##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period
Ended: March 31,
2006
    Commission File Number: 333-84068
 
 Crum & Forster Holdings Corp.
 (Exact Name of Registrant as Specified in its Charter)
 Delaware
    
    04-3611900(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer Identification Number)
 305 Madison Avenue, Morristown, New Jersey 07962
 Address
of principal executive office
 (973) 490-6600  (Registrants telephone number, including area code)
 o þ
  Large accelerated filer
o   Accelerated filer
o   Non-accelerated filer þ
 o þ
  Class
    
    Number of Shares Outstanding
at May 2, 2006Common Stock, $.01 Par Value
    
    100




---



##### 



CRUM & FORSTER HOLDINGS CORP.
 Form 10-Q
 Index
 PageNumberPART IFINANCIAL
INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance Sheets at March 31, 2006 and December 31, 2005
    
    3Consolidated Statements of Income for the Three Months Ended March 31, 2006 and 2005
    
    4Consolidated Statements of Shareholders Equity for the Three Months Ended March 31,
2006 and 2005
    
    5Consolidated Statements of Comprehensive Income for the Three Months Ended March 31,
2006 and 2005
    
    6Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005
    
    7Notes to
Consolidated Financial Statements
    
    8ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    16ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    26ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    28PART IIOTHER
INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    28ITEM 5.
    
    OTHER INFORMATION
    
    30ITEM 6.
    
    EXHIBITS
    
    30SIGNATURES
    
    31INDEX TO EXHIBITS
    
    32
 2




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##### 



PART I
FINANCIAL INFORMATION
 
 ITEM 1.   FINANCIAL STATEMENTS
 CRUM & FORSTER HOLDINGS CORP.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except per share amounts)
 March 31,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSInvestments:Fixed income securities, at fair value (amortized cost of $1,979,553 and
$2,073,443 in 2006 and 2005, respectively)
    
    $
    1,838,040
    
    
    $
    1,991,118Equity securities, at fair value (cost of $553,900 and $503,942 in 2006 and
2005, respectively)
    
    
    573,584
    
    
    
    595,944Other invested assets
    
    
    409,266
    
    
    
    391,132Total investments
    
    
    2,820,890
    
    
    
    2,978,194Cash and cash equivalents
    
    
    312,794
    
    
    
    245,441Assets pledged for short-sale obligations
    
    
    479,999
    
    
    
    496,903Premiums receivable
    
    
    272,089
    
    
    
    245,795Reinsurance recoverable
    
    
    1,767,420
    
    
    
    1,806,082Reinsurance recoverable from affiliates
    
    
    292,690
    
    
    
    304,033Prepaid reinsurance premiums
    
    
    32,070
    
    
    
    31,308Deferred income taxes
    
    
    232,569
    
    
    
    175,207Deferred policy acquisition costs
    
    
    78,026
    
    
    
    70,807Other assets
    
    
    192,819
    
    
    
    129,109Total assets
    
    $
    6,481,366
    
    
    $
    6,482,879LIABILITIESUnpaid losses and loss adjustment expenses
    
    $
    3,640,968
    
    
    $
    3,673,034Unearned premiums
    
    
    548,938
    
    
    
    499,551Accounts payable and other liabilities
    
    
    286,201
    
    
    
    264,525Funds held under reinsurance contracts
    
    
    278,407
    
    
    
    277,868Deferred income on retroactive insurance
    
    
    181,119
    
    
    
    184,498Short-sale obligations
    
    
    344,050
    
    
    
    329,740Long-term debt
    
    
    292,640
    
    
    
    292,470Total liabilities
    
    
    5,572,323
    
    
    
    5,521,686SHAREHOLDERS EQUITYCommon stock, $0.01 par value; 1,000 shares authorized; 100 issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    740,993
    
    
    
    740,993Accumulated other comprehensive income, net of tax
    
    
    (35,070
    )
    
    
    53,443Retained earnings
    
    
    203,120
    
    
    
    166,757Total shareholders equity
    
    
    909,043
    
    
    
    961,193Total liabilities and shareholders equity
    
    $
    6,481,366
    
    
    $
    6,482,879
 The accompanying notes are an integral part of the consolidated financial statements.
 3




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##### 



CRUM & FORSTER HOLDINGS CORP.
 
 CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in thousands)
 Three MonthsEnded March 31,2006
    
    
    2005(Unaudited)REVENUESPremiums earned
    
    $
    246,719
    
    
    $
    231,554Investment income
    
    
    56,458
    
    
    
    34,657Realized investment gains
    
    
    121,822
    
    
    
    14,250Total revenues
    
    
    424,999
    
    
    
    280,461EXPENSESLosses and loss adjustment expenses
    
    
    169,012
    
    
    
    153,633Policy acquisition costs
    
    
    31,233
    
    
    
    30,414Other underwriting expenses
    
    
    39,025
    
    
    
    33,395Interest expense
    
    
    8,241
    
    
    
    8,224Other expense, net
    
    
    2,664
    
    
    
    1,308Total expenses
    
    
    250,175
    
    
    
    226,974Income before income taxes and equity in earnings of investees
    
    
    174,824
    
    
    
    53,487Income tax expense
    
    
    60,320
    
    
    
    18,365Income before equity in earnings of investees
    
    
    114,504
    
    
    
    35,122Equity in earnings of investees, net of tax
    
    
    1,859
    
    
    
    4,433NET INCOME
    
    $
    116,363
    
    
    $
    39,555
 The accompanying notes are an integral part of the consolidated financial statements.
 4




---



##### 



CRUM & FORSTER HOLDINGS CORP.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (Dollars in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005(Unaudited)COMMON STOCKBalance, beginning and end of period
    
    $
    
    
    
    $
    ADDITIONAL PAID-IN CAPITALBalance, beginning and end of period
    
    
    740,993
    
    
    
    740,993ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAXBalance, beginning of period
    
    
    53,443
    
    
    
    55,875Unrealized investment losses, net of transfers to realized investment gains and losses
    
    
    (88,775
    )
    
    
    (13,471
    )Foreign currency translation
    
    
    262
    
    
    
    (1,184
    )Balance, end of period
    
    
    (35,070
    )
    
    
    41,220RETAINED EARNINGSBalance, beginning of period
    
    
    166,757
    
    
    
    84,321Net income
    
    
    116,363
    
    
    
    39,555Dividend to shareholder
    
    
    (80,000
    )
    
    
    Balance, end of period
    
    
    203,120
    
    
    
    123,876TOTAL SHAREHOLDERS EQUITY
    
    $
    909,043
    
    
    $
    906,089
 The accompanying notes are an integral part of the consolidated financial statements.
 5




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##### 



CRUM & FORSTER HOLDINGS CORP.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (Dollars in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005(Unaudited)NET INCOME
    
    $
    116,363
    
    
    $
    39,555Change in
components of other comprehensive (loss) income for the period, before tax:Unrealized
investment losses, net of transfers to realized investment gains and
losses
    
    
    (136,578
    )
    
    
    (20,726
    )Foreign currency translation
    
    
    403
    
    
    
    (1,821
    )Other comprehensive loss for the period, before tax
    
    
    (136,175
    )
    
    
    (22,547
    )Deferred income tax benefit (expense) for the period:Deferred income tax benefit from unrealized investment losses
    
    
    47,803
    
    
    
    7,255Deferred income tax (expense) benefit from foreign currency translation
    
    
    (141
    )
    
    
    637Total deferred income tax benefit for the period
    
    
    47,662
    
    
    
    7,892Other comprehensive loss for the period, net of tax
    
    
    (88,513
    )
    
    
    (14,655
    )COMPREHENSIVE INCOME
    
    $
    27,850
    
    
    $
    24,900
 The accompanying notes are an integral part of the consolidated financial statements
 6




