UNITED STATES
    SECURITIES AND EXCHANGE COMMISSIONWashington, 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:
    June 30, 2009

Commission File Number:
    333-84068    
  Crum & Forster
    Holdings Corp.
 (Exact Name of Registrant as
    Specified in its Charter)
   Delaware(State or Other Jurisdiction
    of
    Incorporation or Organization)

04-3611900(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
  Regulation S-T o o
  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
    July 30, 2009Common Stock, $.01 Par Value


100




---



##### 



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

FINANCIAL STATEMENTSConsolidated Balance Sheets at June 30, 2009 (Unaudited)
    and December 31, 2008


3Consolidated Statements of Operations for the Three and Six
    Months Ended June 30, 2009 and 2008 (Unaudited)


4Consolidated Statements of Shareholders Equity for the Six
    Months Ended June 30, 2009 and 2008 (Unaudited)


5Consolidated Statements of Comprehensive Income (Loss) for the
    Three and Six Months Ended June 30, 2009 and 2008
    (Unaudited)


6Consolidated Statements of Cash Flows for the Six Months Ended
    June 30, 2009 and 2008 (Unaudited)


7Notes to Consolidated Financial Statements


8ITEM 2.

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


28ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK


43ITEM 4T.

CONTROLS AND PROCEDURES


45PART IIOTHER INFORMATIONITEM 1.

LEGAL PROCEEDINGS


46ITEM 6.

EXHIBITS


46SIGNATURES


47INDEX TO EXHIBITS


48   2




---



##### 



PART I
    FINANCIAL INFORMATION  ITEM 1.
    FINANCIAL
    STATEMENTS  CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED
    BALANCE SHEETS
  (Dollars in thousands, except per share amounts)
  (Unaudited)
  June 30,


December 31,2009


2008ASSETSInvestments:Fixed income securities,
    available-for-sale,
    at fair value (amortized cost of $1,301,450 and $1,466,114 in
    2009 and 2008, respectively)

$
1,443,265


$
1,533,334Fixed income securities,
    held-for-trading,
    at fair value


331,022



233,998Equity securities,
    available-for-sale,
    at fair value (cost of $1,187,484 and $1,106,098 in 2009 and
    2008, respectively)


1,257,760



1,020,154Investments at equity


150,009



117,586Derivatives and other invested assets, at fair value


256,932



412,747Short-term investments, at fair value


45,707



549,937Total investments


3,484,695



3,867,756Cash and cash equivalents


215,813



159,862Assets pledged for derivatives






4,416Accrued investment income


31,680



29,378Premiums receivable


183,619



182,158Reinsurance recoverable


737,028



759,028Reinsurance recoverable from affiliates


194,992



209,189Prepaid reinsurance premiums


32,893



28,995Deferred income taxes


189,444



239,077Deferred policy acquisition costs


48,895



52,705Other assets


90,963



66,316Total assets

$
5,210,022


$
5,598,880LIABILITIESUnpaid losses and loss adjustment expenses

$
2,806,683


$
2,987,803Unearned premiums


341,031



366,362Funds held under reinsurance contracts


236,745



228,835Accounts payable and other liabilities


157,007



417,669Deferred income on retroactive reinsurance


113,835



121,277Long-term debt


311,289



310,502Total liabilities


3,966,590



4,432,448Commitments and contingencies (Note 9)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 (loss), net of tax


143,240



(7,455
)Retained earnings


359,199



432,894Total shareholders equity


1,243,432



1,166,432Total liabilities and shareholders equity

$
5,210,022


$
5,598,880   The accompanying notes are an integral part of the
    consolidated financial statements.
 3




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  (Dollars in thousands)
  (Unaudited)
  Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008REVENUESPremiums earned

$
200,281


$
262,882


$
407,711


$
534,692Investment income


63,682



31,245



98,952



47,086Net realized investment gains (losses)


23,002



9,709



(68,069
)


164,977Total revenues


286,965



303,836



438,594



746,755EXPENSESLosses and loss adjustment expenses


132,475



245,746



268,325



455,356Policy acquisition costs


27,786



38,497



57,341



76,946Other underwriting expenses


41,020



44,821



78,902



87,429Interest expense


6,951



7,012



13,890



14,032Costs related to early retirement of debt






392







392Other expense (income), net


783



(490
)


1,580



1,652Total expenses


209,015



335,978



420,038



635,807Income (loss) before income taxes and equity in earnings of
    investees


77,950



(32,142
)


18,556



110,948Income tax expense (benefit)


20,697



(12,564
)


(7,670
)


36,662Income (loss) before equity in earnings of investees


57,253



(19,578
)


26,226



74,286Equity in (losses) earnings of investees, net of tax


(1
)


2



79



(461
)NET INCOME (LOSS)

