##### 



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 1934oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934
   For the Quarterly Period Ended:
    March 31, 2008

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
  Rule 12b-2
  Large accelerated
    filer  o

Accelerated
    filer  oNon-accelerated
    filer  þ (Do
    not check if a smaller reporting company)

Smaller reporting company  o
   Rule 12b-2 o þ
    Class

Number of Shares Outstanding at
    May 1, 2008Common Stock, $.01 Par Value


100




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  Form 10-Q
  Index
   
 PageNumberPART I
    FINANCIAL INFORMATIONITEM 1.

FINANCIAL STATEMENTSConsolidated Balance Sheets at March 31, 2008
    (Unaudited) and December 31, 2007


3Consolidated Statements of Income for the Three
    Months Ended March 31, 2008 and 2007 (Unaudited)


4Consolidated Statements of Shareholders
    Equity for the Three Months Ended March 31, 2008 and 2007
    (Unaudited)


5Consolidated Statements of Comprehensive Income
    for the Three Months Ended March 31, 2008 and 2007
    (Unaudited)


6Consolidated Statements of Cash Flows for the
    Three Months Ended March 31, 2008 and 2007 (Unaudited)


7Notes to Consolidated Financial Statements


8ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS


21ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK


36ITEM 4T.

CONTROLS AND PROCEDURES


37PART II
    OTHER INFORMATIONITEM 1.

LEGAL PROCEEDINGS


38ITEM 5.

OTHER INFORMATION


39ITEM 6.

EXHIBITS


39SIGNATURES


40INDEX TO EXHIBITS


41   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)
    (Unaudited)
 March 31,

December 31,2008

2007ASSETSInvestments:Fixed income securities, at fair value (amortized cost of
    $1,655,590 and $1,741,750 in 2008
    and 2007, respectively)

$
1,667,188

$
1,718,637Equity securities, at fair value (cost of $696,951 and $661,289
    in 2008 and 2007, respectively)


677,291


684,457Other invested assets (includes $505,193 and $240,015 in 2008
    and 2007, respectively, carried at fair value)


665,395


631,507Hybrid financial instruments, at fair value


126,941


125,848Short-term investments at cost, which approximates fair value


279,001


196,138Total investments


3,415,816


3,356,587Cash and cash equivalents


169,491


147,506Assets pledged for short-sale obligations and other restricted
    cash


1,037,778


1,043,436Accrued investment income


22,314


37,201Premiums receivable


212,698


213,488Reinsurance recoverable


1,250,855


1,310,192Reinsurance recoverable from affiliates


216,666


229,591Prepaid reinsurance premiums


23,825


21,848Deferred income taxes


62,820


93,161Deferred policy acquisition costs


68,890


72,282Other assets


70,029


87,520Total assets

$
6,551,182

$
6,612,812LIABILITIESUnpaid losses and loss adjustment expenses

$
3,172,873

$
3,178,506Unearned premiums


460,911


486,091Funds held under reinsurance contracts


228,484


250,697Accounts payable and other liabilities


228,888


220,142Deferred income on retroactive reinsurance


148,238


152,041Short-sale obligations


643,785


718,656Long-term debt


313,575


313,220Total liabilities


5,196,754


5,319,353Commitments and contingencies (Note 8)SHAREHOLDER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


5,946


44,479Retained earnings


607,489


507,987Total shareholders equity


1,354,428


1,293,459Total liabilities and shareholders equity

$
6,551,182

$
6,612,812   The
    accompanying notes are an integral part of the consolidated
    financial statements.
 3




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF INCOME
  (Dollars
    in thousands)
  (Unaudited)
  Three Months EndedMarch 31,2008


2007REVENUESPremiums earned

$
271,810


$
293,707Investment income


15,841



35,413Realized investment gains


155,268



14,474Total revenues


442,919



343,594EXPENSESLosses and loss adjustment expenses


209,610



193,460Policy acquisition costs


38,449



42,977Other underwriting expenses


42,608



41,777Interest expense


7,020



8,260Other expense (income)