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##### 



CRUM & FORSTER HOLDINGS CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 Three Months EndedMarch 31,2006
    
    
    2005(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    116,363
    
    
    $
    39,555Adjustments to reconcile net income to net cash from operating activities:Net accretion of discount on fixed income securities
    
    
    (2,141
    )
    
    
    (18
    )Realized investment gains
    
    
    (121,822
    )
    
    
    (14,250
    )Earnings of equity method investees
    
    
    (26,757
    )
    
    
    (14,913
    )Depreciation and amortization
    
    
    816
    
    
    
    865Deferred income tax benefit
    
    
    (9,701
    )
    
    
    (1,562
    )Other non-cash net income adjustments
    
    
    4,199
    
    
    
    4,080Changes in:Premiums receivable
    
    
    (27,044
    )
    
    
    8,485Reinsurance recoverable
    
    
    43,717
    
    
    
    (37,692
    )Prepaid reinsurance premiums
    
    
    (762
    )
    
    
    873Deferred policy acquisition costs
    
    
    (7,219
    )
    
    
    (207
    )Other assets
    
    
    26,509
    
    
    
    19,073Unpaid losses and loss adjustment expenses
    
    
    (32,065
    )
    
    
    31,124Unearned premiums
    
    
    49,387
    
    
    
    6,973Accounts payable and other liabilities
    
    
    13,795
    
    
    
    37,792Net cash from operating activities
    
    
    27,275
    
    
    
    80,178INVESTING ACTIVITIESPurchases of fixed income securities
    
    
    (85,245
    )
    
    
    (93,427
    )Proceeds from sales of fixed income securities
    
    
    174,621
    
    
    
    42,703Purchases of equity securities
    
    
    (134,811
    )
    
    
    (109,767
    )Proceeds from sales of equity securities
    
    
    197,149
    
    
    
    75,947Purchases of other invested assets
    
    
    (546
    )
    
    
    (39,279
    )Proceeds from sales of other invested assets
    
    
    3,371
    
    
    
    664Proceeds from short-sale obligations
    
    
    
    
    
    
    100,013Cash pledged for short-sale obligations
    
    
    (34,252
    )
    
    
    (105,826
    )Purchases of fixed assets
    
    
    (209
    )
    
    
    (108
    )Net cash from investing activities
    
    
    120,078
    
    
    
    (129,080
    )FINANCING ACTIVITIESDividend to shareholder
    
    
    (80,000
    )
    
    
    Net cash from financing activities
    
    
    (80,000
    )
    
    
    Net change in cash and cash equivalents
    
    
    67,353
    
    
    
    (48,902
    )Cash and cash equivalents, beginning of period
    
    
    245,441
    
    
    
    429,205Cash and cash equivalents, end of period
    
    $
    312,794
    
    
    $
    380,303SUPPLEMENTAL CASH FLOW INFORMATIONCash paid to parent for income taxes
    
    $
    23,168
    
    
    $
    1,957
 The accompanying notes are an integral part of the consolidated financial statements
 7




---



##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
 1.
    
    Organization and Basis of Presentation
     8




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##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
 2.
    
    Unpaid Losses and Loss Adjustment Expenses
  Three Months EndedMarch 31,2006
    
    
    2005Gross unpaid losses and LAE, beginning of period
    
    $
    3,673,034
    
    
    $
    3,370,936Less ceded unpaid losses and LAE
    
    
    1,682,768
    
    
    
    1,360,996Net unpaid losses and LAE, beginning of period
    
    
    1,990,266
    
    
    
    2,009,940Losses and LAE incurred related to:Current period
    
    
    171,445
    
    
    
    158,902Prior years
    
    
    (2,433
    )
    
    
    (5,269
    )Total losses and LAE incurred
    
    
    169,012
    
    
    
    153,633Losses and LAE paid related to:Current period
    
    
    8,106
    
    
    
    8,980Prior years
    
    
    157,176
    
    
    