$
57,252


$
(19,576
)

$
26,305


$
73,825   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)
  Six Months EndedJune 30,2009


2008COMMON 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


(7,455
)


44,479Cumulative effect of adoption of Statements of Financial
    Accounting Standards Nos. 157 and 159






(29,897
)Balance, beginning of period, after cumulative effect of
    adjustments


(7,455
)


14,582Unrealized investment gains (losses), net of transfers to
    realized investment gains and losses


150,454



(32,365
)Foreign currency translation


354



83Amortization of actuarial gain, prior service credit and
    transition obligation included in net periodic benefit costs


(113
)


136Balance, end of period


143,240



(17,564
)RETAINED EARNINGSBalance, beginning of period


432,894



507,987Cumulative effect of adoption of Statements of Financial
    Accounting Standards Nos. 157 and 159






86,101Balance, beginning of period, after cumulative effect of
    adjustments


432,894



594,088Net income


26,305



73,825Dividends to shareholder


(100,000
)


(130,000
)Balance, end of period


359,199



537,913TOTAL SHAREHOLDERS EQUITY

$
1,243,432


$
1,261,342   The accompanying notes are an integral part of the
    consolidated financial statements.
 5




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
  (Dollars in thousands)
  (Unaudited)
  Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008NET INCOME (LOSS)

$
57,252


$
(19,576
)

$
26,305


$
73,825Change in components of other comprehensive loss for the period,
    before tax:Unrealized investment gains (losses), net of transfers to
    realized investment gains and losses


350,407



(36,074
)


231,469



(49,792
)Foreign currency translation


334



(187
)


545



128Amortization of actuarial gain and transition obligation
    included in net periodic benefit costs


(87
)


91



(174
)


209Other comprehensive income (loss) for the period, before tax


350,654



(36,170
)


231,840



(49,455
)Deferred income tax benefit for the period:Deferred income tax (expense) benefit from unrealized investment
    gains and losses


(122,643
)


12,626



(81,015
)


17,427Deferred income tax (expense) benefit from foreign currency
    translation


(117
)


65



(191
)


(45
)Deferred income tax benefit (expense) from amortization of
    actuarial gain, prior service credit and transition obligation
    included in net periodic benefit costs


31



(31
)


61



(73
)Total deferred income tax (expense) benefit for the period


(122,729
)


12,660



(81,145
)


17,309Other comprehensive income (loss) for the period, net of tax


227,925



(23,510
)


150,695



(32,146
)COMPREHENSIVE INCOME (LOSS)

$
285,177


$
(43,086
)

$
177,000


$
41,679   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)
  (Unaudited)
 Six Months EndedJune 30,2009


2008OPERATING ACTIVITIESNet income

$
26,305


$
73,825Adjustments to reconcile net income to net cash from operating
    activities:(Accretion of discount) amortization of premium on fixed income
    securities


(5,038
)


929Realized investment losses (gains)


68,069



(164,977
)Losses of equity method investees, net of dividends


121



944(Earnings) losses of investment companies and similar equity
    method investees


(35,621
)


9,853Loss on commutation






75,470Depreciation and amortization


3,142



1,752Deferred income tax benefit


(31,512
)


(7,387
)Costs related to early retirement of debt






170Other adjustments


2,922



9,325Changes in:Accrued investment income


(3,163
)


(3,005
)Premiums receivable


(2,211
)


933Reinsurance recoverable


34,493



373,479Prepaid reinsurance premiums


(3,898
)


(3,268
)Deferred policy acquisition costs


3,810



6,227Other assets


572



16,698Unpaid losses and loss adjustment expenses


(181,120
)


(58,962
)Unearned premiums


(25,331
)


(40,490
)Accounts payable and other liabilities


(124,160
)


(23,988
)Net cash (used in) provided by operating activities


(272,620
)


267,528INVESTING ACTIVITIESPurchases of fixed income securities


(348,832
)


(263,148
)Proceeds from sales of fixed income securities


309,151



228,089Proceeds from maturities of fixed income securities


48,300



760Purchases of equity securities


(308,343
)


(113,091
)Proceeds from sales of equity securities


133,189



Net sales (purchases) of investments at equity


6,255



(11,240
)Purchases of derivatives and other invested assets






(4,993
)Proceeds from sales of derivatives and other invested assets


109,684



158,085Purchases of short-term investments


(108,564
)


(474,450
)Proceeds from sales of short-term investments


584,248



549,862Proceeds from maturities of short-term investments






25Net change in obligation to return short-sale obligations






(649,517
)Net change in cash and cash equivalents held as collateral


4,416



783,114Net settlement of total return swaps


(343
)


(2,616
)Purchases of fixed assets


(590
)


(1,039
)Net cash provided by investing activities


428,571



199,841FINANCING ACTIVITIESDividends to shareholder


(100,000
)