2,142



(775
)Total expenses


299,829



285,699Income before income taxes and equity in earnings of investees


143,090



57,895Income tax expense


49,226



19,407Income before equity in earnings of investees


93,864



38,488Equity in earnings of investees, net of tax


(463
)


4,365NET INCOME

$
93,401


$
42,853   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)
  (Unaudited)
  Three Months EndedMarch 31,2008


2007COMMON STOCKBalance, beginning and end of period

$



$
ADDITIONAL PAID-IN CAPITALBalance, beginning and end of period


740,993



740,993ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXBalance, beginning of period


44,479



(36,978
)Cumulative effect of adoption of Statements of Financial
    Accounting Standards Nos. 157 and 159


(29,897
)


Cumulative effect of adoption of Statement of Financial
    Accounting Standards No. 155






(10,447
)Balance, beginning of period, after cumulative effect of
    adjustments


14,582



(47,425
)Unrealized investment losses, net of transfers to realized
    investment gains and losses


(8,917
)


(5,539
)Foreign currency translation


205



979Amortization of actuarial gain and transition obligation
    included in net periodic benefit costs


76



Balance, end of period


5,946



(51,985
)RETAINED EARNINGSBalance, beginning of period


507,987



389,040Cumulative effect of adoption of Statements of Financial
    Accounting Standards Nos. 157 and 159


86,101



Cumulative effect of adoption of Statement of Financial
    Accounting Standards No. 155






10,447Balance, beginning of period, after cumulative effect of
    adjustments


594,088



399,487Net income


93,401



42,853Dividends to shareholder


(80,000
)


(61,000
)Balance, end of period


607,489



381,340TOTAL SHAREHOLDERS EQUITY

$
1,354,428


$
1,070,348   The
    accompanying notes are an integral part of the consolidated
    financial statements.
 5




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME
  (Dollars
    in thousands)
  (Unaudited)
  Three Months EndedMarch 31,2008


2007NET INCOME

$
93,401


$
42,853Change in components of other comprehensive loss for the period,
    before tax:Unrealized investment losses, net of transfers to realized
    investment gains and losses


(13,718
)


(8,521
)Foreign currency translation


315



1,506Amortization of actuarial gain and transition obligation
    included in net periodic benefit costs


118



Other comprehensive loss for the period, before tax


(13,285
)


(7,015
)Deferred income tax benefit for the period:Deferred income tax benefit from unrealized investment losses


4,801



2,982Deferred income tax expense from foreign currency translation


(110
)


(527
)Deferred income tax expense from amortization of actuarial gain
    and transition obligation included in net periodic benefit costs


(42
)


Total deferred income tax benefit for the period


4,649



2,455Other comprehensive loss for the period, net of tax


(8,636
)


(4,560
)COMPREHENSIVE INCOME

$
84,765


$
38,293   The
    accompanying notes are an integral part of the consolidated
    financial statements.
 6




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  (Dollars
    in thousands)
  (Unaudited)
  Three Months EndedMarch 31,2008


2007OPERATING ACTIVITIESNet income

$
93,401


$
42,853Adjustments to reconcile net income to net cash from operating
    activities:Net accretion of discount on fixed income securities


436



(1,895
)Realized investment gains


(155,268
)


(14,474
)Earnings of equity method investees, net of dividends


831



(5,438
)Earnings of investment companies and similar equity method
    investees


13,680



(3,125
)Depreciation and amortization


864



88Deferred income tax expense


4,727



4,849Other non-cash net income adjustments


3,881



3,515Changes in:Accrued investment income


14,887



14,831Premiums receivable


415



8,928Reinsurance recoverable


42,741



33,775Prepaid reinsurance premiums


(1,977
)


1,584Deferred policy acquisition costs


3,392



1,234Other assets


17,344



(53
)Unpaid losses and loss adjustment expenses


(5,633
)


(7,507
)Unearned premiums


(25,180
)