    148,918Total losses and LAE paid
    
    
    165,282
    
    
    
    157,898Net unpaid losses and LAE, end of period
    
    
    1,993,996
    
    
    
    2,005,675Add ceded unpaid losses and LAE
    
    
    1,646,972
    
    
    
    1,396,385Gross unpaid losses and LAE, end of period
    
    $
    3,640,968
    
    
    $
    3,402,060
  March 31,2006Ceded unpaid losses and LAE in the table above
    
    $
    1,646,972Reconciling items:Reinsurance recoverable on paid losses and LAE
    
    
    58,904Unamortized retroactive reinsurance recoverable
    
    
    375,744Loss sensitive cession1
    
    
    (21,510
    )Total reconciling items
    
    
    413,138Reinsurance recoverable on the consolidated balance sheet
    
    $
    2,060,110
 1
    Equals additional premiums due on retrospectively rated insurance policies that
inure to the benefit of the reinsurer.
 
 9




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##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
 3.
    
    Asbestos and Environmental Losses and Loss Adjustment Expenses
  Three Months EndedMarch 31,2006
    
    
    2005AsbestosGross unpaid losses and allocated LAE (ALAE), beginning of period
    
    $
    469,199
    
    
    $
    522,685Less ceded unpaid losses and ALAE
    
    
    92,418
    
    
    
    113,891Net unpaid losses and ALAE, beginning of period
    
    
    376,781
    
    
    
    408,794Net losses and ALAE incurred
    
    
    
    
    
    
    Net paid losses and ALAE
    
    
    9,598
    
    
    
    15,766Net unpaid losses and ALAE, end of period
    
    
    367,183
    
    
    
    393,028Add ceded unpaid losses and ALAE
    
    
    93,895
    
    
    
    106,492Gross unpaid losses and ALAE, end of period
    
    $
    461,078
    
    
    $
    499,520
 2006
    
    
    2005EnvironmentalGross unpaid losses and ALAE, beginning of period
    
    $
    111,536
    
    
    $
    123,353Less ceded unpaid losses and ALAE
    
    
    37,293
    
    
    
    38,190Net unpaid losses and ALAE, beginning of period
    
    
    74,243
    
    
    
    85,163Net losses and ALAE incurred
    
    
    
    
    
    
    Net paid losses and ALAE
    
    
    1,768
    
    
    
    6,990Net unpaid losses and ALAE, end of period
    
    
    72,475
    
    
    
    78,173Add ceded unpaid losses and ALAE
    
    
    35,334
    
    
    
    36,457Gross unpaid losses and ALAE, end of period
    
    $
    107,809
    
    
    $
    114,630
  10




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##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
 4.
    
    Reinsurance
  Three Months EndedMarch 31,2006
    
    
    2005Premiums written:Direct
    
    $
    310,368
    
    
    $
    286,019Assumed from other companies, pools, or associations
    
    
    36,833
    
    
    
    2,424Ceded to other companies, pools or associations
    
    
    (51,857
    )
    
    
    (49,043
    )Net premiums written
    
    $
    295,344
    
    
    $
    239,400Premiums earned:Direct
    
    $
    282,683
    
    
    $
    278,856Assumed from other companies, pools, or associations
    
    
    14,967
    
    
    
    2,614Ceded to other companies, pools or associations
    
    
    (50,931
    )
    
    
    (49,916
    )Premiums earned
    
    $
    246,719
    
    
    $
    231,554
  March 31,
    
    
    December 31,2006
    
    
    2005Reinsurance recoverable on unpaid losses and
LAE
    
    $
    2,001,206
    
    
    $
    2,040,381Reinsurance receivable on paid losses and LAE
    
    
    58,904
    
    
    
    69,734Total reinsurance recoverable
    
    $
    2,060,110
    
    
    $
    2,110,115
 Corporate
aggregate reinsurance
   11




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##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
  Three Months EndedMarch 31,2006
    