(130,000
)Repayment of
    103/8%
    long-term debt






(4,270
)Net cash used in financing activities


(100,000
)


(134,270
)Net change in cash and cash equivalents


55,951



333,099Cash and cash equivalents, beginning of period


159,862



147,506Cash and cash equivalents, end of period

$
215,813


$
480,605SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest

$
12,788


$
13,009Cash paid to parent for income taxes

$
119,365


$
34,802SUPPLEMENTAL NON-CASH OPERATING AND INVESTING ACTIVITIESFixed income securities transferred to parent as payment for
    income taxes

$
54,008


$
   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      Form 10-K
    2.
    Recent
    Accounting Pronouncements  SFAS No. 168. The FASB Accounting Standards Codification and
    Hierarchy of Generally Accepted Accounting Principles, a
    replacement of FASB Statement No. 162
  SFAS No. 165. Subsequent Events
 8




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
     FSP
    FAS 115-2
    and
    FAS 124-2 Recognition and Presentation of Other Than Temporary
    Impairments FAS 115-2) , FAS 115-2 FAS 115-2 FAS 115-2 FAS 115-2
  FSP
    FAS 157-4 Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability have Significantly Decreased and
    Identifying Transactions That Are Not Orderly FAS 157-4 FAS 157-4
  FSP
    FAS 107-1
    and APB
    28-1 Interim disclosures about Fair Value Measurement Disclosures about Fair
    Value of Financial Instruments, Interim
    Financial Reporting, FAS 107-1 28-1 FAS 107-1 28-1
  SAB 111.
 9




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   SFAS No. 161. Disclosures about Derivative
    Instruments and Hedging Activities  an Amendment of
    FASB Statement No. 133 Accounting for Derivative Instruments and
    Hedging Activities,
  3.
    Investments  available-for-sale held-for-trading
  Available-For-Sale
    Securities
  available-for-sale
  At June 30, 2009Cost or


Gross


GrossAmortized


Unrealized


UnrealizedCost


Gains


Losses


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

$
82,072


$
10,819


$
75


$
92,816States, municipalities and political subdivisions


1,090,602



98,832



3,870



1,185,564Other corporate


128,776



36,109







164,885Total fixed income securities


1,301,450



145,760



3,945



1,443,265Equity securities  common stocks


1,187,484



116,327



46,051



1,257,760Total
    available-for-sale
    securities

$
2,488,934


$
262,087


$
49,996


$
2,701,025
     At December 31, 2008Cost or


Gross


GrossAmortized


Unrealized


UnrealizedCost


Gains


Losses


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

$
136,551


$
32,879


$



$
169,430States, municipalities and political subdivisions


1,279,232



54,230



17,997



1,315,465Other corporate


50,331



2,603



4,495



48,439Total fixed income securities


1,466,114



89,712



22,492



1,533,334Equity securities  common stocks


1,106,098



29,422



115,366



1,020,154Total
    available-for-sale
    securities

$
2,572,212


$
119,134


$
137,858


$
2,553,488
  10




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
    available-for-sale
  June 30, 2009


December 31, 2008Fair


Unrealized


Number of


Fair


Unrealized


Number ofValue


Loss


Securities


Value


Loss


SecuritiesFixed income securities:Investment grade:U.S. government and government agencies and authorities:6 months or less

$
11,702


$
75



3


$



$




States, municipalities and political subdivisions:6 months or less


106,888



2,769



10



385,140



16,865



277  12 months


19,927



768



4



15,462



1,132



3Greater than 12 months


16,216



333



2











143,031



3,870



16



400,602



17,997



30Non-investment grade, other corporate:6 months or less














36,100



4,495



1Total fixed income securities


154,733



3,945



19



436,702



22,492



31Equity securities:6 months or less


377,397



45,042



13



519,602



115,366



147  12 months


22,990



1,009



2











Total equity securities


400,387



46,051



15



519,602



115,366



14Total securities in an unrealized loss position

$
555,120


$
49,996



34


$
956,304


$
137,858



45
    11




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
     Unrealized Loss as a Percentage of CostGrossUnrealizedFair Value


0-10%


10-20%


20-30%


30-40%


40-50%


>50%


Losses6 months or less

$
377,397


$
15,683


$
6,302


$
22,943


$



$



$
114


$
45,0427  12 months


22,990



132











877











1,009Total equity securities fair value and gross unrealized losses

$
400,387


$
15,815


$
6,302


$
22,943


$
877


$



$
114


$
46,051Number of securities


15



7



3



2



1







2



15
     available-for-sale
   12




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   Fixed
    Income Securities Designated as
    Held-for-Trading
  held-for-trading Accounting for
    Certain Hybrid Financial Instruments  an Amendment of
    FASB Statements Nos. 133 and 140 held-for-trading
  held-for-trading
  Investments
    at Equity
    Significant
    Subsidiary
  Regulation S-X.
  Three Months EndedJune 30, 2009Total revenues