(12,844
)Accounts payable and other liabilities


15,879



(39,099
)Net cash provided from operating activities


24,420



27,222INVESTING ACTIVITIESPurchases of fixed income securities


(98,597
)


(142,979
)Proceeds from sales of fixed income securities


194,093



82,017Proceeds from maturities of fixed income securities


550



Purchases of equity securities


(82,326
)


(35,146
)Proceeds from sales of equity securities






1,294Purchases of other invested assets


(4,588
)


(24,038
)Proceeds from sales of other invested assets


139,127



39,145Purchases of short term investments


(435,285
)


(56,135
)Proceeds from sales of short term investments


352,422



19,122Cash paid to close out short-sale obligations


(1,611
)


Net change in cash collateral and other restricted cash


14,143



1,632(Purchases of)/proceeds from fixed assets


(363
)


52Net cash provided from (used in) investing activities


77,565



(115,036
)FINANCING ACTIVITIESDividends to shareholder


(80,000
)


(61,000
)Net cash used in financing activities


(80,000
)


(61,000
)Net change in cash and cash equivalents


21,985



(148,814
)Cash and cash equivalents, beginning of period


147,506



366,743Cash and cash equivalents, end of period

$
169,491


$
217,929SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest

$



$
Cash paid to parent for income taxes

$
12,557


$
32,804   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





Crum & Forster Holdings Corp. (the Company
    or Crum & Forster) is a Delaware holding
    company, which is 100% owned by Fairfax Inc., a Wyoming holding
    company. Fairfax Inc. is ultimately owned by Fairfax Financial
    Holdings Limited (Fairfax), a Canadian financial
    services holding company, which is publicly traded on the
    Toronto Stock Exchange and the New York Stock Exchange under the
    symbol FFH. The Company, through its subsidiaries,
    offers a full range of commercial property and casualty
    insurance distributed through an independent producer force
    located across the United States.



These consolidated financial statements have been prepared in
    conformity with accounting principles generally accepted in the
    United States of America (GAAP) and include the
    accounts of the Company, Crum & Forster Holding Inc.
    and their wholly-owned subsidiaries, including United States
    Fire Insurance Company (US Fire), The North River
    Insurance Company (North River), Crum &
    Forster Indemnity Company (CF Indemnity) and Crum
    and Forster Insurance Company (CF Insurance). US
    Fire owns 100% of the stock of Crum & Forster
    Specialty Insurance Company. North River owns 100% of the stock
    of Seneca Insurance Company, Inc. and its subsidiaries. All
    material intercompany accounts and transactions have been
    eliminated in consolidation.



Effective January 1, 2006, Fairfax announced that certain
    of the business of the insurance companies of Fairmont Specialty
    Group, affiliates of Fairfax, would be conducted as Fairmont
    Specialty, a division of Crum & Forster
    (Fairmont), thereby giving Fairmont access to the
    A− A.M. Best rating of Crum &
    Forster. The Fairmont business is comprised of standard
    commercial and personal lines, bail bonds and accident and
    health coverages. In return for the opportunity to quote
    Fairmont Specialty Groups renewals effective
    January 1, 2006 and thereafter, the Company hired
    substantially all Fairmont Specialty Group employees and assumed
    certain operating obligations. Pending regulatory approval of
    Crum & Forster company rate and form filings for the
    Fairmont business, the policies underwritten by Fairmont were
    issued initially by the insurance companies of Fairmont
    Specialty Group and assumed by the Company through a 100% quota
    share reinsurance agreement. As of March 31, 2008,
    substantially all Fairmont business is written directly by
    Crum & Forster.



The preparation of consolidated financial statements in
    conformity with GAAP requires management to make estimates and
    assumptions that affect the reported amounts of assets,
    liabilities, revenues and expenses and disclosure of contingent
    assets and liabilities. Such estimates and assumptions may
    differ from actual results. Certain financial information that
    is normally included in annual financial statements, including
    certain financial statement footnotes, prepared in accordance
    with GAAP, is not required for interim reporting purposes and
    has been condensed or omitted herein. These consolidated
    financial statements should be read in conjunction with the
    Companys consolidated financial statements, and notes
    related thereto, included in the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2007 filed with the
    Securities and Exchange Commission (SEC) on
    February 29, 2008.