    
    2005Investment income
    
    $
    (4,818
    )
    
    $
    (4,887
    )Losses and LAE
    
    
    (3,379
    )
    
    
    (3,690
    )Income before income taxes
    
    $
    (1,439
    )
    
    $
    (1,197
    )
  Prospective
corporate aggregate reinsurance
  Three Months EndedMarch 31,2006
    
    
    2005Ceded losses and LAE
    
    $
    
    
    
    $
    Less: funds held interest charged to investment income
    
    
    909
    
    
    
    1,265Decrease in income before income taxes
    
    $
    (909
    )
    
    $
    (1,265
    )
 Retroactive
corporate aggregate reinsurance
  Three Months EndedMarch 31,2006
    
    
    2005Increase in reinsurance recoverable due from insurers
    
    $
    
    
    
    $
    Less: related premiums paid
    
    
    
    
    
    
    Income deferred during the period
    
    
    
    
    
    
    Amortization of deferred income
    
    
    (3,379
    )
    
    
    (3,690
    )Decrease in deferred income
    
    
    (3,379
    )
    
    
    (3,690
    )Deferred income on retroactive reinsurancebeginning of period
    
    
    184,498
    
    
    
    223,360Deferred income on retroactive reinsuranceend of period
    
    $
    181,119
    
    
    $
    219,670Funds held interest charged to investment income
    
    $
    3,909
    
    
    $
    3,622
  12




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##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
 5.
    
    Investments and Short-Sale Obligations
      6.
    
    Commitments and Contingencies
   13




---



##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
      14




---



##### 



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited,
dollars in thousands)
 7.
    
    Segment Reporting
  Three Months EndedMarch 31,2006
    
    
    2005Workers compensation
    
    $
    74,800
    
    
    $
    71,336General liability
    
    
    56,852
    
    
    
    49,307Commercial automobile
    
    
    49,996
    
    
    
    45,091Property
    
    
    49,038
    
    
    
    47,992Commercial multi-peril
    
    
    12,340
    
    
    
    11,524Surety
    
    
    3,693
    
    
    
    6,304Total premiums earned
    
    $
    246,719
    
    
    $
    231,554
  Three Months EndedMarch 31,2006
    
    
    2005Amount
    
    Ratio
    
    Amount
    
    RatioWorkers compensation
    
    $
    57,756
    
    
    
    77.2
    %
    
    $
    65,128
    
    
    
    91.3
    %General liability
    
    
    43,228
    
    
    
    76.0
    %
    
    
    32,364
    
    
    
    65.6
    %Commercial automobile
    
    
    30,096
    
    
    
    60.2
    %
    
    
    26,441
    
    
    
    58.6
    %Property
    
    
    29,826
    
    
    
    60.8
    %
    
    
    16,242
    
    
    
    33.8
    %Commercial multi-peril
    
    
    4,792
    
    
    
    38.8
    %
    
    
    6,510
    
    
    
    56.5
    %Surety
    
    
    3,314
    
    
    
    89.7
    %
    
    
    6,948
    
    
    
    110.2
    %Total losses and LAE
    
    $
    169,012
    
    
    
    68.5
    %
    
    $
    153,633
    
    
    
    66.3
    %
   15




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##### 



ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    Statements Regarding Forward-Looking Information
  
    
    Lowering or loss of one of the Companys financial strength ratings;
    
    Insufficient loss reserves, including reserves for asbestos, environmental and other latent claims;
    
    Occurrence of natural or man-made catastrophic events;
    
    Inability to obtain
reinsurance coverage on reasonable terms and prices;
    
    Competitive conditions in the insurance market;
    
    Changes in the business or regulatory environment in which the Company operates as a
result of recent insurance industry investigations by government authorities and other
parties;
    
    SEC requests for information from the Company;
    
    Inability to realize the Companys investment objectives;
    
    Loss of key producers;
    
    Exposure to emerging claims and coverage issues;
    
    Restrictions on the ability of the Companys insurance subsidiaries to pay dividends;
    