$
23,475Total expenses

$
1,050Income from continuing operations

$
22,425Net income

$
22,424
  13




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  Derivatives
    and Other Invested Assets
  Derivative
    Securities
      June 30, 2009


December 31, 2008Notional





Fair Value


Notional





Fair ValueAmount


Cost


Asset


Amount


Cost


AssetCredit default swaps

$
1,538,616


$
21,624


$
42,620


$
3,044,313


$
42,477


$
138,830Eurodollar futures contracts














1,013,000








1Warrants


101,201



10,225



2



101,201



10,225




     1
    
    Eurodollar futures contracts are
    settled daily and therefore had no fair value at
    December 31, 2008.  Credit
    Default Swaps
     14




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##### 



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


Fair ValueExpiring in one year or less

$
597,938


$
6,804Expiring after 1 year through 5 years


940,678



35,816$
1,538,616


$
42,620
     Three Months Ended June 30,


Six Months Ended June 30,2009


2008


2009


2008Credit default swaps

$
(18,746
)

$
2,672


$
13,450


$
156,645SPDRs short-sales






(4,009
)






65,506Total return swaps






11,797







11,797Common stock short-sales






(112
)






4,749S&P Index call options






(33
)






(453
)Other1


1



(2,240
)


(341
)


(3,470
)Total net realized investment (losses) gains

$
(18,745
)

$
8,075


$
13,109


$
234,774
     1
    Other includes warrants and Eurodollar futures contracts. 15




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   mark-to-market mark-to-market
  Three Months Ended June 30, 2009Credit DefaultSwaps1


Other Derivatives


TotalRealized gains on disposal

$



$



$
Reversal of
    mark-to-market
    gains recognized in prior periods










Mark-to-market
    (losses) gains recognized in period


(18,746
)


1



(18,745
)Net realized investment (losses) gains

$
(18,746
)

$
1


$
(18,745
)
     1
    During the three months ended June 30, 2009, the Company
    had no sales of credit default swaps.  Three Months Ended June 30, 2008Common


S&PCredit


SPDRs


Total


Stock


IndexDefault


Short-


Return


Short-


Call


OtherSwaps1


Sales


Swaps


Sales


Options


Derivatives


TotalRealized gains (losses) on disposal

$
25,982


$
(22,523
)

$
(2,617
)

$
2,053


$
(228
)

$



$
2,667Reversal of previously recognized
    mark-to-market
    (gains) losses on current period disposals


(21,911
)


18,514







(2,165
)


228







(5,334
)Mark-to-market
    (losses) gains recognized in period


(1,399
)






14,414







(33
)


(2,240
)


10,742Net realized investment gains (losses)

$
2,672


$
(4,009
)

$
11,797


$
(112
)

$
(33
)

$
(2,240
)

$
8,075
     1
    During the three months ended June 30, 2008, the Company
    sold credit default swaps with a cost of $4,668 and notional
    amount of $145,776 for proceeds of $30,650.  Six Months Ended June 30, 2009CreditDefault


OtherSwaps1


Derivatives


TotalRealized gains on disposal

$
88,807


$
(343
)

$
88,464Reversal of
    mark-to-market
    gains recognized in prior periods


(60,119
)






(60,119
)Mark-to-market
    (losses) gains recognized in period


(15,238
)


2



(15,236
)Net realized investment gains (losses)

$
13,450


$
(341
)

$
13,109
     1
    During the six months ended June 30, 2009, the Company sold
    credit default swaps with a cost of $20,853 and notional amount
    of $1,387,500 for proceeds of $109,660. 16




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   Six Months Ended June 30, 2008Common


S&PCredit


SPDRs


Total


Stock


IndexDefault


Short-


Return


Short-


Call


OtherSwaps1


Sales


Swaps


Sales


Options


Derivatives


TotalRealized gains (losses) on disposal

$
149,518


$
(22,523
)

$
(2,617
)

$
5,116


$
(1,615
)

$



$
127,879Reversal of previously recognized
    mark-to-market
    (gains) losses on current period disposals


(103,545
)


88,029







(367
)


1,555







(14,328
)Mark-to-market
    gains (losses) recognized in period


110,672







14,414







(393
)


(3,470
)


121,223Net gains realized investment gains (losses)

$
156,645


$
65,506


$
11,797


$
4,749


$
(453
)

$
(3,470
)

$
234,774
     1
    During the six months ended June 30, 2008, the Company sold
    credit default swaps with a cost of $20,259 and notional amount
    of $778,891 for proceeds of $169,777.  Other
    Invested Assets
  The Fair Value Option for Financial
    Assets and Liabilities  Including an Amendment of
    FASB Statement No.
  Related
    Party Transactions
     17