The interim financial data at March 31, 2008 and for the
    three months ended March 31, 2008 and 2007 is unaudited.
    However, in the opinion of management, the interim data includes
    all adjustments, consisting of normal recurring items, that are
    necessary for a fair presentation of the Companys results
    for the interim periods. The results of operations for the
    interim periods are not necessarily indicative of the results to
    be expected for the full year.

8




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  2.
    Recent
    Accounting Pronouncements  SFAS No. 161. Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
  SOP 07-1. 07-1, Clarification of the Scope of the Audit and Accounting Guide
    for Investment Companies and Accounting by Parent Companies and
    Equity Method Investors for Investments in Investment Companies (SOP 07-1), SOP 07-1 SOP 07-1-1, Effective Date of AICPA Statement of Position
    07-1, SOP 07-1.
  SFAS No. 159. The Fair Value Option for Financial
    Assets and Financial Liabilities  Including an
    Amendment of FASB Statement No. 115 instrument-by-instrument The Equity Method of
    Accounting for Investments in Common Stock
   9




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
    SFAS No. 157. Fair Value Measurements
  3.
    Investments  Short-Sales,
    Derivatives and Hybrid Financial Instruments
    March 31, 2008


December 31, 2007Fair Value








Fair ValueNotional


Asset





Notional


AssetCost


Value


(Liability)


Cost


Value


(Liability)1Securities sold short:Standard & Poors Depositary Receipts

$
(619,587
)

$



$
(638,100
)

$
(619,587
)

$



$
(707,615
)Common stocks


(7,849
)






(5,685
)


(12,522
)






(12,156
)S&P 500 Index call options


589



875,493







1,615



867,616



60Credit default swaps


72,774



4,831,855



252,735



84,529



5,157,897



234,053Warrants


10,225



101,201



4,672



10,225



101,201



5,902Hybrid financial instruments


136,827



142,546



126,941



136,827



142,546



125,848
     1
    The fair values of the Standard & Poors
    Depositary Receipts (SPDRs) and common stock
    short-sales in the table above have been restated as of
    December 31, 2007, to reflect the adoption of
    SFAS 157. The Company uses the bid price for long positions
    (assets) and the ask price for short positions (liabilities).
    Previously, the Company used a price within the bid-ask spread. 10




---



##### 



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

Fair ValueExpiring in one year or less

$
111,357

$
133Expiring after 1 year through 5 years


3,229,302


170,265Expiring after 5 years through 10


1,491,196


82,337$
4,831,855

$
252,735
      11




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
        ,
    Accounting for Certain Hybrid Financial Instruments 
    an amendment of FASB Statements Nos. 133 and 140
    Three Months EndedMarch 31,2008


2007SPDRs short-sales

$
69,515


$
(875
)Common stock short-sales


4,861



352S&P Index call options


(420
)


(4,896
)Credit default swaps


153,973



10,669Warrants


(1,230
)


(1,236
)Hybrid financial instruments


1,197



(3,488
)Total realized investment gains

$
227,896


$
526
  12




---



##### 



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


Common





Credit





HybridShort-


Stock


S&P Index


Default





FinancialSales


Short-Sales


Call Options


Swaps


Warrants


Instruments


TotalRealized gains on disposal

$



$
3,063


$
(1,387
)

$
123,536


$



$



$
125,212Reversal of previously recognized mark-to-market (gains) losses






(400
)


1,387



(91,877
)










(90,890
)Mark-to-market gains (losses) recognized in 2008


69,515



2,198



(420
)


122,314



(1,230
)


1,197



193,574Net gains (losses)

$
69,515


$
4,861


$
(420
)