    Subordination of debt securities to the obligations and liabilities of the Companys insurance subsidiaries;
    
    Exposure to credit risk, in the event reinsurers or policyholders that owe the
Company premiums or reimbursement of deductibles paid by the Company on their behalf
fail to pay;
    
    Adverse developments in the prospects or results of operations of Fairfax or its affiliates;
    
    Loss of key employees;
    
    Changes in governmental regulations;
    
    Exposure to credit risks on novated policies; and
    
    Limited ability to borrow.
 16




---



##### 



Critical Accounting Policies and Estimates
    Unpaid losses and loss adjustment expenses
    17




---



##### 



Other than temporary declines in value of investments
   Insurance Subsidiaries
 Reinsurance recoverable
    Deferred income tax assets
  18




---



##### 



Summary of Operations
     19




---



##### 



20




---



##### 



Results of Operations
  Three Months EndedMarch 31,2006
    
    
    2005Gross premiums written
    
    $
    347,201
    
    
    $
    288,443Net premiums written
    
    $
    295,344
    
    
    $
    239,400Premiums earned
    
    $
    246,719
    
    
    $
    231,554Losses and LAE
    
    
    169,012
    
    
    
    153,633Underwriting expenses
    
    
    70,258
    
    
    
    63,809Underwriting income
    
    
    7,449
    
    
    
    14,112Investment income and realized investment gains and losses
    
    
    178,280
    
    
    
    48,907Interest and other expense
    
    
    10,905
    
    
    
    9,532Income before income taxes and equity in earnings of investees
    
    
    174,824
    
    
    
    53,487Income tax expense
    
    
    60,320
    
    
    
    18,365Income before equity in earnings of investees
    
    
    114,504
    
    
    
    35,122Equity in earnings of investees, net of tax
    
    
    1,859
    
    
    
    4,433Net income
    
    $
    116,363
    
    
    $
    39,555Loss and LAE ratio
    
    
    68.5
    %
    
    
    66.3
    %Underwriting expense ratio
    
    
    28.5
    
    
    
    27.6Combined ratio
    
    
    97.0
    %
    
    
    93.9
    %
  21




---



##### 



Underwriting
results
 Gross
premiums written
  Three Months Ended March 31,Increase/
    
    
    Percent2006
    
    
    2005
    
    
    (Decrease)
    
    
    ChangeWorkers compensation
    
    $
    82,594
    
    
    $
    75,031
    
    
    $
    7,563
    
    
    
    10.1
    %General liability
    
    
    89,623
    
    
    
    69,996
    
    
    
    19,627
    
    
    
    28.0
    %Commercial automobile
    
    
    66,366
    
    
    
    52,199
    
    
    
    14,167
    
    
    
    27.1
    %Property
    
    
    88,796
    
    
    
    71,428
    
    
    
    17,368
    
    
    
    24.3
    %Commercial multi-peril
    
    
    17,222
    
    
    
    11,338
    
    
    
    5,884
    
    
    
    51.9
    %Surety
    
    
    2,600
    
    
    
    8,451
    
    
    
    (5,851
    )
    
    
    (69.2
    )%Total gross premiums written
    
    $
    347,201
    
    
    $
    288,443
    
    
    $
    58,758
    
    
    
    20.4
    %
  Casualty
gross premiums written
  Property
gross premiums written
  Net
premiums written
  Premiums
earned
  22




---



##### 



Losses
and loss adjustment expenses
   Underwriting
expenses
    Investment
results
  Three Months EndedMarch 31,2006
    
    
    2005Average investments, at book value1
    
    $
    3,648,829
    
    
    $
    3,537,142Investment income
    
    $
    56,458
    
    
    $
    34,657Realized investment gains
    
    
    121,822
    
    
    
    14,250Pre-tax equity in earnings of investees
    
    
    2,860
    
    
    
    6,820Change in unrealized investment gains and losses and foreign currency translation
    