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
   4.
    Fair
    Value Disclosures  Fair
    Value Hierarchy
  Fair Value
    Measurements
            over-the-counter
 18




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
       June 30, 2009Quoted Prices in


Significant OtherActive Markets for


Observable


SignificantIdentical Assets


Inputs


Unobservable Inputs(Level 1)


(Level 2)


(Level 3)


TotalAssetsAvailable-for-sale
    fixed income securities:U.S. government and government agencies and authorities

$



$
92,816


$



$
92,816States, municipalities and political subdivisions






1,185,564







1,185,564Other corporate






164,885







164,885Total
    available-for-sale
    fixed income securities






1,443,265







1,443,265Fixed income securities,
    held-for-trading:Residential mortgage-backed






93,580



21,913



115,493Other corporate






215,529







215,529Total
    held-for-trading
    fixed income securities






309,109



21,913



331,022Equity securities


1,228,306



29,454







1,257,760Derivatives and other invested assets


204,539



52,393







256,932Short-term investments






45,707







45,707Total

$
1,432,845


$
1,879,928


$
21,913


$
3,334,686
  19




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  December 31, 2008Quoted Prices in


Significant OtherActive Markets for


Observable


SignificantIdentical Assets


Inputs


Unobservable Inputs(Level 1)


(Level 2)


(Level 3)


TotalAssetsAvailable-for-sale
    fixed income securities:U.S. government and government agencies and authorities

$



$
169,430


$



$
169,430States, municipalities and political subdivisions






1,315,465







1,315,465Other corporate






48,439







48,439Total
    available-for-sale
    fixed income securities






1,533,334







1,533,334Fixed income securities,
    held-for-trading:Residential mortgage-backed










66,393



66,393Other corporate






167,605







167,605Total
    held-for-trading
    fixed income securities






167,605



66,393



233,998Equity securities


998,582



21,572







1,020,154Derivatives and other invested assets


262,310



164,064







426,374Short-term investments






549,937







549,937Total

$
1,260,892


$
2,436,512


$
66,393


$
3,763,797
        Three Months Ended June 30,


Six Months Ended June 30,2009


2008


2009


2008Balance, beginning of period

$
29,694


$
2,661


$
66,393


$
2,500Purchases, issuances and settlements


(11,404
)






(1,435
)


Transfers to Level 2










(47,611
)


Realized gains (losses) included in net income


3,623



(163
)


4,566



(2
)Balance, end of period

$
21,913


$
2,498


$
21,913


$
2,498Total gains (losses) for the period recognized in earnings
    attributable to the change in unrealized gains or losses
    relating to assets held at period end.

$
246


$
(163
)

$
973


$
(2
)
  20




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  Fair
    Value Option
  instrument-by-instrument
       21




---



##### 



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


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Gross unpaid losses and LAE, beginning of period

$
2,871,026


$
3,172,873


$
2,987,803


$
3,178,506Less ceded unpaid losses and LAE


670,237



1,139,807



684,239



1,197,496Net unpaid losses and LAE, beginning of period


2,200,789



2,033,066



2,303,564



1,981,010Losses and LAE incurred related to:Current period


143,365



186,720



290,100



382,982Prior years


(10,890
)


59,026



(21,775
)


72,374Total losses and LAE incurred


132,475



245,746



268,325



455,356Losses and LAE paid related to:Current period


42,877



58,095



73,438



85,612Prior years


146,801



(174,240
)


354,865



(44,203
)Total losses and LAE paid


189,678



(116,145
)


428,303



41,409Net unpaid losses and LAE, end of period


2,143,586



2,394,957



2,143,586



2,394,957Add ceded unpaid losses and LAE


663,097



724,587



663,097



724,587Gross unpaid losses and LAE, end of period

$
2,806,683


$
3,119,544


$
2,806,683


$
3,119,544
       June 30,2009Ceded unpaid losses and LAE in the table above

$
663,097Reconciling items:Reinsurance receivable on paid losses and LAE


11,240Retroactive reinsurance recoverable


257,683Reinsurance recoverable on the consolidated balance sheet

$
932,020
  22




---



##### 



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


Six Months EndedJune 30,


June 30,2009


2008


2009


2008AsbestosGross unpaid losses and allocated LAE (ALAE),
    beginning of period