$
153,973


$
(1,230
)

$
1,197


$
227,896
   Affiliate
    Transactions
    Significant
    Subsidiary
  Regulation S-X.
    Three Months EndedMarch 31, 2008Total revenues

$
64,121Total expenses

$
44,049Income from continuing operations

$
20,072Net income

$
12,532
   4.
    Fair
    Value Disclosures   13




---



##### 



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

Significant Other

SignificantActive Markets for

Observable

UnobservableIdentical Assets

Inputs

Inputs(Level 1)

(Level 2)

(Level 3)

TotalAssetsFixed income securities

$


$
1,667,188

$


$
1,667,188Equity securities


677,291








677,291Other invested
    assets1


247,786


257,407





505,193Hybrid financial instruments





124,280


2,661


126,941Assets pledged for short-sale obligations and other restricted
    cash2





316,965





316,965Total

$
925,077

$
2,365,840

$
2,661

$
3,293,578LiabilitiesShort-sale obligations

$
643,785

$


$


$
643,785
     1
    Excludes investments which are carried under the equity method
    and cost method of accounting totaling $160,202.2
    Excludes cash of $720,813. 14




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
     5.
    Unpaid
    Losses and Loss Adjustment Expenses    Three Months EndedMarch 31,2008

2007Gross unpaid losses and LAE, beginning of period

$
3,178,506

$
3,371,549Less ceded unpaid losses and LAE


1,197,496


1,355,253Net unpaid losses and LAE, beginning of period


1,981,010


2,016,296Losses and LAE incurred related to:Current period


196,262


205,947Prior years adverse (favorable) development


13,348


(12,487
)Total losses and LAE incurred


209,610


193,460Losses and LAE paid related to:Current period


27,517


15,621Prior years


130,037


165,171Total losses and LAE paid


157,554


180,792Net unpaid losses and LAE, end of period


2,033,066


2,028,964Add ceded unpaid losses and LAE


1,139,807


1,335,078Gross unpaid losses and LAE, end of period

$
3,172,873

$
3,364,042
     March 31,2008Ceded unpaid losses and LAE in the table above

$
1,139,807Reconciling items:Reinsurance recoverable on paid losses and LAE


41,027Retroactive reinsurance recoverable


308,197Loss sensitive
    cession1


(21,510
)Total reconciling items


327,714Reinsurance recoverable on the consolidated balance sheet

$
1,467,521
     1
    Equals additional premiums due on retrospectively rated
    insurance policies that inure to the benefit of the reinsurer 15




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   6.
    Asbestos
    and Environmental Losses and Loss Adjustment Expenses    Three Months EndedMarch 31,2008

2007AsbestosGross unpaid losses and allocated LAE (ALAE),
    beginning of period

$
428,139

$
443,055Less ceded unpaid losses and ALAE


94,497


94,817Net unpaid losses and ALAE, beginning of period


333,642


348,238Net losses and ALAE incurred


25,500


Net paid losses and ALAE


8,126


7,207Net unpaid losses and ALAE, end of period


351,016


341,031Add ceded unpaid losses and ALAE


83,178


88,565Gross unpaid losses and ALAE, end of period

$
434,194

$
429,596
     Three Months EndedMarch 31,2008

2007EnvironmentalGross unpaid losses and ALAE, beginning of period

$
117,768

$
110,636Less ceded unpaid losses and ALAE


32,725


37,103Net unpaid losses and ALAE, beginning of period


85,043


73,533Net losses and ALAE incurred





Net paid losses and ALAE


2,410


936Net unpaid losses and ALAE, end of period


82,633


72,597Add ceded unpaid losses and ALAE


31,754


33,476Gross unpaid losses and ALAE, end of period

$
114,387

$
106,073
    16




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  7.
    Reinsurance     Three Months EndedMarch 31,2008


2007Premiums written:Direct

$
278,049


$
315,800Assumed from other companies, pools and associations


4,544



11,131Ceded to other companies, pools and associations


(37,940
)