    
    (136,175
    )
    
    
    (22,547
    )Total return on investments
    
    $
    44,965
    
    
    $
    33,180Annualized total return on investments
    
    
    4.9
    %
    
    
    3.8
    %
 
 1
    Includes cash and cash equivalents and assets pledged for short-sale obligations 23




---



##### 



Interest
and other expense
  Liquidity and Capital Resources
 Holding
company
     24




---



##### 



Insurance
subsidiaries
     At March 31, 2006Cost or
    
    
    Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFixed income securities:United States government and government agencies
and authorities
    
    $
    1,696,912
    
    
    $
    27
    
    
    $
    155,243
    
    
    $
    1,541,696States, municipalities and political subdivisions
    
    
    7,072
    
    
    
    37
    
    
    
    28
    
    
    
    7,081Other corporate fixed income securities
    
    
    275,569
    
    
    
    13,898
    
    
    
    204
    
    
    
    289,263Total fixed income securities
    
    
    1,979,553
    
    
    
    13,962
    
    
    
    155,475
    
    
    
    1,838,040Equity securities:Common stocks
    
    
    543,900
    
    
    
    32,556
    
    
    
    12,838
    
    
    
    563,618Preferred stocks
    
    
    10,000
    
    
    
    
    
    
    
    34
    
    
    
    9,966Total equity securities
    
    
    553,900
    
    
    
    32,556
    
    
    
    12,872
    
    
    
    573,584Total available-for-sale securities
    
    $
    2,533,453
    
    
    $
    46,518
    
    
    $
    168,347
    
    
    $
    2,411,624
   25




---



##### 



Ratings
   
 ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  26




---



##### 



Interest Rate Risk
  At March 31, 2006Fair Value ofFixed Income
    
    Hypothetical
    
    HypotheticalPortfolio
    
    $ Change
    
    % Change200 basis point decline
    
    $
    2,539,954
    
    
    $
    570,519
    
    
    
    29.0
    %100 basis point decline
    
    $
    2,229,250
    
    
    $
    259,815
    
    
    
    13.2
    %Base scenario
    
    $
    1,969,435
    
    
    $
    
    
    
    
    
    %100 basis point increase
    
    $
    1,754,536
    
    
    $
    (214,899
    )
    
    
    (10.9
    )%200 basis point increase
    
    $
    1,573,242
    
    
    $
    (396,193
    )
    
    
    (20.1
    )%
 Equity Price Risk
   27




---



##### 



Foreign Currency Exchange Rate Risk
  
 ITEM 4.   CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
   
 Part II
 OTHER INFORMATION
 
 ITEM 1.   LEGAL PROCEEDINGS
   28




---



##### 



29




---



##### 



ITEM 5.   OTHER INFORMATION
  
 ITEM 6.   EXHIBITS
  30




---



##### 



SIGNATURES
  CRUM & FORSTER HOLDINGS CORP.(Registrant)Date:
May 2, 2006
    
    By:
    
    /s/ Nikolas AntonopoulosNikolas AntonopoulosPresident and Chief Executive OfficerDate: May 2, 2006
    
    By:
    
    /s/ Mary Jane RobertsonMary Jane RobertsonExecutive Vice President, Chief Financial Officer and Treasurer
 31




---



##### 



INDEX TO EXHIBITS
 Exhibit No.
 *
    
    31.1
    
    
    Certification of President and Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*
    
    31.2
    
    
    Certification of Executive Vice President, Chief Financial Officer and Treasurer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
    
    32.1
    
    
    Certification of President and Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
    
    32.2
    
    
    Certification of Executive Vice President, Chief Financial Officer and Treasurer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    
    
    Risk Factors (incorporated into Part II of this Form 10-Q by reference to the section
entitled Risk Factors in the Companys Annual Report on Form 10-K for the year ended
December 31, 2005 filed with the Securities and Exchange Commission on March 22, 2006).
 
 *
    
    Filed herewith 32