject to this Agreement.
         Segregation may be accomplished by appropriate identification on the
         books and records of the holder, including a financial or securities
         intermediary or a clearing corporation.

7.       NOTICES AND OTHER COMMUNICATIONS

         Any and all notices or other communications hereunder shall be given by
         mail or facsimile as follows:

         To Fairfax:                Fairfax Financial Holdings Limited
                                    95 Wellington Street West, Suite 800
                                    Toronto, Ontario, Canada M5J 2N7
                                    Facsimile:  416-367-2201



                                       2
<PAGE>

                                    Attention: Chief Financial Officer

         To C&F Insurance:          Crum and Forster Insurance Company
                                    305 Madison Avenue
                                    Morristown, New Jersey 07960
                                    Facsimile:  973-490-6612
                                    Attention:  Chief Financial Officer

8.       ENTIRE AGREEMENT; SEVERABILITY; AMENDMENT; MODIFICATION; AND
         TERMINATION

         This Agreement shall supersede any existing agreements between the
         parties concerning the subject matter hereof. Each provision and
         agreement herein shall be treated as separate and independent from any
         other provision or agreement herein and shall be enforceable
         notwithstanding the unenforceability of any such other provision or
         agreement. No amendment, assignment, modification or termination of
         this Agreement shall be effective unless such amendment, assignment,
         modification or termination is (i) filed with the New Jersey Department
         of Banking and Insurance ("NJDBI") at least 30 days prior to the
         proposed effective date, (ii) not disapproved by the NJDBI, (iii) made
         in writing, and (iv) signed by the parties hereto.

9.       GOVERNING LAW

         This Agreement shall be governed by the laws of the State of New Jersey
         without giving effect to the conflict of law principles thereof.

10.      COUNTERPARTS

         This Agreement may be executed in two counterparts, each of which shall
         be deemed an original, but all of which together shall constitute one
         and the same instrument.


                                          FAIRFAX FINANCIAL HOLDINGS LIMITED


                                          --------------------------------------
                                          By:
                                          Title:


                                          CRUM AND FORSTER INSURANCE COMPANY


                                               /s/ HOWARD DEBARE
                                          --------------------------------------
                                          By:  Howard DeBare
                                          Title:  Vice President


                                               /s/  VALERIE J. GASPARIK
                                          --------------------------------------
                                          By:  Valerie J. Gasprik
                                          Title:  Vice President


                                       3