$
372,456


$
434,194


$
387,224


$
428,139Less ceded unpaid losses and ALAE


95,432



83,178



85,336



94,497Net unpaid losses and ALAE, beginning of period


277,024



351,016



301,888



333,642Net losses and ALAE incurred














25,500Net paid losses and ALAE


10,499



11,748



35,363



19,874Net unpaid losses and ALAE, end of period


266,525



339,268



266,525



339,268Add ceded unpaid losses and ALAE


113,671



82,349



113,671



82,349Gross unpaid losses and ALAE, end of period

$
380,196


$
421,617


$
380,196


$
421,617
   Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008EnvironmentalGross unpaid losses ALAE, beginning of period

$
107,517


$
114,387


$
107,948


$
117,768Less ceded unpaid losses and ALAE


30,466



31,754



28,969



32,725Net unpaid losses and ALAE, beginning of period


77,051



82,633



78,979



85,043Net losses and ALAE incurred














Net paid losses and ALAE


1,754



3,780



3,682



6,190Net unpaid losses and ALAE, end of period


75,297



78,853



75,297



78,853Add ceded unpaid losses and ALAE


29,665



30,887



29,665



30,887Gross unpaid losses and ALAE, end of period

$
104,962


$
109,740


$
104,962


$
109,740
    23




---



##### 



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


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Premiums written:Direct

$
228,956


$
274,775


$
439,855


$
552,824Assumed from other companies, pools or associations


9,227



4,864



16,553



9,408Ceded to other companies, pools or associations


(39,971
)


(33,358
)


(77,926
)


(71,298
)Net premiums written

$
198,212


$
246,281


$
378,482


$
490,934Premiums earned:Direct

$
227,906


$
289,728


$
464,458


$
592,615Assumed from other companies, pools or associations


9,609



5,222



17,281



10,108Ceded to other companies, pools or associations


(37,234
)


(32,068
)


(74,028
)


(68,031
)Premiums earned

$
200,281


$
262,882


$
407,711


$
534,692
     Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Earned premiums ceded to reinsurers

$
(37,234
)

$
(32,068
)

$
(74,028
)

$
(68,031
)Commissions earned on ceded reinsurance premiums


9,313



7,018



17,567



14,624Claims incurred ceded to reinsurers


17,349



(68,359
)


40,924



(59,104
)Provision for uncollectible reinsurance






(2,000
)


(2,000
)


(4,000
)Net impact of ceded reinsurance transactions

$
(10,572
)

$
(95,409
)

$
(17,537
)

$
(116,511
)
     June 30,


December 31,2009


2008Reinsurance recoverable on unpaid losses and LAE

$
920,780


$
949,364Reinsurance receivable on paid losses and LAE


11,240



18,853Total reinsurance recoverable

$
932,020


$
968,217
    24




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  Corporate
    Aggregate Reinsurance
      Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Funds held interest charged to investment income

$
(3,832
)

$
(3,798
)

$
(7,599
)

$
(9,107
)Losses and LAE


(3,721
)


71,669



(7,442
)


68,262Decrease in income before income taxes

$
(111
)

$
(75,467
)

$
(157
)

$
(77,369
)
     Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Increase in reinsurance recoverable due from insurers

$



$



$



$
Less: related premiums paid














Income deferred during the period














Amortization of deferred income


(3,721
)


(12,579
)


(7,442
)


(16,382
)Decrease in deferred income


(3,721
)


(12,579
)


(7,442
)


(16,382
)Deferred income on retroactive reinsurance  beginning
    of period


117,556



148,238



121,277



152,041Deferred income on retroactive reinsurance  end of
    period

$
113,835


$
135,659


$
113,835


$
135,659
     Form 10-K
  8.
    Income
    Taxes   25




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
  9.
    Commitments
    and Contingencies        10.
    Segment
    Reporting    Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008General liability

$
36,638


$
52,532


$
76,167


$
106,564Workers compensation


47,223



60,654



94,637



118,353Commercial automobile


33,096



48,250



68,499



101,807Property


24,310



44,920



54,870



100,910Commercial multi-peril


19,240



20,208



38,720



40,774Accident and health


33,437



29,301



62,108



52,224Other1


6,337



7,017



12,710



14,060Total premiums earned

$
200,281


$
262,882


$
407,711


$
534,692
     1
    
    Other includes surety, homeowners
    and personal automobile lines of business. 26




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (Unaudited, dollars in thousands)
     Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Amount


Ratio


Amount


Ratio


Amount


Ratio


Amount


RatioAccident year loss and LAE ratios:General liability

$
27,472



75.0
%

$
37,622



71.6
%

$
54,500



71.6
%

$
77,830



73.0
%Workers compensation


37,094



78.6
%


46,651



76.9
%


75,763



80.1
%


95,181



80.4
%Commercial automobile


25,625



77.4
%


35,666



73.9
%


50,380



73.5
%


75,016



73.7
%Property


17,413



71.6
%


31,587



70.3
%


39,956



72.8
%


67,858



67.2
%Commercial multi-peril


10,768



56.0
%


12,438



61.5
%


22,111



57.1
%


25,216



61.8
%Accident and health


22,737



68.0
%


20,039



68.4
%


42,469



68.4
%


35,737



68.4
%Other


2,256



35.6
%


2,717



38.7
%


4,921



38.7
%


6,144



43.7
%Total accident year losses and LAE


143,365



71.6
%


186,720



71.0
%


290,100



71.2
%


382,982



71.6
%Prior years loss development


(10,890
)