(44,484
)Net premiums written

$
244,653


$
282,447Premiums earned:Direct

$
302,887


$
309,445Assumed from other companies, pools and associations


4,886



30,330Ceded to other companies, pools and associations


(35,963
)


(46,068
)Premiums earned

$
271,810


$
293,707
     March 31,

December 31,2008

2007Reinsurance recoverable on unpaid losses and LAE

$
1,426,494

$
1,487,986Reinsurance receivable on paid losses and LAE


41,027


51,797Total reinsurance recoverable

$
1,467,521

$
1,539,783
     Corporate
    Aggregate Reinsurance
      17




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
    Three Months EndedMarch 31,2008


2007Investment income

$
(5,309
)

$
(4,152
)Losses and LAE


(3,803
)


(3,387
)Income before income taxes

$
(1,506
)

$
(765
)
     Prospective
    Corporate Aggregate Reinsurance
    Three Months EndedMarch 31,2008


2007Ceded losses and LAE

$



$
Less: funds held interest charged to investment income


1,575



631Decrease in income before income taxes

$
(1,575
)

$
(631
)
     Retroactive
    Corporate Aggregate Reinsurance
    Three Months EndedMarch 31,2008


2007Increase in reinsurance recoverable due from insurers

$



$
Less: related premiums paid






Income deferred during the period






Amortization of deferred income


(3,803
)


(3,387
)Decrease in deferred income


(3,803
)


(3,387
)Deferred income on retroactive reinsurance  beginning
    of period


152,041



168,018Deferred income on retroactive reinsurance  end of
    period

$
148,238


$
164,631Funds held interest charged to investment income

$
3,734


$
3,521
  18




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  Form 10-K
  8.
    Commitments
    and Contingencies       19




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   9.
    Segment
    Reporting    Three Months EndedMarch 31,2008

2007General liability

$
54,032

$
61,750Commercial automobile


53,557


53,845Workers compensation


57,699


63,843Property


55,990


70,039Commercial multi-peril


20,566


16,670Accident and health


22,923


19,668Other1


7,043


7,892Total premiums earned

$
271,810

$
293,707
     1
    Other includes surety, homeowners and personal automobile lines
    of business.    Three Months EndedMarch 31,2008


2007Amount


Ratio


Amount


RatioAccident year loss and LAE ratios:General liability

$
40,208



74.4
%

$
44,067



71.4
%Commercial automobile


39,350



73.5
%


35,335



65.6
%Workers compensation


48,530



84.1
%


53,946



84.5
%Property


36,271



64.8
%


47,198



67.4
%Commercial multi-peril


12,778



62.1
%


9,862



59.2
%Accident and health


15,698



68.5
%


12,475



63.4
%Other


3,427



48.7
%


3,064



38.8
%Total accident year losses and LAE


196,262



72.2
%


205,947



70.1
%Prior years loss development


13,348



4.9



(12,487
)


(4.2
)Calendar year losses and LAE

$
209,610



77.1
%

$
193,460



65.9
%
    20




---



##### 



ITEM 2.  
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS    Form 10-K
    Statements
    Regarding Forward-Looking Information
    
    Competitive conditions in the insurance market;
    Insufficient loss reserves, including reserves for asbestos,
    environmental and other latent claims;
    Occurrence of natural or man-made catastrophic events;
    Lowering or loss of one of the Companys financial strength
    ratings;
    Inability to realize the Companys investment objectives;
    Inability to obtain reinsurance coverage on reasonable terms and
    prices, particularly property catastrophe reinsurance;
    Adverse effect of recent credit market events on the
    Companys financial results;
    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;
    Loss of key producers;
    Exposure to emerging claims and coverage issues;
    Exposure to credit risk, in the event reinsurers or
    policyholders fail to pay the Company amounts owed to it;
    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;
    Adverse developments in the prospects or results of operations
    of Fairfax or its affiliates;
    Changes in governmental regulations; and
    Exposure to credit risks on novated policies. 21