(5.5
)


59,026



22.5



(21,775
)


(5.4
)


72,374



13.6Calendar year losses and LAE

$
132,475



66.1
%

$
245,746



93.5
%

$
268,325



65.8
%

$
455,356



85.2
%
    27




---



##### 



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 and the ability
    to attract and retain new business;
    Adverse effect of continuing volatility in the global financial
    markets including changes in interest rates, credit spreads,
    foreign currency exchange rates and other factors;
    Current economic downturn;
    Insufficient loss reserves, including reserves for asbestos,
    environmental and other latent claims;
    Occurrence of natural or man-made catastrophic events;
    Inability to realize the Companys investment objectives;
    Inability to obtain reinsurance coverage on reasonable terms and
    prices, particularly property catastrophe reinsurance;
    Exposure to credit risk, in the event reinsurers or
    policyholders fail to pay the Company amounts owed to it;
    Lowering or loss of one of the Companys financial strength
    ratings;
    Loss of key producers;
    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;
    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;
    Ability of Fairfax to determine the outcome of corporate action
    requiring stockholder approval;
    Changes in governmental regulations; and
    Exposure to credit risks on novated policies. 28




---



##### 



Form 10-K Form 10-Q.
  Critical
    Accounting Policies and Estimates
      Form 10-K
  Unpaid
    Losses and Loss Adjustment Expenses
         29




---



##### 



Investments
    , Fair Value
    Measurements
   30




---



##### 



available-for-sale
      Reinsurance
    Recoverable
       31




---



##### 



Deferred
    Income Tax Assets
    and/or
  available-for-sale
    Summary
    of Operations
  Overview
     32




---



##### 



33




---



##### 



Market
    Conditions
        Reinsurance
    Programs
         34




---



##### 



Results
    of Operations
    Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Gross premiums written

$
238,183


$
279,639


$
456,408


$
562,232Net premiums written

$
198,212


$
246,281


$
378,482


$
490,934Premiums earned

$
200,281


$
262,882


$
407,711


$
534,692Losses and LAE


132,475



245,746



268,325



455,356Underwriting expenses


68,806



83,318



136,243



164,375Underwriting (loss) income


(1,000
)


(66,182
)


3,143



(85,039
)Investment income and net realized investment gains and losses


86,684



40,954



30,883



212,063Interest and other expense


7,734



6,522



15,470



15,684Costs related to early retirement of debt






392







392Income (loss) before income taxes and equity in earnings of
    investees


77,950



(32,142
)


18,556



110,948Income tax expense (benefit)


20,697



(12,564
)


(7,670
)


36,662Income (loss) before equity in earnings of investees


57,253



(19,578
)


26,226



74,286Equity in (losses) earnings of investees, net of tax


(1
)


2



79



(461
)Net income (loss)

$
57,252


$
(19,576
)

$
26,305


$
73,825Loss and LAE ratio


66.1
%


93.5
%


65.8
%


85.2
%Underwriting expense ratio


34.4



31.7



33.4



30.7Combined ratio


100.5
%


125.2
%


99.2
%


115.9
%        35




---



##### 



Underwriting
    Results
  Gross
    Premiums Written
    Three Months Ended June 30,Increase/


Percent2009


2008


(Decrease)


ChangeGeneral liability

$
51,216


$
59,679


$
(8,463
)


(14.2)%Workers compensation


51,885



52,922



(1,037
)


(2.0)%Commercial automobile


34,339



41,674



(7,335
)


(17.6)%Property


26,141



58,352



(32,211
)


(55.2)%Commercial multi-peril


22,011



22,900



(889
)


(3.9)%Accident and health


46,592



37,613



8,979



23.9 %Other


5,999



6,499



(500
)


(7.7)%Total gross premiums written

$
238,183


$
279,639


$
(41,456
)


(14.8)%   Six Months Ended June 30,Increase/


Percent2009


2008


(Decrease)


ChangeGeneral liability

$
103,359


$
123,514


$
(20,155
)


(16.3)%Workers compensation


101,965



107,640



(5,675
)


(5.3)%Commercial automobile


62,049



99,908



(37,859
)


(37.9)%Property


49,600



106,716



(57,116
)


(53.5)%Commercial multi-peril


41,359



42,353



(994
)


(2.3)%Accident and health


87,322



70,823



16,499



23.3%Other1


10,754



11,278



(524
)