---



##### 



Form 10-K Form 10-Q.
  Critical
    Accounting Policies and Estimates
      Form 10-K
  Unpaid
    Losses and Loss Adjustment Expenses
         22




---



##### 



Other
    than Temporary Declines in Value of Investments
      Insurance
    Subsidiaries
 23




---



##### 



Derivatives
    and Hybrid Financial Instruments Valuation
      Reinsurance
    Recoverable
          Deferred
    Income Tax Assets
   24




---



##### 



and/or
      Summary
    of Operations
  Overview
         25




---



##### 



Market
    Conditions
       26




---



##### 



Reinsurance
    Programs
            Results
    of Operations
    Three Months EndedMarch 31,2008


2007Gross premiums written

$
282,593


$
326,931Net premiums written

$
244,653


$
282,447Premiums earned

$
271,810


$
293,707Losses and LAE


209,610



193,460Underwriting expenses


81,057



84,754Underwriting (loss) income


(18,857
)


15,493Investment income and realized investment gains and losses


171,109



49,887Interest and other expense


9,162



7,485Income before income taxes and equity in earnings of investees


143,090



57,895Income tax expense


49,226



19,407Income before equity in earnings of investees


93,864



38,488Equity in earnings of investees, net of tax


(463
)


4,365Net income

$
93,401


$
42,853Loss and LAE ratio


77.1
%


65.9
%Underwriting expense ratio


29.8



28.8Combined ratio


106.9
%


94.7
%  27




---



##### 



Underwriting
    Results
  Gross
    Premiums Written
    Three Months Ended March 31,Increase/


Percent2008

2007

(Decrease)


ChangeGeneral liability

$
63,835

$
76,983

$
(13,148
)


(17
.1)
%Commercial automobile


58,234


54,137


4,097



7
.6
%Workers compensation


54,718


66,848


(12,130
)


(18
.1)
%Property


48,364


82,980


(34,616
)


(41
.7)
%Commercial multi-peril


19,453


14,350


5,103



35
.6
%Accident and health


33,210


26,269


6,941



26
.4
%Other1


4,779


5,364


(585
)


(10
.9)
%Total gross premiums written

$
282,593

$
326,931

$
(44,338
)


(13
.6)
%     1
    Other includes surety, homeowners and personal automobile lines
    of business.    Casualty
    Gross Premiums Written
   28




---



##### 



Property
    Gross Premiums Written
      Other
    Gross Premiums Written
    Net
    Premiums Written
    Premiums
    Earned
    Losses
    and Loss Adjustment Expenses
     29




---



##### 



Underwriting
    Expenses
        Investment
    Results
    Three Months EndedMarch 31,2008


2007Average investments, at book
    value1

$
4,548,155


$
3,993,057Investment income

$
15,841


$
35,413Realized investment gains


155,268



14,474Pre-tax equity in earnings of investees


(712
)


6,716Change in unrealized investment gains and losses and foreign
    currency translation


(13,403
)


(7,015
)Total return on investments

$
156,994


$
49,588Annualized total return on investments


13.8
%


5.0
%     1
   30




---



##### 



Investment
    Income
    Three Months Ended March 31,2008


2007Interest on fixed income securities

$
24,291


$
25,196Dividends from equity securities


6,908



5,358(Losses) earnings from other invested assets


(13,680
)


3,125Other, primarily interest on cash and cash equivalents


9,953



9,555Gross investment income


27,472



43,234Interest on funds held under reinsurance contracts


(5,309
)


(4,152
)Investment expenses


(6,322
)


(3,669
)Investment income

$
15,841


$
35,413     Realized
    Investment Gains
    Three Months Ended March 31,2008


2007Fixed income securities

$
10,940


$
5,061Equity securities






8,845Short-sales, derivatives and hybrid financial instruments


227,896



526Other invested assets


(42,655
)


42196,181



14,474Other than temporary impairment charges


(40,913
)


Total realized investment gains (pre-tax)

$
155,268


$
14,474      31




---



##### 



The Fair Value Option for Financial Assets and
    Financial Liabilities  Including an Amendment of FASB
    Statement No. 115
  Pre-tax
    Equity in Earnings of Investees
  The Equity Method of Accounting for Investments
    in Common Stock
  Interest
    and Other Expense
    Liquidity
    and Capital Resources
  Holding
    Company
         32




---



##### 



Insurance
    Subsidiaries
              At March 31, 2008Cost or

Gross

GrossAmortized

Unrealized

UnrealizedCost

Gains

Losses

Fair ValueFixed income securities:U.S. government and government agencies and
    authorities1

$
1,961,161

$
27,166

$
10,653

$
1,977,674States, municipalities and political subdivisions


2,808


39


34


2,813Other corporate fixed income securities


3,515


151





3,666Total fixed income securities


1,967,484


27,356


10,687


1,984,153Equity securities:Common stocks


688,861


33,793


53,198


669,456Preferred stocks


8,090





255


7,835Total equity securities


696,951


33,793


53,453


677,291Total available-for-sale securities

$
2,664,435

$
61,149

$
64,140

$
2,661,444     1
    Includes U.S. Treasuries pledged for short-sale obligations at a
    fair value of $316,965 (book value of $311,894). 33




---



##### 



Less than 12 Months

Greater than 12 Months

TotalGross


Number




Gross


Number




Gross


NumberFair


Unrealized


of

Fair


Unrealized


of

Fair


Unrealized


ofValue


Loss


Securities

Value


Loss


Securities

Value


Loss


SecuritiesFixed income securities:U.S. government and government agencies and authorities

$
1,085,866


$
6,258



3

$
92,789


$
4,395



2

$
1,178,655


$
10,653



5States, municipalities
    and political subdivisions


672



34



3













672



34



3Total fixed income securities


1,086,538



6,292



6


92,789



4,395



2


1,179,327



10,687



8Equity securities:Common stocks


249,444



53,198



10













249,444



53,198



10Preferred stocks


7,835



255



2













7,835



255



2Total equity 
    securities


257,279



53,453



12













257,279



53,453



12Total securities in an unrealized loss position

$
1,343,817


$
59,745



18

$
92,789


$
4,395



2

$
1,436,606


$
64,140



20            34




---



##### 



Recent
    Accounting Pronouncements Adopted
  Fair Value Measurements
      Ratings
       35




---



##### 



ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK          Interest
    Rate Risk
    At March 31, 2008Fair Value ofFixed Income

Hypothetical


HypotheticalPortfolio

$ Change


% Change200 basis point decline

$
2,719,494

$
608,400



28.8
%100 basis point decline

$
2,389,637


278,543



13.2
%Base scenario

$
2,111,094






100 basis point increase

$
1,879,481


(231,613
)


(11.0
)%200 basis point increase

$
1,682,045


(429,049
)


(20.3
)%      36




---



##### 



Equity
    Price Risk
      Foreign
    Currency Exchange Rate Risk
    ITEM 4T.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Internal
    Control Over Financial Reporting
     37




---



##### 



Part II
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS      and/or and/or
   38




---



##### 



ITEM 5.
    OTHER
    INFORMATION  Changes
    to Board of Directors
  Form 8-K
  Changes
    of Officers
  Form 8-K
  ITEM 6.
    EXHIBITS   39




---



##### 



SIGNATURES    CRUM & FORSTER HOLDINGS CORP.
 (Registrant)
  Date: May 1, 2008

By: /s/  Douglas
    M. LibbyDouglas M. Libby
    President and Chief Executive OfficerDate: May 1, 2008

By: /s/Mary
    Jane RobertsonMary Jane Robertson
    Executive Vice President, Chief 
    Financial Officer and Treasurer  40




---



##### 



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, 2007 filed with the Securities and Exchange
    Commission on February 29, 2008).     *
    
    Filed herewith 41