(4.6)%Total gross premiums written

$
456,408


$
562,232


$
(105,824
)


(18.8)%     1
    
    Other includes surety, homeowners
    and personal automobile lines of business.     36




---



##### 



Casualty Gross Premiums Written
      Property Gross Premiums Written
      Other Gross Premiums Written
    Net
    Premiums Written
    Premiums
    Earned
   37




---



##### 



Losses
    and Loss Adjustment Expenses
        Underwriting
    Expenses
    Investment
    Results
    Three Months Ended June 30,


Six Months Ended June 30,2009


2008


2009


2008Average investments, including cash and cash equivalents,
    at book
    value1

$
3,579,803


$
4,391,345


$
3,736,214


$
4,421,123Investment income

$
63,682


$
31,245


$
98,952


$
47,086Realized investment gains (losses)


23,002



9,709



(68,069
)


164,977Pre-tax equity in earnings (losses) of investees


(1
)


3



122



(709
)Change in unrealized investment losses and foreign
    currency translation


350,741



(36,261
)


232,014



(49,664
)Total return on investments

$
437,424


$
4,696


$
263,019


$
161,690Annualized total return on investments


48.9
%


0.4
%


14.1
%


7.3
%     1
    
    Includes cash and cash equivalents
    and assets pledged for derivatives. 38




---



##### 



Investment Income
    Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Interest on fixed income securities

$
25,076


$
26,396


$
53,590


$
50,687Dividends from equity securities


10,230



7,559



22,393



14,467Earnings (losses) from other invested assets


34,817



3,827



35,621



(9,853
)Other, primarily interest on cash and cash equivalents


607



5,918



1,104



15,871Gross investment income


70,730



43,700



112,708



71,172Interest on funds held under reinsurance contracts


(3,832
)


(3,797
)


(7,599
)


(9,106
)Investment expenses


(3,216
)


(8,658
)


(6,157
)


(14,980
)Investment income

$
63,682


$
31,245


$
98,952


$
47,086    39




---



##### 



Net Realized Investment Gains and Losses
    Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Fixed income securities

$
73,459


$
1,118


$
73,724


$
13,255Equity securities


7,194







8,678



Derivatives and short-sale obligations


(18,745
)


8,075



13,109



234,774Investments at equity and other invested assets


12,647



681



(57,626
)


(41,974
)74,555



9,874



37,885



206,055Other than temporary impairment charges:Equity securities


(51,553
)


(165
)


(102,447
)


(39,813
)Fixed income securities










(3,507
)


(1,265
)(51,553
)


(165
)


(105,954
)


(41,078
)Total pre-tax net realized investment gains (losses)

$
23,002


$
9,709


$
(68,069
)

$
164,977   mark-to-market held-for-trading mark-to-market The Fair Value Option for
    Financial Assets and Financial Liabilities  Including
    an Amendment of FASB Statement No. 115
  mark-to-market held-for-trading
    Interest
    and Other Expense
   40




---



##### 



Liquidity
    and Capital Resources
  Holding
    Company
          Insurance
    Subsidiaries
     41




---



##### 



Ratings
   42




---



##### 



ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK          Interest
    Rate Risk
    At June 30, 2009


At December 31, 2008Fair Value of








Fair Value ofFixed Income


Hypothetical


Hypothetical


Fixed Income


Hypothetical


Hypothetical(dollars in millions)

Securities


$ Change


% Change


Securities


$ Change


% Change200 basis point decline

$
2,045,793


$
271,506



15.3
%

$
2,106,515


$
339,183



19.2
%100 basis point decline

$
1,912,467


$
138,180



7.8
%

$
1,958,505


$
191,173



10.8
%Base scenario

$
1,774,287










$
1,767,332







100 basis point increase

$
1,604,809


$
(169,478
)


(9.6
)%

$
1,584,304


$
(183,028
)


(10.4
)%200 basis point increase

$
1,425,146


$
(322,141
)


(18.2
)%

$
1,425,703


$
(341,629
)


(19.3
)%  43




---



##### 



Equity
    Price Risk
  available-for-sale
 44




---



##### 



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
     45




---



##### 



PART II
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS          ITEM 6.
    EXHIBITS   46




---



##### 



SIGNATURES    CRUM & FORSTER HOLDINGS CORP.
    (Registrant)
  Date: July 30, 2009

By:  /s/  Douglas
    M. LibbyDouglas
    M. Libby
    President and Chief Executive Officer   Date: July 30, 2009

By:  /s/  Mary
    Jane RobertsonMary
    Jane Robertson
     Executive Vice President, Chief
    Financial Officer and Treasurer  47




---



##### 



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, 2008 filed with the
    Securities and Exchange Commission on February 27, 2009).     *
    
    Filed herewith 48